IDA20 Report from the Executive Directors of the International Development Association to the Board of Governors Additions to IDA Resources: Twentieth Replenishment Building Back Better from the Crisis: Toward a Green, Resilient and Inclusive Future Approved by the Executive Directors of IDA on February 17, 2022 ACRONYMS AND ABBREVIATIONS Fiscal Year (FY) = July 1 to June 30 All dollar amounts are US dollars unless otherwise indicated AfDB African Development Bank DSF Debt Sustainability Framework AfDF African Development Fund DSSI Debt Service Suspension Initiative AsDB Asian Development Bank EFNs External Financing Needs AsDF Asian Development Fund ERF Early Response Financing AVAT African Vaccine Acquisition Trust ESF Environmental and Social Framework BSO Balance Sheet Optimization FCS Fragile and Conflict-affected Cat DDO Catastrophe Deferred Drawdown Situation Option FCV Fragility, Conflict, and Violence CCAP2 WBG Climate Change Action Plan 2021-2025 GAFSP Global Agriculture and Food Security Program CCDRs Climate Change Development Reports GBV Gender-Based Violence CEIP-1 Coastal Embarkment GDP Gross Domestic Product Improvement Project GNI Gross National Income CERCs Contingency Emergency GPSA Global Partnership for Social Response Components Accountability COVAX COVID-19 Vaccines Global GRID Green, Resilient and Inclusive Access Development COVID-19 Coronavirus Disease 2019 GW Gigawatts CPF Country Partnership Framework HCI Human Capital Index CPGA Crisis Preparedness Gap HIPC Heavily Indebted Poor Countries Analysis IBRD International Bank for CPIA Country Policy and Institutional Reconstruction and Development Assessment IDA International Development CPL Concessional Partner Loans Association CRW Crisis Response Window IDS International Debt Statistics CSO Civil Society Organization IEG Independent Evaluation Group CPSD Country Private Sector IFC International Finance Diagnostic Corporation DPF Development Policy Financing IFF Illicit Financial Flows DRM Domestic Resource Mobilization ILO International Labour DSA Debt Sustainability Analysis Organization IMF International Monetary Fund RRAs Risk and Resilience Assessments IoC Instrument of Commitment RW Regional Window JET Jobs and Economic SCD Systematic Country Diagnostics Transformation SDFP Sustainable Development LICs Low-income Countries Finance Policy LTS Long-Terms Strategies SDG Sustainable Development Goals MDB Multilateral Development Bank SDR Special Drawing Rights MDRI Multilateral Debt Relief Initiative SIDS Small Island Developing States MIGA Multilateral Investment SIEs Small Island Economies Guarantee Agency SMEs Small and medium-sized MPA Multiphase Programmatic Enterprises Approach SML Shorter-Maturity Loans MSMEs Micro, Small, and Medium SSA Sub-Saharan Africa Enterprises SUW Scale-Up Window MTR Mid-Term Review TAA Turn-Around Allocation NBSAPs National Biodiversity Strategies and Action Plans UN United Nations NDCs Nationally Determined UNESCO United Nations Educational, Contributions Scientific and Cultural Organization ODA Official Development Assistance UNHCR United Nations High OECD Organisation for Economic Co- Commissioner for Refugees operation and Development VTD Vaccines, Therapeutics and OFF Official Financial Flows Diagnostics OOF Other Official Flows UNICEF United Nations Children’s Fund PBA Performance-Based Allocation WASH Water, Sanitation and Hygiene PCO Program of Creditor Outreach WBG World Bank Group PPA Performance and Policy Action WHO World Health Organization PSW Private Sector Window WHR Window for Host Communities RMR Risk Mitigation Regime and Refugees RMS Result Measurement System TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................... i SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS ......................................... v INTRODUCTION......................................................................................................................... 1 SECTION I: POVERTY ALLEVIATION, DEVELOPMENT PROGRESS AND FINANCING LANDSCAPE ........................................................................................................ 2 A. PROGRESS ON THE TWIN GOALS .......................................................................................... 2 B. PROGRESS ON SUSTAINABLE DEVELOPMENT ....................................................................... 5 C. GLOBAL AID FINANCING LANDSCAPE ................................................................................. 8 SECTION II: DELIVERING LONG-TERM OUTCOMES IN THE POOREST COUNTRIES ............................................................................................................................... 12 A. IDA’S COMPARATIVE ADVANTAGE ................................................................................... 12 B. AID COORDINATION AND DEVELOPMENT EFFECTIVENESS ................................................ 16 C. OUTCOME ORIENTATION AND RESULTS MEASUREMENT ................................................... 19 SECTION III: BUILDING BACK BETTER FROM THE CRISIS –TOWARD A GREEN, RESILIENT, AND INCLUSIVE FUTURE ............................................................................. 21 A. IDA20 OVERARCHING THEME ........................................................................................... 21 B. CROSS-CUTTING ISSUES ..................................................................................................... 24 I. CRISIS PREPAREDNESS .............................................................................................. 24 II. GOVERNANCE AND INSTITUTIONS ............................................................................. 30 III. DEBT ......................................................................................................................... 33 IV. TECHNOLOGY ........................................................................................................... 38 C. SPECIAL THEMES ............................................................................................................... 40 I. HUMAN CAPITAL ...................................................................................................... 40 II. CLIMATE CHANGE .................................................................................................... 49 III. FRAGILITY, CONFLICT AND VIOLENCE ...................................................................... 57 IV. GENDER AND DEVELOPMENT .................................................................................... 62 V. JOBS AND ECONOMIC TRANSFORMATION ................................................................. 66 SECTION IV: VOLUMES AND TERMS OF IDA ASSISTANCE IN IDA20 ..................... 71 A. CONCESSIONAL IDA FINANCING ....................................................................................... 73 I. COUNTRY ALLOCATIONS .......................................................................................... 73 II. CONCESSIONAL WINDOWS ........................................................................................ 75 III. ARREARS CLEARANCE .............................................................................................. 78 B. NON-CONCESSIONAL IDA FINANCING .............................................................................. 78 C. LENDING TERMS ................................................................................................................ 79 D. LOCAL CURRENCY FINANCING .......................................................................................... 82 SECTION V: MANAGING IDA’S FINANCIAL RESOURCES .......................................... 83 A. COMMITMENT AUTHORITY ................................................................................................ 83 B. CONTRIBUTION AND IBRD TRANSFERS ............................................................................. 84 C. REPLENISHMENT EFFECTIVENESS ...................................................................................... 87 D. CONTRIBUTION PROCEDURES ............................................................................................ 88 SECTION VI: FINANCING DEBT RELIEF AND ARREARS CLEARANCE ................. 90 A. THE HIPC INITIATIVE ........................................................................................................ 90 B. THE MULTILATERAL DEBT RELIEF INITIATIVE .................................................................. 91 C. FINANCING OF ARREARS CLEARANCE OPERATIONS .......................................................... 92 SECTION VII: RECOMMENDATION................................................................................... 93 TABLE OF FIGURES, BOXES, AND TABLES Figures Figure 1. 1. Simple Averages of Shared Prosperity, and Growth of Mean and Median Incomes, Circa 2013-2018 ............................................................................. 2 Figure 1. 2. Evolution of the Number of Global Poor, Including Projected Impacts of the COVID-19 Pandemic .................................................................................................. 4 Figure 1. 3. External Financing Needs in IDA20 ........................................................................... 9 Figure 1. 4. Composition of Aid Flows from Official Donors to IDA Red Light Countries ....... 11 Figure 2. 1. IDA Disbursements to FCS and RMR countries, and Small States .......................... 13 Figure 2. 2. IDA Replenishment Size Over Time ......................................................................... 15 Figure 2. 3. FY21 IDA PSW Commitments Leveraged Significant Private Sector Financing .... 16 Figure 2. 4. New IDA20 RMS Indicators ..................................................................................... 20 Figure 3. 1. IDA20 Overarching Theme ....................................................................................... 22 Figure 3. 2. Enhancements to IDA’s Toolkit by Start of IDA20 .................................................. 28 Figure 3. 3. IDA Commitments to Select Global Practices .......................................................... 41 Figure 3. 4. IDA20 JET Framework ............................................................................................. 67 Figure 4. 1. New IDA20 Terms Compared with Products of Other MDBs for IDA Countries ... 80 Figure 4. 2. Overview of IDA20 Financing Terms ....................................................................... 81 Figure B3.3. 1. Tax revenue and Log GDP per capita for IDA Countries ................................... 31 Figure B3.3. 2. Direct and Indirect Tax Revenue ......................................................................... 31 Boxes Box 2. 1. An Unparalleled Response to an Unparalleled Crisis ................................................... 14 Box 2. 2. Strengthening Donor Harmonization, Alignment with Country Priorities, and Outcome-Orientation ..................................................................................................... 17 Box 3. 1. Inclusion of Disadvantaged and Vulnerable Groups in IDA20 .................................... 23 Box 3. 2. Food and Nutrition Security .......................................................................................... 25 Box 3. 3. State of Tax in IDA Countries....................................................................................... 31 Box 3. 4. Lessons from Implementation of the Sustainable Development Finance Policy .......... 36 Box 3. 5. Cybersecurity/ Data Privacy.......................................................................................... 40 Box 3. 6. Advancing Disability-Inclusive Development .............................................................. 42 Box 3. 7. Partnering to Roll Out COVID-19 Vaccinations in IDA Countries.............................. 47 Box 3. 8. Aligning New Operations with Paris Agreement: A Key Innovation in IDA20 .......... 52 Box 3. 9. Implementing Conflict Prevention in Mozambique ...................................................... 58 Box 3. 10. World Bank - UNHCR Strengthened Partnership for Addressing Forced Displacement ..................................................................................................... 60 Box 3. 11. Tackling Economic Migration .................................................................................... 68 Tables Table 4. 1. IDA20 Use of Resources ............................................................................................ 73 LIST OF ANNEXES Annex 1. Results Measurement System........................................................................................ 94 Annex 2. IDA20 Policy Commitments ....................................................................................... 114 Annex 3. Performance-Based Allocation System ....................................................................... 120 Annex 4. Fragility, Conflict and Violence Envelope Implementation Arrangements ................ 124 Annex 5. Window for Host Communities and Refugees Implementation Arrangements .......... 130 Annex 6. Regional Window Implementation Arrangements ...................................................... 133 Annex 7. Crisis Response Window Implementation Arrangements .......................................... 138 Annex 8. Private Sector Window Implementation Arrangements.............................................. 147 Annex 9. Scale Up Window Implementation Arrangements...................................................... 150 Annex 10. Sustainable Development Finance Policy ................................................................. 153 Annex 11. Enhancements to IDA’s Crisis Toolkit aimed at Incentivizing Crisis Preparedness 160 Annex 12. Concessional Partner Loans ...................................................................................... 167 Annex 13. Documents Provided for the IDA20 Replenishment................................................. 172 Annex 14. IDA20 Mid-Term Review Deliverables .................................................................... 174 Annex 15. Draft IDA20 Resolution ............................................................................................ 175 Annex 16. IDA20 Partner Contributions in US$ ........................................................................ 197 Annex 17. IDA Voting Rights Framework ................................................................................. 199 ANNEXES - TABLE OF FIGURES, TABLES AND BOXES Figures Figure A1. 1. IDA RMS Tiers Cover the Results Chain .............................................................. 94 Figure A4. 1. IDA20 FCV Envelope by Allocation ................................................................... 124 Figure A10. 1. Replenishment Cycle-Neutral Set-Aside Mechanism Framework ..................... 157 Figure A11. 1. Enhancements to IDA’s Toolkit by Start of IDA20 ........................................... 162 Figure A12. 1. Illustrative Example of how to Bridge the Difference Between the Maximum Coupon Rate and the CPL Coupon Rate if Higher ............................................. 170 Boxes Box A3. 1. CPIA Criteria........................................................................................................... 120 Box A4. 1. Common Features of the FCV Envelope ................................................................. 125 Box A11. 1. The Crisis Preparedness Gap Analysis (CPGA) .................................................... 164 Tables Table A1. 1. IDA20 Results Measurement System ...................................................................... 99 Table A1. 2. Annotated IDA20 RMS Indicators by Tier............................................................ 105 Table A11. 1. IDA20 Policy Commitments related to Crisis Preparedness ............................... 161 Table A12. 1. IDA20 Discount Rates ......................................................................................... 168 Table A12. 2. IDA20 Maximum Coupon Rates and Corresponding Grant Element ................. 169 Table A12. 3. Additional Grant Payments Required for a Buydown of 100bps to Meet the Maximum Coupon Rate ........................................................................ 170 Table A16. 1. Contributions to the Twentieth Replenishment 8/ ................................................ 197 Table A16. 2. Concessional Loan Contributions to the Twentieth Replenishment .................... 198 EXECUTIVE SUMMARY i. The international community is coming together in solidarity with the poorest countries to help them respond to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic, recoup development losses, and build back better from the crisis. The COVID-19 crisis has had a devastating impact on development, compounded existing risks, and continues to present new challenges for the world’s poorest countries. The twentieth replenishment of the International Development Association (IDA20) reaffirms the international community’s commitment to support IDA countries address the challenges arising from the crisis and get them back on track toward the Sustainable Development Goals (SDGs) and the World Bank Group (WBG) Twin Goals to end extreme poverty and promote shared prosperity in a sustainable manner. To mitigate the pressures faced by IDA countries, IDA Deputies and Borrower Representatives (“Participants”) agreed in February 2021 to significantly increase financial support to IDA countries in FY22 and FY23 by frontloading resources from the nineteenth replenishment of IDA (IDA19) from FY23 to FY22 and truncating the IDA19 implementation period from three to two years. The decision meant that the IDA20 replenishment was advanced by one year to cover the period from July 1, 2022 to June 30, 2025. This shortening of the IDA19 cycle by one year further allowed a carry-over of $11 billion to IDA20. This report summarizes the guidance provided by Participants on the policy, financing and results framework that underpins IDA20. ii. The combined impacts of COVID-19, rising conflict and climate risks are exacerbating extreme poverty, undermining growth, and jeopardizing the prospects of a resilient and inclusive future in IDA countries. Global poverty is increasing for the first time in a generation, triggered by the COVID-19 pandemic, with likely long-term impacts. Recovery from the COVID-19 crisis has so far been uneven: advanced economies are rebounding but many of the poorest countries are being left behind. Growth in low-income countries in 2021 is forecast to be the slowest in the past 20 years other than 2020, partly reflecting the uneven pace of vaccination. The deep and protracted COVID-19 crisis is causing significant reversals of hard-won development gains and human capital accumulation, with lasting effects. The pandemic is also inflicting disproportionate impacts on women, school-age children, informal and unskilled workers, and vulnerable groups such as forcibly displaced populations and people with disabilities, which is widening inequality. Meanwhile, food insecurity, as well as risks posed by climate change and Fragility, Conflict, and Violence (FCV) are all rising. iii. IDA countries will require significant financial assistance to support their efforts to respond, recover, rebuild, and achieve their long-term development goals. The COVID-19 crisis is driving up public borrowing in IDA countries, weakening their capacity to service and repay rising public debt and exposing public debt vulnerabilities. Overall financing needs in IDA countries have increased drastically as a result of the crisis and are expected to remain elevated over the near term. Increasing debt vulnerabilities coupled with high development expenditure needs increase the need for concessional financing to support COVID-19 response and recovery efforts at a time when concessional resources are constrained. The challenge is compounded by growing fragmentation of aid flows and a proliferation of donor entities, increasing transaction costs for the recipient countries. This reinforces the importance of enhanced donor coordination and effective collaboration to harness complementarities and comparative advantages in the context of governments’ own national development strategies toward achieving the SDGs. - ii - iv. IDA is uniquely positioned to support the poorest countries in responding to the COVID-19 crisis and deliver lasting development results as they build back better. Guided by ambitious policy commitments made in successive replenishment cycles, IDA continues to adapt to changing global needs with a sharp focus on country contexts and on translating new ideas and agendas into better and lasting results. With its strong global footprint and longstanding engagement in the poorest countries, IDA brings significant comparative advantages in supporting IDA countries to respond to the crisis and get back on track to achieving their long-term development goals. IDA’s country-driven model and Performance-Based Allocation (PBA) system ensure that financial support is tailored to each borrowing country’s needs, performance, and development plans, and is structured to help governments sustainably manage their finances in close collaboration with other development actors. This is underpinned by strong incentives to reduce debt vulnerabilities, by linking country allocations to sustainable development financing, and further reinforced by special concessional financing windows that prioritize areas that are critical to the IDA20 agenda. v. IDA’s hybrid financial model offers unique value for money among Multilateral Development Banks by mobilizing more than three dollars in IDA commitment authority for every one dollar in Partner contributions. IDA’s innovative hybrid financial model allows for Partner contributions to be complemented by capital market borrowings at low-interest rates, supported by IDA’s triple-A rating. This, in turn, has allowed IDA to significantly expand its financial capacity and better support client needs. This means that more than 70 percent of the IDA19 replenishment was funded from resources other than Partner contributions, up from 65 percent in IDA18 and between 40 and 50 percent in the six previous replenishments before the introduction of the hybrid model in IDA18. vi. The IDA20 overarching theme “Building Back Better from the Crisis – Toward a Green, Resilient and Inclusive Future” captures the need to support client countries in overcoming their most pressing challenges, and to continue on a greener, more resilient, more inclusive development path. Under the IDA20 overarching theme and in alignment with the WBG approach for Green, Resilient and Inclusive Development (GRID), i IDA is increasing its ambitions with a sharp focus on: targeting support, through increased efforts on reaching the poorest and most vulnerable, including in FCS; building resilience, by providing cushioning against future shocks, including through strengthened crisis preparedness; accelerating green, climate friendly development, by stepping up ambition on climate change, nature-based solutions and biodiversity; and investing in people, by addressing inequalities and boosting investments in Human Capital. vii. IDA20 builds on the strong foundation and results delivered in IDA19 and previous replenishments and introduces several enhancements to make IDA20 even more ambitious and fit for today’s challenges. IDA’s unprecedented response to the COVID-19 crisis has once again demonstrated the relevance, flexibility, and strength of the IDA policy and financing framework. This undertaking has ensured that IDA has largely stayed on track to deliver on long- i See also World Bank Group. 2021. From COVID-19 Crisis Response to Resilient Recovery: Saving Lives and Livelihoods while Supporting Green, Resilient and Inclusive Development (GRID). Washington, DC: World Bank Group. - iii - term priorities while addressing countries’ emergency needs. This has included playing a lead role in rolling out vaccines and strengthening health systems in low-income countries. The existing IDA framework provides a strong foundation to enhance support to IDA countries, but the unique context of IDA20 calls for sharpened focus in certain areas. It calls for innovations to the policy framework by introducing Human Capital as a Special Theme in IDA20 and Crisis Preparedness as a new Cross-Cutting Issue. This also involves increasing ambition under the Special Themes of Climate Change, Gender and Development, FCV and Jobs and Economic Transformation, as well as the Cross-Cutting Issues of Debt and Technology. Similarly, a broadened focus on strengthening Governance and Institutions across all Special Themes and strong emphasis on inclusion will allow IDA to deepen and scale up existing efforts, while adjusting and innovating for COVID-19 recovery needs to ensure inclusive and sustainable longer-term growth and development. Guided by highly ambitious policy commitments, the Special Themes and Cross-Cutting Issues provide a solid policy framework for prioritizing select issues during IDA20, pushing the frontiers, and measuring results. viii. IDA20 will significantly enhance the incentive framework for countries to strengthen their approach to crisis preparedness for deeper resilience. IDA countries are experiencing the effects of multiple crises that occur more frequently and with compounded effects, some of which could spill across borders. The potential for diseases to spread is increasing, as is the risk of outbreaks escalating into epidemics or pandemics. Similarly, the frequency and severity of natural hazards is likely to increase in the future, affecting hundreds of millions of people each year. In some countries, natural hazards, locust swarms and disease outbreaks have amplified vulnerabilities and are driving food and nutrition insecurity to unprecedented levels. Underpinned by several policy commitments, IDA will help countries address this complex and compounded challenge through an integrated multi-faceted approach that systematically utilizes analytics, financial instruments, and tracking and reporting systems as crisis preparedness tools. ix. Building on IDA19, IDA will continue to lead the rollout of COVID-19 vaccinations in IDA countries in partnership with key actors, and IDA20 will introduce additional incentives to boost vaccinations and to strengthen pandemic preparedness. The World Bank will continue to work hand-in-hand with key actors, including COVID-19 Vaccines Global Access Facility (COVAX), African Vaccine Acquisition Trust (AVAT), the United Nations Children's Fund, the World Health Organization, Gavi, The Vaccine Alliance, and the Global Fund, to support vaccination rollout in low and middle-income countries. Underpinned by ambitious policy commitments, IDA’s support is anchored in a broader effort to strengthen health systems and pandemic preparedness and bolster production of vaccines in IDA countries. Given that vaccination is a country-driven decision, IDA financing for countries’ vaccine response will continue to be embedded into country allocations. Additionally, IDA20 will provide more incentives for countries to implement vaccination programs. This will include supplementing country allocation resources used for financing vaccines, therapeutics, and diagnostics (VTD) with access to the enhanced Regional Window and the use of Shorter-Maturity Loans in the Scale-Up Window, thereby providing top-up for VTD financing as well as support to regional and global procurement mechanisms like AVAT and COVAX. - iv - x. IDA’s firm commitment to drive positive change for the 1.3 billion people living in IDA countries is reflected in the revamped and more outcome-oriented Results Measurement System (RMS) as well as through institutional measures. IDA has always been a pioneer in results monitoring, and the IDA20 RMS indicators capture more outcomes, offer more disaggregation, and include new indicators on topics of special importance. The RMS maintains its three-tier structure and, introduces new features that advance IDA’s outcome orientation, including: (a) vertical linkage of indicators across tiers to better connect IDA’s contributions to country-level outcomes, (b) indicators that fully reflect IDA20’s strategic priorities across the five IDA20 Special Themes and the four Cross-Cutting Issues, (c) monitoring of long-term progress made in IDA countries by retaining indicators from previous IDA cycles, and (d) increased alignment with the SDGs. Furthermore, the World Bank has recently developed a roadmap to enhance the outcome orientation of the institution, including through new guidance on country engagement and country-level results frameworks, which will help to shape and monitor how IDA supports critical development outcomes through multisectoral investments and policy dialogue at the country level. xi. Enabled by IDA’s hybrid financial model, IDA20 provides the most ambitious package for IDA thus far, made possible by continued strong donor support and additional IDA balance sheet optimization measures. Together with support by other actors, the IDA20 financing package will ensure that IDA countries have the resources they need to respond to the COVID-19 pandemic and build back better and greener from the crisis. Several balance sheet optimization measures are introduced in the IDA20 financing framework to stretch the reach of donor contributions for the benefit of IDA countries. Along with continued and prudent lengthening of the maturity of IDA’s market borrowings, these measures enhance the efficiency of IDA’s capital utilization. xii. Voting rights. IDA Executive Directors completed the review of IDA’s voting rights framework and presented their recommendations to IDA Governors during the 2021 Annual Meetings. IDA Governors supported the recommendations, which will be implemented in IDA20. -v- SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS xiii. Participants agreed on a set of policy and financial recommendations to help IDA countries achieve the WBG Twin Goals. They noted that the policy and financing package will help countries recoup their development losses due to the impact of COVID-19 and recover lost ground toward the 2030 agenda and a green, resilient, and inclusive future. The IDA20 results indicators are summarized in Annex 1, and the full set of IDA20 policy commitments is presented in Annex 2. The key conclusions and recommendations are summarized below. xiv. Human Capital. Commitments aim to help IDA countries address the immediate challenges posed by the COVID-19 pandemic while simultaneously scaling up investments in health, education and social protection systems, to underpin a green, resilient, and inclusive recovery. a. To strengthen health security and advance inclusive health systems and universal health coverage, Participants requested that IDA support all IDA countries to (i) contain the COVID-19 pandemic, through vaccine rollout, preventive measures, testing, treatment and care, and (ii) strengthen pandemic preparedness, including through prevention, detection and response efforts. b. To promote child development, Participants requested that IDA restore and expand access to quality early years services, including maternal and nutrition services, in at least 30 IDA countries, of which 15 countries are among those IDA countries with the lowest Human Capital Index (HCI). ii c. To address gaps exacerbated by the COVID-19 crisis, Participants requested that IDA support at least 40 IDA countries, of which 10 are Fragile and Conflict-affected Situations (FCS), with access to core, quality, inclusive social services focused on: (i) social protection systems with a particular focus on vulnerable and underserved informal workers, and/or (ii) students’ return to school and accelerated recovery of learning losses, with a special focus on addressing constraints faced by girls, and/or (iii) children’s immunizations. d. To ensure inclusive and effective response against shocks and crises, especially among the poorest and most vulnerable, Participants requested that IDA support at least 20 IDA countries’ resilience by building adaptive social protection systems, including the use of digital technologies. e. To fill critical learning gaps and ensure improvements in learning outcomes, Participants requested that IDA support at least 20 IDA countries, of which 10 are among those IDA countries with the lowest HCI, to reduce learning poverty by (i) measuring learning, with sex-disaggregation and (ii) implementing core elements of the literacy package (e.g., effective literacy instruction, structured lesson plans, adequate reading materials for all children. ii The lowest HCI countries refer to the 30 IDA countries with the lowest Human Capital Index (HCI). - vi - f. To promote inclusive societies, Participants requested that IDA support at least 18 IDA countries to meet the needs of persons with disabilities by implementing the principles of non-discrimination, inclusion, and universal access as per the Environmental and Social Framework, through projects in education, health, social protection, water, urban, digital development and/or transport. g. To strengthen health security by improving pandemic preparedness and prevention at the nexus of human, animal, and ecosystems health, including zoonotic diseases and anti- microbial resistance, Participants requested that IDA support at least 20 IDA countries to mainstream One Health approaches. h. To strengthen public finance for human capital investments, Participants requested that IDA support operations in at least 20 IDA countries, of which eight are among those IDA countries with the lowest HCI through policy or administrative reforms impacting (i) the availability of resources, and/or (ii) the efficiency of expenditure management and/or (iii) the results-orientation of human capital investments. xv. Climate Change. Commitments aim to help IDA countries address short- and long-term adaptation needs, decarbonization objectives, and protection of biodiversity, natural capital and ecosystems services, while enabling a green recovery. a. Participants requested that IDA’s Climate Co-Benefits share of total commitments increase to 35 percent, on average, over FY23-25, with at least 50 percent for adaptation. For IDA Private Sector Window (PSW) operations, Climate Co-Benefits will increase to 35 percent of International Finance Corporation (IFC) and/or Multilateral Investment Guarantee Agency (MIGA) Own-Account commitments under such operations, on average. b. Participants requested that starting in FY24, all new World Bank IDA20 operations align with the Paris Agreement and that by the end of IDA20, all new IDA PSW real sector operations be Paris aligned. Support will be provided to at least 30 countries to develop Country Climate and Development Reports and at least 50 countries to develop, update and/or implement Nationally Determined Contributions or Long-Term Strategies. c. Participants requested that IDA support at least 50 IDA countries (including at least 20 FCS) to develop inclusive climate policies and increase investment in climate adaptation and mitigation in at least one key transition system (i.e., agriculture, food, water and land; cities; transportation; and/or manufacturing), including community-led climate investments in at least 15 countries. d. Participants requested IDA to facilitate development of low-carbon energy sector development strategies and policies in at least 20 IDA countries (including at least eight FCS) and development of battery storage in at least 15 IDA countries (including at least 10 FCS); provide direct, indirect, and enabling policy support for at least 10 gigawatts (GW) of renewable energy (including at least one GW in FCS). The support would cover on-grid, off-grid, and distributed renewable energy. - vii - e. Participants requested that IDA support at least 20 IDA countries (including at least five FCS) to revise their financial regulatory frameworks to manage climate and environmental risks and to mobilize private capital for a low-carbon and resilient economy. f. Participants requested that IDA implement nature-based solutions, including landscape, seascape, and watershed restoration and management or forest restoration and sustainable forest management, in at least 20 countries, to support biodiversity and ecosystem services. g. Participants requested that IDA support at least 25 IDA countries to implement integrated and sustainable management of freshwater, coastal and marine ecosystems, including by addressing marine plastic pollution. h. Participants requested that IDA support at least 25 IDA countries (including at least 10 FCS) facing natural hazards and food crises to improve their crisis preparedness and response capacity by strengthening related institutional and planning frameworks and/or physical infrastructure. This support should include improving climate data and information services (such as hydromet and early warning systems) in at least 10 countries. xvi. Fragility, Conflict and Violence. Commitments aim to deepen the implementation of the WBG FCV Strategy, including through tailored country engagement, as well as IDA FCS sub- targets embedded across other Special Themes. a. Participants requested that IDA reinforce implementation of the WBG FCV Strategy by ensuring that all country engagement products in IDA FCS demonstrate how the WBG program, in collaboration with relevant partners, help address FCV drivers and sources of resilience, based on FCV diagnostics and FCV sensitive portfolio analysis undertaken in Risk and Resilience Assessments or other FCV assessments. iii An FCV lens will continue to be integrated into relevant joint World Bank-IFC Country Private Sector Diagnostics in IDA FCS. b. Participants requested that IDA work with government counterparts and other partners to ensure that, by the end of IDA20, at least 60 percent of the countries eligible for the Window for Host Communities and Refugees (WHR) will have implemented significant policy reforms related to the WHR purposes, as identified through the Refugee Policy Review Framework. c. Participants requested that IDA support 40 percent of IDA countries in FCS (with active portfolios) to establish and/or strengthen core government functions that facilitate effective, inclusive and responsive public services, enhance transparency and accountability, and promote resilience and trust, including by partnering with key national and international stakeholders. d. Participants requested that IDA implement regional initiatives in the Sahel, Lake Chad, the Horn of Africa, and Central Asia to help address transboundary drivers of FCV, support iii Country engagement products include Country Partnership Frameworks, Country Engagement Notes and Performance and Learning Reviews. - viii - transboundary resilience, and/or strengthen regional crisis risk preparedness and mitigation together with key relevant partners. IFC will commit to leverage its local presence to scale up upstream and advisory service activities in these areas, leading to enhanced private sector opportunities. xvii. Gender and Development. Commitments aim to deepen the implementation of the WBG Gender Strategy across its four pillars, increase ambition in areas where gender gaps have been exacerbated by the COVID-19 crisis and ensure that gender equality is a critical element of IDA’s support to a green, resilient, and more inclusive recovery. a. Participants requested that IDA support women’s empowerment, through restoring and expanding access to quality and affordable sexual and reproductive, adolescent, and maternal health services, in at least 30 IDA countries, of which 15 countries with the lowest HCI. b. Participants requested that IDA incorporate specific productive economic inclusion components (e.g., producer cooperatives/associations, digital finance/savings and service delivery, entrepreneurship support, social care services, regulatory frameworks, and/or links to market support) for women in at least 35 IDA social protection/jobs, agriculture, urban, and/or community development projects. c. Participants requested that IDA support at least 15 IDA countries to expand access to quality affordable childcare, especially for low-income parents. d. Participants requested that at least 35 percent of IDA20 infrastructure operations (transport, energy, and water) include actions to create employment opportunities for women in medium and high skilled jobs in these sectors. e. Participants requested that at least 30 IDA20 operations in digital development, financial inclusion, and agriculture increase women’s access to and usage of digital technology to close gender gaps in access and usage. f. Participants requested at least 70 percent of IDA20 operations with land activities in (i) land administration, (ii) post-disaster reconstruction and resilient recovery, and (iii) urban development include specific actions to strengthen women’s land rights. g. Participants requested that IDA support at least 10 IDA countries to strengthen national policy frameworks for prevention and response to gender-based violence (GBV), and in at least 15 IDA countries, of which five are FCS, support GBV related services in health systems, and implement GBV prevention and response protocols as part of safe and inclusive educational institutions. h. Participants requested that IDA support at least 10 IDA countries to make their fiscal policy and budget systems more inclusive and gender responsive by, for example, budget reforms, removing discriminatory provisions from tax legislation and/or monitoring the - ix - effectiveness of public spending, including where appropriate through fiscal incidence analysis for equality policies. xviii. Jobs and Economic Transformation (JET). Commitments aim to help IDA countries to address both the immediate needs of minimizing job losses and mitigate risks, while also helping them to seize longer-term opportunities in a world transformed by COVID-19. a. Participants requested that IDA strengthen the resilience, inclusion, and depth of the financial system in 15 IDA countries, including five FCS, based on the Financial Sector Assessment Program or similar financial sector analytics to support a robust and inclusive recovery. b. In the context of IDA PSW operations involving IFC, Participants requested that IFC aim to increase the share of its commitments in FCS-IDA17 & LIC-IDA17 iv countries, reaching 12-17 percent of Own-Account commitments on average during the IDA20 cycle, with an intent to reach an Own-Account annual commitment of 14-17 percent in the last fiscal year of IDA20. Consistent with this aim, targeted platforms and programmatic approaches for IDA PSW-eligible countries will be supported to develop and encourage scalable initiatives across sectors in these countries, including those targeted to support small and medium- sized enterprises, for trade finance purposes, in investment focused on mitigation and adaptation. c. Participants requested that IDA support at least 20 IDA countries, of which 10 have a score of 3.0 or less on Country Policy and Institutional Assessment Dimension 16 covering transparency, accountability and corruption, to identify the governance constraints to the development, financing, and delivery of quality infrastructure investments, with particular attention to resilience, climate and environment, and regulatory practices, transparency and integrity, to inform the adoption of policies and/or regulations for enhanced infrastructure governance in a majority of these. These will be undertaken through Infrastructure Sector Assessments Programs and standalone governance assessments that support improved delivery of quality infrastructure services. d. Participants requested that IDA support interventions to address market failures and remove constraints in sectors with high potential for the private sector to drive sustainable and inclusive economic transformation and create better jobs, or where women and youth disproportionately work, in 20 IDA countries, of which five are FCS, including through upstream activities informed by data and private sector development diagnostics such as the joint IFC-WB Country Private Sector Diagnostics, and selected in agreement with country authorities. e. Participants requested that IDA improve agricultural productivity, including through the promotion of climate-smart agriculture, and strengthen sustainable agri-business value chains with high potential for growth and better jobs addressing modernization and food and nutrition security in 15 IDA countries, including five FCS, in ways that are inclusive, iv See footnote 133. -x- expanding training for agricultural workers to access these better jobs, and encouraging private sector opportunities. f. To close the connectivity gap, Participants requested that IDA support 17 IDA countries, including those which will benefit from IFC’s support under the IDA PSW, to develop digital infrastructure, to increase inclusive, secure and affordable access to and usage of broadband connectivity, among which are six landlocked countries, four Small States and nine FCS. g. Participants requested that IDA support programs in 15 IDA countries, to strengthen private sector recovery and transformation that are well targeted, inclusive of small and medium-sized enterprises (SMEs) and support the adoption of digital technologies, with monitoring to capture distributional impacts and effectiveness. To support this, IFC will increase its support to digital infrastructure, with consideration of cyber security and related issues, and its venture capital work in IDA and FCS countries. h. Participants requested that IDA support 34 IDA countries including those with ongoing statistical operations (i) to strengthen institutions and build capacity to reduce gaps in the availability of core data for evidence-based policy making, including disaggregation by sex and disability where appropriate; and (ii) to increase resilience of statistical systems, including through investments in digital technology and high-frequency monitoring capabilities. xix. Crisis Preparedness. Commitment aims to help countries build resilience in a world where crises occur more frequently and with compounded effects and complements the integrated approach to crisis preparedness across IDA20 Special Themes. a. Participants requested that WBG country programs in all IDA countries provide technical and financial support to strengthen crisis preparedness. Such support will be informed by appropriate crisis preparedness assessments such as the Crisis Preparedness Gap Analysis, and/or other relevant diagnostic tools. xx. Governance and Institutions. Commitments aim to deepen support for capable, inclusive and accountable public administration. a. Participants requested that IDA support 50 IDA countries in publishing comprehensive public and publicly guaranteed debt reports or fiscal risk statements. b. Participants requested that IDA support at least 15 IDA countries to bolster their domestic resource mobilization capacity through equitable (fair and progressive) revenue policies (as verified using fiscal incidence analysis or other methods) toward achieving a tax-to- GDP ratio of at least 15 percent in the medium term. v v Revenue policies include tax administrative policies, including those that seek to improve and introduce new tax compliance measures. The concept of equitable DRM has two dimensions: (1) fairness (taxpayer with similar income or property should be treated similarly); and (2) progressivity (contribution according to taxpayers’ ability to pay). - xi - c. Participants requested that IDA support at least 15 IDA countries to adopt universally accessible GovTech policies, regulations or solutions to enable secure digital government services. d. Participants requested that IDA support at least five countries to conduct comprehensive Illicit Financial Flows (IFF) assessment and prepare action plans. Also support at least 20 IDA countries to take policy actions that tackle corruption, money laundering, and/or tax evasion to reduce IFF, such as strengthening public accountability mechanisms, increasing access to and awareness of beneficial ownership information, and/or adopting automatic exchange of information to reduce tax evasion. xxi. Adjustments to Volumes and Terms of IDA Assistance. a. Participants agreed to the following changes that will affect IDA20 volumes and terms: (i) Introduction of new terms. The first of these are 50-year credits for country allocations of IDA-only yellow light countries (with exemption for Small States), vi which will be offered with a 10-year grace period and zero interest or service charge. The other is the introduction of concessional shorter-maturity loans (SMLs) for IDA-only countries at low or moderate risk of debt distress, as well as Gap and Blend countries (except Small States that are at high risk or in debt distress). SMLs are introduced in two parts of the IDA financial architecture: (i) as a small portion of country allocations and (ii) in the Scale-Up Window (SUW) – which will be offered with 12-year maturity, 6-year grace period, and zero interest or service charges. Before yellow light IDA-only countries are provided with access to SMLs in both the PBA and SUW, the impact on their debt sustainability will be checked through Debt Sustainability Analyses. Management would provide a review of the use of SMLs at the IDA20 Mid-Term Review (MTR). (ii) Continue the implementation of the Sustainable Development Finance Policy (SDFP), linking IDA country allocations to the satisfactory implementation of concrete Performance and Policy Actions (PPAs) aimed at enhancing debt transparency, fiscal sustainability, and debt management. Countries that do not satisfactorily meet their PPAs will be subject to a set-aside of their country allocation in the following year, with one additional year to recover the set-aside by implementing the agreed PPAs, or irrevocably lose it. SDFP set-asides would be taken first from SML allocations. b. Participants agreed to: (i) scale up the FCV Envelope in IDA20; (ii) retain its key features including in-cycle identification, eligibility-based processing and annual reviews, PBA- aligned financing, and full integration in country portfolios; and (iii) retain the same three allocations: The Prevention and Resilience Allocation, the Remaining Engaged during Conflict Allocation, and the Turn-Around Allocation. vi Country debt risk ratings emerge from country-specific forward-looking debt sustainability analyses based on the joint IMF-World Bank Debt Sustainability Framework (DSF) for low-income countries. These risk ratings follow a "traffic lights" system: high risk or in debt distress ("red light”), medium risk ("yellow light”), and low risk ("green light”). - xii - c. Participants agreed to: (i) increase the Regional Window (RW) to $7.9 billion; (ii) provide flexibility to access RW financing by allowing two-country operations in all regions, as long as they demonstrate significant externalities; vii and (iii) leverage the existing mechanisms of the RW to provide additional resources to IDA countries for the purchase and deployment of COVID-19 vaccines, therapeutics, and diagnostics (VTD). d. Participants agreed to: (i) maintain the WHR and its existing policies in IDA20, with an allocation of $2.4 billion; and (ii) for yellow light countries to benefit from softer terms with 50-year credits under the WHR. e. Participants agreed to: (i) increase the size of the Crisis Response Window (CRW), with an overall allocation of $3.3 billion; (ii) within the CRW, retain and increase Early Response Financing (ERF) with an allocation of $1 billion; and (iii) increase the ERF cap on pre-allocated Contingency Emergency Response Components to $25 million per country. f. Participants agreed to: (i) maintain the regular Scale-up Window (SUW), with an allocation of $6.3 billion; and (ii) provide additional concessional resources under SUW as SMLs with an allocation of $7.8 billion, to scale up investments to build back better and greener in eligible countries – i.e., IDA-only countries at low or moderate risk of debt distress, as well as Gap and Blend countries (except Small States that are at high risk or in debt distress). SUW-SML will be offered on terms outlined in (paragraph a. (i) above). g. Participants agreed to: (i) maintain the size of the PSW, with an allocation of $2.5 billion in resources, with utilization to be reviewed at the IDA20 MTR; (ii) IFC and MIGA disclosing to the public systematic impact and mobilization data for projects benefiting from PSW support to complement existing project information; and (iii) subject to the approval of individual investment transactions by the IDA Board of Executive Directors, up to $100 million out of the PSW Blended Finance Facility will be used to support Micro- , Small and Medium-sized Enterprise incubators and accelerators. Through a “fund of funds” approach, the PSW will co-invest with IFC and provide de-risking support to third parties when needed to catalyze investors, make investment funds viable, and ensure adequate return for incubators/early-stage fund managers. As part of this initiative, PSW will establish a very high-risk tolerance seed capital fund of up to $15 million. This will be fully funded by the PSW and eligible to invest, without IFC’s co-investment, up to $1 million each in emerging fund managers, helping them to establish a track record to assist in mobilizing private investment capital in the future. h. Participants agreed to build flexibility in adjusting the size of each window within a range of 10 percent in IDA20, in accordance with demand during the period with close monitoring by Management and reporting to Participants. vii Up to now, three countries are required to participate, reduced to two if one is FCS. The policy also allows the Regional Window to finance operations located in a single country when it is clearly expected to generate transformational impacts at the regional level or contribute to global public goods, subject to early Board consultation. This feature has been used judiciously and would remain in IDA20. - xiii - i. Participants agreed that no set aside to support the possible reengagement of currently inactive IDA countries will be allocated, but that, should meaningful progress arise in any country in arrears during the IDA20 period, Management would call for a reallocation discussion with Participants. j. Participants agreed to introduce fully hedged local currency financing in IDA20 with a pilot to be completed by IDA20 MTR. IDA will provide local currency financing to its borrowing members by introducing the currency conversion option in its concessional financing and hedging its exposure through issuing local currency bonds or entering cross currency swaps with market counterparties, subject to market availability. Local currency financing through currency conversion is already authorized for IDA’s non-concessional financing. xxii. Replenishment of IDA Resources. a. Participants recommended that contributions of $23.5 billion (equivalent to SDR16.5 billion) be provided to achieve a total replenishment of $93 billion (equivalent to SDR65.1 billion in IDA20, including the $11 billion [equivalent to SDR7.7 billion]) carry-over from IDA19 resulting from the shortening of IDA19. b. Participants recognized that strong grant contributions continue to remain a critical element in IDA’s financial framework, enabling IDA to provide concessionality even as it leverages in a sustainable manner. c. Participants noted the importance of providing their Instruments of Commitment as early as possible to enable timely implementation of IDA20. d. Participants recommended that IDA’s cost of debt relief under the Heavily Indebted Poor Country Initiative in IDA20 be covered under the IDA20 Replenishment, funded by Partner contributions. e. Participants recognized the importance for Partners to continue implementing their financing commitments to the separate Multilateral Debt Relief Initiative replenishment in order to support the total volume of IDA20 commitment authority. f. Participants endorsed the continuation of Concessional Partner Loans (CPLs) in IDA20. They endorsed the IDA20 CPL framework which maintains the IDA19 CPL framework with the following adjustments: (i) adding as a new CPL term 50-year maturity, 10-year grace; and (ii) using an averaging period to determine CPL discount rates to reduce the impact of market volatility. g. Related to the structural gap, Participants agreed that a Dual Reporting Approach – reporting both gross and net donor burden shares – represents a pragmatic and balanced path forward and adequately addresses concerns with the current approach with respect to reported burden share and the impact of an increasing structural gap earlier raised. - xiv - h. Participants emphasized the importance of transfers from the International Bank for Reconstruction and Development (IBRD) to IDA to signify solidarity among the WBG institutions, continuing with the formula-based approach for IBRD transfers and which transfers would be subject to annual approvals by the IBRD Board of Governors after considering IBRD reserve retention needs. INTRODUCTION 1. The Coronavirus Disease 2019 (COVID-19) crisis has transformed the world, caused significant development losses, compounded existing risks, and continues to present new challenges for the world’s poorest countries. The impacts of COVID-19, along with rising conflict and climate risks, have caused major setbacks to progress in global wellbeing, and countries eligible for financing from the International Development Association (IDA) have quickly moved backwards on their path to achieving the Sustainable Development Goals (SDGs) and the Twin Goals of the World Bank Group (WBG). With sharp economic declines and rising poverty, IDA countries face high financing needs and an uncertain and prolonged recovery. 2. IDA has delivered a swift, targeted, and agile response of unprecedented scale to the global COVID-19 response efforts, yet more is needed to address the disruptions and development challenges exacerbated by the protracted crisis. Since the onset of the crisis, the WBG has been the leading multilateral development bank (MDB) in delivering crisis support to IDA countries to help save lives and livelihoods, lay a foundation for durable recovery, while keeping an eye on high-level outcomes. At the same time, IDA countries’ need for support for both their COVID-19 response and their long-term development agenda will remain high for years to come. 3. The international community is stepping up support to IDA countries to help them respond to the ongoing COVID-19 crisis, recoup development losses, build back better, and get back on track toward meeting their long-term development priorities. IDA Deputies and Borrower Representatives (“Participants”) agreed in February 2021 to shorten IDA19 to a two- year cycle and frontload IDA19 resources from FY23 to FY22 to mitigate the pressures on IDA countries and facilitate the extraordinary level of support required to help them address the health, social and economic challenges raised by the COVID-19 pandemic. This also meant an unprecedented advancement of the Twentieth IDA Replenishment (IDA20) by one year, which was agreed after months of focused discussion to find the best option for scaling up support and making additional resources available to countries at this time of crisis. In addition, on July 15, 2021, 23 African Heads of States issued the Abidjan Declaration, 1 calling on IDA Partners to support an ambitious IDA20 replenishment focusing on the key priorities of human capital improvement, job creation through private sector development policies, economic recovery, while continuing efforts to mobilize tax revenue, increase transparency, and strengthen governance. 4. This report summarizes the guidance provided by Participants on the policy, financing and results framework that underpins IDA’s support to client countries during the IDA20 replenishment period (July 1, 2022 to June 30, 2025).2 The report is structured in seven parts: Section I discusses the progress on the Twin Goals and the SDGs and summarizes the financing landscape; Section II presents IDA’s value addition, including key features of the 1 https://www.worldbank.org/en/news/statement/2021/07/15/abidjan-s-declaration-african-heads-of-state-calls- for-an-ambitious-replenishment-of-the-resources-of-the-international. 2 Participants provided guidance on the IDA20 policy and financing package during virtual replenishment meetings on April 14-15, 2021, on June 28-30, 2021, and on October 20-22, 2021. The framework further benefitted from technical sessions with Participants and meetings with representatives from civil society. Participants also shared several non-papers proposing key priorities and recommendations for IDA20. -2- operating and financing model as well as the results framework; Section III presents the strategic directions for IDA20, the priority Cross-Cutting Issues, Special Themes and key commitments; Section IV summarizes the financing volumes and terms for IDA20; Section V presents how IDA20 resources will be managed; Section VI focuses on the financing of debt relief and arrears clearance; and Section VII recommends the adoption of the draft IDA20 Resolution attached in Annex 14. SECTION I: POVERTY ALLEVIATION, DEVELOPMENT PROGRESS AND FINANCING LANDSCAPE A. PROGRESS ON THE TWIN GOALS 5. The remarkable progress made Figure 1. 1. Simple Averages of Shared toward poverty reduction over the past Prosperity, and Growth of Mean and quarter century had already slowed before Median Incomes, Circa 2013-2018 the COVID-19 crisis, particularly in IDA countries characterized as Fragile and 4 Bottom 40 Median Total Conflict-affected Situations (FCS). After Annualized per Capita Growth, almost 25 years of steady declines, the fall in 3 global poverty rates started to slow in 2015. As Percentage described in the World Bank “Reversals of 2 Fortune” publication, this was manifested in the increased concentration of global poverty in 1 Sub-Saharan Africa (SSA), as well as conflict- related increases in poverty in the Middle East 0 and North Africa region. 3 Around six out of 10 IBRD IDA-eligible Rest of the global poor live in SSA, where the poverty rate World has been declining very slowly, and the Source: Global Database of Shared Prosperity (circa 2013–18), absolute number of poor increased between World Bank, Washington, DC, https://www.worldbank.org/en/topic/poverty/brief/global- 4 1990 and 2017. In IDA FCS, the absolute database-of-shared-prosperity. number of poor people rose from 251 million in 2015 to 279 million in 2019; 5 and average poverty rates were at 39.1 percent, compared to 19.7 percent in non-FCS (per nowcast estimates). Among the 20 lowest ranked IDA countries on the Human Capital Index (HCI), 11 are IDA FCS. Within IDA FCS, poverty disproportionally impacts women and girls and the most vulnerable people and communities, including forcibly displaced populations. 3 Global poverty declined by an average of about 1 percentage points per year between 1990 and 2015 but slowed to half a percentage point between 2015 and 2017. See World Bank. 2020. Poverty and Shared Prosperity 2020: Reversals of Fortune. Washington, DC: World Bank. 4 Ibid. 5 Global poverty estimates are available through 2017, the latest year with sufficient global population coverage of household survey data. Estimates for 2018-2020 are predictions, or nowcasts, based on information on national accounts growth rates after 2017 and additional assumptions about the relationship between these and growth in the survey welfare aggregates measured either as consumption or income. For additional information, see World Bank. 2020. Poverty and Shared Prosperity 2020: Reversals of Fortune, Washington, DC: The World Bank. -3- 6. Shared prosperity gains in IDA countries were disappointing prior to the pandemic, reflecting stubborn challenges to inclusive growth. Among IDA countries for which shared prosperity can be measured, the average annualized growth of incomes of the bottom 40 percent was 0.9 percent during the 2013-2018 period (Figure 1.1), much lower than 3.3 percent in International Bank for Reconstruction and Development (IBRD) countries, and also lower than the 1.7 percent annualized growth registered in IDA countries during the 2011-2016 period. 6 Notably, the shared prosperity premium for IDA countries with available data, calculated as the difference between the growth rate of incomes of the bottom 40 percent and the growth rate of the mean, was negative for the 2013-2018 period, compared to only 31 percent for IBRD countries. This reflects the disproportionate challenges IDA countries face, including climate, conflict, an unfinished structural agenda, inequality, governance and institutional weaknesses, as well as stagnant agricultural productivity and slow job transitions out of agriculture, all of which hamper inclusive growth. The shortening of the Nineteenth IDA Replenishment (IDA19) and advancement of IDA20 is serving to channel needed additional and countercyclical resources to mitigate this longer-term slowdown. 7. The pandemic has triggered an unprecedented health crisis that, in addition to having an enormous human toll, has led to the deepest global recession since World War II. COVID- 19 led to a massive collapse in growth as economies around the world imposed severe containment measures to control the spread of the virus. Global economic output contracted by 3.5 percent in 2020, with over two-thirds of IDA countries experiencing negative growth. Sharp output contractions have had a significant impact on per capita income. By reducing growth in average incomes, COVID-19 has already led to major declines in shared prosperity, which will persist until the virus is controlled and growth resumes. 7 The adverse effects of the pandemic have been exacerbated by the underlying vulnerabilities of these economies, including limited institutional capacity, weak health service delivery systems and prevalence of informality – particularly in jobs. In addition, their limited fiscal space and high debt servicing costs has resulted in lower levels of own resources to respond to the crisis, constraining the reach of countercyclical measures introduced. The extent and duration of the pandemic remains uncertain, with the health, social and economic impacts of additional waves of infections being a key concern. 8. As a result of COVID-19, global poverty has increased for the first time in a generation, causing deep pain in IDA countries, both FCS and non-FCS alike. The year 2020 marked the first reversal in poverty reduction in more than two decades, with an estimated 97 million people falling into poverty due to COVID-19 (Figure 1.2). 8 Thirty one percent of these reside in IDA eligible countries, with 56 percent in IDA FCS. This share is projected to increase to 42 percent in 2021, as the recovery in IDA countries lags that of other countries. The pandemic is projected to increase the international poverty rate in IDA countries by 1.7 percentage points in 2020, exceeding the 1.1 percentage points increase in IBRD countries. In SSA, the international poverty rate will increase by at least 0.8 percentage points relative to pre-pandemic projections. 6 Shared prosperity estimates for the 2013-2018 window are available for a total of 88 countries, including 15 IDA countries, 29 IBRD countries, and 34 “rest of the world” countries. 7 World Bank estimates for IDA countries’ Gross National Income (GNI) per capita (Atlas method) point to an average 3 percent reduction in income levels in 2020, with even sharper declines estimated for Small States. 8 World Bank. 2021. Global Economic Prospects, June 2021. Washington, DC: World Bank. -4- Shared prosperity will also drop sharply in nearly all economies, with virtually no growth of incomes for the bottom 40 percent of the population estimated for 2019-2021. Figure 1. 2. Evolution of the Number of Global Poor, Including Projected Impacts of the COVID-19 Pandemic 320 IDA-eligible FCS 220 IDA-eligible non-FCS 210 200 Millions of poor Millions of poor 270 190 180 220 170 2015 2017 2019 2021 2015 2017 2019 2021 Historical numbers Historical numbers Pre-COVID projection Pre-COVID projection June-2021 GEP projection June-2021 GEP projection Notes: 2018 and 2019 estimates are based on nowcasts; GEP refers to Global Economic Prospects report. Source: Calculations based on data in https://blogs.worldbank.org/opendata/updated-estimates-impact-covid-19-global-poverty-turning-corner- pandemic-2021 9. Global growth is expected to remain highly uneven, reflecting major risks around how the pandemic will evolve and the possibility of financial stress amid a large debt load. The ongoing pandemic continues to shape the path for economic activity, with severe outbreaks and feeble progress in vaccine deployment continuing to weigh on growth in many IDA countries. Erosions of human capital and large death tolls from the ongoing effects of the pandemic will remain a significant factor. In 2021, growth in IDA countries will be the slowest in more than two decades, with FCS growing by a mere 1.3 percent, and will likely remain subdued compared to pre-COVID-19 levels. For this subset, growth is set to be dampened by increased debt burdens, policy uncertainty, social unrest and rising insecurity – which will more than offset improvements in the external context. Moreover, World Bank analysis indicates that economic growth in IDA countries will lag that of advanced economies by around 2 percentage points a year on average from 2021 through 2023, thereby widening an already large gap between rich and poor countries. Reducing extreme poverty to 3 percent by 2030 would require all countries to grow at rates of between 8 and 8.5 percent per year (depending on scenario) for the remainder of the decade. 9 10. The poverty impact of the pandemic will be long-lasting, further jeopardizing achievement of the global goal to eradicate extreme poverty by 2030. In IDA countries, the poverty rate is projected to increase by 2.3 percentage points in 2021 relative to pre-COVID-19 projections, much higher than the 0.9 percentage points increase for non-IDA countries. Accounting for the impacts of COVID-19, the latest forecasts of poverty dynamics through 2030 9 Note that due to the absence of comprehensive data for many countries, the global estimates for 2020 and 2021, and longer-term projections through 2030, assume that there are no changes in inequality. If the pandemic and the recovery were to increase inequality, as some of the emerging evidence from high-frequency phone survey data suggests, the estimated increase in global poverty on account of the COVID-19 pandemic would be even greater. -5- estimate that 7.2 percent of the world’s population will be living below the International Poverty Line by 2030, compared to 6.7 percent based on pre-COVID-19 projections, representing an additional 47 million people. In IDA eligible countries, the poverty rate projection for 2030, accounting for the impact of COVID-19, is 25.1 percent; 1.7 percentage points, or 36 million people higher than for pre-COVID-19 projections. B. PROGRESS ON SUSTAINABLE DEVELOPMENT 11. The COVID-19 crisis is having catastrophic effects on IDA countries’ ability to realize the 2030 Agenda for Sustainable Development.10 COVID-19 is causing significant reversals on key development outcomes. IDA countries are hit relatively harder by the impacts of the COVID- 19, with wide-ranging secondary effects, including increased food insecurity and rising risks of Fragility, Conflict and Violence (FCV). The prospects of IDA countries meeting the SDGs by 2030 are increasingly becoming a distant ambition. As the crisis and efforts to protect lives and livelihoods continue, intensified support will be critical not only for hastening recovery from the pandemic but strengthening preparedness for future crises and shocks toward promoting a more resilient, green and inclusive future for all. 12. The pandemic is causing significant losses in IDA countries and risks reversing a decade of progress to human capital outcomes. Absent decisive large-scale investments commensurate to this challenge, the COVID-19 crisis could reverse a decade of progress in human capital as measured by the HCI, and the scars on human capital and the loss of future productivity would become permanent. 11 The scars are likely to be large in IDA FCS, which account for 11 of the 20 lowest ranked IDA countries in terms of the HCI. 12 COVID-19 is putting massive strains on health systems in IDA countries as they try to cope with the demands of prevention, testing and treatment for COVID-19 and provision of regular essential health services. Health costs, including those associated with COVID-19, are depleting lifesavings and limited assets of families in IDA countries. Childhood immunization rates remain low, the global burden of tuberculosis increased in 2020 with worse impacts forecasted for 2021 and 2022, the malaria burden in SSA has increased significantly due to COVID-19 related disruptions, and maternal and child mortality in IDA countries is estimated to increase by 12 percent and 18 percent respectively. 13 Access to child and elder care is dropping, and the average coverage of social assistance is increasingly inadequate, with many households forced to dip into emergency savings or sell assets. 14 At the same time, curtailed access to education services further poses substantial risks to human capital and future productivity. Based on the latest published estimates, COVID-19 related school closures are estimated to have led to a loss of between 0.5 to 0.9 quality adjusted years of schooling and increased dropout rates, with UNESCO projecting that 11 million girls are at risk of not returning to school. The current generation of children in IDA countries stands to lose up-to $900 billion in 10 United Nations. 2021. The Sustainable Development Goals Report 2021. New York: United Nations. 11 World Bank. 2020. The Human Capital Index 2020 Update: Human Capital in the Time of COVID-19. Washington, DC: World Bank. 12 Ibid. 13 Hogan, A., et al. 2020. Potential impact of the COVID-19 pandemic on HIV, tuberculosis, and malaria in low- income and middle-income countries: a modelling study. The Lancet Global Health 8.9 (2020): e1132-e1141. 14 https://blogs.worldbank.org/voices/how-covid-19-affects-households-poorest-countries-insights-phone-surveys -6- future lifetime earnings. Evidence shows that increasing levels of education for girls can drastically improve health outcomes for them and broader human development outcomes for their children. 15 13. With COVID-19, the existing jobs crisis has only deepened. The jobs challenge is acute: even before the crisis, IDA countries were in dire need to create jobs just to keep pace with the number of youths entering the job market. Now, the loss of working hours globally is estimated at the equivalent of 255 million full-time jobs.16 Small and medium-sized enterprises (SMEs) and informal businesses have been the hardest hit by lockdowns and had less access to government support programs, and many risk falling into arrears. 17,18 The impact across countries varies; Small Island Developing States (SIDS) reliant on tourism have faced the deepest declines. Seventy percent of the jobs lost have led to people dropping out of the labor force, the large majority of them women. 19 Households are feeling the loss of income, with a higher incidence of work stoppages and income losses among youth, women, and self-employed and casual workers with lower levels of education. 20 14. The challenges in IDA countries are further compounded by the effects of climate change. Climate impacts continue to undermine development outcomes, with a disproportionate impact on the poorest and most vulnerable IDA countries, including SIDS and FCS. Furthermore, within IDA countries, climate change often affects the poorest and most vulnerable communities, including those reliant on agricultural or coastal livelihoods. Smallholder farmers produce a significant share of food for their communities and regions, yet they themselves are food insecure, and most susceptible to climate change, further undermining crop and livestock production and rural poverty. IDA countries contribute only around four percent to global greenhouse gas emissions, yet they bear the disproportionate impacts of climate change. Over the last decade, IDA countries have been hit by nearly eight times as many natural disasters compared to the 1980s, resulting in a threefold increase in economic damage. 21 Estimates suggest that if unchecked, the effects of climate change will push 132 million people into poverty over the next 10 years. 22 The risks of both internal displacement and international migration are expected to increase due to 15 Azevedo, J. P., A. Hasan, D. Goldemberg, S. A. Iqbal, and K. Geven. 2021. Simulating the Potential Impacts of COVID-19 School Closures on Schooling and Learning Outcomes: A Set of Global Estimates. The World Bank Research Observer, World Bank Group, vol. 36(1), pages 1-40. 16 International Labour Organization. 2021. ILO Monitor: COVID-19 and the World of work. Seventh edition. Geneva: International Labour Organization. 17 Apedo-Amah, Marie Christine; Avdiu, Besart; Cirera, Xavier; Cruz, Marcio; Davies, Elwyn; Grover, Arti; Iacovone, Leonardo; Kilinc, Umut; Medvedev, Denis; Maduko, Franklin Okechukwu; Poupakis, Stavros; Torres, Jesica; Tran, Trang Thu. 2020. Unmasking the Impact of COVID-19 on Businesses: Firm Level Evidence from Across the World. Policy Research Working Paper; No. 9434. Washington, DC: World Bank. 18 World Bank. 2021. Supporting Firms in Restructuring and Recovery. EFI Insight-Finance, Competitiveness and Innovation. Washington, DC: World Bank 19 International Labour Organization. 2021. ILO Monitor: COVID-19 and the World of work. Seventh edition. Geneva: International Labour Organization. 20 Bundervoet, T., Davalos, M., and Garcia, N.. 2021. The short-term impacts of COVID-19 on households in developing countries: an overview based on a harmonized dataset of high-frequency surveys. Policy Research Working Paper No. 9582, Washington, DC: World Bank. 21 The International Disaster Database (EM-DAT) 22 Jafino, Bramka Arga, et al. 2020. Revised estimates of the impact of climate change on extreme poverty by 2030. Washington, DC: World Bank Group. -7- more intense and frequent storms, increased drought and desertification, rising sea levels, and reduced agricultural productivity. 23 15. Together with COVID-19 and climate change, the worsening impacts of conflict are aggravating stresses and insecurity underscoring the importance of crisis preparedness. Economic shocks and environmental factors such as resource degradation exacerbate food insecurity, drive inequality, and aggravate grievances. Humanitarian needs have increased sharply, and the number of people experiencing food insecurity and hunger is expected to increase dramatically, with 34 million people across 17 countries, 24 the majority of which are IDA FCS, at risk of experiencing famine in 2021, 25 and further deterioration expected in 2022. These stresses underscore the need to support investments in crisis preparedness to help IDA countries to prepare timely, cost-effective responses to future shocks, and the need to invest in core systems for government service delivery. 16. Gender gaps are widening, undoing years of hard-won development gains. Women are overrepresented in informal sector jobs, which are at higher risk of being lost. Compared to men, women in informal employment are more often found to be in the most vulnerable types of jobs, such as domestic and home-based work. The COVID-19 crisis highlighted both the important role of social protection in managing and mitigating crises but also the gaps in access particularly for women. Prior to the pandemic, women dedicated on average 3.2 times more time than men to unpaid care work, 26 and COVID-19 is exacerbating the demand for childcare and caring for the elderly and sick, which is often the responsibility of women. 27 Furthermore, in IDA countries, four out of 10 adolescent girls were already out of school before the pandemic struck. While schools have been closed during the pandemic, girls have taken up a disproportionate share of household chores and have been exposed to harmful risks, with increased likelihood of exploitation, early marriages, and adolescent pregnancy, with negative consequences for returning to school. Evidence from multiple countries and data sources points toward an increase in intimate partner violence and other forms GBV during the pandemic, especially during periods of lockdowns across multiple low- and middle-income countries. 28 17. Energy access remains critically important in IDA countries and is an unfinished agenda. Universal access to affordable, reliable, sustainable and modern energy for all is instrumental to achieving the SDGs, including economic growth and prosperity, human capital development and public service delivery. IDA countries score lowest on access to energy at home, 23 Kanta K. Rigaud et al. 2018. Groundswell: Preparing for Internal Climate Migration. Washington, DC: World Bank. 24 IPCC. 2019. Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystem. 25 WFP and FAO. 2021. Hunger Hotspots. FAO-WFP early warnings on acute food insecurity: March to July 2021 Outlook. Rome. Global Humanitarian Overview 2021, OCHA. 26 Charmes, J. 2019. The Unpaid Care Work and the Labour Market. An analysis of time use data based on the latest World Compilation of Time-use Surveys. Geneva: International Labour Organization. 27 UN Women. 2020. Surveys show that COVID-19 has gendered effects in Asia and the Pacific. Gender and Covid- 19. April 29, 2020. 28 Center for Global Development. 2020. COVID-19 and Violence against Women and Children – A Third Research Round Up for the 16 Days of Activism (December 2020) https://www.cgdev.org/sites/default/files/covid-and- violence-against-women-and-children-three.pdf -8- schools, hospitals and industry, with high costs of supply, more than double the cost in Organisation for Economic Co-operation and Development (OECD) countries in some cases. In addition, the lack of clean cooking causes more than 4.3 million premature deaths annually– primarily women and girls. The need to enhance energy access continues to be urgent as countries respond to COVID-19 and work toward a resilient recovery. 18. The COVID-19 crisis is also exacerbating inequalities and vulnerabilities, particularly among groups that are already poor and marginalized. The impacts of the pandemic are widening pre-existing gaps, notably among already vulnerable populations including persons with disabilities, informal workers, internally displaced people, and refugees. Persons with non-communicable diseases are more susceptible to the risk of developing severe COVID-19 symptoms and are among the most affected by the pandemic. Persons with disabilities face additional COVID-19 related challenges, including access to health systems, assistive technologies for learning, workplace accommodations, and mobility restrictions. 