fund for the poorest

8/10/2019 Fund for the Poorest

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INTERNATIONAL DEVELOPMENT ASSOCIATION

The World Banks

POORESTFORTHE

FUND


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This publication is a product of the

Development Finance

Vice Presidency of the World Bank

1818 H Street, N.W.Washington, D.C. 20433

www.worldbank.org/ida

www.facebook.com/ida.wbg

www.youtube.com/worldbank

October 2014

Photography:

Cover, Arne Hoel/World BankWalking to school, Ghana.

p.3, World BankBefore and after shot showing the impact of the Coastal Cities Environmental Sanitation Project in Vietnam.

p.4, Simone D. McCourtie/World BankCommunity meeting in Aurangabad, India.

p.5, Stephan Bachenheimer/World BankChildren in Liberia receive school feeding as part of the Banks Global Food Crisis Response Program.

p.6,Arne Hoel/World BankSolar panels enable Bangladeshi children, Shati and Towhid, to study at night.

p.7, Bill Lyons/World BankStudents taking year-end exams at Kardi School i n Sanaa, Yemen.

p.8, Jonathan Ernst/World BankWinston Mills-Compton teaches a class in mathematics at the Mfantsipim Boys School in Cape Coast, Ghana.

p.9, Dang Thanh LanWorkers in Vietnam fight erosion by building a secure corridor at Mui Ne beach in Binh Thuan Province.

p.10, UNICEFSomali drought refugees receive education, vaccinations, and food in the refugee camps in Daddab, Kenya.

p.12, Jonathan Ernst/World BankWorkers maintain the thermal power station in Takoradi, Ghana.

back cover,Arne Hoel/The World BankHydro power plant in Ghana; Simone D. McCourtie/World BankFemale farmer showcasing her agricultural products in Maharashtra, India.


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| I DA | THE WORLD BANKS FUND FOR THE POOREST | 1

Who We Are

The International Development Association (IDA)

is the part of the World Bank that helps the worlds

poorest countries. Established in 1960, IDA aims to

reduce poverty by providing loans (called credits)and grants for programs that boost economic

growth, reduce inequalities, and improve peoples

living conditions.

IDA complements the World Banks origi-

nal lending armthe International Bank for

Reconstruction and Development (IBRD).

IBRD was established to function as a self-

sustaining business, and provides loans

and advice to middle-income and credit-

worthy countries. IBRD and IDA share the

same staff and headquarters and imple-

ment and evaluate projects with the same

rigorous standards.

IDA is one of the largest sources of assis-

tance for the worlds 771poorest coun-

tries, 39 of which are in Africa, and is the

single largest source of donor funds for

basic social services in these countries.

IDA-financed interventions bring positive

change to 2.8 billion people, the majority

of whom survive on less than $2 a day.

1 India graduated from IDA at the end of FY14 but will receive

transitional support on an exceptional basis through the IDA17

period (FY15-17).

3.5millionTeachers recruited and/or

trainedmore than four

times the number of primary

and secondary school teachers

in France. (From 20022012)

597million+Children immunized

equivalent to 6.5 times

the number of children in

the United States. (From

20032013)

123millionPeople received access to an

improved water source. For

every $1 invested in water

and sanitation, $8 is returned.

(From 20022012)

By the NumbersKey IDA achievements


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2 | IDA | THE WORLD BANKS FUND FOR THE POOREST |

IDA lends money on concessional terms.

This means that IDA credits have a zero or

very low interest charge and repayments are

stretched over 25 to 38 years, including a

5- to 10-year grace period. IDA also provides

grants to fragile and conflict-affected states,

and other countries at risk of debt distress.

In addition to concessional loans and

grants, IDA provides significant levels of

debt relief through the Heavily Indebted

Poor Countries (HIPC) Initiative and the

Multilateral Debt Relief Initiative (MDRI).

Since its inception, IDA has supported

activities in 112 countries. Annual commit-

ments have averaged about $18 billion over

the last three years, with about 50 percent

of that going to Africa. For the fiscal year

ending on June 30, 2014, IDA commitments

reached $22.2 billion spread over 242 new

operations. 12 percent of the total was com-

mitted on grant terms.

What We DoThe worlds poorest countries are often

unable to attract sufficient capital to

support their urgent development needs

and therefore rely on official aid flows as a

critical source of funding.

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 im-

provements, infrastructure, and institutional

reforms. These projects pave the way toward

equality, economic growth, job creation,

higher incomes, and better living conditions.

