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Speech by Mr Lawrence Wong, Minister for National Development & Second Minister for Finance, on Moving a Motion to Increase the Subscription to the International Development Association
Madam, I beg to move,
“That this Parliament, in accordance with Section 4(2) of the International Development Association Act, resolves that the total subscription of Singapore to the International Development Association be increased to a sum not exceeding One Million, One Hundred Thousand United States dollars (US$ 1,100,000).”
Madam, the World Bank offers concessional loans and grants through the International Development Association or IDA. These concessional loans and grants are offered to its least developed member countries to promote economic and social development and reduce poverty. IDA was started in 1960 and has been replenished every three years or so.
Members might know that IDA has been playing a leading role in responding to complex global challenges like healthcare, education, gender inequality, climate change and institutional reform by focusing on some of the world’s poorest countries. It has helped country recipients build long-term, sustainable capacities and put them on a path of self-reliance. To date, 30 countries have “graduated” from IDA’s support. Some, like China and South Korea, have gone on to help finance IDA’s programmes.
Some of our ASEAN neighbours have also benefited from IDA. In the last replenishment round, Cambodia, Lao PDR, Myanmar and Vietnam received a total of 3.8 billion US dollars in allocations. Vietnam’s education sector, in particular, has received support from IDA to deliver joint training programmes with reputable universities worldwide at their higher education institutions. Vietnam is also one of three countries slated to graduate from the IDA programme, and will receive transitional IDA support to ensure a smooth graduation.
Overall, these are positive developments for Singapore, because an improvement in the economic climate of our neighbouring countries will have positive spillover effects on our own economy.
Singapore will do its part as a responsible international citizen to support IDA. We have been contributing to IDA replenishments since 2002. In 2010, we increased our share of contributions from 0.08% to 0.15% for the 16th round of replenishment, and this is part of our commitment to a wider international effort to support global developmental objectives. We maintained this share of 0.15% for the 17th replenishment exercise in 2013.
So now, we have an upcoming 18th round of replenishment for IDA, and the majority of IDA donors have supported a total replenishment size of 75 billion US dollars over the period of FY18 to FY20. This round of replenishment will enable IDA to double its core resources to countries in fragile and conflict-affected situations, as well as channel resources for crisis response and pandemic preparedness.
To fund this 18th replenishment, the IDA will for the first time also tap on capital markets to blend grant member contributions with market borrowings, and based on IDA’s track record and capital adequacy, Standard and Poor’s has assigned it a rating of ‘AAA’ on long-term; and ‘A-1+’ on short-term credit. This allows IDA to raise funds in a cost-efficient way from the capital markets. IDA will also strengthen client support by working with two other World Bank Group institutions – the International Finance Corporation and the Multilateral Investment Guarantee Agency – to promote private sector development in recipient countries, especially those in fragile and conflict-affected situations.
Singapore strongly supports these initiatives to crowd-in private sector funding as a sustainable way of supporting global development. These innovations also mean that member contributions requested by IDA can actually be lower than that committed under the last replenishment exercise.
So for this coming 18th round of replenishment, we will be maintaining our burden share at 0.15%. This was the same percentage as we had in the last round, and this translates to an amount of up to US dollars 46 million from MOF’s budget.
Every country that donates to IDA has a subscription share with IDA. Singapore’s subscription amount today is 911,709 US dollars. With the new round of replenishment, we anticipate that our IDA subscription will cross the 1 million US dollar mark. Under Section 4(2) of the IDA Act, Parliament’s approval is required for total IDA subscription exceeding 1 million US dollars. We are therefore requesting that Parliament approves that the total subscription of Singapore to IDA be increased to a sum not exceeding 1.1 million US dollars.
Madam, I beg to move.
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Last Updated on
September 12, 2017