29 Sexual and gender minorities also face additional challenges related to accessing community organizations for essential services, increased isolation, or overrepresentation in homeless populations, which in turn lack the ability to engage in effective social distancing. 30 19. While the COVID-19 crisis highlights the key role of technology in supporting national resilience, it has also highlighted the growing digital divide. COVID-19 has been a catalyst for digital government services, or GovTech solutions, particularly for business continuity, service delivery, and institutional performance. Meanwhile, access to digital infrastructure and connectivity remains severely limited in IDA countries, which lag far behind non-IDA countries, with impacts on productivity and job creation. Mobile internet penetration rates are around 20 percent in IDA countries, compared to 63 percent for non-IDA countries. At the same time, cybersecurity risks are growing rapidly with digitalization and are compounded in IDA countries by the lack of adequate legal frameworks on data governance and data protection. Gaps in access to technologies have also been felt in the education sector, where varied technology use to enable remote learning has revealed a digital divide, potentially leaving vulnerable groups farther behind. Efforts to close the digital divide need to be complemented by support to increase access to electricity. C. GLOBAL AID FINANCING LANDSCAPE 20. In the context of mounting pressures from compounding crises, overall and external financing needs (EFNs) of IDA countries are surging. With growing current account deficits and debt amortization resulting from the global economic slowdown, estimates indicate that EFNs in Low Income Countries (LICs) over the IDA20 period (FY23-25) will amount to $429 billion.31 It is further estimated that in order to return to a path of convergence with advanced economies, 29 World Bank. 2021. Draft issues paper on persons with disabilities in the COVID-19 pandemic. Washington, DC: The World Bank. 30 World Bank. 2021. Issues paper on the intersection of SOGI and COVID-19. Washington, DC: The World Bank. 31 World Bank. 2021 IDA20 Ask Paper: Demand, Architecture, and Scenarios. Washington, D.C.: World Bank Group. -9- LICs would require an additional $310 Figure 1. 3. External Financing Needs in billion. 32 As a result, overall financing needs IDA20 for IDA countries are estimated at around $739 300 billion over the period (Figure 1.3). 33 In an 250 adverse scenario of slower-than-expected 103 114 US$, billion 200 recovery or further shocks, a further $66 93 billion would be needed to return to 150 convergence. Meeting these needs, as well as 100 134 151 144 bridging the financing gap toward long-term 50 sustainable development, requires a multi- 0 faceted approach, including stepped-up 2023 2024 2025 financing from the international community – Baseline EFN despite their more constrained financing Additional financing for convergence environment. Source: World Bank (May 2021), IMF (April 2021). Estimates for additional financing needed for convergence uses LICs which is a 21. The elevated financing needs in IDA narrower subset of IDA countries, and excludes Nigeria and Pakistan. countries have not been matched by a commensurate increase in available Official Development Assistance (ODA). There are indications that official financial flows to developing countries have experienced a small decline or stagnated at best since the beginning of the pandemic, due to tight fiscal conditions in donor countries. 34 This presents a serious challenge for IDA countries as they are facing higher spending needs and declining fiscal revenues resulting from COVID-19. Indeed, IDA countries’ limited fiscal space and marginal buffers have made it difficult for countries to respond with large fiscal stimulus packages, a stark reminder of the financing challenges they face when compared to advanced economies. 22. Concurrently, while IDA countries seek to address their increased external financing needs, unexpected tightening of external financial conditions could curtail their recovery efforts, especially those with heightened debt vulnerabilities. Global financial conditions remain generally supportive for most countries, compared to the same period in the aftermath of the Global Financial Crisis. 35 However, some emerging market and developing economies are experiencing larger increases in borrowing costs, particularly countries that are heavily indebted. 36 If recent inflationary pressures persist, more emerging markets central banks may be forced to tighten their monetary policy making it even more difficult to access funding on reasonable terms from international capital markets. 37 Furthermore, investors appear to be pricing in substantially 32 International Monetary Fund. 2021. Macroeconomic Developments and Prospects in Low-Income Countries. Policy Paper No. 2021/020. Washington, DC: IMF. 33 See April 2021 World Economic Outlook (IMF). Projections are based on LICs’ current account deficits and external debt amortization. Actual financing needs of IDA countries are likely to be higher than the LICs estimate because while the LICs group (69 countries) excludes several IDA countries (74 countries), including some large borrowers, such as Nigeria and Pakistan, which cumulatively borrow more than $2.5 billion from IDA annually. 34 United Nations Inter-Agency Task Force on Financing for Development. 2021. Financing for Sustainable Development Report. New York, NY: United Nations, 2021). 35 World Bank. 2021. Global Economic Prospects, June 2021. Washington, DC: The World Bank. 36 Ibid. 37 International Monetary Fund. 2021. World Economic Outlook Update, July 2021. Washington, DC: IMF. - 10 - higher rates over the next few years. As a result, during this period financial markets may not be as accessible as they were pre-COVID-19. 23. IDA countries also face challenges in terms of domestic resource mobilization, which are exacerbated by tax avoidance, corruption, and illicit financial flows. In many IDA countries, revenue collection lags behind government needs due to narrow tax bases, large informal sectors, and difficulties in reforming tax systems. Furthermore, even before the outbreak of COVID-19, IDA countries faced a persistent challenge with corruption, associated with shortcomings in public sector accountability and transparency. The risk of tax evasion and cross- border corruption further increased as governments relaxed already weak administrative controls to expedite pandemic responses. 38 These challenges exert added pressure on countries’ constrained fiscal spaces. Moreover, while IDA is supporting countries’ efforts to increase their own resources, the impacts of these efforts are likely to only show over the medium-term. 24. Elevated financing needs require a shift in the global aid architecture, with particular focus on rising debt vulnerabilities, which heighten the need for concessional financing, especially grants. The share of ODA grants in Official Financial Flows (OFF) to countries at high risk of, or already in, debt distress (red light countries) 39 declined from 93 to 62 percent in the ten years leading up to 2019 (Figure 1.4). 40,41 While 2019 represented a reversal in this trend, a quarter of OFF to red light countries continues to be provided as loans of varying concessionality. Contrastingly, as of June 2021, 54 percent of IDA countries under the LIC Debt Sustainability Framework (DSF) are classified as red light countries (of which 56 percent are FCS), up from 50 percent in 2019 and 26 percent in 2013. Moreover, Debt Sustainability Analyses (DSAs) for countries in unsustainable or near-unsustainable debt situations show large breaches of liquidity indicators and some borrowers face high redemptions in the medium term. This underscores the importance of concessional financing, especially grants, in restoring debt sustainability in IDA countries. The continued implementation of the Sustainable Development Financing Policy (SDFP) will be critical in stemming vulnerabilities, and the added fiscal space from the G20 Debt Service Suspension Initiative (DSSI) and special debt treatments under the G20 Common 38 FACTI Panel. 2021. Financial Integrity for Sustainable Development. New York: United Nations Department of Economic and Social Affairs. 39 Country debt risk ratings emerge from country-specific forward-looking debt sustainability analyses based on the joint IMF-World Bank Debt Sustainability Framework (DSF) for low-income countries. These risk ratings follow a "traffic lights" system: high risk or in debt distress ("red" light), medium risk ("yellow" light), and low risk ("green" light). 40 World Bank estimates based on the OECD Creditor Reporting System. OFF is the sum of ODA (subdivided between grants and loans) and Other Official Flows (OOF). ODA are financing flows that are concessional in character and promote and target the economic development and welfare of developing countries as their main objectives. The concessionality of a loan is measured by its grant element, which is the difference between the loan's nominal value (face value) and the sum of the discounted future debt-service payments to be made by the borrower (present value), expressed as a percentage of the face value. Typically, a loan is concessional if its grant element is 35 percent or more. In OECD statistics, different grant element percentages are used for different types of countries as a measure of donor effort. OOF includes flows that do not meet ODA criteria, such as transactions primarily for representational, commercial, or export-facilitating purposes or official transactions intended to promote development, but which do not meet concessionality thresholds. 41 The trend of decreasing grants in OFF to red light countries observed since 2014 holds even when excluding Blend and Gap countries, which may not be eligible for grants from some MDBs like IDA. - 11 - Framework are bringing some respite. Still, many IDA countries will continue to need highly concessional financing to build back better and prevent further worsening of their debt positions. Figure 1. 4. Composition of Aid Flows from Official Donors to IDA Red Light Countries 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ODA Grants ODA Loans OOF Source: World Bank estimates, based on OECD Creditor Reporting System.). Note: This figure shows the share of each year's total for OFF commitments at 2019 prices for IDA countries classified as red light in that year. 25. Increased fragmentation in the global aid architecture coupled with lower aid flows have translated into increased costs for recipient countries. 42 Notably, the number of donor entities increased from less than 200 two decades ago, to approximately 500 today. 43 In parallel, the average value of aid flows has declined gradually (that is, the average size of loans and grants), from $2.2 million in 2000 to $1.4 million today, 44 and more so for ODA grants, which almost halved in size from $1.5 to $0.8 million over this period. 26. MDBs are well placed to improve aid coordination and address the financing gaps, however their concessional arms that rely on periodic replenishments face falling donor contributions. MDBs play a crucial countercyclical role in helping countries withstand financial crises, such as fiscal consolidation and other macroeconomic reforms to promote economic development. 45 They also collaborate to ensure their respective financing options fit within a coherent framework and incentive structure and coordinate on common approaches on resource allocation, graduation criteria, regional initiatives, support to FCS, and crisis response. Despite such coordinated financing, new donor contributions to the three largest concessional MDB 42 More than 70 percent of recipient countries now receive funding from more than 50 different donor entities, each with their own priorities, sets of rules, and reporting requirements. 43 Staff estimates based on the OECD Creditor Reporting System. Part of the sharp increase observed may be due to under-reporting in the past. 44 Staff calculations based on the OECD Creditor Reporting System. 45 OECD. 2018. Multilateral Development Finance: Toward a New Pact on Multilateralism to Achieve the 2030 Agenda Together. Paris: OECD Publishing. - 12 - arms—IDA, the African Development Fund (AfDF) and the Asian Development Fund (AsDF)— have declined by 15 percent in nominal terms over the last three replenishments. 46 SECTION II: DELIVERING LONG-TERM OUTCOMES IN THE POOREST COUNTRIES 27. IDA is uniquely positioned to support the poorest and most vulnerable countries respond to the impacts of COVID-19 and compounding crisis and address their most pressing long-term development priorities. Underpinned by strong country presence and long- standing client engagements, IDA’s country-driven model drives results targeting those who need it the most and achieves greater and measurable development impact. IDA pools and leverages funds to reach more people and amplify the impact of development resources, knowledge, and capabilities. Guided by ambitious policy commitments and rigorous results measurement, IDA is continuously adapting to changing global needs, mobilizing more resources, and creating better and lasting solutions for the most acute development problems. IDA remains the largest provider of unearmarked and concessional finance among MDBs and continues to play a leading role in helping the poorest countries return to a path of convergence. Within a global coalition of multilateral, bilateral and other official donors, IDA stands ready to play its role to meet the unprecedented needs. A. IDA’S COMPARATIVE ADVANTAGE 28. IDA’s success rests on its ability to help its client countries achieve the development outcomes they desire. The country-driven model is critical in ensuring that the most important development priorities in IDA countries are addressed and have lasting impact. The country-driven model ensures that priorities for IDA support at the country level is tailored to each borrowing country’s needs, performance, and development plans, and is structured to help governments sustainably manage their finances. It also ensures that responses to considerable challenges, including climate change and pandemics, are grounded in country specific circumstances. The model, anchored in the WBG Country Engagement approach, puts strong emphasis on country ownership, alignment with national priorities, and a sharp focus on sustainable development outcomes. 29. The country driven model is underpinned by an increasing global footprint, enabling a deep understanding of client needs and what works best, as well as effective implementation support. The number of staff in IDA countries and IDA Fragile and Conflict-affected Situations (FCS) has continued to increase in line with IDA’s commitment to ensure robust country engagement and dialogue, as well as to provide on-the-ground implementation support and results monitoring as called for by Participants at the IDA19 Mid-Term Review (MTR) meeting in April 2021. IDA’s strong country presence has been a critical aspect of the strong implementation 46 Donor contributions to MDB funds fell by $5.6 billion over the period. Contributions to IDA16, AfDF12, and AsDF10 totaled $36.4 billion, while contributions to IDA19, AfDF15, and AsDF13 totaled $30.8 billion. Despite this drop, the size of MDBs’ replenishments has risen by 34 percent from a combined $70 billion to $94 billion. - 13 - progress in IDA19, 47 including IDA’s rapid response to the COVID-19 pandemic, building on existing engagements and aligned with countries longer-term priorities (See Box 2.1). Thus, while the pandemic has compounded the major challenges that low-income and FCS countries were already facing, IDA’s swift response, firmly anchored in the support provided over successive IDA cycles, has been a critical element of the global efforts to mitigate the severity of the impacts. Beyond its in-country presence, IDA continuously takes measures to enhance implementation support to IDA countries by building client capacity, streamlining processes, strengthening operational policies and systems, sharpening outcome orientation, and drawing on lessons learned through self-assessments and evaluations by the Independent Evaluation Group (IEG) that will improve implementation during IDA20. 30. IDA brings substantial unearmarked resources that drive positive development outcomes for the 1.3 billion people who live in IDA countries. IDA’s financing architecture represents a robust and efficient framework for allocating resources through the Performance- Based Allocation (PBA) system that provides unearmarked support to the poorest countries. Over past replenishments, IDA financing volumes have increased significantly, with a proportionally higher share targeting the countries with the highest needs, including IDA FCS and Risk Mitigation Regime (RMR) countries, and Small States (see Figure 2.1a and 2.1b). 48 Figure 2. 1. IDA Disbursements to FCS and RMR countries, and Small States Figure 2.1.a IDA Disbursements to FCS and RMS Figure 2.1.b IDA Disbursements to Small States (US$, million) (US$, million) 6,000 600 5,000 500 4,000 400 3,000 300 2,000 200 1,000 100 0 0 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 Source: World Bank data. 47 See also World Bank 2021. IDA19: Implementation Status and Proposed Reallocations. Washington, DC: World Bank. 48 Disbursements refer to gross disbursements obtained from the WBG Finances website. Disbursements exclude the PSW and, in FY17, $50 million to Pandemic Emergency Financing Facility. FCS refer to those countries on the Lists of Fragile Situations in the corresponding fiscal years, with the exception of FY20, for which the FY19 list is used. RMR countries include the four IDA countries (Guinea, Nepal, Niger, and Tajikistan) under the exceptional Risk Mitigation Regime in IDA18. Small States refer to IDA-eligible countries with population of 1.5 million or less (21 IDA-eligible countries as of FY20). - 14 - Box 2. 1. An Unparalleled Response to an Unparalleled Crisis From the onset of the COVID-19 crisis, the World Bank Group has been the leading multilateral development bank in supporting IDA countries to respond to the pandemic. As part of the WBG response, IDA leaned forward, applying all the tools in its toolkit, and reacted fast and at scale, providing a significant counter-cyclical response. To help countries address the health, economic, and social impacts of the COVID-19 crisis, IDA allocated 43 percent of IDA19 resources in FY21. This was followed by an agreement to frontload resources from FY23 to FY22 to sustain the scale of financing at $35 billion for both FY21 and FY22. This attests to the scale of IDA’s response to the crisis, the heightened financing needs and absorptive capacity of IDA countries, and the decisive way in which clients have used IDA resources to protect hard-earned development gains. While the pandemic has compounded the major challenges that IDA countries were already facing, IDA’s swift response, firmly anchored in the support over successive IDA cycles, has cushioned the severity of the impacts. During a challenging period where clients have needed support on issues ranging from vaccine deliveries to remote learning, from structural reform to safety nets, and from locust swarms to severe food insecurity, IDA made a difference in the lives of millions of the world’s most vulnerable people. This included the approval of $6 billion for the Global Health Multiphase Programmatic Approach (MPA) and a further $12 billion for vaccines, with an expansion of up to $20 billion announced in June of 2021. The Global Health MPA+ supports the initial COVID- 19 health response to prevent, test and provide care for those infected, and the additional financing provides affordable and fair access to vaccines for low- and middle-income countries. As of September 30, 2021, the total COVID-19 health emergency response amounted to $12.9 billion, including $9.8 billion for the COVID-19 MPA response and $3.1 billion from re-purposed financing from existing projects in the health portfolio that were restructured. Vaccine financing accounts for $5.8 billion of the total COVID-19 health emergency response, of which $3.2 billion is in IDA countries, and will support vaccine acquisition and deployment in 61 countries, including 46 IDA countries. This support was provided in close collaboration with key partners, including through COVID-19 Vaccines Global Access and the African Vaccine Acquisition Trust. a, b Meanwhile, in order to enable IDA to continue meeting the heightened financing needs of IDA countries, IDA Participants agreed on February 8, 2021 to advance IDA20 by one year, (i.e., starting at the beginning of FY23 instead of FY24) to allow for frontloading of some resources from FY23 to FY22, and to carry over remaining resources to IDA20. IDA will continue to stretch in IDA20 to maximize the reach of Partner contributions, supporting its clients to respond to the extraordinary needs that the COVID-19 pandemic has created, while keeping in sight its role to support countries’ development objectives in the longer term. An ambitious IDA20 is made possible by Partner contributions and further IDA balance sheet optimization, including new instruments for IDA clients discussed in further detail in Section IV: Volumes and Terms of IDA Assistance in IDA20. _______________ a The African Union, working closely with the World Bank, negotiated with Johnson & Johnson on behalf of the African countries to produce 400 million doses of vaccine for the continent with the goal of vaccinating 40 percent of the population by the end of 2021 and 60 percent by June 2022. Early September 2021, 100,800 first doses have already been shipped to Cote d’Ivoire. See How Cote d’Ivoire became a model for managing vaccine hesitancy. b A comprehensive summary of IDA’s crisis response is provided in World Bank. 2021. IDA19: Implementation Status and Proposed Reallocations. Washington, D.C.: World Bank Group. - 15 - 31. In addition, through its hybrid financial model, IDA offers unique value for money among MDBs with concessional business models, with ability to leverage Partner contributions at scale. The adoption of the innovative hybrid financial model in the eighteenth IDA Replenishment (IDA18), whereby Partner contributions are complemented by capital market borrowings at low-interest rates, supported by IDA’s triple-A rating, has allowed IDA to significantly expand its financial capacity and better support client needs. Since IDA18, every dollar of Partner contribution has allowed to mobilize three dollars in IDA commitment authority, up from a ratio of 1-to-2 in IDA17. 49 The success of the model builds on IDA’s capital strength, unique mandate and development role, robust track record of prudent financial management policies, continued timely repayment by client countries of outstanding loans, and continued strong financial support from IDA’s contributing partners—all of which underpin confidence from capital markets and IDA’s triple-A rating. As outlined in Figure 2.2, more than 70 percent of the IDA19 replenishment was funded from resources other than Partner contributions, up from 65 percent in IDA18 and between 40 and 50 percent in the six previous replenishments before the IDA18 introduction of the hybrid model. Figure 2. 2. IDA Replenishment Size Over Time 90 80% 80 70% 70 60% US$, billions 60 50% 50 40% 40 30% 30 20% 20 10 10% 0 0% IDA10 IDA11 IDA12 IDA13 IDA14 IDA15 IDA16 IDA17 IDA18 IDA19 IDA0 IDA1 IDA2 IDA3 IDA4 IDA5 IDA6 IDA7 IDA8 IDA9 Replenishment Size Percent Funded by Resources other than Partner replenishment contributions Source: World Bank Data. 32. In addition to its resources, IDA leverages the weight and experience of the WBG to support IDA countries. Over the past 15 years, IDA has worked closely with partners across the WBG to triple the volume of total WBG financing to IDA countries. Bringing in both the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) and working as one WBG has significantly increased the role of the private sector in IDA countries, which has become even more critical as governments are trying to stimulate economic 49 World Bank. 2021. IDA20 Financing Framework. Washington, DC: World Bank Group. - 16 - recovery and job creation following the COVID-19 crisis. The introduction of the Private Sector Window (PSW) in IDA18 has allowed IDA funds to leverage other WBG investments by approximately sixfold in private investment finance in some of the world’s most challenging markets (see Figure 2.3). IFC Upstream Advisory work has been key in facilitating a strong pipeline of impactful investments, some of which benefit from PSW support. These mobilization efforts have had a considerable demonstration effect, boosting investor confidence, and opening investment opportunities in some of the most challenging markets and increasing external financing. In IDA20, the PSW will continue to reinforce this collaboration by mitigating private sector risks with a special focus on IDA FCS, exemplifying IDA’s role as a catalyst of private financing in the world’s toughest markets. Figure 2. 3. FY21 IDA PSW Commitments Leveraged Significant Private Sector Financing x6.2 Source: World Bank Data. B. AID COORDINATION AND DEVELOPMENT EFFECTIVENESS 33. Leveraging partnerships is a core element of IDA’s commitment to address aid fragmentation, and IDA’s strong country presence provides a robust platform that helps bring together other development partners to collaborate effectively to achieve results at the country level. At global, regional, and country levels, IDA partners with countries and institutions to respond to client needs in a coordinated and effective manner. This includes collaboration with multilateral, bilateral and domestic partners, including the International Monetary Fund (IMF) and other MDBs, the United Nations (UN) and its agencies, the European Commission, bilateral partners, Civil Society Organizations (CSOs), and the private sector. In particular, IDA is playing a key role in bringing development actors together through its country-level presence, multi- sectoral expertise, lending capacity, analytical work that serves as public goods, policy dialogue, inclusive engagement with stakeholders and knowledge transfers across regions/countries. Through Country Platforms, IDA is taking a leadership role in supporting countries to better coordinate donor efforts to enhance development impact at the country level based on a clear - 17 - understanding of comparative advantage (see Box 2.2). IDA also works with other multilateral and bilateral development partners through co-financing agreements, which during IDA18 and IDA19 (FY21) periods, helped mobilize $5.9 billion in co-financing to IDA projects. For instance, IDA’s partnership with Agence Française de Développement alone helped provide $1.1 billion in co- financing to 15 IDA projects over the course of IDA18 and the first year of IDA19. Box 2. 2. Strengthening Donor Harmonization, Alignment with Country Priorities, and Outcome-Orientation The World Bank has historically played an active role in country-led coordination. To further strengthen government-led collaboration at the country level, IDA is increasingly participating in country platforms in IDA countries. As such, through diagnostics and financing, IDA contributes to defining aid effective country development programs and financing strategies to support countries in making progress towards the Sustainable Development Goals (SDGs). This work is done in close partnership with other development actors, including through the Integrated National Financing Framework platforms that coordinate country-based development partners (including MDBs, UN agencies, bilateral actors, and others) around the SDG agenda. Country platforms are government-led mechanisms aimed at enhancing the development impact of public programs and projects by improving donor coordination and alignment of efforts on key reform areas. The World Bank has been supporting and monitoring country platform implementation progress in several IDA countries during IDA19, including Afghanistan, Ethiopia, Kenya, Pakistan, Uzbekistan, and Yemen. Importantly, coordination through country platforms has helped advance the Jobs and Economic Transformation (JET) agenda and mobilization of private finance. For instance, in Pakistan, three of the four main priorities of the emerging country platform are related to JET and focus on sustainable power, education and learning outcomes, and digital financial inclusion. Sustainable power is more advanced, supported by a sector coordination mechanism led by the Ministry of Energy and focused on reducing sector financial deficits and the cost of energy (including through increased private sector participation in generation). While the COVID-19 pandemic has shifted immediate priorities and constrained the frequency of country platforms meetings in many countries, country platforms have also served as a platform to coordinate support to governments’ COVID-19 response. In Kenya, one of the top priorities on the country platform agenda has been facilitating information sharing through updates on COVID-19 and the status of vaccination efforts. In Uzbekistan, the Government has requested the creation of a Socio- Economic Task Force as a response to the pandemic, co-chaired by the World Bank and the United Nations Development Programme and including all UN agencies and international financial institutions. In cooperation with the Government’s Anti-Crisis Committee, the Task Force, established in April 2020, has coordinated financing and advice on the Government’s social and economic anti-crisis policy responses, as well as job creation. Building on its renewed commitment to ensure that development effectiveness its measured by the ability to contribute to long-term development outcomes, IDA plays a leading role in chairing the Multilateral Development Banks Working Group on Managing for Development Results. 34. IDA works closely with the IMF and other MDBs to ensure alignment on policy frameworks and country programs. IDA has traditionally had a strong partnership with the IMF, particularly on the issues of Development Policy Financing (also in coordination with other - 18 - relevant MDBs), 50 the Debt Sustainability Framework as well as coordinated reengagements with countries in arrears. IDA also collaborates with other MDBs, particularly on debt issues, under the auspices of the Program of Creditor Outreach (PCO) a pillar of the Sustainable Development Finance Policy (SDFP). The PCO also facilitates engagement with creditors, such as the Organisation for Economic Co-operation and Development, Paris Club, and the United Kingdom Foreign, Commonwealth & Development Office. In addition, IDA works with MDBs on resource allocation systems, which extend to common approaches to defining country access, graduation criteria, and use of exceptional allocations for regional initiatives, FCS, and crisis response. 35. IDA continues to have strategic and operational collaboration with UN agencies, particularly as IDA moves into the humanitarian-development-peace nexus. The World Bank’s engagement with UN agencies is undertaken through several modalities, including indirect and direct financing as well as through close cooperation on policy, operations and analysis. For instance, from FY16-21, $3.72 billion in IDA financing has been implemented with support of UN partners, with $1.21 billion and $2.5 billion, in indirect and direct financing, respectively. Through the indirect financing modality, the World Bank has negotiated Standard Forms of Agreements with 12 UN agencies. 51,52 Some UN agencies have also been direct recipients of IDA grants to support the implementation of projects or activities within a project in difficult environments. In IDA FCS, the World Bank has intensified mission-driven partnerships, leveraging the organizations’ complementary mandates, capacity, and expertise to maximize collective impact. The World Bank currently has structured partnerships with UN agencies in more than 40 crisis- affected situations, which ensures coordinated common approaches and alignment with countries’ priorities. In 2020, the World Bank also signed an Operational Framework Agreement with the International Committee of the Red Cross, as part of scaling-up collaborative efforts to enhance impact in FCV settings. IDA20 will build on and further strengthen these initiatives. 36. In all its engagements, IDA acts with openness and accountability serving its clients and partners. IDA publicly discloses results, operational and financial data for accountability toward its donors, clients, and citizens. The Aid Transparency Index places IDA in its highest category, ranking it among the most transparent development institutions.53 Citizen engagement is also essential to achieving development outcomes, and as such all, IDA investment operations are required to be informed by consultations with civil society. An important channel for engaging civil society is the Global Partnership for Social Accountability (GPSA), a multi-donor trust fund managed by the World Bank. The GPSA provides grants to CSOs, supporting them with capacity building and implementation support in their engagement with governments to help solve pressing development and governance challenges, especially in the delivery of services, and to improve 50 In line with the recommendation for the use of policy-based lending endorsed by the G20. 51 These are contract templates pre-negotiated by the World Bank and UN partners for Borrowers to engage UN agencies at the country level, as mandated by the World Bank’s Procurement Regulations for Borrowers. 52 These are the Food and Agriculture Organization, International Labour Organization, International Organization for Migration, United Nations Development Programme, United Nations Educational, Scientific and Cultural Organization, United Nations Population Fund, United Nations Children’s Fund, United Nations Industrial Development Organization, United Nations Office for Project Services, World Food Programme, World Health Organization, and World Meteorological Organization. 53 See Aid Transparency Index 2020. https://www.publishwhatyoufund.org/the-index/2020/. - 19 - development outcomes using social accountability mechanisms including citizen feedback. 54 Since it was established in 2012, the GPSA has disbursed 51 grants totaling 33.5 million of which 73 percent was for IDA countries. Moreover, after the publication of the Strategic Framework for Mainstreaming Citizen Engagement in 2014, citizens’ voices and agency are increasingly and more systemically integrated in WBG policies, projects, and advisory services to improve development results and build sustainable national systems for citizen and civil society engagement. The World Bank’s partnership with the Global Agriculture and Food Security Program (GAFSP) highlights another critical role played by IDA in the global financial architecture. 55 Since inception in 2010, IDA implemented half of GAFSP’s public sector projects, leveraging grant financing to pilot test innovation, scale up, and complement IDA (or other MDB) financed agriculture and food security projects/programs. C. OUTCOME ORIENTATION AND RESULTS MEASUREMENT 37. For almost two decades, IDA’s Results Measurement System (RMS) has measured success by how well IDA’s support and policy commitments lead to outcomes that improve living conditions in the world’s poorest countries. IDA was the first multilateral development institution to develop a framework with quantitative indicators to monitor aggregate results, marking a turning point in the way such institutions across the world tracked their contributions to results. As an integral part of IDA’s architecture, the RMS helps transform new ideas and agendas into measurable results and long-term impact. 38. There is a strong thematic and sequential relationship between IDA policy commitments and the outcomes measured by the RMS. Policy commitments made in different replenishment cycles reinforce themselves over time, with each cycle further advancing the previous. As new development challenges and priorities emerge and when areas with a long history of IDA support become ripe for scaling up or a new emphasis, IDA hardwires commitments into internal systems and processes, building the capacity of both clients and staff. Learning from implementation, IDA makes substantive policy commitments to achieve still higher-level results along the development path. The RMS reinforces this drive for results by incorporating indicators to track the effects of IDA commitments on all clients. It buttresses policy commitments by determining the desired scope of systemic change during each cycle and provides incentives to amplify change. 39. IDA20 takes further steps toward outcome-orientation through the revamped RMS. The RMS has constantly improved, and in IDA20, it maintains its three-tier structure and introduces new features that advance IDA’s outcome orientation: (a) vertical linkage of indicators across tiers to better connect IDA’s contributions to country-level outcomes, (b) indicators that fully reflect IDA20’s strategic priorities across the five IDA20 Special Themes and the four Cross- 54 The GPSA’s governance structure comprises of a Steering Committee, co-chaired by the World Bank and its constituent members in rotation. It has a balanced representation of CSOs, donors and governments, consistent with the GPSA’s Board Paper. The Committee provides guidance on strategy for the GPSA and approves CSO grant proposals. 55 The World Bank serves as the trustee, host of coordinating unit, and is one of several implementing agencies for GAFSP, an innovative multilateral financial instrument dedicated to fighting hunger, malnutrition, and poverty through increased investment in IDA-only countries. - 20 - Cutting Issues, (c) monitoring of long-term progress made in IDA countries by retaining indicators from previous IDA cycles, and (d) increased alignment with the SDGs. The IDA20 RMS also reorganizes Tier 3 indicators into processes that are essential to manage for outcomes. This new alignment facilitates the understanding of how IDA inputs and activities (Tier 3) deliver outputs and early and intermediate outcomes (Tier 2) that set the basis for high-level outcomes (Tier 1). This tighter linkage provides a structure to draw lessons from implementation and surface knowledge gaps, thus further advancing IDA’s outcome orientation. 40. The IDA20 RMS is the most ambitious in IDA’s history and includes new indicators on topics of special importance in line with the GRID agenda while also offering more disaggregation. With 15 new indicators, the IDA20 RMS fully integrates key aspects of a green, resilient, and inclusive future across the three Tiers (see Table 2.1). These indicators were agreed with Participants recognizing data availability-imposed limitations in identifying indicators that are quantifiable, sensitive to regular changes, from widely accepted sources, and prone to aggregation across IDA countries. Participants welcomed that the RMS offers more disaggregation by sex and FCS wherever possible while working with clients to address data limitations. Figure 2. 4. New IDA20 RMS Indicators • Internet usage • Gini index Resilient • Access to Clean Inclusive Green Cooking • Undernourishment • Tax fairness and • NBSAPs prevalence progressivity • Country Climate • COVID-19 Vaccine • Disability data Development Reports doses administered collection • Operations with • Adaptive Social • Access to finance for Climate Change Protection bottom 40 percent Indicators • Projects with AA • Countries without Resilience Rating natural capital depletion • Country programs informed by crisis preparedness diagnostics 41. The IDA20 RMS indicators ensure continuity over multiple IDA cycles and reflect the priorities under the five Special Themes and the four Cross-Cutting Issues. Participants welcomed the effort to balance new indicators to capture emerging priorities against the need to maintain continuity of indicators to measure long-term trends. As high-level outcomes take time to materialize, many indicators from the IDA19 RMS are carried over into IDA20. Furthermore, in addition to reporting against the IDA20 performance standards, the RMS will also report cumulative results over the IDA19 and IDA20 cycles for indicators that have been maintained. 56 56 Consistent with the current methodology of aggregation, Tier 2 results indicators will be reported on a cumulative and fiscal-year basis. For the IDA20 cycle, Tier 2 results will first report progress achieved during FY23 (during the IDA20 MTR); FY23 and FY24, and FY23, FY24 and FY25 (at the end of the IDA20 cycle). FY21 and 22 - 21 - By ensuring continued close alignment with the IDA20 Special Themes, the RMS is also designed to capture the development outcomes resulting from policy commitments made over consecutive IDA cycles. The close alignment together with the aggregated reporting will help track the continuity of efforts across key themes and showcase trends over time. 42. IDA continues to strengthen and institutionalize outcome orientation, including through country engagement and in collaboration with other partners. IDA is implementing a detailed roadmap to improve the organization’s outcome orientation. This involves introducing high-level outcomes in Country Partnership Frameworks (CPFs), enhancing the role of Completion and Learning Reviews to better inform CPFs, and ensuring that Systematic Country Diagnostics identify long-term development outcomes, which are critical to the achievement of the twin goals, and articulate constraints and opportunities for achieving them. The adjustments to the country engagement guidance will allow IDA to show more explicitly how IDA-supported activities contribute to achieving high-level and long-term country outcomes, learn more frequently from implementation, and account for the indirect pathways that underpin the achievement of sustainable results. IDA results stories will continue to document the more nuanced, richer, and multiple dimensions that determine IDA’s effectiveness at the country level, the cornerstone of its success. Outside the institution, the World Bank is leveraging its leadership role to strengthen coordination among MDBs and development partners to help clients enhance results-based monitoring and evaluation and outcome orientation. SECTION III: BUILDING BACK BETTER FROM THE CRISIS – TOWARD A GREEN, RESILIENT, AND INCLUSIVE FUTURE 43. The IDA20 replenishment, brought forward by a year, recognizes the need to help address the profound challenges faced by IDA countries. IDA20 reaffirms the international community’s commitment to scale up support to enable IDA countries to respond to the ongoing COVID-19 crisis, recoup their development losses, and get back on track toward the 2030 Agenda. This means finding ways to address short-term needs while pursuing long-term development priorities, and it requires countries to adapt to new realities and seize opportunities in a transformed world. A. IDA20 OVERARCHING THEME 44. Under the overarching theme “Building Back Better from the Crisis –Toward a Green, Resilient and Inclusive Future” IDA20 will support client countries to emerge on a greener, more resilient, more inclusive development path in line with the Green, Resilient and Inclusive Development (GRID) framework. 57 To achieve this goal, IDA20 will work along three key dimensions: data from IDA19 RMS reporting will also be added for indicators that will be carried over from IDA19 RMS to show longer-term cumulative results. 57 See also, World Bank Group. 2021. From COVID-19 Crisis Response to Resilient Recovery: Saving Lives and Livelihoods while Supporting Green, Resilient and Inclusive Development (GRID). Washington, DC: World Bank Group. - 22 - a. Green: increasing climate finance and supporting countries to source nature-based solutions, transition key systems for low-carbon development, create green jobs, and green entire sectors, including finance. b. Resilient: supporting countries to strengthen crisis preparedness, bolster food security, tackle the drivers of Fragility, Conflict and Violence (FCV), address debt vulnerabilities, mobilize domestic revenue, build quality infrastructure, and seize long-term economic opportunities to sustain growth in a post-COVID-19 world. c. Inclusive: supporting countries to address the needs of the poorest and most vulnerable, reduce structural inequalities, and mitigate rising FCV risks through policies and investments that build human capital, strengthen service delivery, close gender gaps, create jobs (including green and decent jobs), and narrow the growing digital divide. 45. 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, in a people-centered approach that benefits all. Participants welcomed the continuation of Climate Change, Gender and Development, Jobs and Economic Transformation (JET), and Fragility, Conflict and Violence as Special Themes, as well as Debt and Technology as Cross-Cutting Issues, with greater ambition on each and a sharper focus on the most pressing issues IDA countries face today. Participants also welcomed several innovations. Human Capital is introduced as a Special Theme to anchor the significant efforts needed to build back better by strengthening systems essential to human capital, including health, education, and safety nets, and by focusing on inclusion, including disability inclusion (see Box 3.1.). Crisis Preparedness is Figure 3. 1. IDA20 Overarching Theme introduced as a Cross-Cutting Issue to reflect the need for IDA countries to build greater resilience in a world where shocks occur more frequently with compounded effects. It provides the opportunity to elevate and bring together more cohesively IDA’s significant and longstanding work on crises such as pandemics, natural hazards, food insecurity, as well as economic and financial shocks. Governance and Institutions moved from a Special Theme to a Cross-Cutting Issue to reflect its foundational role in sustaining progress across all Special Themes and the need to broaden this agenda. This policy architecture will enable IDA to deepen and scale up existing efforts, while adapting to the IDA20 context and supporting IDA countries to build back better in greener, inclusive, and more resilient ways to sustain long-term growth and development. - 23 - 46. Policy commitments are a critical component of IDA’s value proposition and reinforce key priorities where IDA and its partners agree that specific attention is needed. Policy commitments represent specific areas where IDA Management and Participants agree to prioritize special and emerging issues, push the frontiers, measure results, and bring both clients and other development partners along in the process. They help to ensure that IDA continues to provide global leadership on addressing the most important development priorities, and the associated actions are critical in driving systemic change and long-term results over consecutive replenishments. Importantly, policy commitments do not capture all the support IDA provides to address the needs and development priorities of clients. Indeed, the bulk of IDA support is agreed through the country engagement process focused on development outcomes, where the client and IDA together prioritize a package of services for maximum impact to help end poverty and promote shared prosperity in a sustainable way. The identification of policy commitments for each replenishment cycle, including the increasing level of ambition, is therefore also considering the realities, constraints, and absorptive capacities of clients in line with the World Bank’s country- driven model. The IDA20 policy commitments are presented in Annex 2 and are discussed in the sections below. Box 3. 1. Inclusion of Disadvantaged and Vulnerable Groups in IDA20 During recent IDA cycles, IDA operations have increasingly addressed the differentiated needs of disadvantaged and vulnerable groups and individuals, such as persons living in extreme poverty, in situations of fragility or displacement, minority ethnicities, or persons with disabilities. Operations have also increased the focus on other at-risk groups, including those living at risk of discrimination based on age, race, ethnicity, religion, and/or sexual orientation. The objective is to ensure equitable access to the benefits deriving from development projects. IDA20 will build on this work on inclusion, supported by corporate policies and commitments such as the Environmental and Social Framework (ESF), IDA20 policy commitments, and corporate WBG commitments, such as the Ten Commitments on disability-inclusive development (see Box 3.6). The IDA20 Results Measurement System will track and report on progress. The work to safeguard against exclusion is primarily guided by the ESF, which puts in place strong provisions for universal access to Bank-supported operations, along with a tracking indicator. The ESF also requires IDA clients to look specifically at the exclusion issue as part of social assessments. The IDA20 policy package provides a strong framework to sustain and further accelerate inclusion in key areas. This includes, but is not limited to, promoting universal coverage in health and education, including through equitable access to vaccines and strong foundations for learning, while supporting countries to build adaptive social protection systems that respond to the needs of the most vulnerable. IDA20 will also support countries to develop inclusive climate policies to take diverse viewpoints into consideration, including vulnerable populations, in line with the Climate Change Action Plan 2021- 2025. IDA20 will advance the inclusion of persons with disabilities and of displaced populations and individuals through dedicated policy commitments. IDA20 will also seek to foster more inclusive financial systems and public services in Fragile and Conflict-affected Situations, and boost agricultural productivity, value chains and food security – including for disadvantaged and vulnerable groups. - 24 - B. CROSS-CUTTING ISSUES 47. IDA20 will strengthen the foundational cross-cutting building blocks for sustainable development. Participants welcomed the four priority Cross-Cutting Issues—Crisis Preparedness, Debt, Governance and Institutions, and Technology—as foundational areas of focus in IDA20, underpinned by targeted policy actions to deepen IDA’s impact across dialogue, finance, and operations. The four Cross-Cutting Issues are mutually reinforcing and instrumental to making progress toward more inclusion, greater resilience to future shocks and a greener recovery. i. CRISIS PREPAREDNESS 48. In IDA20, the Crisis Preparedness Cross-Cutting Issue will accelerate support to countries to build resilience in a world of more frequent crises with compounded effects. IDA20 will significantly step-up support to strengthen crisis preparedness in IDA countries through a multi-faceted approach and an enhanced toolkit with stronger incentives, a dedicated policy commitment under this Cross-Cutting Issue, and by mainstreaming crisis preparedness across Special Themes. 49. Crises in IDA countries are often interconnected and produce overlapping consequences that can spill across borders. The potential for diseases to spread is increasing, as is the risk of outbreaks escalating into epidemics or pandemics. 58 Similarly, the frequency and severity of natural hazards is set to increase in the future, affecting hundreds of millions of people each year. 59 In some countries, natural hazards, locust swarms and disease outbreaks have amplified vulnerabilities and are driving food and nutrition insecurity to unprecedented levels (see Box 3.2). Furthermore, economic and financial crises continue to affect IDA countries. Without making requisite investments in Crisis Preparedness, countries risk unexpected setbacks each time they face a shock, which undermines their longer-term development as well as regional and global progress. 50. IDA has several comparative advantages that position it well to support countries to better prepare for crises. First, IDA stays engaged through the integration of short-term needs with longer-term goals, maintaining a line of sight to longer-term development needs and structural reforms. 60 In doing so, IDA helps to integrate crisis risk management and resilience into development agendas and country systems, while seeking to close gender gaps. Second, IDA helps countries invest in crisis-specific interventions (e.g., strengthening physical infrastructure to better withstand the impacts of natural hazards and boosting COVID-19 vaccine rollout), as well as shock-agnostic investments that enhance readiness across different types of shocks (e.g., adaptive social protection systems). Third, IDA’s country-driven model facilitates tailored diagnostics and solutions and the ability to transfer knowledge globally. IDA’s broad cross-sectoral expertise and global reach allow it to provide an extensive range of support such as advisory services, risk assessments, financing, and project design across multiple sectors. IDA’s unearmarked funds help 58 https://www.gavi.org/vaccineswork/5-reasons-why-pandemics-like-covid-19-are-becoming-more-likely. 59 https://media.ifrc.org/ifrc/world-disaster-report-2020. 60 Compared to humanitarian actors that provide immediate relief during crises, IDA’s mandate requires continued engagement in countries long after an emergency subsides. - 25 - clients to prioritize crisis preparedness investments that fit their country risk profiles, and to respond flexibly and at scale when crises occur. In addition, IDA’s strong presence enables it to complement global expertise with local knowledge on crisis preparedness, especially in IDA FCS and Small States where best-fit solutions are critical. Box 3. 2. Food and Nutrition Security COVID-19 has dramatically increased the number of people facing food insecurity. Global hunger has been increasing since 2014—in IDA countries, one in six people were undernourished in 2019 compared to one in 10 worldwide. The World Food Programme estimates that 221 million people across 54 IDA countries are facing acutely food insecure (IPC3) conditions or worse, a 71 percent increase from 2019, with 41 million people in 43 countries at risk of falling into famine. By 2022, an estimated 13.6 million additional children will suffer from acute malnutrition, and 3.6 million children will be stunted.a The impacts are particularly acute in fragile and conflict-affected situations (FCS) that concurrently face multiple vulnerabilities. Food and nutrition security has been an area of focus for IDA over the past decades. The World Bank is one of the largest sources of development finance for addressing food insecurity, with over $60 billion in financing since the 1980s, two-thirds of which come from IDA. IDA provided $5.8 billion in new commitments during FY18-20 for agriculture and social protection to address short-term and longer-term drivers of food insecurity. In FY21 new commitments increased to $10.6 billion, with an additional $8.9 billion projected for FY22. IDA’s nutrition portfolio has grown significantly from $10 million in FY12 to $700 million in FY21.b Supporting food and nutrition security is central to the GRID agenda and will remain a priority in IDA20, with a focus on addressing drivers of food insecurity and strengthening food systems. IDA will continue engaging clients and development partners to address food security challenges, including through rapid country diagnostics and data-based monitoring instruments. As part of the policy package, IDA20 will help countries combat food insecurity and malnutrition due to food price increases, disruptions in food supply chains (due to market closures, interruptions in trade, transport and logistics services, etc.), health service disruptions and income losses. Support will also focus on longer- term drivers of food insecurity to make agriculture more inclusive, productive, resilient, green, sustainable, and nutritious through a comprehensive strategy that seeks to (i) repurpose agricultural policies and support programs to accelerate the transition to more inclusive, productive, resilient and sustainable food systems and improved livelihoods of smallholder farmers and farm workers; (ii) promote farming systems that are more nature– and climate–smart and produce a more diverse and nutritious mix of foods; (iii) support resilient supply chains; (iv) reduce post-harvest food losses; (v) improve food safety and hygiene in food distribution channels; and (vi) better link production and consumption centers. Furthermore, IDA will support investments in research and development to develop and disseminate technologies and practices that are climate-smart and enable increasing the micronutrient content of foods and raw materials, and advocate for policy and regulatory reforms to improve the efficiency and integration of domestic food markets. Overall, beyond strengthening crisis preparedness, investing in food and nutrition security through food system transformation and tackling both stunting and obesity can also be foundational investments to build back better, including through strengthening resilience, greening the economy and galvanizing economic growth. _______________ a https://www.nature.com/articles/s43016-021-00319-4 b The estimates are indicative. Box continues on the next page - 26 - Box 3.2 continued IDA20 will strengthen the resilience of food systems and deliver expedited emergency support by fast-tracking financing through existing projects to respond to crisis situations. IDA financing deployed through Country Allocations and other sources of funds such as the Crisis Response Window’s Early Response Financing and the Regional Window, will provide support from upstream resilience- building to post-crisis intervention. These will be complemented by Trust Funds to support analytical products, technical assistance and capacity building. A recent review by the Independent Evaluation Group affirms that the World Bank has supported client countries, particularly low-income IDA countries and FCS, to improve access to food and nutrition for their vulnerable populations.c IDA20 will build on the lessons learned to enhance effectiveness in supporting food security and nutrition. Partnerships remain key for IDA.d At the country level, IDA actively engages and coordinates with development partners. The World Bank’s response to food security crises remains closely aligned with, and complementary to, the efforts of its partners, including as part of international coordination mechanisms. IDA also partners with key actors around the humanitarian, development, and peacebuilding nexus in IDA FCS as conflict and crisis can also be drivers of food insecurity. On nutrition, the WBG is a founding partner of the Scaling Up Nutrition movement, with strong partnerships with bilateral partners, civil society, foundations, and United Nations agencies. ____________ c Independent Evaluation Group. 2021. Food and Nutrition under COVID-19 Crisis: Lessons for Protecting the Vulnerable and Facilitating Recovery. Washington, DC: World Bank Group. d A comprehensive list of IDA’s partnerships can be found in the recent paper: World Bank. 2020. Responding to the Emerging Food Security Crisis. Washington, DC: IDA. 51. IDA20 will build on IDA’s extensive experience in Crisis Preparedness over past decades. First, experience has shown that sustained preparedness investments are vital for effective responses when crises strike, and the benefits far outweigh the costs. 61,62 This entails strengthening key country systems through technical assistance, policy reforms, and investments, as well as adopting principles of country ownership and leadership. Second, helping countries better understand their crisis risks, potential impacts, and the key gaps in their crisis preparedness is vital for galvanizing policy dialogue around preparedness and creating entry points for subsequent investments and reforms. Third, building on successes in mainstreaming crisis preparedness for natural hazards, 63 Performance-Based Allocations (PBA) will continue to serve as the key vehicle to finance preparedness for other types of shocks. Fourth, pre-arranged financing instruments such as Contingency Emergency Response Components (CERCs) 64 and 61 In the West Africa Ebola crisis, Nigeria—which had an epidemic response infrastructure—faced economic costs of $186 million. In contrast, Liberia, Sierra Leone and Guinea suffered $2.8 billion in losses despite being smaller countries. https://resolvetosavelives.org/assets/Resources/ROI-Why-Preparedness-is-a-Smart-Investment.pdf. 62 See: Ozawa, S. et al. 2016. Return on investment from childhood immunization in low- and middle-income countries, 2011-20. Health Affairs, Vol. 35/2. and Chapagain, J. and A. Steer. 2020. Preparing for the next crisis before it's too late. July 6, 2020. 63 IDA commitments for building resilience to natural hazards increased from less than one percent in 2009 to 15.1 percent in 2020, of which 70–75 percent was funded by PBA. Bangladesh is a salient example of how PBA was used for climate and disaster resilience enabled by sustained policy dialogue, backed by IDA financing and knowledge, especially given the threat of regular hazards such as cyclones and floods. 64 The number of CERCs embedded in IDA IPFs has risen from only one CERC in FY11 to eighty CERCs in FY20. CERCs were a key mechanism for providing rapid support during COVID-19, with 51 CERC activations in FY20–21. - 27 - Disaster Risk Management Development Policy Financing (DPF) with a Catastrophe Deferred Drawdown Option (Cat DDOs) 65 have worked quite well to incentivize crisis preparedness, 66 as evidenced by the increased activation of such tools to rapidly channel financing during COVID- 19. Fifth, a whole-of-government approach is needed to tackle crises with wide-scale spillovers. 52. The policy commitments are designed to support engagement with client countries to embed preparedness in core operations, through a holistic approach facilitated by an enhanced crisis toolkit that comprises analytics, financial instruments, and tracking and reporting systems. To effectively incentivize crisis preparedness in a world of increasingly multidimensional and compounding shocks, IDA20 takes a multifaceted approach (see Figure 3.2). IDA’s support will be underpinned by strong analytics to enhance clients’ understanding of crisis risks, strengthen country ownership of the preparedness agenda and inform subsequent IDA programming. Such analytics are a crucial foundation as they pave the way for deepening country dialogue, as well as identifying key gaps and entry points for priority interventions. To this end, all new Systematic Country Diagnostics (SCDs) for IDA countries will be informed by appropriate crisis preparedness assessments, depending on the country’s profile and circumstances. The choice of assessments may include the forthcoming Country Preparedness Gap Analysis (CPGA) and/or other diagnostics as relevant. IDA will also deploy a suite of enhanced instruments to further incentivize crisis preparedness. This includes a more systematic approach to using CERCs; a higher Crisis Response Window (CRW) Early Response Financing (ERF) cap on pre-allocated CERCs; the Investment Project Financing with Deferred Drawdown Option (IPF-DDO); and improved incentives for Cat DDOs. In addition, there will be enhanced tracking and reporting of IDA’s support for crisis preparedness that demonstrates the degree to which IDA and clients are managing for results. Annex 11 elaborates on the IDA20 incentive framework for helping clients fortify their preparedness to crises. 65 From FY18–21, fifteen IDA DPFs with Cat DDOs ($675.8 million) were approved, of which eight ($237.3 million) were in FY20. Since FY20, twelve Cat DDOs ($463.5 million) have been drawn down for health emergencies such as COVID-19 and measles, as well as natural hazards. There are four more under preparation, showing the continued demand for this product. 66 One example is the Cat DDO instrument that provides a 50 percent top-up in financing volume if a country funds it using IDA country allocations. - 28 - Figure 3. 2. Enhancements to IDA’s Toolkit by Start of IDA20 Analytics Inform all new Systematic Country Diagnostics in IDA countries using appropriate crisis preparedness assessments, including the Crisis Preparedness Gap Analysis (CPGA) and/or other diagnostics. Instruments  Deploy a more systematic approach to using CERCs.  Raise the ERF cap on pre-allocated CERCs.  Enhance the financial incentives for using Cat DDOs.  Formalize the IPF-DDO. Tracking and Reporting  Monitor the number of SCDs and CPFs informed by crisis preparedness diagnostics.  Monitor the number of countries with adaptive social protection systems integrated into national systems with IDA support.  Develop an indicator on crisis preparedness financing by IDA20 Mid-Term Review. 53. Productive partnerships are critical for effective and scalable preparedness solutions in IDA20. Partnerships have been central to IDA’s work. Recent initiatives include collaboration around vaccine readiness assessments with United Nations Children’s Fund (UNICEF), World Health Organization (WHO), partnerships with COVID-19 Vaccines Global Access (COVAX) and Gavi, The Vaccine Alliance; as well as an innovative partnership with the African Vaccine Acquisition Trust (AVAT) to expedite vaccines access and deployment for up to 400 million people across Africa. Multi-donor trust funds such as the Global Facility for Disaster Reduction and Recovery, the Global Financing Facility, the Global Risk Financing Facility (GRiF) and the Japan-World Bank Program for Mainstreaming Disaster Risk Management are other examples. IDA20 will continue to strengthen such partnerships to enhance effectiveness and coordination around crisis preparedness and response. 54. In addition to its country-specific support to IDA countries dealing with natural disasters, IDA has been supporting the long-term sustainability of regional risk pools as they expand and develop. To date, IDA’s financial support has been instrumental in assisting countries to pay premia to the Caribbean Catastrophe Risk Insurance Facility, the Pacific Catastrophe Risk Insurance Company, and the South East Asian Disaster Risk Insurance Facility, leveraging both country and regional IDA allocations. The catalytic effect of having 3–4 years’ worth of secured premium financing can help extend or establish new innovative products to meet countries’ needs, potentially benefiting other countries. Further, IDA financing complements risk pools through continued support to invest in better crisis preparedness and risk reduction. Looking ahead, IDA20 will continue to support risk pools and explore possibilities to increase financial protection against crises. This could include enhanced coverage that draw further on IDA country allocations if this - 29 - is prioritized in country programing. Special attention will be given to initiatives that incentivize risk reduction while increasing financial protection. The GRiF can also act as a vehicle to increase collaboration with risk pools, such as by enabling their member countries to access cost-effective financial solutions. 55. Through a dedicated IDA20 policy commitment, WBG country programs in all IDA countries will provide technical and financial support to strengthen crisis preparedness. This may entail technical assistance to support the capacity of key country systems for crisis preparedness, as well as financial support for targeted reforms and investments in crisis preparedness. Such support will be informed by appropriate crisis preparedness assessments to prepare for and respond to shocks, including the forthcoming CPGA and/or other relevant diagnostic tools. As IDA countries face a range of shocks from natural hazards to pandemics to food insecurity, this policy commitment is meant to cover different types of crises. It also facilitates country choice and does not mandate specific types of crisis preparedness interventions, as that would depend on IDA countries’ respective risk profiles, capacity gaps and policy priorities. Crisis Preparedness Cross-Cutting Issue Policy Commitment 1. Strengthening crisis preparedness: WBG country programs in all IDA countries will provide technical and financial support to strengthen crisis preparedness. Such support will be informed by appropriate crisis preparedness assessments, such as the Crisis Preparedness Gap Analysis (CPGA) and/or other relevant diagnostic tools. 56. This policy commitment complements the integrated approach to crisis preparedness and related commitments embedded across the IDA20 Special Themes. Under the Human Capital Special Theme, IDA20 will support IDA countries’ efforts on strengthening health systems, expanding adaptive social protection and building resilience to shocks, as well as supporting pandemic preparedness through multi-sector investments that encompass a “One Health” approach. Under the Climate Change Special Theme, IDA20 will strengthen institutional and planning frameworks and/or physical infrastructure to fortify IDA countries’ crisis preparedness and response capacity. This support will entail improving climate data and information services. Under the JET Special Theme, IDA20 will support strengthening of countries’ capacity to conduct early supervisory analysis and actions, private debt workouts, orderly bank resolution; manage climate change risk and provide sustainable finance; develop crisis risk finance policies/strategies; and finance the real economy. Under the FCV Special Theme, addressing crisis preparedness will remain a critical part of IDA20 engagement for IDA FCS with a commitment to strengthen regional crisis risk preparedness and mitigation, together with key relevant partners. Under the Gender and Development Special Theme, IDA20 will help countries incorporate productive economic inclusion programs, which can support women in climate- affected sectors like agriculture, forestry, and fisheries to adapt with more resilient skills and knowledge for sustainable livelihoods. Relatedly, IDA20 will also work towards expanding women’s land rights through World Bank operations in post disaster reconstruction and recovery, supporting crisis preparedness where possible. - 30 - ii. GOVERNANCE AND INSTITUTIONS 57. The COVID-19 crisis exposed weaknesses in the core governance systems. Governments in IDA countries have experienced enormous strain to swiftly implement containment measures, respond to surging demands for health care services, manage large-scale vaccination campaigns, deliver offsite/remote education services, and scale-up social protection programs. Challenges include uneven planning, regulatory and implementation capacity, as well as suboptimal structures for policy coordination at national and subnational levels. The crisis has also amplified liquidity constraints and impeded efforts for allocative and spending efficiency, fiscal sustainability, and institutional accountability and transparency. 58. In IDA20, the Governance and Institutions Cross-Cutting Issue will deepen support for capable, inclusive, and accountable public administration. In IDA20, the Governance and Institutions Cross-Cutting Issue will serve both as an enabler and a cross-cutting foundation for IDA’s effective investments in a green, resilient, and inclusive recovery. IDA20 will build on the strong progress made in IDA19 and will deepen commitments that reinforce fiscal sustainability and accelerate digital governance to improve service delivery, statistical capacity, and institutional strengthening. This work also links closely with the Debt Cross-Cutting Issue, under which IDA will deepen progress made thanks to the IDA19 Sustainable Development Finance Policy (SDFP). 59. Domestic Resource Mobilization (DRM) remains an important focus in IDA20. IDA countries will need to generate significant fiscal space to fund investments in human capital and green infrastructure given the ongoing impacts of the crisis (see Box 3.3), while also encouraging sustainable economic transformation through competitive business environments. Concurrently, tax systems need to contribute to a level playing field to encourage voluntary compliance and formality. To this end, and in line with the World Bank’s broader approach to DRM, IDA20 will support countries in reshaping their tax systems to promote greater fairness and progressivity, transparency, and streamlined taxpayer services, while reducing opportunities for corruption. In particular, IDA20 will deepen support for policy reforms and modernize administrative systems to broaden tax bases, enhance progressivity and address corporate tax avoidance and evasion, thereby achieving income and wealth redistribution and creating inclusive economies that put people at the center, leading to better GRID and SDGs outcomes. Building on the experience under the WBG’s pilot Innovations in Tax Compliance program, IDA will bolster tax compliance through innovative measures that promote facilitation, enforcement, and building trust. 67 More equitable and efficient tax policy and administration systems will enable IDA countries with persistently low tax revenues to generate resources to finance their crisis response and recovery while limiting debt burdens and fostering a healthy business environment that creates jobs and improves livelihoods. 67 These include specific efforts in the following areas: fostering quasi-voluntary compliance through trust-building, strengthening fiscal contracts, greater tailoring of administrative reform approaches to local circumstances, and navigating the political challenges of reform - 31 - Box 3. 3. State of Tax in IDA Countries The COVID-19 pandemic has exacerbated pre-existing Domestic Resource Mobilization (DRM) challenges in IDA countries. Tax Revenue as a percentage of Gross Domestic Product (GDP) for IDA countries has been rising over the years with a reversal in 2020 due to the economic shock from COVID- 19. The average tax-to-GDP ratio of IDA countries in 2020 was 15.5 percent, which is nearly 5 percentage points (pp) below that of IBRD countries and 8 pp lower than in advanced economies. While the average tax-to-GDP ratio had reached 15 percent in 2017 and in 2019, taxes in about half of IDA countries (49 percent) remain below this threshold, falling short of what is needed to fund basic state functions. A much larger share (70 percent) of countries in fragile and conflict-affected situations do not meet this threshold for tax revenues. Figure B3.3. 1. Tax revenue and Log GDP Figure B3.3. 2. Direct and Indirect Tax per capita for IDA Countries Revenue 2018 or Latest Year Available Percent of GDP 39 36 30 Micronesia 33 Lesotho 25 Tax Revenue (% of GDP) 30 St. Vincent 20 27 Solomon Islands 15 24 Dominica 10 21 5 18 0 15 2003-2007 2008-2012 2013-2018 2003-2007 2008-2012 2013-2018 2003-2007 2008-2012 2013-2018 12 Congo, Rep. 9 Bangladesh Nigeria 6 Yemen, Rep. Myanmar 3 Sudan IDA IBRD Not IDA- Timor-Leste 0 IBRD 5 6 7 8 9 Log GDP per capita Direct Taxes Indirect Taxes Tax revenues in IDA countries are not only low but their composition is also skewed toward indirect taxes with direct taxes contributing only 35 percent of the total revenue collection in 2018. In the case of IBRD countries, this is nearly 45 percent while it is above 60 percent for advanced economies. This means that IDA countries have been funding their expenditures largely from regressive indirect taxes as compared to more progressive direct taxes. The composition of the tax revenues reflects government policies and institutional capacity as well as the underlying nature of the economy that generates tax handles (i.e., convenient points where the government can collect the tax). In countries with less formalized (and corporatized) economies, such tax handles to collect direct taxes are fewer than for indirect taxes. For example, a significant amount of direct taxes in developed countries are collected by wage withholding from employers in the organized sector the size of which is much smaller in IDA countries. Despite these drawbacks, there is a need to address this over-reliance by IDA countries on regressive taxes. Note: Data for 2019 and 2020 has been limited and hence strict comparability with respect to 2018 and earlier is difficult. - 32 - 60. IDA will redouble its efforts to tackle illicit financial flows (IFFs), including by addressing corruption. Tackling IFFs has significant consequences for resilient recovery. The opaque and often destabilizing transfer of capital strips governments of much-needed resources for financing their development priorities. IFFs also undermine trust and the rule of law, further inequities and give rise to other negative impacts through the underlying activities that generate them, such as government decisions distorted by corrupt practices or state capture of resources. IDA20 will scale up support for countries’ reform efforts to combat IFFs by assisting in designing and implementing comprehensive risk-based approaches and mitigation plans following a whole- of-government approach. IDA20 will also support stronger beneficial ownership frameworks and tax-related exchange of information to enhance transparency, facilitate fairer and more progressive taxation. IDA20 will also promote stronger public accountability mechanisms, such as conflict of interest management systems, income and asset declarations, and institutions of oversight. Investing in these reform areas will strengthen countries’ capacity to fight corruption, money laundering, and other sources of illicit financial flows. 61. Technology and innovation will play a key role in strengthening government capability in IDA20. IDA20 will build on IDA19 efforts on universally accessible GovTech to continue to leverage technology for strengthening service delivery, core government operations, and government-citizen interaction. 68 The COVID-19 crisis accentuated the need for accessible sector-based services (health, education, and social protection services) and administrative government services, including for those with disabilities. IDA20 will enhance focus on accessible, secure, and inclusive digital technologies and GovTech solutions. These investments will remain critical for strengthening fiscal capability, service delivery, and crisis preparedness and response. GovTech solutions such as cloud-based platforms for remote government can ensure business continuity and data recovery during disasters and crises, as well as support emergency response and communication systems. 62. IDA will seek to foster more inclusive governance by strengthening platforms for greater social accountability and citizen engagement. IDA20 will continue to further sharpen focus on citizen engagement by supporting better integration of gender and social inclusion considerations in all stages of fiscal planning and budgeting. Well-planned fiscal policy and budget systems are central for achieving strategic priorities such as inclusive governance and gender equality. IDA20 will help countries foster inclusive governance and institutions through reforms that incorporate principles of equity into the management of financial resources and public investments. Gender responsive budgeting also involves economic modelling to better understand and address the impacts of fiscal policy on multiple stakeholders and gender equality outcomes. 63. Participants welcomed the foundational IDA20 policy commitments under the Governance and Institutions Cross-Cutting Issue. 68 Universally accessible GovTech services, which include the modality and content of services, require that services are designed in a manner that can be accessed, understood, and used by all persons regardless of disability, age, use of assistive devices, location, or internet access. It applies to hardware, such as electronic kiosks, touch screen interfaces, and software components—websites, electronic documents, forms, e-portals, multimedia. - 33 - Governance and Institutions Cross-Cutting Issue Policy Commitments 1. Increasing debt transparency and fiscal sustainability: Support 50 IDA countries in publishing comprehensive public and publicly guaranteed debt reports or fiscal risk statements. 2. Improving domestic resource mobilization: Support 15 IDA countries to bolster their domestic resource mobilization capacity through equitable (fair and progressive) revenue policies (as verified using fiscal incidence analysis or other methods) toward achieving a tax-GDP ratio of at least 15 percent in the medium term. a 3. Enabling digital government services: Support at least 15 IDA countries to adopt universally accessible GovTech policies, regulations, or solutions to enable secure digital government services. 4. Combatting illicit financial flows: Support at least five IDA countries to conduct comprehensive IFF assessments and prepare action plans. Also support at least 20 IDA countries to undertake policy actions that tackle corruption, money laundering, and/or tax evasion to reduce IFF, such as strengthening public accountability mechanisms, increasing access to and awareness of beneficial ownership information, and/or adopting automatic exchange of information to reduce tax evasion. Note: a Revenue policies include tax administrative policies, including those that seek to improve and introduce new tax compliance measures. The concept of equitable DRM has two dimensions: (1) fairness (taxpayer with similar income or property should be treated similarly); and (2) progressivity (contribution according to taxpayers’ ability to pay). 64. Beyond these policy commitments, commitments related to the Governance and Institutions Cross-Cutting Issue are embedded across the IDA20 Special Themes. Under the Human Capital Special Theme, IDA20 will mobilize, allocate, and spend public funds more efficiently and effectively to maximize investments in people. The Gender and Development Special Theme will support countries’ efforts on making fiscal policy and budget systems more inclusive and gender responsive, including through budget reforms, removing discriminatory provisions from tax legislation and/or monitoring the effectiveness of public spending for equality policies. Under the Fragility, Conflict and Violence Special Theme, IDA20 will deepen engagement on strengthening core institutions in IDA FCS with special attention to effective and inclusive service delivery to support resilience and vulnerable groups and individuals. The Jobs and Economic Transformation Special Theme will support IDA countries in identifying the governance constraints to the development, financing, and delivery of quality infrastructure investments and support institutional capacity to improve data for policy decision-making. iii. DEBT 65. The COVID-19 crisis is increasing IDA countries’ financing needs and therefore public borrowing, while weakening their economic performance and capacity to service and repay public debt. Debt vulnerabilities in IDA countries were rising well before the onset of the COVID-19 crisis, with rising public debt levels and increasing reliance from non-concessional external financing. 