International Development Association

Management’s Discussion & Analysis
andFinancial Statements
June 30, 2023

Management’s Discussion and Analysis

Contents
Section I: Executive Summary

Summary Financial Results

4

Section II: Overview

IDA Replenishment
Twentieth Replenishment of Resources (IDA20)IDA Crisis Facility
Financial Business Model
Basis of Reporting

6
6
6
6
7

Section III: IDA's Financial Resources

IDA20 Funding
Allocation of IDA20 Resources8
8

Section IV: Financial Results

Financial Results and Portfolio Performance

14

Section V: Development Activities, Products and Programs Lending Framework
Financial Terms
Loans, Grants and Guarantee Activity

24
26
27

Section VI: Other Development Activities and Programs

Guarantees
Other Financial Products and Services
Grant Making Facilities
Debt Relief
Externally-Funded Activities

29
30
30
30
31

Section VII: Investing Activities

Investments - Trading Portfolio
Investments - Non-Trading Portfolio

33
34

Section VIII: Borrowing Activities

Market Debt
Concessional Partner Loans
Other Short-Term Borrowings
Contractual Obligations

35
35
36
36

Section IX: Risk Management

Risk GovernanceRisk Oversight and Coverage
Management of IDA's Risks

37
37
39

Section X: Critical Accounting Policies and the Use of
Estimates

Fair Value of Financial Instruments
Provision for Losses on Loans and Other Exposures

49
49

Section XI: Governance and Internal Controls

Business Conduct
General Governance
Audit Committee
External Auditors
Senior Management Changes
Internal Controls

50
50
51
52
52
52

Appendix

Glossary of Terms
List of Tables, Figures and Boxes

54
55

Management’s Discussion and Analysis

Section I: Executive Summary

This Management’s Discussion & Analysis (MD&A) reflects the results of the International Development
Association’s (IDA) financial performance for the fiscal year ended June 30, 2023 (FY23). 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, 2022, as compared to the year ended June 30, 2021, see Section IV – Financial Results in IDA’s MD&A
and Financial Statements for the fiscal year ended June 30, 2022 (FY22).

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,
2023
Lending Highlights (Sections IV & V)
Loans, Grants and Guarantees
Net commitments a
Gross disbursements a
Net disbursements a
Balance Sheet (Section IV)
Total assets
Net investment portfolio b
Net loans outstanding
Borrowing portfolio c
Total equity
Income Statement (Section IV)
Interest revenue, net of borrowing expenses
Transfers from affiliated organizations and others
Development grants
Net (loss) income
Non-GAAP Measures
Adjusted Net Income (Section IV)
Deployable Strategic Capital Ratio (Section IX)

2022

2021

$

34,24527,71819,968$37,727
21,214
14,477$36,02822,921
16,465$

227,482
30,672
187,669
35,393
185,782$

220,014
39,561
174,490
35,032
178,668$

219,324
37,921
177,779
28,335
180,876

$

2,367
117
(3,946)(3,262)

$

1,901
274
(2,372)
12

$

1,996
544
(2,830)
(433)

$

193
24.1 %$

260
26.4 %$

394
30.4 %

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

2

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section I: Executive Summary

Section I: Executive Summary
IDA, an international organization owned by its 174 member countries, is one of the five institutions of the WorldBank Group (WBG1). Each WBG organization is legally and financially independent from IDA, with separate assets
and liabilities. IDA is not liable for the obligations of the other institutions.
IDA is rated triple-A by the major rating agencies and has been providing financing and knowledge services to manyof the world’s developing countries for 62 years. With its many years of experience and its depth of knowledge ininternational development, IDA plays a key role in achieving the WBG’s goal of helping countries achieve better
development outcomes. IDA provides loans, grants, guarantees, and other financial products to the poorest and mostvulnerable countries to help meet their development needs, and technical assistance and policy advice by leveraging
its experience and expertise. 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 in reducing poverty and inequality, achieve improvements
in growth, job creation, governance, the environment, climate adaptation, mitigation and resilience, human capital,
infrastructure and debt transparency, among others. To meet its development goals, the WBG supports client
countries' efforts to implement programs to improve growth and development outcomes. Further, new and ongoingchallenges continue to influence the global outlook. These include high inflation, the rise in food insecurity, growing
inequality, global fragility, pandemic risk, Russia's invasion of Ukraine and other geopolitical events, rising debt,
climate change, and macroeconomic imbalances. In response, IDA, as part of the WBG efforts, continues to workwith partners at global and country levels to support its borrowing countries in addressing the impact of these
multiple crises, to enhance resilience, and lay the groundwork for rebuilding better. To further enhance these efforts,
the Board and Management have been working on an Evolution Roadmap for the WBG to better address the scale ofdevelopment challenges by adapting the WBG's vision and mission, strengthening its operating model, andenhancing its financial capacity and model. Management is in the process of advancing agreed actions anddeveloping further proposals, including efforts to expand crisis preparedness, response and recovery and increaseprivate finance mobilization, with particular efforts to scale investment in emerging markets.

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). The World Bank consists of IBRD and IDA.

IDA Management's Discussion and Analysis: June 30, 2023

3

Section I: Executive Summary

Management’s Discussion and Analysis

Summary of Financial Results
Net Income and Adjusted Net Income

In millions of U.S. dollars

Net Income: IDA reported a net loss of $3,262
million in FY23, compared to net income of $12
million in FY22. The decrease was primarily driven
by the increase in development grant expenses, lower
unrealized mark-to-market gains on non-trading
portfolios, and higher borrowing expenses. See
Section IV: Financial Results.

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

Adjusted Net Income: IDA’s adjusted net income
was $193 million in FY23, compared to $260 million
in FY22. The decrease was primarily due to higher
borrowing expenses and higher provision expenses
for losses on loans and other exposures, partially
offset by higher net interest revenue on investments.
See Section IV: Financial Results.

(4,000)(8,000)
FY19

FY20

FY21

FY22

FY23

Loans and grants
IDA’s net commitments in FY23 were $34.2 billion, $3.5 billion lower than FY22 primarily due to lower grantcommitments. Out of the total net commitments, $27.0 billion were loan commitments and $7.3 billion were grantcommitments. FY23 net loan commitments included $1.2 billion approved under the IDA19 envelope due to theextension of the closing date for the approval of IDA19 operations.
IDA’s net loans outstanding increased by $13.2 billion to $187.7 billion as of June 30, 2023, from $174.5 billion asof June 30, 2022, primarily due to net loan disbursements. See Section IV: Financial Results.
Development grant expenses were $3.9 billion in FY23 compared to $2.4 billion in FY22 due to higher
disbursements of conditional grants during the year as the conditions for recognition were met.
In billions of U.S. dollars

Net Commitments ᵃ
Gross Disbursements
Net Disbursements
40
32
24
16
8
0

250

Net Loans Outstanding

Net Grant Commitments
Grant Expense
Net Grant Disbursements

200
150
100
50
0

FY19 FY20 FY21 FY22 FY23

Jun
19

Jun
20

Jun
21

Jun
22

Jun
23

a. Includes loans, grants, and guarantees

4

IDA Management's Discussion and Analysis: June 30, 2023

40
32
24
16
8
0
FY19 FY20 FY21 FY22 FY23

Management’s Discussion and Analysis

Section I: Executive Summary

Net Investment Portfolio
As of June 30, 2023, the net investment portfolio was$30.7 billion, compared with $39.6 billion as ofJune 30, 2022. The decrease was due to net cash
outflows from loan and grant disbursements, partially
offset by cash contributions from members. See
Section VII: Investment Activities. The primaryobjective of IDA’s investment strategy is principal
protection. As of June 30, 2023, 78% of IDA’s
investment portfolio was held in instruments rated
AA or above (See Table 27).

In billions of U.S. dollars
Net Investment Portfolio

50
40
30
20
10
0
Jun 19Jun 20Jun 21

Jun 22Jun 23

Jun 21

Jun 22Jun 23

Jun 21

Jun 22 Jun 23

Borrowing Portfolio
Market borrowings at fair value: As of June 30, 2023,
the market borrowings carried at fair value and therelated derivatives were $19.6 billion, a decrease of$2.2 billion from June 30, 2022 primarily due to net
maturities during the year.
Market borrowings at amortized cost: As of June 30,
2023, the market borrowings carried at amortizedcost were $8.6 billion, an increase of $2.4 billion
from June 30, 2022 primarily due to a new issuanceduring the year.

In billions of U.S. dollars
Borrowing Portfolio

50
40
30
20
10
0
Jun 19Jun 20Concessional Partner Loans at amortized cost: As ofJune 30, 2023, total borrowings from members Concessional Partner Loans (CPL) were $7.2 billion,
an increase of $0.2 billion from June 30, 2022.
See Section VIII: Borrowing Activities
In billions of U.S. dollars
EquityEquity and Capital Adequacy
As of June 30, 2023, IDA’s equity was $185.8
billion, an increase of $7.1 billion from June 30,
2022. The increase was primarily due to higher
subscriptions and contributions paid in. See Section
IV: Financial Results.

200
160
120
80
40
0
Jun 19 Jun 20

The Deployable Strategic Capital (DSC) ratio, IDA’s
main capital adequacy measure, was 24.1% as ofJune 30, 2023, above the zero percent policy
minimum and a decrease of 2.3 percentage points
from 26.4% as of June 30, 2022. The decrease wasmainly due to the increase in total resources
required. See Section IX: Risk Management.

Ratio in percentages
Deployable Strategic Capital Ratio

45%

30%

15%
Jun 19Jun 20Jun 21

Jun 22Jun 23

Policy Minimum ratio = 0%

IDA Management's Discussion and Analysis: June 30, 2023

5

Management’s Discussion and Analysis

Section II: Overview

Section II: Overview
IDA Replenishment
Generally, every three years, representatives of IDA’s members2 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 thatare 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.

Twentieth Replenishment of Resources (IDA20)
IDA’s Twentieth Replenishment, the replenishment period of FY23 through FY25, commenced on July 1, 2022,with a financing envelope of $93.0 billion3, including $11.0 billion of IDA19 carry over, supported by $23.5 billionof member contributions. IDA20 recognizes the need to help address the profound challenges faced by IDA
countries. IDA20 reaffirms the international community’s commitment to scale up support to enable IDA countries
to respond to the effects of the coronavirus disease (COVID-19) pandemic crisis, recoup their development losses,
and resume progress toward the 2030 Sustainable Development goals. IDA20 supports the world’s poorest and mostvulnerable countries to emerge on a development path in line with the Green, Resilient and Inclusive Development(GRID) framework. IDA20 builds on the IDA19 special themes, with the continuation of climate change, fragility,
conflict, and violence (FCV), gender and development, jobs and economic transformation and the introduction ofhuman capital as a special theme in IDA20. In addition, IDA20’s policy package incorporates four cross-cutting
issues: crisis preparedness (introduced in IDA20), governance and institutions, debt, and technology.
IDA20 became effective in December 2022. See Notes to the Financial Statements for the year ended June 30, 2023,
Note A – Summary of Significant Accounting and Related Policies, Members’ Subscriptions and Contributions.

IDA Crisis Facility
In May 2023, IDA's Executive Directors approved Management's recommendation to establish a Crisis Facility toscale up support for the world’s poorest countries to address worsening development challenges due to theoverlapping global crises, particularly food insecurity and extreme climate events. IDA’s Board of Governors
adopted the Resolution for the Crisis Facility on July 5, 2023. The Crisis Facility has two objectives: i) to provide
additional resources to IDA countries affected by Russia’s invasion of Ukraine at a time of compounding,overlapping global crises; and ii) to provide a mechanism for pooling and leveraging contributions to support
Ukraine, and to neighboring Moldova. This facility will be supported by member contributions and enhance IDA's
financing capacity in addition to 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 of $185.8 billion as of June 30, 2023. Since FY18, IDA has shifted to a hybrid
financial model by introducing 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:•

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.

Currently, IDA's non-concessional and concessional lending, including grants, is primarily financed by IDA’sequity. As IDA’s funding program expands under the hybrid financial model, a larger portion of lending will be
2

IDA’s members are owners and hold voting rights in IDA. Members do not, however, hold shares in IDA and are therefore notreferred to as shareholders. Payments for subscriptions and contributions from members increase IDA’s paid-in equity and arefinancially equivalent to paid-in capital in multilateral development organizations that issue shares.
3
U.S. dollar amounts are based on IDA20 reference rate of USD/SDR 1.42934. 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, 2023

Management’s Discussion and Analysis

Section II: Overview

funded by market debt, together with member countries’ contributions (equity). Funds not deployed for lending are
maintained in IDA’s investment portfolio to supply liquidity for its operations.

Basis of Reporting
IDA prepares its financial statements in conformity with accounting principles generally accepted in the UnitedStates of America (U.S. GAAP). IDA’s reporting currency is the U.S. dollar. IDA’s functional currencies are theSDR and its component currencies of the U.S. dollar, euro, Japanese yen, pound sterling and Chinese renminbi.
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
the adjustments, see Section IV: Financial Results.

IDA Management's Discussion and Analysis: June 30, 2023

7

Management’s Discussion and Analysis

Section III: IDA's Financial Resources

Section III: IDA’s Financial Resources
IDA finances its operations mainly with its own equity, including regular additions to equity through members'
subscriptions and contributions as part of the replenishment process. Members’ subscriptions and contributions
receivable for each replenishment are settled through payment of cash or deposit of nonnegotiable, noninterestbearing demand notes which become due throughout the replenishment period, generally three years. The notes areencashed 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.

IDA20 Funding
IDA’s financing resource envelope available for lending and grant commitments is based on the long-term outlookof IDA’s financial sustainability. This takes into account the amount of member contributions and theconcessionality of the proposed financing to borrowers, market conditions, and capital adequacy requirements. For
the three-year funding cycle of IDA20, the agreed resource envelope totals $93.0 billion, supported by $23.5 billionof member contributions.

Allocation of IDA20 Resources
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 that is updated annually. For FY24, thethreshold is $1,315 (FY23: $1,255).
Table 1: IDA20 Allocations
In billions of U.S. dollars
USD Equivalent a

Allocation
Concessional financing
Country Allocation Envelope
IDA Concessional Windows
Non-concessional financing
Private Sector Window
Total Allocation

$

$

62.8
21.4
6.3
2.5
93.0

a. U.S. dollar amounts are based on IDA20 reference rate of USD/SDR 1.42934. The U.S. dollar
amounts are provided for reporting purposes only.

As of July 1, 2023, 75 countries are eligible to borrow from IDA on concessional terms as follows:
IDA-only

40 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 Gap
countries

Blend

18 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.
14 countries that are determined: (a) by IDA to be eligible for IDA financing; and (b)by IBRD to be creditworthy to borrow from IBRD. 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.

8

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section III: IDA's Financial 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. The allocation framework is
agreed for each replenishment cycle. 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 rest of IDA resources are provided through five IDA
Windows dedicated to addressing specific development priorities, and an Arrears Clearance framework that provides
exceptional support for countries to fully reengage with the World Bank.
IDA responds to specific needs of its members through the following five IDA Windows:

Table 2: Cumulative Net Commitments since July 1, 2022
In millions of U.S. dollars
Loans andGuarantees

As of June 30, 2023
Concessional financing
IDA Country Allocations
IDA Concessional Windows
Regional Window
Window for Host Communities and Refugees
Crisis Response Window
Scale-up Window – Shorter Maturity Loans$

IDA19 Commitments approved in July 2022
IDA Country Allocations
Total Cumulative Net Commitments a

Total

18,268 $4,311 $

22,579

1,047
33
417
3,758

1,321
437
1,215
—

2,368
470
1,632
3,758

$

2,238
25,761 $—7,284 $

2,238
33,045$$1,200 $
26,961 $— $7,284 $

1,200
34,245

Non-concessional financing including Scale-up
Window
Cumulative Net Commitments under IDA20

Grantsa. Commitments are net of full cancellations and terminations approved in the same fiscal year. Commitments exclude IDA-IFCMIGA Private Sector Window (PSW) activities.

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
IDA Management's Discussion and Analysis: June 30, 2023

9

Management’s Discussion and Analysis

Section III: IDA's Financial Resources

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 areused to incentivize satisfactory implementation of Performance and Policy Actions. Countries which demonstratesatisfactory progress in implementing their Performance and Policy Actions have access to their full annual country
allocation. Countries that do not satisfactorily implement their Performance and Policy Actions will either have ashare of their country allocation set aside or their country allocation 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 IDA20
continues to be aligned with 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 ofallocation for grants for IDA-only countries is based on an assessment of the country’s risk of debt distress, wherecountries, including IDA-only Small States, with high risk of debt distress, or in debt distress, receive their IDA
assistance in grants. IDA-only Small States at moderate risk of debt distress continue to receive half of their IDA20
allocation in grants and half in loans. Gap and Blend countries are only eligible for grant financing through theWindow for Host Communities and Refugees, if applicable.
As part of IDA’s balance sheet optimization measures, two new financing terms have been introduced in IDA20
which carry no interest or service charges: a) Concessional Shorter-Maturity Loans (SMLs); and b) 50-year loans.
See Figure 1 for Overview of IDA20 Financing Terms. In addition, starting from IDA20, the borrowers are offered,as part of the loan agreement, an option to convert their concessional borrowing into one of the SDR component
currencies or non-SDR local currency terms, at their choice and subject to market availability.
Figure 1: Overview of IDA 20 Financing Terms

Country Allocation Envelope represents $62.8 billion of the IDA20 resource envelope and is allocated based on
the PBA. The amount available for each country is a function of the country’s CPR rating, population, and per capita
income, complemented by the FCV envelope, where applicable. With the introduction of new financing terms in
10

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section III: IDA's Financial Resources

IDA20, some IDA countries receive a portion of their country allocations as concessional SMLs. In addition, IDAonly countries at moderate risk of debt distress, with the exception of Small States, receive their country allocations
as 50-year loans. Previously, these countries were eligible for half grants and half loans.
IDA Concessional Windows allow IDA to respond to specific needs of its members. In IDA20, $21.4 billion of the
IDA20 resource envelope will be used to fund the following:••••$7.9 billion of Regional Window.
$2.4 billion of Window for Host Communities and Refugees.
$3.3 billion of Crisis Response Window.
$7.8 billion of Concessional Scale-up Window (SUW) – SMLs.

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; andconvening 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 tosupport 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; andstrengthen country preparedness for increased or potential new refugee flow.

Crisis Response Window (CRW)
The primary objective of the CRW is to provide IDA countries with additional resources that will help them torespond to major natural disasters, or public health emergencies and severe economic crises so that they can returnto their long-term development paths. This $3.3 billion window under the IDA20 resource envelope includes anallocation of up to $1.0 billion under the CRW Early Response Financing (ERF) to enable IDA countries tointervene earlier in response to slower-onset crises, namely disease outbreaks and food insecurity.
Concessional Scale-up Window – Shorter Maturity Loans (SUW-SML)The Shorter Maturity Loans under the Scale-up Window will provide additional concessional resources with anallocation of $7.8 billion in eligible countries i.e., IDA-only countries at low or moderate risk of debt distress, aswell as Gap and Blend countries (except Small States that are at high risk or in debt distress).

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 IDA20 resource envelope, $6.3 billion of resources have been allocated to nonconcessional financing which entirely relates to the regular Scale-up Window.
Non-Concessional Scale-up Window: The Non-Concessional Scale-up Window is a window of resources
established to enhance support for high-quality, transformational, country-specific and/or regional operations withstrong development impact. Allocation of Non-Concessional Scale-up Window resources to the regions will broadly
conform to the allocations under the PBA, excluding countries at a high risk of debt distress. Allocations arebalanced between IDA-only and Blend countries, and to avoid countries from having a concentration of NonConcessional Scale-up Window resources. Implementation arrangements will prioritize a country’s ability to absorb
resources and the proposed projects’ alignment with IDA20 policy priorities and the debt-related Sustainable
Development Finance Policy.
IDA Management's Discussion and Analysis: June 30, 2023

11

Management’s Discussion and Analysis

Section III: IDA's Financial Resources

Private Sector Window (PSW)The IDA-IFC-MIGA Private Sector Window was created under IDA18 to mobilize private sector investment in
IDA-only countries and IDA-eligible Fragile and Conflict-affected Situations. Under IDA20, $2.5 billion has been
allocated to PSW, bringing the cumulative total allocation to $5.5 billion.
PSW is deployed through four facilities. These facilities have been designed to target critical challenges faced by theprivate sector and will leverage IFC and MIGA’s business platforms and instruments.
As of June 30, 2023, $1.3 billion had been utilized out of a combined total of $3.8 billion committed in IDA18
through IDA20. See Notes to the Financial Statements for the year ended June 30, 2023, Note G –Transactions withAffiliated Organizations – Table G4.
Table 3: Utilization of PSW Commitments
In millions of U.S. dollars
As of June 30, 2023
Allocation
Net Commitments

IDA18 and
IDA19$
2,950 $
2,947

Of which utilized
Guarantees
Derivatives
Funding of IFC's PSW related debt andequity investments
Loans
Total utilization of IDA PSW

IDA202,500 $
900

Total
5,450
3,847

Utilization Measure

$

795
276

Face value of outstanding guarantees
Notional amount

$

95
102
1,268

Initial value of investment
Amortized cost

Arrears Clearance Framework
IDA has a policy of not providing additional financing to borrowers who are overdue on their payments to IDA or
IBRD. However, IDA may engage with these countries under limited and clearly defined circumstances. IDA’s
arrears clearance framework sets out these circumstances, including (i) pre-arrears clearance grants; and (ii) the
arrears clearance set-aside, that can only be financed under the arrears clearance operations. In IDA20, no allocation
was set aside towards arrears clearance to support the possible reengagement of IDA countries that are currently inarrears. However, during the IDA20 period, should meaningful progress arise in any country in arrears, areallocation discussion with IDA members will be initiated.
i.

