IDA Prevails, Others Flail—and What Recent Replenishments Portend for 2025

Across 2024 and 2025, almost a dozen major multilateral funds are going to donors for additional funding in what we dubbed a “traffic jam” of replenishments. As 2024 draws to a close, three replenishments have concluded (sort of—read on for more). IDA is the largest and the standout: the World Bank’s concessional fund hit the $100-billion mark even as donor pledges stayed flat. IDA was swimming against the tide of increasingly inward-facing policy agendas across many core donor countries, so just being able to hold steady is a significant achievement. Others, like the Pandemic Fund and the World Health Organization’s inaugural “investment round,” are encountering bigger challenges, with pledges to date only meeting half their fundraising targets.  

Here are our top takeaways: 

1. IDA hits $100-billion headline but donor contributions fell short  

IDA’s replenishment reached the $100-billion mark earlier this month at the pledging conference in South Korea, the culmination of a year-long negotiation. The headline number is shy of the $120 billion that African heads of state called for, but it’s a record, nonetheless. Most importantly, it should allow IDA to sustain the $33–34-billion-per-year program of concessional loans and grants that it has maintained over the past three years.  

The IDA replenishment report, including an official list of pledges, won’t be made public until February so there is much we don’t know about the arithmetic behind the headline number. But we can make some basic inferences from the topline numbers emerging from last week.  

Even though the headline $100 billion figure is IDA’s largest, the level of donor contributions is not a record (see chart)—instead, the fund is relying on a growing stream of reflows from loans and will likely leverage its balance sheet more aggressively to expand its total replenishment size. 

Overall donor contributions for this cycle were again more or less flat compared to the last replenishment. Total contributions came in at $23.7 billion, short of the $27–28 billion IDA was targeting. Given that several major donors announced increases ahead of the IDA replenishment meeting, including the US (up $500 million), Denmark (up more than $110 million), the UK (up more than $530 million), and South Korea (up more than $90 million), IDA would have reached $25 billion in donations if all other donors had remained flat in dollars—meaning some other donors must have fallen short. 

Exchange rate headwinds and a strong dollar will have been a key factor in those shortfalls—for example, the Japanese pledge was up 13 percent in yen terms compared to last cycle but was actually smaller by nearly 20 percent when measured in dollars because the dollar is so much stronger (and the yen so much weaker) than it was in late 2021. While there is not yet a full public breakdown of the remaining pledges, the $23.7 billion number is far enough below where IDA was tracking to suggest it’s not all about the exchange rate, and that some big donors may have decreased their pledges from last cycle even in national currency terms. 

Notably, many of the countries that have historically been the largest IDA donors did not match their peak contributions (and this is in non-inflation adjusted terms!) While the US nearly matched its record pledge of $4.075 billion a decade ago in IDA16, the UK pledge was nearly 30 percent below its record pledge of £2.814 billion in IDA17.

Of course, the burning question is how did IDA turn those pledges into $100 billion? When we ran the numbers in May, we estimated it would take around $28 billion in pledges to reach a $100 billion replenishment. IDA has since made tweaks to its financial framework that have reduced key provisioning requirements, so that will be part of the equation.

The other part of the ledger are measures to reduce the grant program. About a quarter of IDA’s spending currently goes out as grants (compared to 10 percent a decade ago), due to increasingly high debt levels in IDA countries. This grant program has put strain on IDA’s financing model. To cut back on the program, IDA has proposed a 10 percent haircut on grants. To avoid the haircut, countries at high risk of debt distress could instead opt for highly concessional loans. The choices countries make around this tradeoff could influence the overall size of IDA’s grant program, and the financial profile of the institution.

Another big question mark is around IDA’s ability to accommodate a bigger client pool. IDA20 saw old recipients re-enter the fray like Sri Lanka, which “reverse graduated” back into IDA eligibility last year. Depending on how things shape up in Syria, the country could become eligible for IDA financing as well. In the past, IDA has been able to rely on a few country graduations each cycle to distribute more resources among the remaining countries. We may see the opposite this cycle, with new countries coming into IDA and adding to existing strains on the system. 

Yet for all the challenges of IDA’s replenishment, it may prove a success compared with other multilateral institutions.  

2. The Pandemic Fund and WHO look less successful, with pledges only meeting half their replenishment targets and fundraising efforts continuing 

Launched in 2022, the Pandemic Fund is still relatively new. This year, it sought to raise $2 billion for the next three years. The Fund has secured $982 million in pledges to date, just under 50 percent of its target. Notable pledges include $667 million from the US as well as a €50 million pledge from Germany and $50 million from Japan. With a glaring gap of over $1 billion, the Pandemic Fund will continue efforts to bring in additional pledges over the coming months. This funding gap is especially notable given the continued high demand from countries that is outstripping available grant funding.  

The WHO has also adopted a “replenishment-style fundraising model,” taking after the approach used by other global health funds like Gavi and the Global Fund to increase the predictability and flexibility of its funding. The institution launched its first-ever investment round this year with a headline goal of $7.1 billion in “voluntary contributions” to the WHO’s budget, in addition to the mandatory membership fees (known as “assessed contributions”) paid by member states.  

The investment round was reportedly meant to culminate in a pledging event on the sidelines of the G20 summit in Brazil last month. To date, the WHO has raised a total of $3.8 billion for the next four years: $1.7 billion in donor pledges and an additional $2.1 billion in funding agreements with partners like Gavi and the Global Fund.  

While pledges from the investment round have only reached roughly half the target, the WHO is highlighting progress in broadening its donor base: 33 member states made their first-ever voluntary contributions. But those contributions only total $43 million, a mere one percent of the overall pie (and notably, a majority of this sum—$30 million—was from Indonesia). Additionally, the UK and Germany are the only G7 countries to have made pledges, both of which fall short of their previous pledges.  

Last month’s pledging event did not end up being a culminating moment. Instead, the WHO will reportedly continue to drum up additional pledges over the coming months. In the meantime, the jury is still out on whether this is the right fundraising model for the institution. 

3. Reading the tea leaves: How will political and economic headwinds shape the 2025 replenishments?

Replenishment season will continue well into 2025, with major fundraising efforts from Gavi, the Global Fund, the African Development Fund, and others.

Gavi’s replenishment, which seeks to raise $9 billion for the next five years, will be hosted by the European Union and Gates Foundation in the first half of 2025, with the AfDF and Global Fund replenishments slated for late 2025. Together, Gavi, the Global Fund, and the African Development Fund could be aiming to raise at least another $30 billion from donors.  

There’s no doubt that these replenishments are facing challenging political headwinds as donors slash aid budgets. But in addition, the strength of the US dollar is depressing overall donor pledges made in national currencies. The Japanese yen lost 25 percent of its value against the dollar compared to this time three years ago, and the euro and the pound are down 7 and 5 percent, respectively. Other major donor currencies, such as the Swedish krona, Norwegian krone, and Canadian dollar, lost 17, 18, and 10 percent, respectively. Donor pledges made in these currencies are, therefore, equivalent to a lower dollar amount today. Take the case of IDA: if exchange rates had held steady at 2021 levels (the year of the last replenishment), we estimate this cycle’s pledges would have been worth at least $25.9 billion, more than $2 billion more than the actual figure of $23.7 billion. 

As replenishments continue to pile up, the big question for 2025 will be whether some donors will be tapped out—and whether we’ll see new or different ones rise to help fill the gap and meet critical needs. Amidst a tough funding climate, the time seems ripe for ideas that can help bridge the gap between increasingly constrained resources and rising needs.  

-- 

We’ll continue to watch how this round of replenishments evolves, and we plan to do more in this space next year. Stay tuned.