International Development Association

Management’s Discussion & Analysis
andFinancial Statements
June 30, 2022

Management’s Discussion and Analysis

Contents
Section I: Executive Summary

Summary of Financial Results

4

Section II: Overview

Presentation
Introduction
Twentieth Replenishment of Resources (IDA20)
Financial Business Model
Basis of Reporting

6
6
6
6
7

IDA19 Funding
IDA20 Funding
Allocation of IDA20 Resources899

Section IV: Financial Results

Financial Results and Portfolio Performance

15

Section V: Development Activities, Products
and Programs

Lending Framework
Financial Terms
Loans, Grants and Guarantee Activity

24
25
27

Section VI: Other Development Activities andPrograms

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

29
30
30
30
30

Section VII: Investment Activities

Investments – Trading Portfolio
Investments - Non-Trading Portfolio

33
34

Section VIII: Borrowing Activities

Concessional Partner Loans
Market Debt
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 theUse of Estimates

Fair Value of Financial Instruments
Provision for Losses on Loans and Other Exposures
Provision for HIPC Debt Initiative and MDRI

49
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

53
54

Section III: IDA’s Financial Resources

Management’s Discussion and Analysis

Section I: Executive Summary

This Management’s Discussion & Analysis (MD&A) discusses the results of the International Development
Association’s (IDA) financial performance for the fiscal year ended June 30, 2022 (FY22). 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, 2021, as compared to the year ended June 30, 2020, see Section IV – Financial Results in IDA’s MD&A and
Financial Statements for the fiscal year ended June 30, 2021 (FY21). For information relating to IDA’s development
operations’ results and corporate performance, refer to the World Bank Corporate Scorecard and Sustainability
Review.

Box 1: Selected Financial Data
In millions of U.S. dollars, except ratios which are in percentages
As of and for the fiscal years ended June 30,
2022

2021

2020

$ 37,727$ 36,028

21,21422,921

21,17914,477

16,465

15,112

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

Net disbursements a$

30,365

Balance Sheet (Section IV)
Total assets$ 220,014$ 219,324

Net investment portfolio b

39,56137,92135,571

Net loans outstanding

174,490

177,779

160,961

35,03228,335

19,653

178,668

180,876

168,171

Borrowing portfolioc

Total equity$

199,472

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

Transfers from affiliated organizations and others

1,901

$

1,996

$

1,843

274

544

252

Development grants(2,372)(2,830)(1,475)

Net income (loss)

12

(433)

(1,114)

Non-GAAP Measures:
Adjusted Net Income (Section IV)
Deployable Strategic Capital Ratio (Section IX)

$

260
26.4%

$

394
30.4%

$

724
35.8%

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

2

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section I: Executive Summary

Section I: Executive Summary
IDA, an international organization owned by its 1741 member countries, is one of the five institutions of the WorldBank Group (WBG2). 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 more than 61 years. With its many years of experience and its depth ofknowledge in the international development arena, IDA plays a key role in achieving the WBG’s goal of helping
countries achieve better development outcomes. IDA contributes to the WBG’s twin goals of ending extreme poverty
and promoting shared prosperity by providing loans, grants, and guarantees, and other financial products to the poorestand most vulnerable countries to help meet their development needs and by providing technical assistance and policy
advice 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 achieve improvements in growth, job creation, poverty
reduction, governance, the environment, climate adaptation and resilience, human capital, infrastructure, and debt
transparency, among others. To meet its development goals, the WBG has been increasing its focus on country
programs in order to improve growth and development outcomes. Further, the last fiscal year brought new challenges
to the global outlook – high inflation and the rise in food insecurity that came on top of growing inequality, global
fragility, the coronavirus disease (COVID-19) pandemic and other geopolitical events, rising debt, andmacroeconomic imbalances. In response, IDA, as part of the WBG efforts, continues to work with 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. The responses all remain in compliance with IDA’s existing
financial, operational and risk management policies.
The nineteenth replenishment of IDA (IDA19), which ended in FY22, built on the strong momentum of the IDA18
financing framework by combining contributions from members with market borrowings. IDA’s hybrid financial
model has allowed IDA to significantly expand its financial capacity and provide $72 billion in financing for its clientsfrom the IDA19 replenishment.
On March 31, 2022, IDA’s Twentieth Replenishment (IDA20) was approved by the Board of Governors. In April
2021, members agreed to launch IDA20 one year early, to commence in FY23, and to shorten IDA’s Nineteenth
Replenishment (IDA19) implementation period to two years (FY21-FY22). The IDA20 operational and financing
framework will continue to leverage IDA’s strong equity base to help low-income countries respond to the COVID19 crisis and build a greener, more resilient, and inclusive future. Members agreed to a financing envelope of $93
billion3 over the three-year replenishment period, FY23-FY25, supported by $23.5 billion of member contributions.
See Section III: IDA’s Financial Resources.

1

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

2

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

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).

IDA Management’s Discussion and Analysis: June 30, 2022

3

Management’s Discussion and Analysis

Section I: Executive Summary

Summary of Financial Results
Net Income and Adjusted Net Income
Net Income: IDA reported net income of $12 million in FY22,
compared to a net loss of $433 million in FY21. The increase wasprimarily driven by non-functional currency translation adjustments
and the decrease in development grant expenses, partially offset by
the increase in the provision for losses on loans and other exposures.
See Section IV: Financial Results.

In millions of U.S. dollars
Adjusted Net Income (Loss)Net Income (Loss)
8,000
4,000
0

Adjusted Net Income: IDA’s adjusted net income was $260 million
in FY22, compared to $394 million in FY21. The decrease wasprimarily due to lower interest revenue on loans and higher net noninterest expenses. See Section IV: Financial Results.

(4,000)(8,000)
FY18

FY19

FY20

FY21

FY22

Lending Operations
IDA’s net commitments in FY22 were $37.7 billion, 5% higher than FY21 and the highest annual level in IDA’s
history. Out of the total net commitments, $24.5 billion were loan commitments and $13.2 billion were grantcommitments. FY22 commitments reflected continued support for COVID-19 related efforts, including $2.3 billionof financing for COVID-19 vaccines and $3.7 billion of financing for food security. In addition, FY22 commitments
included $1 billion financing to provide fast-disbursing support for Ukraine on an exceptional basis.
IDA’s net loans outstanding decreased by $3.3 billion, from $177.8 billion as of June 30, 2021, to $174.5 billion asof June 30, 2022, primarily due to currency translation losses as the SDR depreciated against the U.S. dollar, partially
offset by net loan disbursements during the year. See Section IV: Financial Results.
Development grant expenses were $2.4 billion in FY22 compared to $2.8 billion in FY21. The development grantactivity volume in FY22 was higher than FY21, excluding grants of $1.3 billion disbursed to Sudan in the previous
year after its arrears were cleared in March 2021. The decrease in development grant expenses from FY19 to FY20,
as shown in the graph below, is due to the timing of the recognition of the grant expenses as a result of theimplementation of a new accounting standard in FY20.
In billions of U.S. dollarsa

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

a.

4

40

200
160
120
80
40
0
FY18 FY19 FY20 FY21 FY22

Net Grant Commitments
Grant Expense
Net Grant Disbursements

Net Loans Outstanding

32
24
16
8
0
Jun 18 Jun 19 Jun 20 Jun 21 Jun 22

Includes loans, grants, and guarantees.

IDA Management’s Discussion and Analysis: June 30, 2022

FY18 FY19 FY20 FY21 FY22

Management’s Discussion and Analysis

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

Net Investment Portfolio
As of June 30, 2022, the net investment portfolio was $39.6 billion,
compared with $37.9 billion as of June 30, 2021. See Section VII:
Investment Activities. The primary objective of IDA’s investment
strategy is principal protection. As of June 30, 2022, 74% of IDA’s
investment portfolio was held in instruments rated AA or above (SeeTable 30).

Net Investment Portfolio

50
40
30
20
10
0
Jun 18Jun 19Jun 20Jun 21

Jun 22Jun 21

Jun 22In billions of U.S. dollars

Borrowing Portfolio
Market borrowings at fair value: As of June 30, 2022, the market
borrowings carried at fair value, and the related derivatives were
$21.9 billion, an increase of $1.3 billion from June 30, 2021.
Market borrowings at amortized cost: As of June 30, 2022, themarket borrowings carried at amortized cost were $6.2 billion (Nil June 30, 2021).

Borrowing portfolio
50
40
30
20

Concessional Partner Loans at amortized cost: As of June 30,
2022, total borrowings from members - Concessional Partner Loans(CPL) were $7.0 billion, a decrease of $0.7 billion from June 30,
2021.

10

Equity and Capital Adequacy

In billions of U.S. dollars0
Jun 18Jun 19Jun 20EquityAs of June 30, 2022, IDA’s equity was $178.7 billion, a decrease of$2.2 billion from June 30, 2021. The decrease was primarily due to 200
currency translation losses consistent with the depreciation of the150
SDR against the U.S. dollar. See Section IV: Financial Results.
100
50
0
Jun 18 Jun 19 Jun 20 Jun 21 Jun 22

The Deployable Strategic Capital (DSC) ratio, IDA’s main capital Ratio in percentages
adequacy measure, was 26.4% as of June 30, 2022, above the zero
Deployable Strategic Capital Ratio
percent policy minimum and a decrease of 4.0 percentage points
45%
from 30.4% as of June 30, 2021. IDA’s capital continues to beadequate to support its operations. See Section IX: Risk
30%
Management.
15%
Policy Minimum Ratio = 0%0%
Jun 18 Jun 19 Jun 20 Jun 21 Jun 22

IDA Management’s Discussion and Analysis: June 30, 2022

5

Management’s Discussion and Analysis

Section II: Overview

Section II: Overview
Presentation
This document provides Management’s Discussion and Analysis of the financial condition and results of operations
for IDA for the fiscal year ended June 30, 2022. A Glossary of Terms is provided at the end of this document.

Introduction
Generally, every three years, representatives of IDA’s members4 meet to assess IDA’s financial capacity and the
medium-term demand for new IDA financing. Members decide on the policy framework, agree upon the amount offinancing to be made available for the replenishment period, and commit to additional contributions of equity that are
required to meet these goals. The meetings culminate in a replenishment agreement that determines the size, sources(both internal and external), and uses of funds for the replenishment period.

Twentieth Replenishment of Resources (IDA20)On March 31, 2022, the IDA20 Resolution was approved by IDA’s Board of Governors. IDA20 recognizes the needto help address the profound challenges faced by IDA countries. IDA20 reaffirms the international community’scommitment to scale up support to enable IDA countries to respond to the effects of the COVID-19 crisis, recoup theirdevelopment losses, and resume progress toward the 2030 Sustainable Development goals. IDA20 will support theworld’s poorest and most vulnerable countries to emerge on a development path in line with the Green, Resilient andInclusive Development (GRID) framework. IDA20 will build on the IDA19 special themes, with the continuation ofhuman capital, climate change, fragility, conflict, and violence (FCV), gender and development, jobs, and economictransformation. In addition, IDA20’s policy package will incorporate four crosscutting issues: crisis preparedness,governance and institutions, debt (including transparency), and technology.
With this agenda in the forefront, IDA members agreed on the IDA20 operational and financing framework thatreflects a financing envelope of $93 billion, over a three-year replenishment period (FY23-FY25), that will besupported by $23.5 billion of member contributions. The remainder of the financing envelope will be covered by theMultilateral Debt Relief Initiative (MDRI), financing raised in the capital markets, the IDA19 carry-over, internal
resources (e.g., loan repayments) and transfers from IBRD.

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 $178.7 billion as of June 30, 2022. In FY15, IDA introduced debt to its
financial model with concessional partner loans received from certain member countries. In FY18, IDA introduced ahybrid financing model by including market debt into its business model. By prudently leveraging its equity andblending market debt with equity contributions from members, IDA has increased its financial efficiency, and scaled
up its financing to support the escalating demand for its resources to deliver on the following priorities:
Provide concessional financing on terms that respond to clients’ needs; andEnsure long-term financial sustainability of IDA’s financial model through a prudent risk management framework.
Non-concessional lending will primarily be financed by market debt. Concessional lending, including grants, isprimarily financed by IDA’s equity. As IDA’s funding program expands under the hybrid financing model, a bigger
portion of concessional lending will be 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.
See Figure 1.
••

4

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.

6

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section II: Overview

GrantsEquityConcessional Lending and Investments

Borrowings

Non – Concessional Lending

Reflows and Operating
Results

Figure 1: IDA's Financial Business Model

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

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

IDA Management’s Discussion and Analysis: June 30, 2022

7

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

Section III: IDA’s Financial Resources
IDA’s replenishments have grown from $1.0 billion in the initial replenishment to $93 billion in IDA20. Members’
subscriptions and contributions receivable for each replenishment are settled through payment of cash or deposit ofnonnegotiable, non-interest-bearing demand notes which become due throughout the replenishment period, generally
three years. The notes are encashed by IDA on a pro rata basis over a 9 to 11-year period which generally correspondswith the disbursement period of the loans and grants.

IDA19 Funding
In April 2021, the IDA19 financing period was shortened to two years (FY21-FY22) and the IDA19 financing
framework was adjusted to $71 billion from the original commitment authority of $82 billion. The remaining $11
billion was carried forward to be utilized in the replenishment period of IDA20. In April 2022, IDA’s Board approved
an increase in the adjusted IDA19 commitment authority by $1 billion to $72 billion to support the urgent development
financing needs and to supplement IBRD and development partners’ support for Ukraine. The increase did not impact
the use of the original IDA19 financing plan of $71 billion.
As of June 30, 2022, IDA completed its nineteenth replenishment period. See Table 1 for results for IDA19 sources
and uses.
Table 1: Results for IDA19 Sources and Uses
In billions of U. S. dollars
Sources
Member equity contributions
Member compensation for MDRI
Reflows, carryover, and borrowings
Transfers from IBRD
Total Sources

USD equivalent a
$
23.5
3.9
54.7
0.9
$
83.0

Uses
USD equivalent b
Concessional financing
Loans and guarantees c$
45.1
Grants25.4
Non-concessional financing
4.5
Private Sector Window
1.7
Less: Recommitments of cancellations from previous replenishments(4.7)
Total Uses$
72.0
Carry-over to IDA20

$

11.0

Total Uses and Carry-over$
83.0
a. U.S. dollar amounts are based on IDA19 reference rate of USD/SDR 1.38318. The U.S. dollar amounts are provided for reporting
purposes only.
b. U.S. dollar amounts are based on exchange rate as per the date of approval.
c. Includes $1.2 billion of loans approved by the Board in July 2022 due to the extension of the closing date for the approval of
IDA19 operations.

Figure 2 below shows the allocation of IDA19 sources to fund IDA’s lending activities (excluding PSW activities).
Figure 2: Funding Allocation during IDA19 replenishment period

Non-concessional
6%

Regular loans
23%

Grants34%

Blend loans
37%

8

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

Table 2: Cumulative Net Commitments during the IDA19 replenishment period
In millions of U.S. dollars
Loans andGuarantees

As of June 30, 2022
Concessional financing
IDA Country Allocations
IDA Concessional Windows
Regional Window
Window for Host Communities and Refugees
Crisis Response Window
Arrears Clearance
Non-concessional financing
Total Net Commitments a$

39,382

$

3,447
30
1,024
4,518
48,401

Grants$

19,576

$

2,450
1,239
1,089
1,000
25,354

Total$

58,958

$

5,897
1,269
2,113
1,000
4,518
73,755a. Commitments are net of full cancellations/terminations approved in the same fiscal year. Commitments exclude IDA-IFC-MIGA
Private Sector Window (PSW) activities of $1.7 billion, and $1.2 billion of loans approved by the Board in July 2022 associated with
IDA19.

IDA20 Funding
IDA’s financing resource envelope available for lending and grant commitments is based on the long-term outlook of
IDA’s financial sustainability. This takes into account the amount of member contributions and the concessionality ofthe proposed financing to borrowers, market conditions, and capital adequacy requirements.

Allocation of 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 and is updated annually. For FY23, thethreshold is $1,255 (FY22: $1,205).
Table 3: IDA20 Sources and allocation
In billions of U.S dollars
Sources
Member equity contributions
Member compensation for MDRI
Reflows, carryover, and borrowings
Transfers from IBRD
Total Sources

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

USD equivalent a
23.5
1.8
66.9
0.8
$
93.0
$

USD equivalent a
$

$

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.

IDA Management’s Discussion and Analysis: June 30, 2022

9

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

As of July 1, 2022, 74 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
countries

Gap

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

Blend

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

IDA financing is provided in the form of loans, grants, and guarantees. Most of IDA’s resources are allocated toeligible members through IDA Country Allocations that provide unearmarked support. IDA Country Allocations are
determined using the Performance Based Allocation (PBA) system, which takes into account the country’s
performance rating (CPR), population size and per capita income, and complemented by the FCV envelope. The restof IDA 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. The allocation framework is agreed for each replenishment cycle.
Figure 3: Allocation of IDA20 Resources
IDA

ountry Allocations

IDA

Regional

indo s i eligi leindow

erformace ased Allocations, includingFC
if eligi leCrisis Response
indow

Scale pindow

Concessional

ost Communities
and Refugees

ri ate Sector
indow

on Concessional

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

10

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

efforts to address their debt-related vulnerabilities. A set-aside from or a discount of IDA’s country allocation are used
to incentivize satisfactory implementation of Performance and Policy Actions. 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 will be reduced.
In recognition of the change in IDA’s business model starting in IDA18, and to ensure that its lending decisions arecompatible with the capital adequacy requirements of a triple-A rating, the allocation framework for 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 of allocation
for grants for IDA-only countries are based on an assessment of the country’s risk of debt distress, where countries
with high risk of debt distress will receive their IDA assistance in grants. Gap and Blend countries are only eligible
for grant financing via the Window for Host Communities and Refugees, if applicable.
As part of IDA’s balance sheet optimization measures, new financing terms have been introduced in IDA20 which
include:•Concessional Shorter-Maturity Loans (SMLs). Concessional SMLs will be offered through the Scale-Up Window(SUW) and country allocations based on the PBA system. IDA-only countries at moderate and low risk of debt
distress, including Small States, as well as IDA Gap and Blend countries (unless they are high risk Small States),
will receive a portion of their country allocations as SMLs.

•

50-year loans for IDA-only countries at moderate risk of debt distress in lieu of the previous financing terms ofhalf grants and half loans, with an exception for Small States. IDA-only Small States at moderate risk of debt
distress will continue to receive half grants and half loans.

See Figure 4 for Overview of IDA20 Financing Terms.
Figure 4: Overview of IDA 20 Financing Terms

IDA Management’s Discussion and Analysis: June 30, 2022

11

Management’s Discussion and Analysis

Section III: IDA’s Financial ResourcesCountry 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
IDA20, some IDA countries will receive a portion of their country allocations as concessional SMLs. In addition,
IDA-only countries at moderate risk of debt distress, with the exception of Small States, will 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; and•convening state and nonstate actors for coordination and collective actions.

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

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

Crisis Response Window (CRW)
The primary objective of the CRW is to provide IDA countries with additional resources that will help them to respondto major natural disasters, or public health emergencies and severe economic crises, so that they can return to theirlong-term development paths. The $3.3 billion window under the IDA20 resource envelope includes an allocation of
up to $1.0 billion under the CRW Early Response Financing (ERF) which will support IDA countries’ response toslower-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, as well
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 adjusted IDA20 resource envelope, $6.3 billion of resources have been allocated to
non-concessional 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 are balanced
between IDA-only and Blend countries, and to avoid countries from having a concentration of Non-Concessional
Scale-up Window resources. Implementation arrangements will prioritize a country’s ability to absorb resources and

12

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

the proposed projects’ alignment with IDA20 policy priorities and the debt-related Sustainable Development Finance
Policy.

Private Sector Window (PSW)The IDA-IFC-MIGA Private Sector Window was created under IDA18 to mobilize private sector investment in IDAonly countries and IDA-eligible Fragile and Conflict-affected Situations. In IDA19, the PSW was allocated an initialenvelope of $2.5 billion which was revised to $1.7 billion under the adjusted IDA19 resource envelope. Under IDA20,$2.5 billion has been allocated to the PSW envelope.
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.
During FY22, $1,107 million of the IDA19 PSW resources, net of full terminations and cancellations, were committed.
As of June 30, 2022, $879 million had been utilized out of a combined total of $2.9 billion committed in IDA18 and
IDA19. See Notes to the Financial Statements for the year ended June 30, 2022, Note G –Transactions with Affiliated
Organizations – Table G4.
Table 4: Utilization of PSW Commitments
In millions of U.S. dollars
As of June 30, 2022

IDA18

Allocation a$

Net Commitments bof which utilized

1,282

Guarantees
Derivatives
Funding ofinvestments

1,282

IDA19
$

1,668

Total
$

1,665

2,947
$

IFC's

PSW-related

Utilization Measure

2,950

638

Face value of outstanding guarantees

132

Notional amount

59

Amortized cost

50

Amortized costequityLoans
Total utilization of IDA PSW$

879

a. IDA18 final allocation of $1,370 million was reduced by $88 million of cancellations which were reallocated to IDA19 PSW.
b. Of the $1,282 million net commitments under IDA18 PSW, $79 million was returned to country allocations and is no longer available
for utilization.

Arrears Clearance Framework
IDA has a policy of not providing additional financing to borrowers who are overdue on their current payments to
IDA or IBRD. However, it 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 in arrears.
However, during the IDA20 period, should meaningful progress arise in any country in arrears, a reallocation
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. Thiswas first introduced in IDA12 to be used to finance high priority activities related to the preparation of a program ofsocial and economic recovery and to build resilience until the arrears are fully cleared. Conditions constituting thisframework include indications that:• early performance is promising as evidenced by the recipient country having taken convincing steps towards socialand economic recovery.
• arrears to IDA and/or IBRD are large and protracted and cannot be easily or quickly cleared using domestic
resources.
• a concerted international effort to provide positive financial flows and other assistance is underway, and othercreditors have agreed not to make net withdrawals of financial resources from the country.
• alternative sources of financing for post-conflict recovery are inadequate or available only on inappropriate terms;
and

IDA Management’s Discussion and Analysis: June 30, 2022

13

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources• Pari passu sharing arrangements are in place between preferred creditors, for any payments made by the country
in advance of arrears clearance.
The PACG program has met its objectives with each of the prior PACG recipients successfully clearing all their arrears
to IDA. 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 FY22.
(ii) Arrears Clearance Set-Aside
The arrears clearance set-aside (ACSA) forms part of IDA’s overall financing commitments. It is financed byadditional member contributions under the replenishments. In IDA15, the arrears clearance was further enhanced.
IDA members agreed to ring-fence arrears clearance support to IDA countries that were in arrears as of December 31,
2006 and meet a very narrow and well-defined set of criteria– see below, including eligibility for support under the
Heavily Indebted Poor Countries (HIPC) debt initiative. Amounts were set aside within the IDA replenishment so thatwhen circumstances allow, IDA would be able to help countries clear arrears and fully re-engage with the WorldBank.
To be considered for any arrears clearance support, the country would need to meet the following criteria:•

be eligible for HIPC debt relief;•

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

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

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

In addition, to receive support for arrears clearance, project proposals should meet re-engagement criteria based on
facts and circumstances of each case.

