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August 20, 2014

Important Details you should know about International Development Association (IDA)


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It was suggested in 1958  that a new international institution, to be known as International Development Association (IDA), be established and administered by the World Bank. The IDA started functioning from 8th November 1960.

Aims and Objectives of IDA

The main objective of the IDA has been to provide financial assistance to Less Developed Countires (LDCs) on soft loan basis, which means on terms imposing a lower servicing charge on loans than on conventional loans by the World Bank to its member countries. 

IDA has given loans to LDCs at 3/4 per cent rate of Interest. Another important aspect of IDA loans is that the loans can be repaid in loan currencies of borrowing countries. This ensures that the IDA loans do not have adverse effect on balance of payments of the LDCs. 

IDA lends to those countries that had gross national income (GNI) per capita not morethan $1,175 (in 2010 dollars).

Membership of the IDA 

It is provided that any member country of World Bank can become a member of the IDA, provided that a country is ready to subscribe the IDA at the rate of 5 per cent of its existing World Bank share capital subscription quota. At present the IDA has 172 member countries which pay contributions every three years as replenishments of its capital. The IDA lends to 81 borrowing countries, nearly half of which are in Africa. South Sudan is the newest member of IDA (joined on 18th April 2012). 

The total subscriptions and contributions of IDA aggregated at $41.879 million. Subscriptions are payable in five installments. For purpose of subscription, distinction has been made between the more industrialized part (1) and less developed part (2) countries. The developed countries have been designated as part 1 countries and the rest of the countries have named as less developed countries and included in part 2. 

India and IDA

India has immensely benefited form the credits granted to her by the IDA. Upto 30th June 1987, she had received massive credit assistance of $14,508 million in the form of 174 credits to finance her various development projects. This is by far the largest credit assistance that the IDA has given to any single member country so far. Recently on 23rd July 2014, recognizing that India still needs to lift around 270 million people out of poverty, the International Development Association (IDA) donors have agreed to provide $3.4 billion over the next three years as transitional support.

List of Top 10 IDA Borrowers 2014

FY14 Top 10 IDA Borrowers
Sri Lanka

Where do IDA resources come from ?

The largest source of IDA resources is new contributions from donor countries. This accounts for about more than half of the US$ 33 billion which will be made available to IDA borrowers durign the three year period of IDA 14. The second largest resources, which include repayments from graduated and current IDA borrowers, investment income, and other resound residual resources from past replenishments. An additional source of funds is transfers from IBRD net income. 

Fast Facts of IDA

  • Formed in - 8th November 1960
  • Head Quarters - Washington, D.C
  • Members - 172 Countries
  • Newest Member - South Sudan (18th April 2012)
  • Parent Organization - World Bank
  • President - Jim Yong Kim (President of the World Bank)
  • Largest Borrower - India

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