International Development Association UN-IDA of the UN

The International Development Association, UN-IDA of the United Nations

The International Development Association (IDA) is one of the two major affiliates of the World Bank. It was officially established on September 24, 1960, and opened for business in November of the same year. The purpose of the association is to provide preferential long-term loans to low-income countries to promote their economic development. The loan target is limited to the governments of member countries, mainly used to develop agriculture, transportation, electronics, education and other aspects. 

No interest is charged on the loan, and only a handling fee of 0.75% of the amount paid is charged annually. 

From January 1982, a 0.5% commitment fee will be levied annually on the unpaid portion. The final repayment period of the loan is 50 years, with no repayment for the first 10 years, 1% for each year in the second 10 years, and 3% for each year thereafter, which can be repaid in the currency of the borrowing country.

UN Organization Name:  International Development Association, IDA

Founded in:    1960

Abbreviated    IDA

Member    169 Member States

Headquarters:    Washington, America

Basic Profile of International Development Association

Full name in English: (International Development Association)

Responsible person: The current chairman is Jin Chenyong (American medicine professor), a Korean American, who took office on July 1, 2012 for a term of 5 years.

Organizational structure: The board of directors is the highest decision-making body, and the board of directors composed of donor countries is responsible for handling daily operations.

Main activities: Hold a regular spring meeting and an annual meeting with the International Bank for Reconstruction and Development every year.

What is the Organization Structure of International Development Association (IDA)?

Council

All power of the International Development Association rests with the Council. Where a member of the World Bank is also a member of the Association, the bank director and deputy director appointed by it are also the director and deputy director of the association according to their powers. 

The deputy director has no right to vote except in the absence of the director. The President of the World Bank Council is also the President of the International Development Association Council.

The board of directors shall hold an annual meeting once a year. The quorum to attend the meeting shall be more than half of the directors and shall hold no less than 2/3 of the total voting rights.

The Council has the right to decide:

• The conditions for the admission of new members and the admission of its membership. 
• To approve additional subscriptions and to determine the relevant provisions and conditions. 
• Temporarily suspend membership of the Member States
• To adjudicate objections arising from the interpretation of the location of the Association’s provisions by the Executive Board.
• Stop the association's business and distribute its assets forever.
• Determine the distribution of the association's net income.

The first founding member state of the Council has the right to vote with 500 votes, plus an additional vote for every $ 5,000 of its first subscription. 

The voting rights that should be enjoyed by the location of shares other than the initial subscription shall be determined by the Council according to the circumstances. 

Unless otherwise specified, all matters of the Association shall be adopted by the principle of simple majority.

Executive Board Responsible for handling the daily business of the association

The elected executive director of the World Bank, the country where the seat is located, is a member of the Association and has the right to vote in the International Development Association. 

Every director has the right to vote as a unit. When a director is absent, the deputy board of directors appointed by him shall assume all his powers. 

When a director is present, the deputy director may attend the meeting, but has no voting rights. 

The quorum for executive board meetings shall be more than half of the directors and exercise at least 1/2 of the total voting rights.

Funds

Subscription of shares

When accepting membership, each Member State shall bear the additional share subscription amount, that is, the parity subscription. 

The amount of initial subscription allocated to each founding member country is expressed in US dollars (this dollar is based on the gold content and condition of the US dollar on January 1, 1960). 

The 10% portion of each founding member's initial subscription shall be paid in gold or freely convertible currency. 

The remaining 90% of the part, if it belongs to the member state of each part (payment country), should be paid in gold or freely convertible currency. 

If it belongs to the second part of the member state (borrowing country), you can use the subscription member state Payment in domestic currency. 

This part of the share capital should be paid in 5 installments annually.

According to the completion status of the initial subscription payment of the founding member countries, the International Development Association can check whether its funds are sufficient. 

If it thinks it necessary, it can approve the general increase in the subscription amount. 

Once the additional subscriptions are approved, the Chinese associations can subscribe for a certain amount of shares under the conditions determined by the International Development Association, so that they can maintain the corresponding voting rights. But Member States have no obligation to subscribe.

Currency use

The currency of any member country (borrowing country) included in the second category, regardless of whether it is freely convertible or not, shall be accepted by the Association for the payment of 90% of its due portion in the currency of the member country in accordance with regulations. 

The currency of the country derived from the money for the principal, interest and other expenses can be used by the association to pay the expenses of the association's bank where it is located on the territory of the member country.

As long as it meets proper monetary policy, it can also be used to pay for goods and services produced in the territory of the Member State and required for the location of the project funded by the Association in the territory of the Member State. 

In addition, the economic and financial situation of the current Member State. 

When the reliability has been reached, the currency of the Member State shall be freely convertible or may be used for projects funded by the Association outside the territory of the Member State.

The subscription currency, supplementary capital currency, and the currency derived from the principal, interest and other expenses derived from this, the use method is subject to the conditions stipulated when accepting the currency. 

All other currencies accepted by the association can be freely used or exchanged, not subject to any restrictions on Member States whose currencies are used or exchanged. 

However, the association and the Member State where the funding project is located can also restrict the association’s use of the member’s currency.

Monetary value

When the face value of a member’s currency decreases, or the association believes that the foreign exchange value of a member country’s preference has greatly depreciated within its territory, the member state shall make an additional domestic currency payment to the association.

