IDA21 Second Replenishment Meeting
Co-Chair’s Summary
Washington, DC. — April 21, 2024
For PublicationA.

Introduction:

1.
IDA Deputies and Borrower Representatives (Participants) held the second meetingof the IDA21 Replenishment on April 21, 2024 in Washington, D.C. The Participantsconsidered debt vulnerabilities in IDA countries, conducted the annual review of theimplementation of IDA’s Sustainable Development Finance Policy (SDFP), and provided
feedback to Management on options for allocating concessionality in IDA21. Participants also
discussed Management’s approach to simplifying IDA implementation in IDA21 and heard
updates on plans for the third meeting in Kathmandu, Nepal.
2.
The replenishment is co-chaired by the World Bank’s Senior Managing Director andthe Independent Co-chair appointed in December 2023. The Co-chairs opened the meeting,emphasizing the importance of balancing continued attention to sustainable debt with the demandfor concessional finance and the need to protect IDA’s long-term financial viability. The WorldBank’s Vice President for Prosperity discussed historically high debt levels in IDA countries.
He observed that structural solutions to debt vulnerabilities include increasing domestic revenue
mobilization and economic growth and should be accompanied by multifaceted support frominternational partners, comprising a mix of analytics, technical support, policy dialogue, convening
and coordinating power, and financial support. During a panel discussion moderated by the WorldBank’s Vice President for External and Corporate Relations, the Managing Director ofOperations, Managing Director and Chief Financial Officer, and Senior Managing Directorof Development Policy and Partnerships reflected on how World Bank Group (WBG) Evolution
priorities discussed during the 2024 Spring Meetings are interrelated with IDA21 priorities.
B.

Sustainable Development Finance Policy:

3.
Participants commended the positive results of SDFP implementation to date andwelcomed enhanced focus of SDFP Performance and Policy Actions (PPAs) on fiscal
sustainability (including domestic revenue mobilization) and more complex debt
management actions, while emphasizing the need to sustain a focus on debt transparency
and continue expanding support to programmatic PPAs. Participants encouraged continued
technical support to IDA countries such as small states that face capacity challenges to ensure
PPAs are implemented and suggested better integrating PPAs into the Bank’s work (such as withlending operations, country partnership frameworks, the Corporate Scorecard, IDA policy
commitments, and technical assistance) to support implementation of PPAs. Some Participants
observed that the IDA21 Scorecard could support better reporting on institutional and capacity
building on debt issues across cycles in the results narratives. Participants requested to see greateruse of PPAs to enhance domestic resource mobilization (DRM), with some requesting to focus onprogressive domestic resource mobilization specifically, and encouraged more use of PPAs toaddress domestic debt management. Participants also asked the Bank to integrate PPAs withoperations, going beyond just Development Policy Operations. Participants also welcomed IDA’scollaboration with the International Monetary Fund (IMF) on debt and domestic revenue

-2mobilization and asked that a joint World Bank-IMF paper on DRM currently under development
be finalized before the third replenishment meeting in June.
4.
Participants took note of efforts through the SDFP Program of Creditor Outreach(PCO) and welcomed IDA’s stock taking of PCO implementation experience. Participantscommended IDA’s partnership with other multilateral development banks (MDBs) andencouraged exploring the possibility of joint MDB PPAs. They urged continuing to increase
collaboration with other platforms including the Global Sovereign Debt Roundtable, the Paris Cluband the G20’s Common Framework for Debt Treatment, and continuing to expand outreach to,and engagement with, a wide array of lenders. One Participant emphasized that IDA21 should takean objective perspective in evaluating the implementation of the G20 Common Framework forDebt Treatment.
5.
Participants expressed support for Management’s two policy proposals to improve
SDFP implementation:
a. Participants supported a proposal to allow mid-year revisions to PPAs when necessary.
Participants also suggested clearly spelling out the criteria for such revisions, emphasized
the need for a rigorous review process to ensure the revisions do not alter the objectives orlower the ambition of reforms, and asked Management to ensure that revisions aretransparently reported in the annual SDFP update along with the countries remaining under
the purview of the SDFP Committee. Management affirmed the rigor of the review process
will be sustained, and that details of PPA revisions will be presented in the annual SDFP
Updates.
b. Participants also supported the proposal to shift from a negative to a positive incentive
structure within the SDFP, highlighting the need to ensure the policy continues toincentivize the implementation of reforms. Management observed that the change isexpected to improve policy dialogue and country ownership without weakening SDFP
incentive mechanisms. Management will consider this feedback as details of the financing
mechanism are refined over the course of the IDA21 Replenishment.
6.
Noting that in addition to changes proposed in the annual SDFP Update, Participants had
also considered SDFP policy changes during the IDA20 Mid-Term Review (MTR), there was acall for Management to assess implementation of the policy as revised before proposing furtherchanges. With regards to the moving decision-making for SDFP implementation to the regions,
one Participant requested Management to define the allocation of roles and responsibilities
between the SDFP Committee and the regions.
C.

