International Development Association

Management’s Discussion & Analysis
andCondensed Quarterly Financial Statements
December 31, 2021
(Unaudited)

International Development Association (IDA)
Management’s Discussion and Analysis
December 31, 2021
Contents
Section I: Executive Summary

Summary of Financial Results

4

Section II: Overview

Financial Business Model
Basis of Reporting

6
7

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

Section IV: Financial Results

Financial Results and Portfolio Performance

10

Section V: Risk Management

Risk GovernanceManagement of IDA’s Risks

17
17

Section VI: Governance

Senior Management Changes

24

List of Tables, Figures and Box

TablesFigures
Box

25
25
25

Management’s Discussion and Analysis

Section I: Executive Summary

This Management’s Discussion & Analysis (MD&A) discusses the results of the International Development
Association’s (IDA) financial performance for the six-month period ended December 31, 2021 (FY22 YTD). This
document should be read in conjunction with IDA’s financial statements and MD&A issued for the fiscal year ended
June 30, 2021 (FY21). IDA undertakes no obligation to update any forward-looking statements. Certain
reclassifications of prior years’ information have been made to conform with the current year’s presentation. For
information relating to IDA’s development operations’ results and corporate performance, refer to the World Bank
Corporate Scorecard and Sustainability Review.

Box 1: Selected Financial Data
In millions of U.S. dollars, except ratios which are in percentages
As of and for the six months
ended December 31,
2021
2020

As of and for the fiscal
year ended June 30,
2021

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

Gross disbursements
Net disbursementsaa

11,404$

13,611$

36,028

8,556

9,654

22,921

5,177

6,942

16,465

Balance Sheet (Section IV)
Total assets$

Net investment portfoliob

Net loans outstanding
Borrowing portfolioc

Total equity

219,723$

212,064$

219,324

38,25135,54737,921

177,148

172,761

177,779

32,212

24,36428,335

178,739

174,845

180,876

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

937

Transfers from affiliated organizations and others

274

Development grants
Net loss

$

845

$

1,996

-

544

(986)

(932)

(2,830)(430)(1,103)(433)

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

$

149

$

(51)

$

394

Capital Adequacy (Section V)
Deployable Strategic Capital Ratio

29.1%

34.7%

30.4%

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 net investment portfolio, see Notes to Condensed Quarterly Financial Statements, Note C – Investments – Table
C2.
c. Includes associated derivatives.

2

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section I: Executive Summary

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

1

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

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

IDA Management’s Discussion and Analysis: December 31, 2021

3

Management’s Discussion and Analysis

Section I: Executive Summary

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

Net Loss and Adjusted Net Income
Net Loss: For FY22 YTD, IDA reported a net loss of $430 million,
compared to a net loss of $1,103 million for the six-month period
ended December 31, 2020 (FY21 YTD). The decrease in net loss
was primarily driven by non-functional currency translation
adjustment gains and transfers from affiliated organizations,partially offset by unrealized mark-to-market losses on the nontrading portfolios. See Section IV: Financial Results.
Adjusted Net Income: For FY22 YTD, IDA’s adjusted net income
was $149 million compared with the adjusted net loss of $51 million
in FY21 YTD. The increase was primarily due to lower provision forlosses on loans and other exposures and higher interest revenue onloans. See Section IV: Financial Results.

YTD Adjusted Net Income (Loss)YTD Net Income (Loss)
4,000
2,000
0
(2,000)(4,000)
FY18

FY19

FY20

FY21

FY22

Lending Operations
IDA made $11.4 billion of net commitments in FY22 YTD, of which $6.7 billion was loan commitments. The
remainder were grant commitments, which are recorded as an expense in IDA’s Statement of Income once allconditions are met, which generally occurs at the time of disbursement. FY22 YTD commitments reflected support
for COVID-19 related efforts, including $1.2 billion of financing for COVID-19 vaccines.
IDA’s net loans outstanding decreased by $0.6 billion, from $177.8 billion as of June 30, 2021 to $177.1 billion asof December 31, 2021. See Section IV: Financial Results.
In billions of U.S. dollarsa

YTD Net Commitments
YTD Gross Disbursements
YTD Net Disbursements

Net Loans Outstanding

YTD Net Grant Commitments
YTD Grant Expense

200
16

16

160

12

120

12

8

80

8

4

40

4

0

0

FY18 FY19 FY20 FY21 FY22

Jun 18 Jun 19 Jun 20 Jun 21 Dec 21

0
FY18 FY19 FY20 FY21 FY22

a. Includes loans, grants, and guarantees.

Net Investment Portfolio

In billions of U.S. dollars

As of December 31, 2021, the net investment portfolio was $38.3 billion,
compared with $37.9 billion as of June 30, 2021. See Section IV: Financial
Results. The primary objective of IDA’s investment strategy is principal
protection. As of December 31, 2021, 65% of IDA’s investment portfolio
was held in instruments rated AA or above (See Table 15).

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

4

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section I: Executive Summary

In billions of U.S. dollars

Borrowing Portfolio
Market borrowings at fair value: As of December 31, 2021, the market
borrowings portfolio outstanding carried at fair value was $22.4 billion, an
increase of $1.8 billion from June 30, 2021. Section IV: Financial Results.
Market borrowings at amortized cost: As of December 31, 2021, themarket borrowings outstanding carried at amortized cost were $2.2 billion(Nil - June 30, 2021). See Section IV: Financial Results.

Borrowing portfolio
75
60
45
30
15
0

Concessional Partner Loans at amortized cost: As of December 31,
2021, total borrowings from members - Concessional Partner Loans(CPLs) - were $7.6 billion, a decrease of $0.1 billion, compared with June30, 2021 ($7.7 billion). See Section IV: Financial Results.

Jun 18 Jun 19 Jun 20 Jun 21 Dec 21

Equity and Capital Adequacy

In billions of U.S. dollars

As of December 31, 2021, IDA’s equity was $178.7 billion, a decrease of$2.1 billion from June 30, 2021. See Section IV: Financial Results.

Equity
200
150
100
50
0
Jun 18

The Deployable Strategic Capital (DSC) ratio, IDA’s main capital
adequacy measure, was 29.1% as of December 31, 2021, above the zero
percent policy minimum, and a decrease of 1.3 percentage points from
30.4% as of June 30, 2021. IDA’s capital continues to be adequate tosupport its operations. See Table 14.

Jun 19Jun 20Jun 21

Dec 21

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

IDA Management’s Discussion and Analysis: December 31, 2021

Dec 21

5

Management’s Discussion and Analysis

Section II: Overview

Section II: Overview
Generally every three years, representatives of IDA’s members3 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.
The Nineteenth Replenishment (IDA19) financing framework is an integrated package that continues to leverage
IDA’s strong equity base. The first year of the implementation of IDA19 commenced in FY21 which coincided withthe onset of the COVID-19 pandemic. As a result, IDA has significantly scaled up its financial support, serving clientsand targeting resources to those most in need. In recognition of the heightened financing needs of IDA countries andto make additional resources available to them to respond to, and recover from the COVID-19 crisis, IDA members
agreed in April 2021 to launch the Twentieth IDA Replenishment (IDA20) one year early, to commence in FY23 andto shorten the IDA19 implementation period to two years (FY21-FY22). The remaining resources from IDA19 will
be carried forward to be utilized in the replenishment period of IDA20. In December 2021, IDA members agreed on
the IDA20 operational and financing framework that reflects an IDA20 financing envelope of $934 billion that will besupported by $23.5 billion of member contributions; Multilateral Debt Relief Initiative (MDRI), financing raised in
the capital markets, IDA19 carry-over, internal resources (e.g., loan repayments) and transfers from IBRD, make up
the remainder. The IDA20 operational and financing framework will be reviewed for approval by IDA’s Executive
Directors in February 2022, after which the IDA20 resolution will be considered for adoption by IDA’s Board ofGovernors in March 2022.

Financial Business Model
IDA has financed its operations over the years with its own equity, including regular additions to equity provided bymember countries as part of the replenishment process. As a result of the strong support of member countries, IDA
has built up a substantial equity base, amounting to $178.7 billion as of December 31, 2021. In FY15, IDA introduced
debt to its financial model with concessional partner loans received from certain members. In FY18, IDA introduced
a hybrid financing model by including market debt into its business model. By prudently leveraging its equity andblending market debt with additional equity contributions from members, IDA has increased its financial efficiency,
and scaled up its financing to support the escalating demand for its resources to deliver on the following priorities:• Provide concessional financing on terms that respond to clients’ needs; and• Ensure long-term financial sustainability of IDA’s financial model through a prudent risk management framework.
Concessional lending, including grants, is primarily financed by IDA’s equity. Non-concessional lending will
primarily be financed by market debt. To the extent that market debt will be used to finance concessional lending, it
will be blended with member contributions (equity). Funds not deployed for lending are maintained in IDA’s
investment portfolio to supply liquidity for its operations. See Figure 1.

3 IDA’s members are owners and hold voting rights in IDA. Members do not, however, hold shares in IDA and are therefore not referred

to as shareholders. Payments for subscriptions and contributions from members increase IDA’s paid-in equity and are financiallyequivalent to paid-in capital in multilateral development organizations that issue shares.
4
U.S. dollar amounts are based on IDA20 reference rate of USD/SDR 1.42934. The U.S. dollar amounts are provided for reporting
purposes only, as IDA’s balance sheet is predominantly managed in Special Drawing Rights (SDR).

6

IDA Management’s Discussion and Analysis: December 31, 2021

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. For the convenience of its members and other users, IDA’s
financial statements are reported in U.S. dollars. Management uses net income as the basis for deriving adjusted net
income, as discussed in Section IV: Financial Results.

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

IDA Management’s Discussion and Analysis: December 31, 2021

7

Management’s Discussion and Analysis

Section III: IDA’s Financial Resources

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

Allocation of IDA19 Resources
IDA financing is provided in the form of loans, grants, and guarantees. Most of IDA’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 Fragile, Conflict andViolent (FCV) envelope. The rest of IDA’s support is 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.
IDA responds to specific needs of its members through the following five IDA Windows:

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

As of December 31, 2021
Concessional financing
IDA Country Allocations
IDA Concessional Windows
Regional Window
Window for Host Communities and Refugees
Crisis Response Window
Arrears Clearance
Non-concessional financing
Total Net Commitments a$

25,878Grants
$

1,496
30
445
2,735
$

30,584

13,381

Total
$

1,299
756
412
1,000
$

16,84839,259
2,795
786
857
1,000
2,735

$

47,432a. Commitments are net of full cancellations/terminations approved in the same fiscal year. Commitments exclude IDA-IFC-MIGA
Private Sector Window (PSW) activities.

Private Sector Window
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. During FY22
YTD, $154 million of the IDA19 PSW resources, net of full terminations and cancellations, were committed.

