The International Development Association (IDA) is the part of the World Bank Group (WBG) that helps the world's 74 poorest countries end extreme poverty and build shared prosperity in a sustainable manner. It aims to reduce poverty by providing financial resources that boost economic growth, strengthen governance, reduce inequalities, and improve people’s living conditions. As a donor and through an active participation, Switzerland plays an important role in shaping the IDA’s priorities.
IDA is one of the largest sources of assistance for the world’s poorest countries. It provides support for health and education, climate change, infrastructure and agriculture, and economic and institutional development. It advises governments on programmes to achieve these goals. To finance such programmes, it issues loans and grants and provides considerable debt relief. IDA’s operational work is complemented by analytical studies that support the design of policies to reduce poverty.
Donor countries including Switzerland replenish the resources of the IDA every three years. These replenishment negotiations are an opportunity to discuss the strategic and operational orientation of the fund.
Background: Adressing financial needs of developing countries
IDA addresses challenges such as building resilience to climate change, working in fragile and conflict-affected countries, improving gender equality and helping countries prepare for and respond to future crises. It lends money on concessional terms, meaning its loans have a zero or very low interest charge and repayments are stretched over 30 or more years, including a 5 to 10-year grace period.
With regard to development finance, the WBG, and IDA in particular, is the most influential multilateral organization. It has the largest potential to address the need for financial resources demanded by the 2030 Agenda for Sustainable Development.
IDA’s aims: The five special themes of the IDA19 replenishment
The replenishment negotiations for the current funding cycle 2020-2023, known as IDA19, assembled a record USD 82 billion financing package. This was possible due to an adjustment of the IDA’s financing model introduced under IDA18. Under this model, IDA was allowed for the first time to leverage its balance sheet on the international capital markets. This new business model answers the call of the Addis Ababa Action Agenda for multilateral development banks to maximize their resources and find innovative ways to finance the 2030 Agenda for Sustainable Development.
IDA19 places a special emphasis on five thematic areas: climate; jobs and economic transformation; fragility, conflict & violence; governance and institutions; and gender.
The IDA19 financing package includes:
- A significant increase of resources for fragile countries (USD 18.7 billion), including targeted support to fragile countries to address and prevent conflict risk;
- Increased financing for regional programs to expand regional integration and infrastructure (USD 7.6 billion);
- A window for refugees and their IDA host governments (USD 2.2 billion)
- Financing for crisis response, including more recently support for early response to slow-onset crises like food insecurity (USD 2.5 billion)
- A Private Sector Window to mobilize private investment in IDA countries (USD 2.5 billion)
- Non-concessional financing for lower risk IDA countries for scaling up successful projects (USD 5.7 billion)
The five special themes of IDA19 correspond closely to Switzerland’s development priorities defined in Switzerland's international cooperation strategy 2021-2024.