A Better Outcome for the Poorest: Finding the Right IDA-IBRD Balance

Abstract

In a resource-scarce environment coupled with high and growing demand for aid, the multilateral development banks (MDBs) need to direct grants and concessional finance to the countries that need it the most. Nowhere is this principle more important than IDA, the largest global financing facility for low-income countries. Operationalizing this principle requires that the World Bank prioritize allocating grants and concessional loans to the poorest countries whose access to alternative funding sources is extremely limited. But trends have been moving in the opposite direction. Currently, a majority of IDA countries surpass the income threshold, and many enjoy regular access to capital markets, the two criteria for IDA eligibility. These countries—many of which have exceeded IDA's income threshold for years or even decades—are consuming a disproportionate share of concessional resources, crowding out IDA-only countries with the greatest need. At the same time, IBRD funding for lower-middle-income countries has been on the decline since 2018 and IDA transfers have not kept pace with record profits. Both IDA and IBRD need to course correct.

In this paper, we argue that IDA's current financing structure disadvantages the world's poorest countries because an overly flexible graduation process enables better-off countries to remain IDA-eligible for too long. We also make the case that IBRD’s creditworthiness assessments are too conservative and that it has the headroom and prudential space to bring more IDA countries onto its balance sheet.

We advance three reforms to address these shortcomings. First, IDA's graduation policy should become more rules-based, with clearer milestones, facilitating transitions rather than leaving them to borrower initiative. Second, IBRD should revise its creditworthiness assessments to better reflect new credit rating agency methodologies and sovereign default and recovery rates. And third, IBRD should introduce a new semi-concessional lending instrument for lower-middle-income countries, funded through its net income, to smooth the graduation transition and expand the overall concessional envelope. Together, these reforms would rebalance burden-sharing between IDA and IBRD and help the most vulnerable countries receive the financing they need as global aid budgets contract, without putting their AAA ratings at risk.

Executive summary

The International Development Association (IDA) is the pre-eminent source of official financing for the poorest countries and enabling IDA to meet their financing needs remains a major global imperative. The next replenishment, launching soon, will be among the most consequential multilateral negotiations this decade. Success is vital but not assured. Unfortunately, there are too many funds chasing too few dollars, especially with the United States and other major donors cutting aid budgets.

Well before recent events in the Middle East, the World Bank projected that demand for IDA resources would increase until at least 2034, largely due to limited graduation prospects of current IDA borrowers.[1] This is a surprising prognosis considering that more than half of countries eligible for IDA support are above the operational cutoff (i.e., GNI per capita of $1,325 in FY26). Most of these countries have been above the cutoff for years but have not transitioned to the International Bank for Reconstruction and Development’s (IBRD’s) balance sheet due to creditworthiness concerns. Small island states—all of which are middle-income countries—also retain IDA access due to their common vulnerabilities. Meanwhile, IBRD has unused lending headroom but in recent years has been shifting resources toward its wealthier borrowers while transfers to IDA—which used to constitute the vast majority of IBRD profits—represented just over a third of the total in FY25.

Demand for IDA financing will likely be revised upward due to the fuel and fertilizer price shocks associated with the war in Iran, especially for the poorest countries. The risk is that higher demand coupled with flat or declining donor support will lead to smaller country allocations. This would disproportionately disadvantage the poorest IDA countries, which remain heavily dependent on IDA resources but currently access only a little more than half of IDA’s financing envelope. IDA stakeholders need to address this head-on. With the midterm review looming at the end of the year, any significant changes to IDA’s lending and financing models should be deliberated well in advance of IDA22 negotiations. In this paper, we encourage stakeholders to consider the following reforms as potential input into those negotiations:

• First, IDA’s graduation process should become more rules-based to help ensure that countries move more consistently through the gap and blend categories. The current process allows for considerable flexibility and lacks mechanisms to move countries toward graduation as they achieve certain major milestones (e.g., market access). IDA also needs to reconcile its eligibility criteria (per capita income and creditworthiness) with the fact that there are multiple criteria for graduation.
• Second, the IBRD should revise its creditworthiness assessments of IDA countries to better capture their financial realities, including durable track records of market access, recent developments in rating agency methodologies and borrowers’ repayment and recovery histories. Relatedly, there should be a more systematic effort to increase the proportion of IBRD funding for blend countries as part of a multiyear graduation transition.
• Third, IBRD should introduce a semi-concessional financing instrument for select lower-middle-income countries (LMICs) funded through IBRD net income. This would expand the concessional resources envelope while moderating the impact of the harder lending terms associated with IBRD loans. It would also be affordable: IBRD’s net income has been rising steadily since 2022, and we project it will surpass $3 billion per year by 2030.