Pre-Arrears Clearance Grants (PACG)

The PACG mechanism enables IDA to engage early in support of a government undertaking convincing reforms.
This was first introduced in IDA12 to be used to finance high priority activities related to the preparation of aprogram of social and economic recovery and to build resilience until the arrears are fully cleared. Conditions
constituting this framework include indications that:
•
•
•
•
•

early performance is promising as evidenced by the recipient country having taken convincing steps towards
social and 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; andPari 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 theirarrears to IDA. Prior PACG recipients are Democratic Republic of the Congo, Cote d’Ivoire, Afghanistan, Liberia,
Myanmar, Somalia, and Sudan for an amount totaling $802 million between FY01 and FY23.
12

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section III: IDA's Financial Resources

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 underthe Heavily Indebted Poor Countries (HIPC) debt 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 theWorld 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 andmonitored by IMF staff or supported by an IMF arrangement; andagree 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.

IDA Management's Discussion and Analysis: June 30, 2023

13

Management’s Discussion and Analysis

Section IV: Financial Results

Section IV: Financial Results
Financial Results and Portfolio Performance
Net Loss
IDA had a net loss of $3.3 billion in FY23 compared with net income of $12 million in FY22 (See Table 4). The
decrease in net income during the year was primarily driven by:
•
•

•
•
•

An increase of $1.6 billion in development grant expenses due to higher disbursements of conditional grants in
FY23 as the conditions for recognition were met;
A decrease of $1.3 billion in unrealized mark-to-market gains on non-trading portfolios. The decrease wasmainly driven by lower mark-to-market gains from the derivatives held for the Capital Value Protection
Program (CVP), as the increase in U.S. dollar and Euro interest rates for long tenors during the year was more
prominent in FY22;
An increase of $0.7 billion in borrowing expenses as a result of the increase in interest rates;
An increase of $0.4 billion in provision expense for losses on loans and other exposures mainly due to theincrease in exposure; partially offset by
An increase of $0.9 billion in net interest revenue on investments as a result of higher interest rates in FY23.

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 are mainly comprisedof development grants, provision for HIPC / Multilateral Debt Relief Initiative (MDRI) debt relief, andamortization 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 are mainlycomprised of contributions from IBRD, IFC and other contributions from trust funds. These are intended tofinance development activities similar to member contributions but are not directly included in equity as they do
not carry voting 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 andliabilities 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 are mainly comprised of unrealized
mark-to-market 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 to unrealized 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.

•

Unrealized mark-to-market gains/losses on certain positions in the investment trading portfolios, net: Thisadjustment applies to trades where the unrealized gains and losses on derivative forward contracts are recordedin the income statement and the underlying physical assets being purchased and sold are recorded at amortizedcost during the holding period. In these cases, the unrealized gains and losses on the forward contract at the endof the reporting period (if any) are excluded from net income when calculating adjusted net income.

•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 andreimburses IBRD for its proportionate share of any contributions made to these plans by IBRD, as part of a

14

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IV: Financial Results

Board-approved cost sharing ratio. The Pension adjustment reflects the difference between IDA’s share of cash
contributions to both the pension 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 tostabilize contributions to the pension and post-retirement benefits plans. Management has designated theincome from these assets to meet the needs of the pension plans. As a result, PEBP and PCRF investment
revenue is excluded from adjusted net income.
•

Other Adjustments:i.

Under certain arrangements (such as Externally Funded Outputs (EFOs)), IDA receives a share of therevenue 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
and are therefore considered contractually restricted until applied for these purposes. Income attributable tothese arrangements is excluded from reported income when determining adjusted net income since there isno discretion about the use of these funds.

ii. Under the Board-approved framework, RAMP fees are dedicated for the purpose of providing technicalassistance and asset management services to external clients. Due to the potential timing mismatch between
fee revenue (recognized as earned) and program expenditures (recognized as incurred), fees earned in agiven fiscal year may be used to provide services in a future fiscal year. To ensure that RAMP revenues are
only used for the delivery of RAMP services, and not allocated for other purposes, any difference between
fee revenue and expenses from RAMP included in reported net income is excluded to arrive at adjusted net
income.
IDA’s adjusted net income was $193 million in FY23 compared with adjusted net income of $260 million in FY22
(See Table 4). The decrease was primarily driven by the following offsetting factors:• An increase of $712 million in borrowing expenses, excluding amortization of the discount on CPL, as aresult of the increase in interest rates;• An increase of $439 million in the provision expense for losses on loans and other exposures, excluding theprovision expense for HIPC/MDRI and grant advances, mainly due to the increase in exposure, partially
offset by:• An increase of $864 million in net interest revenue on investments as a result of higher interest rates in
FY23; and• An increase of $296 million in net interest revenue from loans due to the higher average balance and theincrease in interest rates on non-concessional loans in FY23.

IDA Management's Discussion and Analysis: June 30, 2023

15

Management’s Discussion and Analysis

Section IV: Financial Results

Table 4: Condensed Statements of Income
In millions of U.S. dollars
For the fiscal year ended June 30,
Interest Revenue
Loans, net a
Investments, net
Asset-liability management derivatives, net
Borrowing expenses, net
Interest Revenue, net of borrowing expenses
Provision for losses on loans and other exposures
Other revenue (expenses), net (Table 10)
Net non-interest expenses (Table 8)
Transfers from affiliated organizations and others
Non-functional currency translation adjustment gains, net
Unrealized mark-to-market losses on investments-trading portfolio, net b
Unrealized mark-to-market gains on non-trading portfolios, net
Development grants
Net (Loss) Income
Adjustments to reconcile net (loss) income to adjusted net income:
Activities directly funded by member contributions
Contributions from affiliated organizations and others
Non-functional currency translation adjustment gains, net
Unrealized mark-to-market gains on non-trading portfolios, net c
Pension and other adjustments
Adjusted Net Income

2023

2022

Negative Impact

Positive Impact$ 2,256 $ 1,960
1,053
189
15
1
(957)
(249)
(708)
$ 2,367 $ 1,901
(688)
(278)
(410)
55
(2)
(1,464) (1,392)
(72)
117
274
(157)
192
511
(319)
(29)
(104)
134
1,474
(1,340)(3,946) (2,372)(1,574)$ (3,262) $12 (3,274)
4,000
2,508
(117)
(274)
(192)
(511)
(32) (1,432)
(204)
(43)
$ 193 $ 260

296
864
14
466
57

75

1,492
157
319
1,400
(161)
(67)

a. Includes interest rate swap income or expense from loan related derivatives.
b. Includes IDA’s share of returns from Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve Fund(PCRF) assets – $83 million positive return (FY22- $37 million negative return).
c. Excludes $102 million of gains from revenue-related forward currency contracts (FY22 - $42 million of gains).
Table 5: Condensed Balance Sheets
In millions of U.S. dollars
As of June 30,
AssetsDue from banks
Investments
Net Loans Outstanding
Derivative assets, net
Other assets
Total assets
Liabilities
Borrowings
Derivative liabilities, net
Other liabilities
EquityTotal liabilities and equity

16

$

$

$

$

2023

2022

689 $
31,822
187,669
364
6,938
227,482 $686
39,827
174,490404
4,607
220,01432,567 $
1,244
7,889
185,782

32,899579
7,868
178,668

227,482 $220,014

IDA Management's Discussion and Analysis: June 30, 2023

Decrease Increase3(8,005)
13,179
(40)
2,331
7,468

(332)
665
21
7,114
7,468

Section IV: Financial Results

Management’s Discussion and Analysis

The main drivers for the movements in the Balance Sheets from June 30, 2022 to June 30, 2023 are as follows:• An increase in net loans outstanding due to net loan disbursements during the year;• An increase in other assets due to higher grant advances;• A decrease in investments due to net cash outflows for funding loan and grant disbursements during theyear;• An increase in derivative liabilities primarily due to unrealized mark-to-market losses on borrowing-related
derivatives as a result of the increase in interest rates;• An increase in equity due to higher subscriptions and contributions paid in, partially offset by the increasein demand obligations and the increase in the accumulated deficit.

EquitySee Figure 2 below for the change in IDA’s equity during FY23:
Figure 2: Changes in Equity
In billions of U.S. dollars

200

178.7

13.5

0.2
(3.3)

(3.3)

Nonnegotiable,
non-interest
bearingdemandobligations

Accumulated
deficit

185.8

150
100
50
0
Equity as ofJune 30, 2022

Subscriptions
andcontributions
paid-inAccumulated
Equity as ofotherJune 30, 2023
comprehensive
loss

Results from Financing Activities
Loan Portfolio and Grant Activity
As of June 30, 2023, net loans outstanding were $187.7 billion, $13.2 billion higher compared with June 30, 2022.
The increase was mainly due to net loan disbursements during the year.
As of June 30, 2023, 83% of IDA’s total loans outstanding were denominated in the SDR. For the regionalpresentation of total loans outstanding, see Notes to the Financial Statements for the year ended June 30, 2023, Note
D – Loans and Other Exposures – Table D7.

IDA Management's Discussion and Analysis: June 30, 2023

17

Management’s Discussion and Analysis

Section IV: Financial Results

Figure 3: Net Loans Outstanding Activity
In billions of U.S. dollars

200

12.9

Figure 4: Net Loans Outstanding
In billions of U.S. dollars

0.7

174.5

200

187.7

(0.4)

177.8

174.5

Jun 21

Jun 22

187.7

150

150

100
50
0

100
Net Loans
Net loan
Accumulated Translation
outstanding disbursements provision for and otheras of Juneloan losses adjustments
30, 2022

Net Loansoutstanding
as of June30, 2023

Jun 23

IDA’s loans generally disburse within five to ten years for Investment Project Financing (IPF) and one to three years
for Development Policy Financing (DPF). Therefore, each year’s disbursements also include amounts relating tocommitments made in earlier years (See Table 6).
Table 6: Gross Disbursements of Loans and Grants by Region
In millions of U.S. dollars
Loans aFor 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

$

$

6,345 $
6,034
1,297
2,104
235
46
4,487
20,548 $2023
Grants b
4,072 $
1,914
151
281
87
506
159
7,170 $

Loans aTotal
10,417
7,948
1,448
2,385
322
552
4,646
27,718$$4,520 $
4,942
1,365
631
346
63
3,952
15,819 $2022
Grants b
2,613 $
1,602
137
133
164
496
250
5,395 $

Total
7,133
6,544
1,502
764
510
559
4,202
21,214

Variance
$

$

3,284
1,404
(54)
1,621
(188)
(7)
444
6,504

a. Excludes PSW related disbursements - $53 million (FY22 - $41 million).
b. Excludes Project Preparation Advances (PPA)

As of June 30, 2023, 56% of IDA’s loans were on regular terms (75 basis points SDR equivalent service charge)
See Table 7. The increase in IDA’s revenue from loans in FY23 compared to FY22 was primarily due to the higher
average balances of loans outstanding and the increase in interest rates on non-concessional loans.

18

IDA Management's Discussion and Analysis: June 30, 2023

Section IV: Financial Results

Management’s Discussion and Analysis

Table 7: Revenue and Loan Balances by Product Category
In millions of U.S. dollars

Category
Loans
Concessional
Regular
Blend
Hard b
SML
50-yearNon-concessional c
Others d
Total
a.
b.
c.
d.

Interest revenue on loans a
For the fiscal year ended June 30,
2023
2022

Balance as of June 30,
2023
2022

$

$

106,720
69,908
1,280
3,014
1,113
9,497
152
191,684$$

104,716
65,617
1,327
NA
NA
6,381
50
178,091

$

$

806
1,072
44
NA
NA
322
6
2,250

$

$

829
970
47
NA
NA
116
1
1,963

Excludes interest rate swap income or expense from loan related derivatives - $6 million of income in FY23 ($3 million of
expense in FY22)
Effective FY18, Hard-term loans are no longer offered.
In addition, $27 million of commitment charges were earned in FY23 on undisbursed balances of non-concessional loans($24 million in FY22).
Represents loans under the PSW and others.

Provision for losses on loans and other exposures
In FY23, IDA recorded a provision expense for losses on loans and other exposures of $688 million compared to a
provision expense of $278 million in FY22 (see Notes to the Financial Statements for the year ended June 30, 2023,
Note D – Loans and Other Exposures – Table D5). The increase in provision expense was primarily due to higher
exposure in FY23 compared to FY22. For adjusted net income purposes, the provision for losses on loans and otherexposures excludes the provision for debt relief under HIPC/MDRI, and the provision for grant advances, sincethese are funded by contributions from members.

Results from Investing Activities
Investment Portfolio
IDA’s net investment portfolio decreased to $30.7 billion as of June 30, 2023, from $39.6 billion as of June 30,
2022. The decrease was primarily due to net cash outflows from net loan and grant disbursements, offset by cash
received from member contributions. See Notes to the Financial Statements for the year ended June 30, 2023, Note
C - Investments.
Investment interest revenue, net of derivatives
During FY23, IDA’s net interest revenue from investments was $1,053 million, an increase of $864 million
compared with FY22. The increase in interest revenue was mainly driven by the higher interest rates in FY23
compared to FY22.

IDA Management's Discussion and Analysis: June 30, 2023

19

Section IV: Financial Results

Management’s Discussion and Analysis

Figure 5: Net Investment Portfolio
In billions of U.S. dollars

50
40

Figure 6: Net Investment Revenue
In millions of U.S. dollars

1200

39.6

37.9

30.7

30

900
600

20

300

10
0

0
Jun-21

Jun-22Jun-23

FY19

FY20

FY21

FY22

FY23

Unrealized mark-to-market gains (losses) on investments-trading portfolio
During FY23, IDA’s investments-trading portfolio, excluding IDA's share of returns from PEBP and PCRF, had
unrealized mark-to-market losses of $112 million, compared to $67 million of unrealized mark-to-market losses in
FY22. The increase in losses was mainly due to the increase in yield curves of certain non-USD denominated bonds
in FY23.

Results from Borrowing Activities
As of June 30, 2023, the fair value of the market borrowing portfolio was $19.6 billion, a decrease of $2.2 billion
compared to June 30, 2022 ($21.9 billion). The decrease was mainly due to the maturities during the year.
As of June 30, 2023, the market borrowings recorded at amortized cost were $8.6 billion, an increase of $2.4 billion
from June 30, 2022 ($6.2 billion). The increase was due to an issuance of new long-term fixed rate market debt
during the year. See Notes to the Financial Statements for the year ended June 30, 2023, Note E – Borrowings.
Concessional partner loans from members recorded at amortized cost were $7.2 billion as of June 30, 2023, an
increase of $0.2 billion from June 30, 2022 ($7.0 billion).
Figure 7: Borrowing Portfolio
In billions of U. S. dollars

Market borrowings at fair valueMarket borrowings at amortized cost
Concessional partner loans at amortized cost
40
30
20

21.9

19.6

6.2
7.0

8.6

7.7
Jun-21

Jun-22Jun-23

20.6

10
0

7.2

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
is a function of IBRD's financial results. On October 14, 2022, IBRD’s Board of Governors approved a transfer from
FY22 allocable income of $117 million to IDA which was received by IDA on October 20, 2022.

Net Non-Interest Expense
IDA’s net non-interest expenses are primarily comprised of administrative expenses, net of revenue from externallyfunded activities. IBRD and IDA's administrative budget is a single resource envelope that funds the combined work

20

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IV: Financial Results

programs of both entities. The allocation of administrative expenses between IBRD and IDA is based on an agreed
cost and revenue sharing methodology, approved by their Boards. The allocation 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 otherexternally funded activities.
The increase in net non-interest expenses from FY22 to FY23, on both a U.S. GAAP basis and on an adjusted net
income basis, was primarily driven by higher travel and higher staff costs (See Table 8). Travel expenses have been
increasing since the easing of the COVID-19 related travel restrictions and office closures and are now
approximately at 83% of the pre-COVID levels for the World Bank.
Table 8: 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 a

2023
$

$

Contributions to special programs b

1,228
165
588
163
100
144
22
2,410

2022
$

$

1,137
71
588
191
83
144
24
2,238

Variance
$

$

91
94
—
(28)
17
—
(2)
172

20

19

1

(47)
(686)
(57)
(3)
(173)
(966)
1,464

$
$

(41)
(613)
(43)
(3)
(165)
(865)
1,392

$
$

(6)
(73)
(14)
—
(8)
(101)
72

Adjustments to arrive at Net non-interest expenses - Adjusted Net Income basis
Pension, RAMP and EFO adjustments (Table 9) c
121
Net non-interest expenses - Adjusted Net Income basis
$
1,585

$

80
1,472

$

41
113

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) - GAAP Basis$$a. Includes expenses related to IDA executed trust funds of $686 million for FY23 and $613 million for FY22.
b. Included in Non-interest expenses – Other in the Statements of Income.
c. Adjustments are included in the Pension and other adjustments line in Table 4.

IDA aims to have its net administrative expenses covered by its loan revenue (interest, service charges, commitment
fees, and guarantee fees). Thus, IDA monitors its net administrative expenses as a percentage of its loan revenue,
using a measure referred to as the budget anchor. In FY23, IDA’s budget anchor was 69.9%, improved by 4.4
percentage points compared to FY22 primarily due to a higher increase in loan revenue than the increase inadministrative expenses. See Table 9.

IDA Management's Discussion and Analysis: June 30, 2023

21

Management’s Discussion and Analysis

Section IV: Financial Results

Table 9: Budget Anchor
In millions of U.S. dollars
For the fiscal year ended June 30,
Total net Non-interest Expenses (Table 8)
Pension, RAMP and EFO adjustments (Table 8) a
Net administrative expenses for Budget Anchor$$

Interest Revenue from Loans, net of associated borrowing expenses
Commitment charges and Guarantee fees (Table 10)
Gains on revenue-related forward currency contracts
Total revenue for Budget Anchor$$

Budget Anchor

2023
1,464
121
1,585

2022
1,392
80
1,472

$
$

2,106
58
102
2,266

$

1,892
46
42
1,980

$

69.9%

Variance
72
41
$
113
$

$

$

74.3%

214
12
60
286
(4.4)%

a. These adjustments are made to arrive at net administrative expenses used for adjusted net income purposes.

In FY23, IDA’s net other revenue was $55 million compared to $2 million net other expenses in FY22. The change
was due to lower PPA grant expenses, net of cancellations and refinancing of PPA grants previously approved.
Refinanced PPA grants are included in the loan provided to the borrower, and correspondingly, prior grant expenses
are reversed.
Table 10: Other Revenue (Expenses), net
In millions of U.S. dollars
For the fiscal year ended June 30,
PPA grants and others a
Guarantee fees and others b
Commitment charges
Other Revenue (Expenses), net (Table 4)

2023
$

(3)
31
27
55

$

2022
$

Variance

(48)
22
24
(2)

$

$

45
9
3
57

$

a. Included in Non-interest expenses – Other in the Statements of Income.
b. Included in Non-interest revenue – Other in the Statements of Income.

Unrealized mark-to-market gains (losses) on non-trading portfolios, net
During FY23, the non-trading portfolios had $134 million net unrealized mark-to-market gains ($1,474 million net
unrealized mark-to-market gains in FY22). The decrease was mainly driven by lower unrealized mark-to-market
gains from the derivatives held for the CVP, managed as part of Asset-Liability Management (ALM), as a result of asmaller increase in the U.S. dollar and EUR interest rates for long tenors in FY23 compared to FY22. (Section IX:
Risk Management).
Table 11: 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

$

$

2023
143
(5)
(4)
134

$

$

2022
1,441
(26)
59
1,474

$

$

Variance(1,298)21(63)(1,340)a. Other comprises mark-to-market gains (losses) on borrowings, loan related derivatives and on PSW associated instruments.

Non-functional currency translation adjustment gains (losses), net
Non-functional currency translation adjustment gains or losses represent unrealized exchange rate gains or losses
resulting from the hedging of exchange rate risk related to future donor contributions, 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. The translation adjustment gains in FY23 and FY22 were primarily driven by the hedging of
exchange rate risk related to future donor contributions. Certain members pledge their future equity contributions in
non-SDR currencies. These future cash flows are economically hedged using currency forwards. The economic

22

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IV: Financial Results

offset is inherent in the future contribution inflows. The payable portion of the currency forward contracts aredenominated in non-functional currencies. The depreciation or appreciation of these currencies against the U.S.
dollar results in exchange rate gains or losses which are recorded in the income statements. Accordingly, thetranslation adjustment gains on non-functional currencies were $192 million in FY23, compared to translation
adjustment gains of $511 million in FY22. The decrease in translation gains in FY23 was primarily driven by lessdepreciation of certain non-functional currencies against the U.S. dollar when compared to FY22.

