International Development Association: Difference between revisions

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The '''International Development Association''' ('''IDA''') ({{lang-fr|link=no|Association internationale de développement}}) is ana [[internationaldevelopment financialfinance institution]] which offers concessional [[loan]]s and [[grant (money)|grant]]s to the world's poorest [[developing country|developing countries]]. The IDA is a member of the [[World Bank Group]] and is headquartered in [[Washington, D.C.]] in the [[United States]]. It was established in 1960 to complement the existing [[International Bank for Reconstruction and Development]] by lending to developing countries which suffer from the lowest [[gross national income]], from troubled [[credit risk|creditworthiness]], or from the lowest [[per capita income]]. Together, the International Development Association and International Bank for Reconstruction and Development are collectively generally known as the [[World Bank]], as they follow the same executive leadership and operate with the same staff.<ref name="What is IDA">{{Cite web | title = What is IDA? | publisher = World Bank Group | author = International Development Association | url = http://ida.worldbank.org/about/what-is-ida | access-date = 2019-06-13}}</ref><ref name="Coppola 2011">{{Cite book | title = Introduction to International Disaster Management, 2nd Edition | author = Coppola, Damon P. | year = 2011 | publisher = Butterworth-Heinemann | location = Oxford, UK | isbn = 978-0-75-067982-4}}</ref><ref name="Sanford 2002">{{Cite journal | title = World Bank: IDA Loans or IDA Grants? | journal = World Development | volume = 30 | issue = 5 | year = 2002 | pages = 741–762 | author = Sanford, Jonathan E. | doi=10.1016/S0305-750X(02)00003-7| url = https://digital.library.unt.edu/ark:/67531/metadc815707/ }}</ref><ref name="Dreher et al. 2009">{{Cite journal | title = Development aid and international politics: Does membership on the UN Security Council influence World Bank decisions? | journal = Journal of Development Economics | volume = 88 | issue = 1 | year = 2009 | pages = 1–18 | author = Dreher, Axel | author2 = Sturm, Jan-Egbert | author3 = Vreeland, James Raymond | doi=10.1016/j.jdeveco.2008.02.003| hdl = 10419/50418 | hdl-access = free }}</ref>

Developing countries grew increasingly frustrated with not being able to afford IBRD lending and perceived the [[Marshall Plan]] as a comparatively generous gift to [[Europe]]an nations. In the late 1940s and early 1950s, developing countries began calling for the [[United Nations]] (UN) to create a development agency that would offer technical support and concessional financing, with a particular desire that the agency adhere to other UN bodies' convention of each country having one vote as opposed to a weighted vote. However, the United States ultimately opposed proposals of that nature. As the United States grew more concerned over the growth of the [[Cold War]], it made a concession in 1954 at the behest of its [[United States Department of State|Department of State]] by backing the conception of the [[International Finance Corporation]] (IFC). Despite the launch of the IFC in 1956, developing countries persisted in demanding the creation of a new concessional financing mechanism and the idea gained traction within the IBRD.<ref name="Gwin 1997" /> Then-President of the IBRD [[Eugene R. Black, Sr.]] began circulating the notion of an International Development Association, as opposed to an idea of a concessional named the Special United Nations Fund for Economic Development (SUNFED) governed by the United Nations.<ref name="Murphy, Craig 2006">Murphy, Craig, 2006, The United Development Programme: A Better Way?, Cambridge: Cambridge University</ref> Paul Hoffman, the Marshall Plan's former Administrator, proposed the idea of a soft-loan facility within the World Bank, where the US would have a preponderant voice in the allocation of such loans. Democratic Senator [[A. S. Mike Monroney|Mike Monroney]] of [[Oklahoma]] supported this idea.<ref name="Murphy, Craig 2006"/> As Chairman of the Senate Subcommittee on International Finance, Monroney proposed a resolution recommending a study of the potential establishment of an International Development Association to be affiliated with the IBRD.<ref name="IDA History 2012" /> Monroney's proposal was more preferred received within the United States than the SUNFED.<ref name="Gwin 1997" /> The resolution passed the senate in 1958, and then-[[United States Treasury Secretary|U.S. Treasury Secretary]] [[Robert B. Anderson]] encouraged other countries to conduct similar studies. In 1959, the World Bank's Board of Governors approved a U.S.-born resolution calling for the drafting of the articles of agreement.<ref name="IDA History 2012" /> SUNFED later became the Special Fund and merged with the Expanded Programme of Technical Assistance to form the [[United Nations Development Programme]].{{fact|date=November 2023}}

