IDA—International Development Association
Created in 1960, IDA offers assistance to the poorest countries, providing them with interest-free loans, grants, technical assistance and policy advice. IDA is funded by wealthier nations, lending only to those countries that have a per capita income of less than $1,135 and lack the financial ability to borrow from the International Bank for Reconstruction and Development (IBRD), which lends to middle-income countries. At present, 64 countries are eligible to borrow from IDA, including 14 'blend' countries which are credit-worthy enough to borrow from IBRD as well. Since 2002, IDA has also offered grants to countries based on their risk of debt distress. IDA disbursements totalled $11.2 billion in fiscal year 2009, of which 19% was grants, a slightly lower proportion than the average for the last six years.
Donors convene every three years to replenish IDA's funds. They provide more than half its funds, while the rest comes from loan repayments, the IBRD and the International Finance Corporation, the private sector arm of the World Bank. For IDA 15, the 15th replenishment of IDA funds, $41 billion was made available for 2008-2011. Of this, 45 donor countries committed a record $25.1 billion, an increase of 42 percent relative to the previous replenishment. The largest of the 45 contributions were from the USA, UK, Japan, Germany and France. Three overarching themes were agreed for IDA 15: IDA's aid architecture, its country-level aid effectiveness, and its work in 'fragile' states.
The next replenishment will be negotiated in 2010. The replenishment process involves representatives from donor and borrower countries, as well as consultations with civil society. Traditionally, donors and civil society have used replenishments as opportunities to push for reforms. During IDA 15, there was a pan-European civil society campaign pushing for an end to economic policy conditionality and to lending for fossil fuel projects. Norway withheld a quarter of the extra funds it had planned, pending progress on conditionality. In the previous round, the UK held back $50 million of funding for the same reason.
In light of the financial crisis, volatile oil prices, and the food crisis, the Bank announced in December 2008 that some IDA funding would be fast-tracked to countries in need. By November 2009, projected expenditure for the first half of IDA 15 was $20 billion - higher than usual, but less than half of the commitments for the three-year period. Disbursements in financial year 2009 were roughly equal to 2008.
IDA activity by sector
Infrastructure and social sectors have been the main destinations for IDA finance in the current round, respectively receiving 35% and 26% of commitments in financial year 2009. During IDA14, between 2005 and 2008, infrastructure received 38% of IDA lending, followed by public administration and law, while agriculture and industry received 8-9% each.
IDA activity by region
Thirty-nine of the 78 countries eligible for IDA support are situated in Africa. In FY2009, 47% of the IDA's disbursements and 56% of commitments were to sub-Saharan Africa. The African countries eligible for IDA support are: Angola; Benin; Burkina Faso; Burundi; Cape Verde; Cameroon; Central African Republic; Chad; Comoros; Congo; Democratic Republic of Congo; Republic of Bongo, Cote d'Ivoire; Ethiopia; Eritrea; Gambia; Ghana; Guinea; Guinea-Bissau; Kenya; Lesotho; Liberia; Madagascar; Malawi; Mali; Mauritania; Mozambique; Niger; Nigeria; Rwanda; Sao Tome and Principe; Senegal; Sierra Leone; Somalia; Sudan; Tanzania; Togo; Uganda; Zambia; and Zimbabwe. Zimbabwe's IDA lending is currently suspended due to IMF arrears.
Eight of the 78 countries eligible for IDA support are in South Asia. Around one third of funds were directed to this region in FY2009. The South Asian countries eligible for IDA support are: Afghanistan; Bangladesh; Bhutan; India; Maldives; Nepal; Pakistan; and Sri Lanka. Of these India and Pakistan are IDA / IBRD blend countries.
East Asia and the Pacific
Twelve of the 78 countries eligible for IDA grants and concessional loans are in East Asia and the Pacific; in FY 2008 16% went to this region, as opposed to 11% in 2006. The East Asian and Pacific countries eligible for IDA support are: Cambodia; Kiribati; Laos PDR; Mongolia; Myanmar; Papua New Guinea; Samoa; Solomon Islands; Timor-Leste; Tonga; Vanuatu; and Vietnam.
Of these Papua New Guinea is an IDA / IBRD blend country. The Bank has not approved new lending to Myanmar since 1987, nor has any plans to resume its programme, due to Myanmar´s accumulation of arrears with the Bank and the current political situation in the country.
Europe and Central Asia
Eight of the 78 countries eligible for IDA support are in Europe and Central Asia. They are: Armenia; Azerbaijan; Bosnia-Herzegovina; Georgia; Kyrgyz Republic; Moldova; Tajikistan; and Uzbekistan. Of these Armenia, Azerbaijan, Bosnia-Herzegovina, Georgia and Uzbekistan are IDA / IBRD blend countries.
Middle East and North Africa
In the Middle East and North Africa, Djibouti and the Republic of Yemen are eligible for IDA support.
Latin America and the Caribbean
Nine of the 78 countries eligible for IDA support are in Latin America and the Caribbean. This region received just 3 per cent of IDA funds in the FY 2008. The region includes a number of Caribbean islands which have higher per capita incomes than other IDA countries but are granted loans based on small island economy exceptions. These islands are eligible for a blend of loans from IDA and the IBRD, as is Bolivia. The Latin American and Caribbean countries eligible for IDA support are: Bolivia; Guyana; Haiti; Honduras; Nicaragua; Dominica; Grenada; St. Lucia; and St. Vincent.
Published: Monday 30th November 2009, last edited: Friday 28th May 2010
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