These reforms would enable IBRD to boost its support for IDA-eligible countries that are above the IDA income threshold and could be engineered as a win-win scenario for donors and IDA borrowers without undermining IBRD’s AAA rating. The end result would be a better burden-sharing arrangement between IDA and IBRD, with the lowest-income borrowers on both balance sheets reaping the most benefit.

The challenges

1. IDA cannot respond to higher demand absent more donor support

Demand for IDA resources remains high and, according to World Bank calculations, will likely increase through 2034.[2] Their 2023 model predicts only a few graduates in the near- to medium-term—Guyana and Bangladesh—and possibly some island states. These estimates were made long before the economic shocks associated with the current war in the Middle East. In mid-June, the World Bank revised its global economic growth outlook from 2.9 percent to 2.5 percent for 2026 and noted the preponderance of downside risks in low-income countries (LICs), including the potential spread of the Ebola outbreak.[3] The International Monetary Fund’s latest economic outlook cautioned that food insecurity could worsen materially in low-income countries if disruptions in fertilizer and energy markets persist.[4]

At the same time, donors are pulling back. The 21^st replenishment (IDA21) hit a record funding target during the December 2024 pledging session, but the donor component stayed flat, and the US administration has asked Congress to further reduce its annual IDA pledge from $1.07 billion to $867 million.[5] Indeed, after peaking in IDA16 more than 15 years ago, donor funding has been declining (see Figure 1)

We expect 2027—when IDA22 will be negotiated—to be another difficult year for fundraising. For context, the Global Fund announced in February that it had raised $12.6 billion[6] for its eighth and latest replenishment, down from $15.7 billion[7] for the seventh and $5.4 billion short of its $18 billion target, despite a surprisingly strong pledge from the United States of $4.6 billion[8]. In 2025, Gavi secured more than $9 billion, $2.5 billion shy of its $11.9 billion fundraising target, with no US pledge.[9] Although the African Development Fund announced a record replenishment number in December 2025 ($11 billion), they included cofinancing agreements, not just core contributions, which declined by about $1 billion.[10] The United States did not pledge.

2. Fewer than half of IDA countries meet IDA’s eligibility criteria

Currently, 78 countries have access to IDA support, up from 70 countries in 2020.[11] Under IDA’s financing model, there are two primary criteria for eligibility: per-capita income ($1,325 per capita GNI in FY26) [12] and lack of creditworthiness. Countries that meet both criteria are classified as IDA-only. Due to a lack of creditworthiness, many countries remain on the IDA balance sheet for years, regardless of income threshold, under the following special categories:

• Gap countries, which exceed the income threshold but are deemed not creditworthy and continue to borrow almost exclusively from IDA;
• Blend countries, which borrow mostly from IDA but are assessed as creditworthy enough for some IBRD borrowing (historically, this group of countries fell below the income threshold, but that is no longer the case); and
• Small economies—mostly island states—which borrow on special terms (see Table 1).

Currently, most IDA-eligible countries exceed the income threshold, especially small economies (see Figure 2).

The number of IDA-eligible countries increased over the past five years due to expanded eligibility criteria and reverse graduation. For the current replenishment, IDA agreed to broaden its small island states exception to include small economies.[13] As a result, Belize, Eswatini, and Suriname have gained access to IDA resources under this exception.[14]

The number and severity of exogenous and endogenous shocks have also raised the likelihood of IBRD countries becoming re-eligible for IDA financing (i.e., reverse graduation). For example, Sri Lanka graduated from IDA to become an IBRD-only country in fiscal year 2017 (FY17), but due to their 2022 balance of payments crisis, they lost creditworthiness for any IBRD lending, becoming an IDA-only borrower in December 2022.[15]

3. The poorest countries are heavily reliant on IDA

IDA support is a lifeline for the poorest countries, and reliance by IDA-only countries has been increasing steadily since FY17, when IDA accounted for 15 percent, on average, of gross flows, rising to more than 30 percent of flows by IDA24 (see Figure 3). This dependence is likely to remain at or exceed current levels due to the prevalence of external shocks and debt sustainability challenges among IDA-only countries (see Figure 4).