IDA Management's Discussion and Analysis: June 30, 2023

23

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 acommon framework which extends across all its development activities. The main elements of this framework arefinancing 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
financing principles are described in Box 2. Within the scope permitted by the Articles of Agreement, application ofthese financing principles must be developed and adjusted in light of experience and changing conditions.
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 fortechnical, 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, andother natural 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.

Financing Cycles
Financing cycles involve identifying and appraising a project and approving and disbursing the funds. In response to
emergency situations, such as natural disasters and other crises, IDA is able to accelerate the preparation andapproval cycle. In most cases, IDA’s Board approves each loan, grant, and guarantee after appraisal of a project bystaff. Under a Multiphase Programmatic Approach (MPA) approved by the Board in FY18, the Board may approvean 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 ofconditions set out in the loan or grant agreement. As of June 30, 2023, $15.5 billion was committed under the MPA.
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 arereported directly to the Board. From July 1, 2023, new financing and guarantees provided by IDA are being tracked
against the objectives of the Paris Agreement and a country's pathway towards low greenhouse gas emissions andclimate-resilient development.

Financing Categories
Most of IDA’s lending is of three types: investment project financing, development policy financing, and programfor-results. Figure 8 shows the percentage of loans approved for investment lending, development policy operations
and program-for-results over the past five fiscal years.
24

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Figure 8: Net Annual Commitments and Percentage Share of Financing Categories
In billions of U.S. dollars, except rates in percentages

100%

$22
7

$30
4

22

24

$36

$38

12

12

19

75%

$34
19

9
19

50%
71

72

69

FY19

FY20

FY21

79
62

25%

0%

Investment Project Financing

Development Policy Financing

FY22

FY23
Program-for-Results

Investment Project Financing (IPF)
IPF provides financing for a wide range of activities aimed at creating the physical and social infrastructurenecessary to reduce poverty and create sustainable development. IPF is usually disbursed over the long-term(approximately 5 to 10 years). FY23 net commitments under IPF totaled $21.3 billion, compared with $29.9 billion
in FY22.
Development Policy Financing (DPF)DPF aims to support borrowers in achieving sustainable development through a program of policy and institutional
actions. Examples of DPF projects include strengthening public financial management, improving the investment
climate, addressing bottlenecks to improve service delivery, and diversifying the economy. DPF supports such
reforms through non-earmarked general budget financing. DPF provides fast-disbursing financing (approximately 1
to 3 years) to help borrowers address actual or anticipated financing requirements. FY23 net commitments under
DPF totaled $6.5 billion, compared with $3.4 billion in FY22.
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. PforR disburses when agreed results are achieved andverified. Results are identified and agreed upon during the preparation stage. FY23 net commitments under PforR
totaled $6.4 billion, compared with $4.4 billion in FY22. Observable increases in the proportion of PforR reflectborrower preferences.
These three complementary categories support the policy and institutional changes needed to create an environment
conducive to sustained and equitable growth.

IDA Management's Discussion and Analysis: June 30, 2023

25

Section V: Development Activities, Products and Programs

Management’s Discussion and Analysis

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 financing recipients to denominate new IDA loans in U.S. dollar, euro, poundsterling or Japanese yen. For cumulative loans approved under Single Currency program as of June 30, 2023, see
Table 12.
Table 12: 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
Pound Sterling
Total

$
$

2023
38.7
32.1
1.2
0.1
72.1

$

30.3

$

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

Table 13: Summary of Financial Terms for IDA Lending Products, effective July 1, 2023
Instrument type aCurrencies

Maturity/Grace
PeriodService Charges

Interest rates

Grant
Regular-Term loan

SDR
SDR, USD, EUR,
GBP, JPY

Not applicable
38/6 years

Not applicable
75bps SDR equivalent
service charge

Not applicableNot applicable

Regular-Small Economy loan

SDR, USD, EUR,
GBP, JPY

40/10 years

75bps SDR equivalent
service charge

Not applicable

Blend-Term loan

SDR, USD, EUR,
GBP, JPY

30/5 years

75bps SDR equivalent
service charge

1.25% SDR equivalentinterest rate

50-year loan

SDR, USD, EUR,
GBP, JPY

50/10 years

Zero interest and service
chargeZero interest and service
chargeShorter Maturity Loan (SML)

SDR, USD, EUR,
GBP, JPY

12/6 years

Zero interest and service
chargeZero interest and service
chargeNon-concessional loans Scale-up Window (SUW)

USD, EUR, GBP,JPY

Up to 35 years
maximum; up to 20
years average
maturity

25 bps one-time frontend fee
25 bps commitment fee

IBRD Flexible Loan
terms bCatastrophe Deferred Draw
Down Option (CAT DDO) c

SDR, USD, EUR,
GBP, JPY

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.

a. 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.
b. There is an implicit floor of zero on the overall interest rate in IDA’s non-concessional loans.
c. 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, net in theStatements of Income. Commitment charges earned on loans and grants, if any, are reported as non-interest revenue
in the Statements of Income.

26

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

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, hard-term loans, and non-concessional loans.
Further, loans offered under non-concessional terms are available at variable interest rates on IBRD terms. All otherrates 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 FY23, the commitment charge on undisbursed
concessional loans had been set at zero, and for grants it had been set at zero from FY03 to FY23. For FY24,
commitment charges on concessional loans remain at zero. The commitment charge on non-concessional loans isaligned to IBRD terms, which is 0.25% per annum.

Repayment Terms
IDA’s lending terms recognize the variation in economic 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 the borrower
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, 2023, $27.0 billion of qualifying loans outstanding from 15 borrowers that have graduated from IDA
since the introduction of the accelerated repayment clause were under the accelerated repayment terms. Of these 15
borrowers, 9 borrowers selected the principal option, 5 borrowers selected the interest option, and 1 borrower
selected a combination of the two options.
The accelerated repayment clauses in all of these legal agreements also allow a borrower to subsequently request
pausing of those accelerated terms or cancellation if economic conditions in the borrower’s country havedeteriorated, in which case, the terms of repayment can revert to the original terms of the financing agreements. As
repayment accelerations, pausing of accelerations, and cancellation are contemplated in the original terms of the
instruments, they do not constitute loan modifications.

Loans, Grants and Guarantee Activity
Commitments
FY23 net loan commitments were $27.0 billion, an increase of $2.5 billion or 10% over FY22 ($24.5 billion),
mainly driven by higher DPF commitments. There were no guarantee commitments in either FY23 or FY22. (SeeTable 14). Also, see Section VI: Other Development Activities and Programs.
FY23 net commitments of grants were $7.3 billion, a decrease of $5.9 billion compared to FY22 ($13.2 billion) (SeeTable 15). This decrease was mainly driven by lower grant commitments to Eastern and Southern Africa andWestern and Central Africa.

IDA Management's Discussion and Analysis: June 30, 2023

27

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Table 14: Net Commitments of Loans and Guarantees 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

2023

% of total

$

9,661
9,790
826
898
51
15
5,720
26,961

36 %
36
3
4
*
*
21
100 %

2023

% of total

$

4,707

64 %

$

1,600
51
200
130
546
50
7,284

22
1
3
2
7
1
100

$

2022

% of total

$

7,751
8,779
1,039
2,046
534
162
4,183
24,494

32 %
36
4
8
2
1
17
100 %

2022

% of total

$

7,515

57 %

$

3,434
634
465
496
655
34
13,233

26
5
3
4
5
*
100 %

$

Variance
$

$

1,910
1,011
(213)
(1,148)
(483)
(147)
1,537
2,467

* indicates percentage less than 0.5%.
Table 15: 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
* indicates percentage less than 0.5%.

28

IDA Management's Discussion and Analysis: June 30, 2023

Variance$(2,808)$(1,834)
(583)
(265)
(366)
(109)
16
(5,949)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 tohelp them meet their development goals. These include guarantees, debt relief, trust fund administration, andexternally funded reimbursable advisory services.

Guarantees
IDA offers both project-based and policy-based guarantees. These guarantees are available for projects andprograms in member countries to help mobilize private financing for development purposes. IDA’s guarantees are
partial in nature 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 asovereign counter-guarantee and indemnity, comparable to the requirement of a sovereign guarantee for IDA
lending to sub-sovereign and non-sovereign borrowers. See Table 16 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 reviews the choice of instrument for all proposed new guarantee operations.
Table 16: Types of Guarantees
Project-based
Project-based guarantees are provided to mobilize private financing for a project and/or mitigate payment
guarantees
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.
Loan guarantees 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 suchdefault, 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
Policy-based guarantees are provided to mobilize private financing for sovereigns or sub-sovereigns. Theyguarantees
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 17: Pricing for IDA’s Project-Based and Policy-Based Guarantees, effective July 1, 2023
Charges
Front-end fee
Initiation fee a
Processing fee bStandby fee
Guarantee fee

Guarantees on Concessional Terms
Private Projects
Public Projects
NANA
15 bpsNA
Up to 50 bps
NA
0 bps
0 bps
75 bps75 bpsGuarantees on Non-Concessional Terms
Private Projects
Public Projects
25 bps
25 bps
15 bpsNA
Up to 50 bps
NA
25 bps
25 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.

Guarantee Exposure
IDA’s guarantee exposure is measured by discounting each guaranteed amount from its next call date. See Table
below for IDA’s guarantee exposure and maximum potential undiscounted future payments that IDA could be
required to make under these guarantees. In addition, IDA had $795 million of exposure under PSW guarantees as ofJune 30, 2023 ($638 million — June 30, 2022). See Section III: IDA’s Financial Resources for PSW guarantees. For
additional information, see Notes to the Financial Statements for the year ended June 30, 2023, Notes D – Loans andOther Exposures and Note G – Transactions with Affiliated Organizations.
In millions of U.S. dollars
As of June 30,
Guarantee Exposure
Maximum potential undiscounted future payments

$

2023
1,744
1,763

$

IDA Management's Discussion and Analysis: June 30, 2023

2022
1,845
1,869

29

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

During the fiscal year ended June 30, 2023, IDA's partial guarantee of certain Eurobonds that had been issued by the
Republic of Ghana (Ghana) was called and in accordance with the terms of the guarantee, IDA made a payment of$50 million to the guaranteed bondholders out of the total $372 million Eurobonds guarantee exposure. Pursuant to
the terms of the related indemnity agreement between IDA and Ghana, IDA directed Ghana to reimburse IDA for
the $50 million in twelve equal semi-annual installments, commencing April 15, 2029, and to repay interest on theoutstanding amount at 2.73% per annum. The outstanding amount of $50 million is included in Loans Outstandingon the Balance Sheet as of June 30, 2023. No other guarantees provided by IDA to sovereign or sub-sovereign
borrowers have been called during the fiscal years ended June 30, 2023 and June 30, 2022.

Other Financial Products and Services
IDA facilitates access to risk management solutions to mitigate the financial effects of natural disasters forborrowing members. Financial solutions can include disaster risk financing through catastrophe swaps, insurance
and reinsurance contracts, and regional pooling facilities.
The Catastrophe Deferred Draw-Down Option (CAT-DDO) promotes countries' resilience to disasters and expands
the range of IDA's crisis instruments. The CAT-DDO is a contingent credit line that provides immediate liquidity tocountries 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. CAT-DDOs are intended to enhance IDA countries’
capacity to plan for and manage crises. As of June 30, 2023, the amount of CAT DDOs disbursed and outstanding
was $367 million ($359 million as of June 30, 2022), and the undisbursed amount of effective CAT DDOs was $194
million, compared to $53 million a year earlier.

Grant Making Facilities
Grant Making Facilities (GMFs) are contributions to specific trust funds and complementary to IDA’s work. In
FY23, the amount under this program was $20 million in accordance with the cost sharing agreement with IBRD
(FY22 - $19 million). These amounts are reflected in Non-Interest Expenses - Contribution to Special Programs in
IDA’s Statements of Income.

Debt Relief
The Heavily Indebted Poor Countries Debt Initiative (HIPC Initiative) was launched in 1996 as a joint effort bybilateral and multilateral creditors to provide debt relief to the poorest countries to reduce their external debt
payments to sustainable levels. Under the HIPC initiative, implementation mechanisms include partial forgivenessof IDA debt service as it comes due and partial repayment with IDA resources of outstanding IBRD debt. The
Multilateral Debt Relief Initiative (MDRI) was implemented in 2006 and provides debt relief by writing-off eligibleloans upon qualifying borrowers reaching the HIPC Completion Point. Both of the initiatives are part of a global
effort focused on heavily indebted poor countries with strong policy performance. The initiatives aim to reduce theexternal debt of eligible countries as part of a broader poverty reduction strategy, whilst safeguarding the long-term
financial capacity of IDA and other participating 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
and adjusted to reflect the impact of any changes.
During FY23, HIPC debt relief was provided on $22 million of loans ($30 million in FY22). There was no HIPC
debt relief on service charges in FY23 or FY22. On a cumulative basis, debt relief has been provided on $2.2 billion
of loans and $335 million of service charges under HIPC as of June 30, 2023.

30

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

During FY23 and FY22, 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, 2023. The provision for the debt relief
was recorded 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 Activity
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
resources to achieve development goals that cannot be addressed effectively by any single member, given theircomplexity, scale, and scope.
IDA’s roles and responsibilities in managing trust funds depend on the type of fund, outlined as follows:
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 $686 million in FY23 ($613 million in FY22) of trust fund program funds, which was
included in Non-interest expense, Administrative in IDA's Statements of Income.
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 uses a cost recovery framework for trust funds, which aims to recover the costs of performing agreed roles inadministrating trust funds, and is guided by principles of transparency, fairness, simplification, standardization,
predictability, and consistent treatment across all trust fund donors.
Management continues to implement measures to better integrate planning, support sustainability and enhancealignment of external 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.
During FY23, IDA’s share of revenue and fees from Trust Fund administration activity was $57 million ($43 million
in FY22). For additional information, see Notes to the Financial Statements for the year ended June 30, 2023, 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. See Table 18. These funds did not include $729 million of undisbursed
third-party contributions made to IDA executed trust funds, which are recognized on the Balance Sheet. Theseamounts are included in Other assets and the corresponding liabilities are included in Accounts payable andmiscellaneous liabilities on the Balance Sheets.

IDA Management's Discussion and Analysis: June 30, 2023

31

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

Table 18: Funds Held in Trust by IDA
In millions of U.S. dollars
As of June 30,
IDA executed
Jointly executed with affiliated organization
Recipient-executed
Financial intermediary funds
Execution not yet assigned a
Total

$

$

Total Fiduciary Assets
2023
39
$
1,027
2,017
292
8,213
11,588
$

2022
38
1,004
1,855
285
5,800
8,982

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., trust
funds), 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 FY23, income relating to reimbursableadvisory services was $47 million (FY22 - $41 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. IDA received and recorded$3 million of restricted revenue in FY23 (FY22 - $3 million), which was included in the line "Total net non-interest
expenses – GAAP basis" in Table 8.
Restrictions are released once the funds are used for the purposes specified by donors. In FY23, there was a releaseof $13 million (FY22 - $17 million).

32

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section VII: Investment Activities

Section VII: Investment Activities
As of June 30, 2023, IDA’s net investment portfolio totaled $30.7 billion (Figure 9). See the Notes to the Financial
Statements for the year ended June 30, 2023, Note C – Investments.
Figure 9: Net Investment Portfolio
In billions of U.S. dollars

Trading Portfolio

Non-trading Portfolio

50
40

0.5

0.4
0.3

30
20

37.4

39.2

Jun 21

Jun 2230.4

100
Jun 23

Investments – Trading Portfolio
The primary objective of IDA’s investments-trading portfolio strategy continues to be preservation of capital within
institutional constraints. Consistent with this primary objective, IDA invests in high quality instruments. IDA aims
to earn reasonable investment returns, while ensuring timely availability of funds for future cash flow requirements,
including disbursements for loans, grants, debt service, and administrative expenses.
The investments-trading portfolio is held in three sub-portfolios: Operational, Stable, and Discretionary. Each may
have different risk profiles and performance guidelines (See Table 19).
•

Operational portfolio is used to meet IDA’s day-to-day cash flow requirements.

•

Stable portfolio is mainly an investment portfolio holding all or a portion of the Prudential Minimum level ofliquidity, set at the start of each fiscal year.

•

Discretionary portfolio gives IDA the flexibility to execute its borrowing program and can be used to tap
attractive market opportunities. Additional portions of the Prudential Minimum may also be held in thisportfolio.

As of June 30, 2023, the operational sub-portfolio decreased by $11.7 billion compared to June 30, 2022 mainly
driven by large loan and grant disbursements during FY23. As of June 30, 2023, $20.4 billion (approximately 66%
of total volume) of the net investment portfolio was due to mature within six months, of which $9.2 billion was
expected to mature within one month.
IDA’s total return on its investments-trading portfolio for FY23 (excluding unrealized mark-to-market gains / losses
on PEBP assets) was 2.63%, compared to 0.26% in FY22, primarily due to higher interest revenue resulting from theincrease in average interest rates in FY23, partially offset by higher unrealized mark-to-market losses in FY23
compared to FY22. The unrealized mark-to-market losses in FY23 primarily reflected the increase in yield curves ofcertain non-USD denominated bonds during the year.
Table 19 provides a breakdown of the outstanding balances, average balances and returns of IDA’s investmentstrading portfolio. For details on returns of the total portfolio, refer to Section IV: Financial Results.

IDA Management's Discussion and Analysis: June 30, 2023

33

Management’s Discussion and Analysis

Section VII: Investment Activities

Table 19: Investments Trading Portfolio
In millions of U.S. dollars, except rates in percentages
Sub Portfolios
Operational
StableDiscretionary *
Total

$

$

Outstanding as of June 30
2023
2022
4,235 $
15,92922,49422,734
3,699
552
30,428 $39,215$$

Average Balance
FY23
FY22
11,200 $16,136
21,332
23,9593,116
167
35,648 $40,262Average Return
FY23
FY22
3.01 %
0.25 %
2.12
0.26
5.00
—
2.63 %
0.26 %* Discretionary sub-portfolio was terminated between December 2020 and September 2021.

IDA’s liquid assets are held mainly in the following types of highly rated, fixed-income instruments. See Table 26
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. The prudential minimum for FY24 has been set
at $24.7 billion, compared to $20.8 billion for FY23, a $3.9 billion increase due to higher projected net
disbursements. 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. As of June 30, 2023, the investments non-trading portfolio had a fair value of $244 million($346 million in FY22). The changes in fair value for this security are recognized in the Unrealized mark-to-market
gains (losses) on non-trading portfolios, net line in the Statements of Income. See Notes to the Financial Statements
for the year ended June 30, 2023, Note C – Investments and Note G - Transactions with Affiliated Organizations.

34

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section VIII: Borrowing Activities

Section VIII: Borrowing Activities
IDA’s borrowing portfolio comprises market borrowings (carried at amortized cost or fair value) and concessional
partner loans made by IDA members (carried at amortized cost).
Table 20: Borrowing Portfolio
In millions of U.S. dollars, except rates in percentages
Interest expense a

Outstanding as of June 30,
2023
2022
Market debt including related
derivatives, at fair valueMarket debt, at amortized cost
Concessional partner loans
Total

$

19,612

$

8,627
7,154
35,393$

21,851

$

6,201
6,980
35,032

FY23
$

703

$

97
139
939

Weighted average rate

FY22

FY23

FY22

$

64

4.99 %

1.54 %

$

14
144
222

1.28
2.02
3.47 %

0.86
1.99
1.51 %

a. Excludes interest expenses associated with repurchase agreements - $18 million in FY23 (FY22 - $27 million).

Market Debt
IDA has been issuing bonds in the international capital markets since FY18 including long-term fixed rate bonds
recorded at amortized cost to fund its fixed rate loans since FY22. As of June 30, 2023, market borrowings recorded
at fair value were $19.6 billion, a decrease of $2.2 billion compared to June 30, 2022, primarily due to net maturities
during the year. As of June 30, 2023, market borrowings recorded at amortized cost were $8.6 billion, an increase of$2.4 billion compared to June 30, 2022, primarily due to a new issuance during the year.

Concessional Partner Loans
Concessional partner loans (CPLs) continue as a source of funding, whereby the borrowing terms of theconcessional loans from members aim to follow the concessional features of IDA’s loans.
The maturities of the CPLs can be 25, 40 or 50 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 or a 50-year loan. The loans have an all-in SDR equivalentcoupon 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 thereplenishment discussions. See Table 21.
Table 21: Concessional Partner Loans Terms
Maturity
25-year40-year50-yearGrace period
5 years
10 years
10 years

SDR Discount rates (IDA20)
1.41%
1.79%
1.84%

The increase of $0.2 billion in concessional partner loans outstanding was primarily due to net new issuance during
the year. Interest expense associated with these loans was $139 million in FY23 (FY22 - $144 million).
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.

