ST. CHARLES, Missouri — In 1960, the World Bank established an association that would help the world’s poorest countries. As a part of the World Bank, The International Development Association, or IDA, functions with the main goal of reducing poverty by providing loans, referred to as “credits,” and grants for programs that help boost economic growth, reduce inequalities and improve people’s living conditions.
The IDA complements the World Bank’s International Bank for Reconstruction and Development, or IBRD, which was originally established to function as a self-sustaining business. The IBRD and the IDA actually share the same staff and headquarters and seek to implement and evaluate projects with the same “rigorous standards.”
“IDA is a multi-issue institution, supporting a range of development activities, such as primary education, basic health services, clean water and sanitation, environmental safeguards, agriculture, business climate improvements, infrastructure, and institutional reforms.”
What does the IDA do?
The IDA lends money on concessional terms, meaning that the IDA credits have zero to little interest rates and repayments are actually stretched anywhere from 25 to 30 years. The IDA also provides grants to fragile states, states that are experiencing conflict, and other countries that run a risk of debt distress.
The projects of the IDA contribute to equality, economic growth, job creation, better living conditions and higher incomes. They also help countries resolve issues such as security, environmental and health concerns, and helps prevent threats from becoming a global issue.
How does the IDA do it?
One major reason why the IDA is able to accomplish all that they do is through contributions from donors. The contributions are pooled together and the IDA has the ability to respond to critical country needs particularly during times of crisis and in more fragile environments by leveraging a large un-earmarked capital base.
The IDA’s Board of Governors is compromised of 173 shareholder countries, which oversee The Association. When it comes to day-to-day development work of the IDA, it is managed by Bank operational staff, governments, and implementing agencies in the program countries.
As one of the largest sources of assistance for the world’s 77 poorest countries, the IDA is the single largest source of donor funds for basic social services in these countries. Their financed interventions bring a positive change to more than 2.8 billion people, the majority of whom survive on only two dollars a day or less.
Representatives from both donor and borrower countries meet every three years and agree on the IDA’s strategic direction, financing, and allocation rules in an open and transparent process. This makes their governing process very unique, innovative, and effective.
Typically, the replenishment process consists of four formal meetings held within the year. During these meetings, policy papers are discussed and negotiations are disclosed to the public. The draft replenishment agreement is posted on the web for public comment before the last replenishment meeting.
Why does the IDA do this?
The answer seems simple—to help lift countries out of poverty. For the first time, the IDA placed in the highest category in the 2014 Aid Transparency Index. The IDA took fourth place out of 17 multilateral organizations and was among only six organizations that scored more than 80 percent for project-level information.
Between 2003 and 2013, the IDA provided more than 117 million people with access to a basic package of health, nutrition or population services. They also helped immunize nearly 600 million children while subsequently providing prenatal care for more than 195 million pregnant women in their program countries.
The IDA’s financing is crucial to these poverty-stricken countries. Between 2002 and 2012, the IDA assisted in providing over 123 million people with access to an improved water source and trained more than 3.5 million teachers.
The countries eligible to receive assistance from the IDA are home to half of the total population of the developing world and a half of those people who reside there survive on incomes of two dollars or less a day.
What is the United States’ role in the IDA?
The World Bank Group includes four other organizations apart from the IDA. The United States is the largest contributor for World Bank operations. Recently, the IDA and the U.S. have made headlines. The U.S. passed the measure to encourage ongoing environmental and human rights protections in development planning.
According to Environmental News Service, “Environmental and social justice groups in the United States and around the world are applauding a provision of the 2015 Omnibus Appropriations Act, passed by the U.S. Congress just before the Christmas recess … The senators warned that the Bank plans to replace existing environmental and social safeguards with weaker mechanisms for transparency, oversight, and accountability and to eliminate essential protections for biodiversity, forest-dependent peoples and communities displaced by Bank projects.”
– Eastin Shipman