The IDA is governed by the World Bank's Board of Governors which meets annually and consists of one governor per member country (most often the country's finance minister or treasury secretary). The Board of Governors delegates most of its authority over daily matters such as lending and operations to the Board of Directors. The Board of Directors consists of 25 executive directors and is chaired by the [[World Bank Group#Presidency|President of the World Bank Group]]. The executive directors collectively represent all 187 member states of the World Bank, although decisions regarding IDA matters concern only the IDA's 172 member states. The president oversees the IDA's overall direction and daily operations.<ref name="Ottenhoff 2011">{{Cite report | title = World Bank | publisher = Center for Global Development | date = 2011 | author = Ottenhoff, Jenny | url = http://cgdev.org/content/publications/detail/1425482 | access-date = 2012-06-05}}</ref> {{As of|AprilMay 20192024}}, [[DavidAjay MalpassBanga]] serves as the President of the World Bank Group.<ref>{{Cite web|title=DavidAjay MalpassBanga|url=https://www.worldbank.org/en/about/people/d/david-malpass|access-date=2021-09-12|website=World Bank|language=en}}</ref> The association and IBRD operate with a staff of approximately 10,000 employees.<ref name="BIC World Bank Structure 2012">{{Cite web | title = World Bank (IBRD & IDA) Structure | publisher = Bank Information Center | url = http://www.bicusa.org/en/Institution.Structure.5.aspx | access-date = 2012-07-01 | url-status = dead | archive-url = https://web.archive.org/web/20120208011649/http://www.bicusa.org/en/Institution.Structure.5.aspx | archive-date = 2012-02-08 }}</ref>

The IDA is evaluated by the Bank's [[Independent Evaluation Group]]. In 2009, the group identified weaknesses in the set of controls used to protect against fraud and corruption in projects supported by IDA lending.<ref name="The Economist 2009">{{cite news | title = Forgotten sibling | date = 2009-04-23 | newspaper = The Economist | url = http://www.economist.com/node/13528242 | access-date = 2012-07-02}}</ref> In 2011, the group recommended the Bank provide recognition and incentives to staff and management for implementing activities which implement the [[Aid effectiveness#Paris Declaration on Aid Effectiveness, February 2005|Paris Declaration on Aid Effectiveness]] principles of harmonization and alignment, promote greater use of sector-wide approaches to coordination, and explain the reasons why when a country's financial management system is not used so that the client country may address those shortcomings. It also recommended that the Bank collaborate with development partners to strengthen country-level leadership of development assistance coordination by offering greater financial and technical support.<ref name="IEG 2011">{{Cite report | title = World Bank Progress in Harmonization and Alignment in Low-Income Countries | publisher = World Bank Group | date = 2011 | author = Independent Evaluation Group | url = http://ieg.worldbank.org/content/dam/ieg/pubs/donor_harmonization.pdf | access-date = 2012-07-14 | url-status = dead | archive-url = http://webarchive.loc.gov/all/20130609234246/http://ieg.worldbank.org/content/dam/ieg/pubs/donor_harmonization.pdf | archive-date = 2013-06-09 }}</ref> Development economists, such as [[William Easterly]], have conducted research which ranked the IDA as featuring the most transparency and best practices among donors of development aid.<ref name="Ghosh & Kharas 2011">{{Cite journal | title = The Money Trail: Ranking Donor Transparency in Foreign Aid | journal = World Development | volume = 39 | issue = 11 | year = 2011 | pages = 1918–1929 | author = Ghosh, Anirban | author2 = Kharas, Homi | doi=10.1016/j.worlddev.2011.07.026}}</ref><ref name="Easterly & Pfutze 2008">{{Cite journal | title = Where Does the Money Go? Best and Worst Practices in Foreign Aid | journal = Journal of Economic Perspectives | volume = 22 | issue = 2 | year = 2008 | pages = 29–52 | author = Easterly, William | author2 = Pfutze, Tobias | doi=10.1257/jep.22.2.29| s2cid = 153469295 | urldoi-access = http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.2.29free }}</ref>

