Norway increasing contribution to fund for world’s poorest countries

Press release | Date: 18/11/2024 | Office of the Prime Minister, Ministry of Foreign Affairs

The Norwegian Government is contributing more than NOK 5 billion to the World Bank's International Development Association (IDA) to combat poverty in the world's poorest countries. This is a larger amount than in any previous year.

Norway's contribution for the period 2026-2028 represents an increase of 50 % compared to previous replenishment periods.

'Norway will continue to help the poorest populations. More people are facing hunger than ever before. Reversing this negative trend requires a concerted effort. Funding from Norway will be used to help to provide people with food and access to electricity, as well as to implement measures to address climate change,' said Prime Minister Jonas Gahr Støre.

Prime Minister Jonas Gahr Støre at the G20-meeting in Rio de Janeiro 18 November 2024. Credit: Hilda Nyfløt / NRK

Effective development assistance

IDA is the World Bank's funding mechanism for the world's 78 poorest countries. IDA provides heavily subsidised or interest-free loans and grants to the most indebted of these countries.

IDA ranks highly in international evaluations that assess whether development assistance is effective and delivers results. The key indication that IDA is effective is the fact that countries that were previously the recipients of IDA support, such as China, South Korea and India, are now donors. There are 35 countries that have graduated from IDA.

Every three years, the 55 donor countries participate in a replenishment process. Norway will contribute NOK 5.024 billion in this round, which is an increase from NOK 3.35 billion in the previous round, and Norway's highest allocation ever. The World Bank's goal is a total replenishment of USD 105 billion (compared to USD 93 billion raised for IDA20).

Powerful tool

'IDA is one of our most powerful tools in the fight against poverty. The fund employs a unique business model - for every krone contributed to IDA, over NOK 3.5 will be deployed to finance projects and programmes. IDA has proven that this model delivers reliable results. This is a good way to invest in global stability and development at a time when poverty levels are rising across the world,' said Minister of International Development Anne Beathe Kristiansen Tvinnereim.

Over two-thirds of IDA's funding goes to African countries. In August, the Government presented its new strategy for Norwegian engagement with African countries, which gives priority to promoting sustainable development and reducing poverty. The increased support to IDA is a means of translating the strategy into action. It also enables Norway to promote efforts to increase food security and enhance climate-resilient agriculture, areas in which IDA plays a key role.

Building trust

'A total of NOK 600 million of Norway's contribution will be set aside to be used over three years to promote food security. This is crucial if we are to successfully address today's hunger crisis, which is affecting more people than ever before. IDA bases its assessments on the needs of the recipient countries, and this is essential to build trust in a world experiencing a crisis of confidence,' said Ms Tvinnereim.

Norway has been working with like-minded donor countries and has won support for providing the vast majority of IDA countries with financing for climate adaptation measures. It is the poorest countries that are most negatively affected by climate change and these countries have repeatedly stated their need for funding for adaptation measures. IDA will also play a key role in achieving 'Mission 300', which aims to provide 300 million people in Africa with access to electricity by 2030. High priority will also be given to efforts to increase access to clean energy, support women and gender equality, promote sexual and reproductive health (SRHR) and establish 'green jobs'.

'Norway's contribution is important, but what is most critical for the world's poorest countries is the overall replenishment financing for IDA21. It is our hope that more countries will give priority to increasing their funding in this round, to ensure that the financing target is reached. There are only six years left before the deadline for achieving the UN Sustainable Development Goals. We all have to do more,' said Ms Tvinnereim.

About the International Development Association (IDA)

IDA, the part of the World Bank that helps the world's 78 poorest countries, was established in 1960. IDA is the largest single channel for unearmarked multilateral aid to these countries.

For every dollar the donors give to IDA, IDA now provides almost four dollars to the poorest countries. This is made possible by a financing model under which donor contributions are combined with relending of repayments and annual transfers from the World Bank's surplus funds. This is supplemented by financing raised by issuing bonds in the financial markets, where the Bank benefits from its AAA credit rating and can secure very favourable terms.

In October 2021, IDA made its debut in the Norwegian financial market, raising NOK 2 billion in capital through a five-year sustainable development bond.