Skip to main content
The World Bank


Country On selection, leaving this page

The World Bank Group (WBG) works closely with client countries to ensure that their debt burdens do not overwhelm their ability to reduce poverty or provide essential government functions. For countries eligible for financing under IDA, these activities are financed through the Debt Management Facility (DMF), a WBG trust fund dedicated to strengthening debt-management capacity in developing countries.

Debt Sustainability & Grants

 The World Bank Group and the IMF work with low-income countries to produce regular Debt Sustainability Analyses, which are structured examinations of developing country debt based on the Debt Sustainability Framework. Our two institutions use this framework to guide the borrowing decisions of low-income countries in a way that balances their financing needs with their ability to repay—both in the present and in the future. IDA translates debt distress risk ratings into "traffic lights", which then determine the share of IDA grants and highly concessional IDA credits for each country. Countries at high risk or in debt distress (red light) can benefit from 100% grants, medium-risk countries (yellow light) from 50%, while low-risk countries (green light) cannot benefit from grants. By boosting the share of grants for countries at risk of debt distress, IDA helps restore or maintain external debt sustainability and prospects for future assistance.

Sustainable Development Finance Policy (SDFP)

All IDA countries are subject to the Sustainable Development Finance Policy (SDFP) , which incentivizes sustainable borrowing and promotes coordination between IDA and other creditors. The policy has two pillars: (1) the Debt Sustainability Enhancement Program (DSEP) to help IDA countries address debt vulnerabilities through incentives and policy actions; and (2) the Program for Creditor Outreach (PCO) to facilitate information sharing, dialogue and coordination among creditors to help address debt-related risks, building on IDA’s global platform and convening role.

For more information about the SDFP:

Sustainable Development Finance Policy: Mid-Term Implementation Review (April 2023)

Addressing debt vulnerabilities in IDA countries

Concessionality & Grant Element Calculations
Low-income countries can evaluate the level of concessionality of the loan portion of WBG assistance (also known as ‘grant element’) using the online grant element calculator.

Last Updated: May 16, 2023