IBRD Operational Highlights

IBRD Financial Highlights Figures

IBRD Operational Highlights Figures

IBRD Financial Highlights

Managing Returns to Maintain Strength

• As a cooperative institution, IBRD does not seek to maximize profit but to earn adequate return on assets to ensure its financial strength and sustain its development activities on an ongoing basis.

• IBRD targets a net return on assets (ROA) of about 1 percent per annum. In fiscal 2000, a reduction in the loan loss provision due to improved credit quality of loans boosted ROA by 0.16 percent.

Managing Risk

• Consistent with its development mandate, IBRD’s main risk is the credit risk of its loan portfolio. This risk is closely managed.

• IBRD keeps its exposure to market risk quite limited. Market risk arises due to movements in market variables such as interest rates and exchange rates.

• The Bank’s equity capital-to-loans ratio is a summary measure of its risk-bearing capacity. This ratio declined over fiscal 1998—99 due to a surge in Bank lending. However, the Bank remains strongly capitalized.

Achieving Efficient Intermediation

• IBRD’s high credit rating (AAA) allows the Bank to borrow for long maturities at favorable terms. The Bank borrows globally in multiple markets and currencies.

• Outstanding debt after swaps reached 76 percent of average total earning assets, as of June 30.

• IBRD borrowed $15.8 billion at medium- to long-term maturities in fiscal 2000. Innovation in capital markets continued: IBRD pioneered a first-ever electronic bond offering and became the first foreign issuer in the Mexican and Chilean peso bond markets, creating a new asset class for foreign investors.

• As of June 30, 2000 the liquid asset portfolio was $24.3 billion, comprised of extremely liquid investments.

IBRD Operational Highlights

Lending: Volume Down, Quality Up (see also Overview)

• The quality of IBRD operations continued to improve: ongoing projects had substantially fewer problems than a few years ago.

• As emerging markets recovered from the financial crisis, IBRD lending in fiscal 2000 fell below the record levels of the last two years, back to historical pre-crisis trends in lending levels.

• The level and type of Bank lending support has been continuously evolving in response to changing demands from country clients. Global economic recovery contributed strongly to trends in Bank lending over the past year, as successful economic reforms in many emerging markets restored their access to international capital markets. Lower volume also reflects a gradual downtrend in the size of operations in line with the ongoing shift away from large infrastructure projects toward smaller operations supporting institution-building and human development.

• Increasingly, nonlending activities precede or accompany lending to promote effective use of resources; advisory and analytical services in fiscal 2000 helped countries build consensus and ownership.

Lending by Region: Last Year’s Crisis Borrowings Recede

• Loans to Brazil, Colombia, and Mexico–three of the IBRD’s top five borrowers in fiscal 2000–accounted for a large part of new commitments in the Latin America and Caribbean region.

• Turkey was the largest IBRD borrower in fiscal 2000 ($1.8 billion), as the Bank supported key structural and social reforms and responded to a severe earthquake; China was the second largest ($1.7 billion), reflecting the Bank’s support for infrastructure and rural development needs.

• In the wake of East Asia’s marked economic recovery, the region borrowed $2.5 billion in fiscal 2000, compared with $8.8 billion in both fiscal 1999 and fiscal 1998. Argentina and Indonesia, last year’s largest borrowers ($6 billion combined), together borrowed under $70 million in fiscal 2000.

Lending by Sector: Institutions and Infrastructure; People

• IBRD support in fiscal 2000 focused on strengthening the financial sector ($1.6 billion), improving public sector management ($1.5 billion), and meeting infrastructure needs ($1.8 billion including transport, telecommunications, and water supply)–key elements for successful private sector development and poverty reduction.

• Human development was also a priority in IBRD assistance in fiscal 2000: lending for education, health and nutrition, and social protection amounted to $1.7 billion, with notable support for strengthening health systems and health care institutions.

• Also noteworthy was the support for rural development and environmental needs ($1.5 billion, half of which for China), while multisector lending ($0.5 billion) reflected mainly assistance for disaster recovery, including prevention and risk mitigation efforts.

IBRD Investment and Adjustment Lending

• Investment lending accounted for the bulk of IBRD’s new commitments in fiscal 2000 (59 percent of the total). The share of adjustment lending fell from 63 percent in fiscal 1999 to 41 percent in fiscal 2000.

• IBRD support for structural and sectoral adjustment (promoting policy and institutional reforms conducive to private sector—led growth and poverty reduction) focused on financial sector and public sector management reforms and governance (including assistance for decentralization in Mexico, fiscal transparency in Thailand, and subnational reforms in India’s Uttar Pradesh state).

• Latin American countries accounted for much of the year’s adjustment lending, but other reforming nations (such as Thailand and Turkey) also received substantial support.