International Development Association

FY2018 Funding Recommendation:  
$1.5 billion

 

Funding History

       Enacted   

       House/Senate FY2017 Request

       InterAction's FY2018 Recommendation


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Justification

 Key Facts

  • IDA is ranked as one of the top six most transparent development aid organizations in the world in Publish What You Fund’s 2016 Aid Transparency Index; it is the highest performing multilateral development fund.

  • Since its inception, IDA has supported activities in 112 countries through grants and interest-free and low-interest, long-term loans, half of which were directed to countries in Africa. Thirty-three recipients have since graduated and no longer receive IDA support.

  • IDA18 aims to double financing to more than $14 billion over the next three years to address conflict and fragility.

  • The IDA18 financing package introduces an innovative proposal to leverage IDA’s balance sheet, which offers donors exceptional value for money to increase their reach and development impact. This is expected to result in about $3 in financing for every $1 in donor contributions.

  • The IDA18 special theme on governance and institutions will continue IDA’s work on tackling weak systems. U.S. leadership in the IDA18 negotiations has been instrumental in elevating good governance and institution-building, which are indispensable to deliver on all other development commitments.

The International Development Association (IDA) is known as the World Bank’s “Fund for the Poorest.” One of the largest development financiers in the world’s least-developed countries, IDA supports antipoverty programs with long-term, soft loans and grants. Since its inception in 1960, IDA has provided $328 billion for investments in 112 countries. Over the last three years, it has distributed on average $19 billion annually in grants and loans, directing approximately half of those funds to Africa.

IDA is a critical facilitator and financier of development projects in areas such as increasing access to affordable and reliable energy, strengthening fragile and conflict-afflicted states, and promoting good quality education. It leverages the efforts of other donors to help countries develop the systems and capacity they need to use donors’ funds effectively.  Between 2011 and 2016, IDA ensured: half a billion people received essential health services; 250 million children were immunized; 64 million people received access to better water services; 23 million women received prenatal care from a health provider; and 7 million teachers were recruited and/or trained.

In December 2016, donors committed a record $75 billion to the 18th IDA replenishment to cover IDA financing for three years (from July 1, 2017 to June 30, 2020). The IDA18 financing package introduces an innovative proposal to leverage IDA’s balance sheet, which offers donors exceptional value for money to increase their reach and development impact. This is expected to result in about $3 in financing for every $1 in donor contributions. The U.S. pledged $3.87 billion for the 3-year IDA18 cycle; this translates to a $1.29 billion commitment on an annual basis. InterAction recommends a funding level of $1.39 billion for IDA, which includes the full U.S. 2018 commitment and an additional $100 million to partially cover unmet US commitments from previous years.

With these funds, IDA estimates that from 2017 to 2020, it will provide:

  • Essential health and nutrition services for up to 400 million people;
  • Access to improved water sources for up to 45 million people;
  • Financial services for 4–6 million people;
  • Safe childbirth for up to 11 million women through provision of skilled health personnel;
  • Training for 9–10 million teachers to benefit more than 300 million children;
  • Immunizations for 130–180 million children;
  • Better governance in 30 countries through improved statistical capacity; and
  • An additional 5 GW of renewable energy generation capacity.

Multilateral Debt Relief Initiative

In addition, the U.S. is approximately $580 million behind in payments for its commitment to the Multilateral Debt Relief Initiative (MDRI), which provides certain low-income countries with 100% relief on eligible debt from three multilateral institutions at IDA and the African Development Fund. InterAction recommends an additional $111 million to continue paying down our arrears to the IDA MDRI.

This brings the total InterAction funding recommendation for FY2018 to $1.5 billion.

Success Story

Employment Generation Program for the Poorest in Bangladesh

Twice a year before the harvests, fewer laborers are needed to cope with the grain production and there is a shortage of employment opportunities in rural Bangladesh. The seasonal job drought hits the poorest the hardest as they struggle to put food on the table and meet the basic needs of their families. Men are forced to leave for the city in search of employment, leaving women and children in the villages. Reaching these extremely vulnerable people has always been the greatest challenge for the government of Bangladesh. The Employment Generation Program for the Poorest (EGPP), established in response to the 2008 global food price crisis, has been providing a secure and regular source of income to over 800,000 of the poorest people. Over 33% of the participants are women. The EGPP has become one of the largest well-targeted safety net programs in Bangladesh, and has consistently received the highest increases in Government budget allocation, compared to similar programs, over the past five years.

From FY2011 through FY2013, $150 million in IDA financing supported EGPP through a results-based credit whereby funds are released upon achievement of milestones focused on improving targeting, enhancing transparency, and strengthening monitoring and evaluation capacity. This approach created incentives for efficiency and allows for innovation, making the EGPP the dynamic program it is today. With additional grant funding of $1 million, IDA also piloted projects to test electronic worker attendance systems that linked to payments using mobile phones and Postal Cash Cards. Based on the satisfactory outcomes of the results-based IDA financing and the grant, a follow-on results-based IDA Credit of $500 million is currently supporting the Government in further improving the equity, efficiency and transparency of other similar programs along with EGPP.

Since its inception in late 2010, EGPP has produced notable results: 800,000 people in extreme poverty are now employed every year, including over 300,000 women; 16,000 community level sub-projects, mostly building and repair of rural roads, are implemented twice a year; over 60 million work days are created per year; and 100% of payments are made via beneficiary bank accounts.  In FY2016 the government of Bangladesh has increased its share of the costs by approximately $190 million – a 50% increase over from when IDA financing was initially committed in FY2011.

Photo: World Bank

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