71, 7,77"T~~~~~~~~~~~~~~~~1~2~';FT 5F! r! .11 IV AilS v~~~~~~ IL~~~~~~~~~~~~~~~~~~~~~~~~~N F H I 11iiv~'F~ ~ $~~'Y F F 0 bF~~~~~~~~~\ ~~~~~ ~ ~~~~~ . Fl~~~~~~~J FL F UI;.%7F. IrF~~~~~~~~~~~~~iiF; ~ ~ ~ ~ 4 f - t'llF }C7eqpment IF approved projects in 65 countries in fisca 1994, sIn up from 54 countries in fiscal 1993. This increase Enew - X x r was due to changes in the imvestment environment S271 in a number of countries as the movement to market economies accelerated, and it furthered the Corpora- tion's long-term objective of achieving a regionally balanced and divefied portfolio. The amount of financing approved for lFCs own account increased Cerent for most regions, with the biggest percentage increase development materisnd in Central Asia, the Middle East, and North Africa- devdOpllent EilanUtCt . - . mati* filuscrvkces -sm9 Of the total number of projects approved. 98, repre S6F8 senting S1.1 billion in financing, were located in ChGInicals. | -S309 countries wiith per capita incomes of $830 or less. petrocicis. I . Loans and investments approved for projects in these fertiiz5rs M*ui, nonlferrous countries accounted for 50 percent of the number Total S4.28 S35Z of projects and 44 perocet of the financing approved for IFC"s own account. REPORT ON OPERATIONS :: - ~ ~ ~~~~~~~~5 - THE PAST TEN YEARS (iniliouis of US. dollars) FISCAL YEAR 1985 19S6 1987 1988 1989 1990 1991 1992 1993 1994 OPERATIONS Investment Approvals Nunmber ofprojects 75 85 92 95. 92 122 152 167 185 231 Total financing 938 1,164 914 1,270 1,710 2,201 2,846 3,226 3,936 4 ,87 Finandng for IFC's own account 611 710 790 1,039 1,292 1,505 1,540 1,773 2,133 2,463 Undervriting and syndications 328 454 124 231 418 695 1,306 1,452 1,803 1,824 Total project costs 2,788 3,588 4,343 5,010 9,698 9,490 10,683 12,000 17,427 15,839 Committed Pbortfolio Number offirms 366 377 409 454 468 495 618 703 798 868 Total committed portfolio 3,318 3,441 3,795 4,270 4,968 5,884 7,008 8,718 10,026 11,512 For IFCs own account 2,116 2,387 2,756 3,374 4,045 4,752 5,494 6,423 7,132 7,893 Held forothers 1,202 1,054 1,039 896 923 1,132 1,514 2,295 2,894 3,619 RESOURCESAND INCOME Capital-iation Borrowvings 825 1,223 1,581 2,047 2,255 3,580 4,130 5,114 5,565 6,531 Paid-in capital 546 602 722 850 948 1,072 1,145 1,251 1,423 1,658 Retained earnings 258 284 338 438 635 792 957 1,138 1,280 1,538 Earnings Net income 28.3 25A 53.8 100.6 19635 157.0 165.9 180.2 141.7 258.2 Sectoral breakdown of projecs. is an important element in its investment program, As in previous years, the Corporation approved and about 37 percent of the financng approved by financing for projects in a broad range of sectors, IFC for capital markets projects in fiscal 1994 was induding capital markets, infrastructure, extracive in the form of equity investments. lFC's support for industries, agribusiness, and general manufacturing, various types of financial intermediaries is also a The improved poliqc environment in many member key component of its strategy for reaching small countries made it possible for IFC to increase its cap- and medium-sized businesses indirectly. ital markets activities. IFC approved loans and equity investments for a broad variety of financial institu- Demand for IC financng for infrastructure projects tions, including commercial and investment banks, grew as more governments, particularly in Latin leasing companies, discount houses, insurance com- America and Asia, opened sectors such as telecom- panies, and venture capital funds. In fiscal 1994 IFC's munications, transportation, and power to the pri- investments in this sector accounted for 24 percent vat seCtor. IFC approved financing of $599 million of total financing approved for the Corporation's own for its own account for infiastructure projects in fis- account IFC's role as a shareholder in new financial cal 1994, in addition to $731 million in loans to be institutions and an investor in various kinds of funds syndicated with international commercial banks. It REPORT ON OPERATIONS 6 placements by IFC of securities issued by client FINANCING APPROVED, FY90-94 companies during the year came to $230 million. (millionis of U.S& dollars) 5,000 Syndications The principal direct means by which IFC mobilizes third-party funds is the loan participation program, 4X000 _ - whereby lFC makes its lender-of-record Uumbrellan - - available to particpating financial institutions. By sharing with its partners both the commercial risks 3.000 --of projects and the benefits it derives from its multi- lateral status, IFC has for many years been successful -,00- I i_ in mobilizing finance for borrowvers that would not °°° _ _ . g ~ othenvise have access to long-term project loans from international financial markets. While leading pnvate sector borrowers from the cdeveloping world were able to raise finance from A B E L the international securities market on attractive 1 990 1991 1992 1993 1994 terms during part of fiscal 1994, commercial banlks rcinained reluctant to increase their long-term cross- * Syndications and undewdting border exposure to many countries, other than in * Financig forIFC's own account. - cofinancings with IFC and other multilateral institu- tions. In OECD countries where banks are required to mainmtin minimum levels of country-risk- provi- approved a £50 million investment in a global fund sioning, exemptions are now generally available for that wil provide mezzanine financing for power pro- participations in IFC loans. jects throughout the developing world and a SI mil- lion invstment in the fund management company. The volume and number of IFC syndicated loans signed in fiscal 1994 wvere considerably higher than in The agribusiness and food-processing sectors any previous year. The total volume of signings accounted for a greater share of total financing exceeded S1.47 billion, compared with S816 million approved than in recent years. IFC approved in fiscal 1993, and involved a total of 111 participant S224 million in financing for 29 projects, induding banks from 25 countries. The total number of indi- AEF projects. vidual loan participations was 264. Finally, IFC's involvement in privatization continued, Reflecting the timing of several large projects, the not only ir. terms of advisory mandates, but also volume of loans approved by IFC's Board of Directors in terms of investment activity. LFC approved financ- for syndications was slightly lower in fiscal 1994. ing totaling $184 million for 10 projects involving Total approvals reached S172 billior for 65 projects, privatization. compared with $1.79 billion for 53 projects in the previous year. However, for the fourth year running, Project financing activities are described in more the volume of Board-approved syndications exceeded detail in the Regional Reports. that of loans approved for IFCGs own account RESOURCE MOBILIZATION IFCs principal financing partners have for more than The Corporation continued to be successful in mobi- a decade been leading European banks-particularly hzing capital for private sector projects in developing from France, Germany, the Netherlands, and Switzer- countries-for every Si in financing approved by land. While these institutions remain highly valued IFC for its own account in fical 1994, other investors partners, the Corporation has been seeking to and lenders wil provide $5.43. Some of this financing broaden its participant base at a time of rapidly will be in the form of cofinancing; $1.8 billion will increasing overall demand for its loan syndication be mobilized direcly, through loan syndications services. Fiscal 1994 saw progress in this direction. and securities underwriting. In addition, private The share of loan participation signings taken by REPORT ON OPERATIONS 7. IFC LOAN SYNDICATIONS SIGNED IN FISCAL YEAR 1994 Participants induded the foliowing: ABN AMRO Bank N.V. Caia Genil de Dep6sitos Korea First Finance Ltd. Amrnican Express Bank Ltd. Chlase Manhattan Bank N.A. (The) Kredietbank N.V. Arab Investment Company SAA. Cho Hung Bank Landesbank Hessen-Thuiringen Ltd. Christiania Bank og Krediitlasse Girozentrale Arab Petroleum Investments CitLbank, N.A Long-Term Credit Bank of Japan, Corporation (APICORP) Comerica Bank Ltd. (The) Asahi Bank Limited (The) Commercil Bank of Korea Ltd. Mediocredito Centrale Asian Finance and Investment CThe) MeesPierson N.V. Corporation (AFRC) Credit Lyonnais MHB Mitteleuropiische ASLK-CGERBank Credit National HandelsbanklAG Australia and New Zealand Credit Suisse -Mitsubishi Trust and Banling Banking Group Limited Creditanstalt-Bankverein Corporation (The) Banc Agriculi i Commercial Credito Italimno SpA Mitsi Trust & Bankdng Co., Ltd. d'Andorra Dai-[chi KIangvo Banlc, Limited (The) Banco di Napoli (The) MTB Bank Banca di Roma . Daiwa Bank, Ltd. (The) Nationsbank Banco Bilbao Vizcaya De Nationale Investeriagsbank NBD Bank N.A. Banco Central Hispano N.V. Nederlandse Fmanciering- Banco dc Negocios Argentaria Den norske Bank Maatschappj voor BancD Espafiol de Credito Deutsch-Suidamerikische Bank- Ontwkelingslanden N.V. (BANESTO) AG (FMO) Banco Exterior de Espania Deutsch-Tiirkishe Bank AG Nippon Credit Bank, Ltd. (The) Bank Austria AG Deutsche Bank AG Nordbanken Bank Bumiputra Malaysi Berhad Development Bank of Singapore Orix USA Corporation Bank of America N.T. & SA Ltd. (The). Rabobank Nederland Bank of Seoul Ltd. (The) Dresdner Bank AG Raifissm Zentralbank Osterreich Bank of Tokyo, Ltd. (The) Fuji Bank Limited (The) AG Banque et Caisse dlEpargne d Generale Banik Royal Bank of Scotland plc (The) I'Etat Luxembourg GiroCredit Bank Sahean Merchant Banking Banque Europeenne pour Aktiengesellschaft der Corporation rrAmnrique Latine (BEAL) SA Sparkassen Sakura Bank, Linited (The) Banque Francaise du Commerce Gulflnternational Bank BSC Sanwa Bank, Lmited (The) Exterieur Hongkong & Shanghai Societe G6nErale Banque Indosuez Banking Corporation Sumitomo Bank, Limited (The) Banque Internationale a Limited (The) Swiss Bank Corporation Luxembourg SA- Industil Bank of Japan, Ltd. Swiss Volksbank Banque Nationale de Paris (The) Tat Lee Bank Limited Banque Panibas Internationale Nederlanden Bank Tokai Bank, Ltd. (Ihe) Banque Sudameris N.V. Union Bank of Fmland Ltd. Banque Worms Joyo Bank, Ltd. (The) Union Bank of Switzerland Barclays Bank PLC KEXIM Bank (UK) Limited United Overseas Bank Limited Bayerische Vereinsbank AG IKKBC International Ltd. Westdeutsche Landesbank BerlinerBank AG KLB Asia Finance Ltd. Girozentrale I West LB BHF-BANK - Korea Development Bank (The) Westpac Banlkng Corporation REPORT ON OPERATIONS Q European banks w%as 71 percent, compared with institutions. The Corporation currently administers 84 percent in fiscal 1993, while the sharc talen by a loan portfolio in excess of $3.6 billion for the Asian banks rose to 22 percent, compared with account of its participants. 12 perctnt; U.S. banks also increased their share slightly, from 4 percent to 5 percent. Banks partici- Securities underwriting pating for the first time in IFC loan syndications IFC helps private sector companies in developing included lenders from Andorra, Italy, the Republic countries gain access to the international capital mar- of Korea, Singapore, and Spain. kets through securities issues. It advises, structures, underwrites, and places international corporate issues IFC is also wsrorking to involve non-bank financial of equity, quasi-equity, and debt securities as well as institutions in its loan participation program. Major pooled investment vehicles. IFC joint-lead manages insurance companies, leasing companies, and special- these offerings in partnership with prominent inter- ized finance companies are showing increasing inter- national investment banks. IFC often plays a catalytic est in participatii.g in the Corporation's project loans, role, and many of the investment vehides it under- particularly for infrastructure projects requiring large writes are the first of their kind in the host countries. amounts of long-term finance. During fiscal 1994 the Board approved IFC's invole- During fiscal 1994 IFC's largest-ever loan syndication ment as joint-lead manager in a total of eight securi- wvas signet: a $350 million facility for a new refinery ties offerings with an aggregate value of $715 million. in Thailand constructed by Star Petroleum Refining Equity and quasi-equity issues accounted for 47 per- Company, Ltd., a joint venture between Caltex Trad- cent of this total, with specialized investment funds ing and Transport Corporation and the Petoleum representing the balance. Authority of Thailand. This project, to which IFC and Barclays Bankl PLC were joint financial advisers, IFC underwrote a portion of the intemational involved a record number of 51 participant banks in securities issues of three important Indian companies the IFC syndicated loan. -an S80 million convertible bond issue for Gujurat Amnbuia Cements Limited, a $100 million converble Other major syndications signed included loans for bond issue for The Tata Iron and Steel Company lim- Tuntex Petrochemicals (Thailand) Ltd., for a purified ited. and a $75 million equity issue for Tata Electric terephthalic acid plant in Thailand ($137.5 million); Companies--introducing these companies to the inter- Edenor SA., an electricity distribution company in national markets. The issues were all oversubscnbed. Argentina (SU8 million); Empresa Eletrica Pangue SA., for additional finarice for a hydroelectric powver A major market innovation during the fiscal year was plant in Chile ($100 million); Celulosa y Derivados, an emerging markets index fund, which tracks the SAL de C.V., and Masterpak, S- de C.V., two subsid- performance of 23 emerging stock markets in the IFC iaries of Cydsa SA with activities in fibers, packag- Investable Composite Index (IFCI Index). The fund's ing, chemicals, and plastics in Mexico (S50 milion); structure and broad coverage are aimed at a distinct Yacylec SA, for an electricity transmission line in class of major institutional investors, induding pri- Argentina (S45 million); Grupo Idesa, S.A. de C.V., vate and public pension funds in the United States for the modernization of an ethylene plant in Mexico and abroad. (S42.5 million);Apasco, SA de C.U, for the expansion of a cement plant in Mexico (S40 million); and Bacell Emerging Markets Data Base SA, for a viscose pulp plant in Brazil (S36 million). Since the introduction in fiscal 1993 of the IFCI Index, which supplements IFC's Global hIdesc series Of the S1.47 billion total volume of syndicated loans (the IFCG Indexes) by reflecting the degree to which signed by IFC during fiscal 1994,51 percent is for certain emerging markets are open to foreign inves- borrowers in Latin America, folloLved by4l percent tors, the use of services related to FC's Emerging for Asia, 6 percent for Europe, and 2 percent for Markets Data Base (EMDB) has grown rapidly. Central Asia, the Middle East, and North Africa. EMDB data are increasingly being used as a bench- mark by portfolio managers to gauge performance. Since its loan syndication program began more Equally important, the IFCI Index is being used by than 30 years ago, IFC has placed-participations of fund managers in structuring investment vehides more than S6.5 billion with some 350 financial such as indexed funds and deivative products. The REPORT ON OPERATIONS 9 first index fund was the State Street Bank and Trust risks that would not be available to them through the Company/lFC Emerging Markets Index Common commercial banking sector, mainly because of coun- Trust Fund, which IFC launched early in fiscal 1994. try risk and the credit-sensitive nature ofthe financial derivatives markets. During the year the Emerging Marklets Data Base Unit continued to improve customer service and to Since the inception of its risk management services expand its product line. Five emerging markets were program, IFC has obtained 28 Board approvals for added to the Data Bas China, Hungary, Peru, hedging (in aggregate) a notional amount of up Poland, and Sri Lanka. EMDB now covers 25 mar- to S1.8 billion- In these risk- management projects kets, and the number of companies it covers has lFC has either provided the hedging transactions increased to more than 1,400. -mostly currency and interest rate swaps-directly, or cooperated wzith commercial banks on a risk- IFC provides publications and services related to its sharing basis. In either case, IFC has provided sub- Emerg Markers Data Base to more than 200 sub- stantial technical advice to dients on developing scrbers. In addition to products available on-line apprpriate hedging strategies -the weekly and monthly stock series, weekdy and monthly index series, and mondlly markxet series- In fiscal 1994 the Corporation approved 7 risk man- IFC publishes a monthly update, a quarterly review, agement projects for companies and banks located in and an annual Emertng StockMarks Factbookj Asia. Europe, Latin America, and the Middle East wthical includes a comprehensive directory of emerg- These projects wil enable the Corporation to hedge ing markets around the world, an analysis of individ- financial risks of up to 5221 million in notional ual markets and market trends, and data on historical amounts on behalf of its dients, resulting in an IFC lFC indexes. Now in its eighth edition, the Factbookl exposure of approximately $28 nllion. A significant is considered the foremost publication on stock mar- effort was made this fiscal year to identifyr clients with kets in developing countries risk management requirements in countries where lFC had not yet undertaken hedging transactions. EFC Newv capital marlet products is helping a Russian private sector bank. Tokobank to During fiscal 1994 the Global and New Product hedge its currency and interest rate mismatches, with Development Division structured and helped launch a view to enabling it to offer hedging instruments an emerging markets index fund, a new investment to its Russian clients in the fiture. IFC approved its vehide that tracks 23 developing-country stock mar- first risk management transaction in India, for Indo kets covered by the IFa Index In selected countries Rama Synthetics (India) Limited. This company faces IFC is also engaged in establishing specialized domes- a 10-year deutsche markl currency exposure because tic financial institutions that would structure and of a deutsche mark-denominated loan it contracted enhance the credit of securitization transactions although its export revenues are in Us. dollars. The involving housing mortgages, consumer finance company plans to swap deutsche mark for US. dol- receivables, and other financial assets. IFC has also lars with IEC's asistance [PC is also work-ing on developed structured commercial paper programs its first risk management transactions in Peru and designed to enable companies in developing coun- the Philippines. In Peru EFC is discussing hedging tries to gain access to the U.S. commercial paper alternatives with a mining company exposed to markeL deutsche mark currencq risk. A power plant in Northern Mindanao in the Phiippines wishes to RISK MANAGEMENT SERVICES manage inte-est rate exposure on its borrowings by IFC has beers ulfring risk- management services to its undertaing swap transactions with IFC. clients for the past four years. The objective of lFCs program has been to assist customers in devising and TECHNICAL ASSISTANCE AND ADVISORY executing risk management strategies to hedge finan- SERVICES cial risks emanating from changes in interest rates, Demand for IE's advisory services and technical exchange rates, or commodity prices Left unhedged. assistance continued to grow in fiscal 1994 IFC movements in these financial variables can have a sig- signed 56 new advisory mandates, more than 20 nificant negative impact on the financial performance of which related to privatization. Mandates were of a company or a financial institution. IFC makes obtained in all regions but were concentrated in accessible to its diaits products for hedging their Central and Eastern Europe andAsia. REPORT ON OPERATIONS - - - ~~~~~~~~~~~~~~~10- PROJECT APPROV'ALS BY REGION, FY94 AND FY93 FY94 FY93 Fuancing Financing Total forlFCs Toul for lFCs Number financing' own account ?Number finandng' own accunt muliionsof U.S4 dogr) (millios of U.S dolaars) Sub-Saharan Africa S7 "26 157 45 261 193 Asia 44 1,229 605 39 1,144 521 Central Asia, Middle East, North Africa 30 599 383 28 387 270 Europe 46 596 443 20 784 419 Latin America and Caribbean 52 1,577 815 52 1,340 710 WMorldwside 2b 61 61 1' 20 20 Total 231 4,287 2,463 185 3,936 '2133 .Ate Fgr sar xadd up ra raows becaus ofmiug1 a. DoUr amounn arescowlJinamch approswdJbr lFCs ar lean syndiaom and unAewri_i h GaWbPerInmGs Compan SteSmren Bank and Tusr CompanylECEnzegigMairtslndaCGmnwn TrF ant c_EmerngMarfrrs CodFAn IFC normally charges market rates for its technical During the year IFC provided considerable technical assistance, but occasionally provides such a e assistance to a number of member countries on on a concessionary basis when donor funding is capital market development, induding drafting sec- available, rities marlet laws and regulations, providing advice an the regulatory environment for new types of Demand wvas especially strong for IFCs advice on financial institutions, establishing supervisory and pnriatization and corporate restructuring, where its enforcement entities and mechanisms for securities experience has proven valuable, particularly with markets, and creating or developing stock exchanges. respect to establishing ownership structures and In addition IFC advised govemrnments on the develop- positiomnig companies to face the increased competi- ment of collective investment vehicles, entry and exit tion that comes vith a market economy.. During the requirements for foreign portfolio investment, prac- vear IFC helped the Government of Poland to com- tices related to non-voting shares, and the develop- plete the sale of five cement and lime companies, and meat of dearing, settlement, and depositonr svsters. the Government of Trinidad and Tobago to sell shares IFC also collaborated with the IBRD on several finan- in a methanol companyr. These were the largest priva- cial sector reviews and helped government authori- tization transactions in these countries last year and a ties in several countries to design studies of finarcial major source of revenue for the governments The sector development For ecanple,jIFC assisted in the buyers committed themselves to making substantial creation of Zambia's new stock exchange-, carried out investments in rehabilitation and modernization. a study on creating a legal and fiscal regulatory frame- The Corporation also provided advice on the privati- work for a regional leasing industry in West Africa; zation of infiastructure services in a numnber of coun- and provided advice on establishing a financial futures tries and has begun to w,ork in countries such as and options market in Thailand, restructuring com- lndia, Kena, Ukraine, and Zimbabwe that have merdal bankls in Slovenia, and setting up a privrate begun to move twvard private ownership. pension fund system in Perun More details about these activites can be found in the Regional Reports. IFC also continued to provide technical assistance in At June 30, 1994, IFC was wsork-ing on 32 technical privatization in the former Soviet republics, design- assistance activities in 23 countries or regions. ing and helping to implement a program fiur the privatization of agricultural lands in NizhIy IFC's Technical Assistance Trust Funds Program was Novgorod, in Russia With respect to the privatiza- established in 1988 to provide the technical assistance tion of small enterprises, it ertended its program in and funding neeeded to develop projects and prepare Uklraine, begun in L'viv in fiscal 1993, to ten cities, proposals capable of satidsfying the criteria of prospec- and launched a program in Belarus. tive investors, induding IFC During fiscal 1994 IFC REPORT ON OPERATIONS 1 1 financed 55 technical assistance projects in 40 coun- policies, programs, and institutional arrangements tries and a number of projects focused on particular that would help them attract more and better foreign regions, induding sub-Saharan Africa, the Baltic direct investment. In fiscal 1994 FIAS completed republics, and East Asia. These projects involved advisory projects in 25 countries. It also conducted a feasibility studies, technology transfer, sector and number of seminars on foreign investment policy, project identification studies, operational technical induding the Conference on Investment Promotion assistance, and expert advice on privatization and Techniques for 25 Arab countries, and the Round- capital market development. With funding support. table on Foreign Direct Investment in Infiastructure from the EC (Asia) Trust Fund, IFC conducted a in Asia for 12 Asian countriem. FIAS also continued a study on the use of mixed waste paper to produce multi-year program of institutional development for high-value paper goods in South Asia and East Asia- the Board of Investment of Bangladesh. It launched This study, which is described in detail in the chapter two research initiatives, one to asses the strategies of entitled IFC and ther Environment: Anual Revieiv firns considering investments in Eastern Europe and 1994, has led to the identif cation of several projects. the former Soviet Union, and the other to determine The results of the study have been published. IFC is why developing countries restrict ownership by for- also considering new initiatives related to the estab- eign investors. In addition FIAS continued to test and lishment of joint ventures that would provide envi- implement a computerized investor tracking system ronmental services to firms in developing countries in several investment promotion agencies. FLASs and the conversion of gasoline- and diesel-powered advisory activities, seminars, and reseach projects vehides to compressed natural gas. are described in detail in the Regional Reports and in the box on page 108. During the year two new trust funds -were set up with the Govement of Denmark to help provide techni- IFCs operations are complemented by several pro- caI assistance-one for IFC member countries on the grams that help entrepreneurs in smaller economies list of the Development Assistance Committee of the develop business proposals and raise finamcing for OECD, and one covering countries in Central and projects the Africa Project Development Facility, the Eastern Europe and the former Soviet Union. New Business Advisory Service for the Carbbean and trust funds were also set up with the Governments of Central America, the Polish Business Advisry Ser- Norway and the United Kingdom to support techni- vice, and the South Pacific Project Facdity. IFC cal assistance in member countries in Central and helped to establish these programs, which are Eastern Europe and the former Soviet republics. described in greater detail in the Regional Reports, Replenishment of funds has been secured from the and is the executing agenqc for all of them- Governments of Fimland, Italy, and Japan. Australia, Canada, India, the Nethedands, Sweden, Switzerland, and the United States are also donors. An equityline established in fiscal 1993 with the European Commu- nity was used in fiscal 1994 to support IFC invest- ments in parallel with European Community investments that support smaR and medium-sized private ventures in South Asia and North Afiica. To date, some 180 projects involving more than $16 million in cofinancing have been funded through the Technical Assistance Trust Funds Program, which has doubled in size since it was established. IFC now manages 21 trust finds totaling appronxmately $35 million contributed by a number of bilateral and multilateral agencies. The Foreign Investment Advisory Service (FLAS), which is jointly operated by IFC, the Multiateral Investment Guarantee Agency (MIGA), and the IBRD, provides advice to member governments on REPORT ON OPERATIONS 12 GLOBAL PROJ ECTS APPROVED IN FISCAL 19 94* FINANCING (ndhlilnsof U. daolars) PROJECT DESCRIPTION TYPE TOTAL IFC wil invest in commonshare oftheGlobalPowerlnvestments Company, Equity 51.1 51.1 which will provide mezzanine financing for power projects in developing countries. Project cost $1.0 billion. IFCstructuredandisassitingintheplacementoftheStateStreetBankand Equity 10.0 10.0 Trust Companyl1FC Emerging Markets Index Common Thist Fund, an equity fund for passive global investment in 23 stock- markets covered by the IFC Investable Indexes Project cost $2001 million. GLOBAL TECHNICAL ASSISTANCE AND ADVISORY PROJECTS FOCUS DESCRIPTION Financial advisory IFC provided assistance on a best-efforts placement with Japanese institutional investors ofthe initial offering of dte $33 million Capital International Asia Pacific Trust - Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported a study to identify business opportnities for small and medium-sized private sector ventures in Albania, Eritrea, and Mozambique. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured funding for a three-city study to identifr prospectivejoint ventures to create high-tedcnology diagnostic centers and clinics in Egypt, Hungary, and Poland. Technical advice IFC is serving as a member of the International Organization of Securities Commissions Task Force on Derivatives. IFC is working with the U.S. Securities and Exdhange Commission in assistng Turkish and Thai authorities in preparing case studies for the development of their derivatives markets. Technical advice IFCpreparedthefirstcomprehenzsive studyontheprospectsfordomesticfutures and options markets in developing member countries. Se tabksiRegwn Report for imrst approvl; anfd cniMasbsaasc and adviypm inch rewn REPORT ON OPERATIONS .13 FINANCIAL REVIEW J FC's strong financial performance in fiscal 1994 z was reflected in an 82 percent increase in net NET INCOME, FY9O-94 income to S258 million-a record level-from (rinonnif US. dolars) S142 million in fiscal 1993. This sharp incr ise can be autibuted primarily to the exceptional perfor- mance of IFC's equity portfolio. It wvas, to a lesser extent, the result of other fictors as well an increase 250 in loan interest income, induding the recovery of past-due interest, and greater fee revenues. Net income represented an 8.8 percent return on average 200 net wvorth. IFC;s funding program continued to expand; IFCs borrowings in the international mar- kets during the year totaled Sl473 billion. Member countries paid in 5240 million under the capital in- creases approved by the Corporation's Board of Gov- ernors in fiscal 1992 and 1993, as well as fiscal. 1985. INCOME 50 During fiscal 1994 the equityportfblio continued to perform strongly, generating income of S269 million. Dividends amounted to $28 million. As in fiscal 1993, 0 _ _ _ _ _ a substantial portion of dividends came from cornpa- 1990 1991 1992 1993 1994 nies paying for the first time. Capital gains reached a record S241 million, as the Corporation sold a number of mature investments in response to oppor- maintain loan spreads in line with market rates and tmuites presented by surgng equitv markets m to achieve greater efficiency in the processing of new ieveral countries investments. SOURCES OF INCOME, FY94 AND FY93 Income from the liquid assets portfolio was S130 mil- (millions of US. dollars) lion, 25 percent lover than in fiscal 1993. IFC earned a gross return on liquid assets of 35 percent,com- FY94 FY93 pared with 4.7 percent in fiscal 1993. This resuIt Interest and financial fees 354.5 319J reflects the lowv level of interest rates prevailing at Dividends and profit participations 282 382 the start of the fiscal rear, combined with the sharp Realized gains on equity sales 241.1 117.0 increase m interest rates in U.S. dollars (the predomi- Senrice fees 51.6 36A4 nant currency in which the liquid asset portfolio is Deposits and securities 129.8 133.2 denominated) during thethird quarterof fiscal Other income 23 3.7 1994 (US. dollar interest rates rose by 100 to 225 - - basis points across aU maturities). 807.5 648.2 Fee income from syndications and from advisory Despite the lower interest rate environment, which services provided in connection with privatizations, restrained the revenue generated by IFCs lending capital markets transactions, and other types of oper- activities and liquid asset during the fiscal year, ations rose. IFCs activities in these areas continued to income from loans rose as a result of the growth growas a result ofthe Corporation's efforts to marlet of IFCs disbursed loan portfolio, an increase in its specialized technical expertise. recoveries of past-due interest, and a slightly higher collecion rate of interest payments. The increase in Gross income increased to $807-5 million in fiscal loan income also reflects management's efforts to 1994, from S648.2 million in fiscal 1993. FINANCIAL KEVIEWV 14 ADMIN[STRATIVE EXPENSES BY CATEGORY FY9O-FY94 (millions of U.S. dollars) EXPENSE CATEGORY 1990 1991 1992 1993 1994 Staff costs 63.0 64.8 78.6 95.7 105-5 Consultants 4.4 65 8.5 910 9.2 Operational travel and representation 10.5 12.7 15.8 16.8 15.2 Payments to IBRD for office space and services 15.0 17.7 17.7 16.2 17.4 Overheads and other 13.0 18.0 19.1 5. 27.9 Total 105.9 119.7 139.7 163.2 175.2 EXPENSES received during fiscal 1994; this brings cumulative The Corporations total expenses were 5549 million payments under the GCI to $314 million, which rep- -8.5 percent highertan in fiscal 1993, when expenses resents 3' percent of the shares subscribed to date. were S506 million, but in line with projections. In addition Estonia, Kazalkhstan, Latvia, Ukraine, and Administrative expenses increased to $175 mnllion, Uzbek-istan became members of IFC under the 5150 from $163 million in fiscal 1993, to cover the growth milion special capital increase (SCI) approved in fis- of the Corporation's business. The ratio of total cal 1993 to accommnodate the republics of the formner administrative costs for investment operations for Soviet Union. With these new memberships, nine fiscal 1994 dropped to 2.7 percent of the average of the former Soviet republics (accounting for 90 per- disbursed portfolio, fom 2.8 percent in fiscal 1993. cent of the shares allocated under the SCI) have joined IFC. Payments for shares subscnrbed under Finandal charges increased by 11 percent, from the SC aggregating S39 million were received during S219 million in fiscal 1993 to S243 million in fiscal the year- 1994, as the cost of new borrowings offset savings from lower interest rates. Fnally, several member countries received and paid for special allocations of shares in IFC, either to take In fiscal 1994 the Corporation contnbuted $3.5 mil- up shares originally allocated under the 1985 general lion to special programs-the Africa Project Devel- capital increase, or in some other cases (induding opment Facility, the South Pacific Project Facility, China and Mexico) to increase their shareholding in the Polish Business Advisory Service, and the Foreign IFC During the year $16 million of capital was Investment Advisory Service-compared with received from special allocations. $33 million in fiscal 1993. In total these payments and payments under IFC's Net provision for losses in fiscal 1994 was S127 mil- 1985 capital increase raised IFC's paid-in capital by lion, compared with $121 million in fiscal 1993. Loss $240 million to S11 billion. reserves at June 3D, 1994, at $637 million, represented 103 percent of the disbursed loan and equity port- As the high level of net income brought retained folio of 56;2 billion, the same percentage as at earnings to $15 billion, IFC's total net worth June30, 1993. increased to $3 2 billion at June 30,1994, compared with $2.7 billion at the end of fiscal 1993. CAPITAL AND RETAINED EARNINGS During the fiscal year, several more member coun- During fiscal 1994 the Board of Directors approved tries completed the subscription process to IFC's a new financial policy that requires the Corporation $1 billion general capital increase (GCI), which was to maintain a minimum capital adequacy ratio of approved by the Board of Governors in fiscal 1992. 30 percent of risk-weighted assets. This replaces the Byyear-end, 92 percent of the allocated shares had leverage poliqc limit of 2.5:1 that has governed IFC been subscnbed. Payments are scheduled to be made since 1989, and the maximum risk assetstequity ratio over five years, and payments of $183 million were of 2.7:1 that was adopted as an interim measure in FINANCtAL REVIEW 15 1993. tFC's leverage will continue to be subject to the lire, Japanese yen, Spanish pesetas, and Greek drach- limit of 4.0:1 contained in the Corporation's Articles mas. IFC's largest borrowing was a S500 million of AgreemenL Eurodollar issue. That five-year transaction provided an important benchmark for tihe Corporation, since IFC's capital adequacy ratio is calculated in line with it was IFC's largest bond issuc to date and it was the methodology recommended by the Basle Com- launched at IFC's tightest-ver spread to a US. Trea- mittee, under the auspices of the Bank for Inter- surybenchmarkl bond. Favorable market conditions national Setdements, for assessing the financial allowed IFC to largely complete its borrowing pro- health of commercial banks. The ratio compares gram by February 1994, before interest rates world- the level of IFC's capital (induding paid-in capital. wide began increasing in response to the tightening retained earnings, and general loss reserve) to the of monetary policy by the U13S. Federal Reserve Bank. Corporation's risk-weighted exposures, both on- and off-balance sheeL In fiscal 1993 the Board of Direc- Other highlights of the fiscal year wvere IFC's first tors had approved the adoption of a capital adequacy repurchases of outstanding debt and its first issuance frameworkl as the principal policy goveming IFCs in Greek draclhnnis. In November 1993 IFC made a growYth (with the maximum leverage ratio providing successfiil public tenderfor $200 million of four of its an additional check on the level of IFC's borrowings), seasoned Eurodollar bond issues launched during a and had asked management to define guidelines four-year periodL from fiscal 1989through fiscal under the new framework that are appropriate to 1992; these bond issues had an aggregate principal IFC's unique business mri Policy research and analy- amount at issuance equal to $1.1 billion and maturity sis during fiscal 1994 led to the condusion that a dates from 1995 through 1998. The bonds had minimum capital adequacy ratio of 30 percent of - become relatively illiquid and, thus, wrere trading at risk-weighted assets, and maximum leverage of 40:1, relatively low prices. Through the repurchase pro- would provide an appropriately prudent level of pro- gram IFC was able to tighten the spreads to U.S. Trea- tection against the ridsks hced by IFC in its opera- sury benchmark- bonds at which IFC's outstanding tions. The two main U.S. rating agences concurred Eurodollar bonds trade, thereby enhancing the value that this level of capital adequacy would be consistent of those bonds to investors and reducing the spread at with IFCs triple-A credit ratings. which IFC was able to subsequently launch the $500 milion Eurodollar benchmarkl issue. Retiring sea- At June 30,1994, IEC's capital adequacy ratio stood at soned Eurodollar bonds in fiscal 1994 also enabled 43 percent, well above the po cy- minimum. IFCs IFC to improve the overall maturity profile of its out- leverage ratio (outstanding borrowings and guaran- standing debt. Fmally, IFC was able to generate a tees measured in relation to the sum of subscrbed modest profit through the debt repurchases. capital and retained earnings) wLas 1.7:1, the same as at the end of fiscal 1993; this was well withi the limit The Corporation subsequently announced its readi- of 4.01. These ratios convey the strong level of the ness to repurchase other outstanding debt on an Corporation's capital and reserves in relation to its ongoing basis, induding structured notes issued risk exposures and outstanding borrowings. under its Medium-Term Note (MTN) program. As these notes are often tailored to meet the financing FUNDING MANAGEMENT needs of a few investors, secondary mark-et liquidity IFC's borrowing activity increased significantly dur- can be lirnited. By standing ready to repurchase its ing fiscal 1994 to keep pace with the increase in its debt, the Corporation is addressing the liquidity con- lending activities. Total borrowings amounted to cerns of investors and enhancing the relative attrac- S1.65 billion, a considerable increase over the $133 tiveness of IFC as an issuer of structured debt. In billion borrowed during fiscal 1993. As in previous fiscal 1994 the Corporation repurchased $25 million years, the bulk of I[FCs borrowings-S l.47 billion- of commodity-linked notes issued under the MTN was raised in the international markets. The remain- program. All repurchased debt was retired and refi- ing S180 mllion was borrowed from the IBRD, with nanced through new market borrowiings during the which IFC has maintained a Master Loan Agreement. fiscal year. During fiscal 1994 IFC continued to pursue a diversi- IFCs Greek drachma issue was one of the first issues fied borrowing strategy, issuing bonds in six different in Greece's emerging capital market,and the sixteenth currencies-US. dollars, Hong Kong dollars, Italian different currency in which the Corporation has FINANCIAL REVIEW *16 borrowed. Through the Greek drachma issue, IFC continued its practice of borrowsing in emerging capi- tal markes thereby contributing to their develop- ment while at the same time helping to reduce the Corporation's overall borrowing coss IFC also con- tinued the warrants issuance program initiated in fiscal 1993, launching two issues of currency' war- rants, each of which had an underlving face value of S200 million. In fiscal 1994 the Board authorized a pilot program that will enable IFC to borrow and lend to clents in the currencies of up to three developing member countries. At the end of the fiscal year IFC was well advanced in establishing a medium-term note facilin, in Hungary underwhich it will be able to offer its cli- ents the abilt to borrow from IFC in Hungarian forinL All market borrowings during fiscal 1994 were swvapped into variable-rate US. dollars to find dient loans, which are predominantly denominated in that currency and interest rate basis. The sub-LIBOR cost achieved through these swaps, as well as profit gener- ated through the debt repurchase program and war- rants issuance, made significant contrbutions to lowering IFCls overall funding costs and to increasing IFCGs overall profitability for the year. In fiscal 1995 borrowings are expected to show further growth. to more than S2 bilion equivalent, reflecting the continued expansion of IFC's lending operations. FlNANCIAL REVIEW 17 THE PORTFOLIO J FC's committed portfolio at the end of fiscal compared with $15 billion in fiscal 1993. Loan com- 1994 amounted to £739 billion, of which mitments came to $1A billion, equity to $413 million $6A4 billion was in the form of loans and Neyw comnitments were concentrated in Latin Amer- S1.5 billion was in the form of equity invest- ica and the Caribbean (35 percent) and Asia (26 per- ments. In addition IFC held and managed for partici- cent). The sectors with the biggest volume of new pants £3.6 billion in loans it had syndicated. The commitments were capital markets, development following table presents the break-down of IFC's finance, and financial services (23 percent). and infra- portfolio at June 30, 1994: structure (12 percent). Commitments wvere made in Cape Verde, Estonia, Kazakbstan, Papua New Guinea, the Russian Federation, Ukraine, and Viet Nam, (mzlliows of U.S. dollars) countries in which IFC had not previously invested. Total committed portfblio for IFC's account 7,893 Loans 6,398 The total committed portfolio for IFC's owvn account Equity 1,495 increased by 11 percent to $7.9 billion at June 30, Total disbursed portfolio 6,180 1994, from S7.I binlion at the dose of fiscal 1993. The Total undisbursed portfolio 1,713 net increase of the committed portfolio was S761 mtl- Total committed portfolio hed lion after taking into account new commitments, forparticipants 3,619 repayments, sales, cancellations, pre-payments, Off balance sheet commitments 811 wTite-offs, and exchange adjustments. Loan repay- ments during the year came to S653 milion, and $91 million in equity investments were sold or Atyear-end lFs committed portfolio induded loans redeemed. During the year IFC added 152 companies and equity investments for 868 companies. Of these to the portfolio. Eighty-two companies were removed companies, 845 are located in 92 countries, 15 are from the portfolio because they repaid their loans or financial institutions whose operations are regional, IFC sold its equity holding or wrote off its loan or and 8 are hnancial institutions or investment funds equity investment whose scope is globaL. DISBURSEMENTS The acrrency breakdown of the disbursed loan port- The pace of disbursements was strong in fiscal 1994, folio at June 30, 1994, is shown in the Notes to the reflecting not only the record volume of new com- Financial Statements. Off balance sheet, IFC had mitments but also the large volume of commitments outstanding commitments of $811 rillion for pending disbursement at the end of fiscal 1993. Dis- guarantees, intermediary notional interest rate and bursements totaled $1 5 billion, up from $1.1 billion contractual currency swvaps, and other transaction in fiscal 1993. Loan disbursements grew to S 1.2 bil- amounts for 20 dients in 12 countries, lion, and equity disbursements were S319 nDllion, or 21 percent of total disbursements. IFC, as agent, also COMMITMENTS disbursed $671 milion on behalf of financial institu- The demand for IFC's financing remained strong in tions participating in IFC's syndicated loans. fiscal 1994, led by continuing economic reformis in Latin America and Asia as 'we as by the liberalization The total disbursed and outstanding portfolio for of the economies of Central and Eastem Europe. In IFC's own account increased by 14 percent, from addition the trend towvard privatization of state enter- S5A billion at June 30, 1993, to $62 billion at the prises continued in the developing world, as govern- end of fiscal 1994. The disbursed loan portfolio grew ments turned to privatization as a way of financing by 11 percent over the fiscal year, and the equity port- expansion and modmeization prograns in various folio by 28 percent industries and infrastructure services. PORTFOLIO MANAGEMENT Commitments reached record levcls in fiscal 1994. Portfolio quality remains strong overall IFC's New comnu :ments for the year totaled S1L8 billion, management continues to give a high priority to the THE PORTFOLIO 18 COMMnTrED PORTFOLIO, FY90-94 COMM1TTED PORTFOUO BY SECTOR (mnilions of U.& dollars) AT JUNE30, 1994 mwiwonsofU daffars) 12,000 Cea.ent and construction materials 5445 10,000 Capital mark, devdopment _______________ _ - finance finandal services Trnb, pulp, and paper 51,564 5477 slo_o r- Tourkumother S,OOO II 51_ S1,026 services [uf atucture . Tsm =toinotivetomoindustr, -S563 industrial equipment n_ _ _ _ _ =S765-E 1990 1991 1992 1993 1994 j - hg,~~~~~~rMn non-tfru metals iron, steel Chernicals,pt dincic%tls,nliers Held for others S72s -s694- IEC Total $7,893 supervision of investments. Portfolio supervision disbursed loan portfolio, from 8.6 percent at June 30, involves a number of key activities; monitoring of 1993, to 7.2 percent at June 30, 1994. Because of the compliance with investment agreements; regular vis- low interest rate environment prevailing during its to project sites; reporting on project status; and most of the year, however, the increase in interest intensive, case-by-case attention to problem projects- income was relatively modest despite the grovth The implementation of a new risk-management and of the disbursed loan portfolio and higher interest other information systms during the year has collection rate. enhanced IFC's supervisory role. Loan arrears were exacerbated by continued prob- Projects experiencing difficulties are assessed on a lems in sub-Saharan Africa and problem projects in case-by-case basis by the IFC investment departiunts Europe and Latin America. Sectors affected induded responsibl for them and, in selected cases, by IFCs food and agribusiness, tourism, and textiles. In the Special Operations Unit, to determine whether reme- former Yugoslav republics, litde progress can be made dial action is needed. Whem such action is needed, on improving loan performance until conditions are IFC negotiates agreements on burden-sharing that normalized. The problems faced in other countries are fair to all creditors and shareholders to enable the are being resolved on a case-by-case basis. project to continue while problems are being addressed. When the parties caxmot reach an under- The performance of the equity portfolio continued to standing, IFC will take any necessary and appropriate be strong During the year, capita gains of S241 mil- actions to protect its interests. lion were realized on 41 investments. The estimated fair value of IFCs equity investments increased. In fiscal 1994 trends in the loan portfolio indicators were positive overall. The interest collection rate The reserve against losses increased to S637 million in improved slightly. Principal outstanding on non- fiscal 1994, or 10.3 percent of the disbursed portfolio. accruing loans dropped as a percentage of the The increase in the reserve for losses was the net THE PORTFOUO 19 result of the $127 million taken in provisions, recoveries of $0.2 million, and write-offs of $53 mil- lion. The loss reserve comprises specific reserves for investments with significant and relatively permanent impainnent as well as a general reserve that covers risks inherent in the entire portfolio. THE PORTFOLIO 20 THE CLIMATE FOR PRIVATE INVESTMENT RECENT TRENDS addition Canada, Mexico, and the United States Global economic conditions remained generally slug- signed an agreement establishing the North Amneri- gish in 1993, with robust growth in some regions but can Free Trade Area, which will create a relatively very slowr or even negative growth in others. The open market in North America. This agreement growth rate for the industrial countries dropped, as a should significantly benefit all three countries. continuing modest expansion in North America was offset by recessions in both Westem Europe and The U.S. economic recovery, which began in late Japan. On the other hand, average annual growth of 1992, continued, but GDP grev at a much slower rate real GDP in the developing countries (excluding (2.8 percent) than in earlier recoveries. One conse- Central and Eastern Europe and the former Soviet quence of the growth in the United States was that the Union) was about 4.5 percent, once again demon- volume of imports rose 9.3 percent Import growth in strating that, economically, these countries are the United States is important to developing coun- becoming increasingly independent from conditions tries, particularly those exporting manufactured in the industrial countries. As with the industrial products. Three-quarters of U.S. imports from dvvel- countries, however, there was considerable disparity oping countries are manufacturs, a much higher in growth among developing countries. East Asia proportion than in either Europe or Japan. Thus, U.S. again led the way, with a 9-2 percent increase in real growth leads to better export prospects for poorer GDP, a figure heavily influenced by double-digit rates countries, especially in East Asia and Latin America. of growth in China. Output in Western Europe turned slightly negative in The past year was marked by several events that 1993. In all major countries except the United KCing- promise to have a positive effect on economic condi- dom, GDP fell, as a combination of anti-inflationary tions in many developing countries. Of primary polides put in place after German reunification, importance was agreement on most parts of the structural employment problems, and sluggish Uruguay Round negotiations conducted under the demand led to reduced output throughout the Euro- auspices of the General Agreement on Tariffs and pean Union. In contrast with the United States, Trade (GATr). Upon final approval by various par- imports dropped sharply in Europe; this drop had ticipating governments, the agreement wil reduce a strong impact on the continent's major trading barriers to trade even further, induding some barri- partners, which indude several developing countries. ers that affect developing countries (see box). In Moreover, possiblybecause Europe is rnore dependent GROSS DOMESTIC PRODUCa, GROWTH RATES, 1991-1993 1991 1992 1993 Rel Real per Real Real per Real Real per GDP capita GDP GDP capita GDP GDP capita GDP 'even major OECD countries 0.6 0.1 1.7 IA 1.3 1.1 Developing countries 02 (1.6) 0.3 (15) 2.1 0.2 Sub-Saharan Africa 1.5 (1.5) 1.2 (1.8) 1A (1.7) East Asia and Pacific 7.0 5.5 8.7 7.2 9.2 7.5 SouthAsia 2.0 (0.2) 4.6 2.5 3.8 1.8 Middle East and North Africa 3.1 (0.2) 4.0 1.1 1.9 (1.1) Europe and CentralAsia (9.3) (98) (12.7) (13.2) (7.4) (8.0) LatinAmericaand the Canbbean 3.4 1.6 2.8 1.0 3.5 1.6 Developing countries excluding Europe and Central Asia 4.1 2.0 3.6 1.7 4.5 2.9 THE CLtMATE FOR PRIVATE INVESTMENT 21 SHARE OF TOTAL EXPORT VOLUME BY DEVELOPING REGION, 1986-93 10% 41_ - Asia 896 _om, Latin America and Caribbean 6% - _ol Europe _ Middle Es 4% __ _ _:mand North Africa Sub-Sahaa Afiica 2%-_ 0% 1986 1987 1988 1989 1990 1991 1992 1993 than the United States on imports of industrial growth of China's GDP has averaged nearly 10 per- commodities, prices of many minerals and other cent annually. commodities remained at historically low levels. Increased exports ofsome of these commodities from Although it had the highest econonic growth rate the former Soviet republics exacerbated the problem. in the world, China was not the only Asian country to experience rapid expansion. Many of the countries Japan saw ersentially no growth in its GDP in 1993, of Southeast Asia enjoyed robust growth-for exam- for the first time in more than twvo decades. The ple, Indonesia (6.7 percent), Malaysia (8.5 percent), country has been plagued by a rising exchange rate, and Thailand (8.4 percent). All of the Southeast which has affected exports (measured in yen) in Asian countries began to confront infrastructure particular, and by adjustments necessitated by over- bottlenecl-s that will require significant investmnent in investment and asset price inflation. As a result of the the years to come. Infrastructure needs are increas- appreciation of the yen with respect to the U.S. dollar, ingly being met by the private sector, not only in however, the production of components in foreign Southeast Asia but in all Asian countries. countries-especially developing ones-has become more attractive, and Japan has witnessed an increase South Asia presented a mixed economic picture in in imports, including manufactured goods from 1993, with modest growth in India and Bangladesh, developing countries, and slower, declining growth in Pak-istan. India has embarked on a broad program of liberalization in As for the developing regions, the economies of both product and financial markets, which has Asia-especially East Asia-continued to expand already resulted in an expansion of exports and rapidly. China, by far the largest country in the increased foreign investment Pakistan's economy region, also had the fastest-growing economy, at a grew by 2.2 percent, in the face of severe flooding, rate of 13 percent in real terns, despite the Govern- falling cotton output, and political uncertainties. ment's efforts to slow growth. Foreign direct invest- Higher growth rates in Bangladesh in recent years are ment reached record proportions, as investors reacted due primarily to market-oriented improvements in positively to economic liberalization and the rapid the agricultural sector, rather than to increased expansion of the internal market Since 1980, the industrial output as in other South Asian countries. THE CLIMATE FOR PRIVATE INVESTMENT 27 In Latin America a positive annual growth rate for they are not yet complete in many countries, partly the third consecutive year (3.5 percent in 1993) bc=ause political instability continues to plague many caused per capita incomes to rise by 1.6 percent in countries, and-as a result-partly because business real terms in 1993. In most of the region, a combina- confidence has not had sufficient time to revive. tion of continued fiscal restraint and market liberal- Africa, therefore, remains the only developing region ization has raised the confidence of both domestic where public investment exceeds private investment, and foreign investors. Net capital inflows to the region increased, from an average of $8 billion annu- There are some bright spots in Africa, however. ally in the late 1980s to approximately $60 billion Ghana began an economic recovery program ten annually in 1992-1993. In contrast with earlier peri- years ago and, since that time, has achieved an aver- ods, most recent capital inflows have been in the form age growth rate of 5 percent, allowing per capita of foreign direct investment, other equity invest- incomes to rise by 2 percent annually. In Uganda ments, and bond financing. Today these forms of stronger growth has followed reforms that brought investment account for half of all flows to Latin inflation under control, freed prices and exchange America, up from only 16 percent in the mid-1980s. rates, and liberalized the trade regime. Mauritius's positive economic performance of recent years con- Growth in the larger countries was generally strong in tinued in 1993. Some other countries-Madagascar, 1993, with a few exceptions. Argentina, in the context Mozambique, Zimbabwe, for example-are also of Lontinued fiscal stringency and large capital attempting to move from centrally controlled infows, had a growth rate of 6 percent in 1993, economies to market-based ones, and economic slightly lower than in 1992. In Brazil GDP grew by improvement is anticipated as reforms go forward. 