International Development Association

The World Bank and IMF launched several financial initiatives to help out the IDA countries in times of the COVID-19 crisis.

About IDA

The IDA or International Development Association is an international financial institution that is a part of the World Bank Group. It was established in 1960 and headquartered in Washington D C. It aims to ‘reduce poverty by providing loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions’.

Function

The IDA was established to complement the IBRD or International Bank for Reconstruction and Development which is the original lending arm of the World Bank group. The IDA is one of the largest source of financial assistance for 76 of the world’s poorest countries. It lends money as loans on concessional terms with very low or zero interest charged. The repayments are stretched over 30 to 38 years and it also gives 5 to 10 years as grace period. It provides debt relief through its programs like Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative.

Members

It has 173 member states which contributes to replenish its capital every 3 years. It lends to 75 borrowing countries. Most of the borrowing countries are in Africa (39 countries). 44 countries have graduated from the IDA. India (in 2014) is one such country that has graduated from the eligibility for IDA lending.