WASHINGTON, D.C., October 22, 1998 --- During the first quarter of FY 1999 the International Finance Corporation continued to see strong demand for its services. Commitments during the quarter amounted to US$386 million and new investment approvals, covering 30 countries, were $505 million. As of September 30, 1998, IFC’s outstanding portfolio of loan and equity investments in developing countries was $9.4 billion. IFC had paid-in capital and retained earnings of $5.1 billion as of September 30, 1998.
Continuing difficult conditions in several emerging markets led IFC to increase its reserves against possible losses. Consistent with IFC’s conservative approach, new provisions amounting to $177 million were charged to income in the first quarter to accommodate potential impairment of the Corporation’s investments, primarily in Russia and Asia. IFC has provisioned 18% against its total outstanding portfolio as of September 30, 1998. Largely reflecting the impact of this additional prudence, the Corporation expects to report a loss of $45 million for the first quarter of FY 1999. This loss compares with net income of $148 million in the first quarter of FY 1998, when the Corporation realized substantial capital gains through sales from its equity portfolio. Assuming no further significant deterioration in the global financial markets, IFC expects that it will report a profit for the full fiscal year which ends June 30, 1999.
“Not surprisingly, our net income for the quarter has been adversely affected by the severe conditions that have prevailed in some emerging markets over the last several months,” said Jannik Lindbaek, Executive Vice President of IFC. “We continue to take a very prudent approach in provisioning against possible losses. Barring unforseen circumstances, we expect to realize a positive net income for the full year. Meanwhile, we are continuing our work in helping to restructure, advise and invest in the private sectors of our developing member countries, many of whom are now experiencing difficulties as a result of adverse market conditions. We remain strongly capitalized, fully engaged and in an excellent position to assist our members,” Lindbaek added.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