69 The crisis has led to large fiscal and current account deficits with public gross 69 Public debt levels rose from an average 40 percent of GDP in 2010 to around 54 percent by 2019. - 34 - financing needs in IDA countries averaging 11 percent of Gross Domestic Product (GDP) in 2020, up from an average of about 7 percent of GDP from 2015 to 2019. Overall and external financing needs are expected to remain high over the next few years as countries respond to the crisis, while also facing large debt servicing. IDA countries’ capacity to service and repay elevated public debt is expected to recover only slowly, with GDP, revenue, and exports remaining below their pre- COVID-19 trajectories. 66. IDA plays a key role in a global coalition to address debt vulnerabilities in IDA countries, by supporting the G20 Debt Service Suspension Initiative (DSSI) and the Common Framework for debt treatment, in close collaboration with the IMF. The DSSI, extended until end-2021, has provided 47 IDA countries with $10.3 billion in debt service suspension between April 2020 and June 2021, creating much needed liquidity and fiscal space to address the COVID- 19 crisis. 70 During that period, for the DSSI-eligible countries, IDA has provided $48.4 billion in total commitments, resulting in $27.2 billion gross disbursements, and $22.7 billion in net transfers. Beyond the DSSI, the G20 endorsed the Common Framework at the end of 2020 to provide debt treatment, tailored to address specific sovereign debt challenges of these DSSI- eligible countries. 71 These initiatives complement IDA’s ongoing support to countries to confront their debt vulnerabilities through a comprehensive policy toolkit comprising the World Bank-IMF Multi-Pronged Approach; IDA19’s set of interrelated policy commitments covering debt transparency, DRM and infrastructure governance; and the Performance and Policy Actions (PPAs) being implemented through IDA’s Sustainable Development Finance Policy (SDFP). During its first year, the SDFP also supported the implementation of the DSSI, aiming at monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing, as well as proactively contributing to efforts in the context of the ongoing Common Framework. In addition, for greater transparency, the World Bank released the DSSI webpage which offers a country-by-country accounting of DSSI participants and the amounts they owe to creditors based on information from the World Bank’s International Debt Statistics (IDS) database. 67. Debt will be an important Cross-Cutting Issue in IDA20 to further address public debt vulnerabilities in a comprehensive and integrated manner, reinforcing the SDFP. 72 The rollout of the SDFP in IDA19 has been instrumental in elevating the policy dialogue on debt and mainstreaming debt issues into IDA’s country programs and its policy dialogue with clients. Debt transparency efforts have been enhanced by sharpening/expanding tools for data disclosure 70 Based on WBG IDS data, the DSSI extension through January to December 2021 is estimated to provide $12.6 billion of additional debt service suspension from the same group of creditors for 47 participating countries as of end-June 2021. 71 The Common Framework applies to the same 73 countries that are eligible to participate under the DSSI. It aims at providing debt treatments, to low-income countries with significant debt vulnerabilities and deteriorating outlook. The Common Framework has broad creditor coverage including all G20 and Paris Club Creditor, bilateral creditors and private creditors. Both the Common Framework and DSSI are supported by World Bank and IMF. The World Bank and IMF’s role will be critical in ensuring debt treatment is grounded in sound analytics, while also having an important role in providing sufficient concessional financing to participating countries during the debt treatment phase. As of end June 2021, three countries (Chad, Ethiopia and Zambia) have requested a Common Framework treatment. 72 https://ida.worldbank.org/debt/sustainable-development-finance-policy - 35 - and reporting, 73 including the World Bank’s recent launch of a fiscal risk tool and the debt reporting heatmap as well as domestic debt securities heatmap to monitor improvements in public debt reporting. At the same time, the publication of an enhanced World Bank IDS database has increased transparency on financing to IDA countries. 74 Enhanced public sector debt transparency enables borrowers and lenders to effectively evaluate debt sustainability and make informed borrowing and lending decisions. It also supports the effective pricing of debt instruments and the reduction of risk and could thereby stimulate private investment. The IMF and the World Bank are engaged in extending the sectoral and instrument coverage of their debt statistics and reports, including in Debt Sustainability Analyses (DSAs). 75 In addition, IMF and the World Bank are currently working on the use of collateral in debt financing. Such information is also available in the World Bank’s public debt reporting heatmap where relevant. In addition, the World Bank is revising the Debt Reporting System manual implementing the international standards of debt coverage and classification to possibly collect more information and data on collateralization. With the crisis further accentuating debt vulnerabilities, IDA20 will build on these achievements to support countries’ efforts toward a sustainable debt path. 68. Building on the substantial progress made in IDA19, IDA20 will deepen support in the areas of debt management, fiscal sustainability, and debt transparency, including through the SDFP. The SDFP addresses debt sustainability, debt transparency and fiscal sustainability challenges in a systematic way over a longer-term horizon, based on country dialogue, analytics, financing, and technical assistance. Drawing from lessons from the first year of implementation (see Box 3.4) and early evaluation feedback in IDA20, the SDFP will continue to strengthen, incentivize, and deepen reforms aimed at reducing debt vulnerabilities and advance creditor collaboration and dialogue toward sustainable financing. 76 Management will also carry out a comprehensive review of the implementation of the SDFP as part of the IDA20 Mid-Term Review. 73 As collateralization is a standard practice for many types of private-sector financing, systematic recording on the collateral transaction is important going forward. 74 The IDS provides additional information on stocks and flows by creditor for each borrowing country. This has supported the release of a DSSI webpage providing country-by-country accounting of DSSI participants and amounts owed to creditors. 75 Efforts are underway to (i) update the IMF’s Public Sector Balance Sheet database with the latest data on assets and liabilities of the public sector and subsectors, (ii) expand the coverage of the countries included in the database, (iii) expand and improve coverage of sub-sectors and debt instruments of the public sector for countries already in the database; and (iv) enhance support for compilation of balance sheet data of the general government through the Financial Sector Stability Trust Fund 76 See World Bank. 2021. Sustainable Development Finance Policy (SDFP) of the International Development Association: early findings from the first year of implementation. Washington, DC: World Bank, and Independent Evaluation Group. (forthcoming) IDA’s Sustainable Development Finance Policy: An Early-Stage Evaluation. Washington, DC: World Bank. - 36 - Box 3. 4. Lessons from Implementation of the Sustainable Development Finance Policy Through the Sustainable Development Finance Policy (SDFP), IDA has adopted a more systematic dialogue on debt issues at the country-level, elevating discussions on debt vulnerabilities in IDA countries. Compared to the past, this dialogue ensures robust and in-depth discussions with countries on their key debt vulnerabilities, drivers of debt accumulation and debt management as a whole. The dialogue is underpinned by rigorous analytics, and actions tailored to country-specific circumstances. The SDFP contributes toward mitigating the rise in debt vulnerabilities in many IDA countries. The design of the policy has shown strong focus on mitigating core debt vulnerabilities, while flexibly adapting to country circumstances, especially in the context of the COVID-19 pandemic. Concrete actions have been taken to help mitigate against debt vulnerabilities in 55 IDA countries over the course of FY21. Performance and policy actions (PPAs) under the SDFP support IDA’s efforts to ‘institutionalize’ within country systems policy actions for enhanced debt management, debt transparency and fiscal sustainability. Out of 55 countries required to prepare PPAs in FY21, 93 percent satisfactorily implemented their PPAs during the course of the fiscal year. As a result of the SDFP, 33 IDA countries that prepared PPAs periodically produce and publish annual debt reports or/and quarterly debt bulletins. Similarly, six countries have strengthened their public investment management regulations; and ten have started to perform annual fiscal risk assessments to inform fiscal policy decisions. The SDFP supports and complements other Bank activities and debt related initiatives. In most countries, the SDFP leverage planned or ongoing advisory and financing operations, such as Technical Assistance and Development Policy Financing. During its first year of implementation, the SDFP also supported the implementation of the Debt Service Suspension Initiative (DSSI), aimed at concentrating countries’ resources to fighting the pandemic and safeguarding lives and livelihoods. In line with the DSSI objectives, the SDFP supported actions aimed at monitoring spending, enhancing public debt transparency, and ensuring prudent borrowing. PCO activities provide a platform for exploring further collaboration with MDBs and bilateral partners. IDA, in coordination with the IMF, participates in discussions with the OECD presenting the key features of the SDFP and how debt ceilings are being established and coordinated between the two institutions. Regular engagements with other multilateral development banks (including African Development Bank and Asian Development Bank) have also taken place. IDA has also engaged with non-traditional creditors, including through the jointly organized high-level workshop on Sustainable Lending Practices with the Multilateral Cooperation Center for Development Finance, and the Debt Management Facility Stakeholders’ Forum, which includes representatives from the European Investment Bank, the Arab Fund, and the Kuwait Fund, amongst others. 69. Support on public debt management has been mainstreamed into World Bank operations and country dialogue to address vulnerabilities in a comprehensive manner. The World Bank has provided substantial debt management technical assistance to IDA countries, much of it through the Multi-Pronged Approach implemented with the IMF and partly funded by the Debt Management Facility, a multi-donor trust fund. Support under the MPA comprises institutional and operational aspects of debt management, developing debt management strategy, enhancing debt transparency, managing fiscal risks, and developing domestic debt markets. FCS receive more than 20 percent of TA provided, given their institutional and capacity challenges. - 37 - The World Bank’s technical assistance on debt is systematically coordinated with regional development partners and supported by continuous policy dialogue between the country teams and clients, guided by DSAs, Medium Term Debt Management Strategies, Debt Management Performance Assessments and Domestic Debt Market Development missions. Debt management considerations have also been increasingly integrated into World Bank operations and systematic country dialogue, supported by the SDFP, the Multi-Pronged Approach, and enhanced cooperation between technical and country teams. Such continuous engagement and interaction with IDA countries, including FCS, will continue to deepen in IDA20. 70. The SDFP offers incentives to countries with debt vulnerabilities to improve debt management by linking core allocations and grant allocation framework to their performance and policy actions on debt. The SDFP provides robust incentives for IDA countries to make improvements toward a sustainable borrowing path by linking core allocations with their performance in meeting the agreed policy actions implemented on an annual basis. Where these are not met, a share of the country’s allocation is set aside, with grant recipient high-risk countries having a 20 percent set-aside, and those at moderate-risk or with a Market Access Countries-DSA a 10 percent set-aside. Unsatisfactory implementation of PPAs for two consecutive years results in loss of the set-aside amount. Management also has the option to harden IDA financing terms when a country repeatedly fails to satisfactorily implement its PPAs or if the existence of other country policies and actions undermine the achievement of agreed PPAs. In particular, repeated unsatisfactory implementation of PPAs, particularly those that include debt ceilings, may lead to the combined application of both set-asides and hardening of financing terms. 71. Through the SDFP and IDA’s toolkit of financing instruments and Advisory and Services Analytics, IDA continues to support countries’ progress toward achieving fiscal and debt sustainability. DPFs play a key role in supporting reforms in IDA countries, in particular through policy and institutional actions that improve public finance and debt management that support the maintenance of an adequate macro framework including sustainable borrowing policies. Compared to the past, the SDFP allows IDA to engage in more in-depth discussions around countries’ key debt vulnerabilities and drivers of debt accumulation. Annual discussions on PPAs are now a key component of the dialogue at the country level. Similarly, the non- concessional borrowing ceilings implemented through the SDFP help ensure that IDA countries access sustainable and affordable finance through highly concessional sources thus avoiding the accumulation of debt vulnerabilities and risks. These ceilings, along with broader efforts to improve debt transparency, provide clear signals to lenders on countries’ ability to meet external obligations and requirements for financing on adequate terms and volumes. 72. A key priority in IDA20 will be to deepen engagement through the Program of Creditor Outreach (PCO), including through better information sharing among creditors, and concrete objectives and expected outcomes for the PCO. During IDA19, activities under the PCO have focused on sharing IDA’s experience in implementing the Debt Sustainability Enhancement Program, aligning the application of non-concessional borrowing policies with other MDBs, and deepening engagement with creditors. To this end, IDA facilitated a High-Level Roundtable on Sustainable Development Finance on September 28, 2021, which included Paris Club, Non-Paris Club creditors, MDBs and the private sector. The forthcoming work of the World Bank on the implementation of the Common Framework in light of high debt vulnerabilities is - 38 - noted. Going forward in IDA20, the priority is to make further progress on ensuring consistent signaling among creditors on sustainable debt practices at the country level; promoting improved lending and grant policies and practices by creditors, including on debt and fiscal transparency; strengthening information sharing on debt policies and initiatives; and coordinating debt management technical assistance at the country level. The PCO will also aim to support debt data sharing among creditors, including MDBs, Paris Club and non-Paris Club creditors. In addition, Management will provide updates to the Board, including by elaborating on strategic directions and overall goals of the PCO, including on country level activities after further implementation of the program, as part of the SDFP Updates to the Board. 73. IDA20 will also focus on supporting more comprehensive reporting of public and publicly guaranteed debt and the publication of fiscal risk statements to boost the quality and comprehensiveness of targeted outcomes. Due to low initial capacity, enhancing debt transparency and improving fiscal risk assessments require long-term, sustained, programmatic assistance to put in place effective legal frameworks and institutional arrangements. Building on gains made in IDA19, IDA20 will further advance this agenda through both the Debt and Governance and Institutions Cross-Cutting Issues by shifting the focus from publishing debt reports to enhancing their quality and coverage. This will include additional subsectors, coverage of State-Owned Enterprises, and comprehensive fiscal risk statements that help mitigate key debt vulnerabilities and risks. The SDFP will play a key role in galvanizing such actions and incentivizing sustainable financing in IDA countries, while strengthening the quality of debt reporting and debt transparency. iv. TECHNOLOGY 74. The COVID-19 crisis underscores the urgency to address the digital divide and accelerate the adoption of transformative technology in IDA countries to kickstart a green, inclusive, and resilient recovery. Access to digital connectivity remains severely limited in IDA countries. While mobile coverage has expanded rapidly on a global level, IDA countries are far behind, with mobile internet penetration rates of 32 percent as of 2021 Q2, compared to 66 percent for other countries. Challenges related to access, skills gaps, and affordability contribute to low usage levels in IDA countries. With continued uncertainty regarding the depth and duration of the crisis, digital technologies will remain critical to support crisis response and resilience, with measures such as telemedicine and digital platforms for vaccine administration, social safety net, remote education and learning, mobile payment systems, etc. Beyond ensuring continuity in crisis, improving digital connectivity and technology solution will remain essential for boosting economic growth, productivity, and job creation in the long-term. 75. Through the Technology Cross-Cutting Issue, IDA20 will help integrate digital technology into development solutions to build resilience and support long-term growth in IDA countries. IDA19 supported a large portfolio of digital transformation operations in IDA countries, for instance, through the Digital Economy for Africa initiative, with key reforms and public investments in infrastructure, financial services, and entrepreneurship. IDA20 will build on these efforts and to further accelerate digital transformation, IDA20 will focus on holistic and ecosystem approach bringing together global knowledge, cross-sector expertise, and financing to support countries to build foundational digital infrastructure and the specific applications needed - 39 - for key sectors of the economy to thrive. IDA20 will also help mitigate the risks of digital exclusion and support the creation of reliable, cyber-secure data systems. 76. Technology will serve as a “connective tissue” across the IDA20 Special Themes and the overall IDA portfolio. Under the JET Special Theme, IDA20 will go beyond access to technology to further address issues of affordability, usage, and inclusion. Addressing the gaps exposed during the crisis, IDA20 will focus on expanding the adoption and upgrading of digital technologies in private sector to spur recovery and transformation. Under the Human Capital Special Theme, IDA20 will support adaptive social protection systems through increased access to official digital ID and civil registration systems. IDA20 will also support disability inclusion by enabling universal access to digital services supported by IDA, as well as in education, health, social protection, water, urban, and transport sectors. IDA will also promote the resilience and crisis preparedness of education systems by strengthening learning continuity through integration of technology for remote and hybrid or blended learning, improvement of learning environment outside school doors, and investments in climate-resilient educational infrastructure at scale. Under the Gender and Development Special Theme, IDA20 will merge and deepen two IDA19 policy commitments to increase ambition and address persistent gender gaps in the access and use of technology, through increased coverage in sectors such as agriculture and finance using bundled interventions. Under FCV Special Theme, technology and digital solutions will support implementation, monitoring, and supervision in IDA FCS, especially in highly insecure settings. Under Governance and Institutions Cross-Cutting Issue, IDA20 will support countries to make progress on GovTech policies, regulations, or solutions to enable digital government services. 77. As IDA countries embrace digital transformation, they are facing emerging threats to cybersecurity and data privacy. Risks relating to data protection, privacy and cybersecurity are growing rapidly with digitalization, and are further compounded by lack of adequate legal frameworks and institutional capacity in many IDA countries (see Box 3.5). IDA20 will support countries to develop and strengthen reliable cyber-secure data systems by integrating assessment of cybersecurity risks across operations and strengthening government capacities to manage these risks. IDA’s support will assist countries to formulate appropriate legal and regulatory frameworks, build systems and institutional capacity for cybersecurity and data protection, and provide the training and investments needed to strengthen resilience against cyberattacks. - 40 - Box 3. 5. Cybersecurity/ Data Privacy The cybersecurity agenda in IDA countries is relatively nascent, with little capacity and expertise to deal with emerging risks. IDA countries operate a large and rapidly growing array of systems, networks, and critical infrastructure, many of which have been designed during early years of the digital revolution. These systems across sectors such as energy, transport, finance, health, etc. remain highly vulnerable to cybersecurity attacks with potentially serious consequences. The exposure to risks is growing with increasing number of devices and users, as penetration of digital technology into everyday life is creating more opportunities and vulnerabilities for cyberattacks. The World Development Report 2021: Data for Better Livesa emphasized the pressing need for all countries to establish new social contracts to guide the appropriate use of data. Best practices are emerging, and IDA support will be critical to support countries in building reliable, cyber-secure data ecosystems based on trust. IDA20’s focus on risks related to cybersecurity, data privacy and governance - cutting across all Special Themes and Cross-Cutting Issues - will significantly strengthen these efforts. This will include mainstreaming of cybersecurity diagnostics as part of a project’s cycle and development of capacity building instruments (including awareness activities, training programs and staff up-skilling). The work around operationalization of the 2021 World Development Report and building reliable data ecosystems will tackle the issues of data infrastructure (including cloud, international and regional connectivity), data protection, data-sharing and pooling structures, digital transformation, and adoption of digital by households and businesses. ____________ a World Bank Group. 2021. World Development Report 2021: Data for Better Lives. Washington, DC: World Bank Group. C. SPECIAL THEMES 78. IDA’s Special Themes focus attention on select issues that are essential to enable IDA countries address the immediate and long-term development priorities. Participants encouraged IDA to provide intense and systematic focus on the five Special Themes—Human Capital, Climate Change, FCV, Gender and Development, and JET. These Special Themes constitute a framework for prioritizing select issues, pushing the frontiers, and measuring results. The five Special Themes build on IDA’s comparative advantage and track-record in previous IDA replenishments in catalyzing change in the global community and reaching the poorest and most vulnerable populations. Innovations to Special Themes in IDA20 will serve to further increase IDA’s ambition and sharpen its focus to ensure a green, resilient and inclusive future for all. i. HUMAN CAPITAL 79. For decades, IDA has focused on investing in people through nutrition, health care, quality education, jobs and social protection, and skills, but more is needed to arrest declines in human capital and to help countries recover from the COVID-19 crisis. IDA’s Human Capital Special Theme builds on a strong foundation of longstanding World Bank support of countries’ efforts to create human capital, and over the years, IDA’s support to countries’ investment in Human Capital has substantially increased (see Figure 3.3). As a Cross-Cutting Issue under IDA19, the focus on Human Capital was further enhanced and related commitments have supported countries to mitigate the impact of COVID-19 and accelerate the positive pre-crisis - 41 - trajectory toward better human capital outcomes. Given the extraordinary impacts of the COVID- 19 crisis, significant additional investments and reforms are now needed to strengthen systems that deliver services that improve human capital outcomes. By deepening the implementation of and drawing on the experience from the Human Capital Project and the accompanying regional plans, notably for Africa and South Asia, IDA20 will help countries address the growing gaps in health, nutrition and other key elements of human capital and provide a foundation for a strong and sustained recovery, while also strengthening resilience to future crises and addressing structural inequalities. Digital transformation of health, education, and social protection delivery systems in IDA countries will also be a critical element of the recovery. Figure 3. 3. IDA Commitments to Select Global Practices 77 14.0 12.0 10.0 8.0 US$, billion 6.0 4.0 2.0 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 IDA1 5 IDA1 6 IDA1 7 IDA1 8 IDA1 9 Education Health, Nutrition, and Population Social Protection and Jobs Source: World Bank Data 80. Participants welcomed the introduction of Human Capital as a new Special Theme in IDA20. Progress made in IDA19 provides a solid basis to deepen work in priority areas. IDA20 will take a dual-track approach by supporting countries to control the pandemic and address immediate human capital needs; while simultaneously scaling up investments that underpin a green, resilient and inclusive recovery. Prioritizing human capital investments can help IDA countries harness the demographic dividend, including by expanding access to primary health care and to sexual and reproductive, adolescent, maternal, neonatal health, and nutrition services, including through education; early years investments, such as identification and screening for disability; and supporting acquisition of foundational skills to improve learning outcomes and future productivity. This will be further supported by the Gender Special Theme Policy Commitment on women’s empowerment through access to sexual and reproductive and maternal health services, which are essential for women to manage their lives and for countries to advance a demographic transition. The policy commitment on expanding childcare under the Gender and Development Special Theme will also support human capital outcomes, as affordable quality childcare plays a crucial role in both child development and women’s and girls’ learning and labor force outcomes. 81. Participants supported IDA20’s focus on inclusion, and its efforts to tailor support to the most vulnerable, including persons with disabilities and those discriminated based on their sexual orientation and gender identity. Within the overall goals of universal access to core human capital services, this focus on inclusion means that IDA20 will pay heightened attention to 77 These Global Practices constitute the bulk of the World Bank’s work on human capital. - 42 - the barriers that prevent the poor, persons with disabilities, refugees, internally displaced populations, and other marginalized individuals, including those discriminated based on their sexual orientation and gender identity, from achieving their full potential. 82. IDA20 will endeavor that projects in the education, health, social protection, water, urban, digital development, and transport sectors contain actions to make core services accessible to persons with disabilities. These efforts will be underpinned by the World Bank’s corporate framework and objectives on disability inclusion, laid out in the ESF, progress on the IDA19 policy commitments, the Ten Commitments on disability-inclusive development, and the Disability Inclusion and Accountability Framework (see Box 3.6). Box 3. 6. Advancing Disability-Inclusive Development As one of the leading international organizations on disability inclusion in development, the World Bank promotes the full integration of persons with disabilities in societies in line with the Convention on the Rights of Persons with Disabilities.a IDA20 will continue taking actions to promote non-discrimination, inclusion, and universal access in its broader sense to ensure that persons with disabilities can access, participate in, and benefit from infrastructure, products, programs, and/or services. The concept of universal access, including accessibility, applies both to the built environment (e.g., schools, community water, sanitation facilities, bus terminals, and public playgrounds), virtual environments (e.g., smart villages/city interfaces, online learning, government portals to access social benefits), as well as the design and delivery of services (e.g., skills development programs, cash transfers). Over the past five years, the World Bank has sharpened its focus on making development more inclusive of persons living with disabilities. The goal is, on the one hand, to ensure that no group is excluded from the benefits of development project impacts through lack of access or through outright discrimination, and on the other hand, to empower individuals to lead as full, healthy, and productive lives as possible. The work to safeguard against exclusion of persons living with disabilities is guided by the Environmental and Social Framework (ESF), which puts in place strong provisions for universal access to Bank-supported operations, along with a tracking indicator.b The ESF also requires IDA clients to look specifically at disability as part of social assessments. In addition, a series of steps have been taken to go beyond safeguards to promote more inclusive societies and economies, and more opportunity for persons living with disabilities. For instance, the World Bank has produced sector-specific Practice and Technical Notes to support task teams to design disability-inclusive projects, and a cross-practice monitoring committee ensures peer-to-peer learning, knowledge sharing, and progress monitoring. This work helps inform operational design as part of the enhanced focus on disability inclusion in IDA19, reinforced by six disability-related policy commitments. ____________ a UN General Assembly. 2007. Convention on the Rights of Persons with Disabilities: resolution / adopted by the General Assembly. January 24, 2007, A/RES/61/106 Box continues on the next page - 43 - Box 3.6 continued In line with the Ten Commitments on Disability Inclusive Development made at the 2018 Global Disability Summit,c the World Bank is working to ensure that all Bank financed projects/programs in education and digital development as well as those financing public facilities in post-disaster reconstruction are disability-inclusive by 2025. The World Bank is also working to make 75 percent of Social Protection projects disability inclusive by 2025 and have all new urban mobility and rail projects supporting public transport services incorporate universal access features to facilitate usage by persons with disabilities. The IDA20 Results Measurement System (RMS) will continue to monitor and report on the share of investment project finance operations that applies the concept of universal access. IDA20 will further scale up support to disability inclusion across Practice Groups and Special Themes. A new stand-alone policy commitment will address the needs of persons with disabilities by implementing the principles of universal access through projects across sectors. This policy commitment advances the concept of universal access as introduced in IDA19 by focusing on progressive realization as it focuses on supporting unrestricted physical and digital access for persons with disabilities to core services. Support will also be provided to build IDA countries’ statistical capacity for the implementation of disaggregated household surveys, by sex and disability. Furthermore, an indicator will be included in the RMS to track the number of IDA countries where capacity is being strengthened to incorporate disability status questions from the Washington Group Short Set of questionaries along with other disability questions in national data systems. ____________ b https://www.worldbank.org/en/projects-operations/environmental-and-social-framework c https://www.worldbank.org/en/topic/socialsustainability/brief/world-bank-group-commitments-on-disability-inclusion- development 83. In far too many communities, lesbian, gay, bisexual, transgender, and intersex (LGBTI) people continue to struggle for recognition and equality. IDA will learn from the publication of the Equality of Opportunity for Sexual and Gender Minorities report 78 to define and develop its contribution on this agenda, and report back to the Participants at the IDA20 MTR. The recent report is intended to be the first in a series of studies offering insights around legislation affecting sexual and gender minorities across diverse countries. A similar study is currently being undertaken by the Asian Development Bank for 24 countries in their region in collaboration with the World Bank. 84. IDA20 will focus on investing in people and building their human capital at each stage of the life cycle, starting with a focus on the early years. Cumulative, complementary investments over the life cycle promote productivity and enhance resilience to adversity. Setbacks during key stages of life, particularly in a child’s early years—such as lack of adequate maternal prenatal health, poor nutrition or stimulation during early childhood, exposure to stress, or lack of access to foundational skills in preschool—can have especially damaging, compounding, and long- lasting effects that in turn lead to the intergenerational transmission of vulnerability. 79 78 See Cortez, Clifton; Arzinos, John; De la Medina Soto, Christian. 2021. Equality of Opportunity for Sexual and Gender Minorities. Washington, DC: World Bank 79 Early years refer to the first 2,000 days of a person’s life (or until entry into primary school), with nutrition interventions usually having a priority focus on the first 1,000 days. - 44 - 85. The equitable and inclusive rollout of COVID-19 vaccinations and accompanying strengthening of health systems and pandemic preparedness will be a critical priority in IDA20. An immediate global priority is to support the acquisition and rollout of COVID-19 vaccinations, and ensure continuity of prevention, testing, treatment and care for COVID-19 patients, as well as strengthening essential health services, enhancing pandemic preparedness, and supporting countries to achieve universal health coverage. Building on and further enhancing the support provided in IDA19, the support to health system strengthening will focus on improving core capabilities of IDA countries in line with the International Health Regulations 80 and the Political Declaration on Universal Health Coverage. 81 This will include a focus on prevention and promotion services for communicable and noncommunicable diseases, nutrition, reproductive, newborn, and adolescent health. IDA support will also include mental health and psycho-social support to address the additional strain that the pandemic has placed on many individuals, households, and communities, including in IDA FCS. 86. IDA20 will support the implementation of inclusive national vaccination plans covering procurement and deployment. IDA20 support to vaccinations will build on the strong progress of IDA19, during which regional initiatives such as the Regional Disease Surveillance Systems Enhancement (REDISSE) program in West and Central Africa were implemented. 82 This will include leveraging the full suite of IDA financing mechanisms, including the Regional Window to provide additional financial incentives to invest in vaccines, therapeutics and diagnostics (VTD). It will be carried out in ways that strengthen health care systems, including to address remaining COVID-19 challenges, through prevention, testing, treatment, and care. Support will include assisting client countries to implement vaccination programs using vaccine doses donated by developed countries in collaboration with COVAX. Moreover, the World Bank will work closely with COVAX and AVAT to ensure financial assurance to support advanced vaccine purchase arrangements with manufacturers. 87. Furthermore, as part of IDA’s commitment to enhancing pandemic preparedness and prevention, IDA20 will also support global health security by assisting countries with One Health approaches to tackle the nexus between human, animal, and ecosystem health. With most recent pandemics and communicable diseases—such as Ebola, Avian influenza, Severe Acute Respiratory Syndrome, Middle East Respiratory Syndrome and COVID-19—having their origins in animals, One Health is recognized as an essential foundation for global health security. IDA20 envisions cross-sectoral programs guided by the One Health principles to reduce zoonotic risks through interventions to protect biodiversity, limit environmental degradation, improve animal health management, support healthy food systems, enhance integrated surveillance, increase coordination to prevent and prepare for emerging infectious diseases, and address growing 80 World Health Assembly. 2005. International Health Regulations, Second Edition. Geneva: World Health Organization. 81 Political Declaration of the High-level Meeting on Universal Health Coverage. 2019. Universal health coverage: moving together to build a healthier world. New York: United Nations. 82 The REDISSE Program was created in the aftermath of the 2014-2016 Ebola Virus outbreak in West Africa and has since grown to include 16 countries in West and Central Africa. REDISSE is investing directly in countries and select regional institutions to build core public health capacity at the country level, as well as regionally to address common needs, harmonize policies and practices, share epidemiological data, and establish regional training institutions and laboratory networks. REDISSE provided the first response in Africa to country requests for financing to prepare for COVID-19. - 45 - antimicrobial resistance to treat infections. This will be based on the WBG One Health Operational Framework. 83 88. To further bolster countries’ preparedness for future crisis, Participants welcomed IDA20’s complementary focus on Adaptive Social Protection. Building on the robust progress in IDA19, and in line with the framework for action towards universal social protection systems adopted by the International Labour Conference, 84 IDA20 will support further incorporating adaptive social protection into national systems to reduce the risks of a range of shocks and provide a platform for the delivery of a range of other services to hard-to-reach individuals and groups. This work has proven to be critical to responding to the COVID-19 crisis and demonstrates IDA’s comparative advantage in supporting countries to strengthen systems for inclusion and resilience. In partnership with key actors, such as the International Labour Organization, IDA’s support will contribute to the broader goal of ensuring universal access to social protection by working to ensure that all those who need social protection can access it when they need it. 85 In this context, IDA will continue using a “progressive universalism” approach with a focus on reaching the poorest and most vulnerable first, as they are typically the most in need and the most under-served group, before expanding the coverage further. Informal workers in both urban and rural areas, having access neither to social safety net programs nor employment-based social insurance, have been particularly vulnerable to the economic impacts of COVID-19. IDA20 will focus on including these under-served groups into social protection systems to gradually advance toward universal social protection. 89. IDA20 will work intensively on recovering and accelerating the learning process and rebuilding education systems in the context of the COVID-19 impacts. As more evidence is emerging on the severe impacts of global school closures on learning, priority is to get girls and boys back to school, accelerate the pace of learning recovery, and also to integrate technology for remote and hybrid or blended learning to ensure learning continuity and preparedness for any future crises. Acquisition of foundational skills, particularly literacy, in preschool and primary education is a precondition for accumulation of the more sophisticated skills and competencies that are increasingly demanded by the changing world of work. The evidence on the pandemic's impacts on girls' education is still nascent, but risks and challenges, especially for adolescent girls in returning to schooling, remain. IDA will continue to place a strong emphasis on girls’ education that goes beyond school attendance and learning outcomes with focus on ensuring girls have safe, joyful, and inclusive experiences with education systems that set them up for success in life and motivate them to become lifelong learners. This approach prioritizes investments in four key areas: (a) removing barriers to girls’ schooling; (b) promoting safe and inclusive schools for girls; (c) improving the quality of education for girls and boys; and (d) developing skills for life and labor market success for young women. 83 World Bank Group. 2018. One Health. Operational Framework for Strengthening Human, Animal, and Environmental Public Health Systems at their Interface. Washington, DC: World Bank Group. 84 Record of proceedings, International Labour Conference – 109th Session, 2021 wcms_804457.pdf (ilo.org). 85 This is in line with the International Labour Organization’s R202 - Social Protection Floors Recommendation, 2012 (No. 202) and the progressive achievement of higher levels of protection in accordance with the Social Security (Minimum Standards) Convention, 1952 (No. 102) that seek to ensure that at a minimum, over the life cycle, all in need have access to essential health care and basic income security. - 46 - 90. Consistent with the life cycle focus, the Human Capital Special Theme will focus on reducing learning poverty while continuing to support skills and employability for youth, including through expanded access to secondary and tertiary education programs. IDA20 will continue supporting students’ transition to secondary and higher levels of education, with particular attention to the unique barriers faced by girls and young women and improving the quality and relevance of these education services. This is critical to meet the increased demand for advanced skills, which are fostered in secondary and post-secondary education and training institutions. This is further supported by work under the JET agenda and commitments under Gender and Development to help address the impact of COVID-19 on female employment and make progress to close gaps in the labor force, including through improved access to affordable and quality childcare and scaling up productive economic inclusion programs. IDA20 will continue to strengthen education systems by empowering and supporting teachers, building management capacity of principals and education policymakers, supporting efficient financing of education, and applying educational technology to all levels of education to ensure that education reaches all students anytime, anywhere. The objective of this work will be to enable quality education and training systems that deliver cognitive, socioemotional, technical, and digital skills to children and youth. 91. In a context of narrowed fiscal space, IDA20 will support countries to mobilize, allocate, and spend public funds more efficiently and effectively to maximize investments in people. The availability of resources will need to be calibrated with needs for human capital spending and there is an opportunity to improve both the efficiency and efficacy of human capital financing, notably through a focus on performance and the use of results-oriented policy and administrative reforms. In addition to enhancing domestic revenue mobilization capacities, which will be supported under the Governance and Institutions Cross-Cutting Issue, IDA20 will strengthen resource and expenditure management to ensure that public spending and investments yield high-growth dividends. 92. Participants called for further strengthening of partnerships to deliver on the crisis response and intensify efforts to build back better. Addressing the human capital gaps exacerbated by COVID-19 requires a multi-sectoral approach and the engagement of a broad set of stakeholders. The Human Capital agenda is supported through strong partnerships not only within the WBG, such as in bolstering vaccine production and distribution with the IFC, but also with other development partners, such as the United Nations Educational, Scientific and Cultural Organization (UNESCO), UNICEF, Global Partnership for Education, Education Cannot Wait, and others, as well as the African Union through the African Vaccine Acquisition Trust (AVAT). Together with the Global Financing Facility, WHO, Gavi, The Vaccine Alliance, and others, and particularly through close collaboration with COVAX and AVAT on vaccines, IDA’s response to COVID-19 has been comprehensive, while also bringing much needed leadership to Access to COVID-19 Tools Accelerator (see Box 3.7), including as co-lead of the Health Systems Connector Pillar. Strong partnerships with multilateral and bilateral partners, such as Bill and Melinda Gates Foundation, UNICEF, as well as several bilateral partners, are central to the World Bank’s Accelerators initiative to recover learning losses and accelerate progress in foundational learning. Going forward in IDA20, these will be further strengthened. - 47 - Box 3. 7. Partnering to Roll Out COVID-19 Vaccinations in IDA Countries While the COVID-19 pandemic is ravaging populations and straining health systems with emerging variants leading to new waves of the pandemic, vaccine rollout has been uneven. As of October 25, 2021, of the 6.92 billion vaccine doses that have been administered globally, only 31.5 million benefitted low-income countries (LICs). Only 3.1 percent of people in low-income countries had received at least one dose, compared with 71.1 percent in high income countries. The cost to IDA countries of a rollout of the currently available vaccines, including the logistical costs of vaccine distribution, but excluding current levels of COVAX support come to nearly $13 billion.a This inequity has implications for economic recovery, poverty alleviation, and global health. A key priority in IDA20 will be to accelerate support to COVID-19 vaccination rollout and to strengthen pandemic preparedness. Anchored in a broader effort to strengthen health systems in IDA countries, IDA20 offers an ambitious policy package to support containing the COVID-19 pandemic through accelerated vaccine rollout and boosting preparedness for future pandemics including through One-Health approaches. While IDA financing for countries’ vaccine acquisition and deployment will continue to be primarily from country allocations, IDA20 will provide additional incentives for countries with access to the enhanced Regional Window and the use of Short-Maturity Loans in the Scale up Window for their vaccine response. Partnerships will remain central to IDA’s work on the immediate COVID-19 response and support toward pandemic preparedness. The World Bank is working closely with other partners to help countries to mobilize and strengthen their capacities to acquire and deploy COVID-19 vaccines. The World Bank has produced vaccine readiness assessments in more than 145 countries in collaboration with UNICEF and WHO, Gavi, The Vaccine Alliance and the Global Fund. The Bank is also teaming up with COVAX and the African Union African Vaccine Acquisition Trust (AVAT) to step up the purchase and deployment of COVID-19 vaccines for the low and middle-income countries and in particular for the Africa Region, which is lagging far behind the rest of the world in vaccinations. The Bank is providing support to countries in the use of different emerging options to secure and deploy COVID-19 vaccines. In addition, the Bank and WHO co-chair the COVID-19 Multilateral Leaders Task Force on COVID-19, working together with IMF and the World Trade Organization. The task force aims to track, coordinate and advance delivery of COVID-19 health tools to developing countries and mobilize stakeholders and national leaders to remove critical roadblocks. The Bank is also a lead partner of the Access to COVID-19 Tools Accelerator, including as co-lead of the Health Systems Connector Pillar. The IFC will continue to ramp up engagement with the private sector to improve access to critical healthcare products and services by closing key supply gaps, to support regional and local vaccine manufacturing and to strengthen the service capacities of IDA countries’ health systems. Under the Global Health Platform, IFC is committing $2 billion and mobilizing another $2 billion in private investment to help close the massive healthcare supply gaps faced by developing countries in the fight against COVID-19. IFC has already committed $220 million with a pipeline of $1.3 billion, of which more than $450 million is for vaccine-related projects. In response to the extraordinary strain on health systems in Africa caused by COVID-19, IFC has created the “Scaling Health in Africa” initiative to (i) tackle the immediate healthcare product and service gaps resulting from the COVID-19 crisis and (ii) strengthen the resilience of health systems in the long-term. IFC is also supporting COVID-19 response programs through a $545 million allocation provided under IDA18 and an additional $80 million of IDA PSW support approved under IDA19 in support of the Base of the Pyramid program under the Global Health Platform. ________________ a This estimate does not include financing needs for systems strengthening and for hiring additional healthcare workers/vaccinators. - 48 - 93. Participants welcomed the broad and ambitious agenda to contain the pandemic, restore human capital losses, rebuild quality, core social services, and accelerate the pre- COVID-19 trajectory of human capital gains. Based on progress on core human capital commitments advanced in IDA19, coupled with additional priority human capital investments, IDA20 will focus on the Policy Commitments outlined below. Human Capital Special Theme Policy Commitments 1. Boosting COVID-19 vaccination rollout and strengthening pandemic preparedness: Support all IDA countries to strengthen health security and advance inclusive health systems and universal health coverage, including (i) containing the COVID-19 pandemic, through vaccine rollout, preventive measures, testing, treatment and care, and (ii) strengthening pandemic preparedness, including prevention, detection and response. 2. Investing in children’s early years: To promote child development, restore and expand access to quality early years services, including maternal and nutrition services, in at least 30 IDA countries, of which 15 countries are among those IDA countries with the lowest Human Capital Index (HCI).a 3. Supporting core social service delivery systems: To address gaps exacerbated by the COVID-19 crisis, in at least 40 IDA countries, of which 10 are FCS, support access to core, quality, inclusive social services focused on: (i) social protection systems with a particular focus on vulnerable and underserved informal workers, and/or (ii) students’ return to school and accelerated recovery of learning losses, with a special focus on addressing constraints faced by girls, and/or (iii) children’s immunizations. 4. Expanding adaptive social protection and building resilience to shocks: To ensure inclusive and effective response against shocks and crises, especially among the poorest and most vulnerable, support at least 20 IDA countries’ resilience by building adaptive social protection systems, including the use of digital technologies. 5. Addressing learning poverty: To fill critical learning gaps and ensure improvements in learning outcomes, support at least 20 IDA countries, of which 10 are among those IDA countries with the lowest HCI, to reduce learning poverty by (i) measuring learning, with sex disaggregation and (ii) implementing core elements of the literacy policy package (e.g., effective literacy instruction, structured lesson plans, adequate reading materials for all children). 6. Expanding access to core services for persons with disabilities: To promote inclusive societies, support at least 18 IDA countries to meet the needs of persons with disabilities by implementing the principles of non-discrimination, inclusion, and universal access as per the Environmental and Social Framework, through projects in education, health, social protection, water, urban, digital development and/or transport. a The lowest HCI countries refer to the 30 IDA countries with the lowest Human Capital Index (HCI). - 49 - Human Capital Special Theme Policy Commitments continued 7. Supporting prevention of and preparedness for future pandemics: To strengthen health security by improving pandemic preparedness and prevention at the nexus of human, animal, and ecosystem health, including zoonotic diseases and anti-microbial resistance, support at least 20 IDA countries to mainstream One Health approaches. 8. Leveraging adequate, efficient financing for human capital: To strengthen public finance for human capital investments, support IDA operations in at least 20 IDA countries, of which eight are among those IDA countries with the lowest HCI through policy or administrative reforms impacting (i) the availability of resources, and/or (ii) the efficiency of expenditure management and/or (iii) the results-orientation of human capital investments. ii. CLIMATE CHANGE 94. IDA countries face disproportionate risks from the impacts of climate change, and the IDA20 Climate Change Special Theme offers an actionable package to scale up integration, scale, and impact. Over four IDA replenishment cycles, IDA has made significant progress in mainstreaming climate change and scaling up climate action in IDA countries. The focus has increasingly been on systemic approaches and concurrent measures to ensure transformational climate action. Vital lessons have also been learned across sectors and regions, and IDA20 draws on the solid track record and significant progress to date. Toward deepening the integration, scale, and impact of climate action, the IDA20 policy commitments will support large- scale climate interventions in adaptation and mitigation, prioritizing countries that have larger carbon emissions and deeper climate vulnerabilities. Collectively, the IDA20 policy commitments will help to address short and long-term adaptation needs, decarbonization objectives, and protection of biodiversity, natural capital, and ecosystem services, while stimulating growth and enabling a green recovery, and staying committed to harmony between humans and nature. 95. IDA20 continues to raise ambition toward a green future. Since Climate Change was introduced as Special Theme in IDA16, it has shaped IDA’s focus on climate outcomes through compounded policy commitments and RMS indicators. For instance, following the agreement of the IDA18 policy commitments, all World Bank lending operations have since been screened for climate impact, and in IDA19 a policy commitment was introduced requiring all projects with 20 percent or more climate Co-Benefits to include at least one climate-related indicator in the results frameworks. Building on this, IDA20 is introducing ambitious actions and measures to strengthen the outcome orientation of climate investments, including an additional incentive in the IDA20 RMS to move the focus from climate financing to climate results. 96. The IDA20 Climate Change Special Theme aligns closely with the recently launched WBG Climate Change Action Plan 2021-2025 (CCAP2). 86 In line with the CCAP2, IDA20 commitments aim to go faster to help countries integrate climate into their development agendas. IDA will help countries to repair the damage from the COVID-19 crisis while building the 86 World Bank Group. 2021. World Bank Group Climate Change Action Plan 2021–2025: Supporting Green, Resilient, and Inclusive Development. Washington, DC: World Bank Group. - 50 - resilience and inclusion needed to withstand future shocks and seizing economic opportunities to create more and better jobs in a greening global economy. The IDA20 policy package will support countries to make progress on several SDGs, including climate action (SDG13), affordable and clean energy (SDG7), industry, innovation, and infrastructure (SDG9), health (SDG3) and sustainable use of ecosystems and biodiversity loss (SDG15). 97. IDA20 will increase climate-related financing, with both a higher Climate Co-benefit target and intensified emphasis on climate adaptation. IDA20 will support efforts to increase Climate Co-Benefits to 35 percent, with adaptation finance comprising at least half of the total climate-related financing. The ambitious 35 percent target represents a significant increase from the 27 percent achieved through IDA operations on average during the first CCAP period (FY16- 20) and an even larger increase in dollar terms as the support through IDA20 is to be expanded. This should further be seen in light of the COVID-19 response and recovery work, which is shifting demand away from traditionally climate-focused sectors such as infrastructure, energy, agriculture, and water, toward operations in the health, education, social, and economic sectors as well as DPFs, and the design of green stimulus packages. In addition, Climate Co-Benefits for IDA PSW operations will increase to 35 percent on average to reflect the PSW’s catalytic role in greening economies. 98. Alignment with the Paris Agreement 87 and rollout of Country Climate and Development Reports (CCDRs) are significant innovations in IDA20. Starting in FY24, all new IDA20 operations will align with the Paris Agreement (See Box 3.8), and by the end of IDA20, all new IDA PSW real sector operations will be aligned with the Paris Agreement. As another substantial innovation in IDA20, CCDRs are being introduced as core analytics required for country strategies and are also monitored in the IDA20 RMS. As a critical diagnostic, the CCDRs will help integrate climate adaptation and mitigation strategies into national planning and investments and thereby fulfill the increased ambitions set out in CCAP2. To help clients maximize impact at the country level, IDA will enhance support to national planning, including by supporting more countries to update and implement Nationally Determined Contributions (NDC) and to develop complementary and mutually reinforcing Long-Terms Strategies (LTS) for low-carbon and resilient development. The aim of this national planning support is to integrate development and climate action consistent with the long-term goals of the Paris Agreement. The global response to the threat of climate change, including by holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, is critical. The importance of this 1.5°C global goal was recognized by many Participants. IDA20 will support clients in a way that is consistent with low- carbon and climate-resilient development pathways, aligned with the objectives of the Paris Agreement, and in agreement with clients’ NDCs, LTSs, or other national climate commitments. 99. IDA20 will deepen support to IDA countries in their efforts to deal with climate change by transitioning key systems. IDA20 will step up support to prioritize climate action across agriculture, food, water, and land; cities; transport; and manufacturing systems in IDA countries, which is imperative to address the causes and consequences of climate change. IDA20 87 UN Climate Change Conference of the Parties. 2015. Paris Agreement to the United Nations Framework Convention on Climate Change. Dec. 12, 2015, T.I.A.S. No. 16-1104. - 51 - will apply the Avoid-Shift-Improve approach to investments in the transport sector. 88 The WBG will step up support for climate-smart agriculture across the entire agriculture and food value chains, including the blue economy, via policy and technological interventions, using nature-based solutions where appropriate. IDA will support cities to become sustainable and climate-smart, putting in place policies and regulations to make cities more livable and sustainable, through land use planning, improving air quality, decarbonizing energy systems, promoting green and resource- efficient buildings and infrastructure, improving urban transport, strengthening solid-waste management, and improving water and sanitation. IDA’s support to the manufacturing sector will improve competitiveness of industries through business continuity planning, resource efficiency and circularity, and improved management of supply chains and industrial parks in line with the WBG Resilient Industries approach. 88 Avoid-Shift-Improve focuses on the demand side of transport, supporting a sustainable design which reduces the environmental impact of transport on the quality of life. - 52 - Box 3. 8. Aligning New Operations with Paris Agreement: A Key Innovation in IDA20 Aligning new operations with the Paris Agreement entails supporting IDA countries in ways that are consistent with low-carbon and climate-resilient development pathways. Paris alignment assessments will be conducted to determine whether an activity advances, hinders, or is neutral to the attainment of the goals of the Paris Agreement. Financing should not hinder efforts to limit global warming, recognizing that peaking of greenhouse gas emissions will take longer for developing countries. The WBG is developing rigorous methodologies to assess Paris alignment and is piloting these methods on investment lending projects. New methodologies are also being designed for other lending instruments, including policy-based lending and investments in financial institutions and funds. Paris alignment means that WBG support would be consistent with the goals of the Paris Agreement and guided by countries’ Nationally Determined Contributions (NDC), Long-Terms Strategies (LTS), and other national climate commitments. An IDA operation is considered Paris-aligned if it: a. actively contributes to decarbonization pathways (e.g., renewable energy) in line with the goals of the Paris Agreement; b. fully addresses climate risks in terms of adaptation and resilience; or c. neither harms nor contributes to climate outcomes but fully addresses exposure to climate risks and is consistent with country policies on low-carbon and resilient development in line with the goals of the Paris Agreement. Paris alignment means that IDA’s engagement in natural gas projects will be limited to where gas would have a role in the energy sector that cannot be substituted economically with cleaner alternatives. In IDA countries, natural gas investments may be aligned with the Paris Agreement where there is urgent energy demand and no short-term lower-carbon alternatives to reliably and economically serve such demand. Accounting for unique national circumstances, any IDA investments in new gas infrastructure will be in the midstream or downstream sector and assessed for consistency with NDCs, LTSs or other national development strategies to ensure that they are not leading to long-term carbon lock-in, as well as for consistency with the goals of the Paris Agreement, among other considerations. Operations that are considered universally non-aligned include the mining of thermal coal, electricity from coal, extraction of peat, and electricity from peat. To help phase out coal production and use, the WBG will also support decommissioning of coal mines and energy generation infrastructure reliant on coal. Assistance could include support to the retrenched workers, including retraining, and to the communities adversely affected by such decommissioning. 100. Addressing gender inequality and supporting more inclusive approaches for more effective, low-carbon and resilient development is an important focus of IDA. IDA20 is fully aligned with the three principles of the WBG CCAP2, which focus on people, nature, and partners. People must benefit from the transition to a low-carbon and resilient future. The WBG is committed to supporting client countries’ efforts for inclusive and gender-responsive climate actions, particularly through considering gender-differentiated impact and how they would impact resilience in NDCs and other national plans. In supporting key systems transitions and investing in nature and biodiversity and crisis preparedness, IDA will address the distributional and social impacts of shifts to a low-carbon and resilient economy. In doing so, IDA can help ensure that - 53 - women, youth, and marginalized and vulnerable groups – including people with disabilities, those discriminated against due to sexual orientation, and indigenous people among others – are protected from adverse impacts, can benefit equitably from the climate investments and contribute to green transition as agents of change. IDA20 will build capacity of national and local governments to work in partnership with communities while building the leadership potential of women and youth, through supporting mechanisms such as community-driven development that promote local leadership and meaningful citizen and community participation in all levels of climate decision making. 101. The energy sector is especially important to climate and development, and IDA20 will step up support for clean energy through a holistic approach. IDA20 will help countries to facilitate the transition to low-carbon, climate-resilient economies through the design of low- carbon energy sector development strategies, upstream work to support development of battery storage, and the provision of direct, indirect, and enabling policy support for renewable energy, while also recognizing the emerging environmental and social risks. This will involve work on techno-economic assessments and supporting basic regulatory structures for introducing new multifunctional technologies such as battery storage. To help IDA countries address challenges to energy access discussed in Section I, IDA20 will continue to provide direct, indirect, and enabling policy support to countries to achieve new or improved electricity service and access to clean cooking, including in IDA FCS. The number of beneficiaries of these supports will be measured and monitored as part of IDA20 RMS. IDA will also work with IDA countries to systematically explore available opportunities to identify realistic and socially inclusive approaches for phasing out fossil fuels. This entails supporting clients to think through other systemic barriers that need to be addressed in order to put them on a low-GHG emissions development pathway and enable a Just Transition from the current investment needs to low-GHG emissions options. 102. In a further innovation, IDA20 will introduce targeted support to the financial system to address climate-related risks and mobilize capital for low-carbon, resilient investments. IDA20 will integrate considerations of climate and environmental risk and opportunity into institutional banking, funds, and capital markets. IDA will also work with policymakers to identify climate and environmental risks to the financial sector, including through climate stress testing in the banking sector. IDA20 will support countries to ensure that financial sector policies and incentives are aligned with nature and biodiversity goals and support better measurement and management of biodiversity risk. Capturing the economic value of biodiversity and ecosystem services will be critical in channeling financial flows toward investments that contribute to conservation, restoration, and sustainable use of biodiversity and its services to people. 103. IDA20 will step up support to nature smart-policies and nature-based solutions in response to the global biodiversity crisis and the risks it poses to development and climate outcomes. Biodiversity and climate change are closely interlinked, with terrestrial and marine ecosystems serving as critically important carbon sinks, while climate change acts as a direct driver of land degradation, biodiversity and ecosystem services loss. Recognizing this, IDA20 connects the climate and biodiversity agendas and seeks to exploit synergies between them, to support a green, resilient, and inclusive development in IDA countries. To achieve this, IDA will: - 54 - a. Deepen support for nature-based solutions for the protection, restoration, and sustainable use of biodiversity and ecosystem services. Ecosystems and biodiversity services provide a lifeline to the poorest communities, particularly in coastal areas and near forests, buffering them from extreme climatic events and satisfying essential needs including the provision of nutritious food, biomass for energy, medicine and basic raw materials, ensuring a basic safety net and contributing directly to poverty alleviation and livelihoods. 89 An example is Bangladesh’s Coastal Embarkment Improvement Project (CEIP-1), which has contributed to the protection of more than 330,000 people, half of them women, by creating greater resilience in select polders. 90 b. Building on recent progress achieved, scale up support to integrated landscape, forest, seascape and watershed management, which is critical for many communities in IDA countries; c. Expand its focus to freshwater, coastal, ocean and marine ecosystems, which are covered for the first time under IDA policy commitments. IDA20 will prioritize integrated and sustainable management while contributing to blue growth. This will include addressing marine plastic pollution, which is a key concern for many IDA countries, including Small Island Developing States (SIDS) in the Pacific, Caribbean and Africa; d. Continue to support NBSAP implementation and/or updating under IDA20. This support will be maintained and monitored in IDA20 RMS. The WBG is developing, by the IDA20 MTR, a methodology to identify, monitor, and track nature-positive WBG investments in support of biodiversity and ecosystems services; e. Support IDA countries with implementing their national priorities on biodiversity and climate change agreements in the context of global frameworks such as the Convention on Biological Diversity 91 and Paris Agreement to respond to these two intertwined crises; f. Address risks to nature, including land degradation, through investments under IDA20 and support nature-based approaches and innovative technologies for sustainable business models. Across the WBG, metrics and decision-support tools will be developed that are based on the best scientific data available and on economic analysis. Comprehensive wealth accounting, that includes biodiversity and ecosystem services, and integrated 89 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). 2019. Summary for policymakers of the global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. S. Díaz, J. Settele, E. S. Brondizio E.S., H. T. Ngo, M. Guèze, J. Agard, A. Arneth, P. Balvanera, K. A. Brauman, S. H. M. Butchart, K. M. A. Chan, L. A. Garibaldi, K. Ichii, J. Liu, S. M. Subramanian, G. F. Midgley, P. Miloslavich, Z. Molnár, D. Obura, A. Pfaff, S. Polasky, A. Purvis, J. Razzaque, B. Reyers, R. Roy Chowdhury, Y. J. Shin, I. J. Visseren-Hamakers, K. J. Willis, and C. N. Zayas (eds.). Bonn: IPBES secretariat. 90 CEIP-1 was designed to support the rehabilitation and upgrade of protection polders, areas of low-lying land reclaimed from the sea, to mitigate the effects of tidal flooding and frequent story surges. https://www.worldbank.org/en/results/2021/04/26/building-coastal-resilience-to-protect-lives-and-livelihoods- in-bangladesh 91 United Nations Conference on Environment and Development. 1992. Convention on Biological Diversity. Adopted in Rio de Janeiro, Brazil on June 5, 1992 - 55 - ecosystem-economy modeling together can maximize synergies between low-carbon and nature investments; and g. Engage with the private sector to support the achievement of critical biodiversity goals. IFC is in the preliminary stages of developing sector-wide approaches to integrate biodiversity considerations at the earliest stages of landscape planning, particularly for the agriculture and infrastructure sectors. IFC will work to develop new approaches and business models to support biodiversity finance and explore catalyzing private financing in its client markets, by creating value for a business. New and expanding markets that put a financial value on ecosystem services include carbon sequestration, watershed protection or natural disaster mitigation. IFC will help companies operating in these and other emerging markets understand, manage, and benefit from biodiversity. 104. Through the Climate Change Special Theme, IDA20 will also help IDA countries to build preparedness for disasters and crises, including food insecurity. The COVID-19 crisis has highlighted the value of wide-reaching, efficient emergency preparedness and response systems that can be swiftly activated to smoothen and lessen the impacts of a major shock, be it climate-related or otherwise. Early warning and evacuation systems remain underdeveloped in many IDA countries, despite the known benefits. IDA20 will support countries facing natural hazards or food crises to improve crisis preparedness and response capacity by strengthening institutional and planning frameworks and/or physical infrastructure. This will include good public financial management systems for crisis preparedness. IDA20 will help countries to access and use the best available data, information, and tools, including through digital technologies, to strengthen preparedness through key early warning systems. Strengthened drought, flood, and famine early warning systems, as well as disease surveillance systems, will be the focus of programming to boost resilience for vulnerable populations. - 56 - 105. Participants endorsed the strategic approach of the Climate Change Special Theme and the ambitious package of policy commitments outlined below. Climate Change Special Theme Policy Commitment 1. Increasing Climate Co-Benefits: IDA’s Climate Co-Benefits share of total commitments will increase to 35 percent, on average over FY23-FY25, with at least 50 percent for adaptation. For IDA PSW operations, Climate Co-Benefits will increase to 35 percent of IFC and/or MIGA own account commitments under such operations, on average. 2. Aligning all IDA operations with the Paris Agreement: Starting in FY24, all new World Bank IDA operations will align with the Paris Agreement. By the end of IDA20, all new IDA PSW real sector operations will be Paris aligned. Support will be provided to at least 30 countries to develop Country Climate and Development Reports and at least 50 countries to develop, update and/or implement Nationally Determined Contributions or Long-Term Strategies. 3. Transitioning key systems for adaptation and mitigation: Support at least 50 countries (including at least 20 FCS) to develop inclusive climate policies and increase investment in climate adaptation and mitigation in at least one key transition system (i.e., agriculture, food, water and land; cities; transportation; and/or manufacturing), including community-led climate investments in at least 15 countries. 4. Sustainable energy for all: Facilitate development of low-carbon energy sector development strategies and policies in at least 20 countries (including at least eight FCS) and development of battery storage in at least 15 countries (including at least 10 FCS); provide direct, indirect, and enabling policy support for at least 10 gigawatts (GW) of renewable energy (including at least one GW in FCS). The support would cover on-grid, off-grid, and distributed renewable energy. 5. Scaling-up green financing: Support at least 20 countries (including at least five FCS) to revise their financial regulatory frameworks to manage climate and environmental risks and to mobilize capital for a low-carbon and resilient economy. 6. Enhancing biodiversity and ecosystem services: Implement nature-based solutions, including landscape, seascape and watershed restoration and management or forest restoration and sustainable forest management, in at least 20 countries to support biodiversity and ecosystem services. 7. Strengthening management of fresh water, coastal and marine ecosystems: Support at least 25 countries to implement integrated and sustainable management of freshwater, coastal and marine ecosystems, including by addressing marine plastic pollution. 8. Increasing crisis preparedness and response: Support at least 25 countries (including at least 10 FCS) facing natural hazards or food crises to improve their crisis preparedness and response capacity by strengthening related institutional and planning frameworks and/or physical infrastructure. This support should include improving climate data and information services (such as hydromet and early warning systems) in at least 10 countries. - 57 - iii. FRAGILITY, CONFLICT AND VIOLENCE 106. The development challenges facing IDA FCS are especially dire. Even before COVID- 19, the increasing concentration of poverty in IDA FCS meant that IDA would need to sustain focus on the FCV Special Theme for some time. Now that IDA FCS have been especially hard hit by COVID-19, the potency and urgency of these challenges are even greater. While the political, economic, and social impacts of COVID-19 in FCV settings are yet to fully materialize, it is clear that IDA20 must place FCV issues front and center of both the immediate and longer-term development response, including its response to broader conflict prevention and peacebuilding approaches, to ensure a green, inclusive, and resilient future, both for IDA FCS and other countries. 107. FCV has been an IDA Special Theme since IDA15 and has evolved and increased ambition over subsequent replenishment cycles. The World Development Report 2011 coincided with IDA16 and called for a paradigm shift in operational engagement and financial assistance for IDA FCS for confidence building and flexible responses. Over IDA17 and IDA18 financing to IDA FCS increased substantially and new allocations were introduced to incentivize prevention and support transitions out of fragility. Decentralization of staff and focus on partnerships, including with the UN and other partners around the humanitarian, development, and peacebuilding (HDP) nexus, have been a key priority throughout. In IDA18 the Facetime Index was introduced to support a policy commitment on increasing the footprint in IDA FCS, and in IDA19 a policy commitment and related RMS indicator was introduced to build capacity to leverage field-appropriate technology for digital data collection and analysis thereby addressing constraints of monitoring and data collection in IDA FCS. IDA20 will further enhance ambition across country programming by introducing specific FCS sub-targets across all special themes. 108. Participants welcomed IDA20’s focus on deepening implementation of the WBG FCV Strategy, including through tailored country engagements, as well as the IDA FCS sub- targets embedded across the Special Themes. IDA20 will continue to integrate FCV drivers and sources of resilience in country engagement products, based on Risk and Resilience Assessments (RRAs) and other diagnostics, to strengthen FCV sensitive programming at country and regional level. Participants welcomed the enhanced ambition of IDA FCS sub-targets, as well as IDA’s commitment to deepen work on making core governance functions more resilient in 40 percent of IDA FCS, 92 building on the work in IDA19, but with stronger focus on facilitating effective, inclusive, and responsive public services and enhance transparency and accountability to help build trust and strengthen the social contract. Addressing crisis preparedness will also remain a critical part of IDA20 engagement for IDA FCS facing multiple, simultaneous crises. Building on IDA19, IDA20 will scale-up engagement on addressing transboundary drivers of FCV and strengthening regional crisis risk preparedness in the Sahel, Lake Chad, the Horn of Africa, and Central Asia, including around the HDP nexus. 109. IDA will sustain its efforts to scale-up resources for IDA countries experiencing FCV, including through the FCV Envelope. The share of IDA resources/commitments going to IDA countries facing FCV challenges has increased fivefold since IDA16, reaching over 39 percent of total IDA resources with more than half of the grants going to IDA FCS/V. 93 The FCV Envelope 92 The 40 percent target reflects the support provided during IDA20 alone, unlike the cumulative target in IDA19. 93 As of June 30, 2021. - 58 - has quickly become an essential tool to support IDA FCS to seize opportunities and respond with greater agility to their evolving needs (see Box 3.9). IDA20 will continue the strategic features of the FCV Envelope and maintain the strong focus on incentivizing eligible countries to align their dialogue and programming more directly with the objectives of conflict and violence prevention, preserving development gains, and managing successful transitions out of fragility through strong diagnostics and FCV sensitive country engagement aligned with the humanitarian-development- peace nexus. Box 3. 