For the period July 1, 2014June 30, 2017

(IDA17), IDA operations will place a special

emphasis on four thematic areas: climate

change, fragile and conflict-affected coun-

tries, gender equality, and inclusive growth.

Many of the issues developing countries

face do not respect borders. By helping

address these problems, IDA addresses

security, environmental and health

concerns, and helps prevent these threats

from becoming global issues.

Because donor contributions to IDA are

pooled together, IDA is able to leverage

a large un-earmarked capital base to

respond to critical country needs, particu-

larly during times of crisis and in difficult,

fragile environments.

IDAs operational work is complemented by

analytical studies that support the design of

policies to reduce poverty. IDA advises gov-

ernments 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 can-

not manage their debt-service burden, and

has a system for allocating grants based on

countries risk of debt distress, designed to

help countries ensure debt sustainability.

IDA places a premium on development

impact and is regarded as a transparent,

cost-effective platform for achieving results.

(Read about results measurement below.)

In the period 20032013, for example, IDA

financing immunized more than 597 million

children; provided access to health services

for 117 million people; and helped 195 mil-

lion women receive prenatal care.

Visit us online to learn more about what we

do and see what donors and others say

about us at www.worldbank.org/ida,

facebook.com/ida.wbg,and

www.youtube.com/worldbank.


between 20002010

2million+Classrooms built or rehabilitated

benefiting over 105 million

children per year.

33millionMosquito nets purchased and/or

distributed to prevent malaria.


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@WorldBank IDA-nanced projects deliver positive

change for 2.8bn peoplemost of whom survive on less

than $2 a day. Discuss on Twitter: #AidEffectiveness


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4 | I DA | THE WORLD BANKS FUND FOR THE POOREST |

How Does IDA Work?

IDA funding and voice.IDA is overseen by

its 173 shareholder countries, which com-

prise the Board of Governors. The day-to-day

development work of IDA is managed by Bank

operational staff, and governments and imple-

menting agencies in the program countries.

While the IBRD raises most of its funds on

the worlds financial markets, IDA is funded

largely by contributions from the govern-

ments of its member countries. Additional

funds come from IBRD and the International

Finance Corporation, IFC ($3.2 billion in

IDA17), and from borrowers repayment of

earlier IDA credits ($14.3 billion in IDA17).

The most recent replenishment of IDAs

resources (IDA17) was finalized in Decem-

ber 2013, resulting in a record replenish-

ment of $52.1 billion to finance projects over

the three-year period. Donor contributions

represent the largest share of IDA funding,

accounting for 65 percent in IDA17 ($34.1

billion).

Donors and borrower country representatives

hold replenishment meetings every three years

to agree on IDAs strategic direction, financ-

ing, and allocation rules in an open and trans-

parent process. IDAs capacity for learning,

adaptation, and innovation is grounded in this

unique governance process.

The replenishment process typically consists

of four formal meetings held over the course

of one year. In addition to officials from the

now 50+ donor governments (known as IDA

Deputies), representatives of borrowing

member countries are invited to participate

to help ensure that IDAs policy framework is

responsive to country needs.

Policy papers discussed during the replenish-

ment negotiations are disclosed to the public,

and the draft replenishment agreement is

posted on the web for public comment prior

to the last replenishment meeting. IDA staff

also engages with civil society organizations

(CSOs) around the world on an ongoing basis.

Eligibility for IDA support depends first and

foremost on a countrys relative poverty,defined

as gross national income (GNI) per capita below an

established threshold and updated annually.

IDA also supports some countries, including several

small island economies, which are above the

threshold but lack the creditworthiness needed to

borrow from IBRD.

Some countries, such as Vietnam and Pakistan, are

IDA-eligible based on per capita income levels, but are

also creditworthy for some IBRD borrowing. They are

referred to as blend countries.

Seventy-seven countries (plus India) are currently eligi-

ble to receive IDA resources. Together, these countries

are home to 2.8 billion people, half of the total popula-

tion of the developing world. An estimated 1.8 billion

people there survive on incomes of $2 or less a day.

See the list of current IDA borrowers at

www.worldbank.org/IDA/

borrowers.

IDA Borrowers


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How IDA funds are allocated.IDA

borrowing countries have very significant

needs for concessional financing. But the

amount of funds available, which is fixed

once contributions are pledged by donor

governments, is below what countries need.

IDA must therefore make decisions about

how to allocate limited resources among the

eligible countries. (See box on borrowers.)

Funding decisions are based on a set of

agreed criteria, including countries income

levels and performance record in managing

their economies and ongoing IDA projects.

To be eligible for funds, countries must first

meet the following criteria:

Relative poverty defined as GNI per

capita must be below an established

threshold (updated annually). In fiscal

year 2015, this was $1,215.

