International Development Association

Management’s Discussion & Analysis
andCondensed Quarterly Financial Statements
September 30, 2021
(Unaudited)

International Development Association (IDA)
Management’s Discussion and Analysis
September 30, 2021
Contents
Section I: Executive Summary

Summary of Financial Results

4

Section II: Overview

Nineteenth Replenishment of Resources (IDA19)
Financial Business Model
Basis of Reporting

6
6
7

Section III: IDA’s Financial Resources IDA19 Funding
Allocation of IDA19 Resources8
8

Section IV: Financial Results

Summary of Financial Results

10

Section V: Risk Management

Risk GovernanceManagement of IDA’s Risks

17
17

Section VI: Governance

Senior Management Changes

24

List of Tables, Figures and Box

TablesFigures
Box

25
25
25

Management’s Discussion and Analysis

Section I: Executive Summary

This Management’s Discussion & Analysis (MD&A) discusses the results of the International Development
Association’s (IDA) financial performance for the three-month period ended September 30, 2021 (FY22 YTD). This
document should be read in conjunction with IDA’s financial statements and MD&A issued for the fiscal year ended
June 30, 2021 (FY21). IDA undertakes no obligation to update any forward-looking statements. Certain
reclassifications of prior years’ information have been made to conform with the current year’s presentation. For
information relating to IDA’s development operations’ results and corporate performance, refer to the World Bank
Corporate Scorecard and Sustainability Review.

Box 1: Selected Financial Data
In millions of U.S. dollars, except ratios which are in percentages
As of and for the three months
ended September 30,
2021

As of and for the fiscal
year ended June 30,

2020

2021

Lending Highlights (Section IV)
Loans, Grants and Guarantees
Net commitments a$

Gross disbursements
Net disbursements

a

a

2,630

$

7,495

$

36,028

3,423

4,374

22,921

1,893

3,130

16,465

Balance Sheet (Section IV)
Total assets
Net investment portfolio$b221,070$

203,601$

219,324

40,40533,41037,921

Net loans outstanding

176,547

166,586

177,779

Borrowing portfolio c

32,204

19,82828,335

Total equity

179,395

171,110

180,876

Income Statement (Section IV)
Interest revenue, net of borrowing expenses$

Transfers from affiliated organizations and others

468

$

420

$

1,996

-

-

544

Development grants

(343)

(509)

(2,830)Net loss

(80)

(448)

(433)

Non-GAAP Measures:
Adjusted Net Income (Loss) (Section IV)

$

33

$

(30)

$

394

Capital Adequacy (Section V)
Deployable Strategic Capital Ratio

31.0%

35.4%

30.4%

a. Commitments that have been approved by the Executive Directors (referred to as “the Board” in this document) and net of fullcancellations / terminations approved in the same fiscal year. Commitments and disbursements exclude IFC-MIGA Private Sector
Window (PSW) activities.
b. For composition of net investment portfolio, see Notes to Condensed Quarterly Financial Statements, Note C – Investments – Table
C2.
c. Includes associated derivatives.

2

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section I: Executive Summary

Section I: Executive Summary
Owned by its 1741 members, IDA, an entity rated triple-A by the major rating agencies, and one of the five institutionsof the World Bank Group (WBG2), has been providing financing and knowledge services to many of the world’s
developing countries for 61 years. Each organization is legally and financially independent from IDA, with separate
assets and liabilities, and IDA is not liable for their obligations.
With its many years of experience and its depth of knowledge in the international development arena, IDA plays a
key role in achieving the WBG goal of helping countries achieve better development outcomes. IDA contributes tothe WBG’s twin goals of ending extreme poverty and promoting shared prosperity by providing loans, grants, andguarantees to countries to help meet their development needs and by leveraging its experience and expertise to provide
technical assistance and policy advice. It also supports countries with disaster risk financing and insurance against
natural disasters and health-related crises and facilitates financing through trust fund partnerships.
IDA and its affiliated organizations seek to help countries achieve improvements in growth, job creation, poverty
reduction, governance, the environment, climate adaptation and resilience, human capital, infrastructure, and debt
transparency. To meet its development goals, the WBG has been increasing its focus on country programs in order toimprove growth and development outcomes. Further, in response to the global outbreak of the coronavirus disease(COVID-19) and to support global public goods, IDA continues to work in solidarity with partners at global andcountry levels to support its borrowing countries.

1

On November 3, 2021, Bulgaria became the 174th member country of IDA.

2 The other WBG institutions are the International Bank for Reconstruction and Development (IBRD), the International FinanceCorporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment
Disputes (ICSID). The World Bank consists of IBRD and IDA.

IDA Management’s Discussion and Analysis: September 30, 2021

3

Management’s Discussion and Analysis

Section I: Executive Summary

Summary of Financial Results
In millions of U.S. dollars

Net Loss and Adjusted Net Income
Net Loss: For FY22 YTD, IDA reported a net loss of $80 million,
compared to a net loss of $448 million in FY21 YTD. The decreasein net loss was primarily driven by non-functional currencytranslation adjustment gains in FY22 YTD and lower development
grant expenses. See Section IV: Financial Results.
Adjusted Net Income: For FY22 YTD, IDA’s adjusted net income
was $33 million compared with adjusted net loss of $30 million in
FY21 YTD. The increase was primarily due to higher net interest
revenue on loans. See Section IV: Financial Results.

YTD Adjusted Net Income (Loss)YTD Net Income (Loss)
3,000
1,500
0
(1,500)(3,000)
FY18

FY19

FY20

FY21

FY22

Lending Operations
IDA made $2.6 billion of net commitments in FY22 YTD, of which $1.5 billion was loan commitments. FY22 YTD
commitments reflected support for COVID-19 related efforts, including $0.5 billion of financing for COVID-19
vaccines. The remainder were grant commitments, which are recorded as an expense in IDA’s Statement of Income
once all conditions are met, which generally occurs at the time of disbursement.
IDA’s net loans outstanding decreased by $1.2 billion, from $177.8 billion as of June 30, 2021 to $176.5 billion as
of September 30, 2021. See Section IV: Financial Results.
In billions of U.S. dollarsa

YTD Net Commitments
YTD Gross Disbursements
YTD Net Disbursements

Net Loans Outstanding
200

12

160

9

120

6

80

3

40

0

12
9
6
3

0
FY18 FY19 FY20 FY21 FY22YTD Net Grant Commitments
YTD Grant Expense0
Jun 18 Jun 19 Jun 20 Jun 21 Sep 21

FY18 FY19 FY20 FY21 FY22

a. Includes loans, grants, and guarantees.

Net Investment Portfolio

In billions of U.S. dollars

As of September 30, 2021, the net investment portfolio was $40.4 billion,
compared with $37.9 billion as of June 30, 2021. See Section IV: Financial
Results. The primary objective of IDA’s investment strategy is principal
protection. As of September 30, 2021, 67% of IDA’s investment portfolio
was held in instruments rated AA or above (See Table 15).

Net Investment Portfolio
75
60
45
30
15
0
Jun 18 Jun 19 Jun 20 Jun 21 Sep 21

4

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section I: Executive Summary

In billions of U.S. dollars

Borrowing Portfolio
Market borrowings at fair value: As of September 30, 2021, the market
borrowings portfolio outstanding carried at fair value was $22.3 billion, an
increase of $1.7 billion from June 30, 2021. Section IV: Financial Results.
Market borrowings at amortized cost: As of September 30, 2021, themarket borrowings outstanding carried at amortized cost were $2.3 billion.
See Section IV: Financial Results and Notes to the Condensed Quarterly
Financial Statements for the period ended September 30, 2021, Note E Borrowings, Table E2.
Concessional Partner Loans at amortized cost: As of September 30,
2021, total borrowings from members - Concessional Partner Loans(CPLs) - were $7.6 billion, a decrease of $0.1 billion, compared with June30, 2021 ($7.7 billion). See Section IV: Financial Results.

Borrowing portfolio
75
60
45
30
15
0
Jun 18 Jun 19 Jun 20 Jun 21 Sep 21

Equity and Capital Adequacy

In billions of U.S. dollars

As of September 30, 2021, IDA’s equity was $179.4 billion, a decrease of$1.5 billion from June 30, 2021. See Section IV: Financial Results.

Equity
200
150
100
50
0
Jun 18

The Deployable Strategic Capital (DSC) ratio, IDA’s main capital
adequacy measure, was 31.0% as of September 30, 2021, above the zero
percent policy minimum, and an increase of 0.6 percentage points from
30.4% as of June 30, 2021. IDA’s capital continues to be adequate tosupport its operations. See Table 14.

Jun 19Jun 20Jun 21

Sep 21

Ratio in percentages
Deployable Strategic Capital Ratio
45%
30%
15%
Minimum ratio = 0%0%
Jun 18Jun 19Jun 20Jun 21

IDA Management’s Discussion and Analysis: September 30, 2021

Sep 21

5

Management’s Discussion and Analysis

Section II: Overview

Section II: Overview
Generally every three years, representatives of IDA’s members 3 meet to assess IDA’s financial capacity and the
medium-term demand for new IDA financing. Members decide on the policy framework, agree upon the amount offinancing to be made available for the replenishment period, and commit to additional contributions of equity that are
required to meet these goals. The meetings culminate in a replenishment agreement that determines the size, sources(both internal and external), and uses of funds for the replenishment period.

Nineteenth Replenishment of Resources (IDA19)The IDA19 financing framework is an integrated package that continues to leverage IDA’s strong equity base. The
first year of the implementation of IDA19 commenced in FY21 which coincided with the onset of the COVID-19
crisis. Since the onset of the COVID-19 crisis, IDA has significantly scaled up its financial support, serving clientsand targeting resources to those most in need. In recognition of the heightened financing needs of IDA countries andto make additional resources available to them to respond to, and recover from the COVID-19 crisis, IDA members
agreed in April 2021 to launch the twentieth IDA replenishment (IDA20) one year early, to commence in FY23. The
IDA19 implementation period will be shortened to two years (FY21-FY22), and $12.5 billion of IDA19 resources
originally projected for use in FY23 will be available for financing in FY22. The IDA19 financing framework has
been adjusted to make $71 billion of resources available, of a total original IDA19 commitment authority of $82
billion 4 , all on standard IDA terms. The remaining $11 billion will be carried forward to be utilized in thereplenishment period of IDA20.

Financial Business Model
IDA has financed its operations over the years with its own equity, including regular additions to equity provided bymember countries as part of the replenishment process. As a result of the strong support of member countries, IDA
has built up a substantial equity base, amounting to $179.4 billion as of September 30, 2021. In FY15, IDA introduced
debt to its financial model with concessional partner loans received from certain members. In FY18, IDA introduced
a hybrid financing model by including market debt into its business model. By prudently leveraging its equity andblending market debt with equity contributions from members, IDA has increased its financial efficiency, and scaled
up its financing to support the escalating demand for its resources to deliver on the following priorities:• Provide concessional financing on terms that respond to clients’ needs; and• Ensure long-term financial sustainability of IDA’s financial model through a prudent risk management framework.
Concessional lending, including grants, is primarily financed by IDA’s equity. Non-concessional lending will
primarily be financed by market debt. To the extent that market debt will be used to finance concessional lending, it
will be blended with member contributions (equity). Funds not deployed for lending are maintained in IDA’s
investment portfolio to supply liquidity for its operations. See Figure 1.

GrantsEquityConcessional Lending and Investments

Borrowings

Non – Concessional Lending

3

Reflows and Operating
Results

Figure 1: IDA's Financial Business Model

IDA’s members are owners and hold voting rights in IDA. Members do not, however, hold shares in IDA and are therefore not referred
to as shareholders. Payments for subscriptions and contributions from members increase IDA’s paid-in equity and are financiallyequivalent to paid-in capital in multilateral development organizations that issue shares.
4 U.S. dollar amounts are based on IDA19 reference rate of USD/SDR 1.38318. The U.S. dollar amounts are provided for reporting
purposes only, as IDA’s balance sheet is predominantly managed in Special Drawing Rights (SDR).

6

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section II: Overview

Basis of Reporting
IDA prepares its financial statements in conformity with accounting principles generally accepted in the United Statesof America (U.S. GAAP). IDA’s functional currencies are the SDR and its component currencies of U.S. dollar, euro,
Japanese yen, pound sterling and Chinese renminbi. For the convenience of its members and other users, IDA’s
financial statements are reported in U.S. dollars. Management uses net income as the basis for deriving adjusted net
income, as discussed in Section IV: Financial Results.

Adjusted Net Income
Adjusted Net Income (ANI), a non-GAAP measure, reflects the economic results of IDA’s operations and is used by
IDA’s management and the Board as a financial sustainability measure. ANI is defined as IDA’s net income, adjusted
to exclude certain items. After the effects of these adjustments, the resulting ANI generally reflects amounts which
are realized, not restricted for specific uses, and not directly funded by members. For a detailed discussion of theadjustments, see IDA’s MD&A for the fiscal year ended June 30, 2021, Section IV: Financial Results.

IDA Management’s Discussion and Analysis: September 30, 2021

7

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

Section III: IDA’s Financial Resources
IDA19 Funding
IDA’s financing resource envelope available for lending and grant commitments is based on the long-term outlook of
IDA’s financial sustainability. This takes into account the amount of member contributions and the concessionality ofthe proposed financing to borrowers, market conditions, and capital adequacy requirements.

Allocation of IDA19 Resources
IDA financing is provided in the form of loans, grants, and guarantees. Most of IDA resources are allocated to eligible
members through IDA Country Allocations that provide unearmarked support. IDA Country Allocations are
determined using the Performance Based Allocation (PBA) system, which takes into account the country’s
performance rating (CPR), population size and per capita income, and complemented by the Fragile, Conflict andViolent (FCV) envelope. The rest of IDA support is provided through five IDA Windows dedicated to addressing
specific development priorities, and an Arrears Clearance Set-Aside that provides exceptional support for countries tofully reengage with the World Bank. The allocation framework is agreed for each replenishment cycle.
IDA responds to specific needs of its members through the following five IDA Windows:

Eligibility and the percentage of allocation for grants for IDA-only countries is based on the country’s classification
and an assessment of the country’s risk of debt distress, where the higher the risk assessment, the greater the proportionof grant financing. Gap and Blend countries are only eligible for grant financing through the Window for Host
Communities and Refugees, if applicable.
Table 1: Cumulative Net Commitments under IDA19
In millions of U.S. dollars
Loans andGuarantees

As of September 30, 2021
Concessional financing
IDA Country Allocations
IDA Concessional Windows
Regional Window
Window for Host Communities and Refugees
Crisis Response Window
Arrears Clearance
Non-concessional financing
Total Net Commitments a$

21,696

Grants

$

1,335
445
1,965
$

25,441

10,066

Total

$

1,166
628
357
1,000
$

13,21731,762
2,501
628
802
1,000
1,965

$

38,658a. Commitments are net of full cancellations/terminations approved in the same fiscal year. Commitments exclude IFC-MIGA Private
Sector Window (PSW) activities.

