UGM June 2019 Q7
0. Which of the following institutions is known as the ‘soft loan Window’ of the World Bank?
- Option : B
- Explanation : There are three affiliates of the IBRD, viz., the International Development Association (IDA), the International Finance Corporation
(IFC) and the Multilateral Investment Guarantee Agency (MIGA). The IBRD, popularly known as World Bank, and it's three affiliates are collectively called the World Bank Group.
International Development Association(IDA): The IDA was set up by a resolution of the IBRD adopted on 1st October 1959 which read: “Resolved that with respect to the question of creating International Development Association as an affiliate of the Bank, the Executive Directors, having regard to the views expressed by the Governors and considering the broad principles on which such an association should be established and all other aspects of the matter are requested to formulateExecutive Directors, having regard to the views expressed by the Governors and considering the broad principles on which such an association should be established and all other aspects of the matter, are requested to formulate articles of agreement of such an association for submission to the member governments of the Bank.” The IDA formally started its operations on November 8, 1960. It grants development loans more generously to the developing countries and its terms are more flexible than the loans advanced by the IBRD. It supplements the activities of the IBRD by granting loans on more liberal terms for projects which do not receive assistance from the Bank either because they do not carry the guarantee of the Government of the country concerned or they do not contribute directly and immediately to the productive capacity of the borrowing country. Not only that, the rate of interest charged by the IBRD being high and the period of repayment being short, an urgent need was felt for setting up a new international financing agency and this need was fulfilled by setting up the IDA. Since the terms of loans are very liberal, the IDA has been nicknamed as the ‘soft loan window’.
