Oxfam International on Friday called for prudence following the World Bank’s announcement that it would tap capital markets for funds to support development work in the world’s poorest countries.
The International Development Association, a World Bank arm which offers concessional loans and grants to support poverty alleviation in 77 countries, has received its first credit rating and will soon borrow on capital markets, according to a World Bank announcement on Thursday.
That would be a break from its traditional reliance only on funding from World Bank member countries.
“The Bank also needs to walk with extreme caution if it is going to start using IDA funds to back private sector investments which come with their own set of risks,” Nadia Daar, head of Oxfam International’s Washington office, told AFP in an email.
“It must ensure that pro-poor development impacts are prioritized above financial returns as investment choices are made.”
The IDA is currently negotiating its latest three-year package of donor cash contributions and World Bank officials say that issuing bonds could add as much as 50 percent to the resources available to support clean water and energy development as well as poverty alleviation.
“We hope this financing model doesn’t result in donors being let off the hook for committing strong concessional financing towards IDA,” Daar told AFP.