Private Sector Window
The IFC-MIGA Private Sector Window was created under IDA18 to mobilize private sector investment in IDA-only
countries and IDA-eligible Fragile and Conflict-affected Situations. In IDA19, PSW was allocated an initial envelopeof $2.5 billion which was revised to $1.7 billion under the adjusted IDA19 resource envelope. During FY22 YTD,
$76 million of the IDA19 resources, net of full terminations and cancellations, were committed.

8

IDA Management’s Discussion and Analysis: September 30, 2021

Section III: IDA’s Financial Resources

Management’s Discussion and Analysis

As of September 30, 2021, $660 million has been utilized out of a total of $2.0 billion commitments in IDA18 and
IDA19. See Notes to the Condensed Quarterly Financial Statements for the period ended September 30, 2021, Note
G – Transactions with Affiliated Organizations – Table G4.
Table 2: Utilization of PSW Commitments
In millions of U.S. dollars
As of September 30, 2021

IDA 18

IDA 19Total

Utilization measure

Allocation

$

1,370

$

1,700

$

3,070

Net Commitments$

1,325a

$

671

$

1,996

Guarantees
Derivatives
Funding of IFC's PSW- related
equity investments
Loans

$

509

Face value of outstanding guarantees

94

Notional amount47

Amortized cost

10

Amortized cost

Total utilization of IDA PSW$

Of which utilized

660

a. $45 million of cancellation is available for recommitment under IDA19 PSW.

IDA Management’s Discussion and Analysis: September 30, 2021

9

Management’s Discussion and Analysis

Section IV: Financial Results

Section IV: Financial Results
Summary of Financial Results
IDA had a net loss of $80 million in FY22 YTD compared with net loss of $448 million in FY21 YTD (See Table 3).
The decrease in net loss was primarily driven by:•$168 million of non-functional currency translation adjustment gains in FY22 YTD as compared to $5 millionof non-functional currency translation adjustment losses in FY21 YTD. The gains in FY22 YTD wereprimarily due to the depreciation of the majority of the non-functional currencies against the U.S. dollar;•$166 million decrease in development grant expenses due to lower disbursements of conditional grants andhigher grant advances that are not yet expensed.

Adjusted Net Income
IDA’s adjusted net income was $33 million in FY22 YTD compared with $30 million of loss in FY21 YTD (SeeTable 3). The increase in ANI was primarily driven by:••$44 million increase in net interest revenue on loans, mainly driven by the higher volume of loans
outstanding;$21 million decrease in provision for losses on loans and other exposures, excluding $1 million release fordebt relief under Heavily Indebted Poor Countries (HIPC)/ Multilateral Debt Relief Initiative (MDRI).

Table 3: Condensed Statement of Income
In millions of U.S. dollars
For the three months ended September 30,

2021

2020

Negative
ImpactPositive
ImpactInterest revenue
Loans, net$

Investments, net$

33

Asset-liability management derivatives, net
Borrowing expenses, net
Interest revenue, net of borrowing expenses

481$

Provision for losses on loans and other exposures, charge

44

37

(4)

-

(5)

5

(46)

(49)

3

468

$

(100)

Other (expenses) revenue, net (Table 12)

437

420

48

(122)

22

(5)

17

Net non-interest expenses (Table 11)

(345)

(397)

Non-functional currency translation adjustment gains (losses), net

168

(5)

Unrealized mark-to-market gains on investments-trading portfolio, net a

15

19

(4)

62

129

(67)

(343)

(509)

Unrealized mark-to-market gains on non-trading portfolios, net
Development grants
Net Loss

$

(80)

$

379

520

Non-functional currency translation adjustment (gains) losses, net

(168)

5

Unrealized market-to-market (gains) on non-trading portfolios, net b

(64)

(130)

Pension, PEBP and PCRF adjustments

(37)

22

Externally Funded Outputs (EFO) revenue
$

52
173

166

(448)

Adjustments to reconcile net (loss) income to adjusted net income:Expenses relating to development financing activities directly fundedby contributions from members

Adjusted Net Income (Loss)

(22)

3

1

33

(30)

368

(141)
(173)
66
(59)
2
63

a. Includes IDA’s share of returns from Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve Fund(PCRF) assets – $17 million (FY21 YTD – $39 million).
b. For FY22 YTD, excludes $2 million of loss from revenue-hedging forward currency contracts (FY21 YTD - $1 million of loss).

10

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section IV: Financial Results

Table 4: Condensed Balance Sheet
In millions of U.S. dollars
As ofAssetsDue from banks
Investments
Net loans outstanding a
Derivative assets, net
Other assets
Total assets
Liabilities
Borrowings
Derivative liabilities, net
Other liabilities
EquityTotal liabilities and equity

September 30, 2021
$

$

$

$

610
39,866
176,547364
3,683
221,070

31,978173
9,524
179,395
221,070

June 30, 2021
$

$

$

$

Decrease

496
37,376
177,779
249
3,424
219,324

28,314408
9,726
180,876
219,324

Increase
114
2,490(1,232)
115
259
1,746

3,664
(235)
(202)
(1,481)
1,746

a. The fair value of IDA loans was $162,681 million as of September 30, 2021 ($164,606 million – June 30, 2021).

EquitySee Table 5 below for the change in IDA’s equity during FY22 YTD.
Table 5: Changes in Equity
In millions of U.S. dollars
Equity as of June 30, 2021
Activity during the year:
Subscriptions and contributions paid-in a
Nonnegotiable, noninterest-bearing demand obligations
Change in Accumulated deficit
Change in Accumulated other comprehensive income (loss)
Change in Deferred amounts to maintain value of currency holdings
Total activity
Equity as of September 30, 2021$

180,876
(227)
700
(80)
(1,873)(1)$(1,481)$

179,395

a. Includes $293 million of translation adjustment losses (See Notes to the Condensed Quarterly
Financial Statements, Note B – Members’ Subscriptions and Contributions).

Total Assets
As of September 30, 2021, total assets were $221.1 billion, an increase of $1.8 billion from June 30, 2021 ($219.3
billion). The increase was primarily driven by the increase in investments partially offset by decrease in net loans
outstanding, as discussed below.

Results from Lending Activities
Loan Portfolio and Grant Activity
As of September 30, 2021, the net loans outstanding (after accumulated provision for losses on loans) was $176.5
billion, lower by $1.2 billion compared with June 30, 2021. The decrease was mainly due to currency translation losses
of $2.2 billion, consistent with the 1.2% depreciation of the SDR against the U.S. dollar during the year, partially
offset by $1.0 billion in net loan disbursements.
As of September 30, 2021, 90% of IDA’s total loans outstanding were denominated in SDR. For the regionalpresentation of total loans outstanding, see Notes to the Condensed Quarterly Financial Statements for the period
ended September 30, 2021, Note D – Loans and Other Exposures – Table D6.

IDA Management’s Discussion and Analysis: September 30, 2021

11

Management’s Discussion and Analysis

Section IV: Financial Results

Table 6: Net Loans Outstanding activity

Figure 2: Net Loans Outstanding

In millions of U.S. dollars

In billions of U.S. dollars

Net Loans outstanding as of June 30, 2021
Activity during the period:
Gross loan disbursements
Loan repayments
Change in Accumulated provision for loan losses a
Translation adjustments
Other b
Total activity
Net Loans outstanding as of September 30, 2021$

177,779$$

2,493(1,531)39(2,222)(11)(1,232)
176,547

a. See Notes to the Condensed Quarterly Financial Statements, Note D –Loans and Other Exposures.
b. Includes deferred loan origination costs of $2 million, and HIPC Debt
relief provided of $9 million.

200
161

178

177

Jun 21

Sep 21

150
100
50
0
Jun 20During FY22 YTD, net loan commitments were $3.4 billion lower, compared with the same period in FY21, mainly
due to high levels of financing in FY21 YTD committed to IDA’s response to the COVID-19 crisis.
Table 7: Net Commitments of Loans and Guarantees by Region
In millions of U.S. dollars
For the three months ended September 30,
Eastern and Southern Africa

2021$

Western and Central Africa% of total

30

2020

2%

$

% of total

1,631

33 %

Variance$(1,601)

1,219

79

1,727

35

(508)

East Asia and Pacific

25

2

114

2

(89)

Europe and Central Asia

56

4

84

2

(28)

Latin America and the Caribbean

4

*

-

-

4

200

13

1,402

28

(1,202)

100 %

$

4,958

100 %

$

-

South Asia
Total

$

1,534

of which Guarantees

$

-

$

(3,424)$-* Indicates percentage less than 0.5%.
Table 8: Net Commitments of Grants by Region
In millions of U.S. dollars
For the three months ended September 30,
Eastern and Southern Africa

2021$% of total

2020

318

29 %

667

61

882

35

East Asia and Pacific

36

3

-

-

36

-

-

200

8

(200)

75

7

4

*

71

-

-

410

16

(410)

2,537

100 %

Latin America and the Caribbean
South Asia
Total

$

1,096

100 %

$

1,041

41 %

Variance

Western and Central Africa
Europe and Central Asia$

% of total
$

(723)
(215)

$

(1,441)* Indicates percentage less than 0.5%.

IDA’s loans generally disburse within five to ten years for Investment Project Financing (IPF) and one to three years
for Development Policy Financing (DPF). Therefore, each year’s disbursements also include amounts relating tocommitments made in earlier years (See Table 9).
During FY22 YTD, gross disbursements were lower by 22% compared with the same period in FY21. The higher
gross disbursements in FY21 YTD were mainly driven by the increase in emergency funding in response to the
COVID-19 pandemic.

12

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section IV: Financial Results

Table 9: Gross Disbursements of Loans and Grants by Region
In millions of U.S. dollars
Loans

2021
Grants a

Total

Loans

2020
Grants a

Total

685

344

1,029

$ 1,088

326

1,414

Western and Central Africa

546

192

738

728

597

1,325

(587)

East Asia and Pacific

287

13

300

304

19

323

(23)

Europe and Central Asia

55

33

88

68

53

121

(33)

Latin America and the Caribbean

113

49

162

68

15

83

79

6

130

136

9

12

21

115

South Asia

800

170

970

887

200

1,087

(117)

Others b

1

-

1

1

-

1

2,493

931

3,424

$ 3,153

1,222

4,375

For the three months ended September 30,
Eastern and Southern Africa$

Middle East and North Africa

Total

$

Variance
$

(385)

$

(951)

a. Excludes Project Preparation Advances (PPA).
b. Represents loans under PSW.

As of September 30, 2021, 60% of IDA’s loans were on regular terms (75 basis points SDR equivalent service charge),
see Table 10. For a summary of financial terms for IDA’s lending products, effective July 1, 2021, refer to IDA’s
MD&A for the fiscal year ended June 30, 2021, Section V: Development Activities, Products and Programs.
For the three months ended September 30, 2021, the increase in IDA’s revenue from loans was primarily due to thehigher volume of loans outstanding.
Table 10: Revenue and Balance by Product Category
In millions of U.S. dollars
Interest revenue on loans aBalance as of September 30,
Category
Loans
Concessional
Regular
Blend
Hard b
Non-concessional c
Others d
Total

For the three months ended September 30,

2021

2020

2021

2020

$

108,692
64,634
1,383
5,516
10

$ 105,851
60,161
1,395
3,632
6

$

208
236
12
26
*

$

197
208
12
20
*

$

180,235$ 171,045

$

482

$

437

a. Excludes interest rate swap expenses related to loan hedges - $1 million in FY22 YTD (less than $0.5 million - FY21 YTD).
b. Prior to July 1, 2017, IDA offered Hard-Term loans to Blend Countries (excluding Small Island Economies). Hard-term loans are nolonger offered.
c. Excludes $6 million of commitment charges earned in FY22 YTD on undisbursed balances of non-concessional loans ($4 million
in FY21 YTD). See Table 12.
d. Represents loans under the PSW.
* Indicates amount less than $0.5 million.

Results from Investing Activities
Investment Portfolio
IDA’s net investment portfolio increased to $40.4 billion as of September 30, 2021, from $37.9 billion as of June 30,
2021. The increase was primarily due to proceeds from net new debt issuances, offset by net loan and grant
disbursements and translation adjustment losses.
Net Investment Revenue
During FY22 YTD, IDA’s net investment revenue was $33 million, a decrease of $4 million compared with the same
period in FY21. The decrease in interest revenue was mainly driven by the lower interest rate environment in thecurrent period.

IDA Management’s Discussion and Analysis: September 30, 2021

13

Management’s Discussion and Analysis

Section IV: Financial Results

Figure 3: Net Investment Portfolio

Figure 4: YTD Net Investment Revenue

In billions of U.S. dollars

In millions of U.S. dollars

40

37.9

35.6

40.4

400
320

30

240

20

160

10

80

0
Jun 20Jun 21

Sep 21

0
FY18

FY19

FY20

FY21

FY22

Results from Borrowing Activities (excluding associated derivatives)
As of September 30, 2021, market borrowings recorded at fair value were $22.1 billion, an increase of $1.5 billion
compared to June 30, 2021 ($20.6 billion). The increase was mainly driven by net new issuances of Medium andLong-term instruments during the period. See Notes to the Condensed Quarterly Financial Statements for the period
ended September 30, 2021, Note E – Borrowings.
In July 2021, a 10-year fixed rate bond was issued and recorded at amortized cost to fund fixed rate loans. As of
September 30, 2021, the market borrowings at amortized cost were $2.3 billion. See Section V – Risk Management
and Notes to the Condensed Quarterly Financial Statements for the period ended September 30, 2021, Note A –Summary of Significant Accounting and Related Policies and Note E – Borrowings.
Concessional partner loans from members, recorded at amortized cost were $7.6 billion as of September 30, 2021($7.7 billion - June 30, 2021). As part of IDA19, two members have agreed to provide IDA with concessional partner
loans totaling $1.1 billion. As of September 30, 2021, one of the two members had signed a concessional partner loan
agreement with IDA for $0.6 billion.
Figure 5: Borrowings
In billions of U.S. dollars
Concessional partner loans, at amortized costMarket borrowings, at amortized costMarket borrowings, at fair value

40
30
7.7

7.6
2.3

20.6

22.1

Jun 21

Sep 21

20
7.6
10
12.1
0
Jun 20Transfers from Affiliated Organizations
Since 1964, IBRD has made transfers to IDA out of its net income, upon approval by the Board of Governors. Undera formula-based approach for IBRD's income support to IDA, the amount of income transfer recommended for IDA
is a function of IBRD's financial results. On October 14, 2021, IBRD’s Board of Governors approved a transfer of$274 million to IDA which was received by IDA on October 25, 2021.