8

IDA Management’s Discussion and Analysis: December 31, 2021

Section III: IDA’s Financial Resources

Management’s Discussion and Analysis

As of December 31, 2021, $694 million had been utilized out of a total of $2.1 billion commitments in IDA18 and
IDA19. See Notes to the Condensed Quarterly Financial Statements for the period ended December 31, 2021, Note G– Transactions with Affiliated Organizations – Table G4.
Table 2: Utilization of PSW Commitments
In millions of U.S. dollars
As of December 31, 2021

IDA 18

IDA 19Total

Utilization measure

Allocation

$

1,370

$

1,700

$

3,070

Net Commitments
Of which utilized$

1,325 a

$

749

$

2,074

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

$

499

Face value of outstanding guarantees

119

Notional amount52

Initial value of investment

24

Amortized cost

Total utilization of IDA PSW$

694

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

IDA Management’s Discussion and Analysis: December 31, 2021

9

Management’s Discussion and Analysis

Section IV: Financial Results

Section IV: Financial Results
Financial Results and Portfolio Performance
Net Loss
IDA had a net loss of $430 million in FY22 YTD compared with a net loss of $1,103 million in FY21 YTD (See Table3). The decrease in net loss was primarily driven by:$207 million of non-functional currency translation adjustment gains in FY22 YTD as compared to $499 million
losses in FY21 YTD. The gains in FY22 YTD were primarily due to the depreciation of the majority of the nonfunctional currencies against the U.S. dollar.

$274 million received as transfer from IBRD’s FY21 allocable income in FY22 YTD, upon approval by the Boardof Governors. The transfer from IBRD’s FY20 allocable income was received in February 2021, and accordingly
nil for the comparative six-month period in FY21.

$115 million decrease in provision for losses on loans and other exposures, partially offset by$87 million of unrealized mark-to-market losses on the non-trading portfolios in FY22 YTD as compared to $395
million gain in FY21 YTD. The decrease was mainly driven by mark-to-market losses from the derivatives held
for the Capital Value Protection Program (CVP), due to the decrease in interest rates for long tenors during theperiod.

Adjusted Net Income
IDA’s adjusted net income was $149 million in FY22 YTD compared with a $51 million loss in FY21 YTD (SeeTable 3). The increase in ANI was primarily driven by:$86 million increase in net interest revenue on loans, mainly driven by the higher average balance of loans
outstanding.

$114 million decrease in provision for losses on loans and other exposures, excluding $1 million release for debt
relief under Heavily Indebted Poor Countries (HIPC)/ Multilateral Debt Relief Initiative (MDRI).

Table 3: Condensed Statement of Income
In millions of U.S. dollars
For the six months ended December 31,
Interest revenue
Loans, net$
Investments, net
Asset-liability management derivatives, net
Borrowing expenses, net
Interest revenue, net of borrowing expenses$
Provision for losses on loans and other exposures, (charge)
Other (expenses) revenue, net (Table 12)
Net non-interest expenses (Table 11)
Transfers from affiliated organizations and others
Non-functional currency translation adjustment gains (losses), net
Unrealized mark-to-market gains on investments-trading portfolio, net a
Unrealized mark-to-market (losses) gains on non-trading portfolios, net
Development grants
Net Loss$
Adjustments to reconcile net (loss) income to adjusted net income:Expenses relating to development financing activities directly funded bycontributions from members
Contributions from affiliated organizations and others
Non-functional currency translation adjustment (gains) losses, net
Unrealized market-to-market losses (gains) on non-trading portfolios, net b
Pension and other adjustments
Adjusted Net Income (Loss)
$

2021

2020

967 $
881
66
70
(9)
(96)
(97)
937 $
845
(134)
(249)
(15)
38
(705)
(785)
274
207
(499)
79
84
(87)
395
(986)
(932)
(430) $ (1,103)

1,066
(274)
(207)
91
(97)
149

954
499
(403)
2
(51)

Negative
ImpactPositive
Impact
86

(4)
9
1
92
115
(53)
80
274
706
(5)
(482)
(54)
673

112
(274)
(706)
494
(99)
200

a. Includes IDA’s share of returns from Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve Fund(PCRF) assets – $58 million (FY21 YTD – $112 million).
b. For FY22 YTD, excludes $4 million of gain from revenue-hedging forward currency contracts (FY21 YTD - $8 million of loss).

10

IDA Management’s Discussion and Analysis: December 31, 2021

Section IV: Financial Results

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

December 31, 2021

June 30, 2021

$

$

$

$

$

684
35,725
177,148
222
5,944
219,723

31,766345
8,873
178,739
219,723$$$

Decrease

Increase

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

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

a. The fair value of IDA loans was $163,476 million as of December 31, 2021 ($164,606 million – June 30, 2021).

EquitySee Table 5 below for the change in IDA’s equity during FY22 YTD.
Table 5: Changes in Equity
In millions of U.S. dollars
Equity as of June 30, 2021
Change during the period:
Subscriptions and contributions paid-in
Nonnegotiable, noninterest-bearing demand obligations
Change in Accumulated deficit
Change in Accumulated other comprehensive (loss)
Total change
Equity as of December 31, 2021$

180,876
1,171
62
(430)
(2,940)$(2,137)$

178,739

Results from Lending Activities
Loan Portfolio and Grant Activity
As of December 31, 2021, the net loans outstanding (after accumulated provision for losses on loans) was $177.1
billion, lower by $0.6 billion compared with June 30, 2021. The decrease was mainly due to currency translation lossesof $3.5 billion, consistent with the 1.9% depreciation of the SDR against the U.S. dollar during the period, offset by$2.8 billion in net loan disbursements.
As of December 31, 2021, 90% of IDA’s total loans outstanding were denominated in SDR. For the regionalpresentation of total loans outstanding, see Notes to the Condensed Quarterly Financial Statements for the period
ended December 31, 2021, Note D – Loans and Other Exposures – Table D6.

IDA Management’s Discussion and Analysis: December 31, 2021

11

Management’s Discussion and Analysis

Section IV: Financial Results

Table 6: Net Loans Outstanding activity

Figure 2: Net Loans Outstanding

In millions of U.S. dollars

In billions of U.S. dollars

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

177,779200
161

Gross loan disbursements
Loan repayments
Change in accumulated provision for loan losses a
Currency translation adjustments
Other b6,199
(3,381)28(3,458)(19)

Total change
Net Loans outstanding as of December 31, 2021

$

(631)

$

177,148

178

177

Jun 21

Dec 21

150
100
50
0
Jun 20a. See Notes to the Condensed Quarterly Financial Statements, Note D –Loans and Other Exposures.
b. Represents deferred loan origination costs of $4 million, and HIPC Debt
relief provided of $15 million.

During FY22 YTD, net loan commitments were $2.4 billion lower, compared with the same period in FY21, mainly
due to high levels of financing in FY21 YTD in the earlier stages of the COVID-19 pandemic.
Table 7: Net Commitments of Loans and Guarantees by Region
In millions of U.S. dollars
For the six months ended December 31,

2021

Eastern and Southern Africa$% of total

2020

1,655

25 %

3,829

East Asia and Pacific% of total

Variance

2,199

24 %

57

3,991

44

(162)

63

1

154

2

(91)

Europe and Central Asia

306

5

384

4

(78)

Latin America and the Caribbean

44

1

229

3

(185)

Western and Central Africa

$

$

(544)

Middle East and North Africa

80

1

5

*

75

South Asia

700

10

2,088

23

(1,388)

100 %

$

9,050

100 %

$

-

Total

$

6,677

of which Guarantees

$

-

$

(2,373)$-* Indicates percentage less than 0.5%.
Table 8: Net Commitments of Grants by Region
In millions of U.S. dollars
For the six months ended December 31,

2021% of total

2020% of total

2,658

56

1,580

33

2,038

45

1,349

30

East Asia and Pacific

154

3

60

1

Europe and Central Asia

94

90

2

206

4

(116)

Latin America and the Caribbean

75

2

72

2

3

Middle East and North Africa

170

4

329

7

(159)

Eastern and Southern Africa$

Western and Central Africa

South Asia
Total

$

-

-

4,727

100

%

%

$

$

507

11

4,561

100

Variance
%

$

620
231

(507)
%

$

166

* Indicates percentage less than 0.5%.

IDA’s loans generally disburse within five to ten years for Investment Project Financing (IPF) and one to three years
for Development Policy Financing (DPF). Therefore, each year’s disbursements also include amounts relating tocommitments made in earlier years (See Table 9).
During FY22 YTD, gross disbursements were lower by 11% compared with the same period in FY21. The higher
gross disbursements in FY21 YTD were mainly driven by the increase in emergency funding in response to the
COVID-19 pandemic.

12

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section IV: Financial Results

Table 9: Gross Disbursements of Loans and Grants by Region
In millions of U.S. dollars
For the six months ended December 31,
Eastern and Southern Africa$

2021
Grants b

Loans a1,240 $

873 $

2,113

1,936

837

East Asia and Pacific768

Europe and Central Asia

432

Latin America and the Caribbean
Middle East and North Africa

Western and Central Africa

South Asia
Total

$

Loans a

Total
$

2020
Grants b

Total

Variance

2,049 $

1,002 $

3,051

2,773

1,873

1,003

2,876

54

822

642

73

715

107

63

495

559

77

636

(141)

224

87

311

167

55

222

89

47

272

319

42

120

162

157

1,537

186

1,723

1,649

343

1,992

6,184 $

2,372 $

8,556

6,981 $

2,673 $

9,654

$

$

(938)
(103)

(269)
$

(1,098)a. Excludes PSW related disbursements - $15 million (FY21 YTD - $3 million).
b. Excludes Project Preparation Advances (PPA).

As of December 31, 2021, 60% of IDA’s loans were on regular terms (75 basis points SDR equivalent service charge),
see Table 10. For a summary of financial terms for IDA’s lending products, effective July 1, 2021, refer to IDA’s
MD&A for the fiscal year ended June 30, 2021, Section V: Development Activities, Products and Programs.
The increase in IDA’s revenue from loans in FY22 YTD compared to FY21 YTD was primarily due to the higher
average balance of loans outstanding.
Table 10: Revenue and Balances by Product Category
In millions of U.S. dollars
Interest revenue on loans aBalance as of December 31,
2021
2020

Category
Loans

For the six months ended December 31,
2021
2020

Concessional
Regular$108,404$

109,281

$

417

$

398

Blend

65,34762,673475

420

Hard b

1,397

1,425

24

24

5,677

3,957

52

40

24

8

*

*

Non-concessional c
Others d
Total$

180,849$

177,344

$

968

$

882

a. Excludes interest rate swap expenses related to loan hedges - $1 million in FY22 YTD ($1 million - FY21 YTD).
b. Prior to July 1, 2017, IDA offered Hard-Term loans to Blend Countries (excluding Small Island Economies). Hard-term loans are nolonger offered.
c. Excludes $12 million of commitment charges earned in FY22 YTD on undisbursed balances of non-concessional loans ($9 million
in FY21 YTD).
d. Represents loans under the PSW.
* Indicates amount less than $0.5 million.

Results from Investing Activities
Investment Portfolio
IDA’s net investment portfolio increased to $38.3 billion as of December 31, 2021, from $37.9 billion as of June 30,
2021. The increase was primarily due to the investment of proceeds from net new debt issuances, offset by net loan
and grant disbursements and translation adjustment losses.
Investment interest revenue, net of derivatives
During FY22 YTD, IDA’s net investment revenue was $66 million, a marginal decrease compared with the same
period in FY21.

