International Development Association

Background

During the 1940s and 1950s, low-income developing countries began to realize that they could no longer afford to borrow capital and needed more-favorable lending terms than offered by the International Bank for Reconstruction and Development (IBRD). At the onset of his inaugural term in 1949, then-president of the United States Harry S. Truman assembled an advisory group to suggest ways to accomplish his Point Four Program, of which a significant component was an effort to strengthen developing countries, especially those nearest to the Eastern Bloc, to dissuade them from aligning with other communist states. The advisory group recommended an international mechanism that would function somewhere in between providing strictly-loaned and strictly-granted funds. The UN and United States government published reports expressing support for the creation of a multilateral, concessional lending program for the poorest developing countries. However, the United States was largely unresponsive and ultimately distracted by its involvement in the Korean War and unconvinced that development needed greater financial stimulation.

Developing countries grew increasingly frustrated with not being able to afford IBRD lending and perceived the Marshall Plan as a comparatively generous gift to European nations. In the late 1940s and early 1950s, developing countries began calling for the United Nations (UN) to create a development agency that would offer technical support and concessional financing, with a particular desire that the agency adhere to other UN bodies' convention of each country having one vote as opposed to a weighted vote. However, the United States ultimately opposed proposals of that nature. As the United States grew more concerned over the growth of the Cold War, it made a concession in 1954 at the behest of its Department of State by backing the conception of the International Finance Corporation (IFC). Despite the launch of the IFC in 1956, developing countries persisted in demanding the creation of a new concessional financing mechanism and the idea gained traction within the IBRD. Then-President of the IBRD Eugene R. Black, Sr. began circulating the notion of an International Development Association, as opposed to an idea of a concessional named the Special United Nations Fund for Economic Development (SUNFED) governed by the United Nations. Paul Hoffman, the Marshall Plan's former Administrator, proposed the idea of a soft-loan facility within the World Bank, where the US would have a preponderant voice in the allocation of such loans. Democratic senator Mike Monroney of Oklahoma supported this idea. As Chairman of the Senate Subcommittee on International Finance, Monroney proposed a resolution recommending a study of the potential establishment of an International Development Association to be affiliated with the IBRD. Monroney's proposal was more preferred received within the United States than the SUNFED. The resolution passed the senate in 1958, and then-U.S. treasury secretary Robert B. Anderson encouraged other countries to conduct similar studies. In 1959, the World Bank's Board of Governors approved a U.S.-born resolution calling for the drafting of the articles of agreement. SUNFED later became the Special Fund and merged with the Expanded Programme of Technical Assistance to form the United Nations Development Programme.

Founding

By the end of January 1960, fifteen countries signed the articles of agreement which established the International Development Association. The association launched in September of that same year with an initial budget of $913 million ($7.1 billion in 2012 dollars). Over the next eight months following its launch, the IDA grew to 51 member states and loaned $101 million ($784.2 million in 2012 dollars) to four developing countries.

1960–1979

By 1978, the IAD had grown its available resources to approximately $18.1 billion ($89.4 billion in 2025 dollars) split between approximately $1.1 billion ($5.4 billion in 2025 dollars) in recurring funding from member governments and approximately $15.6 billion ($77.1 billion in 2025 dollars) in supplementary contributions. The primary focus of this lending was for Agriculture and rural development representing approximately $1.34 billion ($6.6 billion in 2025 dollars) or 58% of all credits, for uses such as establishing dairy cooporatives in India or grain storage and marking systems in Ethiopia.

1980–1999

Inn 1983, the UN reported that more than 50 countries were eligible to receive loans from IDA with a gross national product of less than $796 per person ($2,821 in 2025 dollars). Loans at the time were interest free, but carried service charges of.75 % on disbursed amounts and.5% on undispersed balances. The loans had 10-year grace periods and were then repayable over 50-year terms. The number of countries eligible to receive funds grew to 81 countries by the end of 1999, with lending reaching $6.8 billion ($13.2 billion in 2025 dollars).

2000–2019

IDA grew to $8.7 billion ($14.4 in 2025 dollars) in 2005, covering 160 projects in 66 countries. Of these, the largest commitments were for projects in Africa totaling $3.9 billion ($6.4 in 2025 dollars). Total membership in the IDA stood at 165 countries by the end of the 2005 fiscal year.

The IDA is governed by the World Bank's Board of Governors which meets annually and consists of one governor per member country (most often the country's finance minister or treasury secretary). The Board of Governors delegates most of its authority over daily matters such as lending and operations to the Board of Directors. The Board of Directors consists of 25 executive directors and is chaired by the president of the World Bank Group. The executive directors collectively represent all 187 member states of the World Bank, although decisions regarding IDA matters concern only the IDA's 172 member states. The president oversees the IDA's overall direction and daily operations. As of May 2024, Ajay Banga serves as the President of the World Bank Group. The association and IBRD operate with a staff of approximately 10,000 employees.

The IDA is evaluated by the Bank's Independent Evaluation Group. In 2009, the group identified weaknesses in the set of controls used to protect against fraud and corruption in projects supported by IDA lending. In 2011, the group recommended the Bank provide recognition and incentives to staff and management for implementing activities which implement the Paris Declaration on Aid Effectiveness principles of harmonization and alignment, promote greater use of sector-wide approaches to coordination, and explain the reasons why when a country's financial management system is not used so that the client country may address those shortcomings. It also recommended that the Bank collaborate with development partners to strengthen country-level leadership of development assistance coordination by offering greater financial and technical support. Development economists, such as William Easterly, have conducted research which ranked the IDA as featuring the most transparency and best practices among donors of development aid.

Researchers from the Center for Global Development expect that the IDA's collection of eligible borrowing countries will decrease by half by the year 2025 (marking the 65th anniversary of the association's establishment) due to graduations and that remaining borrowers will consist primarily of African countries and will face substantial population declines. These changes will imply a need for the association to carefully examine its financial models and business operations to determine an appropriate strategy going forward. The center recommended that the World Bank leadership begin discussing the long-term future of the IDA.