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Nigeria, 73 other countries to benefit from $93bn IDA package – World Bank

Nigeria’s debt to balloon further while Angola’s is seen falling says World Bank report

Nigeria is among the 74 countries that would benefit from a $93 billion replenishment package of the World Bank’s International Development Association (IDA) for low-income countries (LIC), a new report by the World Bank indicated.

The World Bank Thursday announced a $93 billion replenishment package of the International Development Association (IDA) to help low-income countries respond to the COVID-19 crisis and build a greener, more resilient, and inclusive future.

The financing brings together $23.5 billion of contributions from 48 high- and middle-income countries with financing raised in the capital markets, repayments, and the World Bank’s contributions.

Due to the urgent development needs of IDA countries, the World Bank said the replenishment was advanced by one year.

IDA20 will cover the period of July 1, 2022, to June 30, 2025. The IDA20 policy architecture builds on the strong foundation of IDA19, with enhancements to make IDA20 even more ambitious and fit for today’s challenges, the World Bank said.

The World Bank’s IDA, which was established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa.

According to the Global Bank, eligibility for IDA support depends first and foremost on a country’s relative poverty, defined as Gross National Income (GNI) per capita below an established threshold and updated annually ($1,205 in the fiscal year 2022).

IDA also supports some countries, including several small island economies that are above the operational cutoff but lack the creditworthiness needed to borrow from the International Bank for Reconstruction and Development (IBRD).

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Some countries, such as Nigeria and Pakistan, are IDA-eligible based on per capita income levels and are also creditworthy for some IBRD borrowing. They are referred to as “blend” countries.

A total of 74 countries are currently eligible to receive IDA resources.

The financing package agreed over a two-day meeting hosted virtually by Japan, is the largest ever mobilization in IDA’s 61-year history. IDA’s unique leveraging model enables it to achieve greater value from donor resources – every $1 that donors contribute to IDA is now leveraged into almost $4 of financial support for the poorest countries.

“Today’s generous commitment by our partners is a critical step toward supporting poor countries in their efforts to recover from the COVID-19 crisis,” said World Bank Group President David Malpass.

“We are grateful for the confidence our partners have in IDA as a non-fragmented and efficient platform to tackle development challenges and improve the lives of millions of people around the world.”

The funds will be delivered to the world’s 74 poorest countries under the 20th replenishment (IDA20) program, which focuses on helping countries recover from the impacts of the COVID-19 crisis.

In these countries, the ongoing pandemic is worsening poverty, undermining growth, and jeopardizing the prospects of resilient and inclusive development. Countries are struggling with falling government revenues; increasing debt vulnerabilities; rising risks to fragility, conflict, and instability; and dropping literacy rates. About a third of IDA countries are facing a looming food crisis.

To help countries build back greener, a substantial portion of these funds go to tackling climate change, with a focus on helping countries adapt to rising climate impacts and preserve biodiversity. IDA will also deepen support to countries to better prepare for future crises, including pandemics, financial shocks, and natural hazards.

While IDA20 will support countries globally, resources are increasingly benefiting Africa, which will receive about 70 percent of the funding.

With this strong package, IDA will be able to scale up its support in the pandemic and address health challenges, helping 400 million people receive essential health and nutrition resources.

The social safety nets program is also expected to reach as many as 375 million people.

The country benefited from the World Bank’s IDA financing for strong Covid-19 vaccines, health professionals’ training, and hospital equipment in IDA19 achievements, which was key to IDA20.

The IDA20 program has more ambitious policy commitments that will support countries in prioritizing investments in human capital, covering issues such as education, health and nutrition, vaccines, safety nets, and support for people with disabilities.

IDA will also increase its ambition in addressing other major development challenges such as gender inequality, job creation, and situations of fragility, conflict, and violence, including in the Sahel, the Lake Chad region, and the Horn of Africa.

A continued emphasis on governance and institutions, debt sustainability, and digital infrastructure interventions will help foster economic and social inclusion.