IDA Management’s Discussion and Analysis: December 31, 2021

13

Management’s Discussion and Analysis

Section IV: Financial Results

Figure 3: Net Investment Portfolio

Figure 4: YTD Investment interest revenue, net of derivatives

In billions of U.S. dollars

In millions of U.S. dollars

40

35.6

400

38.3

37.9

320
30

240

20

160

10

80

0
Jun 20Jun 210

Dec 21

FY18

FY19

FY20

FY21

FY22

Results from Borrowing Activities (excluding associated derivatives)
As of December 31, 2021, market borrowings recorded at fair value were $22.0 billion, an increase of $1.4 billion
compared to June 30, 2021 ($20.6 billion). The increase was mainly driven by net new issuances of Medium andLong-term instruments during the period. See Notes to the Condensed Quarterly Financial Statements for the period
ended December 31, 2021, Note E – Borrowings.
As of December 31, 2021, the market borrowings at amortized cost were $2.2 billion. See Section V – Risk
Management and Notes to the Condensed Quarterly Financial Statements for the period ended December 31, 2021,
Note E – Borrowings.
Concessional partner loans from members, recorded at amortized cost were $7.6 billion as of December 31, 2021($7.7 billion - June 30, 2021). As part of IDA19, two members have agreed to provide IDA with concessional partner
loans totaling $1.1 billion. As of December 31, 2021, these two members had signed concessional partner loan
agreements with IDA for a total of $0.7 billion.
Figure 5: Borrowings
In billions of U.S. dollars
4030Concessional partner loans, at amortized costMarket borrowings, at amortized costMarket borrowings, at fair value
7.6
7.7

2.2

20
7.6
10

20.6

22.0

Jun 21

Dec 21

12.1
0
Jun 20Transfers from Affiliated Organizations
Since 1964, IBRD has made transfers to IDA out of its net income, upon approval by the Board of Governors. Undera formula-based approach for IBRD's income support to IDA, the amount of income transfer recommended for IDA
is a function of IBRD's financial results. On October 14, 2021, IBRD’s Board of Governors approved a transfer from
FY21 allocable income of $274 million to IDA which was received by IDA on October 25, 2021.

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

14

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section IV: Financial Results

The administrative expenses shown in the table below include costs related to IDA-executed trust funds and otherexternally funded activities.
See Table 11 for a comparison of the main sources of administrative expenses and revenue from externally funded
activities in FY22 YTD and FY21 YTD.
IDA’s net non-interest expenses were $705 million in FY22 YTD, compared to $785 million in FY21 YTD. The key
driver 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 $744 million in FY22 YTD, compared to $671
million in FY21 YTD. The increase was primarily due to higher staff, consultant, and travel costs in FY22.
Table 11: Net Non-Interest Expenses
In millions of U.S. dollars
For the six months ended December 31,

2021

2020

Variance

Administrative expenses:
Staff costs

$

593

$

557

$

36

Travel18

4Consultant and contractual services

215

195

20

Pension and other post-retirement benefits

98

249

(151)

Communications and technology

40

33

7

Premises and equipment

65

68

(3)

Other expenses

20

Total administrative expenses

$

1,049

Contributions to special programs a

14

20
$

1,126

$

(77)

17

18

(1)

Reimbursable revenue - IDA executed trust funds

(253)

(239)

(14)

Other revenue

(108)

(120)

Revenue from externally funded activities:
12

Total revenue from externally funded activities

$

(361)

$

(359)

$

(2)

Total Net Non-Interest Expenses (Table 3) - GAAP basis

$

705

$

785

$

(80)

$

39
744

$

(114)
671

$

153
73

Adjustments to arrive at Net non-interest expenses - Adjusted Net Income basis
Pension and Externally Financed Output (EFO) adjustments b
Net non-interest expenses - Adjusted Net Income basis
a. Included in Non-interest expenses – Other in the Condensed Statement of Income.
b. Adjustments are included in the Pension and other adjustments line in Table 3.

During FY22 YTD, IDA’s net other expenses were $15 million compared to $38 million of net other revenue in FY21
YTD. PPA cancellations and refinancing of PPA grants previously approved exceeded grant expenses in FY21 YTD,
generating net other revenue. Refinanced PPA grants are included in the loan provided to the borrower, andcorrespondingly, prior grant expenses are reversed.
Table 12: Other (Expenses) Revenue, net
In millions of U.S. dollars
For the six months ended December 31,

2021

PPA grants and others

$

(39)

2020
$

22

Guarantee fees

12

7

Commitment charges

12

9

Other (Expenses) Revenue, net (Table 3)

$

(15)

$

38

Variance
$

(61)
5
3

$

IDA Management’s Discussion and Analysis: December 31, 2021

(53)

15

Management’s Discussion and Analysis

Section IV: Financial Results

Provision for losses on loans and other exposures
In FY22 YTD, IDA recorded a provision for losses on loans and other exposures of $134 million as compared to $249
million in FY21 YTD. The provisions in FY22 YTD and FY21 YTD were primarily due to the increase in exposures,with a greater increase in FY21. See Notes to the Condensed Quarterly Financial Statements for the period ended
December 31, 2021, Note D – Loans and Other Exposures – Table D3.

Unrealized mark-to-market gains (losses) on investments-trading portfolio
During FY22 YTD, IDA’s investments-trading portfolio had unrealized mark-to-market gains of $21 million,
excluding positive returns from IDA’s share of PEBP earnings, mainly due to cross-currency management strategies($28 million of unrealized mark-to-market losses in FY21 YTD).

Unrealized mark-to-market gains (losses) on non-trading portfolios, net
During FY22 YTD, the non-trading portfolios had $87 million of net unrealized mark-to-market losses ($395 millionof net unrealized mark-to-market gains in FY21 YTD). The FY22 YTD mark-to-market losses were primarily fromthe derivatives held for the CVP, due to the decrease in interest rates for long tenors during the period.
Table 13: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
In millions of U.S. dollars
For the six months ended December 31,
Asset-liability management
Investment portfolio
Other a
Total

$

$

2021
(88)
(5)
6
(87)

$

$

2020
386
(4)
13
395

$

Variance
(474)
(1)

$

(7)
(482)

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

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, translation of loans, borrowings,
and all other assets and liabilities held on IDA’s Balance Sheet, that are denominated in currencies other than the SDR
and its component currencies (Section V: Risk Management). During FY22 YTD, translation adjustment gains on
non-functional currencies were $207 million, primarily driven by the depreciation of the majority of the non-functional
currencies against the U.S. dollar, IDA’s reporting currency. In comparison, the translation adjustment losses in FY21
YTD were $499 million due to the appreciation of the majority of the non-functional currencies against the U.S. dollar.

16

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section V: Risk Management

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

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

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

COVID-19 pandemic
The continuing spread of COVID-19 and variants has resulted in governments worldwide enacting emergency
measures to combat the spread of the virus. Those measures include travel bans or restrictions, quarantine periods andsocial distancing, which cause material disruption to businesses globally, resulting in an economic slowdown.
Governments and central banks reacted with significant monetary and fiscal interventions designed to stabilize
economic conditions.
Due to the ongoing COVID-19 pandemic, IDA continues to monitor the developments and to manage the risks
associated with all its portfolios.
As of December 31, 2021, IDA had sufficient resources to meet its liquidity requirements and continues to have accessto capital market resources. IDA continues to maintain a robust liquidity position and flexibility to access the necessary

IDA Management’s Discussion and Analysis: December 31, 2021

17

Management’s Discussion and Analysis

Section V: Risk Management

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

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 Deployable
Strategic Capital (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 is calculated as the amount by which Total Resources Available (TRA) exceed Total Resources
Required (TRR), plus a Conservation Buffer (CB). The TRA consists of IDA’s existing equity plus accumulated
provision for loan losses and other exposures. The TRR is the minimum capital required to cover expected andunexpected 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 fromvaluing IDA’s concessional loan portfolio in present value terms using market interest rates. This allowance iscalculated using a stressed interest rate to account for a potential future rise in market interest rates. Beginning in June
2021, as part of the DSC framework refinement, TRR now includes capital requirements to account for development
grants which are approved but not yet expensed to address the delay in expense recognition for grants made as a resultof the implementation of a related accounting standard update. It also takes into consideration the capital adequacy
protection provided by long-term fixed rate borrowings against changes in market interest rates. The CB is an extra
buffer in the amount of 10 percent of TRA.
As of December 31, 2021, the DSC was 29.1%, lower by 1.3 percentage points compared with June 30, 2021 (30.4%).
The decrease in the ratio was mainly due to lower TRA and a higher TRR. The decrease in TRA was primarily driven
by the decline in equity as a result of the currency translation adjustment losses as the SDR depreciated against the
U.S. dollar. The increase in TRR was primarily due to higher capital requirements for conditional development grants
not expensed. See Table 14.
In addition to the DSC framework, IDA has policies in place to ensure alignment of its lending and borrowing
activities. Included in these policies are asset coverage requirements, where management monitors asset and liquidity
levels to ensure IDA’s ability to satisfy all its borrowing and commitment obligations. See IDA’s MD&A for the fiscal
year ended June 30, 2021, Section IX: Risk Management.
Table 14: Deployable Strategic Capital Ratio
In billions of U.S. dollars except ratios in percentage
As ofDecember 31, 2021

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

$

$

183.7
111.9
18.4
53.4
29.1%

June 30, 2021
$

$

185.7
110.6
18.6
56.5
30.4%

Variance
$

$

(2.0)
1.3
(0.2)
(3.1)
-1.3%

Asset/Liability Management (ALM)
On July 1, 2021, IDA implemented an interim ALM policy which, under specific criteria, allows funding fixed rateloans with long-term fixed rate market debt and CPLs (both reported at amortized cost), as part of IDA’s interest rate

18

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section V: Risk Management

risk management to match debt characteristics with that of the loan portfolio. For more details, see Notes to theCondensed Quarterly Financial Statements for the period ended December 31, 2021, 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. For more details, see Notes to theCondensed Quarterly Financial Statements for the period ended December 31, 2021, Note F: Derivative Instruments.

Management of Credit and Market Risks
Credit Risk
IDA faces two types of credit risk: country credit risk and counterparty credit risk. Country credit risk is the risk ofloss due to a country not meeting its contractual obligations, and counterparty credit risk is the risk of loss attributable
to a counterparty not honoring its contractual obligations. IDA is exposed to commercial as well as noncommercial
counterparty credit risk.
Country Credit Risk
IDA’s lending management framework encompasses the long-standing Performance Based Allocation (PBA)
mechanism and allocation framework agreed at each replenishment, complemented by additional considerations
required when accessing debt markets to ensure adherence to risk management (capital adequacy) requirements.
IDA regularly assesses the country credit risk of all its borrowers. IDA produces credit risk ratings for all its borrowing
countries, which reflect country economic, financial, and political circumstances, and also considers environmental,social and governance (ESG) risk factors. Based on these risk ratings, to manage IDA’s overall portfolio risk, theallocation outcomes of the PBA and other mechanisms are reviewed to ensure that they are compatible with the
Deployable Strategic Capital Framework and Single Borrower Limit (SBL).
For FY22, the SBL has been set at $45.2 billion (25% of $180.9 billion of equity as of June 30, 2021). Currently, themaximum country exposure levels compatible with IDA’s overall capital adequacy target are lower than the SBL for
all IDA-borrowing countries. As a consequence, the SBL is not currently a constraining factor.
As of December 31, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure(Figure 6). IDA’s largest exposure to a single borrowing country, India, was $21.2 billion as of December 31, 2021.
Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans, aswell as disbursement profiles and projected new loans and guarantees.
Figure 6: Country Exposures as of December 31, 2021
In billions of U.S. dollars