14

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IV: Financial Results

Section IV: Financial Results
Financial Results and Portfolio Performance
Net Income
IDA had net income of $12 million in FY22 compared with a net loss of $433 million in FY21 (See Table 5). The
increase in net income during the year was primarily driven by:• A positive change of $0.9 billion in non-functional currency translation adjustment gains/(losses) primarily
attributable to the depreciation of the majority of the non-functional currencies against the U.S. dollar in FY22
compared to the appreciation of these currencies in FY21;• A decrease of $0.5 billion in development grant expenses primarily due to the disbursement of $1.3 billion ofdevelopment grants to Sudan in FY21 in support of the re-engagement and reform program after its arrears
clearance;• An increase of $0.4 billion in unrealized mark-to-market gains on non-trading portfolios. The increase was mainly
driven by higher 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 higher compared to FY21;
partially offset by• A charge of $0.3 billion for provision for losses on loans and other exposures in FY22 compared to a release of$0.5 billion in FY21 driven by a $0.8 billion release of provision after Sudan cleared its overdues in FY21.

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 comprised ofdevelopment grants, provision for HIPC / Multilateral Debt Relief Initiative (MDRI) debt relief, amortization of
discounts on CPL. For financial reporting, these activities are treated as expenses, while contributions frommembers 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 to financedevelopment activities similar to member contributions but are not directly included in equity as they do not carryvoting rights.
• Non-functional currency translation adjustment (gains) losses: These represent unrealized exchange rate
gains/losses resulting from the translation of loans, borrowings, development grants payable and all other assets
and liabilities still held on IDA’s Balance Sheet, that are denominated in currencies other than the component
currencies of SDR.
• Unrealized mark-to-market gains/losses on non-trading portfolios: These 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 tounrealized mark-to-market gains/losses on non-trading portfolio since the objective of the loan revenue hedges is
to stabilize IDA’s revenue against any currency risk.
• 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 recorded in
the income statement and the underlying physical assets being purchased and sold are recorded at amortized cost
during the holding period. In these cases, the unrealized gains, and losses on the forward contract at the end of thereporting period (if any) are excluded from net income when calculating adjusted net income. As of June 30, 2022,
there were no active trades requiring adjustment.
• Pension, Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve (PCRF) adjustments:
While IDA is not a participating sponsor to these benefit plans, IDA shares in the costs and reimburses IBRD for
its proportionate share of any contributions made to these plans by IBRD, as part of a Board-approved cost sharing
ratio. The Pension adjustment reflects the difference between IDA’s share of cash contributions to both the pension
plans and PCRF, and the accounting expense, as well as the investment revenue earned on those assets related to

IDA Management’s Discussion and Analysis: June 30, 2022

15

Management’s Discussion and Analysis

Section IV: Financial Results

the PEBP and PCRF. The PCRF was established by the Board to stabilize contributions to the pension and postretirement benefits plans. Management has designated the income from these assets to meet the needs of thepension 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 the revenue
earned from agreements with donors under which funds received are to be used to finance specified 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 to these arrangements
is excluded from reported income when determining adjusted net income since there is no discretion about theuse of these funds.
ii. Effective from FY22, the difference between fee revenue and expenses from the Reserve Advisory andManagement Partnership (RAMP) program is excluded from the reported net income to arrive at adjusted net
income. Under the Board-approved framework, RAMP fees are dedicated for the purpose of providing
technical assistance 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 a given 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 will be excluded to arrive at adjusted
net income.
IDA’s adjusted net income was $260 million in FY22 compared with $394 million in FY21 (See Table 5). The
decrease of $134 million was primarily driven by a $90 million decrease in net interest revenue on loans mainly due
to the recognition of $244 million of service charge revenue in FY21 when Sudan paid all the overdue principal andservice charges due to IDA.
Table 5: Condensed Statement of Income
In millions of U.S. dollars
For the fiscal year ended June 30,
2022
Interest revenue
Loans, net$ 1,960
Investments, net
189
Asset-liability management derivatives, net
1
Borrowing expenses, net(249)
Interest revenue, net of borrowing expenses$ 1,901
Provision for losses on loans and other exposures, (charge) release(278)
Other (expenses) revenue, net (Table 14)(2)
Net non-interest expenses (Table 12)(1,392)
Transfers from affiliated organizations and others274
Non-functional currency translation adjustment gains (losses), net
511
Unrealized mark-to-market (losses) gains on investments-trading portfolio, net a(104)
Unrealized mark-to-market gains on non-trading portfolios, net
1,474
Development grants(2,372)Net Income (Loss)$
12
Adjustments to reconcile net (loss) income to adjusted net income:Expenses relating to development financing activities directly funded bycontributions from members
2,508
Contributions from affiliated organizations and others(274)
Non-functional currency translation adjustment (gains) losses, net(511)b
Unrealized market-to-market gains on non-trading portfolios, net(1,432)
Pension and other adjustments(43)
Adjusted Net Income
$
260
a.
b.

16

2021

Negative
ImpactPositive
Impact$ 2,050
147
(14)
(187)
$ 1,996539
56(1,612)
544
(372)
144
1,102
(2,830)$ (433)

2,070
(544)
372
(1,118)47$
394

Includes IDA’s share of returns from Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve
Fund (PCRF) assets – $37 million negative return (FY21- $184 million positive return).
Excludes $42 million of gains from revenue-related forward currency contracts (FY21 - $16 million of losses).

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IV: Financial Results

Table 6: Condensed Balance Sheet
In millions of U.S. dollars
As ofAssetsDue from banks
Investments
Net loans outstanding a
Derivative assets, net
Other assets
Total assets
Liabilities
Borrowings
Derivative liabilities, net
Other liabilities
EquityTotal liabilities and equity

June 30, 2022
$

$

$

$

June 30, 2021

686
39,827
174,490404
4,607
220,014$32,899579
7,868
178,668$

220,014$$

Decrease

Increase
190

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

2,451(3,289)
155
1,183
690

4,585

28,314408
9,726
180,876

171(1,858)(2,208)690

219,324

a. The fair value of IDA’s loans was $141,193 million as of June 30, 2022 ($164,606 million –June 30, 2021).

EquitySee Table 7 below for the change in IDA’s equity during FY22:
Table 7: Changes in Equity
In millions of U.S. dollars
Equity as of June 30, 2021
Change during the year:
Subscriptions and contributions paid-in$ 180,876
7,325

Nonnegotiable, noninterest-bearing demand obligations
Change in Accumulated deficit

1,265
12

Change in Accumulated other comprehensive (loss) income
Change in Deferred amounts to maintain value of currency holdings
Total change
Equity as of June 30, 2022

(10,808)(2)(2,208)$ 178,668

Results from Lending Activities
Loan Portfolio and Grant Activity
As of June 30, 2022, IDA’s net loans outstanding was $174.5 billion, lower by $3.3 billion compared with June 30,
2021. The decrease was mainly due to currency translation losses of $12.5 billion, consistent with the depreciation of
the SDR by 6.9% against the U.S. dollar during the year, partially offset by net disbursements of $9.1 billion during
the year.
As of June 30, 2022, 88% of IDA’s total loans outstanding were denominated in the SDR. For the regional presentationof total loans outstanding, see Notes to the Financial Statements for the year ended June 30, 2022, Note D – Loans
and Other Exposures – Table D8.
Provision for losses on loans and other exposures
In FY22, IDA recorded a provision for losses on loans and other exposures of $278 million primarily due to theincrease in exposure during the year. This compares to a $539 million release of provision in FY21 mainly due to an$831 million release of loan loss provision after Sudan cleared its arrears in March 2021 (see Notes to the Financial
Statements for the year ended June 30, 2022, Note D – Loans and Other Exposures – Table D5).
For adjusted net income purposes, the provision for losses on loans and other exposures excludes the provision fordebt relief under HIPC/MDRI and the provision for grant advances since these are funded by contributions frommembers.

IDA Management’s Discussion and Analysis: June 30, 2022

17

Management’s Discussion and Analysis

Section IV: Financial Results

Table 8: Provision for losses on loans and other exposures
In millions of U.S. dollars
For the fiscal year ended June 30,
Provision for losses on loans and other exposures, (charge) release
Loans and other exposures
Debt relief under HIPC/MDRI
Total

2022
$
$

2021

(283)
5
(278)

Table 9: Net Loans Outstanding Activity

$

(289)
828
539

$

6
(823)
(817)

$

In billions of U.S. dollars

Net Loans outstanding as of June 30, 2021
Change during the year:$

177,779

200

178

174

Jun 21

Jun 22161

Gross loan disbursements
Loan repayments
Change in accumulated provision for loan losses a
Translation adjustments
Other b15,860(6,738)135(12,505)(41)

Total change

150
100
50

(3,289)Net Loans outstanding as of June 30, 2022$

0

174,490

Jun 20b.

$

Figure 5: Net Loans Outstanding

In millions of U.S. dollarsa.

Variance

Includes translation adjustments on accumulated provision for loan
losses and debt relief under HIPC/MDRI. See Notes to the Financial
Statements, Note D – Loans and other exposures.
Includes deferred loan origination costs of $11 million, and HIPC debt
relief provided of $30 million.

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 10).
Table 10: 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
a.
b.

$

$

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 $

Loans a

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

4,785 $
4,384
1,186
736
369
70
5,145
16,675 $2021
Grants b
3,296 $
1,661
111
144
126
309
599
6,246 $

Total
8,081
6,045
1,297
880
495
379
5,744
22,921

Variance
$

$

(948)
499
205
(116)
15
180
(1,542)(1,707)

Excludes PSW related disbursements - $41 million (FY21 - $6 million).
Excludes Project Preparation Advances (PPA).

As of June 30, 2022, 59% of IDA’s loans were on regular terms (75 basis points SDR equivalent service charge) see
Table 11. The decrease in IDA’s revenue from loans in FY22 compared to FY21 was primarily due to $244 millionof service charges recorded in March 2021 when Sudan paid all its overdue principal and charges due to IDA.

18

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IV: Financial Results

Table 11: Revenue and Balances by Product Category
In millions of U.S. dollars
Interest revenue on loans aBalance as of June 30,
Category
Loans
Concessional
Regular
Blend
Hard b
Non-concessional c
Others d
Total

For the fiscal year ended June 30,

2022

$

$

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

2021

$

$

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

2022

$

$

829
970
47
116
1
1,963

2021

$

$

1,055
862
49
85
1
2,052

a. Excludes interest rate swap expenses related to loan hedges - $3 million ($2 million in FY21).
b. Prior to July 1, 2017, IDA offered Hard-Term loans to Blend Countries (excluding Small Island Economies). Hard-term loans are nolonger offered.
c. In addition, $24 million of commitment charges were earned in FY22 on undisbursed balances of non-concessional loans ($19
million in FY21).
d. Represents loans under the PSW.

Results from Investing Activities
Investment Portfolio
IDA’s net investment portfolio increased to $39.6 billion as of June 30, 2022, from $37.9 billion as of June 30, 2021.
The increase was primarily due to the investment of cash received from member contributions and proceeds from net
new debt issuances, partially offset by net loan and grant disbursements.
Investment interest revenue, net of derivatives
During FY22, IDA’s net interest revenue from investments was $189 million, an increase of $42 million comparedwith FY21. The increase in interest revenue was mainly driven by the higher average interest rate environment in thecurrent year and the higher average balance of the portfolio.
Figure 6: Net Investment Portfolio

Figure 7: Net Investment Revenue

In billions of U.S. dollars
40

35.6

In millions of U.S. dollars
37.9

39.6

500
400

30

300

20

200

10

100

0

0
Jun 20Jun 21

Jun 22

FY18

FY19

FY20

FY21

FY22

Results from Borrowing Activities (excluding associated derivatives)
As of June 30,2022, Market borrowings recorded at fair value were $19.7 billion, a decrease of $0.9 billion comparedto June 30, 2021 ($20.6 billion). The decrease was driven mainly by the impact of increasing interest rates andtranslation gains during the year. See Notes to the Financial Statements for the year ended June 30, 2022, Note E –Borrowings.
As of June 30, 2022, the market borrowings at amortized cost were $6.2 billion (Nil – June 30, 2021). In FY22, IDA
started to issue long-term fixed rate market debt to fund fixed rate loans and the new issuances during the year were
$6.2 billion. See Notes to the Financial Statements for the year ended June 30, 2022, Note E – Borrowings.
Concessional partner loans from members, recorded at amortized cost were $7.0 billion ($7.7 billion - June 30, 2021).
The decrease of $0.7 billion was mainly due to translation adjustment gains.

IDA Management’s Discussion and Analysis: June 30, 2022

19

Management’s Discussion and Analysis

Section IV: Financial Results

Figure 8: Borrowings
In billions of U. S. dollars
4030Concessional partner loans, at amortized costMarket borrowings, at amortized costMarket borrowings, at fair value
7.7

7.0
6.2

20
7.6
10

20.6

19.7

Jun 21

Jun 2212.1
0Jun 20Transfers from Affiliated Organizations
Since 1964, IBRD has made transfers to IDA out of its net income, upon approval by the Board of Governors. Undera formula-based approach for IBRD's income support to IDA, the amount of income transfer recommended for IDA
is a function of IBRD's financial results. On October 14, 2021, IBRD’s Board of Governors approved a transfer from
FY21 allocable income of $274 million to IDA which was received by IDA on October 25, 2021.

Net Non-Interest Expense
As shown in Table 12, IDA’s net non-interest expenses are primarily comprised of administrative expenses, net ofrevenue from externally-funded activities. IBRD and IDA's administrative budget is a single resource envelope thatfunds the combined work programs of IBRD and IDA. The allocation of administrative expenses between IBRD and
IDA is based on an agreed cost and revenue sharing methodology, approved by their Boards. 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 other externally funded activities.
IDA’s net non-interest expenses on a GAAP basis were $1,392 million in FY22, compared to $1,612 million in FY21.
The key driver for the decrease was the decrease in pension costs, primarily driven by the higher asset returns in FY21,
which resulted in lower amortization of unrecognized actuarial losses in FY22.
IDA’s net non-interest expenses for adjusted net income purposes were $1,472 million in FY22, compared to $1,381
million in FY21, an increase of $91 million. FY21’s net non-interest expenses were significantly impacted by COVID19-related restrictions. FY22’s increase was driven by higher travel expenses due to the gradual easing of COVID-19related travel restrictions/office closures, inflationary cost pressures, the acceleration of work programs from the highlevel of lending activities during the year as well as additional support and engagement in FCV countries to address
the growing needs and the increase in conflict situations. As a result, travel costs increased by $56 million but are stillless than what they were before the COVID-19 pandemic, approximately 38% of FY19 costs. The cost of operatingin FCV countries also affected expenses including costs associated with evacuations and security in dangerous
situations.

20

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IV: Financial Results

Table 12: Net Non-Interest Expenses
In millions of U.S. dollars
For the fiscal year ended June 30,

2022

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$$Contributions to special programs b

2021

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

$

$

Variance

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

$

16
56
44
(303)
15
9
(5)
(168)

$

19

20

(1)

$
$

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

$
$

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

$
$

5
(60)
(5)
12
(3)
(51)
(220)

Adjustments to arrive at Net non-interest expenses - Adjusted Net
Income basis
Pension, RAMP and EFO adjustments (Table 13) c
Net non-interest expenses - Adjusted Net Income basis
$

80
1,472

$

(231)
1,381

$

311
91

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 5) - GAAP Basisa. Includes expenses related to IDA executed trust funds of $613 million for FY22 and $553 million for FY21.
b. Included in Non-interest expenses – Other in the Statement of Income.
c. Adjustments are included in the Pension and other adjustments line in Table 5. The RAMP adjustment was effective in FY22 andmade prospectively.

IDA’s goal is 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 FY22, IDA’s budget anchor was 74.3%, higher by 7.6
percentage points compared to FY21 primarily due to the one-time effect of $244 million of service charges recognizedin FY21 when Sudan paid all its overdue principal and charges due to IDA. Excluding the impact of Sudan’s arrears
clearance of $244 million in FY21, IDA’s FY22 budget anchor improved by 1.3%. See Table 13.
Table 13: Budget Anchor
In millions of U.S. dollars
For the fiscal year ended June 30,
Total net Non-interest Expenses (Table 12)
Pension, RAMP and EFO adjustments (Table 12) a
Net administrative expenses for Budget Anchor
Interest Revenue from Loans, net of associated borrowing expenses
Commitment fee and Guarantee fee revenue (Table 14)
Gains (losses) on revenue-hedging forward currency contracts
Total revenue for Budget Anchor
Budget Anchor

$
$
$

$

2022
1,392
80
1,472
1,892
46
42
1,980
74.3%

$
$
$

$

2021
1,612
(231)
1,381
2,050
36
(16)
2,070

$
$
$

$

Variance
(220)
311
91
(158)
10
58
(90)

66.7%

7.6%

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

IDA Management’s Discussion and Analysis: June 30, 2022

21

Management’s Discussion and Analysis

Section IV: Financial Results

Figure 9: Budget Anchor
In millions of U.S. dollars, except ratio in percentages
3,000

100%

81.0%

2,250

74.3%

66.7%

80%
60%

1,500
40%
750

20%

0
FY20
FY21
Net administrative expenses for budget anchor

0%
FY22
Budget Anchor Revenue

Budget Anchor

In FY22, IDA’s net other expenses were $2 million as the PPA grant expenses exceeded PPA cancellations andrefinancing of PPA grants previously approved. In contrast, in FY21, IDA had $56 million of net other revenue as
PPA cancellations and refinancing of PPA grants previously approved exceeded PPA grant expenses. Refinanced PPA
grants are included in the loan provided to the borrower, and correspondingly, prior grant expenses are reversed.
Table 14: Other (Expenses) Revenue, net
In millions of U.S. dollars
For the fiscal year ended June 30,

2022

PPA grants and others
Guarantee fees
Commitment charges
Other (Expenses) Revenue, net (Table 5)

$

2021

(48)
22
24
(2)

$

$

$

Variance

20
17
19
56

$

$

(68)
5
5
(58)

Unrealized mark-to-market gains (losses) on investments- trading portfolio
IDA’s investments-trading portfolio, excluding the returns from the PEBP, had unrealized mark-to-market losses of$67 million in FY22, compared to unrealized mark-to-market losses of $40 million in FY21. The losses in both years
were mainly due to the increase in yields on long-term euro government bonds.

Unrealized mark-to-market gains (losses) on non-trading portfolios, net
During FY22, the non-trading portfolios had $1.5 billion of net unrealized mark-to-market gains ($1.1 billion net
unrealized mark-to-market gains in FY21). The increase is mainly driven by unrealized mark-to-market gains fromthe derivatives held for the CVP, managed as part of ALM, as the U.S. dollar and EUR interest rates for long tenors
increased more in FY22 compared to FY21. (Section IX: Risk Management).
Table 15: 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 derivatives
Investment portfolio
Other a
Total

$

$

2022
1,441
(26)
59
1,474

$

$

a. Other comprises mark-to-market gains (losses) on the borrowings, loan related derivatives and on PSW.

22

IDA Management’s Discussion and Analysis: June 30, 2022

2021
1,080
(12)
34
1,102

$

$

Variance
361
(14)
25
372

Management’s Discussion and Analysis

Section IV: Financial Results

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, and the translation of loans,borrowings, and all other assets and liabilities held on IDA’s Balance Sheet, that are denominated in currencies otherthan the SDR and its component currencies. The translation adjustment gains and losses in FY22 and FY21 wereprimarily 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 offset is inherent in the future contribution inflows. The payable portion of thecurrency forward contracts are denominated in non-functional currencies. The appreciation or depreciation of thesecurrencies against the U.S. dollar results in exchange rate gains or losses which are recorded in the income statement.
Accordingly, the translation adjustment gains of $511 million in FY22 were driven by the depreciation of the hedged
non-functional currencies against the U.S. dollar, while the translation adjustment losses of $372 million in FY21
were due to the appreciation of these currencies against the U.S dollar.

IDA Management’s Discussion and Analysis: June 30, 2022

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 a common
framework which extends across all its development activities. The main elements of this framework are financing
principles, financing cycles and financing categories.

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

Financing Cycles
The process of identifying and appraising a project and approving and disbursing the funds often extends over several
years. However, in response to emergency situations, such as natural disasters and financial crises, IDA is able toaccelerate the preparation and approval cycle. In most cases, IDA’s Board approves each loan, grant, and guarantee
after appraisal of a project by staff. Under a Multiphase Programmatic Approach (MPA) approved by the Board in
FY18, the Board may approve an overall program framework, its financing envelope and the first appraised phase,and then authorize management to appraise and commit financing for later program phases. Disbursements are subject
to the fulfillment of conditions set out in the loan or grant agreement. IDA used this approach to expedite support for
COVID-19 related projects. As of June 30, 2022, $12.0 billion was committed under the MPA, of which $6.7 billion
was COVID-19 related commitments.
During implementation of IDA-supported operations, staff review progress, monitor compliance with IDA’s policies,
and assist in resolving any problems that may arise. An independent unit, the Independent Evaluations Group, also
assesses the extent to which operations have met their major objectives, and these evaluations are reported directly to
the Board.

Financing Categories
Most of IDA’s lending is of three types: investment project financing, development policy financing, and programfor-results. Figure 10 shows the percentage of loans approved for investment lending, development policy operations
and program-for-results over the past five years.
Box 2: Financing Principles(i) IDA may provide financing for its development operations in the form of loans, grants, and guarantees directly to its members,
public or private entities and regional or public international organizations.
(ii) IDA’s financing of its de elopment operations is designed to promote economic de elopment, increase productivity, and thus
raise standards of li ing in its mem er countries. In estment projects financed y IDA are required to meet IDA’s standards
for technical, economic, financial, institutional, and environmental soundness. Specific provisions apply to development policy
financing, including the treatment of the macroeconomic framework, poverty and social impact, environment, forests, and othernatural resources.
(iii) Decisions to appro e financing are ased upon, among other things, studies y IDA of a mem er country’s economic structure,including assessments of its resources and ability to generate sufficient foreign currencies to meet debt-service obligations.
(iv) IDA must e satisfied that in the pre ailing market conditions taking into account the mem er’s o erall 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 y requiring recipients a to su mit documentation esta lishing, 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.

24

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Figure 10: Net Annual Commitments and share of financing categories
In billions of U.S. dollars, except rates in percentages
Percent
$22

7

$30
4

22

24

71

72

69

FY19

FY20

FY21

$24

100
29

$36

$38

12

12

19

75

9

9
50

25

62

79

0
FY18

Investment Lending

Development Policy

FY22

Program-for-Results

Investment Project Financing (IPF)
IPF provides financing for a wide range of activities aimed at creating the physical and social infrastructure necessary
to reduce poverty and create sustainable development. IPF is usually disbursed over the long-term (roughly a 5 to 10year horizon).
FY22 net commitments under IPF totaled $29.9 billion, compared with $24.7 billion in FY21.
Development Policy Financing (DPF)DPF aims to support the borrower 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 (roughly 1 to 3 years) tohelp borrowers address actual or anticipated financing requirements.
FY22 net commitments under DPF totaled $3.4 billion, compared with $7.0 billion in FY21.
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.
FY22 net commitments under PforR totaled $4.4 billion, compared with $4.3 billion in FY21.
These three complementary categories support the policy and institutional changes needed to create an environment
conducive to sustained and equitable growth.

