TANAKA Akihiko

Jim Yong Kim, President of the World Bank Group, right, and JICA President Akihiko Tanaka shake hands after signing the agreement.

On July 11, the Japan International Cooperation Agency (JICA)signed an ODA loan agreement for “International Development Association (IDA) seventeenth replenishment” with IDA, part of the World Bank. This is the first JICA loan provided to IDA, which will finance up to 190,386.45 million yen.

The objective of this loan is to allow IDA to secure resources for its activities during the IDA17 period (July 2014 to June 2017) and to contribute to the development assistance projects implemented by IDA through provision of funds to IDA (1).

IDA currently extends assistance to 82 countries to promote economic growth and reduce inequity, aiming to reduce poverty. Most of the 82 countries have relative poverty with Gross National Income (GNI) per capita being US$1,205 or less and the African countries account for 40%.

In April 2013, the World Bank Group (WBG, 2) newly introduced two strategic targets: “eradication of extreme poverty” and “shared prosperity.” More specifically, WBG aims to reduce the absolute poverty to 3% or less of the world’s population by 2030 and increase the real income of the low-income group, which accounts for 40% of the world population. Currently, nearly one billion people live on less than US$1.25 a day in some low-income countries, to which IDA will mainly extend assistance. Continuous support for these countries is required to achieve the target. It was confirmed in the negotiation of the IDA17 replenishment that the fragile states in conflict need additional assistance to overcome the challenges that face them and restore their stability.

In the negotiation of the IDA17 replenishment, in addition to the grant contribution, concessional loan contribution was introduced for the first time as a new method to secure resources to provide assistance to developing countries under the severe fiscal condition of the developed countries. As a result, the largest-ever replenishment amounting to US$52.1 billion in total was pledged. In this replenishment, the contributions to IDA by the Japanese government consist of grant contribution and the concessional loan. The present ODA loan constitutes the latter one.

The resources contributed to IDA by the member countries will be allocated to the recipient countries based on the ratings of the Country Policy and Institutional Assessment (CPIA) of the World Bank, the population and GNI per capita. Also, the resources distributed to the recipient countries will be utilized in accordance with the County Partnership Strategy of the World Bank mainly in the following four priority areas: i) inclusive growth, ii) gender equality, iii) climate change and disaster risk reduction, iv) fragile states/ conflict affected states.

With the International Bank for Reconstruction and Development (IBRD, 3) of WBG, IDA is an important partner to JICA. Both JICA and IDA have worked together for social and economic development of poorest countries and their policy and institutional improvement. During the past 10 years from FY2004 through 2013, the two institutions have co-financed 35 projects in 10 countries including Vietnam, Laos, and Tanzania, and will continue to pursue more effective assistance to developing countries.

Notes:

1: The International Development Association (IDA) supports developing countries with particularly low income level and higher poverty rate by extending very long-term/low-interest loans or grant assistance to their governments. The IDA resources are replenished every three years.
2: The World Bank Group consists of five institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Center for Settlement of Investment Disputes (ICSID).
3: The International Bank for Reconstruction and Development (IBRD) is an institution to extend loans and assistance to the developing country governments. The bank provides assistance to developing countries which enjoy a higher level of income than the IDA recipient countries.

(Reference)

1. Terms and Amounts of Loan

2. Borrower and Executing agency
International Development Association
Address:1818 H Street, N.W., Washington, DC 20433, United States of America
Phone:+1-202-473-1468、FAX:+1- 202-522-3155

3. Planned implementation schedule
Disbursement will be completed during the IDA17 period from July 2014 through June 2017.