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

21.2
17.9
16.4
13.8
12.2
11.2
10.1
8.3
5.7
4.5
0

2

4

6

8

10

12

14

16

18

20

22

Expected Losses, Overdue Payments and Non-Performing Loans
When a borrower fails to make payments on any principal, interest, or other charges due to IDA, IDA may suspend
disbursements immediately on all loans and grants to that borrower. IDA’s current practice is to exercise this option
using a graduated approach. These practices also apply to member countries eligible to borrow from both IDA and
IBRD, and whose payments on IBRD loans may become overdue. It is IDA’s practice not to reschedule service

IDA Management’s Discussion and Analysis: December 31, 2021

19

Management’s Discussion and Analysis

Section V: Risk Management

charges, interest or principal payments on its loans or participate in debt rescheduling agreements with respect to its
loans. As of December 31, 2021, none of the IDA borrowing countries in the accrual portfolio had overdue payments
beyond 90 days.
As an exception to the practices set forth for treatment of overdue payments, IDA has provided financing to countries
with overdue payments, in very specific situations. For further details, refer to IDA’s MD&A for the fiscal year ended
June 30, 2021, Section IX: Risk Management.
Accumulated Provision for Losses on Loans and Other Exposures
As of December 31, 2021, IDA had $180.8 billion of loans outstanding, of which loans in nonaccrual status represent
0.5%. IDA’s total provision for losses on loans and other exposures was $4.9 billion, which represents a provisioning
rate of 1.9% of the underlying exposures as of December 31, 2021 ($4.9 billion as of June 30, 2021, 2.0% of theunderlying exposure). See Notes to the Condensed Quarterly Financial Statements for the period ended December 31,
2021, Note D – Loans and Other Exposures.
Commercial Counterparty Credit Risk Exposure
Commercial counterparty credit risk is the risk that counterparties fail to meet their payment obligations under theterms of the contract or other financial instruments. Effective management of counterparty credit risk is vital to thesuccess of IDA’s funding, investment, and asset/ liability management activities. The monitoring and management ofthese risks is continuous as the market environment evolves.
As a result of IDA’s use of mark-to-market collateral arrangements for swap transactions, its residual commercial
counterparty credit risk exposure is concentrated in the investment portfolio, in instruments issued by sovereign
governments and non-sovereign holdings (including Agencies, Asset-backed securities, Corporates, and Time
Deposits) (See Table 15).
The credit quality of IDA’s investment portfolio remains in the upper end of the credit spectrum with 65% of theportfolio rated AA or above as of December 31, 2021, reflecting IDA’s continued preference for highly-rated securities
and counterparties across all categories of financial instruments.
Total commercial counterparty credit exposure, net of collateral held, was $36.0 billion as of December 31, 2021. For
the contractual value, notional amounts, and related credit risk exposure amounts by instrument, see Notes to theCondensed Quarterly Financial Statements for the period ended December 31, 2021, Note F: Derivative Instruments.
Table 15: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
In millions of U.S. dollars, except rates in percentages
As of December 31, 2021
Counterparty Ratinga

AAA

NonSovereigns

Sovereigns$

12,342

34 %

8,583

88

10,975

31

A

7,995

4,565

133

12,69335

36,010100 %Counterparty Rating a
AAA
AA
A
Total

18,886$

Sovereigns
$

$

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

$

$

3,755

16,903

$

$

-

221

As of June 30, 2021
NonNet Swap
Sovereigns
Exposure
6,023 $
7,438
179
4,378
68
17,839 $247$% of Total

2,304
$

$

Total Exposure

AA
Total

8,587

Net Swap
Exposure$

Total Exposure$$

15,368
10,136
12,01737,521% of Total
41 %
27
32
100 %

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

20

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

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

Setting

Date of cessation

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

Despite the extension of the publication of certain U.S. dollar LIBOR rates to June 30, 2023, the regulators’ guidance
remains that LIBOR should not be used for new contracts after 2021. In July 2021, the Commodity Futures Trading
Commission’s Market Risk Advisory Committee (MRAC) adopted a market best practice known as SOFR First, afour phased plan to switch derivative trading conventions from LIBOR to Secured Overnight Financing Rate (SOFR)
for USD derivative instruments. The first three phases of transitioning trading conventions from LIBOR to SOFR

IDA Management’s Discussion and Analysis: December 31, 2021

21

Management’s Discussion and Analysis

Section V: Risk Management

were fully implemented as of December 31, 2021. The fourth and last phase of SOFR First will involve exchangetraded derivatives with the timing to be determined. Also, in July 2021, the Alternative Reference Rates Committee(ARRC) formally recommended CME Group’s forward-looking term rate for SOFR, for use in markets wheretransitioning from LIBOR to an overnight rate has been difficult. The forward-looking term rate for SOFR is basedon transactions in the SOFR derivatives markets. The ARRC recommended these rates for legacy loans and bond
instruments but not for the vast majority of the derivative instruments.
In consideration of the regulatory guidance and in preparation for the global markets’ transition away from LIBOR,IDA has taken the necessary steps to facilitate a smooth and orderly transition of its financial instruments effected byalternative reference rates.
IDA previously completed an initial impact assessment of its exposure, both quantitatively and qualitatively, to
LIBOR and developed an implementation roadmap for the LIBOR transition. IDA has been actively working throughthis transition from multiple perspectives: lending, funding, accounting, operations, information technology, liquidity
investing, risk and legal, considering the portfolio of existing loans and other instruments that use LIBOR as abenchmark.
Most of IDA’s loans are on fixed rate concessional terms. Therefore, the impact of the LIBOR transition changes islimited. For IDA’s LIBOR based non-concessional and hard-term loans, in FY20, the Board endorsed an omnibus
amendment process with borrowers for certain existing loan agreements to address inadequate fallback provisions for
LIBOR replacement, allowing IDA to maintain the principles of fairness and equivalence for any replacement
reference rate. The contract amendments enabled similar treatment to all loans by bringing the fallback provisions
related to changes in the reference rate in the General Conditions into conformity with the revised General Conditionsof December 2018. The new language permitted IDA to transition the interest rate to alternative reference rates when
it is appropriate to do so. The majority of IDA loans were denominated in USD, EUR, GBP, and JPY as of December
31, 2021. IDA adopted the following alternative reference rates: 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. IDA made significant
progress to ensure a smooth transition to alternative reference rates. Through the omnibus amendments and reference
rate replacement notification process, 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 switch over 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 $180,849 million as ofDecember 31, 2021, approximately 2% is subject to transition to alternative reference rates.
As of December 31, 2021, IDA’s borrowing portfolio carries only fixed interest rates and is not subject to transition
to alternative reference rates.
Out of the total derivative portfolio notional as of December 31, 2021, approximately 39% is subject to transition toalternative reference rates. For the vast majority of these, IDA either has sufficient provisions in the derivative
agreements with its counterparties or has adhered to the International Swaps and Derivatives Association (ISDA) 2020
IBOR Fallbacks Protocol (IBOR Protocol).
IDA will continue to work with key stakeholders, including internal subject matter experts, senior management,
borrowers, industry groups and other market participants, to mitigate potential financial and operational risks to which
IDA is exposed and to ensure an orderly transition to alternative reference rates. IDA is managing the transition
prudently and in a cost-effective manner.
Exchange Rate Risk
Changes in exchange rates affect the capital adequacy of IDA when the currency of the equity supporting the loan
portfolio and other assets is different from that of the risk exposure. Accordingly, the primary objective of IDA’s
currency risk management is to protect IDA’s financial capacity, as measured by the capital adequacy framework,from exchange rate movements. To achieve this, IDA’s balance sheet is managed in multiple currencies: SDR and thecurrencies comprising the SDR basket. The exchange rate risk management methodology encompasses the hedging
of currency risk arising from the various inflows and outflows inherent in IDA’s business model.

22

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

Section V: Risk Management

IDA uses currency forward contracts to convert future inflows from members’ receivables provided in national
currencies into the five currencies of the SDR basket, thereby aligning the currency composition of member
contributions with the net cash outflows relating to loans and grants, which are primarily denominated in SDR.
The payable leg of the currency forward contracts economically hedging member equity contribution pledges isdenominated in non-functional currencies. IDA pays the market counterparty in a non-SDR currency. Accordingly,
appreciation (depreciation) of the non-SDR currencies against the U.S. dollar results in exchange rate losses (gains),
which are reported in the Statement of Income. The translation adjustment on future inflows from members, eventhough they are not recorded in the balance sheet, is the economic offset to the translation adjustment on non-functional
currencies of currency forward contracts.
Liquidity Risk
Liquidity risk arises in the general funding of IDA’s activities and in managing its financial position. It includes therisk of IDA being unable to fund its portfolio of assets at appropriate maturities and rates, and the risk of being unable
to liquidate a position in a timely manner at a reasonable price.
IDA’s aggregate liquid asset holdings are kept above a specified Prudential Minimum to safeguard against cash flowinterruptions. The Prudential Minimum is equal to 80% of 24 months of projected net outflows. For FY22, thePrudential Minimum has been set at $19.3 billion. As of December 31, 2021, IDA had liquid assets of $37.8 billion,
which represented 196% of the Prudential Minimum.
IDA will hold liquidity above the Prudential Minimum to ensure sufficient liquidity under a wide range of shock
scenarios as well as to give it flexibility in timing its borrowing transactions and to meet working capital needs.
Operational Risk
Operational risk is defined as the risk of financial loss, or damage to IDA’s reputation resulting from inadequate or
failed internal processes, people, and systems, or from external events.
IDA recognizes the importance of operational risk management activities, which are embedded in its financial
operations. As part of its business activities, IDA is exposed to a range of operational risks including physical security
and staff health and safety, data and cyber security, business continuity, and 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.

IDA Management’s Discussion and Analysis: December 31, 2021

23

Management’s Discussion and Analysis

Section VI: Governance

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

24

IDA Management’s Discussion and Analysis: December 31, 2021

Management’s Discussion and Analysis

List of Tables, Figures and Box

List of Tables, Figures and Box
TablesTable 1: Cumulative Net Commitments under IDA19
Table 2: Utilization of PSW Commitments
Table 3: Condensed Statement of Income
Table 4: Condensed Balance Sheet
Table 5: Changes in Equity
Table 6: Net Loans Outstanding activity
Table 7: Net Commitments of Loans and Guarantees by Region
Table 8: Net Commitments of Grants by Region
Table 9: Gross Disbursements of Loans and Grants by Region
Table 10: Revenue and Balances by Product Category
Table 11: Net Non-Interest Expenses
Table 12: Other (Expenses) Revenue, net
Table 13: Unrealized Mark-to-Market gains (losses) on non-trading portfolios, net
Table 14: Deployable Strategic Capital Ratio
Table 15: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating

8
9
10
11
11
12
12
12
13
13
15
15
16
18
20

FiguresFigure 1: IDA's Financial Business Model
Figure 2: Net Loans Outstanding
Figure 3: Net Investment Portfolio
Figure 4: YTD Investment interest revenue, net of derivatives
Figure 5: Borrowings
Figure 6: Country Exposures as of December 31, 2021

7
12
14
14
14
19

Box
Box 1: Selected Financial Data

2

IDA Management’s Discussion and Analysis: December 31, 2021

25

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26

IDA Management’s Discussion and Analysis: December 31, 2021

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)
CONTENTS
December 31, 2021

