IDA's 82 eligible recipients have very significant needs for concessional funds. But the amount of funds available, which is fixed once contributions are pledged by donor governments, tends to be well below the countries' needs. IDA, therefore, must allocate scarce resources among eligible countries. This is done on the basis of recipients' policy performance and institutional capacity in order to concentrate resources where they are likely to be most helpful in reducing poverty.
Two criteria are used to determine which countries can access IDA resources:
- Relative poverty defined as GNI per capita below an established threshold and updated annually (in fiscal year 2012: $1,175).
- Lack of creditworthiness to borrow on market terms and therefore a need for concessional resources to finance the country's development program.
The main factor that determines the allocation of IDA resources among eligible countries is each country's performance in implementing policies that promote economic growth and poverty reduction. This is assessed by the Country Policy and Institutional Assessment (CPIA), which for the purposes of resource allocation is referred to as the IDA Resource Allocation Index (IRAI). The IRAI and portfolio performance together constitute the IDA Country Performance Rating (CPR). In addition to the CPR, population and per capita income also determine IDA allocations. Beginning 2005, the numerical IRAI as well as the CPR are disclosed.
The allocation of IDA's resources is determined primarily by each recipient’s rating in the annual CPIA. In addition, the IDA16 Agreement recommends that because the acceleration of economic and social development in Sub-Saharan Africa remains foremost among IDA's priorities, these countries should receive priority in the allocation process, provided their policy performance warrants it. In the case of countries that are eligible for both IDA and IBRD funds ("blend countries"), IDA allocations must also take into account those countries' creditworthiness for and access to other sources of funds. Individual country performance-based allocations serve as an anchor for the formulation of Country Assistance Strategy (CAS) lending programs. For a more detailed overview of the IDA's Country Assessment and Allocations process, see Annex 2 of the IDA16 Replenishment Report (pdf).