9. Implementing Conflict Prevention in Mozambique Rapidly increasing insecurity in Northern Mozambique led to a rethink of the World Bank’s country engagement. A constructive Government-led dialogue with the international and national stakeholders on the country’s conflict risks and resilience supported access to the Prevention and Resilience Allocation opening new opportunities for engagement. Importantly, this led to shifts in the WBG portfolio and operational footprint in Mozambique, targeting the IDA program more closely to support conflict prevention. A spatially differentiated portfolio approach was introduced to support the re- establishment of the state’s presence in areas adjacent to the conflict, besides prevention efforts to minimize risk of conflict escalation. The recalibration and emergency response to the conflict supports provision of essential services to displaced populations and members of host communities, complemented by operations in the “buffer zone” adjacent to the conflict areas to ensure access to basic services, livelihoods, and economic opportunities. These efforts will be reinforced by the recently completed Recovery and Peacebuilding Assessment for Northern Mozambique, carried out by the EU, UN, WBG, and AfDB under the 2008 Joint Declaration on Post-Crisis Assessments and Recovery Planning, which underpinned the Government’s Integrated Development and Resilience Strategy for the North. Coordinated support under the Strategy is key to ensuring coherence among partner efforts in support of the Government, in order to chart a pathway towards peace and stability in the North. 110. The WHR will continue to play a key role in an inclusive recovery by incentivizing eligible countries to find socio-economic opportunities for both refugees and their host communities. IDA20 will maintain the key features of WHR, with continued emphasis on government policy commitment, resilient and inclusive recovery, social cohesion, and gender equality. Further, the WHR will continue to support operations that promote policy change and strengthen country systems for crisis preparedness and inclusion, such as by expanding access to social protection and health systems by refugee populations. While the WHR is targeting refugees and their hosts, IDA will continue to highlight the plight of other forcibly displaced populations, including internally displaced persons (IDPs) and returnees. Here, the focus will be on ensuring inclusive approaches that seek to address the displacement-related vulnerabilities that hinder those forcibly displaced from benefitting from development opportunities available to their compatriots. 94 94 The World Bank recently published “A Development Approach to Conflict-Induced Internal Displacement” which outlines the key principles and agenda for strengthening the institution’s engagement on IDPs in alignment with the report and recommendations from the UN High Level Panel on Internal Displacement. - 59 - 111. Participants welcomed IDA’s continued efforts on FCV staffing. IDA’s strong ground presence is core to its comparative advantage and has been instrumental to scaling-up and tailoring its programming in IDA FCS, despite the crisis. IDA is on track to meet its original IDA19 commitment over a three-year period (FY21-23), 95 and efforts to continue to strengthen its ground presence will be prioritized in IDA20 as part of FCV Strategy implementation and broader institutional efforts. The World Bank will continue to monitor staffing in IDA FCS (as well as the Facetime Index indicator in the RMS) and roll out additional measures to attract both local and international talent to FCV settings and ensure their wellbeing, safety, and security. 112. Mobilizing private sector investment in IDA FCS presents both challenges and opportunities, and Participants welcomed the enhanced ambition of the PSW. Through the PSW, IFC and MIGA continue to seize opportunities for private investments in the toughest markets, with nearly half of PSW commitments in IDA19 supporting investments in IDA FCS. For example, the Africa Medical Equipment Facility supports smaller healthcare providers in Sub- Saharan Africa, and the Base of the Pyramid Program focuses on microfinance institutions and micro, small, and medium enterprises (MSMEs). Experience from investing in IDA FCS markets has shown that on-the-ground presence, reliability of long-term funding, and sustained engagement are key to project identification and implementation. IDA20 will further strengthen PSW programming in underserved segments and IDA FCS, to identify green, resilient, and inclusive private sector solutions that can spur crisis recovery. In doing so, IFC and MIGA will focus more on new clients with higher risk profiles in order to achieve scale in riskier markets affected by the crises and FCV. 113. Partnerships will continue to be central to IDA’s work in all countries, but especially in FCS. Partnerships play a mission-critical role in FCS, including with the UN agencies, IMF, MDBs, the European Commission, bilateral partners, regional institutions such as the African Union, and Civil Society Organizations (see Box 3.10). 96 The WBG will continue to work closely and systematically with partners, including in the preparation of RRAs, Recovery and Peacebuilding Assessments and other FCV assessments. These partnerships will continue to be a priority in IDA20, particularly around addressing the HDP nexus for enhanced impact, as outlined in the FCV Strategy. 97 Special attention will go to partnerships for crisis preparedness, resilience- 95 In IDA19, IDA committed to deploy at least 150 more GE+ staff, including extended term consultants, to IDA FCS locations and nearby locations to serve IDA FCS. The IDA19 target was subsequently adjusted downwards to 100, because IDA19 was shortened from three years to two. As of end-FY21, an additional 46 staff had been deployed in IDA19. Between FY19 and FY21, IFC opened 8 new offices in Sub-Saharan Africa, 5 of which in IDA-FCS (Chad, Mali, Niger, Somalia and Togo) and increased staff numbers in IDA-FCS from 69 as of FY19- end to 132 as of FY21-end. IDA is on track to meet the target of at least 150 by end-FY23, noting that recent developments in some FCS have necessarily entailed a reduction in the World Bank’s presence on the ground for reasons beyond its control, which will need to be taken into account going forward. 96 The World Bank has a structured partnership with the UN in more than 40 crisis-affected situations, including collaboration on analytics such as joint Recovery and Peace-building Assessments and RRAs. In the context of COVID-19, IDA partnered with several UN agencies, the Asian Development Bank and others to strengthen health systems, social safety nets and reach vulnerable communities in countries such as Papua New Guinea, Haiti, Niger, and Yemen. Furthermore, engagement with partners, such as the International Committee of the Red Cross, has helped enhance the World Bank’s effectiveness in insecure settings like Somalia and South Sudan. 97 The FCV Strategy outlines four measures especially focused on systematizing, operationalizing and incentivizing partnerships with humanitarian, development, security, and peacebuilding actors as well as with MDBs, regional organizations and civil society. - 60 - building, and COVID-19 vaccine rollout in order to leverage comparative advantages and deploy complementary technical expertise in fragile settings. Box 3. 10. World Bank - UNHCR Strengthened Partnership for Addressing Forced Displacement The World Bank and United Nations High Commissioner for Refugees (UNCHR) partnership provides complementary tools and approaches to support host countries and enhance refugee self-reliance as part of ongoing efforts to operationalize the United Nations’ Global Compact on Refugees. The partnership cuts across countries and themes. For example, in Uganda, IDA and UNHCR partner to support the government’s progressive “whole of society approach” to transition from humanitarian to government- run education, health and water systems. In Kenya, IDA and UNHCR surveyed the socioeconomic conditions in Kalobeyei, a settlement established to accommodate the growing population of refugees from South Sudan, to inform policies and programs advancing opportunities for girls and women; and promoting agriculture to prevent food insecurity. In addition, the World Bank / UNHCR Joint Data Center on Forced Displacement established in October 2019, is working to improve availability, quality, and access to socio-economic data and evidence on those affected by forced displacement. 114. Participants supported IDA20 simultaneous focus on addressing drivers of FCV and COVID-19 crisis response and recovery priorities. Achieving green, resilient, and inclusive development outcomes in IDA FCS will continue to require a differentiated and tailored approach. The IDA20 Special Theme of FCV is fully aligned with the FCV Strategy and includes a deliberate focus on (a) rebuilding human capital, including education, supporting vaccine deployment, and investing in shock responsive social services; (b) strengthening core governance functions and institutions for service delivery and enhanced capacity to prepare for and respond to crises; (c) creating jobs and economic opportunities, including in agriculture, for economic recovery and building social cohesion; (d) helping address tensions related to natural resources and environmental impacts in the face of climate change and food insecurity; and (e) closing gender gaps as a critical element of FCV prevention, focusing on women’s empowerment and agency, promoting women’s meaningful participation in conflict, prevention, and peacebuilding efforts, and supporting the inclusion of children, youth, and vulnerable and marginalized people and communities (including people with disabilities) in our efforts to recover from crisis and address FCV challenges. 115. IDA20 will deliver four foundational policy commitments under the FCV Special Theme, with additional commitments contained within other Special Themes. This policy package is underpinned by the IDA FCV financing toolkit and reinforces the implementation of the WBG FCV Strategy. - 61 - FCV Special Theme Policy Commitments 1. Operationalizing the FCV Strategy through better tailored country engagement: Reinforce implementation of the WBG FCV Strategy, by ensuring that all country engagement products a in IDA FCS demonstrate how the WBG program, in collaboration with relevant partners, help address FCV drivers and sources of resilience, based on FCV diagnostics and FCV sensitive portfolio analysis undertaken in Risk and Resilience Assessments or other FCV assessments. An FCV lens will continue to be integrated into relevant joint World Bank-International Finance Corporation Country Private Sector Diagnostics in IDA FCS. 2. Leveraging outcomes for both refugee and host communities: Work with government counterparts and other partners to ensure that, by the end of IDA20, at least 60 percent of the countries eligible for the Window for Host Communities and Refugees (WHR) will have implemented significant policy reforms related to the WHR purposes, as identified through the Refugee Policy Review Framework. 3. Strengthening core governance institutions: Support 40 percent of IDA countries in FCS (with active portfolios) to establish and/or strengthen core government functions that facilitate effective, inclusive, and responsive public services, enhance transparency and accountability, and promote resilience and trust, including by partnering with key national and international stakeholders. 4. Addressing transboundary drivers of FCV and recovering from crisis: Implement regional initiatives in the Sahel, Lake Chad, the Horn of Africa, and Central Asia to help address transboundary drivers of FCV, support transboundary resilience, and/or strengthen regional crisis risk preparedness and mitigation together with key relevant partners. IFC will commit to leverage its local presence to scale up upstream and advisory service activities in these areas, leading to enhanced private sector opportunities. a Country engagement products include Country Partnership Frameworks (CPFs), Country Engagement Notes (CENs) and Performance and Learning Reviews (PLRs). 116. Participants also welcomed the IDA FCS sub-targets embedded under other Special Themes, as follows: a. The Human Capital Special Theme includes an IDA FCS sub-target to support access to core, quality, inclusive social services and addressing gender and human capital gaps. Several policy commitments have a special emphasis on countries with low HCI, which include many IDA FCS. b. Under the JET Special Theme, policy commitments with IDA FCS sub-targets support resilience of financial systems; increasing private investment in IDA FCS; job creation and economic transformation in high potential sectors; improved agricultural productivity and food security; and affordable access to broadband. - 62 - c. Under the Climate Change Special Theme, policy commitments with IDA FCS sub-targets support countries to design and adopt policies that encourage investment in climate adaption and mitigation in key transition sectors; renewable energy and low-carbon development; scaling up green financing and strengthened crisis preparedness and response. d. The Gender and Development Special Theme includes a sub-target on GBV, to complement the measures outlined under Human Capital for advancing gender equality in FCV contexts. The overall package focuses on tackling gender disparities in access to economic opportunities, social protection and services, gender and forced displacement, and gender and conflict prevention. iv. GENDER AND DEVELOPMENT 117. Gender and Development has been an IDA Special Theme since IDA16—reflecting a broad consensus that closing gaps between women and men, and boys and girls are essential for reducing poverty and boosting shared prosperity. IDA’s approach to gender has significantly evolved over time, including by better monitoring progress toward outcomes, integrating gender analysis and programming in country strategies, improving the collection of sex-disaggregated data, and launching work to address gaps in fragile and conflict-affected situations. Since IDA18, the WBG Gender Strategy 98 has served to further raise ambitions toward gender equity, moving beyond gender mainstreaming, and focusing on identifying outcomes and monitoring results on closing gender gaps. These were further accelerated by policy commitments since IDA17 as well as RMS indicators to track action to close gender gaps, with significant guidance and training for staff and inbuilt incentives for managers. 118. Gains achieved over decades are now at risk as a result of COVID-19 crisis. In the years leading up to 2020, IDA countries mobilized to narrow gender inequalities in IDA countries with significant progress in many domains. Persistent gaps, particularly in terms of economic empowerment, persisted, but the trajectory was promising. COVID-19 both halted and set back progress. Women were more likely than men to lose their jobs in the first months of the crisis; 99 and data from 49 countries show that women entrepreneurs resumed their business operations at a slower pace than men entrepreneurs. 100 Evidence from multiple countries and data source consistently points toward an increase in intimate partner violence and other forms of GBV during the pandemic, with digital platforms expanding potential channels for such abuse and harassment, especially during periods of lockdowns. Overall, the COVID-19 crisis has exposed serious weaknesses in terms of safety net coverage for informal workers (particularly for women in urban areas), economic inclusion, availability of affordable and quality childcare, access to finance, insurance, digital technology, skills, and comprehensive GBV prevention and response services. 98 World Bank Group. 2015. World Bank Group Gender Strategy (FY16-23): Gender Equality, Poverty Reduction and Inclusive Growth. Washington, DC: World Bank Group. 99 Kugler, M., M. Viollaz, D. Duque, I. Gaddis, D. Newhouse, A. Palacios-Lopez, M. Weber (2021). “How Did the COVID-19 Crisis Affect Different Types of Workers in the Developing World?” Policy Research Working Paper No 9703; Washington, DC.: World Bank Group. 100 Torres, J., F. Maduko, I. Gaddis, L. Iacovone and K. Beegle (2021). “The Impact of the COVID-19 Pandemic on Women-Led Businesses.” Paper Presented at the 2021 Jobs and Development Conference, Washington, DC.: World Bank Group. - 63 - 119. Stepped-up efforts on gender equality are a critical element of a green, resilient, and more inclusive recovery, and looking forward, IDA can play an important role to help client countries implement policies and programs that address gender gaps. Women are at the center of the GRID agenda as powerful agents of change. Fostering equitable and durable recovery will require understanding how investments can create job and entrepreneurship opportunities for both women and men in sectors transitioning to a low-carbon footprint, including renewables, and that would avoid sex-segregation and low-productivity employment for women. Adaptive social protection can help women smallholders and subsistence producers to transition to climate friendly approaches in agriculture, fisheries, and other sectors. Delivery systems for government services can also be designed as more inclusive and effective through, for example, leveraging digitalization. And, finally, tax and expenditure systems that enable countries to meet the SDGs can be strengthened to support gender equality objectives. 120. IDA20 will deepen the implementation of the WBG Gender Strategy and focus on impact across the strategy’s four pillars. IDA has been an important anchor for the WBG Gender Strategy and has helped to accelerate progress across the four pillars including: (i) improving gaps in human endowments; (ii) removing constraints for more and better jobs; (iii) removing barriers to women’s ownership; and (iv) control of assets and enabling women’s voice and agency. IDA20 will sharpen the focus on results and support policy actions that build on gains achieved in IDA19, particularly in terms of strengthening and bringing innovative approaches to scale. 121. The IDA20 policy commitments continue to support key priority areas in IDA19 as well as new emerging priorities in light of the COVID-19 crisis with a high level of ambition. IDA20 includes ambitious targets in the areas where gender gaps have been exacerbated by the COVID-19 crisis, including in access to sexual and reproductive and adolescent health services and in women’s return to paid employment. IDA20 will continue to focus on women’s empowerment through increased access to quality sexual and reproductive, adolescent, and maternal health services. Building on the work in IDA19 and earlier cycles, IDA’s efforts will better enable women to make decisions about their sexual and reproductive lives and equip them to build their own human capital and that of their families. There is a strong link between sexual and reproductive health, family planning and women’s empowerment, and IDA operations have supported reproductive health over consecutive IDA cycles in line with the WBG Gender Strategy. The Bank follows the WHO definition of reproductive health that includes family planning as a core component and encompasses a broad set of age ranges. Building on the evidence generated through pilots supported by the Bank’s multi-donor trust fund partnerships, IDA20 will also work to strengthen social protection systems and make them gender-responsive. IDA19’s focus on closing the gender digital divide will be enhanced through accelerating digitalization of identification systems and government payment platforms, as well as pursuing opportunities with the private sector to provide phones and access to information and communications technology infrastructure. In addition, digitalization can enhance women’s access to climate services, including information, hydromet services, and early warning systems, helping build their resilience to climate shocks. 122. IDA20 builds on significant progress in increasing IDA financing for GBV prevention and responses across regions and sectors. IDA has developed a portfolio of projects that dedicate substantial funding to prevent and/or respond to GBV in areas such as health, education, trade and - 64 - competitiveness, transport, and social development. For example, the Zambia COVID-19 Emergency Response project seeks to address high prevalence of GBV through training of community volunteers and health workers, investing in community outreach on GBV and available services, and help improve GBV-related data collection. IDA20 will build on these experiences to expand the scope of previous support in more countries to strengthen national frameworks on GBV prevention and response services, including psychosocial services in clinics, hospitals, and schools, as well as access to justice, women’s rights, and safety. Moreover, the WBG continues to mitigate sexual exploitation and abuse (SEA) and sexual harassment (SH) risks associated with projects as continuum of efforts to implement the recommendation of the WBG Global Task Force on Gender-Based Violence since IDA18. The Good Practice Note on addressing SEA/SH in IPF involving Major Civil Works, 101 lays the framework for SEA/SH risk mitigation at all levels of project related risk and is implemented as part of the Environmental and Social Framework. 123. IDA20 features new policy commitments to improve the quality and affordability of childcare and foster productive economic inclusion. As outlined above, the pandemic has widened gaps in women’s labor force participation. The new policy commitments will focus WBG efforts across sectors to help address pandemic’s impact on female employment and make sustainable progress to close gaps in the labor force. Improved access to affordable and quality childcare will target the lowest income workers and parents and address a binding constraint to labor force participation; while scaling up productive economic inclusion programs (extending access to credit, savings, and insurance) will focus on female-owned firms and female farmers, especially the poorest, through social safety nets, urban development, and community development programs. IDA 20 also features a new policy commitment to support the implementation of fiscal policy and budget systems to close gender gaps. 124. The Gender and Development Special Theme features strong linkages with other special themes to ensure that women and men benefit from IDA interventions. The Human Capital Special Theme strongly supports scaling up productive economic inclusion for women with a focus on education through its learning poverty and productivity commitment. The priorities under JET Special Theme support women’s economic empowerment through labor earning and ownership, control over assets and will continue to emphasize sex disaggregated data collection. Under the Climate Change Special Theme, IDA will also help countries to develop inclusive climate policies to integrate gender equality into mitigation and adaptation actions and implement gender-responsive actions in NDCs. Closing gender gaps remains a critical element as countries recover from crises and address FCV challenges. Strengthening systems and building trust in institutions will be key to making progress in FCV settings. 101 World Bank. 2020. Addressing Sexual Exploitation and Abuse and Sexual Harassment (SEA/SH) in Investment Project Financing involving Major Civil Works. Second Edition. Washington, DC: World Bank Group. - 65 - 125. Participants welcomed the policy commitments under Gender and Development Special Theme. Gender and Development Special Theme Policy Commitments 1. Investing in women’s empowerment: Support women’s empowerment, through restoring and expanding access to quality and affordable sexual and reproductive, adolescent, and maternal health services, in at least 30 IDA countries, of which 15 countries with the lowest HCI. 2. Scaling productive economic inclusion: Incorporate specific productive economic inclusion components (e.g., producer cooperatives/associations, digital finance/savings and service delivery, entrepreneurship support, social care services, regulatory frameworks, and/or links to market support) for women in at least 35 IDA social protection/jobs, agriculture, urban, and/or community development projects. 3. Expanding childcare: Support at least 15 IDA countries to expand access to quality, affordable childcare, especially for low-income parents. 4. Supporting medium and high skilled employment opportunities for women: At least 35 percent of IDA20 infrastructure operations (transport, energy, and water) will include actions to create employment opportunities for women in medium and high skilled jobs in these sectors. 5. Closing gaps in digital technology: At least 30 IDA20 operations in digital development, financial inclusion, and agriculture will increase women’s access to and usage of digital technology to close gender gaps in access and usage. 6. Strengthening women’s land rights: At least 70 percent of IDA20 operations with land activities in (i) land administration, (ii) post-disaster reconstruction and resilient recovery, and (iii) urban development will include specific actions to strengthen women’s land rights. 7. Increasing support to prevention of and response to GBV: Support at least 10 IDA countries to strengthen national policy frameworks for prevention of and response to GBV, and in at least 15 IDA countries, of which five are FCS, support GBV related services in health systems, and implement GBV prevention and response protocols as part of safe and inclusive educational institutions. 8. Implementing fiscal policy and budget systems to close gender gaps: Support at least 10 IDA countries to make their fiscal policy and budget systems more inclusive and gender responsive by, for example, budget reforms, removing discriminatory provisions from tax legislation and/or monitoring the effectiveness of public spending, including where appropriate through fiscal incidence analysis for equality policies. - 66 - v. JOBS AND ECONOMIC TRANSFORMATION 126. In IDA20, the JET agenda is as critical and urgent as ever. Even before the COVID-19 crisis, around 20 million jobs needed to be created each year for the next decade in IDA countries just to keep pace with youth entering the labor market. In 2020, lost working hours total around 255 million full time jobs – four times the losses during the 2009 global financial crisis, 102 and 97 million people (30 million of which in IDA + blend countries, or 21 million in IDA only countries) fell back into poverty. 103 The impact across countries varies, with SIDS and FCS facing the deepest declines. Inequality is rising across sectors and locations, and informal, women-owned, and small firms are being hit disproportionately. 127. The crisis is affecting all the productivity channels associated with economic transformation. Macro-fiscal underpinnings have been challenged as revenues have fallen, while demand on fiscal spending has risen steeply. Trade in services remains low. Global value chains are still adjusting, with some seeking to diversify production locations, and as a result opening opportunity for nearshoring among countries seeking to become competitive locations to attract investors. Upgrading and adopting technology, particularly digital technology, has been an avenue to raise countries’ productivity and access larger markets. However, the ability to access affordable and reliable solutions varies by country. The ability to reallocate resources to more productive uses has also been disrupted by the downturn and rise in uncertainty. To achieve a speedy and inclusive recovery, firms and workers will need to reposition and reskill themselves. 128. In IDA20, the JET Special Theme will support IDA countries to address both the immediate needs of minimizing job losses and mitigating risks, while also helping them to seize longer-term job creation opportunities in a world transformed by COVID-19. JET is focusing on how greening sectors (including the financial sector), innovation and skills can be sustainable and create more green jobs, contribute to achieving the CCAP2 and the GRID agenda. To achieve such priorities, the enhanced IDA20 JET framework (see Figure 3.4) is focused on the enabling foundations to incentivize the expansion of private investment and job creation, including a sound macro-financial stability and governance, a conducive business enabling environment with open and contestable markets, and open access to infrastructure and financial services. 102 International Labor Organization. 2021. ILO Monitor: COVID-19 and the World of Work. Seventh Edition. Geneva: ILO. 103 Mahler et al. 2021. Updated Estimates of the Impact of COVID-19 on Global Poverty: Turning the corner on the pandemic in 2021? World Bank Blogs: Data Blogs, June 24, 2021; World Bank. 2021. Global Economic Prospects, June 2021. Washington, DC: World Bank - 67 - Figure 3. 4. IDA20 JET Framework Sector Diversification & Connectivity & Integration Upgrading & Technology Competitiveness Expand into new sectors with Increase scale and access to Raise quality and efficiency with potential for jobs and higher larger markets through trade and better skills, technology adoption, value-added activities, move into foreign direct investment, innovation, entrepreneurship more sustainable production urbanization, firm-linkages Enabling Foundations to Expand Private Investment Ensure incentives to invest are sound: Macro-financial stability; strong governance; enabling business environment with open and contestable markets; access to resilient and inclusive infrastructure and financial services 129. IDA20 will focus on inclusive digitalization, investments in agriculture and food security, and addressing constraints to MSMEs. JET will explore new economic opportunities in an inclusive manner, including those emerging for MSMEs in the digital economy space. JET’s support to agriculture productivity complements the commitments on climate change and climate- smart agriculture under the Climate Change Special Theme. Adopting digital solutions can raise efficiency and open a new range of activities that can be done safely. This is part of the broader WBG support for digital public goods, including deploying quality open-source digital technology solutions. In Mozambique, IDA is supporting the improvement of the government’s capacity to deliver digital services, and to foster the growth of domestic digital businesses. Indeed, government responses to COVID-19 have expanded the use of new technologies, and the JET agenda will continue to support such expansion, noting that closing the digital divide is particularly pressing in FCS. Support to improving agriculture productivity is being widened to address structural issues that are at the root of food and nutrition security as well as the modernization of agribusiness value chains to raise farmers’ incomes and enable economic transformations as rural incomes increase. 130. The IDA20 JET Special Theme also offers some new policy commitments in quality infrastructure and financial sector resilience that will be essential to help countries build back better. IDA countries need support to ensure quality infrastructure investments, including in rural areas, particularly given that needs remain high and that fiscal space is tight. Priority will be given to strengthening infrastructure governance in countries with lower Country Policy and Institutional Assessment (CPIA) governance scores. The ongoing Infrastructure Governance Assessment Framework will also cover social considerations, and engagements in IDA20 will address constraints identified through diagnostic assessments. IDA20 will further support resilient financial systems given the critical role they play for an efficient recovery. This support will be complemented by the commitment under the Climate Change Special Theme to green the financial sector by expanding investments in green sectors while addressing risks to assets posed by climate change. 131. IDA20 will identify and prioritize high-potential sectors that can drive job creation in a post-COVID-19 world. Such high-potential sectors include climate and environmentally friendly sectors with high potential for green growth and green jobs, as well as those that traditionally employ women and youth. Priority engagements in IDA20 will be identified in - 68 - consultation with country counterparts as per IDA’s country-driven model, leveraging WBG analytical methodologies, such as the Country Private Sector Diagnostics (CPSD). Key criteria include potential for productivity growth, private sector-led sustainable growth and creation of inclusive and green jobs, or where women or youth work. Green sectors will be getting heightened attention. 132. Amid concerns for growing inequality, IDA20 will look also at the quality of jobs and skills, including the importance of ‘Decent Work’. 104 Participants welcomed IDA’s emphasis on raising productivity and people’s earnings, improving working conditions, strengthening workers’ voice, and improving the stability of work, consistent with the goals of Decent Work. All Bank-financed projects recognize the importance of respecting the rights and safety of workers including by implementing the Labor and Working Condition standard under the ESF, considering the labor market context, particularly among the bottom 40 percent. The Better Work partnership between the ILO and International Financial Institutions, including the WBG, illustrates the complementarities of these approaches. Better jobs for migrants and for host communities remains a concern and will be a key focus (see Box 3.11). This support is complemented by the Human Capital Special Theme, which covers the broader skills agenda, while JET Special Theme will focus specifically on addressing workers’ skills and supporting them to meet the shifting demand and ensure their employability. Deepening skills, digital skills and those needed to access green jobs or jobs in green sectors, will be important both to ensure the growth of high-potential sectors and that more workers can access these employment opportunities. Box 3. 11. Tackling Economic Migration Approximately 74 million international migrants, about a quarter of international migrants worldwide, have originated in IDA countries. Emigration flows from small island nations are particularly sizeable. Internal, rural-urban migration is several times larger. Remittances sent by migrants provide a financial lifeline to many IDA countries. In 2021, remittances to IDA countries are on track to reach $137 billion, larger than the sum of Official Development Assistance and Foreign Direct Investments combined. Even as IDA countries host nearly 19 million economic migrants, most migrants from IDA countries are in high-income destination countries where migrants provide significant benefits related to increased labor supply and reduced skill scarcity. Economic migration, internal or international, is driven by income and employment gaps, inequality, demographic imbalances, and environmental changes. Climate- driven migration often takes the form of internal migration. In line with the IDA18 and IDA19 policy commitments, the WBG has applied a ‘migration lens’ to 50 Systematic Country Diagnostics, Country Partnership Frameworks, and Country Engagement Notes in IDA countries (including home, host, and transit countries) where migration has a significant economic and social impact. Migration-related activities are addressing facilitation of remittances, mobilization of diaspora resources through diaspora bonds, development of skills and certification, providing access to health, education, and housing to migrants in IDA host countries, and supporting the return of stranded migrant workers. Experience from these projects suggests that IDA’s knowledge, finance and Box continues on the next page 104 ILO defines decent work as the sum of the aspirations of people in their working lives. This involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men. https://www.ilo.org/global/topics/decent-work/lang--en/index.htm. - 69 - Box 3.11 continued convening power can be usefully deployed to support safe and legal labor mobility, reduce remittance costs, and mobilize diaspora resources for development, and these efforts will continue under IDA20. The WBG will continue to apply a migration lens to ASAs and lending operations in IDA “migration countries” where emigration, immigration, transit migration, or remittance flows have critical significance in the economy.a In IDA20, the JET Special Theme, supported by other Special Themes (including FCV, focusing inter-alia on forced displacement), will continue to take a balanced approach to address poverty, inequality, lack of jobs, lack of security, and climate change that are drivers of migration, as well as to support host countries. In addition, the World Development Report 2023 will focus on cross-border mobility. The report will leverage data and research on the macro- and micro-determinants of mobility to analyze current trends and possible scenarios and will review policy responses by both origin and host countries. It will put forward a set of recommendations to operationalize its findings, which will be relevant for several IDA20 Special Themes. ______________ a Leveraging Economic Migration for Development: A Briefing for the World Bank Board. World Bank. Washington DC. September 2019. 133. In IDA20, the PSW will continue to catalyze private sector investment, job creation and create markets in the most fragile and difficult settings, based on sound principles including the transparency and disclosure of information. A strong WBG collaboration targeted at mobilizing the private sector by supporting IFC and MIGA’s high ambitions in IDA, and particularly in IDA FCS, is essential for a rapid recovery and to the JET agenda in IDA20. The PSW is an effective tool to support IFC and MIGA’s high impact investments in challenging IDA and FCS markets that would not otherwise be commercially viable. The window also plays an important role in crowding in additional sources of financing, as well as in setting high standards. In IDA20, IFC will continue expanding its Own-Account annual commitment investments in LIC-IDA countries and FCS in line with the 2030 Capital Package commitments, including with IDA PSW’s support. IFC’s efforts focused on Upstream engagement will lay the groundwork for private solutions once the immediate crisis impacts subside, along with the use of blended finance to support investments in the most challenging markets. The PSW’s governance framework is guided by sound principles, including around the transparency and disclosure of information on PSW-supported projects, in accordance with IFC and MIGA’s respective information disclosure policies, and complemented by additional information on expected impacts and subsidies utilized. - 70 - 134. Participants welcomed the following IDA20 policy commitments under the JET Special Theme. JET Special Theme Policy Commitments 1. Supporting resilient financial systems for recovery: Strengthen the resilience, inclusion and depth of the financial system in 15 IDA countries, including five FCS, based on FSAP or similar financial sector analytics to support a robust and inclusive recovery. 2. Leveraging One WBG to increase private investments: In the context of IDA PSW operations involving IFC, IFC will aim to increase the share of its commitments in FCS-IDA17 & LIC-IDA17 countries, reaching 12-17 percent of its Own-Account commitments on average during the IDA20 cycle, with an intent to reach an Own-Account annual commitment of 14-17 percent in the last fiscal year of IDA20. Consistent with this aim, targeted platforms and programmatic approaches for IDA PSW-eligible countries will be supported to develop and encourage scalable initiatives across sectors in these countries, including those targeted to support small and medium-sized enterprises, for trade finance purposes, in support of gender, and for climate friendly investments focused on mitigation and adaptation. 3. Delivering quality infrastructure investments in countries with governance challenges: Support at least 20 countries, of which 10 have a score of 3.0 or less on CPIA Dimension 16 covering transparency, accountability and corruption, to identify the governance constraints to the development, financing, and delivery of quality infrastructure investments, with particular attention to resilience, climate and environment, and regulatory practices, transparency and integrity, to inform the adoption of policies and/or regulations for enhanced infrastructure governance in a majority of these. These will be undertaken through Infrastructure Sector Assessments Programs and standalone governance assessments that support improved delivery of quality infrastructure services. 4. Creating better jobs and sustainable, inclusive economic transformation in high potential sectors: Support interventions to address market failures and remove constraints in sectors with high potential for the private sector to drive sustainable and inclusive economic transformation and create better jobs, or where women and youth disproportionately work, in 20 IDA countries, of which five are FCS, including through upstream activities and informed by data and private sector development diagnostics such as the joint IFC-WB Country Private Sector Diagnostics (CPSD), and selected in agreement with country authorities. 5. Boosting agriculture productivity, value chains and food security: Improve agricultural productivity, including through the promotion of climate-smart agriculture, and strengthen sustainable agri-business value chains with high potential for growth and better jobs addressing modernization and food and nutrition security in 15 IDA countries, including five FCS, in ways that are inclusive, expanding training for agricultural workers to access better jobs, and encouraging private sector opportunities. - 71 - JET Special Theme Policy Commitments continued 6. Expanding broadband access and usage for jobs of the future: To close the connectivity gap, IDA will support 17 IDA countries, including those which will benefit from IFC’s support under the IDA PSW to develop digital infrastructure, to increase inclusive, secure and affordable access to and usage of broadband connectivity, among which are six landlocked countries, four Small States and nine FCS. 7. Positioning more firms for recovery, including through the adoption of digital technology: Support programs in 15 IDA countries, to strengthen private sector recovery and transformation that are well targeted, inclusive of SMEs and support the adoption of digital technologies, with monitoring to capture distributional impacts and effectiveness. To support this, IFC will increase its support to digital infrastructure, with consideration of cyber security and related issues, and its venture capital work in IDA and FCS countries. 8. Boosting institutional capacity to improve data for policy decision-making: Support 34 IDA countries including those with ongoing statistical operations (i) to strengthen institutions and build capacity to reduce gaps in the availability of core data for evidence-based policy making, including disaggregation by sex and disability where appropriate; and (ii) to increase resilience of statistical systems, including through investments in digital technology and high-frequency monitoring capabilities. SECTION IV: VOLUMES AND TERMS OF IDA ASSISTANCE IN IDA20 135. Participants called for an ambitious IDA20 financing package to ensure that IDA countries have the resources they need to respond to the COVID-19 pandemic and build back better and greener from the crisis. Participants acknowledged the need to scale up IDA programming to compensate for recent development losses and support countries’ return to a positive trajectory toward achieving the Twin Goals and the Sustainable Development Goals (SDGs). They agreed that IDA20 can reach even further than IDA19 on an exceptional basis to meet the surging demand for IDA resources, deliver even more support to countries to address the widespread effects of the crisis, and lay the foundations for a successful recovery. 136. IDA is among the world’s most efficient and effective vehicles for international development to support good country outcomes, as discussed in Section II: Delivering Long- Term Outcomes in the Poorest Countries. Among the factors that set IDA apart is its hybrid financial model that leverages scarce shareholder resources with market debt in order to increase financing for IDA countries. Enabled by IDA’s hybrid financial model, IDA20 provides the most ambitious package for IDA thus far, made possible by continued strong Partner support and additional IDA balance sheet optimization measures. - 72 - 137. Several balance sheet optimization measures (BSO) are introduced in the IDA20 financing framework to stretch the reach of Partner contributions for the benefit of IDA countries. a. These BSO measures focus on enhancing the efficiency of IDA’s capital utilization and remain consistent with the leveraging principles agreed by IDA Participants in IDA18 (see also paragraph 163), as well as IDA’s financial risk management policies. b. The measures include the introduction of new financing terms, namely: 50-year credits for IDA-only yellow light countries (with exemption for Small States) and concessional shorter-maturity loans (SMLs). These new financing terms are discussed in further detail in this section, along with the terms of IDA20 financing, which otherwise remain unchanged from IDA19. c. Balance sheet optimization also results from the continued and prudent lengthening of the maturity of IDA’s market borrowings. Building on IDA’s recent successes in capital markets including the lengthening of the maturities of IDA bonds, IDA will continue to expand its long-dated market borrowings program in IDA20 and include its impacts as part of the IDA20 financing framework. Given the long duration of IDA’s fixed-rate loan assets, lengthening the duration of IDA’s borrowings would reduce IDA’s interest rate risk and provide capital release impacts that open up additional capacity for IDA to support client countries. Management assured IDA Participants that variations, if any, in the amount of capital release achieved will not result in a call for additional donor resources in IDA20 or downward adjustments to the size of future replenishments. 138. Participants endorsed this approach and agreed to an IDA20 replenishment of $93 billion (equivalent to SDR65.1 billion),105 financed by new contributions and a $11 billion carry-over from IDA19, which together represent a 10 percent increase in real terms compared to the previous cycle. They acknowledged that the IDA19 allocation framework has proven to be robust and called for it to be retained in IDA20, while enhancing it with several innovations to respond to the needs for volume on concessional terms. The breakdown of the IDA20 use of resources is summarized in Table 4.1 below: 105 At the IDA20 foreign exchange reference rate of SDR/US$ 1.42934. - 73 - Table 4. 1. IDA20 Use of Resources In US$/ SDR a billion Original IDA19 in IDA20 nominal terms b US$ SDR US$ SDR Total (I + II + III) 82.0 59.3 93.0 65.1 Of which, concessional resources 73.8 53.4 84.3 58.9 I. IDA Country Allocations 60.5 43.7 62.8 44.0 Of which, FCV envelope (estimates) 7.5 5.4 8.8 6.2 Memo items: I-a. Regular Term Financing 60.5 43.7 54.0 37.8 I-b. Shorter Maturity Loans (SMLs) (concessional) 0.0 0.0 8.8 6.2 II. IDA Windows 20.5 14.8 30.2 21.1 1. Regional Window 7.6 5.5 7.9 5.6 2. Host Communities & Refugees Window 2.2 1.6 2.4 1.7 3. Crisis Response Window 2.5 1.8 3.3 2.3 4. Scale-up Window (SUW) 5.7 4.1 14.1 9.9 4-a. Regular SUW (non-concessional) 5.7 4.1 6.3 4.4 4-b. SUW-SML (concessional) 0.0 0.0 7.8 5.5 5. Private Sector Window (non-concessional) 2.5 1.8 2.5 1.7 III. Arrears Clearance 1.0 0.7 0.0 0.0 Memo: Total SMLs (PBA + SUW) 0.0 0.0 16.6 11.6 Grant element ($) 43.7 31.6 48.1 33.7 Grant element: Concessional IDA (%) c 59.3% 57.1% Grant element: Overall Replenishment (%) d 55.0% 53.2% Note: Figures in billions. a Based on the agreed IDA19 SDR/US$ exchange rate of 1.38318, and IDA20 SDR/US$ exchange rate of 1.42934. b Original IDA19 as presented in the Deputies’ report. c Includes SUW-SMLs (concessional). d Excludes PSW. A. CONCESSIONAL IDA FINANCING 139. Participants underscored that concessional resources are essential to respond to the elevated financing needs resulting from the crisis while preserving debt sustainability. In IDA20, concessional resources will constitute 91 percent of the overall financing envelope, through the country allocations, inclusive of the Fragility Conflict and Violence (FCV) envelope, and four concessional windows. i. COUNTRY ALLOCATIONS 140. Participants agreed to maintain country allocations as the cornerstone of IDA20 financing. Country allocations are derived from the Performance-Based Allocations (PBA) system, including the FCV envelope, and are central to IDA’s country-based model. In IDA20, country allocations will comprise 68 percent of the envelope, down from 74 percent in the original IDA19 replenishment, with the volume of $62.8 billion representing a one percent increase in real terms. The PBA mechanism allows for strategic allocation of IDA’s limited resources to meet country needs, while incentivizing strong policies and performance. In IDA20, the PBA system will remain largely the same as in IDA19. With the introduction of new financing terms in IDA20, as outlined in paragraphs 154 to 158 below, some IDA countries will now receive a small portion - 74 - of their country allocations as concessional SMLs, and IDA-only yellow light countries (with the exception of Small States) will receive their country allocations as 50-year credits. In a global aid landscape that is characterized by proportionally decreasing unearmarked resources at the expense of sector-specific funds, country allocations will continue to provide critical support to all IDA- eligible countries for priority investments toward a green, resilient, and inclusive future. With IDA20 country allocations, IDA will sustain its role as the largest source of unearmarked concessional finance in the world, reinforced by in-country presence in almost 70 countries, ensuring that programming focuses on the key development priorities of IDA countries. Implementation arrangements for the IDA20 PBA system are outlined in Annex 3. 141. Participants agreed to scale up the FCV envelope in IDA20, to complement the PBA with enhanced support for countries facing situations of fragility, conflict, and violence. Given the good progress achieved in IDA19, the FCV Envelope will retain its key features, which include in-cycle identification, eligibility-based processing and annual reviews, PBA-aligned financing, and full integration into country portfolios. The IDA20 FCV envelope will be composed of the same three allocations: The Prevention and Resilience Allocation, the Remaining Engaged during Conflict Allocation, and the Turn-Around Allocation (TAA). IDA19 policies and eligibility criteria will be retained. Countries eligible in IDA19 will not need to undergo a new eligibility review, as their continued eligibility will be confirmed through the existing annual review process. The number of eligible recipients is expected to increase only slightly in IDA20, and Management estimates that the FCV envelope will allocate around $8.8 billion during the cycle. 106 Implementation arrangements for the IDA20 FCV envelope are outlined in Annex 4. 142. Participants acknowledged the need to maintain strong incentives to reduce debt vulnerabilities in IDA countries, by continuing to link country allocations to sustainable borrowing practices. Building on the successful implementation of the Sustainable Development Finance Policy (SDFP), IDA20 will continue to provide a strong framework for countries to move toward more sustainable borrowing practices. This will be achieved by linking IDA country allocations to the satisfactory implementation of concrete Performance and Policy Actions (PPAs) aimed at enhancing debt transparency, fiscal sustainability, and debt management. As per the SDFP framework, countries that do not satisfactorily meet their PPAs will be subject to a set-aside of their country allocation in the following year, with one additional year to implement the PPAs and recover the set-aside, or irrevocably lose it. Details of the SDFP and the system of set-asides are outlined in the SDFP policy document. 107 143. Participants agreed to maintain the various measures in place to support Small States to respond to their unique development challenges. In IDA20, all IDA countries will continue to receive a minimum base allocation of SDR15 million per year (equivalent to $21.4 million),108 106 FCV Envelope amounts are indicative depending on eligibility of countries and take-up. If not subscribed, unused amounts will be reallocated to all IDA countries through PBA or inter/intra-regional reallocations in the second half of the IDA period. The IDA20 FCV envelope will also allow for the provision of up to $1.0 billion in potential core funding for Syria through the TAA, subject to eligibility and performance. 107 World Bank. 2020. Sustainable Development Finance Policy of the International Development Association. Washington, DC: World Bank. Please also see World Bank. 2021. Sustainable Development Finance Policy (SDFP) of the International Development Association: early findings from the first year of implementation. Washington, DC: World Bank. 108 Using IDA20 foreign exchange reference rate of SDR/US$1.42934. - 75 - which was increased by 275 percent in IDA18 from SDR4 million in IDA17. This particularly benefits Small States for which country allocations would otherwise be significantly lower due to their small population size. Small States will also continue to benefit from the enhanced linkages to resilience under the Crisis Response Window (CRW), as well as specific provisions under the Regional Window. Small Island Economies (SIEs) – a subset of Small States – will continue to receive special treatment from IDA pursuant to IDA’s SIEs Exception Policy. 109 Seventeen SIEs with GNI per capita above the IDA operational cut-off will continue to receive IDA concessional credits on Small Economy Terms, which represent the most favorable terms that IDA offers. These measures will help IDA continue supporting robust country engagements in Small States in IDA20, accompanied by dedicated capacity building to ensure absorption capacity and the efficient use of resources. ii. CONCESSIONAL WINDOWS 144. Participants recognized that the IDA19 window architecture has proven to be robust and should be maintained, with some refinements. Refinements to concessional windows focus on ramping up support in areas that are critical to the IDA20 agenda, including through increased flexibility and stronger externalities under the Regional Window, softer terms for yellow light countries under the WHR, elevated Early Response Financing (ERF) in the CRW, and a new concessional portion of the SUW offering concessional SMLs. As in IDA19, the concessional windows will be critical to achieving IDA’s overall ambition and making progress on key priorities and policy commitments. 145. The Regional Window (RW) will continue to bring countries together to address regional challenges and help catalyze regional integration investments that are essential to the IDA20 agenda, including financing for COVID-19 vaccines, therapeutics and diagnostics (VTD). Financing for regional integration continues to be in high demand in all regions. Countries are seeking to integrate their recovery efforts to build back better and greener to (a) consolidate investments in infrastructure to strengthen economic corridors, create jobs, and pursue transformation; (b) facilitate trade and market development across countries, especially in the energy sector; (c) better manage shared natural resources given climate uncertainty; and (d) strengthen human capital toward increased job creation with a focus on women and youth. The RW will also continue to support regional initiatives to address FCV drivers, particularly in the Sahel, Lake Chad, the Horn of Africa, and Central Asia. In IDA20, the existing mechanisms of the RW will be leveraged to bolster vaccination efforts and provide stronger incentives, by topping up country allocations dedicated to financing VTD or providing support to regional or global procurement mechanisms. 110 The objectives of the window are well aligned with the global and 109 The SIE Exception Policy, first adopted in 1985, was revised in March 2019 to include (a) criteria for considering requests from IBRD-only SIEs to be reclassified as IDA-eligible SIEs; and (b) criteria for calibrating the terms on which IDA concessional resources are provided to SIEs. In accordance with the revised policy, the borrower status of the Republic of Fiji was reclassified from “IBRD-only” to “Blend Country” status, effective as of July 1, 2019. 110 Financing support for COVID-19 vaccines, therapeutics and diagnostics (VTD) will be channeled primarily through country allocations (PBA), with support under the RW to be extended using the existing RW framework – i.e., in the form of additional resources made available to countries when operations meet the window eligibility criteria described in Annex 6. The amount of resources dedicated to VTD or regional/global procurement - 76 - regional public good nature of vaccination programs, and its implementation arrangements provide a tested and well-suited framework to incentivize additional investments in financing for such programs. 111 146. To respond to high demand, Participants agreed to scale up and increase the flexibility of the RW, which will be sized at $7.9 billion in IDA20, a one percent increase in real terms compared to IDA19. Participants agreed to provide flexibility to access RW financing by allowing two-country operations in all regions, as long as they demonstrate significant externalities. 112 Already, RW operations are expected to generate positive spillovers or mitigate negative ones across country boundaries among participating countries, but these objectives will be strengthened by hardwiring this requirement into the Project Development Objective-level indicators. 113 The combined effect of these policy changes is expected to stimulate demand in countries that have no or few IDA neighbors, particularly in East Asia and the Pacific, Latin America and the Caribbean, Europe and Central Asia, and South Asia, while improving overall project quality. Implementation arrangements for the IDA20 Regional Window are outlined in Annex 6. 147. Participants agreed to increase financing levels and maintain existing policies for the Window for Host Communities and Refugees (WHR). With COVID-19 exacerbating inequalities, the WHR will help countries with significant refugee populations to narrow the gaps between refugee and host communities and within communities, while supporting key priority areas for crisis recovery and building back better. These include expanding access to health, deploying COVID-19 vaccines, education, and employment, especially for women and girls. IDA19 WHR policies will be maintained in IDA20. The eligibility criteria will remain the same and countries that were eligible in IDA19 will not need to re-do their eligibility process in IDA20. While the number of refugees living in IDA countries has increased from 8.9 million in 2017 to 9.5 million in 2020, refugees continue to largely concentrate in the same IDA countries, with the number of WHR-eligible countries expected to increase slightly with some new entrants in the Africa and East and Central Asia regions, while overall needs are likely to rise for refugees and hosting communities. The size of the WHR will increase in nominal terms compared to IDA19, i.e., $2.4 billion for IDA20. IDA yellow light countries will benefit from softer terms under the WHR, with fifty percent grants and fifty percent 50-year credits in IDA20 (instead of 50 percent mechanisms will depend on specific demand from IDA countries (i.e., there will be no pre-defined set-aside for such programs), while ensuring an appropriate balance with other regional integration investments. 111 See for instance the multiple RW-funded projects under the Regional Disease Surveillance Systems Enhancement (REDISSE) program in West Africa. 112 Up to now, three countries are required to participate, but only two if one is FCS. The policy also allows the Regional Window to finance operations located in a single country when it is clearly expected to generate transformational impacts at the regional level or contribute to global public goods. Single country operations are subject to early Board consultation. 113 This change builds on recommendations from the Independent Evaluation Group (IEG). See Independent Evaluation Group. 2019 Two to Tango: An Evaluation of World Bank Group Support to Fostering Regional Integration. Washington, DC: World Bank. - 77 - grants and 50 percent regular IDA credits in IDA19). 114 Implementation arrangements for the IDA20 WHR are outlined in Annex 5. 148. Participants agreed to increase the size of the Crisis Response Window and include a high-level cap for ERF. The CRW has long been a key part of IDA’s crisis management toolkit and has again proven its usefulness since the beginning of the COVID-19 crisis. It remains particularly valuable to IDA Fragile and Conflict-affected Situations (FCS), which often face overlapping crises and have received 63 percent of CRW allocations to date. While the CRW is mainly for crisis response, it will also support the IDA20 priorities of building back better and crisis preparedness, as CRW-financed response interventions typically integrate elements to strengthen resilience to future shocks. Sizing the CRW is challenging due to the varied crises it covers, and difficulties in predicting the timing and severity of crises. For instance, underutilization in IDA16 led to reallocations out of the window, while demand was very strong in IDA17. Usage was uneven in IDA18, with modest utilization in the first two years before demand surged as COVID-19 struck. In IDA20, the CRW will be sized at $3.3 billion, a figure that reflects both the need to protect countries against increased vulnerability to shocks, especially food crises, while ensuring a progressive transition from COVID-19 crisis response to building back better and greener in the outer years of IDA20. Within this envelope, up to $1 billion will be made available for ERF, twice as much as in IDA19 initially. 115 The ERF cap on pre-allocated Contingency Emergency Response Components will be raised from $12.5 million to $25 million per country. Implementation arrangements for the CRW are outlined in Annex 7. 149. Participants agreed to provide additional concessional resources under the Scale-Up Window (SUW) as SMLs to scale up investments in building back better and greener in IDA20. The new SUW-SMLs will be sized at $7.8 billion and will be offered on the new financing terms described in paragraph 155. They will provide additional volume of concessional resources to countries that are IDA-only countries at low or moderate risk of debt distress, as well as Gap and Blend countries (except Small States that are at high risk or in debt distress). The SUW-SMLs will provide resources for countries to further scale up investments aligned with the IDA20 overarching theme of building back greener, more resilient, and more inclusive. As per existing SUW practices, each Region will be provided a notional indicative allocation of SUW-SMLs for IDA20, based on the regions’ share of country allocations among all eligible countries, which will then be refined based on actual demand and pipeline review. An analysis of the future impact of SUW-SMLs suggested high demand from eligible clients and limited effects on debt sustainability. SUW financing on SML terms could even result in improvements in debt burden indicators under some scenarios. This is the case when additional SML financing would be used to substitute for less concessional external financing. However, to further reduce debt risks, access to SUW-SMLs for countries with debt vulnerabilities will be subject to compliance with PPAs under the SDFP. Access to SMLs (both in country allocations and SUW) for IDA-only yellow light countries will 114 The WHR offers all red light countries regardless of country group 100 percent grants for the WHR portion of WHR operations. IDA-only green light countries receive 50 percent grants and 50 percent credits for their WHR portion of WHR operations. Gap and Blend countries that are not in red light status receive 50 percent blend credits and 50 percent grants for their WHR portion of WHR operations. All WHR countries will continue to contribute at least 10 percent of their PBA toward WHR operations on their given Regular PBA terms. 115 The ERF helps finance operations to respond to slower-onset crises at an earlier stage of progression. This contrasts with the traditional “last resort modality” of the window, to support response to natural hazards, public health emergencies, and severe economic shocks. - 78 - be conditioned to an ex-ante Debt Sustainability Analysis confirming that SMLs will not worsen debt sustainability risks. Management will closely monitor the use of SMLs and provide a review for the IDA20 Medium Term Review (MTR). Implementation arrangements for the SUW-SMLs, including on eligibility and prioritization criteria, are outlined in Annex 9. 150. Participants also agreed to build in flexibility to adjust the size of each window within a range of 10 percent in IDA20, in accordance with demand during the period with close monitoring by Management and reporting to IDA Participants. iii. ARREARS CLEARANCE 151. Participants agreed that no set aside to support the possible reengagement of currently inactive IDA countries will be allocated, but that, should meaningful progress arise in any country in arrears during the IDA20 period, Management would call for a reallocation discussion with Participants. Three countries remain in arrears to IDA with cumulative IDA arrears of $523 million as of September 30, 2021, and total arrears to the World Bank of $1.6 billion.116 Management will continue to monitor the situation in these countries and will propose reallocations in consultation with Participants should the opportunity for re-engagement emerge in IDA20. B. NON-CONCESSIONAL IDA FINANCING 152. Participants acknowledged the need to maintain the regular SUW to provide countries with healthy debt outlooks the opportunity to pursue selected high-impact operations at IBRD terms. The demand for SUW’s non-concessional financing continues to grow among eligible countries, although rising debt vulnerabilities may render more countries ineligible. 117 Based on these counter-balancing factors, regular SUW will be sized at $6.3 billion in IDA20 and allocated across regions based on the respective share of country allocations of their eligible countries. All operations to be considered for regular SUW financing will continue to be carefully screened to ensure that they would not exacerbate debt vulnerabilities in recipient countries. Country eligibility criteria remain the same as in IDA19. Implementation arrangements for the non-concessional regular SUW are outlined in Annex 9. 116 Eritrea and Syria each have recent IDA arrears of $139 million and $13 million respectively and are currently not eligible for arrears clearance set-aside support, as this was limited to countries with protracted arrears that had accrued before the inception of arrears clearance set-aside support in 2007. Zimbabwe’s arrears are older and larger at $371 million to IDA and $1.051 billion to IBRD, and while not currently eligible for debt relief under the heavily indebted poor countries (HIPC) initiative, the possibility that Zimbabwe could qualify for HIPC has been retained in the relevant HIPC ringfencing exercise. Options for Zimbabwe’s re-engagement are under consideration including via HIPC and non-HIPC routes. 117 Because regular SUW financing is offered on non-concessional terms, country eligibility is based on a country’s risk of debt distress and in compliance with IDA’s Sustainable Development Finance Policy (SDFP) and the IMF’s Debt Limit Policy. Countries subject to a Low-Income Country Debt Sustainability Framework (LIC-DSF) are eligible only if they are at moderate or low risk of debt distress. Eligibility of countries that are not subject to a LIC-DSF is considered on a case-by-case basis, subject to confirmation of compliance with the SDFP and the IMF’s Debt Limit Policy. At the beginning of IDA19, 36 countries were eligible for SUW, based on their risk of debt distress status. In FY21, Guinea-Bissau lost eligibility when it was assessed as a country at high risk of debt distress. The remaining 35 countries continue to be eligible. - 79 - 153. Participants agreed to maintain the size of the Private Sector Window (PSW). The PSW will be sized at $2.5 billion to sustain momentum in catalyzing impactful private sector investments in IDA-only and IDA FCS markets with enhanced focus on Micro, Small and Medium Enterprises (MSMEs) and MSMEs incubators, in collaboration with IFC and MIGA. The size of the PSW may be reviewed at the IDA20 MTR, especially if more resources are needed to scale up private sector investment in COVID-19 vaccine production or large-scale infrastructure investments to build back better. The IDA20 PSW will build on the strong implementation progress and valuable lessons learned during IDA18 and IDA19, such as additional upstream efforts on project development and preparation, working as one WBG with IFC and MIGA. Moreover, in IDA20, IFC and MIGA will complement the existing project information disclosed to the public with systematic impact and mobilization data for projects benefiting from PSW support. Subject to the approval of individual investment transactions by the IDA Board of Executive Directors, up to $100 million out of PSW Blended Finance Facility resources will be used to support MSMEs incubators and accelerators. Through a “fund of funds” approach, the PSW will co-invest with IFC and de-risk all investors in a fund as needed to catalyze investments, make funds viable, and ensure adequate return for incubators/early-stage fund managers. As part of this initiative, PSW will establish a very high-risk tolerance seed capital fund of up to $15 million. This will be fully funded by the PSW and eligible to invest, without IFC’s co-investment in the initial stages, up to $1 million in each emerging fund manager, helping them to establish a track record to assist in mobilizing private investment capital in the future. Implementation arrangements for the IDA20 PSW are outlined in Annex 8. C. LENDING TERMS 154. Participants agreed to introduce new financing terms in IDA20 to prioritize grants for countries facing acute debt risks, while providing additional volumes for all other countries to meet their heightened financing needs. Two changes to financing terms are introduced in IDA20: (a) the provision of 50-year credits for IDA-only yellow light countries in lieu of the grant-credit mix in IDA19, and (b) the introduction of concessional SMLs in two parts of the financial architecture. The first portion of SMLs will be allocated through the country allocations based on the PBA system. As such, IDA-only yellow light countries, IDA-only green light countries, as well as all Gap and Blend countries (unless they are red light Small States) will receive a small portion of their country allocations as SMLs but continue to receive the most of their country allocation as regular-term PBA. The second portion of SMLs will be allocated through the SUW, enabling around two-thirds of IDA countries to secure additional volumes of concessional resources on a demand basis to support high-impact investments aligned with the IDA20 agenda. SMLs – both PBA-SMLs and SUW-SMLs – are planned to be offered only during IDA20. 155. The 50-year credits will be for IDA-only yellow lights (with exception for Small States), 118 and have 50-year final maturity, 10-year grace period, and zero interest or service 118 In IDA20, IDA-only yellow light Small States would continue to maintain their current financing terms of 50 percent grant and 50 percent credits on Small Economy Terms (40-year maturity, 10-year grace period, 0.75 percent service fee), considering the larger impact this change would have on the concessionality they receive compared to other yellow light countries and the particularly high vulnerability they face. Countries that would fall under this exception include Vanuatu, Solomon Islands, and Comoros. - 80 - charges. SMLs have 12-year final maturity, 6-year grace period, and zero interest or service charges, making them concessional. The proposed SML terms compare well with other types of financing available to IDA countries. For instance, they provide a slightly longer maturity profile and a higher degree of concessionality than the IMF’s Rapid Credit Facility, which has been the IMF’s primary instrument for COVID-19 related financing for LICs. They also compare well to recent market bonds issued by IDA countries. 119 These two lending terms will help IDA countries to fight COVID-19 and scale up support as countries build back better and greener, while protecting debt sustainability. See Figure 4.1 for how both terms compare with existing IDA terms, and products of other multilateral development banks (MDBs) for IDA countries. Figure 4. 1. New IDA20 Terms Compared with Products of Other MDBs for IDA Countries 90% Proposed 80% 50-year IDA credit IDB 70% IDA SIE Concessional AsDB Regular Concessionality (at 5 percent) Proposed 60% AsDB Project Shorter- Policy Loans AfDF Maturity Loans Regular 50% Loan AfDF Advance 40% 35% Concessionality Threshold 30% AfDF IDA Blend AsDB Blend Blend IMF IMF Rapid 20% Standby Credit Credit Facility 10% Facility 0% 6 8 9 15 16 18 19 20 22 23 27 27 30 40 Average Maturity (Years) Source: Concessionality figures represent WB staff estimates. Note: Over the six-month period of March to August 2021, only a few IDA-only countries accessed the Eurobonds market, these had borrowing terms that provided no concessionality, measured at 5%. 156. Aside from these new terms and minor exceptions outlined below, Participants agreed to retain IDA19 financing terms and the existing grant allocation framework in IDA20. For IDA-only countries (i.e., not Gap or Blend), grant eligibility will continue to be based on their risk of external debt distress. IDA-only countries at low risk of debt distress (green light) will continue to receive their concessional IDA resources mostly on regular credit terms along with a small portion in SMLs under country allocations. IDA-only countries at moderate risk of debt distress (yellow light) will now receive their IDA resources mostly as 50-year credits along with a small portion in SMLs. 120 IDA-only countries at high risk of debt distress (red light) will continue to receive their country allocations fully on grant terms, subject to a ceiling of $1 billion per fiscal 119 Based on the illustrative case of approximately $6 billion of Eurobonds accessed by four IDA-eligible countries in the last 6 months, these had on average 12 years average maturity, and roughly 7 percent interest rate. 120 This represents a change to IDA19, where IDA countries at moderate risk of debt distress (yellow light) received their IDA allocations 50 precent on credit terms and 50 percent on grant terms. - 81 - year per country. 121 Gap and Blend countries will continue to borrow mostly on Blend terms along with a small portion in SMLs. 122 IDA20 financing terms are summarized in Figure 4.2. Figure 4. 2. Overview of IDA20 Financing Terms Lending Group Financing Terms* Risk of External Non-Small States Debt Distress Small States High Risk or in Debt • Grants • Grants Distress IDA-only Countries • Half grants and half 40-year • 50-year credits (new) Moderate Risk credits (small economy) • 12-year concessional SMLs • 12-year concessional SMLs • 38-year credits (regular) • 40-year credits (small economy) Low Risk • 12-year concessional SMLs • 12-year concessional SMLs Gap Countries • 30-year credits (blend) • 40-year credits (small economy) • 12-year concessional SMLs • 12-year concessional SMLs** Blend Countries Note: *Some of the financing terms are adjusted under IDA Windows. This includes: (i) Softer terms for most country lending groups under the WHR, (ii) flexibility to adjust terms in case of natural disasters under the CRW, (iii) provisions to offer credits and grants to regional organizations under the RW, (iv) credits at IBRD terms and SMLs under the SUW, and (v) IFC and MIGA financing terms under PSW. Please refer to Windows implementation arrangements in Annex for more details. ** Except for red light Small States. 157. As mentioned above, the bulk of IDA20 country allocations will continue to be offered on regular PBA terms, 123 with a small portion offered as SMLs. SMLs are expected to account for no more than 14 percent of the total IDA20 country allocations. All countries - other than IDA- only red light countries which will continue to only receive grants, and Gap and Blend red light Small States which will continue to only receive small economy terms - will receive a share of their country allocation as PBA-SMLs. The share of PBA-SMLs will be higher for IDA-only green light countries, Gap and Blend countries than for IDA-only yellow light countries, for which half of the financing is currently provided in grants in IDA19. SDFP set-asides applied to country allocations would be taken first from SML allocations. Finally, financing terms for any additional country allocations secured through the FCV envelope will follow the same composition and share of terms as the PBA. Details on financing terms under the PBA and the FCV envelope are provided in Annexes 3 and 4. 121 The ceiling applies to country allocations, including both Regular PBA and PBA-SMLs, but not windows, and can be backloaded/frontloaded within the replenishment period. 122 Red light Gap and Blend Small States are not eligible for SMLs. 123 Regular PBA financing excludes concessional SMLs. - 82 - 158. Financing terms for IDA windows will remain the same as in IDA19, with the exception of the SUW and WHR. As outlined in paragraphs 149 and 152, the SUW will comprise two distinct parts in IDA20: the non-concessional regular SUW, where eligible countries can borrow on IBRD terms (group A), and the new concessional SUW-SML, offered at the terms described in paragraph 155. With regards to the WHR, to offer higher concessionality to IDA-only yellow light countries, these countries will be able to finance window operations at 50 percent grant / 50 percent 50-year credits, as opposed to 50 percent grant / 50 percent regular IDA credits in IDA19. Details on financing terms for IDA windows are outlined in the respective window implementation arrangements provided in the Annexes. D. LOCAL CURRENCY FINANCING 159. Participants discussed possible options to increase access to local currency financing for IDA clients, with due consideration to IDA’s financial sustainability and following the discussion of the first paper in October 2020. 124 Due to the underdeveloped capital markets in IDA countries and the non-existence of liquid swap markets, as well as the large size and long tenor of IDA loans, and sovereign nature of IDA clients vis-à-vis private sector focused MDBs, discussions centered around solutions that would be scalable, affordable to IDA countries, and would not create additional cost or risk for IDA. 160. Participants agreed to introduce fully hedged local currency financing in IDA20 with a pilot completed by IDA20 MTR. IDA will provide local currency financing, including currencies not pegged to EUR and USD, to its borrowing members by hedging its exposure through issuing local currency bonds or entering cross currency swaps with market counterparties, subject to market availability. The fully hedged local currency lending requires no or little support from IDA capital (over and above lending in hard currencies) and will not affect IDA’s lending volumes. The existing IDA lending under SUW currently has a conversion clause in the loan agreement, which already allows non-concessional loans to be converted into other currencies with a hedging opportunity. In addition, IDA will add into IDA’s concessional loan agreement an option to allow borrowers to convert their concessional borrowing into one of the SDR component currencies or non-SDR local currency terms as well, at their choice and subject to market availability. This conversion option could help borrowers improve their debt situation, and particularly those who borrow through SMLs. 125 The hedging costs will vary based on the currency, maturity, availability of market counterparts, and prevailing economic environment. Similar to the existing conversion option in its non-concessional financing, IDA will offer the fully hedged local currency concessional loans on a cost-recovery basis. Implementation arrangements will be developed in due course. 161. Participants acknowledged that unhedged local currency lending would require significant amount of additional risk capital to fully absorb the exchange rate risk and would reduce IDA’s overall regular lending volumes unless accompanied by additional donor 124 See World Bank. 2020. Local Currency Financing in IDA Countries, Stage One Report to IDA Deputies. Washington, DC: World Bank Group. 125 Assuming more affordable price and market hedging opportunity for SML with a shorter maturity and lower coupon rate. - 83 - contributions. They encouraged IDA to continue considering the unhedged local currency lending in the future when it can deploy the necessary capital and if there would be demand for it. SECTION V: MANAGING IDA’S FINANCIAL RESOURCES 162. Participants endorsed a total replenishment of $93 billion (equivalent to SDR65.1 billion) for IDA20, 126 which would constitute the IDA20 commitment authority envelope, financed by new contributions and a $11 billion (equivalent to SDR7.7 billion) carry-over from IDA19. A. COMMITMENT AUTHORITY 163. Participants supported continuation of sustainable leveraging in the IDA hybrid financial model guided by the key leveraging principles agreed in IDA18: a. Maintaining IDA’s ability to continue fulfilling its mission in the future, as well as predictability and stability of financing for clients; b. Ensuring IDA’s ability to service debt without restricting future lending capacity, without negatively affecting its leveraging potential at future replenishments, and without creating hidden liabilities for Partners; and c. Preserving IDA’s ability to adjust its policies at future replenishments, ensuring that decisions for the current replenishment do not pre-commit future funding levels, lending volumes, and allocation principles. 