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 to turn its attention next to developing countries. By the 1950s, it became clear that the poorest developing countries needed softer borrowing terms than those offered by the Bank.
With the United States taking the initiative, some 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 so they could afford to borrow capital and grow.
They called the agency the International Development Association (IDA). 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.
1. Financing from IDA responds to priorities and needs identified by recipient countries. Areas for IDA assistance are determined through Country Assistance Strategies (CAS), developed with governments and in consultation with partners and other stakeholders.
2. As the largest global multilateral institution, IDA links global issues to country programs through country strategies, analytical work, credits and grants, global programs and trust fund activities.
3. IDA has offices and teams in 64 out of the 80 IDA-supported countries, on four continents, facilitating a greater alignment of programs with the local context and better use of local knowledge.
4. Because its funds are not pre-assigned to specifi c sectors or themes, IDA can respond quickly with fl exible funding for countries coming out of confl ict or natural disaster.
5. IDA supports countries over the long run, with predictable aid fl ows and sustained technical advice, helping countries to tackle complex problems.
6. IDA was the first international fi nancial institution to introduce a results-measurement system (RMS) to monitor development progress, linking outcomes and outputs to country programs and projects.
7. The level of IDA’s financial assistance to countries balances needs and country performance placing signifi cant importance on the quality of governance.
8. IDA often leverages funds from other donors to expand critical activities in country-owned programs and projects, helping reduce costs and increase effectiveness for both donors and recipients.
9. As the largest multilateral financier, IDA is one of the major sources of fi nancing for infrastructure in poor countries, a sector critical to reaching the Millennium Development Goals.
10. IDA provides a total of $54 billion in debt relief to poor countries under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).
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