EMBARGO: Information in both volumes of the annual report is not for publication or broadcast until noon, Eastern Daylight Time (1600 GMT), Wednesday, September 18, 2002.
Washington, D.C., September 18, 2002—
The International Finance Corporation released its 2002 annual report showing investments for its own account increased 14 percent to reach $3.1 billion during its most recent fiscal year, which ended June 30. Operating profit declined by a third from FY 2001 to $161 million.
Consistent with IFC’s strategy to support businesses in sectors identified for their high developmental impact, nearly two-thirds of investments were in financial markets, infrastructure, information technology, and health and education. Lending to small and medium enterprises directly and through intermediaries amounted to about $540 million, or 17 percent of investment for IFC’s own account.
As part of this year’s annual report, IFC published its first corporate review of sustainability. It highlights the business case for a sustainable approach to private sector investment in emerging markets and reviews IFC’s economic, environmental, and social impact.
Facing a rapidly changing situation in emerging markets, IFC focused on better serving clients and creating new business opportunities through more coordinated client service. In his opening message to the report Executive Vice President Peter Woicke said, “We brought to bear all the necessary ingredients for promoting sustainable development in emerging markets, even in these challenging times, and are moving decisively to make them work more effectively and profitably.”
IFC undertook a major reorganization during FY02, putting more senior staff in regional hubs to further improve client service. “I believe the reorganization will allow us to use our knowledge and skills more effectively in response to our clients’ needs. Better delivery of products and services is a powerful and positive result of the lessons learned during a difficult year,” added Mr. Woicke.
IFC’s financial performance during FY02 was negatively affected by the uncertainty in Argentina, where IFC has an investment portfolio of more than $1 billion. Mr. Woicke reaffirmed IFC’s commitment to working with clients through a difficult period in that country, noting that IFC’s long-term commitment and ability to invest in markets where private capital has become scarce can help restore confidence if there is a genuine government commitment to good policies.
IFC arranged $518 million in syndicated loans, or B-loans, for 17 projects and raised $193 million through parallel facilities, resulting in total direct mobilization of funds for projects in emerging markets of $709 million during FY02. B-loan signings declined due to market conditions and the different business mix of the Corporation where there was less need for mobilization from the financial markets. Despite the reduced appetite for emerging market risk among many private sector lenders, IFC successfully increased its syndicated lending to $330 million in Latin America in difficult market conditions.
IFC’s sustainability review in this year’s annual report marks a new strategic commitment by the Corporation. The review highlights and expands IFC’s ability to provide clients with expertise in environmental, social, technical, and other areas. IFC sees sustainability as a critical way to differentiate itself from other financial institutions, provide clients with high-value services, and ensure its own future business success and profitability. IFC’s approach to sustainability is built around the business case – the growing body of evidence that holds that, in many situations, improved environmental, social, and corporate governance performance provides financial benefits.
Other highlights of the report:
·IFC signed gross commitments of $3.61 billion, including financing for IFC’s own account and syndicated loans, for 204 projects in 75 countries. Of these commitments, IFC signed $518 million in syndicated loans.
·Commitments by dollar volume, including financing for IFC’s own account and syndicated loans, grew most rapidly in East Asia and the Pacific (up 65 percent), Europe and Central Asia (up 45 percent), and Latin America and the Caribbean (up 45 percent).
·In the East Asia and the Pacific region, IFC committed financing for 33 projects amounting to $673 million for its own account and another $67 million in syndicated loans. Twelve FY02 projects from the region were in China, including a range of financial sector projects. In both China and Vietnam, IFC supported innovative projects in the health sector.
·In Europe and Central Asia, IFC committed financing for 60 projects amounting to $664 million for its own account and $74 million in syndicated loans. Especially notable were IFC’s 18 commitments in Russia, which included a range of financial sector transactions and other projects. IFC signed 12 new commitments in Turkey.
·In Latin America and the Caribbean, IFC committed financing for 47 projects amounting to $1.1 billion for its own account and $330 million in syndicated loans. Notable among the projects were the first investment agreement in Argentina since the onset of the crisis. In Colombia, IFC signed large transactions with major companies that will help develop the strength of the private sector through financing and improved corporate governance.
·In Sub-Saharan Africa, IFC committed financing for 37 projects amounting to $252 million for its own account. IFC supported the financial sector throughout the region, including a loan facility in Nigeria to help link the development of small and medium enterprises to oil exploration by a large oil company.
·In South Asia, IFC committed financing for 15 projects amounting to $250 million for its own account and $17 million in syndicated loans. IFC continued to introduce products new to India, including $45 million in loan guarantees and $50 million in risk management products. IFC provided its first rupee-denominated loan this year.
·In the Middle East and North Africa, IFC committed financing for 11 projects amounting to $107 million for its own account and $31 million in syndications. IFC signed two notable transactions in Syria intended to help develop the financial and industrial sectors.
·As part of its sustainability initiative, IFC developed a pilot process for identifying, assessing, and tracking new commitments that have high beneficial impact in one or more dimension of financial, economic, corporate governance, or social performance. IFC determined that 47 percent of FY02 commitments have high impact in at least one of the new sustainability framework dimensions.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC’s committed portfolio at the end of FY02 was $15.1 billion.
The annual report can be viewed on-line at: http://www.ifc.org/ar2002.