5.1 percent, but the country suffered from rampant Devaluation of the currency and th&implementation inflation and its fiscal deficit increased. GDP of complementary economic policies should lead to increased by 6 percent in Chile, and by more than better growth prospects in the CFA franc zone coun- 5 percent in Colombia. Although growth in Mexico tries, and the recent political transition in South slowed to 0.6 percent, the country concluded the far- Africa is a positive development that should contnb- reaching NAFTA accord and remained committed to ute to stability and growth throughout southern an economic structural adjustme't process begun in Africa. 1988. GDP dropped by 1 percent in Venezuela. Political instability is still hampering economic activ- After a decade of rapid growth, most Caribbean ity in a number of countries in sub-Saharan Africa, countries experienced a slowdown in 1993. However, however. Violence and massive movements of refu- the Dominican Republic and Jamaica continued gees are still unfortunate characteristics of life in to show gains. The Caribbean region in general some parts of the continent. Under such circum- improved fiscal performance through expenditure stances it clearly remains difficult, if not impossible, containment and privatization, and inflation contin- to bring to bear consistent policies that might make ued to be low. sustainable development possible for these countries and, often, their neighbors. Of all the developing regions, sub-Saharaii Africa is still the most dependent on commodity exports, The region of Central Asia, the Middle East, and whose prices are highlyvolatile. Economic growth for North Africa comprises an enormously varied group the region as a whole was about 1.4 percent, some- of countries, some of which have only recently joined what higher than in 1992, when a serious drought lFC. Growth in the Middle East and North Africa, devastated southern Africa, but only slightly outpac- at 1.9 percent, slowed from 1992 but is expected to ing population growth. Because economic growth recover somewhat in 1994. The new Central Asian has barely exceeded population growth for many republics are striving to achieve macroeconomic sta- years, Africans today are almost as poor as they were bility and to recover from a coUapsed trading system. 30 years ago. In an attempt to reverse this trend, most Although output was still flling in 1993, several African countries have embarked upon policy and countries in the region began to take steps to regain structural reform programs, seeking to create more stability and to attract foreign investors. stable macroeconomic conditions and develop more responsive and market-oriented policies. These Of the North African and Middle Eastern countries, reforms have had only modest success, partly because Morocco was the most successful in attracting outside THE CLIMATE FOR PRIVATE INVESTMENT - - .' F =- .-, -. : - , =; - , ,23,,---; GDP GROWTH RATES BY REGION, 1986-93 12% 9% _ EntAsia 6% - othi 3% - Lati America nd Caaibean, 0% - MiddklEaa and Koth -3% Africa -6% - Sub-&sh2n Africa -9% *~~~~~~~~~~ Juroand CnrlAsha -12% -15% 1986 L987 1988 1989 1990 1991 1992 1993 investment and seems poised for further growth in former Soviet Union, particularly Russia. Reforms in coming yeas, if current polcies are maintained and Russia have been slow. As a result, inflation has been a reforms continue. Morocco and Tunisia, which were major problem; the fiscal deficit remains huge. and both adversely affected in 1993 bya drought and production continues to fal. Even so, there are posi- a downturn in their primary export markets in tive signs-for example, more tan 8,500 large and Europe, still enjoyed positive growth. Egyptes reform medium-sized enterprises have already been priva- process is well under way. However, growth has been tized, and inflation abated in the spring of 1993. In slow, as in many countries undergoing structural several former Soviet republics, conditions were cha- adjustment. otic in 1993; in a few, armed conflicts ecacerbated economic difficulties. Incomes are still filling in The Central Asian Republics are going through a very nearly aU of the former Soviet republics. difficult period as they make the transition from cen- trally planned to market-based economies. The result Countries in Centrl and Eastern Europe have begun of this transition has been high inflation, large fiscal to reap the rewards of a difficult adjustnent process. deficits, and rapidly lalling production levels Even Both the Czech Republic and Poland enjoyed positive so, their rich resources and promising agricultural growth in 1993, and privatization efforts are moving sectors have made some of these countries quite ahead rapidly. Hungary, which has attracted more attractive to foreign investors. Kazakhstan, which foreign investment than any other country in the introduced its own currency and embarked upon a region, has unfortunately seen exports fall, and difficult stabilization program in 1993, drew about the Hungarian economy's growth was slightly nega- $300 million in foreign direct investment in energy tive in 1993. The economies of Albania and Romania projects, light industries, banks, and hotels. Other seem to be turning around; growth rates were posi- republics-for example, the Kyrgyz Republic and tive in 1993 thanks to the inaeases in output Uzbekistan-have also begun to create more stable achieved by new private firms. Reforms in Slovenia macroeconomic conditions. are also well under way. The economies of the three Baltic states-Estonia, Latvia, and Lithuania- All of these countries are likely to remain quite are depressed to different degrees, but the economies dependent on developments in other parts of the of Estonia and Latria have begun to turn around THE CLIMATE FOR PRIvATE INVESTMENT 24 PRIVATE INVESTMENT AS A PE RCENTAGE OF GDP, 1981-92 (simple averages) 25% - EatAsi 20% - Latin Ameca and Caribbea Middle East 15% _2 and North Afica 3 South Asia 10% c iiatm a N bwPIs ishria mt AefgwesftrSas5iih_ 5% - TurkryhisindaWinr -- sfardtcMkeAEast 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 -WnL*nh*r. and are attracting foreign investment. All tree Private investment in several other developing countnes have undertaken substantial ref countries, although not yet at these levels, also programs. expanded-fbr exmple, Argentina, Mexico, Morocco, Pakistan, the Philippines, Sri Lanka, PRIVATE INVESTMENT and Venezuela. Generally, private investment in TRENDS most of sub-Sahanrn Afica remained very low Data on private investment trends for developing relative to GDP, reflecting slowv economic progress countries exst only through 1992. In 1992 invest- and high investor uncertainty. ment continued a five-year upward trend that- reflected a number of related factors. economic liber- Some of the increase in private investment stems alization in an increasing number of countries, a -from the wave of privatization that has swept over renewed emphasis on private mark-ets in the provi- many developing countries. Recent years have seen sion of goods and services, and, not least, respectable a significant and continuing movement from state rates of economic growth in a number of developing control of production facilities to private ownership. countries. The expectation is that these trends wil The privatization movement has targeted not only continueand that the rate ofeconomic growth will be manufictuiuig plants but, even more important, higher in the developing countries than in the indus- activities ranging from financial services to infra- trial countries. The trends are dearly &vorable to pri- structure, induding electricity, communications, vate investors, who have responded positively. Data transportation, and port &cilities. Between 1988 for foreign direct investment (FDI) are available and 1992, governments of developing countries through 1993 and shov dvh -)I reached record realized more than $60 billion in revenues from levels in 1992 and 1993. the sale of state-owned assets. Most privatizations have occurred in latin America, but the trend is As in recent years, in 1992 private investment visible throughout the developing world: the Czech accounted for a much higher percetmage of gross Ripublic, Hungary, Malaysia, the Philippines, domestic product in East Asia than in any other Poland, Portugal. and Thailand are just a few of developing region; the ratio was particularly high the countries that have made significant progress in the Republic of Korea, Malaysia, and Thailand. in this area. THE CLIMATE FOR PRIVATE INVESTMENT -25 --- NET FDI FLOWS TO DEVELOPING REGIONS, 1981-93 (milios of US dolls) 50,000 40,000 *2Wd& Ea and Nor iAfica 30,000 U LAtn Aerica 30.000 m m ~~~~~~~~~~~~~~~~~~~~~~and Cribban S oaudt Asia 20,000 E*EAi. 10,000 Africa O ~~~~~~~~~~~~~~~~~~~~~~NotcPaanns 0 &thw n dabnr 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 fr SoxshAsi Privatization isbeingdriveti prinarilybytwo factors. INVESTMENT PROSPEC]7S IN DEVELOPING Firstj governments are finding that state-owned COUNTRIES enterpises are a drain on their fiscal accounts at The investnent outlook for developing countries a time when it is difficult to generate revenues. might be considered the most positive feature of the More important, the move to privatize is often global economy. These countries are expected to motivated by the realization that public sector grow faster than the industrial world for the foresee- companies are simply unable to provide many able f&ture, as they have in recent years. In act, types of sevices Efficient operations are rarely the although developing countries in 1993 represented main objective of state enterprises their costs are only about 15 percent of the world economy, they thus often uncompetitie, and they are slow to accounted for more than 40 percent of global GDP respond to changing markets and consumer desires. growth. Since new investment might bc expected to Although most funding to support privatization expand fastest where growth is most robust, the has come from local sources, during the 1988- recent pattern of very rapid growth in developing 1992 period foreign sources provided S 185 billion regions might be expected to continue unabated for -nearly a third of total financing-and foreign some time to come. direct investment accounted for $14.5 billion of this amount. In contrast, the economies of the industrial countries have been relatively sluggish. Although some FDI flows to developing countries have been soar- improvement is lildy beginning in 1994, the pace ing, despite a dedine in DI in the industr coun- of recovery is expected to be slower tha in past tries. Since 1985, FDI flows to developing countries recoveries. Growth prospects appear to be best in have increased at an average annual rate of about the United States, but only a moderate increase in 23 percent, and flows have been increasing even faster the growth rate is likely. The European economies, in recent years. FlD flows to developing countries which stalled in 1993, should begin to recover, but expanded from $8.5 billion in 1985 to $56 bilion the recovery wil probably be slow in comparison in 1993. Again, East Asia and Latin America were with past expansions. Many European countries far and away the largest recipients, accounting face daunting structural problems, particularly between them for more than 80 percent of the totaL in labor markets, and working out solutions will THE CLIMATE FOR PRIVATE INVESTMENT 26 THE URUGUAY. ROUND AND DEVELOPING COUNTRIES One of the defining events of 1993 was the successful conclusion of the Uruguay Round of the GAIT negotiations. Although several important maHers remain to be negotiated, the existing accord promises to introduce several new elements of interest to developing countries. In general the conclusion of the Uruguoy Round will greotly benefit both the industrial and the developing countries over the next ten years, as various provisions are iniroduced. But the effects are likely to be unevenly distributed among countries, and sorme potentially worthwhile changes are to be introduced so slowly that the possibility of delays beyond the decade cannot be entirely discounted. Tariffs, which for most industrial products are already quite low in industrial countries, and non-tariff barriers to trade are to be reduced even further. The main impact of these reductions is likely to be felt by two different groups of countries The first group, which will benefit, consists of countries in East Asia and, to a lesser extent, Latin America that already export manufoctured goods and will become more compebtiive as a result of lower tariffs. These export- ers, unlike many other developing countries, have not been dependent on special preferences to gain a foothold in morkets in the industrial countries. The second group consists of countries that have benefited from special preferences; lower tariffs will cause the value of preFerences to drop and these counbries will need to adopt to the new conditions. Another major change resubing from the Uruguay Round involves the industrial countries' agricultural subsidies, which are expected to drop 30 percent This change is likely to have a strong impact on competitive pro.ucers of temperate zone agricultural items in developing countries. For the most part, Latin America would benefit the most from falling subsidies. With some exceptions in the Caribbean, tropical exporters would be litde affected, since trade barriers were low prior to the GAIT negotictions However, countries that were recipients of subsidized food exports from the industrial regions will see the cost oF food imports rise as subsidies are phased out. One potentially very important part of the GATr accord is the ten-year phase-out of the Multfiber Arrangement If the phase-out occurs according to schedule, textile and apparel production will be reallocated globally based on countries' comparative advantages in the industry. Although it is difficult to sort out a priori just where production would be sited in a more open global market, adjustment difficulties might be anticipated For countries that are now producers bosed solely on the avoilability of quotas in the United States and Europe. In any event, the implemento- tion schedule for this provision is heavily weighted toward the end of the decade; this could result in further delays as the deadline approaches. Nonetheless, the in;lusion oF textiles in the accord represents a major victory for devel- oping countries and for consumers in the industrial countries. Developing countries themselves mode some noteworthy commitments in the Uruguay Round. Most important, export subsidies are to be reduced significantly, as are trade-distorting investment measures Ifor example, local content requirements and trade balancing). Importont concessions were also made in the protection of intellectual property, and over 70 developing countries mode commitments in services. SerWices, it might be noted, were included in GAIT negotiations for the first time; Finai agreement on a number of sensitive issues in services has yet to occur and negotiations continue. TIHE CLMATE FOR PRIVATE INVESTMENT 27 tak-e some time. Recovery in Japan is also likely to Uruguay, is scheduled to take effect in 1995. Since this be slow. accord was announced, Brazil's trade with Argentina has more than doubled. Foreign direct investment Thus, most economic forecasters agree that the aver- flows betwveen countries in Latin America have also age annual growth of real GDP in the industrial been rising. Intra-regional trade and trade with coun- countries will be significantly lower in the next tries outside the region have both increased, forcing few years than it was during the past 20 years. companies to become more efficient and competitive. Although lower growth rates will have a negative effict on exports from developing countries, this is The economies in Latin America and the Caribbean expected to be offset by other developments in the are performing considerably better than during the world economy. First, despite recent increases in 1980ss Private firrns in Argentina, Chile, and Mexico interest rates in the United States, real interest rates have been increasingly successful in raising capital on are expected to remain low worldwide, partly reflect- international financial markets, and companies from ing the slowver pace of economic activity in the indus- other countries are expected to gain access to the trial countries. Second, private capital flows to markets in the next fev vears. Countries in the region developing countries should continue at the brisk are confronting the problems of poverty, lack of edu- rate of the early 1990s, as companies allocate more cation, and inadequate infrastructure. The outlook investments to areas with higher anticipated growth for Latin America is more hopefu nowz than it has rates. Third, completion of the Uruguay Round is been for a long time. expected to accelerate the growth of wvorld trade. And, fourth, commodity prices should first stabilize Civil strife and low levels of physical capital and and then begin a slow recoverv as economic activity human skills are still problems in parts of sub- picks up slowly in Europe and Japam Saharan Africa. Africa's dependency on commodity exports will be a decsive element in its growth pros- South and Southeast Asia are likely to continue to be pects. If commodity prices continue to rise, the past the mos rapidly growing regions in the developing decade's experience with negative per capita income world. All of the major South Asian countries have growth should start to be reversed. This is particu- been hlberalizing their economies; reforms should larly true if African countries can sustain macro- result in higher growth rates for the next few years- economic reforms and if the public sector's domi- especially in Bangladesh, India, and Sri Lanka-and, nance can be lessened. consequently; in enhanced investment prospects for both domestic and international businesses. East Much of southern Africa's very tentative economic Asia, the fastest-growing developing region for at rebound, howevei will depend on events in South least two decades, promises to continue in that role, Africa. South Africa, which has a much larger economy led by China. Intra-regional trade and investment than other sub-Saharan countries, could be an effec- have been accelerating and should help sustain tiveengine for rgional growsth. Ifthe political outlook growth of past leaders as well-namely, Indonesia, in South Africa remains positive, investment flows Malaysia, and Thaland. The Philippines, which in should revive, not only to South Africa but to the region the past has been hampered by hesitant and some- as a whole, resulting in better growth prospects for all times contradictory economic policies, is likely to see countries. On the other hand, poliqc reversals of the a faster rate of expansion in the next few years than it type that have recendy been seen in Nigeria tend to has in the recent past. discourage investors from making long-term com- mitments It is heartening to note that several ne w The approval of NAFTA should give a big push to investment funds specializing in Africa have been trade alliances that have been springing up through- established recently-induding two set up by IFC- out Latin America The G-3 treaty recently signed by demonstrating that private investors art beginning to Colombia, Mexico, and Venezuela will talke on greater see Africa!s growth potential, despite the risks. significance as a result of NAFTA. Since the treaty took effect, trade between Colombia and Venezuela In the Middle East and North Africa, improved has tripled; these two countries have also agreed to a peace prospects increase the likelihood of continued free trade arrangement with Bolivia and Ecuador, to recovery. Jordan, Lebanon, and the Syrian Arab takle effect before the end of 1995. The Mercosur Republic, in particular, should benefit from an easing agreement, signed byArgentina, Brazil, Paraguay, and of tensions. There are signs that Eyt's economy THE CLIUMATE FOR PRIVATE INVESTMENT 28 is beginning to recover from a recession brought about by the first stages of the country's economic reform program. Morocco and Tunisia have under- taken structural reforms and are attempting to build more effective relationships with the European Union. As these relationships deepen and as Europe begins its recovery, both countries should benefit The Central Asian Republics of the former Soviet Union still present a difficult environment for business operations. While growth in the region is not expected in 1994, some indications of a bottoming-out are evident, and foreign investors have shown interest in some of the new countries, despite the uncertainties. In Kazakhstan, for example, foreign investment agreements totaling $3 bilion over the next fourvyears have either been conduded or are well advanced In the region as a whole, how- ever, reconstructing economies will requZre unusual pefsistence and policy steadiness, and the process will be difficulL Investors in such drcumstancs .ill find both opportunities and much uncertainty. The same observation might be made for Russia, the European republics of the former Soviet Union, ard the Central and Eastern European countries that for- merly had command economies. As noted, however, reforms and privatizations in several countries are sufficiently far along that there has been a renewal of growth, and private inestors are responding. Even in the face of recession in Western Europe, foreign investments continue at well over $1 billion annually in the Czech Republic and Hungary, for example, and are increasing rapidly in Poland. The economic future for most of these countries remains uncertain and will depend on the speed and efficacywith which reforms are carried out THE CLIMATE FORPIRIVATE INVESTMENT 29 REGIONAL REPORTS SUB-SAHARAN AFRICA f1irwgla a credit line to Industrial PrumotirinServices rlenya) Lrd. .-. - IFC has indirectly prmidJinance to a numberofsmnai! - - mid mned iun-sLd Kenyan emcprises such as rigo!wn wvicidprocese and atisgremn beans and bnssdsprvuts prinarilyforexpar to Europe. T > he investment climate in sub-Saharan will indude developing and strengthening manage- Africa remains challenging despite some ment information systems and helping to identify improvements. Private investment, both solutions to production and marketing problems. As domestic and foreign, is still low. In this IFC will rely heavily on local consultants to provide context IFC's strategy in the region has four compo- ESSAs services, ESSA will hdp strengthen domestic nents: promotion of small businesses; capital mariet technical capacity. Initially ESSA will be launched on development; financing of projects in manufacturing, a pilot basis in Ghana and will rely on donor funding, infrastructure, and natural resource-based industries; but it is expected to recover a large part of its costs by and advisory services and technical assistance for charging fese IFCs second initiative will make financ- governments and businesses. ing available to microenterprises that are too small for financing by the Africa Enterprise Fund (AEF). In light of the small size of most African economies, the preponderance of small and medium-sized enter- AEF, established in 1989, is a vehicle for financing prises, and the essential role these enterprises play in small and medium-sized projects with costs between economic development, IFC has set up several special $250,000 and $5 million. AEFs loans and invest- financing and technical assistance programs forsmall ments, typically ranging between S100,000 and businesses. In fiscal 1994 IFC began to develop two St million, are processed in Africa under the super- new initiatives in fhvor of small and medium-sized vision of IFC's Regional and Resident Representa- enterprises-the Enterprise Support Service for Africa tives. About half of all projects approved by IFC (ESSA) and a lending program for microenterprises-- in sub-Saharan Africa are financed by AEE IFC both of which are expected to be launched early in also finances smaller African companies indirecly fiscal 1995. ESSA will address a critical gap by provid- through credit lines to financial intermediaries and ing post-investment operational advice. Its services venture capital funds. SUB-SAHARAN AFRICA 30 Another program of assistance for African entrepre- The number of projects approved in Africa by IFC neurs is the Africa Project Development Facility reflects the Corporation's commitment to the region: (APDF), established in 1986 by IFCl UNDP, and the of the 231 projects approved by IFC worldwide in African Development Bank, and managed by IFC. fiscal 1994, one-fourth are in sub-Saharan Africa. APDF's activities are descnbed on pages 34-35. In keeping with IFC's goal of fostering the develop- To alleviate the shortage of well-trained and experi- ment of small businesses in the region, more than enced managers in sub-Saharan Africa, the Corpora- half of the projects for which IFC approved financing tion helped launch the African Management Services were small or medium-sized and were financed Company (AMSCO) in 1989, also in collaboration through AEF In fiscal ' 994 AEF projects accounted with UNDP and the African Development Bank. for $19 mtllion-S 18.5 million in loans and guaran- AMSCO is descnrbed on page 36. tees and $0.5 million in equity and quasi-equity-for 33 projects in 15 countries. This brings total financ- IFC coordinates its private sector development activi- ing approved for AEF projects since AEFs inception ties in sub-Saharan Africa with the [BRD. IFC and the to $61 million for 109 projects in 24 countries. IBRD have jointly produced private sector assessments for all the large countries in the region. In fiscal 1994 The African companies for which IFC approved IFC and the IBRD began work on private sector assess- financing were active in a variety of sectors, induding ments for Cameroon, The Gambia, and Mozambique. oil and gas, telecommunications, agribusiness, A second area of cooperation is financial sector devel- cement and construction materials, tourism, andI opment, where IEC and the IBRD work- together to manufacturing. IFC approved financing for its first improve the legal and regulatory frameworL Finally, project in the health care sector in sub-Saharan IFC maintains a dialogue with the IBRD on private Africa, the construction of a diagnostic center in sector issues in the context of country assistnce Nigeria. In the oil and gas sector, IFC approved a loan strategies and Consultative Group meetings. of up to $105 milion, of which S65 infllion wil be syndicated, for Pecten Gameroon Company, to help PROJECT FINANCING AND RESOURCE finance a program to improve recovery of oil from MOBILIZATION offshore fields and increase production. In the tele- In fiscal 1994 IFC approved 57 projects (induding communications sector, lFC is financing a project by AEF projects) in 22 countries in sub-Saharan Africa, compared with 45 projects in 18 countries in fiscal 1993. At June 30,1994, the Corporation's committed FNANCING APPROVED, FY90-94 portfolio induded loans and investments for 191 (mffionsof USi ddmars) companies in 31 countries, compared with 166 com- 5W3 panies in 32 countries at June 30, 1993. 