Grant Allocation Framework:

7.
Management continues to explore all options to support a robust IDA21 replenishment,including how best to allocate grant resources under IDA21. No decisions were requested or madeon this topic — instead, Management solicited preliminary views to shape ongoing analysis.
Participants acknowledged the importance of donor contributions and strong collaboration
between Management, Donors, and Borrowers to strengthen the availability of grant
financing in IDA21 and encouraged a cautious and balanced approach as Management

-3considers options for allocating concessionality in IDA21. They urged strong collaboration
with other multilateral development banks (MDBs) and the IMF, in particular the Poverty
Reduction and Growth Trust (PRGT) on such discussions and requested to discuss thecollaboration at the next meeting.
C.

Simplification in IDA21

8.
Participants' discussed Management's overview of the 'SimplifIDA' concept for
streamlining IDA21, initially launched at the IDA20 MTR. Participants affirmed theircontinued support for the effort to ensure that IDA’s rules and processes contribute to WBGwide efforts to improve selectivity, speed, and impact without compromising quality, andunderscored the importance of clearly articulating the value proposition offered bysimplification measures in IDA21.
9.
While recognizing the potential benefits of such streamlining for IDA21 operations,Participants reiterated the importance of IDA’s policy commitments, incentives, and a solid results
measurement system to building a compelling case for an ambitious IDA21 replenishment. Some
Participants underscored the value of policy commitments to track and measure IDA’sperformance. Some comments suggested incorporating the proposed organizational efficiency andeffectiveness dashboard as a fifth building block of the IDA21 Scorecard. They encouraged
Management to prioritize ensuring that IDA21’s policy architecture supports impactful delivery,
and to avoid focusing on a pre-set number of policy commitments.
a. Participants suggested specific areas that they considered well-suited to policy
commitments in IDA21, including in relation to jobs, infrastructure, digitalization
fragility, prosperity, progressive DRM, private capital mobilization and institutional
reform. Management took note of Participants' emphasis and confirmed that a selectnumber of policy commitments will be proposed for discussion under each IDA21 Focus
Area and Lens at the third replenishment meeting. These papers will also reflect onvaluable insights from Borrower and Donor non-papers.
b. Management affirmed its preference for select impactful policy commitments thatcomplement the new WBG Scorecard. At Participants' request, Management agreed toarrange advance technical briefings related to proposed policy commitments, asscheduling allows, prior to the third replenishment meeting. Management also
committed to updating Participants on progress developing the organizational efficiency
and effectiveness dashboard as that work advances.
10.
Management observed that the ‘SimplifIDA’ initiative goes beyond the IDA21 policy
framework to consider, based on lessons from implementation, how IDA processes can besimplified. It will also review how IDA windows, including window eligibility rules, can bealigned better with IDA's strategic objectives and reduce unnecessary barriers to access.
Participants requested a comprehensive explanation of each IDA window, including their original
purpose and the historic evolution.
11.
Participants asked Management to ensure that simplification measures continue to be
discussed and where applicable, endorsed by, IDA Participants, allowing sufficient time to-4consider any complex proposals. They encouraged Management and Borrowers to continue
providing concrete examples of challenges clients face in grappling with IDA's complexity, as abasis for identifying where simplification would be most helpful to discuss during theReplenishment and reflect in the IDA21 Deputies' Report.
D.

Next Steps

12.
The Co-chairs thanked Participants for the dialogue and valuable feedback that will inform
preparations for the third replenishment meeting and discussions over the course of thereplenishment, and affirmed Management’s continuing commitment to ensure Participants receive
meeting materials three weeks in advance. They also drew Participants’ attention to upcoming
events:a. Reiterating their appreciation for Kenya as host of the IDA for Africa Heads of State
Summit planned for April 29, the Co-chairs wished the hosts great success for the event.
(Completed).
b. The Co-chairs thanked the Republic of Korea for its generous offer to host the final
IDA21 replenishment meeting in December 2024, at which time donors will makepledges to IDA21. The window for considering hosting offers will remain open for
consultation until May 15, 2024, after which time Management will finalize the decision.
(Completed – Korea confirmed as host for the pledging session scheduled on December
5 - 6, 2024).
c. Management reaffirmed that it will endeavor to schedule a technical briefing on theproposed IDA21 policy commitments in May. (Completed – Management organized avirtual technical discussion to discuss details of the IDA21 Policy and Financing
Framework from June 3 – 5, 2024).
d. The Borrower Representative from Nepal offered Participants a preview of the third
replenishment meeting and expressed that the Government of Nepal looks forward towelcoming Participants to Kathmandu from June 18-21, 2024. (Completed – The
Government of Nepal successfully hosted the IDA21 3rd Replenishment Meeting in
Kathmandu from June 18 – 21, 2024).