CONDENSED QUARTERLY FINANCIAL STATEMENTSCONDENSED BALANCE SHEET

28

CONDENSED STATEMENT OF INCOME

30

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

31

CONDENSED STATEMENT OF CHANGES IN ACCUMULATED DEFICIT

31

CONDENSED STATEMENT OF CASH FLOWS

32

NOTES TO CONDENSED QUARTERLY FINANCIAL STATEMENTS

33

INDEPENDENT AUDITOR'S REVIEW REPORT55

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)27

CONDENSED BALANCE SHEET
Expressed in millions of U.S. dollars
December 31, 2021
(Unaudited)
AssetsDue from banks—Notes C and J
Unrestricted cash
Restricted cash$

Investments (including securities transferred under repurchase or
securities lending agreements of Nil—December 31, 2021; Nil—June
30, 2021) —Notes C, G and J
Derivative assets, net—Notes C, F, G and J
Receivable from affiliated organization—Note G
Loans outstanding—Notes D, G and J
Total loans approved
Less: Undisbursed balance (including signed loan commitments of$62,534 million—December 31, 2021; $60,775 million—June 30,
2021)
Loans outstanding
Less: Accumulated provision for loan losses
Deferred loan income
Net loans outstanding
Other assets—Notes C, D and G
Total assets

28

$

658
26
684

June 30, 2021
(Unaudited)

$

470
26
496

35,72537,376

222

249

1,013

865

249,316

251,676(68,467)
180,849(3,690)(11)
177,148(70,172)
181,504(3,718)(7)
177,779

4,931

2,559

219,723

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)$

219,324

December 31, 2021
(Unaudited)

June 30, 2021
(Unaudited)

Liabilities
Borrowings—Notes E and J
Market borrowings, at fair value$

21,960$20,555Market borrowings, at amortized cost

2,255

-

Concessional partner loans, at amortized cost

7,551

7,759

31,76628,314345

408

Payable for development grants—Note H

5,825

6,820

Payable to affiliated organization—Note G

564

561

Other liabilities—Notes C, D and G

2,484

2,345

Total liabilities

40,98438,448292,458

292,534

Subscriptions and contributions receivable
Cumulative discounts/ acceleration credits on subscriptions andcontributions(36,991)(38,240)(3,844)(3,842)

Subscriptions and contributions paid-in

251,623

250,452(11,370)(11,432)

(244)

(244)

Accumulated deficit (Statement of Changes in Accumulated Deficit)(59,986)(59,556)

Accumulated other comprehensive (loss) income—Note I(1,284)

1,656

Total equity

178,739

180,876

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

EquityMembers' subscriptions and contributions—Note B
Subscriptions and contributions committed
Less:

Nonnegotiable, noninterest-bearing demand obligations on account ofmembers' subscriptions and contributions
Deferred amounts to maintain value of currency holdings

Total liabilities and equity$

219,723$

219,324

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

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)29

CONDENSED STATEMENT OF INCOME
Expressed in millions of U.S. dollars
Three Months Ended
December 31,(Unaudited)
2021
2020
Interest revenue
Loans, net—Note D
Investments, net—Notes C and G
Asset-liability management derivatives, net

$

486
33
-

$

Six Months Ended
December 31,(Unaudited)
2021
2020

444 $
33
(4)

967
66
-

$

881
70
(9)

Borrowing expenses, net—Note E

(50)

(48)

(96)

(97)

Interest revenue, net of borrowing expenses

469

425

937

845

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

(34)

(127)

(134)

(249)

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

212
6
8
226

206
5
4
215

361
12
12
385

359
9
7
375

Non-interest expenses
Administrative—Note G
Other
Total

(555)
(41)
(596)

(576)
(6)
(582)

(1,049)(56)(1,105)(1,126)
4(1,122)

Transfers from affiliated organizations and others—Note G

274

-

274

-

Development grants—Note H

(643)

(423)

(986)

(932)

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

39

(494)

207

(499)

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

64

65

79

84

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

(149)

266

(87)

395

(655) $

(430)

Net loss

$

(350)

$

$

(1,103)

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

30

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Expressed in millions of U.S. dollars
Three Months Ended
December 31,(Unaudited)
2021
2020
Net loss
Other comprehensive (loss) income —Note I
Currency translation adjustments on functional
currencies
Net Change in Debit Valuation Adjustment (DVA) on
Fair Value option elected liabilities
Comprehensive (loss) income

$

$

(350)

$

Six Months Ended
December 31,(Unaudited)
2021
2020

(655)

$

(430) $

(1,103)(1,049)3,429(2,891)

7,249

(18)
(1,417)

(16)
2,758

(49)
(3,370) $

(32)
6,114

$

$

CONDENSED STATEMENT OF CHANGES IN ACCUMULATED DEFICIT
Expressed in millions of U.S. dollars
Six Months Ended
December 31,(Unaudited)
2021
2020
Accumulated Deficit at beginning of the fiscal year
Cumulative effect of a change in accounting principle—Notes A and D
Adjusted Accumulated Deficit at beginning of the fiscal year
Net loss
Accumulated deficit at end of the period$$$(59,556)(59,556)(430)(59,986)$$$(58,321)(802)(59,123)(1,103)(60,226)

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

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

CONDENSED STATEMENT OF CASH FLOWS
Expressed in millions of U.S. dollars
Six Months Ended
December 31,(Unaudited)
2021
2020
Cash flows from investing activities
Loans
Disbursements
Principal repayments
Non-trading securities—Investments
Repayments
Net cash used in investing activities$

Cash flows from financing activities
Members' subscriptions and contributions
Medium and long-term borrowings
New issues
Retirements
Short-term borrowings (original maturities greater than 90 days)
New issues
Retirements
Net short-term borrowings (original maturities less than 90 days)
Net derivatives-borrowings
Net cash provided by financing activities
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities
Provision for losses on loans and other exposures, net—charge
Non-functional currency translation adjustment (gains) losses, net
Unrealized mark-to-market losses (gains) on non-trading portfolios, net
Other non-interest expenses (income), net
Amortization of borrowing costs
Changes in:
Net Investment portfolio
Other assets and liabilities
Net cash used in operating activities
Effect of exchange rate changes on unrestricted and restricted cash
Net increase in unrestricted and restricted cash
Unrestricted and restricted cash at beginning of the fiscal year
Unrestricted and restricted cash at end of the period
Supplemental disclosure(Decrease) increase in ending balances resulting from exchange rate fluctuations:
Loans outstanding
Investment portfolio
Derivatives—Asset-liability management
Borrowings
Principal repayments written off under Heavily Indebted Poor Countries (HIPC)
Debt Initiative
Interest paid on borrowing portfolio$$(6,199)3,381$ (6,984)
2,712

61(2,757)64(4,208)

1,232

1,359

4,733
(47)

3,974
(48)

2,831
(4,236)
1,162
1
5,676

3,750
(6,491)
2,668
25
5,237

(430)

(1,103)

134
(207)
87
39
50

249
499
(395)
(22)
48

995
(3,399)(2,731)

1,595(1,879)(1,008)

188
496
684

48
69
674
743

(3,458)
(535)
502
(761)

$

$

7,697
1,540
(1,065)964

1545The Notes to Condensed Quarterly Financial Statements are an integral part of these Statements.

32

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

5
63

NOTES TO CONDENSED QUARTERLY FINANCIAL STATEMENTSNOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIESBasis of Preparation
These unaudited condensed quarterly financial statements and notes should be read in conjunction with the June 30,
2021 audited financial statements and notes included therein. The condensed comparative information that has been
derived from the June 30, 2021 audited financial statements has not been audited. In the opinion of management, thecondensed quarterly financial statements reflect all adjustments necessary for a fair presentation of IDA’s financial
position and results of operations in accordance with accounting principles generally accepted in the United Statesof America (U.S. GAAP).
Management makes estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the condensed quarterly financial statements and thereported amounts of revenue and expenses during the reporting periods. Due to the inherent uncertainty involved in
making those estimates, actual results could differ from those estimates. Areas in which significant estimates havebeen made include, but are not limited to, the provision for losses on loans and other exposures and valuation ofcertain financial instruments carried at fair value. The results of operations for the first six months of the current
fiscal year are not necessarily indicative of the results for the full year.
Certain reclassifications of the prior year’s information have been made to conform with the current year’s
presentation.
These financial statements were issued on February 11, 2022 which was also the date through which IDA’s
management evaluated subsequent events.
Accounting and Reporting Developments
Accounting Standards Under Evaluation:
In November 2021, the Financial Accounting Standards Board (FASB) issued the Accounting Standard Update(ASU) 2021-10, Disclosure by Business Entities about Government Assistance, which requires entities to makeannual disclosure about certain government assistance they received. This ASU is effective for annual periods
beginning after December 15, 2021, with early adoption permitted. IDA is currently evaluating the impact of the
ASU on its financial statements.
Fair Value Election on Borrowings
Previously, under IDA’s fair value elections, all market debt was carried at fair value. Starting July 1, 2021, IDA
only elects fair value for market debt designated to fund the investment portfolio or variable rate loans. Market debt
not meeting the fair value election criteria are reported at amortized cost. Market debt subject to the previous fairvalue election will continue to be carried at fair value.
NOTE B—MEMBERS’ SUBSCRIPTIONS AND CONTRIBUTIONS
The movement in Subscriptions and Contributions paid-in is summarized below:
Table B1: Subscriptions and contributions paid-in
In millions of U.S. dollars
December 31, 2021
Beginning of the fiscal year$

250,452

June 30, 2021$

241,343

Cash contributions received

364

3,442

Demand obligations received

1,161

4,901

Translation adjustment

(354)

766

End of the period/fiscal year$

251,623$

250,452

During the six months ended December 31, 2021, IDA encashed demand obligations totaling $868 million.

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)33

Membership
On November 3, 2021, Bulgaria became the 174th member of IDA.
NOTE C—INVESTMENTS
The investment securities held by IDA are designated as either trading or non-trading. All securities are carried andreported at fair value, or at face value, which approximates fair value.
As of December 31, 2021, IDA’s Investments were mainly comprised of government and agency obligations (63%),
with all the instruments being classified as either Level 1 or Level 2 within the fair value hierarchy. As of December
31, 2021, the largest holding of Investments-Trading with a single counterparty was Japanese government
instruments (18%).
A summary of IDA’s Investments is as follows:
Table C1: Investments-composition
In millions of U.S. dollars
December 31, 2021
Trading
Government and agency obligations
Time deposits
Asset-backed securities (ABS)$

Non-trading
Debt securities
Total

$

22,685
12,346274
35,305$420
35,725June 30, 2021$$

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

IDA manages its investments on a net portfolio basis. The following table summarizes IDA’s net portfolio position:
Table C2: Net investment portfolio position
In millions of U.S. dollars
December 31, 2021
Investments
Trading
Non-trading
Total

$

35,305420
35,725June 30, 2021$

36,889487
37,376

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

(41)

-

272
272

167
167

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

(126)
(5)
(131)

(65)
(17)
(82)

547
1,908
(29)
38,251

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. Includes $41 million of cash collateral received from counterparties under derivative agreements (Nil - June 30, 2021).
b. This amount is included in Unrestricted cash under Due from Banks on the Condensed Balance Sheet.
c. This amount is included in Other assets on the Condensed Balance Sheet.
d. This amount is included in Other liabilities on the Condensed Balance Sheet. As of December 31, 2021, there were no shortsales (Nil - June 30,2021).