IDA Management's Discussion and Analysis: June 30, 2023

35

Management’s Discussion and Analysis

Section VIII: Borrowing Activities

Figure 10: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2023

Borrowings including Derivatives

Borrowing excluding Derivatives
Other
3%

GBP
12%
JPY
9%

GBP
18%
USD
42%

JPY
9%

EUR
37%

USD
32%

EUR
38%

Figure 11: Medium- and Long-Term Borrowings Issued by Currency during the year, excluding Derivatives

June 30, 2023

June 30, 2022
USD
3%

USD
10%

EUR
90%

NOK
6%

GBP
21%
EUR
70%

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 shortterm borrowings. 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.
Table 22: Short-Term Borrowings
As of June 30,

2023

2022

Securities sold under repurchase agreements and securities lent
under securities lending agreements
Average monthly balance during the year
Weighted average rate during the fiscal year464*

2.06 %

0.04 %* Indicates less than $0.5 million.

Contractual Obligations
In conducting its business, IDA takes on contractual obligations that may require future payments which are mainly
associated with IDA’s borrowings. See Notes to the Financial Statements for the year ended June 30, 2023, Note E –Borrowings – Table E6. Other contractual obligations are reflected on IDA’s balance sheet including undisbursedloans, amounts payable for currency and interest rate swaps, amounts payable for investment securities purchased,guarantees, and cash received under agency arrangements.

36

IDA Management's Discussion and Analysis: June 30, 2023

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 the 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, andsupports management in its oversight function, particularly in coordinating different aspects of risk management andin connection 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, andInternal Audit provides independent oversight.

IDA’s risk management process comprises risk identification, assessment, response, and risk monitoring andreporting. IDA has policies and procedures under which risk owners and corporate functions are responsible for
identifying, assessing, responding to, monitoring, and reporting risks.

Risk Oversight and Coverage
Financial and Operational Risk Management
The Vice President and WBG Chief Risk Officer (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 to people, processes, and systems, or from external events. In
addition, the CRO works closely with IBRD, IFC, and MIGA’s management to review, measure, aggregate, andreport on risks and share best practices across the WBG. The CRO also helps enhance cooperation between theentities 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 fraud and corruption risks may impact IDA-financed projects, OPCS, the Regions and Practice Groups, andthe Integrity Vice Presidency jointly address such issues.
The following three departments report directly to the CRO:
Credit Risk Department•••

Identifies, measures, monitors, and manages country credit risk faced by IDA. By agreement with the Board, theindividual country credit risk ratings are not shared with the Board and are not made public.
Assesses loan portfolio risk and capital requirements, determines the adequacy 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 withoverall capital adequacy.
Reviews proposed new financial products for any implications for country credit risk.

Market and Counterparty Risk Department•

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

IDA Management's Discussion and Analysis: June 30, 2023

37

Management’s Discussion and Analysis•

Section IX: Risk Management

Ensures effective oversight, including: i) maintaining sound credit assessments, ii) addressing transaction andproduct risk issues, iii) providing an independent review function, iv) monitoring market and counterparty riskin the investment, borrowing and client operation portfolios, and v) implementing the model risk governanceframework. It also provides reports to the Audit Committee and the Board on the extent and nature of risks, risk
management, and oversight.

Operational Risk Department•••

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 the operational risk management framework which is aligned with Baselprinciples and provides direction to business unit partners to ensure consistent application, (iii) assisting andguiding business units in identifying and prioritizing significant operational risks and enabling monitoring andreporting of risks through suitable metrics (or risk indicators), (iv) helping identify emerging risks and trends
through monitoring of internal and external risk events, (v) supporting risk response and mitigating actions, andprepares a corporate Operational Risk Report for review and discussion by the ORC.
Responsible for the oversight of the enterprise risk, operational risk, business continuity, corporate insurance,and data privacy functions.

Risk Committees
Figure 12: Management Risk Committee Structure for Financial and Operational Risks

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) 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 financial and operational risks in the areas of finance, which include country
credit, market, counterparty, liquidity, and 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 already in place and provides a forum for discussing and communicating significant
risk related issues. The FRC meets regularly to discuss the new products and services and financial risk managementof 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 ensurethat management 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

38

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IX: Risk Management

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 areviewing 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 Vice President-level committee chaired by the Managing Director andChief Administrative Officer (MDCAO) that oversees IDA’s non-financial risks through reviewing, discussing and/or formulating proposed policies, procedures, directives, guidance, and other matters requested by its members.
ERC’s scope comprises : a) operational risk, including business continuity, corporate security, cyber security, and IT
service continuity; b) enterprise risk; c) Integrity Vice Presidency (INT) and Ethics and Business Conduct (EBC)
policies and methodologies; d) shared services; and e) any other matters brought by the MDCAO. The ERC
leverages existing risk management mechanisms that are in place to provide a corporate view of operational andnon-financial risks.
Operational Risk Committee (ORC) is the main governance committee for operational risk and provides amechanism for an integrated review and response across IDA units on operational risks associated with people,
processes, and systems or from external events 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 CROVP and escalates significant risks anddecisions 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 in its financial activities, which includelending, borrowing and investing (Table 23). 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
operational risks across business units.
Table 23: 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 align the currency composition of assets and liabilities.

Liquidity Risk

Prudential Minimum liquidity level.

Operational Risk

Risk assessment and monitoring of key risk indicators and internal and external
operational risk events.

IDA Management's Discussion and Analysis: June 30, 2023

39

Management’s Discussion and Analysis

Section IX: Risk Management

Geopolitical events and Global Outlook
In response to geopolitical events and other ongoing challenges to the global outlook, IDA continues to support its
client needs in a financially sustainable manner.
As of June 30, 2023, IDA had sufficient resources to meet its liquidity requirements and continues to have access tocapital market resources. IDA continues to maintain a robust liquidity position and flexibility to access the necessary
liquidity resources. Management remains vigilant in assessing funding needs in the medium and longer-term tomanage the effect of possible severe market movements.
IDA’s capital remains adequate and above the zero percent policy minimum as indicated by the DSC ratio (SeeTable 24).
As of the reporting date, country credit risk and counterparty credit risk remain in line with the existing governanceframework and established credit limits. The loan loss provisions include IDA’s current assessment of country credit
risk. The fair values of related financial instruments reflect counterparty credit risk in IDA’s portfolios.
Developments in the market continue to be closely monitored and managed.
IDA continues to monitor associated risks and mitigates its exposures and risks in line with the risk governanceframework.

Capital Adequacy
IDA uses a solvency-based capital adequacy model, which mandates that IDA hold capital for credit risk, market
risk and operational risk covering all activities and assets on its books. The main measure of capital adequacy is
DSC, a non-GAAP measure, which is the capital available to support future commitments, over and above thecurrent portfolio. IDA is required, by the Board, to keep the DSC at levels greater than or equal to zero percent. The
DSC is calculated as the amount by which Total Resources Available (TRA) exceed Total Resources Required(TRR), plus a Conservation Buffer (CB). The TRA consists of IDA’s existing equity plus accumulated provision forloan losses and other exposures. The TRR is the minimum capital required to cover expected and unexpected losses,(under a stressed but still plausible downside scenario), in connection with all of IDA’s currently existing operations
and assets. Within the TRR, there is also a capital allowance to reflect losses that result from valuing IDA’sconcessional loan portfolio in present value terms using market interest rates. This allowance is calculated using a
stressed interest rate to account for a potential future rise in market interest rates. In addition, TRR includes capitalrequirements to account for development grants which are approved but not yet expensed. It also takes into
consideration the capital adequacy protection provided by long-term fixed rate borrowings against changes in market
interest rates. The CB is equivalent to 10 percent of TRA.
As of June 30, 2023, the DSC was 24.1%, lower by 2.3 percentage points compared with June 30, 2022 (26.4%).
The decrease was mainly due to the increase in TRR exceeding the increase in TRA. The increase in TRR was
primarily due to higher capital requirements for the increase in total exposure and the increase in conditional
development grants approved but not yet expensed. The increase in TRA was primarily due to the increase in equityfrom subscriptions and contributions. IDA’s capital continues to be adequate to support its operations. See Table 24.
Table 24: 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 TRA

40

$

$

2023
191.3
126.1
19.1
46.1
24.1 %IDA Management's Discussion and Analysis: June 30, 2023

$

$

2022
183.5
116.7
18.4
48.4
26.4 %$$

Variance
7.8
9.4
0.7
(2.3)
(2.3)%

Management’s Discussion and Analysis

Section IX: Risk Management

Asset-Liability Management
Since FY22, IDA's interim ALM policy allows, under specific criteria, funding fixed rate loans with long-term fixed
rate market debt and CPLs (both reported at amortized cost), as part of IDA’s interest rate risk management to alignthe interest rate and maturities of the debt with those of the loan portfolio. For more details, see Notes to the
Financial Statements for the year ended June 30, 2023, Note E - Borrowings.
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 in the ALM portfolio. For more details,
see Notes to the Financial Statements for the year ended June 30, 2023, 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 monitors the level of assets available to satisfy all of IDA’s borrowings and adjusts future
lending and grant commitments should the level of asset coverage fall below the level expected for a triple-A
rated entity.
Management monitors 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 additionalloan or grant commitments will be approved until access to cash funding has resumed or all market debt isrepaid.

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
the Country 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 regularly assesses the country credit risk of all its borrowers.
IDA produces credit risk ratings for all its borrowing countries, which reflect country economic, financial, andpolitical circumstances, and also considers environmental, social and governance (ESG) risk factors. Based on theserisk ratings, to manage overall portfolio risk, the allocation outcomes of the PBA and other mechanisms arereviewed to ensure that they are compatible with the Deployable Strategic Capital Framework and Single Borrower
Limit.

IDA Management's Discussion and Analysis: June 30, 2023

41

Section IX: Risk Management

Management’s Discussion and Analysis

Single Borrower Limit
Portfolio concentration risk, which arises when a small group of borrowing countries account for a large share ofloans 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 FY24, the SBL has been set at $46 billion (25 percent of $185.8 billion of equity as of June 30, 2023), amarginal increase compared to FY23 ($45 billion). 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 aconsequence, the SBL is currently not a constraining factor.
As of June 30, 2023, the ten countries with the highest exposures accounted for 64% of IDA’s total exposure (Figure13). Monitoring these exposures relative to the SBL, requires consideration of the repayment profiles of existingloans, as well as disbursement profiles and projected new loans and guarantees.
Figure 13: Country Exposures as of June 30, 2023
In billions of U.S. dollars

Top Ten Country Exposures
19.3

Bangladesh
17.9

India
16.9

Pakistan
14.3

Nigeria
12.6

Vietnam
Ethiopia

11.6

Kenya

11.4

Tanzania

9.8

Ghana

6.0

Uganda

4.6
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 tomaintain macroeconomic stability, carry out key structural and social reforms, and maintain all loans in accrual
status.
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 25). 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 withrespect to its loans. As of June 30, 2023, none of the IDA borrowing countries in the accrual portfolio had overdue
payments beyond three months.

42

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IX: Risk Management

Table 25: Treatment of Overdue Payments

Overdue by 30 days

Overdue by 45 days

Overdue by 60 days

Overdue by morethan six months

Where the borrower is the member country, no new loans, or grants to the member country, or to any
other borrower 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 havebeen received. Where the borrower is not the member country, no new loans or grants to that borrower
will be signed or approved.
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 orapproved.
In addition to the suspension of approval for new loans or grants and signing of previously approvedloans or grants, disbursements on all grants or loans to or guaranteed by the member country aresuspended until all overdue amounts are paid. This policy applies even when the borrower is not themember country. Under exceptional circumstances, disbursements can be made to a member country
upon the Board’s approval.
All loans made to or guaranteed by a member or to the territory of a member of IDA are placed in
nonaccrual status, unless IDA determines that the overdue amount will be collected in the immediate
future. Unpaid service charges and other charges not yet paid on loans outstanding are deducted fromloan revenue in the current period. To the extent that these payments are received, they are included inloan revenue. 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, adecision is made on the restoration of accrual status on a case-by-case basis and in certain cases, thisdecision may be deferred until after a suitable period of payment or policy performance has passed.

As an exception to the practices set forth in Table 25, 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, a country with overdue payments at the time.
In December 2014, Kariba Dam Rehabilitation Project ($75 million) that included benefits for Zimbabwe, acountry with overdue payments.
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.
Accumulated Provision for Losses on Loans and other Exposures
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. 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, 2023, IDA had $191.7 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 $5.5 billion, which represents a

IDA Management's Discussion and Analysis: June 30, 2023

43

Management’s Discussion and Analysis

Section IX: Risk Management

provisioning rate of 2.0% of the underlying exposures ($4.8 billion as of June 30, 2022, 1.9% of the underlying
exposures). For a summary of countries with loans or guarantees in nonaccrual status as of June 30, 2023, see Notes
to the Financial Statements for the year ended June 30, 2023, 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 andlimits, and determining the risk profile of specific transactions. Credit limits are set and monitored throughout theyear. Counterparty exposure is updated daily, taking into account current market values of assets held, estimates ofpotential 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 assessmentsin the approval and monitoring of higher exposure counterparts for the liquid asset portfolio and for derivative
counterparties.
IDA’s liquid asset portfolio consists mostly of sovereign government bonds, debt instruments issued by sovereign
government agencies, and time deposits with banks.
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, 2023, IDA received $439 million of cash collateral
for its derivative transactions ($772 million - June 30, 2022).
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, 2023,
Note F–Derivative Instruments).
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
financial model. Issuer and product investment eligibility and risk parameters relative to benchmarks are corecomponents of these Guidelines. The Guidelines also include a consultative loss limit to reflect a level of tolerance
for the risk of underperforming the benchmark in any fiscal year and a duration deviation metric. Clear lines of
responsibility for risk monitoring and compliance are highlighted in the Guidelines. Credit risk appetite is conveyed
through specific eligibility criteria (Table 26). 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 market and counterparty risk department, as deemed necessary.

44

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IX: Risk Management

Table 26: Eligibility Criteria for IDA’s Investments
Eligible Investments a

Description

Sovereigns

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 thegovernment of 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
senior debt 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. All investments are subject to approval by the Market and Counterparty Risk department and must appear on the “Approved
List” created by the department.
b. 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 78% of theportfolio rated AA or above as of June 30, 2023, reflecting IDA’s continued preference for highly-rated securities
and counterparties across all categories of financial instruments.
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). Total commercial counterparty credit exposure, net of collateral held, was $32,384 million as of June 30,
2023. (See Table 27).
Table 27: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
In millions of U.S. dollars, except rates in percentages
Counterparty Rating

a

AAA
AA
A
Total

Counterparty Rating
AAA
AA
A
Total

Sovereigns
$

$

a

9,128
5,563
2,353
17,044

Sovereigns$$

10,5672,226
4,256
17,049Non-Sovereigns
$

$

3,021
7,401
4,555
14,977

Non-Sovereigns
$

$

5,038
11,9495,901
22,888

As of June 30, 2023
Net Swap
Total Exposure
Exposure
$

$

—
148
215
363

As of June 30, 2022
Net Swap
Exposure
$

$

—
155
284
439

$

$

12,14913,112
7,123
32,384

Total Exposure$$% of Total
38
40
22
100

%

%

% of Total

15,605
14,33010,44140,376

39
35
26
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.

IDA Management's Discussion and Analysis: June 30, 2023

45

Management’s Discussion and Analysis

Section IX: Risk Management

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, 2023, Note F - Derivative Instruments.
Credit and Debit Valuation Adjustments
Most outstanding derivative positions are transacted over-the-counter and therefore valued using internallydeveloped valuation models. For commercial and non-commercial counterparties where IDA has a net exposure (netreceivable 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 Debit Valuation Adjustment (DVA) to reflect its own credit risk.
The CVA is calculated using future projected exposures of the derivative contracts, net of collateral received undercredit support agreements, and the probability of counterparty default based on the Credit Default Swaps (CDS)
spread and, where applicable, 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, 2023, IDA recorded a CVA on its balance sheet of $102 million,
and a DVA of $27 million.

Market Risk
IDA is exposed to changes in interest and exchange rates and uses derivatives to manage its exposure to market
risks. Derivatives are used to align the interest and currency composition of its assets (loan and investment trading
portfolios) with that of its liabilities (borrowing portfolio) and equity, with the exception of the long-term fixed rate
market debt that is used to fund fixed rate loans. Figure 14 below illustrates the use of derivatives for market
borrowing portfolios. The loan, investment and borrowing portfolios are largely maintained in SDR and its
component currencies.
Figure 14: Use of Derivatives for Market Borrowings at fair value

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 (11 years). This long duration, combined with volatility inmarket interest rates, results in significant year-on-year variability in the fair value of loans. 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. IDA’s investment-trading portfolio (liquid asset portfolio) has a relatively low sensitivity to interest
rates with a duration of five months as of June 30, 2023.
Under its integrated financial model, IDA employs the following strategies to manage interest rate risk:
•
•
•

46

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 is monitored through duration measurements and adjustments to capital requirements to cover thisrisk.

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section IX: Risk Management

Alternative Reference Rate
The Financial Conduct Authority (FCA), the regulator of London Interbank Offered Rate (LIBOR), confirmed that
effective December 31, 2021, all the LIBOR settings, except for certain USD LIBOR, which were available until
June 30, 2023, ceased to be provided by any administrator or were no longer representative. In consideration of theregulatory guidance and in preparation for the global markets’ transition away from LIBOR, IDA took the necessary
steps to facilitate a smooth and orderly transition of its financial instruments to alternative reference rates. Thistransition started on January 1, 2022.
Out of the total loans outstanding as of June 30, 2023, 98% were not subject to transition to alternative reference
rates as they are on fixed-rate terms. The remaining 2% have either transitioned or will be transitioned as the loans
reset by December 31, 2023.
As of June 30, 2023, IDA’s borrowing portfolio before associated derivatives carries only fixed interest rates andwas not subject to transition to alternative reference rates. Out of the total derivative portfolio notional as of June 30,
2023, 60% of the total derivative portfolio notional were not subject to transition to alternative reference rates,
approximately 5% had transitioned, and 35% were subject to transition which started in July 2023, as derivatives
reset. For the vast majority of the derivative portfolio subject to transition, IDA either has sufficient provisions in thederivative agreements with its counterparties or has adhered to the International Swaps and Derivatives Association(ISDA) 2020 IBOR Fallbacks Protocol (IBOR Protocol) or works bilaterally with counterparties to ensure smoothtransition to alternative reference rates.
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 towhich IDA is exposed and to ensure an orderly transition to alternative reference rates.
Exchange Rate Risk
IDA faces foreign exchange rate risk exposure as a result of the currency mismatch between its commitments forloans 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
denominated in 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 from exchange rate movements, as measured by thecapital adequacy framework. To achieve this, IDA’s balance sheet is managed in multiple currencies: SDR and thecurrencies comprising the SDR basket. The exchange rate risk management methodology includes the hedging of:(i) currency risk arising from settlement 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 byexchange rate movements in all the currencies in which IDA transacts, relative to its reporting currency, the U.S.
dollar. These movements are shown as currency translation adjustments. Translation adjustments relating to therevaluation of assets and liabilities denominated in SDR and SDR component currencies, (IDA’s functional
currencies), are reflected in Accumulated Other Comprehensive Income (Loss), in equity. Translation adjustments
relating to non-functional currencies are reported in IDA’s Statements of Income (see Notes to the Financial
Statements for the year ended June 30, 2023, 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.
The payable leg of the currency forward contracts economically hedging member equity contribution pledges isdenominated in non-functional currencies. IDA pays the market counterparty in a non-SDR currency. Accordingly,(depreciation) appreciation of the non-SDR currencies against the U.S. dollar results in exchange rate gains orlosses, which are reported in the Statements of Income. The translation adjustment on future inflows from members,
even though they are not recorded in the balance sheet, is the economic offset to the translation adjustment on
nonfunctional currencies of currency forward contracts.

IDA Management's Discussion and Analysis: June 30, 2023

47

Management’s Discussion and Analysis

Section IX: Risk Management

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 FY23, theprudential minimum was $20.8 billion. For FY24, the prudential minimum has been set at $24.7 billion. As ofJune 30, 2023, IDA’s liquid assets were $30.4 billion, 146% of the FY23 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 physicalsecurity and staff health and safety, data and cyber security, business continuity, and third party vendor risks. IDA’s
approach to identifying and managing operational risk includes a dedicated program for these risks and a robust
process that includes identifying, assessing, and prioritizing operational risks, monitoring, and reporting relevant key
risk indicators, aggregating and analyzing internal and external events, and identifying emerging risks that may
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.

48

IDA Management's Discussion and Analysis: June 30, 2023

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 and susceptible 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 Statements 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 generally 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 andstructured 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.
IDA’s financial instruments recorded at fair value are classified as either Level 1 or Level 2 as of June 30, 2023, as
the inputs are based on observable market data and less judgment is applied in arriving at fair value 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
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 Statements ofIncome. 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.
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, 2023, Note A - Summary of Significant Accounting and Related
Policies and Note D - Loans and Other Exposures.

IDA Management's Discussion and Analysis: June 30, 2023

49

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls

Section XI: Governance and Internal Controls
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 a Code of Conduct in place. 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 tobusiness conduct 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 othermisconduct that may threaten the operations or governance of the WBG. These rules also offer protection from
retaliation.

