International Development Association

The International Development Association (IDA) is a financial institution that provides low-interest loans and grants to the world’s most impoverished developing nations. It was founded in 1960 as part of the World Bank Group, with its headquarters in Washington, D.C. The IDA was created to work alongside the International Bank for Reconstruction and Development, focusing on countries that have the lowest gross national income, poor creditworthiness, or the smallest per capita income. These two organizations share the same leadership and staff and are together referred to as the World Bank. The IDA’s mission, like that of the World Bank, is to reduce poverty. It aims to offer affordable development financing to nations whose high credit risk prevents them from borrowing commercially or through other World Bank programs. Its stated goal is to help the poorest countries grow more quickly, fairly, and sustainably. The IDA is the largest single source of funding for economic and human development projects in the world’s poorest nations. Between 2000 and 2010, its projects recruited and trained 3 million teachers, immunized 310 million children, provided $792 million in loans to 120,000 small and medium enterprises, built or repaired 118,000 kilometers of paved roads and 1,600 bridges, and expanded access to clean water for 113 million people and improved sanitation for 5.8 million people. Since its launch in 1960, the IDA has issued a total of $238 billion in loans and grants. Thirty-six of its borrowing countries have graduated from eligibility for its concessional lending, though nine of those have since relapsed and not re-graduated. In the 1940s and 1950s, low-income developing countries found they could no longer afford to borrow capital and needed more favorable terms than those offered by the International Bank for Reconstruction and Development (IBRD). In 1949, U.S. President Harry S. Truman formed an advisory group to help implement his Point Four Program, which aimed to strengthen developing countries—especially those near the Eastern Bloc—to discourage them from aligning with communist states. The group recommended an international mechanism that would fall between pure loans and pure grants. The United Nations and the U.S. government published reports supporting a multilateral, concessional lending program for the poorest countries. However, the U.S. was largely unresponsive, distracted by the Korean War and unconvinced that development needed more financial stimulation. Developing countries grew frustrated with their inability to afford IBRD loans and saw the Marshall Plan as a comparatively generous gift to Europe. In the late 1940s and early 1950s, they called for the UN to create a development agency offering technical support and concessional financing, with each country having one vote, as in other UN bodies. The U.S. opposed such proposals. As Cold War concerns grew, the U.S. made a concession in 1954, backing the creation of the International Finance Corporation (IFC). Despite the IFC’s launch in 1956, developing countries continued demanding a new concessional financing mechanism, and the idea gained support within the IBRD. IBRD President Eugene R. Black, Sr. began promoting the concept of an International Development Association, as opposed to a UN-governed fund called the Special United Nations Fund for Economic Development (SUNFED). Paul Hoffman, former Marshall Plan administrator, proposed a soft-loan facility within the World Bank where the U.S. would have a strong voice. 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 an International Development Association affiliated with the IBRD. This proposal was better received in the U.S. than SUNFED. The resolution passed the Senate in 1958, and 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 to draft 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. By the end of January 1960, fifteen countries had signed the articles of agreement establishing the IDA. It launched in September of that year with an initial budget of $913 million (equivalent to $7.1 billion in 2012 dollars). Within eight months, the IDA grew to 51 member states and loaned $101 million ($784.2 million in 2012 dollars) to four developing countries. By 1978, the IDA had increased its available resources to roughly $18.1 billion (about $89.4 billion in 2025 dollars), split between approximately $1.1 billion ($5.4 billion in 2025 dollars) and other funds.