What Should Happen to IDA after It Loses Most of Its Clients? We’ll Explore the Options

Earlier this year, Ben Leo (who recently joined our friends at the One Campaign as their new Global Policy Director) and I projected IDA graduations out to 2025 as an exercise to think through what the World Bank’s soft loan window might look like in the near future (full working paper is here). Everyone knows India is about to graduate—and I’m also thinking a lot about implications for Ghana and will present my findings next month at the Institute for Economic Affairs in Accra—but we wanted to see who else might be moving on to IBRD. The results were fairly startling: within the next 10-15 years, IDA will lose over half of its currently eligible client pool, including some of the largest and best-performing economies. The IDA pool of 2025 be small, almost entirely African, and a majority will be countries currently designated fragile or post-conflict. Yikes!This will obviously have major implications for IDA management and its shareholders. Should IDA continue with the status quo and just allow a smaller number of clients to receive larger and larger allocations? Should it declare success and allow the natural shrinkage of IDA over time, perhaps keeping per capita lending constant? Or should IDA try to reinvent itself focused on tackling poverty in middle income countries (where most of the global poor now live) or to shift toward underfinanced global public goods?To consider these options and to help spark new ideas, CGD has convened a new Future of IDA Working Group to think through precisely these questions. The Working Group—chaired by Jean-Michel Severino—brings together scholars, practitioners, and policymakers to produce analysis and recommendations ahead of the IDA 16 midterm review next summer. The purpose is to encourage World Bank management and shareholders to look beyond the next 3-year replenishment cycle and consider the long-term future of what is arguably the epicenter of the global development assistance system.