General Governance
Figure 15: Governance Structure

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 IDA's Articles. IDA has its own policies and frameworks that are carried out bystaff that share responsibilities for both IDA and IBRD.
In addition, IBRD and IDA have joint internal institutional oversight units which play an assurance role toshareholders and management that IDA’s work is impactful and accountable, informed by best practices, anddelivered to the highest ethical standards with risk management controls and governance processes that arefunctioning effectively.

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 174-member countries. Executive
Directors are neither officers nor staff of IDA. The President is the only member of the Board from management,
and he 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 onother policies that affect its general operations. The Board is also responsible for presenting to the Board ofGovernors, at the Annual Meetings, audited accounts, an administrative budget, and an annual report on operations
and policies and other matters.

50

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls

The Board and its committees are in continuous sessions based in Washington DC, as business requires. Eachcommittee's terms of reference establish its respective roles and responsibilities. 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:
•
•

•
•

•

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 theiralignment 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
position and capital adequacy, with management, external auditors, and internal auditors. It also recommends theannual audited financial statements for approval to the Board. The Audit Committee monitors and reviews
developments in corporate 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.

IDA Management's Discussion and Analysis: June 30, 2023

51

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls

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 otheradvisors as it deems necessary.

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; andRenewal 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 therelevant 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
deemed necessary by either party. The Audit Committee meets periodically with the external auditor and individualcommittee members have independent access to the external auditor. IDA’s external auditors also follow thecommunication 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.
In May 2022, IDA’s Board approved Deloitte & Touche LLP as IDA’s external auditor for a second five-year termcommencing in FY24.

Senior Management Changes
Effective June 1, 2023, David Malpass resigned as World Bank Group President. Ajay Banga was appointed as
President of the World Bank Group effective June 2, 2023.
On March 1, 2023, Mari Pangestu retired as Managing Director for Development Policy and Partnerships.
Effective April 3, 2023, Axel van Trotsenburg became the Senior Managing Director for the World Bank's
Development Policy and Partnerships and Anna Bjerde was appointed Managing Director for Operations,
succeeding Axel van Trotsenburg in that role.

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 materiallyaffect, IDA’s internal control over financial reporting. The internal control framework promulgated by theCommittee of Sponsoring 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 over52

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls

financial reporting. As of June 30, 2023, management maintained effective internal control over financial reporting.
See “Management’s report regarding effectiveness of Internal Control over Financial Reporting” on page 58.
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, 2023. See
Independent Auditor’s Report on page 60.

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, 2023.

IDA Management's Discussion and Analysis: June 30, 2023

53

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): DVA on Fair Value Option (FVO) Elected Liabilities that corresponds to thechange in fair value of the liability presented under the FVO that relate to the instrument specific credit risk (“owncredit 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 improvementsin the 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
or a 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.
54

IDA Management's Discussion and Analysis: June 30, 2023

Management’s Discussion and Analysis

Appendix

List of Tables, Figures and Boxes
TablesTable 1: IDA20 Allocations
Table 2: Cumulative Net Commitments since July 1, 2022
Table 3: Utilization of PSW Commitments
Table 4: Condensed Statements of Income
Table 5: Condensed Balance Sheets
Table 6: Gross Disbursements of Loans and Grants by Region
Table 7: Revenue and Loan Balances by Product Category
Table 8: Net Non-Interest Expenses
Table 9: Budget Anchor
Table 10: Other Revenue (Expenses), net
Table 11: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
Table 12: Cumulative Loans approved under Single Currency program
Table 13: Summary of Financial Terms for IDA Lending Products, effective July 1, 2023
Table 14: Net Commitments of Loans and Guarantees by Region
Table 15: Net Commitments of Grants by Region
Table 16: Types of Guarantees
Table 17: Pricing for IDA’s Project-Based and Policy-Based Guarantees, effective July 1, 2023
Table 18: Funds Held in Trust by IDA
Table 19: Investments Trading Portfolio
Table 20: Borrowing Portfolio
Table 21: Concessional Partner Loans Terms
Table 22: Short-Term Borrowings
Table 23: Summary of IDA's Specific Risk Categories
Table 24: Deployable Strategic Capital Ratio
Table 25: Treatment of Overdue Payments
Table 26: Eligibility Criteria for IDA’s Investments
Table 27: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating

8
9
12
16
16
18
19
21
22
22
22
26
26
28
28
29
29
32
34
35
35
36
39
40
43
45
45

FiguresFigure 1: Overview of IDA 20 Financing Terms
Figure 2: Changes in Equity
Figure 3: Net Loans Outstanding Activity
Figure 4: Net Loans Outstanding
Figure 5: Net Investment Portfolio
Figure 6: Net Investment Revenue
Figure 7: Borrowing Portfolio
Figure 8: Net Annual Commitments and Percentage Share of Financing Categories
Figure 9: Net Investment Portfolio
Figure 10: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2023
Figure 11: Medium- and Long-Term Borrowings Issued by Currency during the year, excluding Derivatives
Figure 12: Management Risk Committee Structure for Financial and Operational Risks
Figure 13: Country Exposures as of June 30, 2023
Figure 14: Use of Derivatives for Market Borrowings at fair value
Figure 15: Governance Structure

10
17
18
18
20
20
20
25
33
36
36
38
42
46
50

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

2
24

IDA Management's Discussion and Analysis: June 30, 2023

55

Management’s Discussion and Analysis

This page intentionally left blank

56

IDA Management's Discussion and Analysis: June 30, 2023

INTERNATIONAL DEVELOPMENT ASSOCIATIONFINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS
JUNE 30, 2023

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

58

Independent Auditor's Report on Effectiveness of Internal Control Over Financial Reporting

60

Independent Auditor's Report

62

Balance Sheets

66

Statements of Income

68

Statements of Comprehensive Income

69

Statements of Changes in Accumulated Deficit

69

Statements of Cash Flows70

Supplementary Information

72

Summary Statement of Loans

72

Statement of Voting Power and Subscriptions and Contributions

75

Notes to Financial Statements

80

IDA Financial Statements: June 30, 2023

57

Management's Report on Effectiveness of Internal Control Over Financial
Reporting
The World BankINTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION

1818 H Street N.W.
Washington, D.C. 20433
U.S.A.

(202) 477-1234
Cable Address: INTBAFRAD
Cable Address: INDEVASManagement’s Report Regarding Effectiveness ofInternal Control over Financial Reporting
August 4, 2023
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 andinclude amounts based on informed judgments and estimates made by 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 of the Executive
Directors and their Committees. Management believes that all representations made to 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 over financial
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 with management’s authorization, assets
are safeguarded, and financial records are reliable. The system of internal control contains monitoringmechanisms, and actions are taken to correct deficiencies identified. Management believes that internal
control over financial reporting supports the integrity and reliability of the external financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibility ofhuman 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 may vary 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 of June 30,
2023. This assessment was based on the criteria for effective internal control over financial reporting
described in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based upon this assessment, management believes that IDA
maintained effective internal control over financial reporting presented in conformity with accounting
principles generally accepted in the United States of America as of June 30, 2023. The independent audit
firm that audited the financial statements has issued an Independent Auditors Report which expresses anopinion on IDA’s internal control over financial reporting.

58

IDA Financial Statements: June 30, 2023

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
entirely of 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 theinternal auditors to ensure that 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 procedures of 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 of management, to discuss the adequacy of internal control overfinancial reporting and any other matters which they believe should be brought to the attention of
the Audit Committee.

IDA Financial Statements: June 30, 2023

59

Independent Auditor's Report on Effectiveness of Internal Control Over
Financial Reporting60

IDA Financial Statements: June 30, 2023

IDA Financial Statements: June 30, 2023

61

Independent Auditor's Report

62

IDA Financial Statements: June 30, 2023

IDA Financial Statements: June 30, 2023

63

Independent Auditor's Report64

IDA Financial Statements: June 30, 2023

INTERNATIONAL DEVELOPMENT ASSOCIATIONFINANCIAL STATEMENTS
JUNE 30, 2023

IDA Financial Statements: June 30, 2023

65

BALANCE SHEETS
June 30, 2023 and June 30, 2022

Expressed in millions of U.S. dollars
2023
AssetsDue from banks—Notes C and K
Unrestricted cash
Restricted cash

$

2022

665
24
689

$

662
24
686

Investments (including securities transferred under repurchase or
securities lending agreements of $217 million - June 30, 2023; Nil June 30, 2022) —Notes C, G and K

31,82239,827

Securities Purchased Under Resale Agreements—Notes C and K

168—

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

364

404

1,291

1,006

3
669
672

9
531
540

Loans outstanding (Summary statement of loans, Notes D, G and K)
Total loans approved

269,364

250,300

Less: Undisbursed balance (including signed loan
commitments of $68,542 million—June 30, 2023; $61,812 million—
June 30, 2022)
Loans outstanding
Less: Accumulated provision for loan losses
Deferred loan income
Net loans outstanding(77,680)
191,684(3,993)(22)
187,669(72,209)
178,091(3,583)(18)
174,490

4,807

3,061

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

Other assets—Notes H and I
Total assets

66

IDA Financial Statements: June 30, 2023$

227,482$

220,014

2023
Liabilities
Borrowings—Notes E and K
Market borrowings, at fair valueMarket borrowings, at amortized cost
Concessional partner loans, at amortized cost$

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

2022

16,786
8,627
7,154
32,567$

19,7186,201
6,980
32,899221—

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

1,244

579

Payable for development grants—Note I

3,092

4,615

Payable to affiliated organization—Note G

594

578

Other liabilities
Payable for investment securities purchased—Note C
Accounts payable and miscellaneous liabilities—Notes D and H

1,322
2,660

343
2,332

Total liabilities

3,982
41,7002,675
41,346

310,351321
310,672

289,214322
289,536(35,201)(4,213)
271,258(27,902)(3,857)257,777(13,431)(46)(13,477)(10,120)(47)(10,167)

(247)

(246)

Accumulated deficit (Statements of changes in accumulated deficit)(62,806)(59,544)

Accumulated other comprehensive loss —Note J
Total equity
Total liabilities and equity(8,946)
185,782
227,482(9,152)
178,668
220,014

EquityMembers' subscriptions and contributions (Statement of voting powerand subscriptions and contributions and Note B)
Unrestricted
Restricted
Subscriptions and contributions committed
Less:
Subscriptions and contributions receivable
Cumulative discounts/credits on subscriptions and contributions, net
Subscriptions and contributions paid-in
Nonnegotiable, noninterest-bearing demand obligations on account ofmembers' 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, 2023

67

STATEMENTS OF INCOME
For the fiscal years ended June 30, 2023, June 30, 2022 and June 30, 2021

Expressed in millions of U.S. dollars
2023
Interest revenue
Loans, net—Note D
Investments, net—Notes C, F, G and K
Asset-liability management derivatives, net—Notes F and K

$

2022

2,256
1,053
15

$

1,960
189
1

2021
$

2,050
147
(14)

Borrowing expenses, net—Note E

(957)

(249)

(187)

Interest revenue, net of borrowing expenses

2,367

1,901

1,996

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

(688)

(278)

539

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

966
27
31
1,024

865
24
22
911

814
19
17
850

Non-interest expenses
Administrative—Notes G and H
Contribution to special programs—Note G
Other
Total

(2,410)(20)(3)(2,433)(2,238)(19)(48)(2,305)(2,406)(20)
20(2,406)

117

274

544

(3,946)(2,372)(2,830)Non-functional currency translation adjustment gains (losses), net

192

511

(372)

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

(29)

(104)

144

143
(9)
134
(3,262) $

1,441
33
1,474
12

1,080
22
1,102
(433)

Transfers from affiliated organizations and others—Notes G and H
Development grants—Note I

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

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

68

IDA Financial Statements: June 30, 2023$

STATEMENTS OF COMPREHENSIVE INCOME
For the fiscal years ended June 30, 2023, June 30, 2022 and June 30, 2021
Expressed in millions of U.S. dollars
2023
Net (loss) income

$

2022

(3,262)

$

2021
12

$

(433)

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

224(10,851)

5,647

Net Change in Debit Valuation Adjustment (DVA) on Fair
Value option elected liabilities

(18)

43

(64)

Comprehensive (loss) income$(3,056)$(10,796)$

5,150

STATEMENTS OF CHANGES IN ACCUMULATED DEFICIT
For the fiscal years ended June 30, 2023, June 30, 2022 and June 30, 2021
Expressed in millions of U.S. dollars
2023
Accumulated Deficit at beginning of the fiscal year
Cumulative effect of a change in accounting
principle—Note D
Adjusted Accumulated Deficit at beginning of the fiscal
year
Net (loss) income
Accumulated Deficit at end of the fiscal year

$

2022

(59,544)$—$$(59,544)(3,262)(62,806)

2021(59,556)$(58,321)—$$(59,556)
12(59,544)

(802)
$
$

(59,123)(433)(59,556)

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

IDA Financial Statements: June 30, 2023

69

STATEMENTS OF CASH FLOWSFor the fiscal years ended June 30, 2023, June 30, 2022 and June 30, 2021
Expressed in millions of U.S. dollars
2023
Cash flows from investing activities
Loans
Disbursements
Principal repayments
Non-trading securities—Investments
Repayments
Net cash used in investing activities

$

2022

(20,601)
7,751

$

2021

(15,860)
6,738$(16,681)6,457

96(12,754)

114(9,008)125(10,099)

10,171

8,589

8,355

2,276
(1,606)

9,756
(101)

9,405
(96)

6,762
(5,783)(2,187)
(7)
9,626

5,716
(8,131)1,890
817,727

8,219(9,561)120
29
16,471(3,262)

12(433)

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) income
Adjustments to reconcile net (loss) income to net cash provided by (usedin) operating activities:
Provision for losses on loans and other exposures charge (release)Non-functional currency translation adjustment (gains) losses, net
Unrealized mark-to-market gains on non-trading portfolios, net
Other non-interest expenses (income), net
Amortization of discount on borrowings
Changes in:
Investments—Trading
Net receivable/payable from investment securities traded/purchased
Net derivatives—Investments
Net derivatives—Asset-liability management

688
(192)
(134)
3
175

278
(511)
(1,474)
48
105

(539)
372
(1,102)
(20)
96

8,651
984
(304)
510

(5,936)299
973
58(2,090)603
160
19Net securities purchased/sold under resale/repurchase agreements
and payable for cash collateral received
Net receivable/payable from/to affiliated organizations
Payable for development grants
Accrued interest and commitment charges
Other assets
Accounts payable and miscellaneous liabilities
Net cash provided by (used in) operating activities

(278)
(269)
(1,526)(135)(1,873)
100
3,138

775
(124)
(1,808)(55)(1,171)37(8,494)(109)
45(2,652)(57)(1,367)471(6,603)

Effect of exchange rate changes on unrestricted and restricted cash
Net increase (decrease) 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

(7)
3
686
689

(35)
190
496
686

53
(178)
674
496

70

IDA Financial Statements: June 30, 2023

$

$

$

STATEMENTS OF CASH FLOWSFor the fiscal years ended June 30, 2023, June 30, 2022 and June 30, 2021
Expressed in millions of U.S. dollars
2023
Supplemental disclosure
Increase (Decrease) in ending balances resulting fromexchange rate fluctuations:
Loans outstanding
Investment portfolio
Borrowings
Derivatives—Borrowings
Derivatives—Asset-liability management
Principal repayments written off under Heavily Indebted Poor
Countries Debt Initiative
Interest paid on borrowing portfolio

$

2022

767
273
761
(26)
190
22
778

$

2021

(12,505)(2,205)(2,950)
446
1,253

$

30
119

5,909
1,180
627
(173)
(880)
9
118

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

IDA Financial Statements: June 30, 2023

71

SUMMARY STATEMENT OF LOANS
June 30, 2023
Amounts expressed in millions of U.S. dollars
Undisbursed balance
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
Egypt, 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
LebanonLesotho72

Total loans
$

301
409
364
765
167
27,548
3,344
404
878
694
*
3,851
119
632
2,039
4,637
123
152
181
142
6,318
749
7,016
478
217
156
1
15
416
*
14,648
378
140
649
7,784
296
1,045
267
191
1,632
18,243345
232
201
15,467
402
1,112
1,330
94
668

Loans approved
but not yet
signed
$
—
—
—
—
—
296
148
—
—
—
—
—
—
—
—
1,113
—
—
—
—
690
89
203
—
—
—
—
—
—
—
50
61
—
—
650
—
—
—
—
60
57
—
—
—
1,439
20
98
95
—
—

IDA Financial Statements: June 30, 2023

Signed loan
commitments
$

—
—
—
3
—
8,002
1,460
18
157
—
—
1,530
—
105
776
1,531
—
—
—
101
2,690
223
3,397
223
74
—
—
—
—
—
3,063
26
12
—
2,034
97
409
67
61
653
273
—
—
42
2,836
122
348
430
10
219

Loans
outstanding
$

301
409
364
762
167
19,250
1,736
386
721
694
*
2,321
119
527
1,263
1,993
123
152
181
41
2,938
437
3,416
255
143
156
1
15
416
*
11,535
291
128
649
5,100
199
636
200
130
919
17,913345
232
159
11,192
260
666
805
84
449

Percentage of
total loans
outstanding a
0.16 %
0.21
0.19
0.40
0.09
10.04
0.90
0.20
0.37
0.36
*
1.21
0.06
0.28
0.66
1.04
0.06
0.08
0.09
0.02
1.53
0.23
1.78
0.13
0.08
0.08
*
0.01
0.22
*
6.02
0.15
0.07
0.34
2.66
0.10
0.33
0.10
0.07
0.48
9.35
0.18
0.12
0.08
5.84
0.13
0.35
0.42
0.04
0.23

SUMMARY STATEMENT OF LOANS
June 30, 2023
Amounts expressed in millions of U.S. dollars
Undisbursed balance
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
UgandaUkraineUzbekistan
Vanuatu
Vietnam
Yemen, Republic ofZambiaZimbabwe
Subtotal—Members a

Total loans
$

$

1,233
4,361
2,064
153
3,222
568
*
1,038
901
10
*
3,564
2,730
5,970
1,052
4,369
21,391
148
22,098
888
1
12
3,895
97
10
6,456
43
491
196
99
75
4,017
*
284
355
275
14
499
14,656
316
937
45
6,831
1,027
5,176
167
14,049
1,210
3,468
439
268,140

Loans approved
but not yet
signed
$
—
—
—
—
—
—
—
—
10
—
—
—
—
100
—
227
798
—
400
41
—
—
—
—
—
397
—
—
—
—
—
198
—
—
—
—
—
—
200
49
99
—
824
—
—
—
261
—
353
—
$
9,026

Signed loan
commitments
$

$

505
2,090
617
58
1,107
154
—
254
126
—
—
553
1,136
1,549
135
1,727
6,512
—
5,022
292
—
—
892
—
—
1,864
—
18
126
—
—
641
—
126
135
—
—
129
4,652
226
435
4
1,459
1
2,148
69
1,212
26
949
—
67,941Loansoutstanding$$

Percentage totalof loans
outstanding a

728
2,271
1,447
95
2,115
414
*
784
765
10
*
3,011
1,594
4,321
917
2,415
14,081
148
16,676
555
1
12
3,003
97
10
4,195
43
473
70
99
75
3,178
*
158
220
275
14
370
9,804
41
403
41
4,548
1,026
3,028
98
12,576
1,184
2,166
439
191,173

IDA Financial Statements: June 30, 2023

0.38 %
1.19
0.76
0.05
1.10
0.22
*
0.41
0.40
0.01
*
1.57
0.83
2.25
0.48
1.26
7.34
0.08
8.70
0.29
*
0.01
1.57
0.05
0.01
2.19
0.02
0.25
0.04
0.05
0.04
1.66
*
0.08
0.12
0.14
0.01
0.19
5.12
0.02
0.21
0.02
2.37
0.54
1.58
0.05
6.56
0.62
1.13
0.23
99.74 %

73

SUMMARY STATEMENT OF LOANS
June 30, 2023
Amounts expressed in millions of U.S. dollars
Undisbursed balance
Borrower or guarantor
African Trade Insurance
AgencyLoans approved
but not yet signed

Total loans
$

422

$

—

Signed loan
commitments

88

0.05 %

10

44

0.02

—

—

8

*

—

76

269

0.14

Bank of the States of Central
Africa54—

Caribbean Development
Bank

8West African Development
Bank

345

$

334

Percentage of
total loans
outstanding a

Loansoutstanding$

Subtotal—Regional
development banks

$

829

$

—

$

420

$

409

0.21 %

Private Sector Window(PSW) Loans
Total—June 30, 2023 a
Total—June 30, 2022

$
$

395
269,364
250,300

$
$

112
9,138
10,397$$

181
68,542
61,812$$

102
191,684
178,0910.05
100.00 %* 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.