Financial Terms
Commitment Currency
The currency of commitment for IDA grants and concessional loans is predominantly the SDR. However, in response
to client needs to reduce currency exposure and simplify debt management, IDA offers a Single Currency Lending
option that allows IDA recipients to denominate new IDA loans in U.S. dollar, euro, pound sterling or Japanese yen.
For cumulative loans approved under Single Currency program as of June 30, 2022, see Table 16.

IDA Management’s Discussion and Analysis: June 30, 2022

25

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Table 16: Cumulative Loans approved under the Single Currency program
In billions of U.S. dollar equivalent value
As of June 30,
Euro
U.S. dollar
Japanese Yen
Pound Sterling
Total

2022
30.5
23.9
0.9
0.1
$ 55.4$Of the above, loans outstanding at the end of the year

$

19.7

Table 17: Summary of Financial Terms for IDA Grants and Lending Products, effective July 1, 2022
Currencies

Maturity/Grace
PeriodCurrent Charges

Interest rates

SDR

Not applicableNot applicableNot applicable

Regular-Term loan

SDR, USD, EUR,
GBP, JPY

38/6 years

75bps SDR equivalent
service charge

Not 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 andservice charge

Zero interest and service
chargeShorter Maturity Loan (SML)

SDR, USD, EUR,
GBP, JPY

12/6 years

Zero interest andservice charge

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

USD, EUR, GBP,JPY

Catastrophe Deferred Draw
Down Option (CAT DDO) c

SDR, USD, EUR,
GBP, JPY

Instrument type a
Grant

a.

b.
c.

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

After Drawdown:- Under PBA or Undisbursed balances option - IDA concessional rates
would apply.
- Under SUW option - non-concessional rates would apply.
Prior to July 1, 2017, IDA offered Hard-Term loans to Blend Countries (excluding Small Island Economies). They had a single
currency option, and had terms equivalent to IBRD’s fixed spread loans, less 200 bps, a variable option was also available.
Hard-term loans are no longer offered.
There is an implicit floor of zero on the overall interest rate in IDA’s non-concessional loans.
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 theStatement of Income. Commitment charges earned on loans and grants (if any) are reported as non-interest revenue in
the Statement of Income.
Service Charge: A service charge is levied on the principal amount disbursed and outstanding on all Regular, Small
Economy, and Blend term loans, regardless of repayment terms, at 0.75% per annum.
Interest: Interest is charged on all loans subject to blend terms approved from IDA16, hard-term loans, and nonconcessional loans. Further, loans offered under non-concessional terms are available at variable interest rates on
IBRD terms. All other rates are fixed.
Commitment Charge: A commitment charge, which is payable on any undisbursed loan or grant amount, is set by
the Board at the beginning of each fiscal year. Commitment charges are set at a level to ensure that net loan revenue
covers administrative expenses over the medium term. From FY09 to FY22, the commitment charge on undisbursed
concessional loans had been set at zero, and for grants it had been set at zero from FY03 to FY22. For FY23,

26

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

commitment charges remain set at zero, the same level as FY22. The commitment charge on non-concessional loans
is aligned to IBRD terms, which include a commitment charge of 0.25%.

Repayment Terms
Loans approved through June 30, 1987 have a final maturity of 50 years, including a grace period of 10 years. In
recent replenishments, differentiation in IDA’s lending terms has been introduced to recognize the variation ineconomic development of broad categories of IDA recipients.
Since 1987, the legal agreements of regular, blend and hard-term loans include an accelerated repayment clause to
double the principal repayments of the loan if the borrower’s GNI per capita exceeds a specific threshold and theborrower is eligible for IBRD financing. Implementation is subject to negotiation with the borrower and approval by
IDA’s Board after considering a borrower’s economic development. The borrower can further negotiate either to (a)shorten the loan’s maturity (principal option), (b) pay interest at a rate that would result in the same net present value(interest option), or a combination of the two options.
As of June 30, 2022, the acceleration clause was implemented for the qualifying loans of 18 borrowers that have
graduated from IDA since the introduction of the accelerated repayment clause. Of these 18 borrowers, 11 borrowers
selected the principal option, 6 borrowers selected the interest option, and one borrower selected a combination of thetwo options.
The accelerated repayment clauses in all of these legal agreements also allow a borrower to subsequently request
pausing of those accelerated terms if economic conditions in the borrower’s country have deteriorated, in which case,the terms of repayment can revert to the original terms of the financing agreements. As repayment accelerations, andpausing of accelerations, are contemplated in the original terms of the instruments, they do not constitute loan
modifications. Given the challenging economic situation as a result of the COVID-19 outbreak, for ten graduate
countries whose accelerated repayments were approved by the Board for implementation in IDA17 and IDA19,
management approved a one-year pause, which became effective July 1, 2020, of the accelerated payment terms to
conform to the schedule originally provided in their financing agreements. Subsequently, this was extended for an
additional year for five graduate countries. As of June 30, 2022, $16.2 billion of loans outstanding were under theaccelerated repayment terms.

Loans, Grants and Guarantee Activity
Commitments
FY22 net loan commitments were $24.5 billion, an increase of $0.6 billion or 2% over FY21 ($23.9 billion), mainly
driven by higher IPF commitments. There were no guarantee commitments in both FY22 and FY21. (See Table 18).
Also, see Section VI: Other Development Activities and Programs.
FY22 Net commitments of grants were $13.2 billion, an increase of $1.1 billion or 9% over FY21 ($12.1 billion). (SeeTable 19).
Table 18: Net Commitments of Loans 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

$

$

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

$

$

2021

% of total

7,105
7,900
1,003
966
622
20
6,291
23,907

30
33
4
4
3
*
26
100

Variance
$

$

646
879
36
1,080
(88)
142
(2,108)587* Indicates percentage less than 0.5%.

IDA Management’s Discussion and Analysis: June 30, 2022

27

Management’s Discussion and Analysis

Section V: Development Activities, Products and Programs

Table 19: Net Commitments of Grants by Region
In millions of U.S. dollars
For the fiscal year ended June 30,2022% of total

2021% of total

7,515

57

3,434

26

6,984

58

3,055

25

East Asia and Pacific

634

379

5

112

1

522

Europe and Central Asia
Latin America and the Caribbean

465

3

349

3

116

496

4

147

1

349

Middle East and North Africa

655

5

638

5

17

South Asia

34

*

836

7

(802)

13,233100

12,121100

Eastern and Southern Africa$

Western and Central Africa

Total

$

* Indicates percentage less than 0.5%.

28

IDA Management’s Discussion and Analysis: June 30, 2022$$

Variance
$

$

531

1,112

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

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

Guarantees
IDA offers both project-based and policy-based guarantees. These guarantees are available for projects and programs
in member countries to help mobilize private financing for development purposes. IDA’s guarantees are partial innature as they are intended to cover risks only to the extent necessary to obtain the required private financing, taking
into account country, market and, if appropriate, project circumstances. IDA’s guarantees require a sovereign counterguarantee and indemnity, comparable to the requirement of a sovereign guarantee for IDA lending to sub-sovereignand non-sovereign borrowers. See Table 20 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 20: Types of Guarantees
Project-based
guarantees

Policy-based
guarantees

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

Loan guarantees: these cover loan-related de t ser ice defaults caused y the go ernment’s failure
to meet specific payment and/or performance obligations arising from contract, law, or regulation. Loanguarantees include coverage for debt service defaults on: (i) commercial debt, normally for a private
sector project; and (ii) a specific portion of commercial debt irrespective of the cause of such default,
normally for a public-sector project.

2.

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

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

Table 21: Pricing for IDA’s Project-Based and Policy-Based Guarantees, effective July 1, 2022
Guarantees on Concessional Terms
Guarantees on Non-Concessional Terms
Private Projects
Public Projects
Private Projects
Public Projects
Front-end fee
N.A.
N.A.
25 bps
25 bps
Initiation fee a
15 bpsN.A.
15 bpsN.A.
bProcessing fee
Up to 50 bps
N.A.
Up to 50 bps
N.A.
Standby fee
0 bps
0 bps
25 bps
25 bpsGuarantee fee
75 bps75 bps50-100 bps c
50-100 bps ca. The Initiation fee is 15 basis points of the guaranteed amount or $100,000, whichever is greater.
b. The processing fee is determined on a case-by-case basis.
c. Based on the weighted average maturity of the guarantee.
Charges

Guarantee Exposure
IDA’s guarantee exposure 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 $638 million of exposure under PSW guarantees as of June 30,
2022 ($484 million — June 30, 2021). See Section III: IDA’s Financial Resources. For additional information, seeNotes to the Financial Statements for the year ended June 30, 2022, Notes D – Loans and Other Exposures and Note
G – Transactions with Affiliated Organizations.
In millions of U.S. dollars
As of June 30,

2022

Guarantee Exposure
Maximum potential undiscounted future payments

$

1,845
1,869

2021
$

1,998
2,029

IDA Management’s Discussion and Analysis: June 30, 2022

29

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

Other Financial Products and Services
IDA facilitates access to risk management solutions to mitigate the financial effects of natural disasters for borrowing
members. Financial solutions can include disaster risk financing through catastrophe swaps, insurance and reinsurance
contracts, and regional pooling facilities.
In order to promote countries’ resilience to disasters and expand the range of IDA’s crisis instruments, in IDA18,
members endorsed the introduction of the Catastrophe Deferred Draw-Down Option (CAT-DDO). The CAT-DDO isa contingent credit line that provides immediate liquidity to countries in the aftermath of a catastrophe and serves as
early financing while funds from other sources such as bilateral aid or reconstruction loans are being mobilized. CATDDOs are intended to enhance IDA countries’ capacity to plan for and manage crises. As of June 30, 2022, the amountof CAT DDOs disbursed and outstanding was $359 million (compared to $388 million as of June 30, 2021), and theundisbursed amount of effective CAT DDOs was $53 million, compared to $56 million a year earlier.

Grant Making Facilities
Grant-Making Facilities (GMFs) are complementary to IDA’s work. In FY22, IDA recorded $19 million under thisprogram in accordance with the cost sharing agreement with IBRD (FY21 - $20 million). These amounts are reflected
in Non-Interest Expenses - Other in IDA’s Statement 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 forgiveness of 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 of eligible loans upon
qualifying borrowers reaching the HIPC Completion Point. Both of the initiatives are part of a global effort focusedon heavily indebted poor countries with strong policy performance. The initiatives aim to reduce the external debt ofeligible countries as part of a broader poverty reduction strategy, whilst safeguarding the long-term financial capacityof 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 andadjusted to reflect the impact of any changes.
During FY22, HIPC debt relief was provided on $30 million of loans ($9 million in FY21). There was no HIPC debt
relief on service charges in FY22 or FY21. On a cumulative basis, debt relief has been provided on $2.2 billion ofloans and $335 million of service charges under HIPC as of June 30, 2022.
During FY22 and FY21, 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, 2022. The provision for the debt relief wasrecorded at the beginning of the MDRI Initiative.

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

Trust Fund 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

30

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programsto achieve development goals that cannot be addressed effectively by any single member, given their complexity,
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 $613 million in FY22 ($553 million in FY21) of trust fund program funds.
Recipient-Executed Trust Funds (RETFs): Funds are provided to a third party, normally in the form of project grant
financing, and are supervised by IDA.
Financial Intermediary Funds (FIFs): IDA, as a trustee, administrator, or treasury manager, offers specificadministrative or financial services with a limited operational role. Arrangements include the administration of debt
service trust funds, fiscal agency funds and other more specialized limited fund management roles.
IDA 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 FY22, IDA’s share of revenue and fees from Trust Fund administration activity was $43 million ($38 million
in FY21). For additional information, see Notes to the Financial Statements for the year ended June 30, 2022, Note
H-Trust Funds Administration.
As noted in the discussion of Trust Fund activities above, IDA, alone or jointly with one or more of its affiliatedorganizations, administers on donors’ behalf funds restricted for specific uses. Such administration is governed byagreements with donors, who include members, their agencies, and other entities. These funds are held in trust andare not included on IDA’s Balance Sheet, except for $707 million of undisbursed third-party contributions made to
IDA-executed trust funds, which are recognized on the Balance Sheet. These amounts are included in Other assets
and the corresponding liabilities are included in Accounts payable and miscellaneous liabilities on the Balance Sheet.
The cash and investment assets held in trust by IDA as administrator and trustee as of June 30, 2022, and June 30,
2021, are summarized in Table 22.
Table 22: Cash and Investment Assets 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
2022
2021
38
$
44
1,004
1,025
1,855
2,365
285
286
5,800
5,365
8,982
$
9,085

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 FY22, income relating to reimbursableadvisory services was $41 million (FY21 - $46 million).

IDA Management’s Discussion and Analysis: June 30, 2022

31

Management’s Discussion and Analysis

Section VI: Other Development Activities and Programs

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 FY22 (FY21 - $15 million), which was included in net non-interest expenses – GAAP
basis. See Table 12.
Restrictions are released once the funds are used for the purposes specified by donors. In FY22, there was a release of$17 million (FY21 - $21 million).

32

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section VII: Investment Activities

Section VII: Investment Activities
As of June 30, 2022, IDA’s net investment portfolio totaled $39.6 billion (Figure 11). See the Notes to the Financial
Statements for the year ended June 30, 2022, Note C – Investments.
Figure 11: Net Investment Portfolio
In billions of U.S. dollars
Trading Portfolio
40

0.6

Non-trading Portfolio
0.4
0.5

30
20

35.0

37.4

39.2

Jun 20Jun 21

Jun 22100Investments – 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 toearn reasonable investment returns, while ensuring timely availability of funds for future cash flow requirements,
including disbursements for loans, grants, debt service, and administrative expenses.
Table 23: Investments-Trading Portfolio Composition
In millions of U.S. dollars
As of June 30,

2022

Investments-trading portfolio
Operational
StableDiscretionary
Total

$

$

15,92922,734552
39,2152021$$

12,836
24,59837,434As of June 30, 2022, $31.0 billion (approximately 80% of total volume) was due to mature within six months, ofwhich $12.3 billion was expected to mature within one month.
IDA’s total return on its investments-trading portfolio for FY22 (excluding unrealized mark-to-market gains / losses
on PEBP assets) was 0.26%, compared to 0.25% in FY21, primarily due to higher interest revenue resulting fromincrease in both average interest rates and average portfolio balance in FY22, partially offset by higher unrealized
mark-to-market losses in FY22 compared to FY21. The unrealized mark-to-market losses in FY22 primarily reflected
the increase in yield curves of long-term EUR government bonds during the year.
Table 24 provides a breakdown of the average balances and returns of IDA’s investments-trading portfolio. For details
on returns of the total portfolio, refer to Section IV: Financial Results.
Table 24: Average Balances and Returns by Sub-Portfolio
In millions of U.S. dollars, except rates in percentages
FY22
Sub Portfolios
Average Balance
Operational$
16,136
Stable23,959Discretionary a
167
40,262
Total$

Return
0.25%
0.26%
0.26%

$

$

FY21
Average Balance
9,557
25,7088735,309Return
0.23%
0.23%
0.26%
0.25%

a. Discretionary portfolio was discontinued between December 2020 and September 2021.

IDA Management’s Discussion and Analysis: June 30, 2022

33

Management’s Discussion and Analysis

Section VII: Investment Activities

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

Government and Agency Obligations.

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

•

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

•

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

•

Exchange-traded options and futures.

IDA’s prudential minimum liquidity policy ensures that it holds sufficient liquidity. The prudential minimum liquidity
level is set at 80% of 24 months of projected net outflows. For FY22, the prudential minimum was $19.3 billion. The
prudential minimum for FY23 has been set at $20.8 billion. See Section IX: Risk Management for details on how IDA
manages liquidity risk.

Investments - Non-Trading Portfolio
During FY15, with the proceeds of a concessional loan from a member, IDA purchased a debt security issued by the
IFC. IDA elected to measure the security at fair value, so that the measurement method could be consistently applied
to all its investments. The changes in fair value for this security are reflected in the Statement of Income. As of June30, 2022, the investments non-trading portfolio had a fair value of $346 million ($487 million in FY21). See Notes to
the Financial Statements for the year ended June 30, 2022, Note C – Investments.

34

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section VIII: Borrowing Activities

Section VIII: Borrowing Activities
Concessional Partner Loans
Concessional partner loans (CPL) continue as a source of funding, whereby the borrowing terms of the concessionalloans from members aim to follow the concessional features of IDA’s loans.
The maturities of the CPL are either 25 or 40 years to match the terms of IDA’s loans, with a grace period of 5 years
for a 25-year loan and 10 years for the 40-year loan. In addition, beginning in FY22, IDA had CPL with maturity of
50 years and a grace period of 10 years. The loans have an all-in SDR equivalent coupon of up to one percent.
Voting rights are allocated to members who provide concessional loans following the drawdowns by IDA, and are
based on the cash paid, computed as the derived grant element of the loan. The grant element, which is paid in cash
and recorded as equity, is a function of the terms of the loan and the discount rate agreed upon during the replenishment
discussions.
SDR Discount rates
Maturity
25-year40-year50-yearGrace period
5 years
10 years
10 years

IDA19

IDA20

2.25%
2.57%
-

1.41%
1.79%
1.84%

The decrease of $0.7 billion in concessional partner loans outstanding was primarily due to translation adjustment
gains. Interest expense associated with these loans was $144 million in FY22 (FY21 - $149 million). See Table 25.

Market Debt
IDA started to issue bonds in the international capital markets in 2018. In FY22, IDA continued to extend its
benchmark curve and issued bonds with longest maturity of 20 years. As of June 30, 2022, market borrowings recorded
at fair value were $19.7 billion, a decrease of $0.9 billion compared to June 30, 2021, primarily due to translation
gains during the year. Beginning in July 2021, IDA issued long-term fixed rate bonds recorded at amortized cost to
fund its fixed rate loans. See Table 25.
Table 25: Borrowings
In millions of U.S. dollars, except rates in percentages

Market debt, at fair valueMarket debt, at amortized cost
Concessional partner loans
Total

Outstanding as of June 30,
2022
2021
$
19,718$20,555
6,201
6,980
7,759
$
32,899$28,314

Interest expense a
FY22
FY21
$ 152
$ 95
14
144
149
$ 310
$ 244

Weighted average rate
FY22
FY21
1.00%
0.65%
0.86%
1.99%
1.90%
1.17%
0.99%

a. Excludes interest revenue/expenses associated with borrowings swaps and repurchase agreements - $61 million in FY22 (FY21–$57 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, 2022

35

Management’s Discussion and Analysis

Section VIII: Borrowing Activities

Figure 12: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2022

Borrowings including Derivatives

Borrowings excluding Derivatives
Others3%

GBP
JPY 11%
9%

JPY
9%
USD
50%

EUR
30%

GBP
18%

USD
40%

EUR
30%

Figure 13: Medium- and Long-Term Borrowings Issued by Currency during the year, excluding Derivatives

June 30, 2022

June 30, 2021

NOK 6%USD 3%EUR 22%
GBP 21%

USD 64%

GBP 14%

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 short-termborrowings. The agreements are secured predominantly by high quality collateral, including government issued debt,
and are used both to enhance returns and for liquidity management purposes.
As of June 30, 2022, and June 30, 2021, there were no securities sold under repurchase agreements or any securities
lent under securities lending agreements. During FY22, the securities sold under repurchase agreements or any
securities lent under securities lending agreements were immaterial with the weighted average rate of 0.04%. In FY21,
the average monthly balance during the year was $9 million and the maximum month-end balance was $107 million
with the weighted average rate of 0.16%.

Contractual Obligations
In conducting its business, IDA takes on contractual obligations that may require future payments mainly associatedwith IDA’s borrowings. See Notes to the Financial Statements for the year ended June 30, 2022, Note E – Borrowings– Table E6. These contractual obligations exclude the following obligations reflected on IDA’s balance sheet:
undisbursed loans, amounts payable for currency and interest rate swaps, amounts payable for investment securities
purchased, guarantees, and cash received under agency arrangements.

36

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Section IX: Risk Management
Risk Governance
IDA’s risk management processes and practices continually evolve to reflect changes in activities in response tomarket, credit, product, operational, and other developments. The Board, particularly Audit Committee members,
periodically review trends in IDA’s risk profiles and performance, and any major developments in risk management
policies and controls.
Management believes that effective risk management is critical for IDA’s overall operations. Accordingly, the risk
management governance structure is designed to manage the principal risks IDA assumes in its activities, and supports
management in its oversight function, particularly in coordinating different aspects of risk management and inconnection with risks that are common across functional areas.
IDA’s financial and operational risk governance structure is built on the “three lines model” where:•

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

The Vice President and WBG Chief Risk Officer (CRO) provides direction, challenge, and oversight overfinancial and operational risk activities, and•Internal Audit provides independent oversight.

IDA’s risk management process comprises risk identification, assessment, response, and risk monitoring andreporting. IDA has policies and procedures under which risk owners and corporate functions are responsible for
identifying, assessing, responding to, monitoring, and reporting risks.
Figure 14: Financial and Operational Risk Management Structure

3 LineCRO

2 LineRisk Oversight

Risk Coverage

Risk ProcessndFinancial Risk

Risk OwnersrdInternal Audit

Operational Risk

stBusiness Units

Identify

AssessRespond

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

IDA Management’s Discussion and Analysis: June 30, 2022

37

Management’s Discussion and Analysis

Section IX: Risk Management

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 for theliquid asset and derivative portfolios, within applicable policy and guideline limits.

•

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 risk in
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 business continuity management, and enterprise risk management functions and corporate
insurance.

Risk Committees
Figure 15: Management Risk Committee Structure for Financial and Operational Risks

Financial Risk
FRC
Finance and Risk Committee
Chair: MDCFO

ALCOAsset and Liability
Management Committee
Chair: MDCFONBC
New Business Committee

Operational Risk
ERCEnterprise Risk Committee
Chair: MDCAO

ORC
Operational Risk Committee

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 to financial
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,

38

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

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 management of IDA.
The New Business Committee (NBC) is a standing subcommittee of the FRC. The NBC provides advice, guidance,and recommendations to the FRC, by performing due diligence over new financial products or services to ensure thatmanagement has a full understanding of the rationale, costs, risks and rewards of the product or service being
considered.
Asset Liability Management Committee (ALCO), a Vice President level committee chaired by the MDCFO
provides a high-level forum to ensure prudent balance sheet management of IDA by: a) monitoring its financial
positions and ALM activities for compliance with its respective guidelines, policies and procedures, including
borrowing and investment activities; b) identifying and providing recommendations on emerging ALM issues for
IDA, as well as those related to capital, balance-sheet planning, and financial sustainability; and c) serving as
reviewing and recommending body for ongoing decisions as part of implementing the ALM policies and proceduresof IDA, including those that impact lending rates and net income.