Gap and blend countries’ reliance on IDA has been on an upward trajectory as well, with IDA accounting for 19 percent of gross flows to gaps in FY24, compared to only 10 percent in FY17. In FY17, IDA accounted for only 7 percent of external flows in blend countries, rising to 14 percent in FY24.

4. IDA’s graduation policy is lax

Under IDA’s graduation policy, countries are expected to move along the following trajectory[16], though in practice there is a lot of variation:

• IDA-only to gap. Countries that have been above the IDA operational cutoff for more than two years but are not yet deemed creditworthy for IBRD financing are classified as IDA-only “gap” countries.
• IDA gap to blend. A positive creditworthiness assessment by IBRD leads to reclassification of a country to blend status (with access to both IDA/IBRD). There is no timeline for this transition, and the borrower must request the creditworthiness assessment. This policy is leading many gap countries to remain as IDA-only borrowers even when they are enjoying market access. Of the 13 gap countries, 10 exceeded the income threshold before 2020, one as early as 2005 (Honduras). Kosovo has never been below the income threshold, and its GNI of $6,910 is more than five times IDA’s income threshold (see Table 2).

• Blend to IBRD-only. The IDA graduation process concludes with a reclassification from blend status to IBRD-only borrower. Graduation decisions are made by IDA deputies and are based on an assessment of the country’s macroeconomic prospects, risk of debt distress, vulnerability to shocks, institutional constraints, and poverty and social indicators.[17] IDA resources for these countries are intended to be temporary and the country itself is expected to “undertake adjustment efforts designed to establish or strengthen creditworthiness as rapidly as possible” (italics ours). But in fact, many blend countries have remained on the IDA balance sheet for decades (see Table 3).

Small economies, mostly island states, have also remained on the IDA balance sheet despite exceeding the income threshold. This reflects their special circumstances—extreme vulnerability to shocks and limited opportunities for growth. However, eight of these countries now meet or exceed the IBRD graduation threshold of $7,855 per capita[18]—Guyana, St. Lucia, St. Vincent, Maldives, Grenada, Dominica, Tuvalu, and the Marshall Islands—making continued access to IDA resources harder to justify (see Table 4).

5. Gap and blend countries are crowding out the poorest

Although loans to blend and gap countries are a steady source of reflows for IDA, keeping all of those countries on the IDA balance sheet risks crowding out financing for the poorest IDA countries. Between FY20 and FY25, gap and blend countries accessed 42 percent of IDA resources on average, leaving only 54 percent for IDA-only countries[19] (see Figure 5).

6. IBRD is not adequately supporting blend countries

Blend countries can borrow from both IDA and IBRD, although in practice, they access IBRD at relatively low levels. Between FY20 and FY25, IDA provided on average $7.5 billion in funding to blend countries per year versus only $1.7 billion from IBRD. The proportion of IBRD lending relative to total borrowing was less than 25 percent for all but one year (FY24) (see Figure 6).

For gap countries, IBRD lending has accounted for less than 2 percent of total World Bank lending because they are not considered creditworthy.

7. IBRD is not using its headroom

Unlike IDA, IBRD is not capital constrained. Its equity-to-loans (E/L) ratio is around 21.4 percent, although the minimum threshold is 18 percent, which translates into headroom of about $100 billion. In other words, IBRD could likely increase its lending by $10 billion a year over the next five years and remain above the 18 percent threshold.

Moreover, based on the Global Emerging Markets Risk Database’s (GEMs) data disclosure, Standard & Poor’s has estimated that the major multilateral development banks (MDBs), including the World Bank, possess an extra $600-$800 billion in lending capacity that could be deployed over the next ten years without putting their ratings at risk.[23] More recently, Moody’s announced a new methodology for rating MDBs that should also give them more lending headroom.[24] Notably, in the new methodology, Moody’s will increase sovereign loan ratings based on preferred creditor status, giving five notches for a Caa rating and four for a single B. This should make it easier for IBRD to bring lower-rated countries onto its balance sheet.

