Developed Nations Push for Higher IDA Contributions Amid Governance Reform Talks: How will it affect ASEAN?

Intan Khairiah Adilah Binte Abdullah | The Business Times

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In the latest round of World Bank negotiations, tactical suggestions were made by the Directors of Japan and Germany, signalling strong support for a substantial increase in the International Development Association (IDA) contribution. The shift was framed as essential to safeguarding financial discipline and long-term development for Low-Income Countries (LICs). 

Speaking on the sidelines of the council, Japan’s representative emphasised that as one of IDA's financial contributors, Tokyo is prepared to invest even more capital – but only under a framework that ensures responsible governance. 

“Japan is a major funder of the IDA. We cannot allow capital to be spent without rigorous oversight,” the delegate said. “Those who contribute significantly should have the economic responsibility to help guide how these funds are used.” 

IDA Cycle	Rough Period  Covered by that IDA round	Year Japan  Pledged	Japan’s  Contribution  (US$ M)
IDA18	FY2017-FY2020	2016-2017	~2,380
IDA19	FY2021-FY2023	2019-2020	3,226
IDA20	FY2023-FY2025 (Cycle runs Jul  2022- June 2025)	2021-2022	3,439
IDA21	FY2026-FY2028	2024	~2,800

Annexes by the World Bank: IDA18, IDA19, IDA20, IDA21 

Japan added that the country’s economic performance is often undervalued due to reliance on Purchasing Power Parity (PPP) metrics. Market exchange rate (MER) calculations, they argued, offer a fairer assessment of Japan’s true economic weight. This point was previously raised during debates on PPP-MER ratios.

Germany echoed Japan, highlighting the global financial implications of a strengthened IDA. 

“Increasing IDA capital boosts investor confidence,” said Germany’s Director, citing the United States’ recent US$4 billion injection as a sign of support. “Germany is ready to contribute more. If the World Bank seeks to expand representation and modernise shareholding, this is the pathway. Additional capital is necessary before any shares can be redistributed.”

Germany’s representatives also noted that greater IDA resources would expand financing options for developing regions, including ASEAN. ASEAN is currently benefiting from climate, infrastructure, and digital development funds. 

ASEAN’s small voting share in the World Bank, they argued, should not be misinterpreted as a development disadvantage. 

Country	Voting Share
United States	~15.8%
Japan	~6.8%
China	~4.4%
Germany	~4.0%
United Kingdom	~3.75%
France	~3.75%
India	~2.9%

Japan added that a higher EW to IDA ratio would encourage developed nations to commit even larger sums, ultimately benefiting all economies. 

The discussion also touched on geopolitical tensions. Both Japan and Germany criticised BRICS members, particularly China, for contributing less relative to their rapid economic growth. 

“Despite China’s rise, its contribution to the World Bank has not matched that trajectory,” Japan said. “By benefiting from a system funded primarily by others, they become free riders.” 

Germany issued a sharper warning, accusing Beijing of promoting alternative financial institutions such as the SCO and AIIB to undermine the World Bank’s mandate. 

“This is not simply under-contribution,” the German Director said. “It is an attempt to shift influence away from the World Bank. The council must remain grounded in democratic representation, not dominance by any single power.” 

Negotiations have produced several proposals for a new IDA ratio. While early discussions explored a 65:35 split, the council is now gravitating towards a provisional 74:26 or 72:28 framework. Delegates cautioned that the final figures may shift as talks proceed on compression factors and basic votes. 

Still, both Germany and Japan expressed satisfaction with the direction of reform. 

“These adjustments protect the World Bank’s AAA credit rating, increase capital available for development, and allow LICs to accelerate growth,” Germany said. “It is ultimately the world’s poorest who benefit.” 

Japan also added, “This is not a zero-sum game. A stronger IDA enables stronger global outcomes.” 

A formal proposal will be tabled once the outstanding technical components are finalised.

Bibliography

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Additions to IDA Resources (Washington, DC: World Bank Group, 2017).

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Burden Shares (Washington, DC: World Bank Group, 2022).

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(Washington, DC: World Bank Group, 2022).

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