Operational Risk Committees:
The Enterprise Risk Committee (ERC) is a 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. ERC’s scope comprises of: 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 andmethodologies; 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 and non-financial risks.
Operational Risk Committee (ORC) is the main governance committee for operational risk and provides a mechanism
for an integrated review and response across IDA units on operational risks associated with people, processes, andsystems 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 and events on a quarterly
basis to ensure that appropriate risk-response measures are taken and reviewing and concluding on IDA’s overall
operational risk profile. The ORC is chaired by the CROVP and escalates significant risks and decisions to the FRC
and ERC.

Management o IDA’s Risks
IDA assumes financial risks in order to achieve its development and strategic objectives. IDA’s financial risk
management framework is designed to enable and support the institution in achieving its goals in a financiallysustainable manner. IDA manages credit, market, and operational risks for its financial activities which includelending, borrowing, and investing (Table 26). The primary financial risk to IDA is the country credit risk inherent in
its loan and guarantee portfolio. IDA is also exposed to risks in its liquid asset and derivative portfolios, where themajor risks are interest rate, exchange rate, commercial counterparty, and liquidity risks. IDA’s operational risk
management framework is based on a structured and uniform approach to identify, assess, and monitor key operationalrisks across business units.

IDA Management’s Discussion and Analysis: June 30, 2022

39

Management’s Discussion and Analysis

Section IX: Risk Management

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

How the risk is managed

Country Credit Risk

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

Counterparty Credit Risk

Counterparty credit limits and collateral.

Market Risk
Interest Rate Risk

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

Exchange Rate Risk

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

Liquidity Risk

Prudential minimum liquidity level.

Operational Risk

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

Geopolitical events and COVID-19
Ukraine
The war in Ukraine that began in February 2022 has negatively impacted regional and global financial markets andeconomic conditions. It has also created significant needs for humanitarian and other critical support.
On April 29, 2022, IDA’s Board approved an increase of the IDA19 commitment authority by $1 billion to support
Ukraine, a country without eligibility for IDA financing, on an exceptional basis. This $1 billion extraordinary
financing will be on non-concessional terms and carry a shorter maturity to provide fast-disbursing support forsustaining institutional and civil service capacity. As of June 30, 2022, $26 million had been disbursed. As of June30, 2022, IDA had no lending operations or other exposures to the Russian Federation.
COVID-19
As a result of the ongoing COVID-19 pandemic, IDA continues to respond to client needs and operate its core business
functions effectively by utilizing technology for remote work, where needed. IDA will continue to prioritize the healthand safety of its staff through mitigation measures, including vaccination, masking, and testing.
As of June 30, 2022, despite the broad impact of geopolitical events and the COVID-19 pandemic on macroeconomic
conditions, IDA had sufficient resources to meet its liquidity requirements and continues to have access to capital
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 to manage theeffect of possible severe market movements.
IDA’s capital remains adequate and above the zero percent policy minimum as indicated by the DSC ratio (Table 27).
As of the reporting date, country credit risk and counterparty credit risk remain in line with the existing governanceframework and established credit limits. The loan loss provisions include IDA’s current assessment of country credit
risk. The fair values of related financial instruments reflect counterparty credit risk in IDA’s portfolios. Developmentsin the market continue to be closely monitored and managed.
IDA continues to monitor associated risks and will mitigate its exposures and risks in line with the existing risk
governance framework.

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 the current
portfolio. IDA is required, by the Board, to keep the DSC at levels greater than or equal to zero percent. The DSC iscalculated 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 for loan losses andother 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’s concessional loan portfolio
in present value terms using market interest rates. This allowance is calculated using a stressed interest rate to account40

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

for a potential future rise in market interest rates. In addition, TRR includes capital requirements to account fordevelopment 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 an extra
buffer in the amount of 10 percent of TRA.
As of June 30, 2022, the DSC was 26.4%, lower by 4.0 percentage points compared with June 30, 2021 (30.4%). The
decrease in ratio is mainly due to a higher TRR. The increase in TRR was primarily due to higher capital requirements
for conditional development grants approved but not yet expensed. IDA’s capital continues to be adequate to support
its operations. See Table 27.
Table 27: Deployable Strategic Capital Ratio
In billions of U.S. dollars except ratios in percentages
As of June 30,

2022

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

2021

183.5
116.7
18.4

$

48.4

$

26.4%

Variance

185.7
110.6
18.6

$

56.5

$

30.4%

(2.2)
6.1
(0.2)
(8.1)
(4.0%)

Asset/Liability Management
On July 1, 2021, IDA implemented an interim ALM policy which, under specific criteria, allows funding fixed rateloans with long-term fixed rate market debt and CPL (both reported at amortized cost), as part of IDA’s interest raterisk management to match debt characteristics with that of the loan portfolio. For more details, see Notes to the
Financial Statements for the year ended June 30, 2022, 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, 2022, Note F - Derivative Instruments.

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

•

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

•

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

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.

IDA Management’s Discussion and Analysis: June 30, 2022

41

Management’s Discussion and Analysis

Section IX: Risk Management

Country Credit Risk
IDA’s lending management framework encompasses the long-standing PBA mechanism and allocation frameworkagreed at each replenishment, complemented by additional considerations required when accessing debt markets toensure adherence to risk management (capital adequacy) requirements.
While the PBA framework was not originally intended as a credit quality metric, it incorporates factors related tocountry credit risk. The PBA determines the volume of concessional IDA resources allocated to each country, basedon performance in implementing policies that promote economic growth and poverty reduction, as assessed under theCountry Policy and Institutional Assessment (CPIA). The CPIA includes economic management criteria, such as fiscal
policy and debt policy and management.
In addition to these considerations in the PBA, IDA assesses the country credit risk of all its borrowers. IDA produces
credit risk ratings for all its borrowing countries, which reflect country economic, financial, and politicalcircumstances, and also considers environmental, social and governance (ESG) risk factors. Based on these risk
ratings, to manage overall portfolio risk, the allocation outcomes of the PBA and other mechanisms are reviewed toensure that they are compatible with the Deployable Strategic Capital Framework and Single Borrower Limit.
Single Borrower Limit
Portfolio concentration risk, which arises when a small group of borrowing countries account for a large share of loans
outstanding, is a key consideration for IDA. Concentration risk is managed through the SBL, which caps exposure to
any single borrowing country at 25 percent of equity, in line with the Basel-based maximum exposure limit.
For FY23, the SBL has been set at $45 billion (25 percent of $178.7 billion of equity as of June 30, 2022), largely
unchanged compared to FY22. Currently, the maximum country exposure levels compatible with IDA’s overall capital
adequacy target are lower than the SBL for all IDA-borrowing countries. As a consequence, the SBL is not currently
a constraining factor.
As of June 30, 2022, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure (Figure16). Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans,
as well as disbursement profiles and projected new loans and guarantees.
Figure 16: Country Exposures as of June 30, 2022
In billions of U.S. dollars

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

19.7
18.0
15.8
13.0
12.9
11.0
10.4
8.4
5.7
4.4
0

2

4

6

8

10

12

14

16

18

20

22

Debt Relief
IDA has participated in two comprehensive debt relief initiatives, HIPC and MDRI, adopted by the global
development community to reduce the debt burdens of developing countries. In each case, IDA agreed to provide debt
relief in return for future compensation from members for forgone reflows, ensuring that IDA’s financial capacity
would not be reduced. For a borrower to be eligible for debt relief on its loans with IDA, it is required to maintainmacroeconomic stability, carry out key structural and social reforms, and maintain all loans in accrual status.
Expected Losses, Overdue Payments and Non-Performing Loans
When a borrower fails to make payments on any principal, interest, or other charges due to IDA, IDA may suspend
disbursements immediately on all loans and grants to that borrower. IDA’s current practice is to exercise this option
using a gradual approach (Table 28). These practices also apply to member countries eligible to borrow from both
IDA and IBRD, and whose payments on IBRD loans may become overdue. It is IDA’s practice not to reschedule

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Management’s Discussion and Analysis

Section IX: Risk Management

service charges, interest or principal payments on its loans or participate in debt rescheduling agreements with respect
to its loans. As of June 30, 2022, two of the IDA borrowing countries in the accrual portfolio had overdue payments
beyond 45 days.
Table 28: Treatment of Overdue Payments

Overdue by 30 days

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

Overdue by 45 days

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

Overdue by 60 days

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

Overdue by morethan six months

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

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

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

In the past, on an exceptional basis, IDA financed through concessional loans and grants the following regional
projects, where participation of a country with overdue payments was crucial to the success of the regional project.
• In April 2017, the Kenya Displacement project ($103 million) through Intergovernmental Authority on
Development (IGAD) that included financing for Somalia, 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 assessmentof borrowers’ ability and willingness to repay IDA on time and in full.

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Management’s Discussion and Analysis

Section IX: Risk Management

As of June 30, 2022, IDA had $178.1 billion of loans outstanding, of which loans in nonaccrual status represent 0.5%.
IDA’s total provision for losses on loans and other exposures was $4.8 billion, which represents a provisioning rateof 1.9% of the underlying exposures ($4.9 billion as of June 30, 2021, 2.0% of the underlying exposures). For asummary of countries with loans or guarantees in nonaccrual status as of June 30, 2022, see Notes to the Financial
Statements for the year ended June 30, 2022, Note D–Loans and Other Exposures.
Commercial Counterparty Credit Risk
Commercial counterparty credit risk is the risk that counterparties fail to meet their payment obligations under theterms of the contract or other financial instruments. Effective management of counterparty credit risk is vital to thesuccess of IDA’s funding, investment, and asset/liability management activities. The monitoring and management ofthese risks is continuous as the market environment evolves.
IDA mitigates the counterparty credit risk from its investment and derivative holdings through the credit approval
process, the use of collateral agreements and risk limits, and other monitoring procedures. The credit approval process
involves evaluating counterparty and product specific creditworthiness, assigning internal credit ratings and limits,and determining the risk profile of specific transactions. Credit limits are set and monitored throughout the year.
Counterparty exposure is updated daily, taking into account current market values of assets held, estimates of potential
future movements of exposure for derivative instruments, and related counterparty collateral agreements. Collateral
posting requirements are based on thresholds driven by public credit ratings. Collateral held includes cash and highly
rated liquid investment securities. Commercial credit risk management includes ESG related assessments in theapproval and monitoring of higher exposure counterparties 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. 74% of these investments are with issuers and counterparties
rated triple-A or double-A (Table 30).
Derivative Instruments
In the normal course of its business, IDA enters into various derivative instruments to manage foreign exchange andinterest rate risks. These instruments are also used to help borrowers to manage their financial risks. Derivativetransactions are conducted with other financial institutions and, by their nature, entail commercial counterparty credit
risk.
While the volume of derivative activity can be measured by the contracted notional value of derivatives, notional
value is not an accurate measure of credit or market risk. IDA uses the estimated replacement cost of the derivative
instruments, or potential future exposure (PFE), to measure credit risk with counterparties.
Under IDA’s mark-to-market collateral arrangements, IDA receives collateral when mark-to-market exposure isgreater than the ratings-based collateral threshold. As of June 30, 2022, IDA received $772 million of cash collateral
for its derivative transactions (Nil - June 30, 2021).
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, 2022,
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 financing
model. Issuer and product investment eligibility and risk parameters relative to benchmarks are core components ofthese Guidelines. The Guidelines also include a consultative loss limit to reflect a level of tolerance for the risk ofunderperforming the benchmark in any fiscal year and a duration deviation metric. Clear lines of responsibility forrisk monitoring and compliance are highlighted in the Guidelines. Credit risk appetite is conveyed through specificeligibility criteria (Table 29). IDA has procedures in place to monitor performance against this limit and potential
risks, and it takes appropriate actions if the limit is reached. All investments are subject to additional conditions
specified by the market and counterparty risk department, as deemed necessary.

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Section IX: Risk Management

Table 29: Eligi ility riteria or IDA’s Investments
Eligible Investments a
Sovereigns

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

Agencies

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

Corporates and asset-backed
securities

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

Time deposits b

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

Commercial paper

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

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

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

Collateral assets

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

a. 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 guaranteed bybanks or other financial institutions.

The credit quality of IDA’s investment portfolio remains in the upper end of the credit spectrum with 74% of theportfolio rated AA or above as of June 30, 2022, reflecting IDA’s continued preference for highly-rated securities andcounterparties across all categories of financial instruments. Total commercial counterparty credit exposure, net ofcollateral held, was $40,376 million as of June 30, 2022.
Commercial Counterparty Credit Risk Exposure
As a result of IDA’s use of mark-to-market collateral arrangements for swap transactions, its residual commercial
counterparty credit risk exposure is concentrated in the investment portfolio, in instruments issued by sovereign
governments and non-sovereign holdings (including agencies, asset backed securities, corporates, and time deposits).
(See Table 30).
Table 30: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
In millions of U.S. dollars, except rates in percentages
Counterparty Rating a
AAA
AA
A
Total

Counterparty Rating a
AAA
AA
A
Total

$

$

$

$

As of June 30, 2022
Sovereigns Non-Sovereigns Net Swap Exposure
Total Exposure
10,567 $5,038 $$
15,6052,226
11,949155
14,330
4,256
5,901
284
10,441
17,049 $22,888 $439$
40,376% of Total
39 %
35
26
100 %

As of June 30, 2021
Sovereigns Non-Sovereigns Net Swap Exposure
Total Exposure
9,345 $
6,023 $$
15,368
2,519
7,438
179
10,136
7,571
4,378
68
12,017
19,435 $17,839 $247$
37,521% of Total
41 %
27
32
100 %

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

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, 2022, Note F - Derivative Instruments.

IDA Management’s Discussion and Analysis: June 30, 2022

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Management’s Discussion and Analysis

Section IX: Risk Management

Credit and Debit Valuation Adjustments
Most outstanding derivative positions are transacted over-the-counter and therefore valued using internally developed
valuation models. For commercial and non-commercial counterparties where IDA has a net exposure (net receivable
position), IDA calculates a Credit Valuation Adjustment (CVA) to reflect credit risk. For net derivative positions withcommercial and non-commercial counterparties where IDA is in a net payable position, IDA calculates a Debit
Valuation Adjustment (DVA) to reflect its own credit risk.
The CVA is calculated using the fair value of the derivative contracts, net of collateral received under credit support
agreements, and the probability of counterparty default based on the Credit Default Swaps (CDS) spread and, whereapplicable, proxy CDS spreads. IDA does not currently hedge this exposure. The DVA calculation is generally
consistent with the CVA methodology and incorporates IDA’s own credit spread as observed through the CDS market.
As of June 30, 2022, IDA recorded a CVA on its balance sheet of $35 million, and a DVA of $19 million.

Market Risk
IDA is exposed to changes in interest and exchange rates. The introduction of market debt financing into IDA’s
business model from FY18 presents additional exposures.
IDA uses derivatives to manage its exposure to various market risks. Derivatives are used to align the interest andcurrency 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 17 below illustrates the use of derivatives for market borrowing portfolios. Loan, investment and borrowing
portfolios are largely maintained in SDR and its component currencies.
Figure 17: Use of Derivatives for Market Borrowings

Interest Rate Risk
IDA is exposed to interest rate risk due to mismatches between its assets (loan and investment portfolios) and its
liabilities (borrowing portfolio) both in terms of maturity and instrument type. Despite the rising interest rate, low andnegative fixed interest rates remain a challenge for the investment of the liquid asset portfolio. Given IDA’s lengthy
disbursement profile, the duration of IDA’s loans is relatively long (12 years). As of June 30, 2022, IDA’s investmenttrading portfolio (liquid asset portfolio) had a duration of four months.
Under its integrated financing model, IDA employs the following strategies to manage interest rate risk:• The capital adequacy policies factor in the sensitivity to interest rates.
• Matching interest rates between assets and related funding to minimize open interest rate positions.
• The funding risk related to the mismatch between the maturity profile of the debt funding and the related assets ismonitored through duration measurements and adjustments to capital requirements to cover this risk.
Alternative Reference Rate
In July 2017, the Financial Conduct Authority (FCA), the regulator of the London Interbank Offered Rate (LIBOR),
announced that it would no longer compel panel banks to submit rates required to calculate LIBOR after December
31, 2021, and therefore, market participants, including IDA and its borrowers, needed to move to alternative reference
rates.

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Section IX: Risk Management

In March 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator orwill no longer be representative, as follows:
Type of LIBOR

Setting

Date of cessation

GBP LIBOR
EUR LIBOR
CHF LIBOR

All settings

December 31, 2021

JPY LIBOR
USD LIBOR

1-week, 2-month

USD LIBOR

Remaining settings, including 6-month

June 30, 2023

In consideration of the regulatory 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 affected byalternative reference rates.
Most of IDA’s loans are on fixed rate concessional terms. Therefore, the impact of the LIBOR transition on IDA loans
is limited. For IDA’s LIBOR based non-concessional and hard-term loans, in FY20, the Board endorsed an omnibus
amendment and notification process with borrowers for certain existing loan agreements to address inadequate
fallback provisions for LIBOR replacement, allowing IDA to maintain the principles of fairness and equivalence forany replacement reference rate. IDA’s non-concessional loans were denominated in USD, EUR, GBP, and JPY as ofDecember 31, 2021. IDA adopted the following alternative reference rates: Secured Overnight Financing Rate (SOFR)
for USD denominated loans, Euro Interbank Offered Rate (EURIBOR) for EUR denominated loans, Sterling
Overnight Index Average (SONIA) for GBP denominated loans and Tokyo Overnight Average Rate (TONA) for JPY
denominated loans. Through these processes, the vast majority of its borrowers’ loans were ready for transition by
December 31, 2021.
Effective January 1, 2022, IDA offers new non-concessional loans with alternative reference rates and ceased to offer
LIBOR based loans. The switchover of existing variable spread and non-USD fixed spread loans to alternativereference rates began in January 2022, at the loan reset dates. The remaining USD fixed spread loans will betransitioning beginning in July 2023, as the loans reset. Out of the total loans outstanding of $178,091 million as ofJune 30, 2022, approximately 0.5% have transitioned and 1.4% are still subject to transition to alternative reference
rates. The remaining 98.1% are not subject to transition to alternative reference rates as they are on fixed-rate terms.
As of June 30, 2022, IDA’s borrowing portfolio before associated derivatives carries only fixed interest rates and is
not subject to transition to alternative reference rates.
Out of the total derivative portfolio notional as of June 30, 2022, approximately 5% have transitioned and 35% aresubject to transition to alternative reference rates. The remaining 60% of the total derivative portfolio notional are notsubject to transition to alternative reference rates. For the vast majority of the derivative portfolio subject to transition,
IDA either has sufficient provisions in the derivative agreements with its counterparties or has adhered to theInternational Swaps and Derivatives Association (ISDA) 2020 IBOR Fallbacks Protocol (IBOR Protocol) or works
bilaterally with counterparties to ensure smooth transition 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 to which
IDA is exposed and to ensure an orderly transition to alternative reference rates.
Exchange Rate Risk
IDA faces foreign exchange rate risk as a result of the currency mismatch between its commitments for loans andgrants, which are mainly denominated in SDRs; equity contributions from members, which are typically denominatedin 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, as measured by the capital adequacy framework,from exchange rate movements.

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Section IX: Risk Management

To achieve this, IDA’s balance sheet is managed in multiple currencies: SDR and the currencies comprising the SDR
basket. The exchange rate risk management methodology includes the hedging of: (i) currency risk arising fromsettlement of loan disbursements, loan repayments and donor contributions; (ii) debt funding; (iii) IDA loans; (iv)donor contributions; and (v) administrative budget.
The reported levels of its assets, liabilities, income, and expenses in the financial statements are affected by exchange
rate movements in all the currencies in which IDA transacts, relative to its reporting currency, the U.S. dollar. Thesemovements are shown as currency translation adjustments. Translation adjustments relating to the revaluation of assets
and liabilities denominated in SDR and SDR component currencies (IDA’s functional currencies), are reflected inAccumulated Other Comprehensive Income (Loss), in equity. Translation adjustments relating to non-functional
currencies are reported in IDA’s Statement of Income (see Notes to the Financial Statements for the year ended June30, 2022, Note A – Summary of Significant Accounting and Related Policies).
IDA uses currency forward contracts to convert future inflows from members’ receivables provided in national
currencies into the five currencies of the SDR basket, thereby aligning the currency composition of member
contributions with the net cash outflows relating to loans and grants, which are primarily denominated in SDR.
Liquidity Risk
Liquidity risk arises in the general funding of IDA’s activities and in managing its financial position. It includes therisk of IDA being unable to fund its portfolio of assets at appropriate maturities and rates, and the risk of being unable
to liquidate a position in a timely manner at a reasonable price.
IDA’s aggregate liquid asset holdings are kept above a specified prudential minimum to safeguard against cash flowinterruptions. The Prudential Minimum is equal to 80% of 24 months of projected net outflows. For FY22, theprudential minimum was $19.3 billion. For FY23, the prudential minimum has been set at $20.8 billion. As of June30, 2022, IDA’s liquid assets were $39.2 billion, 203% of the FY22 prudential minimum.
IDA will hold liquidity above the prudential minimum to ensure sufficient liquidity under a wide range of shock
scenarios as well as to give it flexibility in timing its borrowing transactions and to meet working capital needs.

Operational Risk
Operational risk is defined as the risk of financial loss, or damage to IDA’s reputation resulting from inadequate or
failed internal processes, people, and systems, or from external events.
IDA recognizes the importance of operational risk management activities, which are embedded in its financial
operations. As part of its business activities, IDA is exposed to a range of operational risks including physical security
and staff health and safety, data and cyber security, business continuity, and 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 affectbusiness 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.

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Section X: Critical Accounting Policies and the Use of Estimates

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

Fair Value of Financial Instruments
All fair value adjustments are recognized through the Statement of Income, except for changes in the fair value ofdebt related to IDA’s own credit, which are reported in Other Comprehensive Income. The fair values of financial
instruments are based on a three-level hierarchy.
For financial instruments classified as Level 1 or 2, less judgment is applied in arriving at fair value measures as the
inputs are based on observable market data. For financial instruments classified as Level 3, unobservable inputs areused. These require management to make important assumptions and judgments in determining fair value measures.
Derivative contracts include currency forward contracts, to-be-announced (TBA) securities, swaptions, exchange
traded options and futures contracts, currency swaps, and interest rate swaps. Plain vanilla swaps and structured swaps
are valued using the standard discounted cash flow methods using observable market inputs such as yield curves,foreign exchange rates and basis spreads.
In instances where management relies on instrument valuations supplied by external pricing vendors, there areprocedures in place to validate the appropriateness of the models used as well as the inputs applied in determining
those values.
The majority of IDA’s financial instruments which are recorded at fair value are classified as Level 1 and Level 2 asof June 30, 2022, as the inputs are based on observable market data and less judgment is applied in arriving at fairvalue measures.
On a quarterly basis, the methodology, inputs, and assumptions are reviewed to assess the appropriateness of the fairvalue hierarchy classification of each financial instrument. All the financial models used for input to IDA’s financial
statements are subject to both internal and periodic external verification and review by qualified personnel.