400 i FY94 FY93 - t~~~~~~~~~~mili;omsf US Jo&sjs Financing approved for IFC's account 157 193 300 - _ ___ Loans and guarantees 142 155 Equity and quasi-equity i5 38 J Hi- Die mobHization 69 68 200** Loan syndications 69 68 Undenrriting - - I'll Total financingapproved 226 261 100..; ; Committed portfolio forIFC's account 813 847 I I I , Loans 727 764 O_0- - -- _ - Equity 86 83 1990 1991 1992 1993 1994 Committed portfolio hed for others 341 418 Syndications and underwriting (loan participations) * Financing for IFC's own account Total committed portfolio 1,154 1,265 SU B-SAIIARAN AFRICA 31 THE ESTABUSH-MEN OF THE ZAMBIAN STOCK MARKET in February 1993 the Govemment oF Zambia, in conjunction with the IBRD, requested IFC's 'assistonce in the establishment of a stock market in Lasaka. The project was funded through a World Bank Technical Assistance Loon to Zambia. IFC helped the Government of Zambia to acrete, in oly/ ten months, the Foundations for a functioning securities market-on entire body of securties laws and regulations, a securities regulatory agency, ond the Lusoka Stock Exchange. The regulatory regime took effect at the end of 1993, and the stock exchange unoffidcaly began operations in February 1994. The regulatory regime is tailored to Zambia's needs and provides bosic protection to investors wihout stifling the market. The stock exchange is small and basic (it has a staff of four, as does the regulatory agency), but can be easily upgraded if trading volume expands (there is an automated trading system as well as a central depository). One of the oblectives in creaofing the stock exchange was to make possible the issuance of shores in 15-25 parastotals slated for privatization. Six companies are already being iraded. Clovergem Celte Ltd., a Ugandan company that diversification of finandal services available in a plans to install and operate a national cellular tele- number of countries-it financed the establishment phone network of Malawi's first merchant bank, Kenas first private reinsurance company, and the only leasing compa- One ofthe agribusiness companies in sub-Saharan nies in Benin and Senegal. It also helped set up ven- Africa for which IFC approved financing in fiscal ture capital finds thatwill attrac foreign portfolio 1994, Pescanova Holdings of Namibia Ltd., is invstment to the region. One of the ftnds will in- increasing its fish-processing and storage f&cllities vest in companies in the export-processing zone of and converting fish trawlers into factory ships. Madagascar; another will provide ventire capital Another, lterfresh (Private) Ltd, a producer of in Mauritius. In Tanzania IFC helped create a coin- firsh fruits and vegetables in Zinbabwe, is expanding mercia! bank specialzed in financing international its facilities. trade and the countryls first leasing company. IFC also approved financing for cement projects in TECHNICAL ASSISANCE AND ADVISORY Ghana, Guinea, and Madagascar; hotels in Ghana, SERVICES Kenya, Mali, Mauritius, Tanzania, Uganda, and APDF and AMSCO, two programs that provide Zimbabwe; a paper mill in Kenya; and projects in technical assistance and advisory services to Afiican general manufacturing in a number of countries- businesses, are descnibed in detail on pages 34-36. In for example, padcaging materials in C6te dlIvoire, addition the Corporation provides substantial advice Ghana, Tanzania, and Uganda. in connection with matters such as project appraisal and structuring and debt mobilization, either on a fee In support of capital market development in sub- basis or in conjunction with an IFC investnenL Saharan Africa, IF continued to provide loans and equity investments for leasing and insurance compa- IFC has been particularly active in providing techni- nies, as well as for merchant and commercial banks. cal assistance and advisory services in connection In fiscal 1994 IFC contributed to the broadening and with capital market development in the region. The SUB-SAHARAN AFRICA .32 Corporation has provided advice on the establish- Software developed by FIAS for tracking foreign ment of a stock market in Zambia and is continuing investment has been installed in an investment pro- to assist in the creation of a regional securities market motion agency in Malawi. In conjunction wiith the for the countries belonging to the West African Multilateral Investment Guarantee Agency, FIAS Monetary Union. It is also providing advice on the sponsored a series of workshops on deregulation for creation of an over-the-ounter mechanism in four African countries: Benin, C6te d'Ivoire, Ghana, The Gambia and the modernization of the stock and Senegal. At these meetings, high-ranking govern- exchanges of Ghana, Mauritius, and Zimbabwe. The ment officials from developing countries where Governments of Malawi and Swaziland are receiving deregulation has been successfully implemented to advice on developing securities markets, and IFC promote private investment discussed the reasons for advised Mozambique, Tanzania, and the countries their success and the problems encountered. The aim of the West African Monetary Union on leasing regu- is to help other African countries inplement their lations. In Zimbabwe the Corporation is helping to o wn deregulation programs. formulate a unit trust law and regulations for non- bank financial institutions. It is also conducting a fea- sibility study on a venture capital fund for Kenya, Tanzania, and Uganda Several member governments sought IFC advice on the resructuring and divesiture of public enter- prises. In Zimbabwe IFC has evaluated the commer- cial viability of Affretair the only scheduled cargo airline in southem Africa, and is advising the Government on its strategic options, induding privatization. IFC has also been asked to assist in the restructuring of Kenya Airways' ownermhip, induding the introduction of a strategic partner and divestiture. In Tanzania IFC is supporting the Government's efforts to develop a privately owned and operated national data comunications networlq a study is being financed through IFC's Technical Assistance Trust Funds Program. If such a network should prove commercially viable, [FC wil help set it up and finance it. IFC has also provided advice on financial and opera- tional rmmcturing to private businesses In Nigeria the Corporation is helping United Africa Company Nigera to review its operations, reorient its business lines, and attract joint venture partners IFC is also helping to arrange debt financing of $2.5 billion for Nigeria LNG Ltd., to help finance a proposed lique- fied natural gas export scheme. During fiscal 1994 the Foreign Investment Advisory Service (PIAS) carried out a diagnostic study of the investment environment in Swaziland and provided assitance on institutional development to investment promotion agencies in Ghana, Mozambique, and Zimbabwe. A diagnostic review of the incentive framework was conducted in SenegaL SUB-SAHARAN AFImC: 33 THE AFRICA PROJECr DEVELOPMENT FACILrrY APDF, which has offices in Abidjon, Accro, Douala, Harare, and Nairobi, was estabbished in 1 9B6 to provide advice to African entrepreneurs seeking lo expand or modemize their businesses or start new ones. APDF normally supports projects with investment costs ranging between $250,000 and $7 million, olhough it moy consider bigger or smeller projects that are likely to hove a significant economic impact. APDF provides technical assistance to clients in the preparation of bankable investment proposals. It also helps them find local and foreign financial and technical partners, raise debt and equily financing, and negotiate equitoble financing terms. In addition APDF advises African entrepreneurs interested in buying local companies from foreign shareholders or stote enterprises sloted for privati- zotion. Although APDF does not provide proje t financing, it may finance port of the cost' of market and feasibility studies- During the yeor ended December 31, 1Q953, APDF helped raise financing of $21.2 million for 33 projects with estimated totol investment costs of $36.6 million. These projects are expected to result in the creation of more than 1,700 new jobs and have an annual foreign exchange impact of $21.9 million. From its founding in 1986 to December 31, 1993, APDF assisted a total of 163 projects with total esmakted costs of $270 million, of which APDF helped raise $188 million in loans and equity. The 163 projects are expected to result in the creation of more than 14,000 jobs and will generate estimated onnual foreign exchange eamings or savings of $96 million. APDF is a UNDP project managed by IFC, the executing agency; the African Development Bank is the regional spon- sor. Funding for APDF's operations is provided by UNDP, IFC, the African Development Bank, and the governments oF 15 industrial countries. In addition, Brazil, Israel, and the Export-Import Bank oF India provide technical experts for shoterm use by APDF During fiscal 1994 the Government of Denmark established a Irust fund with an inifial grant contribution of Danish kroner 14 million (approximately $2 million) to finance the cost oF consultants worldng on APDF prolects in eight countries. APDF's managemnent is assisted by an advisory board composed of senior representatives from the three sponsoring agencies and business leaders from AFrica and the donor countries. EXMPLES OF APDF PROJECTS Angola APDF advised Angofrongos, Wa, a poullry producer, on a tophose project. During the first phase, the company will begin producing poultry meat, and it expects to produce 630 tons per year at full capocity; during the second, it will double its annual production oF eggs, from 2.5 million to 4.9 million. The expansion of the company will result in the creation of 60 jobs, and local skills will be developed with the support of a foreign technical partner. Cameroon SOCIAA, which imports and distributes frozen fish, received APDF advice on the creation of a Fleet of industrial fish- ing boats that will enable it to export shrimp and fin-fish to Westem Europe. A small part of SOCLAAs catch will be sold locally. Installation oF the fleet vwill create 84 permanent jobs, and hcird currency eamings are expected to be - bout$2.9 million onnually. SUB-SAHAIA AFRICA 34 Cote d'Woire Lobotec, a new company set up wilh APDF's advice, will perform chemical and bacteriologicol analyses. The company's main clienis are expected to be SIR, the local oil refinery, and mulfinational petroleum companies that are marketing lubricating products mixed locally. At capacity, the company is expected to analyze about 16,000 somples annually; 16 new jobs will be created. Ghana APDF provided advice to BMK, a wood-processing plant that is diversifying into the manufacture of porticlebord. BMK is located in Takoradi, Ghana's mojor timber port, and feedstock for the plant will be waste wood from sawmill- ing operafions in Talkorodi. Much of this waste is currendy being bumed, posing an environmental hazard. Annual production is expected to be 16,000 cubic meters. Madagascar Martin Pdcheurs received APDF advice on the expansion of its copocity to harvest and collect gelidium seoweed, from 200 tons to 600 tons per year. The project will generate about $500,000 annually in foreign exchange from gelidium exports and create 35 fulWlime jobs. Its economic impact wifl be felt in the 50 villages localed on the 200-kilometer coosdine between Fort Dauphin and Cap Faux, many of whose 3,000 inhabitants will be involved in seaweed collection. Seaweed harvesting will offer these communities an alternative economic adcivity to lobster fishing, which has an inactive season from November to January. Seaweed collection is done largely by women. Tanzania APDF has provided advice on the firt phae of a venture to set up a light aircraft passenger service, Precision Air Services. The new company will be the Frst to provide scheduled passenger services from Arusha to destinations on Tanzania's northern tourist circuit, in addition to charter services. During this phose the company will buy one 7-seater and one 1 0-seater aircraft. The company will expand as it gains market share and operating experience. About 15 permanent jobs will be created. Zimbabwe APDF provided advice on the expansion and rationalization of Shamu Pen-rp Company (PN Lid., a manufacturer of ballpoint pens, brass boll pen-tips, plastic adopters, and ref;i!s. The company will be manufacturing a value-added product from brass, while eaming foreign exchange.of approxirnately $200,000 per year fromn exports and provid- ing economic benefits to the rural area in which it is located. SUB-SAHARAN AiRCA. 35 AFRICAN MANAGEMENT SERVICES COMPANY AMSCO, a compony incorporated in the Netherlandds, was founded in May 1989 to carry out the activities of the AFrican lroining and Monagement Services project, a joint initiotive by IFC, UNDP, and the African Development Bonk. AMSCO's main objective is to help rehobilitate ailing companies in subSahoran Africa and create a pool of well-quolified African managers. It thus contributes to the development oF locally managed businesses that are profit- able, competitive, self-sufFicient, and integrated into the international business community. AMSCO provides its client companies with experienced business executifes under secondment arrangements. At the some time, it trains the staff and manogers of these companies so ihat they can take over when the seconded executives' terms expire. AMSCO is supported by its three sponsors and the governments of 11 countries. About 70 percent of its share capital is held by IFC, the African Development Bank, and bilateral agencies from seven industrial countries. The remaining 30 percent is held by more than 50 international private companies with business experience in Africa. In addition UNDP and the donor governments provide grant funding For a Management Loan Fund and a Management Development Fund. The Management Loan Fund pays for loans to companies that have management services con- tracis with AMSCO but lack the foreign currency to cover expenses incurred under the contract. The Management Development Fund finances part of the cost of training local staff and managers. During calendar year 1993 AMSCO signed monagement contracts with 13 companies located in 10 countries in sub-Sharan Africa. By the end of 1993 AMSCO had management contracts with 25 companies located in 15 countries; 51 business executves hod been seconded to these componies. From May 1989 to December 31, 1993, $8.9 million in loans from the Management Loan Fund and $3]1 million in training grants from the Management Development Fund were granted to African componies. SUB-SAHARAN AFRICA 36 PROJECTS APPROVED IN FISCAL 1994 SUB-SAHARAN AFRICA FINANCING (tiiltioios of U.S. giollar) PROJECT DESCRIPTION TYPE TOTAL Benin Equipbail will be the first leasing company established in Benin and will lease Loan 0.7 capital equipment to small and medium-sized companies. Project cost: Equity 0.2 0.9 $1.9 million. Burkina Faso Societe Africaine pour le Commerce et l'Industrie will establish a plant that Guarantee 0.6 0.6 will use locally produced ethyl alcohol to produce 820,000 liters of vinegar annually. Project cost $1.7 million. (AEF) Cameroon Pecten Cameroon Company will improve recovery and extend the produc- Loan 40.0 tion of oil from the Rio Del Rey and Lokele offshore oil fields. Project cost: Syndications 65.0 105.0 $135.0 million. Societe de Production, de Collecte, de Transfonnation et de Loan 1.0 1.0 Conditionnement de Ligunes au Cameroun will establish a 120-hectare farm to produce and process fresh and frozen beans for export to Europe. Project cost $3.7 million. (AEF) United Transport Cameroon, the largest long-haul trucking company in Loan 1.1 1.1 Cameroon, will buy new tractors 0nd trailers. Project cost $4A million. (AEF) C6te d'Ivoire IFCs loan facility will help Banque Atlantique C6te d'Ivoire fund its trade Loan 5.3 5.3 finance and term loan operations. Project cost $7.5 million. Fan Milk-a will establish a factory with an annual capacity of 3.6 million Guarantee 0.3 0.3 liters to produce yogurt, ice cream, and other products from imported milk powder and other reconstituted raw materials. Project cost $1.0 million. (AEF) Filtisac S.A, the country's largest producer of jute and polypropylene bags, Loan 1.1 1.1 is undertaldng a modernization and rehabilitation program to increase production and efficiency. Project cost $10.8 million. Multi-produits, the fourth largest distributor of food and household products Loan 0.4 OA in C6te d'Ivoire, will complete a diversification, modernization, and expan- sion program Project cost $4.4 million. (AEF) Gambia,The Lyefish Company Limited will replace its seafood processing facility to meet Loan 0.4 0.4 the qualityand hygiene standards requiredbythe EC, it! main market Project cost: $0.9 million. (AEF) Ghana Alugan Company Limited* will restructure its activities and finances as it Loan 0.1 0.1 completes its expansion program and establishes a slitting, rollforming, and louvre manufacturing facuity. Project cost $1.6 mllion. (AEF) Ghacem Ltd. will expand its clinker grinding capadty by adding a Loan 3.0 3.0 cement grinding mill with an annual capadty of 300,000 tons. Project cost: $7.0 million. Palm RoyalApartment Hotel CDmpany Limited plans to build an apartment Loan 1.0 1.0 hotel in Accra consisting of 40 self-contained units. Project cost; S4.1 milion. (AEF) SUB-SAHARAK AFRICA 37 PROJECTS APPROVED IN FISCAL 1994 SUB-SAHARAN AFRICA comdnicd FINANCING (familions of U.S. iln/Jars) PROJECT DESCRIPTION 7YPE TOTAL Ghana Shangri-La Hotel,which has the highest occupancy rate in Accra,*will expand, Loan 0.3 0.3 coitinueal modernize, and improve its facilities. Project cost $0-6 million. (AEF) Top Packaging Limited will increase its production capacity and recyde its Loan 0.9 0.9 plastic waste. Project cost: $23 million. (AEF) Guinea Ciments de Guine will build and install a silo and a packing house for Loan 1.5 1.5 the storage, packing, and distribution of imported bulk cement. Project cost: $7.9 million. Guinea Bissau AGRIBISSAU SARL will establish a 1,500-hectare farm to produce raw Loan 0.8 cashew nuts, mangoes, citrus, corn, and cassava for export to India and Equity 0.1 0.9 the EU. Project cost $1.9 milli, on. (AEF) Kenya Aura Garments ManufiLcturing Limited wil establish a plant to makle Loan 0.3 0.3 garments for export to Europe and the United States. Project cost $0.8 million. (AEF) Capital Fish Limited will buy trucks and equipment for its fish processing Loan 0.6 0.6 plant and increase its working capitaL Project cost SLA million. (AEF) IFC will help set up East Africa Reinsurance Company, the country's first Equity L.1 1.1 private sector reinsurance company. Project cost $6.7 milion. International Hotels (Kenya) Limited will refurbish its Nairobi Hilton, Loan 6.0 6.0 upgrading rooms and general facilities, and replacing its electromechanical and fire and safety equipmennt Project cost $12.0 million. Mosi Limited will converta 23-hectarespraycarnations farm into a 2-hectare Loan 0.3 03 farm to grow roses for export to Europe. Project cost $0.8 million. (I 5F) Panafrican Paper Mills (E.A) Ltd.* will improve its current operations and Loan 15.0 15.0 install a paperboard machine, increasing its production capacity by more than 30 percenL Project cost $68.8 L-illion. Waterfront Hospitality Limited will build a four-star beach hotel resembling Loan 1.0 1.0 a traditional Swahfli village on Galu beach, 30 kilometers south of Monibasa. Project cost $4.0 million. (AEF) Madagascar IFC will invest in Madagascar Capital Development Fund, which will t z Equity 1.1 1.1 minority positions in export-oriented companies in Madagascar's export- processing zone. It is the first foreign investment vehicle in Madagascar. Proje,ct cost $5.2 million. Societe Cimentiere de rOcean Indien is building a bulk; cement terminal in Loan 1.5 1.5 the port of Toanasina. Project cost $7.5 mitlion. Malawi IFC vii invest in Indebank Fmancial Services Limited, the country's first Equity 0.5 0.5 merchant bankl Project cost $3.5 million. SUB-SAHARAN AFRICA 38 PROJECTS APPROVED IN FISCAL 1994 SU-B-SAHARAN AFRICA FINANCING (millions of U.S. eiollars) PROJECT DESCRIPTION TYPE TOTAL Mali IFC will provide financing to assist in the purchase and renovation of the Loan 0.9 0.9 74-mom Grand H6ted de Bamako to bring it to international three-star standards. Project cost $2.6 million. (AEF) Mauritius Beijaya Hotels and Resorts is constructing a 200-room beach resort hotel. Loan 5.0 5.0 Project cost: $32.2 million. The Mauritius Venture Capitd Fund, the country's first venture capital fund, Equity t t nwill finance start-ups, management buyouts and buy-ins, and development Quasi-equity 1.1 1.1 capitaL Project cost S6.6 million. Mozambique Refrigerantes da Beira Limitada will acquire and rehabilitate a soft drink and Loan 1.2 1.2 beer plant to makle carbonated soft drink-s under a franchise agreement wvith the Coca-Cola Company. Project cost $4.8 mifion. (AEF) Namiibia Pescanova Holdings of Namibia Ltd.. will expand its fish-processing and Loan 6.5 65 storage facilities, and convert freezer trawlers into factory ships and wet fish trawlers. Project cost S13.5 million. Nitgeria IFC approved financing for the construction, equipment, and management of Loan 1.8 Abuja International Diagnostic Center, an international medical diagnostic Equity 0.7 2.5 and environmental center. Project cost S10.0 million. Eterna Industries Limited will establish an industrial, marine, and automo- Loan 0.9 0.9 tive lubricant and grease blending plant to make Castrol products. Project cost $2.6 million. (AEF) Farbest Industries Limited will establish an industrial cassava plant wvith an Quasi-equity 02 0o2 annual capacity of 3,210 tons, and will use IFCs loan to improve its transport of cassava from its farm to the factory and increase overal lworking capitaL Project cost $15 million. (AEF) Prografik Limitedwill establish a graphics services company offering a range Loan 0.2 0.2 of services including color separation, fhlm imposition, and graphic design. Project cost $0.8 million. (AEF) Senegal SOGECA, a hire-purchase company, is planning to expand into financial Loan 1.0 leasing Project cost $5.0 mitlion. Equity 02 1.2 Tanzania IFC helped establish Eurafrican Bank (Tanzania) Limited, a commercial bank Loan 5-0 specializing in trade finance. Project cost $9.0 million. Equity 0.8 5.8 Moshi Leather Industries Limited will take over and rehabilitate the assets Equity 03 0.3 and business of Moshi Tannery, which is being privatized. Project cost $2.9 milion. (AEF) NomadSafaris LimitedwiUll establish asmall luxurylodgein the Selous Game Loan 0-2 0-2 Reserve that will cater to clients from Europe and the United States. Project cost: $0A million (AEF) SUB-SAHARn AFRICA 39 PROJECTS APPROVED IN FISCAL 1994 SUB-SAHARAN AFRICA corntiined FINANCING (,0aillims of US.. adks) PROJECT DESCRIPTION TYPE TOTAL Tanzania Raffia Bags Tanzania Limited will establish a plant to make woven poly- Loan 0.5 0.5 .r.ti,,lni propylene sacks and polyethylene liners for the domestic market. Project cost $2.5 million. (AEF) Tanzania Breweries Limited will rehabilitate and expand its clear beer plants Loan 13.0 and construct a new brewvery. Project cost $587.2 million. Syndications 4.4 Equity 6.0 23A IFC helped establish the country's first leasing company. ulc (Tanzania) Loan 5.0 Limited. Project cost $10.0 million. Equity 1.0 6.0 Togo IFC will provide a new loan and reschedule its existing loan to help Societe Loan 0.1 0.1 Togolaise de Produits Marins (STPM)* restructure its operations, which wvere disrupted in 1992 and 1993 because of politcal and social problems in Togo. Project cost $0.3 million. (AEF) Uganda Clovergen Celtel Ltd. will instaUll and operate a national celkular network with Loan 4.2 a capaity of 15,000 subscribers. Project cost S16.0 million. Equity 0.6 Quasi-equity 0.8 5.6 Polypack Limited will establish a plant to make 7.7 million woven polypropy- Loan 1.0 1.0 lene sacks and polyediylene liners annually for the domestic market Project cost; $3A million. (AEF) Skyblue Apart-Hotel will develop an apartment hotel in Kampala to serve Loan 0.5 0.5 expatriate and business visitors on short-term assignments. Project cost $1.1 million. (AEF) Zambia Big Five Car Hire Company Limited wil transform its family-owned car rent- Loan 0.6 0.6 al business into an Avis franchise, acquire 42 vehicles, and upgrade facilities. Froject cost $1.2 million. (AEF) Zimbabwe Abercrombie and Kent Safaris (Pvt) Ltd., the second largest tour operator Loan 0.6 0.6 in Zimbabwe, will increase its capacity and replace its fleet of vehides. Project cost $1.2 million. (AEF) Kuchi Builders will acquire Bitumen Construction Services (Pvt) Limited Loan 0.5 from Shell-BP and expand the company, which is engaged in road resurfacing Guarantee OJ 1.2 and construction. Project cost $2.9 million. (AEF) Chiparawe (Private) Limited will construct an additional water reservoir and Loan 0.8 0.8 improve equipment on three farms on which it grows vegetables for exporL Project cost: $1.9 milLion. (AEF) Highveld Horticulture Zimbabwe (Private) Ltd. will diversify its export oper- Loan 0.2 0.2 ations by acquiring and expanding a vegetable and fiuit packing house and cold storage facility. Project cost S0.5 million. (AEF) Interfiesh (Private) Ltd. will expand its capacity for processing and packing Loan 2.4 2.4 fresh fruits and vegetables, and diversifv into related activities in transport and freight-forwarding. Project cost S4.8 million. SUB-SAHARAN AFRICA 40 PROJECTS APPROVED IN FISCAL 1994 SUB-SAHARAN AFRICA FINANCING (m11illiou of U.S. dollars) PROJECT DESCRIPTION TYPE TOTAL Zimbabwe Mukwa Milling Company (Private) Limited, which makes high-quality Loan 0.2 0.2 comirnwd wooden frames and doors, will increase its exports to South Africa. [FC's financing will providc the company with fresh working capital and enable it to build a workshop and acquire machinery. Project cost: $OA million. (AEF) National Merchant Bank of Zimbabwe Limited, the country's first indige- Equity 0.6 0.6 nously owned merchant bank-, plans to increase its finding of medium-term foreign currency loans and provide security for trade finance facilities at foreign banks. Project cost $5.0 million. IFC provided a credit line to NationalMerchant Bank ofZimbabwe Limited. Loan 5.0 5.0 Project cost: $5.0 million. Sable Safari (Private) Limited wl modernize environmental and other fcil- Loan OA 0.4 itics at its two safari camps, build two new camps, and centralize headquarter operations in Harare. Project cost SO.9 million. (AEF) (AUF) Acai EnteapriseFuand lFChasnzadconcermercprneiousavioamenua in, orleans to this copny. t Less du $500 . SUB-SAHARAN AFRICA 41 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS SUB-SAHARAN AFRICA FOCUS DESCRIPTION Gambia, The Capital market development IFC is advising the authorities on the creation of an over-the-counter mechanism. Ghana Capital market development Through its Technical Assistance Trust Funds Program, IFC supported work by consultants advising the Ghana Stock Exchange on modernizing its operations. Foreign direct investment FIAS assisted the investment promotion agency with institutional development. Privatization IFC advised the Government on the sale of part of its interest in Ashanti Goldfields Corporation Limited. Kenya Capital market development IFC recommended steps to encourage the flow of foreign portfolio investmenL Capital marlket development Through its Technical Assistance Trust Funds Program, IFC supported work by consultants advising the NJairobi Stock Exchange on modernizing its operations. Privatization IFC is helping the Government to restructure and privatize Kenya Airways, the national carrier. Projet appraisal and structuring IFC advised Pan African Paper Mils on the purchase of a paperboard machine. Malawi Capital market development IFC is advising the Malawian authorities on securities mark-et development, focusing on the establishment of a share trading brolerage system. Foreign direct investment FIAS installed in the investment promotion agency the software it developed for foreign investennt tradcing. Mauritius Capital market development Through its Technical Assistance Trust Funds Program, IFC supported work by consultants recommending steps to improvre the dearing, settlement, and depos- itory systems of Mauritius's stock- exchange. Mozambique Capital market development IFC is advising the Mozambican authorities on improving the leasing law. Foreign direct investment FIAS assisted in the institutional development of the investment promotion agencyL Project technical assistance IFC supportedL through its Technical Assistance Trust Funds Program, a market and feasibility study for a proposed capital goods leasing venture Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured funding to help an agribusiness group assess the feasibility of growing cashew nuts for export. Project technical assistance IFC secured funding, through its Technical Assistance Trust Funds Program, for a study on expanding and rehabilitating a coal terminal port Nigeria Cal -ital market development Through its Technical Assistance Trust Funds Program, IFC supported work by consultants making recommendations on modernizing the Nigerian Stock Exchange, in particular the dearing and settlement system. SUB-SAHARAN AFRICA 42 TECHN[CAL ASSISTANCE AND ADVISORY PROJECTS SUB-SAHARAN AFRICA FOCUS DESCRIPTION Nigeria Financial advisory/ IFC is revieving the operationsof UnitedAfrica Company Nigeria with a view to -ltihltzid Project technical assistance recommending a re-orientation of its business lines and attracting other inves- tors. Through its Technical Assistance Trust Funds Program, IFC will support technical assistance on restructuring and strategic planning for the company. Project financing IFC received a mandate from Nigeria LNG Ltd. to arrange $2.5 billion in financ- ing for a proposed project involving the export of liquefied natural gas. Project technical assistance IFC will coordinate, with support frorr its Technical Assistance Trust Funds Program, feasibility and technical studies on establishing a greenfield cement opertion. Senegl Foreign direct investment FlAS conducted a diagnostic reriew of the incentive framework Swazand Capital market development/ IFC made recommendations on expanding Swaziland's securities market and, Project technical assistance through its Technical Assistance Trust Funds Program, supported a study on modernization options for the stock market Foreign direct investment FIAS conducted a diagnostic study of the investment climate. Tanzania Capital market development IFC provided advice on improving leasing laws. Privatization IFC advised the Government on the privatization of Mufindi Paper. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported a feasibil- ity study of a capital goods leasing venture. Project technical assistance IFC arranged funding through itsTechnical Assistance Trust Funds Program, for a study of the feasibility of a private data communications netwvorlk Project technical assistance IFC committed funding, through its Technical Assistance Trust Funds Program, for a project identification study in the tourism sector, with a focus on environ- mental and social factors. Uganda Capital market development IFC is providing advice on developing securities markets. Project technical assistance IFC supported, through its Technical Assistance Trust Funds Program, prepara- tory work for a cellular telecommunications project Zambia Capital market development IFC assisted in the creation of the Zambian Stock Exchange, which began oper- ating in February 1994. Zimbabwe Capital market development IFC is providing advice on formulating a unit trust law. Capital market development Through its Technical Assistance Trust Funds Program, IFC supported work by consultants providing advice on the legal framework and modernization of Zimbabwe's stock exchange. Capital market development IFC is advising on the revision of laws for non-bank financial institutions. SUB-SAHARAN AFRICA 43 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS SUB-SAHARAN AFRICA contitiwd FOCUS DESCRIPTION Zimbabwe Privatization IFC is helping the Government to evaluate the viability of Affretair, the national 'owaneatl- cargo airline, and to restructure and privatize it Through its Technical Assistance Trust Funds Program, GFC retained consultants to advise the Government Foreign direct investment FIAS assisted in the development of the investment promotion agency. Regional Capital market development IFC is assisting the countries of the West African Monetary Union in creating a legal framework for a regional securities market Capital market development IFC is assisting the countries of the West African Monetary Union in creating regional leasing regulations. Capital market developmenu/ With support from its Technical Assistance Trust Funds Program, [FC is Project technical assistance conducting a feasibility study on a venture capital fund for Kenya, Uganda, and Tanzania. Private sector development In conjunction with MIGA, FIAS sponsored a series of deregulation workshops for four African countries. Project technical assistance IFC supported. through its Technical Assistance Trust Funds Program, a multi- country market and technical feasibility study on growing flowers in southern Africa for export. SUB-SAHARAN AFRICA 44 REGIONAL REPORTS ASIA I ' '~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1 ~ ~ ~ ~~~~~ - 1 . _-, [Fl ~ ~ - -wa,inta I ,, ---' -- -- IF ts;itlead ~- -a mannscrin tlXe; - -, 1 5 > _ utndeinzinganid 7 . - e firs international ' , - r ; _ Tari Eleatr: Compamus, a private Indian J FC increased its operations in Asia in fiscal headquarters to New Delhi. This mission represents 1994, respondingto rapid economic growth in IFCs first attempt to decentralize its operations most of the region. Trade and financial sector to serve dients better and respond to their needs reforms aimed at opening up the economies in more rapidly. the region were central to IFCs discussions wvith pri- vate enterprises as well as with governments. In terms The South Pacific Project Facility (SPPF), which is of financial products offered, IFC continued to con- managed by IFC, continued to foster the develop- centrate on providing equity and quasi-equity financ- ment of small and medium-sized enterprises in the ings its dient focus is shifting, however, and IFC is South Pacific island countries. SPPF's aaivities are increasingly vorking with second- and third-tier described in detail on page 50. companies. More of the projects approved by IFC in fiscal 1994 had local sponsors than in previous years, During fiscal 1994 EFC-World Bank teams completed a trend that should continue as IEC increases its pres- private sector assessments of India and Sri Lanka. IFC ence in Asia by strengthening its regional and resident prepared a draft private sector assessment for Bang- missions there. ladesh, to be completed in fiscal 1995, in connection with the World Bank's Country Economic Memoran- During fiscal 1994 IFC's missions in China and India dum on that country. expanded their activities. The recently established mission in Beijing, now in fiul operation, is support- PROJECT FINANCING AND RESOURCE ing the expansion of IFC's program beyond China's MOBILIZATION coastal provinces into the country's interior jFC In fiscal 1994 IFC approved 44 projects in Asia-42 increased both staff and operations in its regional in 10 countries and two regional projects-compared mission for South Asia, as it moved the center for with 39 projects in 9 countries in fiscal 1993. On its activities in the region from its Washington June 30,1994, the Corporation's committed portfolio ASIA 45 included loans and investments for 196 companies number of successful bond and equity issues in the in 13 countries, compared with 183 companies in international markets; IrC provided assistance with I I countries at June 30, 1993. several of these operations and acted as joint lead manager for three underwritings totaling $255 mil- I:Y94 FY93 lion. IFC's portfolio of loans and investments in (n94 ma Ys93.&WIrs cement and synthetic fibers in India increased to nearly $50 million for each subsector. As India and Financing approved for IFC's account 605 521 Nepal opened up their power sectors to private Loans and swaps 387 400 investment, IFC's committed portfolio of equity Equity and quasi-equity 218 121 investments and loans for power projects in the Direct mobilization 624 623 region increased to about $300 million. Loan syndications 559 623 Underwriting 65 - IFC intensified its activities in China, which is experi- Total financing approved 1 ,29 1,144 encing rapid industrial and economic growth. It approved investments in venture capital funds and Committed portfolio for IFCs account 2*039 1.761 a fund management company. It also approved Loans 1,538 1.353 financing for two projects in major industrial sectors Equity 501 408 and its first investment in China's interior province, Committed portfolio held for others 1,040 607 a debt and equity package totaling S12 million for (loan participations) Plantation Timber Products in Sichuan Province. Total committed portfo1io 3,079 2,368 The projects impact on job creation and incomes in the area is expected to be large, with 500,000 farmers being affected. Whe growth remained stagnant in the iudustrial countries, investnent in manuficturing and other In Southeast Asia IIC pursued projects in resource- economic activities increased in the buoyant econo- based industries, such as food-processing in Papua mies of Asia. IFC provided financial services to a New Guinea. In the petrochemicals sector, IFC number of Asian companies in the form of loans, approved financing for projects in Thailand, induding equity investments, underwriting, and swaps. IFC a syndicated loan fora joint venture that will produce was particularly active in the manufacturing sector, concentrating on basic industries such as cement, chemicals, and glass; the food-processing industry; FINANCING APPROVED FY9O94 and the infrastructure sector, particularly power. (milions. of US. dollars) IFC helped finance new power plants in South Asia 1,500 and was the promoter of the Asian Infrastructure Fund, which will provide equity and mezzanine financing for powtver, transportation, and telecommu- 1,200 nications projects undertaken by the private sector. in the area of capital market development, lFC not only continued to provide financial and technical 900 support in the establishment or expansion of finan- cial intermediaries-for example, leasing companies, venture capital companies, and mutual funds-but 600 also took several Asian companies to the interna- tional capital markets, facilitating access to interna- tional finance at significantly lower cost 300 Governments in South Asia are strengthening eco- nomic reform programs, and the private sector, both 0 at home and abroad, has responded positively. At the 1990 1991 1992 1993 1994 end of the fiscal year, India was IFC's largest client, * Syndcations and undenrwit:ng in terms of its share of the Corpcration's portfolio. Fancing for IFCl' z.1 account During the year Indian companies made a substantial ASIA 46 POWER PROJECTS IN SOUTH ASIA Since 1991, when the Government oF India adopted new policies that encourage private investment in electricity generotion and create opportunities for private licensees to distribute electricity at the recoil level, there has been enormous interest among private investors in India's power sector. The Indian stote governments alone are consider- ing some 75 proposals For projects that together would provide 32,000 megawatts of generation capacity-enough to replace most of the installed copacity in the country. Interest in private investment in power is also apparent, if not as strong, in Nepal and Sri Lonka. In fiscal 1994 IFC approved financing For two power-generation projects in India: a gas-fired combined cyde plant in Andhra Pradesh and a lignite plant in Tomil Nadu. IFC also approved an investment for a power project in Nepol: a 60-megawatt run-ofthe-river hydroelectric project an the Khimti Kholo River. IFC continued to support private Indian utilities, underwriting o rights issue For Tato Electric Companies. Several more projects were under discussion as the Fiscal year come to a dose- polyvinvl chloride, and a syndicated loan of S100 mni- TECHNICAL ASSISTANCE AND ADVISORY lion, induding S25 million for ks own account for Star SERVICES Petroleum Refining Company, Ltd., which is construt- In fiscal 1994 IFC continued to provide a variety of ing a 130,000-barrel-per-cay oil refinery. In fiscal 1993 technical assistance in Asia, ranging from support IFC approved a S350 milion loan syndication, indud- with project preparation and appraisal to advice to ing 575 million for its own account, for the company. governments on foreign direct investment In sup- port of the efForts of the formerly socialist countries IFC approved its first investment in Viet Nam, for a to build market-oriented financial sectors, IFC held joint venture undertaking the expansion and rehabil- numerous seminars throughout the region. It also itation of a hotel in Hanoi, which has a shortage of expanded the range and volume of advisory services accommodations for the growing number ofbusiness it provides to client companies receiving IFC financ- travelers. ing. The South Pacific Project Facility (SPPF) contin- ued to advise entrepreneurs in the South Pacific IFC advised many of the companies for which it islands on preparing viable projects (see box on approved financing on re-engineering and finandal page 50). restructuring to help prepare them for a more com- petitive environment. For example, it is helping a Traditionally, capital mark-et development in Asia has number of Indonesian manufacturing companies been a high priority for IFC tedhnical assistance. Dur- adapt to an increasingly open environment and to ing fiscal 1994 IFC continued to provide support on build on their comparatve advantages to become the development of securities markets and a leasing wsorld-lass competitors- industry in Viet NanL In India IFC completed a ASIA .47 review of capital markets regulations and operations, as well as of practices related to non-voting shares. Other activities during the fiscal year included help- ing the Chinese regulatory commission to review new securities regulations, and the Thai authorities to establish a financial futures and options exchange. IFC provided advice on the privatization of several companies in the region, including a copper-smelting operation in the Philippines and a plastL.. recycling enterprise in China. In India IFC has signed a man- date to advise Hindustan Machine Tooks Ltd. (HMT) on restructuring and the introduction of private investment and new technology; It is hoped that HMT will serve as a model for similar government-owned enterprises. In Southeast Asia IFC carried out a num- ber of advisory assigmnents to help project sponsors evaluate and structure proposed new investments. The Foreign Investment Advisory Service (FIAS) completed advisory projects in several Asian coun- tries in fiscal 1994, concentrating on the economies in transition and the small island economies. In Cambodia, China, and Vilet Nam, FLS helped sim- plify screening and approval procedures for foreign investment and advised the authorities on improving the coordination of approval procedures and promo- tional activities. In Fiji FIAS reviewed the institu- tional arrangements for foreign direct investment, assisted in the preparation of a new investment act, and examined the incentives frame work In Malaysia FIAS focused on strengthening the promotional and faclitation functions of the Industrial Development Authority. On the regional level, FIAS organized an important meeting in Bangkok to discuss the policy environment needed to attract foreign direct invest- ment in the infratructure sector. The meeting was attended by top government representatives from 12 countries in the region as well as business leaders from around the world. ASIA 48 THE ASIAN INFRASTRUCrURE FUND Infrastructure systems and services in Asia need to be expanded significontly to keep pace with the region's dynamic growth. Governments and public sector entities are finding it increasingly difficult to fund all the r'gion's infrastruc- ture investment needs on their own, and are turning to the private sector to sponsor and finance part of these invest- ments. However, there is a shortage of ban and equity resources to support private sector initiatives in developing and implementing infrastructure projects. To overcome this shortage, IFC has helped develop the Asian Infrostrucure Fund, a pooled investment vehicle that will mobilize funds from strategic and institutional investors worldwide. The fund's target is to raise $1 billion at final closing. The fund will be managed by the Asian Infrastructure Fund Management Company, a new fund manage- ment company and one of the first in Asia to manage o pool of funds that target the infrastructure sector exdusively. The project sponsor is Peregrine Investments Holdings Ltd., a highly successful merchant bank bosed in Hong Kong and part of the Peregrine Group. IFC has approved an equity investment of $50 million in the fund and a 10 percent participation in the equity capital of the fund manogement company. Other shareholders of the management com- pony will include Peregrine Infrastructure Capital Limited (representing Peregrinel, Soros Fund Management, Frank Russell Company, and the Asian Development Bank. IFC has been asked to play a key role in this fund because it is a seasned investor in Asia with considerable experience in greenfield infrastructure projects. IK will be represented on the boards of both the fund and the fund management company. ASIA 49 SOUTH PACIFiC PROJECT FACIlfTY SPPF helps entrepreneurs in IFC's nine South Pacific island member countries to develop bankable projects, either for new businesses or the expansion and diversificotion of existing businesses. Although SPPF does not provide project financing, il finances part of the cost of morket, technical, and feasibility studies, and helps the sponsors raise financ- ing from other sources. SPPF also provides technical assistance during project formulation and implementation. Fund- ing for SPPF's acivities is provided by IKF and the Governments of Australia, Canada, Japan, and New Zealand. The Government of India has agreed to provide technical experts for short-term consultancy assignments required by SPPF. SPPF is based in Sydney, Australia. Between August 1991, when the oFfice in Sydney opened, and June 30, 1994, SPPF had completed 24 projects and technical assisbance programs. During the year ended December 31, 1993, SPPF helped raise financing oF $3.3 million equivalent for eight projects with estimated totol investment costs oF $9.6 million equivalent. These eight projects are expected to create around 370 jobs. During the year SPPF also carried out three technical assistance programs designed to help develop the region's embryonic private setor. EXAMPLES OF SPPF PROJECTS Fiji SPPF helped CHE Intemational, a producer of fumiture, primarily for the Australian market, get loan and equity financing for the acquisition of a factory building and additional woodworking machinery. The company's invest- ment costs are estimated at $300,000 equivalent. In 1991 -SPPF provided technical assistance to help the company develop production costing. Papuo New Guinea SPPF helped Kula Kalun Coastal Shipping, an established local shipping company, raise a loan of $1.5 million equivalent from 'he PNG Banking Corporation through a line of credit from the European Investment Bank. The loan vill help finance the purchase of a 1,000t4on vessel, which cost $1.9 million equivalent. Tonga SPPF prepared a Feasibility study and a project proposal for the purchase of a larger Fishing boat and the diversifica- tion oF Alatini Fisheries, which supplies fish to the local markets and exports snapper to Hawaii. The company raised $100,000 equivalent from the Bank of Tonga. Vanuatu SPPF helped arrange the purchase of Radisson Royal Palms, a 168-room hotel thot had been in receivership for more than a year, by Hotel Properties Limited of Singapore, for a price of $3.8 million equivalent SPPF structured an arrangement acceptable to the buyers, the receivers, the Government, and the senior creditors. ASIA 50 PROJECTS APPROVED IN FISCAL 1994 A S I A FINANCING -(r,,W illims .1... r rl, PROJ/ECT DESCRIPTION TYPE ?TNAL China IFC approved an investment in China Dynamic Growth Fund LP., a venture Equity 20.0 20.0 capital fund. Project cost: $300.0 million. IFC approved equity investments in the China Walden Venture Fund, a new Equity 7.5 7.5 venture fund, and in China Walden Venture Investments, which will manage the fund. Project cost: $50.1 miUlion. Dalian Float Glass Company Limited, a joint venture with partners from the Loan 30.5 United States, Japan, and China, will build and operate a greenfield float glass Syndications 30.5 plant with an annual capacity of 155,000 tons in Dalian, Liaoning Province. Equity 2.4 63.4 Project cost: $134.0 million. Plantation runber Products, a joint venture between a British Virgin Islands Loan 11.0 company and a Chinese company, will build and operate a plant to produce Equity 1.0 12.0 medium-density fiberboard for construction and furniture. The plant will be in Leshan City, Sichuan Province, in China's interior region. Project cost: $48.0 million. Sqhenzhen China Bicycles Company (Holdings) Limited%, one of the world's Equity 1.0 1.0 largest bicycle manufacturers, held a rights issue to finance the development of its domestic distribution and sales network. Project cost $55.3 million. India IFC approved equity investments in the Centurion Quantum Growth Fund, Equity 2.6 2.6 a local mutual fund, and in 20th Century Asset Management Corporation, which will manage the fund. Project cost $18.3 million. Chowgule Steamships Ltd., India's third largest private sector shipping com- Loan 15.0 pany, will replace and expand its fleet. Project cost: $60.0 million. Syndications 27.0 Equity 5.0 47.0 DLF Cement Limited will establish a greenfield cement plant with a capacity Loan 11.0 of lA million tons peryear in the Pali district of Rajasthan. The project Syndications 17.0 includes the construction of a 15-megawatt power plant. Project cost Quasi-equity 8.5 36.5 $130A million. IFC approved an equity investment in Global Trust Bank, a new private bank. Equity 3.2 3.2 Project cost: $33.0 million. GujaratAmbuja Cements Limited will build a greenfield cement plant with a Equity 8.2 8.2 capacity of 1 million tons per year in the noithern state of Himachal Pradesh. Project cost: $126.8 milion. IFC was joint lead manager in the underwriting and placement of the first Underwriting 17.6 17.6 international convertible bond issue by Gujarat Ambuja Cements Limited. Project cost $80.0 million. GVK Industries Ltd. will build a 235-megawatt gaslnaphtha-fired combined Loan 40.0 cycle power plant in Andhra Pradesh, and own and operate it for 30 years, Syndications 70.0 selling the output to the Andhra Pradesh State Electricity Board. Project Equity 8.3 118.3 cost $290.7 million. ASIA 51 PROJECTS APPROVED IN FISCAL 1994 A SIA continued FINANCING (millioris of U.S. dollars) PROJECT DESCRIPTION TYPE TOTAL India IFC participated ina rights issue bylFGLRefractories Limited*,which has set Equity 0.5 0.5 rnritm'ied up a project with Harima Ceramic Company of Japan to make continuous casting refractories for the first time in India. Project cost. $8.0 million. IFC subscnrbed to a rights issue by India Equipment Leasing Limited*. Project Equity 0.1 0.1 cost $1.0 million.8 IFC approved a subscription to a rights issue by India Lease Development Equity 0.3 0.3 Liniited%. Project cost $4.6 million. IFC approved a facility that will enable Endo Rama Synthetics (India) Swan 0.7 § 0.7 Limited* to hedge against deutsche mark currency rate risk by swapping into US. dollars. Project cost $10.0 million. IFC approved a credit line to Infiastucture Leasing & Financial Services, Loan 25.0 25.0 Limited. Project cost $80.0 million. IFC exercised its pre-emptive rights and subscribed to an additional 300,000 Equity 03 0.3 equity shares in Invel Transmissions Limite*. Project cost $21 million. Nippon Denro Ispat Limited* will bud a hot rolled coil steel plant with a Loan 30.0 capacity of 1.2 rnillion tons per year. Project cost $790.0 million. Syndications 60.0 Equity 6.0 96.0 ST-CMS Electric Power Company will build a 250-megawatt lignite-fired Loan 30.0 thermal power plant in Tamil Nadu, and own and operate it for 30 years, Syndications 150.0 seUling the output to the state electricity board. Project cost $450.0 million. Equity 18.0 198.0 IFC was joint lead manager in the underwriting and placement of the first Underwriting 17.8 17.8 international equity issue by Tata Electric Companies*. Project cost $75.2 million. IFC approved an investment in a rights issue by The Great Eastern Equity 2.2 2.2 Shipping CompanyLimited* to finance the acquisition of ships. Project cost $22.6 million. IFC was joint lead manager in the underwriting and placement of the first Underwriting 30.0 30.0 international convertible bond issue by The Tata Iron and Steel Company Limited (TISCO)*, India's largest private steel company. Project cost $100.0 million. JFC made equity investments in Taurus the Star Share Fund, a local mutual Equity 7.5 7.5 fund, and in Credit Capital Asset Management Corporation, which will manage the fund. Project cost: $74.2 million. Indonesia KDLC Bancbali Finance, a new leasing company, will be set up in jakarta. Loan 15.0 Project cost S44.7 milion. Equity 1.2 162 IFC participated in a rights issue by P.T. Astra International*. Project cost: Equity 12.9 12.9 $320.0 million. ASIA 52 PROJECTS APPROVED IN FISCAL 19 9 4 ASIA FINANCING (mnifihs'r qlJUS. dafkarJ PROJECT DESCRIPTION T'PE TOTAL Indonesia FC exercised its pre-emptive rights to subscribe to the capital increase of P.T. Equity 1.4 IA cant mini Lantai Keramik Mas', which is expanding production capacity. Project cost: $9.5 million. IFC approved the exercise of its pre-emptive rights in the capital increase of Equity 6.9 6.9 P.T. Mitracorp PacificNusantarm*. Project cost: $46.5 million. IFC approved an investment in P,T. PAMA Venture Indonesia for 15 percent Equity 7.5 7.5 ($6.8 million) of an off-shore venture fund, 15 percent ($0.7 million) of an oa-,lhure venure uiild, and 10 percent LS 10,000) of the management company. Project cost: $50A0 million. P.T. Saripuri Permai Hotel wil build a 406-room, five-star hotel in Surabaya, Loan 8.0 Indonesia's second largest city. Project cost $68.0 million. Syndications 24.0 Equity 3.6 35.6 Korea, IFC approved a subscription to a rights issue by the Hana Bank*. Project cost Equity 2.1 2.1 Republic of $61.7 milion. IFC approved a subscription to a rights issue by the Korea Long Term Credit Equity 7A 7.4 Bank. Project cost $210.0 million. Nepal Himal Power Ltd. will build and operate a 60-megawatt run-of-the-river Loan 28.0 power plant on a BOT basis in the Ianakpur Zone of Nepal's central region. Syndications 5.0 The project includes an 80-kilometer, 132-kilovolt transmission line tat will Equity 3.0 36.0 carry power into the Kathmandu valley. Project cost $125.7 million. Papua ZZZ PNG Cannery Pty. Ltd.will construct a plant to process 200 tons of tuna Loan 12.0 New Guinea daily, a jetty, and a cold storage facility. Project cost S55.0 million. Quasi-equity 1.0 13.0 Philippines IFC subscribed to a rights issue by the All Asia Capital and Trust Equity OA OA Corporation*. Project cost $4.1 million. IFC approved a credit line to All Asia Capital and Trust Corporation*. Project Loan 25.0 25.0 cost $25.0 million. IFC arranged a risk-management facility to allow the Northern Mindanao Swap 0.5 S 0.5 Power Corporation to restructure liabilities under two dollar-denominated floating-rate loans. Project cost: $23A million. IFC approved invesments in Walden-AB Ventures Limited and in the man- Equity 3.8 3.8 agement company. Project cost: $15.5 million. Sri Lancka Lanka Cellular Services (Private) Ltd.