Singapore, September 18, 2006
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The International Finance Corporation, the private sector arm of the World Bank Group, announced gains on key development indicators for FY06, with investments in high-risk and low-income countries up 20 percent, and a record $9.5 billion in investment commitments and resource mobilization for private sector projects in developing countries.
“We made tremendous progress this year targeting financing and technical assistance in areas where IFC’s help is needed most,” said Lars Thunell, IFC’s Executive Vice President.
He added that, “IFC’s investments in Africa and the Middle East increased 80 percent in fiscal year 2006. Our investments in infrastructure and private sector health and education projects were up more than 50 percent.”
The Corporation has been consistently profitable since its inception in 1956, demonstrating the profit potential of private sector investments in developing countries. In FY06, IFC earned net income of $1.3 billion, compared to $2.0 billion in FY05. Operating income was $1.4 billion in FY06, compared to $2.0 billion for the previous fiscal year.
Mr. Thunell noted several highlights of the past fiscal year:
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Investment commitments for IFC’s own account, $6.7 billion in FY06, were up 25 percent from FY05.
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IFC mobilized an additional $2.9 billion in financing—$1.6 billion through syndicated loans and $1.3 billion through structured finance transactions.
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Investment commitments in local currencies, 20 percent of IFC’s total commitments in FY06, increased substantially. Local currency financing helps domestic borrowers match assets and liabilities and eliminates exchange rate risk.
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IFC and its donors approved more than 400 new technical assistance and advisory projects for businesses and governments during the year. Most of this work is in low-income or high-risk countries—more than 40 percent of project funding approved this year was for work in Sub-Saharan Africa.
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The Corporation improved its standards for the social and environmental performance of its investments and introduced a new policy to disclose more information about its activities.
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IFC introduced a new development outcome tracking system for investment operations, to measure and track results throughout the life of a project. A similar system was implemented to monitor the development impact of all active technical assistance and advisory projects.
Mr. Thunell noted that, “Our record investment commitments reflect our success in delivering on IFC’s long-term growth strategy. While we are increasing our activities, we are also improving measurement of our development effectiveness and of the economic, environmental, and social sustainability of our projects."
The Corporation’s investments in telecommunications have helped 62 million people gain access to phone service since 1996. Oil, gas, and mining companies IFC has invested in have created 50,000 jobs and contributed $4.4 billion to government revenues in developing nations last year.
Of the $6.7 billion in commitments IFC signed for its own account in FY06, $5.0 billion were in loans, $1.1 million were for equity, and $611 million were in guarantees and risk management products. IFC’s committed portfolio for its own account grew to $21.6 billion during the year, an increase of nearly 12 percent.
Expenditures for IFC’s technical assistance and advisory activities, which are delivered through a network of donor-funded facilities and programs, were about $134 million for FY06, a 23 percent increase.
During FY06 IFC adopted new environmental and social standards. These standards have been adopted by 42 international financial institutions as the Equator Principles II.
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit www.ifc.org.
Additional information about IFC's fiscal year results can be found at: http://www.ifc.org/ar2006
