Ajay Banga - Memorandum of the President to the Executive Directors - Adjustments to IDA20

Jul 19, 2026

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Memorandum of the President to the Executive Directors outlines adjustments to IDA20 following the Midterm Review and subsequent discussions. It covers operational and financial framework changes to simplify implementation, proposals for the Private Sector Window and Graduation, and deferral of recalibration criteria for Small Island Economies Exception. It also sets measures to protect IDA financing capacity in FY24–FY25, addressing the projected $7.8 billion gap through portfolio clean-up, Crisis Response Window+ resources, and balance sheet optimization.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages16

Reading Time40 min

Adjustments to IDA20

Background and rationale

Recommended decisions for approval

Crisis response and financing capacity

Public Disclosure Authorized Public Disclosure Authorized Ajay Banga President February 9, 2024 MEMORANDUM OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS Adjustments to IDA20 1. At the IDA20 Midterm Review (MTR) meeting on December 6-8, 2023, in Zanzibar, Tanzania, Management presented to IDA Deputies and Borrower Representatives (Participants) a report of IDA20’s results and implementation progress, as well as options to close the IDA20 financing gap. A virtual MTR meeting was also held on December 20, 2023 to discuss three additional notes.1 2. To ensure continued strong delivery and results monitoring and reporting, Management recommended a number of adjustments2 to the IDA20 operational and financial framework, several of which are to simplify IDA implementation. IDA Participants endorsed Management’s recommendations for operational adjustments as well as additional proposals on the Private Sector Window (PSW) and Graduation. One proposal related to recalibrating the criteria on which IDA concessional resources are provided to countries under the broadened Small Island Economies Exception was deferred for future discussion. In addition, based on Participant’s feedback during the MTR meeting, Participants supported a moratorium on hardening of terms for all IDA countries in good standing with the Sustainable Development Finance Policy (SDFP) in FY24 and FY25, until a review of the Grant Allocation Framework is discussed early in the IDA21 replenishment discussions. 3. Participants expressed consensus to protect IDA financing capacity of $30 billion for FY24 and FY25 so that operational teams and clients have predictability on the available financing envelope. Frontloading of IDA20 resources to FY23 to provide countries surge financing and additional volumes for addressing overlapping crises, and the compounding effect of a stronger US dollar, has resulted in a projected financing gap of $7.8 billion relative to the amount when IDA20 was negotiated. To close this gap, management will employ several measures, including portfolio clean-up, additional resources from the Crisis Response Window+ (CRW+) and balance sheet optimization measures, as outlined in Section III of the attached Board paper. 1 See Annex 2 of the forthcoming IDA20 MTR Chair’s Summary for the list of background documents prepared for the IDA20 Mid-Term Review. 2 See Table 4.1 of the IDA20 Mid-Term Review: Implementation Update and Issues for Discussion (“Omnibus Paper”) . 4. Recommendation. Following the agreements by the Participants to the proposals summarized in Section II3 of the accompanying Board paper, Management proposes the following decisions for your approval: i. CRW+. Adopt a tiered approach to application of the previously approved adjustments to CRW+ eligibility criteria, as follows: (i) If CRW+ pledges reach US$500 million or less, larger countries may be allowed to exceed the US$50 million per country cap on ERF resources if needed; and (ii) If CRW+ pledges exceed US$500 million, the streamlined criteria for providing CRW+ resources to respond to severe economic crises may be applied. ii. Adjust Human Capital Policy Commitment 1 to refocus from rolling out COVID-19 vaccines to boosting health emergency preparedness. Under the revised policy commitment, IDA will “Support at least 20 IDA countries to strengthen inclusive health security and advance universal health coverage by building countries’ capacity to prepare, prevent, detect and respond to the threat posed by pandemics and other health emergencies.” iii. Adjust Gender and Development Policy Commitment 7 to reflect national level policy processes. Under the revised policy commitment, IDA will “Support at least 10 IDA countries to strengthen national policy frameworks for prevention and response to GBV, and in at least 15 IDA countries, of which five are FCS, support GBV related services in health systems, and/or implement GBV prevention and response protocols as p

FAQs

What prompted the recommended adjustments to IDA20?

They were proposed after the IDA20 Midterm Review outcomes and participant feedback to maintain strong delivery, results monitoring, and continued financing effectiveness while addressing implementation and framework needs.

How is IDA’s projected FY24–FY25 financing gap planned to be closed?

Management will use measures including portfolio clean-up, additional resources from the Crisis Response Window+ (CRW+), and balance sheet optimization, as described in the attached Board paper.

What changes are proposed for CRW+ eligibility criteria?

A tiered approach is proposed: if CRW+ pledges are US$500 million or less, larger countries may exceed the US$50 million per-country cap on ERF resources; if pledges exceed US$500 million, streamlined severe-crisis criteria may be applied.

Jul 19, 2026

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