Norway makes contribution to the World Bank’s fund for the poorest countries

Negotiations on replenishment of the International Development Association (IDA) were completed on 14 December. Norway is maintaining its contribution in real terms, which means a drop in its relative share of the total funding.

The donor countries have pledged USD 25.1 billion to IDA for the three-year period from 2008 to 2010. The fund will total USD 41.6 billion, an increase of 30 per cent from the previous replenishment in 2004. This amount includes funding for various initiatives to cancel developing countries’ debts.

Adjusted for inflation, Norway’s contribution to IDA will be NOK 779 million annually for the next three years. This represents an increase of NOK 51 million, or seven per cent. In accordance with a 2005 resolution relating to the cancellation of the debts of poor countries, donor countries are obliged to maintain the level of their contributions in real terms.

In its budget for 2008, the Government had proposed an increase of NOK 80 million in the annual allocation to IDA.

“We are still not completely satisfied with the progress of the World Bank as regards adherence to its conditionality principles. That is why we have reduced the increase. Instead, Norway will use some of this amount to put the Bank in a better position to assess the social consequences of its policies, by financing Poverty and Social Impact Analysis (PSIA). Even though the Bank already undertakes a certain number of such impact analyses, extra efforts and extra pressure are needed,” said State Secretary Håkon A. Gulbrandsen.

Many countries are increasing their contributions by 30 to 70 per cent. The UK is increasing its contribution by 49 per cent, making it the largest contributor to IDA. Norway remains among the 15 largest donors.

The World Bank is to complete new evaluations of its conditionality practices by the summer of 2009. In the IDA replenishment negotiations, Norway has emphasised that the evaluation process must be as open and consultative as possible. This is also pointed out in the final negotiation report.

The World Bank is the most important source of financing for poor countries in Africa. More than half of IDA funds go to Africa. Most of the increased allocations to the IDA will go to the priority areas of climate change, fragile states and reconstruction in post-conflict countries, as well as debt cancellation.

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Acting Head of Information Wera Helstrøm, tel. (+47) 99 40 93 23.