The IDA has 173 member countries which pay contributions every three years as replenishments of its capital. On 12 December 12, 2008, Samoa joined UNIDO as its 173rd member.<ref name="What is IDA" /> The IDA lends to 75 borrowing countries, over half of which (39) are in Africa.<ref name="IDA Borrowers 2019">{{Cite web | title = Borrowing Countries | publisher = World Bank Group | author = International Development Association | url = http://ida.worldbank.org/about/borrowing-countries | access-date = 2019-06-13}}</ref> Membership in the IDA is available to only tothe countries who are members of the World Bank, particularly the IBRD.<ref name="WBG Member Countries 2019">{{Cite web | title = Member Countries | publisher = World Bank Group | author = World Bank Group | url = http://www.worldbank.org/en/about/leadership/members | access-date = 2019-06-13}}</ref> Throughout its lifetime, 44 borrowing countries have graduated from the association, although 9 of these countries have relapsed as borrowers after not sustaining their graduate status.<ref name="IDA Graduates" />

The IDA is a unique part of the World Bank as it requires continuous replenishment of its resources. Member countries replenish its funds through contributions in addition to supplementary funds provided by the International Bank for Reconstruction and Development and the [[International Finance Corporation]] (IFC).<ref name="BIC Demystifying IDA Replenishment 2012">{{Cite web | title = Demystifying International Development Association (IDA) replenishment | publisher = Bank Information Center | url = http://www.bicusa.org/en/Article.3167.aspx | access-date = 2012-07-01 | url-status = dead | archive-url = https://web.archive.org/web/20101227150743/http://bicusa.org/en/Article.3167.aspx | archive-date = 2010-12-27 }}</ref><ref name="Beattie 2010">{{cite news | title = World Bank boosts lending to poor | author = Beattie, Alan | date = 2010-12-15 | newspaper = Financial Times | url = http://www.ft.com/intl/cms/s/0/b84bb304-0873-11e0-80d9-00144feabdc0.html#axzz1zRHPEvPc | access-date = 2012-07-02}}</ref> Whereas the IBRD acquires most of its funds by raising capital on international financial markets, the IDA heavily depends on contributions from its member states.<ref name="Dreher et al. 2009" /> The IDA received 2 billion in [[special drawing right]]s ($3 billion [[United States dollar|USD]]) from the IBRD and IFC.<ref name="IDA Replenishments 2012">{{Cite web | title = IDA Replenishments | publisher = World Bank Group | author = International Development Association | url = http://go.worldbank.org/7ARHOU1WK0 | archive-url = https://archive.today/20130416070657/http://go.worldbank.org/7ARHOU1WK0 | url-status = dead | archive-date = 16 April 2013 | access-date = 2012-07-01 }}</ref> Approximately half of the IDA's resources come from the 45 donating member countries.<ref name="IDA Overview 2012">{{Cite web | title = What is IDA? | publisher = World Bank Group | author = International Development Association | url = https://www.worldbank.org/ida/what-is-ida.html | access-date = 2012-07-01}}</ref> In its early years, the IDA received most of its replenishments from the United Kingdom and United States but, because they were not always reliable sources of funding, other developed nations began to step in and fill the economic gaps not met by these two countries.