Net Non-Interest Expenses
As shown in Table 11, IDA’s net non-interest expenses primarily comprised of administrative expenses, net of revenue
from externally-funded activities. IBRD and IDA's administrative budget is a single resource envelope that funds the
combined work programs of IBRD and IDA. The allocation of administrative expenses between IBRD and IDA is
based on an agreed cost and revenue sharing methodology, approved by their Boards, which is primarily driven by

14

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section IV: Financial Results

the relative level of activities relating to lending, knowledge services and other services between the two institutions.
The administrative expenses shown in the table below include costs related to IDA-executed trust funds and otherexternally funded activities.
See Table 11 for a comparison of the main sources of administrative expenses and revenue from externally funded
activities in FY22 YTD and FY21 YTD.
IDA’s net non-interest expenses were $345 million in FY22 YTD, compared to $397 million in FY21 YTD. The key
driver was the decrease in pension costs, primarily driven by the higher actual asset returns in FY21, which resulted
in lower amortization of unrecognized actuarial losses in FY22.
Table 11: Net Non-Interest Expenses
In millions of U.S. dollars
For the three months ended September 30,
Administrative expenses:
Staff costs
TravelConsultant and contractual services
Pension and other post-retirement benefits
Communications and technology
Premises and equipment
Other expenses
Total administrative expenses
Revenue from externally funded activities:
Reimbursable revenue - IDA executed trust funds
Other revenue
Total revenue from externally funded activities
Total Net Non-Interest Expenses (Table 3)

2021
$

$

286
7
82
48
19
36
16
494

$
$

(102)
(47)
(149)
345

2020

Variance
$

$

277
2
74
126
15
34
22
550

$
$

(96)
(57)
(153)
397

$

$

9
5
8
(78)
4
2
(6)
(56)

$
$

(6)
10
4
(52)

During FY22 YTD, IDA’s net other expenses were $5 million, primarily due to PPA grant activity during the period
compared to $17 million of net other revenue in FY21 YTD due to PPA cancellations and refinancing of PPA grants
previously approved. The refinancing of PPA grants results in inclusion of the amounts in the loan to the borrower,
and the reversal of the grant expense.
Table 12: Other (Expenses) Revenue, net
In millions of U.S. dollars
For the three months ended September 30,

2021

2020

Variance

PPA grants and others
Guarantee fees
Commitment charges

$

(15)
4
6

$

10
3
4

$

(25)
1
2

Other (Expenses) Revenue, net (Table 3)

$

(5)

$

17

$

(22)

Provision for losses on loans and other exposures
In FY22 YTD, IDA recorded a provision for losses on loans and other exposures of $100 million as compared to $122
million in FY21 YTD. The provisions in FY22 YTD and FY21 YTD were primarily due to the increase in exposuresin both periods, with a greater increase in FY21 YTD. See Notes to the Condensed Quarterly Financial Statements forthe period ended September 30, 2021, Note D – Loans and Other Exposures – Table D3.

Unrealized mark-to-market gains (losses) on non-trading portfolios, net
During FY22 YTD, the non-trading portfolios had $62 million of net unrealized mark-to-market gains ($129 million
net unrealized mark-to-market gains in FY21 YTD). The FY22 YTD and FY21 YTD mark-to-market gains wereprimarily from the derivatives held for the Capital Value Protection Program (CVP), and due to the increase in USD
and EUR interest rates during the periods.

IDA Management’s Discussion and Analysis: September 30, 2021

15

Management’s Discussion and Analysis

Section IV: Financial Results

Table 13: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
In millions of U.S. dollars
For the three months ended September 30,
Asset-liability management
Investment portfolio
Other a
Total

$

$

2021
58
(2)
6
62

$

$

2020
125
(1)
5
129

$

$

Variance
(67)
(1)
1
(67)

a. Other comprises mark-to-market gains (losses) on the borrowing and loan portfolios, and PSW.

Non-functional currency translation adjustment gains (losses), net
These represent unrealized exchange rate gains or losses resulting from the translation of loans, borrowings, and allother assets and liabilities held on IDA’s Balance Sheet, that are denominated in currencies other than the SDR and
its component currencies. During FY22 YTD, translation adjustment gains on non-functional currencies were $168
million, primarily driven by the depreciation of the majority of the non-functional currencies against the U.S. dollar,
IDA’s reporting currency. In comparison, in FY21 YTD, the translation adjustment losses were $5 million due to theappreciation of the majority of the non-functional currencies against the U.S. dollar. Non-functional currencytranslation adjustment gains or losses are primarily associated with the hedging of exchange rate risk related to future
donor contributions as discussed in Section V: Risk Management.

16

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Management’s Discussion and Analysis

Section V: Risk Management

Section V: Risk Management
Risk Governance
IDA’s risk management processes and practices continually evolve to reflect changes in activities in response tomarket, credit, product, operational, and other developments. The Board, particularly Audit Committee members,
periodically reviews trends in IDA’s risk profiles and performance, and any major developments in risk management
policies and controls.
Management believes that effective risk management is critical for IDA’s overall operations. Accordingly, the risk
management governance structure is designed to manage the principal risks IDA assumes in its activities, and supports
management in its oversight function, particularly in coordinating different aspects of risk management and inconnection with risks that are common across functional areas.
IDA’s financial and operational risk governance structure is built on the “three lines model” where:
i. Business units are responsible for directly managing risks in their respective functional areas,
ii. The Vice President and WBG Chief Risk Officer (CRO) provides direction, challenge, and oversight overfinancial and operational risk activities, andiii. Internal Audit provides independent oversight.
IDA’s risk management process comprises risk identification, assessment, response, and risk monitoring andreporting. IDA has policies and procedures under which risk owners and corporate functions are responsible for
identifying, assessing, responding to, monitoring, and reporting risks.

Risk Oversight and Coverage
The CRO oversees both financial and operational risks. These risks include (i) country credit risks in the core sovereign
lending business, (ii) market and counterparty risks including liquidity risk, and (iii) operational risks relating topeople, processes, and systems. In addition, the CRO works closely with IBRD, IFC, and MIGA’s management toreview, measure, aggregate, and report on risks and share best practices across the WBG. The CRO also helps enhancecooperation between the entities and facilitates knowledge sharing in the risk management function.
The risk of IDA’s operations not meeting the expected development outcomes (development outcome risks) in IDA’s
lending activities is monitored at the corporate level by Operations Policy and Country Services (OPCS). Where fraudand corruption risks may impact IDA-financed projects, OPCS, the Regions and Practice Groups, and the Integrity
Vice Presidency jointly address such issues.

Management of IDA’s Risks
IDA assumes financial risks in order to achieve its development and strategic objectives. IDA’s financial risk
management framework is designed to enable and support the institution in achieving its goals in a financiallysustainable manner. IDA manages credit, market, and operational risks for its financial activities, which includelending, borrowing, and investing. The primary financial risk to IDA is the country credit risk inherent in its loan andguarantee portfolio. IDA is also exposed to risks in its liquid asset and derivative portfolios, where the major risks areinterest rate, exchange rate, commercial counterparty, and liquidity risks. IDA’s operational risk management
framework is based on a structured and uniform approach to identify, assess, and monitor key operational risks acrossbusiness units.

Coronavirus Disease 2019 (COVID-19) Outbreak
The outbreak of COVID-19 resulted in governments worldwide enacting emergency measures to combat the spreadof the virus. Those measures included travel bans, quarantine periods and social distancing, which caused material
disruption to businesses globally, resulting in an initial economic slowdown. Governments and central banks reactedwith significant monetary and fiscal interventions designed to stabilize economic conditions.
In light of COVID-19, IDA continues to monitor the developments and to manage the risks associated with all its
portfolios.
As of September 30, 2021, IDA had sufficient resources to meet its liquidity requirements and continues to have accessto capital market resources. IDA continues to maintain a robust liquidity position and flexibility to access the necessary

IDA Management’s Discussion and Analysis: September 30, 2021

17

Management’s Discussion and Analysis

Section V: Risk Management

liquidity resources. Management remains vigilant in assessing funding needs in the medium and longer-term tomanage the effect of possible severe market movements.
IDA’s capital remains adequate and above the zero percent policy minimum as indicated by the DSC ratio (Table 14).
As of the reporting date, country credit risk and counterparty credit risk remain in line with the existing governanceframework and established credit limits. The loan loss provisions include IDA’s current assessment of country credit
risk. The fair values of related financial instruments reflect counterparty credit risk in IDA’s portfolios. Developmentsin the market continue to be closely monitored and managed.
IDA continues to respond to client needs and operate its core business functions effectively by utilizing technology
for remote work. Home-based work remains in many World Bank offices throughout the world, in line with IDA’s
Business Continuity Procedures. In addition, other prudent measures are in place to ensure the health and safety of its
employees. IDA continues to monitor risks associated with the COVID-19 and prepare plans to respond as the situation
evolves.

Capital Adequacy
IDA uses a solvency-based capital adequacy model, which mandates that IDA holds capital for credit risk, market risk
and operational risk covering all activities and assets on its books. The main measure of capital adequacy is Deployable
Strategic Capital, a non-GAAP measure, which is the capital available to support future commitments, over and above
the current portfolio. IDA is required, by the Board, to keep the DSC at levels greater than or equal to zero percent.
The DSC is calculated as the amount by which Total Resources Available (TRA) exceed Total Resources Required(TRR), plus a Conservation Buffer (CB). The TRA consists of IDA’s existing equity plus accumulated provision forloan losses and other exposures. The TRR is the minimum capital required to cover expected and unexpected losses,(under a stressed but still plausible downside scenario), in connection with all of IDA’s currently existing operations
and assets. Within the TRR there is also a capital allowance to reflect losses that result from valuing IDA’sconcessional loan portfolio in present value terms using market interest rates. This allowance is calculated using a
stressed interest rate to account for a potential future rise in market interest rates. Beginning in June 2021, as part of
the DSC framework refinement, TRR now includes capital requirements to account for development grants which areapproved but not yet expensed to address the delay in expense recognition for grants made as a result of theimplementation of a related accounting standard update. It also takes into consideration the capital adequacy protection
provided by long-term fixed rate borrowings against changes in market interest rates. The CB is an extra buffer in theamount of 10 percent of TRA.
As of September 30, 2021, the DSC was 31.0%, higher by 0.6 percentage points compared with June 30, 2021 (30.4%).
The increase in the ratio was mainly due to a larger percentage decrease in TRR compared to the percentage decreasein TRA. The decrease in TRR was primarily due to the decrease in total exposure at default. See Table 14.
In addition to the DSC framework, IDA has policies in place to ensure alignment of its lending and borrowing
activities. Included in these policies are asset coverage requirements, where management monitors asset and liquidity
levels to ensure IDA’s ability to satisfy all its borrowing and commitment obligations. See IDA’s MD&A for the fiscal
year ended June 30, 2021, Section IX: Risk Management.
Table 14: Deployable Strategic Capital Ratio
In billions of U.S. dollars except ratios in percentage
As ofTotal Resources Available (TRA)$

September 30, 2021
184.3

Total Resources Required (TRR)

108.7

Conservation Buffer (CB)18.4

Deployable Strategic Capital (DSC = TRA-TRR-CB)$

Deployable Strategic Capital as a percentage of TRA

57.2
31.0%

$

June 30, 2021
185.7
110.6
18.6

$

56.5
30.4%

Asset/Liability Management (ALM)
On July 1, 2021, IDA implemented an interim ALM policy which, under specific criteria, allows funding fixed rateloans with long-term fixed rate market debt and CPLs (both reported at amortized cost), as part of IDA’s interest raterisk management to match debt characteristics with that of the loan portfolio. For more details, see Notes to theCondensed Quarterly Financial Statements for the period ended September 30, 2021, E: Borrowings.

18

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section V: Risk Management

Capital Value Protection Program
In FY20, as part of IDA’s ALM policies, IDA executed pay fixed, receive floating forward-starting swaps with anotional of $15.0 billion under a Board-approved Capital Value Protection Program. The objective of the program is
to partially reduce the sensitivity of IDA’s capital adequacy model to changes in long-term interest rates and allow for
more resources to be available for lending under the capital adequacy framework. For more details, see Notes to theCondensed Quarterly Financial Statements for the period ended September 30, 2021, Note F: Derivative Instruments.

Management of Credit and Market Risks
Credit Risk
IDA faces two types of credit risk: country credit risk and counterparty credit risk. Country credit risk is the risk ofloss due to a country not meeting its contractual obligations, and counterparty credit risk is the risk of loss attributable
to a counterparty not honoring its contractual obligations. IDA is exposed to commercial as well as noncommercial
counterparty credit risk.
Country Credit Risk
IDA’s lending management framework encompasses the long-standing Performance Based Allocation (PBA)
mechanism and allocation framework agreed at each replenishment, complemented by additional considerations
required when accessing debt markets to ensure adherence to risk management (capital adequacy) requirements.
IDA regularly assesses the country credit risk of all its borrowers. IDA produces credit risk ratings for all its borrowing
countries, which reflect country economic, financial, and political circumstances, and also considers environmental,social and governance (ESG) risk factors. Based on these risk ratings, to manage IDA’s overall portfolio risk, theallocation outcomes of the PBA and other mechanisms are reviewed to ensure that they are compatible with the
Deployable Strategic Capital Framework and Single Borrower Limit (SBL).
For FY22, the SBL has been set at $45.2 billion (25% of $180.9 billion of equity as of June 30, 2021). Currently, themaximum country exposure levels compatible with IDA’s overall capital adequacy target are lower than the SBL for
all IDA-borrowing countries. As a consequence, the SBL is not currently a constraining factor.
As of September 30, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure(Figure 6). IDA’s largest exposure to a single borrowing country, India, was $21.6 billion as of September 30, 2021.
Monitoring these exposures relative to the SBL, requires consideration of the repayment profiles of existing loans, aswell as disbursement profiles and projected new loans and guarantees.
Figure 6: Country Exposures as of September 30, 2021

Top Ten Country Exposures
India
Bangladesh
Pakistan
VietnamNigeria
Ethiopia
Kenya
Tanzania
Ghana
Uganda

21.6
17.9
16.3
13.9
11.6
11.2
10.2
8.3
5.7
4.5
0

2

4

6

8

10

12

14

16

18

20

22

Expected Losses, Overdue Payments and Non-Performing Loans
When a borrower fails to make payments on any principal, interest, or other charges due to IDA, IDA may suspend
disbursements immediately on all loans and grants to that borrower. IDA’s current practice is to exercise this option
using a graduated approach. These practices also apply to member countries eligible to borrow from both IDA and
IBRD, and whose payments on IBRD loans may become overdue. It is IDA’s practice not to reschedule service
charges, interest or principal payments on its loans or participate in debt rescheduling agreements with respect to its
loans. As of September 30, 2021, none of the IDA borrowing countries in the accrual portfolio had overdue payments
beyond 90 days.

IDA Management’s Discussion and Analysis: September 30, 2021

19

Management’s Discussion and Analysis

Section V: Risk Management

As an exception to the practices set forth for treatment of overdue payments, IDA has provided financing to countries
with overdue payments, in very specific situations. For further details, refer IDA’s MD&A for the fiscal year ended
June 30, 2021, Section IX: Risk Management.
Accumulated Provision for Losses on Loans and Other Exposures
As of September 30, 2021, IDA had $180.2 billion of loans outstanding, of which loans in nonaccrual status represent
0.5%. IDA’s total provision for losses on loans and other exposures was $4.9 billion, which represents a provisioning
rate of 2.0% of the underlying exposures, as of September 30, 2021 and June 30, 2021. See Notes to the Condensed
Quarterly Financial Statements for the period ended September 30, 2021, Note D – Loans and Other Exposures.
Commercial Counterparty Credit Risk Exposure
Commercial counterparty credit risk is the risk that counterparties fail to meet their payment obligations under theterms of the contract or other financial instruments. Effective management of counterparty credit risk is vital to thesuccess of IDA’s funding, investment, and asset/ liability management activities. The monitoring and management ofthese risks is continuous as the market environment evolves.
As a result of IDA’s use of mark-to-market collateral arrangements for swap transactions, its residual commercial
counterparty credit risk exposure is concentrated in the investment portfolio, in instruments issued by sovereign
governments and non-sovereign holdings (including Agencies, Asset-backed securities, Corporates, and Time
Deposits) (See Table 15).
The credit quality of IDA’s investment portfolio remains in the upper end of the credit spectrum with 67% of theportfolio rated AA or above as of September 30, 2021, reflecting IDA’s continued preference for highly-rated
securities and counterparties across all categories of financial instruments.
Total commercial counterparty credit exposure, net of collateral held, was $40.3 billion as of September 30, 2021. For
the contractual value, notional amounts, and related credit risk exposure amounts by instrument, see Notes to theCondensed Quarterly Financial Statements for the period ended September 30, 2021, Note F: Derivative Instruments.
Table 15: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
In millions of U.S. dollars, except rates in percentages

Counterparty Ratinga

As of September 30, 2021
NonNet Swap
Sovereigns
Exposure

Sovereigns

Total Exposure% of Total

AAA
AA
A
BBB or below

$

8,550
2,440
8,694
-

$

5,088
10,849
4,304
-

$

199
170
-

$

13,63813,488
13,168
-

34
33
33
-

Total

$

19,684$

20,241$

369$

40,294100

Total Exposure% of Total

Counterparty Ratinga

As of June 30, 2021
NonNet Swap
Sovereigns
Exposure

Sovereigns

AAA
AA
A
BBB or below

$

9,345
2,519
7,571
-

$

6,023
7,438
4,378
-

$

179
68
-

$

15,368
10,136
12,017
-

41
27
32
-

Total

$

19,435$

17,839$247$

37,521

100

a. Average rating is calculated using available ratings for the three major rating agencies; however, if ratings are not available fromeach of the three rating agencies, IDA uses the average of the ratings available from any of such rating agencies or a single rating to
the extent that an instrument or issuer (as applicable) is rated by only one rating agency.

Credit and Debit Valuation Adjustments
Most outstanding derivative positions are transacted over-the-counter, and therefore valued using internally developed
valuation models. For commercial and non-commercial counterparties where IDA has a net exposure (net receivable
position), IDA calculates a Credit Valuation Adjustment (CVA) to reflect credit risk. For net derivative positions withcommercial and non-commercial counterparties where IDA is in a net payable position, IDA calculates a Debit

20

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section V: Risk Management

Valuation Adjustment (DVA) to reflect its own credit risk. As of September 30, 2021, IDA’s Condensed Balance
Sheet included a CVA of $4 million and a DVA of $6 million on outstanding derivatives.
Market Risk
IDA is exposed to changes in interest and exchange rates. The introduction of market debt financing into IDA’s
business model from FY18 presents additional exposures. The impending discontinuance of London Interbank Offered
Rate (LIBOR) and the transition to alternative reference rates also presents a risk to IDA’s business activities.
IDA uses derivatives to manage its exposure to certain market risks. These are used to align the interest and currencycomposition of its assets (loan and investment trading portfolios) with that of its liabilities (borrowing portfolio) andequity. Loan and investment portfolios are largely maintained in SDR and its component currencies.
Interest Rate Risk
IDA is exposed to interest rate risk due to mismatches between its assets (loan and investment portfolios) and its
liabilities (borrowing portfolio) both in terms of maturity and instrument type. Given IDA’s lengthy disbursement
profile, the duration of IDA’s loans is relatively long. This long duration, combined with volatility in market interest
rates, would result in significant year-on-year variability in the fair value of equity. However, since the loan portfolio
is not reported at fair value under U.S. GAAP, the impact of this variability on IDA’s Balance Sheet is not fully
evident.
As of September 30, 2021, IDA’s investment-trading portfolio (liquid asset portfolio) had a duration of four months.
Low and negative fixed interest rates present a challenge for the investment of the liquid asset portfolio. During FY22
YTD, this portfolio experienced unrealized mark-to-market losses of $2 million, excluding positive returns from
IDA’s share of PEBP earnings, as a result of the increase in yield curves ($20 million of unrealized mark-to-market
losses in FY21 YTD).
Under its integrated financing model, IDA employs the following strategies to continue to enhance its managementof interest rate risk:• The capital adequacy policies factor in the sensitivity to interest rates.
• Matching interest rates between assets and related funding to minimize open interest rate positions.
• The funding risk related to the mismatch between the maturity profile of the debt funding and the related assets ismonitored through duration measurements and adjustments to capital requirements to cover this risk.
Alternative Reference Rates
In July 2017, the Financial Conduct Authority (FCA), the regulator of LIBOR, announced that it will no longer compel
panel banks to submit rates required to calculate LIBOR after December 31, 2021. Therefore, market participants,
including IDA and its borrowers, need to move to alternative reference rates.
In March 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator orwill no longer be representative, as follows:
Type of LIBOR

Setting

Date of cessation

All settings

December 31, 2021

GBP LIBOR
EUR LIBOR
CHF LIBOR
JPY LIBOR
USD LIBOR

1-week, 2-month

USD LIBOR

Remaining settings, including 6-month

June 30, 2023

Despite the extension of the publication of certain U.S. dollar LIBOR rates to June 30, 2023, the regulators’ guidance
remains that LIBOR should not be used for new contracts after 2021. In July 2021, the Commodity Futures Trading
Commission’s Market Risk Advisory Committee (MRAC) adopted a market best practice known as SOFR First, afour phased plan to switch derivative trading conventions from LIBOR to SOFR for USD derivative instruments.
Also, in July 2021, the Alternative Reference Rates Committee (ARRC) formally recommended CME Group’s
forward-looking term rate for SOFR in markets where transitioning from LIBOR to an overnight rate has beendifficult. The forward-looking term rate for SOFR is based on transactions in the SOFR derivatives markets. The

IDA Management’s Discussion and Analysis: September 30, 2021

21

Management’s Discussion and Analysis

Section V: Risk Management

ARRC recommended these rates for legacy loans and bond instruments but not for derivative instruments. For its
derivative portfolios, IDA has adhered to the International Swaps and Derivatives Association (ISDA) 2020 IBOR
Fallbacks Protocol (IBOR Protocol).
In consideration of the regulatory guidance and in preparation for the global markets’ transition away from LIBOR,IDA has taken important steps to facilitate a smooth and orderly transition of its financial instruments effected byalternative reference rates. The value of IDA’s investments, borrowings, and derivative instruments tied to LIBOR
and the trading market for LIBOR-based securities could be impacted upon its discontinuance or if it is limited. IDA
previously completed an impact assessment of its exposure, both quantitatively and qualitatively, to LIBOR anddeveloped an implementation roadmap for the LIBOR transition. IDA is actively working through this transition frommultiple perspectives: lending, funding, accounting, operations, information technology, liquidity investing, risk andlegal, considering the portfolio of existing loans and other instruments that use LIBOR as a benchmark.
Most of IDA’s loans are on fixed rate concessional terms. Accordingly, the impact of the LIBOR transition changes
will be limited as IDA’s non-concessional loans portfolio represents only 3% of the total loans outstanding as of
September 30, 2021. For IDA’s LIBOR based non-concessional and hard-term loans, in FY20, IDA’s Executive
Directors endorsed an omnibus amendment process with borrowers for certain existing loan agreements to address
inadequate fallback provisions for LIBOR replacement, allowing IDA to maintain the principles of fairness andequivalence for any replacement reference rate. The contract amendments will enable similar treatment to all loans bybringing the fallback provisions related to changes in the reference rate in the General Conditions into conformity
with the revised General Conditions of December 2018. The new language permits IDA to transition the interest rate
to alternative reference rates when it is appropriate to do so. IDA has decided to adopt the following alternativereference rates: Secured Overnight Financing Rate (SOFR) for USD denominated loans, Euro Interbank Offered Rate
(EURIBOR) for EUR denominated loans, Sterling Overnight Index Average (SONIA) for GBP denominated loans
and Tokyo Overnight Average Rate (TONA) for JPY denominated loans. To date, IDA has made significant progress
to secure counter-signature of the omnibus amendments from the majority of its affected borrowers.
While IDA’s primary product is a fixed rate loan that is not dependent on a reference rate, IDA does offer certain
borrowers non-concessional terms based on the lending rate of IBRD loan products. Effective April 2021, IDA
suspended the offering of non-concessional loans on fixed spread terms as well as the suspension of a related
conversion feature from the variable spread terms to fixed spread terms. In July 2021, the Board approved offering
new loans with new alternative reference rates and ceasing to offer LIBOR based loans effective January 1, 2022. In
addition, the Board approved the switch-over from LIBOR to new alternative reference rates for existing variableloans beginning in January 2022. This transition plan was based on careful consideration of the regulatory guidance,
relevant provisions in IDA’s General Conditions and loan agreements, ALM needs, as well as borrower implications,and took into account the different characteristics of the new market reference rates and LIBOR and the implicationsof a staggered LIBOR cessation timetable.
IDA has notified the minority of its borrowers who did not yet sign the omnibus amendments of the reference rate
replacement timeline for their existing loans on an absence of objection basis and is also in the process of notifying
other borrowers of the reference rate replacement in their existing loans. IDA will continue to work with key
stakeholders, including internal subject matter experts, senior management, borrowers, industry groups and othermarket participants, to mitigate potential financial and operational risks to which IDA is exposed and to ensure anorderly transition to alternative reference rates. IDA is managing the transition prudently and in a cost-effective
manner.
Exchange Rate Risk
Changes in exchange rates affect the capital adequacy of IDA when the currency of the equity supporting the loan
portfolio and other assets is different from that of the risk exposure. Accordingly, the primary objective of IDA’s
currency risk management is to protect IDA’s financial capacity, as measured by the capital adequacy framework,from exchange rate movements. To achieve this, IDA’s balance sheet is managed in multiple currencies: SDR and thecurrencies comprising the SDR basket. The exchange rate risk management methodology encompasses the hedging
of currency risk arising from the various inflows and outflows inherent in IDA’s business model.
IDA uses currency forward contracts to convert future inflows from members’ receivables provided in national
currencies into the five currencies of the SDR basket, thereby aligning the currency composition of member
contributions with the net cash outflows relating to loans and grants, which are primarily denominated in SDR.
The payable leg of the currency forward contracts economically hedging member equity contribution pledges isdenominated in non-functional currencies. IDA pays the market counterparty in a non-SDR currency. Accordingly,

22

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

Section V: Risk Management

appreciation (depreciation) of the non-SDR currencies against the U.S. dollar results in exchange rate losses (gains),
which are reported in the Statement of Income. The translation adjustment on future inflows from members, eventhough they are not recorded in the balance sheet, is the economic offset to the translation adjustment on non-functional
currencies of currency forward contracts.
Liquidity Risk
Liquidity risk arises in the general funding of IDA’s activities and in managing its financial position. It includes therisk of IDA being unable to fund its portfolio of assets at appropriate maturities and rates, and the risk of being unable
to liquidate a position in a timely manner at a reasonable price.
IDA’s aggregate liquid asset holdings are kept above a specified Prudential Minimum to safeguard against cash flowinterruptions. The Prudential Minimum is equal to 80% of 24 months of projected net outflows. For FY22, thePrudential Minimum has been set at $19.3 billion. As of September 30, 2021, IDA had liquid assets of $40.0 billion,
which represented 207% of the Prudential Minimum.
IDA will hold liquidity above the Prudential Minimum to ensure sufficient liquidity under a wide range of shock
scenarios as well as to give it flexibility in timing its borrowing transactions and to meet working capital needs.
Operational Risk
Operational risk is defined as the risk of financial loss, or damage to IDA’s reputation resulting from inadequate or
failed internal processes, people, and systems, or from external events.
IDA recognizes the importance of operational risk management activities, which are embedded in its financial
operations. As part of its business activities, IDA is exposed to a range of operational risks including physical security
and staff health and safety, data and cyber security, business continuity, and external vendor risks. IDA’s approach toidentifying and managing operational risk includes a dedicated program for these risks and a robust process that
includes identifying, assessing, and prioritizing operational risks, monitoring, and reporting relevant key risk
indicators, aggregating, and analyzing internal and external events, and identifying emerging risks that may affectbusiness units and developing risk response and mitigating actions.

IDA Management’s Discussion and Analysis: September 30, 2021

23

Management’s Discussion and Analysis

Section VI: Governance

Section VI: Governance
Senior Management Changes
The following changes will be effective January 1, 2022:• Jingdong Hua, Vice President and Treasurer of the World Bank, will retire.
• Jorge Familiar Calderon has been appointed to the role of Vice President and Treasurer of the World Bank.
• Pam O’Connell has been appointed as the Vice President and World Bank Group Controller, succeeding Jorge
Familiar Calderon in that role.

24

IDA Management’s Discussion and Analysis: September 30, 2021

Management’s Discussion and Analysis

List of Tables, Figures and Box

List of Tables, Figures and Box
TablesTable 1: Cumulative Net Commitments under IDA19 ................................................................................... 8
Table 2: Utilization of PSW Commitments .................................................................................................... 9
Table 3: Condensed Statement of Income ................................................................................................. 10
Table 4: Condensed Balance Sheet ........................................................................................................... 11
Table 5: Changes in Equity ......................................................................................................................... 11
Table 6: Net Loans Outstanding activity ..................................................................................................... 12
Table 7: Net Commitments of Loans and Guarantees by Region .............................................................. 12
Table 8: Net Commitments of Grants by Region ........................................................................................ 12
Table 9: Gross Disbursements of Loans and Grants by Region ................................................................ 13
Table 10: Revenue and Balances by Product Category ............................................................................. 13
Table 11: Net Non-Interest Expenses ......................................................................................................... 15
Table 12: Other (Expenses) Revenue, net ................................................................................................. 15
Table 13: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net ................................... 16
Table 14: Deployable Strategic Capital Ratio ............................................................................................. 18
Table 15: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating .......................... 20
FiguresFigure 1: IDA's Financial Business Model .................................................................................................... 6
Figure 2: Net Loans Outstanding ................................................................................................................ 12
Figure 3: Net Investment Portfolio .............................................................................................................. 14
Figure 4: YTD Net Investment Revenue ..................................................................................................... 14
Figure 5: Borrowings ................................................................................................................................... 14
Figure 6: Country Exposures as of September 30, 2021............................................................................ 19

Box
Box 1: Selected Financial Data ..................................................................................................................... 2

IDA Management’s Discussion and Analysis: September 30, 2021

25

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26

IDA Management’s Discussion and Analysis: September 30, 2021

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)
CONTENTS
September 30, 2021

CONDENSED QUARTERLY FINANCIAL STATEMENTSCONDENSED BALANCE SHEET

28

CONDENSED STATEMENT OF INCOME

30

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

31

CONDENSED STATEMENT OF CHANGES IN ACCUMULATED DEFICIT

31

CONDENSED STATEMENT OF CASH FLOWS

32

NOTES TO CONDENSED QUARTERLY FINANCIAL STATEMENTS

33

INDEPENDENT AUDITOR’S REVIEW REPORT52

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)27

CONDENSED BALANCE SHEET
Expressed in millions of U.S. dollars
September 30, 2021
(Unaudited)

June 30, 2021
(Unaudited)

AssetsDue from banks—Notes C and J
Unrestricted cash$

Restricted cash

584

$

470

26

26

610

496

39,86637,376

Derivative assets, net—Notes C, F, G and J

364

249

Receivable from affiliated organization—Note G

924

865

248,275

251,676(68,040)(70,172)

180,235

181,504(3,679)(3,718)(9)(7)

176,547

177,779

2,759

2,559

Investments (including securities transferred under repurchaseor securities lending agreements of Nil—September 30, 2021;
Nil—June 30, 2021) —Notes C, G and J

Loans outstanding—Notes D, G and J
Total loans approved
Less: Undisbursed balance (including signed loan
commitments of $63,158 million—September 30, 2021;$60,775 million—June 30, 2021)
Loans outstanding
Less: Accumulated provision for loan losses
Deferred loan income
Net loans outstanding

Other assets—Notes C, D and G

Total assets

28$

221,070$

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

219,324

September 30, 2021
(Unaudited)
Liabilities
Borrowings—Notes E and J
Market borrowings, at fair valueMarket borrowings, at amortized cost
Concessional partner loans, at amortized cost$

Securities sold under repurchase agreements, securities
lent under securities lending agreements, and payable forcash collateral received—Notes C and J

22,0502,305
7,623
31,978June 30, 2021
(Unaudited)$

20,555
7,759
28,314

3

-

173

408

Payable for development grants—Note H

6,345

6,820

Payable to affiliated organization—Note G

508

561

Other liabilities—Notes C, D and G

2,668

2,345

Total liabilities

41,67538,448291,545

292,534(37,478)(38,240)(3,842)
250,225(3,842)
250,452

Nonnegotiable, noninterest-bearing demand obligations on
account of members' subscriptions and contributions(10,732)(11,432)

Deferred amounts to maintain value of currency holdings

(245)

(244)

Accumulated deficit (Statement of Changes in Accumulated
Deficit)(59,636)(59,556)

Accumulated other comprehensive income (loss)—Note I

(217)

1,656

179,395

180,876

Derivative liabilities, net—Notes C, F, G and J

EquityMembers' subscriptions and contributions—Note B
Subscriptions and contributions committed
Less:
Subscriptions and contributions receivable
Cumulative discounts/ acceleration credits on
subscriptions and contributions
Subscriptions and contributions paid-in

Total equity
Total liabilities and equity$

221,070$219,324

The Notes to Condensed Quarterly Financial Statements are an integral part of these Statements.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)29

CONDENSED STATEMENT OF INCOME
Expressed in millions of U.S. dollars
Three Months Ended
September 30,(Unaudited)
2021
2020
Interest revenue
Loans, net—Note D
Investments, net—Notes C and G
Asset-liability management derivatives, net

$

481
33
-

$

437
37
(5)

Borrowing expenses, net—Note E

(46)

(49)

Interest revenue, net of borrowing expenses

468

420

Provision for losses on loans and other exposures, charge—Note D

(100)

(122)

Non-interest revenue
Revenue from externally funded activities—Note G
Commitment charges—Note D
Other
Total

149
6
4
159

153
4
3
160

Non-interest expenses
Administrative—Note G
Other
Total

(494)
(15)
(509)

(550)
10
(540)

Development grants—Note H

(343)

(509)

Non-functional currency translation adjustment gains (losses), net

168

(5)

Unrealized mark-to-market gains on Investments-Trading portfolio, net—
Notes F and J

15

19

Unrealized mark-to-market gains on non-trading portfolios, net—Note J

62

129

Net loss

$

(80)

$

(448)

The Notes to Condensed Quarterly Financial Statements are an integral part of these Statements.

30

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Expressed in millions of U.S. dollars
Three Months Ended
September 30,(Unaudited)
2021
2020
Net loss
Other comprehensive (loss) income —Note I
Currency translation adjustments on functional currencies
Net Change in Debit Valuation Adjustment (DVA) on Fair Value option
elected liabilities
Comprehensive (loss) income

$

$

(80)

$

(448)

(1,842)

3,820

(31)
(1,953)

(16)
3,356

$

CONDENSED STATEMENT OF CHANGES IN ACCUMULATED DEFICIT
Expressed in millions of U.S. dollars
Three Months Ended
September 30,(Unaudited)
2021
2020
Accumulated Deficit at beginning of the fiscal year
Cumulative effect of a change in accounting principle—Notes A and D
Adjusted Accumulated Deficit at beginning of the fiscal year
Net loss
Accumulated deficit at end of the period$$$(59,556)(59,556)(80)(59,636)$$$(58,321)(802)(59,123)(448)(59,571)

The Notes to Condensed Quarterly Financial Statements are an integral part of these Statements.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)31

CONDENSED STATEMENT OF CASH FLOWS
Expressed in millions of U.S. dollars
Three Months Ended
September 30,(Unaudited)
2021
2020
Cash flows from investing activities
Loans
Disbursements
Principal repayments
Non-trading securities—Investments
Repayments
Net cash used in investing activities$ (2,493)
1,531$ (3,153)
1,244

61
(901)

64
(1,845)

473

384

4,432
(25)

1,990
(25)

1,732
(1,619)
(293)
2
4,702

2,016
(4,333)
150
10
192

(80)

(448)

Cash flows from financing activities
Members' subscriptions and contributions
Medium and long-term borrowings
New issues
Retirements
Short-term borrowings (original maturities greater than 90 days)
New issues
Retirements
Net short-term borrowings (original maturities less than 90 days)
Net derivatives-borrowings
Net cash provided by financing activities
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities
Provision for losses on loans and other exposures, net—charge
Non-functional currency translation adjustment (gains) losses, net
Unrealized mark-to-market gains on non-trading portfolios, net
Other non-interest expenses (income), net
Amortization of borrowing costs
Changes in:
Net Investment portfolio
Other assets and liabilities
Net cash (used in) provided by operating activities

100
(168)
(62)
15
25

122
5
(129)
(11)
24

(2,861)(654)(3,685)

3,232
(796)
1,999

Effect of exchange rate changes on unrestricted and restricted cash
Net increase in unrestricted and restricted cash
Unrestricted and restricted cash at beginning of the fiscal year
Unrestricted and restricted cash at end of the period

(2)
114
496
610

19
365
674
1,039

Supplemental disclosure
Increase (Decrease) in ending balances resulting from exchange rate fluctuations:
Loans outstanding
Investment portfolio
Derivatives—Asset-liability management
Borrowings
Principal repayments written off under Heavily Indebted Poor Countries (HIPC)
Debt Initiative
Interest paid on borrowing portfolio$$ (2,222)
(340)
393
(495)

$

$

3,759
778
(45)
398

9
35

The Notes to Condensed Quarterly Financial Statements are an integral part of these Statements.

32

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

3
35

NOTES TO CONDENSED QUARTERLY FINANCIAL STATEMENTSNOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIESBasis of Preparation
These unaudited condensed quarterly financial statements and notes should be read in conjunction with the June 30,
2021 audited financial statements and notes included therein. The condensed comparative information that has been
derived from the June 30, 2021 audited financial statements has not been audited. In the opinion of management, thecondensed quarterly financial statements reflect all adjustments necessary for a fair presentation of IDA’s financial
position and results of operations in accordance with accounting principles generally accepted in the United Statesof America (U.S. GAAP).
Management makes estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the condensed quarterly financial statements and thereported amounts of revenue and expenses during the reporting periods. Due to the inherent uncertainty involved in
making those estimates, actual results could differ from those estimates. Areas in which significant estimates havebeen made include, but are not limited to, the provision for losses on loans and other exposures and valuation ofcertain financial instruments carried at fair value. The results of operations for the first three months of the current
fiscal year are not necessarily indicative of the results for the full year.
Certain reclassifications of the prior year’s information have been made to conform with the current year’s
presentation.
These financial statements were issued on November 12, 2021 which was also the date through which IDA’s
management evaluated subsequent events.
Accounting and Reporting Developments
There were no new Accounting Standard Updates (ASUs) implemented, nor new relevant ASUs issued but not yet
implemented as of September 30, 2021.
Fair Value Election on Borrowings
Previously, under IDA’s fair value elections, all market debt was carried at fair value. Starting July 1, 2021, IDA
only elects fair value for market debt designated to fund the investment portfolio or variable rate loans. Market debt
not meeting the fair value election criteria are reported at amortized cost. Market debt subject to the previous fairvalue election will continue to be carried at fair value.
NOTE B—MEMBERS’ SUBSCRIPTIONS AND CONTRIBUTIONS
The movement in Subscriptions and Contributions paid-in is summarized below:
Table B1: Subscriptions and contributions paid-in
In millions of U.S. dollars
September 30, 2021

June 30, 2021

Beginning of the fiscal year
Cash contributions received
Demand obligations received
Translation adjustment$

250,452
66
(293)

$

241,343
3,442
4,901
766

End of the period/fiscal year$

250,225$

250,452

During the three months ended September 30, 2021, IDA encashed demand obligations totaling $407 million.
Subsequent Event
Membership: On November 3, 2021, Bulgaria became the 174th member of IDA.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)33

NOTE C—INVESTMENTS
The investment securities held by IDA are designated as either trading or non-trading. All securities are carried andreported at fair value, or at face value, which approximates fair value.
As of September 30, 2021, IDA’s Investments were mainly comprised of government and agency obligations (62%),
with all the instruments being classified as either Level 1 or Level 2 within the fair value hierarchy. As of September
30, 2021, the largest holding of Investments-Trading with a single counterparty was Japanese government
instruments (17%).
A summary of IDA’s Investments is as follows:
Table C1: Investments-composition
In millions of U.S. dollars
September 30, 2021
Trading
Government and agency obligations
Time deposits
Asset-backed securities (ABS)$

Non-trading
Debt securities
Total

$

24,80814,360277
39,445$421
39,866

June 30, 2021$$

25,277
11,460152
36,889$487
37,376

IDA manages its investments on a net portfolio basis. The following table summarizes IDA’s net portfolio position:
Table C2: Net investment portfolio position
In millions of U.S. dollars
September 30, 2021
Investments
Trading
Non-trading
Total

$

39,445421
39,866

June 30, 2021$

36,889487
37,376

Securities sold under repurchase agreements, securities lent
under securities lending agreements, and payable for cash
collateral received a
Derivative Assets
Currency swaps and currency forward contracts
Total

(15)

-

240
240

167
167

Derivative Liabilities
Currency swaps and currency forward contracts
Interest rate swaps
Total

(54)
(12)
(66)

(65)
(17)
(82)

Cash held in investment portfolio b

547

426

9

107

Receivable from investment securities traded and other assets c
Payable for investment securities purchased d
Net Investment Portfolio

$

(176)
40,405$(73)
37,921a. Includes $12 million of cash collateral received from counterparties under derivative agreements (Nil - June 30, 2021).
b. This amount is included in Unrestricted cash under Due from Banks on the Condensed Balance Sheet.
c. This amount is included in Other assets on the Condensed Balance Sheet.
d. This amount is included in Other liabilities on the Condensed Balance Sheet. As of September 30, 2021, there were no shortsales (Nil - June 30,2021).

34

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)IDA uses derivative instruments to manage currency and interest rate risk in the investment portfolio. For details
regarding these instruments, see Note F—Derivative Instruments.
The maturity structure of IDA’s non-trading investment portfolio (principal amount due) was as follows:
Table C3: Maturity structure of non-trading investment portfolio
In millions of U.S. dollars
MaturityLess than 1 year
Between1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
Thereafter
Total

$

September 30, 2021
105

$

86
68
55
13
84
411

$

June 30, 2021
113

$

96
77
62
34
90
472

Commercial Credit Risk
For the purpose of risk management, IDA is party to a variety of financial transactions, certain of which involve
elements of credit risk. Credit risk exposure represents the maximum potential loss due to possible nonperformanceby obligors and counterparties under the terms of the contracts. For all securities, IDA limits trading to a list of
authorized dealers and counterparties. In addition, credit limits have been established for counterparties by type of
instrument and maturity category.
Swap Agreements: Credit risk is mitigated through a credit approval process, volume limits, monitoring procedures
and the use of mark-to-market collateral arrangements. IDA may require collateral in the form of cash or otherapproved liquid securities from individual counterparties to mitigate its credit exposure.
IDA has entered into master derivative agreements, which contain legally enforceable close-out netting provisions.
These agreements may further reduce the gross credit risk exposure related to the swaps. Credit risk with financial
assets subject to a master derivatives arrangement is further reduced under these agreements to the extent thatpayments and receipts with the counterparty are netted at settlement. The reduction in exposure as a result of these
netting provisions can vary due to the impact of changes in market conditions on existing and new transactions. The
extent of the reduction in exposure may therefore change substantially within a short period of time following thebalance sheet date. For more information on netting and offsetting provisions, see Note F—Derivative Instruments.
As of September 30, 2021, IDA held cash collateral of $12 million (Nil-June 30, 2021). Of this amount, $5 millionof the cash collateral was invested (Nil-June 30, 2021).
As of September 30, 2021, and June 30, 2021, there were no liabilities relating to securities transferred under
repurchase or securities lending agreements and no securities purchased under resale agreements.
NOTE D—LOANS AND OTHER EXPOSURESIDA’s loans and other exposures are generally made to, or guaranteed by, member countries of IDA. Loans arecarried at amortized cost. Other exposures include: Deferred Drawdown Options (DDO), Irrevocable Commitments
and Guarantees. Based on IDA’s internal credit quality indicators, the majority of the loans outstanding are in theMedium and High-risk classes.
IDA excludes the interest and service charges receivable balance from the amortized cost basis and the related
disclosures as permitted by U.S. GAAP. As of September 30, 2021, accrued interest income on loans of $539
million ($502 million—June 30, 2021), are presented in Other assets on the Condensed Balance Sheet.
Credit Quality of Sovereign Loans
Based on an evaluation of IDA’s exposures, management has determined that IDA has one portfolio segment –Sovereign Exposures. IDA’s loans constitute the majority of the Sovereign Exposures portfolio segment.
IDA’s country risk ratings are an assessment of its borrowers’ ability and willingness to repay IDA on time and in
full. These ratings are internal credit quality indicators. Individual country risk ratings are derived on the basis ofboth quantitative and qualitative analyses. The components considered in the analysis can be grouped broadly into
IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)35

eight categories: political risk, external debt and liquidity, fiscal policy and public debt burden, balance of payments
risks, economic structure and growth prospects, monetary and exchange rate policy, financial sector risks, andcorporate sector debt and vulnerabilities. The analysis also takes into account environmental, social and governancefactors. For the purpose of analyzing the risk characteristics of IDA’s exposures, these exposures are grouped into
three classes in accordance with assigned borrower risk ratings, which relate to the likelihood of loss: Low, Mediumand High risk classes, as well as exposures in nonaccrual status.
IDA’s borrower country risk ratings are key determinants in the provision for loan losses. Country risk ratings aregrouped into pools of borrowers with similar credit ratings for the purpose of the calculation of the expected credit
losses. Country risk ratings are determined in review meetings that take place several times a year. All countries arereviewed at least once a year, or more frequently if circumstances warrant, to determine the appropriate ratings.
An assessment was also performed to determine whether a qualitative adjustment was needed on the loan loss
provision as of September 30, 2021, including consideration of the COVID-19 pandemic. Management concluded
that a qualitative adjustment beyond the regular application of IDA’s loan loss provision framework was notwarranted.
IDA considers loans to be past due when a borrower fails to make payment on any principal, interest or othercharges due to IDA on the dates provided in the contractual loan agreement.
The following tables provide an aging analysis of loans outstanding:
Table D1: Loans-Aging Structure
In millions of U.S. dollars
September 30, 2021
Days past due
Risk Class
Low
MediumHigh

Up to 45
$

46-60

- $
8

61-90
- $
-

91-180- $-Total Past
Due

Over 180
- $
-

- $
-

Current

Total

- $
569 $
569
22,68522,6858
156,053 a
156,061

Loans in accrual status

8

-

-

-

-

8

179,307

Loans in nonaccrual status

5

1

1

11

403

421

499

920

13 $

1 $

1 $

11 $

403 $

429 $ 179,806$ 180,235

Total

$

179,315

Table D1.1:
In millions of U.S. dollars
June 30, 2021
Days past due
Risk Class
Low
MediumHigh

Up to 45
$

- $
7

46-60

61-90
- $
-

91-180- $-Total Past
Due

Over 180
- $
-

- $
-

Current

Total

- $
659 $
659
23,09223,092
7
156,814 a
156,821Loans in accrual status

7

-

-

-

-

7

180,565

Loans in nonaccrual status

7

1

3

9

399

419

513

932

14 $

1 $

3 $

9 $

399 $

426 $ 181,078$ 181,504

Total

$

a. Includes Private Sector Window (PSW) related loans of $10 million ($10 million-June 30, 2021).

36

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

180,572

The tables below disclose the outstanding balances of IDA’s loan portfolio classified by the year the loan agreement
was signed. IDA considers the signature date of a loan as the best indicator of the decision point in the origination
process, rather than the disbursement date.
Table D2: Loan portfolio vintage disclosure
In millions of U.S. dollars
September 30, 2021
Fiscal Year of origination

Risk Class
Low
MediumHigh
Loans in accrual
statusLoans innonaccrual status
Total

2022
$

2021
-

2019

112
58

- $
- $
400
560
253
5,312
6,384
8,457

170

5,712

$ 170

$

2020

6,944

2018
$

69
9,053

CAT DDOs
Loans
disbursed CAT DDOs Outstanding asandConverted to of September
Prior Years revolving Term Loans30, 2021$

569
21,291
126,416

8,710

9,122

148,276$ 5,712 $ 6,944 $ 8,710$ 9,122920$ 149,196

$

$

190

$

191

$

569
22,685
156,061

190

191

179,315

190

$ 191

920
$ 180,235

Table D2.1:
In millions of U.S. dollars
June 30, 2021
Fiscal Year of origination

Risk Class
Low
MediumHigh
Loans in accrual
statusLoans innonaccrual status
Total

$

2021

2020

2019

401
4,803

$

$

564
6,260

5,204

6,824

$ 5,204$ 6,824

2018

- $
255
64
8,266
8,861
8,521

2017
$

488
8,927

CAT DDOs
Loans
disbursed CAT DDOs Outstanding asandConverted to of June 30,
Prior Years revolving Term Loans
2021
$

659
21,320
119,316

8,925

9,415

141,295$ 8,521 $ 8,925$ 9,415932$ 142,227

$

388

$

388

$

388

$

-

$

659
23,092
156,821-

180,572-932$ 181,504

The amount of Catastrophe Deferred Drawdown Option (CAT DDO) outstanding and revolving converted to termloans during the three months ended September 30, 2021 is $191 million.
Accumulated Provision for Losses on Loans and Other Exposures
Management determines the appropriate level of accumulated provisions for losses, which reflects the expected
losses inherent in IDA’s exposures. Management reassesses the adequacy of the accumulated provision on aquarterly basis and adjustments to the accumulated provision are recorded as a charge to or release of provision in
the Statement of Income. In addition, reasonableness of the inputs used is reassessed at least annually.
The provision for Heavily Indebted Poor Countries (HIPC) Debt Initiative and Multilateral Debt Relief Initiative(MDRI) is based on quantitative and qualitative analyses of various factors, including estimates of Decision Point
and Completion Point dates. These factors are reviewed periodically as part of the reassessment of the adequacy of
the accumulated provision for loan losses. Provisions are released as qualifying debt service becomes due and isforgiven under the HIPC Debt Initiative and are reduced by the amount of the eligible loans written off when acountry reaches Completion Point and becomes eligible for MDRI debt relief.
During the three months ended September 30, 2021 and the fiscal year ended June 30, 2021, there were no loans
written off under the MDRI.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

37

The balance of the accumulated provision as of July 1, 2020 was increased by an $802 million transition adjustment
recorded upon adoption of ASU No. 2016-13, ASC 326 - Financial Instruments—Credit Losses (CECL). The
transition adjustment corresponds to the difference between the accumulated provision calculated under the previous“incurred loss” model and the CECL model. Changes to the accumulated provision for losses on loans and otherexposures are summarized below.
Table D3: Accumulated provisions
In millions of U.S. dollars

Accumulated provision, beginning of the fiscal year
Provision, net - charge (release)
Loans written off under:
HIPC/MDRITranslation adjustment
Accumulated provision, end of the period
Including accumulated provision for losses on:
Loans in accrual status
Loans in nonaccrual status
Total

Loans
outstanding
$
2,946
13

$
$
$

(37)
2,922

September 30, 2021
Debt relief
Loan
under
commitments
HIPC/MDRI
Other$
1,054 $
772 $
120 $
59
(1)
29

$

(15)
1,098

2,672
250
2,922

$
$
$

(9) a
(5)
757 $

Total
4,892
100

(1)
148 $

(9)
(58)
4,925

$

3,143
536
3,679

471
286
757

$

Loans:
Loans in accrual status
Loans in nonaccrual status
Loans outstanding$$

179,315920
180,235

June 30, 2021
Debt relief
Loan
under
commitments
HIPC/MDRI
Other
$
- $
1,591 $
72 $
859
2

Total
4,492
802

Table D3.1:
In millions of U.S. dollars

Accumulated provision, beginning of the fiscal year
CECL transition adjustment
Adjusted accumulated provision at the beginning of
the fiscal year
Provision, net - charge (release)
Loans written off under:
HIPC/MDRITranslation adjustment
Accumulated provision, end of the period
Including accumulated provision for losses on:
Loans in accrual status
Loans in nonaccrual status
Total

Loans
outstanding
$
2,829
(59)

$
$
$

2,770
77

859
166

99
2,946

29
1,054

2,692
254
2,946

$

1,591
(828)

$
$
$

(9) a
18
772 $
485
287
772

Loans:
Loans in accrual status
Loans in nonaccrual status
Loans outstanding
a. Represents debt service reduction under HIPC38

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

74
46

5,294
(539)

120 $

(9)
146
4,892

$

3,177
541
3,718

$
$
$

180,572932
181,504

Condensed Balance Sheet
Accumulated Provision forLosses on:
Loans outstanding
Debt Relief under
HIPC/MDRI
Loan commitments and Other
Exposures

Reported as Follows
Condensed Statement of Income

Accumulated provision for loan losses

Provision for losses on loans and otherexposures, release (charge)
Provision for losses on loans and otherexposures, release (charge)
Provision for losses on loans and otherexposures, release (charge)

Accumulated provision for loan losses
Other liabilities

Overdue Amounts
As of September 30, 2021, there were no new principal or charges under sovereign loans in accrual status whichwere overdue by more than three months.
During the fiscal year ended June 30, 2021, Sudan paid all of their overdue principal and charges due to IDA. The
outstanding loans remaining to Sudan were restored to accrual status having met the conditions in accordance with
IDA’s policy.
The following tables provide a summary of selected financial information related to loans in nonaccrual status:
Table D4: Loans in nonaccrual status
In millions of U.S. dollars
Overdue amounts
Nonaccrual
sinceRecorded
investment a

Averagerecorded
investment b

EritreaMarch 2012$$

Syrian Arab
Republic

June 2012

Borrower

440
14

444

Principal
Outstanding

Provisionfor debt
reliefProvision
for loanlosses b

Principal

Charges

$

$

$

$

$

14

440
14

286

16

-

1

105

34

12

1

Zimbabwe
October 2000
Total - September 30, 2021

$

466
920

$

470
928

$

466
920

$

286

233
$ 250

$

304
421

67
$ 102

Total - June 30, 2021

$

932

$

932

$

932

$

287

$ 254

$

419

$ 102

a. A loan loss provision has been recorded against each of the loans in nonaccrual status.
b. Loan loss provisions are determined after taking into account accumulated provision for debt relief.

Table D5: Service charge revenue not recognized
In millions of U.S. dollars

Service charge revenue not recognized as a result of loans being in nonaccrual status$

Three months ended
September 30,
2021
2020
2
$
4

During the three months ended September 30, 2021 and September 30, 2020, no new loans were placed into
nonaccrual status.
During the three months ended September 30, 2021, and September 30, 2020, no service charge revenue wasrecognized on loans in nonaccrual status.
Guarantees
Guarantees of $2,465 million were outstanding as of September 30, 2021 ($2,513 million—June 30, 2021). This
amount includes $509 million relating to the PSW ($484 million—June 30, 2021). The outstanding amount ofguarantees represents the maximum potential undiscounted future payments that IDA could be required to makeunder these guarantees that is not included on the Condensed Balance Sheet. The guarantees issued by IDA haveoriginal maturities ranging between 2 and 22 years and expire in decreasing amounts through 2041.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)39

As of September 30, 2021, liabilities related to IDA’s obligations under guarantees included the obligation to standready of $131 million ($138 million—June 30, 2021), and the accumulated provision for guarantee losses of $131
million ($109 million—June 30, 2021). These have been included in Other liabilities on the Condensed Balance
Sheet.
During the three months ended September 30, 2021 and September 30, 2020, no guarantees provided by IDA tosovereign or sub-sovereign borrowers were called. As of September 30, 2021, none of IDA-PSW Blended Finance
Facility guarantees under the Small Loan Guarantee Program pursuant to the risk-sharing agreement between IDA
and IFC were called (less than $0.5 million-September 30, 2020).
Concentration Risk
Loan revenue comprises service charges and interest charges on outstanding loan balances. For the three months
ended September 30, 2021, loan revenue of $60 million and $59 million from two countries, were each in excess often percent of total loan revenue.
The following table presents IDA’s loans outstanding and associated loan revenue by geographic region:
Table D6: Loan revenue and outstanding loan balances by geographic region
In millions of U.S. dollars

RegionSouth Asia
Eastern and Southern Africa
Western and Central Africa
East Asia and Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
Others a
Total

As of and for the three months ended September 30,
2021
2020
Service and
Loans
Service and
LoansInterest Charges
Outstanding
Interest Charges
Outstanding$
179$
63,524$
165$
61,196
109
48,43494
45,56491
34,65476
31,09959
20,201
56
20,129
28
7,659
31
7,486
11
3,314
10
3,015
5
2,439
5
2,550
10
6
$
482
$
180,235$437$
171,045

a. Represents loans under the PSW.

NOTE E—BORROWINGS
IDA’s borrowings comprise concessional partner loans made by IDA members (carried at amortized cost) as well as
market borrowings (carried at amortized cost or fair value as described in Note A).
Table E1: Borrowings – concessional partner loans outstanding
In millions of U.S dollars

September 30, 2021
June 30, 2021

Concessional Partner Loans outstanding
Principal at
Net unamortizedface value
premium (discount)
$
9,295
$
(1,672)$$
9,495$(1,736)
$

Total
7,623
7,759

As of September 30, 2021, all of the instruments in IDA’s borrowing portfolio were classified as Level 2, within thefair value hierarchy.
Table E2: Market borrowings outstanding, at amortized cost
In millions of U.S dollars
Principal atface value
September 30, 2021
June 30, 2021

40

$
$

2,314
-

Market borrowings, at amortized cost
Net unamortizedpremium (discount)
$
$

(9)
-

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

$
$

Total
2,305
-

IDA uses derivative contracts to manage the currency risk as well as the interest rate risk in the market borrowings,
carried at fair value. For details regarding the derivatives used, see Note F—Derivative Instruments.
Table E3: Market borrowings after derivatives, at fair value
In millions of U.S. dollars
September 30, 2021
22,05023
203$
22,276

Market borrowings
Currency swaps, net
Interest rate swaps, net
Total

$

$

$

June 30, 2021
20,555(97)
118
20,576

NOTE F—DERIVATIVE INSTRUMENTS
IDA uses derivative instruments in its investment, loan and borrowing portfolios, for asset/liability management
purposes, and to assist clients in managing risks.
The following table summarizes IDA’s use of derivatives in its various financial portfolios.
Table F1: Use of derivatives in various financial portfolios
Portfolio
Risk management purposes:

Derivative instruments used

Purpose/Risk being managed

Investments—Trading

Interest rate swaps, currency forward contracts,
currency swaps, options, swaptions, futurescontracts, and TBA securities

Manage currency and interest rate risk in theportfolio.

Other assets/liabilities

Currency forward contracts, currency swaps andinterest rate swaps

Manage currency and interest rate risks.

Loans

Interest rate swaps

Manage interest rate risk in the portfolio.

Borrowings

Interest rate swaps and currency swaps

Manage currency and interest rate risk in theportfolio.

Structured swaps

Assist clients in managing risks.

Other purposes:
Client operations

The derivatives in the related tables of Note F are presented on a net basis by instrument. A reconciliation to theCondensed Balance Sheet presentation is shown in table F2.
Offsetting assets and liabilities
IDA enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting agreements with
substantially all of its derivative counterparties. These legally enforceable master netting agreements give IDA theright to liquidate securities held as collateral and to offset receivables and payables with the same counterparty, inthe event of default by the counterparty.
The following tables summarize the gross and net derivative positions by instrument type. Instruments that are in a
net asset position are included in the Derivative Assets columns and instruments that are in a net liability position
are included in the Derivative Liabilities columns. The gross columns represent the fair value of the instrument leg
that is in an asset or liability position that are then netted with the other leg of the instrument in the gross offset
columns. The effects of the master netting agreements are applied on an aggregate basis to the total derivative asset
and liability positions and are presented net of any cash collateral received on the Balance Sheet in accordance with
ASC 815 – Derivatives and Hedging. The net derivative asset positions in the tables below have been further
reduced by any securities received as collateral to disclose IDA’s net exposure on its derivative asset positions.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)41

Table F2: Derivative assets and liabilities before and after netting adjustments
In millions of U.S. dollars

Interest rate swaps
Currency swaps a
Other b
Total
Less:
Amounts subject to legally
enforceable master netting
agreements
Cash collateral received
Net derivative positions on
the Balance Sheet

Gross
Amounts$
1,245
20,790$ 22,035

Less:
Securities collateral received
Net derivative exposure after
collateral

September 30, 2021
Derivative Assets
Gross
Amounts
Net
Gross
OffsetAmounts
Amounts$ (1,029)
$ 216
$
1,920
(20,178)
612
11,359c$ (21,207)$ 828$ 13,279

$

452
12

$

364

Derivative Liabilities
Gross
Amounts
Net
OffsetAmounts$ (1,562)$
358(11,090)269$ (12,652)
$
627

d

$

454

$

173

c

e

$

364

Table F2.1:
In millions of U.S. dollars

Interest rate swaps
Currency swaps a
Other b
Total
Less:
Amounts subject to legally
enforceable master netting
agreements
Cash collateral received
Net derivative positions on
the Balance Sheet
Less:
Securities collateral received
Net derivative exposure after
collateral

Gross
Amounts$
1,105
15,691$ 16,796

June 30, 2021
Derivative Assets
Derivative Liabilities
Gross
Gross
Amounts
Net
Gross
Amounts
Net
OffsetAmounts
Amounts
OffsetAmounts
$
(912)
$ 193
$
1,886
$ (1,577)$
309(15,231)460
14,956(14,449)507c$ (16,143)$ 653$ 16,842$ (16,026)
$
816

$

404
-

$

249

d

$

249

a. Includes currency forward contracts.
b. These include swaptions, exchange traded options, futures contracts and TBA securities.
c. Total is based on amounts where derivatives have been netted by instrument.
d. Includes $4 million Credit Value Adjustment (CVA) ($2 million-June 30, 2021).
e. Includes $6 million Debit Value Adjustment (DVA) ($6 million-June 30, 2021).

42

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

$

408

$

408

c

e

The following table provides information about the credit risk exposures, at the instrument level, of IDA’s derivative
instruments.
Table F3: Credit risk exposure of the derivative instruments
In millions of U.S. dollars

109
93

September 30, 2021
Currency swaps(including currency
forward contracts)
$
240
317
54

14
216

$

Interest rate
swaps
Investments - Trading
Asset/liability management
Borrowings
Other aTotal Exposure

$

$

1
612

Total
$

$

240
426
147
15
828

Table F3.1
In millions of U.S. dollars

78
103

June 30, 2021
Currency swaps(including currency
forward contracts)
$
167
176
111

12
193

$

Interest rate
swaps
Investments - Trading
Asset/liability management
Borrowings
Other aTotal Exposure

$

$

6
460

Total
$

$

167
254
214
18
653

a. Includes derivatives related to loans and Private Sector Window (PSW).

The volume of derivative contracts is measured using the U.S. dollar equivalent notional balance. The notionalbalance represents the face value or reference value on which the calculations of payments on the derivative
instrument are determined. At September 30, 2021, the notional amounts of IDA’s derivative contracts outstanding
were as follows: interest rate swaps $34,991 million ($33,432 million as of June 30, 2021), currency swaps $32,081
million ($30,349 million as of June 30, 2021). There were no long or short positions of other derivatives (Nil—June
30, 2021).
Collateral: Under almost all of its ISDA Master Agreements, IDA is not required to post collateral as long as it
maintains liquidity holdings at predetermined levels that are a proxy for a triple-A credit rating. After becoming a
rated entity, IDA has started to enter into derivative agreements with commercial counterparties in which IDA is not
required to post collateral as long as it maintains a triple-A rating. The aggregate fair value of all derivative
instruments with credit-risk related contingent features that are in a liability position as of September 30, 2021 is$179 million ($414 million —June 30, 2021). As of September 30, 2021, IDA was not required to post any collateralin accordance with the relevant agreements.
If the credit-risk related contingent features underlying these agreements were triggered to the extent that IDA
would be required to post collateral as of September 30, 2021, the amount of collateral that would need to be posted
would be $35 million ($25 million—June 30, 2021). Subsequent triggers of contingent features would requireposting of additional collateral, up to a maximum of $179 million as of September 30, 2021 ($414 million—June 30,2021).

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)43

Amounts of gains or losses on the non-trading derivatives, by instrument type and their location in the Condensed
Statement of Income are as follows:
Table F4: Unrealized mark-to-market gains (losses) on non-trading derivatives
In millions of U.S. dollars

Type of instrument
Interest rate swaps
Currency swaps and currency forward contracts
Total

Three Months Ended
September 30,
2021
2020
$ (57)$ 179

Reported as
Unrealized mark-to-market(losses) gains on non-trading
portfolios, net

(27)
(84)

$

(59)
120

$

The majority of the instruments in IDA’s investment portfolio are held for trading purposes. Within the trading
portfolio, IDA holds highly rated fixed income instruments as well as derivatives. The trading portfolio is primarily
held to ensure the availability of funds to meet future cash flow requirements and for liquidity management
purposes.
The following table provides information on gains or losses on IDA’s investment trading portfolio (including
derivative instruments), and their location in the Condensed Statement of Income:Table F5: Unrealized mark-to-market gains (losses) on investment trading portfolio
In millions of U.S. dollars

Type of instrument

Fixed income (including related derivatives)Three Months Ended
September 30,
2021
2020

Reported as
Unrealized mark-to-market
gains on InvestmentTrading portfolios, net

$

15

$

19

NOTE G—TRANSACTIONS WITH AFFILIATED ORGANIZATIONSIDA transacts with affiliated organizations as a recipient of transfers and grants, administrative and derivativeintermediation services and through cost sharing of IBRD’s sponsored pension and other postretirement benefit
plans.
Transfers and Grants
Cumulative transfers and grants made to IDA as of September 30, 2021 were $ 20,202 million ($20,202 million—
June 30, 2021). Details by transferor are as follows:
Table G1: Cumulative transfers and grants
In millions of U.S dollars
Transfers fromBeginning of the
fiscal year

Total

$

Of which transfers from:
IBRD
IFC

20,202

16,087
3,885Transfers during
the period$--

End of period$

20,202

16,0873,885

Subsequent Event
On October 14, 2021, IBRD’s Board of Governors approved a transfer of $274 million to IDA. This transfer wasreceived on October 25, 2021.

44

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)Receivables and Payables
The total amounts receivable from (payable to) affiliated organizations is comprised of the following:
Table G2: IDA’s receivables and payables with affiliated organizations
In millions of U.S. dollars

Administrative Services, net a
Derivative Transactions
Derivative assets, net
Derivative liabilities, net
PSW- Blended Finance Facility b
Pension and Other
Postretirement Benefits
Investments

September 30, 2021
IFC
$
$

Total
(185)

IBRD
$ (268)

23
(27)
-

1
(4)
42

24
(31)
42

19
(27)
-

6
(2)
41

25
(29)
41

601
412

421
460

601
421
872

572
296

487
532

572
487
828

IBRD
$ (185)

$

$

$

$

June 30, 2021
IFC
$
-

$

$

Total
(268)

$

a. Includes $323 million as of September 30, 2021 ($293 million-June 30, 2021) receivable from IBRD for IDA's share ofinvestments associated with Post-Retirement Contribution Reserve Fund (PCRF), which is a fund established to stabilize
contributions made to the pension plans.
b. Refer to Table G4: Summary of PSW-related transactions.

The receivables from (payables to) these affiliated organizations are reported on the Condensed Balance Sheet as
follows:
Receivables / Payables related to:Reported as:

Receivable for pension and other postretirement benefits

Receivable from affiliated organization

Receivables (payables) for derivative transactions

Derivative assets/liabilities, net

Payable for administrative services a

Payable to affiliated organization

Receivable for PSW

Other assets

Receivable for investments

Investments

a. Includes amounts receivable from IBRD for IDA’s share of investments associated with PCRF. This receivable is included in
Receivable from affiliated organization on the Condensed Balance Sheet.

Administrative Services: The payable to IBRD represents IDA’s share of joint administrative expenses andcontributions to special programs, net of other revenue jointly earned. The allocation of expenses is based upon anagreed cost sharing formula, and amounts are settled quarterly.
For the three months ended September 30, 2021, IDA’s share of joint administrative expenses and contributions to
special programs totaled $392 million ($455 million - three months ended September 30, 2020).
Other revenue: Includes IDA’s share of other revenue jointly earned with IBRD during the three months ended
September 30, 2021 totaling $47 million ($57 million—three months ended September 30, 2020).
The amount of fee revenue associated with services provided to other affiliated organizations is included in Other
revenue in the Condensed Statement of Income as follows:
Table G3: Fee revenue from affiliated organizations
In millions of U.S dollars
Three Months Ended September 30,
2021
Fees charged to IFC
Fees charged to MIGA

$

2020
17
1

$

19
1

Pension and Other Post-Retirement Benefits: IBRD, along with IFC and MIGA, sponsors a defined benefit Staff
Retirement Plan and Trust, a Retired Staff Benefits Plan and Trust and a Post-Employment Benefits Plan (PEBP)
that cover substantially all of their staff members.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)45

While IDA is not a participating entity to these benefit plans, IDA shares in the costs and reimburses IBRD for its
proportionate share of any contributions made to these plans by IBRD based on an agreed cost sharing ratio.
During the three months ended September 30, 2021, IDA’s share of IBRD’s benefit costs relating to all three plans
totaled $48 million ($126 million—three months ended September 30, 2020).
The cost of any potential future liability arising from these plans would be shared by IBRD and IDA using theapplicable cost sharing ratio.
The receivable from IBRD represents IDA’s net share of prepaid costs for pension and other postretirement benefit
plans and PEBP assets. These will be realized over the lives of the plan participants.
Derivative transactions: IDA enters into currency forward contracts with IBRD acting as the intermediary with themarket, primarily to convert donors’ expected contributions in national currencies under the Sixteenth andSeventeenth replenishments of IDA’s resources into the five currencies of the Special Drawing Rights (SDR) basket.
Investments – Non-trading
During the fiscal year ended June 30, 2015, IDA purchased a debt security issued by IFC for a principal amount of$1,179 million, amortizing over a period of 25 years. The investment carries a fixed interest rate of 1.84% and has aweighted average maturity of 4 years. As of September 30, 2021, the principal amount due on the debt security was$411 million, ($472 million—June 30, 2021), and it had a fair value of $421 million, ($487 million—June 30,2021). The investment is reported under Investments on the Condensed Balance Sheet. During the three months
ended September 30, 2021, IDA recognized interest income of $2 million from this investment ($3 million - threemonths ended September 30, 2020).
Private Sector Window (PSW)The PSW was created under Eighteenth Replenishment of IDA’s Resources (IDA18), which became effective
beginning fiscal year ended June 30, 2018, to mobilize private sector investment in IDA-only countries and IDAeligible Fragile and Conflict-affected Situations. In IDA18, PSW allocation was $1.4 billion which was fullycommitted. The PSW continued under IDA’s Nineteenth Replenishment of Resources (IDA19), which became
effective beginning fiscal year ending June 30, 2021, with an initial allocation set at $2.5 billion which was revised
to $1.7 billion. Under the fee arrangement for the PSW, IDA receives fee income for transactions executed under
this window and reimburses IFC and MIGA for the related costs incurred in administering these transactions.
The following tables provide a summary of all PSW related transactions under which IDA has an exposure as of
September 30, 2021:
Table G4: Summary of PSW-related transactions
In millions of U.S. dollars
Facility