Provision for Losses on Loans and Other Exposures
IDA’s accumulated provision for losses on loans and other exposures reflects the expected losses inherent in its
nonaccrual and accrual portfolios after taking into consideration the expected relief under the HIPC Debt Initiativeand MDRI and any provision for losses on the buy-down of loans.
Adjustments to the accumulated provision are recorded as a charge to or a release of provision in the Statement of
Income. Actual losses may differ from expected losses due to unforeseen changes in any of the factors that affectborrowers’ creditworthiness.
The Credit Risk Committee monitors aspects of country credit risk, in particular, reviewing the provision for losses
on loans and guarantees taking into account, among other factors, any changes in exposure, risk ratings of borrowing
member countries, or movements between the accrual and nonaccrual portfolios.
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, 2022, Note A-Summary of Significant Accounting and Related
Policies and Note D- Loans and Other Exposures.

Provision for HIPC Debt Initiative and MDRI
IDA records a provision for all the estimated expected write-offs of loans outstanding for debt relief to be delivered
under the HIPC Debt Initiative and MDRI. Donors have agreed to compensate IDA through member contributions forthe foregone loan reflows under the HIPC Debt Initiative and MDRI.
The adequacy of the accumulated provision for the HIPC Debt Initiative and MDRI is based on both quantitative andqualitative analyses of various factors, including estimates of Decision and Completion Point dates of eligible
countries. IDA periodically reviews these factors and reassesses the adequacy of the accumulated provision for the
HIPC Debt Initiative and MDRI. Adjustments to the accumulated provision are recorded as a charge to or release ofprovision in the Statement of income.

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49

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls

Section XI: Governance and Internal Controls
Figure 18: Governance Structure

Board of Governors

Audit Committee

Executive
Directors

Committee on Development
Effectiveness

Budget Committee
Human Resources
Committee

President

Committee on Governanceand Executi e Directors’
Administrative Matters

Business Conduct
The WBG promotes a positive work environment in which staff members understand their ethical obligations to theinstitution. In support of this commitment, the institution has 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 to businessconduct identified during the accounting, internal control, and auditing processes.
WBG staff rules clarify and codify the staff’s obligations in reporting suspected fraud, corruption, or other misconductthat may threaten the operations or governance of the WBG. These rules also offer protection from retaliation.

General Governance
IDA’s decision-making structure consists of the Board of Governors, the Executive Directors, the President,
management, and staff. The Board of Governors is the highest decision-making authority. Governors are appointed
by their member governments for a five-year term, which is renewable. The Board of Governors may delegate
authority to the Executive Directors (referred to as the Board in this document) to exercise any of its powers, except
for certain powers enumerated in the IDA Articles. IDA has its own policies and frameworks that are carried out bystaff that share responsibilities for both IDA and IBRD.
In addition, IBRD and IDA have joint internal institutional oversight units which play an assurance role to shareholders
and management that IDA’s work is impactful and accountable, informed by best practices, and delivered to thehighest ethical standards with risk management controls and governance processes that are functioning
effectively. Expenses for these oversight units, including the Executive Directors, were $116.6 million in FY22 (and$111.7 million FY21) shared between IBRD and IDA.

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, andhe serves as a non-voting member and as Chairman of the Board.
The Board is required to consider proposals made by the President on IDA loans, grants, and guarantees and on otherpolicies that affect its general operations. The Board is also responsible for presenting to the Board of Governors, at
the Annual Meetings, audited accounts, an administrative budget, and an annual report on operations and policies andother matters.
The Board and its committees are in sessions as business requires. Each committee's terms of reference establish its
respective roles and responsibilities. As committees do not vote on issues, their role is primarily to serve the Board indischarging its responsibilities.

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Section XI: Governance and Internal Controls

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 their alignment
with the business needs of the organization.

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

Key Responsibilities
The Audit Committee is appointed by the Board for the primary purpose of assisting the Board in overseeing IDA’s
finances, accounting, risk management, internal controls, and institutional integrity. Specific responsibilities include:•
Oversight of the integrity of IDA’s financial statements.
•
Appointment, qualifications, independence, and performance of the External Auditor.
•
Performance of the Group Internal Audit Vice Presidency.
•
Adequacy and effectiveness of financial and accounting policies and internal controls and the mechanisms todeter, prevent and penalize fraud and corruption in IDA operations and corporate procurement.
•
Effective management of financial, fiduciary and compliance risks in IDA.
•
Oversight of the institutional arrangements and processes for risk management across IDA.
In carrying out its role, the Audit Committee discusses financial issues and policies that affect IDA’s financial positionand capital adequacy, with management, external auditors, and internal auditors. It also recommends the annual
audited financial statements for approval to the Board. The Audit Committee monitors and reviews developments incorporate governance and its own role on an ongoing basis.

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

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

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

IDA Management’s Discussion and Analysis: June 30, 2022

51

Management’s Discussion and Analysis

Section XI: Governance and Internal Controls•

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

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

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

External Auditors
The external auditor is appointed to a five-year term, with a limit of two consecutive terms, and is subject to annual
reappointment based on the recommendation of the Audit Committee and approval of a resolution by the Board.
Following a mandatory rebidding of the external audit contract, IDA’s Board approved the selection of Deloitte &Touche LLP as IDA’s external auditor for a five-year term from FY19 through FY23, subject to annual reappointment.
In addition, in May 2022, IDA’s Board approved Deloitte & Touche LLP as IDA’s external auditor for a second fiveyear term commencing in FY24.

Senior Management Changes
The following changes were effective January 1, 2022:•

Jingdong Hua, Vice President and Treasurer of the World Bank, retired.

•

Jorge Familiar was appointed to the role of Vice President and Treasurer of the World Bank.

•

Pamela O’Connell was appointed as the Vice President and World Bank Group Controller, succeeding Jorge
Familiar 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 materially affect,
IDA’s internal control over financial reporting. The internal control framework promulgated by the Committee ofSponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework (2013)”
provides guidance for designing, implementing, and conducting internal control and assessing its effectiveness. IDA
uses the 2013 COSO framework to assess the effectiveness of the internal control over financial reporting. As of June30, 2022, 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, 2022. 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, 2022.

52

IDA Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Appendix

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

IDA Management’s Discussion and Analysis: June 30, 2022

53

Management’s Discussion and Analysis

Appendix

List of Tables, Figures and Boxes
TablesTable 1: Results for IDA19 Sources and Uses
Table 2: Cumulative Net Commitments during the IDA19 replenishment period
Table 3: IDA20 Sources and allocation
Table 4: Utilization of PSW Commitments
Table 5: Condensed Statement of Income
Table 6: Condensed Balance Sheet
Table 7: Changes in Equity
Table 8: Provision for losses on loans and other exposures
Table 9: Net Loans Outstanding Activity
Table 10: Gross Disbursements of Loans and Grants by Region
Table 11: Revenue and Balances by Product Category
Table 12: Net Non-Interest Expenses
Table 13: Budget Anchor
Table 14: Other (Expenses) Revenue, net
Table 15: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
Table 16: Cumulative Loans approved under the Single Currency program
Table 17: Summary of Financial Terms for IDA Grants and Lending Products, effective July 1, 2022
Table 18: Net Commitments of Loans by Region
Table 19: Net Commitments of Grants by Region
Table 20: Types of Guarantees
Ta le 21: ricing for IDA’s roject-Based and Policy-Based Guarantees, effective July 1, 2022
Table 22: Cash and Investment Assets Held in Trust by IDA
Table 23: Investments-Trading Portfolio Composition
Table 24: Average Balances and Returns by Sub-Portfolio
Table 25: Borrowings
Table 26: Summary of IDA's Specific Risk Categories
Table 27: Deployable Strategic Capital Ratio
Table 28: Treatment of Overdue Payments
Ta le 29: Eligi ility Criteria for IDA’s In estments
Table 30: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating

8
9
9
13
16
17
17
18
18
18
19
21
21
22
22
26
26
27
28
29
29
31
33
33
35
40
41
43
45
45

FiguresFigure 1: IDA's Financial Business Model
Figure 2: Funding Allocation during IDA19 replenishment period
Figure 3: Allocation of IDA20 Resources
Figure 4: Overview of IDA 20 Financing Terms
Figure 5: Net Loans Outstanding
Figure 6: Net Investment Portfolio
Figure 7: Net Investment Revenue
Figure 8: Borrowings
Figure 9: Budget Anchor
Figure 10: Net Annual Commitments and share of financing categories
Figure 11: Net Investment Portfolio
Figure 12: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2022
Figure 13: Medium- and Long-Term Borrowings Issued by Currency during the year, Excluding Derivatives
Figure 14: Financial and Operational Risk Management Structure
Figure 15: Management Risk Committee Structure for Financial and Operational Risks
Figure 16: Country Exposures as of June 30, 2022
Figure 17: Use of Derivatives for Market Borrowings
Figure 18: Governance Structure

54

IDA Management’s Discussion and Analysis: June 30, 2022

7
8
10
11
18
19
19
20
22
25
33
36
36
37
38
42
46
50

Management’s Discussion and Analysis

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

2
24

IDA Management’s Discussion and Analysis: June 30, 2022

55

Management’s Discussion and Analysis

Appendix

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56

IDA Management’s Discussion and Analysis: June 30, 2022

INTERNATIONAL DEVELOPMENT ASSOCIATIONFINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS
JUNE 30, 2022
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 Sheet

66

Statement of Income

68

Statement of Comprehensive Income

69

Statement of Changes in Accumulated Deficit

69

Statement of Cash Flows70

Supplementary Information
Summary Statement of Loans

72

Statement of Voting Power and Subscriptions and Contributions

75

Notes to Financial Statements

79

IDA FINANCIAL STATEMENTS: JUNE 30, 2022 57

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

Management’s Report Regarding Effectiveness ofInternal Control over Financial Reporting
August 5, 2022
The management of the International Development Association (IDA) is responsible for the
preparation, integrity, and fair presentation of its published financial statements. The financial
statements have been prepared in accordance with accounting principles generally accepted in the
United States of America and include amounts based on informed judgments and estimates madeby management.
The financial statements have been audited by an independent audit firm, which was given
unrestricted access to all financial records and related data, including minutes of all meetings ofthe Executive Directors and their Committees. Management believes that all representations madeto the independent auditors during their audit of IDA’s financial statements and audit of its internal
control over financial reporting were valid and appropriate. The independent auditors’ reports
accompany the audited financial statements.
Management is responsible for establishing and maintaining effective internal control overfinancial reporting for financial statement presentations in conformity with accounting principles
generally accepted in the United States of America. Management maintains a comprehensive
system of controls intended to ensure that transactions are executed in accordance withmanagement’s authorization, assets are safeguarded, and financial records are reliable. The system
of internal control contains monitoring mechanisms, and actions are taken to correct deficiencies
identified. Management believes that internal control over financial reporting supports theintegrity and reliability of the external financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibilityof human error and the circumvention or overriding of controls. Accordingly, even effective
internal controls can provide only reasonable assurance with respect to financial statement
preparation. Further, because of changes in conditions, the effectiveness of internal controls mayvary over time.
IDA assessed its internal control over financial reporting for financial statement presentation in
conformity with accounting principles generally accepted in the United States of America as ofJune 30, 2022. This assessment was based on the criteria for effective internal control overfinancial reporting described in the Internal Control-Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission. Based upon thisassessment, management believes that IDA maintained effective internal control over financial
reporting presented in conformity with accounting principles generally accepted in the UnitedStates of America as of June 30, 2022. The independent audit firm that audited the financial
statements has issued an Independent Auditors Report which expresses an opinion on IDA’s
internal control over financial reporting.

58 IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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

________________________David Malpass
President________________________
Anshula Kant
Managing Director and World Bank Group Chief Financial Officer________________________
Pamela O'Connell
Vice President and World Bank Group Controller

IDA FINANCIAL STATEMENTS: JUNE 30, 2022 59

INDEPENDENT AUDITOR’S REPORT ON MANAGEMENT’S ASSERTIONREGARDING EFFECTIVENESS OF INTERNAL CONTROL OVERFINANCIAL REPORTING
Deloitte & Touche LLP
7900 Tysons One Place
Suite 800
McLean, VA 22102
USA
Tel: +1 703 251 1000
Fax: +1 703 251 3400
www.deloitte.com

INDEPENDENT AUDITOR'S REPORT
President and Board of Executive Directors
International Development Association
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of International Development Association(“IDA”) as of June 30, 2022, based on the criteria established in the Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). In our opinion, IDA maintained, in all material respects, effective internal control over financial
reporting as of June 30, 2022, based on the criteria established in the Internal Control — Integrated
Framework (2013) issued by COSO.
We also have audited, in accordance with auditing standards generally accepted in the United States ofAmerica (GAAS), the financial statements as of and for the year ended June 30, 2022 of IDA, and ourreport dated August 5, 2022, expressed an unmodified opinion on those financial statements.
Basis for Opinion
We conducted our audit in accordance with GAAS. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting
section of our report. We are required to be independent of IDA and to meet our other ethicalresponsibilities, in accordance with the relevant ethical requirements relating to our audit. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Responsibilities of Management for Internal Control over Financial Reporting
Management is responsible for designing, implementing, and maintaining effective internal control overfinancial reporting, and for its assessment about the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report Regarding Effectiveness of Internal
Control over Financial Reporting.
Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting
Our objectives are to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects and to issue an auditor’s report that includes ouropinion on internal control over financial reporting. Reasonable assurance is a high level of assurance but
is not absolute assurance and therefore is not a guarantee that an audit of internal control over financial
reporting conducted in accordance with GAAS will always detect a material weakness when it exists.
In performing an audit of internal control over financial reporting in accordance with GAAS, we:•60

Exercise professional judgment and maintain professional skepticism throughout the audit.

•Obtain an understanding of internal control over financial reporting, assess the risks that amaterial weakness exists, and test and evaluate the design and operating effectiveness of internal
control over financial reporting based on the assessed risk.

Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity’s internal control over financial reporting is a process effected by those charged withgovernance, management, and other personnel, designed to provide reasonable assurance regarding the
preparation of reliable financial statements in accordance with accounting principles generally acceptedin the United States of America. An entity’s internal control over financial reporting includes thosepolicies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America,
and that receipts and expenditures of the entity are being made only in accordance with authorizations ofmanagement and those charged with governance; and (3) provide reasonable assurance regarding
prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of theentity’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detectand correct, misstatements. Also, projections of any assessment of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.

August 5, 2022

61

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

INDEPENDENT AUDITOR'S REPORT
President and Board of Executive Directors
International Development Association
OpinionWe have audited the accompanying financial statements of International Development Association("IDA"), which comprise the balance sheets as of June 30, 2022 and 2021, and the related statements ofincome, comprehensive income, changes in accumulated deficit, and cash flows for each of the three
years in the period ended June 30, 2022, and the related notes to the financial statements (collectively
referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of IDA as of June 30, 2022 and 2021, and the results of its operations and its cash flows for eachof the three years in the period ended June 30, 2022, in accordance with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with auditing standards generally accepted in the United States ofAmerica (GAAS), IDA’s internal control over financial reporting as of June 30, 2022, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated August 5, 2022, expressed anunmodified opinion on IDA’s internal control over financial reporting.
Basis for Opinion
We conducted our audits in accordance with GAAS. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are required to be independent of IDA and to meet our other ethical responsibilities, in accordancewith the relevant ethical requirements relating to our audits. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion.
Change in Accounting Principle
As described in Note A to the financial statements, IDA changed its method of accounting for theaccumulated provision for loan losses and other exposures on July 1, 2020, due to the adoption of
Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments. Our opinion is not modified with respect to thismatter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in the United States of America, and for thedesign, implementation, and maintenance of internal control relevant to the preparation and fair62

presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about IDA’s ability to continue as agoing concern for one year after the date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance andtherefore is not a guarantee that an audit conducted in accordance with GAAS will always detect amaterial misstatement when it exists. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of thefinancial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, thatraise substantial doubt about IDA’s ability to continue as a going concern for a reasonable period oftime.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Report on Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole.
The supplementary information listed in the table of contents is presented for the purpose of additional
analysis and are not a required part of the financial statements. These schedules are the responsibility
IDA's management and were derived from and relate directly to the underlying accounting and other63

records used to prepare the financial statements. Such schedules have been subjected to the auditing
procedures applied in our audits of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used
to prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with GAAS. In our opinion, such information is fairly stated in all material
respects in relation to the financial statements as a whole.
Other Information Included in Management’s Discussion & Analysis and Financial Statements
Management is responsible for the other information included in Management’s Discussion & Analysis
and Financial Statements. The other information comprises the information included in Management’s
Discussion & Analysis and Financial Statements but does not include the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other information,
and we do not express an opinion or any form of assurance thereon.
In connection with our audits of the financial statements, our responsibility is to read the otherinformation and consider whether a material inconsistency exists between the other information and thefinancial statements, or the other information otherwise appears to be materially misstated. If, based on
the work performed, we conclude that an uncorrected material misstatement of the other information
exists, we are required to describe it in our report.

August 5, 2022

64

INTERNATIONAL DEVELOPMENT ASSOCIATIONFINANCIAL STATEMENTS
JUNE 30, 2022

65

BALANCE SHEET
June 30, 2022 and June 30, 2021

Expressed in millions of U.S. dollars
2022
AssetsDue from banks—Notes C and K
Unrestricted cash
Restricted cash$

Investments (including securities transferred under repurchase or
securities lending agreements of Nil - June 30, 2022; Nil - June 30,2021) —Notes C, G and K
Derivative assets, net—Notes C, F, G and K
Receivable from affiliated organization—Note G
Other receivables
Receivable from investment securities traded—Note C
Accrued interest and commitment charges

Loans outstanding (Summary statement of loans, Notes D, G and K)
Total loans approved
Less: Undisbursed balance (including signed loan
commitments of $61,812 million—June 30, 2022; $60,775
million—June 30, 2021)
Loans outstanding
Less: Accumulated provision for loan losses
Deferred loan income
Net loans outstanding
Other assets—Note H and I
Total assets

66

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

$

2021

662
24
686

$

470
26
496

39,82737,376

404

249

1,006

865

9
531
540

7
511
518

250,300

251,676(72,209)
178,091(3,583)(18)
174,490(70,172)
181,504(3,718)(7)
177,779

3,061

2,041

220,014$219,324

2022
Liabilities
Borrowings—Notes E and K
Market borrowings, at fair valueMarket borrowings, at amortized cost
Concessional partner loans, at amortized cost

$

2021

19,718
6,201
6,980

$

20,555
7,759

32,89928,314579

408

Payable for development grants—Note I

4,615

6,820

Payable to affiliated organization—Note G

578

561

343
2,332
2,675
41,346

73
2,272
2,345
38,448Derivative liabilities, net—Notes C, F, G and K

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

289,214322
289,536

292,210324
292,534(27,902)(3,857)257,777(38,240)(3,842)
250,452

Nonnegotiable, noninterest-bearing demand obligations on accountof members' subscriptions and contributions
Unrestricted
Restricted(10,120)(47)(11,382)(50)(10,167)(11,432)

(246)

(244)

Accumulated deficit (Statement of changes in accumulated deficit)(59,544)(59,556)

Accumulated other comprehensive (loss) income—Note J
Total equity
Total liabilities and equity(9,152)
178,668
220,014

1,656
180,876
219,324Deferred amounts to maintain value of currency holdings$$

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

67

STATEMENT OF INCOME
For the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020

Expressed in millions of U.S. dollars
2022Interest revenue
Loans, net—Note D
Investments, net—Notes C, F, G and K
Asset-liability management derivatives, net—Notes F and K

$

1,960
189
1

2021
$

2,050
147
(14)

2020
$

1,684
422
(22)

Borrowing expenses, net—Note E

(249)

(187)

(241)

Interest revenue, net of borrowing expenses

1,901

1,996

1,843

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

(278)

539

170

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

865
24
22
911

814
19
17
850

902
15
15
932

(2,238)(19)(48)(2,305)(2,406)(20)
20(2,406)(2,389)(21)(40)(2,450)

274

544

252

(2,372)(2,830)(1,475)

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

511

(372)

95

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

(104)

144

207

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

1,441
33
1,474

1,080
22
1,102

(699)
11
(688)

Non-interest expenses
Administrative—Notes G and H
Contributions to special programs—Note G
Other
Total
Transfers from affiliated organizations and others—Notes G and H
Development grants—Note I

Net income (loss)

$

12

$

(433)

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

68

IDA FINANCIAL STATEMENTS: JUNE 30, 2022$

(1,114)

STATEMENT OF COMPREHENSIVE INCOME
For the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
2022

Net income (loss)

$

2021

12

$

2020

(433)

$

(1,114)

Other Comprehensive (loss) income—Note J
Currency translation adjustments on functional currencies(10,851)

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

43

(64)

7

Comprehensive (loss) income$(10,796)

$

5,150

$

(2,633)

STATEMENT OF CHANGES IN ACCUMULATED DEFICIT
For the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
2022

Accumulated Deficit at beginning of the fiscal year$

Cumulative effect of a change in accounting principleNote D
Adjusted Accumulated Deficit at beginning of the
fiscal year

(59,556)$$

Net income (loss)
Accumulated Deficit at end of the fiscal year2021

(59,556)(59,544)$(57,207)

(802)
$

12
$

(58,321)2020(59,123)

$

(433)
$

(59,556)(57,207)(1,114)$(58,321)

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

69

STATEMENT OF CASH FLOWSFor the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
2022
Cash flows from investing activities
Loans
Disbursements
Principal repayments
Principal prepayments
Non-trading securities—Investments
Repayments
Net cash used in investing activities

Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash used in 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) losses 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
Net 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 used in operating activities
Effect of exchange rate changes on unrestricted and restricted cash70

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

2020

(16,681)6,457-$ (16,449)
6,016
51

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

124(10,258)

8,589

8,355

7,823

9,756
(101)

9,405
(96)

5,725
(43)

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

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

12,018(8,178)16(20)
17,34112(433)(1,114)278(511)(1,474)
48
105

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

(170)
(95)
688
40
133

(5,936)299
973
58(2,090)603
160
19(2,323)
(155)
(89)
533

775
(124)
(1,808)(55)(1,171)37(8,494)
(35)
190
496
686

(109)
45
(2,652)(57)(1,367)471(6,603)
53
(178)
674
496

(601)
14
(3,070)(43)(1,279)992(6,539)
(8)
536
138
$
674

$ (15,860)
6,738-

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

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

2021

$

$

$

STATEMENT OF CASH FLOWSFor the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
2022
Supplemental disclosure(Decrease) Increase 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 (HIPC) Debt Initiative
Loans prepaid—carrying value
Interest paid on borrowing portfolio$(12,505)(2,205)(2,950)
446
1,253
30
119

2021

$

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

2020

$

9
118

(1,543)
(449)
(149)
62
321
10
54
161

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

71

SUMMARY STATEMENT OF LOANS
June 30, 2022
Amounts expressed in millions of U.S. dollars

