International Finance Corporation1985 Annual Report

IFC22668

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International Finance Corporation1985 Annual Report

IFC

IFC's Objectives

IFC is a multilateral development institution established to promote the growth of productive private investmentand to assist enterprises that will contribute to the economic development of its developing member countries.

The Corporation was established in 1956 as an affiliate of the World Bank. Its capital resources are provided by its127 member countries, 106 of which are developing, which collectively determine its policies and activities.

The ultimate objective of the Corporation is to improve the well-being of the people in its developing membercountries. Its principal tasks are to provide and bring together financing, technical assistance and managementneeded to develop productive investment opportunities in its developing member countries. The Corporation seeksto invest in privately-owned enterprises but will participate in mixed enterprises, with an element of govemmentownership where there is no realistic altemative and where there is a clear intention to move towards fuller privateownership and control.

IFC makes both equity investments and loans without govemment guarantees. This permits the Corporation toprovide financial assistance suited to the needs of each project and to the ability of each firm to raise funds fromother sources on reasonable terms.

In all of its activities, the Corporation works to raise investor confidence. In addition to providing financial andtechnical assistance, the Corporation may, as an international institution, help facilitate the process by whichinvestors and govemments can arrive at mutually satisfactory agreements.

The Corporation seeks to encourage the flow of private capital both domestically and intemationally, through theestablishment or expansion of local capital markets and financial institutions. It also offers technical assistance tomember govemments in support of their efforts to create an investment environment which will encourageproductive and beneficial domestic and foreign investment.

ii

Table of Contents

IFC Objectives ii

Letter to the Board of Governors 2

The Year in Review 4

Investment Climate 7

The Year's Operations 11

The Year's Investments 18

Summary 18

Regional Summaries 20

Other Operations 30

Investment Table 35

Administration and Management 44

Financial Statements 45

Appendices 53

International Finance Corporation 1818 H Street, N.W. (202) 477-1234Washington, D.C. 20433 Cable Address: CORINTFINU.S.A.

August 6, 1985

To the Board of Governors

The Board of Directors is pleased to report that during Fiscal Year 1985, the Corporation significantly expandedits assistance to the private sectors of its developing membercountries and introduced a numberof operationalinnovations which position the Corporation better to respond to the needs of its clients The $937.2 million totaland $609.3 million net investments in the 75 business ventures approved by the Board of Directors were the highesteverrecorded The introduction of variable rate lending, the expanded use of guarantees and underwritings, andthe first direct borrowing from international capital markets were among the steps taken during the Year to providethe Corporation with the flexibility it needs to operate successfully in these changing and challenging times

With this increased volume of business, coming after several years of slower growth, a good start has been madetowards expanding the role of the Corporation as envisaged in the current Five Year Program. Under the Program,the Corporation's activities will be more than doubled over the period

This Program is based on the proposed capital increase which was approved by the Board of Directors in June1984 and on which voting by Governors has been proceeding during FY85 At year-end, 104 countries out of IFC's127 member countries, representing 70.6 percent of the voting total, had voted for the capital increase. It is fullyexpected that the 75 percent needed to ratify the resolution will be received early in Fiscal Year 1986. Thefulfillment of the Five Year Program also depends on timely payments by governments of the capital increase tothe Corporation in accordance with the approved schedule. These payments should begin as soon as the capitalincrease has been approved by the Board of Governors

In light of the Year's record performance in very difficult circumstances, the Board of Directors expresses itsappreciation to the staff of IFC for its dedication and its ability to develop new and innovative ways of carryingout the purposes of the Corporation The Board also wishes to welcome Sir William Ryrie who assumed office asExecutive Vice President on 1st October 1984 and to express again its deep appreciation for the services ofDr. Hans A Wuttke who retired from the Corporation as of September 30, 1984.

The Board of Directors has had thisAnnual Report prepared for the Fiscal Yearending June 30, 1985, in accordancewith theBy-Laws of the Corporation. A W. Clausen, President of the Corporation and Chairman of theBoard ofDirectors, has submitted this Report, togetherwith accompanying audited financialstatements, to the Board ofGovernors

2

The Board of DirectorsDirectors Alternates

Fawzi Hamad Al-Sultan Mohammad Al-ShawiMourad Benachenhou Salem Mohamed OmeishJames B. Bumham Hugh W. FosterKenneth Coates Felix Alberto CamarasaFerdinand van Dam Riza SapunxhiuRonald H. Dean You Kwang ParkMario Draghi Rodrigo M. GuimaraesAstere Girukwigomba Mitiku JembereLeonor Filardo de Gonzalez Maria Antonieta DominguezJacques de Groote Oral AkmanEdgar Gutierrez-Castro Guillermo A RiveraChristian Ulrik Haxthausen Per TaxellTimothy P. Lankester Richard ManningBruno de Maulde Francis MayerReinhard Munzberg Michael von HarpeXu Naijiong Yang GhanghuiPhaichitr Uathavikul Sashi N. ShahFrank Potter George L ReidC. R Krishnaswamy Rao Sahib Gholam KibriaNicephore Soglo Andre MilongoKenji Yamaguchi Zenbei Mizoguchi

Officers

A. W. Clausen PresidentSir William Ryrie Executive Vice President

Francisco J. Alejo Vice President, Corporate Affairs andDevelopment

K. Georg Gabriel Vice President, Finance and PlanningJudhvir Parmar Vice President, Investment Operations

Jose E. Camacho Vice President and General CounselMakarand V. Dehejia Vice President, EngineeringT. T. Thahane SecretaryRichard H. Frank Director, Financial Management and

Planning DepartmentRoswitha J. Klement-Francis Director, Management Systems and

Accounting Department

Advisory Panel

IFC's advisory panel meets regularly with the Corporation's management to discuss its activities and policies The Corporation wishesto express its appreciation for the valuable advice the panel members have given.

Members are:

Jan Ekman, President Dr. Conrad Oort, Member ofSvenska Handelsbanken Managing BoardStockholm Algemene Bank Nederland

Dr. Wilfried Guth, Speaker of the AmsterdamManaging Board Lord Roll of Ipsden, ChairmanDeutsche Bank A.G., Frankfurt S.G. Warburg and Co., Ltd.

Jean-Yves Haberer LondonPresident Directeur General Robert V. Roosa, Partnerof Banque PARIBAS Brown Brothers Harriman and Co.Paris New York

Yusuke Kashiwagi, Chairman Anthony SolomonThe Bank of Tokyo, Ltd. Former Undersecretary for MonetaryTokyo Affairs of the United States Treasury

and President of the New YorkFederal Reserve Bank

'With effect from September 3,1985, Mr. Hilary Reddy will assume the new position of Vice President, Portfolio and Financial Managementincluding the responsibilities exercised by Mr. Gabriel.

3

Fiscal 1985 panding its activities in Fiscal Year 1985 and is on trackto achieve the objectives of the Five Year Program.

This report covers the Fiscal Year which ended on 30th The volume of new business done by the CorporationJune 1985. This was the first year in IFC's current Five was increased significantly after several years of slowYear Program. growth. Seventy-five projects were approved by the

Board of Directors, 21 percent more than the previousThe Program sets ambitious targets for the expansion year. The $609.3 million of net investments approvedof the Corporation's activities to enable it to play a by the Board was an increase of 56 percent and totallarger role in the development process. The loan and inetments, in cluingrtato of $327.9 milequity investments in private enterprises in its develop- were up by 35 percent. Each of these totals was theing member countries will be more than doubled under highest achieved since the founding of the Corporation.the plan. This objective will require the Corporation not Tighes icreaedsw inle the f of Yea Prporamoonly to expand its traditional business but to do so in and provided a good basis for continuing progressnew ways and also undertake new types of activities. during the remaining years of the Program.

In recent years the economic climate in most develop-ing countries has been harsh. Many private companies A number of innovative ventures were approved duringhave been experiencing serious problems and the cli- the year the Corporation's first oil exploration and itsmate has not been encouraging for new investment first mineral exploration project; the first life insuranceThis has made IFC's task more difficult but at the same investment and the first in rural housing finance; andtime more urgent and important. Despite these condi- the first major underwriting venture with IFC in thetions, the Corporation made excellent progress in ex- lead, beginning a process of channelling the resources

of large institutional investors directly into projects indeveloping countries. The Corporation decided to un-dertake its first investment in the People's Republic of

Portfolio China, in a venture in which 10 percent of the equityUS$ Millions will be offered for sale to the Chinese public. IFC

3,500 resumed its investment activities in Zaire in response toimproved economic conditions there.

3,000 The economic difficulties of recent years have not onlyrestricted opportunities for new investment but haveimposed severe financial pressures on many existing

2,500 companies. The low level of aggregate demand, theweakness of commodity markets and the instability ofexchange rates continued to be particularly trouble-

2,000 some for many of the Corporation's partners and clientcompanies.

1,500 The IFC devoted increased attention and effort to thesupervision of its portfolio. The Corporation's conserva-

1,000 ~~~~~~~~~~~~tive reserve and income accumulation policies were1,000 iiiIIi~~~~~~~~t ~continued. A special unit created in Fiscal Year 1984 to

(t5IIIII(I i 'deal with jeopardy cases did useful work in 1985500 providing technical and sometimes financial assistance111111 III ~~~~~to companies facing temporary but, nevertheless, seri-

ous difficulties. Towards the end of the Fiscal Year therelllflllllllfllllllllllllllllllllllllllll l were indications that the deterioration in the condition

1981 1982 1983 1984 1 B5 of the portfolio which was observed in the years 1981-1984 may not be continuing.

4

The Past Ten Years(US$ millions)

Fiscal Years 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

OPERATIONS

Approved Investmentsnumber of projects 33 34 41 48 55 56 65 58 62 75number of countries 22 21 31 33 30 34 31 36 37 38amount (gross S) 236 259 338 425 681 811 612 845 696 937total project costs 1,383 1,228 1,872 1,714 2,377 3,340 2,936 2,894 2,473 2,768

Cumulative Approvalsnumber of projects 357 388 429 477 532 588 653 711 773 848amount (gross $) 1,549 1,808 2,146 2,571 3,252 4,063 4,675 5,520 6,216 7,153total project costs 7,962 9,190 11,062 12,776 15,153 18,493 21,429 24,323 26,796 29,564syndications 440 548 688 890 1,157 1,559 1,747 2,166 2,471 3,125

Investment Heldnumber of firms 187 200 225 253 288 314 333 341 349 367loans 627 704 799 889 1,159 1,374 1,551 1,588 1,644 1,748equity 152 160 184 223 245 273 284 294 346 368total 779 864 983 1,112 1,404 1,647 1,835 1,882 1,990 2,116

RESOURCES AND INCOME

Capitalizationborrowings 327 445 462 455 438 509 531 536 582 825paid-in capital 108 108 144 229 307 392 497 544 544 546accumulated earnings 78 87 100 119 140 159 181 204 230 258

Earningsnet income 7.7 8.9 12.5 19.2 20.7 19.5 21.6 23.0 263 28.3

To enable it to meet the needs of its clients better, the Corporation was reorganized. The aim was to giveCorporation widened the range of financial and techni- greater emphasis to promotional efforts, to strengthencal services it offers. Early in the Year, the Board of portfolio supervision and financial planning and controlDirectors approved the use of variable rate lending and and to streamline operating procedures. The top man-20 percent of the new loans approved during the year agement of the Corporation was organized into threewere at variable rates. The Corporation responded to vice-presidencies under the new Executive Vice Presi-the diverse needs of its clients by increased use of dent New investment operations were consolidatedunderwriting, guarantees, and novel equity-like finan- under one vice president, development, syndicationscial instruments, and by its ability to offer loans in a and public affairs under another and finance and port-range of currencies. IFC launched proposals for the folio supervision under a third.creation of a Project Development Facility and a Man-agement Services Facility in Africa to help the private In December 1984, a decision by the Board of Directorssector in that region and their plans are under discus- opened the way for the Corporation to raise fundssion with governments. directly from international capital markets. This move

not only broadened the Corporation's options forAs part of the effort to equip IFC to meet the challenges matching its capital and operational needs but alsoof the Five Year Program, the management of the expanded the sources of financing available to IFC.

5

Reflecting the market's confidence in IFC, the Corpo- quired to enlarge its capital base. If these funds wereration was able to raise $100 million on the Eurodollar not made available on schedule, the Corporation wouldmarket and DM90 million in the Federal Republic of have to scale back its plans for expansion.Germany on excellent terms and conditions. This wasin addition to the funds IFC borrowed from the World The Corporation's own financial condition remainsBank, from which the Corporation still expects to con- sound, with net income rising from $26.3 million totinue to raise the larger part of the funds it requires. $28.3 million, slightly more than had been budgeted for.

Productivity, as measured by the ratio of new invest-The Year's activities leave the Corporation well placed ments to administrative expenditures and staff numbers,to meet the challenges of the Five Year Program. The improved significantly during the Year.Program is based on the capital increase which wasapproved by the Board of Directors and proposed to During the year, Mozambique and Hungary joined theIFC's member governments at the end of the last Fiscal IFC as the Corporation's 126th and 127th members.Year. At the end of Fiscal Year 1985,104 of IFC's Imembers representing 70.6 percent of the voting shares The record of Fiscal Year 1985 justifies a degree ofhad voted in favor of the increase. With the addition of optimism about the prospects for enlarging the role ofthe votes of one major shareholder, which has not yet private investment in development and the contribu-voted, the Corporation anticipates that the 75 percent tion IFC makes to it in the second half of the decade.of the voting shares required for ratification will be Economic conditions certainly remain difficult but thereached early in FY86. sound economic policies being pursued in many coun-

tries and the great encouragement many of them areAs the Corporation enters Fiscal Year 1986, continued now giving to private investments are reasons for be-advances towards the targets of the Five Year Program lieving that future progress will be made in Fiscal Yearwill depend upon the timely receipt of the funds re- 1986 and beyond.

6

Investment Climate

A year ago the prevalent, though not unanimous, view The International Environmentof the international economic situation was that the The economic performance of the industrialized coun-developing country debt crisis had been managed suc- tries, so important for the developing countries, wascessfully, and that the international financial system had generally good during 1984. The industrial countries'proved strong and flexible enough to avert collapse. GDP grew 4.9 percent-their best performance since

1976. Moreover, this was accomplished with only mod-At that time IFC called attention to the severe problems est price increases: the GNP deflator rose only 4.1that continued to face private industry in most devel- percent, down from 4.9 percent in 1983. Interest ratesoping countries, brought about not only by the debt also declined; the six-month LIBOR rate, a benchmarkrisis itself but also by the subsequent adjustments it for many developing country loans, fell from about 12

required. These problems, which differed from one percent in mid-1984 to about 8 percent in June 1985,developing country to another, included excessively its lowest level in seven ears.high and widely fluctuating interest rates, weak domes- ytic demand, and both weak demand and low prices for These favorable developments in the industrializedexports. All these had harmful effects on cash flows and countries, combined with policy improvements in theprofits of private firms. In many cases, these effects led developing countries, resulted in increased economicto bankruptcies, takeovers by governments, or large growth and a strong improvement in the current ac-numbers of mergers and consolidations. In some coun- count position of the latter group. Stimulated by theirtries such problems went beyond industry and extended export growth of 10.8 percent, the developing coun-to the financial sector. In its last Annual Report, IFC tries' GDP increased by 3.9 percent in 1984, up frompointed out that ". . . in the long run, the ability of the only a 1.9 percent annual increase during 1982-83.* Asdebtor countries to service their debts depends on in the past, there were significant differences amonggrowth of their productive capacity and of their exports countries. For example, in 1984 GDP grew 6.4 percent. . ." and, therefore, that private sector recovery was an in the Asia region, compared to only 2.2 percent ininternational necessity. To permit private sector recov- Africa and 2.4 percent in Latin America.ery, IFC expressed the hope ". . . that the debt renego-tiation process can evolve into longer-run solutions that The combined current account deficit of the developingwill provide responsible debtors with sufficient breath- countries continued to decline, falling from its peak ofing space to permit them to resume servicing their debt $113 billion in 1981 to only $38 billion in 1984-out of a growing national product" equivalent to only 7 percent of the combined exports

of these countries, which is the lowest level of thisThe evolution of the situation during the last year, index since it was first recorded by the IMF in 1967.which on balance has been positive, contains a fair However, both aggregate debt service ratios and themixture of both good and bad news. The intemational stock of extemal debt as a percentage of GDP roseeconomic situation improved significantly-but that slightly. And the balance of payments for many of theimprovement was uneven, and may now be slowing. In most heavily-indebted Latin American countries, aftera substantial number of developing countries, for the the very encouraging performance of 1983 and much ofmost part middle-income countries that did not indebt 1984, has begun to deteriorate again.themselves heavily, growth is strong and the invest-ment climate is good. Among the heavily indebted The drastic reduction that the developing countriescountries, most improved their performance substan- achieved in their current account deficits was of coursetially in 1983 by reining in excessive demand, keeping a necessary accommodation to the scarcity of extemalexchange rates at reasonable levels, and reducing trade finance. During the two years 1983-84, only $33 billiondeficits. However, most of them have yet to subdue of net new private lending flowed to developing coun-inflation, and in late 1984 and early 1985 their extemal tries (most of it in conjunction with IMF agreements),accounts showed some renewed deterioration. The debt compared to a net flow of $132 billion during 1981 andburden still restricts growth severely in most debtor 1982. The gap created by these severe cutbacks incountries, and for private business in the majority of the private credit was not filled by other sources of externaldeveloping countries the outlook continues to be onedevelofslackodemand,pensie credi, uoncrtainusty ad low 'These and all other aggregates for developing countries refer to theof slack demand, expensive credit, uncertainty and low IMF category of "indebted developing countries", which includes allconfidence. developing countries except eight Middle-East oil exporters.