34

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)IDA uses derivative instruments to manage currency and interest rate risk in the investment portfolio. For details
regarding these instruments, see Note F—Derivative Instruments.
The maturity structure of IDA’s non-trading investment portfolio (principal amount due) was as follows:
Table C3: Maturity structure of non-trading investment portfolio
In millions of U.S dollars
MaturityLess than 1 year
Between1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
Thereafter
Total

December 31, 2021$
105

June 30, 2021
$ 113

86
68
55
13
84
411

96
77
62
34
90
$ 472

$

Commercial Credit Risk
For the purpose of risk management, IDA is party to a variety of financial transactions, certain of which involve
elements of credit risk. Credit risk exposure represents the maximum potential loss due to possible nonperformanceby obligors and counterparties under the terms of the contracts. For all securities, IDA limits trading to a list of
authorized dealers and counterparties. In addition, credit limits have been established for counterparties by type of
instrument and maturity category.
Swap Agreements: Credit risk is mitigated through a credit approval process, volume limits, monitoring procedures
and the use of mark-to-market collateral arrangements. IDA may require collateral in the form of cash or otherapproved liquid securities from individual counterparties to mitigate its credit exposure.
IDA has entered into master derivative agreements, which contain legally enforceable close-out netting provisions.
These agreements may further reduce the gross credit risk exposure related to the swaps. Credit risk with financial
assets subject to a master derivatives arrangement is further reduced under these agreements to the extent thatpayments and receipts with the counterparty are netted at settlement. The reduction in exposure as a result of these
netting provisions can vary due to the impact of changes in market conditions on existing and new transactions. The
extent of the reduction in exposure may therefore change substantially within a short period of time following thebalance sheet date. For more information on netting and offsetting provisions, see Note F—Derivative Instruments.
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
Collateral received
Cash
Securities
Total collateral received
Collateral permitted to be repledged
Amount of collateral repledged
Amount of Cash Collateral invested

December 31, 2021

June 30, 2021

$

$

$
$

41
2
43
43
41

$
$

-

As of December 31, 2021, and June 30, 2021, there were no liabilities relating to securities transferred under
repurchase or securities lending agreements and no securities purchased under resale agreements.
NOTE D—LOANS AND OTHER EXPOSURESIDA’s loans and other exposures are generally made to, or guaranteed by, member countries of IDA. Loans arecarried at amortized cost. Other exposures include: Deferred Drawdown Options (DDO), irrevocable commitments
and guarantees. Based on IDA’s internal credit quality indicators, the majority of the loans outstanding are in theMedium and High-risk classes.

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

35

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 December 31, 2021, accrued interest income on loans of $510 million($502 million—June 30, 2021), are presented in Other assets on the Condensed Balance Sheet.
Credit Quality of Sovereign Loans
Based on an evaluation of IDA’s exposures, management has determined that IDA has one portfolio segment –Sovereign Exposures. IDA’s loans constitute the majority of the Sovereign Exposures portfolio segment.
IDA’s country risk ratings are an assessment of its borrowers’ ability and willingness to repay IDA on time and in
full. These ratings are internal credit quality indicators. Individual country risk ratings are derived on the basis ofboth quantitative and qualitative analyses. The components considered in the analysis can be grouped broadly into
eight categories: political risk, external debt and liquidity, fiscal policy and public debt burden, balance of payments
risks, economic structure and growth prospects, monetary and exchange rate policy, financial sector risks, andcorporate sector debt and vulnerabilities. The analysis also takes into account environmental, social and governancefactors. For the purpose of analyzing the risk characteristics of IDA’s exposures, these exposures are grouped into
three classes in accordance with assigned borrower risk ratings, which relate to the likelihood of loss: Low, Mediumand High risk classes, as well as exposures in nonaccrual status.
IDA’s borrower country risk ratings are key determinants in the provision for loan losses. Country risk ratings aregrouped into pools of borrowers with similar credit ratings for the purpose of the calculation of the expected credit
losses. Country risk ratings are determined in review meetings that take place several times a year. All countries arereviewed at least once a year, or more frequently if circumstances warrant, to determine the appropriate ratings.
An assessment was also performed to determine whether a qualitative adjustment was needed on the loan loss
provision as of December 31, 2021, including consideration of the COVID-19 pandemic. Management concluded
that a qualitative adjustment beyond the regular application of IDA’s loan loss provision framework was notwarranted.
IDA considers loans to be past due when a borrower fails to make payment on any principal, interest or othercharges due to IDA on the dates provided in the contractual loan agreement.
The following tables provide an aging analysis of loans outstanding:
Table D1: Loans-Aging structure
In millions of U.S. dollars
December 31, 2021
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

Up to 45
$

$

46-60

- $
15
15
7
22 $

61-90
1
1
1

$

91-180
4
4

$

$

9
9

$

Over 180

Total Past
Due

$

$

$

410
410

$

16
16
430
446

Current

Total

$

510 $
510
22,101
22,101a
157,308
157,324
179,919
179,935484
914$ 180,403 $ 180,849

Table D1.1:
In millions of U.S. dollars
June 30, 2021
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

Up to 45
$

$

- $
7
7
7
14 $

46-60

61-90
1
1

$

$

91-180
3
3

$

$

9
9

Over 180

Total Past
Due

$

$

$

399
399

$

7
7
419
426

Current
$

659 $
659
23,09223,092
156,814 a
156,821
180,565
180,572513
932$ 181,078 $ 181,504

a. Includes Private Sector Window (PSW) related loans of $24 million ($10 million-June 30, 2021).

36

Total

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

The tables below disclose the outstanding balances of IDA’s loan portfolio classified by the year the loan agreement
was signed. IDA considers the signature date of a loan as the best indicator of the decision point in the origination
process, rather than the disbursement date.
Table D2: Loan portfolio vintage disclosure
In millions of U.S. dollars
December 31, 2021
Fiscal Year of origination

Risk Class
Low
MediumHigh
Loans in accrual
statusLoans innonaccrual status
Total

2022
$

2021

2020

2019

2018

- $
- $
- $
- $
111
399
558
252
866
5,900
6,754
8,664

- $
510 $
72
20,7099,427
125,336

- $
190

- $
187

510
22,101
157,324

977

9,499

190

187

179,935

190 $

187 $

914
180,849

6,299

7,312

8,916

977 $ 6,299 $ 7,312 $ 8,916 $

$

Loans
CAT DDOs CAT DDOs Outstanding as
disbursed Converted to of December
Prior Years and revolving Term Loans
31, 2021

146,555914
9,499 $ 147,469 $Table D2.1:
In millions of U.S. dollars
June 30, 2021
Fiscal Year of origination

Risk Class
Low
MediumHigh
Loans in accrual
statusLoans innonaccrual status
Total

2021
$

$

2020

2019

2018

2017

Loans
CAT DDOs CAT DDOs Outstanding as
disbursed Converted to of June 30,
Prior Years and revolving Term Loans
2021

- $
- $
- $
- $
401
564
255
64
4,803
6,260
8,266
8,861

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

- $
388

- $
-

659
23,092
156,821

5,204

9,415

388

-

180,572

388 $

- $

932
181,504

6,824

8,521

8,925

5,204 $ 6,824 $ 8,521 $ 8,925 $

141,295

932
9,415 $ 142,227 $The amount of Catastrophe Deferred Drawdown Option (CAT DDO) outstanding and revolving converted to termloans during the three months and six months ended December 31, 2021 was nil and $187 million, respectively.
Accumulated Provision for Losses on Loans and Other Exposures
Management determines the appropriate level of accumulated provisions for losses, which reflects the expected
losses inherent in IDA’s exposures. Management reassesses the adequacy of the accumulated provision on aquarterly basis and adjustments to the accumulated provision are recorded as a charge to or release of provision in
the Statement of Income. In addition, reasonableness of the inputs used is reassessed at least annually.
The provision for Heavily Indebted Poor Countries (HIPC) Debt Initiative and Multilateral Debt Relief Initiative(MDRI) is based on quantitative and qualitative analyses of various factors, including estimates of Decision Point
and Completion Point dates. These factors are reviewed periodically as part of the reassessment of the adequacy of
the accumulated provision for loan losses. Provisions are released as qualifying debt service becomes due and isforgiven under the HIPC Debt Initiative and are reduced by the amount of the eligible loans written off when acountry reaches Completion Point and becomes eligible for MDRI debt relief.
During the six months ended December 31, 2021 and the fiscal year ended June 30, 2021, there were no loans
written off under the MDRI.

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

37

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 (CECL) model. Changes to the accumulated provision for losses onloans and other exposures are summarized below.
Table D3: Accumulated provisions
In millions of U.S. dollars
December 31, 2021
Loans
outstanding
Accumulated provision, beginning of
the fiscal year
Provision, net - charge (release)
Loans written off under:
Prepayments
HIPC/MDRITranslation adjustment
Accumulated provision, end of theperiodIncluding accumulated provision for losseson:
Loans in accrual status
Loans in nonaccrual status
Total
Loans:
Loans in accrual status
Loans in nonaccrual status
Loans outstanding

$

2,946
52

$

(57)
$

2,941

$

2,693
248
2,941

$

Debt relief
under
HIPC/MDRI

Loan
commitments
1,054
63

$

(24)
$

1,093

772
(1)

Other a$(15) b
(7)
$

749

$

464
285
749

$

Total

120
20

$

4,892
134

(2)
$

138

(15)
(90)
$

4,921

$

3,157
533
3,690

$
$
$

179,935
914
180,849

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

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

2,829
(59)

Loan
commitments$

859

June 30, 2021
Debt relief
under
HIPC/MDRI
$

1,591
-

Other a
$

72
2

$

4,492
802

2,770
77

859
166

1,591
(828)

74
46

5,294
(539)

99

29

(9) b
18

-

(9)
146

2,946

2,692
254
2,946

$

1,054

$

772

$

485
287
772

$

$

120

a. These amounts primarily relate to outstanding guarantees
b. Represents debt service reduction under HIPC

38

Total

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

$

4,892

$

3,177
541
3,718

$
$
$

180,572932
181,504

Condensed Balance Sheet

Reported as Follows
Condensed Statement of Income

Accumulated Provision forLosses on:
Loans outstanding

Accumulated provision for loan losses

Debt Relief under HIPC/MDRI

Accumulated provision for loan losses

Loan commitments and Other
Exposures

Other liabilities

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

Overdue Amounts
As of December 31, 2021, there were no new principal or charges under sovereign loans in accrual status whichwere overdue by more than three months.
During the fiscal year ended June 30, 2021, Sudan paid all of their overdue principal and charges due to IDA. The
outstanding loans remaining to Sudan were restored to accrual status having met the conditions in accordance with
IDA’s policy.
The following tables provide a summary of selected financial information related to loans in nonaccrual status:
Table D4: Loans in nonaccrual status
In millions of U.S. dollars
Overdue amounts
Nonaccrual
Borrowersince
EritreaMarch 2012
Syrian Arab
Republic
June 2012
Zimbabwe
October 2000
Total - December 31, 2021
Total - June 30, 2021

Average
Provision
RecordedrecordedPrincipal
for debt
investment a investment b Outstanding
relief
$
437 $
441 $
437 $
285

Provision
for loanlosses b$
16

Principal$
109

Charges
$
34

$

13
308
430

$

1
68
103

$

419

$

102

$

14
463
914 $

14
467
922 $

14
463
914 $

285

$

1
231
248

$

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.