74

IDA Financial Statements: June 30, 2023

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2023
Expressed in millions US Dollars except vote data
Member a, c
Non-Recipients
Albania
Algeria
Argentina
Australia
Austria
Bahamas, The
Barbados
Belgium
BelizeBotswana
BrazilBulgaria
CanadaChile
China
Colombia
Costa Rica
Croatia
CyprusCzechia
Denmark
Dominican Republic
EcuadorEgypt, Arab Republic of
El Salvador
Equatorial Guinea
Estonia
Eswatini
FinlandFranceGabon
Germany
GreeceGuatemala
Hungary
IcelandIndonesia
Iran, Islamic Republic of
Iraq
Ireland

Percentage of total
votes

Number of votes

61,859127,203427,350
384,733
302,625
59,90662,860346,034
19,83453,986477,996
113,171
837,069
58,505781,230
133,290
31,091
95,847
79,580139,232
296,662
27,78050,151
134,452
46,516
6,167
58,53322,322
194,585
1,200,618
2,093
1,655,219
60,51541,077214,794
70,287
262,094
115,867
73,274
119,570

Subscriptions andcontributions committed b

0.20 % $
0.41
1.37
1.24
0.97

0.38
58.57
161.215,776.11
4,586.81

0.19
0.20
1.11
0.06
0.17
1.53
0.36
2.69
0.19
2.51
0.43
0.10
0.31
0.26
0.45
0.95
0.09
0.16
0.43
0.15
0.02
0.19
0.07
0.62
3.86
0.01
5.31
0.19
0.13
0.69
0.23
0.84
0.37
0.24
0.38

8.54
2.36
5,865.12
0.27
3.63
834.538.02
14,470.50
39.11
3,437.26
25.17
0.28
8.97
37.52
173.494,621.68
0.58
0.94
18.52
0.49
0.41
27.28
0.42
2,386.12
22,043.35
0.63
30,624.96
220.580.56
185.37116.61
168.6924.18
1.12
1,038.13

IDA Financial Statements: June 30, 2023

75

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2023
Expressed in millions US Dollars except vote data
Member a, c

Number of votes

Percentage of total
votes

Subscriptions andcontributions committed b

Israel

96,4760.31 % $Italy

702,983

2.26

11,813.50

Japan

2,601,407

8.35

51,927.09

Jordan24,8650.08

0.41

Kazakhstan

23,2970.07

8.50

Korea, Republic of

337,179

1.08

3,131.05

Kuwait128,191

0.41

1,185.44

Latvia65,067

0.21

25.82

Lebanon

8,562

0.03

0.56

Libya

44,7710.14

1.31

Lithuania

58,437

0.19

26.16

Luxembourg

85,8720.28

459.29

Malaysia

113,209

0.36

77.74

Mauritius

75,8610.24

1.31

Mexico142,2360.46

168.34Montenegro

59,6800.19

0.76

Morocco115,160

0.37

10.57

Netherlands

639,396

2.06

11,470.93

New Zealand

87,5970.28

446.88

North Macedonia

47,0950.15

1.09

Norway330,435

1.06

4,827.19

Oman

59,388

0.19

1.42

Palau

3,804

0.01

0.03

Panama10,1850.03

0.03

Paraguay

46,493

0.15

0.43

Peru

93,174

0.30

18.09

Philippines

155,919

0.50

40.28

Poland610,208

1.96

166.37

Portugal

81,3550.26

353.94

Romania

96,0100.31

5.11

Russian Federation

95,3400.31

799.81
3,906.49

Saudi Arabia

180.401,042,180

3.35

Serbia86,0960.28

7.09

Singapore

65,6950.21

386.49Slovak Republic

99,993

0.32

40.36

Slovenia
South Africa
Spain
St. Kitts And Nevis
Sweden63,32981,077
344,843
13,868660,445

0.20
0.26
1.11
0.04
2.12

51.54
259.26
5,241.78
0.17
10,454.28

76

IDA Financial Statements: June 30, 2023

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2023
Expressed in millions US Dollars except vote data
Member a, c

Number of votes

Percentage of total
votes

Subscriptions andcontributions committed b

Switzerland
ThailandTrinidad And Tobago
Tunisia
TürkiyeUkraineUnited Arab Emirates
United Kingdom
United States
Subtotal Non-Recipients

428,265
119,054
81,067
2,793
184,701
115,569
1,367
2,152,475
3,008,614
24,837,060

1.37 % $
0.38
0.26
0.01
0.59
0.37
*
6.91
9.67
79.73 % $7,339.75
27.80
2.13
1.89
215.23
8.01
5.58
37,738.83
59,755.96
309,571

Interstitial dAngolaArmenia
Azerbaijan
Bolivia
Bosnia And Herzegovina
Georgia
India
Moldova
Mongolia
Vietnam
Subtotal Interstitials

153,437
69,842
73,224
79,231
60,63070,833904,384
56,58245,81861,168
1,575,149

0.50 % $
0.22
0.24
0.25
0.19
0.23
2.90
0.18
0.15
0.20
5.06 % $

8.24
1.67
6.35
1.67
5.52
3.00
816.96
0.88
0.30
2.23
847

Total Non-Recipients

26,412,209

84.79 % $310,418

59,204
176,234
69,166
66,53275,06464,46043,84071,08960,782
48,91052,21047,14082,69952,211
67,377
48,11658,892
46,63660,17919,8090.19 % $
0.57
0.22
0.21
0.24
0.21
0.14
0.23
0.20
0.16
0.17
0.15
0.27
0.17
0.22
0.15
0.19
0.15
0.19
0.06

1.50
7.95
0.78
0.08
0.81
1.09
0.13
1.60
1.61
0.77
0.78
0.13
4.59
0.74
1.55
0.26
0.14
0.14
0.70
0.75

Recipients
Afghanistan
Bangladesh
Benin
BhutanBurkina Faso
BurundiCabo VerdeCambodia
Cameroon
Central African Republic
Chad
Comoros
Congo, Democratic Republic ofCongo, Republic of
Cote D'Ivoire
Djibouti
Dominica
Eritrea
EthiopiaFiji

IDA Financial Statements: June 30, 2023

77

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2023
Expressed in millions US Dollars except vote data
Member a, c

Number of votes

Percentage of total
votes

Subscriptions andcontributions committed b

Gambia, The

55,2080.18 % $

0.42

Ghana

86,6770.28

3.10

Grenada29,0270.09

0.14

Guinea37,2870.12

1.33

Guinea-Bissau

44,5000.14

0.22

Guyana83,979

0.27

1.29

Haiti

54,6380.18

1.11

Honduras

59,206

0.19

0.44

Kenya

87,7320.28

2.36

Kiribati

43,592

0.14

0.10

Kosovo77,7780.25

0.91

Kyrgyz Republic

64,5220.21

0.56

Lao People's Democratic Republic

57,2550.18

0.73

Lesotho

57,1060.18

0.23

Liberia

52,0380.17

1.12

Madagascar

70,5830.23

1.38

Malawi58,641

0.19

0.98

Maldives

55,046

0.18

0.05

Mali

62,4450.20

1.36

Marshall Islands

4,902

0.02

0.01

Mauritania

60,5550.19

0.79

Micronesia, Federated States of

26,1890.08

0.03

Mozambique

73,3100.24

2.10

Myanmar82,096

0.26

2.56

Nepal

54,7100.18

0.72

Nicaragua

62,982

0.20

0.44

Niger

52,2100.17

0.76

Nigeria

134,137

0.43

60.40

Pakistan

268,5370.86

105.84

Papua New Guinea

67,7540.22

1.27

Rwanda52,0380.17

1.12

St. Lucia

30,5320.10

0.23

St. Vincent And The Grenadines

49,929

0.16

0.12

Samoa

43,901

0.14

0.14

Sao Tome And Principe

49,5190.16

0.12

Senegal84,6150.27

2.70

Sierra Leone

63,6380.20

1.02

Solomon Islands

43,9010.14

0.13

Somalia

10,5060.03

0.95

South Sudan

52,447

0.17

0.45

78

IDA Financial Statements: June 30, 2023

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2023
Expressed in millions US Dollars except vote data
Member a, c

Percentage of total
votes

Number of votes

Subscriptions andcontributions committed b

Sri Lanka
Sudan

114,72165,0030.37 % $
0.20

4.23
1.50

Syrian Arab Republic

24,077

0.08

1.22

Tajikistan

53,9180.17

0.53

Tanzania

78,7150.25

2.35

Timor-Leste

45,123

0.14

0.44

Togo

61,840

0.20

1.18

Tonga

49,5140.16

0.11

Tuvalu

8,938

0.03

0.03

Uganda50,3920.16

2.31

Uzbekistan

73,9360.24

1.92

Vanuatu

50,952

0.16

0.31

Yemen, Republic of

78,4750.25

2.24

Zambia87,1270.28

3.66

Zimbabwe

0.38

6.52

Total Recipients

4,737,642

118,69315.21 % $254

Total All Members b

31,149,851

100 % $

310,672

Total—June 30, 2022 b

29,898,233$

289,536

NOTES
a. See Notes to Financial Statements—Note A for an explanation of the two categories of membership.
b. May differ from the calculated amounts or sum of individual figures shown due to rounding.
c. Pursuant to the new IDA Voting Rights Framework approved by IDA’s Board effective July 1, 2022, for the purposes ofadditional subscriptions, IDA’s membership structure was changed from either Part I or Part II to either Non-Recipient or
Recipient, driven by their IDA borrowing eligibility (See Notes to Financial Statements—Note A for Members' Subscriptions andContributions).
d. If a Non-Recipient member has graduated within the last five replenishments, they are classified as Interstitial Non-Recipient
members (See Notes to Financial Statements—Note A for Members' Subscriptions and Contributions).
* Indicates amounts less than 0.005 percent.

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

IDA Financial Statements: June 30, 2023

79

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 exposuresthat include signed loan commitments, including deferred drawdown options that are effective and irrevocablecommitments, guarantees and project preparation facilities.
The Executive Directors approved these financial statements for issuance on August 4, 2023, which was also thedate through 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 reporting its financial position and theresults of its operations.
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 othercurrencies (non-functional currencies) are reported in the Statements of Income.
Members’ Subscriptions and Contributions
Recognition
Members’ subscriptions and contributions committed for each IDA replenishment are initially recorded as bothsubscriptions 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.

80

IDA Financial Statements: June 30, 2023

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 contributing members whose subscriptions andcontributions aggregate to a specified portion of the full replenishment. Amounts not yet paid in at the date ofeffectiveness, are recorded as subscriptions and contributions receivable and shown as a reduction of subscriptions
and contributions committed. These receivables become due throughout the replenishment period, generally three
years, in accordance with an agreed payment schedule. The actual payment of receivables when they become due
may be subject to the budgetary 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.
Acceleration credits and discounts are presented on the Balance Sheet in the line item cumulative discounts/credits
on subscriptions and contributions, net. The discounts and acceleration credits are deducted in arriving at thesubscriptions 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 (CPL), 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’sloans. Proceeds received under this arrangement have two separate components: (1) a borrowing component and (2)a grant component, for which voting rights are allocated to providers of the CPL. The borrowing component of the
CPL is recognized and reported at amortized cost (see borrowings section for more details). The grant component iscalculated as a function of the terms of the loan and the discount rate agreed upon during the replenishment
discussions. This grant component is recorded as equity, equivalent to the cash received.
For the purposes of determining its initial subscriptions and additional subscriptions and contributions up to andincluding IDA19, the membership of IDA is divided into two categories: (1) Part I members, which make paymentsof subscriptions and contributions provided to IDA in convertible currencies that may be freely used or exchanged
by IDA in its operations and (2) Part II members, which make payments of ten percent of their initial subscriptionsin freely convertible currencies, and the remaining 90 percent of their initial subscriptions, and all additional
subscriptions and contributions in their own currencies or in freely convertible currencies. Certain Part II members
provide a portion of their subscriptions and contributions in the 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 and contributions unless released under anagreement between the member and IDA, or used for administrative expenses. The cash paid and notes deposited innonconvertible 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.
From IDA20 and onwards, under the new Voting Rights Framework, IDA members are classified as either a NonRecipient, Interstitial Non-Recipient, or Recipient member. The payment terms for Non-Recipient members
corresponds to those outlined above for Part I members. Payment terms for Interstitial Non-Recipient and Recipient
members follow those outlined above for Part II members.

IDA Financial Statements: June 30, 2023

81

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.
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 reporting 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 andcontributions of IDA through the Third Replenishment, but are not applicable to those of the Fourth and subsequent
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.

82

IDA Financial Statements: June 30, 2023

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 Sheets.
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, acountry’s per capita income must be below a certain level ($1,255 for the fiscal year ended June 30, 2023 and$1,205 for the fiscal year ended June 30, 2022) 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. Any loan origination fees incorporated in the terms of a loan are deferred and recognized over thelife of the loan as an adjustment of the yield. Accrued interest is presented on the Balance Sheets 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 perform 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, a new loan, or asa continuation 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.
Interest and other charges on nonaccruing exposures are included in revenue only to the extent that payments havebeen received by IDA. A decision on the restoration of accrual status is made upon arrears clearance. If collectibility
risk is considered to be particularly high at the time of arrears clearance, the member’s exposures may not
automatically emerge from nonaccrual status until a suitable period of payment or policy performance has passed.
The repayment obligations of loans funded from resources through the Fifth Replenishment are expressed in the loan
agreements in terms of 1960 dollars. In June 1987, the Executive Directors decided to value those loans at the rate 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.

IDA Financial Statements: June 30, 2023

83

Development Grants
Development grants made by IDA that are deemed to be conditional, are expensed when all the conditions havebeen met, which generally occurs at the time of disbursement. At times, grant advances may be disbursed torecipients prior to the conditions stipulated in the grant agreement being met and are presented in the Other assets
line on the Balance Sheets. Once the conditions for the grant advances are met, they are expensed. Development
grants that are deemed to be unconditional are expensed upon approval.
Commitment charges on the undisbursed balance of development grants are recognized in revenue as earned.
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 Sheets. 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 under an indemnity agreement. The receivable arising out of the indemnity agreements for amounts paid by
IDA are presented as Loans outstanding on the Balance Sheets.
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. 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 through additional

84

IDA Financial Statements: June 30, 2023

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.
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 the 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 the accumulated
provision for loan losses on the Balance Sheets, and as a provision expense in the Statements of Income. Thisestimate is subject to periodic revision. Adjustments to the accumulated provision are recorded as a charge to or
release of provision in the Statements of Income. The accumulated provision for HIPC Debt Initiative is reduced as
debt relief is provided. The accumulated provision for the HIPC Debt Initiative is reduced by the amount of theeligible loans 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
IDA Financial Statements: June 30, 2023

85

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 the effective
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 100%. At times, to reflect certain distinguishing circumstances of a particular nonaccrual
situation, different input assumptions may be used for a specific country.
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 Statements 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
Sheets.
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, areincluded in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance Sheets.
Statements of Cash Flows: For the purpose of IDA's Statements of Cash Flows, cash is defined as the amount ofboth Unrestricted cash and Restricted cash presented under the Due from banks line on the Balance Sheets.
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 are used
to determine the fair value of trading securities. Examples include most government and agency securities, assetbacked securities (ABS) and mortgage-backed securities (MBS). For instruments for which market quotations are
not available, fair values are determined using model-based valuation techniques, whether internally generated or

86

IDA Financial Statements: June 30, 2023

vendor-supplied, that include the standard discounted cash flow method using observable market inputs such as
yield curves, credit spreads, and constant prepayment rates. Unless quoted prices are available, time deposits arereported at face value, which approximates fair value, as they are short term in nature. The first-in first-out method isused 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 Statements of Income. Unrealized mark-to-market
gains and losses for investment trading securities and related financial instruments held in the investment portfolio
are included in the Unrealized mark-to-market gains (losses) on Investments-Trading portfolio, net line in theStatements of Income. Realized gains and losses on investment trading securities are recognized in the same line in
the Statements of 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 isonly recorded on IDA’s Balance Sheets 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 Sheets, and securities received under resale agreements are not recorded on the Balance
Sheets. 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 mannerin which these instruments are settled. The interest earned with respect to securities purchased under resaleagreements is included in Investments, net, line in the Statements of Income. The interest expense pertaining to thesecurities sold under repurchase agreements and security lending arrangements is included in the Borrowing
expenses, net line in the Statements of Income.
Borrowings
IDA introduced long term borrowings through CPL for the first time in the fiscal year commencing July 1, 2014.
The borrowing terms of the CPL aim to match the features of IDA’s concessional loans. These borrowings are
unsecured and unsubordinated debt in SDR component currencies. IDA may prepay some or the entire outstanding
amounts without penalty. These borrowings are carried and reported at amortized cost.
IDA also issues debt instruments in the capital markets that are reported at either fair value or amortized cost.
Through June 30, 2021, all market debt was carried at fair value. Starting July 1, 2021, IDA only elects fair value formarket debt designated to fund liquidity or variable rate loans. Market debt not meeting the fair value election
criteria are reported at amortized cost. For debt carried at fair value, changes in fair value are recognized in therelated Unrealized mark-to-market gains (losses) on non-trading portfolios, net, line in the Statements 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
by revaluing each liability to determine the changes in fair value of that liability arising from changes in IDA’s costof funding relative to the applicable reference rates.
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.
Interest expense relating to all debt instruments in IDA’s borrowing portfolio is measured on an effective yield basis

IDA Financial Statements: June 30, 2023

87

and is reported as part of the Borrowing expenses, net line in the Statements of Income.
Amortization of discounts and premiums is also included in the Borrowing expenses, net line in the Statements ofIncome.
For the purpose of the Statements of Cash Flows, short term borrowings, if any, with an original maturity of lessthan 90 days, are presented net of new issuances and retirements. In contrast, short term borrowings with an original
maturity greater than 90 days and less than one year are presented on a gross basis.
Accounting for Derivatives
IDA has elected not to designate any hedging relationships for accounting purposes. Rather, all derivative
instruments are recorded at fair value on the Balance Sheets, with changes in fair value accounted for through theStatements of Income.
The presentation of derivative instruments on IDA’s Balance Sheets 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 other conditions are met. In addition, in the Notes to the financial statements, unlessstated differently, derivatives are presented on a net basis by instrument.
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) from these instruments are reflected aspart of Investment interest revenue, while unrealized mark-to-market gains and losses on these derivatives arereflected as part of the Unrealized mark-to-market gains (losses) on Investments-Trading portfolio, net line in theStatements 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 Statements of Income. Changes in fair values of these derivatives arerecorded in the Statements of Income as Unrealized mark-to-market gains and losses on non-trading portfolios, net.
For the purpose of the Statements 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 future projected exposures of the derivative contracts, netof collateral received under credit support agreements, and the probability of counterparty default based on theCredit Default Swaps (CDS) spread and, where applicable, proxy CDS spreads. The DVA calculation is generally

88

IDA Financial Statements: June 30, 2023

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, 2023 and June 30, 2022, 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), thenext 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 Sheets 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 Statements of Income upon approval by the Boardof Governors of IBRD. Similarly, transfers relating to grants made from IFC’s retained earnings to IDA are
recognized in the Transfers from affiliated organizations and others on the Statements of Income upon execution ofa 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.

IDA Financial Statements: June 30, 2023

89

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 Sheets, 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 Sheets.
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 Sheets.
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.
Accounting and Reporting Developments
Evaluated Accounting Standards:
In December 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU)
2022-06 - Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The ASU extended thetimeline for temporary relief to certain contract modification guidance provided by ASU 2020-04 - Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting from December
31, 2022 to December 31, 2024. ASU 2022-06 was effective upon issuance, and the adoption did not have a material
impact on IDA’s financial statements.
In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures, which
eliminates the accounting guidance on troubled debt restructurings for creditors and amends the guidance on“vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. This ASU will
be effective for IDA from the quarter ending September 30, 2023 (fiscal year 2024), and the adoption of this ASU is
not expected to have a material impact on IDA's financial statements.
In November 2021, the FASB issued the ASU 2021-10, Disclosure by Business Entities about Government
Assistance, which requires entities to make certain annual disclosure about government assistance transactions. Thisis effective for IDA from the fiscal year ending June 30, 2023 (annual statements of fiscal year 2023). IDA has
evaluated the ASU and determined no additional disclosures are required in its financial statements.

90

IDA Financial Statements: June 30, 2023

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, 2023
257,777
5,100
8,506
(125)
$
271,258

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

June 30, 2022
250,452
3,937
4,668(1,280)$257,777$$

a. Includes any restricted cash subscriptions.

During the fiscal year ended June 30, 2023, IDA encashed demand obligations totaling $5,071 million ($4,652
million - fiscal year ended June 30, 2022).