7

capital. Official transfers increased only marginally from lower interest rates will reduce Mexico's current ac-1983 to 1984, from $12.9 to $13.1 billion, and net direct count deficit by at least one-third for the period of theinvestment flows declined from an average of $11.6 new loans. The debt-service ratio,which before thebillion per year during 1979-82 to $9.1 billion in 1984. rescheduling was projected to rise from 61 percent inThese facts add up to a continuing cause for concern. 1984 to a peak of over 70 percent in 1987, and to stay

over 50 percent throughout this decade, is now project-There are also other clouds on the horizon. One is a ed to decline gradually from 47 percent in 1985 topossible slowdown in the developed countries. In the about 34 percent in the late 1990s.OECD countries, GDP growth fell from about 6.8 percentin the first half of 1984 to 3.4 percent in the second, and Venezuela has succeeded in negotiating a broadly com-is estimated at 3 percent for the first half of 1985. A parable package, and Brazil is now in the process ofsecond concern is continued low prices for primary doing the same. However, virtually all other debtors arecommodities; after rising in 1983 and early 1984, many still dealing with shorter-term restructurings whichof these have fallen again and are in dollar terms near only postpone unmanageable levels of service by one ortheir all-time historic lows of 1982. A third element was two years, and which leave them with a dangerouslythe continued appreciation of the US dollar, which, while small capacity for economic growth in the interim. Init helps some developing countries, continues to increase the absence of more fundamental restructuring, thethe burden of the debt of most of them. Finally, interest servicing of the enormous stock of debt is bound torates, while considerably lower than a year ago, are still dominate the development equation and to curb privateat historically high levels in real terms. sector growth, as it forces measures that cut domestic

demand, reduces the means to pay for necessary im-Thus, the improvements in the international environ- ports, and drains local credit supply-thus both reduc-ment during the past year are not unmixed with prob- ing sales revenues and increasing costs for businesses.lems. The debt crisis of 1982 was dealt with by short-term measures that rely heavily for their success on The Situation of the Private Sector of thecontinued industrial country prosperity and growing Developing Countriesdeveloping country exports. Either a prolonged falter- Currently, the private investment climate is best in theing of growth in the industrialized countries, or a middle-income countries that did not contract toosignificant weakening of policies that foster exports in much debt. Most of these countries are in Asia; theythe debtor countries could trigger a renewal of that include open, export-oriented economies such as Korea,crisis. Malaysia and Thailand, some less open ones such as

Colombia, India and Pakistan, as well as a few oilTwo recent debt reschedulings, achieved by Mexico and exporters such as Cameroon and Indonesia. All followedVenezuela, are bright spots in this picture. These re- relatively conservative demand management policies,schedulings are examples of what is needed to provide and were quicker to curtail government expendituresthe breathing space that would permit economic when conditions worsened. They thus were able togrowth to resume in debtor countries. Mexico's private minimize the boom-and-bust cycle experienced by socommercial creditors rescheduled $46 billion, which many other developing countries in the mid-'70s towas almost all of the debt Mexico owed to private early '80s. Private business in these countries still hadforeign banks and just over half of the country's total to endure the effects of the high interest rates andforeign debt. The agreement had several positive new world recession of recent years, and profits and invest-features: creditors agreed to reschedule repayments due ment levels fell. But these impacts were comparativelyover six years (1985 through 1990), instead of only one mild and growth rebounded in these countries in 1984,or two years. They spread these repayments out over a especially in the countries where private industry hadrelatively long time (14 years), and they arranged the grown up in regimes that made it flexible enough toterms so as to keep total debt service payments almost adapt quickly to changes in prices and falling demandconstant during the life of the new loans. They also for some exports.reduced interest rates significantly. The new paymentschedule eliminates the "wall" of debt previously com- At the other extreme are countries suffering from aing due in 1986-88; a previous, shorter-term restructur- combination of debt and heavy reliance on non-petro-ing had only postponed that wall by two years. The leum commodity exports. Conditions in these countries

8

have been severely depressed for several years. In Peru, countries. While some of them are implementing rigor-for example, private investment in 1984 was estimated ous financial stabilization and structural adjustmentat half of its 1980 level; in Zambia all investment has measures, others are only starting to come to grips withfallen 40 percent in the same period. In some other their problems. In most of them demand is slack,countries in this group, such as Moroceo and Chile, financial resources are scarce, and private investment iseconomic reforms are producing some improvements, very low. The situations in Kenya and the Ivory Coast,but in general both domestic and export demand are historically two of the best-performing countries of thisweak, and capacity utilization and corporate profits group, illustrate the problems these countries face.continue to be low. Because of the structure of their economies they have

not yet benefitted greatly from the recent recovery inOther highly indebted countries are more industrial- the industrialized countries. In 1984, stagnation inized, with more diversified exports. Their terms of trade already-low terms of trade, drought, and austerity pro-are healthier than those of the commodity exporters, grams caused GDP to fall in both countries.they have had much more success in increasing theirexports, and most of them are proceeding with stabili- Towards Private Sector Developmentzation and adjustment programs that augur well for the Development through the private sector is being givenfuture. However, considerable variation in economic increased priority in a number of developing countries.performance exists among these countries. Turkey, Unsatisfactory results of some public interventions,where the crisis came two years before the others, is combined with inability to continue to finance them,well along in its adjustment. Mexico, with exports up are leading some governments to tilt the public-privateand its foreign debt restructured, resumed moderate mix in their economies more toward the private sector.growth in production around the middle of 1984. Bra- The adjustments variously include some liberalizationzil's growth is also resuming and dramatic increases in of controls on prices, private investment, and foreignexports in 1983 and 1984 have reduced the debt service trade; a stronger welcome for foreign investment; andratio somewhat. But the country has not yet concluded in some cases transfer of state-owned enterprises toa long-term restructuring of its debt; inflation contin- private operation.ues to be a problem, and recent data show exportsdeclining slightly. In the Philippines GDP fell 6 percent It is ironic that the private sector is coming more intoin 1984, and in Argentina the government at this favor just when private firms in so many of the coun-writing is adopting a rigorous and far-reaching econom- tries are weakened from the events of the last few years.ic stabilization program which unavoidably will cause Indeed, in some cases this weakness has led govern-fresh problems for its already heavily burdened private ments to intervene in decapitalized industry and shakyindustry. In spite of these variations, however, the financial intermediaries, actually increasing the publicdepressing effects of recent stabilization and adjust- sector's share of the economy. It is to be hoped thatment programs still dominate the private investment resumption of economic growth will be accompanied byclimate in most of these countries. Businesses typically a renewed effort to foster private sector development.are faced with excess capacity, high costs of capital,excessive debt on their balance sheets, and considerable If private enterprise is to flourish and contribute touncertainty about the future. As a result, investment in development, it requires some minimum level of stabil-new fixed assets is quite low. ity and prosperity. Frequent and drastic changes in

economic policy, large gyrations in interest rates andMost of the small, low-income countries rely heavily on exchange rates, austerity and recession are poor basesagriculture and mining, so their GDP and export per- for long-term investment in productive assets. Structur-formance are especially subject to adverse changes in al adjustments to reduce excessive protection and toclimatic conditions as well as in intemational commod- increase efficiency are necessary medicine in manyity prices. Some of them are significantly indebted countries, but they are especially difficult to deal withrelative to their GDP, even though the absolute size of during a recession which saps the financial strengththeir debt may appear small in the international total. and ability of business to adjust.They too have been affected by high internationalinterest rates and by the world recession; limitations on Faced with poor prospects of increased commercial andofficial capital flows have also been keenly felt in these official capital flows, some observers are looking to

9

direct foreign private investment (DFPI) to fill the gap. countries' obligations, so that domestic austerity can beDFPI can be useful in providing capital, know-how, and eased to some extent and imported inputs can be madeaccess to markets, but it has definite limitations. Like more readily available. It requires a renewal of someany private investment, it requires complementary combination of official and commercial capital flows tophysical and human infrastructure, and these must be the same ends. It requires that signals in the developingfinanced from domestic or foreign savings in addition countries' markets be such as to induce efficiency, andto the DFPI itself, whatever its amount. Moreover, DFPI in particular that the exchange rate be handled in a wayby its nature tends to concentrate on certain sectors and that motivates exports-which in the last analysis willon certain countries. Steps can and should be taken to always be the greatest generator of foreign exchangeattract it wherever it can contribute, but it alone can for any country. It requires that systems of rigid con-never be the panacea for shortages of other internation- trols and pervasive regulation of business activity beal capital flows. liberalized, so that entrepreneurs can respond to chang-

ing market conditions. It requires, in sum, a concertedTo restructure the environment so that the private effort by the governments of the industrialized nations,sector will play the role desired of it thus requires fiscal by commercial creditors, and by the governments of theresponsibility of governments so that private firms are developing countries as well as by the private sector.not squeezed out of credit markets. It requires funda- Such a cooperative effort is the way to a new period ofmental, long-term restructuring of responsible debtor efficient and sustainable growth.

10

The Year's Operations

Investment Operations The Corporation estimates that the total capital costs.of approved projects it will help to finance will be morethan $2,767.6 million. This means that for every dollar

InvestmentApprovals: During the Fiscal Year, the invested by IFC for its own account, others will investBoard of Directors approved 75 investments in 38 about 3j dollars.developing countries and in one Region (Africa) total-ling $937.2 million. Of this, it is expected that $609.3 All loans were made at rates in line with market ratesmillion will be invested for IFC's own account and with the typical US dollar fixed rate loan currently$327.9 million will be syndicated, or sold, to other priced at 13.25 percent for a period of seven to eightinvestors. Compared to the previous Year, total ap- years with a grace period of four years. Maturities ofproved investments increased $241.6 million from IFC's loans are set to conform with the nature and$695.6 million and investments net of syndications needs of each project and this Year they ranged betweenincreased $218.3 million from $391.0 million. eight years to 12 years.

Early in the Fiscal Year, the Board of Directors, at therequest of IFC management, approved the use of vari-able rate lending. The new variable rate lending pro-

Cumulative IFC Investments gram proved to be successful and during the Year overApprovals 20 percent of the loans approved by the Board wereUS$ Millions priced at variable rates, with 34 percent of US dollar

8.000 °denominated loans being so priced. The agreed ratesranged from 125 to 275 basis points over six-month

7,000 LIBOR or its equivalent in addition to appropriate levelsof front-end and commitment fees.

6,000 The Corporation continued its policy, initiated somethree years ago, of offering, at the election of its

5,000 borrowers, loans denominated in currencies other thanUS dollars. While the majority of loans were still in US

4,000lllllllllllllslllllllllillllllll l l l l l ldollars, the growth in the use of non-US dollars contin-ued. For loans approved this Fiscal Year, the currencymix was (in millions of US dollar equivalents):

3,000

2,000 US dollars ............... $320.0Japanese yen .............. $ 18.0German Deutsche mark. .clients.with.$142.4Swiss fr-ancs .............. $ 43.1UK pounds Sterling ........... $ 13.3Other currencies ............ $ 11.6

1981 1982 1983 1984 185

Supplementing its loans, equity and equity-like instru-ments, the Corporation also provided clients with a

Of the total, $875.9 million was for loans and $61.3 broad range of other financial services. During this Year,million for equity or equity-like investments. Of the they included underwritings, guarantees, and standbylatter, $7.4 million was approved for the exercise of arrangements. In addition, the Corporation was able torights issues by firms in which IFC already has equity help one of its clients by undertaking a currency swapinvestments. Of the loans, four, totalling $37.3 million, to convert the currency of an existing loan with theinvolved restructuring of existing obligations. assistance of Bank of America.

11

Approved by Business Sector: Fiscal 1985

NUMBER OF INVESTMENTS AMOUNT OF INVESTMENT

7% Agribusiness18% Agribusiness lIllllIlllHlllIlIlIllll 2% Cement and Steel

l |||||||||||||||||||||||||||| 3% Tourism

l4% VWood, Pulp and Paper

iII1||II| II|i||||I|||||5% Cement and Steel1IyIlilllli 5% Tourism

5% Wood, Pulp and Paper40% Fertilizers, Chemicals

10% Fertilizers, Chemicals and Petrochemicalsand Petrochemicals

28% Capital Markets!Financial Services

27% Capital Markets!Financial Services

8% Energy and Minerals

21% Other Manufacturing 9% Energy and Minerals

8% Other Manufacturing

Non-financial services have always been a significant help fill a financing gap in two projects this Year aactivity for IFC and it is estimated that up to one-third battery manufacturing business in the Yemen Arabof IFC's total staff effort is expended in technical Republic and a plantation in the Philippines.assistance activities. This is in addition to the usualanalytical and technical work needed to reach an invest- Syndications The Corporation continued to aggressive-ment decision. IFC has generally provided these so- ly seek out commercial banks and other financial insti-called special services to clients free of charge, despite tutions to join in loan syndications and parallel financ-their being a source of substantial income for other ing. This Year, some $327.9 million in loans by IFC wereintemational lending institutions. To come more in line syndicated with 36 such institutions, thus maintainingwith market practice, during FY85, IFC sought oppor- the Corporation's objective of placing about one-third oftunities to charge fees for its special service activities. its loans to the private sector in developing countries inIt is estimated that special service fees generated about the international financial market.$2.6 million in income for IFC in FY85.

Other funding: Included among this Year's activitiesEquity from the special line of financing established with was a $50 million underwriting for a Latin Americanthe Kingdom of Saudi Arabia in 1983 was called upon to export finance bank for which IFC, together with

12

Goldman Sachs International Corporation, was lead responding to the highest priority needs of the privateunderwriter. The medium-term floating rate note issue sectors in IFC's developing member countries.was the first for a Latin American private sector firminvolving new money from international capital mar- Corporate Restructuring Assistance In light of thekets since the debt crisis started in 1982. economic and financial difficulties faced by private

companies throughout most developing countries, theDisbursements: Corporation accelerated its efforts to provide both tech-During the year, an equivalent of $266.4 million was nical and financial assistance to troubled companies.disbursed against committed loans and equity invest-ments. Of this, $240.4 million was for loans and $26.0 Corporate restructuring assistance was provided tomillion for equity. In addition, $84.0 million was dis- some 30 companies, primarily to firms which needed tobursed for participants in ItC financings which the restructure their operations to reflect economic polic,yCorporpoation manages. adjustments being made by their governments. In four

Corporation manages. cases that were completed this year, the CorporationTotal disbursements of $350.4 million were $30.5 mil- provided $40.3 million in loans and quasi-equity invest-lion smaller than the previous year. Sales from the ments. Often the financial packages put together by IFClsortfolio and repayments to IFC and participants during included new subordinated debt with convertible fea-portfolio amountdrepayme to FC2 aondo phartianet during tures or attached warrants, income notes or cumulativehursements totaled $90.2 million. convertible preferred stock. Three of these restructur-

ing efforts were made available to companies whichwere in IFC's portfolio and one was to a company withno previous connection with the Corporation.

Five Year Program and New Initiatives African Initiatives During the Year, the Board of Direc-

tors approved $60.4 million in financing for 15 projectsFive Year Program: During the latter part of the previ- in Sub-Saharan Africa. Not considering two projectsous Fiscal Year, the Board of Directors approved a which accounted for over $100 million of FY84's total,financial and operational plan covering Fiscal Years this is a considerable improvement over the previous1985 to 1989. This program, closely linked to and Year's business.dependent upon the proposed $650 million capitalincrease, targets an annual growth rate for the Corpo- Many of the Region's countries see that their privateration of about 7 percent in both the number and the sectors can make an increasing contribution to thedollar volume in real terms of projects approved by the success of their structural adjustment programs .OneBoard of Directors. Thus, over the five program years difficult problem faced by the private sectors is thatthe Corporation would expect to undertake over 400 experienced management talents are thinly spread.new investments and commit about $4,000 million of Thus, during the Year, the Corporation began informalits own funds (or $7,300 million inclusive of syndica- discussions in a number of capitals and, in May, enteredtions to commercial financial institutions) in business into a funding agreement with the United Nationsventures with total capital costs exceeding $30,000 Development Programme to undertake preparatorymillion. studies to support the establishment of an African

Project Development Facility. This facility, to be estab-With the increase in this Year's volume of approvals, lished jointly by IFC and other donor agencies, will helpboth in terms of the number of projects and dollar African entrepreneurs develop new business ventures.value, the Corporation's performance was very much in Simultaneously, the Corporation began discussionsline with the operational targets set for this first year with private companies and public agencies, on anof the program. African Management Services Facility which could con-

tribute experienced management to new and existingNew Initiatives While the program anticipates a con- businesses.siderable increase in the Corporation's volume of busi-ness and in the development of new financial services Energy: The Corporation has targeted considerablefor its clients, it also sets out important new initiatives effort towards diversifying its activities in oil and gas

13

exploration and development, particularly with respect Net Incometo encouraging independent oil companies to expand us$ Millionstheir activities in developing countries. One oil explo- 35ration project in Colombia and two energy developmentprojects in Chile and Pakistan were approved by theBoard during the Year. Several more are expected to beconsidered early in the next Fiscal Year. 30

FinancialMarkets and Institutional Development The 25Corporation expanded its activities into a number of 25new areas including insurance and new techniquessuch as the underwriting of a Eurodollar bond issue, 20providing a line of equity to an intermediary on an 20

agency basis, and setting up new investment banks withthe participation of similar developing country institu- 1 Itions which themselves had been created with IFC's 15

assistance.

Recognizing the critical need to encourage equity 10flows, the Corporation embarked upon several differentinitiatives to promote the formation of both national 5and multi-country equity investment trusts.

The primary focus of its substantial technical policy 5advice services to member countries was on securities 1981 1982 1983 1984 1985market development

Financial Results The significant increase in income from deposits andsecurities was a result of the Corporation profitablyinvesting the proceeds of its borrowings from private

Net Income: capital markets and drawdowns of its variable rate loanfrom the World Bank. These funds were invested onbehalf of the Corporation by the World Bank under an

Net income amounted to $28.3 million, which was an investment management agreement between the Bankincrease of $2.0 million, or 7.6 percent, over Fiscal Year and IFCn1984. This is the fourth consecutive annual increase inthe Corporation's net income which has, over the same Sources of Incomeperiod, increased at an average compounded rate of 9.8 (US$ millions)percent All of the net income was added to accumulat- FY85 FY84

ed earnings. Interest from loans ............ 131.8 123.7

Income and Expenses: Dividends and profitparticipations ................ 14.4 10.8

The Year's operating income of $172.7 million was Realized gains on equity sales .... 4.6 7A$21.6 million higher than the previous Year's. The Commitment fees and other ...... 6.7 7.5increase in interest payments was in part attributable From deposits and securities .... 15.2 1.7to an increase in the outstanding balance of loans from$1,160.1 million in Fiscal Year 1984 to $1,257.0 million Operating expenses rose $19.6 million over the previ-in Fiscal Year 1985. ous Year to $144.4 million. About $14.7 million of the

14

increase was due to higher financial charges on borrow- ing policy, $100.0 million of this was priced at variableings which this Year amounted to $63.5 million. rates.

Reflecting in part the Corporation's increased businessactivities, administrative expenses increased by $6.5million over the previous Year to $51.5 million. Howev- Payments:er, out of every dollar of operating income, administra- Fiscal Year 1985tive expenses accounted for 30 cents-the same as theprevious Year. 17% Repayments

on BorrowingsAfter several years of significant increases, chargesagainst operating income for reserves against losses 11% Administrativedecreased. This Year, about $29.4 million was added to Expenses

the reserve against losses as compared to $30.9 millionthe previous Year. 14% Financial

Charges

Financial Resources58% Disbursements

Borrowings:

While it continued to raise the greater part of itsborrowed funds from the World Bank, the Corpora-tion, for the first time, supplemented these arrange-ments by raising funds from private capital markets. InDecember 1984, the Board of Directors gave its ap-proval for the Corporation to raise $100 million inthese markets. By the end of May 1985, the Corpora-tion had carried out two $50 million fixed rate borrow-ings at very favorable rates. Nomura International Repayments during the Year amounted to $42.5 millionLimited, London, was the arranger for both of the and drawings on World Bank loans totaled $203.3Limitd, Lodon,was te arangerfor oth o themillion. Total borrowings from all sources, includingprivate placement issues which were sold to institu- undrawn balances, increased from $901 million at thetional investors in Europe and Asia. Both issues carried end of FY84 to $1,300 million.maturities of 10 years. The second borrowing allowedthe Corporation to carry out an interest rate swap toachieve a 10-year variable rate US dollar funding. The Capital and Accumulated Earnings:swap intermediaries were Citibank and Manufacturers On June 21, 1984, the Board of Directors approved forHanover Trust Company. Towards the end of the Fiscal submission to the Board of Govemors a resolutionYear, the Board authorized the Corporation to raise up proposing to increase the Corporation's authorizedto an additional $30 million. Shortly thereafter, the shares from 650,000 shares to 1,300,000 shares. DuringCorporation raised DM90 million ($29 million) the Year, 104 member countries, representing 70.6through a private placement arranged by Berliner percent of the total voting shares and 82 percent of theHandels-und Frankfurter Bank. membership, ratified the Board's resolution. With the

addition of the votes of one major shareholder, whichDuring the Year, the Corporation borrowed $400.0 has not yet voted, the Corporation anticipates that themillion in various currencies from the World Bank. 75 percent of the voting shares required for ratificationReflecting the success of IFC's new variable rate lend- will be reached early in FY86.

15

participations and administers such loans on behalf ofReceipts: the participants. During the Year, the CorporationFiscal Year 1985 . called and disbursed $84.0 million of participants'

funds.

