IDA

International Development Association

Introduction The International Development Association (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.

International Bank for Reconstruction and Development

(IBRD)–which serves middle-income countries with capital

investment and advisory services.

IDA is one of the largest sources of assistance for the world’s

79 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.

History IBRD established in 1944 to help Europe recover -devastation of

World War II

Success of that enterprise led the Bank, within a few years, to

turn its attention to developing countries

By the 1950s- poorest developing countries needed softer terms

than those offered by the Bank-afford to borrow the capital they

needed to grow.

United States -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

Wanted IDA to be run with the discipline of a bank. (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.

IDA currently has 170 member countries

Members subscribe to IDA’s -submitting necessary documentation

– make required payments under the replenishment arrangements.

35 countries have graduated from IDA throughout its history and

some reentered

IDA BORROWERS

• 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 2011: US$1,165)

• 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.

• Seventy-nine countries are currently eligible to receive IDA resources.

Top Ten IDA Borrowers

($million, includes regional projects)

India 2,578Vietnam 1,429Tanzania 943Ethiopia  890

Nigeria 890

Bangladesh 828Kenya  614

Uganda  480Dem. Rep.

Congo 460

Ghana 433

New IDA Lending by Region:

Sub-Saharan Africa 49 %

South Asia 32 %

East Asia/Pacific 11 %

Europe/Central Asia 4 %

Latin America/Caribbean 2 %

Middle East/North Africa 1 %

IDA Lending by Sector:

Infrastructure 37 %

Social sector 29 %

Industry 2 %

Public Admin and Law

18 %

Agriculture 8 %

Finance 5 %

IDA lending's IDA credits- maturities of 20, 35 or 40 years 10-year grace

period

IDA funds are allocated to the borrowing countries relation -

income levels and record of success in managing their

economies and ongoing IDA projects.

IDA credits have no interest charge but small service charge,

currently 0.75 percent on funds paid out.

IDA also provides grants, which are allocated to the countries

that are at risk of debt distress.

In fiscal year 2010 IDA commitments totaled US$14.5 billion-

18% was provided on grant terms.

Since 1960, IDA has provided US$222 billion to 108 countries.

Annual commitments increased steadily and averaged about

US$13 billion over last 3 years.

IDA-financed operations address primary needs

These projects pave the way toward economic growth, job

creation, higher incomes and better living conditions.

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

Recovery from civil trouble, armed conflict and natural disaster

Promotion of trade and regional integration

IDA advises governments -broaden the base of economic growth and

protect the poor from economic shocks.

IDA coordinates donor assistance to provide relief for poor countries

that cannot manage their debt-service burden.

IDA developed a system for allocating grants based on countries’ risk

of debt distress, designed to help countries ensure debt sustainability.

IBRD raises its funds on the world's financial markets, IDA is funded

largely by contributions from the governments of richer member

countries.

Additional funds from IBRD's income and from borrowers'

repayments of earlier IDA credits.

Function of World Bank Group’s organizations

The functions of the International Bank for Reconstruction and Development are: The assistance and development of territories of its members The promotion of a balanced growth in international trade

The International Development Association seeks to: Promote world development, increase productivity and

standards of leaving in the less developed countries of its membership

Assist the International Bank for Reconstruction and Development

Introduction

Official Development Assistance (ODA) flows are a primary source of financing for low- income countries (LICs), and IDA continues to be their main source of multilateral ODA

IDA’s role in the international aid architecture - financing and knowledge service and support aid delivery platform

In light of the growing complexity of the global aid architecture, IDA’s role in supporting LICs has become even more important.

The country-based development model in a changing aid landscape

There is broad agreement that the country-based development model

However, some recent trends in ODA flows are potentially at odds

IDA’s role at the country level

Client surveys indicate that IDA’s core strengths reside in its financial resources - but also, in its global reach combined with local presence, its ability to operate on a multi-sectoral basis

These core strengths enable IDA not only to provide direct support to client countries

IDA brings greater strategic coherence in development assistance programs and plays a central role in enhancing alignment and harmonization as well as in achieving sustained results at the country level.

Challenges going forward and conclusion

Focuses on the main challenges going forward and how IDA is gearing up to address them.

IDA will have to adapt and intensify its efforts in four main areas:

(i) strengthening complementarity with vertical approaches to aid delivery;(ii) ensuring appropriate sectoral funding;(iii) addressing critical global challenges with an increased priority given to climate change;(iv) and enhancing alignment and harmonization.

IDA is also in the process of reforming and modernizing its operational policies, designed to improve its operational effectiveness and thus its ability to meet the challenges outlined above.

THANK YOU

DONE BY: GROUP 3