fbpx Core Principles of Sustainable Financing | International Development Association - World Bank | International Development Association - World Bank

Core Principles of Sustainable Financing

Objective

The objective is to promote information-sharing and coordination among Multilateral Development Banks (MDBs) and other International Financial Institutions (IFIs) with respect to the implementation of resource allocation frameworks and selected debt/financing policies.  These principles are intended to be open to all MDBs and other IFIs.

Financing policies

  • For countries with higher debt vulnerabilities, limit non-concessional lending, where applicable.
  • Consideration of debt vulnerability in resource allocation decisions (volumes, terms and/or related financing conditions). This includes:
    • Prioritizing financing with higher concessionality, including grants, for countries with higher debt vulnerabilities, informed by the joint World Bank (“Bank”)-International Monetary Fund (“Fund”) Debt Sustainability Framework.
    • Ensuring allocation and terms policies create incentives for addressing vulnerabilities, for instance by reflecting policy and performance actions as defined under the Bank’s Sustainable Development Financing Policy (SDFP) or similar policy at other Institutions and the Fund’s Debt Limits Policy (DLP) for both concessional and non-concessional financing.
    • Use of the methodology and principles as agreed in the Bank-Fund Debt Sustainability Framework for calculating the grant element of financing.

Creditor Coordination

  • Coordinate efforts to support borrowing countries to take policy actions aimed at enhancing debt transparency and debt management
  • Enhance stakeholder coordination and engage in dialogue on policies to reduce debt vulnerabilities, possibly also in the form of dialogue at the country level.
  • Promote regular dialogue among MDBs and other IFIs and client countries on financing and debt-related policies; including -when relevant- to harmonize positions in international fora.
  • Promote participation by all MDBs and other IFIs.

Information Sharing and Transparency

  • Exchange of information on elements relevant for the adequate implementation of the policies covered under these principles, consistent with the relevant institutions’ Access to Information Policy or disclosure policy requirements. This includes: applicable policies and related parameters/responses (e.g., ceilings), provision of non-concessional financing, provision of financing under special arrangements or with special clauses (e.g., collateralization, arrears)
  • Enhance transparency of policy decisions through a website in accordance with the relevant institutions’ Access to Information Policy or disclosure requirements. This includes relevant debt policies, country-specific information and links to other relevant websites.

Financial Innovation

  • Support international efforts regarding financing solutions that enhance borrower country resilience, and – when consistent with the governing framework of the relevant institution and beneficial for client countries – consider the provision of such instruments to client countries.