164. Policies on the scale, funding, and allocation of IDA resources, reflecting the three main financial policy levers – replenishment size, Partner contributions, and concessionality – can be adjusted over time. Adjustments will be made according to evolving circumstances and in the context of future replenishments, safeguarding IDA’s continued ability to provide its clients financing at scale over the long-term, For instance, while Participants recognized the flexibility offered by the hybrid financial model, including the potential to scale up financing in response to severe and large-scale global crisis where it was judged critical to draw forward financing capacity, this will be done in a sustainable manner, protecting IDA’s triple-A rating and cost-effective access to markets to allow stability in future financing to clients and preserve capacity to respond to major crises. Choices would be made within the limits of appropriate credit risk, capital adequacy and exposure management frameworks, including overall lending limits and financial ratios commensurate with IDA’s risk-bearing capacity. 165. Participants affirmed their strong support for IDA and confirmed the importance of Partner contributions in the integrated financing framework given the need to provide grants and concessional credits to countries. While leveraging introduced in the IDA hybrid financial model offers significant value for money for Partner contributions, Participants 126 At the IDA20 foreign exchange reference rate of SDR/$1.42934. - 84 - recognized that market debt is not a source of concessionality and thus donor contributions remain critical for IDA to provide grants and blend resources with market debt to provide other concessional financing. Strong shareholder support through continued grant contributions is also critical to IDA’s financial framework for the hybrid financial model to successfully leverage funds and be financially sustainable over the long term. Participants also reiterated their commitment under the Multilateral Debt Relief Initiative (MDRI) to fully finance the costs to IDA of providing MDRI debt relief and their agreement that the financing of these costs would be additional to regular IDA contributions. B. CONTRIBUTION AND IBRD TRANSFERS 166. IDA20 commitment authority will be supported by Partner grant contributions including the grant element of the concessional loans from Partners and transfers from IBRD.127 These resources, as well as IDA’s existing equity, enable leveraging through the capital markets to fund IDA20 commitments. 167. Partner contributions supporting IDA20 commitment authority are provided as part of the IDA20 replenishment itself as well as under the MDRI replenishment. Participants noted that Management will review IDA's commitment authority and report to the IDA Board of Executive Directors on a regular basis. This review will take into account the status of Partner financing commitments to the IDA20 replenishment and the MDRI replenishment, as well as any significant changes in the financial variables impacting IDA’s financial projections. In the event of a shortfall of Partner commitments, the level of IDA20 commitment authority could be adjusted over the course of the IDA20 period. Management will consult with the Board and, as necessary, make adjustments to the level of IDA20 commitment authority. Such adjustment will be guided by the financial and risk management framework and principles of IDA’s long-term financial sustainability. 168. Participants endorsed $23.5 billion (equivalent to SDR16.5 billion) of total Partner contributions for the IDA20 Replenishment. IDA20 Partner contributions comprise: (i) basic contributions of $23.1 billion (equivalent to SDR16.2 billion), which includes grant contributions of $23.1 billion (equivalent to SDR16.1 billion) and the grant element of $69 million (equivalent to SDR48 million) from Concessional Partner Loan (CPL) contributions; and (ii) contributions to cover IDA’s debt relief costs under the Heavily Indebted Poor Countries (HIPC) Initiative in IDA20 amounting to $0.4 billion (equivalent to SDR0.3 billion). In addition, Partner contributions are expected to generate investment income amounting to $16.2 billion (equivalent to SDR11.4 million) by using a regular encashment profile of 9 years.128 Partner contributions (subscriptions and contributions) underpin IDA20’s commitment authority. 169. New and prospective Partners. Croatia and Morocco pledged to become new IDA contributing Partners and Algeria, Mexico and the Russian Federation have returned as donors. Participants noted that, in their view, there are still a number of countries that have the economic 127 The IBRD transfers are made out of its net income and are subject to annual approvals by the IBRD’s Board of Governors after considering IBRD’s reserve retention needs as required by IBRD’s Articles. 128 Amounts may not add up due to rounding. - 85 - capability to contribute to IDA but have not yet done so. They welcomed Management’s efforts to reach out to these countries and continue to encourage them to become IDA Partners. 170. Additional grant contributions. Partners may, at any time, make additional grant contributions to the amounts shown in Table 1 of Annex 15. 171. Structural gap in reported Participants’ burden shares. Participants agreed that a Dual Reporting Approach—reporting both gross and net donor burden shares—represents a pragmatic and balanced path forward and adequately addresses Participants’ concerns with the current approach with respect to their reported burden share and the impact of the increasing structural gap. Participants agreed to implement this new approach in IDA20. 172. Voting rights. IDA Executive Directors completed the review of IDA’s voting rights framework and presented their recommendations to IDA Governors during the 2021 Annual Meetings. IDA Governors supported the recommendations, which will be implemented in IDA20. 173. Participants reaffirmed the need to provide additional Partner contributions for the MDRI replenishment of $1.8 billion (equivalent to SDR 1.2 billion), to cover IDA’s debt relief costs due to the MDRI during IDA20. Partner contributions to the MDRI replenishment are governed by the MDRI Resolution. 129 Under the terms of the MDRI Resolution, IDA has undertaken to reflect changes in actual and estimated costs of MDRI debt forgiveness by making adjustments to Partner contributions to MDRI every three years – normally in conjunction with regular replenishments. 130 The additional partner contribution MDRI amount of $1.8 billion reflects a two-year additional costing period for IDA20, rather than the usual three years, as Partners have already agreed to provide unqualified financing for the first year of IDA20 (FY23) as part of the IDA19 MDRI costing update. Revised Compensation Schedule and Partner Contribution tables to the MDRI Resolution, reflecting the updated cost estimates for the MDRI as of June 30, 2021, have been provided to members. Corresponding adjustments to reflect these updated amounts are also required in the payment schedule attached to each IDA member’s Instrument of Commitment (IoC) for its MDRI subscription and contribution. 131 Section VI: Financing Debt Relief and Arrears Clearance below provides further information regarding Partner contributions to finance debt relief costs under the HIPC Initiative and MDRI. 174. Participants noted that, as agreed as part of the 2018 WBG Capital Package, the IBRD income transfer formula used in IDA18 will continue to be applied in future replenishments. The current estimate for IDA20 is approximately $0.8 billion (equivalent to SDR 0.6 billion) which represent projected IBRD transfers in FY24 and FY25 (the FY23 transfer having been part of IDA19). These transfers will be subject to annual approvals by IBRD’s Board of Governors based upon evaluations of IBRD’s annual results and after considering IBRD reserve retention needs. 129 IDA, Additions to IDA’s Resources: Financing the Multilateral Debt Relief Initiative: IDA Resolution No. 211 adopted by IDA’s Board of Governors on April 21, 2006 (the “MDRI Resolution”). 130 Paragraphs 1(f), 2(c) and 2(d) of the MDRI Resolution. 131 Members will be notified of the necessary amendments to their MDRI IoC and the payment schedule following adoption of the IDA20 Resolution by the Board of Governors. - 86 - 175. Per the 2018 WBG Capital Package agreement, IFC transfers to IDA will remain suspended. 132 Instead, the income transfer is expected to be redeployed to support expanded IFC activities in IDA countries, as such boosting IFC’s direct engagement in IDA countries. Included in the commitments are IFC’s aim to expand commitments in IDA and in IDA FCS and reach up to 40 percent of all IFC commitments by 2030 and an average of 32.5 percent over FY19-FY30. To that end, see also the IDA policy commitment under the JET Special Theme, in which IFC will aim to increase the share of its commitments in FCS-IDA17 & LIC-IDA17 countries, 133 reaching 12-17 percent of its Own-Account commitment on average during the IDA20 cycle, with an intent to reach an Own-Account annual commitment of 14-17 percent in the last fiscal year of IDA20. 176. Participants acknowledged that CPLs represent an effective way to leverage IDA’s balance sheet. CPLs provide IDA interest-rate risk reduction benefits being low cost, fixed- rate, long-term funding to IDA, and provide Partners with increased flexibility to contribute to IDA. They noted that concessional loan contributors would receive burden sharing recognition through voting rights based on the grant element of the loan, with such voting rights allocated following loan drawdown by IDA. Partners also noted that loan funding will not be earmarked for any purpose and will be used as part of IDA’s overall pool of funding. 177. Participants endorsed the principles of ensuring transparency, equal treatment, and additionality (i.e., avoiding substitution), and they reaffirmed their commitment to protect IDA’s long-term financial sustainability. While CPLs provide IDA Partners with flexibility to provide additional contributions, Partner grant contributions remain critical to IDA’s hybrid financial model. In line with IDA17, IDA18 and IDA19 CPL Frameworks, the IDA20 CPL Framework therefore continues to seek to balance the strong incentives for Partners to provide grant financing with the need to provide recognition for the additional funding provided by concessional loans in a fair and transparent way. 178. Participants agreed that Partners who are providing concessional loans to IDA20 should provide at least 80 percent of their benchmark Minimum Grant Equivalent Contribution 134 (as defined below) in the form of a basic grant contribution, and at least 100 percent of the benchmark Minimum Grant Equivalent Contribution in the form of a basic grant equivalent contribution (basic grant contribution plus the grant element of the CPL), where the benchmark Minimum Grant Equivalent Contribution is defined flexibly as follows: a. The Minimum Grant Contribution benchmark is defined as 100 percent of a Partner’s previous basic grant equivalent contributions (which would include basic contributions from grants and grant element from a CPL) based on the lower of IDA18 or IDA19 as the Partner prefers. 132 Sustainable Financing for Sustainable Development DC2018-0002/2 (April 17, 2018). 133 LIC-IDA17: Countries that are classified as low-income countries (LIC) as of July 1, 2016 (GNI per capita <=$1,025 in 2015). FCS-IDA17: The subset of IDA17-eligible countries that are also on the latest (FY19) FCS list. See Annex 4 of IFC Strategy and Business Outlook Update (FY20-FY22) for more details. 134 For the purposes of Minimum Grant Contribution benchmark calculation, IDA17 basic grant equivalent contribution includes compensation for grant principal foregone. - 87 - b. the Minimum Grant Contribution benchmark could be based on the Currency of the Pledge, National Currency or SDR amounts, as the Partner prefers. 179. Similar to IDA17, IDA18, and IDA19, CPLs can be provided in SDR or single currencies of the SDR basket. In addition, Partners welcomed the additional flexibility introduced in IDA19 to convert CPLs into an eligible non-SDR currency upon signature of the loan agreement. 180. Participants agreed the proposal of adding 50-year maturity as the new CPL term into the framework, which could provide additional flexibility and incentives for Partners contributing to IDA through CPLs. Participants also endorsed the revision of CPL discount rate calculation, to be based on the average interest rates over a 6-month period, ending August 31, 2021 for IDA20, instead of spot rates as of a specific date, to reduce the impact of market volatility. 181. Key IDA CPL financing terms and additional details of the IDA20 CPL Framework, including calculation of the grant element, are described in Annex 12. C. REPLENISHMENT EFFECTIVENESS 182. Partners recommended that financing for IDA20 be made subject to an effectiveness condition similar to that used under previous IDA replenishments. The purpose of such a condition is to ensure that most Partner financing, including contributions by major Partners, is in place on time. Partners recommended that IDA20 become effective when Instruments of Commitment (IoC) including Qualified IoCs, and concessional loan agreements accounting in the aggregate for 60 percent of the total of Partner grant and concessional loan contributions as per Table 1a-SDR of Annex 15, 135 have been received by IDA. They recommended a target effectiveness date for the replenishment of March 15, 2023. 136 183. Participants noted the importance of providing their IoC and signing their concessional loan agreements as early as possible, so as to advance the date of reaching the threshold for replenishment effectiveness. 137 184. Participants also noted the importance of timely availability of Partner contributions for IDA’s ability to provide grants. As mentioned previously, with the hybrid financial model, Partner contributions are used to support increased concessionality and specifically grant financing for the poorest and most vulnerable countries. 185. Advance Contribution Scheme. In past IDA replenishments, Participants agreed that a share of their contributions could be used before the replenishment becomes effective unless otherwise requested by a Partner. Under this Advance Contribution Scheme, one-third of the amount specified in a contributing member’s IoC received before effectiveness would be used for commitment authority purposes, unless stated otherwise by a Partner. Upon reaching 135 Only grant element of concessional loan contributions is used for the purposes of meeting effectiveness condition. 136 See Table 1 in World Bank. 2020.Financing Options for IDA Countries. Washington, DC: World Bank Group. 137 Some Partners’ budgetary and legislative timetables permit them to make their contributions at an early stage in the fiscal year. - 88 - replenishment effectiveness condition, the remaining amount of the Partners’ IoC amounts will be used for commitment authority purposes. D. CONTRIBUTION PROCEDURES 186. Participants recommended that the contribution and payment arrangements for grant contributors continue as in previous replenishments. a. Partners will provide their grant contributions in the form of cash or promissory notes in three equal annual installments. The first installment will be due 31 days after the replenishment becomes effective, which is expected by March 15, 2023, except for advance contributions, which will be paid as specified by IDA. The second installment will be paid no later than April 15, 2024, and the third installment no later than April 15, 2025. IDA may agree to postpone any payment under the terms of the IDA20 Resolution. b. Partners will provide their CPLs in the form of cash in up to three annual installments. The first installment will be due 31 days after the replenishment becomes effective, which is expected by March 15, 2023, except for advance contributions, which will be paid as specified by IDA. The second installment will be paid no later than April 15, 2024, and the third installment no later than April 15, 2025. At its discretion and with the agreement of the loan provider, Management may draw down on different dates and over shorter periods. IDA may agree to adjust the concessional partner loan schedule under the terms of the Loan Agreement or as discussed with the Partners. 187. Participants recommended that subscription and payment arrangements for non- contributing members continue as in previous replenishments. Subscription payments of non- contributing members will be fully paid in one installment and in national currency or, with the approval of IDA, in any convertible currency of another member country, either in cash or by promissory notes. 188. Partner grant contributions, if provided in the form of promissory notes, will be encashed on an approximately pro rata basis among Partners following the agreed (Attachment II of the IDA20 Resolution) or custom encashment schedule. Partners may, with the agreement of IDA, adjust their grant encashments to reflect their legal and budgetary requirements. Participants agreed to indicate any special preferences in this regard to Management before or when Partners deposit their IoC. Participants recognized that the timing of encashments affects IDA’s resource base. They agreed that in exceptional cases, should unavoidable delays occur, IDA’s grant encashment requests to the relevant Partner may be adjusted to take into account any past payment delays by that Partner and any related lost income to IDA. IDA may also agree with any Partner on a revised grant encashment schedule that yields at least an equivalent value to IDA. A Partner’s voting rights will be affected if the net present value is not maintained. Participants agreed that the present value of Partners’ grant encashment schedules will be based on a 0.3 percent per annum discount rate. Partners that accelerate their grant encashments can use the additional resources as a credit item, either to increase their own regular burden share, to cover a share of their costs under the MDRI replenishment, or to cover a portion of payment arrears from previous replenishments. If a Partner uses their acceleration of the grant encashment - 89 - to increase their regular burden share, that Partner will receive additional subscription votes on account of the additional resources provided to IDA from accelerated grant encashment. Partners that use accelerated grant encashment can alternatively benefit from a discount on the amounts encashed. 189. Valuation of contributions. Participants agreed to denominate their grant contributions in their respective national currencies if freely convertible, in SDRs, or, with the approval of IDA, in any convertible currency of another member country. They also agreed to determine the currency of denomination for each Partner’s grant contribution as of the date of conclusion of the IDA20 replenishment discussions. For the purpose of establishing equivalence of value among different currencies and the SDR for grant contributions, Participants agreed to use the average daily exchange rate for the period between March 1, 2021 and August 31, 2021. To help maintain the value of contributions from Partners with high inflation rates, grant contributions from Partners with domestic annual inflation of 10 percent or higher in 2017-2019 will be denominated in SDRs or in any SDR component currency as agreed with IDA. 138 Participants noted that CPLs would be denominated in SDR or single currencies of the SDR basket, namely the US Dollar, Euro, Japanese Yen, British Pound and Chinese Renminbi. Partners could request to convert such loan to a non- SDR currency based on agreed criteria as specified in the IDA20 CPL Framework (see Annex 12). They also agreed to determine the currency of denomination for each Partner’s concessional loan as of the date of conclusion of the IDA20 replenishment discussions. Original currencies of denomination of Partners’ grant contribution or Partners’ concessional loans shall not be changed after the approval of the Deputies’ Report by IDA’s Executive Directors. 190. Participants agreed that the IDA19 unused funds carried over into the IDA20 period will be allocated using IDA20 terms, conditions, and procedures. Partner contributions remaining outstanding at the end of IDA19 will be administered under the terms of the IDA20 replenishment subject, as appropriate, to the terms and conditions applicable to the IDA19 replenishment with respect to financial management matters such as payment, encashment and allocation of voting rights. 191. Reporting of contributions. Participants requested Management to report regularly to the IDA Board of Executive Directors on the status of Partners’ commitment and actual contributions to IDA, including on the status of concessional loan contributions. 138 Inflation is measured by the rate of change of the national Consumer Price Index (CPI), or the GDP deflator in case of contributing partner countries for which the CPI is not available. - 90 - SECTION VI: FINANCING DEBT RELIEF AND ARREARS CLEARANCE 192. Participants reiterated their strong support for the Heavily Indebted Poor Countries (HIPC) initiative and Multilateral Debt Relief Initiative (MDRI), which provide debt relief to the world’s poorest and most indebted countries. They reviewed updated cost estimates for IDA’ lost credit reflows and the status of Partner financing for the MDRI. A. THE HIPC INITIATIVE 193. Impact on IDA finances. Participants reviewed the impact of HIPC debt relief on IDA’s finances. They reaffirmed the basic HIPC principle that debt relief should not reduce IDA’s capacity to support poverty reduction and development and should be additional to other IDA assistance. IDA will need additional financing of around $0.4 billion (equivalent to SDR 0.3 billion) in IDA20 to finance forgone credit reflows due to the HIPC Initiative. Due to the truncation of IDA19, this amount covers two rather than three additional years (FY24 and FY25) of foregone credit reflows. 194. Participants supported the continued use of the two mechanisms used in IDA18 for Partners’ HIPC-related contributions: (a) contributing to IDA directly; or (b) channeling contributions through the Debt Relief Trust Fund. 139 The HIPC-related contributions will be recorded separately from regular IDA contributions in order to ensure that HIPC debt relief is additional to other IDA assistance and shown as a separate column in Table 1a of the IDA20 Resolution (See Annex 15). 195. Partner funds provided directly to IDA will be treated in the same manner as regular contributions, becoming part of IDA’s general resources. Partners can choose to submit one Instrument of Commitment (IoC) that combines regular IDA contributions and HIPC-related contributions, or separate IoCs for regular IDA contributions and HIPC-related contributions. Partners can pay their HIPC contributions in cash or promissory notes. Since these additional contributions will reimburse IDA for its forgone reflows during FY24-25, they will be drawn down over the IDA20 period. Partners will receive voting rights for contributions upon payment to IDA20. 140 139 As amended by Partners and the IDA Board of Executive Directors. 140 Partners can also make HIPC contributions directly to the Debt Relief Trust Fund. In such case, Partners would sign contribution agreements with IDA, as administrator of the Debt Relief Trust Fund, specifying the contribution amount and payment modalities – in cash or in notes to be drawn down over a three-year period. Partners will deposit their contributions in the WB component of the Debt Relief Trust Fund, and contributions will be transferred to IDA to reimburse IDA for its forgone credit reflows. Since these funds become part of IDA’s general resources at the time of transfer from the Debt Relief Trust Fund to IDA’s cash accounts, Partners will receive additional voting rights in IDA following such transfers. Management will report periodically to Partners on the status of their contributions to the Debt Relief Trust Fund. - 91 - B. THE MULTILATERAL DEBT RELIEF INITIATIVE 196. Replacement of lost credit reflows. In the Spring of 2006, Partners and shareholders approved IDA’s participation in MDRI, which provides 100 percent cancellation of eligible debt owed to IDA by countries reaching the HIPC completion point. Starting on July 1, 2006 and over the next four decades of MDRI implementation, IDA is projected to cancel an estimated total amount of $33.1 billion (equivalent to SDR23.5 billion) of credit reflows from eligible HIPC countries. Under the MDRI replenishment arrangements, Partners have committed to compensate IDA’s MDRI costs on a ‘dollar-for-dollar’ basis over the duration of the cancelled credits. Participants reiterated the need for full replacement of the lost credit reflows due to the MDRI to ensure that the debt relief granted by IDA will be additional for recipient countries, providing further resources for their development efforts. 197. MDRI replenishment. Partner contributions for IDA’s MDRI costs are recorded under a separate replenishment and added to IDA’s general resources following established IDA procedures. Participants reaffirmed the need for full replacement of lost credit reflows due to debt relief and their commitment “to fully finance the costs to IDA of providing MDRI debt relief over the 40-year time span of the MDRI”. 141 Participants acknowledged the need to provide unqualified and firm MDRI financing commitments over the disbursement period of each future IDA replenishment. Participants meanwhile also recognized that the ability to provide binding financial commitments for the entire duration of MDRI varies from Partner to Partner and committed themselves to make every effort possible to translate their full political commitment into as firm and far-reaching financial pledges as allowed for by their legislative processes. 198. To back IDA20 commitment authority, Participants reaffirmed the need to provide additional Partner contributions for the MDRI replenishment of $1.8 billion (equivalent to SDR 1.2 billion), to cover IDA’s debt relief costs due to the MDRI during the IDA20 disbursement period (ending in FY33) as agreed under the MDRI. The additional partner contribution amount reflects a two-year costing period, rather than the usual three years, as Partners have already agreed to provide unqualified financing for the first year of IDA20 (FY23) as part of the IDA19 MDRI cost update. 199. Participants noted that the value of IDA’s lost credit reflows under the MDRI will continue to fluctuate over the 40-year period. The MDRI financing arrangements include a mechanism to adjust the compensatory amounts payable by Partners in conjunction with every regular IDA replenishment. Participants reviewed the updated cost estimates for the MDRI under the IDA20 replenishment which provide the basis for updates to the MDRI cost tables and partner payment schedule. Revised tables to the MDRI Resolution, reflecting the updated cost estimates, have been provided to IDA members. Corresponding adjustments to reflect these updated amounts are also required in the payment schedule attached to each member’s IoC for its MDRI subscriptions and contributions. Participants noted that each IDA member has agreed to amend its IoC to reflect any such adjustment. 141 IDA, Additions to IDA Resources: Financing the Multilateral Debt Relief Initiative, approved by IDA’s Executive Directors on March 28, 2006. Paragraph 5. - 92 - 200. Monitoring Partner contributions. Participants reaffirmed the need for continued monitoring of Partner contributions to the MDRI. For transparency, Partner contributions to the MDRI will continue to be recorded separately from regular IDA replenishment contributions as additional to Partners’ regular financial support to IDA. They noted that Partner contributions to the MDRI have been reported to the IDA Board of Executive Directors and will continue to be reported in the same way in IDA20. Such reporting will contain information on the volume of debt relief delivered by IDA under the MDRI and the amount of compensatory partner resources received. C. FINANCING OF ARREARS CLEARANCE OPERATIONS 201. Burden shares. Since IDA15, there has been a systematic approach to arrears clearance. 142 In general, Partners have also supported the use of their HIPC burden shares to finance arrears clearance operations in a given replenishment, and also agreed that if the resources requested for the present replenishment are insufficient to cover the full cost of the arrears clearance support, the shortfall would be made up in the succeeding replenishment in the same manner that HIPC costs are updated at each replenishment based on the use and availability of resources. 202. Resources for arrears clearance. As mentioned in Section IV, Participants agreed that no set-aside for arrears clearance will be allocated at the start of IDA20. Support for the reengagement of IDA countries that are currently inactive and in arrears will be subject to demonstration of meaningful progress. Management will continue to monitor the situation in relevant countries and will propose reallocations in consultation with Participants should the opportunity for reengagement emerge in IDA20. This approach means that with no IDA19 arrears clearance set- aside to carry over, 143 and no allocation for arrears clearance in IDA20, should allocations for arrears clearance operations be made during IDA20, Partner contributions would need to replenish the arrears clearance set-aside for the full estimated amount. 203. With respect to IDA countries with debt to the IBRD, Participants agreed that IDA provide debt relief grants or credits, where necessary, for the World Bank to deliver its share of debt relief under the HIPC Initiative. Such debt relief grants from IDA (for interim HIPC relief on IBRD debt service payments) and prepayment by IDA of remaining IBRD claims at the HIPC completion point are part of the implementation modalities for IDA’s delivery of debt relief under the HIPC process. 144 These debt relief grants and prepayments are to be funded by resources other than IBRD’s net income transfers. 142 See section IV.C, page 31 in World Bank. 2008. Additions to IDA Resources: Fifteenth Replenishment – IDA: The Platform for Achieving Results at the Country Level. Washington, DC: World Bank. For a full discussion of the arrear’s clearance needs of countries eligible for the exceptional arrear’s clearance approach, see World Bank. 2019. The Demand for IDA19 Resources and the Strategy for their Effective Use. Washington, DC: World Bank. 143 The $1 billion IDA19 arrears clearance set-aside amount was fully utilized in Sudan’s arrears clearance process. 144 World Bank. 2000. Heavily Indebted Poor Countries (HIPC) Initiative: Note on Modalities for Implementing HIPC Debt Relief under the Enhanced Framework. Washington, DC: World Bank - 93 - SECTION VII: RECOMMENDATION 204. Participants propose that the Executive Directors recommend to the Board of Governors the adoption of the draft IDA20 Resolution attached in Annex 15. ANNEXES - 94 - ANNEX 1. RESULTS MEASUREMENT SYSTEM 1. Since its inception, the International Development Association (IDA) has served as a steady and reliable development partner, marshalling all its expertise and resources to help clients achieve high-level outcomes over the long term. This support comes through an integrated package of financing, knowledge, and convening services, and is delivered directly by investing in infrastructure and services and indirectly by strengthening policies, systems, and capabilities. This combination allows IDA to build the foundations that underpin the effective use of IDA’s and other resources and maximizes impact. 2. For almost two decades, IDA’s Results Measurement System (RMS) has measured success by how well IDA improves living conditions in the world’s poorest countries rather than how much money it commits or how many projects it implements. The RMS provides an aggregate view of IDA’s business model, tracking its overall intervention logic. IDA complements the RMS with a wide array of information through numerous channels, from project and program results frameworks to independent and self-evaluation tools, feedback from clients, and multiple thematic and regional reports. These tools help the RMS stay focused on answering the most fundamental questions, offering opportunities for selective lesson learning, and contributing to better development outcomes. 3. The three-tiered RMS Figure A1. 1. IDA RMS Tiers Cover the Results Chain structure disentangles the way IDA aims for outcomes Tier 1 following the results chain What high-level outcomes are High-level outcomes IDA countries delivering? from inputs to results. As shown in Figure A1.1, the RMS is structured in three tiers to Intermediate outcomes facilitate an understanding of Tier 2 how IDA inputs and activities What outputs and intermediate outcomes is IDA Early or immediate outcomes (Tier 3) deliver outputs and support delivering? early and intermediate outcomes (Tier 2) that set the basis for Outputs high-level outcomes (Tier 1). Tier 3 While the correspondence How effectively is IDA between tiers and the logical managing itself for outcomes? Inputs and activities chain is complex, this way of thinking helps to inform and Source: World Bank staff. Results chain adapted from the outcome classification of the Independent Evaluation Group in Results and Performance 2020. prioritize the selection of meaningful indicators. a. Tier 1 reports on the long-term development outcomes achieved by IDA countries and is primarily drawn from the World Development Indicators. These data are publicly available and easily accessible. Progress against Tier 1 indicators is not directly attributed to IDA’s interventions, but to the outcome of a collective effort by IDA countries and their development partners. They report data based on the list of eligible IDA borrowers at the beginning of the reporting fiscal year. - 95 - b. Tier 2 tracks IDA-supported development results in client countries across different sectors and are primarily derived from project supervision reports. These indicators aggregate the results delivered through IDA-financed operations during the fiscal year from the active portfolio and operations that closed during the year. Most Tier 2 indicators use a standard set of Corporate Results Indicators, but outcomes of IDA-financed operations necessarily extend far beyond what can be reported in the RMS. This section of the RMS also summarizes the extent to which this broader set of outcomes has been achieved by aggregating independent evaluations of outcomes of country programs and operations as well as client feedback on effectiveness of Analytics and Advisory Services. c. Tier 3 includes measures of IDA’s operational and organizational effectiveness, largely drawn from the Bank’s own operational databases. With the right processes, systems, and financing in place, IDA strategically manages its portfolio from the initial strategy development to the implementation of projects, all the while aiming for development outcomes. This is not a minor task, with a portfolio of over 1,100 active projects totaling close to $150 billion in commitments. Steering a portfolio of this magnitude towards high-level outcomes requires clear metrics to continually assess portfolio priorities against capacity, determining which combination best advances IDA’s ambitious goals. Tier 3 is organized around three categories. Financing outcomes tracks how IDA manages and leverages its resources to focus on the right priorities and amplify its impact. Monitoring outcomes measures Bank performance in IDA-financed operations, the quality of monitoring and evaluation, and results chains in gender and of indicators that track the results of climate change. Implementing for outcomes reports on the pace of implementation, the ability to turn around under-performing operations, and the number of operations that prioritize relevant issues. 4. The IDA20 RMS shows more explicitly how country programs contribute to high- level outcomes and green, resilient and inclusive development by regrouping indicators within tiers. The revamped RMS links indicators vertically across tiers 1 and 2 by reorganizing both tiers around the IDA special themes and cross-cutting issues with explicit connections across the two tiers. The results reported in Tier 1 are not purely context, but also high-level outcomes to which Tier 2 outputs and intermediate outcomes contribute. To illustrate, Tier 2 tracks the number of women and children receiving nutrition services through IDA support, while Tier 1 tracks the prevalence of stunting. Although Tier 1 results are not attributable to any development organization, the scale of IDA’s support as well as its recognized role as a thought leader means that IDA is a significant contributor to some of these Tier 1 results over time. Highlighting these links helps to show how substantial achievements at Tier 2 can be contextualized as drivers of change or progress at Tier 1. Similarly, the IDA20 RMS strengthens the connections between IDA outputs, early and intermediate outcomes in Tier 2, and IDA inputs and activities in Tier 3 by regrouping indicators into processes that are essential to manage for outcomes. Results are now going to be collected, analyzed, and presented in a way that not only provides performance information, but also illuminates logical connections that enable evidence-informed programming. 5. The purpose of the IDA20 RMS is to measure and steer progress towards IDA20’s ambition for a green, resilient and inclusive future. A green future entails growth through environmental, socio-economic and financial sustainability; a resilient future safeguards - 96 - development by preparing countries and firms to mitigate and adapt to a wide range of risks and uncertainties; and an inclusive future ensures that the recovery does not leave anyone behind and reduces disparities in opportunities and outcomes. Realizing this vision requires IDA to help clients achieve high-level outcomes directly by investing in infrastructure and services in the five IDA20 Special Themes and indirectly by strengthening policies, systems, and capabilities through the four Cross- Cutting Issues. This combination builds the foundations that underpin the effective use of IDA and other resources to maximize impact. The IDA20 RMS includes indicators that measure progress of both pathways, disentangling the way IDA aims for outcomes. 6. The IDA20 RMS is the most ambitious in the history of IDA. The RMS targets have been stretched, aiming to deliver more and better outcomes for the world’s poor. For example, gains on safety nets are being consolidated, and IDA20 aims to reach tens if not hundreds of millions more poor and vulnerable people compared to previous cycles. The coverage of the IDA20 RMS has also been stretched to report more holistically across the IDA20 overarching theme of a green, resilient and inclusive future. A total of 15 new indicators have been added to the IDA20 RMS, including on climate and biodiversity; on crisis preparedness; and on disability and inequality. All told, IDA20 is stepping up to deliver more and even better outcomes, and the RMS is a robust system that tracks all the key priorities of IDA20 and completes an exciting package. 7. IDA20 is introducing complementary ways to strengthen the RMS’s outcome orientation while data capabilities continue to evolve. A foundational strategy for the IDA20 RMS is to adopt sentinel indicators as proxy for outcomes. Sentinel indicators are those that capture essential elements for achieving the ultimate desired change. These indicators are not necessarily outcome indicators, but progress in these indicators entails a higher likelihood of achieving the desired high-level outcomes, based on available evidence. 8. As high-level outcomes take time to materialize, many indicators from the IDA19 RMS are carried over into IDA20, facilitating trend analysis. RMS indicators need to be quantifiable, sensitive to regular changes, from widely accepted sources, and prone to aggregation across IDA countries. Furthermore, it is important to maintain some continuity of indicators across IDA cycles, as repeated revisions to indicators would disrupt data trends, making it difficult to analyze progress, and increasing the calculation and reporting load. Meanwhile, adjustments have been made to some indicators to capture emerging priorities and address any potential shortcomings. 9. Because of the extraordinary circumstances that led to advancing IDA20 and thereby shortening IDA19, the IDA20 RMS will report Tier 2 results both for IDA20 on its own as well as cumulative results for IDA19 and IDA20 together. This approach will encourage a longer-term perspective, smoothing out the expected wide variations in several indicators affected by the COVID-19 crisis and response. And it will allow stakeholders to account for the sum of results delivered over the longer five-year period. This cumulative reporting will cover only those indicators that are used in both cycles and will not include additional expected values or ranges beyond those identified for the individual cycles. - 97 - 10. IDA’s commitment to outcome orientation involves strengthening alignment with the Sustainable Development Goals (SDGs), which represent a set of shared high-level outcomes that clients and development partners alike aspire to achieve. Since IDA19, each of the 17 SDGs is covered in the RMS with at least one indicator, reflecting the goals’ strategic directions, their targets, or specific indicators. The IDA20 RMS further increases its alignment with the SDGs by strengthening and incorporating indicators in several development areas. Tables A1.1 and A1.2 provide details on the proposed indicators, including their links to the Sustainable Development Goals and their expected value or range where applicable. 11. IDA continues to strengthen and institutionalize outcome orientation, including through country engagement and in collaboration with other partners. IDA is implementing a detailed roadmap to improve the organization’s outcome orientation. This involves introducing high-level outcomes in Country Partnership Frameworks (CPFs), enhancing the role of Completion and Learning Reviews to better inform CPFs, and ensuring that Systematic Country Diagnostics identify long-term development outcomes, which are critical to the achievement of the twin goals, and articulate constraints and opportunities for achieving them. The adjustments to the country engagement guidance will allow IDA to show more explicitly how IDA-supported activities contribute to achieving high-level and long-term country outcomes, learn more frequently from implementation, and account for the indirect pathways that underpin the achievement of sustainable results. IDA results stories will continue to document the more nuanced, richer, and multiple dimensions that determine IDA’s effectiveness at the country level, the cornerstone of its success. Outside the institution, the World Bank is leveraging its leadership role to strengthen coordination among MDBs and development partners to help clients enhance results-based monitoring and evaluation and outcome orientation. 12. The IDA20 RMS provides more data disaggregation to reveal deprivations and inequalities and expose trends that may not be fully reflected in aggregated data. Indicators in all three tiers are disaggregated by sex and for IDA countries characterized as Fragile and Conflict-affected Situations (FCS) where applicable and available. For instance, nearly all Tier 1 indicators are disaggregated by FCS, whereas disaggregation by sex is not possible for many indicators that track results at a country level (for example the number of countries with low or moderate risk for unsustainable debt) or community level (for example people provided with access to improved urban living conditions), or when an indicator is tracking the well-being of only one sex (for example maternal mortality rate). On disability inclusion, IDA20 will track the share of operations using the concept of universal access and the number of countries collecting disability data with IDA support. IDA remains committed to use the question sets from the Washington Group on Disability Statistics. 13. Most indicators in Tiers 2 and 3 include an expected range or value for the IDA20 cycle. For Tier 2, these are typically stretch targets based on the projected results of the active portfolio and targeted results for new operations and cover the cumulative delivery over the three- year cycle. They are expressed as a range to underscore a large degree of uncertainty as results in a given timeframe are dependent on client demand and influenced by external circumstances. For Tier 3, these are typically performance standards, and reflect the expected performance on an annual or rolling basis, depending on the indicator. - 98 - 14. Because IDA’s services are customized to the needs of each client country, its results cannot be simply summarized with a small number of indicators. Indeed, the RMS provides only a limited view of the breadth and depth of results IDA and its clients deliver together across a portfolio of more than a thousand operations in scores of countries. The RMS is therefore complemented by a set of results stories, each of which provides a deeper understanding of the nature of IDA’s support on the ground, including its focus on helping client countries build the institutions to deliver high-level outcomes on a sustained basis over time. - 99 - Table A1. 1. IDA20 Results Measurement System Table A1.1.a. IDA20 RMS - Tier 1: IDA Countries’ Progress Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex WORLD BANK GROUP GOALS 1 Population living on less than $1.90 a day (%)   1.1.1 2 Median growth rate of consumption/income per capita of the bottom 40 percent (%)   10.1 3 Countries with growth concentrated in the bottom 40 percent (%)   10.1 4 Gini index   10 IDA20 SPECIAL THEMES Climate Change 5 CO2 emissions (metric tons per capita)   9.4.1 6 Countries without wealth depletion (%)   12 7 Countries without natural capital wealth depletion (%)   12 8 Average annual deforestation change (%)   15.2 9 Marine protected areas (% of territorial waters)   14.5 Gender and Development 10 Legal changes that support gender equality (number of legal changes)   5.1, 5.a 11 Ratio of female to male labor force participation rate (%)   8.5 12 Maternal mortality ratio (number of maternal deaths per 100,000 live births)   3.1.1 13 Proportion of births attended by skilled health personnel (%)   3.1.2 14 Contraceptive prevalence by modern methods (% of women ages 15-49) 1   3.7.1 15 Adolescent fertility rate (number of births per 1,000 women ages 15-19)   3.7.2 FCV 16 Refugees by country or territory of asylum (million)   Internally displaced persons, total displaced by conflict and violence 17   16 (million) Jobs and Economic Transformation (JET) 18 GDP per person employed (constant 2011 PPP $)   8.2.1 19 Non-agriculture sectors, value added (as % of GDP)   1 Data coverage may fall below the typical threshold of 66% aggregate reporting. - 100 - Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex 20 Annual growth rate of real GDP per capita (%)   8.1.1 21 Proportion of population with access to electricity (%)   7.1.1 Youth employment to population ratio (age 15-24) (%) 8.6 22 - Youth employment to population ratio (age 15-24), women (%)    - Youth employment to population ratio (age 15-24), men (%) Proportion of adults (15 years and older) with an account at a bank or other financial institution or 8.10.2 23    with a mobile money service provided (%) Proportion of adults (15 years and older) with an account at a bank or other financial institution or 8.10 24    with a mobile money service provided, bottom 40% (%) Human Capital 25 Prevalence of stunting among children under 5 years of age (%)   2.2.1 26 Under-5 mortality rate (number of under-five deaths per 1,000 live births)   3.2.1 27 Incidence of HIV (% of uninfected population ages 15-49)   3.3.1 28 Population of children who cannot read by end-of-primary-school age (%)   4.1 Lower secondary gross completion rate (%)    4.1 29 - Ratio of girls’ to boys’ completion rate   4.1 Lower secondary enrollment rate (%)    4.1 30 - Ratio of girls’ to boys’ enrollment rate   4.1 31 People using basic drinking water services (% of population)   6.1 32 People using basic sanitation services (% of population)   6.2 IDA20 CROSS-CUTTING ISSUES Debt 33 IDA countries with low or moderate risk from unsustainable debt (number)   17.4 Governance and Institutions IDA countries with improved budget reliability, transparency of public finances, and control in 34   16.6 budget execution (number) 35 Statistical Performance Indicators (score from 0 to 100)   17.19 36 IDA countries with increased tax fairness and progressivity (number)   10, 17 Unweighted average increase in tax-to-GDP ratio in at least those IDA countries with tax 37   17.1 revenues below 15 percent of their GDP for three consecutive years (%) Technology 38 Individuals using the internet (% of population in IDA countries)  9.c  - 101 - Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex Crisis Preparedness 39 Prevalence of undernourishment (% of population in IDA countries)   2.2 Table A1.1.b. IDA20 RMS - Tier 2: IDA-Supported Development Results Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex IDA20 SPECIAL THEMES Climate Change 1 Generation capacity of renewable energy (GW)   7.2 2 Net GHG emissions (total CO2 equivalent/year)   9.4 3 People provided with access to clean cooking (million)   4 IDA countries supported to implement and/or update their NBSAPs (number)   15 5 IDA countries with completed Country Climate Development Reports (CCDRs) (number)   13.2 FCV IDA FCS supported in building capacity to use field-appropriate digital open-source tools for 6 collection and analysis of geo-tagged data, and apply this technology to enhance project  17.8  implementation and coordination (number) Jobs and Economic Transformation (JET) 7 Farmers adopting improved agricultural technology (million)    2.4 8 Area provided with new/improved irrigation or drainage services (Ha)   2.4 9 People provided with new or improved electricity service (million)   7.1.1 Beneficiaries reached with financial services supported by World Bank operations (million) 10 - People    8.10 - Businesses 11 Beneficiaries in IDA countries of job-focused interventions (million)    8.5 12 People with enhanced access to transportation services (million)   9.1 13 People provided with improved urban living conditions (million)   11.1 Human Capital - 102 - Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex Beneficiaries of social safety net programs (million)  14 Note: This indicator would disaggregate data reporting on SSN beneficiaries specifically from   1.2 COVID-19 programs People who have received essential health, nutrition and population services (million) (Indicator 15    reporting total from sub-indicators 16, 17 and 18 below) 16 Children Immunized (million)    3.8 17 Women and children who have received basic nutrition services (million)    2.2 18 Deliveries attended by skilled health personnel (million)    3.1.2 19 COVID-19 vaccine doses administered (million)  20 Large-scale assessments completed at primary or secondary level (number)   4.1 21 People provided with access to improved water sources (million)   6.1.1 22 People provided with access to improved sanitation services (million)   6.2.1 IDA20 CROSS-CUTTING ISSUES Debt 23 IDA countries publishing annual and timely public debt reports (number)   17.1 Governance and Institutions IDA countries provided statistical capacity building support by the WBG for the implementation 24   17.19 of household surveys (number) 25 Countries collecting disability data with IDA support (number)   Technology 26 People provided with enhanced access to broadband internet (million)   9.c Crisis Preparedness Countries supported toward institutionalizing disaster risk reduction as a national priority with 27   13.2 IDA support (number) 28 Countries integrating adaptive social protection into national systems with IDA support (number)   1.2 DELIVERING OUTCOMES 29 Satisfactory outcomes of IDA Country Partnership Frameworks (%, IEG Rating, 4-year rolling)   Satisfactory outcomes of IDA operations:   30 -as a share of commitments (%, IEG ratings, 3-year rolling)   -as share of operations (%, IEG ratings, 3-year rolling)   31 Advisory Services and Analytics (ASA) objectives accomplished (client rating, %)   - 103 - Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex Client feedback in IDA countries on WBG effectiveness and impact on results (average rating 32   scale: 1-10) 33 Client feedback in IDA countries on WBG knowledge (average rating scale: 1-10)   Table A1.1.c. IDA20 RMS – Tier 3: IDA Organizational and Operational Effectiveness Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex FINANCING OUTCOMES 1 IDA Budget Anchor (%)  2 Bank budget to Portfolio Volume Ratio (per $ billion under supervision) ($ million)  3 Average cost of IDA supervision projects (implementation support) ($ thousand)  4 Share of climate co-benefits over total commitments in IDA-supported operations (%)   13.2 5 Share of adaptation co-benefits over total climate co-benefits in IDA-supported operations (%)   13.2 Total private mobilization of WBG-supported operations/transactions in IDA countries. 6 - Direct mobilization ($ billion)   17.3 - Indirect mobilization ($ billion) IDA countries with the lowest Human Capital Index supported to improve the sustainability of 7   17.1 human capital financing (number) 8 IDA financing commitments with disaster risk management co-benefits ($ billion)   13.2 MONITORING OUTCOMES Satisfactory Bank performance in IDA-financed operations (%, IEG Rating)   -Overall   9 -At entry   -During supervision   10 Quality of M&E in IDA-financed operations (%, IEG ratings, 3-year rolling)   11 IDA20 projects with an AA Resilience Rating (number)   13.1 - 104 - Included Disaggregation No. Indicator in IDA19 New SDG RMS FCS Sex Percentage of IDA operations with substantial 2 climate co-benefits including at least one climate 12   13 change indicator in the results framework (%) Percentage of IDA-supported projects that demonstrate a results chain by linking gender gaps 13   5 identified in analysis to specific actions that are tracked in the results framework (%) IMPLEMENTING FOR OUTCOMES 14 Disbursement ratio (%)   15 Proactivity Index (%)   16 IDA-supported operations that address and respond to gender-based violence (GBV) (number)   5.1 17 Country programs (SCDs and CPFs) informed by diagnostics on crisis preparedness (number)   18 Facetime index in FCS   Share of IDA IPF operations that applied the concept of universal access at design (% of approved 19   10.2 IDA IPF in FY). 20 Countries supported by IDA to take IFF-related actions (number)   16.4 Client feedback on WBG on responsiveness and staff accessibility 21   (average rating scale: 1-10) Client feedback on WBG on collaboration with other donors 22   17.16 (average rating scale: 1-10) 23 Projects with beneficiary feedback at design (%)   2 Includes all operations with 20 percent or more climate co-benefits. - 105 - Table A1. 2. Annotated IDA20 RMS Indicators by Tier Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) Tier 1: IDA Countries Progress WBG goals 1 Population living on less than US$1.90 a day % of population Staff estimates calculated using 2019 Not applicable data from PovcalNet 2 Median growth rate of consumption/income per capita of % Global database of Shared 2019 Not applicable the bottom 40 percent Prosperity, calculated from the Global Poverty Working Group dataset 3 Countries with growth concentrated in the bottom 40 % Global database of Shared 2019 Not applicable percent Prosperity, calculated from the Global Poverty Working Group dataset 4 Gini index Index Global database of Shared Not applicable Not applicable Prosperity, calculated from the Global Poverty Working Group dataset IDA20 SPECIAL THEMES Climate Change 5 CO2 emissions Metric tons per World Development Indicators 2018 Not applicable capita (WDI) Database 6 Countries without wealth depletion % of countries Staff estimates based on WB data 2014 Not applicable 7 Countries without natural capital wealth depletion (%) % of countries Staff estimates based on WB data Not applicable Not applicable 8 Average annual deforestation change % World Development Indicators 2016 Not applicable (WDI) Database 9 Marine protected areas %, territorial World Development Indicators Not applicable Not applicable waters (WDI) Database Gender and Development 10 Legal changes that support gender equality Number of legal Women, Business and the Law September Not applicable gender changes dataset 2019-October 2020 - 106 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 11 Ratio of female to male labor force participation rate % World Development Indicators 2019 Not applicable (WDI) Database 12 Maternal mortality ratio Number of World Development Indicators 2017 Not applicable maternal deaths (WDI) Database per 100,000 live births 13 Proportion of births attended by skilled health personnel % World Development Indicators 2018 Not applicable (WDI) Database 14 Contraceptive prevalence by modern methods % of women ages World Development Indicators 2017 Not applicable 15-49 (WDI) Database 15 Adolescent fertility rate Number of births World Development Indicators 2019 Not applicable per 1,000 women (WDI) Database ages 15-19 FCV 16 Number of refugees by country or territory of asylum Million World Development Indicators 2020 Not applicable (WDI) Database 17 Internally displaced persons, total displaced by conflict and Million World Development Indicators 2020 Not applicable violence (WDI) Database Jobs and Economic Transformation (JET) 18 GDP per person employed Constant 2011 World Development Indicators 2020 Not applicable PPP $ (WDI) Database 19 Non-agriculture sectors, value added (as % of GDP) % World Development Indicators 2020 Not applicable (WDI) Database 20 Annual growth rate of real GDP per capita % World Development Indicators 2020 Not applicable (WDI) Database 21 Proportion of population with access to electricity % World Development Indicators 2019 Not applicable (WDI) Database 22 Youth employment to population ratio (age 15-24) % World Development Indicators 2019 Not applicable - Youth employment to population ratio (age 15-24), (WDI) Database women - Youth employment to population ratio (age 15-24), men 23 Proportion of adults (15 years and older) with an account at % World Development Indicators 2017 Not applicable a bank or other financial institution or with a mobile money (WDI) Database service provided - 107 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 24 Proportion of adults (15 years and older) with an account at % World Development Indicators 2017 Not applicable a bank or other financial institution or with a mobile money (WDI) Database service provided, bottom 40% Human Capital 25 Prevalence of stunting among children under 5 years of age % World Development Indicators 2019 Not applicable (WDI) Database 26 Under-5 mortality rate Number of under- World Development Indicators 2019 Not applicable five deaths per (WDI) Database 1,000 live births 27 Incidence of HIV % of uninfected World Development Indicators 2020 Not applicable population ages (WDI) Database 15-49 28 Population of children who cannot read by end-of-primary- % World Development Indicators Not applicable Not applicable school age (WDI) Database 29 Lower secondary gross completion rate % World Development Indicators 2017 Not applicable (WDI) Database Ratio of girls’ to boys’ completion rate % World Development Indicators 2017 Not applicable (WDI) Database 30 Lower secondary enrollment rate % World Development Indicators 2018 Not applicable (WDI) Database Ratio of girls’ to boys’ enrollment rate % World Development Indicators 2018 Not applicable (WDI) Database 31 People using basic drinking water services % of population World Development Indicators 2020 Not applicable (WDI) Database 32 People using basic sanitation services % of population World Development Indicators 2020 Not applicable (WDI) Database IDA20 CROSS-CUTTING ISSUES Debt 33 IDA countries with low or moderate risk from Number Staff estimate using CPIA scores 2020 Not applicable unsustainable debt Governance and Institutions 34 IDA countries with improved budget reliability, Number PEFA Secretariat 2019 Not applicable transparency of public finances, and control in budget execution - 108 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 35 Statistical Performance Indicators (score from 0 to 100) Index World Bank Statistical 2019 Not applicable Performance Indicators 36 IDA countries with increased tax fairness and progressivity Number Staff estimates using data from Not applicable Not applicable International Center for Tax and Development and Macro Poverty Outlook 37 Unweighted average increase in tax-to-GDP ratio in at least Number IMF WEO database; OECD Tax Not applicable Not applicable those IDA countries with tax revenues below 15 percent of Statistics; GFS their GDP for three consecutive years Technology 38 Individuals using the internet in IDA countries % of population World Development Indicators Not applicable (WDI) Database Crisis Preparedness 39 Prevalence of undernourishment in IDA countries % of population World Development Indicators Not applicable (WDI) Database Tier 2: IDA-Supported Development Results IDA20 SPECIAL THEMES Climate Change 1 Generation capacity of renewable energy GW PADs FY21 10 GW 2 Net GHG emissions tCO2eq / year Operations Portal and GHG FY21 Monitored Accounting Focal Points data submission files 3 People provided with access to clean cooking Number PADs and other project Not applicable 20 (millions) documentation 4 IDA countries supported to implement and/or update their Number of Staff assessment using World Not applicable 20 NBSAPs countries Bank systems 5 IDA countries with completed Country Climate Number of Staff assessment using World Not applicable 30-40 Development Reports countries Bank systems FCV 6 IDA FCS supported in building capacity to use field- Number of PADs, ISRs, ICRs and other FY21 18 appropriate digital open-source tools for collection and countries project documentation analysis of geo-tagged data, and apply this technology to enhance project implementation and coordination Jobs and Economic Transformation (JET) - 109 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 7 Farmers adopting improved agricultural technology Million PADs, IDA projects’ ISRs and FY21 6.5-7.0 ICRs 8 Area provided with new/improved irrigation or drainage Ha PADs, IDA projects’ ISRs and FY21 1.5-2.0 million services ICRs 9 People provided with new or improved electricity service Number of people PADs, IDA projects’ ISRs and FY21 35-50 (million) ICRs 10 Beneficiaries reached with financial services supported by Number of PADs, IDA projects’ ISRs and FY21 5.0-6.5 World Bank operations people/businesses ICRs (o/w 95% individuals - People (million) and 5% firms) - Businesses 11 Beneficiaries in IDA countries of job-focused interventions Number of people PADs, IDA projects’ ISRs and FY21 Monitored (million) ICRs 12 People with enhanced access to transportation services Number of people PADs, IDA projects’ ISRs and FY21 90-105 (million) ICRs 13 People provided with improved urban living conditions Number of people PADs, IDA projects’ ISRs and FY21 15-20 (million) ICRs Human Capital 14 Beneficiaries of social safety net programs (million) Number of people PADs, IDA projects’ ISRs and FY21 75-375 Note: This indicator would expand and disaggregate data (million) ICRs reporting on SSN beneficiaries from COVID-19 programs specifically 15 People who have received essential health, nutrition and Number of people PADs, IDA projects’ ISRs and FY21 285-430 population services (Indicator reporting total from [sub]- (million) ICRs indicators 16, 17 and 18 below) 16 Children Immunized Number of people PADs, IDA projects’ ISRs and FY21 105-200 (million) ICRs 17 Women and children who have received basic nutrition Number of people PADs, IDA projects’ ISRs and FY21 140-150 services (million) ICRs 18 Deliveries attended by skilled health personnel Number of people PADs, IDA projects’ ISRs and FY21 40-80 (million) ICRs 19 COVID-19 vaccine doses administered Number of doses IDA project documentation, Not applicable Monitored (million) World Bank SAP, staff calculations 20 Number of large-scale assessments completed at primary or Number PADs FY21 25-35 secondary level - 110 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 21 People provided with access to improved water sources Number of people PADs, IDA projects’ ISRs and FY21 13-20 (million) ICRs 22 People provided with access to improved sanitation Number of people PADs, IDA projects’ ISRs and FY21 12-18 services (million) ICRs IDA20 CROSS-CUTTING ISSUES Debt 23 IDA countries publishing annual and timely public debt Number of PADs, ISRs, ICRs and other FY21 30-35 reports countries project documentation Governance and Institutions 24 IDA countries provided statistical capacity building support Number of PADs, ISRs, ICRs and other FY21 55 by the WBG for the implementation of household surveys countries project documentation 25 Countries collecting disability data with IDA support Number of PADs, ISRs, ICRs, and other Not applicable Monitored countries project documentation Technology 26 People provided with enhanced access to broadband Number of people PADs, ISRs, ICRs, and other FY21 80-88 internet (million) project documentation Crisis Preparedness 27 Countries supported toward institutionalizing disaster risk Number of PADs, ISRs, ICRs and other FY21 55-70 reduction as a national priority with IDA support countries projects’ documentation 28 Countries integrating adaptive social protection into Number of PADs, ISRs, ICRs and other Not applicable Monitored national systems with IDA support. countries projects’ documentation DELIVERING OUTCOMES 29 Satisfactory outcomes of IDA Country Partnership %, IEG rating, 4- IEG FY18-FY21 70% Frameworks year rolling (4-year rolling) 30 Satisfactory outcomes of IDA operations: %, IEG rating, 3- IEG FY17-FY19 year rolling (3-year rolling) -as a share of commitments %, IEG rating, 3- IEG FY17-FY19 80% year rolling (3-year rolling) -as share of operations %, IEG rating, 3- IEG FY17-FY19 75% year rolling (3-year rolling) 31 Advisory Services and Analytics (ASA) objectives Client rating, % World Bank Satisfaction Survey FY21 80% accomplished - 111 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 32 Client feedback in IDA countries on WBG effectiveness Average rating WBG COS Program FY21 7 and impact on results scale: 1-10 33 Client feedback in IDA countries on WBG knowledge Average rating WBG COS Program FY21 7 scale: 1-10 Tier 3: IDA Organizational and Operational Effectiveness FINANCING OUTCOMES 1 IDA Budget Anchor % World Bank SAP /IDA Financial FY21 <=100 Statements 2 Bank budget to Portfolio Volume Ratio (per $ billion under $ million World Bank SAP and Business FY21 Monitored supervision) Warehouse 3 Average cost of IDA supervision projects (implementation $ thousand Business Warehouse FY21 Monitored support) 4 Share of climate co-benefits over total commitments in % World Bank SAP, PADs and/or FY21 35% over FY21-FY25 IDA-supported operations supporting documents 5 Share of adaptation co-benefits over total climate co- % World Bank SAP, PADs and/or FY21 >=50% benefits in IDA-supported operations supporting documents 6 Total private mobilization of WBG-supported $ billion World Bank SAP Monitored operations/transactions in IDA countries. - Direct mobilization FY21 - Indirect mobilization 7 IDA countries with the lowest Human Capital Index Number of Staff calculations based on World FY21 15 supported to improve the sustainability of human capital countries Bank systems financing 8 IDA financing commitments with disaster risk management $ billion WBG CPF reviews FY21 2 co-benefits MONITORING OUTCOMES 9 Satisfactory Bank performance in IDA-financed operations %, IEG Ratings IEG -Overall %, IEG Ratings IEG FY17-FY19 80% (3-year rolling) - 112 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) -At entry %, IEG Ratings IEG FY17-FY19 Monitored (3-year rolling) -During supervision %, IEG Ratings IEG FY17-FY19 Monitored (3-year rolling) 10 Quality of M&E in IDA-financed operations % IDA IEG FY17-FY19 60% commitments, (3-year rolling) IEG ratings, 3- year rolling 11 IDA projects with an AA Resilience Rating Number PADs and other project Not applicable 10 documentation 12 Percentage of IDA operations with substantial 3 climate co- % PADs Not applicable 95% benefits including at least one climate change indicator in the results framework 13 Percentage of IDA-supported projects that demonstrate a % World Bank SAP, PADs and/or FY21 60% results chain by linking gender gaps identified in analysis supporting documents. to specific actions that are tracked in the results framework IMPLEMENTING FOR OUTCOMES 14 Disbursement ratio % World Bank SAP FY21 20% 15 Proactivity Index % World Bank SAP FY21 80% 16 IDA-supported operations that address and respond to Number World Bank SAP, PADs and/or FY21 Monitored gender-based violence (GBV) supporting documents. 17 CPFs informed by diagnostics on crisis preparedness Number Staff calculations based on World Not applicable Monitored Bank systems 18 Facetime index in FCS Index/ Number of Staff calculations based on World FY21 Monitored days Bank systems 19 Share of IDA IPF operations that applied the concept of % of approved Staff calculations based on World FY21 Monitored universal access at design. IDA IPF in FY Bank systems 3 Includes all operations with 20 percent or more climate co-benefits. - 113 - Indicator Unit of Measure Data Source Date of Latest Expected Results Range/Value for IDA20 (FY23-FY25) 20 Countries supported by IDA to take IFF-related actions Number Staff calculations based on World FY21 Monitored Bank systems 21 Client feedback on WBG on responsiveness and staff Average rating WBG COS Program. FY21 7 accessibility scale: 1-10 22 Client feedback on WBG on collaboration with other Average rating WBG COS Program. FY21 8 donors scale: 1-10 23 Projects with beneficiary feedback at design % PADs FY21 100% - 114 - ANNEX 2. IDA20 POLICY COMMITMENTS Crisis Preparedness Governance and Institutions Debt Technology HUMAN CAPITAL Cross-Cutting Objective Policy Commitment Issue Boosting COVID-19 1. Support all IDA countries to strengthen health security and advance inclusive health systems and universal health vaccination rollout and coverage, including (i) containing the COVID-19 pandemic, through vaccine rollout, preventive measures, testing, strengthening pandemic treatment and care, and (ii) strengthening pandemic preparedness, including prevention, detection and response. preparedness Investing in children’s early 2. To promote child development, restore and expand access to quality early years services, including maternal and nutrition years services, in at least 30 IDA countries, of which 15 countries are among those IDA countries with the lowest HCI.a a The lowest HCI countries refer to the 30 IDA countries with the lowest Human Capital Index (HCI) Supporting core social service 3. To address gaps exacerbated by the COVID-19 crisis, in at least 40 IDA countries, of which 10 are FCS, support access delivery systems to core, quality, inclusive social services focused on: (i) social protection systems with a particular focus on vulnerable and underserved informal workers, and/or (ii) students’ return to school and accelerated recovery of learning losses, with a special focus on addressing constraints faced by girls, and/or (iii) children’s immunizations. Expanding adaptive social 4. To ensure inclusive and effective response against shocks and crises, especially among the poorest and most vulnerable, protection and building support at least 20 IDA countries’ resilience by building adaptive social protection systems, including the use of digital resilience to shocks technologies. Addressing learning poverty 5. To fill critical learning gaps and ensure improvements in learning outcomes, support at least 20 IDA countries, of which 10 are among those IDA countries with the lowest HCI, to reduce learning poverty by (i) measuring learning, with sex disaggregation and (ii) implementing core elements of the literacy policy package (e.g. effective literacy instruction, structured lesson plans, adequate reading materials for all children). Expanding access to core 6. To promote inclusive societies, support at least 18 IDA countries to meet the needs of persons with disabilities by services for persons with implementing the principles of non-discrimination, inclusion, and universal access as per the Environmental and Social disabilities Framework, through projects in education, health, social protection, water, urban, digital development and/or transport. Supporting prevention of and 7. To strengthen health security by improving pandemic preparedness and prevention at the nexus of human, animal, and preparedness for future ecosystem health, including zoonotic diseases and anti-microbial resistance, support at least 20 IDA countries to pandemics mainstream One Health approaches. Leveraging adequate, efficient 8. To strengthen public finance for human capital investments, support IDA operations in at least 20 IDA countries, of financing for human capital which eight are among those IDA countries with the lowest HCI through policy or administrative reforms impacting (i) the availability of resources, and/or (ii) the efficiency of expenditure management and/or (iii) the results-orientation of human capital investments. - 115 - CLIMATE CHANGE Cross-Cutting Objective Policy Commitment Issue 1. IDA’s Climate Co-Benefits share of total commitments will increase to 35 percent, on average over FY23-FY25, with at Increase Climate Co-benefits least 50 percent for adaptation. For IDA PSW operations, Climate Co-Benefits will increase to 35 percent of IFC and/or MIGA own account commitments under such operations, on average. Aligning all IDA operations 2. Starting in FY24, all new World Bank IDA20 operations will align with the Paris Agreement. By the end of IDA20, all with the Paris Agreement new IDA PSW real sector operations will be Paris aligned. Support will be provided to at least 30 countries to develop Country Climate and Development Reports and at least 50 countries to develop, update and/or implement Nationally Determined Contributions or Long-Term Strategies. Transitioning key systems for 3. Support at least 50 countries (including at least 20 FCS) to develop inclusive climate policies and increase investment in adaptation and mitigation climate adaptation and mitigation in at least one key transition system (i.e., agriculture, food, water and land; cities; transportation; and/or manufacturing), including community-led climate investments in at least 15 countries. Sustainable energy for all 4. Facilitate development of low-carbon energy sector development strategies and policies in at least 20 countries (including at least 8 FCS) and development of battery storage in at least 15 countries (including at least 10 FCS); provide direct, indirect, and enabling policy support for at least 10 gigawatts (GW) of renewable energy (including at least 1 GW in FCS). The support would cover on-grid, off-grid, and distributed renewable energy. Scaling-up green financing 5. Support at least 20 countries (including at least 5 FCS) to revise their financial regulatory frameworks to manage climate and environmental risks and to mobilize private capital for a low-carbon and resilient economy. Enhancing biodiversity and 6. Implement nature-based solutions, including landscape, seascape and watershed restoration and management or forest ecosystem services restoration and sustainable forest management, in at least 20 countries to support biodiversity and ecosystem services. Strengthening management of 7. Support at least 25 countries to implement integrated and sustainable management of freshwater, coastal and marine fresh water, coastal and ecosystems, including by addressing marine plastic pollution. marine ecosystems Increasing crisis preparedness 8. Support at least 25 countries (including at least 10 FCS) facing natural hazards and food crises to improve their crisis and response preparedness and response capacity by strengthening related institutional and planning frameworks and/or physical infrastructure. This support should include improving climate data and information services (such as hydromet and early warning systems) in at least 10 countries. - 116 - FRAGILITY, CONFLICT AND VIOLENCE Cross-Cutting Objective Policy Commitment Issue Operationalizing the FCV 1. Reinforce implementation of the WBG FCV Strategy, by ensuring that all country engagement productsa in IDA FCS Strategy through better demonstrate how the WBG program, in collaboration with relevant partners, help address FCV drivers and sources of tailored country engagement resilience, based on FCV diagnostics and FCV sensitive portfolio analysis undertaken in Risk and Resilience Assessments (RRAs) or other FCV assessments. An FCV lens will continue to be integrated into relevant joint World Bank-IFC Country Private Sector Diagnostics in IDA FCS. a Country engagement products include Country Partnership Frameworks (CPFs), Country Engagement Notes (CENs) and Performance and Learning Reviews (PLRs). Leveraging outcomes for both 2. Work with government counterparts and other partners to ensure that, by the end of IDA 20, at least 60 percent of the refugee and host communities countries eligible for the Window for Host Communities and Refugees (WHR) will have implemented significant policy reforms related to the WHR purposes, as identified through the Refugee Policy Review Framework. Strengthening core 3. Support 40 percent of IDA countries in FCS (with active portfolios) to establish and/or strengthen core government governance institutions functions that facilitate effective, inclusive, and responsive public services, enhance transparency and accountability, and promote resilience and trust, including by partnering with key national and international stakeholders. Addressing transboundary 4. Implement regional initiatives in the Sahel, Lake Chad, the Horn of Africa, and Central Asia to help address drivers of FCV and recovering transboundary drivers of FCV, support transboundary resilience, and / or strengthen regional crisis risk preparedness and from crisis mitigation together with key relevant partners. IFC will commit to leverage its local presence to scale up upstream and advisory service activities in these areas, leading to enhanced private sector opportunities. - 117 - GENDER AND DEVELOPMENT Cross-Cutting Objective Policy Commitment Issue Investing in women’s 1. Support women’s empowerment, through restoring and expanding access to quality and affordable sexual and empowerment reproductive, adolescent, and maternal health services, in at least 30 IDA countries, of which 15 countries with the lowest HCI. Scaling up productive 2. Incorporate specific productive economic inclusion components (e.g., producer cooperatives/associations, digital economic inclusion finance/savings and service delivery, entrepreneurship support, social care services, regulatory frameworks, and/or links to market support) for women in at least 35 IDA social protection/jobs, agriculture, urban, and/or community development projects. Expanding childcare 3. Support at least 15 IDA countries to expand access to quality, affordable childcare, especially for low-income parents. Supporting medium and high 4. At least 35 percent of IDA20 infrastructure operations (transport, energy, and water) will include actions to create skilled employment employment opportunities for women in medium and high skilled jobs in these sectors. opportunities for women Closing the gap in digital 5. At least 30 IDA20 operations in digital development, financial inclusion, and agriculture will increase women’s access to technology and usage of digital technology to close gender gaps in access and usage. Strengthening women’s land 6. At least 70 percent of IDA20 operations with land activities in (i) land administration, (ii) post-disaster reconstruction rights and resilient recovery, and (iii) urban development will include specific actions to strengthen women’s land rights. Increasing support to 7. Support at least 10 IDA countries to strengthen national policy frameworks for prevention and response to GBV, and in prevention of and response to at least 15 IDA countries, of which five are FCS, support GBV related services in health systems, and implement GBV Gender-based Violence prevention and response protocols as part of safe and inclusive educational institutions. (GBV) Implementing fiscal policy 8. Support at least 10 IDA countries to make their fiscal policy and budget systems more inclusive and gender responsive and budget systems to close by, for example, budget reforms, removing discriminatory provisions from tax legislation and/or monitoring the gender gaps effectiveness of public spending, including where appropriate through fiscal incidence analysis for equality policies. - 118 - JOBS AND ECONOMIC TRANSFORMATION Cross-Cutting Objective Policy Commitment Issue Supporting resilient financial 1. Strengthen the resilience, inclusion and depth of the financial system in 15 IDA countries, including five FCS, based on systems for recovery FSAP or similar financial sector analytics to support a robust and inclusive recovery. Leveraging One WBG to 2. In the context of IDA PSW operations involving IFC, IFC will aim to increase the share of its commitments in FCS- increase private investments IDA17 & LIC-IDA17 countries, reaching 12-17 percent of Own-Account commitments on average during the IDA20 cycle, with an intent to reach an Own-Account annual commitment of 14-17 percent in the last fiscal year of IDA20. Consistent with this aim, targeted platforms and programmatic approaches for IDA PSW-eligible countries will be supported to develop and encourage scalable initiatives across sectors in these countries, including those targeted to support small and medium-sized enterprises, for trade finance purposes, in support of gender, and for climate friendly investments focused on mitigation and adaptation. Delivering quality 3. Support at least 20 countries, of which 10 have a score of 3.0 or less on Country Policy and Institutional Assessment infrastructure investments in Dimension 16 covering transparency, accountability and corruption, to identify the governance constraints to the countries with governance development, financing, and delivery of quality infrastructure investments, with particular attention to resilience, climate challenges and environment, and regulatory practices, transparency and integrity, to inform the adoption of policies and/or regulations for enhanced infrastructure governance in a majority of these. These will be undertaken through Infrastructure Sector Assessments Programs and standalone governance assessments that support improved delivery of quality infrastructure services. Creating better jobs and 4. Support interventions to address market failures and remove constraints in sectors with high potential for the private sustainable, inclusive sector to drive sustainable and inclusive economic transformation and create better jobs, or where women and youth economic transformation in disproportionately work, in 20 IDA countries, of which five are FCS, including through upstream activities and informed high potential sectors by data and private sector development diagnostics such as the joint IFC-WB Country Private Sector Diagnostics, and selected in agreement with country authorities. Boosting agriculture 5. Improve agricultural productivity, including through the promotion of climate-smart agriculture, and strengthen productivity, value chains sustainable agri-business value chains with high potential for growth and better jobs addressing modernization and food and food security and nutrition security in 15 IDA countries, including five FCS, in ways that are inclusive, expanding training for agricultural workers to access these better jobs, and encouraging private sector opportunities. Expanding broadband access 6. To close the connectivity gap, IDA will support 17 IDA countries, including those which will benefit from IFC’s support and usage for jobs of the under the IDA PSW to develop digital infrastructure, to increase inclusive, secure and affordable access to and usage of future broadband connectivity, among which are six landlocked countries, four Small States and nine FCS. Positioning more firms for 7. Support programs in 15 IDA countries, to strengthen private sector recovery and transformation that are well targeted, recovery, including through inclusive of SMEs and support the adoption of digital technologies, with monitoring to capture distributional impacts and the adoption of digital effectiveness. To support this, IFC will increase its support to digital infrastructure, with consideration of cyber security technology and related issues, and its venture capital work in IDA and FCS countries. Boosting institutional 8. Support 34 IDA countries including those with ongoing statistical operations (i) to strengthen institutions and build capacity to improve data for capacity to reduce gaps in the availability of core data for evidence-based policy making, including disaggregation by sex policy decision-making and disability where appropriate; and (ii) to increase resilience of statistical systems, including through investments in digital technology and high-frequency monitoring capabilities. - 119 - CRISIS PREPAREDNESS Cross-Cutting Objective Policy Commitment Issue Strengthening crisis 1. WBG country programs in all IDA countries will provide technical and financial support to strengthen crisis preparedness preparedness. Such support will be informed by appropriate crisis preparedness assessments such as the Crisis Preparedness Gap Analysis (CPGA) and/or other relevant diagnostic tools. GOVERNANCE AND INSTITUTIONS Cross-Cutting Objective Policy Commitment Issue Increasing debt transparency 1. Support 50 IDA countries in publishing comprehensive public and publicly guaranteed debt reports or fiscal risk and fiscal sustainability statements. Improving domestic resource 2. Support 15 IDA countries to bolster their domestic resource mobilization capacity through equitable (fair and mobilization progressive) revenue policies (as verified using fiscal incidence analysis or other methods) toward achieving a tax-GDP ratio of at least 15 percent in the medium term.a a Revenue policies include tax administrative policies, including those that seek to improve and introduce new tax compliance measures. The concept of equitable DRM has two dimensions: (1) fairness (taxpayer with similar income or property should be treated similarly); and (2) progressivity (contribution according to taxpayers’ ability to pay). Enabling digital government 3. Support at least 15 IDA countries to adopt universally accessible GovTech policies, regulations or solutions to enable services secure digital government services. Combatting illicit financial 4. Support at least five countries to conduct comprehensive Illicit Financial Flows (IFF) assessments and prepare action flows plans. Also support at least 20 IDA countries to undertake policy actions that tackle corruption, money laundering, and/or tax evasion to reduce IFF, such as strengthening public accountability mechanisms, increasing access to and awareness of beneficial ownership information, and/or adopting automatic exchange of information to reduce tax evasion. - 120 - ANNEX 3. PERFORMANCE-BASED ALLOCATION SYSTEM A. CALCULATION OF COUNTRY ALLOCATIONS 1. Country allocations from the International Development Association (IDA) provide unearmarked resources to IDA countries, aligned with Country Partnership Frameworks (CPFs). Country allocations are fundamental to IDA’s value proposition and its country-driven model. They are calculated following the Performance Based Allocations (PBA) system, which strategically allocates resources based on countries’ performance in implementing policies that promote economic growth and poverty reduction (assessed through the Country Performance Rating (CPR)) and their financing needs (assessed by their population and Gross National Income (GNI) per capita). The PBA system constitutes the centerpiece of IDA’s mechanism to allocate country resources and—since IDA19—is complemented by a new envelope providing targeted resource boosts to eligible countries facing risks of fragility, conflict, and violence (FCV). Country allocations are subject to set-asides under the Sustainable Development Finance Policy (SDFP). 