Fiscal 2003 was a strong year for IFC’s financial performance and its leadership on issues of sustainable development. IFC Executive Vice President Peter Woicke noted, "These results underscore two very clear messages. Despite spots of volatility, the emerging markets still represent major long-term opportunities for investors. Also, IFC is one of the few institutions that can catalyze innovative, pioneering investments that combine the leading edge of finance with environmental sustainability and high development impact."
IFC Portfolio for FY03
As detailed in IFC’s Annual Report and its Sustainability Review, the Corporation’s operating income grew to $528 million in FY03, a significant gain from $161 million in FY02. The committed portfolio grew by 11.5 percent to $16.8 billion. IFC tracks projects that have positive environmental, social, or corporate governance impact for a community or nation beyond profitability, job creation, tax revenues, and compliance with basic environmental and social standards and safeguards. In FY03, IFC’s percentage of high impact projects increased by 9.1% over FY02, to 56.4 percent.
The sectors that IFC prioritizes for their high development impact—financial markets, infrastructure, information technology, and health and education—were the focus of two-thirds of IFC’s FY03 investments. Gross commitments were $5.03 billion, including $1.18 billion in syndicated loans, for 204 projects in 64 countries. Lending to small and medium enterprises, also a high priority, amounted to about $450 million, or 12 percent of investments for IFC’s own account. New facilities to promote small and medium enterprises were established in North Africa, South Asia, and eastern Indonesia. In Sub-Saharan Africa, IFC has begun to collaborate with IDA to support sustainable development of smaller businesses.
The Equator Principles
In June, IFC advised ten leading international banks as they adopted the Equator Principles, a set of voluntary environmental and social policies and guidelines modeled on those of IFC and the World Bank. Mr. Woicke said, "We believe IFC can play a strong leadership role beyond providing capital, and we demonstrated that this year. These banks took a major step in recognizing that their interests align with those of the people and the environment in developing countries." Major banks continue to join this group.
IFC in the Regions
IFC’s growth in commitments was strongest in Europe and Central Asia (up 89 percent), led by financial sector investments, and in Latin America and the Caribbean (up 48 percent), where IFC continued to play a critical countercyclical role, especially in trade finance. In the Middle East and North Africa, IFC’s investments grew steadily (up 26 percent) in spite of political turmoil in much of the region. Investment activity remained stable in East Asia despite the outbreak of SARS.
Highlights of FY03
- A major increase, to $836 million, in IFC’s use and mobilization of structured finance products, such as partial credit guarantees and securitizations.
- IFC’s entry into the municipal finance market, where infrastructure projects are increasingly funded. IFC invested in a municipal water company in Mexico and created a joint unit with the World Bank for municipal finance.
- IFC developed its first carbon emissions credits deals in Brazil, Guatemala, and India.
- In Tajikistan, IFC helped develop and finance a public-private partnership for completion of a hydroelectric plant that combined IFC funds with those of IDA and the Agha Khan Fund for Economic Development.