Table D5: Service charge revenue not recognized
In millions of U.S. dollars
Three months ended
December 31,
2021
2020
Service charge revenue not recognized as a result of loans being in nonaccrual status $1 $4

Six months ended
December 31,
2021
2020
$
3 $
8

During the six months ended December 31, 2021 and 2020, no loans were placed into nonaccrual status.
During the three and six months ended December 31, 2021, service charge revenue recognized on loans in
nonaccrual status was less than $0.5 million (Nil – three months and six months ended December 31, 2020).
Guarantees
Guarantees of $2,424 million were outstanding as of December 31, 2021 ($2,513 million—June 30, 2021). This
amount includes $499 million relating to the PSW ($484 million—June 30, 2021). The outstanding amount ofguarantees represents the maximum potential undiscounted future payments that IDA could be required to makeunder these guarantees and is not included on the Condensed Balance Sheet. The guarantees issued by IDA haveoriginal maturities ranging between 2 and 22 years and expire in decreasing amounts through 2043.

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)39

As of December 31, 2021, liabilities related to IDA’s obligations under guarantees included the obligation to standready of $151 million ($138 million—June 30, 2021), and the accumulated provision for guarantee losses of $123
million ($109 million—June 30, 2021). These have been included in Other liabilities on the Condensed Balance
Sheet.
During the six months ended December 31, 2021 and 2020, no guarantees provided by IDA to sovereign or subsovereign borrowers were called. During the six months ended December 31, 2021, none of the 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–six months ended December 31, 2020).
Concentration Risk
Loan revenue comprises service charges and interest charges on outstanding loan balances. For the six months ended
December 31, 2021, loan revenue of $120 million and $119 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 D6: Loan revenue and outstanding loan balances by geographic region
In millions of U.S. dollars

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

As of and for the six months ended December 31,
2021
2020
Service and
Loans
Service and
LoansInterest Charges b
Outstanding
Interest Charges b
Outstanding$
360$
63,111$
333$
62,602
218
48,443
191
47,406
184
35,580156
32,968117
20,066
113
20,630
56
7,836
59
7,989
23
3,379
20
3,152
10
2,410
10
2,589
24
8
$
968
$
180,849$
882$
177,344

a. Represents loans under the PSW.
b. Excludes $1 million of interest rate swap expenses related to loan hedges ($1 million-six months ended December 31, 2020)

NOTE E—BORROWINGS
IDA’s borrowings comprise concessional partner loans made by IDA members (carried at amortized cost) as well as
market borrowings (carried at amortized cost or fair value as described in Note A).
IDA uses derivative contracts to manage the currency risk as well as the interest rate risk in market borrowings,
carried at fair value. For details regarding the derivatives used, see Note F—Derivative Instruments.
As of December 31, 2021, and June 30, 2021, instruments in IDA’s borrowing portfolio measured at fair value wereclassified as Level 2, within the fair value hierarchy. The fair value of these instruments are as follows (for details
on principal due upon maturity, see Note J—Fair Value Disclosures):
Table E1: Market borrowings outstanding after derivatives, at fair value
In millions of U.S. dollars
Market borrowings
Currency swaps, net
Interest rate swaps, net
Total at fair value

40

December 31, 2021$
21,96075
371$
22,406

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

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)Table E2: Market borrowings outstanding, at amortized cost
In millions of U.S dollars
Market borrowings, at amortized cost outstanding
Principal at
Net unamortizedface value
premium (discount)
Total
$
2,264
$
(9)
$
2,255
$
$
$
-

December 31, 2021
June 30, 2021

Table E3: Concessional partner loans outstanding, at amortized cost
In millions of U.S dollars
Concessional Partner Loans outstanding
Principal at
Net unamortizedface value
discount
Total
$
9,211
$
(1,660)
$
7,551
$
9,495
$
(1,736)$
7,759

December 31, 2021
June 30, 2021

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

Derivative instruments used

Purpose/Risk being managed

Investments—Trading

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

Manage currency and interest rate risk in theportfolio.

Other assets/liabilities

Currency forward contracts, currency swaps andinterest rate swaps

Manage currency and interest rate risks.

Loans

Interest rate swaps

Manage interest rate risk in the portfolio.

Borrowings

Interest rate swaps and currency swaps

Manage currency and interest rate risk in theportfolio.

Structured swaps

Assist clients in managing risks.

Other purposes:
Client operations

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

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)41

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
Less:
Securities collateral received
Net derivative exposure after
collateral

December 31, 2021
Derivative Assets
Derivative Liabilities
Gross
Gross
Gross
Amounts
Net
Gross
Amounts
Net
Amounts
OffsetAmounts
Amounts
OffsetAmounts$
716 $(604) $
112$
2,465 $
(1,920) $545
19,320(18,612)708
10,619(10,257)
362$
20,036 $(19,216) $820$
13,084 $ (12,177) $
907

$

557 b
41

$

562 c

$

222

$

345

2
$

220

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
-

$

408 c

$

249

$

408

$

249

a. Includes currency forward contracts.
b. Includes $2 million Credit Value Adjustment (CVA) ($2 million-June 30, 2021).
c. Includes $6 million Debit Value Adjustment (DVA) ($6 million-June 30, 2021).

42

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

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

$

45
52
15
112

$

December 31, 2021
Currency swaps(including currency
forward contracts)
$
272
413
23
$
708

Total
$

$

272
458
75
15
820

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

The volume of derivative contracts is measured using the U.S. dollar equivalent notional balance. The notionalbalance represents the face value or reference value on which the calculations of payments on the derivative
instrument are determined. At December 31, 2021, the notional amounts of IDA’s derivative contracts outstanding
were as follows: interest rate swaps $34,913 million ($33,432 million as of June 30, 2021), and currency swaps$31,687 million ($30,349 million as of June 30, 2021). There were no long or short positions of other derivatives(Nil—June 30, 2021).
Collateral: Under almost all of its ISDA Master Agreements, IDA is not required to post collateral as long as it
maintains liquidity holdings at predetermined levels that are a proxy for a triple-A credit rating. After becoming a
rated entity, IDA has started to enter into derivative agreements with commercial counterparties in which IDA is not
required to post collateral as long as it maintains a triple-A rating. The aggregate fair value of all derivative
instruments with credit-risk related contingent features that are in a liability position as of December 31, 2021 is$351 million ($414 million —June 30, 2021). As of December 31, 2021, IDA was not required to post any collateralin accordance with the relevant agreements.
If the credit-risk related contingent features underlying these agreements were triggered to the extent that IDA
would be required to post collateral as of December 31, 2021, the amount of collateral that would need to be posted
would be $8 million ($25 million—June 30, 2021). Subsequent triggers of contingent features would require postingof additional collateral, up to a maximum of $351 million as of December 31, 2021 ($414 million—June 30, 2021).

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)43

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

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

Three Months Ended
December 31,
2021
2020

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

Six Months Ended
December 31,
2021
2020

$

(280)

$

204

$

(337)

$

383

$

(37)
(317)

$

31
235

$

(65)
(402)

$

(28)
355

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

Type of instrument a
Fixed income (including related
derivatives)a.

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

Three Months Ended
December 31,
2021
2020

$

64

$

65

Six Months Ended
December 31,
2021
2020

$

79

$

84

Amounts associated with each type of instrument include 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. During the fiscal year ended June 30, 2021, IBRD’s Board of Governors approved atransfer of $331 million on January 25, 2021. This transfer was received on February 1, 2021.
Transfers and Grants
Cumulative transfers and grants made to IDA as of December 31, 2021 were $20,476 million ($20,202 million—
June 30, 2021). Details by transferor are as follows:
Table G1: Cumulative transfers and grants
In millions of U.S dollars
Transfers from
Total
Of which transfers from:
IBRD
IFC

44

Beginning of the
fiscal year$
20,202

Transfers during
the period$274

End of period$ 20,476

16,087
3,885

274
-

16,361
3,885

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)Receivables and Payables
The total amounts receivable from (payable to) affiliated organizations is comprised of the following:
Table G2: IDA’s receivables and payables with affiliated organizations
In millions of U.S. dollars

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

December 31, 2021
IBRD
IFC
Total
$ (210)$$ (210)

$

22
(34)
659
437

$

(7)
48
420
461

$

22
(41)
48
659
420
898

IBRD
$ (268)

$

19
(27)
572
296

June 30, 2021
IFC
Total
$
$ (268)

$

6
(2)
41
487
532

$

25
(29)
41
572
487
828

a. Includes $354 million as of December 31, 2021 ($293 million-June 30, 2021) receivable from IBRD for IDA's share of investments
associated with Post-Retirement Contribution Reserve Fund (PCRF), which is a fund established to stabilize contributions madeto the pension plans.
b. Refer to Table G4: Summary of PSW-related transactions.

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

Receivable for pension and other postretirement benefits

Receivable from affiliated organization

Receivables (payables) for derivative transactions

Derivative assets/liabilities, net

Payable for administrative services a

Payable to affiliated organization

Receivable for PSW

Other assets

Receivable for investments

Investments

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

Administrative Services: The payable to IBRD represents IDA’s share of joint administrative expenses andcontributions to special programs, net of other revenue jointly earned. The allocation of expenses is based upon anagreed cost sharing formula, and amounts are settled quarterly.
For the three and six months ended December 31, 2021, IDA’s share of joint administrative expenses andcontributions to special programs totaled $421 million and $813 million, respectively ($450 million and $905
million - three and six months ended December 31, 2020, respectively).
Other revenue: Includes IDA’s share of other revenue jointly earned with IBRD during the three and six months
ended December 31, 2021 totaling $61 million and $108 million, respectively ($63 million and $120 million—threeand six months ended December 31, 2020, respectively).
The amount of fee revenue associated with services provided to other affiliated organizations is included in Other
revenue in the Condensed Statement of Income as follows:
Table G3: Fee revenue from affiliated organizations
In millions of U.S dollars

Fees charged to IFC
Fees charged to MIGA

Three Months Ended December 31,
2021
2020
$
21
$
18
1
1

Six Months Ended December 31,
2021
2020
$
38
$
37
2
2

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)45

Pension and Other Post-Retirement Benefits: IBRD, along with IFC and MIGA, sponsors a defined benefit Staff
Retirement Plan and Trust, a Retired Staff Benefits Plan and Trust and a Post-Employment Benefits Plan (PEBP)
that cover substantially all of their staff members.
While IDA is not a participating entity to these benefit plans, IDA shares in the costs and reimburses IBRD for its
proportionate share of any contributions made to these plans by IBRD based on an agreed cost sharing ratio.
During the three and six months ended December 31, 2021, IDA’s share of benefit costs relating to all three plans
totaled $50 million and $98 million, respectively ($123 million and $249 million—three and six months ended
December 31, 2020, respectively).
The cost of any potential future liability arising from these plans would be shared by IBRD and IDA using theapplicable cost sharing ratio.
The receivable from IBRD represents IDA’s net share of prepaid costs for pension and other postretirement benefit
plans and PEBP assets. These will be realized over the lives of the plan participants.
Derivative transactions: IDA enters into currency forward contracts with IBRD acting as the intermediary with themarket, primarily to convert donors’ expected contributions in national currencies under the Sixteenth andSeventeenth replenishments of IDA’s resources into the five currencies of the Special Drawing Rights (SDR) basket.
Investments – Non-trading
During the fiscal year ended June 30, 2015, IDA purchased a debt security issued by IFC for a principal amount of$1,179 million, amortizing over a period of 25 years. The investment carries a fixed interest rate of 1.84% and has aweighted average maturity of 3 years. As of December 31, 2021, the principal amount due on the debt security was$411 million, ($472 million—June 30, 2021), and it had a fair value of $420 million, ($487 million—June 30,2021). The investment is reported under Investments on the Condensed Balance Sheet. During the three and six
months ended December 31, 2021, IDA recognized interest income of $2 million and $4 million, respectively fromthis investment ($2 million and $5 million - three and six months ended December 31, 2020 respectively).
Private Sector Window (PSW)The PSW was created under Eighteenth Replenishment of IDA’s Resources (IDA18), which became effective
beginning fiscal year ended June 30, 2018, to mobilize private sector investment in IDA-only countries and IDAeligible Fragile and Conflict-affected Situations. In IDA18, the PSW allocation was $1.4 billion which was fullycommitted. The PSW continued under IDA’s Nineteenth Replenishment of Resources (IDA19), which became
effective beginning in the 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.