In late 2024, Fitch published analysis affirming that 12 MDBs could increase lending by a combined $480 billion before they would risk rating downgrades, based on changes to Fitch's supranationals rating criteria. Among the MDBs, they found that IBRD could increase lending by approximately $117 billion.[25]

In addition, by creating a more diversified portfolio, IBRD could address a key obstacle to portfolio growth—concentration risk. Notably, 10 IBRD borrowers accounted for 56 percent of IBRD’s total exposure as of December 2025 (see Figure 9).[26] This concentration risk is putting the brakes on IBRD’s further portfolio growth in these high-demand countries.

8. IBRD financing for lower-middle income borrowers is decreasing

IBRD is also channeling more lending to countries above its graduation threshold (i.e., the “Graduation Discussion Income” level or GDI), leading to a decline in the share of funding to LMICs since 2018. 

In addition, IBRD’s transfers to IDA are not keeping pace with record profits.

From 2011-2017, IDA transfers averaged $522 million per year, or 65 percent of net income. This compares to $311 million per year, or 20 percent, between 2018-2025 (although FY25 represented a significant uptick, with transfers closer to a third of total profits, see Figure 12).[27] We project profits will continue to grow, boosting IBRD’s equity levels and further enabling an expansion in lending.

The response

These challenges underscore that both IDA and IBRD need to do more to increase and shift resources to the poorest countries. We offer three reforms to accomplish this objective:

Reform 1: Make the IDA graduation process more rules-based

The first fix is to make the graduation process a more consistent, rigorous, rules-based process. A priority should be to address a glaring inconsistency in IDA’s graduation policy, which is that there are two criteria for IDA eligibility (per capita income and creditworthiness), but numerous criteria for graduation.

IDA’s Articles of Agreement explicitly state that IDA “shall not provide financing if in its opinion such financing is available from private sources on terms which are reasonable for the recipient or could be provided by a loan of the type made by the Bank.”[28] However, IDA considers multiple factors when assessing graduation readiness, including GNI per capita, time since a country has exceeded the income threshold, creditworthiness, poverty headcount, population, exports/GDP, life expectancy, urbanization, fragility, institutional development, and resource rents.[29] The latest mid-term review overview of IDA graduation also includes a summary rationale for why each blend country is unable to graduate. Factors include vulnerabilities to climate and external shocks as well as institutional weakness. The implication is that if a country exceeds the IDA cutoff and is creditworthy, there are numerous other factors that justify continued access to IDA funding. This, in turn, implies that IDA eligibility is much more complex than an income threshold and creditworthiness determination. The paper also claims that “only small island states have been granted exceptional access to IDA resources even though they have a per capita GNI above the operational cut-off and – in some cases – have access to IBRD or other market-based sources of financing.” But as we have shown in this paper, this is simply not the case; moreover, the exception has been broadened to include small economies. To us, this points to institutional drift away from IDA’s core mandate.

Next, IDA needs to formalize the transition from gap to blend status, which is currently borrower-driven, by developing and operationalizing criteria that determine when countries move from one category to the other.

Finally, IDA and IBRD need to engage jointly and proactively with blend countries to enable IDA graduation, identifying reform priorities developed through this engagement that are then included and assessed in their Country Partnership Framework (CPFs). From what we could discern, CPFs do not include any explicit discussion of graduation trajectories. We assessed the CPFs of all current blend countries and found that with one exception—Pakistan—no CPF included a reference to IDA graduation. Moreover, the Pakistan CPF, which spans nearly ten years (FY26-FY35) predicts that the country will not graduate during this period.[30] If this holds, Pakistan will have remained a blend country for 20 years. This forecast is illustrative of the fact that blend country access to IDA is temporary in theory but not in practice.

Reform 2: The IBRD should revise its creditworthiness assessments

Second, the IBRD should revise its creditworthiness assessments of IDA countries to better capture their financial realities, including borrowers’ repayment and recovery histories and durable track records of market access. The process for determining creditworthiness is not public, but we know the broad components: political risk, external debt and liquidity, fiscal policy and public debt burden, balance-of-payments risks, economic structure and growth prospects, monetary and exchange rate policy, financial sector risks, and corporate sector debt.