Borrower or guarantor
Afghanistan$
Albania
AngolaArmenia
Azerbaijan
Bangladesh
Benin
BhutanBolivia
Bosnia and Herzegovina
Botswana
Burkina Faso
BurundiCabo Verde, Republic ofCambodia
Cameroon
Central African Republic
Chad
China
Comoros
Congo, Democratic Republic ofCongo, Republic ofCôte d'Ivoire
Djibouti
Dominica
Dominican Republic
EcuadorEgypt, Arab Republic of
El Salvador
Equatorial Guinea
Eritrea
Eswatini
Ethiopia
Fiji
Gambia, The
Georgia
Ghana
GrenadaGuineaGuinea-Bissau
GuyanaHonduras
India
Indonesia
Iraq
JordanKenya
KosovoKyrgyz Republic
Lao People's Democratic Republic
LebanonLesotho72

Total loans
308
456
418
831
183
25,954
2,598
412
920
814
*
3,353
123
575
1,710
3,923
126
159
365
139
4,423
580
4,934
469
217
*
*
231
1
16
415
*
14,568
317
144
762
7,033
298
850
270
194
1,695
20,340534
248
206
13,630
381
1,015
1,245
95
680

$

Undisbursed balance
Loans
Signed loan
approved but
commitments
not yet signed
- $
*
5
1,547
6,482
243
1,016
22
201
1,291
116
157
667
1,037
1,144
108
76
2,327
29
247
138
2,411
253
99
3,622
49
28
17
4
856
1,471
101
13
227
91
42
57
270
468
83
536
42
238
3,149
208
25
364
514
10
71
193

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Loans
outstanding
$

308
456
418
826
183
17,925
1,339
390
719
814
*
2,062
123
459
886
1,742
126
159
365
31
2,020
304
2,385
216
118
*
*
231
1
16
415
*
10,946
240
127
758
4,706
197
610
179
95
957
19,721
534
248
164
10,243
173
626
731
85
416

Percentage of
total loans
outstanding a
0.17 %
0.26
0.23
0.46
0.10
10.06
0.75
0.22
0.40
0.46
*
1.16
0.07
0.26
0.50
0.98
0.07
0.09
0.20
0.02
1.13
0.17
1.34
0.12
0.07
*
*
0.13
*
0.01
0.23
*
6.15
0.13
0.07
0.43
2.64
0.11
0.34
0.10
0.05
0.54
11.07
0.30
0.14
0.09
5.75
0.10
0.35
0.41
0.05
0.23

SUMMARY STATEMENT OF LOANS
June 30, 2022
Amounts expressed in millions of U.S. dollars

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

Total loans
$

$

963
3,317
2,155
118
2,566
454
*
1,053
927
15
1
3,134
3,054
5,745
1,071
3,542
20,151
163
20,486
927
2
15
3,441
101
10
5,154
87
497
197
110
76
3,552
*
292
305
313
14
513
12,638
268
649
46
*
*
6,581
985
4,488
167
15,218
1,287
2,642
438
249,086

Undisbursed balance
Loans
Signed loan
approved but
commitments
not yet signed
$
29 $
300
1,332
240
649
22
543
65
136
249
49
129
150
1,394
489
1,228
116
83
132
1,582
1,228
6,374
863
4,063
148
245
839
1,625
47
6
147
517
30
119
15
87
160
4,218
116
114
310
5
1,036
1,136
959
400
1,802
68
2,341
26
365
674
$
10,272 $61,093Loansoutstanding
$

$

634
1,985
1,266
96
2,023
389
*
668
749
15
1
2,984
1,660
4,028
872
1,828
12,549163
15,560
534
2
15
2,602
101
10
3,529
87
450
44
110
76
3,035
*
143
203
313
14
353
8,420
38
339
41
*
*
4,409
26
2,286
99
12,877
1,261
1,603
438
177,721

Percentage of
total loans
outstanding a
0.36 %
1.12
0.71
0.05
1.14
0.22
*
0.38
0.42
0.01
*
1.68
0.93
2.26
0.49
1.03
7.05
0.09
8.74
0.30
*
0.01
1.46
0.06
0.01
1.98
0.05
0.25
0.03
0.06
0.04
1.70
*
0.08
0.11
0.18
0.01
0.20
4.73
0.02
0.19
0.02
*
*
2.48
0.01
1.28
0.05
7.23
0.71
0.90
0.25
99.79 %IDA FINANCIAL STATEMENTS: JUNE 30, 2022

73

SUMMARY STATEMENT OF LOANS
June 30, 2022
Amounts expressed in millions of U.S. dollars

Borrower or guarantor
African Trade Insurance Agency
Bank of the States of Central
AfricaCaribbean Development BankWest African Development Bank
Subtotal—Regional
development banks

$

55
9
342
$

Private Sector Window (PSW)
Loans
Total—June 30, 2022 a
Total—June 30, 2021

Total loans
422

Undisbursed balanceLoansapproved but
Signed loan
not yet signed
commitments
$
- $
388

828

$

386
$
$

250,300
251,676

-

13
107
$

125
$
$

10,3979,397

Loans
outstanding
$
34

508

$

211
$
$

61,812
60,775

$
$

42
9
235

0.02
0.01
0.13

320

0.18 %

50

0.03

178,091
181,504* 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, 2022

Percentage of
total loans
outstanding a
0.02 %

100.00 %STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2022
Amounts expressed in millions of U.S. dollarsaMemberPart I Members
Australia
Austria
Belgium
CanadaDenmark
Estonia
FinlandFranceGermany
GreeceIceland
Ireland
Italy
Japan
KuwaitLatviaLithuania
Luxembourg
Netherlands
New Zealand
NorwayPortugal
Russian Federation
Slovenia
South Africa
Spain
SwedenSwitzerland
United Arab Emirates
United Kingdom
United States
Subtotal—Part I Members b
Part II Members
Afghanistan
Albania
Algeria
AngolaArgentina
Armenia
Azerbaijan
Bahamas, The
Bangladesh
Barbados
BelizeBenin
BhutanBolivia, Plurinational State ofBosnia and Herzegovina

Number of votes

Percentage of total
votes

369,627
280,620
328,254
796,011
280,433
54,499186,548
1,140,506
1,592,292
60,26865,969111,780
676,7612,492,887
122,63161,00354,366
84,672
603,32182,461
313,507
77,01690,64760,47476,935326,300
621,680
400,003
1,367
2,044,544
2,947,708
16,405,090

1.24
0.94
1.10
2.66
0.94
0.18
0.62
3.81
5.33
0.20
0.22
0.37
2.26
8.34
0.41
0.20
0.18
0.28
2.02
0.28
1.05
0.26
0.30
0.20
0.26
1.09
2.08
1.34
6.84
9.86
54.86

59,20461,859122,959
153,438
423,520
65,14672,88659,906
156,11062,86019,83460,82058,732
79,16555,440

0.20
0.21
0.41
0.51
1.42
0.22
0.24
0.20
0.52
0.21
0.07
0.20
0.20
0.26
0.19

Subscriptions andcontributionscommitted b
%

$

%

$

5,459.93
4,076.83
5,381.19
13,436.47
4,250.85
21.53
2,229.86
20,461.16
28,772.38
219.01103.65916.91
11,115.85
49,373.14
1,119.02
19.57
19.40
455.53
10,497.76
414.584,564.17
338.75749.3145.20
248.56
4,909.53
9,727.31
6,553.25
5.58
35,871.41
56,214.92
277,573
1.50
0.36
30.53
8.35
161.21
0.72
6.14
8.54
8.03
2.36
0.27
0.76
0.08
1.67
2.48

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

75

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2022
Amounts expressed in millions of U.S. dollars
Member a
Botswana
BrazilBulgaria
Burkina Faso
BurundiCabo Verde, Republic ofCambodia
Cameroon
Central African Republic
Chad
Chile
China
Colombia
Comoros
Congo, Democratic Republic ofCongo, Republic of
Costa Rica
Côte d’Ivoire
Croatia
CyprusCzech Republic
Djibouti
Dominica
Dominican Republic
EcuadorEgypt, Arab Republic of
El Salvador
Equatorial Guinea
Eritrea
Eswatini
Ethiopia
Fiji
Gabon
Gambia, The
Georgia
Ghana
GrenadaGuatemalaGuineaGuinea-Bissau
GuyanaHaiti
Honduras
Hungary
India
Indonesia
Iran, Islamic Republic of
Iraq
IsraelJordanKazakhstan

76

Number of votes
53,807477,996
108,609
66,63655,801
43,84071,08960,782
48,91052,21058,505723,535
133,32147,14082,69952,21030,99867,37791,99475,327
133,572
48,11658,892
27,78050,151
134,452
46,516
6,167
46,53622,322
51,73219,8092,093
55,20865,71786,67728,927
40,69637,28744,50074,34354,53859,206208,032
864,601
256,899
115,867
73,19991,18524,86523,297

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Percentage of total
votes
0.18
1.60
0.36
0.22
0.19
0.15
0.24
0.20
0.16
0.17
0.20
2.42
0.45
0.16
0.28
0.17
0.10
0.23
0.31
0.25
0.45
0.16
0.20
0.09
0.17
0.45
0.16
0.02
0.16
0.07
0.17
0.07
0.01
0.18
0.22
0.29
0.10
0.14
0.12
0.15
0.25
0.18
0.20
0.70
2.89
0.86
0.39
0.24
0.30
0.08
0.08

%

$

Subscriptions andcontributionscommitted b
3.63
833.48
8.02
0.79
1.09
0.13
1.60
1.60
0.77
0.78
39.11
2,354.76
25.17
0.13
4.59
0.74
0.28
1.54
5.92
30.90
154.77
0.26
0.14
0.58
0.94
18.61
0.49
0.41
0.14
0.42
0.69
0.75
0.63
0.42
0.98
3.12
0.14
0.56
1.33
0.22
1.27
1.11
0.44
164.29612.98139.3924.18
1.11
155.17
0.41
8.50

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2022
Amounts expressed in millions of U.S. dollarsaMember
Kenya
Kiribati
Korea, Republic of
Kosovo, Republic ofKyrgyz Republic
Lao People's Democratic Republic
LebanonLesothoLiberia
Libya
Madagascar
MalawiMalaysia
Maldives
Mali
Marshall Islands
Mauritania
Mauritius
MexicoMicronesia, Federated States ofMoldova
Mongolia
Montenegro
MoroccoMozambique
Myanmar
Nepal
Nicaragua
Niger
Nigeria
North Macedonia
Oman
Pakistan
Palau
PanamaPapua New Guinea
Paraguay
Peru
Philippines
PolandRomania
RwandaSamoa
São Tomé and Principe
Saudi Arabia
SenegalSerbiaSt. Kitts and Nevis
St. Lucia
St. Vincent and the Grenadines

Number of votes
77,96043,592
310,747
50,85764,522
48,9108,562
57,00552,03844,771
70,51658,540104,565
55,04662,445
4,902
52,21075,236142,236
18,42456,58245,81859,594111,332
63,91782,09654,71062,982
52,210121,086
47,09559,288
246,4313,804
10,18567,75446,493
93,132150,947
597,334
96,01052,03843,90149,5191,003,435
74,74386,096
13,86830,532
49,929Percentage of total
votes
0.26 %
0.15
1.04
0.17
0.22
0.16
0.03
0.19
0.17
0.15
0.24
0.20
0.35
0.18
0.21
0.02
0.17
0.25
0.48
0.06
0.19
0.15
0.20
0.37
0.21
0.27
0.18
0.21
0.17
0.40
0.16
0.20
0.82
0.01
0.03
0.23
0.16
0.31
0.50
2.00
0.32
0.17
0.15
0.17
3.36
0.25
0.29
0.05
0.10
0.17

$

Subscriptions andcontributionscommitted b
2.38
0.10
2,702.37
0.84
0.57
0.73
0.56
0.23
1.12
1.31
1.39
0.98
59.77
0.05
1.35
0.01
0.78
1.31
168.34
0.03
0.88
0.30
0.76
5.54
2.06
2.56
0.72
0.44
0.76
40.49
1.09
1.42
78.12
0.03
0.03
1.27
0.44
18.07
34.32
144.63
5.08
1.12
0.14
0.12
3,205.70
2.64
7.08
0.17
0.23
0.12

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

77

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS
June 30, 2022
Amounts expressed in millions of U.S. dollars
Subscriptions andcontributionscommitted b
1.03
317.32
37.30
0.13
0.95
0.45
4.11
1.50
1.19
0.53
2.31
18.38
0.44
1.18
0.11
2.13
1.89
201.84
0.03
2.31
8.04
1.92
0.31
2.23
2.20
3.66
6.41

Number of votes
63,63858,284
95,37843,901
10,50652,447
106,639
65,003
14,131
53,91868,943
114,375
45,123
61,84049,51481,0672,793
179,011
8,838
50,392
115,569
73,93650,952
61,16868,97687,027
105,982

Percentage of total
votes
0.21 %
0.19
0.32
0.15
0.04
0.18
0.36
0.22
0.05
0.18
0.23
0.38
0.15
0.21
0.17
0.27
0.01
0.60
0.03
0.17
0.39
0.25
0.17
0.20
0.23
0.29
0.35

13,493,143

45.14 %$

11,963

Total—June 30, 2022 b

29,898,233

100.00 %$289,536

Total—June 30, 2021

29,361,600$

292,534

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

$

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

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

78

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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 concessional and non-concessional 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 repaying project preparation facilities.
On August 5, 2022, the Executive Directors approved these financial statements for issue, which was also the datethrough which IDA’s management evaluated subsequent events.
Certain reclassifications to the prior year’s information have been made to conform with the current year’s
presentation.
Translation of Currencies
IDA’s financial statements are expressed in U.S. dollars for the purpose of reporting its financial position and theresults of its operations.
IDA conducts its operations in Special Drawing Rights (SDR) and its component currencies of the 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 reporting period. Revenue andexpenses 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 the month. Translation adjustments relating to therevaluation of all assets and liabilities denominated in either SDR or the component currencies of SDR, are reflectedin Accumulated Other Comprehensive Income. Translation adjustments relating to other currencies (non-functional
currencies) are reported in the Statement of Income.
Members’ Subscriptions and Contributions
Recognition
Members’ subscriptions and contributions committed for each IDA replenishment are initially recorded 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.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

79

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

80

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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
and contributions of IDA through the Third Replenishment, but are not applicable to those of the Fourth andsubsequent replenishments.
The Executive Directors decided on June 30, 1987 that settlements of maintenance of value, which would result
from the resolution of the valuation issue on the basis of the 1974 SDR, would be deferred until the Executive
Directors decide to resume such settlements. These amounts are shown as Deferred Amounts to Maintain Value of
Currency Holdings and deducted from equity; any changes relate solely to translation adjustments.
Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Members’ Subscriptions andContributions
Payments on these instruments are due to IDA upon demand and these instruments are held in bank accounts in
IDA’s name. These instruments are carried and reported at face value as a reduction to equity on the Balance Sheet.
Loans and Other Exposures
In fulfilling its mission, IDA makes concessional and non-concessional loans to the poorest countries. These loans
and other exposures (collectively “exposures”) are made to, or guaranteed by, member governments or to thegovernment of a territory of a member (except for loans which have been made to regional development institutions
for the benefit of members or territories of members of IDA). In order to qualify for lending on IDA terms, a

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

81

country’s per capita income must be below a certain level ($1,205 for the fiscal year ended June 30, 2022 and$1,185 for the fiscal year ended June 30, 2021) and the country may have only limited or no access to IBRD
lending.
Loans are reported on the balance sheet at amortized cost. Commitment charges on the undisbursed balance of loans
are recognized in revenue as earned. Any loan origination fees incorporated in the terms of a loan are deferred andrecognized over the life of the loan as an adjustment of the yield. Accrued interest is presented on the Balance Sheetin 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, new loan, or as acontinuation of the existing loans.
It is IDA’s policy to place into nonaccrual status all loans and other exposures made to, or guaranteed by, a member
or to the territory of a member if principal or charges with respect to any such loan and other exposures are overdueby more than six months, unless IDA’s management determines that the overdue amount will be collected in theimmediate future. In addition, if loans by IBRD to a member government are placed into nonaccrual status, all loans
and other exposures to that member will also be placed into nonaccrual status by IDA. On the date a member’s loans
and other exposures are placed into nonaccrual status, unpaid charges that had been accrued on loans are deductedfrom 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. Ifcollectability 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 theloan agreements in terms of 1960 dollars. In June 1987, the Executive Directors decided to value those loans at therate of $1.20635 per 1960 dollar on a permanent basis. Loans funded from resources provided under the Sixth
Replenishment and thereafter are denominated in SDRs, with the exception of loans provided under the Single
Currency Lending program, which allows IDA recipients to denominate new IDA loans in one of the five
constituent currencies of the SDR basket.
Loan commitments: Undisbursed loans relate to operations approved by the Executive Directors for which
disbursements are yet to be made. IDA records a provision for expected losses on undisbursed loan commitments
including Deferred Drawdown Options (DDOs), when signed by both parties. The signature of the loan agreement isa binding event that prevents IDA from unconditionally withdrawing from the agreement.
Buy-down of Loans
IDA enters into loan buy-down agreements with third party donors who make payments on the borrower’s service
and commitment charges through a trust fund until the borrower reaches agreed performance goals. The trust fundthen buys down the related loans for an amount equivalent to the present value of the remaining cash flows of therelated loans, ensuring IDA incurs no economic loss. The trust fund subsequently cancels the purchased loans,converting them to grant terms.
Development Grants
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 Sheet. 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 upon82

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

83

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

84

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Management reassesses the adequacy of the accumulated provision on a quarterly basis and adjustments to theaccumulated provision are recorded as a charge to or release of provision in the Statement of Income. In addition,
reasonableness of the inputs used is reassessed at least annually.
When a member country prepays its outstanding loans, it may receive a discount equivalent to the difference
between the outstanding carrying amount and the present value of the remaining cash flows. In such instances, IDA
records a provision for losses on loans equivalent to the discount provided, at the time when the prepayment terms
are agreed between IDA and the member country.
Loan Commitments
IDA records the expected credit losses on loan commitments based on the projected disbursements of signed loan
commitments (adjusted by cancellations based on historical experience), the probability of default and loss given
default. The provision is included in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance
Sheet.
Guarantees
IDA records a contingent liability for the expected losses related to guarantees over the projected life of the
instruments, which is determined based on the estimated exposure at default multiplied by the corresponding loss
given default and expected default probability for the projected life of the guarantee. This provision, as well as theunamortized balance of the deferred guarantee fees, and the unamortized balance of the obligation to stand ready,are included in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance Sheet.
Statement of Cash Flows: For the purpose of IDA's Statement of Cash Flows, cash is defined as the amount of both
Unrestricted cash and Restricted cash presented under the Due from banks line on the Balance Sheet.
Restricted Cash: This mainly includes amounts which have been received from members as part of theirsubscriptions, which are restricted for specified purposes.
Investments
Investment securities are classified based on management’s intention on the date of purchase, their nature, andIDA’s policies governing the level and use of such investments. All investment securities are held in the trading
portfolio except for a security purchased from IFC in 2015 which is classified as non-trading. While IDA does notplan to sell the IFC security, IDA elected to measure it at fair value, so that all of its investment securities aremeasured on the same basis. All investment securities and related financial instruments held by IDA are carried andreported at fair value, or at face value which approximates fair value. Where available, quoted market prices areused to determine the fair value of trading securities. Examples include most government and agency securities,
asset-backed securities (ABS) 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 vendor-supplied, that include the standard discounted cash flow method using observable market inputs such as
yield curves, credit spreads, and constant prepayment rates. Where applicable, unobservable inputs such as constantprepayment 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. Purchases and sales of
securities are recorded on a trade-date basis. Time deposits and money market deposits are recorded at settlement.
The first-in first-out method is used to determine the cost of securities sold in computing the realized gains andlosses on these instruments.
Interest revenue is included in the Investments, net line in the Statement of Income. Unrealized mark-to-market
gains and losses for investment securities and related financial instruments held in the investment portfolio areincluded in the Statement of Income. Realized gains and losses on trading securities are recognized in the Statementof Income when securities are sold.
IDA may require collateral in the form of cash or approved liquid securities from individual counterparties underlegal agreements that provide for collateralization, in order to mitigate its credit exposure to these counterparties.
For collateral received in the form of cash from counterparties, IDA invests the amounts received and records theinvestment and a corresponding obligation to return the cash. Collateral received in the form of liquid securities isonly recorded on IDA’s Balance Sheet to the extent that it has been transferred under securities lending agreements
in return for cash.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

85

Securities Purchased Under Resale Agreements, Securities Sold Under Repurchase Agreements, Securities
Lent Under Securities Lending Agreements and Payable for Cash Collateral Received
Securities purchased under resale agreements, securities sold under repurchase agreements, securities lent under
securities lending agreements and payable for cash collateral received are recorded at face value, whichapproximates fair value, as they are short term in nature. IDA receives securities purchased under resale agreements,
monitors the fair value of the securities and, if necessary, closes out transactions and enters into new repriced
transactions. The securities transferred to counterparties under the repurchase and security lending arrangements andthe securities transferred to IDA under the resale agreements have not met the accounting criteria for treatment as asale. Therefore, securities transferred under repurchase agreements and security lending arrangements are retained asassets on the Balance Sheet, and securities received under resale agreements are not recorded on the Balance Sheet.
Securities lent under securities lending agreements and sold under securities repurchase agreements as well as
securities purchased under resale agreements are presented on a gross basis, which is consistent with the manner inwhich these instruments are settled. The interest earned with respect to securities purchased under resale agreements
is included in Investments, net, line in the Statement of Income. The interest expense pertaining to the securities soldunder repurchase agreements and security lending arrangements is included in the Borrowing expenses, net line in
the Statement of Income.
Borrowings
IDA introduced long term borrowings through 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. Through June 30, 2021, all market debt was carried at fairvalue. Starting July 1, 2021, IDA only elects fair value for market debt designated to fund the investment portfolio
or variable rate loans. Market debt not meeting the fair value election criteria are reported at amortized cost. For debt
carried at fair value, changes in fair value are recognized in the related Unrealized mark-to-market gains and losses
on non-trading portfolios, net, line in the Statement of Income, except for changes in the fair value that relate to
IDA’s own credit risk, which are reported in Other Comprehensive Income (OCI) as a Debit Valuation Adjustment(DVA). The DVA on fair value option elected liabilities is measured by revaluing each liability to determine thechanges in fair value of that liability arising from changes in IDA’s cost of funding relative to the applicablereference 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.
For the purpose of the Statement of Cash Flows, short term borrowings, if any, with an original maturity of less than
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.
Interest expense relating to all debt instruments in IDA’s borrowing portfolio is measured on an effective yield basis
and is reported as part of the Borrowing expenses, net line in the Statement of Income.
For presentation purposes, amortization of discounts and premiums is also included in the Borrowing expenses, netline in the Statement of Income.
Accounting for Derivatives
IDA has elected not to designate any hedging relationships for accounting purposes. Rather, all derivative
instruments are recorded at fair value on the Balance Sheet, with changes in fair value accounted for through theStatement of Income.
The presentation of derivative instruments on IDA’s Balance Sheet reflects the netting of derivative asset andliability positions and the related cash collateral received from the counterparty when a legally enforceable masternetting agreement exists, and the other conditions set out in ASC Topic 210-20, Balance Sheet—Offsetting, are met.
In addition, in the Notes to the financial statements, unless stated differently, derivatives are presented on a net basis
by instrument.