46

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

The following tables provide a summary of all PSW related transactions under which IDA has an exposure as ofDecember 31, 2021:
Table G4: Summary of PSW-related transactions
In millions of U.S. dollars
Facility

Notional

Local Currency
Facility$119

Net Asset/(Liability) position$$(7)

Description

Location on the Condensed
Balance Sheet

Currency swaps with IFC tosupport local currency
denominated loans

Derivative assets/ liabilities,net

In millions of U.S. dollars
Facility

Accumulated
Provision

Exposure

MIGA
Guarantee
Facility

$221

$

$35

BlendedFinance
Facility

$278

$

$50

$48

Not applicable

24

4

Location on the Condensed
Balance Sheet
Accumulated
Exposure
Provision

Description

Expanding the coverage of MIGA
Political Risk Insurance (PRI)
products through shared first-loss
or risk participation similar toreinsurance
Sharing the first loss to support
IFC's Small Loan Guarantee
Program, Global Trade Finance
Program and Working Capital
Solutions in PSW eligible countries
Funding for IFC's PSW equity
investment
Concessional senior & subordinated loans to support medium
term projects

Off Balance
Sheet item

Otherliabilities

Off Balance
Sheet item

Otherliabilities

Other assets
Loansoutstanding

Accumulated
Provision for
Loan Losses

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

December 31, 2021
6,820
(787)
(88)
(120)
5,825

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

a. Project Preparation Advances (PPA)IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)47

A summary of the development grant expenses is presented below:
Table H2: Grant activity
In millions of U.S dollars

Conditional Development grants disbursed a
Cancellations
Disbursement of grant advances not yet expensed b
Grant advances meeting expense condition c
Grant Expenses

Three Months Ended December 31,
2021
2020
$
1,033 $
736
(72)
(13)
(543)
(352)
225
52
$
643 $
423

Six Months Ended December 31,
2021
2020
$
1,585 $
1,459
(88)
(125)
(845)
(472)
334
70
$
986 $
932

Grants Approved

$

$

3,594

$

2,054

4,682

$

4,634

a. 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 December 31, 2021, the cumulative amount of conditional grants approved but not yet expensed is $17,541
million.
NOTE I—ACCUMULATED OTHER COMPREHENSIVE INCOME
Comprehensive income consists of net income (loss) and other gains or losses affecting equity that, under U.S.
GAAP, are excluded from net income (loss). For IDA, other comprehensive income (loss) is comprised of net
income (loss), DVA on fair value option elected liabilities and currency translation adjustments on functional
currencies. These items are presented in the Condensed Statement of Comprehensive Income.
The following table presents the changes in Accumulated Other Comprehensive (Loss) Income (AOCI) balances
Table I1: Changes in AOCI
In millions of U.S dollars

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

Six Months Ended December 31,
2021
2020
1,656
$
(3,927)(2,891)
7,249
(49)
(32)
(1,284)$
3,290

NOTE J— FAIR VALUE DISCLOSURES
Valuation Methods and Assumptions
As of December 31, 2021, and June 30, 2021, IDA had no financial assets or liabilities measured at fair value on a
non–recurring basis.
Due from Banks
The carrying amount of unrestricted and restricted cash is considered a reasonable estimate of the fair value of these
positions.
Loans and Loan commitments
There were no loans carried at fair value as of December 31, 2021 and June 30, 2021. IDA’s loans and loan
commitments would be classified as Level 3 within the fair value hierarchy.
Summarized below are the techniques applied in determining the fair values of IDA’s financial instruments.
Investment securities
Where available, quoted market prices are used to determine the fair value of trading securities. Examples include
most government and agency securities and futures contracts.
48

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)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 December 31, 2021, 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
relative to LIBOR.
The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with theirrespective carrying amounts.

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

49

The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with theirrespective carrying amounts.
Table J1: Fair value and carrying amounts of financial assets and liabilities
In millions of U.S dollars

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

December 31, 2021
Carrying Value
Fair Value

June 30, 2021
Carrying Value
Fair Value

$

$

684

$

684

496

$

496

35,725
177,148
222

35,725
163,476
222

37,376
177,779
249

37,376
164,606249

21,960
2,255
7,551
345

21,960
2,199
9,662
345

20,555
7,759
408

20,555
9,516
408

As of December 31, 2021, IDA’s signed loan commitments were $62.5 billion ($60.8 billion – June 30, 2021) andhad a fair value of $(4.9) billion ($(5.4) billion – June 30, 2021).

50

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

The following tables present IDA’s fair value hierarchy for assets and liabilities measured at fair value on arecurring basis.
Table J2: Fair value hierarchy of IDA’s assets and liabilities
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
As of December 31, 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

$

$

$
$

9,505
488
9,993
9,993

$

-

$

$

$

13,18011,858274
25,312
420
25,732

$

708
112
820

$

$

$

-

$

-

$

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

$

708
112
820

$

557
41
222

$

-

$

21,960$-$21,960

$

-

$

362
545
907

$

-

$
$

362
545
907

$

562
345

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

22,685
12,346274
35,305420
35,725$$a. Includes $2 million CVA.
b. Includes $6 million DVA.

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)51

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

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

$

$

7,852
728
8,580
8,580

-

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

$

$

$

$

460
193
653

$

$

-

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

-

$

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

$

460
193
653

$

404
249

$

-

$ 20,555$-$ 20,555

$

-

$

$

-

$

$

$

507
309
816

$

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

$

507
309
816

$

408
408

a. These include swaptions, exchange traded options, futures contracts and TBA securities.
b. Includes $2 million CVA.
c. Includes $6 million DVA.

Presented below is the difference between the aggregate fair value and aggregate contractual principal balance of
non-trading securities in the investment portfolio:
Table J3: Investment portfolio-Non-trading securities
In millions of U.S dollars
December 31, 2021
June 30, 2021

52

$
$

Fair value
420
487

Principal amount due
$
411
$
472

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)$$

Difference
915

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

December 31, 2021
June 30, 2021

Fair Value$21,960$20,555

Principal Due Upon
Maturity$22,335$20,659

Difference$(375)$(104)

Valuation adjustments on fair value option elected liabilities
During the six months ended December 31, 2021, IDA recorded unrealized mark-to-market losses of $49 million($32 million losses– six months ended December 31, 2020) in Other Comprehensive Income, in relation to thechanges in its own credit (DVA) on fair value option elected liabilities (market borrowings carried at fair value).
As of December 31, 2021, IDA’s Condensed Balance Sheet included a DVA of $105 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 Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)

53

The following table reflects the components of the unrealized mark-to-market gains or losses on IDA’s trading andnon-trading portfolios, net.
Table J5: Unrealized Mark-to-Market Gains (Losses) on Trading and Non-Trading Portfolios, Net
In millions of U.S. dollars

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

Three Months Ended December 31, 2021
Unrealized
gains(losses)
excluding
Unrealized
Realized
realized
gains
gains (losses)
amounts a(losses)
$ 110
$
(46)
$
64

$

-

(146)
(3)
(1)
1
$ (149)

(146)
(3)
(1)
1
$ (149)Six Months Ended December 31, 2021
Unrealized
gains(losses)
Realized
excluding
Unrealized
gains
realized
gains(losses)amounts a(losses)
$ 173
$
(94)
$
79

$

-

$

(88)
(5)
10
(4)
(87)

$

(88)
(5)
10
(4)
(87)

Table J5.1:
In millions of U.S. dollars

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

Three Months Ended December 31, 2020
Unrealized
gains(losses)
excluding
Unrealized
Realized
realized
gains
gains (losses)
amounts a(losses)
$
(17)
$
82
$
65

$

-

$

261
(3)
7
1
266

$

261
(3)
7
1
266

Six Months Ended December 31, 2020
Unrealized
gains(losses)
Realized
excluding
Unrealized
gains
realized
gains(losses)amounts a(losses)
$
(11)
$
95
$
84

-

$

-

$

386
(4)
14
(1)
395

$

386
(4)
14
(1)
395

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

NOTE K—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 six months ended December 31, 2021, is not expected to have a material adverse effecton IDA's financial position, results of operations or cash flows.

54

IDA Condensed Quarterly Financial Statements: December 31, 2021 (Unaudited)INDEPENDENT AUDITOR’S REVIEW REPORTINDEPENDENT AUDITORS’ REVIEW REPORT

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

INDEPENDENT AUDITOR’S REVIEW REPORT
President and Board of Executive Directors
International Development Association:
Results of Review of Interim Financial Information
We have reviewed the accompanying condensed balance sheet of the International Development
Association (“IDA”) as of December 31, 2021, and the related condensed statements of income, andcomprehensive income for the three‐month and six‐month periods ended December 31, 2021 and 2020,
and the condensed statements of changes in accumulated deficit, and cash flows for the six‐month periods
ended December 31, 2021 and 2020, and the related notes (collectively referred to as the “interim financial
information”).
Based on our reviews, we are not aware of any material modifications that should be made to theaccompanying interim financial information for it to be in accordance with accounting principles generally
accepted in the United States of America.
Basis for Review Results
We conducted our reviews in accordance with auditing standards generally accepted in the United Statesof America (GAAS) applicable to reviews of interim financial information. A review of interim financial
information consists principally of applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters. A review of interim financial information is substantiallyless in scope than an audit conducted in accordance with GAAS, the objective of which is an expression ofan opinion regarding the financial information as a whole, and accordingly, we do not express such an
opinion. We are required to be independent of IDA and to meet our other ethical responsibilities inaccordance with the relevant ethical requirements relating to our review. We believe that the results of
the review procedures provide a reasonable basis for our conclusion.
Responsibilities of Management for the Interim Financial Information
Management is responsible for the preparation and fair presentation of the interim financial informationin accordance 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 fairpresentation of interim financial information that is free from material misstatement, whether due to fraud
or error.
Report on Condensed Balance Sheet as of June 30, 2021
We have previously audited, in accordance with auditing standards generally accepted in the United Statesof America, the balance sheet as of June 30, 2021, and the related statements of income, comprehensive
income, changes in accumulated deficit, and cash flows for the year then ended (not presented herein);
and we expressed an unmodified audit opinion on those audited financial statements in our report dated
55

August 6, 2021. In our opinion, the accompanying condensed balance sheet of IDA as of June 30, 2021, isconsistent, in all material respects, with the audited financial statements from which it has been derived.

February 11, 2022

56