Unfortunately, it is not clear to what extent these criteria take into account the historical repayment and recovery rates for sovereign creditors. In late 2025, the GEMs Consortium of development financial institutions, which includes the World Bank, released 40 years of data on sovereign default and recoveries. The data show that loan repayments have been consistently near or at 100 percent, with average default rates of only 0.77 percent (see Figure 13). High repayment rates are to be expected—the MDBs benefit from preferred creditor status, and once a country defaults to an MDB, access to capital markets is usually cut off. As of March 31, 2026, IBRD had $283.6 billion of loans outstanding, of which 0.5 percent were in nonaccrual status, all related to Zimbabwe and Belarus. Notably, both were IBRD- not IDA- borrowers at the time of default.

Restoring credibility as a borrower requires making good on these payments, which is why recovery rates are also very high, at 95 percent on average. So far, all defaults covered by the GEMs database have ended with the MDB recovering all overdue principal and interest amounts on a nominal basis, resulting only in losses from the cost of funding overdue interest amounts.

Second, the World Bank’s creditworthiness decisions should better reflect market access. For example, we found that seven gap countries, which are deemed not creditworthy, have had some degree of market access, as have nine blend countries (deemed partially creditworthy) (see Table 5). Given the multiple issues that factor into creditworthiness, we recognize that the ability to issue bonds in international capital markets is a crude proxy. Nevertheless, a couple of countries stand out: Benin and Honduras. Although both are classified as not creditworthy, Benin has issued five Eurobonds since 2020, and Honduras, which has a per capita GNI double the income threshold, has issued two bonds in the last five years. Both countries have composite ratings of B+.

In addition, there is meaningful overlap between gap, blend and IBRD borrowers at the lower classification levels in terms of their creditworthiness (Groups A and B) (see Figure 14).

Reform 3: IBRD should create a new concessional instrument

As countries migrate to the IBRD balance sheet, terms become significantly steeper (see Table 8). We do not want to imperil any country’s development trajectory and debt sustainability by reducing access to affordable sources of finance, especially as the spread between IDA and IBRD lending terms has increased significantly since 2022 (see Figure 15). This is not an apples-to-apples comparison because IDA rates are fixed and IBRD rates are floating, but it does suggest that there is too much volatility during the graduation phase.[31] Therefore, a critical component of our proposal is that IBRD introduce a new instrument that is less concessional than IDA but significantly more generous than what is currently available. For example, a new instrument could feature a 3 percent interest rate with a 20-year maturity and five-year grace period.

The 3 percent interest rate is higher than the 2.1 percent rate that IDA currently offers, and the 20-year maturity is five years shorter than the current 25-year blend terms.[32] However, the 3 percent interest rate is lower than the current IBRD A terms, and is fixed, not variable, while the 20-year maturity is equal to the longest-maturity loans the IBRD regularly offers.

We estimate that the cost to IBRD would be around $1 billion per year in net income to mobilize $9-11 billion in IBRD lending, including around $7 billion in IBRD’s new semi-concessional instrument (see Table 7). IBRD concessional loans could also be directed to social sectors where funding tends to decline once countries graduate from IDA, while standard IBRD terms would apply to projects expected to generate more immediate returns, such as infrastructure.

Funding for the new instrument could come from IBRD’s net income, which reached a record $2.4 billion in FY25.[33] On average, just over 20 percent of IBRD profits has been transferred to IDA since FY 2018, making a significant portion of net income available for other uses. In fact, a portion of net income is already set aside to enable the IBRD to offer concessional lending for global challenges (e.g., for climate-related initiatives or pandemic preparedness). The size of that account could be boosted to accommodate the new countries on IBRD’s balance sheet with uses expanded to all sectors or tailored more narrowly to human capital. Alternatively, IDA itself could create the new semi-concessional instrument on its balance sheet. However, a key principle of our approach is that IBRD needs to assume additional risk while doing more for the poorest.

Finally, we believe the addition of lending targets could help limit institutional drift away from the poorest. Those would be aspirational, not binding, and could be approved and reviewed by IDA deputies.

There is precedent for this approach. In 2015, the Asian Development Bank (AsDB) combined its ordinary capital window (OCW) with its concessional arm, making it significantly more efficient. The grant-only eligible countries were put into their own facility—the Asian Development Fund (ADF)—which continues to rely on donor contributions but at much reduced levels. Concessional lending is subsidized by the AsDB through its profits, and ADF deputies approve country group lending targets. Countries like Pakistan and Bangladesh currently on IDA’s balance sheet borrow from the OCW, not the grant arm (the Asian Development Fund), and the AsDB remains AAA.

