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International Development Association (IDA)

Definition

The IDA is a branch of the World Bank that provides interest-free loans and grants to the world's poorest countries, with the aim of reducing poverty.

Analogy

Think of IDA as a generous friend who lends you money without asking for interest when you're in a tough spot. This friend doesn't just give you cash but also advises on how to use it wisely to get out of your financial troubles.

Related terms

World Bank: An international organization dedicated to providing financing, advice, and research to developing nations for development programs (e.g., bridges, roads, schools) that are expected to improve their economies.

Poverty Reduction Strategy Papers (PRSPs): Documents required by the IMF and World Bank before a country can be considered for debt relief within the Heavily Indebted Poor Countries (HIPC) initiative. They outline the country's macroeconomic, structural and social policies and programs over a three-year or longer period.

Heavily Indebted Poor Countries (HIPC) Initiative: A program set up by the IMF and World Bank in 1996 to reduce external debt burdens on eligible countries so they can focus resources on actions for poverty reduction.