The International Development Asso- ciation (IDA) is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people’s living conditions.
IDA complements the World Bank’s other lending arm–the International Bank for Reconstruction and Development (IBRD)–which serves middle-income countries with capital investment and advisory services. IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards.
IDA is one of the largest sources of assistance for the world’s 78 poorest countries, 39 of which are in Africa. It is the single largest source of donor funds for basic social services in the poorest countries.
IDA lends money (known as credits) on concessional terms. This means that IDA credits have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress.
Since its inception, IDA credits and grants have totaled US$182 billion, averaging US$10 billion a year in recent years and directing the largest share, about 50 percent, to Africa.
A retrospective look at what countries and donors have achieved through IDA in the last decade. Enter Here
In Armenia, IDA's judicial reform program helped put in place the building blocks for a modern judiciary. Twelve new or renovated courthouses, case management software, a revamped judicial training program and a TV show popularizing legal rights helped restore a measure of trust in the judiciary. A follow-up project aims to tackle remaining corruption.
In Bangladesh, the number of girls in secondary schools has more than tripled in 15 years thanks to tuition stipends. IDA helped take forward a government program on a major scale and introduced a transparent and innovative direct funding mechanism, replicated elsewhere since.
In Nicaragua, IDA flexibility made it possible to quickly restructure an ongoing road project to tackle urgent needs following the devastation of Hurrican Mitch. A section of the Pan American highway, the country's main route for exports, was restored, as well as over 3,000 km of roads reconnecting rural communities and rekindling a stalled economy.
In Tanzania, credit to the private sector increased by 250 percent in 6 years. IDA financed the transformation of the largest state-owned savings bank into a private microfinance bank, improving access by small and micro entrepreneurs to the fomal financial system.
In Vietnam, bringing electricity to 2.7 million people has transformed rural communities. A six-year IDA-supported rural energy project helped extend the national grid. Its long-term involvement in the power sector supports the government's broader electrification program.
Eligibility for IDA support depends first and foremost on a country’s relative poverty, defined as GNI per capita below an established threshold and updated annually (in fiscal year 2009: US$1,095).
IDA also supports some countries, including several small island economies, which are above the operational cutoff but lack the creditworthiness needed to borrow from IBRD.
Some countries, such as India, Indonesia and Pakistan, are IDA-eligible based on per capita income levels, but are also creditworthy for some IBRD borrowing. They are referred to as “blend” countries.
Seventy-eight countries are currently eligible to receive IDA resources. Together, these countries are home to 2.5 billion people, half of the total population of the developing world. An estimated 1.5 billion people there survive on incomes of US$2 or less a day.
Sub-Saharan Africa.............49% South Asia...........................34% East Asia/Pacific..................10% Europe/Central Asia...............4% Middle East/North Africa.........2% Latin America/Caribbean........2%
IDA Lending by Sector:
Social sector........................29% Public admin and law...........23% Industry................................8% Infrastructure......................33% Agriculture............................7%
IDA credits have maturities of 20, 35 or 40 years with a 10-year grace period before repayments of principal begins. IDA funds are allocated to the borrowing countries in relation to their income levels and record of success in managing their economies and their ongoing IDA projects. Nearly all IDA credits have no interest charge, but credits do carry a small service charge, currently 0.75 percent on funds paid out. IDA also provides grants, which are allocated that are at risk of debt distress. Current Terms of IDA Lending
In fiscal year 2007 (which ended June 30, 2007), IDA commitments totaled US$11.9 billion, of which 18 percent was provided on grant terms. New commitments in FY07 comprised 189 new operations. Since 1960, IDA has provided US$182 billion to 108 countries. Annual commitments have increased steadily and averaged about US$10 billion over the last three years.
IDA-financed operations address primary education, basic health services, clean water and sanitation, environmental safeguards, business climate improvements, infrastructure and institutional reforms. These projects pave the way toward economic growth, job creation, higher incomes and better living conditions. Explore IDA Projects
IDA emphasizes broad-based growth, including: - Sound economic policies, rural development, private business and sustainable environmental practices - Investment in people, in education and health, especially in the struggle against HIV/AIDS, malaria and TB - Expansion of borrower capacity to provide basic services and ensure accountability for public resources - Recovery from civil strife, armed conflict and natural disaster - Promotion of trade and regional integration
IDA carries out analytical studies to build the knowledge base that allows intelligent design of policies to reduce poverty. IDA advises governments on ways to broaden the base of economic growth and protect the poor from economic shocks.
IDA also coordinates donor assistance to provide relief for poor countries that cannot manage their debt-service burden. IDA has developed a system for allocating grants based on countries’ risk of debt distress, designed to help countries ensure debt sustainability.
While the IBRD raises most of its funds on the world's financial markets, IDA is funded largely by contributions from the governments of its richer member countries. Additional funds come from IBRD's income and from borrowers' repayments of earlier IDA credits.
IDA Replenishments Donors get together every three years to replenish IDA funds. Donor contributions account for 60% of the SDR 27.3 billion (US$41.6 billion) in the IDA15 replenishment, which finances projects over the three-year period ending June 30, 2011.
45 countries contributed to the 15th replenishment of IDA. The largest pledges to IDA15 were made by the United Kingdom, the United States, Japan, Germany, France, Canada, Italy and Spain. IDA Donors and Partners
The IDA15 replenishment raised funds for poor countries for the three-year period between July 2008 and June 2011. These are critical years for countries trying to achieve the UN Millennium Development Goals since it takes time for projects to be completed and yield measurable results.
The International Bank for Reconstruction and Development (IBRD), better known as the World Bank, was established in 1944 to help Europe recover from the devastation of World War II. The success of that enterprise led the Bank, within a few years, to turn its attention to developing countries. By the 1950s, it became clear that the poorest developing countries needed softer terms than those that could be offered by the Bank, so they could afford to borrow the capital they needed to grow.
With the United States taking the initiative, a group of the Bank’s member countries decided to set up an agency that could lend to the poorest countries on the most favorable terms possible. They called the agency the "International Development Association." Its founders saw IDA as a way for the "haves" of the world to help the "have-nots." But they also wanted IDA to be run with the discipline of a bank. For this reason, US President Dwight D. Eisenhower proposed, and other countries agreed, that IDA should be part of the World Bank.
IDA's Articles of Agreement became effective in 1960. The first IDA loans, known as credits, were approved in 1961 to Chile, Honduras, India and Sudan.
Thirty-four countries have graduated from IDA throughout its history, ceasing to borrow from the Association. Some of these countries have since "reverse graduated," or reentered IDA. List of IDA Graduates
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