2. CPR of IDA countries are Box A3. 1. CPIA Criteria determined annually based on the Country Policy and Institutional A. Economic Management 1. Monetary and Exchange Rate Policies Assessment (CPIA) and the 2. Fiscal Policy Portfolio Performance Ratings 3. Debt Policy and Management (PPR). The CPIA assesses each country’s policy and institutional B. Structural Policies framework through 16 specific criteria 4. Trade grouped into four clusters: (a) 5. Financial Sector economic management; (b) structural 6. Business Regulatory Environment policies; c) policies for social inclusion and equity; and (d) public sector C. Policies for Social Inclusion management and institutions. (see Box 7. Gender Equality A3.1). 1 To ensure that ratings are 8. Equity of Public Resource Use 9. Building Human Resources consistent within and across regions, 10. Social Protection and Labor country teams are provided with the 11. Policies and Institutions for Environmental same questions, definitions and clear Sustainability guidance for each criterion. This is followed by a process of institutional D. Public Sector Management and Institutions review of all country ratings to ensure 12. Property Rights and Rule-based Governance harmonization before finalization. 13. Quality of Budgetary and Financial Management 14. Efficiency of Revenue Mobilization 15. Quality of Public Administration 16. Transparency, Accountability and Corruption in the Public Sector 1 For details on the CPIA Questionnaire, see: CPIA Criteria 2021 - 121 - 3. The CPIA underpins IDA’s CPR but is not its only determinant. The IDA PPR, 2 which captures the quality of management of IDA’s projects and programs, also enters in the calculation of the CPR. As in IDA19, the following formula will be used to calculate the CPR in IDA20: Country Performance (0.24 × CPIAA-C + 0.68 × CPIAD Rating + 0.08 × PPR) Where: CPIAA-C is the average of the ratings of CPIA clusters A to C; and CPIAD is the rating of CPIA cluster D. 4. The formula underpinning the PBA system is presented below. The CPR (with an exponent of 3) 3 is the main determinant of IDA country allocations. Country needs are also taken into account through the population size and GNI per capita. Population affects allocations positively (with an exponent of 1) while the level of GNI per capita is negatively related to allocations (with an exponent of -0.125). Specifically: f (CPR3, Population, GNI Per IDA Country Allocation Capita-0.125) 5. In IDA20, the minimum IDA allocation, or base allocation, will remain at SDR 15 million per fiscal year (equivalent to $20.7 million), i.e., SDR 45 million per replenishment (equivalent to $62.2 million). The base allocation was increased substantially in IDA18 to meet the fixed costs of country engagement and maintain an effective country program in Small States, several of which are also Fragile and Conflict-affected Situations (FCS). 6. Country allocations are determined annually with changes reflecting, inter alia, the country’s own performance and its performance relative to other countries, eligibility for IDA financing, and availability of IDA resources. B. FCV ENVELOPE 7. Country allocations calculated through the PBA formula will continue to be complemented by dedicated allocations from the FCV Envelope for eligible IDA countries experiencing FCV challenges. The FCV Envelope provides tailored support to countries through three specific types of allocations based on relevant FCV drivers. Details on the FCV Envelope are provided in Annex 4. Fragility, Conflict and Violence Envelope Implementation Arrangements. 2 The PPR reflects the health of the IDA portfolio, as measured by the percentage of problem projects in each country. 3 The CPR exponent was reduced from 4 to 3 since IDA18 to increase the poverty-orientation of the regular PBA system. This has allowed an increased IDA engagement in the poorest countries, notably the broader group of FCS, most of which have low per-capita GNI levels, while preserving the principle of performance orientation in the allocation system. - 122 - C. SUSTAINABLE DEVELOPMENT FINANCE POLICY 8. Country allocations are subject to allocation set-asides under the SDFP, which seeks to incentivize IDA countries towards more sustainable borrowing practices. Under the SDFP, IDA countries facing elevated debt vulnerabilities need to establish Performance and Policy Actions (PPAs) for each FY. Countries that fail to implement their PPAs successfully may be subject to a set-aside on their country allocations. This set-aside can nonetheless be recovered if the PPAs are satisfactorily completed in the following year; alternatively, if the PPAs are not satisfactorily completed the following year, the set-aside is irrevocably lost. Details on the SDFP and set-aside mechanism are provided in Annex 10. Sustainable Development Finance Policy. D. SHORTER MATURITY LOANS AND 50-YEAR CREDITS 9. New IDA financing terms are temporarily introduced in IDA20 as Balance Sheet Optimization (BSO) measures. New terms include concessional shorter-maturity loans (SMLs) to be offered proportionally through two elements of the IDA financial architecture: (a) the Scale- Up Window (SUW), and (b) Country allocations based on the PBA system. As such, individual country allocations are first determined based on the PBA, as well as FCV top-up, if applicable; subsequently, the grant-credit mix is determined according to the Grant Allocation Framework (GAF) as well as SMLs eligibility. In this, IDA-only yellow light, IDA-only green light, as well as IDA Gap and Blend countries (unless they are red light Small States) will receive a small portion of their country allocations as SMLs, while IDA-only red-light countries will receive the comparable share in grants, instead of SMLs. Also, before yellow IDA-only countries are provided with access to SMLs, the impact of the SMLs on their debt sustainability would be checked through Debt Sustainability Analyses. 10. IDA20 will also introduce the provision of 50-year credits as a new financing term. The 50-year credits will be offered to IDA-only yellow light countries (with exception for Small States) in lieu of the grant-credit mix in IDA19, and have a 50-year final maturity, 10-year grace period, and zero interest on service charges. This new financing term will apply to both country allocations and windows (as part of GAF). As such, IDA-only yellow light countries (with exception for Small States) will now receive their IDA resources mostly as 50-year credits along with a small portion in concessional SMLs for their country allocations. IDA-only yellow light Small States will continue to receive their resources in grant-credit mix and a small portion in SMLs. E. ADDITIONAL CONSIDERATIONS 11. The following exceptions to the PBA formula will remain in place in IDA20: a. As endorsed by IDA Participants during the IDA18 MTR, a 7 percent cap on the total country-allocable envelope will be applied to countries with significant access to International Bank for Reconstruction and Development (IBRD) and IDA in cumulative terms. In IDA20, this will apply to Pakistan, which falls in this category. - 123 - b. Eligible countries that make meaningful progress may qualify for exceptional allocations to help finance the cost associated with the clearance of arrears to IBRD and/or IDA, the allocation would occur when such arrears clearance actually takes place. 4 12. While country allocations based on the PBA system constitute the centerpiece of IDA’s resource allocation system, they will continue to be complemented by dedicated funding under the IDA20 thematic windows: a. IDA will continue to support development opportunities for refugee and host communities through the Window for Host Communities and Refugees (WHR). (See Annex 5. Windows for Host Communities and Refugees Implementation Arrangements.) b. IDA will continue to support regional integration through the Regional Window. (See Annex 6. Regional Window Implementation Arrangements.) c. IDA will continue to provide additional allocations for crisis response through the Crisis Response Window (CRW). (See Annex 7. Crisis Response Window Implementation Arrangements.) d. The IDA Private Sector Window (PSW) will continue to support the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) to mobilize private sector investments into IDA FCS and IDA-only countries. (See Annex 8. Private Sector Window Implementation Arrangements.) e. IDA will continue to offer non-concessional financing under strict circumstances through the SUW. In addition, IDA will offer the concessional SUW-SMLs only in IDA20 in order to scale up investments in eligible countries needed in the short and medium-term as part of their COVID-19 response. (See Annex 9. Scale Up Window Implementation Arrangements.) F. DISCLOSURE 13. IDA countries are informed of the performance assessment process, which is increasingly integrated into the country dialogue. Since IDA14, the numerical ratings for each of the CPIA and CPR criteria have been fully disclosed on IDA’s external website. Starting in IDA15, the country allocations and commitments have also been disclosed annually to the Executive Directors of IDA on an ex-post basis (i.e., at the end of each fiscal year) to increase transparency. Starting in IDA16, the country allocations and commitments have been disclosed on IDA’s external website as well. 4 IDA. 2007. Further Elaboration of a Systematic Approach to Arrears Clearance. Available at https://thedocs.worldbank.org/en/doc/a86a13ca60f766828c4c82bb1f95cb4e- 0410012016/original/arrearsclearancemz.pdf - 124 - ANNEX 4. FRAGILITY, CONFLICT AND VIOLENCE ENVELOPE IMPLEMENTATION ARRANGEMENTS 1. The FCV Envelope, established and operationalized in IDA19, will continue to provide tailored support to eligible countries in IDA20. The FCV Envelope enables IDA to seize opportunities and respond with greater agility to the dynamic needs of IDA countries facing fragility, conflict, and violence. It also enables IDA to offer support that is targeted and tailored to the prevailing conflict and fragility dynamics specific to each IDA client. The FCV Envelope offers a strong incentive and accountability structure, including discussion by the IDA Board of Executive Directors of all eligibility notes. 2. Countries eligible in IDA19 Figure A4. 1. IDA20 FCV Envelope by Allocation will not be required to re-do the FCV envelope eligibility process in Turn Around IDA20, rather, their continued Allocation eligibility would be confirmed Prevention and Resilience 125% PBA top-up $1.25bn cap through an annual review process Allocation which examines country 75% PBA top-up $700m cap performance. The Envelope’s design has worked well so far, and it will Remaining Engaged during continue to operate within the PBA Conflict system. The top-ups and top-up caps Allocation will remain the same as in IDA19. On PBA Floor (CPR 2.5) financing terms, the FCV Envelope is $300m cap integrated into country allocations and serves to boost volume only, so top-up resources will have the same composition and share of terms as Pillar 1: Pillar 2: Pillar 3: country allocations and set asides Pivoting to Remaining Engaged Transitioning Prevention under the SDFP apply to these during out of FCV allocations. RECA countries are Conflict excluded from the requirement to establish PPAs. 3. FCV envelope resources are provided under three separate allocations. The three allocations, described below, share several common features (see Box A4.1). a. The Prevention and Resilience Allocation (PRA) provides enhanced support for countries at risk of escalating into high-intensity conflict or large-scale violence. b. The Remaining Engaged during Conflict Allocation (RECA) enables IDA to maintain a base level of engagement in a small number of countries that experience high-intensity conflict and have extremely limited government capacity. - 125 - c. The Turn Around Allocation (TAA) supports countries emerging from conflict, social/political crisis, or disengagement, and where there is a window of opportunity for IDA to either re-engage or intensify engagement to support these countries to pursue major reforms to accelerate the transition out of fragility and build resilience. Box A4. 1. Common Features of the FCV Envelope The three allocations comprising the FCV Envelope share several common features. In-cycle identification. Eligibility for an allocation can be assessed at any time during the IDA cycle. Countries may apply in FY22 (ending in June 2022) so that allocations are available at the beginning of IDA20 (starting in July 2022). A country may move between different types of allocations within the Envelope throughout the IDA cycle, but may receive only one allocation at any given time. Eligibility-based processing. Each allocation will have an initial eligibility process, and continued eligibility will be based on annual reviews. Countries eligible in IDA19 will not be required to go through the eligibility process again in IDA20. The task team submits the draft eligibility note to the respective focal points in DFi, OPCS, and FCV Group, the FCV lawyer, the IDA and Country Lawyer for advice. Decisions to access the FCV Envelope will be made by DFi with concurrence of OPCS in the same way as in IDA19. Teams will consult with relevant stakeholders in country, including with the UN, when developing the eligibility notes. To the extent possible, eligibility and annual review processes will be synchronized with the country’s CEN (Country Engagement Note) /CPF (Country Partnership Framework) /PLR (Performance and Learning Review) cycle. If country circumstances change and eligibility arises off-cycle, country teams will prepare a stand-alone Eligibility Note. All Eligibility Notes, whether submitted as part of the CEN/CPF/PLR or as a standalone document, will be submitted to the Board for discussion. PBA-aligned financing. Allocations will supplement the country’s PBA by a percentage amount, up to a national top-up cap for the IDA20 period. Financing will be on the same terms as the country’s PBA. Financing from the FCV Envelope should not bring a country’s allocation above seven percent of total country allocations. Countries receiving an FCV Envelope allocation may also continue to access IDA20 windows. Prioritization within the country program. With the increased allocation received from FCV Envelope, the country portfolio will be recalibrated to focus more directly on the purposes and activities for which the allocation is made. - 126 - A. PREVENTION AND RESILIENCE ALLOCATION (PRA) 4. Purpose. As a key financial tool in the pivot to prevention, the PRA supports governments to take proactive measures against escalating conflict and violence. It provides enhanced support for countries at risk of escalating into high-intensity conflict or large-scale violence, where the Government is committed to addressing the underlying drivers of conflict and violence. The PRA enables more agile responses to changing fragility and conflict dynamics, while also ensuring country ownership. 5. Eligibility. PRA eligibility is based on two criteria: (i) a quantified indicator that identifies countries that are at risk of escalating into high-intensity conflict or large-scale violence; 1 and (ii) a Government strategy or plan acceptable to IDA that describes the concrete steps that the country will take to reduce the risks of conflict or violence, and the corresponding milestones the Government commits to implementing with support from the PRA. These eligibility criteria are designed to provide a basis for IDA programming that is genuinely country-led and focused on reducing conflict and violence. 6. Allocation. The PRA will top up a country’s PBA by 75 percent, up to a national top-up cap of $700 million per country for IDA20. 2 7. Financing Terms. Financing will be provided on the same terms as the country’s PBA. While this is a significant top-up, World Bank assesses demand and absorptive capacity to be adequate to scale up meaningful programming in these countries. This also aligns with prioritization of prevention given its net benefits, as outlined in Pathways for Peace. 3 8. Activities. Countries receiving a PRA need to recalibrate their IDA portfolio to focus on de-escalating the conflict and violence through development interventions. This recalibration should be reflected in country dialogue as well as in the pipeline and portfolio of investments and analytical products, as appropriate to each context. The PRA facilitates WB engagement with the Government on critical yet difficult issues and scale up best-fit preventive and inclusive approaches beyond business as usual. Countries may apply for the PRA at any time during the IDA20 cycle by demonstrating the risks, the Government’s plan to address the risks and 1 Data show that the existence of small-scale conflict is one of the strongest predictors of large-scale conflict, reflecting the notion that violence breeds violence. With this in mind, indicators to identify those countries at highest risk of escalating into high-intensity conflict include: (i) countries that already experience some low-level conflict, measured as between 2 and 10 conflict-related deaths per 100,000 people, and an absolute number of conflict-related deaths above 250; and (ii) countries experiencing a rapid deterioration of the security situation, meaning a number of conflict-related deaths between 1 and 2 per 100,000 people, an absolute number above 250, and an increase in conflict-related deaths that is at least double the previous year. This criterion will be based on data from the Armed Conflict Location and Event Data Project (ACLED) and/or the Uppsala Conflict Data Program (UCDP). Below that range, regular PBA can be used to address low risks of conflict, and above that range, the country may become eligible for the RECA. For inter-personal violence, the criterion will be measured as more than 50 intentional homicide-related deaths per 100,000 people using United Nations Office on Drugs and Crime data. 2 Downwards adjustments to this allocation may be warranted in certain circumstances, such as weak absorptive capacity or debt considerations. 3 United Nations and World Bank. 2018. Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict. Washington, DC: World Bank Group. - 127 - accompanying milestones, and the WB’s supportive program. 4 Continued access to the PRA will be subject to annual reviews. 5 B. REMAINING ENGAGED DURING CONFLICT ALLOCATION (RECA) 9. Purpose. The RECA provides a base level of support in rare cases in which a country’s PBA is extremely low due to the often-related combination of high-intensity conflict and weak institutional capacity. Based on lessons from the IDA18-19 engagement in the Republic of Yemen and South Sudan, this financing tool gives IDA the option to support countries in circumstances where, despite conflict, the WB can meaningfully engage to preserve institutional capacity and human capital that will be critical for the country’s future recovery. 10. Eligibility. Eligibility for the RECA will be based on three criteria: (a) a quantified indicator that identifies countries in high-intensity conflict; 6 (b) a Country Policy and Institutional Assessment (CPIA) of 2.5 or below; and (c) a proposed program that is consistent with the RECA. The RECA designation enables more agile responses to changing conflict dynamics. Countries may apply for the allocation at any time during the IDA20 cycle by demonstrating the WB’s proposed approach, including the program, policy dialogue, partnerships and coordination, portfolio pipeline and risk management including the potential impact of IDA’s program on conflict dynamics. 7 Continued access to the RECA is subject to annual reviews. 8 11. Allocation. The RECA tops up a country’s PBA on the same terms as its PBA. If the country’s CPR is 2.5 or below, 9 their PBA will be calculated on the assumption that their CPR is 2.5, up to a national top-up cap of $300 million. 10 RECA countries may also access IDA windows, including the Crisis Response Window (CRW). 4 A PRA Eligibility Note will address: (i) the risks of conflict and violence that the country is facing; (ii) the government’s strategy to mitigate these risks; (iii) milestones that the government commits to meet to progress on preventing the escalation of conflict similar to CPF indicators; (iv) a summary of other partners’ activities; and (v) the WB’s proposed approach, including partnerships, adjustments to the country program, including policy dialogue, portfolio, and pipeline. The Eligibility Note will be synchronized with the CEN/CPF/PLR cycle where possible. The Eligibility Note will be submitted to the Board for discussion. 5 A PRA annual review will update: (i) on risks and the Government’s approach to mitigating these risks; (ii) the Government’s performance against the agreed milestones; (iii) how PRA resources have been used and progress made in recalibrating the country portfolio; and (iv) updates to the WB program and/or the Government’s milestones. In cases where agreed milestones have not been met due to factors within the Government’s control, access to the PRA will be suspended, and the country would return to regular PBA the following FY. 6 The criterion will be measured as 10 or more conflict-related deaths per 100,000 people using ACLED and/or UCDP data. 7 A RECA eligibility note would address (i) situation country is facing; (ii) description on need for preservations of institutions and human capital; (iii) WB proposed program including policy dialogue, partnerships, pipeline and risk management; and (iv) partnership and third-party direct financing. 8 A RECA annual review will address: (i) how the RECA allocation has been used; (ii) conflict dynamics; and (iii) any adjustments to the WB program. 9 Downwards adjustments to this allocation may be warranted in certain circumstances, such as weak absorptive capacity or debt considerations. 10 During high-intensity conflict, it can be difficult to collect the data needed to generate the country’s GNI per capita and population. Where this occurs, the average of the last three years of reliable data will be used for calculations. - 128 - 12. Activities. The RECA is used to finance a specific set of development activities focused on WB comparative advantage as a development actor in the country context. The allocation enables the country portfolio to focus on development activities that preserve institutions and human capital, such as delivery of basic services and capacity building in key institutions. The use of the allocation seeks to ensure value for money in achieving development outcomes, while recognizing that working in these contexts entails higher costs. 13. UN Agencies and International Non-Governmental Organizations (INGOs). In the following limited circumstances, 11 IDA funding in RECA countries 12 may be provided directly to UN agencies and INGOs: 13 a. A government request to provide financing directly to organizations to carry out operations due to capacity constraints of the Government to effectively manage and implement operations; b. Demonstrated value-added of IDA financing to ensure activities and outcomes supported by IDA are consistent with IDA’s development mandate and are additional (i.e., are not already planned or financed by executing parties); c. Demonstrated attention to rebuilding national and/or local systems, including institutional strengthening and capacity building in line with IDA’s rationale for engagement during conflict by focusing on preserving development gains and building capacity for future recovery; and d. Demonstrated attention to sustainability including that the executing parties have a financing plan that goes beyond IDA to support recurrent costs. C. TURN AROUND ALLOCATION (TAA) 14. Purpose. The TAA provides enhanced support to countries that are emerging from conflict, or social/political crisis or disengagement, and where the Government is pursuing a reform agenda to accelerate its transition out of fragility and build resilience. These are countries at a critical juncture in their development trajectory where there is a significant window of opportunity for IDA to help build stability and resilience to accelerate the transition out of fragility. 11 This is in addition to the circumstances where the WB operational policies already allow for such direct financing to UN agencies and/or INGOs. These criterion must be met for each RECA-financed operation. 12 This will apply to RECA countries accessing CRW or other IDA funding. 13 In such cases, no commitment charge would apply. - 129 - 15. Eligibility. Eligibility for the TAA is based on three criteria: (a) a CPIA of 3.0 or below, or a period of disengagement; 14 (b) a Government strategy or plan acceptable to IDA that describes how the country is turning around, including the concrete steps that the country will take to implement a reform agenda to accelerate its transition out of fragility and build resilience, and the corresponding milestones the Government commits to implement with support from the TAA; and (c) a CEN/CPF that makes a compelling case for WB support to the Government’s reform agenda. 16. Allocations. The TAA tops up a country’s PBA on the same terms as its PBA. The top-up is 125 percent of the country’s PBA up to a national cap of $1.25 billion per country during IDA20. 15 While this is a significant allocation, the WB assesses that there is ample demand and absorptive capacity to scale up meaningful programming in these countries. 17. Activities. Countries receiving the TAA develop/recalibrate their IDA portfolio to focus on the Government’s reform agenda. The TAA helps to scale up and focus the country portfolio on supporting the Government’s efforts to implement major policy shifts to accelerate its transition out of fragility and build resilience. Countries may apply for the TAA at any time by demonstrating how the country is turning around, the Government’s reform agenda, the WB’s supportive program, and accompanying milestones. 16 Continued access will be subject to annual reviews. 17 14 Currently, three IDA countries are disengaged from IDA, namely Eritrea, Syria, and Zimbabwe. These countries may choose to re-engage during IDA20 after clearing arrears to IDA and/or IBRD. In the case of Syria, as stated in the IDA18 and 19 Replenishment Report, commitment of IDA funds will require the following: (i) arrangements for the clearance of IDA arrears; and (ii) the WBG’s ability to engage with an appropriate government counterpart and to effectively appraise and supervise projects in the country (whether through staff presence or the use of third-party monitoring agents). If Syria were eligible for the TAA, it could receive up to $1 billion, subject to performance. 15 Downwards adjustments to this allocation may be warranted in certain circumstances, such as weak absorptive capacity or debt considerations. For countries with a CPR of 2.5 or below (including RECA countries moving to the TAA or other post-conflict countries with weak institutions), a CPR floor of 2.5 will be used to calculate their PBA before the 125 percent top-up is applied. The same can be done for a re-engaging country that has very low CPIA and/or CPR. In those rare cases, the CPR floor of 2.5 can be used to calculate their PBA, as if that country were coming from the RECA to the TAA. This eliminates the need for a Post-Conflict Performance Indicator. 16 The TAA Eligibility Note will address: (i) analysis of change/reengagement/FCV drivers and sources of resilience; (ii) the significant window of opportunity, and the government’s strategy to seize this opportunity; (iii) milestones that the government commits to meet with support from the TAA, similar to CPF indicators; (iv) a summary of other partners’ activities; and (v) the WB’s proposed approach, including partnerships, adjustments to the program, including policy dialogue, portfolio, and pipeline. The Eligibility Note will be submitted to the Board for discussion. 17 A TAA annual review will address: (i) how the TAA has been used and progress made in recalibrating the country portfolio; (ii) updates on risks and the implementation of the Government’s reform agenda; (iii) the Government’s performance against the agreed milestones; and (iv) adjustments to the WB program and/or the milestones. In cases where agreed milestones have not been met, or relapse into conflict, access to the TAA will be suspended, and the country would return to regular PBA the following FY. - 130 - ANNEX 5. WINDOW FOR HOST COMMUNITIES AND REFUGEES IMPLEMENTATION ARRANGEMENTS 1. Purpose: The Window for Host Communities and Refugees (WHR) supports operations that promote medium to long-term development opportunities for both refugees and host communities in IDA countries. The purpose of the WHR is to support refugee hosting countries to: (a) mitigate the shocks caused by refugee inflows and create social and economic development opportunities for refugees and host communities; (b) facilitate sustainable solutions to protracted refugee situations including through the sustainable socio-economic inclusion of refugees in the host country and/or their return to the country of origin; and (c) strengthen country preparedness for increased or potential new refugee flows. 2. Activities: In IDA20, the WHR will continue to support host governments to address development needs of both refugees and host communities, focusing on the medium to long-term development needs, not humanitarian needs, which are the mandate of other organizations. Priority initiatives may include operations that: (a) promote refugees’ welfare and inclusion in the host country’s socio-economic structures, including COVID-19 response and green, inclusive and resilient recovery efforts; (b) support legal solutions and/or policy reforms with regard to refugees, e.g., freedom of movement, formal labor force participation, identification documents and residency permits; (c) help support access and quality of services, including COVID-19 vaccines, education, off-grid energy solutions, digital connectivity and basic infrastructure provided to refugees and host communities; (d) support livelihoods and employment opportunities in host community areas, tailored to the needs and constraints of refugees and host community members; (e) support policy dialogue and activities to facilitate and ensure the sustainability of return where refugees go back to their country of origin; and (f) strengthen government finances where these have been strained by expenditures related to their hosting responsibilities. Addressing gender gaps will continue to be a focus under WHR operations: since the beginning of IDA18, around two-thirds of operations have been gender tagged, and this is expected to increase further in IDA20. 3. Eligibility Criteria: WHR policies have been working well and will be retained in IDA20. While the number of refugees living in IDA countries has increased from 8.9 million in 2017 to 9.5 million in 2020, refugees continue to concentrate in the same IDA countries, so the number of WHR-eligible countries is expected to increase slightly (with some new entrants) while their needs are likely to rise. The window will continue to finance all instruments, and the required 10 percent PBA contribution will be retained. Approval of WHR financing is a two-step process. First, a country’s eligibility to receive WHR support is established. Once a country becomes eligible, individual operations are reviewed and cleared for WHR financing before submission to the Board. Specifically, the eligibility criteria for the WHR will remain the same as in IDA19, namely: (a) the number of UNHCR-registered refugees is at least 25,000 or 0.1 percent of the population; (b) the country adheres to an adequate framework for the protection of refugees; and (c) the Government has in place a strategy or plan acceptable to IDA that describes the concrete steps, including possible policy reforms, toward long-term solutions that benefit host communities and refugees. Based on these criteria, 14 countries are already eligible for financing in IDA18-19. Countries that are already eligible in earlier IDA cycles will not have to re-do the eligibility process in IDA20. Rather, the first WHR project that is processed in IDA20 for each country will be accompanied by - 131 - a short country strategy note. For countries that become eligible for the WHR during IDA20, the eligibility process will be the same as it was in IDA19. In addition, for every Project that requests WHR financing in IDA20, the Project Appraisal Document (PAD) will include: (a) updated UNHCR numbers; (b) an update of the country’s refugee policy and institutional environment; and (c) confirmation of the continuing adequacy of the protection framework, noting any recent changes or new risks. 4. Financing: a. Volume: The size of the window will be $2.4 billion (equivalent to SDR1.7 billion). b. Apportionment: The WHR will finance up to 90 percent of the total project amount, complemented by at least 10 percent from the country allocation. c. Notional regional allocations: At the beginning of the IDA20 replenishment cycle, indicative regional allocations will be determined based on the number of refugees in IDA countries eligible for support under the WHR. These notional regional allocations may be adjusted based on changes in refugee numbers and client demand during the IDA cycle. Each WHR-eligible country will have a minimum allocation of $10 million to enable programming at a certain scale. Allocations per country during an IDA cycle will be capped at US$500 million. d. Terms. All WHR-eligible countries (including Gap and Blend Countries) are eligible to receive grants from the WHR as follows: i. Countries that are subject to a Low-income Country Debt Sustainability Framework (LIC-DSF) and at high risk of debt distress receive 100 percent of the WHR financing as IDA Grants. ii. IDA-Only countries that are subject to a LIC-DSF and at moderate risk of debt distress receive 50 percent of the WHR financing as IDA Grants and 50 percent as 50-year Credits. iii. Blend and Gap Countries that are subject to a LIC-DSF and at moderate risk of debt distress receive 50 percent of the WHR financing as IDA Grants and 50 percent as IDA Concessional Credits. iv. Countries that are subject to a LIC-DSF and low risk of debt distress receive 50 percent of the WHR financing as IDA Grants and 50 percent as IDA Concessional Credits. v. Countries that are subject to a Market Access Country Debt Sustainability Analysis (MAC-DSA) receive 50 percent of the WHR financing as IDA Grants and 50 percent as IDA Concessional Credits. - 132 - e. Sudden massive inflow of refugees: The WHR will provide 100 percent grants to countries that experience a sudden massive inflow of refugees, defined as receiving at least 250,000 new refugees or at least one percent of its population within a 12-month period during the IDA20 cycle. - 133 - ANNEX 6. REGIONAL WINDOW IMPLEMENTATION ARRANGEMENTS 1. Purpose. The IDA Regional Window aims to promote development through regional approaches by providing top-up funding for eligible operations. Regional projects support countries to come together to address challenges of small and fragmented markets, find regional solutions for challenges facing multiple countries, and promote global public goods or address public “bads”. They help, among other things, to create larger and more integrated markets, improve connectivity, manage shared resources, exploit economies of scale, and facilitate collective action to address common goals. In IDA20, this may include mobilizing financial resources for COVID-19 vaccine, therapeutics and diagnostics (VTD). 1 2. Lending Instruments. Financing from the IDA Regional Window is provided using Investment Project Financing (IPF) 2 and Development Policy Financing (DPF). 3. Eligibility Criteria: IDA Regional Window operations, should meet all of the following four criteria (for exceptions, see paragraph 7): a. The operation involves two or more countries, both of which need to participate for the project’s objectives to be achievable, and at least one of which is an IDA-eligible country. 3 b. The operation will generate positive economic and/or social externalities (or mitigates negative ones) across country boundaries among participating countries, as demonstrated through at least one project development objective (PDO) level indicator that measures these externalities. In addition to results indicators, the project document should clearly outline how the project will generate such externalities. c. There is clear evidence of country and regional ownership of the operation, demonstrating the commitment of the participating countries. d. The operation provides a platform for a high level of policy harmonization between countries and is part of a well-developed and broadly supported regional strategy. 4. Allocations. Resources from the IDA Regional Window are provided in addition to the IDA country allocations. The size of the window will be $7.9 billion (equivalent to SDR 5.6 billion). 1 Financing support for COVID-19 vaccines, therapeutics and diagnostics (VTD) will be channeled primarily through country allocations (PBA), with support under the RW to be extended using the existing RW framework – i.e., in the form of additional resources made available to countries when operations meet the window eligibility criteria described in this Annex. The amount of resources dedicated to VTD or regional/global procurement mechanisms will depend on specific demand from IDA countries (i.e., there will be no pre-defined set-aside for such programs), while ensuring an appropriate balance with other regional integration investments. 2 Operations can be designed as regular stand-alone projects/programs, Series of Projects (SOPs), or Multi-Phase Approaches (MPAs). 3 When a country has loans or credits in non-accrual status and its participation is crucial to the operation, it may still participate, but IDA financing is not directly provided to that country. A regional entity or another country participating in the project may take on the obligations of the country and implement the project on its behalf. - 134 - a. Allocations to Regions. At the beginning of each IDA cycle, each region is given an indicative allocation for the three-year replenishment period. Of these indicative allocations, 75 percent is allocated to the two Africa regions, while the remaining 25 percent is allocated to the other five regions in proportion to each region’s share in total country allocations to those five regions. Actual allocations are made at the beginning of each fiscal year. b. Allocations to Operations. Actual allocations to each operation are determined by the relevant Region. Operations are selected for their strategic relevance based on regional integration strategies. c. Financing Terms. For each participating country, Regional Window financing is provided on the same terms as the relevant country’s PBA, including any credit/grant distribution. d. Leveraging (Co-financing Ratio). Normally, at least one-third of a country’s share of the cost of an eligible regional project or DPF comes from its country allocation and two-thirds come from the IDA Regional Window. This co-financing ratio, however, could be adjusted by the Bank regions as follows: i. Resource Optimization. To optimize the use of resources from the IDA Regional Window, a region may choose a lower level of leverage. ii. Small States. The contribution from a Small State’s country allocation to Regional Window operations in a given financial year may be capped at 20 percent of its annual country allocation. iii. Large Projects. The contribution from a country allocation to a Regional Window operation may be capped at 20 percent during a replenishment period where the cost of the project is very large relative to the three-year allocation (see paragraph 7 on limitations and process). e. IDA and International Bank for Reconstruction and Development (IBRD) Borrowers. When a regional operation involves the participation of both IDA and IBRD- only countries, the IBRD-only borrowers finance their participation in the project through IBRD borrowings or from other resources. 5. Regional DPF. Regional policy lending may be provided to IDA countries to support the establishment of their common policy framework for coordinating and sequencing reforms. a. To ensure selective use of limited resources to support DPFs, overall allocations to DPF will be capped at 10 percent of the IDA Regional Window. b. DPFs will adhere to the World Bank’s Policy ‘Policy for Development Policy Financing’, which includes inter alia maintaining an adequate macroeconomic policy framework and supporting a set of critical policy and institutional actions, underpinned by analytical work, as agreed between the World Bank and participating IDA countries. - 135 - c. The size of each participating country’s DPF will be determined by the design of each operation, size of ongoing national DPFs, and the fiscal needs (same as national DPFs), as well as the strength and depth of the reform program and agreements among participating countries. d. Financing terms and leveraging ratios for DPFs follow the same rules as IPFs, as outlined in paragraph 4. 6. Regional Organizations. a. Credits to Regional Organizations. The IDA Regional Window may implement some operations with the support of regional organizations which have the capacity to repay IDA credits. 4 In such cases, the IDA Regional Window will extend financing to the organizations on credit terms. Financing will be based on: i. the nature and economic appraisal of the project – for instance, whether it generates revenues and returns that enable the regional organization to repay the credits; ii. the entity is a bona fide regional organization that has the legal status, fiduciary capacity and the legal authority to carry out the activities financed, and; iii. the ability of the regional organization to repay credits, considering the regional organization’s rating with rating agencies and/or assessments based on their revenue streams and cash flows. b. Grants to Regional Organizations. The IDA Regional Window may provide grants to regional entities to support the implementation of Regional Window operations or to build regional entities’ capacity for supporting strategic regional priorities, or both. Eligibility criteria: i. The entity is a bona fide regional organization that has the legal status and fiduciary capacity to receive grant funding and the legal authority to carry out the activities financed. ii. The entity does not meet eligibility requirements to receive an IDA Credit. 5 iii. The costs and benefits of an activity to be financed with the IDA Grant cannot be easily attributed to national programs. 6 4 In IDA18, this was done through a Board-approved waiver to channel credits through the West African Development Bank (BOAD) of the Western Africa Economic Monetary Union (WAEMU) Affordable Housing Project, and the Bank of Central African States (BEAC) to support strengthening Financial Institutions in the Central African Economic and Monetary Community (CEMAC). 5 A regional entity is eligible to receive an IDA Grant only if it lacks the legal capacity or authority to borrow or repay a loan. 6 The activities to be supported from the IDA grant should not produce direct or exclusive benefits to an individual participating country. - 136 - iv. The activities to be financed with an IDA Grant are related to regional infrastructure development, institutional cooperation for economic integration, or coordinated interventions to provide regional public goods or mitigate public “bads”. v. Grant co-financing for the activity is not readily available from other development partners. vi. The entity is associated with a Regional Window operation or otherwise supports the strategic objectives of IDA on regional integration. c. Cap on Grants to Regional Organizations. The total amount of IDA Grants that each Region may provide to Regional Organizations is limited to 10 percent of the Region’s allocation for a Replenishment period. d. Governance. Operations involving regional organizations are approved by the IDA Board of Executive Directors (“the Board” and are subject to regular Bank review and processing procedures for IPF and DPF. 7. Exceptional Financing There are two main exceptions to the eligibility and financing criteria described above. a. Transformational Projects Located in a Single Country. The Regional Window may, on an exceptional basis, finance a project located in only one IDA-eligible country when a project’s physical implementation takes place in only one country but will generate significant transformational externalities beyond the country’s boundaries. All the following criteria would need to be met: i. Clear articulation of the project’s transformational or public good impact on the region, where at least two countries would benefit from substantial and measurable externalities from the project. ii. The project will require financial participation of only the country where it is located; it would not require financial participation of other countries. iii. All other financing options have been ruled out and Regional Window financing is considered as the last resort. iv. The project otherwise meets the window eligibility criteria set out in paragraph 3. b. Large Projects Relative to Country Allocation. As outlined in paragraph 4.c.iii, a country’s contribution to the cost of a regional operation may be capped at 20 percent during a Replenishment period where the cost of the project is very large relative to such three-year allocation. - 137 - c. Limit on Exceptional Financing. During a Replenishment period, the total amount of Regional Window financing provided under the two exceptions described above is limited to 20 percent of the total resource envelope for the IDA Regional Window. d. Process for Exceptional Financing. When a Region intends to seek exceptional financing under the two exceptions described above, Management consults the Board early in the process for clearance. - 138 - ANNEX 7. CRISIS RESPONSE WINDOW IMPLEMENTATION ARRANGEMENTS 1. Purpose. The main objectives of the CRW are to: (a) establish a systematic approach in IDA for crisis response; (b) provide additional and predictable financing to IDA-eligible countries hit by crises; and (c) enhance IDA’s capacity to effectively participate in crisis response efforts. The CRW provides IDA countries with a dedicated source of additional resources to (a) respond, as last resort, to the impact of natural disasters, public health emergencies and economic crises; and (b) respond at an earlier juncture to slower-onset crises, namely, disease outbreaks and food insecurity. CRW support is part of IDA’s overall response to a crisis, complementing the roles of other development partners, and based on IDA’s comparative advantages and development mandate. While the CRW supports response efforts after a crisis has materialized, it contributes to the resilience agenda via building back better. 1 Operations financed by the CRW are expected to include, where feasible, components or features designed to help prevent future crises or mitigate their economic and social impact—unless covered by other operations. A. CRW SUPPORT FOR SEVERE CRISES 2. Purpose. CRW resources are intended as a last resort to assist IDA-eligible countries in coping with severe crises. Access is granted where alternative sources of funding are insufficient and where IDA participates in a concerted international response to a broadly recognized crisis. 3. Country Eligibility. While all IDA-eligible countries are in principle eligible for CRW support, a country’s access to the CRW depends on specific circumstances including the magnitude of the impact of the crisis, the country’s access to alternative sources of financing (including IBRD), and its ability to use its own resources. 4. Allocations. CRW resources are allocated only in response to crises as described in paragraphs 5 (Natural Disasters), 6 (Public Health Emergencies), and 7 (Economic Crises). 2 1 CRW recipients also need to demonstrate a stronger focus on prevention and preparedness in their post-crisis core IDA programming. This is to be reflected in country engagement products, particularly programming documents— CENs, CPFs, and PLRs. The documents should cite the amount of and rationale for CRW support already provided, lessons learned and how these inform the country’s subsequent core IDA programming to strengthen crisis preparedness. The aim is to demonstrate how crisis prevention and preparedness has percolated beyond CRW-funded operations to broader core IDA programming agendas. 2 This includes CRW resources to respond to already-severe food security crises that arise from natural disasters, public health emergencies and economic crises. Such resources would be different from the CRW ERF described in section B. - 139 - i. NATURAL DISASTERS 5. Natural Disasters. CRW resources may be used to support IDA-eligible countries in the aftermath of an exceptionally severe natural disaster (e.g., earthquake, flood, drought and tsunami). a. Trigger. CRW resources can be used only in the case of natural disasters that are exceptionally severe. Parametric data on disaster frequency and impact will be an important, but not the only, eligibility criterion to determine whether a country affected by a particular event qualifies to receive CRW resources. 3 b. Crisis Eligibility and Size of Allocation. In the immediate aftermath of a severe natural disaster, Management will review the available impact data to form an early assessment of a country’s need for CRW resources. As immediate post-disaster impact data tends to be limited and evolving, an early assessment may also take account of whether the affected country has: (i) issued a declaration of emergency; (ii) requested CRW resources; and (iii) requested a post-disaster assessment (such as Post-Disaster Needs Assessment (PDNA), a Global Rapid Post-disaster Damage Estimation (GRADE) or other assessments, or a combination of such assessments). 4 In addition, such assessment will take into account the WBG’s capacity to respond without accessing the CRW; and will also outline, where relevant, cooperation with the UN—particularly the Office for the Coordination of Humanitarian Affairs (OCHA). The early assessment is updated as more data and information become available. The final decision on the size of the CRW allocation takes into account: (i) information on the severity of the crises and cost of recovery based on the relevant post-disaster assessment; (ii) number of affected persons (such as persons rendered homeless) and/or incurred loss of income or livelihood; (iii) estimates of impact on GDP; (iv) availability of resources to respond to the crisis; 5 (v) country’s absorptive capacity; (vi) issuance of UN Flash Appeal; (vii) country size (e.g., Small States); and (viii) the CRW’s past support to the country concerned. ii. PUBLIC HEALTH EMERGENCIES 6. Public Health Emergencies. CRW resources may be used to address public health emergencies that are of potential international importance. a. Trigger. CRW resources can be used only when: i. the affected country has declared a national public health emergency; and 3 Parametric data —e.g., the magnitude of an earthquake on the Richter’s Scale— may not always accurately reflect the impact of a disaster. The severity of the impact also depends on, for example, disaster preparedness and proximity to human settlements. 4 PDNAs provide a reliable, internationally recognized and government-owned mechanism to verify the impacts (damage and losses) of a disaster. They would also: (a) provide a comprehensive estimate of overall and multi- sectoral disaster recovery needs; (b) incorporate disaster risk reduction as an agreed element of the disaster recovery framework; and (c) reflect multi-stakeholder consensus over sectoral recovery strategies. 5 This includes, for instance, resources available from the country’s IDA portfolio, domestic sources, other external financing sources (including IBRD), and the amount of resources left in the CRW. - 140 - ii. the World Health Organization (WHO) has declared that the outbreak is of potential international importance, under WHO’s Global Alert and Response System, in accordance with the 2005 International Health Regulations. b. Crisis Eligibility and Size of Allocation. In the initial stage of a potentially CRW-eligible public health emergency, Management will review available impact data to form an early assessment regarding the need to access CRW resources. Such early assessment may take into account: (i) support from other sources such as the Health Emergency Preparedness and Response Multi-Donor Fund (HEPRF); (ii) whether the affected country has issued a declaration of a public health emergency; (iii) whether the affected country has requested CRW resources; (iv) whether the affected country has requested a Needs Assessment; 6 (v) the WBG’s capacity to respond without accessing the CRW; and (vi) cooperation with the UN—particularly the WHO—and other development partners. The assessment is updated as more data and information become available. The final decision on the size of the CRW allocation takes into account (i) information on the severity of the emergency and the cost of response; (ii) number of affected persons and/or incurred loss of income or livelihood; (iii) estimates of impact on GDP; (iv) availability of resources to respond to the crisis; 7 (v) the country’s absorptive capacity; (vi) issuance of UN Flash Appeal; (vii) country size (e.g., Small States); and (viii) CRW’s past support to the country concerned. iii. ECONOMIC CRISES 7. Economic Crises. CRW resources may be used to address severe economic crises that are caused by exogenous shocks and that affect multiple IDA countries (e.g., global food, fuel or financial crises). In providing CRW assistance, IDA seeks to mitigate the impact on vulnerable groups and protect core development spending at risk, for instance, in health, education, social safety nets, infrastructure and agriculture. a. Trigger. CRW resources can be accessed if there is evidence of a severe economic crisis that is caused by an exogenous shock and that affects a significant number of IDA-eligible countries as follows: i. the crisis is expected to result in a widespread or a regional year-on-year GDP growth decline of three percentage points or more in a significant number of IDA-eligible countries; 8 or ii. in the event of a severe price shock that did not result in a GDP growth decline in line with the above trigger, but: (a) the shock is broad-based and deemed severe in terms of fiscal impact; (b) there is consensus that a concerted international response is needed; 6 A Needs Assessment would: (a) provide, in collaboration with other partners including the WHO, a comprehensive estimate of overall needs; (b) assess the impact on countries’ economies and public finances; and (c) reflect on the impact of the public health emergency on the countries’ medium-/long-term development goals. 7 This includes, for instance, resources available from the country’s IDA portfolio, domestic sources, other external financing sources, and the amount of resources left in the CRW. 8 The projected GDP growth decline is assessed using data primarily from the IMF’s World Economic Outlook. - 141 - and (c) the existing IDA allocations of affected countries are deemed insufficient to provide an adequate response. b. Crisis Eligibility and Size of Allocation. Eligibility is determined primarily by the expected impact of the crisis on a country’s GDP: i. A year-on-year decline of GDP growth of three percentage points or more is the threshold to identify the countries that could be eligible for CRW funding (except in cases of a severe price shock that satisfies the conditions set out in paragraph 7.a.ii above). This preliminary ringfencing is vetted by an analysis of available fiscal data and other relevant data in line with the CRW’s objective to protect or mitigate the impact of the crisis on core spending in the short-term and avoid derailing long-term development objectives. Based on the results of this analysis, countries where the crisis did not have a significant fiscal impact could be excluded from CRW eligibility, even if they did experience a decline in GDP growth of three percentage points or more. ii. The allocation framework is based primarily on a fiscal analysis, 9 taking into account the impact on the country, resource needs and availability, the country’s ability to effectively use resources, and the CRW’s past support to the country concerned. Country allocations are calculated on a per capita basis to take into account country size; countries with the greatest impact are likely to receive proportionately more resources than those with a lower impact. In determining country allocation(s), consideration is given to including (i) a base allocation to ensure a meaningful response, particularly for Small States; and (ii) a cap on the resources allocated to any one country or group of countries; 10 such a cap could be particularly relevant in cases where the same event affects countries or groups of countries with different lags—to avoid the risk of a first-come first-served approach that could lead to depletion of finite resources. iii. Typically, a two-stage approach is adopted in allocating resources for economic crises where the bulk of the allocation (that is, at least 75 percent of the expected total) is assigned to eligible countries in the first round. Allocations may be subsequently adjusted using the share of resources not allocated at the first stage in light of additional country-specific information on crisis impact, resources required, and the capacity to mobilize and effectively use resources. The initial allocation to an individual country may be subsequently increased by up to 33 percent of the first stage allocation. Management will submit a note to the IDA Board of Executive Directors (“the Board”) with details of any second stage allocations in advance of seeking the Board’s approval of projects and programs that will be financed by second stage allocations. 9 The fiscal analysis required to support assessments of country eligibility and the size of the CRW allocation would cover government revenues, spending, and financing plans to estimate the core development spending at risk, where core development spending at risk is defined as the amount needed to maintain the pre-existing path of spending on education, health and operations and maintenance of existing infrastructure, and to maintain or potentially increase spending on safety nets, depending on the nature of the crisis. 10 The cap was originally set at five percent of total resources for the pilot CRW. The cap to be set for economic crises thereafter could vary depending on the number of countries deemed eligible for CRW support. - 142 - c. Coordination with the IMF. Where an economic crisis is caused by external terms of trade shocks or financial market disruptions, Management will reflect in its assessment the views of IMF staff on the overall extent and nature of the shock and, to the extent possible, the impact on the individual countries and relevant information regarding their macroeconomic policy frameworks, drawing primarily on existing publicly available IMF report(s). Staff of the Bank and the Fund will collaborate closely on specific country cases. B. CRW EARLY RESPONSE FINANCING TO SLOWER-ONSET EVENTS 8. Purpose. The CRW Early Response Financing (ERF) resource allocation support early responses to slower-onset events, namely, disease outbreaks and food insecurity. Whereas the devastating effects of sudden-onset crises like earthquakes can be observed more quickly and hence galvanize timely resource mobilization, the impetus to react to slower-onset crises may not be as apparent, especially during the early stages of such events. CRW ERF is intended for slower- onset events which are identified as having the potential to escalate into major crises but are still in the early stages of progression. Should the event intensify into a severe crisis, countries could potentially seek additional CRW support as per Section A above. 9. Country Eligibility. All IDA-eligible countries are eligible for CRW ERF, provided that they: a. have in place a credible preparedness plan 11 for disease outbreaks and/or food insecurity prior to crisis, or develop such a plan subsequently; 12 and b. upon the disease outbreak or food insecurity event materializing, develop a costed response plan which will be assessed as part of the country’s request for CRW ERF. 10. Allocations. CRW ERF resources are allocated only in response to slower-onset events as described in paragraphs 11 (Disease Outbreaks) and 12 (Food Insecurity), subject to the cap mentioned in paragraph 10.a. below. a. Aggregate Limit. The CRW ERF for both disease outbreaks and food insecurity is subject to an aggregate cap of $1 billion. 11 The preparedness plan must set out the operational procedures to respond to and contain a food security crisis or a disease outbreak. It should be based on an analysis of the country’s and the region’s exposure to food insecurity or disease outbreaks and address key drivers of risk. 12 A plan that is developed post-crisis should lay out the links between CRW usage and subsequent programming of country allocations for resilience. See footnote 1 above. - 143 - i. DISEASE OUTBREAKS 11. Disease Outbreaks. CRW ERF resources may be used to support early interventions that help accelerate disease outbreak containment for high-risk outbreaks that pose a significant threat of spreading within a country or across countries, with potential to cause a large-scale regional epidemic or global pandemic. 13 a. Triggers. The CRW ERF can be accessed only if the disease outbreak: i. is due to a pathogen covered in paragraph 11.b.i; ii. meets the severity thresholds in paragraph 11.b.ii; and iii. passes the technical assessment in paragraph 11.b.iii. b. Crisis Eligibility. Eligibility is determined as follows. i. Pathogen Type: Consideration will be given to outbreaks of viral pathogens with a primary zoonotic reservoir 14 or outbreaks due to deliberate or accidental release of pathogens previously eliminated from the human population. 15 Outbreaks of non-viral pathogens and pathogens currently endemic in human populations 16 are excluded. 17 ii. Severity Thresholds: Two epidemiological criteria are used to justify that an outbreak has met a minimum level of severity: (a) the number of laboratory-confirmed cases in the country having reached the pathogen-specific threshold; and (b) there is evidence that these cases are epidemiologically linked and arise from a single outbreak of sustained transmission of the pathogen within the human population—if attributing the source of infection is not feasible, a higher threshold of laboratory-confirmed case numbers alone is sufficient. 18 13 As noted in paragraph 8, should the disease outbreak intensify into a severe crisis, countries could potentially seek additional CRW support as per Section A above. 14 These include novel influenza subtypes being transmitted within the human population, coronaviruses and filoviruses. 15 Currently, smallpox. 16 Endemicity is defined here as continuous sustained human-to-human transmission of a pathogen in the global human population. 17 Examples of excluded pathogens are dengue, cholera, malaria, tuberculosis, measles and Human Immunodeficiency Virus. 18 Determination of whether an outbreak has reached these epidemiological thresholds will be based on publicly available epidemiological data published by the WHO (HQ or regional offices) and/or national public health agencies. - 144 - iii. Technical Assessment: An event deemed potentially eligible based on paragraphs 11.b.i and 11.b.ii above will be referred to subject matter experts for a technical assessment. 19 For an outbreak to qualify for CRW ERF, this technical assessment must verify: (a) that the outbreak is driven by human-to-human transmission, in the case that evidence of human-to-human transmission is available; (b) that the underlying incidence trends suggest continued growth in the weekly number of newly confirmed cases; and (c) unless the proposed outbreak response plan submitted by the country has been endorsed by the WHO, that this proposed plan is consistent with prevailing expert opinions in specialized agencies such as WHO and is aligned with applicable WHO public health recommendations relating to the specific outbreak. c. Size of Allocation. CRW ERF allocations for disease outbreaks will be capped (on a per country per event 20 basis) at the lower of $25 million or the cost of the country’s outbreak response plan. 21 Determination of the actual amount of CRW ERF allocation will take into account factors such as contributions from external partners and/or the affected country for outbreak response. 22 ii. FOOD INSECURITY 12. Food Insecurity. CRW ERF resources may be used to support interventions that help mitigate worsening food insecurity conditions which pose a significant threat of becoming a large- scale food insecurity crisis within a country or across countries. 23 a. Triggers. CRW ERF can be accessed only if the food insecurity event: i. is primarily due to the drivers in paragraph 12.b.i; ii. meets the severity thresholds in paragraph 12.b.ii; and iii. passes the technical assessment in paragraph 12.b.iii. b. Crisis Eligibility. Eligibility is determined as follows. i. Type of Drivers: CRW ERF for food security crises will cover events driven by natural disasters, economic shocks and/or public health threats. 19 Such a technical assessment will be conducted by subject matter experts in the WB, in consultation with the WHO’s Strategic & Technical Advisory Group of Infectious Hazards (STAG-IH). This WB technical group does not have a decision-making role on the use of CRW ERF resources. CRW ERF allocations will be approved by the Board per paragraph 17 of this Annex. 20 “Per event” is defined as an outbreak that is different and unrelated to a past or ongoing outbreak, as determined by the WHO. 21 See paragraph 9.b and 11.a.iii. 22 If such non-CRW resources are forthcoming, the size of the CRW ERF allocation would be reduced correspondingly, unless there for instance remains a financing gap for the costed response plan. 23 As noted in paragraph 8, should the food insecurity event intensify into a severe crisis, countries could potentially seek additional CRW support as per Section A above. - 145 - ii. Severity Thresholds: A food insecurity event in an eligible country must reach a minimum level of severity, determined by either: (a) food insecurity thresholds; or (b) country-specific analyses of risks. (1) Food Insecurity Thresholds: Food insecurity thresholds have been established to identify an eligible event which has the potential to become a major food insecurity crisis. These thresholds serve to provide a consistent risk measure across countries, where available. (2) Country-specific Analyses: Alternatively, an event can qualify based on country- level evidence and established local early warning systems. This applies particularly when the food insecurity thresholds in paragraph 12.b.ii.1 may not be available for a given country due to a lack of forecasting information.24 Additionally, this could apply in situations when food insecurity thresholds are available but have not been breached, but local-level indicators 25 signal a significant cause for concern. iii. Technical Assessment: An event deemed potentially eligible based on paragraphs 12.b.i and 12.b.ii above will be referred for a technical assessment. 26 This technical assessment: (1) where the food insecurity thresholds in paragraph 12.b.ii.1 are breached; verifies that local food insecurity conditions corroborate the worsening outlook; (2) where the food insecurity thresholds are not breached (i.e., paragraph 12.b.ii.2); provides additional information to help inform the Bank’s decision on whether CRW ERF should be deployed; and (3) provides an assessment of the technical quality of the country’s preparedness and response plans. c. Size of Allocation. CRW ERF for food insecurity shall be capped at the lower of $50 million per IDA cycle or the cost of the country’s response plan. Determination of the actual amount of CRW ERF allocation will take into account factors such as contributions from external partners and/or the affected country for responding to the food insecurity event. 27 24 For some countries, districts or time periods, there may not be FEWSNET / IPC data and food insecurity forecasts that are produced or available. 25 Such information may include disaggregated indicators of food insecurity, e.g., market prices, climate-related indicators and seasonal outlook assessments for crop and livestock conditions. The indicators would be selected to be consistent with international standards (including IPC reference tables and IASC Joint Inter-Sectoral Analysis Framework) and to represent operative common benchmarks of human welfare and livelihoods, such as acute malnutrition and mortality. 26 This technical assessment will be conducted by subject matter experts in the WB taking into account relevant external analysis. 27 If such non-CRW resources are forthcoming, the size of the CRW allocation would be reduced correspondingly, unless there for instance remains a financing gap for the costed response plan. - 146 - C. FINANCING TERMS 13. The size of the CRW will be $3.3 billion. 14. The terms of CRW financing are the same as those for financing from regular PBA28 to the country concerned, including the credit/grant distribution. However, in the case of natural disasters, if the natural disaster results in damages and losses of over a third of the country’s GDP, its regular PBA financing terms may be adjusted, based on an updated Debt Sustainability Analysis (DSA) in the aftermath of the crisis in accordance with Section IV of the Bank Policy “Financial Terms and Conditions of Bank Financing.” CRW financing will then follow the adjusted post-disaster IDA financing terms applicable to the country. 15. Contingent Emergency Response Components (CERCs). The CRW finances CERCs as follows: a. Top-up approach. The CRW may replenish, in part or whole, project funds that are drawn down using CERCs to respond to CRW-eligible crises. For the ERF, top-ups are capped at the limits in paragraphs 11.c and 12.c above. b. Pre-allocated approach. For ERF only, the CRW may pre-allocate a CERC up to $25 million. To qualify for CRW pre-allocations, a project needs to demonstrate benefits on how it will enhance resilience. In addition, to avoid substitution vis-à-vis IDA country allocations, the project document needs to demonstrate the additionality of expected outcomes, i.e., pre-allocated CRW funds should only address crisis-related activities and be differentiated from regular project activities that are funded by PBA and other sources. Overall, the crisis-supported activities should connect and be in line with the country’s respective resilience-building efforts. 16. Development Policy Financing with Catastrophe Deferred Drawdown Option (DPF Cat DDO). The CRW will allocate resources for 25 percent of DPF Cat DDOs, supplementing IDA country allocation resources. D. APPROVALS 17. Requests for CRW support for severe crises and for the CRW ERF will be approved by the Board. Where CRW ERF funds are used for pre-allocated CERCs to enable faster response to disease outbreaks and/or food insecurity, the Board will—at the time of project approval—also approve the (i) pre-allocated amount of CRW funds; and (ii) CERC triggers. 29 Upon the CERC being activated, Management will determine the final amount of CRW funds to be disbursed. Such final amount must not exceed the pre-allocated CRW amount that has been approved by the Board. 28 Regular PBA financing excludes concessional SMLs provided under PBA. 29 The CERC triggers for such projects will need to be in accordance with the CRW early response triggers. - 147 - ANNEX 8. PRIVATE SECTOR WINDOW IMPLEMENTATION ARRANGEMENTS 1. Purpose. The objective of the IDA Private Sector Window (PSW), through leveraging International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) platforms, is to support mobilizing private sector investment and scaling up growth of a sustainable and responsible private sector in IDA-only countries and IDA-eligible Fragile and Conflict- affected Situations (FCS). PSW is one of the key instruments available to support IFC and MIGA’s continued expansion and scale up of activities in the most challenging IDA markets, including the green, inclusive, and resilient response to the COVID-19 pandemic, which would lay the foundation for a sustainable recovery. 2. Activities. The PSW’s four facilities support the following activities: (i) a Blended Finance Facility (BFF) to blend PSW funds with IFC investments across sectors with high development impact, including SMEs, agribusiness, health, education, affordable housing, infrastructure and climate finance, among others; (ii) a Risk Mitigation Facility (RMF) to provide guarantees without sovereign indemnity to crowd-in private investment in infrastructure projects and public-private partnerships; (iii) a MIGA Guarantee Facility (MGF) to expand guarantee coverage through shared first-loss and risk participation akin to reinsurance; and, (iv) a Local Currency Facility (LCF) to facilitate local currency IFC investments in PSW eligible countries where capital markets are not developed and/or market solutions are not sufficiently available. 3. Eligibility. The following eligibility and prioritization criteria drive the selection of PSW supported projects: a. IDA-only and fragile or conflict-affected IDA Gap and Blend countries are eligible for PSW support. The list of eligible countries will be confirmed at the beginning of IDA20 for the duration of the three-year period and adjusted if needed for countries that fall back to IDA-only or FCS status. In addition, countries which have transitioned to IDA gap status or out of FCS status during IDA19 will continue being eligible to receive PSW support in IDA20. 1 Furthermore, PSW resources can be used to support regional and/or programmatic investments where a maximum of 20 percent is invested outside of PSW eligible countries. On a case-by-case basis, support to activities in fragile or conflict-affected sub-regions of non-FCS IDA Gap and Blend countries 2 may be considered, subject to review by the PSW Oversight Committee, and approval by the IDA Board of Executive Directors (the Board) in accordance with the PSW governance process, as well as facility-specific risk limits. b. Strategic alignment with IDA’s poverty focus, the IDA20’s Special Themes and Cross- Cutting Issues, WBG’s country strategies, and the WBG’s approach to supporting private sector investment and creating markets. 1 To be eligible for MGF, countries also need to be members of MIGA. 2 Sub-national fragility will be determined through a qualitative and quantitative assessment, including more than 25 conflict related deaths per year, carried out by the FCV Group. - 148 - c. Principles for using blended concessional finance in private sector operations: 3 economic rationale for concessionality, crowding-in and minimum concessionality, commercial sustainability, reinforcing markets, and promoting high standards. d. Risks borne by PSW, including financial loss as well as other risks (e.g., reputational risks, environmental and social (E&S) project risks, etc.). 4. Allocations. The PSW will be allocated IDA resources of $2.5 billion within the IDA20 commitment authority. Facility allocations are indicatively set at $1,200-1,400 million for the BFF, $500-650 million for the LCF, $150-300 million for the RMF, and $500 million for the MGF reflecting evolving demand. Similar to the previous replenishments, Management will retain authority to reallocate resources across the facilities within PSW allocation and will keep the Board and IDA Participants apprised of any such adjustments. The level of resources allocated to the PSW may be reevaluated at the IDA20 Mid-Term Review or as needed, particularly in relation to increased demand to scale up private sector investment in COVID-19 vaccine production and large-scale infrastructure investments associated with COVID-19 pandemic economic recovery. 5. Financing Terms. Financing terms will be determined in line with the principles for using concessional finance as outlined above. Transparent risk-return management will ensure adherence to appropriate pricing principles in light of the risks assumed by IDA under PSW. Recognizing the higher risk carried by PSW-enabled transactions, appropriate approaches established by Management to manage and share various risks will continue to be used while still enabling high- impact projects in PSW eligible countries. PSW financing can be provided in US Dollars and Euros, as applicable. PSW investments will be capped at the equivalent to the allocated $2.5 billion, measured at the time of Board approval of each investment. The risk management approach may be adjusted over time based on how the risk of the actual portfolio evolves. 