23% Repayments During Fiscal Year 1985, $481.2 million in new invest-and Sales ments was added to the portfolio, about $354.0 million

for IFC's own account and $127.2 million for partici-pants. Of the new investments for IFC's account,$313.7 million was for loans and $40.3 million forequity. Loan repayments amounted to $125.3 millionand $17.8 million of investments were sold. Takingthese and other adjustments into account, the net

52% Borrowings increase in the portfolio was $126.4 million. Whileadding 40 new companies to the portfolio during theYear, in 22 cases loans were repaid, equities sold orinvestments written off.

Arrears and Write-Offs With the deterioration in world-wide economic conditions over the past four or five

25% Icomefrom years, the Corporation has paid particularly close atten-Lo'25% Income tion to the condition and performance of its portfolio.Loans/Equity11111111111i1111111 While actual write-offs have not increased, arrearages

on repayments of principal and charges nearly doubledduring the period. In most cases the difficulties with theportfolio could be traced to the general adverse eco-nomic conditions which have prevailed over the pastseveral years. Nevertheless, the Corporation took a

The entire $283 million of net income was added to numerao sepst counteract the develonts,accuulaed ernigs, rining he otalup o $28.4number of steps to counteract these developments,accumulated earnings, bnngmng the total up to $258.4 including a comprehensive study of the portfolio which

million. With paid-in capital of $545.8 million, the Cor- was reviewed by the Board of Directors in May 1985.poration's net worth equaled $804.2 million, up from$774.3 million at the end of the previous Fiscal Year. All companies in which IFC invests are required to

submit quarterly financial statements to the Corpora-tion. Almost one quarter of the Corporation's adminis-trative expenses goes to portfolio supervision. This

Portfolio includes providing work-out assistance to companiesfacing unusual difficulties as well as the efforts of aspecial unit established within the Corporation to re-

Status: At the end of the Fiscal Year, IFC's portfolio solve particularly difficult jeopardy cases.contained loans and equity investments in 367 compa-nies located in 74 developing countries. The total value Interest payments overdue more than 60 days as aof the portfolio was (in millions of US dollars): percent of total disbursed loans at the end of the Fiscal

Year was 4.7 percent, compared with the previousLoans for IFC's account ............... 1,748.1 Year's 3.7 percent. About 24.3 percent of the compa-Equity for IFC's account .368.2 nies in IFC's portfolio were in arrears. This percentageTotal undisbursed .552.9 has remained fairly stable over the past several years.Total disbursed portfolio .1,563A This reflects the cumulative effect of companies with

long-term arrears remaining in the portfolio while theThe Corporation mobilizes funds from commercial Corporation provides technical assistance to helpbanks and other financial institutions through loan them resolve unusual difficulties.

16

PorffolioNumber of Ventures by Sector

-__ __ 19.0% Capital Markets/--- _________ _ Development Finance

13.0% Cement and-___________________________________ Steel

15.2% Food andAgribusiness

9.0% Tourism and Services

9.5% Fertilizer, Chemicals andPetrochemicals

4.9% Lumber, Pulpand Paper

-___________ 6.0% Energy andMinerals

:__________________________________________ _ ::-23.4% OtherManufacturing

As of June 30, 1985

Losses written off by the Corporation since its founding reserve compared with $30.9 million added during thein 1956 on investments held for its own account have previous year.amounted to $33.8 million against disbursements overthe same period of $2,672.2 million. Loan losses were Total reserve after write-offs stood at $156.7 million at0.6 percent of its disbursed loans and equity losses 4.8 year-end against loans and equity commitments out.percent of its disbursed equity. During the Year, two standing of $1,563.4 million. Thus, by the end of thewrite-offs against the reserve for losses amounted to Year, the reserve was 10.0 percent of the total disbursed$200,000. In all cases, adequate reserves had already portfolio as against 8.8 percent the previous Year.been set aside for such eventualities.

Sales from the Portfolio: During the Year, $9.4 millionReserve Against Losse& The Corporation follows a of equity was sold from the portfolio. On these sales,conservative policy of building an adequate reserve the Corporation realized a gain of $4.6 million.against losses by charging income with a provision forlosses following an extensive semi-annual review of the Consistent with IFC's policy to encourage and broadenportfolio. Reflecting both the recent growth in the local ownership in the private sector, all of theportfolio and the difficult business climate in many portfolio sales were undertaken in the countries wheredeveloping countries, $29.4 million was added to the IFC investments were located.

17

Summary: The continued diversification of investment activity isin part due to greater promotional efforts, which inrecent years have been increasingly concentrated in

Regional Distribution. The 75 projects approved by the some of the smaller and poorer member countries.Board of Directors were located in 38 countries and one About 15 percent of IFC's administrative expenses haveregion. In one of these, China, IFC was investing for the been dedicated to promotional efforts.first time and in five it had not undertaken investmentsduring the prior three years. Of the total approved SectoralDistribution The Corporation continued toinvestments of $937.2 million, 33, with a total value of seek out and invest in a wide variety of business and$258.9 million, or 28 percent, were located in countries financial institutions. This is particularly importantwith a per capita income of less than $805. These because, in each case, the Corporation attempts toventures accounted for about 45 percent of IFC project respond to specific needs of, and circumstances prevail-approvals this year. ing in, each of its member countries.

Regionally, investments were distributed as follows: Agribusiness continued to take up an increasing pro-Dollar Volume Number of portion of the number of investments. The 13 agribusi-

(US$ millions) Projects ness projects approved by the Board had an estimatedtotal project cost of $239.9 million and accounted for

Afsca 107.2 18 about 1 7 percent of total approvals. Eight of theseAsia 163A5 20 ventures were in low-income countries.Latin America ~and theCaribbean 546.2 26 To illustrate the broad range of IFC's activities, the

Middle East/Europe 120.3 11 following is a partial list of the sectors in which invest-

ments were undertaken during the year

Ownership in IFC Investments Textiles TourismFiscal 1985 Cotton Farming Cooking Oil

Shipping Oil and GasTrucks and Autos Construction

11% Minority shareholders only Minerals AutomotiveParts

Petrochemicals Securities MarketsI5% Majority foreignl ownedDevelopment Banking Insurancel1l51llilillililiill t% Majority foreign owned Venture Capital Fiberglass

Ammonia Production AgrochemicalsPulp and Paper Cement

16% Majority locally owned (public)

Sources of Financing and Ownership: It is estimatedthat 60 percent of the total project financing was raisedfrom domestic sources. Most of the foreign sourcedfunds were in the form of suppliers' credits or govern-ment funding. Of the estimated $397.6 million provided

58% Majority locally owned by foreign commercial banks, over 82 percent was raised(private) through the syndication of IFC loans.

It is estimated that over 82 companies from industrialcountries participated in one form or another in thebusiness ventures which were this Year supported byIFC. In 19 cases, foreign companies from 10 industrialcountries were equity investors.

18

About $56.5 million equivalent of IFC investments were trale of France both in two projects and the Europeantaken up by government related financial institutions Investment Bank, the Industrial Fund for Developingof industrial countries which specialize in providing Countries of Denmark and the Belgian Corporation forassistance to private enterprises in developing coun- International Investment in one project each.tries. These included The German Company for Eco-nomic Co-operation (Development Company) (DEG) in Of the projects approved by the Board of Directors, 35six projects, the Commonwealth Development Corpora- were wholly privately-owned enterprises and 40 weretion of the United Kingdom in four projects, the Kredi- mixed government/private enterprises.tanstalt fur Wiederaufbau of Germany and Caisse Cen-

Regional Distribution of IFC Investments: Fiscal 1985

NUMBER OF PROJECTS AMOUNT OF INVESTMENT

Latin America/Caribbean

Africa

Europe/Middle East

19

Africa The Government of Tunisia, which seeks to reinforceprivate sector influence in the economy, requestedIFC's assistance to privatize a number of public sector

Board Approvals: corporations. Pursuant to this request, IFC made a$2.6 million equivalent investment during the Year to

During Fiscal Year 1985, the Board of Directors ap- assist in the modernization and privatization of So-proved loans and equity investments totalling $107.2 ciete des Industries Textiles Reunies SA (SITER),million for 18 African business ventures. Of the total Tunisia's largest textile finishing mill which processesfinancing approved, $102.0 million was for loans and grey fabrics produced in the country's principal weav-$5.2 million for equity. Some $22 million of the loans ing mills.was syndicated to other financial institutions. Investment Overview

At the end of the Fiscal Year, the Corporation held African economies have remained very depressed. This$403.1 million in 98 ventures in 29 African countries: is especially so in Sub-Saharan countries where contin-about $348.0 million in loans and $55.0 million in ued effects of the drought have compounded economicequity. This compares with IFC investments in 94 problems. Government policies in some countries, par-ventures with $396.8 million in loans and $68.8 million ticularly price controls, have aggravated the difficultiesin equity at the end of the prior Fiscal Year. The decline by limiting and reducing incentives to farmers andwas due to Egyptian investments being included in the affecting the demand and profitability of industrialEurope and Middle East Region this year. enterprises.

Thirteen of this Year's 18 approved investments were to Most African countries face severe balance of paymentsestablish new companies or were made in companies problems and foreign exchange shortages. These prob-never before having received IFC assistance. Seven were lems, in many cases, are exacerbated by continued lowin agroindustry. Some seven corporate rehabilitation prices for commodities on world markets, by highefforts were undertaken which resulted in $39.1 million production costs and by biases toward import substitu-of new or additional financing. tion.

In Zaire, the Government has implemented a compre- Several Sub-Saharan countries have undertaken eco-hensive program of liberalized economic policy re- nomic adjustment programs. While some are experienc-forms, including a floating exchange rate, which has ing the initial uncertainties inevitable during transi-given private enterprise access to foreign exchange tional periods, others are already looking forward to aand laid the basis for economic recovery. Thus, IFC was more promising near-term future, including improve-able to undertake three investments, totalling $21.3 ments in their investment climate.million, in that country during the Year. Such invest-ments were to finance the completion of an expansion Many African countries are increasingly turning to theirof the Kinshasa Inter-Continental Hotel, modemize private sectors as the driving force for economic growth.and expand the major textile mill of Societe Textile de To the degree to which these countries are looking inKisangani S.ZAR.L. and establish a cotton farm pro- this direction, it is essential that they provide themotional company. environment in which the private sector can function

efficiently.

Agricultural and agroindustrial projects continue to beof major importance in Africa as sources of foreign IFC Regional Initiatives:exchange and in the effort of most countries to reduce As an institution which can facilitate financing of com-dependence on imported foodstuffs. In Cameroon, IFC mercially viable ventures without recourse to govern-invested $2.2 million in expanding a plantation and in ment guarantees, IFC will play an increasingly impor-Kenya it invested $8.8 million in a $34.0 million oil mill tant role in the financing of natural resource projectsproject of Kenya Oil Crop Development Company Lim- in the region. IFC also expects to help African countriesited based on sunflower and rape-seed crops grown by accelerate and optimize the development of their ener-smallholders and large-scale farmers. gy related resources. It will also continue to support

20

IFC FY85 Investment in Africa

IFC ProjectCompany Country Type of Business Investment Costs

(US$ millions)

SIFIDA Africa Region Development finance 4.00 23.90Societe des Palmeraies de la Ferme Suisse Cameroon Agribusiness 2.18 9.70Compagnie des Caoutchoucs du Pakidie Ivory Coast Agribusiness 2.55 930Kenya Oil Crop Development Company Limited Kenya Agribusiness 8.84 34.00Equatorial Beach Properties Limited Kenya Tourism 3.60 13.80La Cotonniere d'Antsirabe (COTONA), SA Madagascar Textiles 6.65 17.20Viphya Plywoods and Allied Industries Limited Malawi Lumber 2.29 2350Societe Mauritanienne d'Industrie

Alimentaire (SOMIA) SA Mauritania Agribusiness 1.20 4.00Fruitiere Marocaine de Transformation Morocco Agribusiness 4.58 17.20Banque Nationale pour le Developpement

Economique Morocco Development finance 40.00 138.00Ikeia Hotel Limited Nigeria Tourism 2.50 10.70Somali Bag Company Limited Somalia Polypropylene bags 0.62 3.80Finance Corporation of Swaziland Limited Swaziland Capital markets 1.63 6.20Textile Corporation of Swaziland Limited Swaziland Textiles 2.43 11.10 -Societe des Industries Textiles Reunies Tunisia Textiles 2.26 1220Kinshasa Inter-Continental Hotel Zaire Tourism 15.00 37.90Societe Textile de Kisangani S.ZAR.L Zaire Textiles 6.78 17A0Promotional company Zaire Agribusiness 0.10 0.50

TOTAL 107.21 390.40

smaller manufacturing and agroindustrial ventures and emerging from the economic difficulties experienced inefforts to increase exports. recent years. In countries that are turning toward the

private sector, IFC is exploring ways to assist memberIn some African countries, IFC expects to finance more countries to transfer state enterprises to private owner-rehabilitation projects in order to help companies ship and management

21

Asia $39.9 million loan was approved for the Mari GasCompany Limited to develop a major gas field.

Board Approvals: IFC extended a $38.0 million overseas constructionguarantee facility to a group of four major Philippine

During Fiscal Year 1985, the Board of Directors ap- contractors. The facility was designed to help theseproved loans and equity investments totalling $163.5 contractors remain competitive in the overseas con-million for 20 Asian business ventures. Of the total struction business.financing approved, $149.3 million was for loans and$14.2 million for equity. More than $34 million of the Also in the Philippines, and in line with Governmentloans was syndicated to other financial institutions. priorities to diversify and increase exports, IFC provided

a $7.0 million loan to, and invested $3.1 million in theAt the end of the Fiscal Year, the Corporation held equity of, NDC-Guthrie Estates, Inc. Under the Corpo-$432.3 million in 95 ventures in 12 Asian countries: ration's agreement with the Kingdom of Saudi Arabia,about $336.2 million in loans and $96.1 million in the Kingdom will take up $1.0 million of the proposedequity. This compares with IFC investments in 93 IFC equity investment in the company. The Corpora-ventures with $318.5 million in loans and $87.7 million tion, at the request of the Government, also is under-in equity at the end of the prior Fiscal Year. taking a major technical assistance effort to rehabilitate

a number of existing enterprises which are basicallyFourteen of this Year's investments were to establish sound but have been severely eroded financially by thenew companies or were made in companies never before recent economic disruptions.having received IFC assistance. One corporate rehabili-tation assistance effort was undertaken which resulted A gold exploration project in Thailand, the first mineralin an additional investment of $830,000. exploration investment approved by IFC, is expected to

lead the way for other similar mineral explorationIFC expects to implement its first investment in China projects. IFC's $1.5 million equivalent investment induring the coming Year. The project, which was ap- Wavin Bangladesh Ltd., to produce PVC pipe is aproved by the Board during the Year, is one in which significant contribution to the emerging private sectorIFC played a key role in finalizing the joint venture in that country. IFC is providing $6.8 million equivalentarrangements. The project itself is the first phase of a to a Sheraton Hotel project in Fiji to help generatejoint venture between the Guangzhou Automobile further foreign exchange earnings .Manufactory (GAM), China International Trust and In-vestment Corporation and Automobiles Peugeot of IFC has continued to provide advice to the National Petro-France to modemize and expand the manufacture of chemical Corporation (NPC) and is providing support forlight commercial vehicles. IFC is putting $15.0 million the eventual implementation of the petrochemical com-in loan and $2.0 million in equity into the project. One plex in Thailand. Its $270,000 in an additional equity com-novel feature of the project is that it is anticipated that mitment in NPC will allow the company to complete itsGAM will reduce its holdings in the project by selling development phase for the olefins plant in the complex.up to 10 percent of the company's equity to the Chinesepublic. Investment Overview

With some exceptions, the Asia and Pacific basin coun-In India, an investment was undertaken in one new tries continued to perform well during the past Year.sector. A $3.45 million loan will enable an existing The climate for private investment has improved and inengineering company to expand its capacity, particularly several countries there were developments which will,to produce very large, single piece engineering products. over the years, further increase the opportunities for

private investmentIn Pakistan, where the Government continues its incen-tive policies for private investment and where oil and India has embarked on a program to encourage techno-gas finds have significantly improved Pakistan's energy logical innovation and industrial liberalization whichposition, the Corporation is giving and will continue to includes the development of high technology productsgive particular attention to this sector. This Year, a assisted, where needed, by foreign technical assistance

22

IFC FY85 Investment in Asia

IFC ProjectCompany Country Type of Business Investment Costs

(US$ millions)

Bata Shoe Company (Bangladesh) Limited Bangladesh Shoes 0.50 2.60Industrial Development Leasing Company Bangladesh Capital markets 2.00 13.30

of BangladeshWavin Bangladesh Limited Bangladesh PVC pipes 1.47 5.10Guangzhou Peugeot Automobile Company Ltd. China Light trucks 17.02 79.50Sopac Resort Partnership Fiji Tourism 6.80 27.60Bajaj Tempo Limited India Commercial vehicles 15.62 52.70Gujarat Rural Housing Finance and

Development Corporation India Capital markets 0.20 1.60Larsen and Toubro Limited India Cement, heavy 13.45 122.00

engineeringLease Development India Limited India Capital markets 5.41 28.60P.T. Asuransi Jiwa Dharmala ManuLife Indonesia Capital markets 0.36 4.00P.T. Semen Andalas Indonesia Indonesia Cement 0.83 12.00Korea Investment and Finance Corporation Korea Capital markets 0.54 12.30Korea Development Investment Corporation Korea Capital markets 5.00 20.00Gold Star Company, Ltd. Korea Appliances 1.70 24.10Mari Gas Company Limited Pakistan Natural gas 39.90 78.10NDC-Guthrie Estates Inc. Philippines Agribusiness 10.11 34.30Guarantee facility Philippines Contractor bonding 38.00 38.00Lanka Orient Leasing Company Limited Sri Lanka Capital markets 3.96 14.90Masbhumi Limited Thailand Gold 0.19 3.70National Petrochemical Corporation Limited Thailand Petrochemicals 0.27 3.00The Siam Cement Co., Ltd. Thailand Cement 0.18 8.70

TOTAL 163.51 '586.10

and direct equity investments from abroad. This pro- IFC's Regional Initiatives:gram is expected to enhance the prospects for private Given the diversity of economies in the Region, IFC'ssector investment activity in the country. investment objectives vary greatly from country to

In the case of the Philippines, the agreement to restruc- ryture that country's debt is in place and various econom- In Bangladesh, IFC has two main objectives. It expectsic stabilization measures have been taken. Confidence to help develop large export-oriented projects based onof the Philippine private sector has begun to reemerge. natural gas, such as urea fertilizer and methanol, and it

will assist smaller private enterprises where IFC notWhile many countries in the Region have continued to only can provide financing but can help mobilize need-perform well, many of the smaller countries have very ed technical assistance.limited resources on which they are dependent Theisland countries in the Pacific have only limited mineral Within its program to modernize industry and otherand agricultural resources in addition to tourism, and sectors of the economy, IFC expects that its activitiesmanufacturing potential is constrained by the small in China will take on increasing importance. Thepopulation base. Some other countries, such as Bangla- Chinese Government fully welcomes IFC's catalyticdesh, where the population is large enough to support presence to facilitate the transfer of modem technolo-an industrial sector, are, at present, constrained by the gy, project structuring and mobilization of foreignlimited number of experienced private entrepreneurs. capital through such joint-venture arrangements.

23

In India, in line with that Government's objectives, the In Korea and Thailand, IFC sees a growing need for itsCorporation will pay particular attention to projects equity funds to support projects. In Thailand, IFC'swhere technological innovation or technology transfer continued technical support in developing large gas-and development are important-whether they are spon- based projects will be an important element in bringingsored by larger, well established firms or smaller, emerg- these projects to fruition.ing business groups and where IFC's equity investmentscould be useful. In addition, IFC will seek to mobilize In the Philippines, IFC will continue to support privateforeign exchange loan financing on a large scale for sector export-oriented initiatives. One promising area isprojects in the automotive and fertilizer sectors. IFC will aquaculture where an IFC study of the potential foralso continue its support to financial sector development cultivating shrimp and other marine products for ex-through investment in leasing, housing finance, venture port has stimulated substantial local entrepreneurialcapital and technical assistance to upgrading and mod- interest and is expected to lead to significant newernizing the securities market investments.