86

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

A master netting agreement is an industry standard agreement with a counterparty that permits multiple transactions
governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency
in the event of a default (e.g., bankruptcy, failure to make a required payment or transfer securities or delivercollateral when due). Obligations under master netting agreements are often secured by collateral posted under anindustry standard credit support annex to the master netting agreement. Upon default by the counterparty, thecollateral agreement grants an entity the right to set-off any amounts payable by the counterparty against any posted
collateral.
IDA uses derivative instruments in its investment trading portfolio to manage interest rate and currency risks. These
derivatives are carried and reported at fair value. Interest revenue (expenses) are reflected as part of Interest revenue,
while unrealized mark-to-market gains and losses on these derivatives are reflected as part of the Unrealized markto-market gains (losses) on Investments-Trading portfolio, net line in the Statement of Income.
IDA also uses derivatives in its loan, asset-liability management and borrowing portfolios. Within the asset-liability
management portfolio, currency forward contracts are used to manage foreign exchange fluctuation risks andinterest rate swap contracts under the Capital Value Protection program are used to manage interest rate volatility of
IDA’s capital adequacy model. In the loan and borrowing portfolios, interest rate swaps are used to modify theinterest rate characteristics of these portfolios. The interest component of these derivatives is recognized as an
adjustment to the loan revenue and borrowing costs over the life of the derivative contracts and is included in Loans,
net and Borrowing expenses, net lines in the Statement of Income. Changes in fair values of these derivatives arerecorded in the Statement of Income as Unrealized mark-to-market gains and losses on non-trading portfolios, net.
For the purpose of the Statement of Cash Flows, IDA has elected to report the cash flows associated with thederivative instruments that are used to economically hedge its borrowings and investments, in a manner consistent
with the presentation of the related borrowing and investment cash flows.
Derivative contracts include currency forward contracts, TBA securities, swaptions, exchange traded options andfutures contracts, currency swaps and interest rate swaps. Currency swaps and interest rate swaps are primarily plain
vanilla instruments and they are valued based on standard discounted cash flow methods using observable market
inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
Most outstanding derivative positions are transacted over-the-counter and are therefore valued using internallydeveloped valuation models. For commercial and non-commercial counterparties where IDA is in a net receivable
position, IDA calculates a Credit Valuation Adjustment (CVA) to reflect credit risk. For net derivative positions
with commercial and non-commercial counterparties where IDA is in a net payable position, IDA calculates a DVA
to reflect its own credit risk. The CVA is calculated using the fair value of the derivative contracts, net of collateral
received under credit support agreements, and the probability of counterparty default based on the Credit Default
Swap (CDS) spread and, where applicable, proxy CDS spreads. The DVA calculation is generally consistent with
the CVA methodology and incorporates IDA’s own credit spread as observed through the CDS market.
Valuation of Financial Instruments
IDA has an established and documented process for determining fair values. Fair value is based upon quoted market
prices for the same or similar securities, where available.
Financial instruments for which quoted market prices are not readily available are valued based on discounted cash
flow models and other established valuation models. These models primarily use market-based or independently
sourced market parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves,and may incorporate unobservable inputs. Selection of these inputs may involve some judgment. In instances wheremanagement relies on instrument valuations supplied by external pricing vendors, there are procedures in place tovalidate the appropriateness of the models used as well as the inputs applied in determining those values.
IDA also has various internal controls in place to ensure that the valuations are appropriate where internallydeveloped models are used.
As of June 30, 2022 and June 30, 2021, IDA had no financial assets or liabilities measured at fair value on a nonrecurring basis.
Fair Value Hierarchy
Financial instruments are categorized based on the priority of the inputs to the valuation technique. The fair value
hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), the

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

87

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

88

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Accounting and Reporting Developments
Evaluated Accounting Standards:
In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments –Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL ASU). The ASU and its
subsequent amendments introduce a new model for the accounting of credit losses of loans and other financial assets
measured at amortized cost. The current expected credit loss (CECL) model requires an entity to estimate the credit
losses expected over the life of an exposure, considering historical information, current information, and reasonable
and supportable forecasts. Additionally, the ASUs require enhanced disclosures about credit quality and significant
estimates and judgments used in estimating credit losses.
For IDA, the ASUs became effective on July 1, 2020. The transition adjustment increased the Accumulated
Deficit by $802 million, which reflects the increase in the credit losses relating to loans and other exposures under
CECL compared to the previous “incurred loss” model. The impact is mainly driven by the requirement to provision
over the full life of IDA’s long maturity profile credit exposures as well as the inclusion of signed loan
commitments in the determination of the provision.
See the table below for details of the CECL transition adjustment as of July 1, 2020. The transition adjustment had
no impact to the Statement of Income. See Note D — Loans and Other Exposures, for additional details.
In millions of U.S. dollars

Location on the Balance Sheet

June 30, 2020
As reported

Impact of the
adoption of the
CECL ASU

July 1, 2020
Adjusted

Loans outstanding

Accumulated provision for loan
losses$$$Debt Relief under HIPC/MDRI

Accumulated provision for loan
losses

1,591

-

1,591

Signed loan commitments

Other liabilities

-

859

859

Other exposures

Other liabilities

72

2

74

Accumulated provision related to

2,829

(59)

2,770

Total accumulated provision

$

4,492

$

802

$

5,294

Accumulated Deficit$(58,321)

$

(802)

$

(59,123)

Accounting Standards Under Evaluation:
In March 2022, the FASB issued the Accounting Standard Update (ASU) 2022-02, Troubled Debt Restructurings
and Vintage Disclosures, which eliminates the accounting guidance on troubled debt restructurings (TDRs) for
creditors and amends the guidance on “vintage disclosures” to require disclosure of current-period gross writeoffs byyear of origination. For IDA, the ASU will be effective from the quarter ending September 30, 2023 (fiscal year2024), with early adoption permitted. IDA is currently evaluating the impact of the ASU on its financial statements.
In November 2021, the FASB issued the ASU 2021-10, Disclosure by Business Entities about Government
Assistance, which requires entities to make annual disclosure about certain government assistance they received.
This ASU will be effective from the fiscal year ending June 30, 2023 (annual statements of fiscal year 2023), withearly adoption permitted. IDA is currently evaluating the impact of the ASU on its financial statements.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

89

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
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

June 30, 2021
241,343
3,442
4,901
766
$
250,452$

a. Includes any restricted cash subscriptions.

During the fiscal year ended June 30, 2022, IDA encashed demand obligations totaling $4,652 million ($4,913
million—fiscal year ended June 30, 2021).
Membership
On November 3, 2021, Bulgaria became the 174 th member of IDA.

NOTE C—INVESTMENTS
The investment securities held by IDA are designated as either trading or non-trading. All securities are reported atfair value, or at face value which approximates fair value.
As of June 30, 2022, IDA’s Investments were mainly comprised of government and agency obligations (60%), withall the instruments being classified as either Level 1 or Level 2 within the fair value hierarchy. As of June 30, 2022,
the largest holding of investments with a single counterparty was Japanese government instruments (8%).
A summary of IDA’s investments composition is as follows:
Table C1: Investments-composition
In millions of U.S. dollars
June 30, 2022
Trading
Government and agency obligations
Time deposits
Asset-backed securities
Non-trading
Debt securities
Total

90

IDA FINANCIAL STATEMENTS: JUNE 30, 2022$$

23,902
15,411
168
39,481$

346
39,827

June 30, 2021$$

25,277
11,460152
36,889$487
37,376IDA manages its investments on a net portfolio basis. The following table summarizes IDA’s net portfolio position;
the presentation of derivative instruments is on a net instrument basis:
Table C2: Net investment portfolio position
In millions of U.S. dollars
June 30, 2022
Investments
Trading
Non-trading
Total

$

39,481
346
39,827

June 30, 2021$

36,889487
37,376

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

(772)

-

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

306
2
308

167
167

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

(50)
(1)
(51)

(65)
(17)
(82)

583
9
(343)
39,561

426
107
(73)
37,921

Cash held in investment portfolio b
Receivable from investment securities traded and other assets c
Payable for investment securities purchased d
Net Investment Portfolio$$a. As of June 30, 2022, this amount represents cash collateral of $772 million received from counterparties under derivative
agreements (Nil - June 30, 2021).
b. This amount is included in Unrestricted cash under Due from Banks on the Balance Sheet.
c. This amount is included in Other receivables and in Other assets, respectively, on the Balance Sheet.
d. As of June 30, 2022, there were no short sales (Nil —June 30, 2021)

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

91

IDA uses derivative instruments to manage currency and interest rate risk in the investment portfolio. For details
regarding these instruments, see Note F—Derivative Instruments.
The maturity structure of IDA’s non-trading investment portfolio (principal amount due) is provided in the tablebelow:
Table C3: Maturity structure of non-trading investment portfolio
In millions of U.S. dollars
PeriodLess than 1 year
Between1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
ThereafterJune 30, 2022

June 30, 2021

$

96

$

77
62
34
12
77
358

$

113

$

96
77
62
34
90
472

Commercial Credit Risk
For the purpose of risk management, IDA is party to a variety of financial transactions, certain of which involve
elements of credit risk. Credit risk exposure represents the maximum potential loss due to possible nonperformanceby obligors and counterparties under the terms of the contracts. For all securities, IDA limits trading to a list of
authorized dealers and counterparties. In addition, credit limits have been established for counterparties by type of
instrument and maturity category.
Swap Agreements: Credit risk is mitigated through a credit approval process, volume limits, monitoring procedures
and the use of mark-to-market collateral arrangements. IDA may require collateral in the form of cash or otherapproved liquid securities from individual counterparties to mitigate its credit exposure.
IDA has entered into master derivative agreements, which contain legally enforceable close-out netting provisions.
These agreements may further reduce the gross credit risk exposure related to the swaps. Credit risk with financial
assets subject to a master 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, 2022
Collateral received
Cash
Securities
Total collateral received
Collateral permitted to be repledged
Amount of collateral repledged
Amount of cash collateral invested$$$

June 30, 2021
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.
These transactions, if any, are conducted under legally enforceable master netting arrangements, which allow IDA toreduce its gross credit exposure related to these transactions.

92

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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.
NOTE D—LOANS AND OTHER EXPOSURESIDA’s loans and other exposures are generally made to, or guaranteed by, member countries of IDA. Loans arereported at amortized cost on the balance sheet. Based on IDA’s internal credit quality indicators, the majority of theloans outstanding are in the Medium and High risk classes.
IDA excludes the interest and service charges receivable balance from the amortized cost basis and the related
disclosures as permitted by U.S. GAAP. As of June 30, 2022, accrued interest income and service charges on loansof $521 million ($502 million — June 30, 2021) are presented in Other receivables – Accrued interest andcommitment charges on the Balance Sheet.
As of June 30, 2022, 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 of June30, 2022.
Maturity Structure
The maturity structure of loans outstanding was as follows:
Table D1: Loans - Maturity structure
In millions of U.S. dollars
June 30, 2022
July 1, 2022 through June 30, 2023
July 1, 2023 through June 30, 2027
July 1, 2027 through June 30, 2037
Thereafter
Total

$

$

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

June 30, 2021
July 1, 2021 through June 30, 2022
July 1, 2022 through June 30, 2026
July 1, 2026 through June 30, 2036
Thereafter
Total

$

$

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

7,415
36,31880,89256,879181,50493

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
Pound sterlingJapanese yen
Total

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

June 30, 2021$
163,964
10,123
7,407
10$
181,504

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 aregrouped in pools of borrowers with similar credit ratings for the purpose of the calculation of the expected credit
losses. Country risk ratings are determined in review meetings that take place several times a year. All countries arereviewed at least once a year, or more frequently if circumstances warrant, to determine the appropriate ratings.
An assessment was also performed to determine whether a qualitative adjustment of the loan loss provision wasneeded as of June 30, 2022, including consideration of the COVID-19 pandemic and other global events.
Management concluded that a qualitative adjustment beyond the regular application of IDA’s loan loss provisionframework was not warranted.
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.

94

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

The following tables provide an aging analysis of loans outstanding:
Table D3: Loans-Aging structure
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
$

$

46-60

61-90

- $
7
7

*
*

7
14 $

*
*

$

91-180
6
6
3
9

$

$

11
11
8
19

$

Total Past
Due

Over 180
$

408
408

$

$

$

Current

Total

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

Current

Total

Table D3.1
In millions of U.S. dollars
June 30, 2021
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual
statusTotal

Up to 45
$

$

46-60

61-90

- $
7
7

-

7
14 $

1
1

$

91-180
3
3

$

$

9
9

$

Total Past
Due

Over 180
$

$

399
399

$

7
7
419
426

$

$

659 $
659
23,09223,092
156,814 a
156,821
180,565
180,572513$ 181,078

932$ 181,504

a. Includes PSW-related loans of $50 million ($10 million-June 30, 2021)* 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.
Table D4: Loan portfolio vintage disclosure
In millions of U.S. dollars
June 30, 2022
Fiscal Year of origination

Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

2022
$

$

2021

2020

2019

2018

Prior
Years

CAT DDOs CAT DDOs
Loans
disbursed Converted Outstandingandto Term
as of June
revolvingLoans
30, 2022

- $
- $
- $
- $
- $
374 $
111
394
542
243
77
19,124
3,678
7,509
7,233
9,365 10,042 118,173
3,789
7,903
7,775
9,608 10,119 137,671
867
3,789 $ 7,903 $ 7,775 $ 9,608 $ 10,119 $ 138,538 $

- $
182
182
182 $

-$
177
177
177 $

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

374
20,491
156,359
177,224867
178,091

95

Table D4.1:
In millions of U.S. dollars
June 30, 2021
Fiscal Year of origination

Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

2021
$

$

2020

2019

2018

2017

Prior
Years

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

- $
- $
- $
- $
- $
659 $
401
564
255
64
488
21,320
4,803
6,260
8,266
8,861
8,927 119,316
5,204
6,824
8,521
8,925
9,415 141,295
932
5,204 $ 6,824 $ 8,521 $ 8,925 $ 9,415 $ 142,227 $

- $
388
388
388 $

-$
-$

659
23,092
156,821
180,572932
181,504

The amount of Catastrophe Deferred Drawdown Option (CAT DDO) outstanding and revolving converted to termloans during the fiscal year ended June 30, 2022 was $177 million (Nil— June 30, 2021).
Accumulated Provision for Losses on Loans and Other Exposures
Management determines the appropriate level of accumulated provisions for losses, which reflects the expected
losses inherent in IDA’s exposures.
The provision for HIPC Debt Initiative and MDRI is based on quantitative and qualitative analyses of various
factors, including estimates of Decision Point and Completion Point dates. These factors are reviewed periodicallyas part of the reassessment of the adequacy of the accumulated provision for loan losses. Provisions are released as
qualifying debt service becomes due and is forgiven under the HIPC Debt Initiative and are reduced by the amountof the eligible loans written off when the country reaches Completion Point and becomes eligible for MDRI debt
relief.
The 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). The transition
adjustment corresponds to the difference between the accumulated provision calculated under the previous “incurredloss” model and the current expected credit loss model. Changes to the accumulated provision for losses on loans
and other exposures are summarized below.

96

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Table D5: Accumulated provisions
In millions of U.S. dollars

Loans
outstanding
Accumulated provision, beginning of the fiscal year $2,946
Provision, net - charge (release)
135
Loans written off under:
HIPC/MDRITranslation adjustment(205)
Accumulated provision, end of the fiscal year$
2,876
Including accumulated provision for losses on:
Loans in accrual status
Loans in nonaccrual status
Total

$
$

June 30, 2022
Debt relief
Loan
under
commitments HIPC/MDRI$
1,054 $
772
109
(5)

$

(81)
1,082

2,641
235
2,876

$
$
$

$

Other a12039(30) b
(30)
707 $

(4)
155

433
274
707

$

Total
4,892
278
(30)
(320)
4,820

$
$

3,074
509
3,583

$

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

177,224867
178,091$

Table D5.1:
In millions of U.S. dollars

Loans
outstanding
Accumulated provision, beginning of the fiscal year $2,829
CECL transition adjustment(59)
Adjusted accumulated provision at the beginningof the fiscal year
2,770
Provision, net - charge (release)77
Loans written off under:
HIPC/MDRITranslation adjustment
99
Accumulated provision, end of the fiscal year$
2,946
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

2,692
254
2,946

June 30, 2021
Debt relief
Loan
under
commitments HIPC/MDRI
$
- $
1,591
859
859
166

$

29
1,054

$

1,591
(828)

$
$
$

(9) b
18
772 $
485
287
772

Other a
72
2

$

Total
4,492
802

74
46

5,294
(539)

120

(9)
146
4,892

$
$
$
$
$

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

a. These amounts primarily relate to outstanding guarantees
b. Represents debt service reduction under HIPCIDA FINANCIAL STATEMENTS: JUNE 30, 2022

97

Reported as
Balance Sheet

Statement of Income

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

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

Accumulated provision for loan losses

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

Accumulated provision for loan losses
Other liabilities

Loans to be written off under MDRI
During the fiscal years ended June 30, 2022 and June 30, 2021, 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, 2022, principal of $11
million and charges of $4 million payable to IDA from one borrower in accrual status were overdue by more than
three months. These overdue installments have been subsequently received.
During the fiscal year ended June 30, 2021, Sudan paid all of their overdue principal and charges due to IDA. The
outstanding loans remaining to Sudan were restored to accrual status having met conditions in accordance with
IDA’s policy.
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
Overdue amounts
Nonaccrual
Borrowersince
EritreaMarch 2012
Syrian Arab
Republic
June 2012
Zimbabwe
October 2000
Total - June 30, 2022
Total - June 30, 2021

Average
Provision
RecordedrecordedPrincipal
for debt
investment a
investment
Outstanding
relief
$
415 $
434 $
415 $
274

Provision
for loanlosses b$
15

Principal$
111

Charges
$
34

$

13
302
426

$

1
66
101

$

419

$

102

$

14
438
867 $

14
459
907 $

14
438
867 $

274

$

1
219
235

$

932 $

932 $

932 $

287

$

254

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

During the fiscal years ended June 30, 2022 and June 30, 2021, no new loans were placed into nonaccrual status.

98

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Table D7: Service charge revenue not recognized
In millions of U.S. dollars
Fiscal Year Ended June 30,
2022
2021
2020
Service charge revenue not recognized as a result of loans
being in nonaccrual status

$

7

$

7

$

15

During the fiscal year ended June 30, 2022, service charge revenue recognized on loans in nonaccrual status wasless than $1 million (Nil—fiscal year ended June 30, 2021 and less than $1 million—fiscal year ended June 30,2020).
Guarantees
Guarantees of $2,507 million were outstanding as of June 30, 2022 ($2,513 million – June 30, 2021). This amountincludes $638 million relating to the PSW ($484 million—June 30, 2021). The outstanding amount of guarantees
represent the maximum potential undiscounted future payments that IDA could be required to make under theseguarantees that is not included on the Balance Sheet. The guarantees issued by IDA have original maturities ranging
between 3 and 22 years, and expire in decreasing amounts through 2043.
As of June 30, 2022, liabilities related to IDA’s obligations under guarantees included the obligation to stand readyof $145 million ($138 million— June 30, 2021), and the accumulated provision for guarantee losses of $126 million($109 million— June 30, 2021). These have been included in Other liabilities on the Balance Sheet.
During the fiscal years ended June 30, 2022 and June 30, 2021, no guarantees provided by IDA to sovereign or subsovereign borrowers were called. During the year ended June 30, 2022, less than $0.5 million of IDA-PSW Blended
Finance Facility guarantees under the Small Loan Guarantee Program pursuant to the risk-sharing agreement
between IDA and IFC were called (less than $0.5 million—fiscal year ended June 30, 2021).
Concentration Risk
Loan revenue comprises service charges and interest charges on outstanding loan balances. For the fiscal year ended
June 30, 2022, loan revenue of $239 million and $237 million from two countries were each in excess of ten percent
of total loan revenue.
The following table presents IDA’s loans outstanding and associated loan revenue by geographic region:
Table D8: Loan revenue and outstanding balance by geographic region
In millions of U.S. dollars

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

As of and for the fiscal years ended June 30,
2022
2021
Service and
Loans
Service and
LoansInterest Charges b
Outstanding
Interest Charges b
Outstanding$
727 $61,062 $676 $64,141444
48,863639
48,508376
36,232
330
34,786233
18,912
230
20,460
114
7,435
114
7,821
48
3,317
42
3,267
20
2,220
20
2,511
1
50
1
10
$
1,963 $
178,091 $2,052 $
181,504

a. Represents loans under the PSW.
b. Excludes $3 million of interest rate swap expenses related to loan hedges ($2 million-June 30, 2021).

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

99

NOTE E—BORROWINGS
IDA’s borrowings comprise CPL made by IDA members (carried at amortized cost) and market borrowings (carriedat amortized cost or fair value as described in Note A).
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,
2022, have original maturities of 25 and 40 years, with the final maturity in 2062. 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 debt in a variety of currencies. Some of these instruments arecallable. IDA has elected the fair value option for certain instruments. Overall market borrowings have original
maturities that range from 24 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 borrowing
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, 2022, 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 outstanding, at fair value, after derivatives
In millions of U.S. dollars
June 30, 2022
19,718547
1,586$
21,851Market borrowings
Currency swaps, net
Interest rate swaps, net
Total at fair value

$

$

$

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

Table E2: Market borrowings outstanding, at amortized cost
In millions of U.S dollars

June 30, 2022
June 30, 2021

Principal at face value
$
6,240
$
-

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

Total
$
$

6,201
-

Table E3: Concessional partner loans outstanding, at amortized cost
In millions of U.S dollars
June 30, 2022
June 30, 2021

100

$
$

Principal at face value
8,508
9,495

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Net unamortized discount$(1,528)$(1,736)

Total
$
$

6,980
7,759

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, 2022$
34,679$34,679(1,780)$32,899

WAC a (%)
1.17 %
1.17 %

WAC a (%)
0.99
0.99

June 30, 2021$
28,404$28,404(90)$
28,314%%a. 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, 2022
30 %
9
18
40
3
100 %

Euro
Japanese yen
Pound sterling
U.S. dollar
OthersJune 30, 2021
18 %
14
17
49
2
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, 2022
5,677
135
2,331
3,847
2,667
19,80934,466$$

June 30, 2021
$

4,724
1,713
146
2,837
4,154
16,47630,050$a. For June 30, 2022, total includes net unamortized discount of $1,528 million ($1,736 million—June 30, 2021) for CPL and $39
million (Nil—June 30, 2021) 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 Statement 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
Fiscal Year Ended June 30,
Reported as

2022

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

$

1,713

2021
$

318

2020
$

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

(106)

101

NOTE F—DERIVATIVE INSTRUMENTS
IDA uses derivative instruments in its investment, loan and borrowing portfolios, for asset/liability management
purposes, and to assist clients in managing risks.
The following table summarizes IDA’s use of derivatives in its various financial portfolios.
Table F1: Use of derivatives in various financial portfolios
Portfolio
Derivative instruments used
Risk management purposes:
Interest rate swaps, currency forward contracts,
Investments-Trading
currency swaps, options, swaptions, futurescontracts and TBA securities

Purpose/Risk being managed
Manage currency and interest rate risk in theportfolio.