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, 2023, IDA’s Investments were mainly comprised of government and agency obligations (62%) andtime deposits (37%), with all the instruments being classified as either Level 1 or Level 2 within the fair value
hierarchy. As of June 30, 2023, the largest holding of Investments-Trading with a single counterparty was German
Government instruments (11%).
A summary of IDA’s investments composition is as follows:
Table C1: Investments-composition
In millions of U.S. dollars
June 30, 2023
Trading
Government and agency obligations
Time deposits$

Asset-backed securities
Non-trading
Debt security
Total

19,77011,703June 30, 2022$

23,902
15,411$

105
31,578$168
39,481$244
31,822$346
39,827

IDA Financial Statements: June 30, 2023

91

IDA manages its investments on a net portfolio basis. IDA uses derivative instruments to manage currency andinterest rate risk in the investment portfolio. For details regarding these instruments, see Note F—Derivative
Instruments. The following table summarizes IDA’s net portfolio position:
Table C2: Net investment portfolio position
In millions of U.S. dollars
June 30, 2023
Investments
Trading
Non-trading
Total

$

June 30, 2022

31,578244
31,822$

39,481
346
39,827

Securities purchased under resale agreements

168—

Securities sold under repurchase agreements, securities lent under securitiesalending agreements, and payable for cash collateral received

(660)

(772)

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

135
5
140

306
2
308

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

(49)
—
(49)

(50)
(1)
(51)

Cash held in investment portfolio b
Receivable from investment securities traded c
Payable for investment securities purchased d
Net Investment Portfolio

570
3(1,322)30,672583
9(343)
39,561$$a. As of June 30, 2023, this amount includes cash collateral of $439 million received from counterparties under derivative
agreements ($772 million - June 30, 2022).
b. These amounts are included in Unrestricted cash under Due from Banks on the Balance Sheets.
c. These amounts are included in Other receivables on the Balance Sheets.
d. As of June 30, 2023 $112 million of liabilities related to short sales (Nil - June 30, 2022).

The maturity structure of IDA’s non-trading investment portfolio (principal amount due on a debt security with IFC)
was as follows. For details regarding this instrument, see Note G - Transactions With Affiliated Organizations.
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 (through 2039)

92

IDA Financial Statements: June 30, 2023$

June 30, 2023
77

$

62
34
12
11
66
262

$

June 30, 2022
96

$

77
62
34
12
77
358

Commercial Credit Risk
For the purpose of risk management, IDA is party to a variety of financial transactions, certain of which involve
elements of credit risk. Credit risk exposure represents the maximum potential loss due to possible nonperformanceby obligors and counterparties under the terms of the contracts. For all securities, IDA limits trading to a list of
authorized dealers and counterparties. In addition, credit limits have been established for counterparties by type of
instrument and maturity category.
Swap Agreements: Credit risk is mitigated through a credit approval process, volume limits, monitoring procedures
and the use of mark-to-market collateral arrangements. IDA may require collateral in the form of cash or otherapproved liquid securities from individual counterparties to mitigate its credit exposure.
IDA has entered into master derivative agreements, which contain legally enforceable close-out netting provisions.
These agreements may further reduce the gross credit risk exposure related to the swaps. Credit risk with financial
assets subject to a master 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, 2023
Collateral received
Cash
Securities
Total collateral received
Collateral permitted to be repledged
Amount of collateral repledged
Amount of Cash Collateral invested

$
$
$
$

June 30, 2022
439
104
543
543
—
349

$
$
$
$

772
—
772
772
—
659

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. Thesetransactions have been conducted under legally enforceable master netting arrangements, which allow IDA to reduce
its gross credit exposure related to these transactions. IDA presents its securities lending and repurchases, as well as
resales, on a gross basis on the Balance Sheets. As of June 30, 2023 and June 30, 2022, there were no amounts that
could potentially be offset as a result of legally enforceable master netting arrangements.
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.

IDA Financial Statements: June 30, 2023

93

The following is a summary of the carrying amount of the securities transferred under repurchase or securities
lending agreements, and the related liabilities:
Table C5: Amounts related to securities transferred under repurchase or securities lending agreements
In millions of U.S. dollars
June 30, 2023
Securities transferred under
repurchase or securities lending
agreements

Liabilities relating to securities
transferred under repurchase or
securities lending agreements

$

$

217

221

June 30, 2022$$

Financial Statement Presentation—

Included under Investments - Trading on
the Balance Sheets—

Included under Securities Sold under
Repurchase Agreements, Securities
Lent under Securities Lending
Agreements, and Payable for Cash
Collateral Received on the Balance
Sheets

As of June 30, 2023, liabilities relating to securities transferred under repurchase or securities lending agreements
amounted to $221 million (Nil—June 30, 2022) and there were no unsettled trades relating to repurchase or
securities lending agreements. There were no replacement trades entered into in anticipation of maturing trades of asimilar amount (Nil—June 30, 2022). The remaining contractual maturity of these agreements as of June 30, 2023
was less than 30 days. The securities transferred were mainly comprised of government and agency obligations.
In the case of resale agreements, IDA receives collateral in the form of liquid securities and is permitted torepledge these securities. While these transactions are legally considered to be true purchases and sales, thesecurities received are not recorded on IDA’s Balance Sheets as the accounting criteria for treatment asa sale have not been met. As of June 30, 2023, and June 30, 2022, there were no unsettled trades pertaining tosecurities purchased under resale agreements. For resale agreements, IDA received securities with a fair value of$169 million as of June 30, 2023 (Nil—June 30, 2022). As of June 30, 2023, and June 30, 2022, none ofthese securities had been transferred under repurchase or security lending agreements.

NOTE D—LOANS AND OTHER EXPOSURESIDA’s loans and other exposures are generally made to, or guaranteed by, member countries of IDA. Loans arecarried at amortized cost. 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 of June 30, 2023, accrued interest income and service charges on loans of $659 million ($521
million — June 30, 2022) million is presented in Other receivables – Accrued interest and commitment charges on
the Balance Sheets.
As of June 30, 2023, 0.5% of IDA’s loans were in nonaccrual status and related to three borrowers. The total
accumulated provision for losses on loans in accrual status and nonaccrual status was 2% of total loans as ofJune 30, 2023.

94

IDA Financial Statements: June 30, 2023

Maturity Structure
The maturity structure of loans outstanding was as follows:
Table D1: Loans - Maturity structure
In millions of U.S. dollars
June 30, 2023
July 01, 2023 through June 30, 2024
July 01, 2024 through June 30, 2028
July 01, 2028 through June 30, 2038
Thereafter
Total

$

$

8,759
38,782
85,69358,450191,684

June 30, 2022
July 01, 2022 through June 30, 2023
July 01, 2023 through June 30, 2027
July 01, 2027 through June 30, 2037
Thereafter
Total

$

$

8,280
36,21978,61754,975
178,091

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

June 30, 2023$
159,759
17,13914,571
133
82$
191,684

June 30, 2022$
156,527
12,600
8,823
64
77
$
178,091

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’s borrower country risk ratings are key determinants in the provision for loan losses. Country risk ratings ofborrowers in accrual status are grouped in pools with similar credit ratings for the purpose of the calculation of the
expected credit losses. Exposure for certain countries in accrual status may be individually assessed on the basis thatthey do not share common risk characteristics with an existing pool of exposures. All exposures for countries innonaccrual status are individually assessed. Country risk ratings are determined in review meetings that take place
several times a year. All countries are reviewed at least once a year, or more frequently if circumstances warrant, todetermine the appropriate ratings.
An assessment was also performed to determine whether a qualitative adjustment of the loan loss provision wasneeded as of June 30, 2023, including consideration of global and macroeconomic events. Management concluded
that a qualitative adjustment beyond the regular application of IDA’s loan loss provision framework was notwarranted.

IDA Financial Statements: June 30, 2023

95

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, 2023
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual
statusTotal

Up to 45
$

$

—
—
22
22
7
29

46-60
$

61-90

—
—

$
*
*

—
—
—
—

* $

3
3

—
$

91-180
$

—
—
—
—
9
9

$

Over 180

Total Past
Due

Current

$

$

—
—
22
22

$

464
486

405
$ 191,198

869$ 191,684

Over 180

Total Past
Due

Current

Total

$

$

$

—
—
—
—
445
445

$

Total

*
$
*
18,65918,659172,134 a
172,156
190,793
190,815

Table D3.1
In millions of U.S. dollars
June 30, 2022
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual
statusTotal

Up to 45
$

$

—
—
7
7
7
14

46-60
$

$

61-90

—
—

91-180

$
*
*

—
—
6
6

*
* $

3
9

$

$

—
—
11
11
8
19

$

—
—
—
—
408
408

$

—
—
24
24

$

374 $
374
20,491
20,491
156,335 a
156,359
177,200
177,224

426
450

441
$ 177,641

867$ 178,091

a. Includes PSW related loans of $102 million ($50 million-June 30, 2022)* Indicates amount less than $0.5 million.

The table below discloses the outstanding balances of IDA’s loan portfolio classified by the year the loan agreement
was signed. IDA considers the signature date of a loan as the best indicator of the decision point in the origination
process, rather than the disbursement date.

96

IDA Financial Statements: June 30, 2023

Table D4: Loan portfolio vintage disclosure
In millions of U.S. dollars
June 30, 2023
Fiscal Year of origination
Risk Class

2023

Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

$

2022

2021

2020

Prior
Years

2019

CAT DDOs
disbursed
andrevolving— $ — $
— $ — $
— $
* $
83
111
394
542
243
17,286
6,964 7,162 10,338 8,956 10,961 127,408
7,047 7,273 10,732 9,498 11,204 144,694
—
—
—
—
—
869
$7,047 $7,273 $10,732 $9,498 $11,204 $145,563 $

—
—
24
24
—
24

CAT DDOs
Converted
to Term
Loans

Loans
Outstanding
as of June 30,
2023

$

$

$

—
—
343
343
—
343

$

*
18,659172,156
190,815869
191,684

Table D4.1:
In millions of U.S. dollars
June 30, 2022
Fiscal Year of origination
Risk Class

2022

Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

$

2021

2020

2019

— $ — $ — $ —
111
394
542
243
3,678
7,509
7,233
9,365
3,789
7,903
7,775
9,608
—
—
—
—
$3,789 $7,903 $7,775 $9,608

2018
$

Prior
Years

CAT DDOs
disbursed
andrevolving

— $
374 $
77
19,124
10,042
118,173
10,119137,671—867$10,119 $138,538 $

—
—
182
182
—
182

CAT DDOs
Converted
to Term
Loans

Loans
Outstanding
as of June 30,
2022

$

$

$

—
—
177
177
—
177

$

374
20,491
156,359
177,224867
178,091* Indicates amount less than $0.5 million.

The amount of Catastrophe Deferred Drawdown Option (CAT DDO) outstanding and revolving converted to termloans during the fiscal year ended June 30, 2023 was $158 million ($177 million — June 30, 2022).
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 the 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 balance of the accumulated provision as of July 1, 2020 was increased by an $802 million transition adjustment
recorded upon the adoption of ASU No. 2016-13, Financial Instruments—Credit Losses (ASC 326) that increased
the accumulated deficit by the same amount. The transition adjustment corresponds to the difference between theaccumulated provision calculated under the previous “incurred loss” model and the current expected credit loss
model. Changes to the accumulated provision for losses on loans and other exposures are summarized below.

IDA Financial Statements: June 30, 2023

97

Table D5: Accumulated provisions
In millions of U.S. dollars
June 30, 2023

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

Loans
outstanding
$
2,876
441

$
$
$

Loan
commitments
$
1,082
223

(3)
11
3,325 $

—
15
1,320

3,089
236
3,325

Debt relief
under
HIPC/MDRI
Other a
$
707 $
155
(18)
42

$
$
$

(22) b
1
668 $

—
1
198

402
266
668

$

$
$
$
$
$

Total
4,820
688
(25)
28
5,511
3,491
502
3,993
190,815869
191,684

Table D5.1:
In millions of U.S. dollars
June 30, 2022

Accumulated provision, 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
$
2,946
135

$
$
$

Loans:
Loans in accrual status
Loans in nonaccrual status
Loans outstandinga. These amounts primarily relate to outstanding guarantees
b. Represents debt service reduction under HIPC98

IDA Financial Statements: June 30, 2023

Loan
commitments
$
1,054
109

—
(205)
2,876 $
2,641
235
2,876

Debt relief
under
HIPC/MDRI
Other a
$
772 $
120
(5)
39

—
(81)
1,082 $$$

(30) b
(30)
707 $
433
274
707

$

Total
4,892
278

—
(4)
155 $

(30)
(320)
4,820

$

3,074
509
3,583

$
$
$

177,224867
178,091

Reported as Follows
Balance Sheets

Statements of Income

Accumulated Provision forLosses on:
Loans Outstanding

Accumulated provision for loan losses

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

Debt Relief under
HIPC/MDRI

Accumulated provision for loan losses

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

Loan commitments and Other
Exposures

Other liabilities

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

Loans to be written off under MDRI
During the fiscal years ended June 30, 2023 and June 30, 2022, 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, 2023, there were no
principal or charges under sovereign loans in accrual status which were overdue by more than three months.
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
NonaccrualsinceMarch 2012

Recorded
investment$
416

Averagerecorded
investment$
413

Principal
Outstanding$
416

Provisionfor debt
relief$266

Provision
for loanlosses a$
15

Syrian Arab
Republic
June 2012
Zimbabwe
October 2000
Total - June 30, 2023
Total - June 30, 2022

14
439
869
867

14
436
863
907

14
439
869
867

—
—
266
274

1
220
236
235

Borrower
Eritrea

$
$

$
$

$
$

$
$

$
$

Overdue amounts
Principal
Charges
$
127 $
37

$
$

14
323
464
426

$
$

1
69
107
101

a. Loan loss provisions are determined after taking into account accumulated provision for debt relief.

During the fiscal years ended June 30, 2023 and June 30, 2022, no new loans were placed into nonaccrual status.
During the fiscal year ended June 30, 2023, service charge revenue not recognized as a result of loans being in
nonaccrual status was $6 million ($7 million and $7 million – fiscal years ended June 30, 2022 and June 30, 2021,
respectively).
During the fiscal year ended June 30, 2023, service charge revenue recognized on loans in nonaccrual status was $1
million (less than $1 million — fiscal year ended June 30, 2022 and Nil —fiscal year ended June 30, 2021).
Guarantees
Guarantees of $2,558 million were outstanding as of June 30, 2023 ($2,507 million – June 30, 2022). This amountincludes $795 million relating to the PSW ($638 million—June 30, 2022). 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 Sheets. The guarantees issued by IDA have original maturities
ranging between 3 and 22 years, and expire in decreasing amounts through 2043.
As of June 30, 2023, liabilities related to IDA’s obligations under guarantees included the obligation to stand readyof $135 million ($145 million—June 30, 2022), and the accumulated provision for guarantee losses of $177 million($126 million—June 30, 2022). These have been included in Other liabilities on the Balance Sheets.

IDA Financial Statements: June 30, 2023

99

During the fiscal year ended June 30, 2023, IDA's partial guarantee of certain Eurobonds that had been issued by the
Republic of Ghana (Ghana) was called and in accordance with the terms of the guarantee, IDA made a payment of$50 million to the guaranteed bondholders out of the total $372 million Eurobonds guarantee exposure. Pursuant to
the terms of the related indemnity agreement between IDA and Ghana, IDA directed Ghana to reimburse IDA for
the $50 million paid in twelve equal semi-annual installments, commencing October 15, 2029, and to repay intereston the outstanding amount at 2.73%. The outstanding amount of $50 million is included in Loans Outstanding on thebalance sheet as of June 30, 2023. No other guarantees provided by IDA to sovereign or sub-sovereign borrowers
have been called during the fiscal years ended June 30, 2023 and June 30, 2022.
During the fiscal year ended June 30, 2023, less than $1 million IDA-PSW Blended Finance Facility guarantees
under the Small Loan Guarantee Program pursuant to the risk-sharing agreement between IDA and IFC were called(less than $0.5 million — fiscal year ended June 30, 2022).
Concentration Risk
Loan revenue comprises service charges, interest and commitment charges, net of waivers. For the fiscal year ended
June 30, 2023, loan revenue of $306 million and $257 million from two countries, both in the South Asia region,
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 D7: Loan revenue and outstanding balance by geographic region
In millions of U.S. dollars

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

As of and for the fiscal years ended June 30,
2023
2022
Service andInterest Charges a
$
835
507
464
236
150
59
18
8
$
2,277

Loans
Outstanding$
62,12154,291
41,92018,734
9,014
3,418
2,084
102
$
191,684

Service andInterest Charges a
$
733
449
385
234
115
48
20
3
$
1,987

Loans
Outstanding$
61,062
48,86336,232
18,912
7,435
3,317
2,220
50
$
178,091

a. Excludes $6 million of interest rate swap income related to loan hedges (interest rate swap expense of $3 million-June 30,2022). Includes net commitment charges of $27 million ($24 million – June 30, 2022).
b. Represents loans under the PSW.

100

IDA Financial Statements: June 30, 2023

NOTE E—BORROWINGS
IDA’s borrowings comprise market borrowings (carried at amortized cost or fair value) and concessional partner
loans made by IDA members (carried at amortized cost).
CPL are unsecured and unsubordinated fixed rate debt in SDR component currencies. IDA may prepay some or theentire outstanding amounts without penalty. These borrowings are reported at amortized cost, and as of June 30,
2023, have original contractual maturities of 25 and 40 years, with the final maturity in 2063. This does not include
the proceeds received under the grant component of the CPL, included in equity for which voting rights have been
attributed.
Market borrowings are unsecured and unsubordinated fixed rate debt in a variety of currencies. Some of these
instruments are callable. IDA has elected the fair value option for certain instruments. Overall market borrowings
have original maturities that range from 91 days to 20 years, with the final maturity in 2042.
IDA uses derivative contracts to manage the currency risk as well as the interest rate risk in the market borrowings
portfolio. For example, IDA may enter into derivative transactions to convert fixed rate bonds into floating rate
instruments. For details regarding the derivatives used in the borrowing portfolio, see Note F—Derivative
Instruments.
As of June 30, 2023, instruments in IDA’s borrowing portfolio measured at fair value were classified as Level 2,
within the fair value hierarchy. A summary of IDA’s borrowings are as follows (for details on principal due uponmaturity, see Note K—Fair Value Disclosures):
Table E1: Market borrowings and borrowing-related derivatives, at fair value
In millions of U.S. dollars
June 30, 2023
16,786682
2,144$
19,612Market borrowings
Currency swaps, net
Interest rate swaps, net
Total

$

June 30, 2022
19,718547
1,586$
21,851$

Table E2: Market borrowings outstanding, at amortized cost
In millions of U.S dollars
Principal at face value
$
8,682
$
6,240

June 30, 2023
June 30, 2022

Net unamortized premium(discount)
$
(55)
$
(39)

Total
$
$

8,627
6,201

Table E3: Concessional partner loans outstanding, at amortized cost
In millions of U.S dollars

June 30, 2023
June 30, 2022$$

Principal at face
value
8,708
8,508

$
$

Net unamortized discount(1,554)(1,528)Total$$

IDA Financial Statements: June 30, 2023

7,154
6,980

101

The following table provides a summary of the interest rate characteristics of IDA’s borrowings:
Table E4: Borrowings-Interest rate composition before derivatives
In millions of U.S. dollars
Fixed
Variable
Borrowings b
Fair Value Adjustment
Total Borrowings

June 30, 2023$
34,996—$34,996(2,429)$32,567

WAC a (%)
1.42 %—
1.42 %

WAC a (%)
1.17 %—
1.17 %

June 30, 2022$
34,679—$34,679(1,780)$32,899a. WAC refers to weighted average borrowing cost as of the reporting date.
b. At amortized cost.

The currency composition of debt in IDA’s borrowing portfolio before derivatives was as follows:
Table E5: Borrowings-Currency composition before derivatives
June 30, 2023
Euro
U.S. dollar
Pound sterlingJapanese yen
OthersJune 30, 2022
38 %
32
18
9
3
100 %

30 %
40
18
9
3
100 %

The maturity structure of IDA’s borrowings outstanding was as follows:
Table E6: 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 aJune 30, 2023
3,112
2,334
3,794
2,612
1,261
21,06334,176$$$$

June 30, 2022
5,677
135
2,331
3,847
2,667
19,80934,466

a. As of June 30, 2023, total includes net unamortized discount of $1,554 million ($1,528 million—June 30, 2022) for CPL and $55
million ($39 million—June 30, 2022) for market borrowings at amortized cost.

The following table provides information on the unrealized mark-to-market gains or losses on market borrowings
recorded at fair value included in the Statements of Income:Table E7: Unrealized mark-to-market gains or losses relating to market borrowings recorded at fair value
In millions of U.S. dollars
Reported as
Unrealized mark-to-market gains on non-trading portfolios, net

102

IDA Financial Statements: June 30, 2023

2023$

Fiscal Year Ended June 30,
2022
573

$

1,713

$

2021
318

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

Derivative instruments used

Purpose/Risk being managed

Investments-Trading

Interest rate swaps, currency forward contracts,
currency swaps, options, swaptions, futurescontracts and to-be-announced (TBA) securities

Manage currency and interest rate risks

Other assets/liabilities
management

Currency forward contracts, currency swaps andinterest rate swaps

Manage currency and interest rate risks

Interest rate swaps
Interest rate swaps and currency swaps

Manage interest rate risks
Manage currency and interest rate risks

Currency swaps

Assist clients in managing risks

Loans
Borrowings
Other purposes:
Client operations

The derivatives in the related tables of Note F are presented on a net basis by instrument. A reconciliation to the
Balance Sheets 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 an aggregate basis to the total derivative asset
and liability positions and are presented net of any cash collateral received on the Balance Sheets. 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, 2023

103

Table F2: Derivatives assets and liabilities before and after netting adjustments
In millions of U.S. dollars
June 30, 2023
Derivative Assets

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

Gross
Amounts$
3,432
13,107$ 16,539

Gross
Amounts
Offset$(1,601)(12,251)$ (13,852)`

Derivative Liabilities
Net
Amounts
$
1,831
856
$
2,687

$

1,884
439

$

364

Gross
Amounts$
2,763
10,781$ 13,544

Gross
Amounts
Offset$(620)(9,871)$ (10,491)b

Net
Amounts
$
2,143
910
$
3,053

$

1,809

$

1,244

c

104

Net derivative exposure after
collateral$

260

Table F2.1
In millions of U.S. dollars
June 30, 2022
Derivative Assets

Interest rate swaps
Currency swaps a
Total
Less:
Amounts subject to legally
enforceable master netting
agreements
Cash collateral received

Gross
Amounts$
3,267
16,624$ 19,891

Gross
Amounts
Offset$(1,678)(15,355)$ (17,033)

Net derivative positions on the
Balance Sheet
Less:
Securities collateral received
Net derivative exposure after
collaterala. Includes currency forward contracts.
b. Includes $102 million CVA adjustment ($35 million-June 30, 2022).
c. Includes $27 million DVA adjustment ($19 million-June 30, 2022).