<ref name="Burki & Hicks 1982">{{Cite journal | title = International Development Association in Retrospect | journal = Finance and Development | volume = 19 | issue = 4 | year = 1982 | pages = 23 | author = Burki, Shahid Javid | author2 = Hicks, Norman }}</ref> Every three years, member nations that provide funds to the IDA gather together to replenish the IDA's resources.<ref name="Abegaz 2005">{{Cite journal | title = Multilateral development aid for Africa | journal = Economic Systems | volume = 29 | issue = 4 | year = 2005 | pages = 433–454 | author = Abegaz, Berhanu | doi=10.1016/j.ecosys.2005.06.005}}</ref> These funds come primarily from well-developed countries including the United States, Japan, France, Germany, and the United Kingdom<ref name="BWP IDA 2012">{{Cite web | title = IDA - International Development Association | publisher = Bretton Woods Project | url = http://www.brettonwoodsproject.org/item.shtml?x=537850 | access-date = 2012-07-14 | url-status = dead | archive-url = https://web.archive.org/web/20120526031455/http://www.brettonwoodsproject.org/item.shtml?x=537850 | archive-date = 2012-05-26 }}</ref> with 58% from the US, 22% from France, and 8% from the UK.<ref name="IDA Aid Architecture 2007">{{Cite report | title = Aid Architecture: An Overview of the Main Trends in Official Development Assistance Flows | publisher = World Bank Group | date = 2007 | author = International Development Association | url = http://siteresources.worldbank.org/IDA/Resources/Seminar%20PDFs/73449-1172525976405/3492866-1172527584498/Aidarchitecture.pdf | access-date = 2012-07-14}}</ref> As of 2016, there have been 18 IDA replenishment rounds.<ref>{{cite web|url=http://ida.worldbank.org/replenishments|title=Replenishments|website=www.worldbank.org|access-date=13 October 2019}}</ref> Fifty -one member countries participated in the IDA's 16th replenishment of US$49.3 billion.<ref name="IDA Overview 2012" /><ref name="IDA Sixteenth Replenishment Report 2011">{{Cite report | title = IDA16: Delivering Development Results | publisher = World Bank Group | date = 2011 | author = International Development Association | url = http://siteresources.worldbank.org/IDA/Resources/IDA16_Report-English-Final.pdf | access-date = 2012-07-01}}</ref> The IDA's loans and grants are usually not paid in full to the borrower at the outset, but rather disbursed incrementally as needed by the project. Most of the donor countries such as the United States commit [[letter of credit|letters of credit]] to the IDA which bear no [[interest rate|interest]] and are not able to be transferred or revoked, and which are exchanged for [[cash]] as needed for project disbursal. Other countries pay their contributions in full on the date of commitment to the IDA so that it may cover its [[operating expense]]s. Donors receive no return of funds and repayments from borrowers are again loaned to future projects such that donors won't need to commit those funds again in the future.<ref name="Sanford 1997">{{Cite journal | title = Alternative ways to fund the International Development Association (IDA) | journal = World Development | volume = 25 | issue = 3 | year = 1997 | pages = 297–310 | author = Sanford, Jonathan E. | doi=10.1016/S0305-750X(96)00111-8}}</ref>