In Pakistan, IFC will seek to support the Government's In the Pacific islands, IFC will concentrate its efforts onpolicy of encouraging private sector development by mineral exploration and helping to raise the capitalconsidering further investment in both the energy and needed to develop tourism facilities in these smallerindustrial sectors. countries.

24

Europe and the Middle East seven operating divisions of Sour Energoinvest. In all,about $100 million in foreign exchange was raised forthe 80 businesses involved. It is anticipated that these

Board Approvals: businesses will increase their net exports by about $65million per year. Of the total funds provided, $15

During Fiscal Year 1985, the Board of Directors ap- million was raised by the sale of participations in theproved loans and equity investments totalling $120.3 IFC loans to 10 commercial banks.million for 11 business ventures in the Region. Of thetotal financing approved, $117.2 million was for loans IFC continues to facilitate direct foreign investmentand $3.1 million for equity. Some $15 million of the and the transfer of technology in the Region. In Turkey,loans was syndicated to other financial institutions. IFC provided a $6.2 million loan to MANAS (a joint

venture between the Ercan Group of Turkey and MAN.At the end of the Fiscal Year, the Corporation held of the Federal Republic of Germany) to build a new$429.3 million in 58 ventures in 11 countries in the truck plant and to modernize an existing bus plant InRegion: about $375.1 million in loans and $54.2 million Egypt, IFC played a fundamental role in putting togeth-in equity. This compares with IFC investments in 49 er a shareholding group of Owens-Corning Fiberglasventures with $259.1 million in loans and $38.8 million Corporation and Misr Iran Development Bank to formin equity at the end of the prior Fiscal Year. the Egypt Fiber Glass Insulation Company.

Seven of this Year's 11 approved investments were to In the Yemen Arab Republic, the Corporation againestablish new companies or were made in companies utilized equity investment resources of the Kingdom ofnever before having received IFC assistance. Saudi Arabia to help finance a private company, Yemen

Battery Manufacturing Company. The advantage ofIn Yugoslavia, IFC continued to finance successfully a having these funds at IFC's disposal was amply illustrat-large number of export oriented enterprises that indi- ed in that such funds helped to close the gap in thevidually required modest amounts of capital. Three project's equity base, allowing the project to go aheadsuch transactions were done: one each for the clients in a timely way.of Ljubljanska Banka and Jugobanka and the third for

IFC FY85 Investment in Europe and the Middle East

IFC ProjectCompany Country Type of Business Investment Costs

(US$ millions)

Egypt Fiber Glass Insulation Company Egypt Fiber glass 4.45 1430Egypt Investment Finance Corporation Egypt Capital markets 1.86 21.00Promotional company Egypt Float glass 0.19 2.50B.P.I.-Banco Portugues de

Investimentos, SARL Portugal Development finance 0.23 3.10Merchant bank Turkey Capital markets 0.31 2.00Istanbul Segman ve Gomlek Sanayi Ticaret AS. Turkey Automotive 0.56 5.60Man Kamyon ve Otobus Sanayi A.S. Turkey Automotive 6.20 29.00Yemen Battery Manufacturing Company, Yemen Arab Batteries 0.36 0.36

YS.C. RepublicNational Company for Vegetable Oil and Yemen Arab Agribusiness 4.50 16.60

Chee Industries Limited RepublicLjubljanska Banka-Zdruzena Banka Yugoslavia Development finance 55.30 220.00Sour Energoinvest Yugoslavia Manufacturing 11.00 56.00Jugobanka-Udruzena Banka Beograd Yugoslavia Development finance 35.30 93.00

TOTAL 120.26 463.46

25

Investment Overview agribusiness, which are not state owned, but are orga-In a nmrfoteitReoanized as cooperatives. These firms are characterized by

In a number of countries In the Region, additional steps atnmu eiinmkn n togcmecahave been taken to welcome foreign investment and to aton. dtcishopedathat an b helpfu inencourage the domestic private sector to take newinitiatives. While the attitudes towards private invest- nurturing the expansion of such enterrises.ment in these countries has probably never been better Given the increased pace of foreign interest and domcs-than it is at the current time, in some cases adverse tic investment activity in Turkey and Egypt, IFC intececonomic conditions continue to restrict the flow of to open an office in Istanbul and expand its Regionalsuch investments.tooeanocinItnuanexndtsRgnl

Office in Cairo. In this way the Corporation can betterIn Turkey, the Govemnment has been aggressively en- promote new IFC initiatives and maintain closer contactcouraging foreign investors to consider a wide array of with the large number of Turkish and Egyptian compa-opportunities for investment and the response has been nies in IFC's portfolio. Being so positioned, the Corpo-

significant. It is quite likely that over the next two years ration can better assist foreign investors, more effective-

a number of important new projects involving foreign Iy handle Inquiries from domestic entrepreneurs andinvestors will emerge. Moreover, policies are in place to iconsderable number of new commercial and merchantencourage the domestic private sector and the Govern- bonkin of mbes.ment is considering ways to privatize some state owned genterprises. IFC envisages particular attention being given to the

energy and mineral sectors in the Region, with IFC'sIn Yugoslavia, a new foreign investment law was passed enrg an miea setr in th ein wt Fto encourage foreign investors to enter into joint ven- ability to invest in energy exploration likely to betures with Yugoslav enterprises, particularly in those particularly important in Turkey and Egypt. The Corpo-areas wieretehnYugosla enterprisfes exparticular hospet ration foresees substantial oil sector related activity inareas where technology transfer and export competi- th Yee ArbRpbi n inrlepoainitiveness of Yugoslav industry would be enhanced by the Yemen Arab Republc and mineral explora.on Inforeign know-how and participation.

IFC's Regional Initiative: .Throughout the Region, the Corporation will continueIF'C's Regional Initiatives: its efforts to mobilize funds from banks and otherIn Hungary, the Government is encouraging foreign financial institutions to assist in the financing of sound-investors to establish joint ventures with domestic ly based projects. IFC's syndication role is critical inenterprises and IFC is seen as a potential catalytic many cases where project financing from commercialpartner in achieving that objective. Secondly, there are sources simply would not be forthcoming without IFC'sa large number of enterprises, both in industry and assistance.

26

Latin America and the Caribbean lion in equity. This compares with IFC investments in117 ventures with $670.9 million in loans and $150.3million in equity at the end of the prior Fiscal Year.

Board Approvals:Fifteen of this Year's 26 approved investments were to

During Fiscal Year 1985, the Board of Directors ap- establish new companies or were made in companiesproved loans and equity investments totalling $546.3 never before having received IFC assistance. Some fivemillion for 26 business ventures in the Region. Of the corporate rehabilitation efforts were undertaken whichtotal financing approved, $507.5 million was for loans resulted in $66.7 million of new or additional financing.and $38.8 million for equity. More than $256 million ofthe loans was syndicated to other financial institutions. In IFC's Latin America and Caribbean I area, the Corpo-

ration undertook eight new investments including aAt the end of the Fiscal Year, the Corporation held $5.0 million investment with Asamera, Inc. and other$853.6 million in 116 ventures in 22 countries in the independent oil companies in the San Femando oilRegion: about $690.7 million in loans and $162.9 mil- exploration project in Colombia. The project is the first

IFC FY85 Investment in Latin America and the Caribbean

IFC ProjectCompany Country Type of Business Investment Costs

(US$minions)

Inversiones Industriales SA Argentina Capital Markets 2.05 10.30Ipako Industrias Petroquimicas

Argentinas SA Argentina Petrochemicals 031 031Isaura SA Argentina Petrochemicals 25.00 109.40Petroquimica Cuyo SAI.C. Argentina Petrochemicals 24.00 10.00Soyex SA Argentina Agribusiness 12.00 45.00Cimetal Siderurgia SA Brazil Steel 1.05 17.90Companhia Siderurgica da Guanabara - Brazil Steel 3.00 34.60

COSIGUAMorro Verde SA Brazil Pulp and paper 30.17 126.20Nitroclor Produtos Quimicos SA Brazil Chemicals 8.00 95.00Papel e Celulose Catarinense SA Brazil Pulp and paper 2A0 2.40Cabo Negro methanol project Chile Petrochemicals 55.00 298.00Compania de Carbones de Chile Cocar SA Chile Coal 18.70 65.00Corporacion Financiera del Valle Colombia Development finance 6.00 8A0Corporacion Financiera Colombiana Colombia Development finance 6.00 8.40Corporacion Financiera Nacional Colombia Development finance 6.00 6.00Leasing Bolivar, SA Colombia Capital markets 0.03 030San Fernando/Chucuri oil exploration Colombia Oil 5.00 33.30

programInterior Forest Industries Company Limited Guyana Timber 1.70 10.10Quasi-equity investment program Jamaica Development finance 730 730Eastem Banana Estates Limited Jamaica Agribusiness 3.54 18.80Banco Latinoamericano de Exportaciones, SA Panama Capital markets 37.50 75.00Westem Agri Produccion del Paraguay S.R.L Paraguay Agribusiness 0.80 3.90Compania Minera Poderosa SA Peru Gold mining 330 10.90Madre de Dios gold mining project Peru Gold mining 1350 27.00Trinidad Nitrogen Co., Limited Trinidad and Chemicals 265.00 265.00

TobagoAstra Pesquerias Uruguayas SA Uruguay Fishing 0.50 3.10Azucitrus SA Uruguay Agribusiness 8.40 36.00

TOTAL 546.25 1,327.61

27

of its kind developed under IFC's new oil and gas Investment Overviewexploration initiative. Another innovation, developed The investment climate throughout most of Centralwith the Eagle Merchant Bank of Jamaica and involving America continues to be poor due to the unsettleda quasi-equity instrument, will use IFC's guarantee to political situation and difficult economic conditions.mobilize local currency denominated equity capital. However, Mexico, through its economic stabilization

program and with IMF support, has begun to recoverIFC acted as an underwriter to help three Colombian frogm the serssion and ecnoi diffculiesfinancieras expand their capital by issuing subordinated from the severe recesslon and economic difficulties.loans. These were the first IFC loans to carry a variable The private sector has largely completed long-terminterest rate. debt restructurings necessaryt following the onset of

the 1982 crisis and has begun to make small invest-

Also in the Latin America and Caribbean I area, in close ments-mainly to improve quality and diversify prod-cooperation with Morgan Guaranty Trust Company of uct lines.New York, IFC played a key role in putting together a$265 million financial plan for the expansion of the In the Caribbean Region, the overall economic climateTringen ammonia project in Trinidad and Tobago. was more buoyant than that of a year ago although

several countries still struggled with the hardships ofIn IFC's Latin America and Caribbean II area, the implementing necessary adjustment programs. Spear-Corporation's program has emphasized projects that headed by a 5 percent increase in tour arrivals, mostdevelop the area's abundant local resources and con- Caribbean economies registered positive rates oftribute to export earnings or reduction of imports of growth and Colombia and Venezuela also reboundedkey commodities. While the majority of the projects from the 1981-83 recession.financed have been start-up ventures, recently an in-creasing proportion have assisted the expansion, re- The Caribbean Basin Initiative program has spurredstructuring, or recapitalization of existing enterprises investor interest and the tangible impact of that pro-which are suffering from the prolonged economic re- gram is beginning to be felt. In general, investor confi-cession in the Region. dence within the Region is increasing but external

sources are still cautious about further exposure.

Chemical and energy related investments have account-ed for one-third of the projects in the area. Included in In South America, the private sector has faced a difficultthis total for this Year was an $8.0 million investment year. Inflation and recession eroded real incomes andin Nitroclor for the development of specialized interme- reduced demand for many products. Shortages of for-diate chemicals for manufacture of pharmaceuticals and eign exchange and long-term finance on commercialagrochemicals in Brazil; a $55.0 million loan to Cabo terms have impeded the development of new invest-Negro in Chile for the development of otherwise un- ments. Political uncertainty and the voluntary end ofutilizable natural gas for the production of methanol; several military administrations have made long-termand an $18.7 million investment in Cocar in Chile for planning by the private sector more difficultthe development of local coal reserves.

As a result, established ventures are increasingly facedSome of the most challenging projects in the Region with short-to-medium term problems and need finan-have been efforts to restructure and, thus, save existing cial, technical, and managerial assistance to better sur-companies. For example, one successful effort involved vive current stresses. New investment is being under-Soyex, a soybean processing company in Argentina, taken on a more cautious and conservative basis, andwhich was imperiled by the bankruptcy of its parent some important projects are being delayed awaitingcompany. IFC's support of the Morro Verde pulp and more certain times.paper project in Brazil will help modernize and activatean uncompleted, mothballed plant that would utilize However, the more confident and better-capitalizedsubstantial existing forest plantations for which there entrepreneurs are using this uncertainty and depressedis little altemative use. Finally, the Corporation's invest- demand advantageously to develop new export markets,ment in the Isaura facility in Argentina has helped displace increasingly expensive imports, and add capac-modemize an important petroleum refinery. ity at favorable costs.

28

The longer-term outlook for the private sector in most In South America, foreign exchange shortages have givenLatin American countries is more positive. The econo- priority to investments in export oriented and importmies of several countries have resumed growing, mea- substitution industries. Such investments have had nota-sures are being taken to improve economic manage- ble success, particularly in Brazil and other larger econ-ment and to stimulate private sector investment, and omies with a substantial, intemationally competitiveimpressive gains in export performance have been industrial base and weak domestic demand. In less indus-noted in some of the larger countries. Such favorable trialized economies where a comparative advantage existsdevelopments will encourage greater private invest- in agriculture, IFC will seek to support export-orientedment. production and agroindustrial investment.

IFC's Regional Initiatives: In keeping with the comparative advantage of mostnations in the Region, IFC's investments are likely to

IFC continues to seek investments in Central America, emphasize agricultural and agroindustrial projects, pro-but the success of these efforts will depend on the motion of basic industries and mining, and develop-stabilization of the political atmosphere. In Mexico, ment of economically attractive domestic energy re-where internal economic adjustments have severely sources.depressed investment levels, a review of private sectorneeds and IFC's investment strategy was initiated at the The recent economic stress has weakened many compa-request of the Mexican government and undertaken in nies which have good, fundamental, long-term pros-conjunction with the World Bank. It covered secondary pects if technical, financial or managerial difficulties arepetrochemicals, mining, agribusiness and capital mar- overcome. IFC is increasing its attempts to assist suchkets, analyzing needs and possibilities for future IFC companies in the development and execution of re-support of the sectors. structuring programs.

In the Caribbean Region, IFC plans to continue its Throughout the Latin American Region, the Corpora-promotional efforts in FY86 and develop new ways in tion will continue to broaden its participation in privatewhich it can assist the private sector's efforts to develop, sector development by the use of new and innovativeexpand or improve productive sector capacity. Particu- financial features. Recent operations have included thelar emphasis will be placed on applying IFC's new use of subordinated convertible loans, underwritingprograms and on continuing to work closely with the assistance, standby facilities, and floating rate loans asCaribbean Project Development Facility to develop well as the more traditional fixed rate loans and straightprojects of mutual interest equity investments. These efforts will continue.

29

Capital Markets* For the first time, IFC participated in the formation ofan insurance company, a joint venture formed in In-donesia between a prominent local group and a large

Board Approvals: international insurance company, which will provideinsurance services new to Indonesia.

During Fiscal Year 1985, the Board of Directors ap-proved loans and equity investments totalling $60.9 Among various leasing investments made during themillion for 12 capital markets institutions. Of the total year, a new company established in Bangladesh isfinancing approved, $51.3 million was for loans and $9.6 noteworthy because its technical partner is a Koreanmillion for equity. leasing company first promoted by IFC a number of

years ago. A similar example of financial and technicalAt the end of the Fiscal Year, the Corporation held assistance by companies from other developing coun-$115.2 million in 42 capital markets institutions in 28 tries is involved in an IFC investment in an Egyptiancountries: about $86.5 million in loans and $28.7 mil- securities company which was established followinglion in equity. This compares with IFC investments in IFC's extensive technical assistance work in the Egyp-34 ventures with $84.5 million in loans and $18.3 tian capital market over a period of several years. Itsmillion in equity at the end of the prior Fiscal Year. technical partner is a Korean short-term finance com-

pany which was established with IFC assistance inEight of this Year's 12 approved investments were to 1971.establish new companies or were made in companiesnever before having received IFC assistance. In Turkey, the creation of a new merchant bank was also

the result of long-term technical assistance efforts toSeveral innovative projects were developed during the contribute to the development of the domestic securi-Year. The Corporation is paying special attention to the ties market An IFC equity investment in an innovativeneed for more effective methods to make equity invest- private rural housing company in India will help pro-ment capital available to enterprises too new or small vide long-term housing loans on market terms to mid-t4 raise equity through domestic stock markets. To this dle-income borrowers in smaller towns and rural areas.eiid the Board approved an investment in a venturecapital company to be formed in Argentina and a line The Corporation's Capital Markets Department alsoof equity to be managed by a venture capital company pursued active programs of advice and technical assis-in Korea. A multi-country survey on venture capital tance during the year in 25 countries involving 51practices is being completed and IFC is expanding itsefforts to establish and maintain, on a continuing basis, the development of domestic securities markets. Coun-a urities markets data base which will track thethdelomnofoesiscutesart.Cu-a s s ar tries to which such assistance was provided includedfir,,~,.i.cial performance of these markets. Fiji, Indonesia, Kenya, Korea, Malaysia, Mexico, Paki-

The Corporation was lead manager in the underwriting stan, Saudi Arabia and Turkey. The Corporation alsopromoted the formation of both national and multi-of a $50 million Eurodollar medium-term floating ratenote issue for a regional export bank based in Panama. country investment trusts. These trusts are seen, inThe underwriting provided the first new money raised approprsate iarcumstances, to offer equity portfoliofrom inteational capital markets institutions on be- sinvestors in major financial markets the opportunity tohalf of a Latin American issuer since 1982, and followed dcversify their Investments wh ile gtvang develop.gIFC's earlier participation as co-lead manager and un- countnes wider access to equity upital.derwriter of the Korea Fund, the shares of which havetraded at a premium over its issue price on the New York IFC continues to expand its leasing activities and toStock Exchange since the Fund was launched in August provide advice on establishing or amending local regu-of 1984. lations covering this activity in a number of countries

including Malawi, Swaziland, Botswana, Turkey andPakistan. IFC is establishing leasing companies in Swa-

'n the Corporation, activities relating to capital markets and the ziland and Pakistan, and expects to do so in Malawi,development of financial institutions are organized not on a regional Tre n gp ntena uuebasis, but in a specialized capital markets department Turkey and Egypt in the near future.

30

During Fiscal Year 1986, it is expected that the expand- As of May 31, 1985, with just less than half of its Fiscaled emphasis on securities market development and Year still to run, the Facility had completed a further nineequity capital mechanisms will lead to further invest- projects compared to nine for the whole of the previousments in these areas. Several countries provide the year. Six of these were in the agribusiness and foodpotential for investment trusts and venture capital processing sectors while the other three covered wigoperations, while merchant banking opportunities exist making, the construction business and a liquified petro-in others. Additional leasing activities hold promise in leum gas plant. Barbados, Belize, Grenada, Haiti, Jamai-a number of countries and IFC may also be involved in ca, the Netherlands Antilles, and St. Christopher andthe formation of the first private commercial banks in Nevis benefitted from these projects which had an ag-a few countries where such projects are now under gregate investment cost of approximately $10 million.discussion.

