The International Development Association

In at least three aspects, the establishment of IDA marked a watershed moment in the history of international economic relations. It stepped up efforts to form a multinational world trade and payment system; It elevated poverty to a formal concern in one of the world’s wealthiest countries; and, It was institutionalised at the worldwide level financing at a reduced rate to stimulate economic growth. International Development Association (IDA full form) has shown to be one of the most effective tools for supporting low-income countries. The IDA has 173 member countries contributing to its capital renewal every three years. 

What is IDA?

The International Development Association (IDA full form) is one of the world’s most powerful and successful forums for combating severe poverty in the world’s poorest nations. 

• IDA is a division of the World Bank that assists the world’s 74 poorest countries and is the single largest source of foreign cash for these countries’ basic social services.

• IDA works to alleviate poverty by providing financial aid, zero to low-interest loans, and policy advice to programs that help impoverished people worldwide expand their economies, build resilience, and better their lives.

• IDA has made a difference in the lives of hundreds of millions of people worldwide ten years leading up to 2021, 395.9 million children were immunised, 974.9 million people received critical health services, and 113.3 million people had better water accessories To International Development Association (IDA full form)

Moderate developing countries began to recognise in the 1940s and 1950s that they could no longer afford to borrow funds. They required more favourable loan terms than those supplied by the International Bank for Reconstruction and Development (IBRD) (IBRD).

Developing countries started calling for the United Nations (UN) to establish a development agency that would provide technical assistance and subsidised financing in the late 1940s and early 1950s, with a particular desire for the agency adheres to other UN bodies’ conventions of each country to have one vote rather than a weighted vote. 

Developing countries insisted on constructing a new concessional lending vehicle despite the IFC’s establishment in 1956, and the proposal gained popularity inside the IBRD. Eugene R. Black, Sr., then-President of the IBRD, floated the idea of an International Development Association as an alternative to the Special United Nations Fund for Economic Development (SUNFED), which the UN managed.

The World Bank’s Board of Governors accepted a resolution drafted in the United States in 1959 that called for preparing the articles of agreement. After merging with the Expanded Technical Assistance Programme to establish the United Nations Development Scheme, SUNFED became the Special Fund.

By the end of January 1960, fifteen countries had signed the International Development Association’s articles of agreement. The organisation began operations in September of that year, with a budget of $913 million ($7.1 billion in 2012 dollars). The IDA expanded to 51 member states in the eight months following its founding, lending $101 million ($784.2 million in 2012 dollars) to four developing countries.

Why International Development Association (IDA full form)?

That’s because:

• IDA is a “first mover” when tackling difficult development issues. IDA brings people together for the common good and helps to make the world a safer place.

• The IDA is in charge of providing leadership. IDA is the first of the main development partners to work in post-conflict and crisis settings when risk mitigation is critical.

• IDA provides global answers to global issues. Many issues are too complex to be solved by single-sector, single-country, or single-organisation solutions. 

• No other development organisation can equal IDA’s convening capacity. Global reach, country solutions, cross-sectoral knowledge, ability to deploy innovative financial tools, and operational and implementation skills are among its comparative advantages.

• IDA is a game-changer. From its history-changing agriculture solutions in the 1970s to its pioneering work in debt relief and the phase-out of leaded gasoline, IDA has helped countries build solutions that have transformed the development scenario.

And, much more responsibilities are taken by IDA.

What is the source of IDA’s funding?

IDA partners and representatives from borrowing nations meet every three years to renew IDA money and evaluate IDA policies. Donations from IDA contributors, contributions from the World Bank Group, and capital market funding make up the replenishment.

• IDA has had 19 regular replenishments since its inception in 1960. IDA19 was renewed with $82 billion in December 2019, with $23.5 billion coming from IDA contributors.

• To address financial demands, the World Bank frontloaded nearly half of IDA19 resources in the first fiscal year (July 2020-June 2021) due to pressures from the COVID-19 issue.

And so on., as there have been other ways of funding IDA’s funding. 

Its Operations & Governance

The IDA is managed by the World Bank’s Board of Governors, which meets once a year and comprises one governor from each member country (usually the finance minister or treasury secretary). The World Bank Group’s President chairs the Board of Directors, which comprises 25 executive directors. Even though the executive directors represent all 187 World Bank member states, decisions involving IDA affairs affect only the IDA’s 172 member states. The president is in charge of the IDA’s overall strategy and day-to-day operations. David Malpass has been the President of the World Bank Group since April 2019.

The Independent Evaluation Group of the Bank assesses the IDA. It was also suggested that the Bank work with development partners to promote country-level leadership in development assistance coordination by providing more technical and financial aid. 

Conclusion

Therefore, IDA’s financial lending effectiveness can be measured using one technique to look at the rate of return on its expenditures. The rates of return projected when projects are evaluated often differ markedly from the actual results for various factors, including weather, government policies, and flaws in project design and operation. Its goal is to help the world’s poorest countries expand more swiftly, fairly, and sustainably to alleviate poverty. The International Development Association (IDA) is the world’s largest funder of economic and human development programmes in the world’s poorest countries.