How Does IDA Work?

IDA is overseen by its 173 shareholder countries, which comprise the Board of Governors. The day-to-day development work of IDA is managed by Bank operational staff, governments, and implementing agencies.

IDA has historically been funded largely by contributions from the governments of its member countries (see box on IDA contributors). Donors meet every three years to replenish IDA resources and review its policy framework. 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 IDA’s policy and financing frameworks are responsive to country needs. Policy papers discussed during the replenishment 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), foundations and think tanks around the world on an ongoing basis.

The financing package offers exceptional value for money—with every $1 in partner contributions generating about $3 in spending authority—and is one of the most concrete and significant commitments to date to scale up financing to achieve the Sustainable Development Goals.

How IDA funds are allocated. IDA borrowers have very significant needs for concessional funds. 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 scarce resources among eligible countries. Allocation decisions are based on several 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 2019, this was $1,145.
  • Lack of creditworthiness to borrow on market terms and therefore have a need for concessional resources to finance the country’s development program.

Countries are then assessed to determine how well they implement policies that promote economic growth and poverty reduction. This is done through the Country Policy and Institutional Assessment. This assessment and portfolio performance together constitute the IDA Country Performance Rating. In addition to the rating, population and per capita income also determine IDA allocations. These ratings are disclosed on IDA’s website.

Lending terms. IDA offers a range of financing products—from grants to loans on IBRD terms—that take into account the variations in economic and social development of IDA countries.