We are not proposing a balance sheet merger, only that IBRD take on more of the borrowing currently done by IDA, including on concessional terms. The ideal course would be for IDA and the World Bank to run a range of scenarios designed to maximize concessional borrowing envelopes and direct funding to the neediest borrowers, without putting the AAA ratings at risk.

Our proposals in action

As an example, we have modeled one scenario demonstrating what these reforms could mean in practice based on how countries score against the following criteria:

1. Per-capita GNI double the IDA income threshold over two cycles (ending in FY2028)
2. Debt sustainability rating of low or moderate
3. Market access as defined by IMF[34] (see Table 8)

Specifically, we recommend the following:

• Countries that meet all three criteria should graduate to IBRD and borrow on Group A terms. This would include Kosovo and Uzbekistan. As an aside, we found the latest rationale for Uzbekistan’s continued access to IDA to be weak. It stated that “the country faces institutional vulnerabilities, a poverty headcount rate of 25.0 percent, and requires substantial concessional financing to support its complete transition to a market economy.”[35] But multiple middle-income countries have large poverty headcounts and there is no compelling rationale for why concessional financing is needed to support Uzbekistan’s transition at this point in its development. Kosovo, an upper-middle-income country, has been given exceptional status since independence due to the lack of formal recognition by two of its neighbors. After 18 years of regional stability, it is time for that status to end. Additionally, we propose that high-income gaps, blends, and small economies graduate to IBRD Group A. Currently, only Guyana meets this criterion, but some small island states will likely reach this milestone soon.
• Countries meeting two of the three criteria should move to the IBRD balance sheet and borrow on Group A and semi-concessional terms with the exact split determined on a case-by-case basis. As there are several small states in this category, we would also propose that they retain access to the IDA crisis response window.
• Countries meeting one of the three criteria should remain on IDA’s balance sheet and have access to IBRD regular and semi-concessional resources.

Based on this model, countries would move to the following categories, as shown in Table 9.

This is only one of many possible scenarios; we are not aiming to be overly prescriptive because we recognize that the implications of moving countries between balance sheets are complex. Moving IDA’s more creditworthy borrowers to IBRD’s balance sheet would free up lending for the poorest but also lead to a decline in credit quality and reflows. This, in turn, would have an impact on IDA’s market borrowing program. IBRD’s credit quality would decline as well, and the potential need for extra provisioning to accommodate higher risk countries could eat up IBRD’s headroom more quickly. On the upside, the addition of new borrowers would create a more diversified portfolio, potentially enabling more lending to the biggest borrowers. Higher IBRD reflows would further increase profits which could be used to support IDA directly (through transfers) or the new semi-concessional lending instrument.

Significant balance sheet shifts would also have implications for IDA’s sustainability given the contribution of reflows from blend countries to its capital base (see Figure 16). Reflows from blend countries account for a third of the total, and those would diminish as countries transitioned to IBRD. It would take two IDA cycles for this scenario to negatively affect reflows.

What is clear is that IDA’s and IBRD’s balance sheets can no longer be considered in isolation, and each institution should redouble its focus on the poorest countries with the least access to other sources of finance. For IDA, that is LICs and vulnerable LMICs; for IBRD that is LMICs with demonstrated market access (or a reasonable proxy).

Our assessment is that IBRD could assume these obligations without putting its AAA rating at risk. But there is an alternative: IBRD could give donors the option of providing portfolio guarantees as they are doing for Ukraine. As of December 31, 2025, IBRD's loans and guarantees outstanding to Ukraine stood at $17.4 billion, but its net exposure was only $5.9 billion because third parties (i.e., IBRD shareholders) have provided $11.5 billion in portfolio guarantees to reduce the risk for IBRD.

The ideal course would be for IDA and the World Bank to run a range of scenarios designed to maximize concessional borrowing envelopes and direct funding to the neediest borrowers, without putting the AAA ratings at risk.

Conclusion

Development initiatives–regardless of track record or merit–are facing a major reckoning in the context of increasing need, declining donor resources and a retreat from multilateralism. Both IDA and the IBRD need to rethink how to increase and better direct resources to the poorest countries that are the most reliant on official development finance.