* will extend its operations to three Equity 0.7 0-7 more cities and improve its service in Greater Colombo to serve an additional 2,400 subscribers. Project cost $5.6 million. Thailand Dhana Siam Fmance and Securities Public Company Limited of Thailand Loan 30.0 30.0 will use IFC's credit line for making long-term loans to Thai companies. Project cost $30.0 million. ASIA 53 PROJECTS APPROVED IN FISCAL 1994 A S I A contiaed FINANCING (millions of U.S. dallcars) PROIECT DESCRIPTION TYPE 7TOAL Thailand IFC approved additional financing for Star Petroleum Refining Company, Loan 25.0 cntinued Ltd.*, a joint venture between Caltex Trading and Transport Corporation Syndications 75.0 100.0 and the Petroleum Authority of Thailand that is building a 130,000 barrels- per-day oil refinery. Project cost $100.0 million. IFC approved an additional syndicated loan for Tuntex Petrochemicals Syndications 125 125 (Thailand) Ltd. to help finance the construction and operation of Thailand's first purified terephthalic acid plant. Project cost: S 12.5 million!' Vimythai Public Company Limited, ajoint venture between Solvayof Belgium Loan 45.0 and the Charoen Pokphand group of Thailand, will build and operate a Syndications 70.0 115.0 140,000 tons-per-year vinyl chloride monomer plant and associated chlorine plant to complete its integrated polyvinyl chloride complex Project cost $406.0 million. Viet Nam Socidt d'Economie Mixte Thong-Nhat M&ropole, a Vietnamese-foreign Loan 5.0 joint venture, will expand the Metropole Hotel in Hanoi. Project cost Syndications 17.5 $35.0 million. Quasi-equity 35 26.0 Regional IFC approved an equity investment in the Asian Infrastructure Fund, which Equity 50.3 50.3 is expected to be structured as a limited liability company in the Cayman Islands, and will invest in power, telecommunications, and transport projects in Asia. IFC also approved an investment in the Asian Infrastructure Fund Management Company, which will manage the fund. Project cost $753.0 million. IFC approved an investment for a 25 percent stake in the South East Asia Equity 10.0 10.0 Venture Investment Company*. Project cost S40.0 million. *IFC has made oe or moreprevi invmenents in. orloans ro this company. 5 >Tis figure nrprcsrnts IFCs initial exposore in a curreqy or intercst rate sip. a As a rights issusubscription afless than 5251J0.m this projeat is not induded in due total number ofprojects apprved in FY94. I. i project is nor induded in the total number ofprojes approved in FY. ASIA 54 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS A S I A FOCUS DESCRIPTION Cambodia Foreign direct investment FIAS helped in the preparation of a new foreign investment law. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported a project identification study for.several business sectors. China Corporate finance IFC reviewed the pre-feasibilitystudy forAKZO's proposed salt project in China to assess the project's bankability. Foreign direct investment FIAS reviewed screening and approval procedures for foreign direct investmenL Privatization IFC advised Shenzen Nanya on the feasibility of establishing a post-consumer polyethylene tereplithalate plastic recyding plant in southern China Project technical assistance With support provided through its Technical Assistance Trust Funds Program, IFC conducted a feasibilitv studv to turn around an existing joint venture for producing photovoltaic equipment Project technical assistance Through its Technical Assistance Trust Funds Program, IFC arranged for expert advisers to assist the securities regulatory commission in its examination of legal and financial institutions. Fiji Foreign direct investrnent FIAS reviewed the institutional arransgements for foreign direct investment, assisted in the preparation of a new investment act, and examined the incentives framework. India Capital market development IFC completed a review of capital markets regulations and operations, as weil as of practices related to non-voting shares. Corporate finance Nocil, a petrochemical company, retained IFC to help structure its moderniza- tion and expansion project. and arrange part of its financing requirements. Privatization/ IFC is assisting Hindustan Machine Tools Ltd., one of India7s largest government- Project technical assistance owned conglomerates, in finding a joint venture partner for its core business. With the support of its Technical Assistance Trust Funds Program, IFC provided advisory services on restructuring and privuatization for the company. Project technical assistance IFC advised DLF Cement Limited on the feasibility of establishing a greenfield cement plant near Ras in Rajasthan- Project technical assistance IFC reviewed the feasibility of establishing Karan Cement Ltd., a greenfield cement plant at Satna in north Madhya Pradesh. Project technical assistance IFC is assisting Nippon Denro Ispat Limited in assessing its forward integration steel project and in arranging finance for its consnructiosi. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured funding for expert technical assistance on options for modernizing and expanding an ammonia plant ASIA 55.S TECHNICAL ASSISTANCE AND ADVISORY PROJECTS A S I A continicd FOCUS DESCRIPTION India Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported an coatitineJit assessment of the environmental impacts of a proposed 250-megawatt lignite-based power planL Project technical assistance IFC arrangedsupport, through its Technical AssistanceTrust Funds Program, for expert assistance in privatizing the telecommunications sector. Indonesia Privatization IFC assisted the Shangri-La Group in structuring and mobilizing the financing for a five-star hotel in Surabaya. Project technical assistance IFC funded, through its Technical Assistance Trust Funds Program, a technical study and recommendations on management for a textile operation. Malaysia Foreign direct investment FIAS helped the Industrial DevelopmentAuthority to strengthen its promotional and fcilitation functions. Project technical assistance IrC supported, through its Technical Assistance Trust Funds Program, a feasibil- ity study for a joint venture to manufacture ceramic roofing tiles. Maldives Foreign direct investment FIAS conducted a diagnostic study of the investrnent climate. Mongolia Corporate finance/Privatization Through its Technical Assistance Trust Funds Program, IFC secured expertise to advise the Government on the completion and privatization of a hotel. Philippines Privatizationl IFC is assisting in the financial restructuring and privatization of Philippines Project technical assistance Associated Smelting and Refining Corporation (PASARX, one of the largest cop- per smelting and refining complexes in Asia. Through its Technical Assistance Trust Funds Program, IFC supported a review of the environmental and legal factors. Technical advice IFC advised on the structuring of Philippines Strategic Investment Holdings, a fund providing mezzanine-level financing for unlisted Philippine companies in the infiastructure and energy sectors. Thailand Corporate finance Star Petroleum Refining Company, Ltd., retained IFC to help structure and ar- range its finandng requirements. Corporate finance IFC advised Tuntex Petrochemicals (Tlailand) Ltd. on securing the financing for a purified terephthalic acid plant with an annual capacity of 350,000 tons. Corporate finance Vmiythai Public Company Limited retained IFC to help structure and arrange financing for the completion of an integrated polyvinyl chloride complex. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported a pre- investment review of market and technical factors for a pulp and paper milL Technical advice IFC is providing technical advice to the Thai securities and exchange commis- sion, which is undertaking a feasibility study on the regulatory framework and structure of a financial futures and options market. ASIA 56 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS A S I A FOCUS DESCRIPTION Viet Nam Capital market development IFC provided technical assistance in developing a leasing industry. Foreign direct investment FIAS assisted in improving coordination of approval procedures and promo- tional activities. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured expertise on establishing stock markets and securities exchange institutions. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured expertise on developing financial and legal institutions to promote private sector enterprise. Project technical assistance IFC supported, through its Tedmical Assistance Trust Funds Program, a studyof the cement sector to i'entify opportunities for investment and expansion. Project technical assistance IFC supported, through its Technical Assistance Trust Funds Program, a feasibil- ity study for a joint venture to produce ceramic floor tiles. Regional Project technical assistance IFC committed funds, through its Technical Assistance Trust Funds Program, for a study to identify potential investment projects in the hotel industry in Cambodia, the Lao People's Democratic Republic, and Thailand. ASIA 57 - REGIONAL REPORTS CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA Vit _fin1aneing and advice, in 1990-91 IFCfaciliated a. Dnanzatentand etnplyr bIrqaout of Eagru Chiemrical Pakistan LiunireL. RtdisnanCsJirtsnalc _ bnyun. It alsao pro- videda syndicatred ; lon to helpfinanc, rtie companly's epanion. En,gro's production capacity, and sales hae since J FC's activities in Central Asia, the Middle East, IFC continued to collaborate with the IBRD on pn° and North Africa grew dramatically in fiscal vate sector development in the region. This collabo- 1994-the volume of investment approvals was ration is resulting in joint projects-for example, 42 percent higher than in fiscal 1993, and three IFC coordinated the design, structure, and focus of times as high as in fiscal 1991-as IFC took advan- its credit line to six leasing companies in Pakistan tage of expanding opportunities stemming from an with the IBRD's.Financial Sector Deepening and improved macroeconomic situation and business di- Intennediation Project. The two institutions are mate in a number of countries collaborating on a similar project in Morocco. Following up on a study carried out in fiscal 1993 Two of the newly independent Central Asian repub- on constraints to private sector development in lics joined IFC during fiscal 1994: Kazakhstan and Morocco, IFC and the IBRD held a seminar in fiscal Uzbelcistan- IFC approved its first investments in 1994 for business and government representatives Kazakhstan and Uzbekistan, and has made substan- on ways to increase private investment. Private sector tial progress on other investment proposals, indud- assessments of Egypt and Tunisia are being jointly ing two in the Kyrgyz Republic. produced by IFC and the IBRD, and a similar study of Pakistan has begun. IFC wvas also able to begin operations in Gaza and the West Bankl following a series of peace and economic PROJECT FINANCING AND RESOURCE accords between Israel and the Palestine Liberation MOBILIZATION Organization. It approved its first project there dur- In fiscal 1994 in Central Asia, the Middle East, and ing the fiscal year. North Africa, IFC approved 30 projects in 9 countries and Gaza and the West Bank, compared with CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA 58 28 projects in 7 countries in fiscal 1993. At June 30, Capital Modaraba. These operations will address 1994. the Corporation's committed portfolio the shortage of medium- and long-term financing included loans and investments for 91 companies in Lebanon and Pakistan, a major constraint on the in 9 countries in the region, compared with 74 com- growth of small and medium-scale enterprises, which panies in 9 countries at June 30, 1993. are the backbone of the productive private sector in both countries. FY 94 FY93 FY9u m YtSMk3u) In response to a need for essential banking services in Kazakhstan and Gaza and the W'est Bank, IFC Fiancing approved for IFC's account 383 270 approved financing for the establishment of nev Loans and swaps 324 213 banks in these areas. Equity and quasi-equity 39 57 Directmobilization 216 117 To intermediate between liquidity surpluses and Loan sndications 194 117 shortages and to make possible the development of Undenrriting - a formal monev market in Morocco, IFC helped Total financing approved 599 387 establish the countrv's first bill-discounting institu- tion, Socidete Marocaine d'Intermddiation Financire. Commited portflio for IFCs account 768 538 And to help overcome the scarcity of equity, includ- Loans 623 433 ing risk capital, in Morocco, IFC approved an invest- Equity 145 105 ment in a mezzanine investment fund. Committed portfolio held for others 139 135 (loan partiipations) Another of IFC's objectives is to help private sector Total committed portfolio 907 673 companies in the region to mobilize capital in the international financial markets. I[C approved Approvals in fiscal 1994 coveed a wvide range of sec- $434 miElion in loan syndications-including tors, induding capital markets, manufacturing, S239 million for its omn account-for 17 projects cement; oil and gas, power, and tourism during the fiscal year The cornerstone of [FCs operations in the region during fiscal 1994 was support for capital market development IFC provided finance and technical assistance aimed at strengthening the region's finan- FINANCING APPROVED, FY90-94 cial institutions and mobilizing medium- and long- (millions of US dollr) term financing for them, developing securities mar- 600 kets, and broadening the range of financial services available to businesses. The capital markets sector accounted for 60 percent of the total number of projects approved in the region; IFC financing of $124 million was approved for projects with total 400 investment costs of about S785 million- IFC approved credit lines for four commercial bank;s in Lebanon (Banque Libano-Frangaise SAL, Socidt& Gdndrale Libano-EuropEenne de Banque SAL, 200 . .. Fransabank SAL, and Banque Libanaise pour le Commerce SAL), and six leasing companies in 100 I I Pakistan (National Development Leasing Corpora- 7 tion, Omb Leasing Pak-istan, Pakistan Industrial 0 - I - I ll Leasing Corporation, Atlas BOT Lease Company, 0 Pakistan Industrial and Commercial Leasing, and 1990 1991 1992 1993 1994 First Leasing Corporation). IFC also approved its N Syndications and underwriting first quasi-equity investnent for a Pakistani financial U Fiannng for IFC's own account institution, with a convertble income note for BRR CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA 59 IFC is also striving to develop institutions and prod- financing for the development of the Akshabulak oil ucts, such as funds, that encourage the expansion of field in central Kazakhstan; production is expected to intra-regional investments, channeling surplus say- be up to 19,000 barrels of oil per day. ings from some countries into investment in areas with a savings deficit. During fiscal 1994 IFC began TECHNICALASSISTANCE AND ADVISORY discussions with commercial banks in the region that SERVICES would be potential participants in IFC loan syndica- IFC has been advising the Government of Pakistan on tions for private sectorcompanies in countries where the power sector, and the Government of Jordan on there is a shortage of commercial lending. It also the telecommunications sector. In view of Pakistan's helped to establish the Near Eastern Fund, a regional new policy on private power, announced in March fund that will invest primarily in listed securities in 1994, IFC is about to approve its first power project Egypt, Jordan, Morocco, Pakistan, Tunisia, and in Pakistan so that it can establish a model for private Turkey. financing of these types of projects. In Jordan IFC played an important role in the preparation and issu- The cement and construction materials sector ance of an open tender for the award to the private attracted a substantial portion of IFC investment sector of the country's first cellular license. approvals for the year, in light of strong demand for these products in the region's expanding economies, IFC has been engaged in 10 technical assistance growing populations, and the bad-og in physical assignments relating to the development of the finan- infrastructure and housing projects. The Corporation cial sector in Jordan, Lebanon, Morocco, Pakistan, approved cement projects in Morocco and Pakistan. and Tunisia, and for the Cooperation Council of the IFC's investnents in Morocco and Pakistan will help Arab States of the Gulf Five of these assignments finance improvements in the environmental condi- were carried out in collaboration with the IBRD. IFC tlions of existing plants and the introduction of stan- has provided advice on a variety of issues related to dard pollution control measures required by IFC in financial sector development, such as securities mar- the new cement plants it finances. In Egypt IFC will ket laws and regulations, the establishment of stock help finance the expansion and privatization of the exchanges, the regulation of corporate debt instru- Alexandria National Iron & Steel Company S.A.E. in ments, and the divestiture of government-ovned response to growing domestic demand for rebars and financial institutions. IFC has also continued to assist other steel products. the Arab Monetary Fund in establishing an Arab Markets Data Base and advised the Cooperation A key element of IFC's strategy in the region is to Council for the Arab States on cross-listing of shares encourage greater private sector activity in infrastruc- in their stock markets. ture services, particularly in power, telecommunica- tions, and wads. Countries in which opportunities The Foreign Investment Advisory Service (FIAS) and are developing are Egypt, Jordan, Lebanon, Morocco, IFC jointly completed a study on wvays to fhcilitate Oman, and Pakistan. IFC approved financing for a linkages between foreign and local firms in Egypt. BOT power project in Oman; this was the first project FIAS completed a comprehensive technical assistance of its kind in the Middle East. program in Pakistan. advising the nev Paklistan Investment Board on promotional strategy and In its new member countries in Central Asia, IFC investment Facilitation. FIAS also organized a work- has focused on projects in sectors that have a signifi- shop in Dubai on investment promotion f6r the Arab cant economic impact or that can generate foreign region. In Lebanon FIAS conducted an assessment of exchange banking, leasing, and natural resource the investment climate; in Oman FIAS completed an development. In Uzbekistan IFC is supporting advisory project on institutional developmenL the evaluation of a gold mine that could lead to a development project; the gold mine is expected to yield 350,0DO ounces of gold per year. The project is being undertaken by a joint venture, Amantaytau Goldfields, set up by Lonrho Plc of the United King- dom and two local entities, the Navoi Mining and Metallurgical Concern and the State Committee fur Geology and Mineral Resources. IFC also approved CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA 60 PROJECTs APPROVED IN FISCAL 1994 CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA FINANCING (nltlions of U.S. .hul irs) PROIECT DESCRIPTION TYPE TOTAL Egypt Alexandria National Iron & Steel Company SA.E.* will increase its rebar pro- Loan 20.0 duction capacity from 1.1 million tons per year to 1.5 million tons per year. Equity 6.8 Project cost $225.5 million. Swap 20.0 5 46.8 Club Ras Soma Hotel Company will build and operate a 314-room five-star Loan 5.2 holiday village on the Red Sea coast, where the World Bank and IFC are Syndications 4.0 financing the infrastructure of Abu Soma, a new private sector tourism devel- Equity 3A 12.6 opment and environmental management projecL Project cost: S75.0 million. Jordan Al Keena Hygienic PaperMill Co.Ltd. will build and operatea papermiHl with Loan 10.0 10.0 a capacity of 30,000 tons per year. Project cost $29.7 million. Kazakbstan ABNAMRO Bank Kazakhstan will provide essential banking services to both Equity 20 2.0 Kazakh enterprises and international joint ventures in Kazakhstan. Project cost: S10.0 million. Kazgernunai, a joint venture betveen Veba Oel AG and EEG of Germany and Loan 40.0 YKNG, a Kazakh production association,will develop theAlcshabulak oil field Syndications 7.5 in central Kazalhstan. Project cost $296.4 million. Quasi-equity 10.0 57.5 Lebanon IFC will provide long-term credit line facilities to the following four Lebanese private sector commercial banks, for onlending to local small and medium- scale enterprises in the private sector Banque Libanaise pour le Commerce SAL Loan 6.0 Project cost $45.0 million. Syndications 3.0 9.0 Banque Libano-Franqaise SAL Loan 6.0 Project cost $60.0 million. Syndications 6.0 12.0 Fransabank SALt Loan 6.0 Project cost £60.0 million. Syndications 6.0 12.0 Societe Gindrale Libano-Europdenne de Banque SAL Loan 6.0 Project cost: $60.0 million. Syndications 6.0 12.0 Morocco Cinents du Maroc (CIMAR)* will renovate, modernize, and make environ- Loan 10.3 mental improvements at its Agadir plant. Project cost $25A million. Syndications 4.3 14.6 Euratlas Capital Developpement Fund, a closed-end investment fund incor- Equity 8.1 8.1 porated in Morocco, will invest in existing companies that are expanding and diversifiring. A fund management company will be established. Project cost $45.4 million. Societe Marocaine d'Intermediation Fnanciere will be the first bill discount- Equity 0.5 0.5 ing institution in Morocco. Project cost $5.0 million. CENIRAL ASIA, THE MIDDLE FAST, AND NORTH AFRICA 61 PROJECTS APPROVED IN FISCAL 1994 CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA FINA NCING (inilliouas of U.S. hillurs) PROJECT DESCRIPTION TYPE TOTAL Occupied Arab Palestine Investment Bank, the first comprehensive commercial and Loan 15.0 Territories investmcnt bank in the West Bank and Cava, will focus on project finance Equity 3.8 18.8 of the and wholesale banking, and will provide a variety of financial services to the West Bank local private sector. In addition to an equity investment, IFC has approved a and Gaza credit line for onlending to small and medium-scale entcrprises. Project cost $75.0 million. Oman United Power Corp. will build, own, and operate, on a BOT basis, a Loan 15.0 90-megawatt thermal power facility at Mana:, and 186 kilometers of tans- Syndications 57.0 mission lines and associated substations. The company will sell electricity Equity 4.0 76.0 to the Government electricity monopoly. Project cost $204.5 million. Pakistan IFC will provide lines of credit to six leasing companies: Atlas BOT Lease Company Loan 10.0 Project cost: $62.5 million. Syndications 2.5 12-5 First Leasing Corporation Loan 5.0 5.0 Project cost $25.0 million. National Development Leasing Corporation Loan 12.5 Project cost: $87.5 million. Syndications 5.0 17.5 Orix Leasing Pakistan Loan 12.5 Project cost: $875 million. Syndications 5.0 17.5 Paldistan Industrial and Commercial Leasing Loan 5.0 5.0 Project cost $25.0 million. Paldistan Industrial Leasing Corporation Loan 10.0 Project cost $62.5 million. Syndications 2.5 12.5 IFC will invest in convertible income notes issued by BRR Capital Modaraba, Loan 10.0 10.0 the first leasing modarabaa in Pakistan. Project cost $40.0 million. IFC will joint lead manage an international equity offering by D. G. Khan Loan 25.0 Cement in the form of global depositary receipts, the first such issue by a Syndications 40.0 Pakistani company. Project cost $156.5 million. Equity 5.0 Underwriting 21.6 91.6 IFC arranged an additional syndication for Fauji Cement Company Ltd&,- Syndications 10.0 10.0 which is building a greenfield cement plant with a capacity of I million tons peryear. Project cost: $10.0 million.) Maple Leaf Cement will expand its annual production capacity for grey Loan 30.0 portland cement from 0.6 million tons to 1.6 million tons and improve Syndications 10.) pollution controls at its facilities. Project cost: $1 60.8 million. Equity 5.2 45.2 CENTRAL ASIA, THE MIDDLE EAST, AN'D NORTH AFRICA 62 PROJECTS APPROVED IN FISCAL 1994 CENTRAL ASIA, TH E MIDDLE EAST, AND NORTH AFRICA FINANCING (rnillioisof U. otidri) PROJECT DESCRIPTION TYPE TOTAL Pakistan ORIX Investment Bank will offer a complete range of investment banking Equity 0.3 0.3 cotistied activities. Project cost: $3A million. IFC subscribed to a rights issue by Packages Limited*. Project cost Equity 0.1 0.1 $1.7 million.' Pa}istan Credit Rating Agency will be Pakistan's first independent commer- Equity 0.2 0.2 cially based credit rating agency. Project cost S1.0 million. Pakistan Petroleum Limited& will install compression facilities to extend the Loan 31.1 life of the Sui natural gas field. Project cost: $72.5 million. Syndications 21.0 52.1 Regent Knitwear will establish a plant to make 5,200 tons of finished cotton Loan 13A fabric and 4,875 tons of dyed yarns annually for sale in both export and Syndications 4.8 domestic markets. Project cost: $47.9 million. Equity 2.2 20.4 Tunisia IFC exercised its pre-emptive rights in a share issue by Sociftl Mini&re de Equity 0-8 0.8 Bougrine' to finance the completion of a zinc mining project. Project cost $7.7 million. TJzbekstan Amanraytau Goldfields, a joint venture company, wI evaluate the economic Quasi-equity 1.2 1.2 and technical feasibility of a gold mining project in central Uzbekistan with a potential output of 350,000 ounces per year. Project cost $6.4 million. Regonal IFCwill help establish the NearEastern Fund, a regional fund that will invest Equity 5.0 5.0 primanly in securities listed in Egypt, Jordan,Morocco, Pakistan,Tunisia, and Turkey. Project cost $30.0 million. IFC has made one or moreprrevio us irnvestnrs in. or loans o. dris rcompainy - Thisfigre reprefents IFCs initial 7posmrc in a unrmacn or interew ratesap. a. A poo of funds mannwd byasseparos specialieda inveumern nmanagementr company simiar to a dosed-end invsnsenr company orfiend. b. 7This projea is not indluded in rie tonl nurnber ofprojets approved in FY94. c As a rigfts issau subscripien of less dran 250o000. this projet is nor induded in twe total number ofprojects apprrd tn FY94. CENTRAL ASIA, THE MIDDLE EAST. AND NORTH AFRICA 63 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS CENTRAL AS[A, THE MIDDLE EAST, AND NORTH AFRICA FOCUS DESCRIPTION Egypt Foreign direct investment FIAS and I FC completed a joint study on ways to fhcilitate linkages between foreign and local firms. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured support for a market and technical study on setting up textile finishing operations. Jordan Capital market development IFC carried out an initial review for the Amman Financial Market of trading, clearing and settlement systems, and the potential for introducing market makers. Project appraisal IFC carried out an appraisal of an export-oriented fertilizer project, including review of feasibility, pricing, and contractual arrangements, and design of financing structure. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported seminars on product quality management for a pharmaceuticals manufacturer. Technical advice IFC assisted a local company in evaluating a bromine chemicals project, and participated in discussing potential joint ventures with foreign partners. Technical advice IFC advised the Govemment on licensing private investors to operate a cellular telephone service. Through its Technical Assistance Trust Funds Program, IFC arranged financing for a study on structuring the project and preparing the tender documents. Kazakhstan Project appraisal IFC conducted an appraisal of the Leninogorsk Gold Tailings Project on behalf of the GovernmenL The appraisal induded an evaluation of the technical and financial aspects of the project and a review of the joint company agreement between the local and foreign partners. Lebanon Capital market development IFC advised the authorities on measures to revitalize the securities markets and reopen the stock exchange. Foreign direct investment FIAS conducted a diagnostic study of the investment climate. Morocco Capital market development IFC reviewed the capital markets as part of a World Bank- Private Sector Assessment and advised the authorities on capital markets issues relating to privatization- Oman Foreign direct investment FIAS assisted in the establishment of an investment promotion unit in the Ministry of Industry and Commerce. Pak-istan Capital market development IFCprovided adviceon various aspects of capital market development, including regulations for a credit rating agency and rating of financial instruments, and reviewed regulations on corporate debt instruments. IFC also participated in the IBRD's Financial Sector Deepening and Intermediation Project pre-appraisal mission and advised on financial sector issues. Foreign direct investment FIAS completed a comprehensive technical assistance program by advising the newly established Paklistan Investment Board on inxvestment facilitation and promotional strategy; CENTRAL ASIA, THE NIIDDLE EAST, AND NORTH AFRICA 64 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA FOCUS DESCRIPTION Pakistan Project techinical assistance 11C arrianged funding. through its 'lchnical Assistanc 'I'rust Funds Program, for conritined training and operational expertise on establishing a credit rating agency. Plroject technical assistance - Tlrough its5Iichnical Assistance Trust Funds Program. 1 Carranged funding for consultants to assess and recommend environmentally sound optioins for mod- ernizingand expanding a cemnent operation. Project technical assistanice 'hrough its lTchnical Assistance Trust Funds P'rogram, 1 lC secured support for a study on automotive pricing mechanisimis. Project technical assistance IFC arranged funding, through its Technical AssistanceTrust lunds Program, for consultants to advise on the proposed modernization and expansion of a plant producing metal conductors and cables. Tunisia Capital market development IFC participated with the IBRD in a review of the financial sector and advised the Government on privatizing financial institutions. Uzbekistan Project technical assistance Through itsTechnical Assistance Trust Funds Program, IFC supported a studyon completing facilities and defining the market for three hotels under construction. Regional Capital market development IFC advised the Cooperation Council of the Arab Stares of the Gulf oni the cross-listing of shares and on improving the efficiency of stock markets in Gulf countries. CENTRAL ASIA, THE MIDDLE EAST, AND NORTH AFRICA 65 REGIONAL REPORTS EUROPE IFC lhrlpcLd .lcs4Pr i.atnd irm plesinet .I pnrhgran to priratize aLgrictiltuiral hands i t silac N'iday Ninwrad region ofRaassia. Telac prngna is laintg *sed as a fnaoad in trie rlst afRaaia. J FC welcomed three new members in the region and to use the proceeds to set up a local-currency during fiscal 1994: Estonia, Latvia, and lending facility in Hungary, another first for Ukraine. Under the terms of the resolutions the Corporation. adopted by the World Bank's executive directors in February 1993, another of the successor republics IFC continued to foster the development of small to the Socialist Federal Republic of Yugoslavia, the businesses in Poland through the Polish Business former Yugoslav Republic of Macedonia, fulfilled the Advisory Service (PBAS), which provides advice to requirements for membership in IFC. Member coun- entrepreneurs. PBAS's activities in 1993 are described tries in the region eligible for IFC investments now on pages 70-71. number 17. Cooperation with the World Bank continued in a Important IFC initiatives in Europe in fiscal 1994 number of areas, notably in a private sector assess- included technical assistance programs in three key ment begun for Hungary and a survey of private areas: the privatization of agricultural lands in Russia; firms carried out in Belarus- the creation of capital markets and financial institu- tions in Russia required following the voucher-based PROJECT FINANCING AND RESOURCE privatization of large enterprises; and the first privati- MOBILIZATION zation of small enterprises in Belarus. In fiscal 1994 IFC approved 46 projects in Europe -39 in 11 countries and 7 regional projects- Other highlights of the year induded several IFC compared with 20 projects in 4 countries in fiscal investments in telecommunications projects, as new 1993. At June 30, 1994, the Corporation's committed opportunities opened up for private investment in portfolio included loans and investments for 121 this sector. Also noteworthy was the authorization by companies in 14 countries, compared with 105 IFC's Board of the establishment of a pilot program companies in 11 countries at June 30, 1993. that will enable IFC to borrow in Hungarian forint EUROPE 66 FY94 FY93 the formation of local telephone companies, and the milions of U.d uan) development of cellular telephone and cable televi- Financing approved for IFC's account 443 419 sion networks. IFC approved financing for several Loans, guarantees, and sivaps 297 377 projects: the privatization of Hungary's national tele- Equity and quasi-equity 146 42 communications operator the creation of a major Direct mobilization 153 365 cellular telephone network and a new private tele- Loan syndications 138 365 phone company in Hungapr the construction and Underwriting 1 5 - or ration of a large private telecommunications Total financing approved 596 784 coijipany in Poland; the establishment of a diversified telecommunications holding company in Rtussia; and Committed portfolio for IFC's account 1,185 1,075 the establishment of a regional fund, Central Europe Loans 983 938 Telecom Investments, Ltd., which. will invest in the Equitv 202 137 equity of privately controlled telecommunications Committed portfolio held for others 494 483 companies in Central and Eastem Europe- (loan participations) Total committed portfolio 1,679 1,55S IFC also approved financing for a number of manu- facturing companies, induding, among others, a cement company in Estonia, a flexible cold-rolling In Europe IFC concentrated on suitable projects in steel mill and a producer of high-quality aluminum the countries in wshich investments are most likely to foil in Turkey, a pulp and paper mill in Poland, and be profitable; at the same time, however, it strove to a manufacturer of glass containers in the Czech develop and finance projects in other countries when Republic. An interesting feature of the project involv- the projects seemed likely to have a strong positive ing Kwvidzyn International Paper in Poland is the impact on private sector development. IFC approved cooperation between IFC and a number of other its first investments in Bulgaria, Estonia, independent development institutions: the Multilateral Investment Slovenia, and Ulkraine, as wvelLas its first regional Guarantee Agency, the European Bankl for Recon- project in the Baltic region.The scale and importance struction and Development, and the U.5. agency of the Russian economy and Russia's move toward OPIC. private ownership on a mark-et basis have created the potential for expanded opportunities for IFC invest- ment in Russia. While the current level of investment activity by the private sector is limited, there is FINANCING APPROVED, FY9O-94 ncreasing optimism- (millions of U.S dofiars) 800 Most investment opportunities in the region involve the modernization and expansion of existing plants 700 or enterprises; greenfield projects are scarce. This is one reason the average investment size in Europe is 600 smaller than in most of the other developing regions. Many of IFC's investments in fiscal 1994 went to newly privatized companies in which foreign firms 400 were involved as direct investors. Several investments will help finance the establishment of new financial 300 1 institutions. In the former centrally planned econo- mies, IFC's investment approvals continued to be 200 E l '- predominantly for joint ventures, while most of the projects in Turkey involved wholly Turkish-owned lo0 _ .. enterprises- I E E E The opening of infrastructure-especially telecom- 1990 L991 1992 1993 1994 munications-to private firms generated investment U Syndications and underwriting opportunities for IFC in connection with the privati- U Financing for [FCs own account zation of state-owned telecommunications systems, EUROPE 67. liuitgar y is the filst coLuntry in which I I Cwi I borrow TECHNICAL ASSISTANCE AND ADVISORY or make loans in local currenc, T he2 establishimenit of SERVICES a local-CUrrency lending flacility in IHuIngaIrvY will IIC provided techinical assistance and advisory allow I tC to provide loiig-terni project finanicinig in services in a numilber of countries in Europe during Itrint to I-lungarian companies that halve little or no fiscal 1994, to companies as well as to governments. foreign exchange revenue and therel;bre prefer liabili- It wIas particuilarly active in several key areas: helpinig ties denomiinated in local currencv. In additioni, governmiieints to design and implemeint pilot privati- development of domestic capital markets, given their 7ations, helping privatized companies to identify inmportance to the efficient functioning of the real strategic partners and attract capital, and developing economy, is one of IFC'.s main objectives. IlFCs bond capital mark-ets. issue in Hlungarv is expected to have a positive impact on tlhe development of the country's bond market- In Belarus, Russia, and Ukraine, IFC continued to for example, by leading to longer maturities for forint provide techinical assistance in privati7ation. I FC's bonds and broadening the range of high-quality stratesgy in the former Soviet republics has been to paper available to investors. launch groundbreaking programs in a city or region that can be used as models elsewhere, and to remain The expansion of small and medium-sized private involved until the programs are weil established. enterprises has become central to the growth of the I FC's technical assistance programs in these countries private sector in most of the former centrally planned have relied heavily on grant financing from donors: economies, and the backwvardness of tht financial US-AID and the United Kingdom's Know-How Fund sector is now widely recognized as a bottl.neck hold- provided substantial support in fiscal 1994. ing back private sector grow th. Accordingly, capital markets projects have a high priority for IFC, which By the second half of fiscal 1994, the largest technical is seekling way-s to meet the needs of the private sector, assistance program in which IFC w 3as involved was especially for equitv and relativelv small investments, the privatization of agricultural lands in the Nizhny IFC has approved a number of capital markets Novgorod region of Russia. Under the procedures project*, induding credit lines; countrv-specific and established, the members of each staie or collective regional venture capital and investment funds that farm receive entitlement certificates for land or prop- not only invest in needed equit, but also mobilize ertv. These certificates can be used in any of several foreign capital; the underwriting of a securities issue. ways-most important, they can be used for bidding a riskc-management facility for a locally owned individually or in groups at non-cash auctions Russian private bank: and the establishment of new for land, property, or businesses of the organization institutions such as leasing, factoring, insurance, being broken up. A decree was signed into latw and securities companies. approving the privatization of land and reorganiza- tion of agricultural enterprises in Nizhny Novgorod In the agribusiness sector, IFC approved three invest- and recommending that these reforms be imple- ments in Turkley for projects involving e.xpansion mented by agricultural enterprises throughout of production capacity, modernization of processing, Russia, vhile also setting in motion various actions and development of the market for meat and dairy required for land privatization nationwide. products. It will also help finance the privatization and modernization of food-processing companies Programs launched earlier in Russia in connection in Hungary and Poland to help them improve with the voucher-based privatization of large enter- efficiency and raise product qualitv to international prises, and the privatization of small enterprises and standards. IFC has also approved financing for a the trucking-transport industries were completed in Hungarian companv that plans to produce high- the course of the fiscal year. The programs were all qualitv malt to compete with the imporLs now used successful, and their impact was felt nationalW In to brew beer. Ukraine, where I FC played a key role by providing assistance in launching the privatization of small In the oil and gas sector, IFC approved an equity enterprises in fiscal 1993, IFC extended its assistance investment in Amoco Poland Petroleum Company, to program to ten cities during fiscal 1994. IFC has also help finance the evaluation of the economic and tech- launched the first privatization of small enterprises in nical feasibility of producing methane gas from coal- Belarus, in the cit of Brest. The production of manu- beds in the Upper Silesia n basin. als and other widely disseminated publications EUROPE 68 describi ng successful privatization methods in detail also began a research project to learn more about continues to be a key element in IFC's programs, in the strengths and weaknesses of Central and Eastern Belarus and Ukraine as well as in Russia. European countries in competing forvarious kinds of foreign direct investment, cspecially when compared In fiscal 1994 IFC continued to provide assistance to with other developing countries. As an important the Government of Poland in the privatization of the part of this research, executives of multinational firms Polish cement and lime sectors; the sale of the Gov- that are actual or potential investors in Europe have ernment's holdings in five companies was conduded. been personally interviewed to clarify their strategies IFC is continuing to work with the Government on and the determinants of their investment decisions as the privatization of three more companies. With they relate to European economies in transition. This IFC's help, during the fiscal year the Czech Republic project will be completed in fiscal 1995. transformed Elitex Usti nad Orlici, a state-owned producer of textile machinery, into a joint stockl com- pany and sold a majority of its shares to a Swiss part- ner. In Slovenia IFC assisted a producer of mopeds and small engines in negotiating and conduding the sale of its chain saw division. In Turkey IFC helped a state-owned mining company conduct a successful search for a private investor to develop, mine, and process soda ash, and received a new mandate from the same dient to help develop its hydrogen peroxide facilities. In Ukraine IFC received mandates to assist in the privatization of the Black Sea Shipping Com- pany (Blasco). the country's commercial shipping company; several vegetable-marketing companies in the Kiev region; Ukraine's largest canning factory; and a poultry planL In addition, following up its assistance in privatizing Odessa Meat Combinat, IFC is organizing a public offering for the company. It will be the first public offering ever in Ukraine. In fiscal 1994 IFC provided technical assistance in capital market development in a number of countries where IFC felt the benefits would be substantiaL There were two main components of IFC's program: following up and complementing the privatization of large enterprises in Russia by developing securities markets, share registries, and associated financial services; and continuing to provide assistance in the development of capital markets legislation and insti- tutions such as stock exchanges, bond markets, com- modity exchanges, commercial banks, and leasing companies. In addition, advisory assistance was given to Ljubljanska Banka in Slovenia, a long-standing IFC client. The Foreign Investment Advisory Service (FIAS) completed diagnostic studies of the environment and procedures for foreign direct investment in Bulgaria, the Slovak Republic, and Ukraine; updated an earlier study on Poland at the Government's request; and held a workshop in Washington to review proposed amendments to Russia's foreign investment law:. FIAS EUROPE 69 POUSH BUSINESS ADVISORY SERVICE PaAS-or, as it is known in Poland, Miedzynarodowo Pomoc Polskim Przedsiqbiarstwom C3P1-begon operations in the fall of 1991. PBAS provides finonciol and technicol advisory services to entrepreneurs in Polond seeking to set up new businesses ar modemize or rehabilitate established ones. In addition to preparing business plons and invest- ment proposals, PBAS engages in technical and marketing advisory work and investment implementation and pro- vides operational support. PBAS also promotes the development of locol business consultants. PBAS is based in Warsaw, with branch offices in Katowice and Poznoa and representative offices in Bialystok and Gdofisk. PSAS was co-sponsored by IFC ond the European Bank for Reconstruction and Development, which provide its fund- ing, along with Canada, Denmark, France, Ireland, Italy, Japan, the Netherlands, Sweden, Switzerlond, ond USAID. IFC is ihe executing agency. EC-PHARE supports part of PBAS's training acivities. The Export-Import Bank of India, the British Know-Iow Fund, ond Kreditanstalt fur Wiederaufbou of Germany have supported PBAS by making consultants owailoble. The Government of Poland has made a contribution in the form of office space in Warsaw. PBAS has had an important impad on the development of the private sector. First, it has facilitated the access of emerging businesses and entrepreneurs to new markets, monagement, technical knowhow, and finance. Since its start-up, PBAS has worked an 64 projeds of various sizes all over Poland. Of tiese, 21 have been completed, 33 are in process, and 10 were either canceled or dropped. Second, PBAS hos made an indirect contribution by assisting in the training of young Polish business consultants and providing them with on-he-ob experience. These consultants will eventually make their knowledge available to other Polish businesses. EXAMPLES Of PBAS PROJECTS Rzesz6w Psternak, a shoe manufocturer with 142 employees and annual sales of about $600,000, retained PBAS to pre- pare a business plan focusing an expanding production and hnding new markets at home and abrood for its output, which consists largely of intermediate products. With PBAS's encouragement and assistonce, the company has started producing and selling finished shoes and shifted its export sales to more profitable markets Slupno Jurmark, a meat-processing ond packing business whose principal product is frozen hamburgers, is a maojor supplier oF an international fast food chain. It is seeking to increase its sales to this chain and to extend soles to supermarkets and independent fast Food restaurants. PBAS helped ihe company improve quality, increase production capacity, strengthen financial controls with a new accounting system, reduce direct costs, and adjust product specifications to satisfy market requirements. It also helped the company renegotiate unprofitable supply contracts and raise its prices on items being sold below cost, rescuing it from bankruptcy and saving more than 30 jobs. PBAS orranged about $1 00,000 in project financing, enabling the company to invest in new equipment EUROPE 70 Walbrzych Marex started its operations in 1990, boatling fragrant ails imported from France for use in ceramic lamps produced in one of its three plants. The bulk of Marex's production is exported to Western Europe. The company is planning to expand its sales and production by at least 30 percent and retained PBAS to develop a business and morketing plan. With PBAS's help, the company has begun to sell its products in the United Stales, and sales tumover in 1993 was double that of 1992. PBAS is now helping the company increase sales to France. As a result oF this expansion, the number of employees should increase, from 85 to 1 15. Wroclaw With assistonce from PBAS, Dijo obtained a $60,000 loan from the Enterprise Credit Corporation to buy equipment for the production of salted pretzel sticks and crackers. It has retained PBAS again to develop new business opportu- nities in related morkets. Zielona G6ra The management of Novfto S.A., with advisory support from PBAS, completed one of the first successful leveraged buyouts under Poland's capitol privatizotion progrom. The cost of the buyout was $2.4 million, excluding capital improvemenis. Prior to the privatization, PBAS had already helped ihe company improve marketing and installed an improved cost accounting system. EUROPE 71 PROJECTS APPROVED IN FISCAL 1994 EUROPE FINANCING enaillioans of U.S. dollars) PROJECT DESCRIPTION TYPE TO7AL Bulgaria EuroMerchantBalkanFund,anew venturecapitalfund, willmakeequityand Equity 5.0 5.0 quasi-equity investments in small and medium-sized private enterprises, pri- marily in Bulgaria. Up to 30 percent of the fund may be invested in Bulgarian companies in its portfolio that are expanding into Albania and Romania. Project cost: $25.0 million. Czech Republic Autokola Nova Hut as. will expand its annual production capacity from Loan 12.9 15 million steel car wheets to 3.5 million fabricated steel and I million alumi- Syndications 21.0 num car wheels. It will also install additional pressing. rim forning, and as- Quasi-equity 2.9 36.8 sembly facilities and complete a new paint plant. Project cost $63.0 million. Etemitove Zavody a.s., a recently privatized maker of building products, Loan 2.6 will modify its plant and convert its production from asbestos-cement to Quasi-equity 1.5 4.1 cellulose-based cement using technology provided by Danskl Etemit-Fabrik A/S. Project cost S 14.9 million. EZA Sumperk a.s., a recently privatized maker of building products. will Loan 3.4 modify its plant and convert its production from asbestos-cement to Quasi-equity 1.3 4.7 cellulose-based cement using technology provided bv Dansk Eternit-Fabrik A/S. Project cost S18.2 million. IFC approved an investment in MaFra as, a newspaper publisher. Project Loan 14.2 14.2 cost S39.2 million. Vetropack Moravia Glass a.s. will increase annual production of glass Loan 19.7 19.7 containers from 145,000 tons to 190,000 tons. Project cost S48.0 million. Estonia Kunda Nordic Cement A/S will modernize a plant that currentlv produces Loan 6.0 almost I million tons of cement per year, improve environmental controls, Equity 4.0 10.0 and build new port facilities. Project cost $60.0 million. Hungary Albadomu Malatermelo Es Kereskedelmi BT will build a malt production Loan 4.9 plant and purchase a silo complex. Project cost: $19.9 million. Quasi-equity 1.9 6.8 IFC approved an investment in the Hungarian Telecommunications Quasi-equity 30.0 30.0 Company to help with its privatization. Project cost S341.1 million. Mirelite Budapest Frozen Food Company Inc. is building a plant to produce Loan 6.0 frozen meals. Project cost: S20.5 million. Equity 3.0 9.0 Papatel will build and operate a local telephone network in the Papa region. Guarantee 3.2 connecting about 10,200 subscribers by 1995. Project cost: $14.4 million. Equity 0.5 3.7 Westel 900 GSM Mobile Telecommunications Company Ltd. will install and Loan 35.0 operate a digital cellular telephone svstem covering 95 percent of Hungary Equitv 4.0 39.0 and serving up to 235,000 subscribers. Project cost: S160.0 million. Poland Amoco Poland Petroleum Company will evaluate coalbed methane gas Quasi-equity 87 8.7 resources in the Upper Silesian basin. Project cost S86-5 million. EUROPE 72 PROJECTS APPROVED IN FISCAL 1994 EUROPE F INA N CING (mIilliols of U.S. diolrsl) PROJECT DESCRIPTION TYPE TOTAL Poland IFC will help establish Handlowy Heller, the first specialized factoring Equity 0.6 0.6 contidnud company in Poland. Project cost $3.0 million. Kw%idzvn International Paper, one of the most modern pulp and paper mills Loan 24.0 in Eastern Europe and the only fully integrated bleached pulp and paper SyndicaLions 18.8 42.8 mill in Poland, will increase capacity by about 50 percent and upgrade its machines. Project cost: S328.0 million. Peters-Przemysl Miesny I Handel S.A, one of the first meat processing plants Loan 4.5 privatized in Poland.will modernize its facilities to EU standards and renovate Quasi-equity 1.0 5.5 a network of retail stores. Project cost S18.0 million. IFC will provide financing for Sprint RP. Telekom, one of the country's first Loan 25.0 privately owned telecommunications networks. Project cost S165.0 million. Syndications 45.0 Equity 8.0 78.0 Portugal [FC exercised its pre-emptiverights in an equity issue byBanco FinantiaS.A. Equity 1.1 Project cost S31.6 million. Quasi-equity 1.9 3.0 Romania [FC will invest in Romnlease S.A, the first leasing company in Romania. Loan 5.0 Project cost: $15.5 million. Equity 0.5 5.5 Russian Framlington Russian Investment Fund, a ten-vear dosed-end fund, will Equity 8-0 8.0 Federation inmest in equity and quasi-equity securities in Russian companies, with a strong emphasis on joint ventures involving established Western partners. Project cost S50.0 million. Russian Telecommunications Development Corporation 4ill expand exist- Equitv 7.5 75 ing cellular and intemational gateway operations and develop new telecom- munications projects. Project cost $40.0 minlion. Savvinskaya-Seiyo Companyw ill build and operate Savvinskaya Business Loan 5.6 Cent. r, a modem office building of 10,959 square meters in central Moscow' Quasi-equity 21 7.7 Project cost: S30A million. IFCv will provide Tokobank ,one of Russia's largest commercial banks, with Hedging fachility 5.0 § 5.0 a risk management facility to help the bank hedge interest rate and currency risks. Project cost S5.0 million. Slovenia IFC wrill help establish the first international factoring company in Slovenia, Quasi-equity 0.2 0.2 LB Factoring. The local sponsor is Ljubljanska Banka, Slovenia's largest bank Intermark-et Factoring of Vienna will own 50 percent and provide managerial support and technical assistance. Project cost: S1.0 million. IFC is providing a loan to LB Leasing, a fully owned subsidiarv of Ljubljansla Loan 3.1 Banka that will exaend leases to private local small and medium-sized Syndications 3.2 6.3 companies. Project cost: S6.3 million. EUROPE 73 PROJECTS APPROVED IN FISCAL 1994 EUROPE cottinued Fl NA NC) N G (1,ilfthi,s 4if U.S. s11dLen)j PROJECT DESCRIPTION TYPE TOTAL Slovenia IFC will provide an agency credit line through Ljubljanska Bank as agent for Loan 5.0 a'nabiziie' onlending to small and medium-sized export-oriented private Slovenian Syndications 5.0 10.0 companies. Project cost $10.0 million. Turkey Assan Demir ve Sac Sanayi A.S. will build a new aluminum continuous cast- Loan 15.3 15.3 ing line, an aluminum foil mill, and other auxiliary equipment. and expand production capacity from 12,000 tons to 25,000 tons oer year. Project cost $39.5 million. Ayta, Di TicaretYatirim Sanayi A6. is building an integrated meat and dairy Loan 8.0 processing facility to EU specifications. Project cost $75.5 million. Syndications 10.0 Equity 2.0 20.0 IFC wll provide a loan to BorcelIkCelikSanayiirtcaretA.S, a flexible stand- Loan 25.0 25.0 alone, cold-rolling mini-mill that will produce about 350,000 tons of cold- rolled steel sheet and coil per year from hot-rolled coils. Project cost $190.0 million. IFC's loan will enable CBS Holding AS., a large paint and ink manufacturer, Loan 1 0.0 to modernize its plant, expand its products and markets, increase its working Quasi-equity 5.0 15.0 capital, and reduce its short-term debL Project cost $34.2 million. Cerrahogullari TALS.,one of the oldest shipping companies in Turkey, is buy- Loan 10.0 10.0 ing a dry cargo vessel. Project cost: $24.0 million. IFCs loan will enable Demirbank Turkey, a medium-sized private bank, to Loan 15.0 offer leasing and trade finance faicilities to pnvate Turkish companies. Project Syndications 35.0 50.0 cost $50.0 million. IFC is providing a loan to Garanti Leasing A.S, to fund medium-term leasing Loan 7.0 7.0 of equipmenL Project cost $7.0 million. IFC will support the expansion of Global Securities A.S., a new securities Equity 0.7 0.7 broking company. Project cost: $85 million. Pinar Entegre Et veYem Sanayii A.S.' is expanding its capacity for producing Loan 7.0 7.0 frozen meat and processed meat products. Project cost: 514.9 million. Pinar Silt Mamilleri Sanayii AS. will modernize and expand its dairy plant Loan 7.5 7.5 to improve efficiency, increase its mik collection capacity, and introduce a new line of aseptic products. Project cost S16.1 million. IFC is providing a loan to Tekfen Investment Bank to fimd medium-term Loan 7.0 7.0 leasing of equipment. Project cost: $7.0 million. Turkey Life Insurance Company A.S. will offer a range of life and health Equity 0.6 0.6 policies as well as pension plans. Project cost $4.0 million. EUROPE 74 PROJECTS APPROVED IN FISCAL 1994 E U itO l' E FINANCING (,tnillil , rs u.W sollIrs) PROJECT DESCRIPTI ON TYPE TOTAL Ukraine Ukraine Fund, managed by Claflin Capital Management of Boston, will Equity 2.0 2.0 invest in local small and mediuin-sized enterprises that operate in Ukraine. Project cost: $11.5 million. Regional IFC is helping to establish Alliance ScanEast Fund L.P., which will invest Equity 8.0 8.0 in equity and quasi-equity securitics of companies in Eastern Europe and the former Soviet republics. The fund is sponsored by Alliance Capital Management, a Newv York-based investment management house, and CapMan Capital Management Oy, the largest Finnish venture capital firm. Project cost: $50.0 million. Central Europe Telecom Investments, Ltd, will establish a fund to invest in Equity 20.0 20.0 the equity securities of privately controlled telecommunications companies in Central and Eastem Europe. Project cost: $100.0 million. IFC will participate as joint lead manager and undervrite up to 15 percent Underwriting 15.0 15.0 of the shares in the Morgan Stanley European Emerging Markets Fund, which will be listed on the NewYork Stock Exchange and will invest primarily in listed equity securities of companies in the Czech Republic, Hungary, and Poland. Project cost $100.0 million. IFC exercised its pre-emptive rights in an equity issue by Pam Gas BV*. Equity 1.0 1.0 Project cost $6.2 million. IFC will exercise its pre-emptive rights in another equity issue by Pani Gas Equity 6.3 6.3 BV. Project cost: S40.0 million. Renaissance Capital will provide venture capital to small and medium-sized Equity 5.0 5.0 private companies that have grwth potential in Central and Eastern Europe, particularly in the Czech Republic, Poland, and the Slovak Republic. Project cost $30.0 million. Rudus Oy, a Finnish holding company, will implement an investment plan Equity 1.5 1.5 involving the privatization and acquisition of companies in the construction materials sector in the Baltic region. Project cost- $7.3 million. IFC kas made one or inore previous investments in, orbats ro. this company. 