Sustainable Development Finance Policy of the International Development Association - Chair Summary - June 9, 2020

Jul 19, 2026

The International Development Association (IDA) Board discussed and approved the Sustainable Development Finance Policy (SDFP), focused on incentivizing IDA-eligible countries to adopt transparent, sustainable borrowing and investment practices while strengthening coordination with other creditors. The policy’s two pillars—Debt Sustainability Enhancement Program (DSEP) and Program of Creditor Outreach (PCO)—are designed to enhance debt transparency, strengthen governance, and ensure fair, country-owned Performance and Policy Actions (PPAs). Implementation is scheduled from July 1, 2020, with monitoring during COVID-19 impacts and updates to the Board, emphasizing public revenue mobilization, investment, and reducing revenue leakage.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages2

Reading Time5 min

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Chair Summary

Policy approval and two pillars

DSEP PPAs, governance, and coordination

Creditor outreach and expected updates

Implementation during COVID-19 and vulnerable states

Monitoring, oversight, results, and capacity building

Public Disclosure Authorized Public Disclosure Authorized Sustainable Development Finance Policy of the International Development Association Chair Summary June 9, 2020 The Board of the International Development Association (IDA) discussed the Memorandum of the President and Board paper entitled Sustainable Development Finance Policy (SDFP) of the International Development Association. They welcomed the policy’s strong focus on incentivizing IDA-eligible countries to move towards transparent, sustainable financing and on promoting coordination between IDA and other creditors in support of countries’ efforts. Directors welcomed written clarifications provided by Management in response to their questions. Directors approved the adoption of IDA’s SDFP and the core elements of the policy as set out in the President’s Memorandum. Directors strongly supported the two pillars comprising the SDFP, the Debt Sustainability Enhancement Program (DSEP), which enhances incentives for countries to move toward transparent and sustainable borrowing and investment practices; and the Program of Creditor Outreach (PCO), which enhances IDA’s global platform and convening role to promote creditor outreach and coordination on sustainable lending practices, including debt transparency. They agreed that the policy should cover all IDA-eligible countries and should come into effect on July 1, 2020. Directors emphasized the importance of a fair approach to the development of country Performance and Policy Actions (PPAs) under the DSEP, accounting for specific debt vulnerabilities and implementation capacity constraints faced by each country as well as for countries’ vulnerability to external shocks and ensuring country ownership. They welcomed Management’s clarifications on the selection of these PPAs, in particular, how the selection will draw from existing, vetted analytical frameworks. Directors emphasized the importance of strong governance in implementation to ensure the quality and consistency of the DSEP. They underscored the importance of coordination with other partners, in particular the International Monetary Fund. Directors also underscored that every effort should be made to reach the broadest possible range of creditors under the PCO. They requested Management to ensure an ambitious approach. They welcomed Management’s commitment to providing the Board with an update on the PCO, with further elaboration on its objectives and expected impact, in the second quarter of FY21, and looked forward to regular updates on SDFP implementation. Directors noted that the early stage of the SDFP implementation will take place during the period when IDA-eligible countries will be affected by the adverse social and economic impacts of the COVID-19 pandemic, the impacts of which will inevitably increase external financing needs andwill lead to deterioration of debt-related vulnerabilities in many countries. They highlighted the vulnerability of small states and countries affected by fragility, conflict, and violence, the need for flexibility in SDFP implementation in these cases, and the importance of taking into account countries’ implementation capacity. Directors underscored the importance of strengthening public revenue mobilization and public investment as well as reducing revenue leakage. They agreed that the implementation of the SDFP will be an important instrument to foster greater debt transparency and to complement the Debt Service Suspension Initiative, making sure that freed up resources are used efficiently. Directors welcomed management’s intention to closely monitor the implementation during this period, ensuring that the content of the PPAs for individual countries is appropriate, applying as necessary the SDFP provisions for countries experiencing severe external shocks, and keeping IDA Board informed to support proper oversight. They welcomed Management’s commitment to providing the Board with an update including the l

FAQs

What is the Sustainable Development Finance Policy (SDFP) and what did the IDA Board approve?

The IDA Board discussed the SDFP and approved its adoption and core elements as presented in the President’s Memorandum, emphasizing incentives for transparent, sustainable financing and creditor coordination.

What are the two pillars of the SDFP?

The SDFP has two pillars: the Debt Sustainability Enhancement Program (DSEP), which promotes transparent and sustainable borrowing and investment, and the Program of Creditor Outreach (PCO), which strengthens IDA’s convening role to support coordination on sustainable lending and debt transparency.

How will the SDFP be implemented and monitored, especially during COVID-19?

Implementation begins July 1, 2020, during the period of adverse social and economic effects from COVID-19. The Board requested close monitoring, appropriate application of SDFP provisions for severe external shocks, early and later updates on identified PPAs, and preparation for results-focused learning.

Jul 19, 2026

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