The Executive Directors of the World Bank have agreed on the disposition of the Bank's FY92 net income. The net income of the International Bank for Reconstruction and Development, as the World Bank is formally known, was $1.645 billion in the fiscal year ended June 30, 1992.
At the end of each fiscal year, the Executive Directors review the Bank's net income and medium-term financial prospects. On the basis or this review, they decide on the allocation or net income to the General Reserve, and on waivers of loan charges to be applied for the subsequent fiscal year. Then they recommend to the Board of Governors how the remainder of the income shall be distributed.
The Executive Directors reaffirmed the 11 percent target for the reserves-to-loans ratio. For borrowers that service their loans in a timely manner, they adopted a partial waiver of interest charges for FY93 that will reduce to 15 basis points the 50-basis point premium the Bank charges over its average cost of borrowings. To maintain the reserves-to-loans target and to fund in advance the estimated cost of the 35-basis point waiver of interest charges for FY93, they allocated $250 million of income to the General Reserve.
In addition, the Bank's Executive Directors recommended to the Board of Governors that $300 million in FY92 net income be transferred as an immediate grant to the International Development Association (IDA). IDA is the Bank's affiliate which provides concessional credits to the world's poorest countries. The Executive Directors recommended that the Bank retain the remaining $1.095 billion of FY92 net income as surplus, provided that $375 million of this amount be transferred, also by way of a grant, to IDA when the next replenishment of resources to the Association becomes effective.
The Executive Directors also approved for the fourth consecutive year a waiver of two-thirds of the 75-basis points commitment fee on undisbursed loan balances.