Other assets/liabilities
management

Currency forward contracts, currency swaps andinterest rate swaps

Manage currency and interest rate risks.

Loans

Interest rate swaps

Manage interest rate risk in the portfolio.

Borrowings

Interest rate swaps and currency swaps

Manage currency and interest rate risk in theportfolio.

Structured swaps

Assist clients in managing risks.

Other purposes:
Client operations

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

102

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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

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

June 30, 2022
Derivative Assets
Derivative Liabilities
Gross
Gross
Gross
Amounts
Net
Gross
Amounts
Net
Amounts
OffsetAmounts
Amounts
OffsetAmounts$
3,267 $
(1,678) $1,589$
2,321 $
(727) $
1,594
16,624(15,355)
1,269
6,569
(5,918)651$ 19,891 $(17,033) $2,858$
8,890 $
(6,645) $
2,245

`

Less:
Securities collateral received
Net derivative exposure after
collateral$

1,682 b772$

1,666 c

$

404

$

579

$

404

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

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
Net derivative exposure after
collateral

June 30, 2021
Derivative Assets
Derivative Liabilities
Gross
Gross
Gross
Amounts
Net
Gross
Amounts
Net
Amounts
OffsetAmounts
Amounts
OffsetAmounts$
1,105 $
(912) $
193$
1,886 $
(1,577) $309
15,691(15,231)460
14,956(14,449)507$ 16,796 $(16,143) $653$
16,842 $ (16,026) $
816

$

404 b
-

$

249

408 c

408

$

249

a. Includes currency forward contracts.
b. Includes $35 million CVA adjustment ($2 million-June 30, 2021).
c. Includes $19 million DVA adjustment ($6 million-June 30, 2021).

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

103

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

$

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

$

$

78
103
12
193

June 30, 2021
Currency swaps(including currency
forward contracts)
$
167
176
111
6
$
460

Total
$

$

167
254
214
18
653

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 payments on the derivative
instrument are determined. As of June 30, 2022, the notional amounts of IDA’s derivative contracts outstanding
were as follows: interest rate swaps $33,267 million ($33,432 million as of June 30, 2021), currency swaps $23,120
million ($30,349 million as of June 30, 2021). There were no long or short positions of other derivatives as of June30, 2022 (Nil— June 30, 2021).
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, 2022 is $586 million ($414 million —June 30, 2021). As of June 30, 2022,
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, 2022, the amount of collateral that would need to be posted
would be $41 million ($25 million—June 30, 2021). Subsequent triggers of contingent features would requireposting of additional collateral, up to a maximum of $586 million as of June 30, 2022 ($414 million—June 30,2021).

104

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

The gains and losses on the non-trading derivatives, by instrument type and their location in the Statement of
Income are as follows:
Table F4: Unrealized mark-to-market gains or losses on non-trading derivatives
In millions of U.S. dollars
Fiscal Year Ended June 30,
2022
2021
2020

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

80

$

898

(293)
(213)

$

(996)

(101)
797

$

385
(611)

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 Statement of Income:Table F5: Unrealized mark-to-market gains or losses on Investments-Trading portfolio
In millions of U.S. dollars
Type of instrument a

Fixed income (including related derivatives)

Fiscal Year Ended June 30,
2022
2021
2020

Reported as
Unrealized mark-to-market(losses) gains on InvestmentsTrading portfolio, net

$

(104)

$

144

$

207

a. Amounts associated with each type of instrument includes gains and losses on both derivative instruments and non-derivative
instruments.

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, 2021, IBRD’s Board of Governors approved a transfer of $274 million to IDA. This transfer wasreceived on October 25, 2021.
Transfers and Grants
Cumulative transfers and grants made to IDA as of June 30, 2022 were $20,476 million ($20,202 million—June 30,2021). 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

Beginning of the
fiscal year$
20,202

Transfers during
the fiscal year$274

End of the fiscal
year$
20,476

16,087
3,885

274
-

16,361
3,885

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

105

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
IBRD
Administrative Services, net a$(174)
Derivative (liabilities)/assets, net(8)
PSW-Blended Finance Facility b
Pension and Other
Postretirement Benefits
602
Investments$
420

June 30, 2022
IFC
$
(9)
54
346
391

$

$

$

Total
(174)
(17)
54
602
346
811

$

$

IBRD
(268)
(8)
-

June 30, 2021
IFC
$
4
41

572
296

487
532

$

$

Total
(268)
(4)
41

$

572
487
828

a. Includes receivable of $404 million for the fiscal year ended June 30, 2022 ($293 million-June 30, 2021) 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. Refer to Table G4: Summary of PSW-related transactions.

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

Receivable for pension and other postretirement benefits

Receivable from affiliated organization

Net receivables (payables) for derivative transactions

Derivative assets/liabilities, net

Payable for administrative services a

Payable to affiliated organization

Receivable for PSW – Blended Finance Facility

Other Assets

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

Administrative Services
The payable to IBRD represents IDA’s share of joint administrative expenses, including contributions to special
programs and IDA’s share of investments associated with PCRF, net of other revenue jointly earned. The allocationof expenses is based upon an agreed cost sharing formula, and amounts are settled quarterly.
During the fiscal year ended June 30, 2022, IDA’s share of joint administrative expenses and contributions to special
programs totaled $1,644 million ($1,873 million—fiscal year ended June 30, 2021 and $1,824 million—fiscal year
ended June 30, 2020). This amount excludes IDA-executed trust fund expenses of $613 million ($553 million—
fiscal year ended June 30, 2021 and $586 million—fiscal year ended June 30, 2020).
Other revenue
IDA’s share of other revenue jointly earned with IBRD during the fiscal year ended June 30, 2022 totaled $252
million ($261 million—fiscal year ended June 30, 2021 and $316 million—fiscal year ended June 30, 2020). This
amount excludes IDA-executed trust fund revenue of $613 million ($553 million—fiscal year ended June 30, 2021
and $586 million—fiscal year ended June 30, 2020).
The amount of fee revenue associated with services provided to other affiliated organizations is included in Other
revenue in the Statement of Income, as follows:
Table G3: Fee revenue from affiliated organizations
In millions of U.S. dollars
2022
Fees charged to IFC
Fees charged to MIGA

106

$

84
5

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

Fiscal Year Ended June 30,
2021
$
77
5

2020
$

80
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 for computing this share ratio is approved by the
Executive Directors for both institutions.
IBRD, along with IFC and MIGA, sponsors a defined benefit Staff Retirement Plan and Trust (SRP), the Retired
Staff Benefits Plan and Trust (RSBP) and the Post-Employment Benefits Plan (PEBP) that cover substantially all of
their staff members.
The SRP provides regular defined pension benefits and also includes a cash balance component. The RSBP provides
certain health and life insurance benefits to eligible retirees. The PEBP provides certain pension benefits
administered outside the SRP.
June 30 is used as the measurement date for these pension and other postretirement benefit plans. All costs, assets
and liabilities associated with these plans are allocated between IBRD, IFC, and MIGA based upon their employees’
respective participation in the plans.
While IDA is not a participating entity to these benefit plans, IDA shares in the costs and reimburses IBRD for its
proportionate share of any contributions made to these plans by IBRD. During the fiscal year ended June 30, 2022,
IDA’s share of IBRD’s costs relating to all the three plans totaled $191 million ($494 million—fiscal year ended
June 30, 2021 and $357 million—fiscal year ended June 30, 2020).
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, 2022, the SRP and the RSBP were overfunded by $1,914 million and $395
million, respectively. The PEBP, after reflecting IBRD and IDA’s share of assets which are included in IBRD’s
investment portfolio of $1,791 million, was underfunded by $316 million.
Derivative transactions
IDA enters into currency forward contracts with IBRD acting as the intermediary with the market, primarily toconvert donors’ expected contributions in national currencies under the Sixteenth and Seventeenth replenishments of
IDA’s resources into the five currencies of the SDR basket.
Investments – Non-trading
During the fiscal year ended June 30, 2015, IDA purchased a debt security issued by IFC for a principal amount of$1,179 million, amortizing over a period of 25 years. The investment carries a fixed interest rate of 1.84% and has aweighted average maturity of 3 years. As of June 30, 2022, the principal amount due on the debt security was $358
million ($472 million—June 30, 2021), and it had a fair value of $346 million ($487 million—June 30, 2021). The
investment is reported under Investments on the Balance Sheet. During the fiscal year ended June 30, 2022, IDA
recognized interest income of $8 million from this investment ($10 million— fiscal year ended June 30, 2021 and$12 million— fiscal year ended June 30, 2020).
Private Sector Window
The PSW was created under the Eighteenth Replenishment of IDA’s Resources (IDA18), which became effective
beginning fiscal year ended June 30, 2018, to mobilize private sector investment in IDA-only countries and IDAeligible Fragile and Conflict-affected States. In IDA18, PSW allocation, net of cancellation, was $1.3 billion which
was fully committed. The PSW continued under IDA’s Nineteenth Replenishment of Resources (IDA19), whichbecame effective beginning fiscal year ending June 30, 2021, with an initial allocation set at $2.5 billion which wasrevised to $1.7 billion. Under the fee arrangement for the PSW, IDA receives fee income for transactions executed
under this window and reimburses IFC and MIGA for the related costs incurred in administering these transactions.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

107

The following tables provide a summary of all PSW related transactions under which IDA had an exposure as ofJune 30, 2022:
Table G4: Summary of PSW related transactions
In millions of U.S. dollars
Facility

Notional

Local Currency
Facility$132

Net Asset/
Description
Location on the Balance Sheet(Liability) position$(9)
Currency swaps with IFC to support Derivative assets/ liabilities,
local currency denominated loansnet

In millions of U.S. dollars
Facility

Accumulated
Provision

Exposure

Description

Location on the Balance Sheet
Accumulated
Provision
Other liabilities

Exposure
MIGA Guarantee
Facility

$

272

$

37

Blended Finance
Facility

$

366

$

55

54

Not applicable

50

7Expanding the coverage of MIGA
Political Risk Insurance (PRI)
products through shared first-loss or
risk participation similar toreinsurance
Sharing the coverage of IFC
programs through shared first loss

Off Balance
Sheet item

Funding for IFC's PSW equity
investments

Other assets

Concessional senior & subordinated loans to support medium
term projects

Loansoutstanding

Off Balance
Sheet item

Other liabilities

Accumulated
Provision for
Loan Losses

NOTE H—TRUST FUNDS ADMINISTRATION
IDA, alone or jointly with one or more of its affiliated organizations, administers on behalf of the donors, including
members, their agencies and other entities, funds restricted for specific uses in accordance with administrationagreements with the donors. Specified uses of the funds include, among others, co-financing of IDA lending
projects, debt reduction operations for IDA members, technical assistance for borrowers including feasibility studies
and project preparation, global and regional programs, and research and training programs. These funds are held in
trust by IDA and/or IBRD, and are held in a separate investment portfolio which is not commingled with IDA and/or
IBRD funds.
Trust fund execution may be carried out in one of two ways: Recipient-executed or IDA-executed.
Recipient-executed trust funds involve activities carried out by a recipient third-party executing agency. IDA enters
into agreements with and disburses funds to such recipients, who then exercise spending authority to meet theobjectives and comply with terms stipulated in the agreements.
IDA-executed trust funds involve execution of activities by IDA as described in relevant administration agreementswith donors, which define the terms and conditions for use of the funds. Spending authority is exercised by IDA,
under the terms of the administration agreements. The executing agency services provided by IDA include, among
others, activity preparation, analytical and advisory activities and project-related activities, including procurement ofgoods and services.
The following table summarizes the expenses pertaining to IDA-executed trust funds:
Table H1: Expenses pertaining to IDA-executed trust funds
In millions of U.S. dollars
2022
IDA-executed trust funds expenses

108$

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

613

Fiscal Year Ended June 30,
2021
$
553

2020
$

586

These amounts are included in Administrative expenses and the corresponding revenue is included in Revenue fromexternally funded activities in the Statement of Income. Administrative expenses primarily relate to staff cost, travel
and consultant fees.
The following table summarizes undisbursed contributions made by third party donors to IDA-executed trust funds,
recognized on the Balance Sheet:
Table H2: Undisbursed contributions made by third party donors to IDA-executed trust funds
In millions of U.S. dollars
June 30, 2022
IDA-executed trust funds$

June 30, 2021
707

$

749

These amounts are included in Other Assets and the corresponding liabilities are included in Accounts payable andmiscellaneous liabilities on the Balance Sheet.
Revenues
IDA’s revenues for the administration of trust fund operations were as follows:
Table H3: IDA’s revenues for the administration of trust fund operations
In millions of U.S. dollars
2022
Revenues$

43

Fiscal Year Ended June 30,
2021
$
38

2020
$

41

These amounts are included in Other non-interest revenue in the Statement of Income.
Amounts collected from donor contributions for administration activities, but not yet earned, totaling $67 million atJune 30, 2022 ($70 million—June 30, 2021) are included in Other Assets and in Accounts payable andmiscellaneous liabilities, respectively, on the Balance Sheet.
Transfers Received
Under the agreements governing the administration of certain trust funds, IDA may receive any surplus assets astransfers upon the termination of these trust funds. In addition, as loans are repaid to trust funds, in certain cases therepayments are transferred to IDA. During the fiscal year ended June 30, 2022, no funds were recorded as Transfersfrom affiliated organizations and others, under these arrangements (Nil—fiscal year ended June 30, 2021 and Nil—fiscal year ended June 30, 2020).

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

109

NOTE I—DEVELOPMENT GRANTS
A summary of changes to the amounts payable for unconditional development grants is presented below:
Table I1: Grants payable
In millions of U.S. dollars
Balance, beginning of the fiscal year
Disbursement (including PPA grant activity)aCancellations
Translation adjustment
Balance, end of the fiscal year$$

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

$

$

June 30, 2021
9,141
(2,417)
(235)
331
6,820

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
Fiscal Year Ended June 30,
2022
Conditional development grants disbursed a
Cancellation of unconditional grants
Disbursement of grant advances not yet expensed b
Grant advances meeting expense condition c
Grant Expenses$

Grants Approved

2021
$

$

3,736
(149)
(1,949)
734
2,372

$

3,829
(235)
(1,033)
269
2,830

$

13,083$

12,192a. Disbursements of conditional grants approved on or after July 1, 2019b. Disbursements made over the period for which the expense recognition criteria has not yet been met.
c. Prior disbursement of grant advances meeting the criteria to be expensed over the period.

As of June 30, 2022, the cumulative amount of conditional grants approved but not yet expensed was $24,384
million. Out of which, the outstanding amount of conditional grant advances disbursed but not yet expensed, totaling$2,189 million at June 30, 2022 ($974 million – June 30, 2021), are included in Other assets on the Balance Sheet.
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 Statement of Comprehensive Income.
The following table presents the changes in Accumulated Other Comprehensive (Loss) Income (AOCI) balances:
Table J1: Changes in accumulated other comprehensive income (loss)
In millions of U.S. dollars
Fiscal Year Ended June 30,
2021
1,656 $
(3,927) $(10,851)
5,647
43
(64)
(9,152) $1,656 $

2022
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

110

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

$

$

2020
(2,408)(1,526)
7(3,927)

NOTE K—FAIR VALUE DISCLOSURES
Valuation Methods and Assumptions
As of June 30, 2022, and June 30, 2021, IDA had no financial assets or liabilities measured at fair value on a non–recurring basis.
Due from Banks
The carrying amount of unrestricted and restricted cash is considered a reasonable estimate of the fair value of these
positions.
Loans and loan commitments
There were no loans carried at fair value as of June 30, 2022 and June 30, 2021. IDA’s loans and loan commitments
would be classified as Level 3 within the fair value hierarchy.
Summarized below are the techniques applied in determining the fair values of IDA’s financial instruments.
Investment securities
Where available, quoted market prices are used to determine the fair value of trading securities. Examples include
most government and agency securities and futures contracts.
For instruments for which market quotations are not available, fair values are determined using model-based
valuation techniques, whether internally-generated or vendor-supplied, that include the standard discounted cash
flow method using observable market inputs such as yield curves, credit spreads, and constant prepayment spreads.
Where applicable, unobservable inputs such as conditional prepayment rates, probability of default, and loss severity
are used.
Unless quoted prices are available, time deposits are reported at face value, which approximates fair value, as they
are short term in nature.
Securities purchased under resale agreements, securities sold under repurchase agreements, and securities lent
under securities lending agreements
These securities are of a short-term nature and are reported at face value, which approximates fair value.
Borrowings
The fair value of IDA’s borrowings carried at fair value is calculated using a discounted cash flow method which
relies on observable market inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
As of June 30, 2022, and June 30, 2021, borrowings measured at amortized cost would be classified as Level 2
within the fair value hierarchy.
Derivative instruments
Derivative contracts include currency forward contracts, TBA securities, swaptions, exchange traded options andfutures contracts, currency swaps and interest rate swaps.
Where available, quoted market prices are used to determine the fair value of trading securities. Examples include
exchange traded options and futures contracts.
For instruments for which market quotations are not available, fair values are determined using model-based
valuation techniques, whether internally-generated or vendor-supplied, that include the standard discounted cash
flow method using observable market inputs such as yield curves, foreign exchange rates, credit spreads, basis
spreads, funding spreads and constant prepayment spreads. Where applicable, unobservable inputs such as constantprepayment rates, probability of default, and loss severity are used.
Valuation adjustments on fair value option elected liabilities
The DVA on fair value option elected liabilities (market borrowings carried at fair value) is 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.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

111

The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with theirrespective carrying amounts.
Table K1: Fair value and carrying amounts of financial assets and liabilities
In millions of U.S dollars

AssetsDue from banks
Investments (including securities transferredunder repurchase or securities lending
agreements)
Net loans outstanding
Derivative assets, net
Liabilities
Borrowings
Market borrowings, at fair valueMarket borrowings, at amortized cost
Concessional partner loans
Derivative liabilities, net

June 30, 2022
Carrying Value
Fair Value

June 30, 2021
Carrying Value
Fair Value

$

$

686

$

686

496

$

496

39,827
174,490404

39,827141,193404

37,376
177,779
249

37,376
164,606249

19,718
6,201
6,980
579

19,718
5,073
7,123
579

20,555
7,759
408

20,555
9,516
408

As of June 30, 2022, IDA’s signed loan commitments were $61.8 billion ($60.8 billion – June 30, 2021) and had afair value of $(8.2) billion ($(5.4) billion - June 30, 2021).

112

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

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, 2022
Level 1
Level 2
Level 3
Total
Assets:Investments—Trading
Government and agency obligations
Time deposits
ABS
Total Investments—Trading
Investments—Non-trading (at fair value)
Total Investments$$

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

$
$

7,699
569
8,268
8,268

$

-

$

$

$

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

$

1,269
1,589
2,858

$

$

$

-

$

-

$

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

$

1,269
1,589
2,858

$

1,682
772
404

$

-

$

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$

23,902
15,411
168
39,481
346
39,827$$a. Includes $35 million CVA.
b. Includes $19 million DVA.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

113

Table K2.1
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
As of June 30, 2021
Level 1
Level 2
Level 3
Total
Assets:Investments—Trading
Government and agency obligations
Time deposits
ABS
Total Investments—Trading
Investments—Non-trading (at fair value)
Total Investments
Derivative assets:
Currency swaps and currency forward contracts
Interest rate swaps

$

$

$
$

7,852
728
8,580
8,580

$

-

$

$

$

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

$

460
193
653

$

$

$

-

$

-

$

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

a. Includes $2 million CVA.
b. Includes $6 million DVA.

114

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

$

460
193
653

$

404
249

$

-

$

20,555$-$20,555

$

-

$

507
309
816

$

-

$
$

507
309
816

$

408
408

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

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

Presented below is the difference between the aggregate fair value and aggregate contractual principal balance of
non-trading securities in the investment portfolio:
Table K3: Investment portfolio-Non-trading securities
In millions of U.S dollars
June 30, 2022
June 30, 2021$$

Fair value
346
487

$
$

Principal amount due
358
472

$
$

Difference(12)
15

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

June 30, 2022
June 30, 2021$$

Fair Value
19,71820,555

Principal Due Upon
Maturity$
21,506$
20,659$$Difference(1,788)(104)

Valuation adjustments on fair value option elected liabilities
During the fiscal year ended June 30, 2022, IDA recorded unrealized mark-to-market gain of $43 million ($64
million unrealized mark-to-market loss – fiscal year ended June 30, 2021) in Other Comprehensive Income, in
relation to the changes in its own credit (DVA) on fair value option elected liabilities (market borrowings carried atfair value).
As of June 30, 2022, IDA’s Balance Sheet included a DVA of $13 million cumulative loss ($56 million cumulative
loss—June 30, 2021) in Accumulated other comprehensive income, associated with the changes in IDA’s own credit
for its market borrowings reported at fair value.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

115

The following table reflects the components of the unrealized mark-to-market gains or losses on IDA’s trading andnon-trading portfolios, net.
Table K5: Unrealized mark-to-market gains (losses) on trading and non-trading portfolios, net
In millions of U.S. dollars
Fiscal Year Ended June 30, 2022
Unrealized gains
Unrealized gains(losses) excluding(losses)realized amounts a

Realized gains(losses)
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)

$

(104)

-

1,441

1,441

-

(26)
(2)
61
1,474

(26)
(2)
61
1,474

$

$

Table K5.1:
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

$

$

Table K5.2:
In millions of U.S. dollars
Fiscal Year Ended June 30, 2020
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

$

$

207

$

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

$

207

-

(699)

(699)

-

29
(13)
(5)
(688)

29
(13)
(5)
(688)

$

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.

116-

Unrealized gains(losses)$NOTE L—CONTINGENCIESDue to the ongoing COVID-19 pandemic, IDA faces additional credit, market, and operational risks. The length andseverity of the pandemic and the related developments, as well as the impact on the financial results and position of
IDA in future periods cannot be reasonably estimated at this point in time and continue to evolve. IDA continues tomonitor the developments and to manage the risks associated with its various portfolios within existing financial
policies and limits.
From time to time, IDA may be named as a defendant or co-defendant in legal actions on different grounds invarious jurisdictions. The outcome of any existing legal action, in which IDA has been named as a defendant or codefendant, as of and for the fiscal year ended June 30, 2022, is not expected to have a material adverse effect on
IDA's financial position, results of operations or cash flows.

IDA FINANCIAL STATEMENTS: JUNE 30, 2022

117