In addition, IFC also recently approved a loan of $1.7million to Interior Forest Industries Company Ltd. ofGuyana for the completion of its logging and sawmill

Caribbean Project Development complex in Anarika, a $10 million project which wasFacility promoted by the Facility and for which it had helped

arrange a loan of $1.2 million from the InteramericanDevelopment Bank in 1984.

The Caribbean Project Development Facility (CPDF)has had another very successful year in assisting the In its first three and a half years, the Facility hasCaribbean private sector raise financing for new invest- completed some 30 projects in 18 different Caribbeanment projects. states, having an aggregate investment cost of approx-

imately $57 million. The Facility has been instrumentalCPDF was created in October 1981 to assist small and in raising both long-term finance and equity for thesemedium-sized businesses that are substantially owned projects in an aggregate amount, net of cancellations,by Caribbean citizens raise funds, both loans and equi- of about $27 million.ty, for new productive investment projects.

The Facility's experimental period is being extendedCPDF was established under the auspices of the United until October 1987 with the full support of the originalNations Development Programme (UNDP) with the donors. The Overseas Development Administration ofInternational Finance Corporation acting as its Execut- the United Kingdom has agreed to become a newing Agency. A number of other international and gov- contributor and it is hoped that one or two otherernmental developmental agencies also provide funding European countries will also shortly announce theirand assistance for the Facility's activities. participation.

31

Technical Assistance structuring major optimal packages of export-orientedprojects in the capital goods, fumiture, textile andengineering manufacturing industries.

During Fiscal Year 1985, the Corporation's technical In Sweden, IFC staff participated as faculty in a Govern-assistance cooperative program with the United Nations ment-sponsored project management seminar, concen-Development Programme (UNDP) was further expand- trating on technical aspects of appraising investmented. Through a special facility established in 1982, the projects; and in China the Corporation joined IBRD in--NDP is helping finance feasibility studies for poten- conducting a seminar on development banking undertially viable investment projects in certain less devel- the auspices of China Investment Bank. IFC also partic-oped countries. During the Year, IFC entered into two ipated in several agricultural conferences to advise onsuch agreements with the UNDP to fund studies for a linking technical assistance with financing in verticallywoolen textile export-oriented rehabilitation project in integrated agribusiness projects.Latin America, and a company to promote cotton grow-ing in East Africa. In 1985, IFC was engaged in special promotion efforts

in two new sectors involving interesting new tech-The Corporation continued to provide its traditional niques not previously familiar to the Corporation: ma-technical assistance associated with specific projects rine shrimp cultivation and bulk distribution. Theseand enterprises as well as on the broader concems of efforts have been aimed at increasing investor aware-sector development. Among these were: ness in these sectors, while at the same time identifying

Sector Activities Country

Mining and Metallurgy Cost benefits of alternative iron ore sourcing MexicoLeast cost solution of transporting mined calcite for processing IndiaOptimizing investment strategy for specialty steelmaker IndiaCritical technology/equipment selection for steel plant EgyptProcess improvements for nickel refinery Philippines

Pulp and Paper Evaluating new technologies for mechanical pulping YugoslaviaCorporate strategy and rationalization of lumber industry Fiji IslandsSectoral strategy using technologies suited to small-scale units Malawi

Chemicals Substitution of alcohol for lead as gasoline octane enhancer EastAkicaTechnical and management improvements for fertilizer complex CyprusSubstitution of alcohol for diesel fuels MalawiApplication of coal-water slurry technology India, Cyprus

Manufacturing Reshape textile modemization project to introduce real wax print Zairetechnology and promote local cotton productionOptimal technical and management structure for float glass plant Egypt

While most of the above were done for specific compa- worthwhile investment opportunities for IFC itself. Innies and/or projects, in some cases they were done at the case of bulk distribution, the Corporation has inthe request of, or for, the government of the country some cases provided technical advice to potential spon-involved. sors at very early stages of project development, with

the intent of including the costs of this assistance inThe Corporation provided technical assistance to sever- the capital costs of future projects.al major Yugoslav banks, which ultimately involved over80 companies, in using concepts and techniques of The Corporation reviews, in consultation with the IBRDinvestment appraisal, developed by IFC, as well as in Office of Environmental and Scientific Affairs, every

32

project to ensure the soundness of the measures taken these efforts will be aimed at identifying suitable tech-to protect both the general environment and the health nologies and innovative products and processes, and toof the people associated directly or indirectly with it. adapt them, if necessary, for transfer to entrepreneursIFC's environmental policy was presented in a 1984 in developing member countries. It will also includeUNIDO workshop in Ghent, Belgium. In 1985, IFC will formulating strategies to promote projects in selectedtake an active part in several international meetings sectors and rehabilitating enterprises experiencing dif-dealing with the environment. ficulties, including those outside IFC's portfolio. In

pursuing these goals, the Corporation also intends toLooking ahead, the Corporation plans to gradually collaborate more closely with the UNDP and otherbroaden its technical assistance activities. In particular, specialized United Nations agencies.

Project Related Technical Assistance-a Case Study

In the course of more than 25 years of global investment In each case, such strategies were formulated in the lightoperations, IFC has accumulated considerable technical of optimizing technological, management andmarketingexpertise related to the creation of new, and restructuring resources, ensuring the deployment of new capital invest-of existing. projects and enterprises, and also to industrial ments toward improvements in product mix, manufactur-sectordevelopment in less developed member countries. ing efficiencies and competitive positioning. In the textileThis know-how covers a wide spectrum of capabilities, sector, for instance, changes in product mix were recom-including investment promotion, technology assessments mended, if there was an option to produce differentand process improvements, project appraisals, market evalu- product lines with higher contribution margins.ations, management audits, financial restructuring and theformulation of corporate, sector and economic strategies. Among capital goods manufacturers, on the other hand,

IFC suggested project improvements by introducingAgainst this background, IFC has atitsdisposal substantial more automated equipment and up-to-date technologiescapabilities to provide technical assistance to enterprises in order to overcome labor shortages and raise productand governments in member countries. The Corporation is quality. Additionally, in the furniture industry, plns wereperhaps uniquely equipped to synthesize worldwide expe- formulated to decisively improve the competitive positionrience in diverse industries, with a view to developing -of exporting firms in the US market by making mrajortailored approaches to specific project and sector needs. changes in marketing strategy and overseas:manage-

ment.During Fisal Year 1985, the Corporation provided thistype of technical assistance on a substantial scale in Furthermore, the Corporation assisted in carrying outYugoslavia. IFC cooperated with majorYugoslav banks and general economic and sector impact reviews, and the entireenterprises, as well as Government authorities, in formu- technical assistance activity was supported byasystematiclating and strucuring three packages of expott-oriented training effort through conducting workshops in Yugosla- -investment projects in the capital goods, fumniture, textile via and at IFC headquarters for Yiugoslav staff.and engineering manufacturing industries. Theseprojectsinvolved about 80 individual industrial companies. The totalcapital costofthese80projectsis'estimatedto

be around $370 miDlion. IFCs combined loans will provideTo meet the complexities of this task within a short time, approximately $100 miDion in several currencies and:IFC was able to draw upon the full range of its multi- around $270 million will come from local equity and loandisciplinary expertise, backed by the application of com- sources for the balance of the financing required. Tenputerized evaluation techniques in the field. Perhaps the leading European banks are joining the WFC loan asmain thrust of IFC's contribution was to help focus on participants to provide about $15 million equivalent onbusiness intrinsics and issues regarding individual capital attractive tems required to support the export orientedprojects by optimizing longer-term corporate strategies -investments.and investment programs.

33

Syndications Syndications processed with commercial banks duringthe Year included significant new funding for projectsin Argentina, India, Morocco, Pakistan, Trinidad and

IFC invites groups of banks and other financial institu- Tobago and Yugoslavia. IFC is working closely with ations to participate in its loans, thus increasing and major international bank to arrange financing for adirecting the flow of additional funds into productive large ammonia plant in Trinidad and Tobago. Theprivate enterprises in the developing countries. major element of the financial plan is an IFC syndica-

tion of up to $225 million, which would represent theDuring Fiscal Year 1985 the Corporation syndicated or largest such transaction completed to date by thehad pending the syndication of $327.9 million of par- Corporation.ticipations in the $875.8 million of loans approved bythe Board of Directors. In addition, an IFC $360,000 In Yugoslavia, IFC expects to complete syndicationsequity investment in a Yemen Arab Republic project was totaling $15 million equivalent in Deutsche mark andfinanced by a Saudi Arabian special fund. Swiss francs for Ljubljanska Banka and for Jugobanka

to be used together with local funds mobilized by theDuring the past five fiscal years, IFC has signed partic- borrowers to help finance small and medium-scale ex-ipation agreements with banks totalling $1,251.0 mil- port oriented projects in that country.lion and at present has under administration for theaccount of the other financial institutions a portfolio of IFC also continued to make use of its relationships in$1,201.6 million. the financial community by encouraging commercial

banks to refer projects to IFC for possible loan andThe Corporation's catalytic role continued to be impor- equity investments. IFC can be useful to companies intant this Year since fewer commercial lenders were connection with investments in developing countries inwilling, on their own, to direct additional funds to the instances where their bankers are restricted by countrylarge number of developing countries which are expe- limits or other lending constraints.riencing economic problems.

Financial Institutions That Participated inIFYC Loans During FY 85Adria Bank Aktiengesellschaft HandelsBank N.W.American Express International Banking Corporation Hessische Landesbank-GirozentraleAmerican Security Bank NA The Industrialization Fund for Developing CountriesAnglo-Yugoslav (LDT) Limited International Westminster Bank PLCBank fur Handel und Effekten Kreditanstalt fur WiederaufbauBanque Nationale de Paris Manufacturers Hanover Trust CompanyBanque Paribas Midland Bank plcBarclays Bank PLC Morgan Guaranty Trust Company of New YorkBaring Brothers Asia Limited Nederlandsche Middenstandsbank nvBA Asia Limited Orion Caribbean LimitedCitibank, NA Pittsburgh National BankCredit Commercial de France PKbanken International (Luxembourg) SACreditanstalt-Bankverein The Royal Bank of CanadaDen norske Creditbank The Siam Commercial Bank Ltd.Deutsche Bank Compagnie Financiere Luxembourg Standard Chartered BankDresdner (South East Asia) Limited Swiss Bank CorporationEDESA International Finance Company Union Bank of SwitzerlandGrindlay Brandts Limited United Bank of Kuwait, Ltd.

34

Investment Table

The Year's Investments

Sector Investments as approved by the Board of Directors IFC Project(USS thousands equivalent at date of Board approval') Cost

AFRICA REGIONDF SIFIDA,* a private financial company which invests exclusively in Loan $ 2,000 $

Africa, will expand its main project financing operations which Equity -include merchant banking and trade finance activities. Syndications 2,000

Total 4,000 23,900

ARGENTINACM InversionesIndustriales SA is being established as a venture Loan -

capital fund that will make equity and quasi-equity investments Equity 2,050in medium-size enterprises being restructured and also a few new Syndications -ventures with promising prospects. Total 2,050 10,300

CP Ipako Industrias PetroquimicasArgentinas SA* shares will be Loansubscribed by IFC in connection with conversion of the Equity 310Corporation's subordinated loan to the company-giving IFC a 4 Syndications -percent holding. Total 310 310

CP Isaura SA will complete the expansion of its Bahia Blanca Loan 25,000refinery-adding a 1,000 metric tons-a-day secondary conversion Equity -facility and a 1,800 tons-a-day primary distillation unit, thereby Syndicationsimproving the plant's output while reducing operating costs. Total 25,000 109,400

CP Petroquimica Cuyo SAI C', requiring an additional $24 million Loanto make up for a shortfall in the financing for its 40,000 metric Equity -tons-a-year polypropylene plant, is being provided a supplemental Syndications 24,000loan by IFC, which had helped to finance the project originally. Total 24,000 10,000

FA Soyex SA. will receive from Banco de la Provincia de Buenos Loan 12,000Aires funds obtained from IFC and required to complete a 600,000 Equity -metric tons-a-year soybean crushing plant The new financing will Syndications -be used to provide additional working capital, correct structural Total 12,000 45,000problems, complete the plant and put the venture on a soundoperational basis.

BANGLADESHMF Bata Shoe Company (Bangladesh) Limitea,* the leading Loan 500

domestic shoe producer, is increasing its capacity to 8.1 million Equitypairs of shoes a year with IFC financial assistance. The project Syndications -will help meet growing demnand in Bangladesh and result in Total 500 2,600foreign exchange savings by reducing the need for imports.

CM IndustialDevelopmentLeasing Company ofBangladesh Loan 1,800Limited, the first equipment leasing company in Bangladesh, will Equity 200provide leasing finance to small and medium-scale enterprises Syndicationswhich have been hampered by lack of adequate term funds. The Total 2,000 13,300technical partner in the project is Korean Development LeasingCompany, which IFC also helped to establish.

MF Wavin Bangladesh Limitedwill produce 3,450 metric tons a year Loan 1,470of PVC pipes for domestic water supply, sewerage and irrigation Equity -uses. The project will create employment in a less developed Syndications -industrial area, improve the know-how of the plastics industry Total 1,470 5,100and generate about $5.6 million annually in net foreign exchangesavings at full capacity.

35

The Year's Investments (continued)

Sector Investments as approved by the Board of Directors IFC Project(US$ thousands equivalent at date of Board approval') Cost

BRAZILIS CimetalSidenurgia SA is undertaking a restructuring and re- Loan $ - $

privatization and, in support, IFC is subscribing to a stock offering Equity 1,050to shareholders and underwriting part of a public offering being Syndicationsmade by the company. Total 1,050 17,900

IS Companhia Siderurgica da Guanabara-COSIGUAI made a Loanshare offering to stockholders to which IFC subscribed. The new Equity 3,000financing is for an ongoing modernization and diversification Syndications -program and to expand operations. Total 3,000 34,600

PT Morro Verde SA will reactivate and further equip its 100,000 Loan 20,860metric tons-a-year long fiber kraft pulp mill in southern Brazil. Equity 9,310The project will create substantial employment and generate Syndications -estimated net foreign exchange benefits of more than $28 million Total 30,170 126,200a year.

CP NitroclorProdutos Quimicos LA will build a fine chemicals plant Loan 3,000in northeast Brazil to produce 14,300 metric tons a year of Equity 5,000chlorobenzene derivatives for use by the agro-chemical, Syndicationspharmaceutical and specialty chemicals industries. The project Total 8,000 95,000will benefit a less developed region in the country and result inestimated net annual foreign exchange savings of $35 million.

PT Papel e Celulose Catarinense LA' shares were acquired by IFC Loanin exchange for the Corporation's outstanding loan to a private Equity 2,400international development company that is being restructured. SyndicationsIFC already had a shareholding in the pulp and paper company Total 2,400 2,400which it helped establish in 1966.

CAMEROONFA Societe desPatmeraies de la Ferme Suissewill expand its Loan 1,620

plantation to 2,800 hectares to fully exploit the good land Equity 560available and permit complete utilization of the 10 metric tons Syndications -per hour oil mill. Total 2,180 9,700

CHILECP Cabo Negro methanolprojectwill establish a 750,000 metric Loan 50,000

tons-a-year methanol plant in southern Chile based on surplus Equity 5,000natural gas in the Strait of Magellan area. It will produce for Syndicationsexport and generate estimated net foreign exchange eamings of Total 55,000 298,000$62 million a year.

EM Compania de Carbones de Chile Cocar SA will develop a 1.1 Loan 16,500million metric tons-a-year open pit coal mine and construct a Equity 2,200bulk-loading marine terminal in southem Chile. Production will Syndications -be used mainly by thermoelectric plants in the northern part of Total 18,700 65,000the country and, by replacing imported oil, generate an estimated$39.7 million a year in net foreign exchange savings.

CHINAAV Guangzhou Peugeot Automobile Company Ltd, ajoint venture Loan 15,000

between Chinese and French sponsors, will be the first project to Equity 2,020be implemented in China with IFC assistance. It will produce Syndications15,000 pickup trucks a year, create more than 1,900 jobs and Total 17,020 79,500result in estimated net foreign exchange savings of $11 millionannually.

36

Sector Investments as approved by the Board of Directors IFC Project(USS thousands equivalent at date of Board approval') Cost

COLOMBIADF Corporacion Financiera del Valle' will meet its near-term on- Loan $ 6,000 $

lending requirements and expand its assistance to Colombian Equity -companies while at the same time strengthening its equity base. Syndications

Total 6,000 8,400

DF Corporacion Financiera Colombiana* will meet its near-term on- Loan 6,000lending requirements and expand its assistance to Colombian Equity -companies while at the same time strengthening its equity base. Syndications

Total 6,000 8,400

DF Corpormcion FYnanciera Nacional will meet its near-term on- Loan 6,000lending requirements and expand its assistance to Colombian Equity -companies while at the same time strengthening its equity base. Syndications

Total 6,000 6,000

CM Leasing Bolivar, SA made a stock offering to shareholders to Loanwhich IFC subscribed. Equity .30

Syndications -

Total 30 300

EM The San Fernando/ Chucuri oil exploration program in the Loan -Middle Magdalena alley, which will be operated by Asamera, Inc. Equity 5,000of Canada, will include seismic work and drilling of up to six Syndications -exploratory wells over a period of four years. Total 5,000 33,300

EGYPTMF Egypt FYber Glass Insulation Company, the first Egyptian glass Loan 3,350

fiber insulation plant, will produce 4,000 metric tons per year of Equity 1,100glass wool products for a wide variety of insulation purposes. Syndications -

Total 4,450 14,300

CM Egypt Investmnent Finance Corporation will be the first Loan 1,500diversified securities market intermediary in Egypt. It will offera Equity 360range of specialized financial services, including underwriting, Syndicationsdealing and brokerage in shares and bonds, money market Total 1,860 21,000operations, corporate advisory services, portfolio managementand investment advisory services.

MF A promotional company to develop a float glass project will Loan -

research all options for the project and identify specific product Equity 190requirements and opportunities for sale of the product locally and Syndications -in export markets. Total 190 2,500

FUI.-TS Sopac Resort Partnership will build and operate a 300-room Loan 6,800

deluxe international standard resort hotel on Denarau Island. The Equity -- project will meet projected demand for tourism facilities and Syndications -result in net foreign exchange benefits of approximately $4.6 Total 6,800 27,600million a year.

GUYANAPT InteriorForestlndustries Company Limitedwill complete and Loan 1,700

rehabilitate its integrated logging and sawmilling complex in Equity -Anarika to further exploit the unique hardwood reserves and to Syndications -earn foreign exchange. Total 1,700 10,100

37

The Year's Investments (continued)

Sector Investments as approved by the Board of Directors IFC Project(USS thousands equivalent at date of Board approval ') Cost

INDIAAV Bajaj Tempo Limitea the leading manufacturer of light Loan $ 7,810 $

commercial vehicles in India, will double its capacity to 30,000 Equityunits annually. The project will improve the company's efficiency, Syndications 7,810result in estimated net foreign exchange savings of $52 million a Total 15,620 52,700year and help meet a critical need for efficient, inexpensivetransport in India.

CM GujaratRural Housing Finance andDevelopment Corporation LoanLimitedwill provide long-term housing finance, mostly to middle- Equity 200income individuals and private cooperatives in small towns and Syndicationslarger villages. Total 200 1,600

CC Larsen and Toubro Limite4 a leading Indian engineering and Loan 6,730MF industrial company, will implement two projects: establishment Equity

of a heavy engineering facility capable of providing 10,000 metric Syndications 6,720tons a year of plant and equipment and doubling of the Total 13,450 122,000company's cement capacity to 2.2 million tons annually. Theengineering project will generate more than 1,500 jobs, improveIndia's capacity to manufacture large-scale equipment and resultin net foreign exchange benefits of $7.7 million annually. Thecement project will help meet a shortfall in Maharashtra Stateand result in estimated net foreign exchange benefits of $29million a year.