This, it should do within a reasonable time in order to maintain the The Member State shall pay to the Association’s currency in accordance with the regulations at the time of subscription and the sufficient value of the amount of currency provided by the location. 

But this situation only applies if the currency has never been paid or exchanged for another as the part of the currency of the Member State.

In addition, the amount to be paid in order to maintain the value of any currency should be as convertible and usable as the currency.

On the contrary, when the face value of the currency of a member country increases, or the association believes that the foreign exchange value of the currency of the member country has risen to a considerable extent within the territory, the association shall refund the member country a sum of the currency of the country within a reasonable time.

The additional burden is equal to the value of this increase in the amount of money.

Business operation

Use of funds and conditions for providing funds

The funds provided by the International Development Association are intended to promote the economic development of underdeveloped Member States. 

It adheres to the principle of giving priority to serving developing countries, and uses funds for specific projects according to the actual situation. 

If the legal person in the loan can obtain a loan from the World Bank or a private association, it will not provide funding.

The loan application should be carefully reviewed by a qualified committee to make recommendations. 

Such committees should all be appointed by the association, including one person nominated by the director (s) representing the Member State (s) of the project location (one or several) under consideration. And one or several technicians who are stubborn. 

If the members of the project location object to this funding, the association does not provide funding for the project. 

When providing funds to public and international or regional organizations, the committee members do not need to be nominated by the member country of the project, and the association does not need to know whether there are individual Member States opposed to loans.

The association shall not impose conditions that restrict the use of loans in a country or a country that causes a particular member state.

 

However, it is also allowed to restrict the use of funds in accordance with regulations, including restrictions imposed on supplementary funds based on the agreement between the association and the funder.

The loan of the association is only used for the purpose of providing the loan, and full attention should be paid to economical, efficient and competitive international trade, and it must not involve political or other non-economic issues.

It can only be provided when payment is made to determine the relevant expenses incurred due to the funded project.

Funding methods and conditions

The IDA's funding generally takes the form of loans, but also other forms of funding. 

There are 2 ways:

 First, from the perspective of the prescribed subscribed funds, the funds are derived from the funds and derived from the principal, interest or other expenses; or under special circumstances, from the supplementary funds provided to the association, and from the funds derived from this section are provided as funds derived from principal, interest or other expenses.

Second, after noting the economic conditions and development prospects of the relevant areas and the nature and requirements of the funded projects, the International Development Association may consider it appropriate Provide funding in a manner and condition.

The association provides financial assistance to member states (including the government and its subordinate political departments within a certain region of the association's members), public and private entities within the territory, and international or regional organizations. 

When lending to entities rather than to Member States, the Association may, as appropriate, request appropriate government guarantees or other guarantees.

Under special circumstances, the association can provide foreign exchange for local expenses.

Amendment of funding conditions

The International Development Association may agree to relax or otherwise revise the funding conditions it has provided according to the conditions determined by it, according to the relevant conditions (including the financial and economic conditions of the relevant Member States and their development prospects), as it deems appropriate.

Other business

• Borrow funds with the consent of Member States
• Provide guarantees for the securities invested by the association to facilitate the sale of securities
• Securities issued, guaranteed, or invested by the Association
• Under special circumstances, guarantee other loans that meet the prescribed purposes
• Provide technical assistance and advisory services requested by Member States
• Exercise other powers to promote the purpose of the association

Prohibition of political activities

The International Development Association and its officials must not interfere in the political affairs of any Member State.

The Association’s decision should be the result of weighing various economic factors, and should not be affected by any political aspects of the Member State. This is so as to truly achieve the purpose of the Association’s location response.

Relationship

What is the Relationship between the International Development Association and the World Bank?

The International Development Association and the World Bank are independent entities, and the funds of the Association and the World Bank are also kept separately. 

The association may not borrow funds from the World Bank nor lend funds to the World Bank. 

The association may invest funds not needed for loan business in bonds issued by the World Bank.

The association may coordinate and communicate with the World Bank on matters such as facilities, personnel and anti-provision of services, as well as the reimbursement of administrative expenses paid by one organization for the other.

The Association is not responsible for any actions or debts of the World Bank, nor is the World Bank responsible for the actions or debts of the Association.

Relations between China and the International Development Association

China's participation: In 1980, China resumed its legal seat in the World Bank Group and became a member of the International Development Association. 

China has 344,829 voting rights in the International Development Association, accounting for 1.88% of the total voting rights. As of July 1999, the association has provided a total of 10.2 billion US dollars of soft loans to China. 

A total of 69 projects were implemented, and from July 1999, the International Development Association stopped providing loans to China. 

In December 2007, China donated US $ 30 million to the International Development Association.

Who can Borrow from International Development Association?

Borrower: Whether a country is eligible for IDA assistance, the primary deciding factor is its relative poverty. 

The latter is defined as per capita gross national income falling below a certain, updated threshold every year (FY2007: $ 1,025).

IDA also provides assistance to certain countries with economic conditions above the business threshold, but does not have the credit to borrow from IBRD, including several small island countries.

Some countries (such as India and Pakistan) are eligible for IDA assistance based on per capita income levels, but they also have the credit to borrow from IBRD. They are called "hybrid" countries.

82 countries are eligible for IDA assistance. 

These countries have a total population of 2.5 billion, accounting for half of the world's total population.

It is estimated that 1.5 billion people in these countries depend on income of US $ 2 or less per day to support themselves.