6. Financing Instruments. Financial support from the PSW is provided through several instruments including, but not limited to, senior and subordinated loans, credit and political risk guarantees, quasi-equity and equity (through funded total return swaps), risk sharing facilities, and derivatives. To address the evolving needs in PSW eligible countries, IDA Management may propose additional instruments and tools aligned with PSW objectives, criteria, and financial and risk parameters. When a new facility or instrument is proposed under the PSW framework, it is presented to the PSW Secretariat, hosted in the Development Finance VPU (DFi), by the institution (either IFC or MIGA) responsible for implementation of the facility or the instrument, after ensuring compliance with its own policies and procedures. After the review by the PSW Secretariat, it is presented to the WBG-wide PSW Oversight Committee (OC) to ensure its alignment with the PSW objectives and criteria. On the IDA side, the financial parameters and risk guidelines are reviewed and approved by the Bank’s Asset-Liability Management Committee (ALCO) and/or the Finance and Risk Committee (FRC), based on recommendation by its standing committee, the New Business Committee (NBC). IDA Participants are consulted for endorsement, following which, the proposed new facility or instrument are presented to the Boards of the 3 The Enhanced Blended Concessional Finance Principles for Development Finance Institutions’ (DFi) Private Sector Operations jointly developed and endorsed by representatives from DFi in 2017, aim to maximize impact and minimize potential market distortions through the use of concessional resources. Additional information and updates can be found at www.ifc.org/blendedfinance. - 149 - respective Institution(s) for approval. Transactions supported by a new facility or instrument are approved by the relevant Boards. 7. Governance. The governance framework of the PSW is guided by the following principles that were agreed by the three WBG institutions: (i) accountability through independent decision- making by each institution (IDA, IFC and MIGA) in line with its unique mandate and structure, the PSW eligibility criteria, and with the ultimate approval authority for use of PSW resources lying with the IDA Board; 4 (ii) oversight through clear reporting and review, with the recourse to PSW OC in the event of disagreement on PSW use and otherwise, in accordance with the PSW OC Procedure; (iii) conflict of interest management through each institution vetting cross- institutional transactions independently, with arrangements between/among IDA, MIGA and IFC with respect to financing under PSW, negotiated on an arm’s length basis to ensure fiduciary and institutional duties are not compromised; (iv) fees and cost sharing through mutually agreed and articulated administration fees, reimbursable costs, and premiums to ensure IDA, IFC and MIGA are appropriately compensated for the risks assumed and the development impact expected from projects through transparent subsidies; and (v) operational efficiency through leveraging existing processes to the maximum extent possible without compromising other governance principles as outlined above; and (vi) transparency and disclosure of information on PSW-supported projects, in accordance with IFC and MIGA’s respective information disclosure policies, and complemented by additional information on expected impacts, investment mobilization, and subsidies utilized. 8. Implementation Support. As in IDA18 and IDA19, IFC and MIGA will be responsible for all aspects of their respective transactions to be supported by the PSW including the origination, structuring and management of those transactions, based on the structure of each of the Facilities— namely: BFF, LCF and RMF for IFC, and MGF for MIGA. Under RMF, MIGA will act as Administrator of the RMF guarantees and IFC as administrator of the RMF account. All applicable IFC and/or MIGA policies and procedures (as the case may be) will apply with respect to the use of PSW resources in support of the relevant IFC and/or MIGA transactions. IDA’s policies and procedures will not apply. 4 Following endorsement from IDA Participants, the IDA Board of Executive Directors has vested authority with Management to process PSW sub-projects under programmatic approaches as a way to promote consistency between IDA and IFC’s respective Board approval processes. - 150 - ANNEX 9. SCALE UP WINDOW IMPLEMENTATION ARRANGEMENTS 1. The Scale Up Window (SUW) will provide a mechanism for eligible IDA countries to augment their country allocations with additional resources delivered through two distinct parts: the concessional SUW-Shorter Maturity Loans (SUW-SML) to be offered only in IDA20 in order to scale up investments in eligible countries needed in the short and medium-term as part of their COVID-19 response, and the non-concessional Regular SUW, where eligible countries can borrow at IBRD terms (group A) to provide countries with healthy debt outlooks the opportunity to pursue selected high-impact operations. A. SCALE UP WINDOW – SHORTER MATURITY LOANS 2. Purpose. The IDA20 concessional SUW-SML is designed to help meet heightened external financing needs in the aftermath of COVID-19. SUW-SML resources are provided in addition to country allocations. In order to address differing additional demands by countries, it makes available resources to further scale up needed investments in the short and medium-term as part of their COVID-19 response, for instance, operations in support of vaccines delivery, social protection operations and priority policy reforms. The SUW-SML are expected to be offered only during IDA20 and close at the end of the cycle. 3. Country Eligibility. IDA-only countries at low or moderate risk of debt distress, as well as Gap and Blend countries (except Small States that are at high risk or in debt distress), may receive SUW-SML financing. Countries that are facing debt vulnerabilities will be able to access SUW-SMLs only if they are on track in implementing reforms to improve debt transparency and management and fiscal sustainability, by having implemented the agreed Performance and Policy Actions (PPAs) in line with IDA’s Sustainable Development Finance Policy (SDFP). In addition, access to SUW-SML for yellow light IDA-only countries will be conditional to an ex-ante DSA showing no negative impact of the proposed SUW-SML financing on a country’s risk of debt distress. 4. Allocations. The size of SUW-SML will be $7.8 billion (equivalent to SDR5.5 billion). a. Regional Allocations. Indicative allocations from SUW-SML are provided to each region in proportion to the Region’s share of country allocations among SUW-SML eligible countries. The regional allocations may be adjusted, based on client demand. b. Country Caps. To avoid concentration of SUW-SML resources, annual SUW-SML financing to a country should not normally exceed its annual country allocation or one- third of the country’s indicative IDA20 allocation, whatever is larger. 5. Project/Program Prioritization. In addition to the country eligibility criteria set out in paragraph 3 above, proposed operations will have to demonstrate alignment with one (or more) of the four pillars of the WBG COVID Response. 1 1 The four pillars comprise: (i) World Bank emergency support to health interventions for saving lives threatened by the virus, (ii) WBG social response for protecting poor and vulnerable people from the impact of the economic - 151 - 6. Financing Terms. IDA20 SUW-SML offers concessional financing at zero interest or service charge, of 12 years maturity, with 6 years grace period. 2 B. REGULAR SCALE UP WINDOW 7. Purpose. The IDA20 non-concessional Regular Scale-up Window (SUW) is designed to scale up IDA financing for transformational, country-specific and/or regional operations with a strong development impact and high economic returns. SUW resources are provided in addition to country allocations that countries receive, making them useful where country allocations are insufficient to support transformational initiatives. 8. Country Eligibility. IDA-eligible countries may receive SUW financing as follows, in alignment with IDA’s SDFP and the IMF’s Debt Limit Policy: a. Countries subject to a Low-Income Country Debt Sustainability Framework (LIC-DSF). These countries are eligible only if they are at low or moderate risk of debt distress; b. Countries not subject to a LIC-DSF. These are considered on a case-by-case basis, subject to: (i) confirmation of alignment with IDA’s SDFP and the IMF’s Debt Limit Policy; and (ii) consultation across Chief Risk Officer (CRO), Macroeconomics, Trade and Investment Global Practice (MTIGP), Operations Policy and Country Services (OPCS), and Development Finance VPU (DFi). 9. Allocations. The size of the Regular SUW will be $6.3 billion (equivalent to SDR 4.4 billion). a. Regional Allocations. Indicative allocations from the Regular SUW are provided to each region in proportion to the share of country allocations to each Region, excluding countries at high risk of debt distress. b. Blend Country Ratios. To appropriately balance Regular SUW resources between Blend countries and other IDA-eligible countries, Regular SUW financing to Blend countries is limited to their respective share of country allocations for Regular SUW-eligible countries in the region. c. Country Caps. To avoid concentration of Regular SUW resources, cumulative Regular SUW financing to a country should not exceed its cumulative IDA20 country allocation at any point during the replenishment. However, there is flexibility for Small States. and social crisis triggered by the pandemic, (iii) WBG economic response for saving livelihoods, preserving jobs, and ensuring more sustainable business growth and job creation by helping firms and financial institutions survive the initial crisis shock, restructure and recapitalize to build resilience in recovery, and (iv) Focused WBG support for strengthening policies, institutions and investments for resilient, inclusive and sustainable recovery by Rebuilding Better. See “Saving Lives, Scaling-up Impact and Getting Back on Track: World Bank Group COVID-19 Crisis Response Approach Paper.” 2 As part of the outreach on the new IDA lending term options, IDA borrowers will be provided with information on the type of operations that should be considered, in line with the four pillars of the WBG COVID Response. - 152 - 10. Project/Program Prioritization. In addition to the country eligibility criteria set out in paragraph 8 above, the following criteria are used to select projects/programs. a. The potential for transformational impact of the proposed project/program. b. Alignment with WBG goals and IDA policy priorities. c. Risk of debt distress status of the borrower. d. The country’s capacity to absorb non-concessional resources for projects with high economic returns. 11. Financing Terms. IDA20 Regular SUW provides non-concessional financing on IBRD Flexible Loan terms (based on Group A pricing), as set out in Paragraph III.2.c.iii of the World Bank’s Policy ‘Financial Terms and Conditions of Bank Financing’. - 153 - ANNEX 10. SUSTAINABLE DEVELOPMENT FINANCE POLICY 1. This Annex outlines the key features of the Sustainable Development Finance Policy (SDFP), including steps that guide its implementation and governance structure. A. KEY FEATURES OF THE SDFP 2. Approved by IDA’s Executive Directors on June 9, 2020, the SDFP became effective on July 1, 2020, at a time when a significant number of IDA countries at high/moderate risk of debt distress were seeing these risks further heightened with the impact of the COVID-19 pandemic. 1 The policy aims to incentivize IDA countries to move towards transparent and sustainable financing and to further enhance coordination between IDA and other creditors in support of the countries’ reform efforts. This is especially important now, given the critical importance of addressing debt vulnerabilities in many IDA countries that already had heightened debt risks and have seen a recent rise with the pandemic impact. 3. The following core elements of the SDFP were approved by the IDA Board of Executive Directors (“the Board”). a. Country Coverage. This Policy applies to all countries eligible for IDA resources, including Gap and Blend countries. This responds to heightened debt risks in the context of a changing financing framework and increased demand for development financing in all IDA countries, and reflects IDA’s broader commitment to ensure that its resources are used prudently across the entire IDA portfolio. b. Two Pillars of the SDFP. The SDFP comprises two main components: (a) the Debt Sustainability Enhancement Program (DSEP) that enhances incentives for countries to move toward transparent and sustainable borrowing and investment practices; and (b) the Program of Creditor Outreach (PCO) that leverages IDA’s global platform and convening role to promote creditor outreach and coordination on sustainable lending practices, including debt transparency. c. Key features of the Debt Sustainability Enhancement Program: i. Performance and Policy Actions (PPAs). To support countries in making continuous improvements towards a sustainable borrowing path, IDA establishes PPAs for countries facing debt vulnerabilities. 1 IDA, April 2020, Sustainable Development Finance Paper: http://documents1.worldbank.org/curated/en/967661593111569878/pdf/Sustainable-Development-Finance- Policy-of-the-International-Development-Association.pdf - 154 - ii. Set-asides and discounts. Set-asides from - or discounts of - IDA’s country allocation (“country allocation”) 2 are used to incentivize satisfactory implementation of these PPAs. d. Key features of the Program of Creditor Outreach: i. Advance dialogue among a broader range of development partners towards putting in place a set of principles on sustainable financing; ii. Facilitate coordination at the country-level among different creditors, including traditional and non-traditional creditors and the IMF, on actions to promote sound economic policies, prudent debt management, and sustainable lending practices; iii. Enhance transparency and communications on sustainable financing through new information sharing initiatives and dialogue on the SDFP. B. DEBT SUSTAINABILITY ENHANCEMENT PROGRAM 4. The SDFP has been established as a multi-year process, 3 aiming to facilitate systematic engagement to address debt sustainability challenges in all IDA-eligible countries, using country dialogue, financing, analytics, and technical assistance. The DSEP is implemented through five steps, namely: (i) annual screening of debt vulnerabilities of all IDA- eligible countries, (ii) identification and selection of PPAs to address critical drivers of debt vulnerabilities, (iii) implementing PPAs with support from IDA, (iv) assessing implementation of PPAs relative to their defined milestones, and (v) implication of PPA implementation on IDA allocations and terms. 5. Information on debt vulnerabilities as of May 31st of each year determines which countries are required to prepare PPAs. Countries assessed through the Low-Income Country Debt Sustainability Framework (LIC DSF) rated at moderate risk, high risk or in external debt distress based on the Debt Sustainability Analyses (DSAs) approved as of May 31st of each year are required to prepare PPAs for the forthcoming fiscal year (FY). Further, countries using the DSA for Market Access Countries (MAC DSA) framework will also have PPAs established for the subsequent FY unless the country team requests otherwise by March 31st of each year and Management determines that the country’s debt vulnerabilities are limited. Countries at low risk of debt distress and some countries are exempt from preparing PPAs. 4 2 Country allocation means IDA resource allocations to IDA eligible countries, based on the PBA or through any exceptional allocation regime, as applicable, which includes the Prevention and Resilience Allocation (PRA), Remaining Engaged during Conflict Allocation (RECA), and Turn Around Allocation (TAA) under the Fragility, Conflict and Violence (FCV) Envelope. 3 IDA policies tend to have a long-term horizon. The SDFP builds on the NCBP, approved in 2006. 4 Four main groups of countries are exempt from preparing PPAs: (i) countries at a low risk of debt distress based on the joint Bank-Fund LIC DSF and countries under the MAC DSA which are determined by Management to have limited debt vulnerabilities; (ii) countries with loans/credits in non-accrual status to the WB; (iii) countries that are eligible for funding from IDA’s Remaining Engaged during Conflict Allocation (RECA); and (iv) countries where IDA has no operational engagement or those under OP 7.30. - 155 - 6. Identification and selection of country PPAs is informed by sound diagnostics, analytical and operational work. PPAs are expected to be policy and institutional actions or performance criteria such as a non-concessional borrowing ceiling. Depending on the country context, PPAs may cover some or all of the following areas: (i) enhancing debt transparency, (ii) strengthening fiscal sustainability, and (iii) improving debt management. Analogous to best practice for Development Policy Financing (DPF) prior actions, PPAs should be credible actions that are expected to make a sustained policy or institutional change. PPAs are defined for each FY and are calibrated to the country’s capacity across the spectrum of the client countries, including Small States and fragile and conflict-affected situations (FCS), to implement them within a given FY. The PPAs and rationale for these are set out in the PPA notes, which are approved by Management. 5 7. IDA provides support to its client countries as they implement their PPAs. Support will be channeled through technical assistance and/or lending operations. When supported by DPFs, PPAs can take the form of a subset of, or full, prior actions or results indicators. PPAs can be based on IMF programs. PPA implementation can also be supported through assistance from IMF, other multilateral development banks (MDBs) or bilateral development partners. 8. An assessment of PPA implementation is carried out at the end of the FY, with implications for the following FY’s country allocations. The SDFP introduces a robust monitoring and accountability framework, where country teams monitor the implementation of PPAs in the context of their country engagement and the authorities are responsible for providing evidence to support the assessment of the PPA implementation. Implementation Assessment Notes are prepared at the end of each FY to evaluate performance against targets. A country that satisfactorily implements all its PPAs in a given year has access to 100 percent of its annual country allocation in the subsequent FY. Where this is not the case, a share of its country allocation for the following FY will be set aside. 9. Amounts of set-asides (or discounts) are determined as follows: a. Countries covered under the LIC DSF: i. For countries at high risk of, or in, external debt distress, the amount is 20 percent of the country’s annual country allocation. ii. For countries at moderate risk of external debt distress, the amount is 10 percent of the country’s annual country allocation. iii. For countries at low risk of external debt distress but required to prepare PPAs, 6 the amount is 10 percent of the country’s annual country allocation. 5 Revisions and cancellations of PPAs take place under exceptional circumstances where warranted by changing country circumstances. 6 These are countries that have an improvement of debt risk rating to green light as per the cut of date of May 31st, but did not satisfactorily implement their PPAs the previous year. - 156 - b. Countries subject to the MAC DSA, the amount is 10 percent of the country’s annual country allocation. c. The risk of debt distress assessment used for determining a country’s set-aside amount (or discount) should be the same used for determining its country allocation for the year for which the set-aside (or discount) is applicable. 10. Set-asides are released based on the findings of an annual exercise whereby IDA Management systematically assesses the implementation of agreed PPAs. 7 If a country satisfactorily implements the PPAs associated with a set-aside in the second FY after which the PPAs were established, the set-aside amount is released at the beginning of the following FY. A country that does not satisfactorily implement the PPAs associated with a set-aside during the second FY after which the PPAs were established loses the set-aside amount (defined as “discount”). Discounts are redistributed as part of the annual country allocation to other IDA- eligible countries which either have been assessed at a low risk of external debt distress for the purpose of that FY or have satisfactorily implemented their PPAs during the previous FY. Set- aside amounts associated with cancelled PPAs are released to the country either immediately or at the beginning of the subsequent FY. 11. The SDFP set-aside mechanism is replenishment cycle-neutral, running continuously across cycles rather than coming to a hard stop at the end of each cycle. 8 As a result, set-asides are applied following one year of unsatisfactory implementation of a PPA and can either be recovered by meeting that PPA the following FY or become permanent discounts if that PPA is not met within two consecutive FYs, maintaining continuity regardless of the replenishment cycle. Figure A10.1 provides a visual representation of the set-aside mechanism under this framework. 7 If Management determines that the financial quality of IDA’s credit portfolio significantly deteriorated as a result of unsatisfactory progress in implementation of PPAs by a significant number of IDA countries, then in order to enhance IDA’s overall financial sustainability Management may request IDA Executive Directors’ approval for reducing the commitment authority for the ongoing replenishment period by the amount of unreleased set-asides instead of redistributing these set-asides to other countries. 8 See IDA Sustainable Development Finance Policy: Proposed Adjustments of the Set-Aside Mechanism, April 2021. - 157 - Figure A10. 1. Replenishment Cycle-Neutral Set-Aside Mechanism Framework Replenishment 1 Replenishment 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 PPA PPA Met Set-aside & PPA not met Recovered PPA met Set-aside & Discount PPA not met Year 2 PPA PPA Met Set-aside & PPA not met Recovered PPA met Set-aside & Discount PPA not met Year 3 PPA PPA Met Set-aside & Recovered PPA not met PPA met Set-aside & Discount PPA not met 12. Management has the option to harden IDA financing terms when a country severely or repeatedly fails to satisfactorily implement its PPAs or if the existence of other country policies and actions may undermine the original goals of the agreed PPAs. In particular, repeated unsatisfactory implementation of PPAs which include debt ceilings could lead to a combination of set aside and the hardening of the terms of IDA financing. 13. Countries with set-asides are subject to special rules for frontloading and reallocations of IDA resources: a. Frontloading. In general, countries subject to a set-aside or discount under the SDFP will not be eligible for frontloading. However, Small States that are subject to a set-aside or discount will be allowed to frontload up to 50 percent of their indicative allocation for the following FY. b. Reallocations. Countries with set-asides are not eligible to receive reallocations should additional resources become available as a result of not being used by other IDA-eligible countries. This is also applicable to cases where funds are made available through reallocations from windows to country allocations. C. PROGRAM FOR CREDITOR OUTREACH 14. IDA is focused on promoting information sharing, collaboration and deepening dialogue between IDA and other creditors. Annual plans outlining key activities in this regard will be approved by DFi VP with concurrence of EFI VP and OPCS VP and with advice from the SDFP Committee. The key areas for creditor coordination include: a. Debt and/or Financing Policies. IDA engages in dialogue with the IMF, MDBs, and bilateral partners on debt and financing policies. - 158 - b. Creditor Coordination at Country Level. IDA engages at the country level on specific debt-related topics with relevant stakeholders including multilateral, bilateral and private creditors. c. Information Sharing. IDA promotes information sharing and transparency through publishing country-specific debt data and areas of the approved PPAs for each country on the IDA website as well as through the “Lending to LICs” mailbox. 9 D. IMPLEMENTATION ARRANGEMENTS 15. Principles. The governance arrangements of the SDFP are intended to ensure that the PPAs are: (i) identified by the Regional Vice President (RVP) based on the policy dialogue with the country authorities; (ii) informed by sound diagnostics; (iii) aimed at supporting an ambitious but realistic pathway toward debt sustainability and addressing related challenges; and (iv) consistent with the objectives of the SDFP as approved by the Board and consistent across countries. 16. Policy dialogue. Country ownership of PPAs is critical for implementation of the SDFP. Country economists conduct, under the guidance of Country Management Units (CMUs) and in collaboration with other country team members and support from global teams, as necessary, a regular policy dialogue on the SDFP. This is related, among other things, to the objectives of the policy, country PPA coverage, selection, design, and verification of implementation of the PPAs. This dialogue builds on the broader corporate dialogue at the global level on the policy. To the extent possible, this dialogue builds on existing corporate and country-specific communication channels (for example, related to Country Policy and Institutional Assessment (CPIA), DSAs, technical assistance engagements and DPFs) in addition to the SDFP-specific communication channels. 17. Accountability and Decision Making. Final decisions on the PPAs and set-asides are taken by the Managing Director of Operations (MDO), upon the recommendation of the RVPs and the concurrence of the respective VPs of DFi, EFI and OPCS, with the advice of the SDFP Committee. The process underlying the formulation of PPAs and assessment of their implementation involves technical global units and country teams. This process includes consultations with the authorities of the country concerned, and, as necessary, advice from the SDFP Committee.The decisions related to various exceptions will generally be taken through the virtual reviews following the same process, unless one of the parties involved requests otherwise. 9 Email: lendingtolics@worldbank.org - 159 - 18. Oversight by the Board. The Board is regularly informed of key SDFP-related decisions. Management will inform the Board during the second quarter of each FY about the content of PPAs for IDA-eligible countries, the outcomes of PPA implementation, and its impact on country allocation, after decisions on these issues are made. This information is also disclosed on the IDA Debt website in accordance with the Access to Information Policy. 10 Debt ceilings are disclosed in coordination with the IMF. 10 Country level information can be assessed through: Debt | International Development Association - World Bank | International Development Association - World Bank - 160 - ANNEX 11. ENHANCEMENTS TO IDA’S CRISIS TOOLKIT AIMED AT INCENTIVIZING CRISIS PREPAREDNESS 1. IDA20 will significantly strengthen the incentive framework for countries to enhance their approach to crisis preparedness, by embedding crisis preparedness in core IDA operations through policy dialogue and enhanced incentives to be delivered in three areas (Figure A11.1). As IDA countries continue to grapple with the COVID-19 pandemic, they face a variety of other threats—such as natural hazards, food insecurity, other disease outbreaks, and economic and financial crises—that could periodically wipe away decades of development gains in the absence of effective crisis preparedness and response. This annex summarizes the IDA20 framework for helping clients fortify their preparedness to crises. A. POLICY COMMITMENTS ON CRISIS PREPAREDNESS 2. The proposed IDA20 policy framework includes seven policy commitments that span shock-specific interventions, as well as shock-agnostic investments designed to enhance readiness across various types of crises. The IDA20 Crisis Preparedness Cross-Cutting Issue will be underpinned by a standalone policy commitment for WBG country programs in all IDA countries to provide technical and financial support to strengthen crisis preparedness. Such support will be informed by appropriate crisis preparedness assessments, such as the Crisis Preparedness Gap Analysis (CPGA) and/or other relevant diagnostic tools. IDA20 also envisions supporting resilience in shock-specific areas, such as by strengthening institutional and planning frameworks and/or physical infrastructure in countries facing natural hazards or food insecurity, and by boosting COVID-19 vaccine rollout and bolstering prevention of and preparedness for pandemics through One Health approaches. These will be complemented by shock-agnostic efforts, such as by supporting IDA countries in building adaptive social protection systems which can be scaled up during different crises. IDA20 will also support making financial systems more resilient and address transboundary drivers of FCV. Table A11.1 lists the IDA20 policy commitments related to crisis preparedness, and these are discussed further in Section III.B.i. of the main text. - 161 - Table A11. 1. IDA20 Policy Commitments related to Crisis Preparedness Policy Commitments Placement Strengthening crisis preparedness: WBG country programs in all IDA Crisis Preparedness countries will provide technical and financial support to strengthen crisis Cross Cutting Issue preparedness. Such support will be informed by appropriate crisis preparedness Policy Commitment 1 assessments, such as the Crisis Preparedness Gap Analysis (CPGA) and other relevant diagnostic tools. Boosting COVID-19 vaccination rollout and strengthening pandemic Human Capital preparedness: Support all IDA countries to strengthen health security and Special Theme: advance inclusive health systems and universal health coverage, including (i) Policy Commitment 1 containing the COVID-19 pandemic, through vaccine rollout, preventive measures, testing, treatment and care, and (ii) strengthening pandemic preparedness, including prevention, detection and response. Expanding adaptive social protection and building resilience to shocks: To Human Capital ensure inclusive and effective response against shocks and crises, especially Special Theme: among the poorest and most vulnerable, support at least 20 IDA countries’ Policy Commitment 4 resilience by building adaptive social protection systems, including the use of digital technologies. Supporting prevention of and preparedness for future pandemics: To Human Capital strengthen health security by improving pandemic preparedness and prevention Special Theme: at the nexus of human, animal, and ecosystem health, including zoonotic Policy Commitment 7 diseases and anti-microbial resistance, support at least 20 IDA countries to mainstream One Health approaches. Increasing crisis preparedness and response: Support at least 25 countries Climate Change (including at least 10 FCS) facing natural hazards or food crises to improve Special Theme: their crisis preparedness and response capacity by strengthening related Policy Commitment 8 institutional and planning frameworks and/or physical infrastructure. This support should include improving climate data and information services (such as hydromet and early warning systems) in at least 10 countries. Supporting resilient financial systems for recovery: Strengthen the resilience, JET Special Theme: inclusion and depth of the financial system in 15 IDA countries, including five Policy Commitment 1 FCS, based on Financial Sector Assessment Program (FSAP) or similar financial sector analytics to support a robust and inclusive recovery. Addressing transboundary drivers of FCV and recovering from crisis: FCV Special Theme Implement regional initiatives in the Sahel, Lake Chad, the Horn of Africa, and Policy Commitment 4 Central Asia to help address transboundary drivers of FCV, support transboundary resilience, and/or strengthen regional crisis risk preparedness and mitigation together with key relevant partners. IFC will commit to leverage its local presence to scale up upstream and advisory service activities in these areas, leading to enhanced private sector opportunities. 3. The IDA20 policy commitments on crisis preparedness are based on a multifaceted toolkit that utilizes analytics, financing instruments, and tracking and reporting systems as crisis tools more systematically. Such an integrated approach is best suited for effectively - 162 - incentivizing crisis preparedness in a world of increasingly multidimensional and compounding shocks (see Figure A11.1). Figure A11. 1. Enhancements to IDA’s Toolkit by Start of IDA20 Analytics Inform all new Systematic Country Diagnostics in IDA countries using appropriate crisis preparedness assessments, including the Crisis Preparedness Gap Analysis (CPGA) and/or other diagnostics. Instruments  Deploy a more systematic approach to using CERCs.  Raise the ERF cap on pre-allocated CERCs.  Enhance the incentives for Cat DDOs.  Formalize the IPF-DDO. Tracking and Reporting  Monitor the number of SCDs and CPFs informed by crisis preparedness diagnostics.  Monitor the number of countries with adaptive social protection systems integrated into national systems with IDA support.  Develop an indicator on crisis preparedness financing by IDA20 Mid-Term Review. 4. The proposals summarized in Figure A11.1 and discussed below are at various stages of design, development and implementation. Some of these—such as the IPF DDO—will require approval from the IDA Board of Executive Directors (“the Board”). B. ANALYTICS 5. IDA20 support will be underpinned by strong analytics to enhance clients’ understanding of crisis risks, strengthen country ownership of the preparedness agenda and inform subsequent IDA programming. Such analytics are a crucial foundation as they pave the way for deepening country dialogue, as well as identifying key gaps and priority interventions. IDA already has an expansive suite of core and extended diagnostics that integrate important aspects of crisis preparedness and resilience, including the Country Climate and Development Report (CCDR), the Pandemic Preparedness Diagnostic, the Financial Sector Assessment Program (FSAP) and the Risk and Resilience Assessment (RRA). In addition, IDA will continue to deploy sector-specific analytics to help assess and improve the capacity of client governments to prepare for and manage a range of crises. These include: (a) the Ready to Respond (R2R) framework to assess emergency preparedness and response capacity; (b) the Social Protection Stress Testing Approach to assess the capacity of existing social protection systems to adapt and expand coverage in the event of shocks; (c) the Disaster Risk Financing Diagnostic tool to understand countries’ preparedness to deal with the financial and economic impacts of disasters; and (d) the Post- - 163 - Disaster Financial Management Review and Engagement Framework to assess the readiness of countries’ Public Financial Management (PFM) systems to deal with disasters, among others. 6. In IDA20, all new Systematic Country Diagnostics (SCD) for IDA countries will be informed by appropriate crisis preparedness assessments, depending on the country’s profile and circumstances. The choice of assessments may include the forthcoming Country Preparedness Gap Analysis (CPGA) and/or other diagnostics as relevant. The CPGA (Box A11.1) will supplement, rather than replace or duplicate, existing shock-specific assessments. It will be available for use starting from the beginning of IDA20 and will be demand-based. In countries where other preparedness-related diagnostic tools have yet to be deployed, the CPGA will serve as an entry point for relevant country teams to conduct further in-depth analyses. Where preparedness-related analytics exist and a CPGA is requested, the CPGA will build on their findings and recommendations. The CPGA’s value-added is in offering a holistic, cross-sectoral analysis of key gaps and entry points for strengthening crisis preparedness across different types of shocks. This cross-cutting approach is especially valuable given the increasingly multidimensional and compounding crises that beset IDA countries. Using the CPGA and/or other appropriate crisis preparedness assessment tools to inform all new SCDs in IDA countries can further help identify key “no regret” interventions to strengthen clients’ ability to prepare for and respond to crises, particularly on cross-cutting elements of crisis preparedness. For World Bank teams, it can help identify opportunities to strengthen and inform engagement on crisis preparedness. Management will embark on an ambitious implementation of this approach in IDA20, including through rollout of the CPGA and revision of the SCD guidance, as relevant. - 164 - Box A11. 1. The Crisis Preparedness Gap Analysis (CPGA) During the IDA19 Replenishment, Management committed to developing an approach to monitor countries’ progress on crisis preparedness, so as to galvanize dialogue on preparedness gaps and inform subsequent IDA programming.a The Global Crisis Risk Platform (GCRP) was tasked with leading this effort, and the CPGA was the product of extensive collaboration across operational and technical units across the Bank, as well as with external partners including World Health Organization (WHO) and the United Nations Office for the Coordination of Humanitarian Affairs (UN OCHA) among others. It builds on existing shock-specific diagnostics both within the Bank and externally, to provide a cross-sectoral perspective on a country’s state of crisis preparedness. The CPGA focuses on five components that correspond to foundational elements of crisis preparedness that are consistent with the World Bank’s mandate. These include (i) legal and institutional foundations; (ii) understanding and monitoring risks; (iii) financial preparedness capacity; (iv) primary response systems; and (v) social and livelihood support to vulnerable populations. These five components aim to assess both shock-agnostic elements of preparedness that are relevant for any type of shock (such as the ability to deploy support to vulnerable households through social protection programs) and shock-specific elements (such as disease surveillance capacities or disaster early warning systems). The CPGA is meant to identify entry points for targeted support on crisis preparedness. It is not a scoring or ranking of IDA countries, and it does not evaluate a country’s past performance nor attempts to predict how a country might fare in the event of a crisis. The CPGA is intended to support prioritization of crisis preparedness programs within country teams and advance dialogue with governments in IDA countries. CPGAs have been piloted in Malawi and Lao PDR and the approach is being refined to reflect lessons learned. In Malawi, the CPGA findings were discussed and further prioritized in a dedicated CPGA country team workshop. a World Bank Group, Additions to IDA Resources: Nineteenth Replenishment – Ten Years to 2030: Growth, People, Resilience, pp. 146. C. INSTRUMENTS 7. IDA20 will support the use of Contingent Emergency Response Components (CERCs) through a systematic portfolio approach, to boost preparedness and augment capacity for surge response during crises. CERCs are contingent financing tools that can quickly channel undisbursed IPF balances toward crisis response. They enhance preparedness by having teams frontload the design of implementation modalities for crisis response, to avoid scrambling in an emergency. 8. As there remain hurdles to mainstreaming CERCs, IDA will adopt a more systematic, integrated approach. The hurdles include reluctance to activate CERCs as there are concerns that new funds may not be forthcoming to replenish the financing that is withdrawn from IPF projects for crisis response, as well as insufficient capacity for CERC implementation. IDA will thus adopt a more systematic, integrated approach by the start of IDA20 that: (i) facilitates CERC preparation via standardized templates and updated guidance; (ii) systematizes country dialogue to identify projects best suited for CERC inclusion; (iii) adapts Bank systems and procedures to better support CERC activation and implementation; and (iv) augments training and outreach. CRW resources can also be used to replenish projects whose funds were redirected to crisis response. - 165 - 9. Further, Management proposes to raise the ERF cap from $12.5 million to $25 million in IDA20. This follows feedback from World Bank teams that the current ERF cap on pre- allocated CERCs may be too low to generate client interest. 10. The incentives to use DPFs with a Catastrophe Deferred Drawdown Option (Cat DDO) will likewise be enhanced, by modifying the co-payment rule for Cat DDOs through a limited use of CRW resources. The Cat DDO was introduced in IDA18 to augment IDA’s crisis response toolkit, deploying a contingent financing line that provides immediate liquidity to countries to help address shocks related to natural disasters and/or health-related events. It has been valuable in promoting crisis preparedness. To qualify, countries must have a satisfactory disaster risk management program or prepare one, and have the contingent financing anchored on an agreed matrix of related policy and institutional reforms. However, some IDA countries may be reluctant to use part of their IDA country allocations for contingent financing even with the incentive under the existing 50-50 co-payment rule. 1 To further incentivize take-up, the co- payment rule for Cat DDOs using IDA country allocations will be modified such that the Cat DDO amount to be covered by IDA country allocations will be reduced from 50 percent currently to at least 25 percent, with a further 25 percent covered using CRW resources, and IDA topping up the remainder of up to 50 percent. In IDA18, 13 Cat DDO operations were approved for a total amount of $530.8 million, of which $265.4 million (50 percent) were covered by clients’ IDA country allocations. Assuming clients would use the same amount of IDA country allocations for Cat DDOs as they did in IDA18 (i.e., $265.4 million), the total volume of Cat DDOs in IDA20 would be estimated at around $1.1 billion. This is a conservative estimate using the IDA18 experience as a proxy, IDA18 being the most recent completed three-year cycle of Cat DDO financing. 2 The risk of over-using resources from the CRW will be managed through the Cat DDO country limits 3 as well as the overall Cat DDO portfolio limit of $3 billion, which were introduced in IDA18. 11. Management also plans to formalize the Investment Project Financing Deferred Drawdown Option (IPF-DDO) within the IPF Policy Framework, as part of an effort to ensure Bank instruments are better fit-for-purpose to meet crisis preparedness and other resilience objectives. While DDOs have been primarily used in Development Policy Financing (DPF) operations, countries’ demand for contingent financing features in IPF operations has increased. IPF operations with a DDO feature could be considered for a broad range of events when a particular risk is identified in advance and the commitment of IPF-DDO financing can strengthen financial resilience to that risk, by ensuring that funding is available for specific expenditures in the event that the risk or shock occurs. Potential uses of such contingent financing include backstopping a national deposit insurance fund against financial sector shocks, stabilizing an energy fund in the event of a weather-induced drop in hydropower generation, and providing 1 Currently, countries which opt to fund their IDA Cat DDOs with IDA country allocations only need to contribute half the Cat-DDO amount using their country allocations, with the remainder funded by IDA general resources. This copayment rule applies only to Cat DDOs funded by IDA country allocations, and not to those funded using other options. 2 The IDA19 data was not used in this case to estimate potential IDA20 demand as the truncated IDA19 cycle is not complete yet. Further, IDA19 is an exceptional period given the COVID-19 crisis which may have impacted Cat DDO utilization. 3 The country limit is set at a maximum of $250 million or 0.5 percent of GDP, whichever is lower. IDA clients with limits below US$20 million may request a Cat DDO up to a maximum of $20 million. - 166 - contingent liquidity support to national emergency funds. Although IPF operations with a contingent financing feature is available in the current toolkit, 4 the IPF-DDO usage and pricing will be formalized within the IPF Policy Framework to facilitate its use. Policy revisions will be proposed to the Board to formalize the IPF-DDO by the start of IDA20 in July 2022. D. TRACKING AND REPORTING 12. Finally, there will be enhanced tracking and reporting of IDA’s support for crisis preparedness that demonstrates the degree to which IDA and clients are managing for results. This will make the scope of this work more visible and allow monitoring of progress over time. The IDA RMS will include indicators that measure the extent to which country strategies embed crisis preparedness considerations, and whether those considerations are leading to relevant results. These cover key plans of an outcome-oriented approach—using evidence about what works and strengthening partner country institutions to achieve high-level outcomes over time. In Tier 3, IDA will track the number of SCDs and CPFs that were informed by diagnostics on crisis preparedness. This indicator measures the extent to which rigorous analysis of crisis preparedness has been mainstreamed into the country diagnostics and programming preparation process. In Tier 2, IDA will track the number of countries integrating adaptive social protection into national systems with IDA support. While adaptive social protection does not cover all aspects of crisis preparedness, it is directly focused on poverty, is shock-agnostic, and its integration into national systems suggests many other crisis preparedness elements are in place, including crisis risk financing and information systems for targeting vulnerable populations. On tracking and reporting of crisis preparedness financing, Management will, by the IDA20 Mid-Term Review (MTR), achieve an operational definition, develop an indicator, and determine the scope of operations and instruments that the indicator could cover. 4 For example, the Uruguay Drought Events’ Impact Mitigation Project (P149069) included such a contingent financing feature, with requisite policy waivers to enable appropriate DDO pricing. The project aimed to enhance the Government of Uruguay’s efforts to mitigate the effect of adverse weather conditions on its public sector accounts and to enhance the efficiency of its risk management framework used to mitigate these risks. - 167 - ANNEX 12. CONCESSIONAL PARTNER LOANS 1. This Annex summarizes the final IDA20 Concessional Partner Loans (CPL) framework which maintains the IDA19 CPL framework with the following updates: (a) the addition of new CPL terms with 50-year maturity, and (b) updated reference period for estimating the discount rates for grant element calculation. The discount rates result based on the average interest rates from the period of March 2021 to August 2021, as well as the illustrative grant element calculation are presented below. 2. Key IDA20 CPL financing terms, as listed below, are proposed to remain similar to the IDA19 framework: a. Maturity: 25, 40 or 50 years. b. Grace period: The grace period would be 5 years for a 25-year loan or 10 years for a 40- year loan and a 50-year loan. c. Principal repayment: Principal repayments of concessional partner loans would begin after the grace period. At that point, a straight-line amortizing repayment schedule would be applied. For 25-year credits, principal would amortize at a rate of 5 percent per annum; for 40-year credits, principal would amortize at a rate of 3.3 percent per annum; for 50-yr loans, principal would be amortized at a rate of 2.5 percent per annum. d. Coupon/Interest: IDA concessional partner loans would have an all-in SDR equivalent coupon of up to 1 percent, 1 hereinafter referred to as “maximum coupon rate”. Partners have the option to provide additional grant resources to buy down the difference between the maximum coupon rate and the CPL coupon rate if higher. For CPLs where the maximum coupon rate is negative, Partners have the additional option to provide a CPL with a coupon rate of 0 percent in the CPL currency and meet the remaining grant element requirement of the framework by providing a larger volume of CPL. 2 e. Prepayment: To ensure IDA’s financial sustainability, IDA may prepay the outstanding balance of the CPL, in whole or in part, without penalty after giving no less than 12 months’ prior notice. f. Effectiveness: Based on the date on which the loan agreement is signed by both parties and upon the provision of the full unqualified amount of a coupon equivalization grant, as applicable. g. Currencies: For pledging purposes, IDA would accept concessional loans in SDRs, or any one of the SDR basket currencies, namely the US Dollar, Euro, Japanese Yen, British 1 The all-in cost may also be achieved by providing additional grants to buy-down the loan coupon rate. 2 This implies a higher coupon rate than the maximum coupon rate in the CPL currency. Fair treatment across Partners will be ensured by using the actual coupon rate of the CPL to calculate the loan’s grant element to determine voting rights and compliance with the minimum grant equivalent contribution benchmark. - 168 - Pound and Chinese Renminbi. Subsequent to pledging, Partners may also request a conversion to eligible non-SDR currencies based on criteria agreed. h. Drawdown: The concessional loans would be drawn-down in three equal annual installments over the IDA20 3-year period. Management may agree on a different draw- down schedule with the loan providers as it deems necessary. 3. Grant Contribution: Partners providing concessional partner loans in IDA20 are expected to provide basic grant contributions equal to at least 80 percent of the Minimum Grant Contribution Benchmark and target the total Grant Equivalent Contribution (which include basic contribution from grant and grant element of CPLs) to at least their Minimum Grant Contribution Benchmark. Partners could select their preferred Minimum Grant Contribution Benchmark as 100 percent of their total Grant Equivalent Contribution based on IDA18 or IDA19, as the Partner prefers. The Minimum Grant Contribution Benchmark could also be based on the Currency of Pledge, National Currency or SDR amounts, as the Partner prefers. 4. Grant Element: As in IDA19, upon receipt of the concessional funding from IDA Partners, the grant element of the CPLs (which reflect the concessionality of the CPL coupon relative to the discount rate) will be recognized for voting rights and burden share purposes. The grant element is a function of the terms of a loan. The terms of the loan determine the cash inflows and outflows related to the loan and the grant element is effectively the ratio of the present value of the debt service to the present value of the loan disbursements, which can be expressed with the formula below: ∑ =1 ( × ) 1− ∑ × =1 � � Where: DFi = Discount factor at period i, calculated using the discount rate of CPL framework CFSi = Cash flow from debt service at period i DFj = Discount factor at period j, calculated using the discount rate of CPL framework CFDj = Cash flow from loan disbursement at period j m = the maturity of the CPL n = the drawdown period of the CPL 5. Discount rate: Following the IDA19 Framework, the discount rate used to calculate the grant element is based on IDA’s projected funding cost in the market and translated into the currencies of the SDR basket. As proposed, the discount rates are estimated using the average monthly interest rates from the period of March 2021 to August 2021. Table A12. 1. IDA20 Discount Rates IDA20 Discount Rates (%) 25-year 40-year 50-year CPL CPL CPL USD 2.11 2.53 2.59 EUR 0.48 0.85 0.87 JPY 0.06 0.41 0.49 - 169 - Table A12.1 continued IDA20 Discount Rates (%) 25-year 40-year 50-year CPL CPL CPL GBP 1.30 1.54 1.56 CNY 2.52 2.98 3.03 SDR 1.41 1.79 1.84 6. Maximum coupon rates: Similar to IDA19, the coupon rate for the IDA20 CPLs would be subject to a maximum coupon rate of 1 percent in SDR. The equivalent maximum coupon rate for each currency is based on the principle that the grant element generated on CPLs in different currencies will be equivalent. For example, as shown in the Table A12.2 below, a 1 percent SDR 25-year maturity loan will have the same grant element of 5.14 percent as a USD CPL with a coupon of 1.67 percent; a EUR CPL with a coupon of 0.10 percent; a JPY CPL with a coupon of -0.30 percent; a GBP CPL with a coupon of 0.89 percent; or a CNY CPL with a coupon of 2.06 percent. Table A12. 2. IDA20 Maximum Coupon Rates and Corresponding Grant Element IDA20 Maximum Coupon Rates (%) 25-year 40-year 50-year CPL CPL CPL USD 1.67 1.66 1.65 EUR 0.10 0.15 0.15 JPY -0.30 -0.25 -0.19 GBP 0.89 0.78 0.76 CNY 2.06 2.06 2.03 SDR 1.00 1.00 1.00 Grant Element 5.14 15.01 18.18 7. Implications of coupon rate lower or higher than maximum coupon rate: a. As in IDA19, if a Partner provides a CPL with a coupon lower than the maximum coupon rate in a given currency, it will benefit from a larger grant element compared to providing a loan at the maximum coupon. For example, a 25-year CPL with a coupon of 0 percent in SDR would generate a grant element of 17.83 percent as opposed to a 1 percent SDR coupon generating grant element of 5.14 percent. b. As in IDA19, if a Partner would like to provide a CPL with a coupon rate higher than the Maximum Coupon Rate but lower than the Discount Rate 3 in a given currency, the Partner would be required to compensate for the difference through additional grants to “buy- down” the terms of the CPL to the level of the maximum coupon rate. 3 Coupon rates cannot exceed the discount rate in a given currency otherwise the CPL doesn’t generate a grant element. - 170 - c. If a Partner makes this additional grant payment up front, the required payment amount will be calculated based on the present value of the difference in future cash flows between the original coupon payments and the targeted coupon payments. The same discount rate in the CPL framework will be used in the present value calculation. The Partner can make the additional grant payment over several installments only if the CPL has the same disbursement schedule (which has a maximum period of 3-year) and if the present value of the additional grant payments is the same as if paying upfront. Table A12.3 illustrates the additional grant payments required for a buydown of 100bps to meet the maximum coupon rate in a given currency. Table A12. 3. Additional Grant Payments Required for a Buydown of 100bps to Meet the Maximum Coupon Rate Additional grant required upfront in the loan currency for every 1,000 million CPL Currency 25-year CPL 40-year CPL 50-year CPL USD 120 176 197 EUR 136 215 253 JPY 142 228 268 GBP 127 199 229 CNY 116 167 186 SDR 127 192 219 d. As in IDA18 and IDA19, if the Maximum Coupon Rate for a particular currency is negative, in addition to the option above (i.e., having a higher CPL coupon rate and making up for the difference in resulting grant element through a “buydown” grant), CPL providers would have the additional option of providing a CPL with zero percent coupon rate and making up for the difference in resulting grant element through a larger CPL. In such a scenario, a zero coupon would mean that the CPL coupon rate would be higher than the maximum 1 percent SDR-equivalent rate. Fair treatment across Partners will be ensured by using the 0 percent coupon rate of the CPL to calculate the loan’s grant element to determine voting rights and compliance with the minimum grant contribution benchmark (aka, “80/20 rule”). See illustration in the Figure A12.1 below: Figure A12. 1. Illustrative Example of how to Bridge the Difference Between the Maximum Coupon Rate and the CPL Coupon Rate if Higher SDR Rate CPL Currency Rate IDA20 Discount Rate 1.79% 0.41% To bring coupon (illustrative) rate from zero Partners can provide percent to additional grant resources desired level 1.3% 0.00% To bring negative Partners can: coupon rate to 1) Provide additional grant and/or zero percent 2) Provide a larger CPL Maximum Coupon Rate 1.0% -0.25% - 171 - 8. Consistent with previous replenishments, IDA requires that Partners provide their Instruments of Commitment before IDA can sign a CPL agreement with the Partner country. This requirement is to enhance the fairness between CPL providers and grant providers, where Instruments of Commitment are required before the grant payment can be received. In addition, in case a Partner plans to provide additional grant resources to lower the coupon rate on the CPL, IDA would require the payment of the additional grant by the Partner as a prerequisite for IDA to accept the disbursement from the CPL. This is to protect IDA from paying a high borrowing cost on CPL without receiving the related grant payment that ensures the required concessionality. 9. Flexibility to provide CPLs in non-SDR currencies: Partners will have some flexibility to provide CPLs in non-SDR currencies while ensuring financial and risk neutrality to IDA by using market instruments and ensuring fair and equal treatment among Partners. 10. To ensure financial and risk neutrality to IDA, Partners who would like to include a CPL in its pledges will continue to be required to pledge the CPL in one of the SDR currencies, with grant element calculated based on the published discount rates for the specific SDR currency, as per the current process. Partners have the option to convert the loan 4 into an eligible non-SDR currency upon signature of the loan agreement. 11. The conversion option will be allowed only for currencies that the World Bank Treasury is able to hedge through the market for the full maturity of the loan (25 or 40 or 50 years). The eligible currencies 5, 6 for IDA20 based on this criterion are Australia Dollars (AUD), Canadian Dollars (CAD), Swiss franc (CHF), Swedish krona (SEK) and South African Rand (ZAR). CPL agreement for the eligible currencies will include additional legal provisions to enable market-based conversions, applicable market clause and the flexibility offered in terms of size and timing in effecting conversion. 12. The terms of such conversions (amount and coupon rate in the selected non-SDR currency) will be based on the hedge IDA can execute at prevailing market rates at the time of conversion with the applicable transaction fees. 7 The market conversions will be offered in a manner that ensures that they don’t entail additional financial risks to IDA, including the excessive income volatility. 4 Or a portion of the loan 5 The final eligibility of CPL in non-SDR currencies would be subject to the market availability when the conversion is to be requested. 6 Given the limited liquidity of the CNY market in long tenors, any conversion from a CPL in CNY into another currency would be subject to the market availability. 7 Transaction fees will be aligned with the WB’s methodology for calculating transaction fees to cover for overhead and market counterparty risk. - 172 - ANNEX 13. DOCUMENTS PROVIDED FOR THE IDA20 REPLENISHMENT 1 April 14 to 15, 2021 – Virtual Meeting 1. IDA19 Implementation of Policy Commitments and Results Update (March 23, 2021) 2. IDA19 Mid-Term Review: Graduation Prospects for IDA Countries (March 29, 2021, updated and published on November 1, 2021) 3. IDA19 Implementation and Adjustments (March 29, 2021)* 4. Note on the Proposed Enhanced PBA Top-up (Replacing COVID-19 CRW) for FY22* 5. Roadmap for the Advance IDA20 Replenishment (March 2021) 6. IDA20 Proposed Strategic Directions (March 23, 2021) 7. SDFP: Proposed Adjustment to the Set-Aside Mechanism (March 23, 2021) 8. IDA Balance Sheet Optimization (March 31, 2021)* 9. Foreign Exchange Period for the IDA20 Replenishment (March 30, 2021)* June 28 to 30, 2021 – Virtual Meeting 1. Adjustments to IDA19 (June 08, 2021) 2. IDA20: An Overview – Building Back Better from the Crisis: Towards a Green, Resilient, and Inclusive Future (June 11, 2021) 3. Cross-Cutting Issues in IDA20 (June 11, 2021) 4. IDA20 Special Theme: Human Capital (June 11, 2021) 5. IDA20 Special Theme: Climate Change (June 11, 2021) 6. IDA20 Special Theme: Gender and Development (June 11, 2021) 7. IDA20 Special Theme: Fragility, Conflict and Violence (June 11, 2021) 8. IDA20 Special Theme: Jobs and Economic Transformation (June 11, 2021) 9. The IDA20 Results Measurement System (June 11, 2021) 10. IDA20 Ask Paper: Demand, Architecture, and Scenarios (June 11, 2021)* 11. IDA20 Financing Framework (June 11, 2021)* 12. Shareholder SDR Allocations: Potential Options for Increasing IDA’s Financing Capacity (July 2, 2021)* October 20 to 22, 2021 – Virtual Meeting 1. The Structural Gap and Reported Burden Share (September 13, 2021)* 2. Local Currency Financing Solutions for IDA Countries (September 13, 2021)* 3. Review of the Capital Adequacy Framework of IDA (September 13, 2021)* 4. IDA19 Mid-Term Review of the Operationalization of the Fragility, Conflict and Violence Envelope (September 23, 2021) 5. IDA19 Mid-Term Review of the Crisis Response Window Early Response Financing (September 23, 2021) 1 The IDA19 Mid-Term Review papers were discussed over several meetings between the April 2021 to October 2021 to inform the IDA20 replenishments discussions. - 173 - 6. Sustainable Development Finance Policy of the International Development Association: Implementation Update (September 22, 2021) 7. IDA19 Mid-Term Review of the IDA Refugee Policy (September 23, 2021) 8. Draft IDA20 Deputies Report: Summary of Comments Received from Public Consultation and Actions Taken (December 8, 2021) 9. Operational and Financing Framework (October 2, 2021)* 10. Review of IDA Capital Value Protection Program (September 17, 2021)* 11. IDA19 Implementation Status and Proposed Reallocations (October 9, 2021) December 14 to 15, 2021 – Virtual Meeting 1. Draft: IDA20 Deputies Report (Report from the Executive Directors of the International Development Association to the Board of Governors - Additions to IDA Resources: Twentieth Replenishment - Building Back Better from the Crisis: Towards a Green, Resilient and Inclusive Future) * These papers were not publicly disclosed as per the World Bank’s Access to Information Policy which excludes disclosure of papers that contain confidential financial projections - 174 - ANNEX 14. IDA20 MID-TERM REVIEW DELIVERABLES The following list outlines deliverables Management has agreed to provide at the IDA20 Mid- Term Review. 1 1. IDA20 implementation update, including progress and utilization of all IDA windows, hereunder the Private Sector Window, and FCV Envelope as well as proposal on guiding principles for a sustainable approach to FCV Envelope phase-out 2. Implementation review of the Sustainable Development Finance Policy 3. Review of the use of Shorter Maturity Loans 4. Define and develop IDA’s contribution to the equality of opportunity for sexual and gender minorities (LGBTI) agenda 5. Complete a pilot on fully-hedged local currency financing 6. Present an operational definition of crisis preparedness, develop an indicator, and determine the scope of operations and instruments that the indicator could cover 7. Develop methodology to identify, monitor, and assess the extent to which project financing generates biodiversity and ecosystems services 8. Review of how IDA is partnering with other development actors 1 Management also agreed to provide an update on the IDA long-dated bond program at the Annual Meetings in 2022. - 175 - ANNEX 15. DRAFT IDA20 RESOLUTION Board of Governors Additions to Resources: Twentieth Replenishment WHEREAS: (A) The members of the International Development Association (the “Association”) have recognized the urgent need to increase the financing of the Association to its borrowing countries to further support the response to and recovery from the COVID-19 pandemic; (B) In recognition of the strong demand for additional resources in the face of the COVID-19 pandemic, the Executive Directors of the Association have considered the prospective financial requirements of the Association and have concluded that it is desirable to: (i) shorten the period of the Nineteenth Replenishment of resources authorized by Resolution No. 244 of the Board of Governors (the “Nineteenth Replenishment”) by one year and adjust the financing envelope for the Nineteenth Replenishment; and (ii) authorize a replenishment of resources for new financing commitments for the period from July 1, 2022 to June 30, 2025 (the “Twentieth Replenishment”) in the amounts and on the basis set out in the report of the IDA Deputies, “Additions to Resources: Twentieth Replenishment – Building Back Better from the Crisis: Toward a Green, Resilient and Inclusive Future,” (the “Report”), approved by the Executive Directors on February 17, 2022, and submitted to the Board of Governors; (C) The members of the Association agree that an increase in the resources of the Association is required and intend to take all necessary governmental and legislative action to authorize and approve the allocation of additional resources to the Association in the amounts and on the conditions set out in this Resolution; (D) Additional subscriptions are to be authorized: (i) for members of the Association that have expressed their intention, subject to any necessary legislative authorization, to make available additional resources to the Association, and (ii) for other members of the Association pursuant to the provisions of Article III, Section 1(c) of the Articles of Agreement of the Association (the “Articles”) to give each such member an opportunity to subscribe, under such conditions as shall be reasonably determined by the Association, an amount which will enable it to maintain its relative voting power; (E) Recipient Members (as defined in paragraph 13(a) below) are to receive additional votes to enhance Recipients’ voice, on the basis of the agreement of Non-Recipient Members (as defined - 176 - in paragraph 13(b) below) and Interstitial Non-Recipient Members (as defined in paragraph 13(a) below) to waive their rights under Article III, Section 1(c) of the Articles; (F) It is desirable to provide for a portion of resources to be subscribed by members to be paid to the Association as advance subscriptions; (G) Additional subscriptions are to be authorized for members to provide compensation for the Association’s debt forgiveness commitments under the HIPC Debt Initiative; and to reflect the grant element of concessional loans made by members to the Association; (H) The Executive Directors of the Association have authorized the borrowing of concessional loans from members (each a “Concessional Partner Loan”) (“CPL”) in the currencies and on the terms and conditions as approved by the Executive Directors and it is intended that the grant element of the CPLs will form part of the member’s subscriptions hereunder; (I) It is desirable to authorize the Association to provide financing in the form of grants, guarantees, equity investments, and the intermediation of risk management products in addition to loans; and (J) It is desirable to administer any remaining funds from the Nineteenth Replenishment as part of the Twentieth Replenishment. NOW THEREFORE THE BOARD OF GOVERNORS HEREBY ACCEPTS the Report as approved by the Executive Directors, NOTES its conclusions and recommendations, AND RESOLVES THAT a general increase in subscriptions of the Association is authorized on the following terms and conditions: 1. Adjustment of the Period of the Nineteenth Replenishment. (a) Resolution No. 244 is amended in Recital A to read as follows: “The Executive Directors of the International Development Association (the “Association”) have considered the prospective financial requirements of the Association and have concluded that it is desirable to authorize a replenishment of the resources of the Association for new financing commitments for the period from July 1, 2020 to June 30, 2022 (the “Nineteenth Replenishment”) in the amounts and on the basis set out in the report of the IDA Deputies, “Additions to Resources: Nineteenth Replenishment,” (the “Report”), approved by the Executive Directors on February 11, 2020, and submitted to the Board of Governors;” (b) Except as provided in paragraph 1(a) above, all other terms of Resolution No. 244 of the Board of Governors shall remain the same. - 177 - 2. Authorization of Subscriptions under the Twentieth Replenishment. (a) The Association is authorized to accept additional resources from each member in the amounts and in the currencies specified for each such member in Columns 5, 6 and 8 of Table 1a-SDR attached to this Resolution. (i) As part of the resources described in paragraph 2(a) above, the Association is authorized to accept additional subscriptions from members to compensate the Association for the Association’s debt forgiveness commitments under the HIPC Debt Initiative in the amounts and as specified in Column 8 of Table 1a-SDR attached to this Resolution. (ii) As part of the resources described in paragraph 2(a) above, the Association is authorized to accept additional subscriptions from members reflecting the grant element of a CPL in the amounts specified in Column 6 of Table 1a- SDR attached to this Resolution. (b) The Association is authorized to accept additional resources from any member for which no subscription is specified in Table 2 and additional subscriptions from members incremental to the amounts specified for each such member in Tables 1a and 1b. (c) The rights and obligations of the Association and the members that make available additional resources to the Association pursuant to paragraph 4(b) below in respect of the authorized subscriptions in paragraphs (a) and (b) above will be the same (except as otherwise provided in this Resolution) as those applicable to the ninety percent portion of the initial subscriptions of original members payable under Article II, Section 2(d) of the Articles by members listed in Part I of Schedule A of the Articles. 3. Agreement to Pay. (a) When a member agrees to pay its subscription, it will deposit with the Association an Instrument of Commitment substantially in the form set out in Attachment I to this Resolution (“Instrument of Commitment”) and with respect to: (i) its subscription for debt forgiveness under the HIPC Debt Initiative, a member will either include such subscription in an Instrument of Commitment or make a Debt Relief Transfer Contribution, as defined and specified in paragraph 10(a) of this Resolution; and (ii) a CPL, a member will enter into written agreement(s) in such form as may be acceptable to the Association. (b) When a member that is referred to in paragraph 4(b) below agrees to pay the first part of its subscription without qualification and the other part is subject to - 178 - enactment by its legislature of the necessary appropriation legislation, it will deposit (other than in respect of the grant element of a CPL) a qualified Instrument of Commitment in a form acceptable to the Association (“Qualified Instrument of Commitment”) and such member: (i) undertakes to exercise its best efforts to obtain legislative approval for the full amount of its subscription by the payment dates set out in paragraph 4(b) of this Resolution; and (ii) agrees that, upon obtaining such approvals, it will notify the Association that any parts of its Qualified Instrument of Commitment have become unqualified. 4. Payment Timeline. (a) Each Recipient Member and Interstitial Non-Recipient Member that agrees to subscribe only up to an amount necessary to enable it to maintain its relative voting power, will pay such amount to the Association in full within 31 days after the date of deposit of its Instrument of Commitment; provided that if the Twentieth Replenishment shall not have become effective by March 15, 2023, payment may be postponed by the member for not more than 31 days after the Effective Date as defined in paragraph 7(a) of this Resolution. (b) A member, other than such members referred to in paragraph 4(a) above, that agrees to subscribe to an amount and that deposits an Instrument of Commitment that is not a Qualified Instrument of Commitment, will pay to the Association the amount of its subscription in three equal annual installments no later than 31 days after the Effective Date or as agreed with the Association, April 15, 2024, and April 15, 2025; provided that: (i) the Association and each member may agree to earlier payment; (ii) if the Twentieth Replenishment shall not have become effective by March 15, 2023, payment of the first such installment may be postponed by the member for not more than 31 days after the date on which the Twentieth Replenishment becomes effective; (iii) the Association may agree to the postponement of any installment, or part thereof, if the amount paid, together with any unused balance of previous payments by the member concerned, is at least equal to the amount estimated by the Association to be required from that member up to the due date of the next installment; and (iv) if any member deposits an Instrument of Commitment with the Association after the date when the first installment of the subscription is due, payment - 179 - of any installment, or part thereof, will be made to the Association within 31 days after the date of such deposit. (c) If a member has deposited a Qualified Instrument of Commitment and, upon enactment of appropriation legislation, notifies the Association that an installment, or part thereof, is unqualified after the date when it was due, then payment of such installment, or part thereof, will be made within 31 days after the date of such notification. (d) Each member that makes a subscription through the grant element of a CPL will pay to the Association the amount of the Loan in three equal annual installments no later than 31 days after the Effective Date, April 15, 2024, and April 15, 2025, or as agreed with the Association. 5. Mode of Payment. (a) Payments pursuant to this Resolution will be made, at the option of the member: (i) in cash, on terms agreed between the member and the Association; or (ii) by the deposit of notes or similar obligations issued by the government of the member or the depository designated by such member, which shall be nonnegotiable, non-interest bearing and payable at their par value on demand to the account of the Association. (b) The Association will encash notes or similar obligations of the members referred to in paragraph 4(b) above, on an approximately pro rata basis among such members, in accordance with the encashment schedule set out in Attachment II to this Resolution, or as agreed between a member and the Association. With respect to a member that is unable to comply with one or more encashment requests, the Association may agree with the member on a revised encashment schedule that yields at least an equivalent value to the Association. (c) The provisions of Article IV, Section 1(a) of the Articles will apply to the use of a member’s currency paid to the Association pursuant to this Resolution as may be applicable. 6. Currency of Denomination of Payments. (a) Members that provide the amount of their subscriptions pursuant to paragraph 4(a) above will denominate the resources to be made available pursuant to this Resolution in the currency of the member or in a freely convertible currency with the agreement of the Association. Payments will be made in the currency of the member or in a freely convertible currency with the agreement of the Association. - 180 - (b) Members that provide the amount of their subscriptions pursuant to paragraph 4(b) above will denominate the resources to be made available pursuant to this Resolution in SDRs, the currency of the member if freely convertible, or, with the agreement of the Association, in a freely convertible currency of another member, except that if a member’s economy experienced a rate of inflation in excess of ten percent per annum on average in the period 2017-2019, as determined by the Association, its subscription will be denominated in SDRs or in any currency used for the valuation of the SDR and agreed with the Association. Payments will be made in SDRs, a currency used for the valuation of the SDR, or, with the agreement of the Association, in another freely convertible currency, and the Association may freely exchange the amounts received as required for its operations. (c) Each member will maintain, in respect of its currency paid by it under this Resolution, and the currency of such member derived therefrom as principal, interest or other charges, the same convertibility as existed on the effective date of this Resolution. (d) The provisions of Article IV, Section 2 of the Articles with respect to maintenance of value will not be applicable. (e) Notwithstanding the foregoing provisions of this paragraph, a member that makes a subscription through the grant element of a CPL will denominate and make payment of such CPL in SDRs or any other currencies approved by the Executive Directors and as defined in their respective loan agreements. 7. Effective Date. (a) The Twentieth Replenishment will become effective and the resources to be subscribed pursuant to this Resolution will become payable to the Association on the date (the “Effective Date”) when the members referred to in paragraph 4(b) above, whose subscriptions aggregate not less than SDR9,868 million shall have deposited with the Association Instruments of Commitment, Qualified Instruments of Commitment, Debt Relief Transfer Notifications (as defined in paragraph 10(b) of this Resolution) or duly executed concessional loan agreements to provide the CPLs, provided that this date shall be not later than March 15, 2023, or such later date as the Executive Directors of the Association may determine. (b) If the Association determines that the availability of additional resources pursuant to this Resolution is likely to be unduly delayed, it shall convene promptly a meeting of the members to review the situation and to consider the steps to be taken to prevent a suspension of financing to eligible recipients by the Association. (d) In order to avoid an interruption in the Association’s ability to commit financing to eligible recipients pending the effectiveness of the Twentieth Replenishment, the Association may deem, prior to the Effective Date, to use one third of the agreed - 181 - Replenishment amount, for grants, loans, guarantees, equity investments and risk management products. 8. Advance Subscriptions. (a) In order to avoid an interruption in the Association’s ability to commit financing to eligible recipients pending the effectiveness of the Twentieth Replenishment, the Association may deem, prior to the Effective Date, one third of the total amount of each subscription for which - (i) an Instrument of Commitment has been deposited with the Association; (ii) a Debt Relief Transfer Notification (as defined in paragraph 10(b) of this Resolution) has been received by the Association; or (iii) a duly executed concessional loan agreement for a CPL has been received by the Association; as an “Advance Subscription” to use for grants, loans, guarantees, equity investments and risk management products, unless the member referred to in paragraph 4(b) above specifies otherwise in its Instrument of Commitment, Debt Relief Transfer Notification or concessional loan agreement for a CPL. (b) The Association shall specify when Advance Subscriptions pursuant to paragraph 8(a) are to be paid to the Association. (c) The terms and conditions applicable to subscriptions to the Twentieth Replenishment shall apply also to Advance Subscriptions until the Effective Date, when such subscriptions shall be deemed to constitute payment towards the amount due from each member referred to in paragraph 4(b) above, for its subscription. (d) In the event that the Twentieth Replenishment shall not become effective pursuant to paragraph 7(a) of this Resolution, (i) voting rights will be allocated to each member for the Advance Subscription as if it had been made as a subscription under this Resolution, and (ii) each member not making an Advance Subscription will have the opportunity to exercise its preemptive rights under Article III, Section 1(c) of the Articles with respect to such subscription as the Association shall specify. 9. Authority to Use Subscription. (a) Subscriptions will become available for use by the Association for financing to eligible recipients upon receipt of the Instruments of Commitment and after the Effective Date, provided that Advance Subscriptions may become available earlier under paragraph 8(a) of this Resolution. - 182 - (b) Any qualified part of a subscription notified under a Qualified Instrument of Commitment will become available for use by the Association for financing when the Association has been notified, pursuant to paragraph 3(b) (ii) of this Resolution, that such parts have become unqualified. (c) The Association may enter into financing commitments with eligible recipients conditional on such commitments becoming effective and binding on the Association when resources under the Twentieth Replenishment become available for commitment by the Association. 10. HIPC Subscriptions. (a) Members making an additional subscription to compensate the Association for forgiveness of debt under the HIPC Debt Relief Initiative, will do so either: (i) through an additional subscription to the Association’s regular resources (a “Debt Relief Additional Subscription”) or (ii) through a creditor-specific contribution for the benefit of the Association to the HIPC window or of the Debt Relief Trust Fund (“Debt Relief Transfer Contribution”). (b) Members making a Debt Relief Transfer Contribution will either (i) enter into a Contribution Agreement with the Association as administrator of the Debt Relief Trust Fund; or (ii) for members that are already current contributors to the Debt Relief Trust Fund, send to the Association a notice of additional contribution or allocation to the appropriate window of the Debt Relief Trust Fund (each a “Debt Relief Transfer Notification”). Such Debt Relief Transfer Notification will provide for a contribution to be made to the appropriate window of the Debt Relief Trust Fund in the amount set forth in Column 8of Table 1a-SDR to this Resolution, to be payable in three equal annual installments no later than 31 days after the Effective Date, April 15, 2024, and April 15, 2025; provided that the Association and each member may agree to earlier payment. (c) When any amount of a Debt Relief Transfer Contribution is paid to compensate the Association for forgiveness of debt under the HIPC Debt Initiative, such amount of the Debt Relief Transfer Contribution will be treated as a subscription under the Twentieth Replenishment. 