World Bank Board Note - Revision to the Bank Policy on Co-financing - March 2026

Jul 19, 2026

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Revision note for the World Bank Board proposing changes to the Bank Policy on co-financing to introduce flexibility to eliminate co-financing fees. It explains how strengthened partnerships and direct co-financing reduce aid fragmentation, transaction costs, and administrative burdens while enabling larger, more complex programs and greater impact. It also reviews how cost recovery requirements have evolved since 1989 and describes current provisions that motivate removing external co-financing fees.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages9

Reading Time23 min

Introduction

Benefits of co-financing

Global coordination and co-financing portal

Recent scaling-up efforts and proposed fee removal

Board approval and policy revision request

The Bank’s Co-financing Policy and Its Provision on Cost Recovery

Evolution of cost recovery requirements

Public Disclosure Authorized Public Disclosure Authorized World Bank Board Note: Revision to the Bank Policy on Co-financing March 2026 Introduction 1. Strengthening partnerships, including through direct co-financing1, is core to the World Bank’s aim to generate efficiencies, boost impact and reduce aid fragmentation. The World Bank (also referred to as “the Bank”)’s April 2024 Development Committee Paper highlights co-financing as an important way to help countries address development challenges with greater scale and impact. Given the significant investments needed in emerging market and developing economies (EMDEs) to support growth and create the necessary jobs in a context of limited public resources, the international community has called for more efficient collaboration among development partners.2 2. Co-financing offers substantial and unique benefits to client countries. Having multiple partners finance the same project together, rather than different projects separately, reduces aid fragmentation, lowers transaction costs, reduces the administrative burden on countries, and enables countries to lead larger and more complex programs than any one financier could support alone. Cofinancing serves to crowd-in resources to better address country, regional, and global challenges, and can be a source of concessional funds of significant benefit to client countries. Overall, the benefits – particularly to countries – are significant, and increasingly more important in the current context. 3. The appetite for increased collaboration through co-financing transcends the Bank. In April 2024, ten multilateral development banks (MDBs) including the Bank came together to launch the Global Collaborative Co-financing Portal to improve coordination and identification of cofinancing opportunities by exchanging information on projects with financing needs. Since the Cofinancing Portal launched, the number of listed projects has increased from 70 to more than 230, representing about $129 billion in total financing needs. 4. Over the past three years, the Bank has been working to scale up co-financing by adding incentives, strengthening partnerships, and formalizing institutional agreements. These efforts fueled a surge in co-financing for Bank projects, especially since the Bank adopted a lower and simpler fee-based approach to cost recovery in October 2023 . While this attracted new and more co-financing, several key partners remained unwilling or unable to pay the fee, with some contesting the underlying principle of the Bank charging fees and limiting their co-financing of IDA/IBRD projects. Given the overall benefits of co-financing, the Bank proposes to remove fees for all co-financiers, to be announced during the 2026 Spring Meetings. 5. In this context, this Note requests the Board’s approval to revise the Bank Policy: Cofinancing to provide flexibility to eliminate co-financing fees. Adjustments to the Bank’s cost recovery fee structure for external funds (including co-financing) lie within Management’s authority.3 1 The Bank’s definition of co-financing refers to any arrangement under which the Bank funds or guarantees are associated with funds provided by third parties to an IDA or IBRD operation. Funds can flow directly from the co-financier to the recipient to finance activities within the scope of a Bank project (direct co-financing) as governed by Bank Policy: Co-financing. Co-financing may also be arranged through WB TFs, which is defined as indirect co-financing. This Note relates to direct co-financing. 2 The Report of the G20 Eminent Persons Group on Global Financial Governance (October 2018) recommended MDBs operate as a system, increasingly harmonize their policies and procedures, and act for each other in client-facing roles. IDA19: An Overview: Ten Years to 2030: Growth, People, Resilience (February 2020) noted the Bank will work with other MDBs and the G20 to follow up on this recommendation.

FAQs

Why does the World Bank emphasize co-financing and direct co-financing?

Co-financing is presented as a core approach to strengthen partnerships by improving efficiency, boosting impact, and reducing aid fragmentation. Direct co-financing also helps lower transaction and administrative burdens and enables larger programs led by client countries.

What global developments are mentioned to support increased co-financing?

The note highlights the Global Collaborative Co-financing Portal launched in April 2024 by ten multilateral development banks to improve coordination and identify co-financing opportunities. It reports growth in listed projects from 70 to more than 230.

What change to the co-financing fee framework is the World Bank proposing?

The Bank proposes removing co-financing fees for all co-financiers, to be announced during the 2026 Spring Meetings. This is intended to provide flexibility to eliminate co-financing fees while aligning with the objective of scaling up co-financing.

Jul 19, 2026

Upload by Finn