INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)


IDA started its operations on Nov. 8 1962. IDA grants development loans more generously to the developing countries. The IDA loans bear a lower interest rate than is charged by the World Bank. IDA Funds come from the subscriptions from its members and from the earnings of IBRD. Credit terms are usually extended to 50 years and at times with no interest. Repayment should begin after a 10 year grace period and can be paid in the local currency, as long as it is convertible.

STRUCTURAL ADJUSTMENT PROGRAMMES (SAPs)

Structural adjustment is the name given to a set of free market economic policy reforms imposed on developing countries by the Bretton Woods institutions as a condition for receipt of loans.

SAPs were developed in the early 1980s as a means of gaining stronger influence over the economies of debt-strapped governments in developing countries. To ensure a continued inflow of funds, countries already devastated by debt obligations have little choice but to adhere to conditions mandated by the IMF and World Bank. Most donor countries, condition their bilateral assistance upon a country's adoption of structural adjustment programmes.

SAPs are designed to improve a country's foreign investment climate by eliminating trade and investment regulations, to boost foreign exchange earnings by promoting exports, and to reduce government deficits through cuts in spending.