For IDA, this means a more rigorous application of its graduation policy so that blend and gap countries with other sources of financing do not consume valuable IDA resources. For IBRD, it means accelerating the transition of countries from IDA to IBRD, boosting support for IDA blend countries, and offering them funding on semi-concessional terms. Getting the balance right will require that the World Bank and IDA model alternative scenarios aimed at maximizing concessionality while minimizing risk.

The risk of inaction is that demand will grow while resources shrink and that IDA funds will not be directed where they are needed most. We urge donors to be proactive and IBRD/IDA management to be responsive. The ingredients of a win-win proposal exist. What is needed now is leadership, initiative, and ambition.

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S&P Global Ratings. “Introduction to Supranationals Special Edition 2025.” October 14, 2025. https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101650656.

U.S. Department of the Treasury. International Programs Congressional Budget Justification, FY 2027. Washington, DC: U.S. Department of the Treasury, 2026. https://home.treasury.gov/system/files/266/150s-FY-2027-CJ.pdf.

World Bank. FY26 Per Capita Income Guidelines for Operational Purposes. May 27, 2025. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099053025094014420.

World Bank. Global Economic Prospects, June 2026. Washington, DC: World Bank, 2026. https://www.worldbank.org/en/publication/global-economic-prospects.

World Bank. IDA20 Mid-Term Review: IDA Access, Terms, and Graduation Prospects. November 22, 2023. https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf.

World Bank. “International Debt Statistics.” DataBank. Accessed July 2026. https://databank.worldbank.org/source/international-debt-statistics.

World Bank. Pakistan - Country Partnership Framework for the Period FY26 Up to FY35. Washington, DC: World Bank, 2025. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099121324161568318.

World Bank. Review of IDA’s Graduation Policy. Report No. 73363. October 24, 2012. https://documents1.worldbank.org/curated/en/833691468338981825/pdf/733630BR0IDA0R0Official0Use0Only090.pdf.

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World Bank Group. “IBRD Commitments and Disbursements - Country / Economy Summary.” Finances One. Last updated May 15, 2026. https://financesone.worldbank.org/ibrd-commitments-and-disbursements-country-economy-summary/DS01556.

World Bank Group. Small States Update. No. 1. April 2025. https://thedocs.worldbank.org/en/doc/773f8552584ad085407766611c9bb058-0290012025/original/WB-Small-States-Newsletter1-apr2025.pdf.

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[1] IDA 20 Mid-Term Review: IDA Access, Terms and Graduation Prospects, November 22, 2023.

https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf

[2] IDA20 Mid-Term Review: IDA Access, Terms and Graduation Prospects, November 22, 2023 https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf

[3] Global Economic Prospects, A World Bank Group Flagship Report, June 2026

https://www.worldbank.org/en/publication/global-economic-prospects

[4] International Monetary Fund, World Economic Outlook Update, July 2026.

https://www.imf.org/en/publications/weo/issues/2026/07/08/world-economic-outlook-update-july-2026?cid=sm-com-fb-WEOET2026004&fbclid=IwY2xjawS7OGVleHRuA2FlbQIxMABicmlkETFoTnRRZVRsb0NpN0pRY2dKc3J0YwZhcHBfaWQQMjIyMDM5MTc4ODIwMDg5MgABHoF69L-l1AG3r7FmZMFAQiUyiHtyHli3nsX6Pi31qCDWUWqWcGf25ft3AlEs_aem_HF7m7BY_CM80N-Q-Aqs08Q

[5] International Programs Congressional Budget Justification FY 2027, U.S. Treasury Department

https://home.treasury.gov/system/files/266/150s-FY-2027-CJ.pdf

[6] Global Fund Board Welcomes Final Eighth Replenishment Outcome of US$12.64 Billion, February 18, 2026

https://www.theglobalfund.org/en/news/2026/2026-02-18-global-fund-board-welcomes-final-eighth-replenishment-outcome/

[7] Global Fund Board Hails Record-Breaking Seventh Replenishment Final Outcome of US$15.7 Billion, November 18, 2022

https://www.theglobalfund.org/en/news/2022/2022-11-18-global-fund-board-hails-record-breaking-seventh-replenishment-final-outcome-of-usd157-billion/

[8] Friends statement on the U.S. commitment to the Global Fund, November 21, 2025

https://www.theglobalfight.org/friends-statement-on-the-u-s-commitment-to-the-global-fund/