Lack creditworthiness to borrow on

market terms.

Countries are then assessed to determine

how well they implement policies that

promote economic growth and poverty

reduction. This is done through the Country

IDA is able to leverage a large capital

base to respond to country needs

during times of crisis #FoodCrisis

#FinancialCrisis #DisasterResponse


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Policy and Institutional Assessment. This

assessment and portfolio performance

together constitute the IDA Country Perfor-

mance Rating. In addition to the rating,

population and per capita income also

determine IDA allocations. These ratings

are disclosed on IDAs website:

www.worldbank.org/ida.

IDA donors and the World Bank in the IDA17

Agreement also recommended that sub-

Saharan Africa remain a priority and receive

at least 50 percent of IDA funds, as warranted

by their performance.

Lending terms.Terms of lending vary for

the different members of IDA, reflecting

their income levels and debt status. As a

result of discussions and reviews conducted

during IDA17, IDA adjusted the lending

terms for IDA-only countries, resulting in a

slight hardening of terms (shorter maturity

and a straight line amortization schedule),

while still maintaining a degree of conces-

sionality.

In 2012, IDA was hailed as a global

aid transparency leader by Publish

What You Fund #OpenDev

#AidEffectiveness #IATI


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In Yemen, 39,000 girls attended school as a result of

conditional cash transfer schemes introduced by IDA in

2008 and 2009 #GirlsEducation #ThinkEqual


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IDA has had a rigorous results measurement system in

place for over 10 years #AidEffectiveness #Value4Money


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How Do We KnowIDA Works?

For more than a decade, IDA has been mea-

suring its role in helping countries grow and

reduce poverty and informing donors about

the effectiveness of their contributions. The

Results Measurement System (RMS) for

IDA16 uses an integrated results and per-

formance framework to show aggregated

results across IDA countries. It assesses

IDAs contribution to development results,

and is linked to the Millennium Development

Goal framework. It also shows whether IDA

is managing its operations and services

effectively and is functioning efficiently.

The RMS framework groups indicators into

four tiers. The first two tiers track aggregate

country development results and IDAs

contribution to these development results.

The other two capture elements of perfor-

mance against agreed IDA16 performance

standards in an IDA Report Card. The

four tiers are: (1) IDA Countries Progress;

(2) IDA-Supported Development Results;

(3) IDA Operational Effectiveness; and (4) IDA

Organizational Effectiveness.

The RMS supplements the more-detailed

project, country, and sector results data

previously available and complements quali-

tative overviews conducted at the country,

sector, thematic, and project levels.

The Future of IDA

Todays fiscal environment presents

challenges for all those involved in develop-

mentfrom borrowing countries to donors

to CSOs. Additional challenges also need

to be addressed, including with respect to

climate change, fragile states, gender

equality, and the need to ensure everyone

benefits from growth. And while a number

of countries are expected to exceed IDAs

per capita income threshold in the next

decade, it is also clear that these countries

will continue to be home to millions of poor

people who will still need extensive support.

The overarching theme for IDA17

Maximizing Development Impactcalls

for IDA to do more to deliver integrated

solutions for IDA countries by leveraging

private investment, public resources, and

knowledge in a more results-oriented and

cost-effective way. The special themes for

IDA17inclusive growth, gender, climate

change, and fragile and conflict-affected

statesaddress the key bottlenecks to

broad-based growth and

the long-term fundamentals for robust and

sustainable development.


from 20002010

300millionTextbooks purchased and/

or distributed15 times the

number of books in the New

York Public Library.


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IDA is providing nutrition, health, and sanitation services

for more than half a million drought refugees living in

settlements along the Somali border in Kenya and Ethiopia.

#CrisisResponse #SocialSafetyNet

IDA continues to undergo an extensive

renewal in the face of evolving global and

country challenges. We are continuously

engaged with donors and borrowers in explor-

ing ways to address issues such as IDAs

financial sustainability, fragility, and results.

The challenge is to keep the world engaged

in the global aspiration to end extreme pov-

erty and to ensure that aid dollars are used

as efficiently as possible.


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IDA more than doubled investment in renewable energy and

energy efciency during 2009-2010 #ClimateAdaptation


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For more on IDA, visit: www.worldbank.org/idaor www.facebook.com/ida.wbg


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The World Banks Fund for the Poorest I IDA

1818 H Street, N.W.

Washington, D.C. 20433

USA

www.worldbank.org/ida

www.facebook.com/ida.wbg

www.youtube.com/worldbank

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