CM Lease Development India Linited is being established to provide Loan 5,000lease financing to the industrial, mining, agricultural, Equity 410construction, transport, commercial and professional sectors, Syndicationsespecially in the north central region of the country. Total 5,410 28,600

INDONESIACM P.T. AsuransiJiwa Dharmala ManuLifeis the first life insurance Loan

company in Indonesia with a foreign partner-Manufacturers Life Equity 360Insurance Company, which is a leading Canadian insurance Syndications -company and technical partner in the project The IFC investment Total 360 4,000is its first in the insurance industry.

CC P.T. Semen AndalasIndonesid* a I million metric tons-a-year Loan 830cement project in northern Sumatra, is being provided additional Equityfinancing as part of a restructuring program and to convert its Syndications -kiln to coal-firing, Total 830 12,000

IVORY COASTFA Compagnie des Caoutchoucs du Pakidids African investors will Loan 2,280

buy out and rehabilitate its two rubber plantations near Abidjan Equity 270by replanting 855 hectares of pre-1960 planted rubber and Syndicationsreplacing old factory machinery. Total 2,550 9,300

JAMAICADF Quasi-equity investnentprogranL IFC, together with Eagle Loan 7,300

Merchant Bank of Jamaica, Ltd. and other Jamaican insurance Equitycompanies and pension funds, will establish a quasi-equity fund Syndicationsto mobilize locally-sourced Jamaican dollar investments fora Total 7,300 7,300selected number of Jamaican enterprises. The arrangements arehighly innovative and involve the use of an'IFC guarantee tobridge the gap between investor preferences and the lendingneeds of companies.

38

Sector Investments as approved by the Board of Directors IFC Project(USS thousands equivalent at date of Board approval') Cost

FA Eastern BananaEstatesLimitedwill establish a 3,050 acre Loan $ 3,000 $banana plantation using advanced cultivation methods to Equity 540produce and package high-quality bananas for export. The project Syndications -will help revive a traditional export industry in Jamaica, create Total 3,540 18,800over 2,000 jobs and earn needed foreign exchange.

KENYAFA Kenya Oil Crop Development Company Limitedwill coordinate Loan 7,440

the production of domestic vegetable oil to replace 27 percent of Equity 1,400Kenya's imports of products for making cooking oils and Syndications -margarine. Total 8,840 34,000

TS Equatorial Beach Properties Limitedwill assist the financial Loan 3,600restructuring and completion of a 182-room hotel of first class Equity -standard with full conference facilities on the Kenya coast near Syndications -Mombasa. Total 3,600 13,800

KOREAcM Korea Investment and Finance Corporation* made a stock Loan -

offering to shareholders to which IFC subscribed. Equity 540Syndications -

Total 540 1Z300CM Korea DevelopmentInvestment Corporation (KDIC) will Loan -

administera new "equity line" being provided by IFC to help Equity 5,000finance small and medium-size Korean companies with high Syndications -growth and profitability potential. KDIC will invest IFC's funds in Total 5,000 20,000parallel with its own and supervise the projects. This is the firsttime IFC has made this type of investment arrangement

MF Gold Star Company, Ltd. made a stock offering to shareholders Loan -to which IFC subscribed. Equity 1,700

Syndications -

Total 1,700 24,100

MADAGASCARTE La Cotonniere d'Antsirabe(COTONAU SLA, an integrated textile Loan 6,480

mill, will be rehabilitated and modernized to improve its Equity 170efficiency, adapt its product mix to compete more effectively in Syndications -export markets, and increase cotton output from the company's Total 6,650 17,200farms.

MALAWIPT Viphya Plywoods andAlliedIndustries Limitedwill establish a Loan 1,790

plant to produce 6,500 cubic meters of sawn wood, 7,500 cubic Equity 500meters of plywood and 7,500 cubic meters of blockboard for Syndications -domestic consumption by processing abundant domestic forest Total 2,290 23,500resources into finished product

MAURITANIAFA Societe Mauritanienne d'lndusbieAlimentaire (SOMLA) LA will Loan 1,200

build a vegetable oil plant with a 7,500 metric tons-a-year capacity Equitywhich will cater to the domestic market and substitute for Syndications -imports. Total 1,200 4,000

39

The Year's Investments (continued)

Sector Investments as approved by the Board of Directors IFC Project(US$ thousands equivalent at date of Board approval I) Cost

MOROCCOFA FruitiereMarocaine de Transfonnation will modernize and Loan $ 4,580 $

expand three of the Company's four plants to increase citrus Equityprocessing capacity to 230,000 metric tons per annum, Syndicationsrepresenting some 20 percent of Morocco's total production. The Total 4,580 17,200project will also expand cold stores and the facilities needed totransport citrus juice to market in bulk rather than in bottles ordrums.

DF BanqueNationalepourleDeveloppementEconomique,' the Loan 20,000principal institution for financing prihate industrial development Equityin Morocco, will utilize IFC's loan to finance the foreign exchange Syndications 20,000needs of efficient industrial projects with special emphasis on Total 40,000 138,000export-oriented industries.

NIGERIATS Ikeja Hotel Limitedis completing a 396-room, first-class hotel of Loan 2,500

international standard at Ikeja, a suburb of Lagos, Nigeria. The Equityhotel will provide some relief to the acute shortage of hotel Syndications accommodations for business travelers in the area. Total 2,500 -10,700

PAKISTANEM Mad Gas Company Limitedwill increase natural gas output at Loan 19,900

the Mari field 50 percent to 300 million cubic feet a day, helping Equity -to ease domestic fuel shortages, reducing oil imports and saving Syndications 20,000an estimated $89 million a year in foreign exchange. Total 39,900 78,100

PANAMAcM Banco Latinoamericano de Exportaciones SAO has issued a $50 Underwritingtj 37,00

million medium-term floating rate note. IFC acted as co-lead Loanmanager in the underwriting. The proceeds will enable the Equitycompany to stabilize and diversify its funding base and re- Syndicationsestablish its access to international capital markets and thus - Total 37,500 75,000increase the company's ability to support the financing of exports.

PARAGUAYFA Western AgriProduccion del Pamguay S.RL is establishing in Loan 800

the southeastem part of the country an integrated farm and Equityranching operation on 4,600 hectares of land that will produce Syndications -1,500 head of cattle and 12,000 metric tons of crops a year for Total 800 3,900both export and domestic consumption.

PERUEM Compania Minera Poderosa &A is expanding its ore mining and Loan 3,300

treatment capacity in northeastern Peru from 130 metric tons a Equityday at present to 250 tons a day, reducing per-unit operating costs Syndications -and improving operating efficiency. The expansion is expected to Total < 3,300 10,900generate net foreign exchange earnings of $8.6 million a year.

EM Madre deDios gold mining project is being implemented by two Loan -6,000subsidiaries of South American Placers, Inc. and will develop an Equity 500alluvial deposits in the jungle region of southern Peru. The Syndications -7200I -project is in line with Government efforts to encourage the Total 13,500 27,000mining sector and will produce, at peak output, an estimated37,000 ounces a year-resulting in estimated net foreignexchange earnings of $12 million a year. -

40

Sector Investments as approved by the Board of Directors IFC Project(USS thousands equivalent at date of Board approval') Cost

PHILIPPINESFA NDC-GuthrieEstates1nc is establishing a 4,000 hectare oil palm Loan $ 7,000 $

plantation and oil extraction mill in central Mindanao to produce Equity 3,110annually some 21,000 metric tons of palm oil and 6,000 tons of Syndicationspalm kernels. The project will create more than 1,100 jobs, benefit Total 10,110 34,300a largely underdeveloped area and generate estimated netexchange earnings of $4.8 million a year.

GF A guarantee facility to assist a group of Philippine contractors in Loan 38,000:securing bonding for their overseas contracts is being provided Equity -by IFC. The facility would generate additional overseas contracts Syndications -for the companies, create employment for some 5,000 Filipinos Total 38,0001$ 38,0001:and result in about $150 million annually in foreign exchangeearnings and worker remittances.

PORTUGALDF RPJ.-BancoPortuguesdeInvestimentos; SA RL, made a Loan

stock offering to shareholders to which IFC subscribed. Equity 230Syndications -

Total 230 3,100

SOMAUAMF SomaliBag Company Limitedwill build a new plant to produce Loan 620

3.5 million polypropylene bags a year for the local market, at 30 Equity -percent below the current cost of imported bags. Syndications

Total 620 3,800

SRI LANKACM Lanka Orient Leasing Company Limited's next two years of Loan 3,960

operations will be financed partly by a public bond issue-the Equity -first of its kind in the country. IFC and a syndicate of banks and Syndicationsfinancial institutions are guaranteeing the bond issue. IFC is also Total 3,960 14,900providing a straight loan.

SWAZILANDCM Finance Corporation of Swaziland Limited will expand its Loan 1,500

activities to include more lease financing of industrial equipment Equity 130and to provide mortgage loans for industrial and commercial Syndications -properties, primarily for small and medium-scale enterprises. Total 1,630 6,200

TE Textile Corporation of Swaziland Limitedwill build and operate Loan 1,400a spinning plant with 18,240 spindles to produce 3,000 tons per Equity 1,030year of cotton and cotton blend yarns for export. Syndications

Total 2,430 11,100

THAILANDEM MasbhumiLimited has been formed to prove up a gold deposit Loan

about 90 miles east of Bangkok If the deposit appears to be viable Equity 190the company will seek to develop it commercially. Syndications -

Total 190 3,700CP National Petrochemical Corporation Limited will continue Loan

preparation of an olefins plant project with additional financing Equity 270provided by IFC and the other sponsors that originally established Syndications -the promotional company. Total 270 3,000

41

The Year's Investments (continued)

Sector Investrnents as approved by the Board of Directors IFC Project(USS thousands equivalent at date of Board approval') Cost

CC The Siam Cement Co., Ltd* made a stock offering to shareholders Loan $ - $to which IFC subscribed. Equity 180

Syndications -Total 180 8,700

TRINIDAD AND TOBAGOCP TrinidadNitrogen Co., Limitedwill expand its ammonia Loan 40,000

production and handling capacity by 450,000 metric tons a year Equity -through the construction of a second ammonia plant The project Syndications 225,000will help the country utilize natural gas resources and diversify Total 265,000 265,000into non-oil export industries.

TUNISIATE Societe deslndustries Textiles Reunieswill rehabilitate and Loan 1,700

modernize a finishing plant to gradually expand annual Equity 560production to 26 million linear meters, penetrate a higher quality Syndicationsmarket and increase exports of finished fabrics. Total 2,260 12,200

TURKEYCM A merchant bank the first to be established in Turkey, will Loan

provide a range of specialized financial services, including Equity 310underwriting and trading of public and private sector securities, Syndications -trade financing and corporate advisory services. Total 310 2,000

AV Istanbul Segman ve Gomlek Sanayi TicaretAS* made a stock Loanoffering to shareholders to which IFC subscribed. Equity 560

SyndicationsTotal 560 5,600

AV Man Kamyon ve Otobus SanayiAS will construct a new plant Loan 6,200in Ankara with a capacity to produce 3,000 heavy truck-tractors Equity -per year in one shift, and improve its existing plant in Istanbul to Syndications -reach production capacity of 1,000 buses per year in two shifts, Total 6,200 29,000modernizing Turkey's transport, which is vital for the country'sdevelopment

URUGUAYFA Astra Pesquerias Uruguayas SA, an integrated fishing Loan 500

operation, is undertaking a restructuring and expansion program Equitywhich is being assisted by IFC. Syndications

Total 500 3,100FA Azucitrus SA is establishing an integrated citrus operation on Loan 6,000

approximately 2,000 hectares in northwestern Uruguay to Equity 2,400produce about 55,000 metric tons of high quality citrus, 2,100 Syndicationstons of frozen fruit juices and 68 tons of essential oils a year. The Total 8,400 36,000project will create approximately 1,200 jobs, benefit a less-developed area of the country and generate net foreign exchangeearnings of some $3.2 million annually.

YEMEN ARAB REPUBLICMF Yemen Battery Manufacturing Company, Y.SC* made a stock Loan

offering to shareholders to which IFC subscribed. EquitySyndications 360

Total 360 360

42

Sector Investnents as approved by the Board of Directors IFC Project(US$ thousands equivalent at date of Board approval I) Cost

FA National Company for Vegetable Oil and Ghee Industries Loan $ 4,500 $Limitedwill establish a factory to produce 17,000 metric tons per Equityyear of vegetable cooking oil and ghee to substitute for current Syndicationsimports. It will use a simple, but well-established, technology to Total 4,500 16,600refine and process vegetable oils imported in bulk.

YUGOSLAVIADF Ljubljanska Banka-Zdruzena Banka' the third largest Loan 45,300

associated bank in Yugoslavia, will channel $55.3 million to 75 Equitysmall and medium-scale export-oriented enterprises in the Syndications 10,000furniture and woodworking, textiles, capital goods and Total 55,300 220,000miscellaneous manufacturing sectors.

MF Sour Energoinvest Yugoslavia's fourth largest enterprise and its Loan 11,000biggest exporter, will help finance the foreign exchange needs of Equityseven export-oriented projects to improve and expand production Syndicationsof circuit breakers, compressors, spark plugs, measuring devices, Total 11,000 56,000relays and switches, modular protection systems and automationdevices.

DF Jugobanka-Udruzena Banka Beogra4 the fourth largest bank in Loan 30,300Yugoslavia, will provide loans to help finance 20 export-oriented Equityprojects which require replacement and modemization in order Syndications 5.000to remain competitive and to increase sales in the export market Total 35,300 93,000

ZAIRETS KinshasaInter-ContinentalHote4 the only first-class hotel in Loan 15,000

Kinshasa, will add a 226-room extension to its existing 270 rooms. EquityDemand for hotel rooms is expected to grow rapidly with a pickup Syndications -of economic activity resulting from Government's wide-ranging Total 15,000 37,900policy changes to liberalize trade and investments.

TE Societe Textile de Kisangani SZA.RL, a major textile mill, will Loan 6,250be modernized and diversified to expand its production by 20 Equity 530percent and upgrade its product line, thus increasing its Syndications -competitiveness and resulting in substantial foreign exchange Total 6,780 17,400savings for Zaire.

FA A promotional companywill undertake detailed studies needed to Loanestablish a cotton farm of about 4,000 hectares to supply cotton to Equity 100Societe Textile de Kisangani. When operational, the farm will Syndication3 -

create employment for 6,000 permanent and seasonal workers and Total 100 500increase Zaire's cotton production by approximately 30 percent

Total Loan $548,370 t- Total Eq.uity $ 60,970

Total Syndications $327,890Grand Total $937,230t $2,767,570t

AV automotive/vehicles GF guarantee facilityCC cement and construction materials IS iron and steelCM capital markets MF manufacturingCP chemicalsand petrochemicals PT pulp, paper and timberDF development financing TE textilesEM energy and mining TS tourism and servicesFA foodsandagribusiness

'The Corporation has made one or more previous investments in this company.tContractor bonding facility.tincludes contractor bonding facility and underwriting.ttThe final issue amountwas $50 million. Of this, IFC committed for $17 million,of which $7.5 million was sold to others and$9.5 million was kept in IFC'sportfolio.'Expressed in US dollars with amounts invested at the exchange rates prevailing at the time of Board approval.

43

On 1st October 1984 Sir William Ryrie became Execu- tions and other efforts to raise finances from banks andtive Vice President of the Corporation in succession to institutional investors for IFC projects.Mr. Hans A. Wuttke. In January 1985 a reorganizationof the internal management was announced in which Mr. Rolf Th. Lundberg will be relinquishing his respon-the regional vice-presidencies were abolished and the sibilities as head of the present Syndications Depart-top management was concentrated in three vice presi- ment on 30th September after 25 years of valuable anddencies under the Executive Vice President. These devoted service.three posts are:

As part of the effort to intensify business promotion inVice President, Investment Operations, with re- Europe, Mr. Gunter Kreuter will take up a new positionsponsibility for all new investment activities in at Director level representing the Corporation in athe regions. Mr. Judhvir Parmar of India, formerly group of European countries from Paris. His activitiesVice President for Asia, Europe and Middle East, will supplement those of Mr. Hans Pollan who willtook this position on the 1st of March. continue to operate from London.

Vice President, Corporate Affairs and Develop- Early in Fiscal Year 1986 the present Asia Departmentment, with responsibility for general promotion, will be split into two departments, one headed by Mr.publicity, development activities and capital mar- Wilfried Kaffenberger, covering South Asia, and onekets. Mr. Francisco J. Alejo of Mexico joined the headed by Mr. Torstein Stephansen, the present headCorporation on the 1st of March to take up this of the Asia Department, will cover East Asia. Thisposition. change is expected to equip the Corporation to expand

its activities substantially in the Region.Vice President, Portfolio and Financial Manage-ment, with responsibility for supervision of the At the end of the Fiscal Year the Corporation had a totalportfolio and for the Corporation's finances, bud- staff of 433 compared with 412 a year earlier. Of these,geting and planning. Mr. Hilary P. Reddy of the 250 were higher level (professional) staff , 33 were atUS has been appointed to this position and will assistant level, and 150 were support staff. A total of 70take up his duties in September 1985. countries were represented and, of these, 54 were

developing countries. The proportion of higher levelLater in the year the creation of a new Corporate staff from developing countries, 40 percent, has re-Promotion and Syndications Department was an- mained constant over the past several years. Of thenounced. Mr. Giovanni Vacchelli will be the Director of Corporation's higher level staff, 18 (7.2 percent) arethis Department, which will be responsible for a cam- women, compared to 19 (8.4 percent) last year. Twenty-paign to publicize the Corporation and its activities four of the assistant level staff are women, compared towidely and to promote business especially with corpo- 21 last year.rations in industrialized countries; and also for syndica-

44

Financial Statements

International Finance CorporationAnnual Report 1985

Balance Sheet 46

Statement of Income 47

Statement of Changesin Financial Position 48

Statement of Subscriptions to Capital Stockand Voting Power 49

Notes to Financial Statements 50

Report of Independent Accountants 52

45

International Finance Corporatin

Balance Sheet Exhibit AJune 30, 1985 and June 30, 1984In Thousands of United States Dollars-See Notes to Financial Statements, Exhibit E

1985 1984

ASSETSLoan and Equity Investments-Note B

Investments committed $2,116,269 $1,989,900Less-Undisbursed 552,912 542,702Disbursed and outstanding .1,563,357 1,447,198Less-Reserve against losses .156,707 127,526

1,406,650 1,319,672

Accrued income on loans .27,662 26,347

Receivable from purchasers of loan and equity investmnents 3,601 4,418

Property, primarily land, acquired through foreclosure .4,400 4,400

Deposits and SecuritiesObligations of governments . . .75,580 29,403Time deposits and other obligations of banks and financial institutions.. 144,473

Accrued income on deposits and securities .2,135

Cash . - ................... 4,040 2,698

Other Assets .4,302 2,985TOTAL ASSETS ........................... ........... $1,672,843 $1,389,923

LIABILITIES AND CAPITALLiabilities

Borrowings-Note DLoans from the International Bank for Reconstruction and Development ... $1,170,576 $ 866,352

Less-Undrawn. 474,826 318,404Withdrawn and outstanding . .......................... ............ 695,750 547,948

Loans from ohers . . .129,405 35,000825,155 582,948

Accrued charges on borrowings . . .17,078 12,731Accounts payable and other liabilities . .........................-..... 16,564 13,676Deferred income .... . .9,821 6,224

TOTAL LIABILITIES .............. 868,618 615,579

Capital and Accumulated EarningsCapital stock, authorized 650,000 shares (650,000 shares-1984) of

$1,000 par value each; subscribed 545,784 shares (544,238 shares-1984)-Note E . . .545,784 544,238

