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Building a Better IDA

December 10, 2010

The International Development Association (IDA) is the World Bank’s arm that provides highly concessional loans and grants to the world’s poorest countries. IDA is one of the largest sources of assistance for these countries – of which, half are located in Sub-Saharan Africa. And, it is the single largest source of donor funding for basic social services in the poorest countries. In FY10, the largest IDA recipients included India, Vietnam, Tanzania, Ethiopia, Nigeria, Bangladesh, Kenya, and Uganda.

According to the Center’s Quality of Official Development Assistance (QuODA) assessment, IDA is the only multilateral aid agency that scores in the top ten across all four sub-indices (maximizing efficiency, fostering institutions, reducing burden, and transparency and accountability).

The majority of IDA’s funding comes from contributions by roughly 45 donor governments. Every three years, these governments gather to replenish IDA’s coffers. The so-called replenishment negotiations provide an opportunity for shareholders and stakeholders to influence IDA’s institutional and programmatic objectives. The largest pledges to previous replenishment (IDA-15) were made by the United Kingdom, the United States, Japan, Germany, France, Canada, Italy and Spain. Additional funds come from the World Bank’s net income and from borrower countries' repayments of earlier IDA loans (i.e., “reflows”).

In mid-December 2010, donor governments will meet in Brussels to conclude the IDA-16 Replenishment agreement. This will be the last full IDA replenishment until the Millennium Development Goals (MDGs) deadline in 2015. The IDA-16 agreement largely will focus on several key themes, including: fragile states, gender, crises response, and climate change. World Bank management has proposed an overall IDA-16 financial envelope of $47 billion – of which, donor governments would provide roughly $33 billion. This would essentially entail flat donor contributions in real terms compared to the previous IDA-15 replenishment. However, it would mean a roughly 15 percent increase overall due to usage of the World Bank’s internal resources (i.e., IDA credit reflows, IBRD net income transfers, etc).

The Center has produced several proposals and analytical papers dealing with IDA’s operations. These include: