International Development Association

Management’s Discussion & Analysis
andFinancial Statements
June 30, 2021

Management’s Discussion and Analysis

Contents
Section I: Executive Summary

Summary of Financial Results

4

Section II: Overview

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

6
6
6
6
7

Section III: IDA’s Financial Resources

IDA19 Funding
Allocation of IDA19 Resources8
8

Section IV: Financial Results

Summary of Financial Results

13

Section V: Development Activities, Products andPrograms

Lending Framework

21

Financial Terms

22

Loans, Grants and Guarantee Activity

24

Guarantees

26

Other Financial Products and Services

26

Grant Making Facilities

27

Debt Relief

27

Externally-Funded Activities

27

Liquid Asset Portfolio

29

Investments - Non-Trading Portfolio

30

Concessional Partner Loans

31

Market Debt

31

Other Short-Term Borrowings

32

Contractual Obligations

32

Risk Governance

33

Risk Oversight and Coverage

33

Management of IDA’s Risks

35

Fair Value of Financial Instruments

46

Provision for Losses on Loans and Other Exposures

46

Provision for HIPC Debt Initiative and MDRI

47

Business Conduct

48

General Governance48

Audit Committee

49

External Auditors

50

Senior Management Changes

50

Internal Controls

50

Glossary of Terms

51

List of Tables, Figures and Boxes

52

Section VI: Other Development
Programs

Activities andSection VII: Investment Activities

Section VIII: Borrowing Activities

Section IX: Risk Management

Section X: Critical Accounting Policies and the Useof Estimates

Section XI: Governance and Internal Controls

Appendix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 fiscal year ended June 30, 2021 (FY21). IDA undertakes noobligation to update any forward-looking statements. Certain reclassifications of prior years’ information have been
made to conform with the current year’s presentation. For discussion of IDA’s financial results for the year ended
June 30, 2020 as compared to the year ended June 30, 2019, see Section IV – Financial Results in IDA’s MD&A and
Financial Statements for the fiscal year ended June 30, 2020. 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 fiscal years ended June 30,
2021

2020

2019

2018

2017

Lending Highlights (Sections IV & V)
Loans, Grants and Guarantees
Net commitments a$

Gross disbursementsa

Net disbursements a

36,028$30,365$21,932$24,010$19,51322,921

21,17917,54914,383

12,71816,465

15,112

12,221

9,290

8,154

Balance Sheet (Section IV)
Total assets

188,553$ 184,666

Net investment portfolio b

37,92135,57132,44333,73529,673Net loans outstanding

177,779

160,961

151,921

145,656

138,351

28,335

19,653

10,149

7,318

3,660

180,876

168,171

162,982

163,945

158,476

Borrowing portfolio$ 219,324cTotal equity$

199,472$$

173,357

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

Transfers from affiliated organizations and others
Development grants
Net loss

1,996

$

1,843

$

1,702

$

1,647

$

1,521

544

252

258

203

599

(2,830)(1,475)(7,694)(4,969)(2,577)(433)(1,114)(6,650)(5,231)(2,296)

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

$

394

$

724

$

225

$

(391)

$

(158)

Capital Adequacy (Section IX)
Deployable Strategic Capital Ratio

30.4%

35.8%

35.3%

37.4%

37.2%

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 the Financial Statements, Note C – Investments – Table C2.
c. Includes associated derivatives.

2

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

Management’s Discussion and Analysis

Section I: Executive Summary

Section I: Executive Summary
Owned by its 173 members, IDA, an entity rated triple-A by the major rating agencies, and one of the five institutionsof the World Bank Group (WBG 1), has been providing financing and knowledge services to many of the world’s
developing countries for 60 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. The World Bank’s operational realignment, which came into effect on
July 1, 2020, places country-driven development at the center of the delivery model, while strengthening thought
leadership on development issues of critical importance to sustainable growth and poverty alleviation. Support
continues to be prioritized for countries at lower levels of income, and fragile and conflict-affected states. The
realignment strengthens the focus on Africa by creating two Vice Presidencies, one focused on Western and Central
Africa and the other on Eastern and Southern Africa.
In March 2020, IDA’s Nineteenth Replenishment of Resources (IDA19) was approved by the Board of Governors.
The IDA19 financing framework is an integrated package that will continue 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 coronavirus
disease (COVID-19) crisis. In order to enable IDA to continue meeting the heightened financing needs for IDA
resources, IDA members agreed in April 2021 to launch the twentieth IDA replenishment (IDA20), which willcommence one year earlier, in FY23. The IDA19 implementation period will be shortened to two years (FY21-FY22),
and $12.5 billion of resources originally projected for use in FY23 will be available for financing in FY22.
In response to the global outbreak of COVID-19 and to support global public goods, IDA has been working insolidarity with partners at global and country levels to support its borrowing countries. A significant portion of the
FY21 commitments supported COVID-19 related efforts. IDA’s operational response includes three stages: a) Relief
stage that involves emergency response to the health threat, b) Restructuring stage that focuses on strengthening healthsystems, restoring human capital, and restructuring of firms and sectors, and c) Resilient recovery stage that entails
new opportunities to build a more sustainable, inclusive and resilient future. Each stage is structured through fourthematic crisis response pillars: i) Saving lives, ii) Protecting the poor and vulnerable, iii) Ensuring sustainablebusiness growth and job creation, and iv) Strengthening policies, institutions, and investment for rebuilding better.

1

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).

IDA Management’s Discussion and Analysis: June 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 the fiscal year ended June 30, 2021, IDA reported a
net loss of $433 million, compared to a net loss of $1,114 million in
FY20. The decrease was primarily driven by the increase inunrealized mark-to-market gains on the non-trading portfolios
partially offset by an increase in development grant expenses during
the year. See Section IV: Financial Results.
Adjusted Net Income: For the fiscal year ended June 30, 2021,
IDA’s adjusted net income was $394 million, a decrease of $330
million from the prior year ($724 million). The decrease wasprimarily due to lower net investment revenue and higher provision
for losses on loans and other exposures, partially offset by higher net
interest revenue on loans. See Section IV: Financial Results.

Adjusted Net Income (Loss)Net Income (Loss)
8,000
4,000
0
(4,000)(8,000)
FY17

FY18

FY19

FY20

FY21

Lending Operations
IDA made $36.0 billion of net commitments in FY21, of which $23.9 billion were loan and guarantee commitments.
The remainder were grant commitments, which are recorded as an expense in IDA’s Statement of Income once allconditions are met, generally at the time of disbursement. The FY21 net commitments reflected the strong support
IDA provided to its client countries during the COVID pandemic including $2.5 billion of newly approved financing
for vaccines as of June 30, 2021, benefiting 41countries.
IDA’s net loans outstanding increased by $16.8 billion, to $177.8 billion as of June 30, 2021, from $161.0 billion asof June 30, 2020. See Section IV: Financial Results.
The decrease in development grant expenses from FY19 to FY20 was due to the timing of the recognition of the grant
expenses as a result of the implementation of a new accounting standard in FY20.
In billions of U.S. dollarsa

Net Commitments
Gross Disbursements
Net Disbursements

40
32
24
16
8
0

Net Loans Outstanding

160

40

120

32

80

24
16

40

8

0
FY17 FY18 FY19 FY20 FY21a.

Net Grant Commitments
Grant Expense200

Jun 17 Jun 18 Jun 19 Jun 20 Jun 21

0
FY17 FY18 FY19 FY20 FY21

Includes loans, grants, and guarantees

Net Investment Portfolio
As of June 30, 2021, the net investment portfolio was $37.9 billion,
compared with $35.6 billion as of June 30, 2020. See Section VII:
Investment Activities. The primary objective of IDA’s investment
strategy is principal protection. As of June 30, 2021, 68% of IDA’s
investment portfolio was held in instruments rated AA or above(See Table 30).

In billions of U.S. dollars
Net Investment Portfolio

75
60
45
30
15
0
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21

4

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

Management’s Discussion and Analysis

Section I: Executive Summary
In billions of U.S. dollars

Borrowing Portfolio
Market borrowings: As of June 30, 2021, the total market
borrowings portfolio outstanding was $20.6 billion, an increase of$8.6 billion compared with June 30, 2020 ($12.0 billion). See
Section IV: Financial Results.
Concessional Partner Loans: As of June 30, 2021, total borrowings
from members - concessional partner loans (CPLs) - were $7.7
billion, an increase of $0.1 billion compared with June 30, 2020($7.6 billion). See Section IV: Financial Results.

Borrowing portfolio
75
60
45
30
15
0
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21
In billions of U.S. dollars

Equity and Capital Adequacy

As of June 30, 2021, IDA’s equity was $180.9 billion, an increase of Equity$12.7 billion from June 30, 2020. See Section IV: Financial Results. 200
150
100
50
0
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21

The Deployable Strategic Capital (DSC) ratio, IDA’s main capital
adequacy measure, was 30.4% as of June 30, 2021, above the zero
percent policy minimum. The decrease of 5.4 percentage points from
June 30, 2020 is primarily driven by a refinement of the DSC
framework during FY21 which includes additional capitalrequirements for approved but not yet expensed grants. While grants
are now expensed at disbursement rather than commitment under an
accounting standard, IDA has now taken the grants into accountupon commitment, consistent with prior practice. IDA’s capital
continues to be adequate to support its operations. See Table 27.

Ratio in percentages
Deployable Strategic Capital Ratio
45%
30%
15%
Minimum Ratio = 0%0%
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21

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

5

Management’s Discussion and Analysis

Section II: Overview

Section II: Overview
Presentation
This document provides Management’s Discussion and Analysis of the financial condition and results of operations
for IDA for the fiscal year ended June 30, 2021. A Glossary of Terms is provided at the end of this document.

Introduction
Generally every three years, representatives of IDA’s members 2 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)
IDA19 supports the world’s poorest and most vulnerable countries to implement country-driven solutions that generate
growth, are people-centered, and strengthen resilience. IDA19 builds on IDA18 development themes, including
creating jobs, focusing on the poorest countries, including Fragile, Conflict and Violent (FCV) states, promoting low
carbon enabling environment and investments, gender, and governance. IDA19’s policy package incorporates four
additional crosscutting issues: debt (including transparency); digital technology and connectivity; investing in people;
and disability inclusion. Members agreed that IDA would make $82.0 billion 3 in new commitments over the
replenishment period, backed by $27.4 billion in new member contributions, including compensation for theMultilateral Debt Relief Initiative (MDRI).
Since the onset of the COVID-19 crisis, IDA has significantly scaled up its financial support, serving clients andtargeting resources to those most in need. In recognition of the heightened financing needs of IDA countries and to
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 resources originallyprojected for use in FY23 will be available for financing in FY22. The IDA19 financing framework has been adjusted
to make $71.3 billion of resources available, of a total original IDA19 commitment authority of $82.0 billion, all on
standard IDA terms. The remaining $10.7 billion will be carried forward to be utilized in the replenishment 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 $180.9 billion as of June 30, 2021. In FY15, IDA introduced debt
to its financial model with concessional partner loans received from certain member countries. In FY18, IDA
introduced a hybrid financing model by including market debt into its business model. By prudently leveraging its
equity and blending 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:• Retain IDA’s mandate to 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.

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.
2

3

U.S. dollar amounts are based on an 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: June 30, 2021

Management’s Discussion and Analysis

Section II: Overview

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). See Figure 1.

EquityConcessional Lending and Grants

Investments
Borrowings

Non – Concessional Lending

Reflows and Operating
Results

Figure 1: IDA's Financial Business Model

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 Section IV: Financial Results.

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

7

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

Section III: IDA’s Financial Resources
IDA’s replenishments have grown from $1.0 billion for the initial replenishment to $82.0 billion in IDA19.
Members’ subscriptions and contributions receivable for each replenishment are settled through payment of cash or
deposit of nonnegotiable, non-interest-bearing demand notes which become due throughout the replenishment period,
generally three years. The notes are encashed by IDA on a pro rata basis over a 9 to 11-year period which generally
corresponds with the disbursement period of the loans and grants.

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’s resources are allocated toeligible 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 FCV envelope. The restof IDA support is provided through five IDA Windows dedicated to addressing specific development priorities, andan Arrears Clearance Set-Aside that provides exceptional support for countries to fully 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:

Table 1: Adjusted IDA19 Resource Allocation
In billions of U.S. dollars
Allocation
Country Allocation Envelope
IDA Concessional Windows
Non-concessional Window
Private Sector Window
Total IDA19 Allocation$$

USD equivalent a
56.0
10.4
3.2
1.7
71.3

a. U.S. dollar amounts are based on IDA19 reference rate of
USD/SDR 1.38318. The U.S. dollar amounts are provided forillustrative purposes only.

8

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

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

Table 2: Cumulative Net Commitments under IDA19
In millions of U.S. dollars
Loans andGuarantees

As of June 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$$

20,476

Grants

$

9,171

Total

$

29,647

1,171

1,002

2,173

445

628
320

628
765

1,815

1,000
-

1,000
1,815

23,907$

12,121$

36,028a. Commitments are net of full cancellations/terminations approved in the same fiscal year. Commitments exclude IFC-MIGA Private
Sector Window (PSW) activities

Eligibility for IDA’s resources is determined primarily by a member’s relative poverty. Relative poverty is defined as
Gross National Income (GNI) per capita below an established threshold and is updated annually. For FY22, thethreshold is $1,205 (FY21: $1,185).
As of July 1, 2021, 74 countries are eligible to borrow from IDA on concessional terms as follows:
IDA-only

41 countries that (a) have not exceeded the IDA operational cut-off GNI per capita for
more than two consecutive years; and (b) are not creditworthy to borrow from IBRD.
This includes: 11 Small Island Economies that have per capita incomes above the IDA
operational cut-off for more than two consecutive years, but that have been granted
the status of an “IDA-only Country” under the Small Island Economies Exception.
2 countries with loans in nonaccrual status, which were classified as “IDA-only” at thetime they became nonaccrual countries.

IDA eligible
countries

Gap

16 countries that are (a) determined by IDA to be eligible for IDA financing; (b)determined by IDA to have a GNI per capita that has exceeded the cut-off for IDA
eligibility for more than two consecutive years; and (c) not currently determined by
IBRD to be creditworthy to borrow from IBRD. This includes 3 Small States that are
not island states.

Blend

14 countries that are determined: (a) by IDA to be eligible for IDA financing; and (b)by IBRD to be creditworthy for borrowing IBRD loans. This includes 6 Small Island
Economies and 1 Small State that is not an island state.
1 country with loans in nonaccrual status, which was classified as “Blend” at the time
it became a nonaccrual country.

Allocation - Performance Based Allocation (PBA) System
IDA’s resources are allocated to eligible members, using its PBA system and the allocation framework agreed during
each replenishment. These allocations depend on several factors: the overall availability of IDA’s resources, individual
country needs, their policy performance and institutional capacity, and each country’s performance relative to others.
The PBA system is designed to provide resources where they are likely to be most helpful in reducing poverty.
Under the PBA, the main factor that determines the allocation of IDA’s core concessional resources among eligible
countries is their performance in the Country Policy and Institutional Assessment (CPIA). The CPIA reflects theresults of an exercise that rates eligible countries against a set of criteria including economic management; structural
policies; policies for social inclusion and equity; and public-sector management and institutions. The CPIA andportfolio performance together constitute the IDA Country Performance Rating (CPR). In addition to the CPR,
population, and per capita income are factored into a country’s allocation, along with the annual base allocation(SDR15 million per country). In addition, country allocations provide the FCV envelope to enhance support for
eligible countries facing different FCV risks. The Sustainable Development Finance Policy (SDFP), which became
effective at the beginning of IDA19, aims to incentivize IDA-eligible countries to move towards transparent,sustainable financing and to promote coordination between IDA and other creditors in support of these countries’
efforts to address their debt-related vulnerabilities. A set-aside from or a discount of IDA’s country allocation are used
to incentivize satisfactory implementation of Performance and Policy Actions (PPAs). Countries which demonstrate

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

9

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

satisfactory progress in implementing their PPAs have access to their full annual country allocation. Countries that do
not satisfactorily implement their PPAs will either have a share of their country allocation set aside or their country
allocation will be reduced.
In recognition of the change in IDA’s business model starting in IDA18, and to ensure that its lending decisions arecompatible with the capital adequacy requirements of a triple-A rating, the allocation framework for IDA19 is alignedwith the Single Borrower Limit (SBL) and capital adequacy requirements under the DSC Framework, see Section IX:
Risk Management.

Concessional Financing
Concessional financing is provided in the form of loans, grants and guarantees. Eligibility and percentage of allocation
for grants for IDA-only countries is based on an assessment of the country’s risk of debt distress, where the higher therisk assessment, the greater the proportion of grant financing. Gap and Blend countries are only eligible for grant
financing via the Window for Host Communities and Refugees, if applicable.
Country Allocation Envelope represents $56.0 billion of the adjusted IDA19 resource envelope and is allocatedbased on the PBA. The amount available for each country is a function of the country’s CPR rating, population, andper capita income, complemented by the FCV envelope.
IDA Concessional Windows allow IDA to respond to specific needs of its members. In IDA19, $10.4 billion of theadjusted IDA19 resource envelope will be used to fund the following windows.
•$5.6 billion of Regional Window;•$1.3 billion of Window for Host Communities and Refugees;•$2.5 billion of Crisis Response Window;•$1.0 billion of Arrears Clearance Set- Aside (Arrears Clearance Framework).

Regional Window
The Regional Window was developed as a funding mechanism to provide additional resources to finance projects that
help low‐income countries achieve their regional integration objectives. IDA fosters regional integration by playing
three overlapping roles:•

supporting an enabling environment through advisory and analytical work;•

financing projects through policy and investment loans; and•convening state and nonstate actors for coordination and collective actions.

Window for Host Communities and Refugees (WHR)
The Window for Host Communities and Refugees will support operations that promote medium-to long-term
development opportunities for refugee and host communities in IDA countries. The purpose of the WHR is to support
refugee hosting countries to:•create social and economic development opportunities for refugee and host communities;•

facilitate solutions that include sustainable socio-economic inclusion of refugees in the host country and/or theirreturn to the country of origin; and•strengthen country preparedness for increased or potential new refugee flow.

Crisis Response Window
The primary objective of the CRW is to provide IDA countries with additional resources that will help them to respondto major natural disasters, or public health emergencies and severe economic crises, so that they can return to theirlong-term development paths. The $2.5 billion window under the adjusted IDA19 resource envelope includes anallocation of up to $1.0 billion under the CRW Early Response Financing (ERF) which will support IDA countries’
response to slower-onset crises, namely disease outbreaks and food insecurity.
Arrears Clearance Framework
IDA has a policy of not providing financing to borrowers who are overdue on their payments to IDA or IBRD.
However, it may engage with these countries under limited and clearly defined circumstances. IDA’s arrears clearance

10

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

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

framework sets out these circumstances, including (i) pre-arrears clearance grants; and (ii) the arrears clearance setaside, that can only be financed under the arrears clearance operations.
(i) Pre-Arrears Clearance Grants (PACG)
The PACG mechanism enables IDA to engage early in support of a government undertaking convincing reforms. Thiswas first introduced in IDA12 to be used to finance high priority activities related to the preparation of a program ofsocial and economic recovery and to build resilience until the arrears are fully cleared. Conditions constituting thisframework include indications that:• early performance is promising as evidenced by the recipient country having taken convincing steps towards socialand economic recovery;• arrears to IDA and/or IBRD are large and protracted, and cannot be easily or quickly cleared using domestic
resources;• a concerted international effort to provide positive financial flows and other assistance is underway, and othercreditors have agreed not to make net withdrawals of financial resources from the country;• alternative sources of financing for post-conflict recovery are inadequate or available only on inappropriate terms;
and• Pari passu sharing arrangements are in place between preferred creditors, for any payments made by the country
in advance of arrears clearance.
The PACG program has met its objectives with each of the prior PACG recipients successfully clearing all their arrears
to IDA and subsequently remaining current on their obligations. Prior PACG recipients are Democratic Republic of
the Congo, Cote d’Ivoire, Afghanistan, Liberia, Myanmar, and Somalia, for an amount totaling $702 million between
FY01 and FY20.
In FY21, PACGs for Sudan for an amount of $410 million were approved to support the country’s reform momentum
towards Heavily Indebted Poor Countries (HIPC) Decision Point. Of this amount, $100 million had been disbursedand expensed.
(ii) Arrears Clearance Set-Aside
The arrears clearance set-aside (ACSA) forms part of IDA’s overall financing commitments. It is financed byadditional member contributions under the replenishments. In IDA15, the arrears clearance was further enhanced.
IDA members agreed to ring-fence arrears clearance support to IDA countries that were in arrears as of December 31,
2006 and meet a very narrow and well-defined set of criteria– see below, including eligibility for support under the
HIPC initiative. Amounts were set aside within the IDA replenishment so that when circumstances allow, IDA would
be able to help countries clear arrears and fully re-engage with the World Bank.
To be considered for any arrears clearance support, the country would need to meet the following criteria:•

be eligible for HIPC debt relief;•

agree to implement a medium-term growth-oriented reform program endorsed by the World Bank;•

ensure a sustainable macro and sustainable debt service after arrears clearance;•

agree on a stabilization program endorsed by the International Monetary Fund (IMF) management and monitoredby IMF staff or supported by an IMF arrangement; and•agree to a financing plan for full clearance of arrears, including normalization with other MultilateralDevelopment Banks (MDBs).

In addition, to receive support for arrears clearance, project proposals should meet re-engagement criteria based on
facts and circumstances of each case.
On March 25, 2021, Sudan paid all of the overdue principal and charges due to IDA and the outstanding loans
remaining to Sudan were restored to accrual status on that date. For more details, see Notes to the Financial Statements
for the year ended June 30, 2021, Note D – Loans and Other Exposures. During FY21, $1.3 billion of development
grants were approved and disbursed to Sudan in support of the re-engagement and reform development policy
financing, of which $1.0 billion was under arrears clearance set-aside.

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

11

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

Non-Concessional Financing
Non-Concessional financing comprises loans and guarantees whose terms are aligned with those of IBRD’s flexible
loans and guarantees. Under the adjusted IDA19 resource envelope, $3.2 billion of resources have been allocated to
non-concessional financing which entirely relates to the Scale-up Window.
Scale-up Window: The Scale-up Window is a window of resources established to enhance support for high-quality,transformational, country-specific and/or regional operations with strong development impact. Allocation of Scale-up
Window resources to the regions will broadly conform to the allocations under the PBA, excluding countries at a highrisk of debt distress. Allocations are balanced between IDA-only and blend countries, and to avoid countries fromhaving a concentration of Scale-up Window resources. Implementation arrangements will prioritize a country’s ability
to absorb resources and the proposed projects’ alignment with IDA19 policy priorities and the debt-related Sustainable
Development Finance Policy.

Private Sector Window (PSW)In IDA19, an initial $2.5 billion IFC-MIGA Private Sector Window was created with the goal of mobilizing private
sector investment in IDA-only countries and IDA-eligible Fragile and Conflict-affected States. Under the adjusted
IDA19 resource envelope, the allocation was revised to $1.7 billion.
PSW is deployed through four facilities. These facilities have been designed to target critical challenges faced by theprivate sector in these difficult markets and will leverage IFC and MIGA’s business platforms and instruments.
During FY21, $595 million of the IDA19 resources, net of full terminations and cancellations, were committed. As ofJune 30, 2021, $630 million has been utilized out of a total of $2.0 billion committed in IDA18 and IDA19. See Notes
to the Financial Statements for the year ended June 30, 2021, Note G –Transactions with Affiliated Organizations –Table G4.
Table 3: Utilization of PSW Commitments
In millions of U.S. dollars
As of June 30, 2021
Guarantees
Derivatives$

Funding of IFC's PSW- related equity investments
Loans
Total utilization of IDA PSW

12

$

484

Face value of outstanding guarantees

90

Notional amount46

Amortized cost

10

Amortized cost

630

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

Management’s Discussion and Analysis

Section IV: Financial Results

Section IV: Financial Results
Summary of Financial Results
IDA had a net loss of $433 million in FY21 compared with a net loss of $1,114 million in FY20 (See Table 4). The
decrease in net loss was primarily driven by:•$1.1 billion of unrealized mark-to-market gains on non-trading portfolios in FY21 ($0.7 billion unrealized
mark-to-market losses in FY20). In FY21, the gains were primarily from the Capital Value Protection
Program (CVP) portfolio, due to the upward movement in U.S. dollar interest rates;•$0.4 billion increase in the release of provision for losses on loans and other exposures mainly due to a releaseof $0.8 billion of loan loss provision due to Sudan’s arrears clearance; partially offset by,•$1.4 billion increase in development grant expenses primarily due to the disbursement of $1.3 billion ofdevelopment grants to Sudan in support of the re-engagement and reform program after its arrears clearance.

Adjusted Net Income
Adjusted Net Income, 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 the following items.
•

Development financing activities directly funded by contributions from members: These mainly comprise ofdevelopment grants, provision for HIPC / MDRI debt relief, and amortization of discounts on CPL. For financial
reporting, these activities are treated as expenses, while contributions from members which finance these
activities, are reflected directly in IDA’s equity since they carry voting rights.

•

Contributions/grants received from affiliated organizations or other similar contributions: These mainlycomprise contributions from IBRD, IFC and other contributions from trust funds. These are intended to financedevelopment activities similar to member contributions but are not directly included in equity as they do not carryvoting rights.

•

Non-functional currency translation adjustment (gains) losses: These represent unrealized exchange rate
gains/losses resulting from the translation of loans, borrowings, development grants payable and all other assets
and liabilities still held on IDA’s Balance Sheet, that are denominated in currencies other than the component
currencies of SDR.

•

Unrealized mark-to-market gains/losses on non-trading portfolios: These mainly comprise unrealized mark-tomarket gains and losses on the asset/liability management (ALM), borrowing, and non-trading investment
portfolios. For the purpose of ANI, the result of loan revenue hedges is not part of the adjustment related tounrealized mark-to-market gains/losses on non-trading portfolio since the objective of the loan revenue hedges is
to stabilize IDA’s revenue against any currency risk.

•

Pension, Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve (PCRF) adjustments:
While IDA is not a participating sponsor 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, as part of a Board-approved cost sharing
ratio. The Pension adjustment reflects the difference between IDA’s share of cash contributions to both thepension plans and PCRF, and the accounting expense, as well as the investment revenue earned on those assets
related to the PEBP and PCRF. The PCRF was established by the Board to stabilize contributions to the pension
and post-retirement benefits plans. Management has designated the income from these assets to meet the needsof the pension plans. As a result, PEBP and PCRF investment revenue is excluded from adjusted net income.

•

Other Adjustments: Under certain arrangements (such as Externally Funded Outputs (EFOs)), IDA receives ashare of the revenue earned from agreements with donors under which funds received are to be used to financespecified outputs or services. These funds may be utilized only for the purposes specified in the agreements andare therefore considered contractually restricted until applied for these purposes. Income attributable to thesearrangements is excluded from reported income when determining adjusted net income since there is no discretion
about the use of these funds.

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

13

Management’s Discussion and Analysis

Section IV: Financial Results

IDA’s adjusted net income was $394 million in FY21 compared with $724 million in FY20 (See Table 4). The
decrease was primarily driven by:•$275 million decrease in net interest revenue on investments due to lower interest rate environment during
the year;•$40 million of unrealized mark-to-market losses on investments-trading, excluding IDA’s share of PEBP
returns, in FY21, compared to $187 million of unrealized mark-to-market gains in FY20, reflecting theincrease in yield curves during the year;•$253 million increase in provision for losses on loans and other exposures, excluding provision for debt relief
under HIPC/MDRI; partially offset by,•$366 million increase in net interest revenue on loans, mainly driven by the recognition of $244 million ofservice charge revenue when Sudan paid all the overdue principal and service charges due to IDA.

Table 4: Condensed Statement of Income
In millions of U.S. dollars
For the fiscal year ended June 30,
Interest Revenue
Loans, net
Investments, net
Asset/liability management derivatives, net
Borrowing expenses, net
Interest Revenue, net of borrowing expenses

2021

2020

$

2,050 $
147
(14)
(187)

1,684
422
(22)
(241)

$

1,996 $

1,843

539
56
(1,612)
544
(372)
144
1,102
(2,830)170(10)(1,508)
252
95
207
(688)
(1,475)

Provision for losses on loans and other exposures, release
Other revenue (expenses), net (Table 11)
Net non-interest expenses (Table 10)
Transfers from affiliated organizations and others
Non-functional currency translation adjustment (losses) gains, net
Unrealized mark-to-market gains on investments-trading portfolio, net a
Unrealized mark-to-market gains (losses) on non-trading portfolios, net
Development grants
Net Loss$

Adjustments to reconcile net (loss) income to adjusted net income:Expenses relating to development financing activities directly funded bycontributions from members
Contributions from affiliated organizations and others
Non-functional currency translation adjustment losses (gains), net
Unrealized mark-to-market (gains) losses on non-trading portfolios, net b
Pension, PEBP and PCRF adjustments
EFO revenue
Adjusted Net Income$(433) $

Negative Positive
Impact Impact(1,114)

2,070
(544)
372
(1,118)
42
5

1,389
(252)
(95)
731
71
(6)

394

724

a. Includes IDA’s share of returns from Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve Fund(PCRF) assets – $184 million of returns (FY20 - $20 million of returns).
b. Excludes $16 million of losses from revenue-related forward currency contracts (FY20 - $43 million of gains).

14

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

Management’s Discussion and Analysis

Section IV: Financial Results

Table 5: Condensed Balance Sheet
In millions of U.S. dollars
As of June 30,
AssetsDue 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

2021
$

$

$

$

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

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

$

$

$

2020

Decrease

674
34,670160,961
136
3,031
199,472(178)

19,766590
10,945
168,171
199,472

Increase

2,706

16,818113393
19,852

8,548(182)(1,219)12,70519,852a. The fair value of IDA loans was $164,606 million as of June 30, 2021 ($149,597 million – June 30, 2020).

EquitySee Table 6 below for the change in IDA’s equity during FY21:
Table 6: Changes in Equity
In millions of U.S. dollars
Equity as of June 30, 2020
Activity during the year:
Subscriptions and contributions paid-in
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 June 30, 2021$

168,171

$

9,109
(753)
(1,235)5,583
112,705
180,876

Total Assets
As of June 30, 2021, total assets were $219.3 billion, an increase of $19.8 billion from June 30, 2020 ($199.5 billion).
The increase was primarily driven by the increase in net loans outstanding and net investment portfolio, as discussed
below.

Results from Lending Activities
Loan Portfolio and Grant Activity
As of June 30, 2021, IDA’s net loans outstanding (after accumulated provision for losses on loans) was $177.8 billion,
higher by $16.8 billion compared with June 30, 2020. The increase was mainly due to $10.2 billion in net loan
disbursements and currency translation gains of $5.9 billion, consistent with the 3.7% appreciation of the SDR against
the U.S. dollar during the year.
As of June 30, 2021, 90% of IDA’s total loans outstanding were denominated in SDR. For the regional presentationof total loans outstanding, see Notes to the Financial Statements for the year ended June 30, 2021, Note D – Loans
and Other Exposures – Table D8.

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

15

Management’s Discussion and Analysis

Section IV: Financial Results

Table 7: 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, 2020
Activity during the period:$

Total activity
Net Loans outstanding as of June 30, 2021

b.

178
161

152

Gross loan disbursements
Loan repayments
Change in Accumulated provision for loan losses a
Translation adjustments
Other ba.

200

160,961$

150

16,681(6,457)
702
5,909
(17)
16,818
177,779100
50
0
Jun 19Jun 20Jun 21

Includes a decrease of $59 million in the accumulated provision forloan losses as of July 1, 2020 due to the adoption of ASU 2016-13.
See Notes to the Financial Statements, Note D – Loans and otherexposures.
Includes deferred loan origination costs of $8 million, and HIPC debt
relief provided of $9 million.

IDA’s loans generally disburse within five to ten years for investment project financing and one to three years fordevelopment policy financing. Therefore, each year’s disbursements also include amounts relating to commitments
made in earlier years (See Table 8).
Table 8: Gross Disbursements of Loans and Grants by Region
In millions of U.S. dollars
2021
For the fiscal year ended June 30,
Eastern and Southern Africa

Loans
$

2020

Grants a

Total

Loans

Total

Variance

4,785 $

3,296 $

8,081

5,524 $

2,380 $

7,904

Western and Central Africa

4,384

1,661

6,045

4,160

1,309

5,469

576

East Asia and Pacific

1,186

111

1,297

1,470

119

1,589

(292)

Europe and Central Asia

736

144

880

282

83

365

515

Latin America and the Caribbean

369

126

495

333

133

466

29

Middle East and North Africa

70

309

379

88

63

151

228

5,145

599

5,744

4,587

648

5,235

509

6

-

6

5

-

5

South Asia
Others b
Total$

16,681 $6,246 $

22,927$

Grants a$

16,449 $4,735 $

21,184

$

177

1
$

1,743

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

As of June 30, 2021, 60% of IDA’s loans were on regular terms (75 basis points SDR equivalent service charge) see
Table 9. During FY21, the interest revenue from loans included $1,535 million of service charges. The increase in
IDA’s revenue from loans was primarily due to $244 million of service charges recognized when Sudan paid all its
overdue principal and charges due to IDA, and the higher volume of loans outstanding. For more details, see Section
IX: Risk Management.

16

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

Management’s Discussion and Analysis

Section IV: Financial Results

Table 9: Revenue and Balances by Product Category
In millions of U.S. dollars

Category
Loans
Concessional
Regular
Blend
Hard b
Non-concessional c
Others d
Total
a.
b.
c.
d.
*

Interest revenue on loans a
For the fiscal year ended June 30,
2021
2020

Balance as of June 30,
2021
2020

$

$

109,612
65,203
1,406
5,273
10
181,504$$

101,957
58,652
1,368
3,398
5
165,380

$

$

1,055
862
49
85
1
2,052

$

$

828
739
47
71
*
1,685

Excludes interest rate swap expenses related to loan hedges - $2 million ($1 million in FY20).
Prior to July 1, 2017, IDA offered Hard-Term loans to Blend Countries (excluding Small Island Economies). Hard-term loans
are no longer offered.
In addition, $19 million of commitment charges were earned in FY21 on undisbursed balances of non-concessional loans ($15
million in FY20).
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 $37.9 billion as of June 30, 2021, from $35.6 billion as of June 30, 2020.
The increase was primarily due to cash received from member contributions and proceeds from net new debt issuances,offset by net loan and grant disbursements.
Net Investment Revenue
During FY21, IDA’s net interest revenue from investments was $147 million, a decrease of $275 million comparedwith FY20. The decrease in interest revenue was mainly driven by the lower interest rate environment in the current
year and the impact of negative interest rates in certain SDR component currencies as the investment portfolio ismanaged in these currencies.
Figure 3: Net Investment Portfolio

Figure 4: Net Investment Revenue

In billions of U.S. dollars
40

32.4

In millions of U.S. dollars
37.9

35.6

500
400

30

300
20

200

10

100
0

0
Jun 19Jun 20Jun 21

FY17

FY18

FY19

FY20

FY21

Results from Borrowing Activities (excluding associated derivatives)
Market borrowings outstanding were $20.6 billion as of June 30, 2021, an increase of $8.5 billion compared to June30, 2020 ($12.1 billion). The increase was driven mainly by net new issuances of medium and long- term debt
instruments during the year. See Notes to the Financial Statements for the year ended June 30, 2021, Note E –Borrowings.
Concessional partner loans are carried at amortized cost. As of June 30, 2021, total borrowings outstanding frommembers were $7.7 billion ($7.6 billion - June 30, 2020). As part of IDA19, two members have agreed to provide
IDA with concessional partner loans totaling $1.1 billion. As of June 30, 2021, IDA had signed a concessional partner
loan agreement with one of the members under IDA19 for $0.6 billion.

Transfers 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

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

17

Management’s Discussion and Analysis

Section IV: Financial Results

is a function of IBRD's financial results. On January 25, 2021, IBRD’s Board of Governors approved a transfer of$331 million to IDA which was received by IDA on February 1, 2021.
On June 21, 2021, IFC’s Board of Governors approved a transfer of $213 million to IDA which was received by IDA
on June 25, 2021.

Net Non-Interest Expense
As shown in Table 10, IDA’s net non-interest expenses are primarily comprised of administrative expenses, net ofrevenue from externally funded activities. IBRD and IDA's administrative budget is a single resource envelope thatfunds 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 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 other externally funded activities.
See Table 10 for a comparison of the main sources of administrative expenses and revenue from externally funded
activities in FY21 and FY20.
IDA’s net non-interest expenses were $1,612 million in FY21, compared to $1,508 million in FY20. The key drivers
during the year were:• increase in pension costs driven by a decrease in the discount rate resulting in higher service cost and higher
amortization of unrecognized actuarial losses, offset by;• decrease in travel costs due to COVID-19, and;• decrease in the share of costs allocated to IDA.
Table 10: Net Non-Interest Expenses
In millions of U.S. dollars
For the fiscal year ended June 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

2021
$

1,121
15
544
494
68
135
29
2,406

$

Contributions to special programs
Revenue from externally funded activities:
Reimbursable advisory services
Reimbursable revenue - IDA-executed trust funds
Revenue – trust funds administration
Restricted revenue
Other revenue
Total revenue from externally funded activities
Total Net Non-Interest Expenses (Table 4)

$
$

2020
$

$

1,114
135
536
357
63
151
33
2,389

Variance
$

$

7
(120)
8
137
5
(16)
(4)
17

20

21

(1)

(46)
(553)
(38)
(15)
(162)
(814)
1,612

(65)
(586)
(41)
(28)
(182)
(902)
1,508

19
33
3
13
20
88
104

$
$

$
$

During FY21, IDA’s net other revenue increased by $66 million. The main driver was the PPA grant activity, including
cancellations and refinancing of PPA grants previously approved.
Table 11: Other Revenue (Expenses), net
In millions of U.S. dollars
For the fiscal year ended June 30,
Other (primarily PPA grants)
Guarantee fees
Commitment charges
Other Revenue (Expenses), net (Table 4)

18

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

2021
$

$

20
17
19
56

2020
$

$

(40)
15
15
(10)

Variance
$

$

60
2
4
66

Management’s Discussion and Analysis

Section IV: Financial Results

IDA’s goal is to have its net administrative expenses covered by its loan revenue (loan interest, service, commitment,
and guarantee fees). Thus, IDA monitors its net administrative expenses as a percentage of its loan revenue, using ameasure referred to as the budget anchor. In FY21, IDA’s budget anchor was 66.7%, lower by 14.3 percentage points
compared to FY20 primarily due to higher interest revenue from loans. See Table 12.
Table 12: Budget Anchor
In millions of U.S. dollars
For the fiscal year ended June 30,

2021

Total net Non-interest Expenses (Table 10)
Pension and EFO adjustments a
Net administrative expenses for Budget Anchor$

Interest Revenue from Loans, net (Table 4)
Commitment fee and Guarantee fee revenue (Table 11)(Losses) gains on revenue-hedging forward currency contracts
Total revenue for Budget Anchor

$

$

$

Budget Anchor

2020

1,612
(231)
1,381

$

2,050
36
(16)
2,070

$

$

$

66.7%

Variance

1,508
(85)
1,423

$

1,684
30
43
1,757

$

104
(146)
(42)

$

366
6
(59)
313

$

81.0%

-14.3%

a. These adjustments are made to arrive at net administrative expenses used for adjusted net income purposes.
Figure 5: Budget Anchor
In millions of U.S. dollars, except ratio in percentages
2,000

120.0%

97.6%

100.0%

81.0%

1,500

66.7%

80.0%

1,000

60.0%
40.0%

500

20.0%

0

0.0%

FY19
Net administrative expenses for budget anchor

FY20

FY21

Budget Anchor Revenue

Budget Anchor

Provision for losses on loans and other exposures
In FY21, IDA recorded a release of provision for losses on loans and other exposures of $539 million compared to$170 million of release in FY20 (see Notes to the Financial Statements for the year ended June 30, 2021, Note D –Loans and Other Exposures – Table D5). The movement is primarily attributed to:•

the release of provision for HIPC debt relief of $819 million when Sudan paid all its overdue principal andcharges due to IDA in March 2021; offset by,•

an increase in exposure comprised of volume of loans as well as inclusion of signed commitments in theprovisioning under the Current Expected Credit Losses (CECL) methodology which became effective July 1,
2020. (see section X: Critical Accounting Policies and the Use of Estimates).

Table 13: Provision for losses on loans and other exposures
In millions of U.S. dollars
For the fiscal year ended June 30,

2021

Provision for losses on loans and other exposures, release (charge)
Loans and other exposures
Debt relief under HIPC/MDRI
Total

$
$

(289)
828
539

2020
$
$

(36)
206
170

Variance$$

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

(253)
622
369

19

Management’s Discussion and Analysis

Section IV: Financial Results

Unrealized mark-to-market gains (losses) on non-trading portfolios, net
During FY21, the non-trading portfolios had $1,102 million of net unrealized mark-to-market gains ($688 million net
unrealized mark-to-market losses in FY20). The increase was mainly driven by unrealized mark-to-market gains fromthe derivatives held for the CVP portfolio due to the increase in U.S. dollar interest rates.
Table 14: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
In millions of U.S. dollars
For the fiscal year ended June 30,
Asset-liability management
Investment portfolio
Other a
Total

$

$

2021
1,080
(12)
34
1,102

$

$

2020
(699)
29
(18)
(688)

$

$

Variance
1,779
(41)
52
1,790

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

Non-functional currency translation adjustment gains (losses), net
These represent unrealized exchange rate gains/losses resulting from the translation of loans, borrowings, and all otherassets and liabilities held on IDA’s Balance Sheet, that are denominated in currencies other than the SDR and its
component currencies. During FY21, translation adjustment losses on non-functional currencies were $372 million as
most of the non-functional currencies appreciated against the U.S. dollar, IDA’s reporting currency. In comparison,in FY20, the translation adjustment gains were $95 million due to the depreciation of most of these non-functional
currencies against the U.S. dollar.

20

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

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Section V: Development Activities, Products and Programs
Lending Framework
IDA provides financing to lower-income countries primarily through loans, grants and guarantees. IDA has a common
framework which extends across all its development activities. The main elements of this framework are financing
principles, financing cycles and financing categories.

Financing Principles
IDA’s operations are required to conform to the general principles derived from its Articles of Agreement. These
principles are described in Box 2. Within the scope permitted by the Articles of Agreement, application of thesefinancing principles must be developed and adjusted in light of experience and changing conditions.

Financing Cycles
The process of identifying and appraising a project and approving and disbursing the funds often extends over several
years. However, in response to emergency situations, such as natural disasters and financial crises, IDA is able toaccelerate the preparation and approval cycle. In most cases, IDA’s Board approves each loan, grant, and guarantee
after appraisal of a project by staff. Under a Multiphase Programmatic Approach (MPA) approved by the Board in
FY18, the Board may approve an overall program framework, its financing envelope and the first appraised phase,and then authorize management to appraise and commit financing for later program phases. Disbursements are subject
to the fulfillment of conditions set out in the loan or grant agreement. IDA used this approach to expedite support for
COVID-19 related projects. As of June 30, 2021, $6.6 billion was committed under the MPA, of which $4.4 billion
was COVID-19 related commitments.
During implementation of IDA-supported operations, staff review progress, monitor compliance with IDA’s policies,
and assist in resolving any problems that may arise. An independent unit, the Independent Evaluations Group, also
assesses the extent to which operations have met their major objectives, and these evaluations are reported directly to
the Board.

Financing Categories
Most of IDA’s lending is of three types: investment project financing, development policy financing, and programfor-results. Figure 6 shows the percentage of loans approved for investment lending, development policy operations
and program-for-results over the past five years.
Box 2: Financing Principles(i) IDA may provide financing for its development operations in the form of loans, grants, and guarantees directly to its members,
public or private entities and regional or public international organizations.
(ii) IDA’s financing of its development operations is designed to promote economic development, increase productivity, and thus
raise standards of living in its member countries. Investment projects financed by IDA are required to meet IDA’s standards
for technical, economic, financial, institutional, and environmental soundness. Specific provisions apply to development policy
financing, including the treatment of the macroeconomic framework, poverty and social impact, environment, forests, and othernatural resources.
(iii) Decisions to approve financing are based upon, among other things, studies by IDA of a member country’s economic structure,including assessments of its resources and ability to generate sufficient foreign exchange to meet debt-service obligations.
(iv) IDA must be satisfied that in the prevailing market conditions (taking into account the member’s overall external financing
requirements); the recipient would be unable to obtain financing under conditions which, in the opinion of IDA, are reasonable
for the recipient. This would include loans made by private sources or IBRD.
(v) The use of funds by recipients is supervised. IDA makes arrangements intended to ensure that funds provided are used only
for authorized purposes and, where relevant, with due attention to considerations of cost-effectiveness. This policy is enforced
primarily by requiring recipients (a) to submit documentation establishing, to IDA’s satisfaction, that the expenditures financedwith the proceeds of loans or grants are made in conformity with the applicable financing agreements, and (b) to maximize
competition in the procurement of goods and services by using, wherever possible, international competitive bidding
procedures or, when it is not appropriate, other procedures that ensure maximum economy and efficiency. In addition, IDA
considers the use of recipient country procurement, financial management and environmental and social safeguard systems
in selected operations once these systems and capacity have been assessed by IDA as acceptable.

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

21

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Figure 6: Net Annual Commitments and share of financing categories
In billions of U.S. dollars, except rates in percentages
Percent
$19

$24

$22

$30

7

4

22

24

71

72

69

FY19

FY20

FY21

100
12
10

29

$36
12

75

19

9

50
78
62

25

0
FY17

FY18

Investment Lending

Development Policy

Program-for-Results

Investment Project Financing (IPF)
IPF is used in all sectors and supports a wide range of activities including capital-intensive investments, agriculturaldevelopment, service delivery, credit and grant delivery, community-based development, and institution building. IPF
is usually disbursed over the long-term (5 to 10-year horizon).
FY21 net commitments under IPF totaled $24.7 billion, compared with $21.8 billion in FY20.
Development Policy Financing (DPF)DPF provides rapidly disbursing financing (1 to 3 years) to help a borrower address actual or anticipated financing
requirements. DPF aims to support the borrower in achieving sustainable development through a program of policy
and institutional actions, for example, strengthening public financial management, improving the investment climate,addressing bottlenecks to improve service delivery, and diversifying the economy. DPF supports such reforms throughnon-earmarked general budget financing that is subject to the borrower's own implementation processes and systems.
FY21 net commitments under DPF totaled $7.0 billion, compared with $7.3 billion in FY20.
Program-for-Results (PforR)
PforR helps countries improve the design and implementation of their development programs and achieve specificresults by strengthening institutions and building capacity. It helps strengthen partnerships with governments,
development partners and other stakeholders by providing a platform to collaborate in larger country programs. PforR
disburses when agreed results are achieved and verified. Results are identified and agreed upon during the preparation
stage. FY21 net commitments under PforR totaled $4.3 billion, compared with $1.3 billion in FY20.
These three complementary categories support the policy and institutional changes needed to create an environment
conducive to sustained and equitable growth.

Financial Terms
Commitment Currency
The currency of commitment for IDA grants and concessional loans is predominantly the SDR. However, in response
to client needs to reduce currency exposure and simplify debt management, IDA offers a Single Currency Lending
option that allows IDA recipients to denominate new IDA loans in U.S. dollar, euro, pound sterling or Japanese yen.
Further, non-concessional loans provided under IDA19 may only be denominated in either U.S. dollar, euro, poundsterling or Japanese yen. For cumulative loans approved under Single Currency program as of June 30, 2021, see
Table 15.

22

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

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Table 15: Cumulative Loans approved under Single Currency program
In billions of U.S. dollar equivalent value
As of June 30,
Euro
U.S. dollar
Japanese Yen
Total

$

2021
21.9
19.0
0.5
41.4

$

15.3

$

Of the above, loans outstanding at the end of the year

Table 16: Summary of Financial Terms for IDA Lending Products, effective July 1, 2021
Instrument type aCurrencies

Maturity/Grace
PeriodSDR

Not applicable

Grant
Regular-Term loan
Regular-Small Economy
loan

SDR, USD, EUR,
GBP, JPY
SDR, USD, EUR,
GBP, JPY

Blend-Term loan

SDR, USD, EUR,
GBP, JPY

Non-concessional loans Scale-up Window (SUW)

USD, EUR, GBP,JPY

Catastrophe Deferred Draw
Down Option (CAT DDO) c

SDR, USD, EUR,
GBP, JPY

a.

b.

c.

38/6 years
40/10 years
30/5 years

Current Charges

Interest rates

None

Not applicable

75bps SDR equivalent
service charge
75bps SDR equivalent
service charge
75bps SDR equivalent
service charge

Not applicableNot applicable
1.25% SDR equivalentinterest rate

Up to 35 years
25 bps one-time frontmaximum; up to 20
IBRD Flexible Loan
end feeyears averageterms b25 bps commitment fee
maturity
Before Drawdown: Front end fee and renewal fee are set at 0.5% and0.25% respectively under SUW option, and at 0% under PBA or Undisbursedbalances option.

After Drawdown:- Under PBA or Undisbursed balances option - IDA concessional rates
would apply.
- Under SUW option - non-concessional rates would apply.
Prior to July 1, 2017, IDA offered Hard-Term loans to Blend Countries (excluding Small Island Economies). They had a single
currency option, and had terms equivalent to IBRD’s fixed spread loans, less 200 bps, a variable option was also available.
Hard-term loans are no longer offered.
There is an implicit floor of zero on the overall interest rate in IDA’s non-concessional loans. Effective April 1, 2021, loans with
fixed spread terms were suspended. See the implications of alternative reference rate changes in Section IX: Risk
Management.
The volume of committed and undisbursed CAT DDOs financed by IDA is limited to 0.5 percent of the country’s GDP or USD
250 million, whichever is lower. The CAT DDO may be renewed once, for a maximum of six years in total.

Charges on Loans and Grants
Service charges and interest income earned on IDA’s loans are reported as Interest revenue on loans in the Statementof Income. Commitment charges earned on loans and grants (if any) are reported as non-interest revenue in theStatement of Income.
Service Charge: A service charge is levied on the principal amount disbursed and outstanding on all Regular, Small
Economy, and Blend term loans, regardless of repayment terms, at 0.75% per annum.
Interest: Interest is charged on all loans subject to blend terms approved from IDA16, hard-term loans, and nonconcessional loans. Further, loans offered under non-concessional terms are available at variable interest rates on
IBRD terms. All other rates are fixed.
Commitment Charge: A commitment charge, which is payable on any undisbursed loan or grant amount, is set by
the Board at the beginning of each fiscal year. Commitment charges are set at a level to ensure that net loan revenue
covers administrative expenses over the medium term. From FY09 to FY21, the commitment charge on undisbursed
concessional loans had been set at nil, and for grants it had been set at nil from FY03 to FY21. For FY22, commitment
charges remain set at nil, the same level as FY21. The commitment charge on non-concessional loans is aligned to
IBRD terms, which include a commitment charge of 0.25%.

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

23

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Repayment Terms
Loans approved through June 30, 1987 have a final maturity of 50 years, including a grace period of 10 years. In
recent replenishments, differentiation in IDA’s lending terms has been introduced to recognize the variation ineconomic development of broad categories of IDA recipients.
Since 1987, the legal agreements of regular, blend and hard-term loans include an accelerated repayment clause to
double the principal repayments of the loan if the borrower’s GNI per capita exceeds a specific threshold and theborrower is eligible for IBRD financing. Implementation is subject to negotiation with the borrower and approval by
IDA’s Board after considering a borrower’s economic development. The borrower can further negotiate either to (a)shorten the loan’s maturity (principal option), (b) pay interest at a rate that would result in the same net present value(interest option), or a combination of the two options.
As of June 30, 2021, the acceleration clause was implemented for the qualifying loans of 18 borrowers that have
graduated from IDA since the introduction of the accelerated repayment clause. Of these 18 borrowers, 11 borrowers
selected the principal option, 6 borrowers selected the interest option, and one borrower selected a combination of thetwo options.
The accelerated repayment clauses in all of these legal agreements also allow a borrower to subsequently request
pausing of those accelerated terms if economic conditions in the borrower’s country have deteriorated, in which case,the terms of repayment can revert to the original terms of the financing agreements. Given the challenging economic
situation as a result of the COVID-19 outbreak, for ten graduate countries whose accelerated repayments wereapproved by the Board for implementation in IDA17 and IDA19, management approved a one-year pause of theaccelerated payment terms to conform to the schedule originally provided in their financing agreements which became
effective July 1, 2020. Subsequently, this was extended for an additional year for five graduate countries. As of June30, 2021, $1.7 billion of loans outstanding were under the original accelerated repayment terms.
As these repayment accelerations and decelerations are contemplated in the original terms of the instruments, they do
not constitute loan modifications.

Loans, Grants and Guarantee Activity
Commitments
FY21 net loan commitments were $23.9 billion, an increase of $1.6 billion (7%) over FY20 ($22.3 billion). There
were no guarantee commitments in FY21, a decrease of $25 million over FY20. (See Table 17). Also, see Section VI:
Other Development Activities and Programs.
FY21 Net commitments of grants were $12.1 billion, an increase of $4.1 billion (52%) over FY20 ($8.0 billion). (SeeTable 18).
Table 17: Net Commitments of Loans and Guarantees by Region
In millions of U.S. dollars
For the fiscal year ended June 30,

2021 % of total

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
South Asia
Total

$

$

7,105
7,900
1,003
966
622
20
6,291
23,907of which Guarantees$-* indicates percentage less than 0.5%.

24

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

30
33
4
4
3
*
26
100

2020 % of total
$

$

5,751
7,187
2,248
1,084
748
146
5,210
22,374

$

25

26
32
10
5
3
1
23
100

Variance
$
$

$

1,354
713
(1,245)
(118)
(126)
(126)
1,081
1,533

$

(25)

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Table 18: Net Commitments of Grants by Region
In millions of U.S. dollars
For the fiscal year ended June 30,
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
South Asia
Total

$

$

2021 % of total
6,984
58
3,055
25
112
1
349
3
147
1
638
5
836
7
12,121100$$

2020 % of total
3,830
48
2,327
29
252
3
413
5
230
3
57
1
882
11
7,991
100

$

$

Variance
3,154
728
(140)
(64)
(83)
581
(46)
4,130

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

25

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

Section VI: Other Development Activities and Programs
IDA has products, services, and programs, other than lending, that it offers to its borrowing member countries to help
them meet their development goals. These include guarantees, debt relief, trust fund administration, and externally
funded reimbursable advisory services.

Guarantees
IDA offers both project-based and policy-based guarantees. These guarantees are available for projects and programs
in member countries to help mobilize private financing for development purposes. IDA’s guarantees are partial innature as they are intended to cover risks only to the extent necessary to obtain the required private financing, taking
into account country, market and, if appropriate, project circumstances. IDA’s guarantees require a sovereign counterguarantee and indemnity, comparable to the requirement of a sovereign guarantee for IDA lending to sub-sovereignand non-sovereign borrowers. See Table 19 for the types of guarantees that IDA provides. These guarantees are
separate and distinct from those offered under the Private Sector Window. The Corporate Risk Guarantee Committee
informs the use of the guarantee instrument.
Table 19: Types of Guarantees
Project-based
guarantees

Policy-based
guarantees

Project-based guarantees are provided to mobilize private financing for a project and/or mitigate payment
and/or performance related risks of a project. There are two types:
1.

Loan guarantees: these cover loan-related debt service defaults caused by the government’s failure
to meet specific payment and/or performance obligations arising from contract, law, or regulation. Loanguarantees include coverage for debt service defaults on: (i) commercial debt, normally for a private
sector project; and, (ii) a specific portion of commercial debt irrespective of the cause of such default,
normally for a public-sector project.

2.

Payment guarantees: These cover payment default on non-loan related government payment
obligations to private entities and foreign public entities arising from contract, law, or regulation.

Policy-based guarantees are provided to mobilize private financing for sovereigns or sub-sovereigns. They
cover debt service default, irrespective of the cause of such default, on a specific portion of commercial debt
owed by government and associated with the supported government’s program of policy and institutional
actions.

Table 20: Pricing for IDA’s Project-Based and Policy-Based Guarantees, effective July 1, 2021
Guarantees on Concessional Terms
Guarantees on Non-Concessional Terms
Private Projects
Public Projects
Private Projects
Public Projects
Front-end fee
N.A.
N.A.
25 bps
25 bps
Initiation fee a
15 bpsN.A.
15 bpsN.A.
Processing fee b
Up to 50 bps
N.A.
Up to 50 bps
N.A.
Standby fee
0 bps
0 bps
25 bps
25 bpsGuarantee fee
75 bps75 bps50-100 bps c
50-100 bps ca. The Initiation fee is 15 basis points of the guaranteed amount or $100,000, whichever is greater.
b. The processing fee is determined on a case-by-case basis.
c. Based on the weighted average maturity of the guarantee.
Charges

Guarantee Exposure
IDA’s guarantee exposure (measured by discounting each guaranteed amount from its next call date), was $1,998
million as of June 30, 2021 ($2,019 million—June 30, 2020). The maximum potential undiscounted future paymentsthat IDA could be required to make under these guarantees is $2,029 million as of June 30, 2021 ($2,054 million—
June 30, 2020). In addition, IDA had $484 million of exposure under PSW guarantees as of June 30, 2021. See Section
III: IDA’s Financial Resources. For additional information, see Notes to the Financial Statements for the year ended
June 30, 2021, Notes D – Loans and Other Exposures and Note G – Transactions with Affiliated Organizations.

Other Financial Products and Services
IDA facilitates access to risk management solutions to mitigate the financial effects of natural disasters for borrowing
members. Financial solutions can include disaster risk financing through catastrophe swaps, insurance and reinsurance
contracts, and regional pooling facilities.
In order to promote countries’ resilience to disasters and expand the range of IDA’s crisis instruments, in IDA18,
members endorsed the introduction of the Catastrophe Deferred Draw-Down Option (CAT-DDO). The CAT-DDO is

26

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

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

a contingent credit line that provides immediate liquidity to countries in the aftermath of a catastrophe and serves as
early financing while funds from other sources such as bilateral aid or reconstruction loans are being mobilized. CATDDOs are intended to enhance IDA countries’ capacity to plan for and manage crises. As of June 30, 2021, the amountof CAT DDOs disbursed and outstanding was $388 million (compared to $330 million as of June 30, 2020), and theundisbursed amount of effective CAT DDOs was $56 million, compared to $90 million a year earlier.

Grant Making Facilities
Grant-Making Facilities (GMFs) are complementary to IDA’s work. In FY21, IDA recorded $20 million under thisprogram in accordance with the cost sharing agreement with IBRD (FY20 - $21 million). These amounts are reflectedin contributions to special programs in IDA’s Statement of Income.

Debt Relief
The Heavily Indebted Poor Countries Debt Initiative (HIPC Initiative) and the Multilateral Debt Relief Initiative(MDRI) were implemented in 1996 and 2006 respectively as a part of a global effort focused on heavily indebted poor
countries with strong policy performance. The initiatives aim to reduce the external debt of eligible countries as partof a broader poverty reduction strategy, whilst safeguarding the long-term financial capacity of IDA and otherparticipating multilateral institutions; and encouraging the best use of additional member resources for development,by allocating these resources to low-income countries on the basis of policy performance.
In order to receive irrevocable debt relief, eligible countries are required to maintain macroeconomic stability, carryout key structural and social reforms, and implement a Poverty Reduction Strategy, in addition to being in goodstanding with respect to all eligible debt repayments. To ensure IDA’s financial capacity was not eroded, members
agreed to compensate IDA with additional contributions to offset the impact of the forgone reflows, resulting fromthe provision of debt relief.
The accumulated provision for debt relief was recorded at the inception of the initiative and is based on bothquantitative and qualitative analyses of various factors, including estimates of the Decision and the Completion Point
dates. These factors are periodically reviewed, and the adequacy of the accumulated provision is reassessed andadjusted to reflect the impact of any changes.
During FY21, HIPC debt relief was provided on $9 million of loans ($10 million in FY20). There was no HIPC debt
relief on service charges in FY21 or FY20. On a cumulative basis, debt relief has been provided on $2.1 billion ofloans and $335 million of service charges under HIPC as of June 30, 2021.
On June 29, 2021, Sudan reached Decision Point under the HIPC debt relief initiative and became eligible for $114
million in debt relief. As a result, IDA recorded a $114 million provision for losses under HIPC on Sudan’s outstandingloans as of June 30, 2021.
During FY21 and FY20, there was no cancellation of eligible loans under MDRI. On a cumulative basis, debt relief
has been provided on $40.2 billion of loans under the MDRI as of June 30, 2021. The provision for the debt relief wasrecorded at the beginning of the MDRI Initiative.

Externally-Funded Activities
Mobilization of external funds from third-party partners includes Trust Funds. Additional external funds include
reimbursable funds and revenues from fee-based services to member countries, which are related to Reimbursable
Advisory Services (RAS), and EFO.

Trust Funds
Trust Funds are a part of the WBG’s development activities, providing resources and added flexibility in providing
development solutions that serve member recipients and donors alike. The partnerships funded by trust funds often
serve as a platform from which IDA and its members can draw on the WBG’s diverse technical and financial resourcesto achieve development goals that cannot be addressed effectively by any single member, given their complexity,
scale, and scope.
Management is implementing measures to better integrate planning, support sustainability and enhance alignment ofExternal Funds with mission priorities through greater use of umbrella trust fund programs, increased cost recovery,
and new budgetary planning measures to manage External Funds usage.
IDA’s roles and responsibilities in managing trust funds depend on the type of fund, outlined as follows:

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

27

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

IDA-Executed Trust Funds (BETFs): IDA, alone or jointly with one or more of its affiliated organizations, manages
the funds and implements the activities financed. These trust funds support IDA’s work program. IDA, as an executing
agency, disbursed $553 million in FY21 ($586 million in FY20) of trust fund program funds.
Recipient-Executed Trust Funds (RETFs): Funds are provided to a third party, normally in the form of project grant
financing, and are supervised by IDA.
Financial Intermediary Funds (FIFs): IDA, as a trustee, administrator, or treasury manager, offers specificadministrative or financial services with a limited operational role. Arrangements include the administration of debt
service trust funds, fiscal agency funds and other more specialized limited fund management roles.
IDA earned revenue from Trust Fund administration activity of $38 million in FY21 ($41 million in FY20). For
additional information, see Notes to the Financial Statements for the year ended June 30, 2021, Note H-Trust Funds
Administration.
As noted in the discussion of Trust Fund activities above, IDA, alone or jointly with one or more of its affiliatedorganizations, administers on donors’ behalf funds restricted for specific uses. Such administration is governed byagreements with donors, who include members, their agencies, and other entities. These funds are held in trust andare not included on IDA’s Balance Sheet, except for $749 million of undisbursed third-party contributions made to
IDA-executed trust funds, which are recognized on the Balance Sheet. These amounts are included in Other assets
and the corresponding liabilities are included in Accounts payable and miscellaneous liabilities on the Balance Sheet.
The cash and investment assets held in trust by IDA as administrator and trustee as of June 30, 2021 and June 30,
2020 are summarized in Table 21.
Table 21: Cash and Investment Assets Held in Trust by IDA
In millions of U.S. dollars
Total Fiduciary Assets
As of June 30,
IDA-executed
Jointly executed with affiliated organization
Recipient-executed
Financial intermediary funds
Execution not yet assigned a
Total

2021
$

$

2020
44
1,025
2,365
286
5,365
9,085

$

$

49
944
1,964
281
4,643
7,881

a. These represent assets held in trust for which the determination as to the type of execution is yet to be finalized.

Reimbursable Advisory Services (RAS)
While most of IDA’s advisory and analytical work is financed by its own budget or donor contributions (e.g., TrustFunds), clients may also pay for services. IDA offers technical assistance and other advisory services to its member
countries, in connection with, and independent of, lending operations. Available services include, for example,
assigning qualified professionals to survey developmental opportunities in member countries; analyzing member
countries fiscal, economic, and developmental environments; helping members devise coordinated development
programs; and improving their asset and liability management techniques. In FY21, income relating to reimbursableadvisory services was $46 million (FY20 - $65 million).

Externally Financed Outputs (EFOs)
IDA offers donors the ability to contribute to specific projects and programs. EFO contributions are recorded as
restricted revenue when received because they are for contractually specified purposes. Restrictions are released once
the funds are used for the purposes specified by donors. In FY21, IDA had $21 million of revenue, compared with
$23 million in FY20.

28

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

Management’s Discussion and Analysis

Section VII: Investment Activities

Section VII: Investment Activities
As of June 30, 2021, IDA’s net investment portfolio totaled $37.9 billion (Figure 7). See the Notes to the Financial
Statements for the year ended June 30, 2021, Note C – Investments.
Figure 7: Net Investment Portfolio
In billions of U.S. dollars
Trading Portfolio

Non-trading Portfolio

40

0.6

0.5

0.7
30
20
31.7

35.0

37.4

Jun 19Jun 20Jun 21100Liquid Asset Portfolio
The primary objective of IDA’s liquid asset portfolio strategy continues to be preservation of capital within
institutional constraints. Consistent with this primary objective, IDA invests in high quality instruments. IDA aims toearn reasonable investment returns, while ensuring timely availability of funds for future cash flow requirements,
including disbursements for loans, grants, debt service, and administrative expenses.
For IDA19, as part of IDA’s evolving ALM needs, to ensure that the overall liquidity level is maintained prudently
and to address the new business circumstances of COVID-19 crisis response, the following refinements to theinvestment strategy were implemented from July 1, 2020. As a result, the average duration of the liquid asset portfolio
shortened to four months in FY21 compared to fifteen months in FY20.
•

Aligned the stable sub-portfolio investment benchmark with the funding benchmark, as the stable sub-portfolio
is expected to be increasingly funded by debt during IDA19 and beyond.

•Merged Tranche 1 assets into stable or discretionary sub-portfolio, as applicable.

Table 22: Liquid Asset Portfolio Composition
In millions of U.S. dollars
As of June 30,
Liquid Asset Portfolio
Operational
StableDiscretionary
Tranche 1
Total

2021
$

$

12,836
24,59837,434

2020
$

$

9,276
15,62487
9,959
34,946

As of June 30, 2021, $28.0 billion (approximately 74% of total volume) was due to mature within six months, ofwhich $11.6 billion was expected to mature within one month.
IDA’s return on its liquid asset portfolio for FY21 (excluding unrealized mark-to-market gains / losses on PEBP
assets) was 0.25%, compared to 1.73% in FY20, primarily due to unrealized mark-to-market losses on investments –trading in FY21 compared to unrealized mark-to-market gains in FY20, reflecting the increase in yield curves during
the year.
Table 23 provides a breakdown of the average balances and returns of IDA’s liquid asset portfolio. For details on
returns of the total portfolio, refer to Section IV: Financial Results.

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

29

Management’s Discussion and Analysis

Section VII: Investment Activities

Table 23: Average Balances and Returns by Sub-Portfolio
In millions of U.S. dollars, except rates in percentages
FY21
Sub Portfolios
Operational
StableDiscretionary *Tranche 1
Total

Average Balance
$

$

9,557
25,7088735,309FY20ReturnAverage Balance

0.23%
0.23%
0.26%
0.00%

$

0.25%

$

8,600
15,420129
9,814
33,963Return
0.46%
1.87%
1.72%
2.74%
1.73%

* Discretionary sub-portfolio was terminated in December 2020.

IDA’s liquid assets are held mainly in the following types of highly rated, fixed-income instruments. See Table 29
for eligibility criteria for IDA’s investments.
•

Government and Agency Obligations.

•Time deposits, and other unconditional obligations of banks and financial institutions.

•

Asset-backed securities (including mortgage-backed securities).

•

Currency and interest rate derivatives (including currency forward contracts).

• Exchange-traded options and futures.
IDA’s prudential minimum liquidity policy ensures that it holds sufficient liquidity. The prudential minimum liquidity
level is set at 80% of 24 months of projected net outflows. For FY21, the prudential minimum was $21.2 billion. The
prudential minimum for FY22 has been set at $19.3 billion. See Section IX: Risk Management for details on how IDA
manages liquidity risk.

Investments - Non-Trading Portfolio
During FY15, with the proceeds of a concessional loan from a member, IDA purchased a debt security issued by the
IFC. IDA elected to measure the security at fair value, so that the measurement method could be consistently applied
to all its investments. The changes in fair value for this security are reflected in the Statement of Income. As of June30, 2021, the investment non-trading portfolio had a fair value of $487 million ($625 million in FY20). See Notes to
the Financial Statements for the year ended June 30, 2021, Note C – Investments.

30

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

Management’s Discussion and Analysis

Section VIII: Borrowing Activities

Section VIII: Borrowing Activities
Concessional Partner Loans
Concessional partner loans (CPLs) continue as a source of funding, whereby the borrowing terms of the concessionalloans from members aim to follow the concessional features of IDA’s loans.
The maturities of the CPLs are either 25 or 40 years to match the terms of IDA’s loans, with a grace period of 5 years
for a 25-year loan and 10 years for a 40-year loan. The loans have an all in SDR equivalent coupon of up to one
percent.
Voting rights are allocated to members who provide concessional loans following the drawdowns by IDA, and are
based on the cash paid, computed as the derived grant element of the loan. The grant element, which is paid in cash
and recorded as equity, is a function of the terms of the loan and the discount rate agreed upon during the replenishment
discussions – 2.25% SDR equivalent for 25-year maturity and 2.57% for 40-year maturity in IDA19 (IDA18 - 2.35%
SDR equivalent for 25-year maturity and 2.70% for 40-year maturity).
The increase of $0.1 billion in concessional partner loans outstanding was primarily due to translation adjustment
losses. Interest expense associated with these loans was $149 million in FY21 (FY20 - $138 million). See Table 24.

Market Debt
IDA has been issuing bonds in the international capital markets since 2018. The market borrowings increased by $8.4
billion compared to June 30, 2020 primarily due to net issuance of medium and long-term debt instruments during theyear. See Table 24.
Table 24: Borrowings
In millions of U.S. dollars, except rates in percentages

Market debt
Concessional partner loans
Total

$
$
$

Outstanding as of June 30,
2021
2020
20,555
12,131
7,759
7,635
28,314$
19,766

Interest expense a
FY21
FY20
95
101
149
138
$ 244
$
239

Weighted average rate
FY21
FY20
0.65%
0.66%
1.90%
1.88%
0.99%
1.14%

a. Excludes gains related to borrowings swaps net of repurchase agreement expenses - $57 million in FY21 ($2 million of net
expenses in FY20).

IDA uses currency and interest rate derivatives in connection with its borrowings for asset and liability management
purposes. For more details, see Section IX: Risk Management.
Figure 8: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2021

Borrowings including Derivatives

Borrowings excluding Derivatives
Others
2%

JPY
14%
EUR
18%

GBP
9%

JPY
14%

USD
59%

GBP
17%

USD
49%
EUR
18%

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

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Management’s Discussion and Analysis

Section VIII: Borrowing Activities

Figure 9: Medium- and Long-Term Borrowings Issued by Currency during the year, Excluding Derivatives

June 30, 2021

June 30, 2020

Others
8%

EUR
22%

USD
64%

EUR
25%

USD
18%

GBP
14%

JPY
14%

GBP
35%

Other Short-Term Borrowings
Under its Investment Guidelines, IDA is allowed to enter into transactions involving securities sold under repurchaseagreements and securities lent under securities lending agreements. These transactions are accounted for as short-termborrowings. The agreements are secured predominantly by high quality collateral, including government issued debt,
and are used both to enhance returns and for liquidity management purposes.
As of June 30, 2021, there were no securities sold under repurchase agreements or any securities lent under securities
lending agreements ($107 million – June 30, 2020). Table 25 provides details on these short-term borrowing activities.
Table 25: Other Short-Term Borrowings
In millions of U.S. dollars, except rates in percentages
As of June 30,
Securities sold under repurchase agreements and securities
lent under securities lending agreements,
Balance at year-end
Average monthly balance during the year
Maximum month-end balance
Weighted-average rate at end of fiscal year
Weighted-average rate during the fiscal year

2021

$
$
$

9
107
0.16%

2020

$
$
$

107
430
619
0.16%
1.49%

2019

$
$
$

698
1,417
2,465
2.71%
2.20%

Contractual Obligations
In conducting its business, IDA takes on contractual obligations that may require future payments mainly associatedwith IDA’s borrowings. See Notes to the Financial Statements for the year ended June 30, 2021, Note E – Borrowings– Table E5. These contractual obligations exclude the following obligations reflected on IDA’s balance sheet:
undisbursed loans, amounts payable for currency and interest rate swaps, amounts payable for investment securities
purchased, guarantees, and cash received under agency arrangements.

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Management’s Discussion and Analysis

Section IX: Risk Management

Section IX: 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 review 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:•

Business units are responsible for directly managing risks in their respective functional areas,•

The Vice President and WBG Chief Risk Officer (CRO) provides direction, challenge, and oversight overfinancial and operational risk activities, and• 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.
Figure 10: Financial and Operational Risk Management Structure

3 LineCRO

2 LineRisk Oversight

Risk Coverage

Risk ProcessndFinancial Risk

Risk OwnersrdInternal Audit

Operational Risk

st

1 LineBusiness Units

Identify

AssessRespond

Monitor andReportRisk Oversight and Coverage
Financial and Operational Risk Management
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.

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Management’s Discussion and Analysis

Section IX: Risk Management

The following three departments report directly to the CRO:
Credit Risk Department

Market and Counterparty
Risk Department

Operational Risk Department•

Identifies, measures, monitors, and manages country credit risk faced by IDA.

•

Assesses loan portfolio risk and capital requirements, determines theadequacy of provisions for losses on loans and other exposures, and monitors
borrowers that are vulnerable to crises in the near term. The Department
assesses the consistency of country lending programs as determined in IDA’s
PBA allocation framework with overall capital adequacy.

•

Whenever a new financial product is being considered for introduction, thisdepartment reviews any implications for country credit risk.

•

Responsible for market, liquidity, and counterparty credit risk oversight,
assessment, and reporting. It does these in coordination with IDA’s financial
managers who are responsible for the day-to-day execution of trades for theliquid asset and derivative portfolios within applicable policy and guideline
limits.

•Responsible for ensuring effective oversight, which includes: i) maintaining
sound credit assessments, ii) addressing transaction and product risk issues,iii) providing an independent review function, iv) monitoring market andcounterparty risk in the investment, borrowing and client operation portfolios,
and v) implementing the model risk governance framework. It also provides
reports to the Audit Committee and the Board on the extent and nature of risks,risk management, and oversight.

•

Provides direction and oversight for operational risk activities by business
function.

•

Key operational risk management responsibilities include: (i) administering
the Operational Risk Committee (ORC) for IDA, (ii) implementing theoperational risk management framework which is aligned with Baselprinciples and providing direction to business unit partners to ensure
consistent application, (iii) assisting and guiding business unit partners in
identifying and prioritizing significant operational risks and enabling
monitoring and reporting of risks through suitable metrics (or risk indicators),(iv) helping identify emerging risks and trends through monitoring of internaland external risk events, (v) supporting risk response and mitigating activities,
and preparing a corporate Operational Risk Report for review and discussion
by the ORC.

•

The department is also responsible for business continuity management, andenterprise risk management functions.

Risk Committees
Figure 11: Management Risk Committee Structure for Financial and Operational Risks

Financial Risk

Operational Risk

FRC

ALCO

ERC

Finance and Risk Committee

Asset and Liability
Management Committee

Enterprise Risk Committee

Chair: MDCFO

Chair: MDCAO

Chair: MDCFO

34

NBC

ORC

New Business Committee

Operational Risk Committee

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Management’s Discussion and Analysis

Section IX: Risk Management

Financial Risk Committees:
The Finance and Risk Committee (FRC), a Vice President level committee, provides a high-level governancestructure for decisions that may have financial risks. The FRC is chaired by the Managing Director and WBG Chief
Financial Officer (MDCFO) and approves, clears, or discusses: (a) risk policy and procedure documents related tofinancial integrity, income sustainability and balance sheet strength, and (b) issues and new business initiatives with
policy implications related to IDA’s risks in the areas of finance, which include country credit, market, counterparty,
liquidity, model risks, and operational risks related to the finance business functions. The FRC helps to integrate
individual components of finance and risk management activities by building on mechanisms and processes alreadyin place and provides a forum for discussing and communicating significant risk related issues. The FRC meetsregularly to discuss the financial performance, new products and services, and risk management of IDA.
The New Business Committee (NBC) is a standing subcommittee of the FRC. The NBC provides advice, guidance,and recommendations to the FRC, by performing due diligence over new financial products or services to ensure thatmanagement has a full understanding of the rationale, costs, risks and rewards of the product or service being
considered.
Asset Liability Management Committee (ALCO), a Vice President level committee chaired by the MDCFO
provides a high-level forum to ensure prudent balance sheet management of IDA by: a) monitoring its financial
positions and ALM activities for compliance with its respective guidelines, policies and procedures, including
borrowing and investment activities; b) identifying and providing recommendations on emerging ALM issues for
IDA, as well as those related to capital, balance-sheet planning, and financial sustainability; and c) serving as
reviewing and recommending body for ongoing decisions as part of implementing the ALM policies and proceduresof IDA, including those that impact lending rates and net income.

Operational Risk Committees:
The Enterprise Risk Committee (ERC) is a corporate committee that has oversight over operational and nonfinancial risks across IDA. Chaired by IDA’s Managing Director and Chief Administrative Officer (MDCAO), it
consists of Vice President level committee members to review and discuss enterprise risk matters. Specifically, theCommittee has a governance role over risk matters relating to corporate security, business continuity and IT security.
Operational Risk Committee (ORC) is the main governance committee for operational risk and provides a mechanism
for an integrated review and response across IDA units on operational risks associated with people, processes, andsystems including business continuity, and recognizing that business units remain responsible for managing
operational risks. The Committee’s key responsibilities include monitoring significant operational risk matters andevents on a quarterly basis to ensure that appropriate risk-response measures are taken and reviewing and concludingon IDA’s overall operational risk profile. The ORC is chaired by the CRO and escalates significant risks/decisions to
the FRC and ERC.

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 (Table 26). The primary financial risk to IDA is the country credit risk inherent in
its loan and guarantee portfolio. IDA is also exposed to risks in its liquid asset and derivative portfolios, where themajor risks are interest 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 operationalrisks across business units.

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Section IX: Risk Management

Table 26: Summary of IDA's Specific Risk Categories
Types of Financial Risk
Credit Risk

How the risk is managed

Country Credit Risk

IDA’s credit-risk-bearing capacity and individual country exposure limits.

Counterparty Credit Risk

Counterparty credit limits and collateral.

Market Risk
Interest Rate Risk

Interest rate derivatives to match the sensitivity of assets and liabilities.

Exchange Rate Risk

Currency derivatives to match the currency composition of assets and liabilities.

Liquidity Risk

Minimum liquidity target levels.

Operational Risk

Risk assessment and monitoring of key risk indicators and events.

Coronavirus Disease 2019 Outbreak
The 2019 outbreak of COVID-19 resulted in governments worldwide enacting emergency measures to combat the
spread of the virus. These measures, which include the implementation of travel bans, quarantine periods and social
distancing, have caused material disruption to businesses globally. Governments and central banks reacted withsignificant monetary and fiscal interventions designed to stabilize economic conditions.
In light of COVID-19, IDA faces additional credit, market, and operational risks for its activities. IDA continues tomonitor the developments and to manage the risks associated with all its portfolios.
As of June 30, 2021, IDA had sufficient resources to meet its liquidity requirements and continues to have access tothe capital markets, despite market volatility. IDA continues to maintain a robust liquidity position and flexibility toaccess the necessary liquidity resources. Management remains vigilant in assessing funding needs in the medium andlonger-term to manage the effect of possible severe market movements.
IDA’s capital remains adequate, as indicated by the DSC ratio, despite increased market volatility since the COVID19 outbreak (Table 27).
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 reflect 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.
Home-based work continues in many World Bank offices throughout the world, in line with IDA’s BusinessContinuity Procedures. In addition, IDA has adopted other prudent measures to ensure the health and safety of its
employees, including imposing travel restrictions and holding public events in virtual format.
While the duration of the COVID-19 pandemic and its effects remain difficult to predict at this time, IDA has
continued to respond to demand and operate its core business functions effectively by utilizing technology for remote
work, and by leveraging its extensive local presence in client countries around the world.
Management has an office reopening framework that prioritizes staff health and safety while taking into consideration
risks including business continuity. The office reopening framework provides for the incremental return to office andon-site business activities in stages or “tiers,” allowing for enough time in between tiers to assess risk and preparedness
indicators. IDA continues to monitor risks associated with COVID-19 and maintains plans to respond as the situation
evolves. While the World Bank offices around the world are in differing operating statuses based on local conditions,
IDA has started the process for a gradual reopening of offices for certain locations, including the headquarter officein Washington D.C.

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 the
Deployable Strategic Capital (DSC), a non-GAAP measure, which is the capital available to support futurecommitments, over and above the current portfolio. IDA is required, by the Board, to keep the DSC at levels greaterthan or equal to zero percent. The DSC is calculated as the amount by which Total Resources Available (TRA) exceed

36

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Management’s Discussion and Analysis

Section IX: Risk Management

Total Resources Required (TRR), plus a Conservation Buffer (CB). The TRA consists of IDA’s existing equity plus
accumulated provision for loan losses. 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. The CB is an extra buffer in theamount of 10 percent of TRA. As part of the DSC framework refinement, during FY21, adjustments were made to the
TRR beginning in June 2021. TRR now include additional capital requirements to account for development grants
which are approved but not yet expensed so that the full effect of grant commitments is included. This adjustment
addresses the delay in expense recognition for grants made as a result of the implementation of the accounting standard
update. Under the expense recognition requirements of the accounting standard update, grants are no longer expensed
at commitment (approval) but generally at disbursement. TRR now also includes a reduction in capital requirements
to account for the capital adequacy protection provided by long-term fixed rate borrowings against changes in market
interest rates. Following a change in market interest rates, the change in the present value of IDA’s long-term fixed
rate borrowings offsets the changes in the present value of loans, partially reducing the sensitivity of IDA’s capital
adequacy to interest rate movements.
As of June 30, 2021, the DSC was 30.4%, lower by 5.4 percentage points compared with June 30, 2020 (35.8%). The
decrease in ratio is primarily driven by the DSC framework refinement. IDA’s capital continues to be adequate tosupport its operations. See Table 27.
Table 27: Deployable Strategic Capital Ratio
In billions of U.S. dollars except ratios in percentages
As of June 30,
Total Resources Available (TRA)
Total Resources Required (TRR)
Conservation Buffer (CB)
Deployable Strategic Capital (DSC = TRA-TRR-CB)
Deployable Strategic Capital as a percentage of Total Resources Available

$

$

2021
185.7
110.6
18.6
56.5
30.4%

$

$

2020
172.6
93.5
17.3
61.8
35.8%

Asset/Liability 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.
Changes in the values of these forward-starting swaps partially offset changes in the present value of loans, thereby
reducing the sensitivity of IDA’s capital adequacy to long-term interest rate movements and providing greater stability
in IDA’s long-term financing to clients. These swaps are included under the ALM portfolio. For more details, seeNotes to the Financial Statements for the year ended June 30, 2021, Note F - Derivative Instruments.

Asset Coverage Principles
In addition to the DSC framework, IDA has policies in place to ensure alignment of its lending and borrowing
activities. Specifically, the Board approved the following asset coverage principles:•Management will monitor the level of assets available to satisfy all of IDA’s borrowings and shall adjust future
lending and grant commitments should the level of asset coverage fall below the level expected for a triple-A
rated entity.

•

Management will monitor IDA’s liquidity to ensure its ability to satisfy its borrowing and commitment
obligations even under stressed conditions taking into account the level expected for a triple-A rated entity
without callable capital.

•

If IDA’s access to the capital markets or alternative sources of cash funding is impaired, then no additional loan
or grant commitments will be approved until access to cash funding has resumed or all market debt is repaid.

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

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Management’s Discussion and Analysis

Section IX: Risk Management

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 PBA mechanism and allocation frameworkagreed at each replenishment, complemented by additional considerations required when accessing debt markets toensure adherence to risk management (capital adequacy) requirements.
While the PBA framework was not originally intended as a credit quality metric, it incorporates factors related tocountry credit risk. The PBA determines the volume of concessional IDA resources allocated to each country, basedon performance in implementing policies that promote economic growth and poverty reduction, as assessed under theCountry Policy and Institutional Assessment (CPIA). The CPIA includes economic management criteria, such as fiscal
policy and debt policy and management.
In addition to these considerations in the PBA, IDA 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 politicalcircumstances, and also considers environmental, social and governance (ESG) risk factors. Based on these risk
ratings, to manage overall portfolio risk, the allocation outcomes of the PBA and other mechanisms are reviewed toensure that they are compatible with the Deployable Strategic Capital Framework and Single Borrower Limit.
Single Borrower Limit
Portfolio concentration risk, which arises when a small group of borrowing countries account for a large share of loans
outstanding, is a key consideration for IDA. Concentration risk is managed through the SBL, which caps exposure to
any single borrowing country at 25 percent of equity, in line with the Basel-based maximum exposure limit.
For FY22, the SBL has been set at $45 billion (25 percent of $180.9 billion of equity as of June 30, 2021), marginallyhigher than FY21. Currently, the maximum 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 aconstraining factor.
As of June 30, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure (Figure12). IDA’s largest exposure to a single borrowing country, India, was $22 billion as of June 30, 2021. Monitoringthese exposures relative to the SBL, requires consideration of the repayment profiles of existing loans, as well as
disbursement profiles and projected new loans and guarantees.
Figure 12: Country Exposures as of June 30, 2021
In billions of U.S. dollars

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

22.0
18.1
16.4

14.1
11.7
11.2
10.2
8.3
5.6
4.4
0

2

4

6

8

10

12

14

16

18

20

22

Debt Relief
IDA has participated in two comprehensive debt relief initiatives, HIPC and MDRI, adopted by the global
development community to reduce the debt burdens of developing countries. In each case, IDA agreed to provide debt
relief in return for future compensation from members for forgone reflows, ensuring that IDA’s financial capacity
would not be reduced. For a borrower to be eligible for debt relief on its loans with IDA, it is required to maintainmacroeconomic stability, carry out key structural and social reforms, and maintain all loans in accrual status.

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Section IX: Risk Management

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 gradual approach (Table 28). 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 June 30, 2021, none of the IDA borrowing countries in the accrual portfolio had overdue payments
beyond 45 days.
Table 28: Treatment of Overdue Payments

Overdue by 30 days

Where the borrower is the member country, no new loans or grants to the member country, or to any otherborrower in the country, will be presented to the Board for approval nor will any previously approved loans or
grants be signed, until payments for all amounts 30 days overdue or longer have been received. Where theborrower is not the member country, no new loans or grants to that borrower will be signed or approved.

Overdue by 45 days

In addition to the provisions cited above for payments overdue by 30 days, to avoid proceeding further on the
notification process leading to suspension of disbursements, the country as borrower or guarantor and all
borrowers in the country must pay not only all payments overdue by 30 days or more, but also all payments
due regardless of the number of days since they have fallen due. Where the borrower is not the member
country, no new loans, or grants to, or guaranteed by, the member country, will be signed or approved.

Overdue by 60 days

In addition to the suspension of approval for new loans or grants and signing of previously approved loans or
grants, disbursements on all grants or loans to or guaranteed by the member country are suspended until all
overdue amounts are paid. This policy applies even when the borrower is not the member country. Under
exceptional circumstances, disbursements can be made to a member country upon the Board’s approval.

Overdue by morethan six months

All loans made to or guaranteed by a member of IDA are placed in nonaccrual status, unless IDA determinesthat the overdue amount will be collected in the immediate future. Unpaid service charges and other charges
not yet paid on loans outstanding are deducted from the income for the current period. To the extent thatthese payments are received, they are included in income. At the time of arrears clearance, if collectability
risk is considered to be particularly high, the member’s exposures may not automatically emerge from
nonaccrual status. In such instances, a decision is made on the restoration of accrual status on a case-bycase basis and in certain cases, this decision may be deferred until after a suitable period of payment
performance has passed.

As an exception to the practices set forth in Table 28, IDA has provided financing to countries with overdue payments,
in very specific situations:•

IDA has provided grants from its Crisis Response Window to third party agencies for use in Somalia andZimbabwe in response to major crises, during FY17 and FY19 respectively, and;•IDA has financed a few regional projects, for the benefit of countries with overdue payments to IDA, through its
Regional Program Window.

In the past, on an exceptional basis, IDA financed through concessional loans and grants the following regional
projects, where participation of a country with overdue payments was crucial to the success of the regional project.
• In April 2017, the Kenya Displacement project ($103 million) through Intergovernmental Authority on
Development (IGAD) that included financing for Somalia.
• In December 2014, Kariba Dam Rehabilitation Project ($75 million) that included benefits for Zimbabwe.
• In September 2003, West Africa HIV/AIDS project for the Abidjan-Lagos Transport Corridor ($17 million) that
included benefits for Togo, a country with overdue payments at that time.
In the above cases, financing was not made directly to the country with overdue payments. Implementation
arrangements were such that a regional bank or another participating country took on the obligation of the regional
project on behalf of the country with overdue payments to IDA.
In addition, IDA may engage with countries with overdue payments when a very narrow and well-defined set ofcriteria are met, including a clear path to arrears clearance. For more details on exceptional financing, see Section III:
IDA’s Financial Resources.
Arrears Clearance
On March 25, 2021, Sudan paid all of the overdue principal and charges due to IDA of $849 million and $244 million,
respectively. The outstanding loans remaining to Sudan were restored to accrual status on that date, in accordance

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

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Management’s Discussion and Analysis

Section IX: Risk Managementwith IDA’s policy. For more details, see Notes to the Financial Statements for the year ended June 30, 2021, Note D– Loans and Other Exposures.
Accumulated Provision for Losses on Loans and other Exposures
Beginning July 1, 2020, IDA records a provision to reflect the expected losses inherent in its loan and other exposures.
Prior to July 1, 2020, the provision was determined based on an incurred loss model. On July 1, 2020, IDA recorded
a transition adjustment of $802 million, increasing the beginning balance of accumulated deficit. This adjustment
represented the difference between the previous method and CECL. For more details, see Notes to the Financial
Statements for the year ended June 30, 2021, Note A – Summary of Significant Accounting and Related Policies.
A key determinant in the provision for losses on loans and other exposures is IDA’s borrowing country credit risk
ratings. These ratings are IDA’s own assessment of borrowers’ ability and willingness to repay IDA on time and in
full.
As of June 30, 2021, IDA had $181.5 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 rateof 2.0% of the underlying exposures ($4.5 billion as of June 30, 2020, 2.7% of the underlying exposures). For asummary of countries with loans or guarantees in nonaccrual status as of June 30, 2021, see Notes to the Financial
Statements for the year ended June 30, 2021, Note D–Loans and Other Exposures.
Commercial Counterparty Credit Risk
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.
IDA mitigates the counterparty credit risk from its investment and derivative holdings through the credit approval
process, the use of collateral agreements and risk limits, and other monitoring procedures. The credit approval process
involves evaluating counterparty and product specific creditworthiness, assigning internal credit ratings and limits,and determining the risk profile of specific transactions. Credit limits are set and monitored throughout the year.
Counterparty exposure is updated daily, taking into account current market values of assets held, estimates of potential
future movements of exposure for derivative instruments, and related counterparty collateral agreements. Collateral
posting requirements are based on thresholds driven by public credit ratings. Collateral held includes cash and highly
rated liquid investment securities. Commercial credit risk management includes ESG related assessments in theapproval and monitoring of higher exposure counterparts for the liquid asset portfolio and for derivative counterparts.
In addition, third-party ESG scores of the liquid asset portfolio and derivative exposures are monitored.
IDA’s liquid asset portfolio consists mostly of sovereign government bonds, debt instruments issued by sovereign
government agencies, and time deposits with banks. More than half of these investments are with issuers andcounterparties rated triple-A or double-A (Table 30).
Derivative Instruments
In the normal course of its business, IDA enters into various derivative instruments to manage foreign exchange andinterest rate risks. These instruments are also used to help borrowers to manage their financial risks. Derivativetransactions are conducted with other financial institutions and, by their nature, entail commercial counterparty credit
risk.
While the volume of derivative activity can be measured by the contracted notional value of derivatives, notional
value is not an accurate measure of credit or market risk. IDA uses the estimated replacement cost of the derivative
instruments, or potential future exposure (PFE), to measure credit risk with counterparties.
Under IDA’s mark-to-market collateral arrangements, IDA receives collateral when mark-to-market exposure isgreater than the ratings-based collateral threshold. As of June 30, 2021, IDA did not receive any cash collateral for its
derivative transactions (June 30, 2020 – $2 million).
IDA is not required to post collateral under its derivative agreements as long as it maintains a triple-A credit rating.
(For the contractual value, notional amounts, related credit risk exposure amounts, and the amount IDA would be
required to post in the event of a downgrade, see Notes to the Financial Statements for the year ended June 30, 2021,
Note F–Derivative Instruments).

40

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Management’s Discussion and Analysis

Section IX: Risk Management

Investment Securities
IDA’s Board-approved General Investment Authorization provides the basic authority for IDA to invest its liquid
assets. Furthermore, all investment activities are conducted in accordance with a more detailed set of Investment
Guidelines set by management. The Investment Guidelines are approved by the MDCFO and implemented by theTreasurer. The most recent update was in FY18, to incorporate the changes required under the IDA18 hybrid financing
model. Issuer and product investment eligibility and risk parameters relative to benchmarks are core components ofthese Guidelines. The Guidelines also include a consultative loss limit to reflect a level of tolerance for the risk ofunderperforming the benchmark in any fiscal year and a duration deviation metric. Clear lines of responsibility forrisk monitoring and compliance are highlighted in the Guidelines. Credit risk appetite is conveyed through specificeligibility criteria (Table 29). IDA has procedures in place to monitor performance against this limit and potential
risks, and it takes appropriate actions if the limit is reached. All investments are subject to additional conditions
specified by the Chief Risk Officer department, as deemed necessary.
Table 29: Eligibility Criteria for IDA’s Investments
Eligible Investments a
Sovereigns

Description
IDA may only invest in obligations issued or unconditionally guaranteed by governments ofmember countries with a minimum credit rating of AA-. However, no rating is required if
government obligations are denominated in the national currency of the issuer.

Agencies

IDA may invest only in obligations issued by an agency or instrumentality of a government of amember country, a multilateral organization, or any other official entity other than the governmentof a member country, with a minimum credit rating of AA-.

Corporates and asset-backed
securities

IDA may only invest in securities with a triple-A credit rating.

Time deposits b

IDA may only invest in time deposits issued or guaranteed by financial institutions, whose seniordebt securities are rated at least A-.

Commercial paper

IDA may only invest in short-term borrowings (less than 190 days) from commercial banks,
corporates, and financial institutions with at least two Prime-1 ratings.

Securities lending, and borrowing,
repurchases, resales, and reverse
repurchases

IDA may engage in securities lending, against adequate collateral repurchases and reverse
repurchases, against adequate margin protection, of the securities described under thesovereigns, agencies, and corporates and asset-backed security categories.

Collateral assets

IDA may engage in collateralized forward transactions, such as swap, repurchase, resale,securities lending, or equivalent transactions that involve certain underlying assets notindependently eligible for investment. In each case, adequate margin protection needs to bereceived.

a.
b.

All investments are subject to approval by the Market and Counterparty Risk department and must appear on the “Approved
List” created by the department.
Time deposits include certificates of deposit, bankers’ acceptances and other obligations issued or unconditionally guaranteedby banks or other financial institutions.

The credit quality of IDA’s investment portfolio remains in the upper end of the credit spectrum with 68% of theportfolio rated AA or above as of June 30, 2021, reflecting IDA’s continued preference for highly-rated securities andcounterparties across all categories of financial instruments. Total commercial counterparty credit exposure, net ofcollateral held, was $37,521 million as of June 30, 2021.
Commercial Counterparty Credit Risk Exposure
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 30).
Table 30: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
In millions of U.S. dollars, except rates in percentages
As of June 30, 2021
Sovereigns Non-Sovereigns Net Swap Exposure

Counterparty Rating a
AAAAAA
BBB or below
Total

$

$

9,345 $
2,519
7,571
19,435 $

6,023
7,438
4,378
17,839

$

$

179
68
247

$

$

Total Exposure% of Total

15,368
10,136
12,01737,521

41
27
32
100

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

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Management’s Discussion and Analysis

Section IX: Risk Management

Counterparty Rating a

Non-Sovereigns

AAA
AA
A
BBB or below
Total

Sovereigns$$

2,814 $
2,221
11,886
16,921 $As of June 30, 2020
Net Swap Exposure

6,617 $
6,997
3,832
*
17,446 $

106
46
152

$

$

Total Exposure% of Total

9,431
9,324
15,764*34,519

27
27
46
*
100

a. Average rating is calculated using available ratings from 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.
* Indicates amount less than $0.5 million or percentage less than 0.5%.

For the contractual value, notional amounts and related credit risk exposure amounts by instrument see Notes to the
Financial Statements for the year ended June 30, 2021, Note F - Derivative Instruments.
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
Valuation Adjustment (DVA) to reflect its own credit risk.
The CVA is calculated using the fair value of the derivative contracts, net of collateral received under credit support
agreements, and the probability of counterparty default based on the Credit Default Swaps (CDS) spread and, whereapplicable, proxy CDS spreads. IDA does not currently hedge this exposure. The DVA calculation is generally
consistent with the CVA methodology and incorporates IDA’s own credit spread as observed through the CDS market.
As of June 30, 2021, IDA recorded a CVA on its balance sheet of $2 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 LIBOR and the transition
to alternative reference rates also presents a significant risk to IDA’s business activities.
IDA uses derivatives to manage its exposure to various 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. Figure 13 below illustrates the use of derivatives for market borrowing portfolios. Loan and investment
portfolios are largely maintained in SDR and its component currencies.
Figure 13: Use of Derivatives for Market Borrowings

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.

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Section IX: Risk Management

As of June 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 FY21, thisportfolio experienced unrealized mark-to-market losses of $40 million, excluding positive returns from IDA’s shareof PEBP earnings, as a result of the increase in yield curves ($187 million of unrealized mark-to-market gains inFY20).
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 Rate
In July 2017, the Financial Conduct Authority (FCA), the regulator of the London Interbank Offered Rate (LIBOR),
announced that it would 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
because the availability of LIBOR after this date is not a certainty.
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:•

All sterling, euro, Swiss franc and Japanese yen LIBOR settings, and the 1-week and 2-month U.S. dollar
LIBOR settings, will cease immediately following publication on December 31, 2021.

•

All remaining U.S. dollar LIBOR settings, including the 6-month U.S. dollar LIBOR used as the reference
rate for IDA loans, will cease immediately following its publication on 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 consideration of the regulatory guidance andin preparations for the global markets’ transition away from LIBOR, IDA has taken important steps to facilitate asmooth and orderly transition of its financial instruments effected by alternative reference rates.
IDA previously completed an initial impact assessment of its exposure, both quantitatively and qualitatively, to
LIBOR and developed an implementation roadmap for the LIBOR transition. IDA is actively working through thistransition and is analyzing the impact from multiple perspectives: lending, funding, accounting, operations,information technology, liquidity investing, risk and legal, considering the portfolio of existing loans and other
instruments that use LIBOR as a benchmark. Although most of IDA’s loans are on fixed rate concessional terms, 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 loan agreements, where relevant, to address the replacement of LIBOR,
allowing IDA to maintain the principles of fairness and equivalence for any replacement reference rate. The contract
amendments will enable similar treatment to all loans by bringing the fallback provisions related to changes in thereference 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 a suitable alternative isavailable, and it is appropriate to do so. To date, IDA has made significant progress in securing counter-signature of
the omnibus amendments from the borrowing countries. IDA is also using pre-existing provisions in loan agreements
to implement these changes.
In addition, as the market undergoes fundamental changes due to the transition to alternative reference rates, as a partof its interest rate risk management, on January 26, 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, effective from April 1, 2021. An existing feature to permit fixing of the reference rate in loans withvariable spread terms remains available.
While IDA’s primary product is fixed rate loans that is not dependent on a reference rate (see Section V: Development
Activities, Products and Programs), IDA does offer certain borrowers non-concessional terms based on the lending
rate of IBRD loan products (See Table 16). In July 2021, the Board approved offering new loans with new alternativereference rates and ceasing to offer LIBOR based loans effective January 1, 2022 for all variable spread loans. Carefulconsideration was given to the regulatory guidance, relevant provisions in IDA’s General Conditions and loan

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

43

Management’s Discussion and Analysis

Section IX: Risk Managementagreements, ALM needs, as well as borrower implications. As a result of the different characteristics of the new market
reference rates and LIBOR and the implications of a staggered LIBOR cessation timetable, there will be changes tothe current loan processes for non-concessional loans, including billing and cost-pass through methodologies used for
IBRD lending rates. However, the impact of these changes will be limited as IDA’s non-concessional loans portfolio
represented 3% of the total loans outstanding as of June 30, 2021.
IDA will continue to work with key stakeholders, including internal subject matter experts, senior management,
borrowers, industry groups and other market participants, to mitigate potential financial and operational risks to which
IDA is exposed and to ensure an orderly transition to alternative reference rates. IDA is managing the transition
prudently and in a cost-effective manner.
Exchange Rate Risk
IDA faces foreign exchange rate risk exposure as a result of the currency mismatch between its commitments for loans
and grants, which are mainly denominated in SDRs; equity contributions from members, which are typicallydenominated in national currencies; and the portion of IDA’s internal resources and expenditures that are denominatedin U.S. dollars.
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 the currencies comprising the SDR
basket. The exchange rate risk management methodology includes the hedging of: (i) currency risk arising fromsettlement of loan disbursements, loan repayments and donor contributions; (ii) debt funding; (iii) IDA loans; (iv)donor contributions; and (v) administrative budget.
The reported levels of its assets, liabilities, income, and expenses in the financial statements are affected by exchange
rate movements in all the currencies in which IDA transacts, relative to its reporting currency, the U.S. dollar. Thesemovements are shown as currency translation adjustments. Translation adjustments relating to the revaluation of assets
and liabilities denominated in SDR and SDR component currencies, (IDA’s functional currencies), are reflected inAccumulated Other Comprehensive Income (Loss), in equity. Translation adjustments relating to non-functional
currencies are reported in IDA’s Statement of Income (see Notes to the Financial Statements for the year ended June30, 2021, Note A – Summary of Significant Accounting and Related Policies).
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.
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 FY21, theprudential minimum was $21.2 billion. For FY22, the prudential minimum has been set at $19.3 billion. As of June30, 2021, IDA’s liquid assets were 177% 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 that44

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

Management’s Discussion and Analysis

Section IX: Risk Management

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 affect business units
and developing risk response and mitigating actions.
Cybersecurity Risk Management
IDA’s operations rely on the secure processing, storage, and transmission of confidential and other information incomputer systems and networks. As is the case for financial institutions generally, cybersecurity risk continues to besignificant for IDA due to the evolving sophistication and complexity of the cyber threat landscape. These risks areunavoidable, and IDA seeks to manage them on a cost-effective basis consistent with its risk appetite.
To protect the security of its computer systems, software, networks and other technology assets, IDA has developed
its cybersecurity risk management program, consisting of cybersecurity policies, procedures, compliance, andawareness programs. IDA deploys a multi-layered approach for cybersecurity risk management to help prevent anddetect malicious activity, both from within the organization and from external sources. In managing emerging cyberthreats such as malware including ransomware, denial of service and phishing attacks, IDA strives to adapt its
technical and process-level controls and raise the level of user awareness to mitigate the risk.
IDA periodically assesses the maturity and effectiveness of its cyber defenses, through risk mitigation techniques,
including but not limited to, targeted testing, internal and external audits, incident response desktop exercises andindustry benchmarking.

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

45

Management’s Discussion and Analysis

Section X: Critical Accounting Policies and the Use of Estimates

Section X: Critical Accounting Policies and the Use of Estimates
IDA’s significant accounting policies, as well as estimates made by management, are integral to its financial reporting.
While all of these policies require a certain level of judgment and estimates, significant policies require management
to make highly difficult, complex, and subjective judgments as these relate to matters inherently uncertain andsusceptible to change. Note A to the financial statements contains a summary of IDA’s significant accounting policies
including a discussion of recently issued accounting pronouncements.

Fair Value of Financial Instruments
All fair value adjustments are recognized through the Statement of Income, except for changes in the fair value ofdebt related to IDA’s own credit, which are reported in Other Comprehensive Income.
The fair values of financial instruments are based on a three-level hierarchy.
For financial instruments classified as Level 1 or 2, less judgment is applied in arriving at fair value measures as the
inputs are based on observable market data. For financial instruments classified as Level 3, unobservable inputs areused. These require management to make important assumptions and judgments in determining fair value measures.
Derivative contracts include currency forward contracts, to-be-announced (TBA) securities, swaptions, exchange
traded options and futures contracts, currency swaps, and interest rate swaps. Plain vanilla swaps, and structured swaps
are valued using the standard discounted cash flow methods using observable market inputs such as yield curves,foreign exchange rates and basis spreads.
In instances where management relies on instrument valuations supplied by external pricing vendors, there areprocedures in place to validate the appropriateness of the models used as well as the inputs applied in determining
those values.
The majority of IDA’s financial instruments which are recorded at fair value are classified as Level 1 and Level 2 asof June 30, 2021, as the inputs are based on observable market data and less judgment is applied in arriving at fairvalue measures.
On a quarterly basis, the methodology, inputs, and assumptions are reviewed to assess the appropriateness of the fairvalue hierarchy classification of each financial instrument. All the financial models used for input to IDA’s financial
statements are subject to both internal and periodic external verification and review by qualified personnel.

Provision for Losses on Loans and Other Exposures
On July 1, 2020, IDA adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) which introduced
a new approach to credit loss measurement - the Current Expected Credit Losses methodology and required additional
disclosures. See Notes to the Financial Statements for the year ended June 30, 2021, Note A – Summary of Significant
Accounting and Related Policies.
For IDA, the primary changes, compared to the previous approach under U.S. GAAP, were to evaluate estimatedexposures over the life of the instrument, to incorporate undisbursed loan commitments in the measure of exposureand to incorporate estimations of future market conditions for a reasonable and supportable forecast period along withhistorical experience. The overall provision for expected losses is the sum of the computed annual losses, taking into
account borrower risk ratings and associated expected default frequencies, estimates of exposure, and severity of loss
given default.
IDA’s accumulated provision for losses on loans and other exposures reflects the expected losses inherent in its
nonaccrual and accrual portfolios after taking into consideration the expected relief under the HIPC Debt Initiativeand MDRI and any provision for losses on the buy-down of loans.
Adjustments to the accumulated provision are recorded as a charge to or a release of provision in the Statement of
Income. Actual losses may differ from expected losses due to unforeseen changes in any of the factors that affectborrowers’ creditworthiness.
The Credit Risk Committee monitors aspects of country credit risk, in particular, reviewing the provision for losses
on loans and guarantees taking into account, among other factors, any changes in exposure, risk ratings of borrowing
member countries, or movements between the accrual and nonaccrual portfolios.

46

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Section X: Critical Accounting Policies and the Use of Estimates

Additional information on IDA’s provisioning policy and the status of nonaccrual loans can be found in the Notes toFinancial Statements for the year ended June 30, 2021, Note A-Summary of Significant Accounting and Related
Policies and Note D- Loans and Other Exposures.

Provision for HIPC Debt Initiative and MDRI
The HIPC Debt Initiative is a comprehensive approach to reduce the external debt of the world’s poorest, most heavily
indebted countries. See Section VI: Other Development Activities and Programs and Section IX: Risk Management.
The list of countries potentially eligible under the HIPC framework has been limited. No new countries are considered
for eligibility unless they met the criteria at the end of 2004 as specified in the initiative.
The MDRI, approved by the Board in June 2006, provides additional debt relief through cancellation of eligible debt
owed to IDA by countries that reach the HIPC Completion Point.
IDA records a provision for all the estimated probable write-offs of loans outstanding for debt relief to be delivered
under the HIPC Debt Initiative and MDRI. Donors have agreed to compensate IDA through member contributions forthe foregone loan reflows under the HIPC Debt Initiative and MDRI.
The adequacy of the accumulated provision for the HIPC Debt Initiative and MDRI is based on both quantitative andqualitative analyses of various factors, including estimates of Decision and Completion Point dates of eligible
countries. IDA periodically reviews these factors and reassesses the adequacy of the accumulated provision for the
HIPC Debt Initiative and MDRI. Adjustments to the accumulated provision are recorded as a charge to or release ofprovision in the Statement of income.

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

47

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls

Section XI: Governance and Internal Controls
Figure 14: Governance Structure

Board of Governors

Audit Committee

Executive
Directors

Budget Committee
Human Resources
Committee

President

Committee on Development
EffectivenessCommittee on Governanceand Executive Directors’
Administrative Matters

Business Conduct
The WBG promotes a positive work environment in which staff members understand their ethical obligations to theinstitution. In support of this commitment, the institution has in place a Code of Conduct. The WBG has both an Ethics
Helpline and a Fraud and Corruption hotline. A third-party service offers many methods of worldwide communication.
Reporting channels include telephone, mail, email, or confidential submission through a website.
IDA has in place procedures for receiving, retaining, and handling recommendations and concerns relating to businessconduct identified during the accounting, internal control, and auditing processes.
WBG staff rules clarify and codify the staff’s obligations in reporting suspected fraud, corruption, or other misconductthat may threaten the operations or governance of the WBG. These rules also offer protection from retaliation.

General Governance
IDA’s decision-making structure consists of the Board of Governors, the Executive Directors, the President,
management, and staff. The Board of Governors is the highest decision-making authority. Governors are appointed
by their member governments for a five-year term, which is renewable. The Board of Governors may delegate
authority to the Executive Directors (referred to as the Board in this document) to exercise any of its powers, except
for certain powers enumerated in the IDA Articles. IDA has its own policies and frameworks that are carried out bystaff that share responsibilities for both IDA and IBRD.

Executive Directors
In accordance with the Articles, Executive Directors are appointed or elected every two years by their member
governments. The Board currently has 25 Executive Directors who represent all 173-member countries. Executive
Directors are neither officers nor staff of IDA. The President is the only member of the Board from management, andhe serves as a non-voting member and as Chairman of the Board.
The Board is required to consider proposals made by the President on IDA loans, grants, and guarantees and on otherpolicies that affect its general operations. The Board is also responsible for presenting to the Board of Governors, at
the Annual Meetings, audited accounts, an administrative budget, and an annual report on operations and policies andother matters.
The Board and its committees are in sessions as business requires. Each committee's terms of reference establish its
respective roles and responsibilities. In light of the COVID-19 situation, currently, the committee meetings are held
in a virtual format. As committees do not vote on issues, their role is primarily to serve the Board in discharging its
responsibilities.
The committees are made up of eight members and function under their respective terms of reference. These
committees are as follows:

48

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Management’s Discussion and Analysis

Section XI: Governance and Internal Controls•

Audit Committee - assists the Boards in overseeing IDA’s finances, accounting, risk management and internal
controls (See further explanation below).

•

Budget Committee - assists the Boards in approving the World Bank’s budget and in overseeing the preparationand execution of IDA’s business plans. The committee provides guidance to management on strategic directionsof IDA.

•

Committee on Development Effectiveness - supports the Boards in assessing IDA’s development effectiveness,
providing guidance on strategic directions of IDA, monitoring the quality and results of operations.

•

Committee on Governance and Executive Directors’ Administrative Matters - assists the Boards in issues related
to the governance of IDA, the Boards’ own effectiveness, and the administrative policy applicable to Executive
Directors’ offices.

•

Human Resources Committee - strengthens the efficiency and effectiveness of the Board in discharging its
oversight responsibility on the World Bank’s human resources strategy, policies and practices, and their alignment
with the business needs of the organization.

Audit Committee
Membership
The Audit Committee consists of eight Executive Directors. Membership in the Audit Committee is determined by
the Board, based on nominations by the Chairman of the Board, following informal consultation with Executive
Directors.

Key Responsibilities
The Audit Committee is appointed by the Board for the primary purpose of assisting the Board in overseeing IDA’s
finances, accounting, risk management, internal controls, and institutional integrity. Specific responsibilities include:•

Oversight of the integrity of IDA’s financial statements.

•

Appointment, qualifications, independence, and performance of the External Auditor.

•

Performance of the Group Internal Audit Vice Presidency.

•

Adequacy and effectiveness of financial and accounting policies and internal controls and the mechanisms todeter, prevent and penalize fraud and corruption in IDA operations and corporate procurement.

•

Effective management of financial, fiduciary and compliance risks in IDA.

•

Oversight of the institutional arrangements and processes for risk management across IDA.

In carrying out its role, the Audit Committee discusses financial issues and policies that affect IDA’s financial positionand capital adequacy, with management, external auditors, and internal auditors. It also recommends the annual
audited financial statements for approval to the Board. The Audit Committee monitors and reviews developments incorporate governance and its own role on an ongoing basis.

Executive Sessions
Under the Audit Committee's terms of reference, it may convene an executive session at any time, without
management’s presence. The Audit Committee meets separately in executive session with the external and internal
auditors.

Access to Resources and to Management
Throughout the year, the Audit Committee receives a large volume of information to enable it to carry out its duties
and meets both formally and informally throughout the year to discuss relevant matters. It has complete access tomanagement, and reviews and discusses with management topics considered in its terms of reference.
The Audit Committee has the authority to seek advice and assistance from outside legal, accounting, or other advisors
as it deems necessary.

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Section XI: Governance and Internal Controls

Auditor Independence
The appointment of the external auditor for IDA is governed by a set of Board-approved principles. These include:•

Limits on the external auditor’s provision of non-audit-related services;•

Requiring all audit-related services to be pre-approved on a case-by-case basis by the Board, uponrecommendation of the Audit Committee; and•Renewal of the external audit contract every five years, with a limit of two consecutive terms and mandatory
rotation thereafter.

The external auditor may provide non-prohibited, non-audit related services subject to monetary limits.
Broadly, the list of prohibited non-audit services includes those that would put the external auditor in the roles typically
performed by management and in a position of auditing their own work, such as accounting services, internal audit
services, and provision of investment advice. The total non-audit services fees over the term of the relevant external
audit contract shall not exceed 70 percent of the audit fees over the same period.
Communication between the external auditor and the Audit Committee is ongoing and carried out as often as deemednecessary by either party. The Audit Committee meets periodically with the external auditor and individual committee
members have independent access to the external auditor. IDA’s external auditors also follow the communication
requirements with the Audit Committee set out under generally accepted auditing standards in the United States.

External Auditors
The external auditor is appointed to a five-year term, with a limit of two consecutive terms, and is subject to annual
reappointment based on the recommendation of the Audit Committee and approval of a resolution by the Board.
Following a mandatory rebidding of the external audit contract, IDA’s Executive Directors approved the selection of
Deloitte & Touche LLP as IDA’s external auditor for a five-year term commencing FY19, subject to annual
reappointment.

Senior Management Changes
There were no senior management changes during the year.

Internal Controls
Internal Control over Financial Reporting
Each fiscal year, management evaluates the internal control over financial reporting to determine whether any changes
made in these controls during the fiscal year materially affect, or would be reasonably likely to materially affect,
IDA’s internal control over financial reporting. The internal control framework promulgated by the Committee ofSponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework (2013)”
provides guidance for designing, implementing, and conducting internal control and assessing its effectiveness. IDA
uses the 2013 COSO framework to assess the effectiveness of the internal control over financial reporting. As of June30, 2021, management maintained effective internal control over financial reporting. See “Management’s report
regarding effectiveness of Internal Control over Financial Reporting” on page 54.
IDA’s internal control over financial reporting was audited by Deloitte & Touche LLP, and their report expresses anunqualified opinion on the effectiveness of IDA’s internal control over financial reporting as of June 30, 2021. See
Independent Auditor’s Report on page 56.

Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed is gathered andcommunicated to management as appropriate, to allow timely decisions regarding required disclosure by IDA.
Management conducted an evaluation of the effectiveness of such controls and procedures and the President and the
MDCFO have concluded that these controls and procedures were effective as of June 30, 2021.

50

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

Management’s Discussion and Analysis

Appendix

Appendix
Glossary of Terms
Blend Borrower: IDA Member that is eligible to borrow from IDA on the basis of per capita income and is also
eligible to borrow from IBRD. Given the access to both sources of funds, blend borrowers are expected to limit IDA
funding to social sector projects and to use IBRD resources for projects in the other sectors.
Board: The Executive Directors as established by IDA’s Articles of Agreement.
Replenishment Envelope: Total value of resources available during a particular replenishment including member
equity contributions, borrowings, internal resources, IBRD transfers, IFC grants and other resources.
Completion Point: When conditions specified in the legal notification sent to a country are met and the country’s
other creditors have confirmed their full participation in the HIPC debt relief initiative. When a country reaches its
Completion Point, IDA’s commitment to provide the total debt relief for which the country is eligible, becomesirrevocable.
Consultative Loss Limit: Reflects a level of IDA’s tolerance for risk of underperforming the benchmark in any fiscal
year.
Credit Valuation Adjustment (CVA): The CVA represents the counterparty credit risk exposure and is reflected in
the fair value of derivative instruments.
Debit Valuation Adjustment (DVA): Debit Valuation Adjustment on Fair Value Option (FVO) Elected Liabilities
that corresponds to the change in fair value of the liability presented under the FVO that relate to the instrument
specific credit risk (“own-credit risk”).
Deputies: Representatives of IDA’s contributing partners, known as “the IDA Deputies”.
Duration: Provides an indication of the sensitivity of underlying yield to changes in interest rates.
Encashment: Draw down (payment in cash) of a demand note in accordance with a schedule agreed for each
replenishment.
Externally Financed Output (EFO): An instrument for receiving external contributions to support the Bank’s work
program, typically, for amounts under $1 million, however larger amounts can also be received.
Graduate Member: A member country that was once eligible to borrow from IDA, however due to improvements inthe member’s economic results is no longer eligible to borrow from IDA and is deemed to have “graduated” to IBRD.
Instrument of Commitment (IoC): The instrument through which a government commits to make a subscription ora subscription and contribution to IDA’s resources.
Lending operations: Total projects from a fiscal year based on project approval date as of June 30 of the fiscal year.
Net Commitments: Commitments of Loans, grants and guarantees, net of full cancellations and terminations
approved in the same fiscal year.
Net Disbursements: Loans and grant disbursements net of repayments and prepayments.
Prudential Minimum: The minimum amount of liquidity that IDA is required to hold. It represents 80% of twentyfour months coverage as calculated at the start of every fiscal year.
Replenishment: The process of regular review of the adequacy of IDA resources and authorization of additional
subscriptions. Under IDA’s Articles, replenishments are required to be approved by IDA’s Board of Governors by a
two-thirds majority of the total voting power.
Special Drawing Rights (SDR): The SDR is an international reserve asset, created by the International Monetary
Fund in 1969 to supplement the existing official reserves of member countries. The SDR is defined as a basket ofcurrencies, consisting of the Chinese Renminbi, Euro, Japanese Yen, Pound Sterling, and U.S. dollar. The basket
composition is reviewed every five years to ensure that it reflects the relative importance of currencies in the world’s
trading and financial systems.
Voting Rights: IDA’s voting rights consist of a combination of membership and subscription votes.
World Bank (WB): The World Bank consists of IBRD and IDA.
World Bank Group (WBG): The World Bank Group consists of the IBRD, IDA, IFC, MIGA and ICSID.

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

51

Management’s Discussion and Analysis

Appendix

List of Tables, Figures and Boxes
TablesTable 1: Adjusted IDA19 Resource Allocation
Table 2: Cumulative Net Commitments under IDA19
Table 3: Utilization of PSW Commitments
Table 4: Condensed Statement of Income
Table 5: Condensed Balance Sheet
Table 6: Changes in Equity
Table 7: Net Loans Outstanding Activity
Table 8: Gross Disbursements of Loans and Grants by Region
Table 9: Revenue and Balances by Product Category
Table 10: Net Non-Interest Expenses
Table 11: Other Revenue (Expenses), net
Table 12: Budget Anchor
Table 13: Provision for losses on loans and other exposures
Table 14: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
Table 15: Cumulative Loans approved under Single Currency program
Table 16: Summary of Financial Terms for IDA Lending Products, effective July 1, 2021
Table 17: Net Commitments of Loans and Guarantees by Region
Table 18: Net Commitments of Grants by Region
Table 19: Types of Guarantees
Table 20: Pricing for IDA’s Project-Based and Policy-Based Guarantees, effective July 1, 2021
Table 21: Cash and Investment Assets Held in Trust by IDA
Table 22: Liquid Asset Portfolio Composition
Table 23: Average Balances and Returns by Sub-Portfolio
Table 24: Borrowings
Table 25: Other Short-Term Borrowings
Table 26: Summary of IDA's Specific Risk Categories
Table 27: Deployable Strategic Capital Ratio
Table 28: Treatment of Overdue Payments
Table 29: Eligibility Criteria for IDA’s Investments
Table 30: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating

8
9
12
14
15
15
16
16
17
18
18
19
19
20
23
23
24
25
26
26
28
29
30
31
32
36
37
39
41
41

FiguresFigure 1: IDA's Financial Business Model
Figure 2: Net Loans Outstanding
Figure 3: Net Investment Portfolio
Figure 4: Net Investment Revenue
Figure 5: Budget Anchor
Figure 6: Net Annual Commitments and share of financing categories
Figure 7: Net Investment Portfolio
Figure 8: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2021
Figure 9: Medium- and Long-Term Borrowings Issued by Currency during the year, Excluding Derivatives
Figure 10: Financial and Operational Risk Management Structure
Figure 11: Management Risk Committee Structure for Financial and Operational Risks
Figure 12: Country Exposures as of June 30, 2021
Figure 13: Use of Derivatives for Market Borrowings
Figure 14: Governance Structure

7
16
17
17
19
22
29
31
32
33
34
38
42
48

Boxes
Box 1: Selected Financial Data
Box 2: Financing Principles

52

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

2
21

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)
FINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS
JUNE 30, 2021

Management’s Report Regarding Effectiveness of Internal Control Over Financial Reporting

54

Independent Auditors’ Report on Effectiveness of Internal Control Over Financial Reporting

56

Independent Auditors’ Report

58

Balance Sheet

60

Statement of Income

62Statement of Comprehensive Income

63Statement of Changes in Accumulated Deficit

63

Statement of Cash Flows

64

Supplementary Information
Summary Statement of Loans

66

Statement of Voting Power and Subscriptions and Contributions

69

Notes to Financial Statements

73

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

53

MANAGEMENT’S REPORT REGARDING EFFECTIVENESS OF
INTERNAL CONTROL OVER EXTERNAL FINANCIAL REPORTING

Management’s Report Regarding Effectivenessof Internal Control over Financial Reporting
August 6, 2021

The management of the International Development Association (IDA) is responsible for the
preparation, integrity, and fair presentation of its published financial statements. The financial
statements have been prepared in accordance with accounting principles generally accepted in the
United States of America and include amounts based on informed judgments and estimates madeby management.
The financial statements have been audited by an independent audit firm, which was given
unrestricted access to all financial records and related data, including minutes of all meetings ofthe Executive Directors and their Committees. Management believes that all representations madeto the independent auditors during their audit of IDA’s financial statements and audit of its internal
control over financial reporting were valid and appropriate. The independent auditors’ reports
accompany the audited financial statements.
Management is responsible for establishing and maintaining effective internal control overfinancial reporting for financial statement presentations in conformity with accounting principles
generally accepted in the United States of America. Management maintains a comprehensive
system of controls intended to ensure that transactions are executed in accordance withmanagement’s authorization, assets are safeguarded, and financial records are reliable. The system
of internal control contains monitoring mechanisms, and actions are taken to correct deficiencies
identified. Management believes that internal control over financial reporting supports theintegrity and reliability of the external financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibilityof human error and the circumvention or overriding of controls. Accordingly, even effective
internal controls can provide only reasonable assurance with respect to financial statement
preparation. Further, because of changes in conditions, the effectiveness of internal controls mayvary over time.
IDA assessed its internal control over financial reporting for financial statement presentation in
conformity with accounting principles generally accepted in the United States of America as ofJune 30, 2021. This assessment was based on the criteria for effective internal control overfinancial reporting described in the Internal Control-Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission. Based upon thisassessment, management believes that IDA maintained effective internal control over financial
reporting presented in conformity with accounting principles generally accepted in the UnitedStates of America as of June 30, 2021. The independent audit firm that audited the financial
statements has issued an Independent Auditors Report which expresses an opinion on IDA’s
internal control over financial reporting.
54 IDA FINANCIAL STATEMENTS: JUNE 30, 2021

The Executive Directors of IDA have appointed an Audit Committee responsible for monitoring
the accounting practices and internal controls of IDA. The Audit Committee is comprised entirelyof Executive Directors who are independent of IDA’s management. The Audit Committee is
responsible for recommending to the Executive Directors the selection of independent auditors. It
meets periodically with management, the independent auditors, and the internal auditors to ensurethat they are carrying out their responsibilities. The Audit Committee is responsible for performing
an oversight role by reviewing and monitoring the financial, accounting and auditing proceduresof IDA in addition to reviewing IDA’s financial reports. The independent auditors and the internal
auditors have full and free access to the Audit Committee, with or without the presence ofmanagement, to discuss the adequacy of internal control over financial reporting and any othermatters which they believe should be brought to the attention of the Audit Committee.

________________________David Malpass
President_______________________
Anshula Kant
Managing Director and World Bank Group Chief Financial Officer________________________
Jorge Familiar Calderon
Vice President and World Bank Group Controller

IDA FINANCIAL STATEMENTS: JUNE 30, 2021 55

INDEPENDENT AUDITORS’ REPORT ON MANAGEMENT’S ASSERTIONREGARDING EFFECTIVENESS OF INTERNAL CONTROL OVERFINANCIAL REPORTING
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 AUDITORS' REPORT
President and Board of Executive Directors
International Development Association:
We have audited the internal control over financial reporting of the International Development Association ("IDA")
as of June 30, 2021, based on the criteria established in the Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s Responsibility for Internal Control over Financial Reporting
Management is responsible for designing, implementing, and maintaining effective internal control over financial
reporting, and for its assessment about the effectiveness of internal control over financial reporting, included in theaccompanying Management’s Report Regarding Effectiveness of Internal Control Over Financial Reporting.
Auditors’ Responsibility
Our responsibility is to express an opinion on IDA's internal control over financial reporting based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects.
An audit internal control over financial reporting involves performing procedures to obtain audit evidence about
whether a material weakness exists. The procedures selected depend on the auditor's judgment, including theassessment of the risks that a material weakness exists. An audit also includes obtaining an understanding ofinternal control over financial reporting and testing and evaluating the design and operating effectiveness ofinternal control over financial reporting based on the assessed risk.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity’s internal control over financial reporting is a process effected by those charged with governance,
management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliablefinancial statements in accordance with accounting principles generally accepted in the United States of America. An
entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally accepted in the United Statesof America, and that receipts and expenditures of the entity are being made only in accordance with authorizationsof management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or
timely detection and correction, of unauthorized acquisition, use, or disposition of the entity's assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct,
misstatements. Also, projections of any assessment of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.
56

Opinion
In our opinion, IDA maintained, in all material respects, effective internal control over financial reporting as of June30, 2021, based on the criteria established in the Internal Control — Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission.
Report on Financial Statements
We have also audited, in accordance with auditing standards generally accepted in the United States of America, thefinancial statements as of and for the year ended June 30, 2021 of IDA, and our report dated August 6, 2021
expressed an unmodified opinion on those financial statements.

August 6, 2021

57

INDEPENDENT AUDITORS’ 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 AUDITORS’ REPORT
President and Board of Executive Directors
International Development Association:
We have audited the accompanying financial statements of the International Development Association ("IDA"),
which comprise the balance sheets as of June 30, 2021 and 2020, and the related statements of income,comprehensive income, changes in accumulated deficit, and cash flows for each of the three years in the period
ended June 30, 2021, and the related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to IDA’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of IDA as of June 30, 2021 and 2020, and the results of their operations and their cash flows for each of thethree years in the period ended June 30, 2021 in accordance with accounting principles generally accepted in the
United States of America.

58

Change in Accounting Principle
As described in Note A to the financial statements, IDA changed its method of accounting for the accumulated
provision for loan losses and other exposures on July 1, 2020, due to the adoption of Accounting Standards Update
No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments.
Report on Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The
summary statement of loans and the statement of voting power and subscriptions and contributions as of June 30,
2021 ("supplementary information") listed in the table of contents are presented for the purpose of additional
analysis and are not a required part of the financial statements. This supplementary information is the responsibilityof IDA's management and was derived from and relates directly to the underlying accounting and other records
used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in
our audits of the financial statements and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare the financial statements or to
the financial statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, such information is fairly stated in all material
respects in relation to the financial statements as a whole.
Report on Internal Control over Financial Reporting
We have also audited, in accordance with auditing standards generally accepted in the United States of America,
IDA's internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control —Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated August 6, 2021 expressed an unmodified opinion on IDA's internal control over financial
reporting.

August 6, 2021

59

BALANCE SHEET
June 30, 2021 and June 30, 2020

Expressed in millions of U.S. dollars
2021
AssetsDue from banks—Notes C and K
Unrestricted cash
Restricted cash$

Investments (including securities transferred under repurchase or
securities lending agreements of Nil - June 30, 2021; $108 million June 30, 2020) —Notes C, G and K

470
26
496

2020

$

650
24
674

37,376

34,670Derivative assets, net—Notes C, F and K

249

136

Receivable from affiliated organization—Note G

865

858

7
511
518

636
440
1,076

251,676

227,291(70,172)
181,504(3,718)(7)
177,779(61,911)
165,380(4,420)1
160,961

2,041

1,097

Other receivables
Receivable from investment securities traded—Note C
Accrued interest and commitment charges

Loans outstanding (Summary statement of loans, Notes D, G and K)
Total loans approved
Less: Undisbursed balance (including signed loan
commitments of $60,775 million—June 30, 2021; $49,580 million—
June 30, 2020)
Loans outstanding
Less: Accumulated provision for loan losses
Add: Deferred loans origination costs
Net loans outstanding
Other assets—Note H
Total assets

60

IDA FINANCIAL STATEMENTS: JUNE 30, 2021$

219,324$

199,4722021
Liabilities
Borrowings—Notes E and K
Market borrowings (at fair value)
Concessional partner loans (at amortized cost)

$

2020

20,555
7,759
28,314

Securities sold under repurchase agreements, securities lent under
securities lending agreements, and payable for cash collateral
received—Note C and K$

12,131
7,635
19,766

-

108

408

590

Payable for development grants—Note I

6,820

9,141

Payable to affiliated organization—Note G

561

509

73
2,272
2,345
38,448

101
1,086
1,187
31,301

292,210324
292,534

267,207322
267,529(38,240)(22,415)(3,842)
250,452(3,771)
241,343(11,382)(50)(11,432)(10,630)(49)(10,679)

(244)

(245)

Accumulated deficit (Statement of changes in accumulated deficit)(59,556)(58,321)

Accumulated other comprehensive income (loss)—Note J
Total equity
Total liabilities and equity

1,656
180,876
219,324(3,927)
168,171
199,472

Derivative liabilities, net—Notes C, F and K

Other liabilities
Payable for investment securities purchased—Note C
Accounts payable and miscellaneous liabilities—Notes D and H
Total liabilities
EquityMembers' subscriptions and contributions (Statement of voting
power and subscriptions and contributions and Note B)
Unrestricted
Restricted
Subscriptions and contributions committed
Less:
Subscriptions and contributions receivable
Cumulative discounts/ acceleration credits on subscriptions andcontributions
Subscriptions and contributions paid-in
Nonnegotiable, noninterest-bearing demand obligations on accountof members' subscriptions and contributions
Unrestricted
Restricted

Deferred amounts to maintain value of currency holdings$$

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

61

STATEMENT OF INCOME
For the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019

Expressed in millions of U.S. dollars
2021Interest revenue
Loans, net—Note D
Investments, net—Notes C, F, G and K
Asset/liability management derivatives, net

$

2020

2019

2,050 $
147
(14)

1,684 $
422
(22)

1,462
466
(8)

Borrowing expenses, net—Note E

(187)

(241)

(218)

Interest revenue, net of borrowing expenses

1,996

1,843

1,702

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

539

170

(316)

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

814
19
17
850

902
15
15
932

783
13
12
808

(2,406)(20)
20(2,406)(2,389)(21)(40)(2,450)(2,241)(21)
12(2,250)

544

252

258

(2,830)(1,475)(7,694)Non-functional currency translation adjustment (losses) gains, net

(372)

95

105

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

144

207

351

Unrealized mark-to-market gains (losses) on Non-Trading portfolios,
net
Asset-liability management—Notes F and K
Investments—Note K
Other
Total
Net loss

1,080
(12)
34
1,102
(433) $

(699)
29
(18)
(688)
(1,114) $Non-interest expenses
Administrative—Notes G and H
Contributions to special programs—Note G
Other
Total
Transfers from affiliated organizations and others—Notes G and H
Development grants—Note I$

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

62

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

359
32
(5)
386
(6,650)STATEMENT OF COMPREHENSIVE INCOME
For the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019
Expressed in millions of U.S. dollars
2021

Net loss

$

2020

(433)

$

2019

(1,114)$(6,650)

Other Comprehensive income (loss)—Note J
Currency translation adjustments on functional currencies

5,647(1,526)(1,735)Net Change in Debit Valuation Adjustment (DVA) on Fair
Value option elected liabilities

(64)

7

2

Comprehensive income (loss)

$

5,150

$

(2,633)$(8,383)

STATEMENT OF CHANGES IN ACCUMULATED DEFICIT
For the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019
Expressed in millions of U.S. dollars
2021
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$

(58,321)

2020
$

(802)
$

Net loss(59,123)$(59,556)(57,207)$(50,557)$(433)

Accumulated Deficit at end of the fiscal year2019

(57,207)$(1,114)$(58,321)(50,557)(6,650)$(57,207)

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

63

STATEMENT OF CASH FLOWSFor the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019
Expressed in millions of U.S. dollars
2021
Cash flows from investing activities
Loans
Disbursements
Principal repayments
Principal prepayments
Non-trading securities—Investments
Repayments
Net cash used in investing activities$

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 (release)chargeNon-functional currency translation adjustment losses (gains),
net
Unrealized mark-to-market (gains) losses on non-trading
portfolios, net
Other non-interest (income) expenses, net
Amortization of discount on borrowings
Changes in:
Investments—Trading
Net investment securities traded/purchased
Net derivatives—Investments
Net derivatives—Asset-liability management
Net securities purchased/sold under resale/repurchaseagreements and payable for cash collateral received
Net receivable from affiliated organizations
Payable for development grants
Accrued interest and commitment charges
Other assets
Accounts payable and miscellaneous liabilities
Net cash used in operating activities
Effect of exchange rate changes on unrestricted andrestricted cash
Net (decrease) increase in unrestricted and restricted cash
Unrestricted cash and restricted cash at beginning of the
fiscal year
Unrestricted and restricted cash at end of the fiscal year$

64

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

(16,681)
6,457
-

2020

$

(16,449)
6,016
51

2019

$

(13,562)
5,277
51

125
(10,099)

124(10,258)

122(8,112)

8,355

7,823

7,421

9,405
(96)

5,725
(43)

872
-

8,219
(9,561)

12,018(8,178)

1,724
-

120
29
16,471

16(20)
17,341140(2)10,155(433)(1,114)(6,650)

(539)

(170)

316

372

(95)

(105)

(1,102)
(20)
96

688
40
133

(386)
(12)
88

(2,090)603
160
19(2,323)
(155)
(89)
533

2,956
(643)
(14)
127

(109)
45
(2,652)(57)(1,367)471(6,603)(601)
14(3,070)(43)(1,279)992(6,539)(1,811)
(26)
3,697
(13)
379
(332)
(2,429)

53
(178)

(8)
536

1
(385)

674
496

$

138
674

$

523
138

STATEMENT OF CASH FLOWSFor the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019
Expressed in millions of U.S. dollars
2021
Supplemental disclosure
Increase (Decrease) in ending balances resulting fromexchange rate fluctuations:
Loans outstanding
Investment portfolio
Derivatives—Asset-liability management
Borrowings
Principal repayments written off under Heavily Indebted
Poor Countries (HIPC) Debt Initiative
Loans prepaid—carrying value
Interest paid on borrowing portfolio

$

5,909
1,180
(880)
627
9
118

2020

$

(1,543)
(449)
321
(149)

2019

$

(1,696)
(334)
293
12

10
54
161

10
54
88

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

65

SUMMARY STATEMENT OF LOANS
June 30, 2021
Amounts expressed in millions of U.S. dollars

Borrower or guarantor
Afghanistan
Albania
AngolaArmenia
Azerbaijan
Bangladesh
Benin
BhutanBolivia
Bosnia and Herzegovina
Botswana
Burkina Faso
BurundiCabo Verde, Republic ofCambodia
Cameroon
Central African Republic
Chad
China
Comoros
Congo, Democratic
Republic ofCongo, Republic ofCôte d'Ivoire
Djibouti
Dominica
Dominican Republic
EcuadorEgypt, Arab Republic of
El Salvador
Equatorial Guinea
Eritrea
Eswatini
Ethiopia
Fiji
Gambia, The
Georgia
Ghana
GrenadaGuineaGuinea-Bissau
GuyanaHonduras
India
Indonesia
Iraq
JordanKenya
KosovoKyrgyz Republic
Lao People's Democratic
Republic
LebanonLesotho66

Undisbursed balance
Loans
Signed loan
Loans
Total loans
approved but
commitments
outstanding
not yet signed
$
337 $
- $
- $
337
541
541
506
5
501
964
10
954
281
281
26,2771,132
7,101
18,044
2,212
27
863
1,322
366
2
364
1,030
246
784
949
1
948
*
*
3,361
221
1,012
2,128
137
137
536
20
60
456
1,592
197
693
702
3,242
826
708
1,708
139
4
135
175
175
649
649
129
109
20

Percentage of
total loans
outstanding a$
0.19 %
0.30
0.28
0.53
0.15
9.94
0.73
0.20
0.43
0.52
*
1.17
0.07
0.25
0.39
0.94
0.07
0.10
0.36
0.01

3,540
520
4,844
346
179
1
*
344
2
19
446
1
15,320
234
159
893
6,581
246
906
298
169
1,642
23,133757
284
207
13,096
330
994

287
63
268
300
14
5
190
112
127
18
9

1,527
170
2,278
138
98
4,130
54
27
10
1,602
66
261
127
71
441
1,026
75
2,968
145
320

1,726
287
2,298
208
81
1
*
344
2
19
446
1
11,190
180
132
883
4,679
180
631
171
93
1,011
21,995757
284
132
10,001
167
665

0.95
0.16
1.27
0.11
0.05
*
*
0.19
*
0.01
0.25
*
6.16
0.10
0.07
0.49
2.58
0.10
0.35
0.09
0.05
0.56
12.12
0.42
0.16
0.07
5.51
0.09
0.37

1,162
102
672

22

434
10
234

728
92
416

0.40
0.05
0.23

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

SUMMARY STATEMENT OF LOANS
June 30, 2021
Amounts expressed in millions of U.S. dollars

Borrower or guarantor
Liberia
Madagascar
Malawi
Maldives
Mali
Mauritania
Mauritius
Moldova
Mongolia
Montenegro
MoroccoMozambique
Myanmar
Nepal
Nicaragua
Niger
Nigeria
North Macedonia
PakistanPapua New Guinea
Paraguay
Philippines
RwandaSamoa
São Tomé and Príncipe
SenegalSerbiaSierra Leone
Solomon Islands
SomaliaSouth Sudan
Sri Lanka
St. Kitts and Nevis
St. Lucia
St. Vincent and the
Grenadines
Sudan
Syrian Arab Republic
Tajikistan
Tanzania
Timor-Leste
Togo
Tonga
Tunisia
TurkeyUgandaUzbekistan
Vanuatu
Vietnam
Yemen, Republic ofZambiaZimbabwe
Subtotal—Members a

Undisbursed balance
Loans approved
Signed loan
Total loans
but not yet
commitments
signed
$
920 $
- $
340
3,095
348
747
2,021
125
735
131
27
2,771
107
493
433
15
1
994
29
253
965
214
25
1
3,429
149
61
3,329
1,540
5,526
60
1,538
1,006
188
3,028
156
1,139
19,538
1,462
6,605
194
21,698
5,566
851
129
255
3
24
3,301
731
112
11
4,973
1,746
158
534
79
119
71
130
81
3,979
741
*
271
136

$

255
371
14
553
12,033
162
516
50
1
2
6,227
3,983
141
17,467
1,462
2,296
472
250,507 $

50
1,143
16
298
540
642
139
9,231 $

58
199
2,599
128
219
5
1,545
1,505
46
2,746
28
812
60,136

580
2,000
1,161
104
2,171
418
1
712
751
25
1
3,219
1,789
3,928
818
1,733
11,471
194
16,132
467
3
24
2,570
112
11
3,227
158
455
48
130
81
3,238
*
135

Percentage
total of loans
outstanding a
0.32 %
1.10
0.64
0.06
1.20
0.23
*
0.39
0.41
0.01
*
1.77
0.98
2.16
0.45
0.95
6.32
0.11
8.89
0.26
*
0.01
1.42
0.06
0.01
1.78
0.09
0.25
0.03
0.07
0.04
1.78
*
0.07

147
371
14
354
8,291
34
281
45
1
2
4,384
1,938
95
14,079
1,434
1,345
472
181,140

0.08
0.20
0.01
0.19
4.57
0.02
0.16
0.03
*
*
2.41
1.07
0.05
7.76
0.79
0.74
0.26
99.79 %

Loans
outstanding$$

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

67

SUMMARY STATEMENT OF LOANS
June 30, 2021
Amounts expressed in millions of U.S. dollars

Borrower or guarantor

Total loans

African Trade Insurance
Agency$Bank of the States ofCentral Africa
Caribbean Development
Bank
West African Development
Bank
Subtotal—Regional
development banks$
Private Sector Window(PSW) Loans
Total—June 30, 2021 a
Total—June 30, 2020$$

Undisbursed balance
Loans approved
Signed loan
but not yet
commitments
signedLoansoutstanding

423 $

- $

388 $

35

0.02 %

60

-

18

42

0.02

10

-

-

10

0.01

389

-

122

267

0.15

882 $

- $

528 $

354

0.20 %

10

0.01

287

166

111

251,676 $
227,291 $9,397 $
12,331 $

60,775 $49,580 $181,504
165,380* Indicates amount less than $0.5 million or 0.005 percent
a. May differ from the calculated amounts or sum of individual figures shown due to rounding.

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

68

Percentage of
total loans
outstanding a

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

100.00 %STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2021
Amounts expressed in millions of U.S. dollars
Member a
Part I Members
Australia
Austria
Belgium
CanadaDenmark
Estonia
FinlandFranceGermany
GreeceIceland
Ireland
Italy
Japan
KuwaitLatviaLithuania
Luxembourg
Netherlands
New Zealand
NorwayPortugal
Russian Federation
Slovenia
South Africa
Spain
SwedenSwitzerland
United Arab Emirates
United Kingdom
United States
Subtotal—Part I Members b
Part II Members
Afghanistan
Albania
Algeria
AngolaArgentina
Armenia
Azerbaijan
Bahamas, The
Bangladesh
Barbados
BelizeBenin
BhutanBolivia, Plurinational State ofBosnia and Herzegovina

Number of
votes

Subscriptions andcontributionscommitted b

Percentage of total
votes

365,955
272,150
320,639782,320
275,568
54,427
185,339
1,118,918
1,569,980
57,46565,779110,230
667,995
2,454,693
122,208
60,91654,27883,584590,188
81,955
308,671
74,30890,64760,44576,902
315,111608,339
389,326
1,367
1,984,072
2,925,790
16,129,565

1.25
0.93
1.09
2.66
0.94
0.19
0.63
3.81
5.35
0.20
0.22
0.38
2.28
8.36
0.42
0.21
0.18
0.28
2.01
0.28
1.05
0.25
0.31
0.21
0.26
1.07
2.07
1.33
6.76
9.96
54.94

59,20461,859122,959
153,438
412,256
65,146
72,63659,906
156,11062,86019,83460,82058,73275,99455,440

0.20
0.21
0.42
0.52
1.40
0.22
0.25
0.20
0.53
0.21
0.07
0.21
0.20
0.26
0.19

%

$

%

$

5,531.34
4,183.42
5,453.06
13,483.05
4,339.45
21.85
2,271.86
20,625.63
29,272.77
214.16103.96938.8911,349.98
50,118.26
1,121.38
20.73
19.83
471.47
10,731.10
421.184,686.94
332.75750.7246.49
249.43
5,006.44
10,095.48
6,575.63
5.58
36,991.70
56,214.92
281,649.45
1.50
0.37
30.57
8.27
156.21
0.69
6.14
8.54
8.16
2.36
0.27
0.78
0.08
1.65
2.50

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

69

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2021
Amounts expressed in millions of U.S. dollars
Member a
Botswana
BrazilBurkina Faso
BurundiCabo Verde, Republic ofCambodia
Cameroon
Central African Republic
Chad
Chile
China
Colombia
Comoros
Congo, Democratic Republic ofCongo, Republic of
Costa Rica
Côte d’Ivoire
Croatia
CyprusCzech Republic
Djibouti
Dominica
Dominican Republic
EcuadorEgypt, Arab Republic of
El Salvador
Equatorial Guinea
Eritrea
Eswatini
Ethiopia
Fiji
Gabon
Gambia, The
Georgia
Ghana
GrenadaGuatemalaGuineaGuinea-Bissau
GuyanaHaiti
Honduras
Hungary
India
Indonesia
Iran, Islamic Republic of
Iraq
IsraelJordanKazakhstan

70

Number of
votes
53,728477,996
66,31055,801
43,84071,08960,782
48,91052,21058,505660,966
133,32147,14082,69952,21028,362
67,37791,99475,021
131,906
48,11658,892
27,78050,151
134,452
46,516
6,167
46,53622,322
51,73219,8092,093
55,20865,71786,67728,927
40,69637,28744,50074,34354,53859,206205,105
851,128
259,846
115,867
72,712
90,204
24,86523,297

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

Percentage of total
votes
0.18 %
1.63
0.23
0.19
0.15
0.24
0.21
0.17
0.18
0.20
2.25
0.45
0.16
0.28
0.18
0.10
0.23
0.31
0.26
0.45
0.16
0.20
0.09
0.17
0.46
0.16
0.02
0.16
0.08
0.18
0.07
0.01
0.19
0.22
0.30
0.10
0.14
0.13
0.15
0.25
0.19
0.20
0.70
2.90
0.88
0.39
0.25
0.31
0.08
0.08

Subscriptions andcontributionscommitted b$
3.63
834.89
0.81
1.09
0.13
1.60
1.61
0.77
0.78
39.12
1,135.53
25.21
0.13
4.60
0.75
0.28
1.57
5.98
32.18
157.38
0.26
0.14
0.58
0.94
18.66
0.49
0.41
0.14
0.42
0.69
0.76
0.63
0.42
0.97
3.14
0.14
0.56
1.33
0.22
1.27
1.11
0.44
173.10628.42140.0924.18
1.11
152.76
0.41
8.50

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2021
Amounts expressed in millions of U.S. dollars
Member a
Kenya
Kiribati
Korea, Republic of
Kosovo, Republic ofKyrgyz Republic
Lao People's Democratic Republic
LebanonLesothoLiberia
Libya
Madagascar
MalawiMalaysia
Maldives
Mali
Marshall Islands
Mauritania
Mauritius
MexicoMicronesia, Federated States ofMoldova
Mongolia
Montenegro
MoroccoMozambique
Myanmar
Nepal
Nicaragua
Niger
Nigeria
North Macedonia
Oman
Pakistan
Palau
PanamaPapua New Guinea
Paraguay
Peru
Philippines
PolandRomania
RwandaSamoa
São Tomé and Principe
Saudi Arabia
SenegalSerbiaSt. Kitts and Nevis
St. Lucia
St. Vincent and the Grenadines

Number of
votes
77,96043,592
297,756
50,85764,522
48,9108,562
57,00552,03844,771
70,51658,540104,565
55,04662,445
4,902
52,21075,236142,236
18,42456,58245,81859,594111,332
63,91782,09654,71062,982
52,210119,982
47,09559,288244,070
3,804
10,18567,75446,493
93,132
149,770
587,836
96,01052,03843,90149,519980,019
74,74386,096
13,86830,532
49,929Percentage of
total votes
0.27 %
0.15
1.01
0.17
0.22
0.17
0.03
0.19
0.18
0.15
0.24
0.20
0.36
0.19
0.21
0.02
0.18
0.26
0.48
0.06
0.19
0.16
0.20
0.38
0.22
0.28
0.19
0.21
0.18
0.41
0.16
0.20
0.83
0.01
0.03
0.23
0.16
0.32
0.51
2.00
0.33
0.18
0.15
0.17
3.34
0.25
0.29
0.05
0.10
0.17

Subscriptions andcontributionscommitted b
$
2.41
0.10
2,817.34
0.86
0.57
0.73
0.56
0.23
1.12
1.31
1.39
0.99
59.81
0.05
1.37
0.01
0.78
1.32
168.34
0.03
0.88
0.30
0.76
5.70
2.06
2.57
0.72
0.44
0.76
40.49
1.10
1.42
78.42
0.03
0.03
1.27
0.44
18.07
34.43
149.36
5.20
1.12
0.14
0.12
3,205.70
2.69
7.11
0.17
0.23
0.12

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

71

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2021
Amounts expressed in millions of U.S. dollars

Number of votes
63,63856,746
94,70443,901
10,50652,447
106,639
65,003
14,131
53,91868,943
113,639
45,123
61,84049,51481,067
2,793
177,195
8,838
50,392
115,569
73,93650,952
61,16868,97687,027
105,982
13,232,035

Percentage of
total votes
0.22 %
0.19
0.32
0.15
0.04
0.18
0.36
0.22
0.05
0.18
0.23
0.39
0.15
0.21
0.17
0.28
0.01
0.60
0.03
0.17
0.39
0.25
0.17
0.21
0.23
0.30
0.36
45.06 %

Total—June 30, 2021 b

29,361,600

100.00 %Total—June 30, 2020

28,824,451

Member a
Sierra Leone
Singapore
Slovak Republic
Solomon Islands
SomaliaSouth Sudan
Sri Lanka
Sudan
Syrian Arab Republic
Tajikistan
Tanzania
Thailand
Timor-Leste
Togo
Tonga
Trinidad and Tobago
Tunisia
TurkeyTuvaluUgandaUkraineUzbekistan
Vanuatu
Vietnam
Yemen, Republic ofZambiaZimbabwe
Subtotal—Part II Members b

Subscriptions andcontributionscommitted b$
1.04
317.81
37.56
0.13
0.95
0.45
4.34
1.50
1.19
0.53
2.32
19.18
0.44
1.19
0.11
2.13
1.89
204.79
0.03
2.32
8.05
1.92
0.31
2.23
2.20
3.63
6.41
$
10,884$

292,534$

267,529

a. See Notes to Financial Statements—Note A for an explanation of the two categories of membershipb. May differ from the calculated amounts or sum of individual figures shown due to rounding.

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

72

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

NOTES TO FINANCIAL STATEMENTSPURPOSE AND AFFILIATED ORGANIZATIONSThe International Development Association (IDA) is an international organization established in 1960. IDA’s main
goal is reducing poverty through promoting sustainable economic development in the less developed countries of theworld that are members of IDA, by extending concessionary and non-concessionary financing in the form of grants,
loans and guarantees, and by providing related technical assistance. The activities of IDA are complemented bythose of three affiliated organizations, the International Bank for Reconstruction and Development (IBRD), theInternational Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). Each of theseorganizations is legally and financially independent from IDA, with separate assets and liabilities, and IDA is notliable for their respective obligations. Transactions with these affiliates are disclosed in the notes that follow.
IDA is immune from taxation pursuant to Article VIII, Section 9, Immunities from Taxation, of IDA’s Articles ofAgreement.
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIESIDA’s financial statements are prepared in conformity with accounting principles generally accepted in the UnitedStates of America (U.S. GAAP).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenue and expenses during thereporting period. Due to the inherent uncertainty involved in making those estimates, actual results could differ fromthese estimates. Significant judgment has been used in the valuation of certain financial instruments and thedetermination of the adequacy of the accumulated provisions for debt relief and losses on loans and other exposures(signed loan commitments, including deferred drawdown options that are effective and irrevocable commitments,
guarantees and repaying project preparation facilities).
On August 6, 2021, the Executive Directors approved these financial statements for issue, which was also the datethrough which IDA’s management evaluated subsequent events.
Certain reclassifications to the prior year’s information have been made to conform with the current year’s
presentation.
Translation of Currencies
IDA’s financial statements are expressed in U.S. dollars for the purpose of summarizing its financial position andthe results of its operations for the convenience of its members and other users.
IDA conducts its operations in Special Drawing Rights (SDR) and its component currencies of U.S. dollar, euro,
Japanese yen, pound sterling and Chinese renminbi. These constitute the functional currencies of IDA.
Assets and liabilities are translated at market exchange rates in effect at the end of the accounting period. Revenue
and expenses are translated at either the market exchange rates in effect on the dates of revenue and expense
recognition, or at an average of the market exchange rates in effect during each month. Translation adjustments
relating to the revaluation of all assets and liabilities denominated in either SDR or the component currencies of
SDR, are reflected in Accumulated Other Comprehensive Income. Translation adjustments relating to nonfunctional currencies are reported in the Statement of Income.
Members’ Subscriptions and Contributions
Recognition
Members’ subscriptions and contributions committed for each IDA replenishment are initially recorded both as
subscriptions and contributions committed and, correspondingly, as subscriptions and contributions receivable. Prior
to effectiveness, only a portion of the value of Instruments of Commitment (IoCs) received as specified in thereplenishment resolution is recorded as subscriptions and contributions committed. Upon effectiveness, theremainder of the value of IoCs received is subsequently recorded as subscriptions and contributions committed.

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

73

IoCs can contain unqualified or qualified commitments. Under an unqualified commitment, a contributing member
agrees to pay a specified amount of its subscription and contribution without requiring appropriation legislation. A
qualified commitment is subject to the contributing member obtaining the necessary appropriation legislation.
Subscriptions and contributions made under IoCs become available for commitment for loans, grants and guarantees
by IDA for a particular replenishment in accordance with the IDA replenishment envelope as approved by the
Executive Directors.
A replenishment becomes effective when IDA receives IoCs from members whose subscriptions and contributions
aggregate to a specified portion of the full replenishment. Amounts not yet paid in at the date of effectiveness, arerecorded as subscriptions and contributions receivable and shown as a reduction of subscriptions and contributionscommitted. These receivables become due throughout the replenishment period, generally three years, in accordancewith an agreed payment schedule. The actual payment of receivables when they become due may be subject to thebudgetary appropriation processes for certain members.
The subscriptions and contributions receivable are settled through payment of cash or deposit of nonnegotiable, noninterest bearing demand notes. The notes are encashed by IDA on an approximately pro rata basis either as provided
in the relevant replenishment resolution over the disbursement period of the loans and grants committed under the
replenishment, or as needed.
In certain replenishments, donors receive discounts (a reduced obligation) when they pay a contribution amount
before the relevant due date, and acceleration credits when they pay their full contribution amount before the due
date. IDA retains any related revenue earned on these early payments, with subscriptions and contributionscommitted being recorded at contribution amounts received, grossed up for discounts and acceleration credits. The
discounts and acceleration credits are deducted in arriving at the subscriptions and contributions paid-in.
Under the Seventeenth Replenishment of IDA’s Resources (IDA17), which became effective beginning fiscal year
ended June 30, 2015, IDA’s Executive Directors approved the use of a limited amount of concessional debt funding,referred to as concessional partner loans, which continued in the subsequent Replenishments of IDA’s Resources.
The borrowing terms of this concessional debt funding aim to match the concessional features of IDA’s loans.
Proceeds received under this arrangement have two separate components: (1) a borrowing component and (2) agrant component, for which voting rights are allocated to providers of the concessional partner loans. The borrowing
component of the concessional partner loans is recognized and reported at amortized cost (see borrowings section
for more details). The grant component is calculated as a function of the terms of the loan and the discount rateagreed upon during the replenishment discussions. This grant component is recorded as equity equivalent to the cash
received.
For the purposes of determining its subscriptions and contributions, the membership of IDA is divided into two
categories: (1) Part I members, which make payments of subscriptions and contributions provided to IDA inconvertible currencies that may be freely used or exchanged by IDA in its operations and (2) Part II members, whichmake payments of ten percent of their initial subscriptions in freely convertible currencies, and the remaining 90
percent of their initial subscriptions, and all additional subscriptions and contributions in their own currencies or infreely convertible currencies. Certain Part II members provide a portion of their subscriptions and contributions inthe same manner as mentioned in (1) above. IDA’s Articles of Agreement and subsequent replenishment resolutions
provide that the currency of any Part II member paid in by it may not be used by IDA for projects financed by IDA
and located outside the territory of the member except by agreement between the member and IDA. The national
currency portion of subscriptions of Part II members is recorded as restricted under Members’ subscriptions andcontributions unless released under an agreement between the member and IDA, or used for administrative
expenses. The cash paid and notes deposited in nonconvertible local currencies for the subscriptions of Part II
members are recorded either as Restricted cash under Due from Banks, or as restricted notes included under
Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Members’ subscriptions and contributions.
Following adoption by the Board of Governors on April 21, 2006 of a resolution authorizing additions to IDA’s
resources to finance the MDRI (Multilateral Debt Relief Initiative), pledges received in the form of IoCs forfinancing the MDRI are recorded and accounted for in their entirety. Therefore, the full value of all IoCs received isrecorded as Subscriptions and contributions committed. Correspondingly, the IoCs are recorded as Subscriptions andcontributions receivable and deducted from equity.

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Withdrawal of Membership
Under IDA’s Articles of Agreement, a member may withdraw from membership in IDA at any time. When agovernment ceases to be a member, it remains liable for all financial obligations undertaken by it to IDA, whether asa member, borrower, guarantor or otherwise. The Articles provide that upon withdrawal, IDA and the government
shall proceed to a settlement of accounts. If agreement is not reached within six months, standard arrangements areprovided. Under these arrangements, IDA would pay to the government the lower of the member’s total paid-in
subscriptions and contributions or the member’s proportionate share of IDA’s net assets. These funds would be paid
as a proportionate share of all principal repayments received by IDA on loans made during the period of thegovernment’s membership.
Valuation of Subscriptions and Contributions
The subscriptions and contributions provided through the Third Replenishment are expressed in terms of “U.S.
dollars of the weight and fineness in effect on January 1, 1960” (1960 dollars). Following the abolition of gold as acommon denominator of the monetary system and the repeal of the provision of the U.S. law defining the par valueof the U.S. dollar in terms of gold, the pre-existing basis for translating 1960 dollars into current dollars or any othercurrency disappeared. The Executive Directors of IDA decided, that until such time as the relevant provisions of the
Articles of Agreement are amended, the words “U.S. dollars of the weight and fineness in effect on January 1, 1960”
in Article II, Section 2(b) of the Articles of Agreement of IDA are interpreted to mean the SDR introduced by theInternational Monetary Fund as the SDR was valued in terms of U.S. dollars immediately before the introduction of
the basket method of valuing the SDR on July 1, 1974, such value being equal to $1.20635 for one SDR (the 1974
SDR). The Executive Directors also decided to apply the same standard of value to amounts expressed in 1960
dollars in the relevant resolutions of the Board of Governors.
The subscriptions and contributions provided through the Third Replenishment are expressed on the basis of the1974 SDR. Prior to the decision of the Executive Directors, IDA had valued these subscriptions and contributions on
the basis of the SDR at the current market value of the SDR.
The subscriptions and contributions provided under the Fourth Replenishment and thereafter are expressed inmembers’ currencies or SDRs and are payable in members’ currencies. Subscriptions and contributions madeavailable for disbursement in cash to IDA are translated at market exchange rates in effect on the dates they weremade available. Subscriptions and contributions not yet available for disbursements are translated at market
exchange rates in effect at the end of the accounting period.
Maintenance of Value
Article IV, Section 2(a) and (b) of IDA’s Articles of Agreement provides for maintenance of value payments on
account of the local currency portion of the initial subscription whenever the par value of the member’s currency or
its foreign exchange value has depreciated or appreciated to a significant extent, so long as, and to the extent that,such currency shall not have been initially disbursed or exchanged for the currency of another member. The
provisions of Article IV, Section 2(a) and (b) have by agreement been extended to cover additional subscriptions
and contributions of IDA through the Third Replenishment, but are not applicable to those of the Fourth andsubsequent replenishments.
The Executive Directors decided on June 30, 1987 that settlements of maintenance of value, which would result
from the resolution of the valuation issue on the basis of the 1974 SDR, would be deferred until the Executive
Directors decide to resume such settlements. These amounts are shown as Deferred Amounts to Maintain Value of
Currency Holdings and deducted from equity; any changes relate solely to translation adjustments.
Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Members’ Subscriptions andContributions
Payments on these instruments are due to IDA upon demand and these instruments are held in bank accounts in
IDA’s name. These instruments are carried and reported at face value as a reduction to equity on the Balance Sheet.
Loans and Other Exposures
In fulfilling its mission, IDA makes concessional and non-concessional loans to the poorest countries. These loans
and other exposures (collectively “exposures”) are made to, or guaranteed by, member governments or to thegovernment of a territory of a member (except for loans which have been made to regional development institutions
for the benefit of members or territories of members of IDA). In order to qualify for lending on IDA terms, a

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country’s per capita income must be below a certain level ($1,185 for the fiscal year ended June 30, 2021 and$1,175 for the fiscal year ended June 30, 2020) and the country may have only limited or no access to IBRD
lending.
Loans are carried at amortized cost. Commitment charges on the undisbursed balance of loans, are recognized inrevenue as earned. Incremental direct costs associated with originating loans are capitalized and amortized over thelife of the loans. Accrued interest is presented on the Balance Sheet in the line item Other receivables, accrued
interest and commitment charges.
It is IDA’s practice not to reschedule service charges, interest or principal payments on its loans or participate indebt rescheduling agreements with respect to its loans. Should modifications be made to the terms of existing loans,
IDA would performs an evaluation to determine the required accounting treatment, including whether themodifications would result in the affected loans being accounted for as a trouble debt restructuring, new loan, or as acontinuation of the existing loans.
It is the policy of IDA to place into nonaccrual status all loans and other exposures made to, or guaranteed by, amember or to the territory of a member if principal or charges with respect to any such loan and other exposures are
overdue by more than six months, unless IDA’s management determines that the overdue amount will be collectedin the immediate future. In addition, if loans by IBRD to a member government are placed into nonaccrual status, allloans and other exposures to that member will also be placed into nonaccrual status by IDA. On the date a member’sloans and other exposures are placed into nonaccrual status, unpaid charges that had been accrued on loans are
deducted from loan revenue in the current period.
Revenue on nonaccrual loans is included in the Statement of Income only to the extent that payments have been
received by IDA. If collectability risk is considered to be particularly high at the time of arrears clearance, themember’s loans and other exposures may not automatically emerge from nonaccrual status, even though themember’s eligibility for new loans may have been restored. In such instances, a decision on the restoration of loans
to accrual status is made on a case-by-case basis after a suitable period of payment or policy performance has passed
from the time of arrears clearance.
The repayment obligations of loans funded from resources through the Fifth Replenishment are expressed in theloan agreements in terms of 1960 dollars. In June 1987, the Executive Directors decided to value those loans at therate of $1.20635 per 1960 dollar on a permanent basis. Loans funded from resources provided under the Sixth
Replenishment and thereafter are denominated in SDRs, with the exception of loans provided under the Single
Currency Lending program, which allows IDA recipients to denominate new IDA loans in one of the five
constituent currencies of the SDR basket.
Loan commitments: Undisbursed loans relate to operations approved by the Executive Directors for which
disbursements are yet to be made. IDA records a provision for expected losses on undisbursed loan commitments
including Deferred Drawdown Options (DDOs), when signed by both parties. The signature of the loan agreement isa binding event that prevents IDA from unconditionally withdrawing from the agreement.
Buy-down of Loans
IDA enters into loan buy-down agreements with third party donors who make payments on the borrower’s service
and commitment charges through a trust fund until the borrower reaches agreed performance goals. The trust fundthen buys down the related loans for an amount equivalent to the present value of the remaining cash flows of therelated loans, ensuring IDA incurs no economic loss. The trust fund subsequently cancels the purchased loans,converting them to grant terms.
Development Grants
Effective July 1, 2019, with the adoption of ASU 2018-08 Not-For-Profit Entities (Topic 958) Clarifying the Scopeand the Accounting Guidance for Contributions Received and Contributions Made, development grants made by
IDA that are deemed to be conditional, are expensed when all the conditions have been met, which generally occurs
at the time of disbursement. Development grants that are deemed to be unconditional, continue to be expensed upon
approval. Prior to July 1, 2019, grants were recorded as an expense, and a liability was recognized, upon approval ofthe development grant by the Executive Directors.
Commitment charges on the undisbursed balance of development grants are recognized in revenue as earned.

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Project Preparation Advances
Project Preparation Advances (PPAs) are advances made to borrowers to finance project preparation costs pending
the approval of follow-on development operations. If approved under grant terms, these amounts are expensed upon
approval by management. To the extent there are follow-on loans or grants, these PPAs are refinanced out of theproceeds of the loans and grants. Accordingly, the PPA grant amounts initially charged to expense are reversed upon
approval of the follow-on development grants or loans.
Guarantees
Financial guarantees are commitments issued by IDA to guarantee payment performance by a member country (thedebtor) to a third party in the event that a member government (or government-owned entity) fails to perform its
contractual obligations to a third party.
Guarantees are regarded as outstanding when the underlying financial obligation of the borrower is incurred, andcalled when a guaranteed party demands payment under the guarantee. IDA would be required to perform under its
guarantees if the payments guaranteed are not made by the borrower and the guaranteed party called the guarantee
by demanding payment from IDA in accordance with the terms of the guarantee.
At inception of the guarantees, IDA records the fair value of the obligation to stand ready and a corresponding
guarantee fee receivable, included in Other Liabilities - Accounts payable and miscellaneous liabilities and in Other
Assets, respectively, on the Balance Sheet. Upfront guarantee fees received are deferred and amortized over the lifeof the guarantee.
In the event that a sovereign guarantee is called, IDA has the contractual right to require payment from the member
country.
HIPC Debt Initiative
The Heavily Indebted Poor Countries (HIPC) Debt Initiative was launched in 1996 as a joint effort by bilateral andmultilateral creditors to ensure that reform efforts of HIPCs would not be put at risk by unsustainable external debt
burdens.
Under the Enhanced HIPC Framework, implementation mechanisms include: (i) partial forgiveness of IDA debt
service as it comes due, and ii) in the case of countries with a substantial amount of outstanding IBRD debt, partial
repayment with IDA resources (excluding transfers from IBRD) of outstanding IBRD debt.
Upon signature by IDA of the country specific legal notification, immediately following the decision by the
Executive Directors of IDA to provide debt relief to the country (the Decision Point), the country becomes eligiblefor debt relief up to the nominal value equivalent of one third of the net present value of the total HIPC debt relief
committed to the specific country. A Completion Point is reached when the conditions specified in the legal
notification are met and the country’s other creditors have confirmed their full participation in the debt relief
initiative. When the country reaches its Completion Point, IDA’s commitment to provide the total debt relief forwhich the country is eligible, becomes irrevocable. IDA’s provisioning policy for the HIPC Debt Initiative isdiscussed below.
Donors compensate IDA on a “pay-as-you-go” basis to finance IDA’s forgone loan reflows (principal and service
charge repayments) under the HIPC Debt Initiative. This means that for the debt relief provided by writing off theprincipal and charges during a replenishment, the donors compensate IDA for the forgone reflows throughadditional contributions in the relevant replenishment. These additional resources are accounted for as equity, as
subscriptions and contributions, because they carry voting rights.
MDRI
Debt relief provided under the Multilateral Debt Relief Initiative (MDRI), which is characterized by the write-off ofeligible loans upon qualifying borrowers reaching the HIPC Completion Point, is in addition to existing debt relief
commitments provided by IDA and other creditors under the HIPC Debt Initiative. When a country reaches
Completion Point, the applicable loans are written off. This write off occurs at the beginning of the quarterly period
following the date on which the country reaches Completion Point. For forgone repayments under MDRI, donors
established a separate MDRI replenishment spanning fiscal years 2007 through 2044 and pledged to compensate
IDA for the costs of providing debt relief under MDRI on a “dollar-for-dollar” basis. These additional resources areaccounted for as equity, as subscriptions and contributions, because they carry voting rights.

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Accumulated Provision for Losses on Loans and Other Exposures
Management determines the appropriate level of accumulated provisions for losses on loan exposures, which reflects
the expected losses inherent in IDA’s exposures.
The accumulated provision for losses on loans and other exposures includes the accumulated provision for HIPC
Debt Initiative and MDRI.
HIPC Debt Initiative and MDRI
The adequacy of the accumulated provision for the HIPC Debt Initiative and MDRI is based on both quantitativeand qualitative analyses of various factors, including estimates of the Decision and the Completion point dates. IDA
periodically reviews these factors and reassesses the adequacy of the accumulated provision for the HIPC Debt
Initiative and MDRI.
Upon approval by the Executive Directors of a country as potentially eligible for IDA debt relief under the
Enhanced HIPC Initiative, the principal component of the estimated debt relief costs is recorded within theaccumulated provision for loan losses on the Balance Sheet, and as a provision expense in the Statement of Income.
This estimate is subject to periodic revision. Adjustments to the accumulated provision are recorded as a charge to or
release of provision in the Statement of Income. The accumulated provision for HIPC Debt Initiative is reduced as
debt relief is provided. The accumulated provision for HIPC Debt Initiative is reduced by the amount of the eligibleloans written off when the country reaches Completion Point and becomes eligible for MDRI debt relief.
Following the Executive Directors' approval of IDA's participation in the MDRI in June 2006, IDA fully provided
for the estimated write-off of the principal component of debt relief to be delivered under the MDRI for the HIPC
eligible countries confirmed by the Executive Directors as eligible for relief at that time.
Loans
Loan exposures are disaggregated into two groups: exposures in accrual status and exposures in nonaccrual status. In
each group, a credit risk rating is then assigned to the exposures for each borrower (defined as the nominal amountof loans outstanding less the accumulated provision for loss under the HIPC Debt Relief Initiative, and MDRI).
The total exposure for provisioning is the current exposure and the estimated exposure taking into account expecteddisbursements and repayments over the life of the instruments. The expected credit losses related to loans and otherexposures are calculated over the life of the instruments based on the expected exposures, the expected default
frequency (probability of default to IDA) and the estimated loss given default. The provision for expected losses is
the sum of the expected annual losses over the life of the instruments.
For countries in accrual status, these exposures are grouped in pools of borrowers with a similar risk rating. The
determination of a borrower’s rating is based on various factors (see Note D—Loans and other exposures). Eachrisk rating is mapped to an expected default frequency using IDA’s credit migration matrix, based on historicalobservations of credit ratings at the beginning and at the end of each year.
Expected losses on loan exposures comprise estimates of potential losses arising from default and nonpayment ofprincipal and interest amounts due, and any economic loss due to delays in receiving payments. The estimated loss
given default is determined at each balance sheet date, based on IDA’s historical experience as well as parameters
adjusted for current conditions during the reasonable and supportable forecast period of IDA. The loss given default
is based on the borrower’s eligibility, namely: IDA, Blend (IBRD and IDA) and IBRD, with the highest loss given
default associated with IDA eligibility. The borrower’s eligibility is assessed at least annually. The main factors
used to determine the loss given default are the estimated length of delays in receiving loan payments and theeffective interest rate of the exposures. IDA’s loan portfolio comprises mostly fixed interest rate loans, therefore, themeasurement of loss severity is not sensitive to market interest rate movements.
For the calculation of expected credit losses, IDA applies a three-year reasonable and supportable forecast period
representing the most reliable and available economic data during this period. IDA also applies a ten-year straightline reversion to the mean to reflect the historical pattern of rating migration to the mean of its loan portfolio.
This methodology is also applied to countries with exposures in nonaccrual status, although the expected default
frequency is equal to one. At times, to reflect certain distinguishing circumstances of a particular nonaccrual
situation, different input assumptions may be used for a specific country.

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All exposures for countries in nonaccrual status are individually assessed. Except for debt relief provided under the
HIPC Debt Initiative and MDRI, it is IDA’s practice not to write off its loans. To date, no loans have been writtenoff, other than under the HIPC Debt Initiative, MDRI and buy-down of loans.
Management reassesses the adequacy of the accumulated provision on a quarterly basis and adjustments to theaccumulated 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.
When a member country prepays its outstanding loans, it may receive a discount equivalent to the difference
between the outstanding carrying amount and the present value of the remaining cash flows. In such instances, IDA
records a provision for losses on loans equivalent to the discount provided, at the time when the prepayment terms
are agreed between IDA and the member country.
Loan Commitments
IDA records the expected credit losses on loan commitments based on the projected disbursements of signed loan
commitments (adjusted by cancellations based on historical experience), the probability of default and loss given
default. The provision is included in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance
Sheet.
Guarantees
IDA records a contingent liability for the expected losses related to guarantees over the projected life of the
instruments, which is determined based on the estimated exposure at default multiplied by the corresponding loss
given default and expected default probability for the projected life of the guarantee. This provision, as well as theunamortized balance of the deferred guarantee fees, and the unamortized balance of the obligation to stand ready,are included in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance Sheet.
Statement of Cash Flows: For the purpose of IDA's Statement of Cash Flows, cash is defined as the amount of both
Unrestricted cash and Restricted cash presented under the Due from banks line on the Balance Sheet.
Restricted Cash: This mainly includes amounts which have been received from members as part of theirsubscriptions, which are restricted for specified purposes.
Investments
Investment securities are classified based on management’s intention on the date of purchase, their nature, andIDA’s policies governing the level and use of such investments. All investment securities are held in the trading
portfolio except for a security purchased from IFC in 2015 which is classified as non-trading. While IDA does notplan to sell the IFC security, IDA elected to measure it at fair value, so that all of its investment securities aremeasured on the same basis. All investment securities and related financial instruments held by IDA are carried andreported at fair value, or at face value which approximates fair value. Where available, quoted market prices areused to determine the fair value of trading securities. Examples include most government and agency securities,
asset-backed securities (ABS), mortgage-backed securities (MBS), to-be-announced securities (TBA securities) andfutures 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 constantprepayment rates. Where applicable, unobservable inputs such as constant prepayment rates, probability of default
and loss severity are used. Unless quoted prices are available, time deposits are reported at face value, whichapproximates fair value, as they are short term in nature. The first-in first-out method is used to determine the cost of
securities sold in computing the realized gains and losses on these instruments.
Interest revenue is included in the Investments, net line in the Statement of Income. Unrealized mark-to-market
gains and losses for investment securities and related financial instruments held in the investment portfolio areincluded in the Statement of Income. Realized gains and losses on trading securities are recognized in the Statementof Income when securities are sold.
IDA may require collateral in the form of cash or approved liquid securities from individual counterparties underlegal agreements that provide for collateralization, in order to mitigate its credit exposure to these counterparties.
For collateral received in the form of cash from counterparties, IDA invests the amounts received and records theinvestment and a corresponding obligation to return the cash. Collateral received in the form of liquid securities is

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only recorded on IDA’s Balance Sheet to the extent that it has been transferred under securities lending agreements
in return for cash.
Securities Purchased Under Resale Agreements, Securities Sold Under Repurchase Agreements, Securities
Lent Under Securities Lending Agreements and Payable for Cash Collateral Received
Securities purchased under resale agreements, securities sold under repurchase agreements, securities lent under
securities lending agreements and payable for cash collateral received are recorded at face value, whichapproximates fair value, as they are short term in nature. IDA receives securities purchased under resale agreements,
monitors the fair value of the securities and, if necessary, closes out transactions and enters into new repriced
transactions. The securities transferred to counterparties under the repurchase and security lending arrangements andthe securities transferred to IDA under the resale agreements have not met the accounting criteria for treatment as asale. Therefore, securities transferred under repurchase agreements and security lending arrangements are retained asassets on the Balance Sheet, and securities received under resale agreements are not recorded on the Balance Sheet.
Securities lent under securities lending agreements and sold under securities repurchase agreements as well as
securities purchased under resale agreements are presented on a gross basis, which is consistent with the manner inwhich these instruments are settled. The interest earned with respect to securities purchased under resale agreements
is included in Investments, net, line in the Statement of Income. The interest expense pertaining to the securities soldunder repurchase agreements and security lending arrangements is included in the Borrowing expenses, net line in
the Statement of Income.
Borrowings
IDA introduced long term borrowings through concessional partner loans for the first time in the fiscal year
commencing July 1, 2014. The borrowing terms of the concessional partner loans aim to match the features of
IDA’s concessional loans. As of June 30, 2021, these borrowings are unsecured and unsubordinated fixed rate debt
in SDR component currencies. IDA may prepay some or the entire outstanding amounts without penalty. Theseborrowings are carried and reported at amortized cost.
IDA has also issued debt instruments in the capital markets. IDA has elected the fair value option for all market debt
issued, as of June 30, 2021. For debt carried at fair value, changes in fair value are recognized in the related
Unrealized mark-to-market gains and losses on non-trading portfolios, net, line in the Statement of Income, except
for changes in the fair value that relate to IDA’s own credit risk, which are reported in Other Comprehensive Income(OCI) as a Debit Valuation Adjustment (DVA). The DVA on fair value option elected liabilities is measured byrevaluing each liability to determine the changes in fair value of that liability arising from changes in IDA’s cost offunding relative to the London Inter-Bank Offered Rate (LIBOR).
Plain vanilla bonds and discount notes, if any, are valued using the standard discounted cash flow method which
relies on observable market inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
Where available, quoted market prices are used to determine the fair value of short-term notes.
For the purpose of the Statement of Cash Flows, new issuances and retirements pertaining to short term borrowings,
if any, with an original maturity of less than 90 days, are presented on a net basis. In contrast, short term borrowings
with an original maturity greater than 90 days and less than one year are presented on a gross basis.
Interest expense relating to all debt instruments in IDA’s borrowing portfolio is measured on an effective yield basis
and is reported as part of the Borrowing expenses, net line in the Statement of Income.
For presentation purposes, amortization of discounts and premiums is also included in the Borrowing expenses, netline in the Statement of Income.
Accounting for Derivatives
IDA has elected not to designate any hedging relationships for accounting purposes. Rather, all derivative
instruments are marked to fair value on the Balance Sheet, with changes in fair value accounted for through theStatement of Income.
The presentation of derivative instruments on IDA’s Balance Sheet reflects the netting of derivative asset andliability positions and the related cash collateral received from the counterparty when a legally enforceable masternetting agreement exists, and the other conditions set out in ASC Topic 210-20, Balance Sheet—Offsetting, are met.
In addition, in the Notes to the financial statements, unless stated differently, derivatives are presented on a net basis
by instrument.

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A master netting agreement is an industry standard agreement with a counterparty that permits multiple transactions
governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency
in the event of a default (e.g., bankruptcy, failure to make a required payment or transfer securities or delivercollateral when due). Obligations under master netting agreements are often secured by collateral posted under anindustry standard credit support annex to the master netting agreement. Upon default by the counterparty, thecollateral agreement grants an entity the right to set-off any amounts payable by the counterparty against any posted
collateral.
IDA uses derivative instruments in its investment trading portfolio to manage interest rate and currency risks. These
derivatives are carried and reported at fair value. Interest revenue (expenses) are reflected as part of Interest revenue,
while unrealized mark-to-market gains and losses on these derivatives are reflected as part of the Unrealized markto-market gains (losses) on Investments-Trading portfolio, net line in the Statement of Income.
IDA also uses derivatives in its loan, asset-liability management and borrowing portfolios. Within the asset-liability
management portfolio, currency forward contracts are used to manage foreign exchange fluctuation risks andinterest rate swap contracts under the Capital Value Protection program are used to manage interest rate volatility of
IDA’s capital adequacy model. In the loan and borrowing portfolios, interest rate swaps are used to modify theinterest rate characteristics of these portfolios. The interest component of these derivatives is recognized as an
adjustment to the loan revenue and borrowing costs over the life of the derivative contracts and is included in Loans,
net and Borrowing expenses, net lines in the Statement of Income. Changes in fair values of these derivatives arerecorded in the Statement of Income as Unrealized mark-to-market gains and losses on non-trading portfolios, net.
For the purpose of the Statement of Cash Flows, IDA has elected to report the cash flows associated with thederivative instruments that are used to economically hedge its borrowings and investments, in a manner consistent
with the presentation of the related borrowing and investment cash flows.
Derivative contracts include currency forward contracts, TBA securities, swaptions, exchange traded options andfutures contracts, currency swaps and interest rate swaps. Currency swaps and interest rate swaps are primarily plain
vanilla instruments and they are valued based on standard discounted cash flow methods using observable market
inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
Most outstanding derivative positions are transacted over-the-counter and are therefore valued using internallydeveloped valuation models. For commercial and non-commercial counterparties where IDA is in a net receivable
position, IDA calculates a Credit Valuation Adjustment (CVA) to reflect credit risk. For net derivative positions
with commercial and non-commercial counterparties where IDA is in a net payable position, IDA calculates a DVA
to reflect its own credit risk. The CVA is calculated using the fair value of the derivative contracts, net of collateral
received under credit support agreements, and the probability of counterparty default based on the Credit Default
Swap (CDS) spread and, where applicable, proxy CDS spreads. The DVA calculation is generally consistent with
the CVA methodology and incorporates IDA’s own credit spread as observed through the CDS market.
Valuation of Financial Instruments
IDA has an established and documented process for determining fair values. Fair value is based upon quoted market
prices for the same or similar securities, where available.
Financial instruments for which quoted market prices are not readily available are valued based on discounted cash
flow models and other established valuation models. These models primarily use market-based or independently
sourced market parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves,and may incorporate unobservable inputs. Selection of these inputs may involve some judgment. In instances wheremanagement relies on instrument valuations supplied by external pricing vendors, there are procedures in place tovalidate the appropriateness of the models used as well as the inputs applied in determining those values.
IDA also has various internal controls in place to ensure that the valuations are appropriate where internallydeveloped models are used.
As of June 30, 2021 and June 30, 2020, IDA had no financial assets or liabilities measured at fair value on a nonrecurring basis.
Fair Value Hierarchy
Financial instruments are categorized based on the priority of the inputs to the valuation technique. The fair value
hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), the

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next highest priority to observable market-based inputs or inputs that are corroborated by market data (Level 2) andthe lowest priority to unobservable inputs that are not corroborated by market data (Level 3).
Financial assets and liabilities recorded at fair value on the Balance Sheet are categorized based on the inputs to thevaluation techniques as follows:
Level 1: Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or
liabilities in active markets.
Level 2: Financial assets and liabilities whose values are based on quoted prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in non-active markets; or pricing
models for which all significant inputs are observable, either directly or indirectly for substantially the fullterm of the asset or liability.
Level 3: Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs
that are both unobservable and significant to the overall fair value measurement.
IDA’s policy is to recognize transfers in and transfers out of levels as of the end of the reporting period in which
they occur.
Accounting for Contributions to Special Programs
IDA recognizes unconditional grants such as contributions to special programs as an expense upon approval by the
Executive Directors.
Transfers
Transfers from IBRD’s net income to IDA are recognized in the Statement of Income upon approval by the Board ofGovernors of IBRD. Similarly, transfers relating to grants made from IFC’s retained earnings to IDA are recognizedin the Transfers from affiliated organizations and others on the Statement of Income and Other assets on the Balance
Sheet upon execution of a grant agreement between IFC and IDA.
In addition, IDA periodically receives contributions from trust funds and private institutions. IDA does not assign
any voting rights for these contributions. Temporary restrictions relating to these contributions may arise from thetiming of receipt of cash, or donor imposed restrictions as to use.
Trust Funds
To the extent that IDA acts as an agent for or controls IDA-executed trust funds, assets held on behalf of specified
beneficiaries are recorded on IDA’s Balance Sheet, along with corresponding liabilities. Amounts disbursed fromthese trust funds are recorded as expenses with the corresponding amounts recognized as revenue. For Recipientexecuted trust funds, since IDA acts as a trustee, no assets or liabilities relating to these activities are recorded on the
Balance Sheet.
In some trust funds, execution is split between Recipient-executed and IDA-executed portions. Decisions on
assignment of funding resources between the two types of execution may be made on an ongoing basis; therefore,
the execution of a portion of these available resources may not yet be assigned.
IDA also acts as a financial intermediary to provide specific administrative or financial services with a limited
fiduciary or operational role. These arrangements, referred to as Financial Intermediary Funds, include, for example,
administration of debt service trust funds, financial intermediation and other more specialized limited fundmanagement roles. For these arrangements, funds are held and disbursed in accordance with instructions fromdonors or, in some cases, an external governance structure or a body operating on behalf of donors. For Financial
Intermediary Funds, since IDA acts as a trustee, no assets or liabilities relating to these activities are recorded on
IDA’s Balance Sheet.
Segment Reporting
Based on an evaluation of its operations, management has determined that IDA has only one reportable segment
since financial results are reviewed and resource allocation decisions are made at the entity level.

82

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

Accounting and Reporting Developments
Evaluated Accounting Standards:
In January 2021, the FASB issued ASU 2021-01 - Reference Rate Reform (Topic 848): Scope. The ASU permits
entities to elect certain optional expedients and exceptions when accounting for derivative contracts affected bychanges in the interest rates used in computations affected by reference rate reform activities. IDA adopted thestandard prospectively effective March 31, 2021, as permitted by the ASU, and the adoption did not have a material
impact on the financial statements.
In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects ofReference Rate Reform on Financial Reporting. The ASU provides temporary optional expedients and exceptions to
the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden of
the expected market transition from LIBOR and other interbank offered rates. To be eligible for the optional
expedients, modifications of contractual terms that change (or have the potential to change) the amount or timing ofcontractual cash flows must be related only to replacement of a reference rate. The relief is temporary and is only
available through December 31, 2022. IDA will apply the standard consistently to contractual amendments made to
all applicable floating rate instruments indexed to IBOR (inter-bank offered rate) rates. IDA adopted the standard
effective June 30, 2020 and the adoption did not have a material impact on the financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework –Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements of
ASC 820. The guidance became effective for IDA from the quarter ending September 30, 2020. The adoption of thisASU had no material impact on IDA’s financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement ofCredit Losses on Financial Instruments (CECL ASU). The ASU and its subsequent amendments introduce a newmodel for the accounting of credit losses of loans and other financial assets measured at amortized cost. The current
expected credit loss (CECL) model, requires an entity to estimate the credit losses expected over the life of an
exposure, considering historical information, current information, and reasonable and supportable forecasts.
Additionally, the ASUs require enhanced disclosures about credit quality and significant estimates and judgments
used in estimating credit losses.
For IDA, the ASUs became effective on July 1, 2020. The transition adjustment increased the Accumulated Deficit
by $802 million, which reflects the increase in the credit losses relating to loans and other exposures under CECL
compared to the previous “incurred loss” model. The impact is mainly driven by the requirement to provision overthe full life of IDA’s long maturity profile credit exposures as well as the inclusion of signed loan commitments inthe determination of the provision.
See the table below for details of the CECL transition adjustment as of July 1, 2020. The transition adjustment had
no impact to the Statement of Income. See Note D — Loans and Other Exposures, for additional details.
In millions of U.S. dollars

Accumulated provision related toLoans outstanding

Location on the Balance Sheet
Accumulated provision for loan
lossesDebt Relief under HIPC/MDRI
Signed loan commitments

Accumulated provision for loan
lossesOther liabilities

Other exposures

Other liabilities

June 30, 2020
As reported

Impact of the
adoption of the
CECL ASU

July 1, 2020
Adjusted

$

$

$

2,829
1,591
-

(59)

2,770

859

72

1,591
859

2

74

Total accumulated provision

$

4,492

$

802

$

5,294

Accumulated Deficit$(58,321)

$

(802)

$

(59,123)

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

83

NOTE B—MEMBERS’ SUBSCRIPTIONS AND CONTRIBUTIONS, AND MEMBERSHIP
The movement in subscriptions and contributions paid-in is summarized below:
Table B1: Subscriptions and contributions paid-in
In millions of U.S. dollars
June 30, 2021
Beginning of the fiscal year
Cash contributions received a
Demand obligations received
Translation adjustment
End of the fiscal year$$

June 30, 2020

241,343
3,442
4,901
766
250,452$$

234,078
3,336
4,233
(304)
241,343

a. Includes any restricted cash subscriptions.

During the fiscal year ended June 30, 2021, IDA encashed demand obligations totaling $4,913 million ($4,487
million—fiscal year ended June 30, 2020).
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 June 30, 2021, IDA’s Investments were mainly comprised of government and agency obligations (68%), withall the instruments being classified as either Level 1 or Level 2 within the fair value hierarchy. As of June 30, 2021,
the largest holding of Investments-Trading with a single counterparty was Japanese Government instruments (14%).
A summary of IDA’s investments composition is as follows:
Table C1: Investments-composition
In millions of U.S. dollars
June 30, 2021
Trading
Government and agency obligations
Time deposits
Asset-backed securities
Non-trading (at fair value)
Debt securities
Total

84

IDA FINANCIAL STATEMENTS: JUNE 30, 2021$$

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

June 30, 2020$$

24,1988,398
1,449
34,045$625
34,670IDA manages its investments on a net portfolio basis. The following table summarizes IDA’s net portfolio position;
the presentation of derivative instruments is on a net instrument basis:
Table C2: Net investment portfolio position
In millions of U.S. dollars
June 30, 2021
Investments
Trading
Non-trading
Total

$

June 30, 2020

36,889487
37,376

Securities sold under repurchase agreements, securities lent under
securities lending agreements, and payable for cash collateral received a$

34,045625
34,670-(109)

Derivative Assets
Currency swaps and currency forward contracts
Interest rate swaps
Other b
Total

167
167

19
1
3
23

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

(65)
(17)
(82)

(143)
(6)
(1)
(150)

426
107
(73)
37,921

602
636
(101)
35,571

Cash held in investment portfolio cReceivable from investment securities traded and other assets d
Payable for investment securities purchased e
Net Investment Portfolio$$a. As of June 30, 2021 there was no cash collateral received from counterparties under derivative agreements ($2 million - June30, 2020, including $1 million excess collateral).
b. These relate to TBA securities, swaptions, exchange traded options and futures contracts.
c. This amount is included in Unrestricted cash under Due from Banks on the Balance Sheet.
d. This amount is included in Other receivables and in Other assets, respectively, on the Balance Sheet.
e. As of June 30, 2021 there were no short sales (less than $0.5 million—June 30, 2020)

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) is provided in the tablebelow:
Table C3: Maturity structure of non-trading investment portfolio
In millions of U.S. dollars
PeriodLess than 1 year
Between1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
Thereafter$June 30, 2021
113

$

96
77
62
34
90
472

$

June 30, 2020
125

$

113
96
77
62
124
597

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 nonperformance

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

85

by 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 derivative 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.
The following table is a summary of the collateral received by IDA related to swap transactions:
Table C4: Collateral received
In millions of U.S. dollars
June 30, 2021
Collateral received
Cash
Securities
Total collateral received
Collateral permitted to be repledged
Amount of collateral repledged
Amount of Cash Collateral invested

$
$
$

-

June 30, 2020
$
$
$

68
68
68
-

Securities Lending: IDA may engage in securities lending and repurchases, against adequate collateral, as well as
securities borrowing and reverse repurchases (resales) of government and agency obligations, and ABS.
These transactions have been conducted under legally enforceable master netting arrangements, which allow IDA toreduce its gross credit exposure related to these transactions. As of June 30, 2021, there were no amounts which
could potentially be offset as a result of legally enforceable master netting arrangements (Nil— June 30, 2020).
Transfers of securities by IDA to counterparties are not accounted for as sales as the accounting criteria for thetreatment as a sale have not been met. Counterparties are permitted to repledge these securities until the repurchasedate.
Securities lending agreements and repurchase agreements expose IDA to several risks, including counterparty risk,
reinvestment risk, and risk of a collateral gap (increase or decrease in the fair value of collateral pledged). IDA has
procedures in place to ensure that trading activity and balances under these agreements are below predefinedcounterparty and maturity limits, and to actively monitor net counterparty exposure, after collateral, through daily
mark-to-market. Whenever the collateral pledged by IDA related to its borrowings under securities lending
agreements and repurchase agreements declines in value, the transaction is re-priced as appropriate by returning
cash or pledging additional collateral.
As of June 30, 2021, there were no liabilities relating to securities transferred under repurchase or securities lending
agreements ($107 million — June 30, 2020, comprised entirely of government and agency obligations, withagreements of overnight and continuous remaining contractual maturity).
As of June 30, 2021, none of the liabilities relating to securities transferred under repurchase or securities lending
Agreements remained unsettled at that date (Nil— June 30, 2020). There were no replacement trades entered into in
anticipation of maturing trades of a similar amount (Nil— June 30, 2020).
In the case of resale agreements, IDA receives collateral in the form of liquid securities and is permitted to repledge
these securities. While these transactions are legally considered to be true purchases and sales, the securities
received are not recorded on IDA’s balance sheet as the accounting criteria for treatment as a sale have not been

86

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

met. As of June 30, 2021, and June 30, 2020, there were no securities purchased under resale agreements, nor were
there any such instruments that remained unsettled on those dates.
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. Based on IDA’s internal credit quality indicators, the majority of the loans outstanding arein the Medium 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 June 30, 2021, accrued interest income and service charges on loansof $502 million is presented in Other receivables – Accrued interest and commitment charges on the Balance Sheet.
As of June 30, 2021, loans outstanding totaling $932 million (0.5% of the portfolio) from three borrowers, remain in
nonaccrual status. On March 25, 2021, all remaining loans to Sudan were restored to accrual status, upon receipt ofoverdue amounts, in accordance with IDA’s policy.
Maturity Structure
The maturity structure of loans outstanding was as follows:
Table D1: Loans - Maturity structure
In millions of U.S. dollars
June 30, 2021
July 01, 2021 through June 30, 2022

June 30, 2020
7,415

July 01, 2020 through June 30, 2021

July 01, 2022 through June 30, 2026

36,318July 01, 2021 through June 30, 2025

31,134

July 01, 2026 through June 30, 2031

46,624

July 01, 2025 through June 30, 2030

40,491

Thereafter

91,147

Thereafter

181,504

Total

Total

$

$

$

6,688

87,067$

165,380

Currency Composition
Loans outstanding had the following currency composition:
Table D2: Loans outstanding- Currency composition
In millions of U.S. dollars
Euro
U.S. dollar
SDR
JPY
Total

June 30, 2021$
7,407
10,123
163,96410$
181,504

June 30, 2020
$
4,715
7,812
152,853$
165,380

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
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 andGovernance factors. For the purpose of analyzing the risk characteristics of IDA’s exposures, these exposures aregrouped into three classes in accordance with assigned borrower risk ratings, which relate to the likelihood of loss:
Low, Medium and High risk classes, as well as exposures in nonaccrual status.

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

87

IDA’s borrower country risk ratings are key determinants in the provision for loan losses. Country risk ratings aregrouped in 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 June 30, 2021, particularly in 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 D3: Loans-Aging structure
In millions of U.S. dollars
June 30, 2021
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual
statusTotal

Up to 45
$

$

46-60

61-90

91-180

- $
7
7

- $
-

-

7
14 $

1
1 $

3
3

$

$

Total Past
Due

Over 180
- $
-

- $
-

9
9 $

399
399 $

Current

Total

- $
659 $
659
23,09223,092
7
156,814 a
156,8217
180,565
180,572419
513
426 $ 181,078

932$ 181,504

Table D3.1
In millions of U.S. dollars
June 30, 2020
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual
statusTotal

Up to 45
$

$

46-60

61-90

91-180

* $
3
3

- $
*
*

*
*

10
13 $

1
1 $

3
3

$

$

Total Past
Due

Over 180
- $
-

- $
-

20
20 $

1,131
1,131 $

Current

Total

* $
985 $
985
23,10023,1003
139,195 a
139,1983
163,280
163,283
1,165
932
1,168 $ 164,212

2,097$ 165,380

a. Includes PSW-related loans of $10 million ($5 million-June 30, 2020)* Indicates amount less than $0.5 million.

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.

88

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

The table below discloses the outstanding balances of IDA’s loan portfolio as of June 30, 2021 classified by the year
the loan agreement was signed.
Table D4: Loan portfolio vintage disclosure
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

2018

2017

Prior
Years

CAT DDOs CAT DDOs
Loans
disbursed Converted
Outstandingandto Term
as of June 30,
revolving
Loans
2021

- $
401
4,803

- $
564
6,260

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

- $
659 $
488
21,3208,927 119,316

- $
388

-

5,204

6,824

8,521

9,415

388

-

5,204 $

6,824 $

8,521 $ 8,925 $

388 $

-

8,925

141,295

932
9,415 $ 142,227 $$659
23,092
156,821
180,572$932
181,504

There were no Catastrophe Deferred Drawdown Option (CAT DDO) outstanding and revolving converted to termloans during the fiscal year ended June 30, 2021.
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.
The provision for HIPC Debt Initiative and MDRI is based on quantitative and qualitative analyses of various
factors, including estimates of Decision Point and Completion Point dates. These factors are reviewed periodicallyas part of the reassessment of the adequacy of the accumulated provision for loan losses. Provisions are released as
qualifying debt service becomes due and is forgiven under the HIPC Debt Initiative and are reduced by the amountof the eligible loans written off when the country reaches Completion Point and becomes eligible for MDRI debt
relief.
The accumulated provision as of July 1, 2020 was increased by an $802 million transition adjustment recorded upon
adoption of CECL. The transition adjustment corresponds to the difference between the accumulated provisioncalculated under the previous “incurred loss” model and the CECL model. Changes to the accumulated provision forlosses on loans and other exposures are summarized below.

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

89

Table D5: Accumulated provisions
In millions of U.S. dollars
June 30, 2021

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 fiscal year
Including accumulated provision for losses on:
Loans in accrual status
Loans in nonaccrual status
Total

Loans
outstanding
$
2,829
(59)

$
$
$

Debt relief
Loan
under
commitments HIPC/MDRI
$
- $
1,591
859
-

2,770
77

859
166

99
2,946

29
1,054 $

$

2,692
254
2,946

Other
$
72
2

1,591
(828) b

$
$

(9) d
18
772 $

$

Total
4,492
802

74
46

5,294
(539)

120

(9)
146
4,892

485
287
772

$
$
$

Loans:
Loans in accrual status
Loans in nonaccrual status
Total

$
$

3,177
541
3,718
180,572932
181,504

Table D5.1:
In millions of U.S. dollars
June 30, 2020

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

Loans
outstanding
$
2,826
33

$
$
$

(3)
(27)
2,829
2,556
273
2,829

Debt relief
Loan
under
commitments HIPC/MDRI
Other
$
- $
1,812 $
70(206) c
3

$

- $
$
$

(10) d(5)
1,591 $
201
1,390
1,591

Loans:
Loans in accrual status
Loans in nonaccrual status
Total
a. For the fiscal year ended June 30, 2020, the provision includes $3 million of discount on prepayment of loansb. Includes $819 million release of Sudan HIPC provision due to arrears clearancec. Includes $280 million release of Somalia HIPC provision due to arrears clearance
d. Represents debt service reduction under HIPC90

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

(1)
72

$

$
$
$
$
$

Total
4,708
(170)
(3)
(10)
(33)
4,492
2,757
1,663
4,420
163,283
2,097
165,380

Reported as Follows
Balance Sheet

Statement of Income

Accumulated Provision forLosses on:
Loans Outstanding
Debt Relief under
HIPC/MDRI
Loan commitments and Other
Exposures

Provision for losses on loans and otherexposures, release

Accumulated provision for loan losses

Provision for losses on loans and otherexposures, release
Provision for losses on loans and otherexposures, release

Accumulated provision for loan losses
Other liabilities

Loans to be written off under MDRI
During the fiscal years ended June 30, 2021 and June 30, 2020, there were no loans written off under the MDRI.
Overdue Amounts
IDA considers loans to be past due when a borrower fails to make payment on any principal, service charges orinterest due to IDA on the dates provided in the contractual loan agreement. As of June 30, 2021, there were no
principal or charges under sovereign loans in accrual status which were overdue by more than three months.
On March 25, 2021, Sudan paid all of their overdue principal and charges due to IDA of $849 million and $244
million, respectively. The outstanding loans remaining to Sudan were restored to accrual status on that date, in
accordance with IDA’s policy. Revenue from loans for the nine months ended March 31, 2021, increased by $244
million, which represents service charges received on March 25, 2021, that would have been recognized in previous
periods had these loans been in accrual status. The arrears clearance of the overdue payments to IDA for Sudan was
accomplished using a bridge financing provided by a member country. On the same day, IDA disbursed two
development grants totaling $1.3 billion to Sudan in support of re-engagement and reform programs. Sudan used$1.1 billion of the proceeds from the program to repay the bridge financing. Sudan’s arrears clearance led to a $831
million release of loan loss provision.
On June 29, 2021, Sudan reached Decision Point under the HIPC debt initiative and became eligible forapproximately $114 million in interim debt relief. As a result, IDA recorded a $114 million charge to the HIPC
provision for losses on Sudan’s outstanding loans as of June 30, 2021.
The following tables provide a summary of selected financial information for loans in nonaccrual status:
Table D6: Loans in nonaccrual status
In millions of U.S. dollars

Nonaccrual
Borrowersince
EritreaMarch 2012
Syrian Arab
Republic
June 2012
Zimbabwe
October 2000
Total - June 30, 2021
Total - June 30, 2020

Average
RecordedrecordedPrincipal
investment a
investment Outstanding
$
446 $
446 $
446

$

14
472
932 $

14
472
932 $

14
472
932

$

2,097 $

2,093 $

2,097

Provisionfor debt
relief
$
287

$

287

$

1,390

Overdue amounts
Provision
for loanlosses b
Principal
Charges
$
17 $
103 $
33

$

1
236
254 $

12
304
419 $

1
68
102

$

273 $

1,165 $

324

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.

During the fiscal years ended June 30, 2021 and June 30, 2020, no new loans were placed into nonaccrual status.

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

91

Table D7: Service charge revenue not recognized
In millions of U.S. dollars
Fiscal Year Ended June 30,
2021
2020
2019
Service charge revenue not recognized as a result ofloans being in nonaccrual status

$

7

$

15

$

19

During the fiscal year ended June 30, 2021, no service charge revenue was recognized on loans in nonaccrual status(less than $1 million—fiscal year ended June 30, 2020 and less than $1 million —fiscal year ended June 30, 2019).
Guarantees
Guarantees of $2,513 million were outstanding as of June 30, 2021 ($2,362 million – June 30, 2020). This amountincludes $484 million relating to the PSW ($308 million—June 30, 2020). The outstanding amount of guarantees
represent the maximum potential undiscounted future payments that IDA could be required to make under theseguarantees that is not included on the Balance Sheet. The guarantees issued by IDA have original maturities ranging
between 2 and 22 years, and expire in decreasing amounts through 2041.
As of June 30, 2021, liabilities related to IDA’s obligations under guarantees of $138 million ($138 million— June30, 2020), have been included in Other liabilities on the Balance Sheet. These include the accumulated provision forguarantee losses of $109 million ($66 million— June 30, 2020). The cumulative effect of the adoption of CECL wasa decrease of $3 million in the accumulated provision for guarantee losses as of July 1, 2020.
During the fiscal years ended June 30, 2021 and June 30, 2020, no guarantees provided by IDA to sovereign or subsovereign borrowers were called. As of June 30, 2021 IDA-PSW Blended Finance Facility guarantees under the
Small Loan Guarantee Program pursuant to the risk-sharing agreement between IDA and IFC were called for an
amount less than $0.5 million. During the fiscal years ended June 30 2021 and June 30, 2020, no other guarantees
provided by IDA under the PSW were called.
Concentration Risk
Loan revenue comprises service charges and interest charges on outstanding loan balances. For the fiscal year ended
June 30, 2021, loan revenue from two countries of $242 million and $218 million were each in excess of ten percent
of total loan revenue.
The following table presents IDA’s loans outstanding and associated loan revenue by geographic region:
Table D8: Loan revenue and outstanding balance by geographic region
In millions of U.S. dollars

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

As of and for the fiscal years ended June 30,
2021
2020
Service and
Loans
Service and
LoansInterest Charges c
Outstanding
Interest Charges c
Outstanding$
676$
64,141$621$
59,629639 b
48,508408
43,598330
34,786266
29,701
230
20,460209
19,602
114
7,821
126
7,388
42
3,267
34
2,925
20
2,511
21
2,532
1
10
5
$
2,052
$
181,504$
1,685$
165,380

a. Effective July 1st, 2020, Africa region has been reorganized into two regions: Eastern and Southern Africa & Western andCentral Africa.
b. Includes $248 million of service charges pertaining to Sudan.
c. Excludes $2 million of interest rate swap expenses related to loan hedges ($1 million-June 30, 2020).
d. Represents loans under the PSW.

92

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

NOTE E—BORROWINGS
IDA’s borrowings comprise both concessional partner loans from IDA’s members and market borrowings.
Concessional partner loans are unsecured and unsubordinated fixed rate debt in SDR component currencies. IDA
may prepay some or the entire outstanding amounts without penalty. These borrowings are reported at amortized
cost, and have original maturities of 25 and 40 years, with the final maturity in 2060. This does not include theproceeds received under the grant component of the concessional partner loan agreements, included in equity forwhich voting rights have been attributed.
Table E1: Borrowings-concessional partner loans outstanding
In millions of U.S dollars
Principal at face
value
June 30, 2021
June 30, 2020

$
$

9,495
9,360

Concessional Partner Loans outstanding
Net unamortized premium(discount)
$
$

Total

(1,736)(1,725)

$
$

7,759
7,635

Market borrowings are unsecured and unsubordinated fixed debt in a variety of currencies. Some of these
instruments are callable. IDA has elected the fair value option for these instruments, which have original maturities
that range from 34 days to 15 years, with the final maturity in 2036.
IDA uses derivative contracts to manage the currency risk as well as the interest rate risk in the market borrowings
portfolio. For example, as part of IDA’s asset-liability management strategy, IDA may also enter into derivativetransactions to convert fixed rate bonds into floating rate instruments. For details regarding the derivatives used in
the borrowing portfolio, see Note F—Derivative Instruments.
Table E2: Market borrowings after derivatives, at fair value
In millions of U.S. dollars
June 30, 2021
20,555(97)
118$
20,576

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

$

$

$

June 30, 2020
12,13140(153)
12,018

As of June 30, 2021, all of the instruments in IDA’s borrowing portfolio were classified as Level 2, within the fairvalue hierarchy.
The following table provides a summary of the interest rate characteristics of IDA’s borrowings:
Table E3: Borrowings-Interest rate composition
In millions of U.S. dollars
Fixed
Variable
Borrowings b
Fair Value Adjustment
Total Borrowings

June 30, 2021$
28,404$28,404(90)$
28,314

WAC a
0.99
0.99

%
%

June 30, 2020$
19,610$19,610156$
19,766

WAC a
1.14 %
1.14 %

a. WAC refers to weighted average cost.
b. At amortized cost.

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

93

The currency composition of debt in IDA’s borrowing portfolio before derivatives was as follows:
Table E4: Borrowings-Currency composition before derivatives
Euro
Japanese yen
Pound sterling
U.S. dollar
OthersJune 30, 2021
18
14
17
49
2
100

June 30, 2020
18
%
20
17
43
2
100
%

%

%

The maturity structure of IDA’s borrowings outstanding was as follows:
Table E5: Borrowings-Maturity structure
In millions of U.S. dollars
PeriodLess than 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
Thereafter
Total a$$June 30, 2021
4,724
1,713
146
2,837
4,154
16,47630,050$$June 30, 2020
5,840
120
1,740
137
2,564
11,09021,491a. For June 30, 2021, total includes net unamortized discount of $1,736 million ($1,725 million—June 30, 2020) for Concessional
Partner Loans.

The following table provides information on the unrealized mark-to-market gains or losses on market borrowings
included in the Statement of Income:Table E6: Unrealized mark-to-market gains or losses relating to market borrowings
In millions of U.S. dollars
Reported as
Unrealized mark-to-market gains (losses) on non-trading portfolios, net

94

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

$

2021
318

$

2020
(106)

$

2019
(63)

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
Derivative instruments used
Risk management purposes:
Interest rate swaps, currency forward contracts,
Investments-Trading
currency swaps, options, swaptions, futurescontracts and TBA securities
Currency forward contracts, currency swaps andOther assets/liabilities
interest rate swaps
Loans
Interest rate swaps
Borrowings
Other purposes:
Client operations

Interest rate swaps and currency swaps
Structured swaps

Purpose/Risk being managed
Manage currency and interest rate risk in theportfolio.
Manage currency and interest rate risks.
Manage interest rate risk in the portfolio.
Manage currency and interest rate risk in theportfolio.
Assist clients in managing risks.

The derivatives in the related tables of Note F are presented on a net basis by instrument. A reconciliation to the
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 a 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 a 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 FINANCIAL STATEMENTS: JUNE 30, 2021

95

Table F2: Derivatives assets and liabilities before and after netting adjustments
In millions of U.S. dollars
June 30, 2021
Located on the Balance Sheet
Derivative Assets
Derivative Liabilities

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

Gross
Amounts$
1,105
15,691$
16,796Gross
Amounts
Offset$(912)(15,231)$ (16,143)`

Net
Amounts
$
193
460
$
653 d

Gross
Amounts$
1,886
14,956$
16,842Gross
Amounts
Offset$(1,577)(14,449)$ (16,026)

Net
Amounts
$
309
507
$
816 d

$

404 e
-

$

408 f

$

249

$

408

Less:
Securities collateral received c-

Net derivative exposure after
collateral$

249

Table F2.1
In millions of U.S. dollars
June 30, 2020
Located on the Balance Sheet
Derivative Assets
Derivative Liabilities

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

GrossAmounts$
189
10,622
3$
10,814Gross
Amounts
Offset$(30)(9,909)$(9,939)Net derivative exposure after
collateral

Net
Amounts
$
159
713
3
$
875 d

$

Gross
Amounts
$
2,328
7,857
1
$
10,186

738 e
1
136
68

$

68

a. Includes currency forward contracts.
b. These include swaptions, exchange traded options, futures contracts and TBA securities.
c. Does not include excess collateral received.
d. Based on the net value per a derivative instrument
e. Includes $2 million CVA adjustment ($7 million-June 30, 2020).
f. Includes $6 million DVA adjustment ($41 million-June 30, 2020).

96

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

Gross
Amounts
Offset$(1,231)(7,593)$(8,824)

Net
Amounts
$
1,097
264
1
$
1,362 d

$

772 f

590

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
June 30, 2021
Currency swaps(including currency
forward contracts)

Interest
rate swaps
Investments - Trading
Asset/liability management
Other b
Total Exposure

$

$

78
115
193

$

$

167
176
117
460

Other a
$

Total
-

$

$

167
254
232
653

$

Table F3.1:
In millions of U.S. dollars
Interest
rate swaps
Investments - Trading
Asset/liability management
Other b
Total Exposure

$

$

1
158
159

June 30, 2020
Currency swaps(including currency
forward contracts)
$
19
$
691
3
$
713
$

Other a

Total
3
3

$

$

23
691
161
875

a. Includes swaptions, exchange traded options and futures contracts and TBA securities. Exchange traded instruments are
generally subject to daily margin requirements and are deemed to have no material credit risk. All swaptions, options, andfutures contracts are interest rate contracts.
b. Includes derivatives related to loans, borrowings and 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. As of June 30, 2021, the notional of interest rate swap contracts was $33,432 million($24,027 million as of June 30, 2020), currency swaps $30,349 million ($18,158 million as of June 30, 2020), there
were no long or short positions of other derivatives ($1,992 million of long position and $507 million of shortposition as of June 30, 2020).
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 June 30, 2021 is $414
million ($719 million —June 30, 2020). As of June 30, 2021, IDA was not required to post any collateral inaccordance 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 June 30, 2021, the amount of collateral that would need to be posted
would be $25 million ($58 million—June 30, 2020). Subsequent triggers of contingent features would requireposting of additional collateral, up to a maximum of $414 million as of June 30, 2021 ($719 million—June 30,2020).

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

97

Amounts of gains and losses on the non-trading derivatives, by instrument type and their location in the Statement of
Income are as follows:
Table F4: Unrealized mark-to-market gains or losses on non-trading derivatives
In millions of U.S. dollars
Unrealized mark-to-market gains(losses)
Fiscal Year Ended June 30,
2021
2020
2019

Type of instrument

Reported as

Interest rate swaps

Unrealized mark-to-market
gains (losses) on Non-Trading
portfolios, net

Currency forward contracts and currency swaps
Total

898

$

(101)
797

(996)

$

58

385
(611)

$

359
417

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 the amount of gains and losses on the IDA’s investment trading
portfolio (derivative and non-derivative instruments), and their location in the Statement of Income:Table F5: Unrealized mark-to-market gains or losses on investment trading portfolio
In millions of U.S. dollars
Unrealized mark-to-market gains
Fiscal Year Ended June 30,
2021
2020
2019

Type of instrument

Reported as

Fixed income (including related derivatives)

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

$

144

$

207

$

351

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 June 30, 2021 were $20,202 million ($19,658 million—June 30,2020). Details by transferor are as follows:
Table G1: Transfers and grants
In millions of U.S. dollars
Transfers from
Total
Of which transfers from:
IBRD
IFC

98

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

Beginning of
the fiscal year

Transfers during
the fiscal year$$

19,65815,756
3,672

544
331
213

End of the
fiscal year$

20,202
16,0873,885

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

June 30, 2021
IFC
$
$

IBRD
$
(268)

$

Total
(268)

IBRD
$
(271)

June 30, 2020
IFC
$
-

Total
$

(271)

19
(27)
-

6
(2)
41

25
(29)
41

74
(53)
-

3
(3)
7

77
(56)
7

572
296

487
532

572
487
828

620
370

625
632

620
625
1,002

$

$

$

$

$

a. Includes $293 million for the fiscal year ended June 30, 2021 ($238 million-June 30, 2020) receivable from IBRD for IDA's shareof investments 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 Balance Sheet as follows:
Receivables / Payables related to:Reported as:

Receivable for pension and other postretirement benefits

Receivable from affiliated organization

Net receivables (payables) for derivative transactions

Derivative assets/liabilities, net

Payable for administrative services a
Payable to affiliated organizationa. 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 Balance Sheet.

Administrative Services
The payable to IBRD represents IDA’s share of joint administrative expenses, including contributions to special
programs, net of other revenue jointly earned. The allocation of expenses is based upon an agreed cost sharing
formula, and amounts are settled quarterly.
During the fiscal year ended June 30, 2021, IDA’s share of joint administrative expenses and contributions to special
programs totaled $1,873 million ($1,824 million—fiscal year ended June 30, 2020 and $1,795 million—fiscal year
ended June 30, 2019). This amount excludes IDA-executed trust fund expenses of $553 million ($586 million—
fiscal year ended June 30, 2020 and $467 million—fiscal year ended June 30, 2019).
Other revenue
IDA’s share of other revenue jointly earned with IBRD during the fiscal year ended June 30, 2021 totaled $261
million ($316 million—fiscal year ended June 30, 2020 and $316 million—fiscal year ended June 30, 2019). This
amount excludes IDA-executed trust fund revenue of $553 million ($586 million—fiscal year ended June 30, 2020
and $467 million—fiscal year ended June 30, 2019).
The amount of fee revenue associated with services provided to other affiliated organizations is included in Other
revenue in the Statement of Income, as follows:
Table G3: Fee revenue from affiliated organizations
In millions of U.S. dollars
Fiscal Year Ended June 30,
2020

2021
Fees charged to IFC
Fees charged to MIGA

$

77
5

$

80
5

2019
$

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

77
5

99

Pension and Other Postretirement Benefits
The staff of IBRD perform functions for both IBRD and IDA, but all staff compensation is paid directly by IBRD.
Accordingly, a portion of IBRD's staff and associated administrative costs is allocated to IDA based on an agreed
cost sharing ratio using various indicators. The methodology for computing this share ratio is approved by the
Executive Directors for both institutions.
IBRD, along with IFC and MIGA, sponsors a defined benefit Staff Retirement Plan and Trust (SRP), the Retired
Staff Benefits Plan and Trust (RSBP) and the Post-Employment Benefits Plan (PEBP) that cover substantially all of
their staff members.
The SRP provides regular defined pension benefits and also includes a cash balance component. The RSBP provides
certain health and life insurance benefits to eligible retirees. The PEBP provides certain pension benefits
administered outside the SRP.
June 30 is used as the measurement date for these pension and other postretirement benefit plans. All costs, assets
and liabilities associated with these plans are allocated between IBRD, IFC, and MIGA based upon their employees’
respective participation in the plans.
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. During the fiscal year ended June 30, 2021,
IDA’s share of IBRD’s costs relating to all the three plans totaled $494 million ($357 million—fiscal year ended
June 30, 2020 and $299 million—fiscal year ended June 30, 2019).
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.
The cost of any potential future liability arising from these plans would be shared by IBRD and IDA using theapplicable share ratio. As of June 30, 2021, the SRP and the RSBP were underfunded by $320 million and $90
million, respectively. The PEBP, after reflecting IBRD and IDA’s share of assets which are included in IBRD’s
investment portfolio of $1,806 million, was underfunded by $533 million.
Derivative transactions
IDA enters into currency forward contracts with IBRD acting as the intermediary with the market, primarily toconvert donors’ expected contributions in national currencies under the Sixteenth and Seventeenth replenishments of
IDA’s resources into the five currencies of the 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 3 years. As of June 30, 2021, the principal amount due on the debt security was $472
million ($597 million—fiscal year ended June 30, 2020), and it had a fair value of $487 million ($625 million—
fiscal year ended June 30, 2020). The investment is reported under Investments on the Balance Sheet. During the
fiscal year ended June 30, 2021, IDA recognized interest income of $10 million from this investment ($12 million—
fiscal year ended June 30, 2020 and $14 million—fiscal year ended June 30, 2019).
Private Sector Window
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 States (FCS). 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.

100

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

The following tables provide a summary of all PSW related transactions under which IDA had an exposure as ofJune 30, 2021:
Table G4: Summary of PSW related transactions
In millions of U.S. dollars

Facility
Local Currency Facility

Notional$ 90

Net Asset/(Liability)
position$4

Facility

Exposure

Accumulated
Provision Description

MIGA Guarantee Facility

$188

$22

Blended Finance Facility

$296

$50

41

Not
applicable

102

Description
Currency swaps with IFC to support local
currency denominated loans

Location on the Balance Sheet
Derivative assets/ liabilities, net
Accumulated
Provision

Exposure

Expanding the coverage of MIGA Political Risk
Insurance (PRI) products through shared firstloss or risk participation similar to reinsurance
Sharing the first loss to support IFC's Small
Loan Guarantee Program, Global Trade
Finance Program and Working Capital
Solutions in PSW eligible countries

Off Balance
Sheet item

Otherliabilities

Off Balance
Sheet item

Otherliabilities

Funding for IFC's PSW equity investment

Other assets

Concessional senior & sub-ordinated loans to
support medium term projects

Loansoutstanding

Accumulated
Provision for
Loan Losses

NOTE H—TRUST FUNDS ADMINISTRATION
IDA, alone or jointly with one or more of its affiliated organizations, administers on behalf of the donors, including
members, their agencies and other entities, funds restricted for specific uses in accordance with administrationagreements with the donors. Specified uses of the funds include, among others, co-financing of IDA lending
projects, debt reduction operations for IDA members, technical assistance for borrowers including feasibility studies
and project preparation, global and regional programs, and research and training programs. These funds are held in
trust by IDA and/or IBRD, and are held in a separate investment portfolio which is not commingled with IDA and/or
IBRD funds.
Trust fund execution may be carried out in one of two ways: Recipient-executed or IDA-executed.
Recipient-executed trust funds involve activities carried out by a recipient third-party executing agency. IDA enters
into agreements with and disburses funds to such recipients, who then exercise spending authority to meet theobjectives and comply with terms stipulated in the agreements.
IDA-executed trust funds involve execution of activities by IDA as described in relevant administration agreementswith donors, which define the terms and conditions for use of the funds. Spending authority is exercised by IDA,
under the terms of the administration agreements. The executing agency services provided by IDA include, among
others, activity preparation, analytical and advisory activities and project-related activities, including procurement ofgoods and services.
The following table summarizes the expenses pertaining to IDA-executed trust funds:
Table H1: Expenses pertaining to IDA-executed trust funds
In millions of U.S. dollars
Fiscal Year Ended June 30,
2020

2021
IDA-executed trust funds expenses

$

553

$

586

2019
$

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

467

101

These amounts are included in Administrative expenses and the corresponding revenue is included in Revenue fromexternally funded activities in the Statement of Income. Administrative expenses primarily relate to staff cost, travel
and consultant fees.
The following table summarizes undisbursed contributions made by third party donors to IDA-executed trust funds,
recognized on the Balance Sheet:
Table H2: Undisbursed contributions made by third party donors to IDA-executed trust funds
In millions of U.S. dollars
June 30, 2021
IDA-executed trust funds$

June 30, 2020
749

$

707

These amounts are included in Other Assets and the corresponding liabilities are included in Accounts payable andmiscellaneous liabilities on the Balance Sheet.
Revenues
IDA’s revenues for the administration of trust fund operations were as follows:
Table H3: IDA’s revenues for the administration of trust fund operations
In millions of U.S. dollars
Fiscal Year Ended June 30,
2020
$
41

2021
Revenues

$

38

2019
$

46

These amounts are included in Other non-interest revenue in the Statement of Income.
Amounts collected from donor contributions for administration activities, but not yet earned, totaling $70 million atJune 30, 2021 ($65 million—June 30, 2020) are included in Other Assets and in Accounts payable andmiscellaneous liabilities, respectively, on the Balance Sheet.
Transfers Received
Under the agreements governing the administration of certain trust funds, IDA may receive any surplus assets astransfers upon the termination of these trust funds. In addition, as loans are repaid to trust funds, in certain cases therepayments are transferred to IDA. During the fiscal year ended June 30, 2021 no funds were recorded as Transfersfrom affiliated organizations and others, under these arrangements (Nil—fiscal year ended June 30, 2020 and $10
million —fiscal year ended June 30, 2019).
NOTE I—DEVELOPMENT GRANTS
A summary of changes to the amounts payable for development grants is presented below:
Table I1: Grants payable
In millions of U.S. dollars
June 30, 2021
Balance, beginning of the fiscal year
Unconditional grants approved
Disbursement (including PPA grant activity)aCancellations
Translation adjustment
Balance, end of the fiscal year
a. Project Preparation Advances (PPA)102

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

$

$

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

June 30, 2020$$

12,345(2,472)
(598)
(134)
9,141

A summary of the development grant expenses is presented below:
Table I2: Grant activity
In millions of U.S dollars

Conditional development grants disbursed a
Unconditional development grants approved
Less:
Cancellations
Disbursement of grant advances not yet expensed b
Add:
Grant advances meeting expense condition cOther disbursements d
Grant Expenses$

Grants Approved

Fiscal Year Ended June 30,
2021
2020
3,829
$
2,216
(235)
(1,033)

(598)
(236)

$

269
2,830

$

27
66
1,475

$

12,192$

7,997

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.
d. Comprises PEF conditional grants and CAT DDOs approved prior to July 1, 2019.

As of June 30, 2021, the cumulative amount of conditional grants approved but not yet expensed was $14,836
million.
NOTE J—ACCUMULATED OTHER COMPREHENSIVE INCOME
Comprehensive income consists of net income (loss) and other gains and losses affecting equity that, under U.S.
GAAP, are excluded from net income (loss). For IDA, 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 Statement of Comprehensive Income.
The following table presents the changes in Accumulated Other Comprehensive (Loss) Income balances:
Table J1: Changes in accumulated other comprehensive income (loss)
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 fiscal year$$

Fiscal Year Ended June 30,
2021
2020
(3,927)$(2,408)$
5,647(1,526)
(64)
7
1,656
$
(3,927)
$

2019
(675)
(1,735)2(2,408)IDA FINANCIAL STATEMENTS: JUNE 30, 2021

103

NOTE K—FAIR VALUE DISCLOSURES
Valuation Methods and Assumptions
As of June 30, 2021, and June 30, 2020, 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 June 30, 2021 and June 30, 2020. 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 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) is being measured by revaluing each liability
to determine the changes in fair value of that liability arising from changes in IDA’s cost of funding relative to
LIBOR.

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IDA FINANCIAL STATEMENTS: JUNE 30, 2021

The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with theirrespective carrying amounts.
Table K1: 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
Concessional partner loans
Securities sold under repurchase agreements, securities
lent under securities lending agreements, and payable forcash collateral received
Derivative liabilities, net

June 30, 2021
Carrying Value
Fair Value

June 30, 2020
Carrying Value
Fair Value

$

$

496

$

496

674

$

674

37,376
177,779
249

37,376
164,606
249

34,670160,961
136

34,670149,597
136

20,555
7,759

20,555
9,516

12,131
7,635

12,131
10,031

408

408

108
590

108
590

As of June 30, 2021, IDA’s signed loan commitments were $60.8 billion ($49.6 billion – June 30, 2020) and had afair value of $(5.4) billion ($(5.1) billion – June 30, 2020).

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

105

The following tables present IDA’s fair value hierarchy for assets and liabilities measured at fair value on arecurring basis.
Table K2: Fair value hierarchy of IDA’s assets and liabilities
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
Other b

$

$

$

$

7,852
728
8,580
8,580

$

-

$

$

$

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

$

460
193
653

$

$

$

-

$

-

$

Less:
Amounts subject to legally enforceable master netting agreements c
Cash collateral received
Derivative assets, net
Liabilities:
Market Borrowings
Securities sold under repurchase agreements andsecurities lent under security lending agreements e
Derivative liabilities:
Currency swaps and currency forward contracts
Interest rate swaps
Other b

$

404
249

-

$

20,555$-$20,555

$

-

$

-

$

-

$

-

$

-

$

507
309
816

$

-

$

$

507
309
816

$

408
408

$

$

a. Includes structured swaps.
b. These include swaptions, exchange traded options, futures contracts and TBA securities.
c. Includes $2 million CVA.
d. Includes $6 million DVA.
e. Excludes amount payable for cash collateral received Nil.

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

$

460
193
653

$

Less:
Amounts subject to legally enforceable master netting agreements d
Derivative liabilities, net

106$25,277
11,460152
36,889487
37,376$

Table K2.1
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
As of June 30, 2020
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
Other b

$

$

9,711
2,458
12,16912,169

$

-

$

$

$

14,4875,940
1,449
21,876625
22,501

$

713
159
3
875

$

$

$

-

$

-

$

Less:
Amounts subject to legally enforceable master netting agreements c
Cash collateral received
Derivative assets, net
Liabilities:
Market Borrowings$

24,1988,398
1,449
34,045625
34,670

$

713
159
3
875

$

738
1
136

$

-

$

12,131$-$

12,131

$

-

$

107

$

-

$

107

$

-

$

264
1,097
1
1,362

$

-

$

$

264
1,097
1
1,362

$

772
590

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

107

Securities sold under repurchase agreements andsecurities lent under security lending agreements e
Derivative liabilities:
Currency swaps and currency forward contracts
Interest rate swaps
Other b

$

$

Less:
Amounts subject to legally enforceable master netting agreements d
Derivative liabilities, net$

a. Includes structured swaps.
b. These include swaptions, exchange traded options, futures contracts and TBA securities.
c. Includes $7 million CVA.
d. Includes $41 million DVA.
e. Excludes amount payable for cash collateral received $2 million.

Presented below is the difference between the aggregate fair value and aggregate contractual principal balance of
non-trading securities in the investment portfolio:
Table K3: Investment portfolio-Non-trading securities
In millions of U.S dollars
June 30, 2021
June 30, 2020$$

Fair value
487
625

$
$

Principal amount due
472
597

Difference
$
$

15
28

Presented below is the difference between the aggregate fair value and aggregate contractual principal balance ofmarket borrowings:
Table K4: Market Borrowings-Fair value and contractual principal balance
In millions of U.S. dollars

June 30, 2021
June 30, 2020

Fair Value$
20,555$
12,131

Principal Due
Upon Maturity$
20,659$11,952$$Difference
(104)
179

Valuation adjustments on fair value option elected liabilities
During the fiscal year ended June 30, 2021, IDA recorded unrealized mark-to-market loss of $64 million ($7 million
unrealized mark-to-market gains – June 30, 2020) in Other Comprehensive Income, in relation to the changes in its
own credit (DVA) on fair value option elected liabilities (market borrowings).
As of June 30, 2021, IDA’s Balance Sheet included a DVA of $56 million cumulative loss ($8 million cumulative
gain—June 30, 2020) in Accumulated other comprehensive income, associated with the changes in IDA’s own
credit for its market borrowings.

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IDA FINANCIAL STATEMENTS: JUNE 30, 2021

The following table reflects the components of the unrealized mark-to-market gains or losses on IDA’s trading andnon-trading portfolios, net.
Table K5: Unrealized mark-to-market gains (losses) on trading and non-trading portfolios, net
In millions of U.S. dollars
Fiscal Year Ended June 30, 2021
Unrealized gains(losses) excluding
realized amounts a

Realized gains(losses)

Investments- Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Investment portfolio—Note C
Other b
Total

$

185

$

-

$

(41)

$

1,080
(12)
34
1,102

Unrealized gains(losses)

$

144

$

1,080
(12)
34
1,102

Table K5.1:
In millions of U.S. dollars
Realized gains(losses)
Investments- Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Investment portfolio—Note C
Other b
Total

$

207

$

-

Fiscal Year Ended June 30, 2020
Unrealized gains(losses) excluding
realized amounts a
$

-

$

(699)
29
(18)
(688)

Unrealized gains(losses)
$

207

$

(699)
29
(18)
(688)

Table K5.2:
In millions of U.S. dollars
Realized gains(losses)

Investments- Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Investment portfolio—Note C
Other b
Total

$

(34)

$

-

Fiscal Year Ended 2019
Unrealized gains(losses) excluding
realized amounts a
$

385

$

359
32
(5)
386

Unrealized gains(losses)

$

351

$

359
32
(5)
386

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

NOTE L—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 by

IDA FINANCIAL STATEMENTS: JUNE 30, 2021

109

governments 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 fiscal year ended June 30, 2021, is not expected to have a material adverse effect on
IDA's financial position, results of operations or cash flows.

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IDA FINANCIAL STATEMENTS: JUNE 30, 2021