October 24, 2024 —  With the 2024 World Bank/IMF Annual Meetings underway, the IRC calls for the World Bank and its shareholders to maximize the potential of its International Development Association (IDA) to support communities in conflict-affected least developed countries (LDCs). In a new report, the International Rescue Committee (IRC) argues that the IDA is a critical source of finance for countries in crisis and outlines how the World Bank and shareholders can support communities in fragile and conflict-affected states by making fragility, conflict and violence central to the World Bank goal of ending extreme poverty on a livable planet.

Today, one-quarter of the world’s extremely poor live in just 14 conflict-affected LDCs, representing around 7% of the global population. Ten of these 14 countries experience control by de facto authorities (DFAs) at either the national or subnational level, posing further challenges to efforts to address extreme poverty and climate change. IDA, with its low and no cost financing, is one of the few lifelines available to conflict-affected LDCs and is increasingly called on to fill the gap left by other development and climate funds.

Daphne Jayasinghe, Policy Director at IRC, said, “Unlike the large stable settings such as China, India, and South Korea that IDA so effectively supported in the past, the new geography of extreme poverty is increasingly concentrated in crisis-affected communities often facing a toxic combination of stretched governments, protracted conflict and climate vulnerability. By 2030, 60% of people living in extreme poverty will be in countries affected by fragility, conflict, and violence (FCV), according to the Bank’s own projections. Solving the challenges in these communities is central to the Bank’s goal of ending extreme poverty on a livable planet.”

As highlighted in the UN’s Summit of the Future Outcome Document, a robust and impactful IDA21 replenishment is crucial. The other half of the equation is ensuring that IDA can deliver maximum impact in all contexts, including where state capacity is constrained or where de facto authorities (DFAs) are present. This will require clear policy ambitions, operationalization of partnerships, financing mechanisms and risk mapping.

Four actions can help the World Bank and shareholders maximize IDA’s potential in the new geography of extreme poverty:

  1. A robust IDA replenishment: Commit to a robust IDA21 replenishment by pledging contributions that exceed the IDA20 amount in real terms, and preserve access to grants and highly concessional loans for conflict-affected LDCs.
  2. An FCV-inclusive IDA21: Drive progress on FCV, gender equality and refugee inclusion and ensure that the growing number of communities impacted by conflict, violence and unconstitutional transfers of power are not left behind.
  3. People-centered financing in the new geography of extreme poverty: Establish reforms to improve IDA performance and delivery in FCV contexts, including via expanded eligibility to the FCV Envelope and improved political risk mapping to inform qualitative assessments.
  4. Sustaining engagement in contexts under the control of DFAs: Integrate assessments of the potential disruption of budget support that could result from DFAs in IDA countries, and set out appropriate adaptation measures that IDA could deploy, including switching to NGO or U.N. partnerships to continue critical projects in appropriate areas of service delivery, such as healthcare, education and gender-based violence (GBV) prevention and response.