[[ImageFile:2005IBRD loans and IDA credits.png|thumb|right|334px|IBRD loans and IDA credits in 2005]]

The IDA lends to countries with the aim to finance projects that will develop [[infrastructure]] and improve education, [[health care|healthcare]], access to clean water and sanitation facilities, and environmental responsibility.<ref name="IDA Overview 2012" /><ref name="Mallick & Moore 2005">{{Cite journal | title = Impact of World Bank lending in an adjustment-led growth model | journal = Economic Systems | volume = 29 | issue = 4 | year = 2005 | pages = 366–383 | author = Mallick, Sushanta | author2 = Moore, Tomoe | doi=10.1016/j.ecosys.2005.06.003| citeseerx = 10.1.1.426.5795 }}</ref> It is considered to be the soft lending window of the World Bank, while the IBRD is considered to be the hard lending window.<ref name="Cline & Sargen 1975">{{Cite journal | title = Performance criteria and multilateral aid allocation | journal = World Development | volume = 3 | issue = 6 | year = 1975 | pages = 383–391 | author = Cline, William R. | author2 = Sargen, Nicholas P. | doi=10.1016/0305-750X(75)90023-6}}</ref><ref name="Van de Laar 1976">{{Cite journal | title = The World Bank and the world's poor | journal = World Development | volume = 4 | issue = 10–11 | year = 1976 | pages = 837–851 | author = Van de Laar, Aart J.M. | doi=10.1016/0305-750X(76)90075-9}}</ref> The association offers grants and loans with maturities ranging from 25 to 40 years, grace periods of 5 to 10 years, and interest rates of 2.8% or 1.25% depending on whether the borrower is a blend country and to which degree it is eligible. Regular IDA-eligible borrowers may take advantage of no-interest loans.<ref name="IDA FY2012 Terms 2011">{{Cite report | title = IDA Terms | publisher = World Bank Group | date = 2011 | author = International Development Association | url = http://siteresources.worldbank.org/IDA/Resources/Seminar%20PDFs/73449-1271341193277/IDATermsFY12.pdf | access-date = 2012-07-01}}</ref> Financial resources are allocated to eligible countries based on their success at implementing pro-growth and a poverty-reducing domestic policies. The IDA uses the World Bank's Country Policy and Institutional Assessment (CPIA) development indicator to determine each country's place in a resource allocation index. It then prioritizes its lending to those countries which are indicated to be most promising in terms of favorable policies and [[aid effectiveness]].<ref name="Adler et al. 2010" /><ref name="IDA Resource Allocation 2012">{{Cite web | title = How IDA Resources are Allocated | publisher = World Bank Group | author = International Development Association | url = http://go.worldbank.org/F5531ZQHT0 | archive-url = https://archive.today/20130416102727/http://go.worldbank.org/F5531ZQHT0 | url-status = dead | archive-date = 16 April 2013 | access-date = 2012-07-01 }}</ref><ref name="Epstein & Gang 2009">{{Cite journal | title = Good governance and good aid allocation | journal = Journal of Development Economics | volume = 89 | issue = 1 | year = 2009 | pages = 12–18 | author = Epstein, Gil S. | author2 = Gang, Ira N. | doi=10.1016/j.jdeveco.2008.06.010| url = https://www.econstor.eu/bitstream/10419/34788/1/573334846.pdf | hdl = 10419/34788 | hdl-access = free }}</ref> The IDA adopted the Crisis Response Window in 2007 to enable the rapid provision of emergency financing in response to crises. The association adopted the Immediate Response Mechanism in 2011 to provide IDA borrowers with immediate access to withdraw undisbursed portions of their loans, should a crisis arise that meets the mechanism's criteria.<ref name="IDA Financing Mechanisms 2012">{{Cite web | title = Emergency and Crisis Financing Mechanisms | publisher = World Bank Group | author = International Development Association | url = http://go.worldbank.org/NYU51XV8W0 | archive-url = https://archive.today/20130416084749/http://go.worldbank.org/NYU51XV8W0 | url-status = dead | archive-date = 16 April 2013 | access-date = 2012-07-01 }}</ref>

Because African Countriescountries face some of the most severe poverty and [[Underdevelopmentunderdevelopment]], and because 39 of those countries are the IDA's poorest member states, the association allocates approximately half of the IDA's resources toward financing projects in those countries. As a result of its efforts to improve the region, the IDA has helped bring electricity to an additional 66 million Africans since 1997, helped build or restore 240,000 kilometers of paved roads, and helped enroll an additional 15 million African children in school since 2002.<ref name="IDA Africa 2012">{{Cite web | title = Accelerating growth in Africa | publisher = World Bank Group | author = International Development Association | url = http://www.worldbank.org/ida/africa/index.html | access-date = 2012-07-15}}</ref> The IDA was approved in May 2012 to provide US$50 million worth of credit to the Women Entrepreneur Development Project as part of an effort to help women in [[Ethiopia]] participate in business as skilled employees or leaders.<ref name="Microfinance Africa 2012">{{Cite news | title = World Bank provides funding to unleash the economic potential of Ethiopian Women Entrepreneurs | date = 2012-05-26 | publisher = Microfinance Africa | url = http://microfinanceafrica.net/news/world-bank-provides-funding-to-unleash-the-economic-potential-of-ethiopian-women-entrepreneurs/ | access-date = 2012-07-15 | archive-date = 4 June 2012 | archive-url = https://web.archive.org/web/20120604053547/http://microfinanceafrica.net/news/world-bank-provides-funding-to-unleash-the-economic-potential-of-ethiopian-women-entrepreneurs/ | url-status = dead }}</ref> Although the positive outcomes of the IDA's efforts in Africa had been historically slow, the large allocation of funding to African countries led to positive outcomes particularly within [[agriculture]] and infrastructure development efforts.<ref name="Burki & Hicks 1982" />