104

IDA Financial Statements: June 30, 2023

Derivative Liabilities
Net
Amounts
$
1,589
1,269
$
2,858

$

1,682
772

$

404
—

$

404

Gross
Amounts
$
2,321
6,569
$
8,890

b

Gross
Amounts
Offset$(727)(5,918)$(6,645)

Net
Amounts
$
1,594
651
$
2,245

$

1,666

$

579

c

The following table provides information about the credit risk exposures at fair value, at the instrument level, of
IDA’s derivative instruments.
Table F3: Credit risk exposure of the derivative instruments:
In millions of U.S. dollars
Interest rate swaps
Investments - Trading
Asset/liability management
Borrowings
Other aTotal Exposure

$

$

5
1,715
—
111
1,831

June 30, 2023
Currency swaps (including
currency forward contracts)
$

$

135
721
—
—
856

Total
$

140
2,436
—
111
2,687

$

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

$

$

2
1,513
2
72
1,589

June 30, 2022
Currency swaps (including
currency forward contracts)
$

$

306
963
—
—
1,269

Total
$

$

308
2,476
2
72
2,858

a. Includes derivatives related to loans 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 interim and final payments by IDA
on the derivative instrument are determined. As of June 30, 2023, the notional amounts of IDA’s derivative contracts
outstanding were as follows: interest rate swaps $30,815 million ($33,267 million as of June 30, 2022), currency
swaps $24,670 million ($23,120 million as of June 30, 2022). There were no long or short positions of otherderivatives as of June 30, 2023 (Nil as of June 30, 2022).
Collateral: IDA is not required to post collateral under its derivative agreements as long as it maintains a triple-A
credit rating. The aggregate fair value of all derivative instruments with credit-risk related contingent features thatare in a liability position as of June 30, 2023 is $1,217 million ($586 million —June 30, 2022). As of June 30, 2023,
IDA was not required to post any collateral in accordance with the relevant agreements.
If the credit-risk related contingent features underlying these agreements were triggered to the extent that IDA
would be required to post collateral as of June 30, 2023, the amount of collateral that would need to be posted
would be $349 million ($41 million—June 30, 2022). Subsequent triggers of contingent features would requireposting of additional collateral, up to a maximum of $1,217 million as of June 30, 2023 ($586 million—June 30,2022).

IDA Financial Statements: June 30, 2023

105

The gains and losses on the non-trading derivatives, by instrument type and their location in the Statements ofIncome are as follows:
Table F4: Unrealized mark-to-market gains or losses on non-trading derivatives
In millions of U.S. dollars
Fiscal Year Ended June 30,
2023
2022
2021

Type of instrument

Reported as

Interest rate swaps

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

Currency forward contracts and currency swaps
Total

$

(252)
(182)
(434)

$

$

80
(293)
(213)

$

$
$

898
(101)
797

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 IDA’s investment trading portfolio(derivative and non-derivative instruments), and their location in the Statements of Income:Table F5: Unrealized mark-to-market gains or losses on Investment-Trading portfolio
In millions of U.S. dollars
Type of instrument

Fixed income (including related derivatives)

Fiscal Year Ended June 30,
2023
2022
2021

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

$

(29)

$

(104)

$

144

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.
On October 14, 2022, IBRD’s Board of Governors approved a transfer of $117 million to IDA. This transfer wasreceived on October 20, 2022.
Transfers and Grants
Cumulative transfers and grants made to IDA as of June 30, 2023 were $20,593 million ($20,476 million—June 30,2022). 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
Nonaffiliated organizations

106

IDA Financial Statements: June 30, 2023

Beginning of the
fiscal year$
20,476

Transfers during
the fiscal year$117

End of the fiscal
year$
20,593

16,361
3,885
230

117
—
—

16,4783,885
230

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
Post-Retirement Contribution Reserve Fund a
Pension and Other Postretirement Benefits
Derivative (liabilities)/assets, net
PSW-Blended Finance Facility c
Investments
Total

June 30, 2023
June 30, 2022
IBRD
IFC
Total
IBRD
IFC
Total
$ (594) $— $ (594) $(578) $
— $
(578)
579
—
579
404
—
404
712
—
712
602
—
602
—
(49) b
(49)
(8)
(9)
(17)
—
96
96
—
54
54
—
244
244
—
346
346
$
697 $
291 $
988 $
420 $
391 $
811

a. Receivable from IBRD for IDA's share of investments associated with Post-Retirement Contribution Reserve Fund (PCRF),
which is a fund established to stabilize contributions made to the pension plans.
b. Includes other receivable of $4 million related to unsettled Local Currency Facility trades that is included in Other assets on the
Balance Sheets.
c. Refer to Table G4: Summary of PSW related transactions.

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

Receivable for pension and other postretirement benefits
Receivable for PCRF
Net receivables (payables) for derivative transactions
Payable for administrative services
Receivable for PSW - Blended Finance Facility
Receivable for Investments

Receivable from affiliated organization
Receivable from affiliated organization
Derivative assets/liabilities, net
Payable to affiliated organization
Other Assets
Investments

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, 2023, IDA’s share of joint administrative expenses and contributions to special
programs totaled $1,744 million ($1,644 million—fiscal year ended June 30, 2022 and $1,873 million—fiscal year
ended June 30, 2021). This amount excludes IDA-executed trust fund expenses of $686 million ($613 million—
fiscal year ended June 30, 2022 and $553 million—fiscal year ended June 30, 2021).
Other revenue
IDA’s share of other revenue jointly earned with IBRD during the fiscal year ended June 30, 2023 totaled $280
million ($252 million—fiscal year ended June 30, 2022 and $261 million—fiscal year ended June 30, 2021). This
amount excludes IDA-executed trust fund revenue of $686 million ($613 million—fiscal year ended June 30, 2022
and $553 million—fiscal year ended June 30, 2021).

IDA Financial Statements: June 30, 2023

107

The amount of fee revenue associated with services provided to other affiliated organizations is included in Other
revenue in the Statements of Income, and is summarized as follows:
Table G3: Fee revenue from affiliated organizations
In millions of U.S. dollars
2023
Fees charged to IFC
Fees charged to MIGA

$

93
6

Fiscal Year Ended June 30,
2022
$
84
5

2021
$

77
5

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 forcomputing this share ratio is approved by the Executive Directors for both institutions.
IBRD, along with IFC and MIGA, sponsor 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, 2023,
IDA’s share of IBRD’s costs relating to all three plans totaled $163 million ($191 million—fiscal year ended
June 30, 2022 and $494 million—fiscal year ended June 30, 2021).
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, 2023, the SRP and the RSBP were overfunded by $3,357 million and $940
million, respectively. The PEBP, after reflecting IBRD and IDA’s share of assets which are included in IBRD’s
investment portfolio of $1,953 million, was underfunded by $104 million.
Derivative transactions: IDA enters into currency forward contracts with IBRD acting as the intermediary with themarket, primarily to convert donors’ expected contributions in national currencies into the five currencies of theSDR 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, 2023, the principal amount due on the debt security was $262
million ($358 million—June 30, 2022), and it had a fair value of $244 million ($346 million— June 30, 2022). The
investment is reported under Investments on the Balance Sheets. During the fiscal year ended June 30, 2023, IDA
recognized interest income of $6 million from this investment ($8 million fiscal year ended June 30, 2022 and $10
million—fiscal year ended June 30, 2021).

108

IDA Financial Statements: June 30, 2023

Private Sector Window
The PSW was created under Eighteenth Replenishment of IDA’s Resources (IDA18) to mobilize private sector
investment in IDA-only countries and IDA-eligible Fragile and Conflict-affected Situations. The PSW continued
under IDA’s Twentieth Replenishment of Resources (IDA20), which commenced on July 1, 2022 with an initial
allocation of $2.5 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 thesetransactions.
The following tables provide a summary of all PSW related transactions under which IDA had an exposure as ofJune 30, 2023:
Table G4: Summary of PSW related transactions
In millions of U.S. dollars
Facility

Notional

Local Currency Facility $233

Facility

Exposure

Net Asset/(Liability) position$(53)

Accumulated
Provision

Description
Currency swaps with IFC to support
local currency denominated loans

Description

Location on the Balance
SheetsDerivative assets/ liabilities,
net
Location on the Balance
SheetsExposure

Accumulated
Provision
Otherliabilities

MIGA Guarantee
Facility

$

358

$

80

Expanding the coverage of MIGA
Off Balance
Political Risk Insurance products through Sheet item
shared first-loss or risk participation
similar to reinsurance

Blended Finance
Facility

$

437

$

71

Sharing the coverage of IFC
programs through shared first loss

Off Balance
Sheet item

96

Not applicable

Funding for IFC's PSW debt andequity investments recorded at fairvalue

Other assets Not
applicable

102

15

Concessional senior and subordinatedloans to support medium term projects

Loansoutstanding

Otherliabilities

Accumulated
provision forloan 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.

IDA Financial Statements: June 30, 2023

109

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
2023
IDA-executed trust funds' expenses$

686

Fiscal Year Ended June 30,
2022
$
613

2021
$

553

These amounts are included in Administrative expenses and the corresponding revenue is included in Revenue fromexternally funded activities in the Statements 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 Sheets:
Table H2: Undisbursed contributions made by third party donors to IDA-executed trust funds
In millions of U.S. dollars
June 30, 2023
IDA-executed trust funds$

June 30, 2022
729

$

707

These amounts are included in Other Assets and the corresponding liabilities are included in Accounts payable andmiscellaneous liabilities on the Balance Sheets.
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
2023
Revenues$

57

Fiscal Year Ended June 30,
2022
$
43

2021
$

38

These amounts are included in Other non-interest revenue in the Statements of Income.
Amounts collected from donor contributions for administration activities, but not yet earned, totaling $69 million atJune 30, 2023 ($67 million—June 30, 2022) are included in Other Assets and in Accounts payable andmiscellaneous liabilities, respectively, on the Balance Sheets.
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, 2023 no funds were recorded as Transfersfrom affiliated organizations and others under these arrangements (Nil—fiscal year ended June 30, 2022 and Nil —fiscal year ended June 30, 2021).

110

IDA Financial Statements: June 30, 2023

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
Balance, beginning of the fiscal year
Disbursements (including PPA grant activity)aCancellations
Translation adjustment
Balance, end of the fiscal year$$

June 30, 2023
4,615
(1,385)
(141)
3
3,092

$

$

June 30, 2022
6,820
(1,659)
(149)
(397)
4,615

a. Project Preparation Advances (PPA).

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

Disbursements for conditional grants a
Disbursements not meeting expense condition b
Cancellations of unconditional grants
Grant expenses for the year$

Grants approved$$

Fiscal Year Ended June 30,
2023
2022
5,785
$
3,736
(1,698)(1,215)
(141)
(149)
3,946
$
2,372
7,263

$

13,083a. 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.

As of June 30, 2023, the cumulative amount of conditional grants approved but not yet expensed since all of theconditions have not been met was $27,407 million. Out of which, the outstanding amount of conditional grant
advances disbursed but not yet expensed, totaling $3,887 million as of June 30, 2023 ($2,189 million – June 30,2022), are included in Other assets on the Balance Sheets.
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). Other comprehensive income (loss) is comprised of currencytranslation adjustments on functional currencies and DVA on fair value option elected liabilities. These items arepresented in the Statements of Comprehensive Income.
The following table presents the changes in Accumulated Other Comprehensive Loss (AOCL) and Accumulated
Other Comprehensive Income (AOCI) balances:
Table J1: Changes in AOCL/AOCI
In millions of U.S. dollars

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

Fiscal Year Ended June 30,
2023
2022
(9,152) $
1,656
$
224
(10,851)(18)
43(8,946) $(9,152) $2021(3,927)
5,647
(64)
1,656

IDA Financial Statements: June 30, 2023

111

NOTE K—FAIR VALUE DISCLOSURES
Valuation Methods and Assumptions
As of June 30, 2023, and June 30, 2022, 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, 2023 and June 30, 2022. 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. For instruments forwhich market quotations are not available, fair values are determined using model-based valuation techniques,
whether internally-generated or vendor-supplied, that include the standard discounted cash flow method using
observable market inputs such as yield curves, credit spreads, and constant prepayment spreads. Where applicable,
unobservable inputs such as conditional prepayment rates, probability of default, and loss severity are used.
Unless quoted prices are available, time deposits are reported at face value, which approximates fair value, as they
are short term in nature.
Securities purchased under resale agreements, securities sold under repurchase agreements, and securities lent
under securities lending agreements
These securities are of a short-term nature and are reported at face value, which approximates fair value.
Borrowings
The fair value of IDA’s borrowings carried at fair value is calculated using a discounted cash flow method which
relies on observable market inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
As of June 30, 2023, and June 30, 2022, the fair value of borrowings measured at amortized cost would be
calculated using the same methodology as described above for borrowings at fair value and classified as Level 2
within the fair value hierarchy.
Derivative instruments
Derivative contracts include currency forward contracts, TBA securities, swaptions, options and futures contracts,
currency swaps and interest rate swaps. Where available, quoted market prices are used to determine the fair valueof trading securities. Examples include options and futures contracts.
For instruments for which market quotations are not available, fair values are determined using model-based
valuation techniques, whether internally-generated or vendor-supplied, that include the standard discounted cash
flow method using observable market inputs such as yield curves, foreign exchange rates, credit spreads, basis
spreads, funding spreads and constant prepayment spreads. Where applicable, unobservable inputs such as constantprepayment rates, probability of default, and loss severity are used.
Valuation adjustments on fair value option elected liabilities
The DVA on fair value option elected liabilities (market borrowings carried at fair value) is measured by revaluingeach liability to determine the changes in fair value of that liability arising from changes in IDA’s cost of funding
applicable to the relevant reference rates.

112

IDA Financial Statements: June 30, 2023

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
June 30, 2023
Carrying
Value
AssetsDue from banks
Investments (including securities purchased under resaleagreements)
Net loans outstanding
Derivative assets, net
Liabilities
Borrowings
Market borrowings, at fair valueMarket borrowings, at amortized cost
Concessional partner loans
Securities sold under repurchase agreements, securities
lent under securities lending agreements, and payable forcash collateral received
Derivative liabilities, net$

689

June 30, 2022
Carrying
Value

Fair Value
$

689

$

686

Fair Value$

686

31,990187,669364

31,990141,478
364

39,827
174,490404

39,827141,193404

16,786

16,786

19,71819,718

8,627
7,154

6,938
6,698

6,201
6,980

5,073
7,123

221
1,244

221
1,244

—
579

—
579

As of June 30, 2023, IDA’s signed loan commitments were $68.5 billion ($61.8 billion – June 30, 2022) and had afair value of $(9.7) billion ($(8.2) billion – June 30, 2022).

IDA Financial Statements: June 30, 2023

113

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, 2023
Level 1
Level 2
Level 3
Total
Assets:Investments—Trading
Government and agency obligations
Time deposits
ABS
Total Investments—Trading
Investments—Non-trading
Total Investments

$

$

$

11,037792—
11,829—11,829Securities purchased under resale agreements$

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

$
$

$

$

8,733
10,911
105
19,749244
19,993

—

$

—
—
—

$
$

$

$

—
—
—
—
—
—

$

19,77011,703105
31,578244
31,822

168

$

—

$

168

856
1,831
2,687

$

—
—
—

$
$

856
1,831
2,687

$

1,884
439
364

$

Less:
Amounts subject to legally enforceable master netting agreements a
Cash collateral received
Derivative assets, net
Liabilities:
Market Borrowings, at fair value

$

—

$

16,786$—$

16,786

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

$

—

$

221

$

—

$

221

$

—
—

$

910
2,143

$

—
—

$

910
2,143

$

—

$

3,053

$

—

$

3,053

$

1,809
1,244

Derivative liabilities:
Currency swaps and currency forward contracts
Interest rate swaps
Less:
Amounts subject to legally enforceable master netting agreements b
Derivative liabilities, net
a. Includes $102 million CVA.
b. Includes $27 million DVA.
c. Excludes amount payable for cash collateral received of $439 million.

114

IDA Financial Statements: June 30, 2023

Table K2.1
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
As of June 30, 2022
Level 1
Level 2
Level 3
Total
Assets:Investments—Trading
Government and agency obligations
Time deposits
ABS
Total Investments—Trading
Investments—Non-trading
Total Investments

$

$

$

7,699
569
—
8,268
—
8,268

Securities purchased under resale agreements$

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

$
$

$

$

16,203
14,842
168
31,213346
31,559

—

$

—
—
—

$
$

$

$

—
—
—
—
—
—

$

23,902
15,411
168
39,481
346
39,827

—

$

—

$

—

1,269
1,589
2,858

$

—
—
—

$
$

1,269
1,589
2,858

$

1,682
772
404

$

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

$

—

$

19,718$—$19,718

$

—
—
—

$

651
1,594
2,245

$

—
—
—

$
$

651
1,594
2,245

$

1,666
579

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

a. Includes $35 million CVA.
b. Includes $19 million DVA.

IDA Financial Statements: June 30, 2023

115

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 security
In millions of U.S dollars
Fair value
June 30, 2023
June 30, 2022

$
$

244
346

Principal Due Upon
Maturity
$
262
$
358

Difference
$
$

(18)
(12)

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

June 30, 2023
June 30, 2022$$

Fair Value
16,786
19,718Principal Due
Upon Maturity$
19,259$21,506$$

Difference(2,473)(1,788)The following table provides information on the changes in fair value due to the change in IDA’s own credit risk forfinancial liabilities measured under the fair value option, included in the Statements of Comprehensive Income:Table K5: Changes in fair value due to IDA’s own credit risk
In millions of U.S. dollars
Fiscal Year Ended June 30,
Unrealized mark-to-market gains/(losses) due to DVA on fair value option electedliabilities
DVA on Fair Value Option Elected Liabilities
Amounts reclassified to net income upon derecognition of a liability
Net change in DVA on Fair Value Option Elected Liabilities

2023
$
$

2022
(18) $—(18) $

43—
43

As of June 30, 2023, IDA’s Balance Sheets included a DVA of $31 million cumulative loss ($13 million cumulative
loss—June 30, 2022) in Accumulated other comprehensive income, associated with the changes in IDA’s own credit
for its market borrowings reported at fair value.

116

IDA Financial Statements: June 30, 2023

The following tables reflects the components of the unrealized mark-to-market gains or losses on IDA’s trading andnon-trading portfolios, net.
Table K6: Unrealized mark-to-market gains (losses) on trading and non-trading portfolios, net
In millions of U.S. dollars
Fiscal Year Ended June 30, 2023
Unrealized gains
Realized gains (losses)(losses) excluding
realized amounts a
Investments- Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Other Non-trading portfolios
Investment portfolio—Note C
Borrowing portfolio—Note E
Other b
Total

$

$

(254)

$

225

Unrealized gains(losses)
$

(29)

—

143

143

—
—
(1)
(1)

(5)
—
(3)
135

(5)
—
(4)
134

$

$

Table K6.1:
In millions of U.S. dollars
Fiscal Year Ended June 30, 2022
Unrealized gains
Realized gains (losses)(losses) excluding
realized amounts a
Investments- Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Other Non-trading portfolios
Investment portfolio—Note C
Borrowing portfolio—Note E
Other b
Total

$

$

407

$

(511)

Unrealized gains(losses)

$

(104)

—

1,441

1,441

—
—
—
—

(26)
(2)
61
1,474

(26)
(2)
61
1,474

$

$

IDA Financial Statements: June 30, 2023

117

Table K6.2:
In millions of U.S. dollars
Fiscal Year Ended June 30, 2021
Unrealized gains
Realized gains (losses)(losses) excluding
realized amounts a
Investments- Trading—Note F
Non-trading portfolios, net
Asset-liability management—Note F
Other Non-trading portfolios
Investment portfolio—Note C
Borrowing portfolio—Note E
Other b
Total

$

185

$

$

(41)

Unrealized gains(losses)

$

144

—

1,080

1,080

—
—
—
—

(12)
15
19
1,102

(12)
15
19
1,102

$

$

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

NOTE L—CONTINGENCIES
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, 2023, is not expected to have a material adverse effect on
IDA's financial position, results of operations or cash flows.

118

IDA Financial Statements: June 30, 2023