Box 13.3IDA Credit Buy-Downs for Polio Eradication

To ensure financing for the MDGs, governments, foundations, agencies, and development banks are all exploring new financing approaches that have the potential to increase resource flows, adjust the concessionality of funding (that is, reduce interest rates and thus increase the grant element) where appropriate, and help focus more attention on effects.

The IDA credit buy-down mechanism was recently piloted in several projects supporting polio eradication, clearly a global public good. The mechanism enhances the concessionality of IDA's assistance in priority areas, mobilizes additional resources from external partners, and focuses the attention of governments, partners, and World Bank staff on clearly defined performance objectives.

Working in partnership with the Bill & Melinda Gates Foundation, Rotary International, and the United Nations Foundation, the World Bank implemented two projects in fiscal 2003, one in Pakistan and the other in Nigeria. The partnerships will buy down a country's IDA loans on successful completion of the country's polio eradication program. Because of the generous loan terms, each grant dollar unlocks roughly US$2.50 for countries to fight polio. To fund the buy-downs, the partnership has established a trust fund with US$25 million from the Bill & Melinda Gates Foundation and US$25 million from Rotary International and the United Nations Foundation. This US$50 million investment has the potential to buy down roughly US$125 million in IDA loans. In this way, developing countries can mobilize what ultimately becomes grant funding to eradicate polio and to contribute to the global campaign to eliminate the transmission of polio.

Source: World Bank 2004d.

From: Chapter 13, Recent Trends and Innovations in Development Assistance for Health

Cover of Disease Control Priorities in Developing Countries
Disease Control Priorities in Developing Countries. 2nd edition.
Jamison DT, Breman JG, Measham AR, et al., editors.
Copyright © 2006, The International Bank for Reconstruction and Development/The World Bank Group.

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