Notional

Local Currency Facility $94$

Net Asset/(Liability)
position(3)

Description

Location on the Condensed
Balance Sheet

Currency swaps with IFC to support local
currency denominated loans

Derivative assets/ liabilities,net

In millions of U.S. dollars
Facility

Accumulated
Description
Provision

Exposure

MIGA Guarantee
Facility

$

201

$

38

Blended Finance
Facility

$

308

$

57

42
10

46

Not
applicable1

Location on the Condensed
Balance Sheet
Accumulated
Exposure
Provision
Off Balance
Other
Sheet item
liabilities

Expanding the coverage of MIGA Political
Risk Insurance (PRI) products throughshared first-loss or risk participation similar
to reinsurance
Sharing the first loss to support IFC's Small Off Balance
Loan Guarantee Program, Global Trade
Sheet item
Finance Program and Working Capital
Solutions in PSW eligible countries
Funding for IFC's PSW equity investment
Other assets
Concessional senior & sub-ordinated loans Loansto support medium term projects
outstanding

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

Otherliabilities

Accumulated
Provision for
Loan Losses

NOTE H—DEVELOPMENT GRANTS
A summary of changes to the amounts payable for development grants is presented below:
Table H1: Grants payable
In millions of U.S dollars
September 30, 2021
Balance, beginning of the fiscal year
Disbursements (including PPA grant activity)aCancellations
Translation adjustment
Balance, end of the period/ fiscal year$

June 30, 2021

6,820
(379)
(16)
(80)
6,345

$

$

$

9,141
(2,417)
(235)
331
6,820

a. Project Preparation Advances (PPA)

A summary of the development grant expenses is presented below:
Table H2: Grant activity
In millions of U.S dollars
Three Months Ended September 30,
2021
2020
Conditional Development grants disbursed a
Less:
Cancellations
Disbursement of grant advances not yet expensed b
Add:
Grant advances meeting expense condition c
Grant Expenses
Grants Approved

$

552

$

(16)
(302)
109
343
1,088

$
$

723
(112)
(120)

$
$

18
509
2,580

a. Disbursements of conditional grants approved on or after July 1, 2019.
b. Disbursements made over the period for which the expense recognition criteria has not yet been met.
c. Prior disbursement of grant advances meeting the criteria to be expensed over the period.

As of September 30, 2021, the cumulative amount of conditional grants approved but not yet expensed was $14,780
million.
NOTE I—ACCUMULATED OTHER COMPREHENSIVE INCOME
Comprehensive income consists of net income (loss) and other gains or losses affecting equity that, under U.S.
GAAP, are excluded from net income (loss). For IDA, other comprehensive income (loss) is comprised of net
income (loss), DVA on fair value option elected liabilities and currency translation adjustments on functional
currencies. These items are presented in the Condensed Statement of Comprehensive Income.
The following table presents the changes in Accumulated Other Comprehensive (Loss) Income (AOCI) balances.
Table I1: Changes in AOCI
In millions of U.S dollars

Balance, beginning of the fiscal year
Currency translation adjustments on functional currencies
DVA on fair value option elected liabilities
Balance, end of the period$$

Three Months Ended September 30,
2021
2020
1,656
$
(3,927)(1,842)
3,820
(31)
(16)
(217)
$
(123)

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)47

NOTE J— FAIR VALUE DISCLOSURES
Valuation Methods and Assumptions
As of September 30, 2021, and June 30, 2021, IDA had no financial assets or liabilities measured at fair value on a
non–recurring basis.
Due from Banks
The carrying amount of unrestricted and restricted cash is considered a reasonable estimate of the fair value of these
positions.
Loans and Loan commitments
There were no loans carried at fair value as of September 30, 2021 and June 30, 2021. IDA’s loans and loan
commitments would be classified as Level 3 within the fair value hierarchy.
Summarized below are the techniques applied in determining the fair values of IDA’s financial instruments.
Investment securities
Where available, quoted market prices are used to determine the fair value of trading securities. Examples include
most government and agency securities and futures contracts.
For instruments for which market quotations are not available, fair values are determined using model-based
valuation techniques, whether internally-generated or vendor-supplied, that include the standard discounted cash
flow method using observable market inputs such as yield curves, credit spreads, and constant prepayment spreads.
Where applicable, unobservable inputs such as conditional prepayment rates, probability of default, and loss severity
are used.
Unless quoted prices are available, time deposits are reported at face value, which approximates fair value, as they
are short term in nature.
Securities purchased under resale agreements, securities sold under repurchase agreements, and securities lent
under securities lending agreements
These securities are of a short-term nature and are reported at face value, which approximates fair value.
Borrowings
The fair value of IDA’s borrowings carried at fair value is calculated using a discounted cash flow method which
relies on observable market inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
Derivative instruments
Derivative contracts include currency forward contracts, TBA securities, swaptions, exchange traded options andfutures contracts, currency swaps and interest rate swaps.
Where available, quoted market prices are used to determine the fair value of trading securities. Examples include
exchange traded options and futures contracts.
For instruments for which market quotations are not available, fair values are determined using model-based
valuation techniques, whether internally-generated or vendor-supplied, that include the standard discounted cash
flow method using observable market inputs such as yield curves, foreign exchange rates, credit spreads, basis
spreads, funding spreads and constant prepayment spreads. Where applicable, unobservable inputs such as constantprepayment rates, probability of default, and loss severity are used.
Valuation adjustments on fair value option elected liabilities
The DVA on fair value option elected liabilities (market borrowings carried at fair value) is being measured byrevaluing each liability to determine the changes in fair value of that liability arising from changes in IDA’s cost offunding relative to LIBOR.
The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with theirrespective carrying amounts.

48

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)Table J1: Fair value and carrying amounts of financial assets and liabilities
In millions of U.S dollars

AssetsDue from banks
Investments (including securities transferred under
repurchase or securities lending agreements)
Net loans outstanding
Derivative assets, net
Liabilities
Borrowings
Market borrowings, at fair valueMarket borrowings, at amortized cost
Concessional partner loans
Securities sold under repurchase agreements, securities
lent under securities lending agreements, and payable forcash collateral received
Derivative liabilities, net

September 30, 2021
Carrying Value
Fair Value

June 30, 2021
Carrying Value
Fair Value

$

$

610

$

610

496

$

496

39,866
176,547364

39,866
162,681364

37,376
177,779
249

37,376
164,606
249

22,0502,305
7,623

22,0502,271
9,586

20,555
7,759

20,555
9,516

3
173

3
173

408

408

As of September 30, 2021, IDA’s signed loan commitments were $63.2 billion ($60.8 billion – June 30, 2021) andhad a fair value of $(5.9) billion ($(5.4) billion – June 30, 2021).
The following tables present IDA’s fair value hierarchy for assets and liabilities measured at fair value on arecurring basis.
Table J2: Fair value hierarchy of IDA’s assets and liabilities
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
As of September 30, 2021
Level 1
Level 2
Level 3
Total
Assets:Investments—Trading
Government and agency obligations
Time deposits
ABS
Total Investments—Trading
Investments—Non-trading (at fair value)
Total Investments
Derivative assets:
Currency swaps and currency forward contracts aInterest rate swaps

$

$

$

$
Less:
Amounts subject to legally enforceable master netting agreements b
Cash collateral received
Derivative assets, net
Liabilities:
Market Borrowings, at fair value$
Derivative liabilities:
Currency swaps and currency forward contracts$
Interest rate swaps$
Less:
Amounts subject to legally enforceable master netting agreements c
Derivative liabilities, net

9,428
482
9,910
9,910

$

-

$

$

$

15,38013,878277
29,535421
29,956

$

612
216
828

$

$

$

-

$

-

$

$

24,80814,360277
39,445421
39,866

$

612
216
828

$

452
12
364

-

$

22,050$-$22,050

-

$

269
358
627

$

-

$
$

269
358
627

$

454
173

$

$

a. Includes structured swaps.
b. Includes $4 million CVA.
c. Includes $6 million DVA.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)49

Table J2.1
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
As of June 30, 2021
Level 1
Level 2
Level 3
Total
Assets:Investments—Trading
Government and agency obligations
Time deposits
ABS
Total Investments—Trading
Investments—Non-trading (at fair value)
Total Investments$$

Derivative assets:
Currency swaps and currency forward contracts aInterest rate swaps

$
$

Less:
Amounts subject to legally enforceable master netting agreements b
Cash collateral received
Derivative assets, net
Liabilities:
Market Borrowings, at fair value
Derivative liabilities:
Currency swaps and currency forward contracts
Interest rate swaps

7,852
728
8,580
8,580

$

-

$

$

$

17,425
10,732152
28,309487
28,796

$

460
193
653

$

$

$

-

$

-

$

$

25,277
11,460152
36,889487
37,376

$

460
193
653

$

404
249

$

-

$

20,555$-$20,555

$

-

$

507
309
816

$

-

$
$

507
309
816

$

408
408

$

$

$

Less:
Amounts subject to legally enforceable master netting agreements c
Derivative liabilities, net
a. Includes structured swaps.
b. Includes $2 million CVA.
c. Includes $6 million DVA.

Presented below is the difference between the aggregate fair value and aggregate contractual principal balance of
non-trading securities in the investment portfolio:
Table J3: Investment Portfolio-Non-trading securities
In millions of U.S dollars
Fair value

Principal amount due

Difference

September 30, 2021

$

421

$

411

$

10

June 30, 2021

$

487

$

472

$

15

Presented below is the difference between the aggregate fair value and aggregate contractual principal balance ofmarket borrowings recorded at fair value on the Condensed Balance Sheet:
Table J4: Market Borrowings reported at fair value and contractual principal balance
In millions of U.S. dollars

September 30, 2021
June 30, 2021

50

Fair Value$
22,050$20,555

Principal Due Upon
Maturity$
22,253$
20,659$$IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)

Difference
(203)
(104)

Valuation adjustments on fair value option elected liabilities
During the three months ended September 30, 2021, IDA recorded unrealized mark-to-market losses of $31 million($16 million losses – three months ended September 30, 2020) in Other Comprehensive Income, in relation to thechanges in its own credit (DVA) on fair value option elected liabilities (market borrowings carried at fair value).
As of September 30, 2021, IDA’s Condensed Balance Sheet included a DVA of $87 million cumulative loss ($56
million cumulative loss—June 30, 2021) in Accumulated other comprehensive income, associated with the changes
in IDA’s own credit for its market borrowings reported at fair value.
The following table reflects the components of the unrealized mark-to-market gains or losses on IDA’s trading andnon-trading portfolios, net.
Table J5: Unrealized Mark-to-Market Gains (Losses) on Trading and Non-Trading Portfolios, Net
In millions of U.S. dollars

Investments, Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Investment portfolio—Note C
Borrowing portfolio—Note E
Other bTotal

Realized
gains(losses)
$ 63

$

-

Three Months Ended September 30,
2021
2020
Unrealized
Unrealized
gains
gains
(losses)(losses)
excluding
Unrealized
Realized
excludingrealized
gains
gains
realizedamounts a(losses)(losses)amounts a$ (48)
$
15
$
6
$
13

$

58
(2)
11
(5)
62

$

58
(2)
11
(5)
62

$

-

125
(1)
7
(2)
$ 129

Unrealized
gains(losses)
$
19
125
(1)
7
(2)
$ 129

a. Adjusted to exclude amounts reclassified to realized gains/losses.
b. Other comprise mark to market gains or losses on the loan portfolio and on PSW.

NOTE K—CONTINGENCIESIn light of the COVID-19 pandemic, IDA faces additional credit, market and operational risks. The duration of the
COVID-19 pandemic is difficult to predict at this time, as are the extent and efficacy of economic interventions bygovernments and central banks. The length and severity of the pandemic and the related developments, as well as
the impact on the financial results and position of IDA in future periods cannot be reasonably estimated at this point
in time and continues to evolve. IDA continues to monitor the developments and to manage the risks associated with
its various portfolios within existing financial policies and limits.
From time to time, IDA may be named as a defendant or co-defendant in legal actions on different grounds invarious jurisdictions. The outcome of any existing legal action, in which IDA has been named as a defendant or codefendant, as of and for the three months ended September 30, 2021, is not expected to have a material adverse
effect on IDA's financial position, results of operations or cash flows.

IDA Condensed Quarterly Financial Statements: September 30, 2021 (Unaudited)51

INDEPENDENT AUDITOR’S REVIEW REPORT
Independent Auditors’ Review Report

Deloitte & Touche LLP
7900 Tysons One Place
Suite 800
McLean, VA 22102
USA
Tel.: +1 703 251 1000
Fax: +1 703 251 3400
www.deloitte.com

INDEPENDENT AUDITOR’S REVIEW REPORT
President and Board of Executive Directors
International Development Association:
Results of Review of Interim Financial Information
We have reviewed the accompanying condensed balance sheet of the International Development Association (“IDA”) as of
September 30, 2021, and the related condensed statements of income, comprehensive income, changes in accumulated deficit,
and cash flows for the three-month periods ended September 30, 2021 and 2020, and the related notes (collectively referred toas the “interim financial information”).
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial
information for it to be in accordance with accounting principles generally accepted in the United States of America.
Basis for Review Results
We conducted our reviews in accordance with auditing standards generally accepted in the United States of America (GAAS)
applicable to reviews of interim financial information. A review of interim financial information consists principally of applying
analytical procedures and making inquiries of persons responsible for financial and accounting matters. A review of interim financial
information is substantially less in scope than an audit conducted in accordance with GAAS, the objective of which is an expressionof an opinion regarding the financial information as a whole, and accordingly, we do not express such an opinion. We are required
to be independent of IDA and to meet our other ethical responsibilities in accordance with the relevant ethical requirements
relating to our review. We believe that the results of the review procedures provide a reasonable basis for our conclusion.
Responsibilities of Management for the Interim Financial Information
Management is responsible for the preparation and fair presentation of the interim financial information in accordance withaccounting principles generally accepted in the United States of America and for the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation of interim financial information that is free from material
misstatement, whether due to fraud or error.
Report on Condensed Balance Sheet as of June 30, 2021
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance
sheet of IDA as of June 30, 2021, and the related statements of income, comprehensive income, changes in accumulated deficit,
and cash flows for the year then ended (not presented herein); and we expressed an unmodified audit opinion on those audited
financial statements in our report dated August 6, 2021. In our opinion, the accompanying condensed balance sheet of IDA as ofJune 30, 2021, is consistent, in all material respects, with the audited financial statements from which it has been derived.

November 12, 2021

52