gauri(international business)

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International development association (IDA) By: Gauri Chaturvedi BBA(MOM) BPIBS

INTRODUCTION: 

INTRODUCTION The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people’s living conditions . IDA complements the World Bank’s other lending arm.

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International bank for reconstruction and development ( ibrd )–which serves middle-income countries with capital investment and advisory services. Ida is one of the largest sources of assistance for the world’s 79 poorest countries,39 of which are in africa . It is the single largest source of donor funds for basic social services in the poorest countries. Ida lends money (known as credits) on concessional terms.

HISTORY: 

HISTORY IBRD established in 1944 to help Europe recover -devastation of World War II Success of that enterprise led the Bank, within a few years, to turn its attention to developing countries By the 1950s- poorest developing countries needed softer terms than those offered by the Bank-afford to borrow the capital they needed to grow. United States -initiative, a group of the Bank’s member countries decided to set up an agency that could lend to the poorest countries on the most favorable terms possible.

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They called the agency the "International Development Association Wanted IDA to be run with the discipline of a bank. (world bank) IDA's Articles of Agreement became effective in 1960. The first IDA loans, known as credits, were approved in 1961 to Chile, Honduras, India and Sudan. IDA currently has 170 member countries Members subscribe to IDA’s -submitting necessary documentation – make required payments under the replenishment arrangements. 35 countries have graduated from IDA throughout its history and some reentered

IDA BORROWERS: 

IDA BORROWERS Eligibility for IDA support depends first and foremost on a country’s relative poverty, defined as GNI per capita below an established threshold and updated annually. (in fiscal year 2011: US$1,165 ) IDA also supports some countries, including several small island economies, which are above the operational cutoff but lack the creditworthiness needed to borrow from IBRD. Seventy-nine countries are currently eligible to receive IDA resources.

TOP 10 IDA BORROWERS: 

TOP 10 IDA BORROWERS Top Ten IDA Borrowers ($million, excludes regional projects) Bangladesh 2,139 India 2,072 Pakistan 1,292 Vietnam 1,280 Ethiopia 630 Ghana 605 Nigeria 535 Kenya 490 Tanzania 420 Mozambique 413 New IDA Lending by Region: Sub-Saharan Africa...........43% South Asia...........................39% East Asia/Pacific..................10% Europe/Central Asia...............4% Latin America/Caribbean........3% Middle East/North Africa.........1% IDA Lending by Sector : Infrastructure ......................42% Public Admin and Law..........23% Social sector.......................20% Agriculture ............................8% Industry ................................6% Finance...................................1%

NEW IDA LENDING BY REGION: 

NEW IDA LENDING BY REGION REGION % Sub-Saharan Africa 49 % South Asia 32 % East Asia/Pacific 11 % Europe/Central Asia 4 % Latin America/Caribbean 2 % Middle East/North Africa 1 %

IDA LENDING BY SECTOR:: 

IDA LENDING BY SECTOR: Infrastructure ...............................42% Public Admin and Law..................23% Social sector.................................20% Agriculture ...................................8% Industry .......................................6% Finance........................................1%

IDA lending's: 

IDA lending's IDA credits- maturities of 20, 35 or 40 years 10-year grace period IDA funds are allocated to the borrowing countries relation -income levels and record of success in managing their economies and ongoing IDA projects. IDA credits have no interest charge but small service charge, currently 0.75 percent on funds paid out. IDA also provides grants, which are allocated to the countries that are at risk of debt distress.

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In fiscal year 2010 IDA commitments totaled US$14.5 billion-18% was provided on grant terms. Since 1960, IDA has provided US$222 billion to 108 countries. Annual commitments increased steadily and averaged about US$13 billion over last 3 years. IDA-financed operations address primary needs These projects pave the way toward economic growth, job creation, higher incomes and better living conditions.

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Sound economic policies, rural development, private business and sustainable environmental practices Investment in people, in education and health, especially in the struggle against HIV/AIDS, malaria and TB Expansion of borrower capacity to provide basic services Recovery from civil trouble, armed conflict and natural disaster Promotion of trade and regional integration IDA EMPHASIZES BROAD-BASED GROWTH, INCLUDING:

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IDA advises governments -broaden the base of economic growth and protect the poor from economic shocks. IDA coordinates donor assistance to provide relief for poor countries that cannot manage their debt-service burden. IDA developed a system for allocating grants based on countries’ risk of debt distress, designed to help countries ensure debt sustainability. IBRD raises its funds on the world's financial markets, IDA is funded largely by contributions from the governments of richer member countries. Additional funds from IBRD's income and from borrowers' repayments of earlier IDA credits.

FUNCTION OF WORLD BANK GROUP’S ORGANIZATIONS: 

FUNCTION OF WORLD BANK GROUP’S ORGANIZATIONS The functions of the International Bank for Reconstruction and Development are: The assistance and development of territories of its members The promotion of a balanced growth in international trade The International Development Association seeks to: Promote world development, increase productivity and standards of leaving in the less developed countries of its membership Assist the International Bank for Reconstruction and Development

INTRODUCTION: 

INTRODUCTION Official Development Assistance (ODA) flows are a primary source of financing for low- income countries (LICs), and IDA continues to be their main source of multilateral ODA IDA’s role in the international aid architecture - financing and knowledge service and support aid delivery platform In light of the growing complexity of the global aid architecture, IDA’s role in supporting LICs has become even more important.

The country-based development model in a changing aid landscape: 

The country-based development model in a changing aid landscape There is broad agreement that the country-based development model However, some recent trends in ODA flows are potentially at odds

IDA’S ROLE AT THE COUNTRY LEVEL: 

IDA’S ROLE AT THE COUNTRY LEVEL Client surveys indicate that IDA’s core strengths reside in its financial resources - but also, in its global reach combined with local presence, its ability to operate on a multi- sectoral basis These core strengths enable IDA not only to provide direct support to client countries IDA brings greater strategic coherence in development assistance programs and plays a central role in enhancing alignment and harmonization as well as in achieving sustained results at the country level.

CHALLENGES GOING FORWARD AND CONCLUSION: 

CHALLENGES GOING FORWARD AND CONCLUSION Focuses on the main challenges going forward and how IDA is gearing up to address them. IDA will have to adapt and intensify its efforts in four main areas: strengthening complementarity with vertical approaches to aid delivery; (ii) ensuring appropriate sectoral funding; (iii) addressing critical global challenges with an increased priority given to climate change; (iv) and enhancing alignment and harmonization . IDA is also in the process of reforming and modernizing its operational policies, designed to improve its operational effectiveness and thus its ability to meet the challenges outlined above.

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