IDA Financing

For a country to access IDA resources, it must be in a situation of relative poverty as indicated by its per capita income falling below the IDA operational cut-off, $1,255 in FY23, and/or lack creditworthiness for IBRD borrowing. IDA funds are allocated to the recipient countries in relation to their income levels and record of success in managing their economies and their ongoing IDA projects. IDA's lending terms are highly concessional, meaning that IDA credits carry no or low interest charges.

The financing terms are determined with reference to recipient countries' risk of debt distress, the level of GNI per capita, and creditworthiness for the International Bank for Reconstruction and Development (IBRD) borrowing. Recipients with a high risk of debt distress receive 100 percent of their financial assistance in the form of grants and those with a medium risk of debt distress receive 50 percent in the form of grants. Other recipients receive IDA credits on regular or blend terms with 38-year and 30-year maturities respectively. Small states receive IDA financing on small economy terms with 40-year maturity.

In the fiscal year ending June 30, 2022, IDA commitments totaled $37.7 billion, of which $13.2 billion in grants. Africa region received 73 percent of the total commitments. Since 1960, IDA has provided $496 billion to 114 countries. Annual commitments have increased steadily and averaged about $34.7 billion over the last three years (FY20-FY22).

IDA-financed operations address primary education, basic health services, clean water and sanitation, environmental safeguards, business climate improvements, infrastructure and institutional reforms. 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 and ensure accountability for public resources
• Recovery from civil strife, armed conflict, and natural disaster
• Promotion of trade and regional integration

IDA carries out analytical studies to build the knowledge base that allows intelligent design of policies to reduce poverty. IDA advises governments on ways to broaden the base of economic growth and protect the poor from economic shocks.

IDA also coordinates donor assistance to provide relief for poor countries that cannot manage their debt-service burden. IDA has developed a system for allocating grants based on countries’ risk of debt distress, designed to help countries ensure debt obligations are met (debt sustainability).

Last Updated: Oct 05, 2022