11. Authorization of Grants, Guarantees, Equity Investments and Risk Intermediation. The Association is hereby authorized to provide financing under the Twentieth Replenishment in the form of grants and guarantees, equity investments and through the intermediation of risk management products. 12. Administration of IDA19 Funds under the Twentieth Replenishment. (a) On the Effective Date, any funds, receipts, assets and liabilities held by the Association under the Nineteenth Replenishment will be administered under the - 183 - Twentieth Replenishment, subject, as appropriate, to the terms and conditions applicable to the Nineteenth Replenishment. (b) Pursuant to Article V, Section 2(a) (i) of the Articles of Agreement of the Association, the Association is authorized to use the funds referred to in paragraph 12(a) above, and funds derived therefrom as principal, interest or other charges, to provide financing in the forms of grants, guarantees, equity investments and through the intermediation of risk management products under the terms, conditions and policies applicable under the Twentieth Replenishment. 13. Allocation of Voting Rights under the Twentieth Replenishment. The IDA Voting Rights Framework recommended by the Executive Directors is hereby approved and, notwithstanding the provisions of paragraph 7 of this Resolution, is effective immediately. On the basis of the IDA Voting Rights Framework, voting rights shall be allocated to members for subscriptions under the Twentieth Replenishment, in addition to their current voting rights, as follows: (a) (i) (1) Each member that is determined to be eligible to receive financing from the Association on or about July 1 immediately preceding the date of submission of this Resolution to the Board of Governors but excluding members that are proposed to graduate from the Association during the Twentieth Replenishment (“Recipient Member”) and (2) each member that is not a Recipient Member but was eligible to receive financing from the Association any time during the period covered by the Fifteenth Replenishment through the Nineteenth Replenishment (“Interstitial Non- Recipient Member”) that agrees to subscribe only up to an amount necessary to enable it to maintain its relative voting power and has deposited with the Association an Instrument of Commitment (other than in respect of the grant element of a Concessional Member Loan which are allocated as per (d) below) shall be allocated the subscription votes specified for each such member in Table 2 on the effective payment date pursuant to paragraph 4(a) of this Resolution on the basis of one additional vote for each $25 of its additional subscription authorized by the Association for such member to enable it to maintain its relative voting power. (ii) Each Recipient Member and each Interstitial Non-Recipient Member that agrees to subscribe to an amount exceeding such amount necessary to enable it to maintain its relative voting power and has deposited with the Association an Instrument of Commitment (other than in respect of the grant element of a Concessional Member Loan which are allocated as per (d) below) shall be allocated one-third the subscription votes specified for each such member in Table 2 on each effective payment date pursuant to paragraph 4(b) of this Resolution on the basis of: - 184 - (A) one additional vote for each $25 of its additional subscription authorized by the Association for such member to enable it to maintain its relative voting power; and (B) one additional vote for each $17,670 of its additional subscription authorized in excess of the amount in subparagraph (A) above. (iii) Each Recipient Member and each Interstitial Non-Recipient Member referred to in subparagraph (i) above shall be allocated the additional membership votes specified in Column d-3 of Table 2 on the date such member is allocated its subscription votes. (iv) Each Recipient Member and each Interstitial Non-Recipient Member referred to in subparagraph (ii) above shall be allocated the additional membership votes specified in Column d-3 of Table 2 for its subscription on the date such member is allocated the first one-third of its subscription votes. (v) Each Recipient Member shall be allocated the additional votes (“Recipient Boost Votes”) specified in Column b-1 of Table 2 on the date such member is allocated its subscription votes. (b) Each member that is not a Recipient Member or an Interstitial Non-Recipient Member (“Non-Recipient Member”) that has deposited with the Association an Instrument of Commitment (other than in respect of the grant element of a Concessional Member Loan) shall be allocated one-third of the subscription votes specified for each such member in Table 2 on each effective payment date pursuant to paragraph 4(b) of this Resolution on the basis of one additional vote for each $17,670 of its additional subscription. Each such member shall be allocated the additional membership votes specified in Column c-3 of Table 2 for its subscription on the date such member is allocated the first one-third of its subscription votes. (c) Each member that has made a Debt Relief Transfer Contribution will be allocated a proportionate share of the subscription votes specified for such member in Column c-2 of Table 2 from time to time and at least semi-annually following payment of any amount of its Debt Relief Transfer Contribution to compensate the Association for forgiveness of debt under the HIPC Debt Initiative. (d) Each member that has provided a CPL in the amount provided in Table 1b will be notified by the Association of the grant element determined by the Association with respect to the CPL and will be allocated, in respect of such grant element, a proportionate share of the subscription votes specified for such member in Column c-2 of Table 2 from time to time following payment to the Association of the CPL. - 185 - (e) Each member that has deposited with the Association a Qualified Instrument of Commitment will be allocated subscription votes at the time and to the extent of payments made in respect of its subscription. (f) Any member that deposits its Instrument of Commitment after any of these dates will be allocated, within 31 days of the date of such deposit, the subscription votes to which such member is entitled on account of such deposit. (g) If a member fails to pay any amount of its subscription when due, or fails to pay when due any amount of (or due in connection with) a CPL, the number of subscription votes allocated from time to time to such member under this Resolution in respect of the Twentieth Replenishment will be reduced in proportion to the shortfall in the net present value of such payments, but any such votes will be reallocated when the shortfall in the net present value of such payments causing such adjustment is subsequently made up. (h) If a member makes available, on or after the date this Resolution is adopted by the Board of Governors, additional resources to the Association in the form of subscriptions, pursuant to the authorization to the Association under the respective resolutions for any replenishment from the Eleventh Replenishment through to the Nineteenth Replenishment to accept additional resources from any member (i) for which no contribution is specified under such resolutions, or (ii) incremental to the amounts specified for such member in such resolutions, such member shall be allocated voting rights, and other members shall have the opportunity to exercise their preemptive right, in respect of this additional subscription, in accordance with the IDA Voting Rights Framework and the provisions of this paragraph 13. - 186 - Table 1a-SDR. Contributions to the Twentieth Replenishment (Contribution Amounts in SDR millions) Total Donor Contributions 1/ Basic Contribution HIPC Costs Net Share 7/ Net Share of which (Illustrative Grant Reference) 7/ Element of Grant Concessional Gross Share 4/ Amount Share 5/ Amount Amount Loan Amount Share 6/ Amount Contributing Members (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Algeria 0.08% 19.59 0.08% 19.59 19.59 - 0.00% - 0.12% 0.11% Argentina 0.01% 2.10 0.01% 1.57 1.57 - 0.20% 0.53 0.01% 0.01% Australia 1.07% 257.93 1.07% 253.67 253.67 - 1.61% 4.26 1.57% 1.48% Austria 1.51% 364.00 1.52% 361.72 361.72 - 0.86% 2.28 2.21% 2.09% Belgium 1.55% 372.91 1.55% 368.37 319.92 48.45 1.71% 4.53 2.27% 2.14% Canada 3.45% 828.90 3.44% 817.93 817.93 - 4.14% 10.97 5.04% 4.76% China 3.84% 923.50 3.88% 923.24 923.24 - 0.10% 0.26 5.62% 5.30% Croatia 0.01% 2.33 0.01% 2.33 2.33 - 0.00% - 0.01% 0.01% Cyprus 0.02% 4.82 0.02% 4.77 4.77 - 0.02% 0.05 0.03% 0.03% Czech Republic 0.05% 12.63 0.05% 12.47 12.47 - 0.06% 0.16 0.08% 0.07% Denmark 1.10% 264.67 1.10% 261.46 261.46 - 1.21% 3.21 1.61% 1.52% Egypt, Arab Rep. of 0.02% 4.33 0.02% 4.30 4.30 - 0.01% 0.03 0.03% 0.02% Estonia 3/ 0.02% 4.29 0.02% 4.27 4.27 - 0.01% 0.03 0.03% 0.02% Finland 0.43% 104.02 0.43% 102.27 102.27 - 0.66% 1.75 0.63% 0.60% France 5.06% 1,216.87 5.04% 1,199.32 1,199.32 - 6.62% 17.54 7.40% 6.99% Germany 5.62% 1,351.08 5.55% 1,320.95 1,320.95 - 11.37% 30.13 8.21% 7.76% Hungary 0.06% 14.44 0.06% 14.28 14.28 - 0.06% 0.16 0.09% 0.08% Iceland 0.04% 10.15 0.04% 10.08 10.08 - 0.03% 0.08 0.06% 0.06% India 0.69% 165.76 0.69% 164.85 164.85 - 0.34% 0.90 1.01% 0.95% Indonesia 0.09% 20.99 0.09% 20.85 20.85 - 0.05% 0.14 0.13% 0.12% Ireland 0.37% 88.46 0.37% 87.92 87.92 - 0.20% 0.53 0.54% 0.51% Israel 0.08% 19.96 0.08% 19.66 19.66 - 0.11% 0.30 0.12% 0.11% Italy 2.05% 493.85 2.03% 483.78 483.78 - 3.80% 10.07 3.00% 2.83% Japan 10.00% 2,405.85 9.93% 2,363.45 2,363.45 - 16.00% 42.40 14.63% 13.81% Korea 1.50% 360.88 1.50% 356.90 356.90 - 1.50% 3.98 2.19% 2.07% Kuwait 0.20% 47.60 0.20% 47.21 47.21 - 0.15% 0.39 0.29% 0.27% Latvia 3/ 0.02% 5.04 0.02% 5.02 5.02 - 0.01% 0.03 0.03% 0.03% Lithuania 3/ 0.02% 5.05 0.02% 5.03 5.03 - 0.01% 0.03 0.03% 0.03% Luxembourg 0.21% 51.11 0.21% 50.61 50.61 - 0.19% 0.50 0.31% 0.29% Malaysia 0.03% 6.30 0.03% 6.09 6.09 - 0.08% 0.20 0.04% 0.04% Mexico 0.05% 11.89 0.05% 11.73 11.73 - 0.06% 0.16 0.07% 0.07% Morocco 0.01% 3.50 0.01% 3.50 3.50 - 0.00% - 0.02% 0.02% Netherlands 3/ 2.94% 706.59 2.94% 698.98 698.98 - 2.87% 7.61 4.30% 4.06% New Zealand 0.11% 27.27 0.11% 26.93 26.93 - 0.13% 0.34 0.17% 0.16% Nigeria 3/ 0.06% 14.15 0.06% 14.02 14.02 - 0.05% 0.13 0.09% 0.08% Norway 1.14% 274.01 1.13% 269.56 269.56 - 1.68% 4.45 1.67% 1.57% Pakistan 0.08% 19.59 0.08% 19.59 19.59 - 0.00% - 0.12% 0.11% Philippines 0.02% 4.18 0.02% 4.09 4.09 - 0.03% 0.09 0.03% 0.02% Poland 0.07% 15.67 0.07% 15.59 15.59 - 0.03% 0.08 0.10% 0.09% Portugal 0.04% 9.96 0.04% 9.86 9.86 - 0.04% 0.10 0.06% 0.06% Russia 0.15% 34.98 0.15% 34.98 34.98 - 0.00% - 0.21% 0.20% Saudi Arabia 2.04% 489.74 2.05% 488.60 488.60 - 0.43% 1.14 2.98% 2.81% Singapore 0.20% 48.11 0.20% 47.73 47.73 - 0.14% 0.38 0.29% 0.28% Slovak Republic 0.01% 2.40 0.01% 2.38 2.38 - 0.01% 0.03 0.01% 0.01% South Africa 3/ 0.04% 9.71 0.04% 9.47 9.47 - 0.09% 0.24 0.06% 0.06% Spain 1.01% 243.56 1.00% 238.29 238.29 - 1.99% 5.28 1.48% 1.40% Sweden 3.14% 755.32 3.14% 747.66 747.66 - 2.89% 7.66 4.59% 4.34% Switzerland 2.10% 506.28 2.10% 500.18 500.18 - 2.30% 6.09 3.08% 2.91% Thailand 0.03% 7.22 0.03% 7.18 7.18 - 0.01% 0.04 0.04% 0.04% Turkey 0.04% 9.87 0.04% 9.87 9.87 - 0.00% - 0.06% 0.06% United Kingdom 5.71% 1,374.78 5.65% 1,345.12 1,345.12 - 11.19% 29.65 8.36% 7.89% United States 10.18% 2,448.68 10.07% 2,395.36 2,395.36 - 20.12% 53.32 14.89% 14.06% Sub-total Contributing Members 16,446.87 16,194.63 16,146.18 48.45 252.24 100.00% Additional financing 2/ 0.05% 11.35 Total 16,458.22 1/ Contribution may be subject to government and/or parliamentary approval. 2/ Represents the investment income estimated to generated by using a regular encashment profile of 9 years vs. an 11-year profile. 3/ Includes an increase in basic share achieved through accelerated encashments. 4/ Gross shares are calculated using the target amount of SDR 24,058.48 million (equivalent to US$34,387.75 million). This figure is derived by grossing up the IDA20 targeted funding volume of US$24.9 billion by the carried-forward prevailing gap of 27.59 percent. With IDA20 Partners' total shares not adding to 100 percent of target, the resulting structural gap is 31.58 percent. 5/ Basic shares are calculated using the target amount of SDR 23,793.48 million (equivalent to US$34,008.97 million). This figure is derived as explained in footnote 4 and subtracting the total HIPC cost for IDA20 of SDR 265.00 million (US$378.78 million). 6/ HIPC contributions are calculated by applying HIPC shares agreed by Partners in the past replenishments, unless otherwise indicated by an individual Partner, to the total HIPC cost for IDA20 of SDR 265.00 million (equivalent to US$378.78 million). 7/ “Net Share” represents individual donor contribution as a percentage share of the actual sum of all donor contributions which total US$23,508.17 million. “Net Share (Illustrative Reference)” reflects individual donor contribution as a percentage share of the target donor contribution of US$24.9 billion. - 187 - Table 1a-CoC. Contributions to the Twentieth Replenishment (Contribution Amounts in Currency of Contribution (CoC), millions) Total Donor Contributions 1/ Basic Contribution HIPC Costs FX Rates Acceleration Grant Element of Currency of Credit Concessional Contribution 2/ Amount 3/ Amount Loan Amount Amount 3/ Amount 3/ (SDR/CoC) Contributing Members (1) (2) (3) (4) (5) (6) (7) Algeria USD 28.00 - - 28.00 - 1.42934 Argentina USD 3.00 - - 2.24 0.76 1.42934 Australia AUD 488.01 - - 479.97 8.04 1.88515 Austria EUR 435.89 - - 433.16 2.73 1.19751 Belgium EUR 388.54 - 58.02 383.11 5.43 1.19751 Canada CAD 1,472.50 - - 1,453.01 19.49 1.77644 China CNY 8,544.44 - - 8,541.99 2.45 9.25221 Croatia HRK 21.00 - - 21.00 - 9.01495 Cyprus EUR 5.77 - - 5.71 0.06 1.19751 Czech Republic CZK 388.90 - - 384.00 4.90 30.78998 Denmark DKK 2,357.00 - - 2,328.44 28.56 8.90558 Egypt, Arab Rep. of USD 6.19 - - 6.15 0.04 1.42934 Estonia EUR 5.10 0.04 - 5.07 0.03 1.19751 Finland EUR 125.00 - - 122.91 2.09 1.19751 France EUR 1,457.21 - - 1,436.20 21.01 1.19751 Germany EUR 1,617.93 - - 1,581.85 36.08 1.19751 Hungary HUF 6,164.14 - - 6,096.24 67.90 427.02226 Iceland ISK 1,812.59 - - 1,798.40 14.19 178.49609 India INR 17,480.00 - - 17,384.92 95.08 105.45636 Indonesia USD 30.00 - - 29.80 0.20 1.42934 Ireland EUR 105.93 - - 105.29 0.64 1.19751 Israel ILS 93.20 - - 91.80 1.40 4.66982 Italy EUR 591.39 - - 579.33 12.06 1.19751 Japan JPY 376,743.34 - - 370,103.72 6,639.62 156.59480 Korea KRW 584,773.42 - - 578,332.16 6,441.26 1,620.42209 Kuwait KWD 20.50 - - 20.33 0.17 0.43063 Latvia EUR 5.97 0.07 - 5.94 0.03 1.19751 Lithuania EUR 6.00 0.05 - 5.97 0.03 1.19751 Luxembourg EUR 61.21 - - 60.61 0.60 1.19751 Malaysia USD 9.00 - - 8.71 0.29 1.42934 Mexico USD 17.00 - - 16.77 0.23 1.42934 Morocco USD 5.00 - - 5.00 - 1.42934 Netherlands EUR 846.13 0.02 - 837.02 9.11 1.19751 New Zealand NZD 55.00 - - 54.31 0.69 2.01683 Nigeria USD 20.00 0.22 - 19.82 0.18 1.42934 Norway NOK 3,348.88 - - 3,294.47 54.41 12.22176 Pakistan USD 28.00 - - 28.00 - 1.42934 Philippines USD 5.97 - - 5.84 0.13 1.42934 Poland EUR 18.77 - - 18.67 0.10 1.19751 Portugal EUR 11.93 - - 11.81 0.12 1.19751 Russia USD 50.00 - - 50.00 - 1.42934 Saudi Arabia USD 700.00 - - 698.37 1.63 1.42934 Singapore USD 68.77 - - 68.22 0.55 1.42934 Slovak Republic EUR 2.88 - - 2.85 0.03 1.19751 South Africa ZAR 199.02 1.58 - 194.09 4.93 20.65496 Spain EUR 291.67 - - 285.35 6.32 1.19751 Sweden SEK 9,200.00 - - 9,106.72 93.28 12.18022 Switzerland USD 725.00 - - 716.29 8.71 1.42934 Thailand THB 327.70 - - 325.99 1.71 45.40357 Turkey USD 14.11 - - 14.11 - 1.42934 United Kingdom GBP 1,414.00 - - 1,383.50 30.50 1.02853 United States USD 3,500.00 - - 3,423.79 76.21 1.42934 1/ Contribution may be subject to government and/or parliamentary approval. 2/ Contributions of countries with an average inflation rate exceeding 10 percent over the 2017-2019 period would be denominated in SDR or in any currency used for the valuation of the SDR and agreed with the association. 3/ The amounts in national currency ('NC') exclude individual acceleration credits (when applicable) and grant elements of concessional loan (when applicable), both of which are included in the SDR and USD amounts. The equivalent NC amount of any individual acceleration credit or grant element of concessional loan is shown separately in columns 3 and 4 respectively. - 188 - Table 1b. Concessional Loan Contributions to the Twentieth Replenishment (Contribution Amounts in SDR millions) Loan Amount1/ Loan Terms Grant Element from Loan Contributing Currency Coupon Rate in Loan SDR Currency Members SDR Million Currency FX Maturity Million Currency Terms Million Million (1) (2) (3) (4) (5) (6) (7) (8) Belgium 213.75 EUR 1.19751 255.97 10-50 0.00% 48.45 58.02 1/ Indicative contribution, subject to government and/or parliamentary approval. - 189 - Table 2. Subscriptions, Contributions, and Votes (amounts in US$ Equivalents) Non-Recipients Current Status (before IDA20) Additional Votes Stemming from IDA20 and Status Including IDA20 Adjusted Voting Power MDRI cost update Subscription Contributions ($) Total Cumulative Subscription Membership Total Subscriptions to Subscription Membership Total Cumulative as % of Non Subscription ($) Contributions ($) Subscription as % of Non Membership Votes Total Votes Total Carrying Votes ($) Resources ($) Votes Votes Voting IDA20 including Votes to be Votes Resources ($) Recipients Votes Recipients Voting Power % adjustments to allocated Power % MDRI ($) under IDA20 Member (a-1) (a-2) (a-3) (a-4) (a-5) (a-6) (c-1) (c-2) (c-3) (e-1) (e-2) (e-3) (e-4) (g-1) (g-2) (g-3) (g-4) (g-5) ALBANIA 400,796 - 400,796 4,659 60,100 0.19% - - - 400,796 0.00% 400,796 - 4,659 0.02% 60,100 64,759 0.18% ALGERIA 6,876,585 24,970,467 31,847,052 75,817 60,100 0.40% 28,019,407 1,586 3,746 59,866,459 0.02% 34,895,992 24,970,467 77,403 0.34% 63,846 141,249 0.38% ARGENTINA 32,764,256 129,368,800 162,133,056 379,510 60,100 1.28% 3,002,079 170 3,746 165,135,135 0.05% 35,766,335 129,368,800 379,680 1.66% 63,846 443,526 1.21% AUSTRALIA 32,913,077 5,726,324,957 5,759,238,034 325,933 60,100 1.12% 372,148,604 21,061 3,746 6,131,386,638 1.94% 405,061,681 5,726,324,957 346,994 1.52% 63,846 410,840 1.12% AUSTRIA 12,167,688 4,183,387,073 4,195,554,761 237,439 60,100 0.87% 522,236,031 29,555 3,746 4,717,790,792 1.49% 534,403,719 4,183,387,073 266,994 1.17% 63,846 330,840 0.90% BAHAMAS, THE 655,542 8,003,489 8,659,031 7,432 59,200 0.19% - - - 8,659,031 0.00% 655,542 8,003,489 7,432 0.03% 59,200 66,632 0.18% BARBADOS 514,018 1,892,596 2,406,614 5,727 60,100 0.19% - - - 2,406,614 0.00% 514,018 1,892,596 5,727 0.03% 60,100 65,827 0.18% BELGIUM 17,963,732 5,360,397,680 5,378,361,412 304,378 60,100 1.06% 536,452,499 30,360 3,746 5,914,813,911 1.87% 554,416,231 5,360,397,680 334,738 1.46% 63,846 398,584 1.08% BELIZE 348,646 - 348,646 4,057 60,100 0.19% - - - 348,646 0.00% 348,646 - 4,057 0.02% 60,100 64,157 0.17% BOTSWANA 291,146 3,631,705 3,922,851 3,736 60,100 0.19% - - - 3,922,851 0.00% 291,146 3,631,705 3,736 0.02% 60,100 63,836 0.17% BRAZIL 35,235,101 960,349,675 995,584,776 478,343 60,100 1.57% - - - 995,584,776 0.31% 35,235,101 960,349,675 478,343 2.09% 60,100 538,443 1.46% BULGARIA 5,201,234 2,999,265 8,200,499 55,764 59,200 0.33% - - - 8,200,499 0.00% 5,201,234 2,999,265 55,764 0.24% 59,200 114,964 0.31% CANADA 66,653,616 13,752,188,628 13,818,842,244 782,051 60,100 2.45% 1,193,570,702 67,548 3,746 15,012,412,946 4.75% 1,260,224,318 13,752,188,628 849,599 3.71% 63,846 913,445 2.48% CHILE 6,058,100 34,746,972 40,805,072 67,796 60,100 0.37% - - - 40,805,072 0.01% 6,058,100 34,746,972 67,796 0.30% 60,100 127,896 0.35% CHINA 55,177,129 2,296,058,368 2,351,235,497 710,921 60,100 2.24% 1,320,914,008 74,755 3,746 3,672,149,505 1.16% 1,376,091,137 2,296,058,368 785,676 3.43% 63,846 849,522 2.31% COLOMBIA 6,254,281 26,659,256 32,913,537 75,629 60,100 0.39% - - - 32,913,537 0.01% 6,254,281 26,659,256 75,629 0.33% 60,100 135,729 0.37% COSTA RICA 347,781 - 347,781 4,009 60,100 0.19% - - - 347,781 0.00% 347,781 - 4,009 0.02% 60,100 64,109 0.17% CROATIA 24,113,738 - 24,113,738 33,003 60,100 0.27% 3,331,885 189 3,746 27,445,623 0.01% 27,445,623 - 33,192 0.14% 63,846 97,038 0.26% CYPRUS 1,352,773 32,379,630 33,732,403 16,529 60,100 0.22% 6,891,807 390 3,746 40,624,210 0.01% 8,244,580 32,379,630 16,919 0.07% 63,846 80,765 0.22% CZECH REPUBLIC 6,438,981 151,059,655 157,498,636 79,461 60,100 0.41% 18,166,025 1,028 3,746 175,664,661 0.06% 24,605,006 151,059,655 80,489 0.35% 63,846 144,335 0.39% DENMARK 16,979,914 4,289,022,797 4,306,002,711 243,690 60,100 0.88% 382,119,228 21,625 3,746 4,688,121,939 1.48% 399,099,142 4,289,022,797 265,315 1.16% 63,846 329,161 0.90% DOMINICAN REPUBLIC 690,738 68,614 759,352 7,853 60,100 0.20% - - - 759,352 0.00% 690,738 68,614 7,853 0.03% 60,100 67,953 0.18% ECUADOR 1,113,917 994,209 2,108,126 12,406 60,100 0.21% - - - 2,108,126 0.00% 1,113,917 994,209 12,406 0.05% 60,100 72,506 0.20% EGYPT, ARAB REP. OF 8,701,133 17,177,708 25,878,841 96,881 60,100 0.46% 6,194,290 351 3,746 32,073,131 0.01% 14,895,423 17,177,708 97,232 0.42% 63,846 161,078 0.44% EL SALVADOR 517,389 23,707 541,096 5,870 60,100 0.19% - - - 541,096 0.00% 517,389 23,707 5,870 0.03% 60,100 65,970 0.18% EQUATORIAL GUINEA 553,133 - 553,133 6,310 60,100 0.19% - - - 553,133 0.00% 553,133 - 6,310 0.03% 60,100 66,410 0.18% ESTONIA 279,327 22,182,050 22,461,377 1,271 53,400 0.16% 6,139,289 347 3,746 28,600,666 0.01% 6,418,616 22,182,050 1,618 0.01% 57,146 58,764 0.16% ESWATINI 553,361 - 553,361 6,316 60,100 0.19% - - - 553,361 0.00% 553,361 - 6,316 0.03% 60,100 66,416 0.18% FINLAND 8,043,176 2,347,891,362 2,355,934,538 133,330 60,100 0.56% 149,987,404 8,488 3,746 2,505,921,942 0.79% 158,030,580 2,347,891,362 141,818 0.62% 63,846 205,664 0.56% FRANCE 94,480,328 20,403,971,507 20,498,451,835 1,160,071 60,100 3.55% 1,753,072,140 99,212 3,746 22,251,523,975 7.03% 1,847,552,468 20,403,971,507 1,259,283 5.50% 63,846 1,323,129 3.60% GABON 857,702 - 857,702 9,586 60,100 0.20% - - - 857,702 0.00% 857,702 - 9,586 0.04% 60,100 69,686 0.19% GERMANY 107,352,405 28,903,303,861 29,010,656,266 1,641,803 60,100 4.95% 1,952,669,054 110,508 3,746 30,963,325,320 9.79% 2,060,021,459 28,903,303,861 1,752,311 7.65% 63,846 1,816,157 4.94% GREECE 4,022,065 231,323,896 235,345,961 13,319 48,500 0.18% 320,000 18 - 235,665,961 0.07% 4,342,065 231,323,896 13,337 0.06% 48,500 61,837 0.17% GUATEMALA 689,007 - 689,007 7,789 60,100 0.20% - - 689,007 0.00% 689,007 - 7,789 0.03% 60,100 67,889 0.18% HUNGARY 13,258,959 191,394,711 204,653,670 160,267 60,100 0.64% 20,747,071 1,174 3,746 225,400,741 0.07% 34,006,030 191,394,711 161,441 0.71% 63,846 225,287 0.61% ICELAND 288,250 116,728,789 117,017,039 6,622 60,100 0.19% 14,574,625 825 3,746 131,591,664 0.04% 14,862,875 116,728,789 7,447 0.03% 63,846 71,293 0.19% INDONESIA 19,021,946 130,914,791 149,936,737 212,061 60,100 0.79% 30,020,794 1,699 3,746 179,957,531 0.06% 49,042,740 130,914,791 213,760 0.93% 63,846 277,606 0.75% IRAN, ISLAMIC REP. OF 7,784,611 48,103,715 55,888,326 86,898 60,100 0.43% - - - 55,888,326 0.02% 7,784,611 48,103,715 86,898 0.38% 60,100 146,998 0.40% IRAQ 1,298,010 - 1,298,010 14,338 60,100 0.22% - - - 1,298,010 0.00% 1,298,010 - 14,338 0.06% 60,100 74,438 0.20% IRELAND 5,106,425 937,229,506 942,335,931 53,330 60,100 0.33% 126,884,983 7,181 3,746 1,069,220,914 0.34% 131,991,408 937,229,506 60,511 0.26% 63,846 124,357 0.34% ISRAEL 3,193,053 142,989,266 146,182,319 44,574 60,100 0.30% 28,546,458 1,616 3,746 174,728,777 0.06% 31,739,511 142,989,266 46,190 0.20% 63,846 110,036 0.30% ITALY 39,529,973 11,678,888,731 11,718,418,704 663,182 60,100 2.10% 714,438,447 40,432 3,746 12,432,857,151 3.93% 753,968,420 11,678,888,731 703,614 3.07% 63,846 767,460 2.09% JAPAN 106,611,133 45,608,794,469 45,715,405,602 2,587,176 60,100 7.70% 3,467,998,770 196,265 3,746 49,183,404,372 15.55% 3,574,609,903 45,608,794,469 2,783,441 12.16% 63,846 2,847,287 7.74% JORDAN 517,000 - 517,000 5,860 60,100 0.19% - - - 517,000 0.00% 517,000 - 5,860 0.03% 60,100 65,960 0.18% KAZAKHSTAN 2,617,371 6,571,277 9,188,648 29,047 60,100 0.26% - - - 9,188,648 0.00% 2,617,371 6,571,277 29,047 0.13% 60,100 89,147 0.24% KOREA 8,560,449 2,820,834,853 2,829,395,302 282,028 60,100 0.99% 518,023,771 29,317 3,746 3,347,419,073 1.06% 526,584,220 2,820,834,853 311,345 1.36% 63,846 375,191 1.02% KUWAIT 5,755,615 1,124,705,557 1,130,461,172 63,976 59,200 0.36% 68,380,425 3,870 3,746 1,198,841,597 0.38% 74,136,040 1,124,705,557 67,846 0.30% 62,946 130,792 0.36% LATVIA 249,469 21,274,206 21,523,675 1,218 60,100 0.18% 7,174,243 406 3,746 28,697,918 0.01% 7,423,712 21,274,206 1,624 0.01% 63,846 65,470 0.18% LEBANON 774,964 - 774,964 8,754 60,100 0.20% - - - 774,964 0.00% 774,964 - 8,754 0.04% 60,100 68,854 0.19% - 190 - Non-Recipients Current Status (before IDA20) Additional Votes Stemming from IDA20 and Status Including IDA20 Adjusted Voting Power MDRI cost update Subscription Contributions ($) Total Cumulative Subscription Membership Total Subscriptions to Subscription Membership Total Cumulative as % of Non Subscription ($) Contributions ($) Subscription as % of Non Membership Votes Total Votes Total Carrying Votes ($) Resources ($) Votes Votes Voting IDA20 including Votes to be Votes Resources ($) Recipients Votes Recipients Voting Power % adjustments to allocated Power % MDRI ($) under IDA20 Member (a-1) (a-2) (a-3) (a-4) (a-5) (a-6) (c-1) (c-2) (c-3) (e-1) (e-2) (e-3) (e-4) (g-1) (g-2) (g-3) (g-4) (g-5) LIBYA 1,718,271 - 1,718,271 18,809 60,100 0.23% - - - 1,718,271 0.00% 1,718,271 - 18,809 0.08% 60,100 78,909 0.21% LITHUANIA 546,573 19,917,436 20,464,009 1,158 59,200 0.18% 7,226,204 409 3,746 27,690,213 0.01% 7,772,777 19,917,436 1,567 0.01% 62,946 64,513 0.18% LUXEMBOURG 1,130,630 473,737,738 474,868,368 26,874 60,100 0.25% 73,290,490 4,148 3,746 548,158,858 0.17% 74,421,120 473,737,738 31,022 0.14% 63,846 94,868 0.26% MALAYSIA 4,382,462 65,200,477 69,582,939 50,696 60,100 0.32% 9,006,238 510 3,746 78,589,177 0.02% 13,388,700 65,200,477 51,206 0.22% 63,846 115,052 0.31% MAURITIUS 1,470,701 35,560 1,506,261 16,286 60,100 0.22% - - - 1,506,261 0.00% 1,470,701 35,560 16,286 0.07% 60,100 76,386 0.21% MEXICO 16,084,958 380,043,877 396,128,835 217,886 60,100 0.81% 17,011,783 963 3,746 413,140,618 0.13% 33,096,741 380,043,877 218,849 0.96% 63,846 282,695 0.77% MONTENEGRO 783,289 - 783,289 8,094 59,200 0.20% - - - 783,289 0.00% 783,289 - 8,094 0.04% 59,200 67,294 0.18% MOROCCO 5,994,700 - 5,994,700 65,260 60,100 0.36% 5,003,466 283 3,746 10,998,166 0.00% 10,998,166 - 65,543 0.29% 63,846 129,389 0.35% NETHERLANDS 48,527,827 10,257,250,918 10,305,778,745 583,236 60,100 1.87% 1,016,529,044 57,529 3,746 11,322,307,789 3.58% 1,065,056,871 10,257,250,918 640,765 2.80% 63,846 704,611 1.92% NEW ZEALAND 605,127 427,102,337 427,707,464 24,205 60,100 0.25% 39,325,644 2,226 3,746 467,033,108 0.15% 39,930,771 427,102,337 26,431 0.12% 63,846 90,277 0.25% NORTH MACEDONIA 4,519,477 - 4,519,477 6,509 60,100 0.19% - - - 4,519,477 0.00% 4,519,477 - 6,509 0.03% 60,100 66,609 0.18% NORWAY 15,262,262 4,881,828,043 4,897,090,305 277,142 60,100 0.98% 395,364,396 22,375 3,746 5,292,454,701 1.67% 410,626,658 4,881,828,043 299,517 1.31% 63,846 363,363 0.99% OMAN 521,777 1,031,875 1,553,652 6,046 60,100 0.19% - - - 1,553,652 0.00% 521,777 1,031,875 6,046 0.03% 60,100 66,146 0.18% PALAU 40,500 - 40,500 630 60,100 0.18% - - - 40,500 0.00% 40,500 - 630 0.00% 60,100 60,730 0.17% PANAMA 46,737 - 46,737 871 60,100 0.18% - - - 46,737 0.00% 46,737 - 871 0.00% 60,100 60,971 0.17% PARAGUAY 517,000 - 517,000 5,860 60,100 0.19% - - - 517,000 0.00% 517,000 - 5,860 0.03% 60,100 65,960 0.18% PERU 3,041,052 15,602,676 18,643,728 34,138 60,100 0.27% - - - 18,643,728 0.01% 3,041,052 15,602,676 34,138 0.15% 60,100 94,238 0.26% PHILIPPINES 8,604,832 26,758,729 35,363,561 94,967 60,100 0.45% 5,974,138 338 3,746 41,337,699 0.01% 14,578,970 26,758,729 95,305 0.42% 63,846 159,151 0.43% POLAND 52,078,291 112,916,797 164,995,088 577,857 60,100 1.85% 22,479,276 1,272 3,746 187,474,364 0.06% 74,557,567 112,916,797 579,129 2.53% 63,846 642,975 1.75% PORTUGAL 4,771,403 343,705,879 348,477,282 19,721 60,100 0.23% 14,679,439 831 3,746 363,156,721 0.11% 19,450,842 343,705,879 20,552 0.09% 63,846 84,398 0.23% ROMANIA 5,720,526 - 5,720,526 61,207 59,200 0.35% - - - 5,720,526 0.00% 5,720,526 - 61,207 0.27% 59,200 120,407 0.33% RUSSIA 3,161,416 892,323,353 895,484,769 52,659 57,500 0.32% 50,174,656 2,840 3,746 945,659,425 0.30% 53,336,072 892,323,353 55,499 0.24% 61,246 116,745 0.32% SAUDI ARABIA 29,238,699 3,194,972,737 3,224,211,436 1,020,937 60,100 3.14% 701,275,187 39,687 3,746 3,925,486,623 1.24% 730,513,886 3,194,972,737 1,060,624 4.63% 63,846 1,124,470 3.06% SERBIA 29,934,718 - 29,934,718 40,876 60,100 0.29% - - - 29,934,718 0.01% 29,934,718 - 40,876 0.18% 60,100 100,976 0.27% SINGAPORE 1,208,058 320,644,944 321,853,002 31,512 59,200 0.26% 69,087,146 3,910 3,746 390,940,148 0.12% 70,295,204 320,644,944 35,422 0.15% 62,946 98,368 0.27% SLOVAK REPUBLIC 3,204,966 33,866,657 37,071,623 38,102 60,100 0.29% 3,399,907 192 3,746 40,471,530 0.01% 6,604,873 33,866,657 38,294 0.17% 63,846 102,140 0.28% SLOVENIA 13,058,937 50,173,115 63,232,052 3,578 60,100 0.19% 60,000 3 - 63,292,052 0.02% 13,118,937 50,173,115 3,581 0.02% 60,100 63,681 0.17% SOUTH AFRICA 12,546,422 287,249,293 299,795,715 16,966 60,100 0.22% 14,031,229 794 3,746 313,826,944 0.10% 26,577,651 287,249,293 17,760 0.08% 63,846 81,606 0.22% SPAIN 22,210,048 5,146,027,357 5,168,237,405 292,487 60,100 1.03% 352,416,035 19,944 3,746 5,520,653,440 1.75% 374,626,083 5,146,027,357 312,431 1.36% 63,846 376,277 1.02% ST. KITTS & NEVIS 230,546 - 230,546 2,795 60,100 0.18% - - - 230,546 0.00% 230,546 - 2,795 0.01% 60,100 62,895 0.17% SWEDEN 28,465,835 10,574,951,003 10,603,416,838 600,080 60,100 1.92% 1,086,211,647 61,472 3,746 11,689,628,485 3.70% 1,114,677,482 10,574,951,003 661,552 2.89% 63,846 725,398 1.97% SWITZERLAND 18,673,464 6,622,977,074 6,641,650,538 375,872 60,100 1.27% 729,072,515 41,260 3,746 7,370,723,053 2.33% 747,745,979 6,622,977,074 417,132 1.82% 63,846 480,978 1.31% THAILAND 5,165,607 14,147,759 19,313,366 56,819 60,100 0.34% 10,323,347 584 3,746 29,636,713 0.01% 15,488,954 14,147,759 57,403 0.25% 63,846 121,249 0.33% TRINIDAD & TOBAGO 2,298,539 - 2,298,539 25,192 60,100 0.25% - - - 2,298,539 0.00% 2,298,539 - 25,192 0.11% 60,100 85,292 0.23% TUNISIA 2,572,205 - 2,572,205 28,207 60,100 0.26% - - - 2,572,205 0.00% 2,572,205 - 28,207 0.12% 60,100 88,307 0.24% TURKEY 10,545,155 247,310,761 257,855,916 139,160 60,100 0.58% 14,119,780 799 3,746 271,975,696 0.09% 24,664,935 247,310,761 139,959 0.61% 63,846 203,805 0.55% UKRAINE 10,605,091 - 10,605,091 112,216 59,200 0.50% - - - 10,605,091 0.00% 10,605,091 - 112,216 0.49% 59,200 171,416 0.47% UNITED ARAB 10,729 5,189,119 5,199,848 619 748 0.00% - - - 5,199,848 0.00% 10,729 5,189,119 619 0.00% 748 1,367 0.00% EMIRATES UNITED KINGDOM 215,713,766 38,680,369,308 38,896,083,074 2,201,250 60,100 6.57% 1,994,526,615 112,876 3,746 40,890,609,689 12.93% 2,210,240,381 38,680,369,308 2,314,126 10.11% 63,846 2,377,972 6.47% UNITED STATES 475,438,187 56,266,888,821 56,742,327,008 3,211,224 59,200 9.51% 3,543,465,937 200,536 3,746 60,285,792,945 19.06% 4,018,904,124 56,266,888,821 3,411,760 14.90% 62,946 3,474,706 9.45% Subtotal Non-Recipients 1,831,779,826 291,081,031,441 292,912,811,267 21,566,023 5,260,548 78.00% 23,426,078,158 1,325,757 183,554 316,338,889,425 100.00% 25,257,857,984 291,081,031,441 22,891,780 100.00% 5,444,102 28,335,882 77.05% Subtotal Recipients & 226,879,256 707,126,698 934,005,954 2,463,683 5,104,900 22.00% 2,636,171 5,804,754 8,440,925 22.95% Interstitial Members Grand Total 2,058,659,082 291,788,158,139 293,846,817,221 24,029,706 10,365,448 100.00% 25,527,951 11,248,856 36,776,807 100.00% Notes: Current Status (a-1) to (a-6): It is assumed that the members that have outstanding commitments to subscribe or contribute to any previous Replenishment will fulfill their obligations. Amounts have been calculated, for purposes of the voting rights adjustment, by multiplying the subscriptions and contributions up to and including the Third Replenishment (which were expressed in terms of U.S. dollars of the weight and fineness in effect on January 1, 1960) by 1.20635 and adding thereto the dollar equivalents of the subscriptions and contributions under the Fourth through Nineteenth Replenishments at the agreed exchange rates. - 191 - Allocation of Additional Votes: Non-Recipient subscription votes allocated under IDA20 and MDRI in column (c-2) comprises: i. votes allocated based on IDA20 contributions as per Table 1 imputed for the agreed acceleration of the encashment schedule from eleven to nine years, and, where relevant, for differences of the agreed encashment schedule from the standard encashment schedule, and ii. votes allocated to reflect the IDA20 MDRI cost updates. These were previously allocated as part of the adjustments to current status amounts. The Total Voting Power % (Current Status [before IDA20]): It incorporates the impact of contributions from existing members and the new membership of Bulgaria, using the pre-IDA20 voting rights framework. New members: Bulgaria has been added to the list, with necessary adjustments made. With respect to Bulgaria’s IDA19 contribution, the Association made an in-principle allocation of Bulgaria’s voting rights on the same basis as for "Part II members" as determined in 'IDA Resolution 245: Membership of Bulgaria' Subscription carrying votes ($) and Subscriptions ($): With the introduction of the new voting rights framework in IDA20, all resources provided since IDA20 (including those provided for exercise of preemptive rights) are allocated to Subscriptions ($).Prior to IDA20, total cumulative resources are allocated between Subscription carrying votes ($) and Contributions ($). The ending balances of Subscriptions ($) consist of Subscription carrying votes ($) allocated prior to IDA20, and Subscriptions ($) allocated since IDA20. - 192 - Recipients and Interstitial Current Status (before IDA20) Recipient Boost Allocation for Exercise of Preemptive Rights Additional Resources Provided under IDA20 in SDRs Adjusted Voting power members to Maintain Voting Power or Freely Convertible Currencies Subscription Contributions ($) Total Cumulative Subscription Membership Total Additional Total Subscriptions Subscription Membership Total Subscriptions Subscription Total Additional Subscription as % of Membership Total Votes Total Carrying Votes Resources ($) Votes Votes Voting Votes Voting ($) Votes Votes Voting ($) Votes Resources ($) Votes Recipients & Votes Voting ($) Power % Power Power % Interstitials Power % (%) Member (a-1) (a-2) (a-3) (a-4) (a-5) (a-6) (b-1) (b-2) (d-1) (d-2) (d-3) (d-4) (f-1) (f-2) (f-3) (g-1) (g-2) (g-3) (g-4) (g-5) Interstitial Members ANGOLA 10,709,981 4,426,432 15,136,413 116,412 60,100 0.51% 209,850 8,394 3,746 0.51% - - - 124,806 4.73% 63,846 188,652 0.51% ARMENIA 723,531 - 723,531 8,174 60,100 0.20% 23,750 950 3,746 0.20% - - - 9,124 0.35% 63,846 72,970 0.20% AZERBAIJAN 1,240,224 5,220,808 6,461,032 14,009 60,100 0.22% 33,775 1,351 3,746 0.22% - - - 15,360 0.58% 63,846 79,206 0.22% BOLIVIA 1,804,201 - 1,804,201 19,769 60,100 0.23% 43,675 1,747 3,746 0.23% - - - 21,516 0.82% 63,846 85,362 0.23% BOSNIA & HERZEGOVINA 10,258,439 - 10,258,439 14,272 60,100 0.22% 34,225 1,369 3,746 0.22% - - - 15,641 0.59% 63,846 79,487 0.22% GEORGIA 1,181,762 - 1,181,762 13,155 60,100 0.21% 32,325 1,293 3,746 0.21% - - - 14,448 0.55% 63,846 78,294 0.21% INDIA 70,943,245 597,706,951 668,650,196 842,671 60,100 2.62% 1,458,575 58,343 3,746 2.62% 235,626,991 13,335 237,085,566 914,349 34.68% 63,846 978,195 2.66% MOLDOVA 961,256 - 961,256 10,762 60,100 0.21% 28,200 1,128 3,746 0.21% - - - 11,890 0.45% 63,846 75,736 0.21% MONGOLIA 400,795 - 400,795 4,659 60,100 0.19% 17,700 708 3,746 0.19% - - - 5,367 0.20% 63,846 69,213 0.19% SRI LANKA 5,144,057 - 5,144,057 55,957 60,100 0.34% 105,900 4,236 3,746 0.34% - - - 60,193 2.28% 63,846 124,039 0.34% VIETNAM 2,572,205 - 2,572,205 28,207 60,100 0.26% 58,200 2,328 3,746 0.26% - - - 30,535 1.16% 63,846 94,381 0.26% Recipients AFGHANISTAN 1,718,321 - 1,718,321 18,810 60,100 0.23% 5,208 0.24% 26,350 1,054 3,746 0.24% - - - 19,864 0.75% 69,054 88,918 0.24% BANGLADESH 9,128,875 - 9,128,875 99,136 60,100 0.46% 10,510 0.49% 148,475 5,939 3,746 0.49% - - - 105,075 3.99% 74,356 179,431 0.49% BENIN 857,726 - 857,726 9,587 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,080 0.38% 68,445 78,525 0.21% BHUTAN 94,679 - 94,679 1,316 60,100 0.18% 4,054 0.19% - - 3,746 0.19% - - - 1,316 0.05% 67,900 69,216 0.19% BURKINA FASO 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% BURUNDI 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% CABO VERDE 145,978 - 145,978 1,883 60,100 0.18% 4,091 0.19% 600 24 3,746 0.19% - - - 1,907 0.07% 67,937 69,844 0.19% CAMBODIA 1,741,313 - 1,741,313 19,213 60,100 0.23% 5,235 0.24% 26,950 1,078 3,746 0.24% - - - 20,291 0.77% 69,081 89,372 0.24% CAMEROON 1,718,271 - 1,718,271 18,809 60,100 0.23% 5,208 0.24% 26,350 1,054 3,746 0.24% - - - 19,863 0.75% 69,054 88,917 0.24% CENTRAL AFRICAN REP. 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% CHAD 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% COMOROS 145,978 - 145,978 1,883 60,100 0.18% 4,091 0.19% 600 24 3,746 0.19% - - - 1,907 0.07% 67,937 69,844 0.19% CONGO, DEM. REP. OF 5,130,636 - 5,130,636 55,901 60,100 0.34% 7,656 0.36% 82,725 3,309 3,746 0.36% - - - 59,210 2.25% 71,502 130,712 0.36% CONGO, REP. OF 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% COTE D'IVOIRE 1,718,271 - 1,718,271 18,809 60,100 0.23% 5,208 0.24% 26,350 1,054 3,746 0.24% - - - 19,863 0.75% 69,054 88,917 0.24% DJIBOUTI 281,880 - 281,880 3,366 60,100 0.18% 4,189 0.19% 2,850 114 3,746 0.19% - - - 3,480 0.13% 68,035 71,515 0.19% DOMINICA 145,978 - 145,978 1,883 60,100 0.18% 4,091 0.19% 600 24 3,746 0.19% - - - 1,907 0.07% 67,937 69,844 0.19% ERITREA 163,243 - 163,243 2,079 60,100 0.18% 4,104 0.19% 900 36 3,746 0.19% - - - 2,115 0.08% 67,950 70,065 0.19% ETHIOPIA 858,323 23,707 882,030 9,605 60,100 0.20% 4,601 0.21% 12,350 494 3,746 0.21% - - - 10,099 0.38% 68,447 78,546 0.21% FIJI 960,277 - 960,277 10,734 60,100 0.21% 4,675 0.22% 14,050 562 3,746 0.22% - - - 11,296 0.43% 68,521 79,817 0.22% GAMBIA, THE 463,172 - 463,172 5,330 60,100 0.19% 4,318 0.20% 5,850 234 3,746 0.20% - - - 5,564 0.21% 68,164 73,728 0.20% GHANA 4,008,767 - 4,008,767 43,654 60,100 0.30% 6,848 0.32% 64,125 2,565 3,746 0.32% - - - 46,219 1.75% 70,694 116,913 0.32% GRENADA 160,692 - 160,692 1,977 60,100 0.18% 4,097 0.19% 750 30 3,746 0.19% - - - 2,007 0.08% 67,943 69,950 0.19% GUINEA 1,718,271 - 1,718,271 18,809 60,100 0.23% 5,208 0.24% 26,350 1,054 3,746 0.24% - - - 19,863 0.75% 69,054 88,917 0.24% GUINEA-BISSAU 244,886 - 244,886 2,885 60,100 0.18% 4,157 0.19% 2,125 85 3,746 0.19% - - - 2,970 0.11% 68,003 70,973 0.19% GUYANA 1,383,975 - 1,383,975 15,303 60,100 0.22% 4,977 0.23% 21,000 840 3,746 0.23% - - - 16,143 0.61% 68,823 84,966 0.23% HAITI 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% HONDURAS 517,000 - 517,000 5,860 60,100 0.19% 4,353 0.20% 6,650 266 3,746 0.20% - - - 6,126 0.23% 68,199 74,325 0.20% KENYA 2,856,949 - 2,856,949 31,207 60,100 0.27% 6,026 0.28% 45,200 1,808 3,746 0.28% - - - 33,015 1.25% 69,872 102,887 0.28% KIRIBATI 111,854 - 111,854 1,508 60,100 0.18% 4,066 0.19% 25 1 3,746 0.19% - - - 1,509 0.06% 67,912 69,421 0.19% KOSOVO 945,056 - 945,056 10,114 59,200 0.20% 4,575 0.21% 11,750 470 3,746 0.21% - - - 10,584 0.40% 67,521 78,105 0.21% KYRGYZ REPUBLIC 688,763 - 688,763 7,774 60,100 0.20% 4,480 0.21% 9,550 382 3,746 0.21% - - - 8,156 0.31% 68,326 76,482 0.21% LAO PEOPLE'S DEM. REP. 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% LESOTHO 281,880 - 281,880 3,366 60,100 0.18% 4,189 0.19% 2,850 114 3,746 0.19% - - - 3,480 0.13% 68,035 71,515 0.19% LIBERIA 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% MADAGASCAR 1,718,271 - 1,718,271 18,809 60,100 0.23% 5,208 0.24% 26,350 1,054 3,746 0.24% - - - 19,863 0.75% 69,054 88,917 0.24% MALAWI 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% MALDIVES 60,926 - 60,926 955 60,100 0.18% 4,030 0.19% - - 3,746 0.19% - - - 955 0.04% 67,876 68,831 0.19% - 193 - Recipients and Interstitial Current Status (before IDA20) Recipient Boost Allocation for Exercise of Preemptive Rights Additional Resources Provided under IDA20 in SDRs Adjusted Voting power members to Maintain Voting Power or Freely Convertible Currencies Subscription Contributions ($) Total Cumulative Subscription Membership Total Additional Total Subscriptions Subscription Membership Total Subscriptions Subscription Total Additional Subscription as % of Membership Total Votes Total Carrying Votes Resources ($) Votes Votes Voting Votes Voting ($) Votes Votes Voting ($) Votes Resources ($) Votes Recipients & Votes Voting ($) Power % Power Power % Interstitials Power % (%) Member (a-1) (a-2) (a-3) (a-4) (a-5) (a-6) (b-1) (b-2) (d-1) (d-2) (d-3) (d-4) (f-1) (f-2) (f-3) (g-1) (g-2) (g-3) (g-4) (g-5) MALI 1,483,405 - 1,483,405 16,322 60,100 0.22% 5,044 0.23% 22,550 902 3,746 0.23% - - - 17,224 0.65% 68,890 86,114 0.23% MARSHALL ISLANDS 27,322 - 27,322 598 60,100 0.18% 4,006 0.19% - - 3,746 0.19% - - - 598 0.02% 67,852 68,450 0.19% MAURITANIA 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% MICRONESIA, FED. ST. OF 44,442 - 44,442 788 60,100 0.18% 4,019 0.19% - - 3,746 0.19% - - - 788 0.03% 67,865 68,653 0.19% MOZAMBIQUE 2,330,345 - 2,330,345 25,475 60,100 0.25% 5,648 0.26% 36,475 1,459 3,746 0.26% - - - 26,934 1.02% 69,494 96,428 0.26% MYANMAR 3,436,117 - 3,436,117 37,561 60,100 0.28% 6,446 0.30% 54,850 2,194 3,746 0.30% - - - 39,755 1.51% 70,292 110,047 0.30% NEPAL 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% NICARAGUA 517,000 - 517,000 5,860 60,100 0.19% 4,353 0.20% 6,650 266 3,746 0.20% - - - 6,126 0.23% 68,199 74,325 0.20% NIGER 857,702 - 857,702 9,586 60,100 0.20% 4,599 0.21% 12,325 493 3,746 0.21% - - - 10,079 0.38% 68,445 78,524 0.21% NIGERIA 5,755,794 35,927,625 41,683,419 64,094 60,100 0.36% 8,197 0.38% 95,200 3,808 3,746 0.38% 20,138,662 1,140 20,233,862 69,042 2.62% 72,043 141,085 0.38% PAKISTAN 17,356,628 63,821,175 81,177,803 195,342 60,100 0.74% 16,859 0.78% 294,750 11,790 3,746 0.78% 27,724,657 1,569 28,019,407 208,701 7.92% 80,705 289,406 0.79% PAPUA NEW GUINEA 1,469,903 - 1,469,903 16,263 60,100 0.22% 5,040 0.23% 22,475 899 3,746 0.23% - - - 17,162 0.65% 68,886 86,048 0.23% RWANDA 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% SAMOA 160,692 - 160,692 1,977 60,100 0.18% 4,097 0.19% 750 30 3,746 0.19% - - - 2,007 0.08% 67,943 69,950 0.19% SAO TOME & PRINCIPE 129,036 - 129,036 1,700 60,100 0.18% 4,079 0.19% 325 13 3,746 0.19% - - - 1,713 0.06% 67,925 69,638 0.19% SENEGAL 2,856,949 - 2,856,949 31,207 60,100 0.27% 6,026 0.28% 45,200 1,808 3,746 0.28% - - - 33,015 1.25% 69,872 102,887 0.28% SIERRA LEONE 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% SOLOMON ISLANDS 160,692 - 160,692 1,977 60,100 0.18% 4,097 0.19% 750 30 3,746 0.19% - - - 2,007 0.08% 67,943 69,950 0.19% SOMALIA 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% SOUTH SUDAN 607,675 - 607,675 6,507 59,200 0.19% 4,337 0.20% 6,275 251 3,746 0.20% - - - 6,758 0.26% 67,283 74,041 0.20% ST. LUCIA 264,244 - 264,244 3,153 60,100 0.18% 4,175 0.19% 2,525 101 3,746 0.19% - - - 3,254 0.12% 68,021 71,275 0.19% ST. VINCENT & GRENADINES 128,854 - 128,854 1,693 60,100 0.18% 4,078 0.19% 325 13 3,746 0.19% - - - 1,706 0.06% 67,924 69,630 0.19% SUDAN 1,718,271 - 1,718,271 18,809 60,100 0.23% 5,208 0.24% 26,350 1,054 3,746 0.24% - - - 19,863 0.75% 69,054 88,917 0.24% SYRIAN ARAB REP. 1,618,593 - 1,618,593 17,777 60,100 0.23% 5,140 0.24% 24,775 991 3,746 0.24% - - - 18,768 0.71% 68,986 87,754 0.24% TAJIKISTAN 638,796 - 638,796 7,257 60,100 0.20% 4,446 0.21% 8,775 351 3,746 0.21% - - - 7,608 0.29% 68,292 75,900 0.21% TANZANIA 2,856,949 - 2,856,949 31,207 60,100 0.27% 6,026 0.28% 45,200 1,808 3,746 0.28% - - - 33,015 1.25% 69,872 102,887 0.28% TIMOR-LESTE 488,450 - 488,450 5,199 59,200 0.19% 4,250 0.20% 4,275 171 3,746 0.20% - - - 5,370 0.20% 67,196 72,566 0.20% TOGO 1,298,010 - 1,298,010 14,338 60,100 0.22% 4,913 0.23% 19,550 782 3,746 0.23% - - - 15,120 0.57% 68,759 83,879 0.23% TONGA 128,854 - 128,854 1,693 60,100 0.18% 4,078 0.19% 325 13 3,746 0.19% - - - 1,706 0.06% 67,924 69,630 0.19% TUVALU 33,867 - 33,867 365 59,200 0.17% 3,931 0.18% - - 3,746 0.18% - - - 365 0.01% 66,877 67,242 0.18% UGANDA 2,856,949 - 2,856,949 31,207 60,100 0.27% 6,026 0.28% 45,200 1,808 3,746 0.28% - - - 33,015 1.25% 69,872 102,887 0.28% UZBEKISTAN 2,097,973 - 2,097,973 23,102 60,100 0.24% 5,491 0.26% 32,875 1,315 3,746 0.26% - - - 24,417 0.93% 69,337 93,754 0.25% VANUATU 331,756 - 331,756 3,877 60,100 0.19% 4,223 0.20% 3,625 145 3,746 0.20% - - - 4,022 0.15% 68,069 72,091 0.20% YEMEN, REPUBLIC OF 2,666,517 - 2,666,517 27,064 60,100 0.25% 5,753 0.27% 38,900 1,556 3,746 0.27% - - - 28,620 1.09% 69,599 98,219 0.27% ZAMBIA 4,571,537 - 4,571,537 49,869 60,100 0.32% 7,258 0.34% 73,575 2,943 3,746 0.34% - - - 52,812 2.00% 71,104 123,916 0.34% ZIMBABWE 6,986,043 - 6,986,043 75,736 60,100 0.39% 8,965 0.42% 112,900 4,516 3,746 0.42% - - - 80,252 3.04% 72,811 153,063 0.42% Subtotal Interstitial Members 105,939,696 607,354,191 713,293,887 1,128,047 661,100 5.20% - 0.00% 2,046,175 81,847 41,206 5.20% 235,626,991 13,335 237,085,566 1,223,229 46.40% 702,306 1,925,535 5.24% Subtotal Recipients 120,939,560 99,772,507 220,712,067 1,335,636 4,443,800 16.80% 381,444 17.72% 1,864,925 74,597 277,204 17.72% 47,863,319 2,709 48,253,269 1,412,942 53.60% 5,102,448 6,515,390 17.72% Subtotal Recipients & 226,879,256 707,126,698 934,005,954 2,463,683 5,104,900 22.00% 381,444 17.72% 3,911,100 156,444 318,410 22.92% 283,490,310 16,044 285,338,835 2,636,171 100.00% 5,804,754 8,440,925 22.95% Interstitial Members Subtotal Non - Recipients 1,831,779,826 291,081,031,441 292,912,811,267 21,566,023 5,260,548 78.00% 22,891,780 5,444,102 28,335,882 77.05% Grand Total 2,058,659,082 291,788,158,139 293,846,817,221 24,029,706 10,365,448 100.00% 25,527,951 11,248,856 36,776,807 100.00% Notes: Current Status (a-1) to (a-6): It is assumed that the members that have outstanding commitments to subscribe or contribute to any previous Replenishment will fulfill their obligations. Amounts have been calculated, for purposes of the voting rights adjustment, by multiplying the subscriptions and contributions up to and including the Third Replenishment (which were expressed in terms of U.S. dollars of the weight and fineness in effect on January 1, 1960) by 1.20635 and adding thereto the dollar equivalents of the subscriptions and contributions under the Fourth through Nineteenth Replenishments at the agreed exchange rates. Allocation of Additional Votes: Recipient and Interstitial subscription votes allocated under IDA20 in column (f-2) comprises of votes allocated based on IDA20 contributions as per Table 1 imputed for the agreed acceleration of the encashment schedule from eleven to nine years, and, where relevant, for differences of the agreed encashment schedule from the standard encashment schedule. - 194 - Additional Resources Provided under IDA20 in SDRs or Freely Convertible Currencies: The amounts shown in column (f-3) represent the additional resources provided under IDA20 by Recipients and Interstitial members in SDRs or freely convertible currencies, as set out in Table 1A-CoC. The U.S. Dollar equivalent has been obtained by converting the SDR amount using the average exchange rates for the U.S. Dollar against the SDR over the period March 1 to August 31, 2021 (SDR1=USD1.42934). The Total Voting Power % (Current Status [before IDA20]): It incorporates the impact of contributions from existing members and the new membership of Bulgaria, using the pre-IDA20 voting rights framework. Subscription carrying votes ($) and Subscriptions ($): With the introduction of the new voting rights framework in IDA20, all resources provided since IDA20 (including those provided for exercise of preemptive rights) are allocated to Subscriptions ($).Prior to IDA20, total cumulative resources are allocated between Subscription carrying votes ($) and Contributions ($). - 195 - Attachment I INTERNATIONAL DEVELOPMENT ASSOCIATION Addition to Resources: Twentieth Replenishment Instrument of Commitment Reference is made to Resolution No. ____ of the Board of Governors of the International Development Association entitled “Additions to Resources: Twentieth Replenishment”, which was adopted on __________, 2022 (“the Resolution”). The Government of _________________________ HEREBY NOTIFIES the Association pursuant to paragraph 3 of the Resolution that it will make the subscriptions 1 authorized for it in accordance with the terms of the Resolution in the amount of ______________. 2 [ 3] ____________________ __________________________________ (Date) (Name and Office) 4 1 This form of Instrument of Commitment may be used for a Member’s regular subscription and any Debt Relief Additional Contribution either under a separate instrument or combined. 2 Pursuant to paragraph 6(b) of the Twentieth Replenishment Resolution, members referred to in paragraph 4(b) of the Resolution are required to denominate their subscription, in SDRs, in the currency of the member if freely convertible, or with the agreement of the Association in a freely convertible currency of another member. Payment will be made as provided in paragraph 6(b) of the Resolution. For members referred to in paragraph 4(a) of the Resolution, payment will be made as provided in paragraph 6(a) of the Resolution. 3 [In addition to this amount, the member will contribute _________ which represents the grant element of the Concessional Partner Loan (only applicable for CPL subscriptions).] 4 The instrument is to be signed on behalf of the Government by a duly authorized representative. - 196 - Attachment II Encashment Schedule for IDA20 Contributions (Percent of Total Contributions) Fiscal Year Standard Schedule 2023 4.7 2024 11.2 2025 17.0 2026 17.3 2027 15.2 2028 13.1 2029 10.2 2010 7.0 2031 4.3 __________ 100.0 - 197 - ANNEX 16. IDA20 PARTNER CONTRIBUTIONS IN US$ Table A16. 1. Contributions to the Twentieth Replenishment 8/ (Contribution Amounts in US$ millions) Total Donor Contributions 1/ Basic Contribution HIPC Costs Net Share 7/ Net Share of which (Illustrative Grant Grant Reference)7/ Element of Concessional Loan Gross Share 4/ Amount Share 5/ Amount Amount Amount Share 6/ Amount Contributing Members (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Algeria 0.08% 28.00 0.08% 28.00 28.00 - 0.00% - 0.12% 0.11% Argentina 0.01% 3.00 0.01% 2.24 2.24 - 0.20% 0.76 0.01% 0.01% Australia 1.07% 368.67 1.07% 362.58 362.58 - 1.61% 6.10 1.57% 1.48% Austria 1.51% 520.28 1.52% 517.02 517.02 - 0.86% 3.26 2.21% 2.09% Belgium 1.55% 533.01 1.55% 526.53 457.28 69.25 1.71% 6.48 2.27% 2.14% Canada 3.45% 1,184.79 3.44% 1,169.10 1,169.10 - 4.14% 15.68 5.04% 4.76% China 3.84% 1,320.00 3.88% 1,319.62 1,319.62 - 0.10% 0.38 5.62% 5.30% Croatia 0.01% 3.33 0.01% 3.33 3.33 - 0.00% - 0.01% 0.01% Cyprus 0.02% 6.89 0.02% 6.82 6.82 - 0.02% 0.07 0.03% 0.03% Czech Republic 0.05% 18.05 0.05% 17.83 17.83 - 0.06% 0.23 0.08% 0.07% Denmark 1.10% 378.30 1.10% 373.71 373.71 - 1.21% 4.58 1.61% 1.52% Egypt, Arab Rep. of 0.02% 6.19 0.02% 6.15 6.15 - 0.01% 0.04 0.03% 0.02% Estonia 3/ 0.02% 6.14 0.02% 6.10 6.10 - 0.01% 0.04 0.03% 0.02% Finland 0.43% 148.67 0.43% 146.18 146.18 - 0.66% 2.49 0.63% 0.60% France 5.06% 1,739.32 5.04% 1,714.24 1,714.24 - 6.62% 25.08 7.40% 6.99% Germany 5.62% 1,931.15 5.55% 1,888.09 1,888.09 - 11.37% 43.06 8.21% 7.76% Hungary 0.06% 20.63 0.06% 20.41 20.41 - 0.06% 0.23 0.09% 0.08% Iceland 0.04% 14.51 0.04% 14.40 14.40 - 0.03% 0.11 0.06% 0.06% India 0.69% 236.92 0.69% 235.63 235.63 - 0.34% 1.29 1.01% 0.95% Indonesia 0.09% 30.00 0.09% 29.80 29.80 - 0.05% 0.20 0.13% 0.12% Ireland 0.37% 126.44 0.37% 125.67 125.67 - 0.20% 0.76 0.54% 0.51% Israel 0.08% 28.53 0.08% 28.10 28.10 - 0.11% 0.43 0.12% 0.11% Italy 2.05% 705.88 2.03% 691.48 691.48 - 3.80% 14.39 3.00% 2.83% Japan 10.00% 3,438.78 9.93% 3,378.17 3,378.17 - 16.00% 60.60 14.63% 13.81% Korea 1.50% 515.82 1.50% 510.13 510.13 - 1.50% 5.68 2.19% 2.07% Kuwait 0.20% 68.04 0.20% 67.48 67.48 - 0.15% 0.56 0.29% 0.27% Latvia 3/ 0.02% 7.21 0.02% 7.17 7.17 - 0.01% 0.04 0.03% 0.03% Lithuania 3/ 0.02% 7.22 0.02% 7.19 7.19 - 0.01% 0.04 0.03% 0.03% Luxembourg 0.21% 73.06 0.21% 72.34 72.34 - 0.19% 0.72 0.31% 0.29% Malaysia 0.03% 9.00 0.03% 8.71 8.71 - 0.08% 0.29 0.04% 0.04% Mexico 0.05% 17.00 0.05% 16.77 16.77 - 0.06% 0.23 0.07% 0.07% Morocco 0.01% 5.00 0.01% 5.00 5.00 - 0.00% - 0.02% 0.02% Netherlands 3/ 2.94% 1,009.96 2.94% 999.09 999.09 - 2.87% 10.87 4.30% 4.06% New Zealand 0.11% 38.98 0.11% 38.49 38.49 - 0.13% 0.49 0.17% 0.16% Nigeria 3/ 0.06% 20.22 0.06% 20.04 20.04 - 0.05% 0.18 0.09% 0.08% Norway 1.14% 391.65 1.13% 385.29 385.29 - 1.68% 6.36 1.67% 1.57% Pakistan 0.08% 28.00 0.08% 28.00 28.00 - 0.00% - 0.12% 0.11% Philippines 0.02% 5.97 0.02% 5.84 5.84 - 0.03% 0.13 0.03% 0.02% Poland 0.07% 22.40 0.07% 22.28 22.28 - 0.03% 0.12 0.10% 0.09% Portugal 0.04% 14.24 0.04% 14.10 14.10 - 0.04% 0.14 0.06% 0.06% Russia 0.15% 50.00 0.15% 50.00 50.00 - 0.00% - 0.21% 0.20% Saudi Arabia 2.04% 700.00 2.05% 698.37 698.37 - 0.43% 1.63 2.98% 2.81% Singapore 0.20% 68.77 0.20% 68.22 68.22 - 0.14% 0.55 0.29% 0.28% Slovak Republic 0.01% 3.44 0.01% 3.40 3.40 - 0.01% 0.04 0.01% 0.01% South Africa 3/ 0.04% 13.88 0.04% 13.54 13.54 - 0.09% 0.34 0.06% 0.06% Spain 1.01% 348.14 1.00% 340.59 340.59 - 1.99% 7.54 1.48% 1.40% Sweden 3.14% 1,079.61 3.14% 1,068.67 1,068.67 - 2.89% 10.95 4.59% 4.34% Switzerland 2.10% 723.64 2.10% 714.93 714.93 - 2.30% 8.71 3.08% 2.91% Thailand 0.03% 10.32 0.03% 10.26 10.26 - 0.01% 0.05 0.04% 0.04% Turkey 0.04% 14.11 0.04% 14.11 14.11 - 0.00% - 0.06% 0.06% United Kingdom 5.71% 1,965.02 5.65% 1,922.64 1,922.64 - 11.19% 42.39 8.36% 7.89% United States 10.18% 3,500.00 10.07% 3,423.79 3,423.79 - 20.12% 76.21 14.89% 14.06% Sub-total Contributing Members 23,508.17 23,147.64 23,078.38 69.25 360.53 100.00% 94.41% Additional financing 2/ 0.05% 16.23 Total 23,524.40 1/ Contribution may be subject to government and/or parliamentary approval. 2/ Represents the investment income estimated to generated by using a regular encashment profile of 9 years vs. an 11-year profile. 3/ Includes an increase in basic share achieved through accelerated encashments. 4/ Gross shares are calculated using the target amount of SDR 24,058.48 million (equivalent to US$34,387.75 million). This figure is derived by grossing up the IDA20 targeted funding volume of US$24.9 billion by the carried-forward prevailing gap of 27.59 percent. With IDA20 Partners' total shares not adding to 100 percent of target, the resulting structural gap is 31.58 percent. 5/ Basic shares are calculated using the target amount of SDR 23,793.48 million (equivalent to US$34,008.97 million). This figure is derived as explained in footnote 4 and subtracting the total HIPC cost for IDA20 of SDR 265.00 million (US$378.78 million). 6/ HIPC contributions are calculated by applying HIPC shares agreed by Partners in the past replenishments, unless otherwise indicated by an individual Partner, to the total HIPC cost for IDA20 of SDR 265.00 million (equivalent to US$378.78 million). 7/ “Net Share” represents individual donor contribution as a percentage share of the actual sum of all donor contributions which total US$23,508.17 million. “Net Share (Illustrative Reference)” reflects individual donor contribution as a percentage share of the target donor contribution of US$24.9 billion. 8/ US$ amount is calculated using IDA20 SDR/US$ reference exchange rate of 1.42934. - 198 - Table A16. 2. Concessional Loan Contributions to the Twentieth Replenishment (Contribution Amounts in US$ millions) Loan Amount1/ Loan Terms Grant Element from Loan Contributing Currency Coupon Rate in Loan SDR Currency Members US$ Million Currency FX Maturity Million Currency Terms Million Million (1) (2) (3) (4) (5) (6) (7) (8) Belgium 305.52 EUR 0.83781 255.97 10-50 0.00% 69.25 58.02 1/ Indicative contribution, subject to government and/or parliamentary approval. - 199 - ANNEX 17. IDA VOTING RIGHTS FRAMEWORK IDA Executive Directors Report to Board of Governors dated September 28, 2021 with Additional Glossary of Terms DEVELOPMENT COMMITTEE (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries) DC2021-0009 September 28, 2021 IDA Voting Rights Review: Report to Governors, Annual Meetings 2021 Attached is the background document titled “IDA Voting Rights Review: Report to Governors, Annual Meetings 2021” prepared by the World Bank Group for the October 15, 2021 Development Committee Meeting. IDA Voting Rights Review Report to Governors Annual Meetings 2021 ACRONYMS AND ABBREVIATIONS COGAM Committee on Governance and Executive Directors’ Administrative Matters IDA International Development Association IFI International Finance Institutions Table of Contents I. INTRODUCTION .........................................................................................................................................1 II. BACKGROUND............................................................................................................................................1 III. STRUCTURE OF DISCUSSIONS ..............................................................................................................3 IV. PROPOSED NEW IDA VOTING RIGHTS FRAMEWORK ..................................................................6 V. CONCLUSION ..............................................................................................................................................8 -1- I. INTRODUCTION 1. The IDA Board, under the leadership of the Committee on Governance and Executive Director’s Administrative Matters (COGAM), has successfully completed its review of IDA’s voting rights framework (the Review) ahead of the 2021 Annual Meetings as requested by Governors. At the 2019 Annual Meetings, Governors were presented with the IDA Voting Rights Review: Report to Governors (the 2019 Report).1 They endorsed the proposed review of IDA’s voting rights framework, including its scope and Guiding Principles, and requested that the IDA Board of Executive Directors (Directors) lead the Review. At the 2020 Annual Meetings, Governors were provided with IDA Voting Rights Review: Interim Progress Report to Governors (the 2020 Report), following which Governors requested Directors to conclude the Review ahead of the 2021 Annual Meetings.2 2. Our extensive discussions and the readiness of Directors to compromise on starting positions have led to a unanimous consensus to recommend a new framework that would serve to enhance IDA’s financial strength by incentivizing contributions in future replenishments. If agreed, this would represent the largest and most significant adjustment to IDA’s voting rights framework since IDA03. The simplified framework would ensure fairness amongst potential donors and would protect and enhance Recipient voting power via a Non-Recipient/Recipient membership structure. 3. This report serves to conclude the Review and update Governors on the work done by the IDA Board of Directors since the 2020 Report and recommends the proposed new IDA voting rights framework. It provides the background of the Review (Section II), outlines the robust Review work program that the Board has completed over the past year (Section III), provides a description of the proposed voting rights framework (Section IV), and finally, concludes with a specific recommendation to Governors on the potential framework (Section V). II. BACKGROUND A. Drivers for Review 4. As noted in both the 2019 and 2020 Reports to the Governors, many Directors felt that a review would be both timely, given that IDA’s current voting rights framework had not been updated since IDA03, and appropriate in light of IDA’s transition to a hybrid financing model and the concerns highlighted by members with the current framework. Specific drivers for the Review were: i) Concern that the current framework is overly complicated. ii) Concern that the framework is outdated, that it has not evolved to reflect global changes since IDA was created. 1 See Development Committee communique dated October 19, 2019 and “IDA Voting Rights Review, Report to Governors, Annual Meetings 2019”, IDA/SecM2019-0205, dated August 23, 2019 2 See Development Committee communique dated October 16, 2020 and “IDA Voting Rights Review: Interim Progress Report to Governors, Annual Meetings 2020”, IDA/SecM2020-0260, dated September 6, 2020 -2- iii) Concern that the voting power of recipient countries will continue to decline due to graduation and as a result of donor contributions by Part II members. iv) The historic first-time use of IDA’s equity to access capital markets has highlighted the importance of safeguarding IDA’s equity, and the fiduciary responsibility that countries have over their contributions. v) A desire that the framework should do more to enhance and balance incentives for increasing contributions by existing and new donors. B. Guiding Principles Endorsed by Governors 5. The use of overarching principles (“Guiding Principles”) that would underpin and set the Review’s direction were identified as key to the Review’s success. The Guiding Principles defined in the 2019 Report, and endorsed by Governors stated that: i) The voting rights system should incentivize donor contributions to IDA, both for new and existing donors, recognizing that IDA contributions are voluntary. ii) IDA recipients are key stakeholders, and their voting power shall be protected and, if possible, enhanced. iii) IDA is a global co-operative; all voices are important to ensure an inclusive and equitable process. iv) All IDA partners have an interest in IDA’s long-term financial sustainability. v) Adjustments requiring changes to IDA’s Articles of Agreement will only be considered if there is no alternative option available. vi) The review shall be de-linked from the IDA19 replenishment and the 2020 Shareholding Review 6. A key element of the Review’s roadmap was the identification of clear roles and responsibilities. Governors asked the Directors to lead the Review with regular updates to IDA Deputies and Borrower Representatives and to complete the Review by the Annual Meeting in 2021. C. Organizing Framework 7. A robust organizing framework, consisting of four key building blocks and two phases, was agreed early in the Review.3 At all times Directors were committed to open discussions, close collaboration, and a willingness to consider various options. They were mindful of the importance of maximizing contributions to IDA, protecting IDA recipient voting power, and ensuring an inclusive and equitable framework. 8. There are four key building blocks that reflect all possible elements of an IDA voting framework. Whilst IDA’s current voting rights framework is complex, involving multiple parameters and calculations, it can be broken down into four interrelated key building blocks: 3 The first COGAM meeting was held on January 29, 2020, to discuss “IDA Voting Rights – Deciding on an Approach to the Review”, COGAM/2020-0001, dated January 21, 2020 -3- a) Membership structure b) Voting calculations for the Upper-Tier of the membership structure c) Voting calculations for the Lower-Tier of the membership structure d) Transition within the membership structure 9. The Review was conducted in two phases: a deliberative phase covering all four Building Blocks, and a consensus building phase. The deliberative phase, where Directors explored and discussed options for each Building Block, was completed in December 2020. The consensus building phase, where Directors focused on narrowing down and agreeing on a combination of key decisions to form the new framework, was completed in September 2021. D. Assessment Criteria for Building Block Options 10. Assessment criteria were used to help evaluate Building Block options. Directors used the assessment criteria listed below to help evaluate Building Block options raised in the first phase of the Review, and then again in evaluating and comparing Building Block combinations in the second phase. Used in conjunction with the more high-level Guiding Principles, Directors were able to identify the range of interpretations by members of the Guiding Principles and the potential trade-offs across criteria. a) Protect or Enhance Voice of IDA Recipients - Does the option make it easier for IDA recipients to maintain or increase their voting power? b) Incentivize donor contributions - Does the option better incentivize donor contributions compared to the current framework? c) Similar or Same Treatment of Members - Does the option treat similar members equitably? d) Dynamic and Self-evolving - Is the option better able to reflect the ongoing changes in IDA, including the evolving profiles of IDA’s members? e) Simplifying - Is the option less complex and simpler to understand than the current framework? III. STRUCTURE OF DISCUSSIONS 11. Over the past year, the IDA Board through COGAM has completed a rigorous work program supporting the Review. After the 2020 Annual Meetings, the first phase of the Review was completed with an analysis of the two remaining Building Blocks (Lower-Tier Voting Calculations and Transitions). The second “consensus building” phase was also completed and consisted of a wide range of approaches to help members narrow down options, increase awareness of each other’s priorities for the new framework, and continue to foster the spirit of compromise. A. Completion of First Phase – Building Block Deliberations 12. The Building Block approach broadened and deepened members’ understanding of voting rights issues and helped identify the key decisions that needed to be addressed for any changes to the voting rights framework. -4- 13. At the outset of the voting rights discussion, members decided to utilize and adapt the existing voting rights system, where voting power in the upper-tier would be determined by contributions to IDA and lower-tier voting power would be maintained through pre-emptive rights. The Membership Structure Building Block discussions prior to the 2020 Annual Meetings focused on a two-tier Non-Recipient/Recipient structure, under which voting power is calculated based on a consistent approach for Donors and potential Donors going forward. In addition, the pre-2020 Annual Meeting discussions on the Upper-Tier Building Block focused on exploring alternative pricing approaches for the Non-Recipient tier. 14. The key challenges to address during this past year were the Recipient lower-tier calculations, particularly the boost to Recipient voting power, the terms of transitioning by Part II members to the Non-Recipient upper-tier, and the appropriate price per vote for Non-Recipient upper-tier members going forward. In order to complete the deliberative phase of the Review, members explored the two remaining Building Blocks: • The Lower-Tier Calculations Building Block centered on Recipient voting power. The key to protecting Recipients’ voting power is their preemptive rights, which ensures they are allocated sufficient votes to maintain their voting power. A boost to Recipient voting power, aimed at enhancing Recipients’ voice and to bring their voting power more in-line with other IFIs, was also discussed. • The Transition Building Block discussions focused on the transition of Part II member to the Upper-Tier. Directors looked at different transition options for transitioning members (both current Part II Non-Recipients and future IDA graduates). The level of grandfathering of voting power upon transition to the new framework (where transitioning members are able to grandfather their voting power to the new framework) and the duration of any grandfathering are key decisions that any new voting rights system would require. Further, Directors analyzed several combinations of Upper-Tier Building Block options with the Transition Building Block options. B. Second Phase - Consensus Building 15. The second phase commenced in January 2021, with Directors focusing their efforts on identifying their preferred combinations, seeking understanding of each other’s positions, and narrowing down possible combinations to identify a pathway to consensus. There were a number of key stages in the consensus building phase which facilitated Directors working together and keeping the Review moving forward in an open, inclusive, and constructive manner. Development and Sharing of a Simulation Tool 16. A simulation tool was developed which strengthened members understanding of the trade-offs between options. The discussions held in the first phase were largely principle driven, where Building Block options were discussed against the Guiding Principles and assessment criteria. In the second phase, to help members narrow down the options, particularly with respect to the potential voting power impact on individual member and member groupings, a simulation tool was provided. The tool allowed members to choose various key decision options and assumptions to project illustrative voting power for each replenishment from IDA20 through to IDA26. -5- Completion of an All-Board Questionnaire 17. All Board members completed a questionnaire to identify preferred Building Block combinations. Once members had familiarized themselves with the simulation tool, each Director was requested to complete a questionnaire to identify their constituency’s preferred option for each of the key decisions, along with any areas of flexibility. The goal of the questionnaire was to identify areas of convergence on key decision preferences and aversions, to guide future areas of focus. 18. The responses to the questionnaire revealed a number of clear preferences by different groups of members. Mixed constituencies, many of which were a microcosm of the whole Board, found the questionnaire particularly challenging. 19. The questionnaire also revealed considerable divergence in key areas of the framework, in particular with the new framework’s terms and conditions relating to transitions and the Non-Recipient vote pricing going forward. In response to the divergence, and to maintain the Review’s momentum, the COGAM Chair arranged for a number of informal working group discussions. Participation in Working Groups 20. The twenty-four Board constituencies4 were divided up into four working groups, with representation from the key membership groups (Part I members, Part II Donors, Recipients, and Part II Non-Recipient/Non-Donors) to deepen the understanding of other perspectives and encourage compromise towards consensus building. The goals of the working groups were to i) reinforce what the Board was trying to collectively achieve, ii) share understanding, and iii) provide advice to COGAM. Comprised of Advisors and Senior Advisors, each working group met multiple times over the course of several weeks to discuss a list of specific topics and complete as series of exercises. Each group produced a working group report that summarized their discussions and highlighted compromise bridge-building combinations that the group believed could form the basis of a consensus. 21. Two compromise bridge-building combinations were identified by the working groups. The working groups were a valuable exercise and good progress was made in reinforcing the overall goals of the Review, improving understanding of the perspectives and priorities of different members, and in identifying possible consensus building framework combinations. There were however different views on how any new framework would incentivize donors, as well as the need to have same or similar treatment for Non-Recipients; finally, there were differing views on the need to provide Recipients with a boost to their voting power. Hosting Bilateral Consultation Meetings 22. Several rounds of informal bilateral meetings, supported by technical notes, helped build consensus around one combination of key decisions. At the completion of the working group discussions, the COGAM Chair requested Management to prepare a note with the details of combinations (based on the two broad compromise combinations identified by the working groups, 4 The Chair’s constituency was not included in order to maintain independence. -6- along with a recipient boost), that would have the greatest possibility for reaching a consensus. These combinations were used to inform a series of bilateral meetings aimed at identifying a combination that all Directors agreed provides a pathway forward. 23. A combination that required similar levels of compromise, where everyone was ‘equally unhappy’, emerged as a pathway forward. Members noted that in addition to adherence to the Review’s Guiding Principles and assessment criteria, three key aspects were needed in order to move forward with the Review and to facilitate a final decision by their capitals: • All members must have compromised on their preferred positions; so in effect that all members are “equally unhappy”. • The country’s voting power is not drastically impacted on transition to the new framework, rather, that any decline is gradual. • The new framework is simple and easily explained. IV. PROPOSED NEW IDA VOTING RIGHTS FRAMEWORK 24. The Board’s unwavering commitment to flexibility and consensus building for the betterment of IDA, along with a robust Review process, has resulted in consensus for the recommended new voting rights framework. IDA members have cooperated to redefine the value proposition of IDA by modernizing its voting rights system, a key governance element, in a simple, inclusive, and sustainable manner. The Guiding Principles have served the Board well as it sought to design a new voting rights framework that reflects the changes in IDA and its members’ landscape, whilst recognizing the importance of Recipients’ voice. Following the Building Block structure used throughout the Review, the key elements of the proposed new framework are outlined below.5 Membership Structure 25. A two-tier, Non-Recipient/Recipient membership structure. IDA’s voting framework for additional subscriptions will move away from the current Part I/Part II structure, a milestone achievement in its own right.6 Instead, the Board supported a fact based, self-evolving, two-tier, Non-Recipient/Recipient membership structure that reflects a member’s IDA status.7 The clear delineation of Recipients acknowledges their importance and will allow their voting power to be better protected. 5 Illustrativevoting power outcomes by member, based on flat contributions and other assumptions, were distributed to the IDA Board as part of the Review’s discussions. 6 A Non-Recipient/Recipient membership structure for additional subscriptions will not require any amendment to IDA’s Articles of Agreement. The Articles refer to Part I/Part II membership status with respect to a member’s initial subscriptions upon joining IDA, and serves to determine the terms of payment for the initial subscription; this remains unchanged. The Review has focused on additional subscriptions, for which the Articles allow the terms and conditions to be determined by IDA. 7 An IDA Recipient is any country eligible to borrow from IDA, a list of Recipients is maintained in the Bank Directive on Financial Terms and Conditions of Bank Financing. All other IDA members are considered Non-Recipients. -7- Upper-Tier Vote Calculation 26. A flat uniform vote price of $17,670 for all Non-Recipients, where Non-Recipients will receive additional subscription votes based on their replenishment contributions. With a flat uniform price, IDA donors’ contributions would be rewarded equally on an additive basis.8 It was noted that the price, as well as the simple and clear approach to additional subscription, would be a firm basis for incentivizing further contributions. As with the calculations under the current framework, Non-Recipients would be agreeing to allocation of voting rights in accordance with the approved voting rights framework. Many Directors noted that a voting system that corresponds to contributions, similar to other market facing financial institutions, is well placed to ensure capital market confidence. Some Part II donors strongly preferred a differentiated pricing approach or a lower uniform price, and their agreement on uniform pricing is a significant compromise in order to reach a consensus. 27. Past and future contributions are equally valuable. The support for setting the Non- Recipient vote price at $17,670, the same level as the current IDA19 vote price, was driven by the need to ensure that past contributions are valued as much as future contributions. Directors noted the importance of avoiding dilution of the voting power associated with the more than $250 billion in historic contributions to IDA, highlighting that these contributions have built a large portion of IDA’s substantial capital base which will continue to support future lending and IDA’s market access. Lower-Tier Voting Calculations and Voting Power 28. A boost to Recipients’ voting power in recognition of the importance of Recipients’ voice. Directors noted that IDA’s country-based model is central to IDA and one of the key factors in its effectiveness. There was broad agreement that the combined voting power of Recipients will be enhanced from 16.85% to 20.50%, while a few Directors preferred the more ambitious 25% target.9 Starting in IDA20, the 3.65% boost would be applied over four IDA replenishments. The new membership-like votes issued to Recipients on a pro-rata basis would dilute other members’ voting power and will therefore effectively be funded on a pro-rata basis by all relevant Non-Recipients.10 29. Preemptive Rights would continue to protect Recipients’ voting power. The Non- Recipient/Recipient membership structure serves to ringfence and protect Recipient voting power by transitioning most donors to the upper-tier. Moreover, as with the current framework, any Recipient voting power dilution resulting from Non-Recipient donor contributions would be offset by the allocation of low-cost ($25) first preemptive right votes. Second pre-emptive rights at the above-mentioned uniform price will offset any contributions from lower-tier members, and any 8 Under an additive basis, subscription votes are calculated based on the donor’s contribution to the current replenishment and added to any existing votes. 9 The 20.5% target reflecting the natural boost Recipients would have received had members transitioned to the new framework without 100% grandfathering. 10 Eleven recent IDA Graduates: Angola, Armenia, Azerbaijan, Bolivia, Bosnia & Herzegovina, Georgia, India, Moldova, Mongolia, Sri Lanka, Vietnam, fall within the IDA20 waiting period, as described in para. 31, on transition to the new framework. Accordingly, these members are not affected by the Recipient Boost during their respective waiting periods. -8- contributions to IDA above the payment required for first pre-emptive rights would receiveadditional subscription votes priced at the uniform price. Terms of Transition to the New Framework and between Tiers 30. 100% Grandfathering for all transitioning members’ voting power under the new framework. All current Part II members who would transition to the Non-Recipient tier under thenew framework would do so with their IDA19 voting power intact. From IDA20 onwards their voting power would be impacted by the Recipient boost (IDA20 through IDA23) and the level oftheir own and other donor contributions. Full grandfathering would also be provided to future IDAgraduates, when they transition to the Non-Recipient tier. Grandfathering was a paramount condition for accepting any new framework for many members, whilst for other members it required a significant compromise. As such, support for 100% Grandfathering was a significant milestone in the consensus building process. 31. Recent and future IDA graduates would have a five-replenishment waiting period, post-graduation, before the standard upper-tier vote calculation is applied. In recognition ofthe challenges faced by many recent IDA Graduates, the application of a waiting period before thefull upper-tier calculations is applied to these members was broadly supported. The delay would allow recent Graduates some additional time before being treated like all other potential donors. Applicable Graduates would continue to have their voting power protected via first preemptive right votes during the five-replenishment waiting period which includes the graduating replenishment. Any contributions above the payment required for first pre-emptive rights will receive additional subscription votes priced at the uniform price. Following the end of the waitingperiod, the standard upper-tier vote calculation would apply to these members, and they would start at their full voting power as a result of the 100% Grandfathering agreement. V. CONCLUSION 32. Governors assigned the IDA Board with the challenging task of reaching an agreement onhow to reform IDA’s voting rights framework. Directors have conducted a robust Review of all the key Building Blocks that any IDA voting rights framework would require. The analytical rigorof the discussions, along with an unwavering commitment that the outcome of the Review leave IDA better placed to fulfil its mission has resulted in unanimous consensus on a new framework. The framework is an extraordinary achievement and indeed, the main beneficiary is IDA. 33. Directors recommend the implementation of the proposed IDA voting rights framework outlined in paragraphs 25-31 above, and that it be implemented for IDA20. In addition, Directorsalso recommend that the framework be reviewed after the Recipient Boost has been fullyimplemented in IDA23 to ensure that it continues to serve IDA well. -9- Additional Glossary of Terms Recipient Member: A member will be considered as a Recipient if it is determined it is eligible 1 to receive financing from the Association on or about July 1 first preceding the date of submission of the replenishment resolution to the Board of Governors but excluding members that are proposed to graduate from IDA as part of the replenishment for which approval is being sought. Recent Graduates (“Interstitial Non-Recipient Members”): Interstitial Non-Recipient members comprise of each member that is not a Recipient Member but was eligible to receive IDA financing as a Recipient Member any time during the period covered by the five replenishments prior to any new replenishment (i.e., IDA15 through IDA19 for IDA20, IDA16 through IDA20 for IDA21, etc.). Recipient Boost: An IDA20 Recipient, as described above, will receive a 3.65% boost to their IDA19 voting power. The 3.65% boost will be applied in four equal amounts (0.9125%) over four replenishments from IDA20 through to IDA23. 2 Membership-like votes will be allocated to the Recipients at each replenishment, at no cost to the Recipient. Replenishment Contributions: New resources to IDA under any replenishment prior to and after IDA20, will be allocated voting rights using the new framework. 1 See applicable Bank Directive on “Financial Terms and Conditions of Bank Financing”. 2 The subscription and membership votes provided to Bulgaria when it joined IDA as a new member in November 2021 (resulting in voting power of 0.33% for Bulgaria before the impact of IDA20 contributions) reduces the voting power of all other existing members.