Accumulated earnings . . .258,441 230,106TOTAL LIABILiTIES AND CAPITAL .................... . . $1,672,843 $1,389,923

46

Intenational Finance Corporation

Statement of Income Exhibit BFor the Fiscal Years Ended June 30, 1985 and June 30, 1984In Thousands of United States Dollars-See Notes to Financial Statements, Exhibit E

1985 1984

INCOMEIncome from loan and equity investments:

Interest ............................................ - ......... .. $131,770 $123,689Dividends and profit participations ....................................... 14,418 10,774Commitment fees ....................................................... 4,786 5,483Realized gain on equity sales ................... ........................ 4,565 7,390Other investment fees ................................................... 2,580 2,235

158,119 149,571

Income from deposits and securities ............... ........................ 15,157 1,683Other income (expense) ................................................... (579) (125)

TCTAL INCOME .................................................... 172,697 151,129

EXPENSESCharges on borrowings .................................................... 63,508 48,835Administrative expenses .............................................. I .... 51,458 45;017Provision for losses ..................................................... 29,396 30,954

TOTAL EXPENSES .................................................. 144,362 124,806

NET INCOME ....... $ 28,335 $ 26,323

47

International Finance Corporation

Statement of Changes in Financial Position Exhibit CFor the Fiscal Years Ended June 30, 1985 and June 30, 1984In Thousands of United States Dollars-See Notes to Financial Statements, Exhibit E

1985 1984

FUNDS PROVIDEDNet income ....................................................... $ 28,335 $ 26,323Items not requiring or providing cash:

Provision for losses .... ........ .............. ... 29,396 30,954Net changes in accrued income and expenses ......... ................. 2,073 (3,915)Net other changes ..................................................... (1 09) (228)

Funds provided from operations ....................................... 59,695 53,134Capital subscription payments ............................................. 1,546 492Borrowings ....... ................................................ 332,422 89,634Repayments of loan investments ................... ........................ 125,316 120,101Other ....................................................... 16,994 14,426

TOTAL FUNDS PROVIDED ................. ........................ 535,973 277,787

FUNDS USEDDisbursements of loan and equity investments ......... .................... 266,448 238,234Repayments of borrowings . ............................................... 77,533 33,755

TOTAL FUNDS USED ............................................... 343,981 271,989

INCREASE IN CASH, DEPOSITS, AND SECURITIES ........ ................ $191,992 $ 5,798

48

Intemational Finance Corporation

Statement of Capital Stock and Voting Power Exhibit DJune 30, 1985 and June 30, 1984In Thousands of United States Dollars-See Notes to Financial Statements, Exhibit E

Capital Stock \oting Power Capital Stock Voting PowerAmount Percent Number Percent Amount Petcent Number Percent

Members Paid of Total of Votes of Ttal Members Paid of Total of \otes of Total

Afghanistan ........... $ 111 .02 361 .06 Liberia $ 83 .02 333 .06Argentina ... ......... 9,821 1.80 10,071 1.74 Libya . .55 .01 305 .05Australia ............. 12,191 2.23 12,441 2.15 Luxembourg . .551 .10 801 .14Austria ............... 5,085 .93 5,335 .92 Madagascar .......... 111 .02 361 .06Bangladesh ........... 2,328 .43 2,578 .45 Malawi.......... . 368 .07 618 .11Barbados ............. 93 .02 343 .06 Malaysia . .3,921 .72 4,171 .72Belgium .............. 13,723 2.51 13,973 2.42 Maldives............. . 4 254 .04Belize ............... 26 * 276 .05 Mali. ............... 116 .02 366 .06Bolivia ............... 490 .09 740 .13 Mauritania . .55 .01 305 .05Botswana ............. 29 .01 279 .05 Mauritius . . 429 .08 679 .12Brazil ............... 10,169 1.86 10,419 1.80 Mexico . .6,004 1.10 6,254 1.08Burkina Faso .......... 245 .04 495 .09 Morocco . .2,328 .43 2,578 .45Burma ....... ....... 666 .12 916 .16 Mozambique . .182 .03 432 .07Burundi ........... _ 100 .02 350 .06 Nepal . .306 .06 556 .10Cameroon ............ 490 .09 740 .13 Netherlands . .14,458 2.65 14,708 2.55Canada .............. 20,952 3.84 21,202 3.67 New ZealaNew Zealand 923 .17 1,173 .20Chile ................ 2328 .43 2.578 .45 Nicaragua............ 184 .03 434 .08China ............... 4,154 .76 4,404 .76 Niger........... 67 .01 317 .05Cogombia ............. 2,083 .38 2,333 .40 Nigeria............... 5,575 1.02 5,825 1.01Congo, People's Norway .4,533 .83 4,783 .83

Republic of the ...... 67 .01 317 .05 Oman. .............. 306 .06 556 .10Costa Rica ........... 245 .04 495 .09 Pakistan .... ... 4,411 .81 4,661 .81Cyprus ............... 551 .10 801 .14 Panama . .344 .06 594 .10Denmark ............. 4,779 .88 5,029 .87 Papua New Guinea 490 .09 740 .13Djibouti .............. 21 271 .05 Paraguay . .123 .02 373 .06Dominica ............. 11 261 .05 Peru ........ P eru 1,777 .33 2,027 .35Dominican Republic .... 306 .06 556 .10 Philippines . . 3,247 .59 3,497 .61Ecuador .............. 674 .12 924 .16 Portugal.............. . 2,144 .39 .2,394 .41Egypt, Arab Republic of 3,124 .57 3,374 .58 Rwanda . .306 .06 556 .10El Salvador ............ 11 261 .05 St. Lucia . .19 269 .05Ethiopia .............. 33 .01 283 .05 Saudi Arabia . .9,251 1.69 9,501 1.65Fiji ......... ...... 74 .01 324 .06 Senegal . .707 .13 957 .17Finland ............... 4,043 .74 4,293 .74 Seychelles .7 * 257 .04France ............... 29,528 5.41 29,778 5.16 Sierra Leone 83 .02 333 .06Gabon ........... ... 429 .08 679 .12 Singapore........... . 177 .03 427 .07Gambia, The .......... 35 .01 285 .05 Solomon Islands 11 * 261 .05Germany, Federal Somalia .83 .02 333 .06

Republic of ......... 33,204 6.08 33,454 5.79 South Africa ..Atric 4,108 .75 4,358 .75Ghana ............... 1,306 .24 1,556 .27 Spain........... 6,004 1.10 6,254 1.08Greece..... __ . .. 1,777 .33 2,027 .35 Sri Lanka 1,838 .34 2,088 .36Grenada............... 21 * 271 .05 Sudan 111 .02 361 .06Guatemala .......... 306 .06 556 .10 Swaziland .184 .03 434 .08Guinea ............... 134 .02 384 .07 Sweden 6,923 1.27 7,173 1.24Guinea-Bissau . ....... 18 268 .05 Syrian Arab Republic 72 .01 322 .06Guyana .............. 368 .07 618 .11 Tanzania............. . 724 .13 974 .17Haiti ............... 306 .06 556 .10 Thailand . .2,818 .52 3,068 .53Honduras ............. 184 .03 434 .08 Togo................. 368 .07 618 .11Hungary . ........ 1,364 .25 1,614 .28 Trinidad and Tobago 1,059 .19 1,309 .23Iceland ............... 11 261 .05 Tunisia . .919 .17 1,169 .20India ............... 19,788 3.63 20,038 3.47 ..............Turkey 3,063 .56 3,313 .57Indonesia ............. 7,351 1.35 7,601 1.32 Uganda.............. 735 .13 985 .17Iran, Islamic Republic of 372 .07 622 .11 United Arab Emirates.. 1,838 .34 2,088 .36Iraq ............... 67 .01 317 .05 United Kingdom .37,900 6.94 38,150 6.61Ireland ........... _.. 332 .06 582 .10 United States .146,661 26.87 146,911 25.44Israel ............... 550 .10 800 .14 Urguay. ............. 919 .17 1,169 .20Italy ............... 19,114 3.50 19,364 3.35 Vanuatu .25 275 .05Ivory Coast ........... 913 .17 1,163 .20 Venezuela 7,106 1.30 7,356 1.27Jamaica .............. 1,103 .20 1,353 .23 VietNam............. 166 .03 416 .07Japan ............... 25,546 4.68 25,796 4.47 Western Samoa 9 * 259 .04Jordan ............... 429 .08 679 .12 Yemen Arab Republic 184 .03 434 .08Kenya ............... 1,041 .19 1,291 .22 Yugoslavia .......... . 2,879 .53 3,129 .54Korea, Republic of ..... 2,450 .45 2,700 .47 Zaire . . 1,929 .35 2,179 .38Kuwait .............. 4,533 .83 4,783 .83 Zambia .1,286 .24 1,536 .27Lebanon .............. 50 .01 300 .05 Zimbabwe .. 546 .10 796 .14Lesotho ....... ...... 18 268 .05 Total June 30, 1985 $545,784 100.00t 577,534 10 0 .00 t

Total June 30, 1984 $544,238 100.00t 575,488 100.00t

Less than .005 percent.t May differ from the sum of the individual percentages shown because of rounding. 49

49

Interrnatonal Finance Corporation

Notes to Financial Statements Exhibit EJune 30, 1985 and June 30, 1984

NOTE A-SIGNIFICANT UNCOLNTING POLICIESThe accounting and reporting policies of the Corporation conform to generally accepted accounting principles. The Corporation carries

its assets and liabilities principally on the historical cost basis, and, except where noted otherwise, follows the accrual method of accounting.Equity investments disbursed in currencies other than United States dollars are expressed in United States dollars at the exchange rateswhich applied at the time of disbursement. Other assets and liabilities not denominated in United States dollars are expressed in UnitedStates dollars at the appraxiunate market rates prevailing at June 30,1985 and 1984. Exchange gains and losses are credited or chargedI income as they occur.

The significant accounting policies are summarized as folbws:Revenue Recognition-Dividends, profit participations and other fees are recorded as income when received. Interest and commitment

fees are recorded as income on an accrual basis. The Corporation does not recognize income on loans where collectibility is in doubt andpayments of principal or interest are past due more than sixty days unless managemnent anticipates that collection will occur. Any interestwhich has been accrued on a loan placed on a nonaccrual basis is reversed out of the current income. Interest on nonaccrual loans isthereafter recognized as income only when actual payment is received. Gains on sales of investments are measured against the averagecost of the investrments sold and are credited to incorme when received. Unrealized losses on investments are provided for as describedbelow in the Reserve Against Losses.

Reserve Against Losses-The Corporation charges income with a provision for losses on investments. The annual provision representsidentifiable losses on specific investments with a significant and relatively permanent decline in value; and an estimate, based on historicalexperience, of the amount of losses on investments which cannot yet be identifed.

Deposits and Securities-Deposits and securities are carried at cost or amortized cost, which approximates market.

NOTE B-LOAN AND EQtJIlY INVESTMENTS AND RESERVE AGAINST LOSSES

Investments are recorded at the date investment commitments are signed by the Corporation and are reflected as assets when dis-bursed. As of June 30, 1985 investments approved by the Board of Directors but not signed as investment commitments totalled $890.2million ($550.0 million-1984) of which $396.6 million ($210.1 million-1984) are to be placed with participants (see Note C) and $493.6million ($339.9 million-1984) are to be held by the Corporation.Investments committed are summarized below ($ thousands):

JUINE 30,1985 JLNE 30.1984Equity Total Loans Equity Total Loans

Loans (at cost) and Equity Loans (at cost) and Equity

Disbursed $ 1,257,004 $ 306,353 $ 1,563,357 $ 1,160,096 $ 287,102 $ 1,447,198Undisbursed 491,031 61.881 552,912 484,082 58,620 542,702

Total $ 1,748,035 $ 368,234 $ 2,116,269 $ 1,644,178 $ 345,722 $ 1,989,900

Loans on which the accrual of interest has been discontinued amounted to $210.6 million ($158.2 million-1 984). If interest on theseloans had been recognized, such income for the fiscal year, net of amounts collected on these loans of $6.3 million ($4.4 million-1 984),would have been $17.0 million ($11.2 million-1984).

Changes in the Reserve Against Losses are summarized as follows:

Fiscal Years Ended June 30(S thousands)

1985 1984

Balance beginning of period ... $ 127,526 $ 99,555Provision charged to income ... 29,396 30.954Investments written off net of

recoveries ...... . (215) (2,983)Balance end of period ......... $156,707 $ 127,526

NOTE C-PARTICIPATIONSThe Corporation mobilizes funds from commercial banks and other financial institutions through loan participations. Participations are

sold without recourse to the Corporation. The Corporation administers such loan participations on behalf of its participants and channelsfunds during disbursements and repayments. During the fiscal year ended June 30, 1985 and 1984 the Corporation called and disbursed$84.0 and $142.7 million of participants' funds. At June 30,1985 and 1984 undisbursed participants commitments were $354.2 and $373.9miliion, respectively.

50

NOTE D-BORROWINGSLoans outstanding from the International Bank for Reconstruction and Development are summarized below:

WeightedPrincipal Amount interest Rate Maturity

($ millions) Per Annum Date1985 1984 1985 1984

US Dollars 492 431 8.23% 8.37% 1985 to 1998DeutscheMark 166 85 9.11% 8.89% 1985to1998Swiss Francs 30 27 6.54% 6.60% 1986 to 1998Japanese Yen 5 4 8.14% 8.14% 1985 to 1997Other Currencies 3 1 12.36% 10.84% 1985 to 1997

$ 696 $ 548

Principal and interest are payable in the currency borrowed. The principal amounts repayable in all currencies dunng the fiscal yearsending June 30, 1986 through June 30, 1990 are $48.6, $54.4, $92.8, $70.7 and $55.4 respectively and $374.1 million thereafter.

A commitment fee is payable on the undrawn balances of the loans at rates from 2/5 to 3/4 of 1% per annum. For the fiscal year endedJune 30,1985 such fees aggregated $2.0 million ($1.8 million-1984). The proceeds of these loans may only be used by the Corporationin its lending operations.

Borrowings outstanding from others are summarized below:Weighted

Principal Amount Interest Rate Matunty($ Millions) Per Annum Date

1985 1984 1985 1984

US Dollars 50 35 11.75% 7.875% 1995Deutsche Mark 29 - 7.125% - 1995US Dollars Discount Bonds 50 - 8.00% - 1995US Dollars Annuity Bonds 9 - 10.85% - 1986-1995Less: Unamortized Discount (9) 50

$ 129 $ 35

Principal and interest are payable in the currency borrowed. The principal amounts repayable on the annuity bonds during the fiscalyears ending June 30, 1986 through June 30, 1990 are approxinately $.8 million each year and $5.5 million thereafter. Under its borrowingagreements, the Corporation is not permitted to mortgage or allow a lien to be placed on its assets (other than purchase money securityinterests) without extending equivalent security to the holders ot such borrowings.

The Corporation has entered into interest swap agreements with respect to notional principal amount of $50 million under which it isobligated to make irterest payments on a variable rate basis (8.25% at June 30, 1985) in exchange for fixed rate paymnents (11.40% at June30, 1985).

NOTE E-CAPITAL STOCKOr`'June 27, 1984, the Directors of the Corporation submitted to the Board of Governors a draft resolution which would increase the

Corporation's authorized capital stock by $650 million. Capital stock in this amount is to be offered for subscription to member countries ofthe Corporation. The resolution shall become effective upon approval by Govemors exercising not less than three-fourths of the total votingpower The voting period for the adoption of this resolution expires September 30, 1985, unless extended by the Directors.

NOTE F-OTHER MATTERSGuarantee-The Corporation and two Cypriot banks have severally guaranteed the payment of principal and interest on a debenture

issue of Cyprus Pounds 775,000 by Dome Investments Limited in Cyprus. The Corporation's participation in the outstanding guaranteeddebenture issue is limited to 34.8%, which at June 30,1985, amounted to apprasimately $432,500 ($466,000-1984).

Staff Retirement Plan-The intemational Bank for Reconstruction and Development has a contributory retirenent plan for its staff, whichalso covers the staff of the Corporation. The staff contribute a fixed percentage of pensionable remuneration and the Bank and the Cor-poration contribute the remainder of the cost of funding the Plan. The total contribution is determined in accordance with an aggregatefunding method. The cost of the Plan is funded as accrued. The total cost allocated to the Corporation for the fiscal year ended June 30,1985 was $5,234,476 ($5,467,320-1984). All contributions to the Plan and all other assets and income held for the purposes of the Planare held by the Bank separately from the other assets and income of the Bank and Corporation and can be used only for the benefit of theparticipants in the Plan and their beneficiaries until all liabilities to them have been discharged.

Service and Support Fees-The International Bank for Reconstruction and Development is charging the Corporation an annual "Serviceand Support Fee" which for the year ended June 30, 1985 was fixed at $2,975,000 ($3,050,000-1984).

51

Financial Statements Covered by theReport of Independent Accountants Foregoing Report

price 1801 K Street, N.W Balance Sheet\{ rhcous - Washington, D.C. 20006 Statement of Income

W atertio-use July 29, 1985 Statement of Changes in Financial PositionStatement of Subscriptions to Capital Stock

and Voting PowerNotes to Financial Statements

President and Board of Governors,International Finance Corporation

In our opinion, the accompanying financialstatements present fairly in terms of United StatesDollars, the financial position of internationalFinance Corporation at June 30, 1985 and 1984,and the results of its operations and the changes inits financial position for the years then ended, inconformity with generally accepted accountingprinciples consistently applied. Our examinations ofthese statements were made in accordance withgenerally accepted auditing standards andaccordingly included such tests of the accountingrecords and such other auditing procedures as weconsidered necessary in the circumstances.

