As global challenges intensify, the International Development Association (IDA) is introducing new options for donor contributions under its IDA21 initiative. The goal is to increase development finance for 78 low-income countries while offering donors more flexibility in how they provide support.
Grants continue to be the main form of contribution, serving as the base for IDA’s work. However, recognizing that many donor countries face budget pressures, IDA21 now includes additional non-grant instruments designed to accommodate different financial and strategic needs.
Two new options are being introduced alongside the existing Concessional Partner Loans (CPLs), which were first used during IDA17. CPLs allow donors to provide reimbursable loans to IDA, generating a steady income stream for donors and helping IDA manage borrowing costs and interest rate risks.
The Portfolio Guarantee Platform (PGP), new in this cycle, enables highly rated donors to guarantee all of IDA’s lending activities without needing upfront cash payments. This approach reduces credit risk and makes more capital available for development projects.
Another addition is Hybrid Capital. Treated like equity on IDA’s balance sheet, Hybrid Capital provides interest income to investors and can later be converted into grant contributions.
These instruments are intended to give donors greater choice and value by offering flexible ways to contribute, maintain voting rights, and consider budget constraints. At the same time, they aim to strengthen IDA’s ability to deliver results for client countries.
According to the announcement: “IDA21 reflects a new era of development finance—one built on innovation, flexibility, and shared purpose. It’s not just about asking for more, but about enabling more: more ways to give, more ways to lead, and more ways to drive lasting impact for people and planet.”