-- Related Links -- IDA IDA At Work: A retrospective of what IDA has achieved Aid Architecture: An Overview of ODA Trends IDA 15 Replenishment Report

At a Glance

·         Established in 1960, the International Development Association (IDA) is the part of the World Bank Group that provides financial support to the world’s poorest countries. It aims to reduce poverty by providing mostly interest-free loans (known as credits) and grants for programs that boost economic growth, reduce inequalities, and improve living conditions.

·         IDA is one of the largest sources of assistance for the 79 poorest countries in the world, 39 of which are in Africa.

·         IDA lends money on highly concessional terms. IDA credits charge little or no interest, and are generally repaid over 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$207 billion, reaching an average of US$12 billion a year in recent years, and directing the largest share, about 50 percent, to Africa.

IDA Borrowers

·         Seventy-nine countries are currently eligible to receive IDA resources. Eligibility for IDA support depends on a country’s relative poverty, defined as Gross National Income (GNI) per capita below an established threshold and updated annually (in fiscal year 2010: $1,135). Most of the countries eligible for IDA funds have average annual incomes of less than $500 per capita and in many, substantially less.

·         IDA also supports some countries, including several small island economies, which are above the operational cutoff but lack the creditworthiness needed to borrow from the International Bank for Reconstruction and Development (IBRD).

·         Some countries, such as India 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 because they receive funds from both IDA and IBRD.

IDA Programs

·         IDA credits have maturities of 20, 35, or 40 years, with a 10-year grace period before repayments of principal begin. IDA allocates funds to borrowing countries in relation to their income levels and record of success in managing their economies and ongoing IDA projects. There is no interest charge, but credits carry a small service charge of 0.75 percent on funds paid out, and variable commitment charges on undisbursed balances.

·         In FY 2009 (which ended June 30, 2009), IDA commitments totaled US$14 billion, including US$11.2 billion in credits and US$2.6 billion in grants to support 177 operations. To rapidly support countries affected by the global crisis, IDA committed US$ 1.1 billion in FY09 for emergency recovery operations.  For example, in response to the global food crisis, IDA and the Food Crisis Response Trust Fund committed US$956 million for 46 projects in 32 countries since May.

·         IDA emphasizes broad-based growth, including:

o   sound economic policies, rural development, private business, and sustainable environmental practices;

o   investment in people, education, and health, especially in the struggle against HIV/AIDS, malaria, and tuberculosis;

o   expansion of borrower capacity to provide basic services and ensure accountability for public resources;

o   recovery from civil strife, armed conflict, and natural disaster; and

o   promotion of trade and regional integration.

·         IDA carries out analytical studies to build the knowledge base that allows tailored 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 relief for poor countries that cannot manage their debt-service burdens. IDA has developed a system for allocating grants based on countries’ risk of debt distress, designed to help countries ensure debt sustainability.

·         IDA provides US$54 billion in debt relief to poor countries: US$17 billion under the Heavily Indebted Poor Countries initiative and $37 billion under the Multilateral Debt Relief Initiative (MDRI). 

IDA Funding

·         Although the IBRD raises most of its funds on the world's financial markets, IDA is funded largely by contributions from the governments of 45 of its member countries, including former IDA recipients and middle-income countries, such as China and Egypt. Additional funds come from World Bank Group net income and from borrowers' repayments of earlier IDA credits.

IDA Replenishments

·         Donors get together every three years to replenish IDA funds. Negotiations for IDA’s 15th replenishment (IDA15) concluded in December 2007. At US$42.4 billion for the next three years, this is IDA’s largest replenishment to date.

·         Donors pledged US25.2 billion to IDA15. Complementing these donor contributions are US$6.3 billion from prior donor pledges to the MDRI and US$10.9 from reflows and other resources, including internal financing from the World Bank Group.

·         The World Bank Group has pledged a record US$3.5 billion to the IDA15 replenishment from its income. Including IDA’s projected investment income on this transfer, the overall contribution will be US$3.9 billion.

·         IDA15 will provide resources to low-income countries for the July 2008 – June 2011 period and will play an important role in supporting IDA-recipient countries in their efforts to achieve the Millennium Development Goals by 2015. 

Contact:

Angela Furtado, (202) 473-1909,afurtado@worldbank.org 

Updated September 2009