52

Appendices

Governors and Alternates 54

Directors and Alternatesand Their Voting Power 56

Statement of CumulativeGross Commitments 57

IFC Management 58

53

Governors and Altemates/Appendix A

?Aember Goverror Alternate

Afghanistan ...... Mohamad Kabir ...... ............. Abdul Ghafoor JoushanArgentina ...... Juan Vital Sourrouille ................... Alfredo Concepci6nAustralia ...... P J. Keating ..... .............. R. B. DunAustria ...... Franz Vranitsky ................... Hans HellerBangladesh ...... M. Syeduz-Zaman ................... M. Munir-uz-ZamanBarbados ...... (vacant) ................... Stephen E. EmtageBelgium ...... F Grootians ................... Jean GodeauxBelize ...... . Dean Barrow ................... Henry CainBolivia ........... ............... Francisco Belmonte ............. Reynaldo Cardoso ArellanoBotswana .... P S. Mmusi . Baledzi GaolatheBrazil .............................. Francisco Neves Dornelles ................ Ant6nio Carlos Braga LemgruberBurkina Faso ....... Justin Damo Baro ................ Youssouf OuedraogoBurma ............................ Tun Tin. ................ Aye KoBurundi ....... Pierre Ngenzi ............. ... Anselme HabonimanaCameroon ....... Youssoufa Daouda ................ Louis-Claude NyassaCanada ....... Michael H. Wilson. . ............... Margaret Catley-CarlsonChile ....... Hernan Buchi ................ Luis Arturo FuenzalidaChina ....... Wang Bingqian ................ Li PengColombia ................... ....... Roberto Junguito Bonnet ................ Hugo Palacios-MeilaCongo, People's Republic of the ....... Pierre Moussa .............. Andre BatangaCosta Rica ..................... Porfirio Morera Batres .... .......... Eduardo Lizano F.Cyprus ...... ...................... Constantinos Kittis ................. H. HadjipanayiotouDenmark .... Uffe Ellemann-Jensen .Mogens Isaksen'Djibouti .... Ibrahim Mohamed Sultan .Mohamed Moussa AliDominica .... Mary Eugenia Charles .Alick B. LazareDominican Republic ............... Hugo Guiliani Cury ........... .................. Opinio Alvarez BetancourtEcuador ............... Francisco X. Swett M ............. ...... Marco Flores TEgypt, Arab Republic of ............. Kamal Ahmed El Ganzouri .............. ..... Erfan A. ShateyEl Salvador . .............. Ricardo Gonzales Camacho .................. Fidel Chavez MenaEthiopia . .............. ............ Tesfaye Dinka .Bekele TamiratFiji ....... Mosese Qionibaravi ............ J. Y KubuabolaFinland ........ ekka Vennamo ............ Annikki SaarelaFrance ....... Pierre Beregovoy ............ Christian NucciGabon ....... Pascal Nze .............. J. Felix MamalepotGambia, The ....................... Sheriff S. Sisay .Mousa Gibril Bala GayeGermany Federal Republic of ......... Juergen Wamke ............. Hans TietmeyerGhana ................... Kwesi Botchwey ............. Theresa OwusuGreece .................... Gerassimos Arsenis .... ......... Constantine VaitsosGrenada ................... Herbert Augustus Blaize ............. L. F. Wilson, Jr.Guatemala ................... Armando Gonzalez Campo ............. Ariel Rivera IriasGuinea ................... Kabine Kaba ............. Saidou DialloGuinea-Bissau ................... Pedro A. Godinho G6mes ............. Jose Lima BarberGuyana .......... ......... Carl Greenidge. ............. W Hasslyn ParrisHaiti .......... ............ .... Frantz Merceron .Allan NolteHonduras .......................... Manuel A. Fontecha Ferrari .Gonzalo Carias PinedaHungary .... Mikl6s Pulai .................. Tibor MelegaIceland .......... _ . ............... Matthias A. Mathiesen .Albert GudmundssonIndia .... Vishwanath Pratap Singh .................. S. VenkitaramananIndonesia . .. .. Aritin M. Siregar . ................. Soegito SastromidjojoIran, Islamic Republic of ...... ...... Hossein Nanazi .......... Iraj ToutounchianIraq .......... ................. Hisham Hassan Tawfik ..... ......... Subhi FrankoolIreland .... ....... Alan M. Dukes .............. Maurice F. DoyleIsrael ........... Moshe Y Mandelbaum ..... ......... Emanuel SharonItaly ........... Carlo Ciampi .............. Mario SarcinelliIvory Coast ........... Abdoulaye Kone .............. Leon NakaJamaica ........... Edward Seaga .............. Horace BarberJapan ........... Noboru Takeshita .............. Satoshi SumitaJordan ........... Abdallah Nsour .............. Ibrahim BadranKenya ........... George Saitoti .............. H. M. MuleKorea, Republic of ...... ..... Mahn-Je Kim ............... Chang-Nak ChoiKuwait ........... .................. Jassim Mohamed Al-Kharafi ................... Faisal Abdul Razzak Al-KhaledLebanon ............. ....... Khattar Chebli ..... .............. Raja HimadehLesotho .... K. T. J. Rakheta .A. M. MonyakeLiberia .... Emanuel 0. Gardiner .John G. BestmanLibya .... Kasem M. Sherlala .Abdul Alrahman R. Shalgham

54

99

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Directors and Alternatesand Their Voting Power/Appendix B June 30, 1985

Director Alternate Casting votes ot Total \Vtes % of Total

AppointedJames B. Burnham' ........ _ Hugh W Foster ............. United States ................ ..... 146,911 25.63Nigel Wicks2 ............... Richard Manning ............. United Kingdom .................... 38,150 6.66Reinhard MCinzberg .......... Michael von Harpe ............ Federal Republic of Germany ......... 33,454 5.84Bruno de Maulde ............. Francis Mayer ............. France ........................... 29,778 5.20Kenji Yarmaguchi .............. Toshihiro Yarnakawa3 .......... Japan ........................... 25,796 4.50

ElectedFawzi Hamad Al-Sultan ........ Mohammad AI-Shawi .......... Egypt (Arab Republic of), Iraq, Jordan,

(Kuwait) (Saudi Arabia) Kuwait, Lebanon, Maldives, Oman,Pakistan, Saudi Arabia, Syrian ArabRepublic, United Arab Emirates, YemenArab Republic ..... ................ 27,269 4.76

Frank Potter ...... George L. Reid ......... Barbados, Belize, Canada, Dominica,(Canada) (Barbados) Grenada, Guyana, Ireland, Jamaica, St.

Lucia .................... ........ 25,175 4,39Jacques de Groote ........... Oral Akman..... . Austria, Belgium, Hungary,

(Belgium) (Turkey) Luxembourg, Turkey ... ...... 25,036 4.37C. R. Krishnaswamy Rao Sahib Gholam Kibria ................ Bangladesh, India, Sri Lanka 24,704 4.31

(India) (Bangladesh)Mario Draghi ............... Rodrigo M. Guimaraes . Greece, Italy, Portugal 23,785 4.15

(Italy) (Portugal)Leonor Filardo de Gonzalez.... Maria Antonieta Dominguez .... Costa Rica, El Salvador, Guatemala,

(Venezuela) (Honduras) Honduras, Mexico, Nicaragua, Panama,Spain, Venezuela .................. . 22,638 3.95

Pekka Korpinen4 .......... Per Taxell .... Denmark, Finland, Iceland, Norway,(Finland) (Sweden) Sweden ........................... 21,539 3.76

Ferdinand van Dam ........... Riza Sapunxhiu ............ Cyprus, Israel, Netherlands, Yugoslavia 19,438 3.39(Netherlands) (Yugoslavia)

Edgar Gutierrez-Castro . ....... Guillermo A. Rivera ........... Brazil, Colombia, Dominican Republic,(Colombia) (Dominican Republic) Ecuador, Haiti, Philippines ........... 18,285 3.19

Ronald H. Dean ........ . You Kwang Park ........ . Australia, Korea (Republic of), New(Australia) (Republic of Korea) Zealand, Papua New Guinea, Solomon

Islands, Vanuatu, Western Samoa ..... 17,849 3.11Phaichitr Uathavikul ........... Sashi N. Shah ....... . Burma, Fiji, Indonesia, Malaysia, Nepal,

(Thailand) (Nepal) Singapore, Thailand, Viet Nam ....... 17,479 3.05Astere Girukwigomba ......... Mitiku Jembere ......... Botswana, Burundi, Ethiopia, The

(Burundi) (Ethiopia) Gambia, Guinea, Kenya, Lesotho,Liberia, Malawi, Mozambique, Nigeria,Seychelles, Sierra Leone, Sudan,Swaziland, Tanzania, Trinidad andTobago, Uganda, Zambia, Zimbabwe 17,333 3.02

Carlos Corti5....... Felix Alberto Camarasa ....... Argentina, Bolivia, Chile, Paraguay,(Uruguay) (Argentina) Peru, Uruguay ...................... 16,958 2.96

Nicephore Soglo .......... Andre Milongo .. ....... Burkina Faso, Cameroon, Congo(Benin) (People's Republic of the (People's Republic of the), Djibouti,

Congo) Gabon, Guinea-Bissau, Ivory Coast,Madagascar, Mali, Mauritania,Mauritius, Niger, Rwanda, Senegal,Somnalia, Togo, Zaire ......... ..... 10,604 1.85

Mourad Benachenhou ......... Salem Mohamed Omeish ...... Afghanistan. Ghana, Iran (Islamic(Algeria) (Libya) Republic of), Libya, Morocco, Tunisia.. 6,591 1.15

Xu Naijiong ........ . Yang Guanghui ........ . China ........................... 4,404 0,77(China) (China)

In ddition to the Directors and Alternates shown in the foregoing list, the following also served after October 31, 1984:

Director End od period oi service: Alternate Director End od period of service:

H. N. Ray .... February 28, 1985 Nibhat Bhukkanasut ............. November 14, 1984(India) (Thailand)

Robert K. Joyce ......... April 2, 1985 Roberto Mayorga-Cortes ........................ May 15, 1985(Canada) (Nicaragua)

Note: South Africa (4.358 votes) did not participate in the 1984 Regular Election of Executive Directors.' Has resigned effective July 12, 1985.2 Has resigned effective June 30, 1985; to be succeeded by Timottiy P Lankester (United Kingdom).3 Has resigned effectve July 5, 1985; to be succeeded by Zenbei Mizoguchi (Japan).4 Has resigned effective July 31, 1985: to be succeeded by Christian Ulrik Haxthausen (Denrrark).5 Has resigned effective June 30, 1985; to be succeeced by Kenneth Coates (Uruguay).

International Finance Corporation

Statement of Cumulative Gross Commitments Appendix CJune 30, 1985In Thousands of United States Dollars

COUNTRY Cumulative Gross Commitments' COUNTRY Cumulative Gross Commitments'REGION OR Number of REGION OR Number ofOTHER AREA Enterprises IFC Syndications Tbtal OTHER AREA Enterprises IFC Syndications Total

Afghanistan .......... 1 $ 322 - $ 322 Malawi ..... S...... 5 $ 25,877 - $ 25,877Argentina ............ 15 170,381 65,633 236,014 Malaysia .6 19,562 1,629 21,191Australia ............ 2 975 - 975 Mali .. ....... 2 2,897 - 2.897Bangladesh .......... 5 10,701 3,406 14,107 Mauritania .1 10.449 9,558 20,007Barbados . ........... 1 300 - 300 Mauritus .2 2,267 98 2,365Bolivia . .............. 5 8.246 1,041 9287 Mexico .27 253,950 499,942 753,892Botswana .... ....... 1 650 - 650 Morocco .7 79,920 19,155 99,075Brazil ............... 46 525,395 505,052 1,030,447 Nepal .2 8,094 - 8,094Burkina Faso ......... 1 542 - 542 Nicaragua .3 8,542 929 9,471Burundi ............. 1 5,634 - 5,634 Niger .1 2,040 - 2,040Carneroon ........... 7 14,940 253 15,193 Nigeria .8 26,063 2,947 29,010Chile ... .... 6 40,287 16,118 56,405 Oman ...... ... 1 2,029 - 2,029Colombia ............ 29 105,418 38,588 144,006 Pakistan .16 86.938 104,519 191,457Congo, People's Panama .3 29,100 - 29,100

Republic of the . . .... 3 4,939 - 4,939 Paraguay 3 13,580 - 13,580Costa Rica ........... 4 6497 217 6,714 Peru .13 61,944 3,573 65,517Cyprus ... ....... 4 5,258 597 5,855 Philippines .25 137,117 22,458 159,575Dominican Repubitc ... 4 16,463 2,400 18,863 Portugal .2 14,926 9,000 23,926Ecuador ............. 6 27,343 696 28,039 Rwanda .1 1,080 - 1.080Egypt, Arab Republic of 9 116,674 73,500 190,174 Senegal .6 33,108 - 33,108El Salvador ........... 2 1,074 - 1,074 Sierra Leone .1 2,050 - 2,050Ethiopia ............. 3 13,136 2,632 15,768 Somalia .2 980 - 980Fiji ................ 1 6,000 - 6,000 Spain .5 20,433 300 20,733Finland .............. 4 1,490 1,658 3,148 Sri Lanka .7 22,041 13,672 35,713Gambia, The ......... 1 2,823 - 2,823 Sudan .6 26,535 6,464 32,999Ghana ............... 1 27,500 27.500 55,000 Swaziland .2 10,870 - 10,870Greece .............. 7 26,906 40,207 67,113 Tanzania .4 8,663 2,436 11,099Guatemala ........... 3 18,200 - 18,200 Thailand .14 106,445 117,874 224,319Guinea .............. 1 14,835 - 14,835 Trinidad and Tobago 2 2,350 - 2,350Guyana ...... ....... 1 2,000 - 2,000 Tunisia .8 20,417 2,079 22,496Haiti ............ ... 1 1,500 - 1,500 Turkey .21 171,650 74,172 245,822Honduras ....... 3 4,352 6,101 10,453 Uganda.. .. 6 14,676 2,176 16,852India ................ 27 207,655 62,781 270,436 Uruguay .5 31,950 - 31,950Indonesia ............ 13 90,494 72,803 163,297 Venezuela 8 24,540 7,581 32,121Iran, Islamic Republic of 7 34,343 8,193 42,536 Yenen ArabRepublic 3 10,110 1,105 11,215Israel ................ 1 10,500 - 10,500 Yugoslavia .21 299,579 128,736 428,315Italy .1 960 - 960 Zaire .6 27,648 - 27,648Ivory Coast-....... 4 11,007 - 11,007 Zambia .8 72,277 17,424 89,701Jamaica ............. 4 9,461 926 10,387 Zimbabwe .2 22,205 18,000 40,205Jordan .. ............. 5 44,614 50,250 94,864Kenya ............... 12 61,777 6,718 68,495 Regional:Korea, Republic of .... 16 122,944 42,551 165,495 Africa .. 1 2,637 1,940 4,577Lebanon ............. 4 6,505 2,600 9,105 Latin America 1 10,000 - 10,000Lesotho ............. 1 330 - 330 Asia .1 1,050 - 1,050Liberia .............. 1 702 1 703Madagascar ......... 3 15,219 - 15,219 Other2 2 9,174 670 9,844

TOTAL 547 $3,535,055 2.100,859 $5,635,914

Note (1): Cummulative commitments are composed of disbursed and undisbursed balances. The undisbursed portion is revalued at current exchangerates while the disbursed portion represents the cost of the commitment at the time of disbtursement.

Note (2): Represents investments made at a time when the authorities on Taiwan represented China in the Intemational Finance Corporation (prior to May 15,1980).

57

IFC Management

President ....... .......................................... .............. .............. A.W ClausenExecutive Vice President ............... I ...................... ................. ... W illiam S. Ryrie

Vice President, Corporate Affairs and Development Francisco J. AlejoVice President, Investment Operations' ... .. ................ ................................. Judhvir ParmarVice President, Portfolio and Financial Management' .Hilary P Reddy2

Vice President and General Counsel .Jose E. CamachoVice President, Engineering .Makarand V Dehejia

v Ice President and Special Advisor .Sven K. RiskaerVice President and Special Advisor .Jose M. Ruisanchez

'Secretary .Timothy T Thahane

INVESTMENT DEPARTMENTS'Director, Department of Investments, Africa I .Andre G. Hovaguimian3

Divisional Manager-Burkina, Cameroon, Congo, Gabon, Ghana, Ivory Coast, Mali, Niger, Togo Pierre BirabenDivisional Manager-Gambia, Guinea, Guinea-Bissau, Liberia, Mauritania, Morocco, Senegal,

Sierra Leone, Tunisia .Guy C. AntoineDirector, Department of Investments, Africa II .M. Azam K. Alizai

Divisional Manager-Botswana, Ethiopia, Kenya, Lesotho, Malawi, Mauritius, Seychelles,Swaziland, Tanzania, Uganda, Zambia Michael Dixon

Divisional Manager-Burundi, Djibouti, Madagascar, Mozambique, Nigeria, Rwanda, Somalia,Sudan, Zaire, Zimbabwe Michael H.R. Jordan

Director. Departmnent of Investments, Asia I Torstein Stephansen4

Divisional Manager .Sakdiyiam KupasrimonkoiDivisional Manager ...................... , , , . ................ Carlos M. Tan

Director, Department of Investrients, Asia i .Wilfried Kaffenberger'Divisional Manager .Jemal-ud-din KassumDivisional Manager .(vacant)

Director, Department of Investments, Europe and Middle East Douglas GustafsonDivisional Manager-Cyprus, Greece, Hungary, Portugal, Spain. Turkey, Yugoslavia .Ignacio D. MarambaDivisional Manager-Egypt, Iran, Iraq, Israel, Jordan, Omnan, Syria, Yemen Arab Republic Edward A. Nassim3

Director, Department of Investments, Latin America and Caribbean I .Helmut PaulDivisional Manager-Costa Rica, El Salvador, Guatemala,, Honduras, Mexico, Nicaragua .Jorge A. NavarreteDivisional Manager-Barbados, Belize, Colombia, Dominica, Dominican Republic, Grenada,

Guyana, Haiti, Jamaica, Panama, St. Lucia, Trinidad and Tobago, Venezuela .Pho Ba QuanDirector, Department of Investments, Latin America and Caribbean 11 .Daniel F. Adams

Divisional Manager-Bolivia, Brazil, Paraguay, Uruguay .Everett J. Santos6

Divisional Manager-Argentina, Chile, Ecuador, Peru ...................................... Eduardo Costa

STAFF AND SUPPORT DEPARTMENTSCAPITAL MARKETS

D irector .......................... ................... ............................. D av id G illDeputy Director ....................................................... Antoine W. Van Agtmael6

CARIBBEAN PROJECTS DEVELOPMENT FACILITYManager Hugh Henry-MayM n ger .... . ... ....... ......................... .... . . . ...... ............ .. H u h H nr - a

CORPORATE PROMOTION AND SYNDICATIONS

Director . . . .'............ ................... Giovanni VacchelliChief, Information Unit Carl T BellSenior Corporate Relations Officer .Bruce W McWilliams

58

Appendix D

DEVELOPMENT

Economic Advisor and Director ....................... ... ............................. Richard RichardsonManager, Economics .............. __ .......................................... Phiroze B. MedhoraChief Operations Evaluation Officer ......... ........................................ Walter 1. Cohn

ENGINEERING

Deputy Director .......................................................... ......... David B. Minch (acting)Technical Manager . .............................................................. Alakadri K. BoseTechnical Manager . ............................................................... Youssef F.A. FouadTechnical Manager . ......................................... .................. David B. MinchTechnical Manager ................................................................. Hussein Mustafa

Manager, Energy Unit . ............................................................ Irving Kuczynski

FINANCIAL MANAGEMENT AND PLANNING

Director ....... ............................................................... Richard H. FrankManager, Programming and Budgeting .......................... : Peter A. DickersonManager, Financial Policy and Planning ............ ................................ Vasant H. KarmarkarManager, Corporate Planning and Policy .................................. ....... Peter R. Nichols

LEGAL

Deputy General Counsel ............................. ................................. Walter F. NorrisChief Counsel ...................... ........................................... Fernando CabezasChief Counsel .................................................................... David G.T d AdhemarChief Counsel ............................ .. ......... ......................... Daoud L. Khairallah

MANAGEMENT SYSTEMS AND ACCOUNTING

Director ........................................................... ........... Roswitha J. Klement-FrancisManager, Accounting . .......................................................... Christos Aliftiras (acting)Manager, Management Systems ...... .................................... ......... John C.N. Tetley (acting)

PERSONNEL AND ADMINISTRATION

Manager ................................ ............................ r....... John H. Stewart

SPECIAL REPRESENTATIVES AND REGIONAL MISSIONSSpecial Representative, Middle East ............. ....................................... Cherif HassanSpecial Representative, Far East ................. ...................... ................ Naokado NishiharaSpecial Representative, London .................. ...................................... Hans PollanSpecial Representative, Paris ........ .................................................. Gunter H. KreuterP

Regional Mission in East Asia ....... .............................................. Vijay K. ChaudhryRegional Mission in Eastern Africa ............ ...................................... VS. RaghavanRegional Mission in India ......... ................................................ Athishdam TharmaratnamRegional Mission in Indonesia . ..................... ..... ................... Peter L.F EdmondsRegional Mission in Westem Africa . ................................................ Jean-Olivier Fraisse

Special Advisor ...................................................................... James M. Kearns

'These otlicers hold the same positions in the IBRO.I The Investment Departmnents report to the Vice President, Investment Operations, with regard to new investmrents and to the vice President. Portfolio and Financial

Management, with regard to investments in portfolio.2 Eftective September 3, 1985,3 Efective September 1, 1985.' Effective October 1, 1985.

Efective August 1, 1985.' Effective December 1, 1985

59

International Finance Corporation

Headquarters1818 H Street, N.W.Washington, D.C. 20433, U.S.ATelephone: (202) 477-1234Telex: ITT 440098

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