[9]Global Summit: Health & Prosperity through Immunisation, 25 June 2025

https://www.gavi.org/investing-gavi/resource-mobilisation-process/protecting-our-future

[10] African Development Fund mobilises a historic $11 billion, marking a new era of African ownership and investment-led development, December 16, 2025

https://www.afdb.org/en/news-and-events/press-releases/african-development-fund-mobilises-historic-11-billion-marking-new-era-african-ownership-and-investment-led-development-89755

[11] IDA Borrowing Countries

https://ida.worldbank.org/en/about/borrowing-countries

[12] Fiscal years in this paper run from 1 July to 30 June. For FY27, beginning 1 July 2026, the income threshold will increase to $1,365.

[13] IDA20 Mid-Term Review: IDA Access, Terms and Graduation Prospects, November 22, 2023

https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf

[14] Small States Update, World Bank, April 2025

https://thedocs.worldbank.org/en/doc/773f8552584ad085407766611c9bb058-0…

[15] IDA Graduates

https://ida.worldbank.org/en/about/borrowing-countries/ida-graduates

[16] Review of IDA Graduation Policy, 24 October 2012

https://documents1.worldbank.org/curated/en/833691468338981825/pdf/733630BR0IDA0R0Official0Use0Only090.pdf

[17]IDA20 Mid-Term Review: IDA Access, Terms and Graduation Prospects, November 22, 2023

https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf

[18] IBRD FY26 Per Capita Income Guidelines for Operational Purposes, May 27, 2025

https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099053025094014420

[19] The remaining 4 percent went to small economies and regional projects.

[20] IDA Financing; https://ida.worldbank.org/en/financing

[21] IBRD Commitments and Disbursements - Country/Economy Summary

https://financesone.worldbank.org/ibrd-commitments-and-disbursements-country-economy-summary/DS01556

[22] Pakistan - Country Partnership Framework for the Period FY26 Up to FY35, January 14, 2025

https://documents.worldbank.org/en/publication/documents-reports/docume…

[23] Figures are not broken down by MDB. S&P Global Introduction to Supranationals Special Edition 2025, https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101650656

[24] Moody’s new rating criteria could liberate MDBs to expand, March 4, 2026

https://www.globalcapital.com/article/2g29nmig4aoopk6wgl5og/sri/the-sustainable-economy/moodys-new-rating-criteria-could-liberate-mdbs-to-expand

[25] Major MDBs Have Rating Headroom for USD480 Billion in New Lending, October 9, 2024

https://www.fitchratings.com/research/sovereigns/major-mdbs-have-rating-headroom-for-usd480-billion-in-new-lending-09-10-2024

[26] IBRD Condensed Quarterly Financial Statements, December 31, 2025

https://thedocs.worldbank.org/en/doc/5e394eaa9f7616b3a5518bd2f4bd9774-0040012025/original/IBRD-Financial-Statements-December-2025.pdf

[27] IBRD Financial Results

https://financesone.worldbank.org/summaryinfo/ibrd

[28] IDA Articles of Agreement, September 24, 1960.

https://thedocs.worldbank.org/en/doc/2a209939e876fdcd0d957036daebff6e-0410011960/ida-articles-of-agreement

[29] IDA20 Mid-Term Review: IDA Access, Terms and Graduation Prospects, November 22, 2023

https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf

[30] Pakistan - Country Partnership Framework for the Period FY26 Up to FY35. January 14, 2025

https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099121324161568318

[31] IDA introduced a floating rate option for blend countries in IDA21.

[32] IDA Lending Terms, 1 April 2026 

https://thedocs.worldbank.org/en/doc/45848f4b32bdefb1317a37feb9aba4c1-0410012026/original/IDA21-Terms-effective-04-01-2026.pdf

[33] IBRD Financial Results

https://financesone.worldbank.org/summaryinfo/ibrd

[34] IMF Policy Paper: 2024 Review of the Poverty Reduction and Growth Trust Facilities and Financing — Reform Proposals (See Annex IX), October 2024

https://www.imf.org/-/media/files/publications/pp/2024/english/ppea2024047.pdf

[35] IDA20 Mid-Term Review: IDA Access, Terms and Graduation Prospects, November 22, 2023

https://documents1.worldbank.org/curated/en/099012624123036908/pdf/BOSIB1cd951f870011b87d1243b7b5be036.pdf