5 Thislfure represents fPCsiniuiI cxposauere am e rreny or initerest rate swap. EUROPE 75 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS EUROPE FOCUS DESCRIPTION Belarus Privatization I PC designed and helped implement the first schienie for privatizinig small enterprises in Brest and other cities. Privatization IFC completed the preparation and distribution of a manual on small-scale privatization. Bulgaria Foreign direct investment FIAS conducted a diagnostic study of the investment climate. Czech Republic Privatization The transformation of Elitec Usti nad Orlici into a joint stock company and the sale of a majority of its shares to a Swiss partner were completed. Project technical assistance IFC reviewed the feasibility of expanding and modernizing the Prague Interna- tional Air Terminal and assisted the sponsors in structuring its financing. Estonia Project technical assistance Through its Technical Assistance Trust Funds Program, I FC supported a studv to develop tools to describe selected economic components of environmental impacts. of a shale-fired cement plant. Hungary Project technical assistance IFC arranged, through its Technical Assistance Trust Funds Program, financing for preparatory work on a proposed public telephone network. Project technical assistance IFC secured funding, through its Technical Assistance Trust Funds Program, for expert assistance on a pre-investmoent review of legal and regulatorv factors involved in establishing an independent telephone company. Latvia Project technical assistance IFC secured funding, through its Technical Assistance Trust Funds Program, for a pre-investment review of a proposed telecommunications venture. Lithuania Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported a study on options for a manufacturer of wyood products for expanding into plywcod manufacture. Project technical assistance IFC arranged funding, through itsTechnical AssistanceTrust Funds Program, for a feasibility study for an integrated wool products operation. Poland Privatization IFC concluded five privatization transactions, all by way of trade sale, in the cement and lime sectors-Odra, Gorazde, Strzelce Opolskie, Opolwap, and Warta. IFC advised the Government on the sale process, evaluation of bids, negotiations with investors, and the structuring and conclusion of the share sales. Privatization IFC advised the Polish Government on the privatization strategy for the cement plant Cementowvnia Malagoszcz SA Privatization IFC is advising the Polish Government on the privatization of the cement plant Cementownia Ozarow S.A. Privatization IFC is advising the Polish Government on the privatization of the cement and lime plant Kujawy SAL EUROPE 76 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS EUROPE FOCUS DESCRIPTION Poland Privatization IFC is advising the Polish Government on the sale of WVojcieszow, a lime plant. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC supported a market and technical feasibility study for a telecommunications joint venture. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC financed advisory work on restructuring and operations for a diversified dairy company. Romania Project technical assistance IFC arranged funding, through its Technical Assistance Trust Funds Program, for assistance with a strategic study and development of a postal bank system. Russian Foreign direct investment FIAS advised on amendments to Russia's foreign investment law. Federation Privatization IFC designed and helped implement a pilot privatization of state and collective farms in Nizhny Novgorod. IFCs design was endorsed by the Russian Prime Minister as a model for Russia. At the central government's request, [FC is drafting enabling decrees and regulations based on the Nizhny Novgorod model. Privatization IFC completed the design and implementation of the first privatization of smaUl enterprises in Nizhny Novgorod. Privatization IFC completed the design and implementation of the privatization of small enterprises in Tomsk and Volgograd and large companies in five regions: Nizhny iNovgorod, Novosibirsk, Tomsk, Volgograd, and Yakutsk. Privatization IFC completed its advice on the privatization of Nizhnv Novgorod's transport sector and-its replication in other regions. Privatization IFC completed the preparation and distribution of an official government guide on the privatization of small enterprises. Privatizationl IFC is assisting "voucherized" companies in restructuring and attracting joint Project technical assistance venture partners and investors. Project technical assistance Tnrough its Technical Assistance Trust Funds Program, IFC secured support for a feasibility study on a joint venture to produce television components. Project technical assistance With funding from the United Kingdom's Know-How Fund, IFC is helping to develop secondary share trading in Nizhnv Novgorod by establishing a share- holder registrar, providing assistance to brok-ers and dealers, and helping a local company to launch a secondary share offering. Technical assistance IFC has continued to assist and advise the Russian Government, especially the presidential commission on securities and stock e3xchanges and its members, on the creation of the legal and regulatory foundations of a national mark-et for corporate equities. Ongoing efforts include the drafting of laws and regulations, the provision and coordination of expert technical advice, the design of specific technical assistance projects, and the identification and coordination of donor funds. EUROPE .77.. TECHNICAL ASSISTANCE AND ADVISORY PROJECTS EUROPE confruimed FOCUS DESCRIPTION Slovak Foreign direct investment FIAS conducted a diagnostic study of the investment climate. Republic Slovenia Privatization/ IFC assisted Tomnos, the country's leading producer of mopeds and small Project technical assistance engines, with designing and implementing a strategy for selling its chain saw division, identifying a strategic partner, and negotiating and concluding the sale. Project technical assistance IFC has seconded staff to provide advice to the Government of Slovenia on capital market development and on commercial bank restructuring. Turkev Financial advice/Privatization IFC is helping Etibank, the state company in charge of mining and mineral processing, in the restructuring and privatization of its Russian-built hydrogen peroxide plant, which has not been operational since construction in 1990. Privatization/ IFC assisted Etibank-BeypazariTrona in its successful search fora privatesector Project technical assistance investor to develop, mine, and process a large deposit of trona, a naturaf source of soda ash. Ukraine Foreign direct investment FIAS conducted a diagnostic study of the investment climate. Privatization IFC designed and helped implement a small-scale privatization program in the cities of Cherkassy, Lugansk, L'viv, Rivne, Uzhgorod, Zaporizhya, Ivano-Frankivskl, Khmelnitskij, Kamyanets-Podilsk, and Tokmak. Privatization IFC helped prepare and distribute a manual on the privatization of small-scale enterprises Privatization IFC advised on the privatization of Kherson Canning, the largest canning factory in Uk-raine, and helped in the search fora foreign strategic partner and long-term financing. Privaization IFC provided the State Property Fund with a technical and financial analysis of Kievskaya Poultry Plant, the second largest producer of eggs in Uk-raine. IFC also assisted with the corporatization and privatization of the plant. Privatization IFC is organizing Ukraine's first public offering, for Odessa Meat Combinat, a company previously privatized with IFC assistance. Privatization/ IFC is advising the Black Sea Shipping Company in the financial and organiza- Project technical assistance tional restructuring and privatization of its core business. Through its Technical Assistance Trust Funds Program, IFC secured expertise on privatization for the company. Privatization/ IFC is advising the Government on the design and implementation of the first Project technical assistance model for the development of a competitive multi-channel markethig system. The vegetable sector of the iCev oblast has been chosen as the pilot sub-sector for developmenL EUROPE 78 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS EUROPE FOCUS DESCR IPTION Regional Plroject technical assistance IFC secured fuiding, throtgh its Technical Assistance 'rrust F'unds Program, to support a fact-finiding and project identificationi study on the status of the con- struction materials sector in tlle IalLic counltries. EUROPE 79 REGIONAL REPORITS LATIN AMERICA AND TrHE CARIBBEAN JrECtipprovei aid sP/IiliCtiCatI lacuz aid tfliasi-eqjIJtf' invelstnnrtSOhlpeur filoiuince Al irionSt- miernt pnrorana by Is,teresticionrl dir CAgin,,rk, LA. d-e C*. , a Mlexvictr pro daLr qof glczed rt arnic tile. W ^ T hile the revival of GDP growth, con- medium- and long-term financial instruments avail- tinued fiscal restraint, and struc- able. In addition there are legal and regulatory tural reforms in Latin America and impediments to developing the local bond and equity the Caribbean have improved the markets, and the project finance capability of the prospects for the region's private sector, they have commercial banks is limited. During the past year, also put it under considerable pressure to adjust to a IFC continued to focus on developing the region's more competitive marketplace. Trade liberalization domestic capital markets. and a number of new trade agreements in the region, induding NAFTA, have contributed to an increase in The Corporation has also continued to wvork- to trede. While many of the larger companies in the improve government policy in the region. In fiscal region are wve"l ad1vanced in the adjustment process, 1994 the IBRD and IFC jointly completcd private sec- small and mredium-sized companies are having a tor assessments for Brazil and Peru, continued to work more difficult time increasing competitiveness. One on an assessment for Colombia, and began work on component of IFC's strategy in the region is to help one for Venezuela. IFC contributed to the IBRD's pri- these companies to restructure and improve efficiency. vate sector assessment of El Salvador. IFC has also been developingjoint operations with the [BRD in the Although conditions in individual countries differ, in capital market and infrastructure sectors in the region. general the region's domestic markets are not yet able to meet private sector demand for long-term finance. PROJECT FINANCING AND RESOURCE M-acroecononiic stabilitv is still relatively new in the MOBILIZATION region, and is only beginning to inspire the type of In fiscal 1994 IFC approved 52 projects in 13 cuun- confidence required for lenders and investors to make tries in Latin America and the Caribbean, compared LATIN AMERICA AND THE CnRIFBBEAN 80 with 52 projects in 16 countries in fiscal 1993. At and upgrade pollution control systems. The project lune 30, 1994. the Corporation's committed portfolio will help the cnimpainy meet increased foreign compe- included loans and investments for 261 companies tition and build on its strength, which is the develop- in 24 countries, compared with 261 companies in ment of new products and designs. II:C is supporting 23 countries at June 3D, 1993. a similar project in Brazil, where Ceramica 1Portobello S.A., also a producer of ceramic tile, is facing l:y,94 X y93 increased counpetiLion resulting from trade liberIl- FYi9ir Y93iw ization. I FC is helping thc company to concentrate on production for the higher-priced markcet segiment, rinancing approved for IFC's account 815 710 where it has a comparative advantage. Loans, standby, and swaps 594 468 Equity and quasi-equity 221 242 In Ch ile IFC approved financing for the development Direct mobilization 762 630 and construction of a new wholesale food market, the Loan syndications 7h2 616 Mercado Mayorista S.A., which will replace an older Underwriting - 14 market in Santiago. The new market, which will Total financing approved 1,577 1,340 introduce improvements in hygiene, traffic patterns, and tax collection, will be the first modern, self- Comnmitted portfolio for I KCs account 3,024 2.787 contained wholesale market developed by the private Loans 2,495 2.355 sector in Latin America and could serve as a model in Equity 529 432 the region. Committed portfolio held for others 1,568 1,125 (loan participations) One of lFC's objectives in the agribusiness sector is to Total commined portfolio 4,592 3,912 upport companies beginning to move into higher value-added products. In Mcxico IFC approved financing for a modernization and expansion pro- GFC supported industrial modernization and expan- gram for Sigma Alimentos, S.A. de C.V., a leader in sion in the region with financing for several projects. the production, marketing, and distribution of For example, IFC approved a loan and equity invest- branded processed mcats. In Brazil I FC is helping to ment of S24 million for Metalsa, SiA de C.V., an finance the modemization and expansion of the automotive parts manufacturer in Mexico seeking to expand its chassis and gas tank production facilities. The expansion will make medium-scale production FINANCING APPROVED, FY90-94 runs possible in these facilities, which are the com- (n1iolimns of U.S. dollars) pany's key business units. Economies of scale are 2.000 critical to competitiveness in the automotive indus- try IFC is also introducing Metalsa to the interna- tional capital mark-ets by syndicating a loan of $35 million. Another example of a company under- 1.500 going operational restructuring with IFC's assistance is Alpargatas &.A.I.X,Argentina's largest manufac- turer of textiles and athletic footwear. Alpargatas is -El seeking to improve productivity and efficiency by 1,0 making a range of capital investments, induding new equipment in the textile and shoe divisions, a new O 1 ,1 management information system, and office conver- _ sion. IFC approved a loan and quasi-equity invest- ment totaling S25 million and is syndicating an additional loan of $35 million. In Mexico IFC approved financing for Internacional 1990 1991 1992 1993 1994 de Cel1mica, S.A_ de CV., a ceramic tile mianufac- * Syndications and underwriting turer, to help the company increase production financingfor lFCs own accXount capacity and productivity, diversify product lines, LATIN AMERICA AND THE CARIBBEAN = . - . - - . . .~~~~~~~~~~8 AGUAS ARGENTINAS Argentina recently decided to privatize its water and sewerage systems. In a groundbreaking privatization, Aguas Argentinos, a new private sedor company, was awarded a 30-ear lull operating concession to provide potable water and seweroge services for the residents of Buenos Aires, Argenlina. Aguas Argentinas, an international consortium led by Lyonnaise des Eaux-Dumez of France, won the bid on the basis of the lowest proposed tariff, representing o 27 percent discount on the previous tariff level. Aguos Argentinas is commilted to undertaking on investment program of opproximately $A billion over the 30-year concession period. IFC has approved financing for the company that will allow the waler and sewerage system to be renovated and extended to those who are not presently connected, approximately one-third of the area's residents. In addilion, the quolily of potable water will be improved, pollution alleviated, ond sewage treatment provided. poultry and pork processing facilities of Chapeco capital and require IFC's assistance. IFC approved Campanhia Industrial Alimentos and S.A. Industria e financing for several infrastructurt. projects in Comercio Chapeco. Argentina- It will provide a loan and equity invest- ment to Aguas Argentinas, a recently privatized In the oil, gas, and mining sectors, IFC has helped company, to help finance the initial phase of the reha- finance development projects in several countries. bilitation and expansion of the greater Buenos Aires In Brazil, Rio Capim Quimica S.A. is being helped to drinking water and sewerage system. IFC is also develop a project to produce paper-coating kaolin helping to finance a project undertaken by Edenor for export. In Bolivia IFC approved financing to help S.N that will reduce system losses and increase the Companila Minera del Sur, S.A., modemize its zinc reliability of the electricity supply for 2 million cus- miningoperations and develop the Bolivarzinc mine in tomers in the northern half of Buenos Aires. In partnership with Comibol, the state mining company. Guatemala IFC is supporting the construction of a private hvdroelectric facility by Fabrigas S.A., a pro- The liberalization of Mexico's petrochemicals sector ducer of industrial gases. In Mexico the Corporation is creating opportunities for private investment. In is helping Compafnia Tratadora de Aguas Negras de fiscal 1994 IFC approved financing for the expansion Puerto Vallarta, S.A. de C.V., to build and operate of Tereftalatos Mexicanos S.A., which manufactures a wastewater treatment plant on a BOT basis. In purified terephthalic acid, the main material used in telecommunications, IFC approved financing for the production of polvester. IFC also approved El Salvador's first cellular network, which would financing for the modeemization program of Grupo be part of a regional system. IRSA S.A. de CV., Mexico's only producer of syn- thetic rubber and carbon black. The development of local capital markets is crucial to the creation of a large, sustainabic source of The privatization and liberalization process has taken domestic savings in the region and thus continues to hold in the infrastructure sector. Newly privatized be of primary importance to IFC. In fiscal 1994 IFC companies have improved and expanded serviccs to approved financing for several hinds and financial customers, and some have gone directly to the inter- institutions with the objectives of increasing flows of national capital markets for capitaL However, certain long-term finance to medium-sized companies and companies still have limited access to international building institutions that promote the long-term *LATIN AMERICA AND THE CARIBBEAN 82 domestic savings flow. Fur example, in Brazil [lPC In Argentinia the Corporation assistedA in the review of supporied the loriiiation of G.R Capital Partners. the newly formed private pension system, includinig L.R, a fund designed to bring necded share capital insurance issues related to the new structure. I[FC is and management to companies, particularly family- advising Colombia's securities exchange commission owned ones. Thle lund will help these companies on rcgulations for rating agencies; it is liso advising improve operating efficiency anid compmtil iveness by the GoveriinmcnIt on the establishment of a secondary making profkssional management available to them. mortgage niarket. In Costa Rica the Corporation pro- The fund is the first of its type in Brazil, as well as the vided assistance in the reform of the country's securi- first of its type in Latin America to benclit from an ties law as well as in the drafting of a leasing law. In IFC investment. The Corporation is also supporting Ecuador IFC is providing technical assistanice to the the undenvriting of debentures issued by small and Quito stock exchange, and in Venezuela the Corpora- medium-sized Brazilian companies by providing tion is assisting in the establishment of an electroniic a line of credit to Uniio dc Bancos Brasileiros S.A. stock exchange and central depository agent. In Chile IFC is investing in the Fondo Pionero dc Inversi6n Mobiliaria, which will invest in small and The Foreign Investment Advisory Service (FIAS) medium-sized companies listed on the Chilean stock continued to cxpand its program in the region during exchanges. fiscal 1994, advising the governments of Argentina. the Dominican Republic, El Salvador, Paraguay, and In Argentina IFC approved a loan and equity invest- Trinidad and Tobago on investment laws, policies, ment for an undervriting facility at Banco General de and institutions. As foreign direct investment once Negocios, S.A., contributing to the development of a again becomes an important economic force in Latin market for equities and U.S. dollar-denominated America, FIAS is helping governments to realize the debt- and equity-linked securities. In Mexico I FC greatest developmental benefit from renewved flows to approved an equity investment in a factoring company the region. In Paraguay, for instance, FIAS first iden- that will serve small and medium-sized enterprises. tified opportunities for foreign investment in differ- ent sectors and then helped the Government to In support of Argentina's newly integrated pension develop a strategv and make the legal, policy, and system. IC approved financing for the Maxima S.A. institutional changes needed to realize these opportu- AFIP Group, which will provide private pension fund nities. In Argentina FIAS focused on institutional management and pension-related insurance services. issues, in particular the strengthening of a national In Peru IFC approved equity investments in a pri- promotion agencyz FlASs advice in the Dominican vate pension fund management company. Horizonte Republic encompassed both institutional and policy AFP S.A., which was recently established as part of issues. Peru's new private pension system. The company is expected to contribute to the local capital market's ability to supply credit to the private sector. TECHNICAL ASSISTANCE AND ADVISORY SERVICES IFC provided a range of advisory services and techni- cal assistance to both businesses and governments in the region during the Year. The Corporation carried out two advisory assign- ments for the Government of Trinidad and Tobago on the sale of part of its ownership in the Trinidad and Tobago Methanol Companv and the Trinidad and Tobago Elcctricity Commission. IFC has also advised the Venezuelan Governmenes Fondo de Inversiones de Venezuela on the management of its portfolio, and the Government of Peru on the design of a privatization strategy for Electrolima, a power company. LA:IN AMERICA AND THE CARIEUBAN 83 BUSINESS ADVISORY SERVICE In 1993 BAS, which raises capitol and provides technical assistonce for small and medium-sized enterprises in the Caribbean and Central America, completed proposals for 21 projects with copital costs of approximately $175 mil- lion. It also secured funding commitments oF $24 million for eight projects. Since it was established, BAS has made significant strides in meeting on increasing proportion of its annual operating costs through fees. BAS's donors, because of pressing new needs for financial assistance in Eastern Europe and elsewhere ond declin. ing oid budgets, have regrettably diminished their support for BAS and, as a result, the scole of BAS's operations in Washington, D.C., has hod to be cut back significontly. Nonetheless, through fees ond with support from Germany, Jopon, Mexico, ond the European Community and continuing assistance from IFC, BAS continues to provide quality services to the private sector in the Coribbean and Centrol Americoa largely through Enterprise Development Limited (EDL) in Trinidad and Tobago and the Asesoria Empresarial Centroamericana (ASECA) in Costa Rica. These entities, established in 1993, have been well received ond supported by locol entrepreneurs and have made considerable progress in enhancing BAS's role in the region. EXAMPLES OF BAS PROJECTS Dominicon Republic BAS prepared an appraisal for the sponsors of the 450-room Copella Beach Resort, helping tkem obtain $5 million from local commercial lenders to complete construction oF the hotel. Copella is managed by Ramada Internafional Hotels and Resorts. Guatemala BAS's Central American affiliale, ASECA, helped Corporoci6n Bononera S.A., a company vith a 2,300.hectore banano plantation, oLtain $10 million in financing from the Inter-American Investment Corporotion and the United Kingdom's Commonweolth Development Corporation. The company has a marketing agreement with FyFfe's, a lead- ing fruit wholesaler in Ireland with sales outlets throughout Europe. Guyana With the assistance of EDL BAS's Southern Coribbeon affiliate, John Fernondes, Ltd., Guyana's premier stevedoring company, obtained a loan of $2.4 million from the Commonweolth Development Corporation to finance the expan- sion of its wharf facilities and improvement of its cargo-handling operations. LATIN AMERICOA AND rHE CARIBBEAN 84 PROJECTS APPROVED IN FISCAL 1994 LATIN A hlERI CA AND THiE CARIBBEAN IFIN,1 NCING; PROJECT DESCRIPTION IYPl. 710A IL Argentina Aceitera General Deheza will build storage and handling facilities, develop Loan 15.0 a co-generation unit, and expand its capacity for producing and marketing Syndications 15.0 valuc-addcd edible oil products. Project cost: $53.5 million. Equity 10.0 40.0 AguasArgentinas is undertaking the first phase of the rehabilitation and Loan 38.0 expansion of the Greater Buenos Aires drinking water and sewverage system, Syndications 77.0 which was recently privatived. Project cost: S329.0 million. Equity 7.0 122.0 Alpargatas S.A.I.C.* is implementing an investment program in its footwear Loan 15.0 and textile divisions to improve quality and reduce costs. Project cnst: Syndications 35.0 $72.8 million. Quasi-equity 10.0 60.0 Banco General de Negocios, SA. will develop its local underwriting Loan 12.0 operations for equity shares and U.S. dollar-denominated bonds of mainly Quasi-equity 3.0 1 5.0 medium-sized enterprises. Project cost: $15.0 million. IFC arranged a syndication to help Bunge y Born S.A.* finance its invest- Syndications 17.5 17.5 ment program and restructure its food and paint operations. Project cost: $17.5 million. Central Termica Tucuman, S.A., will complete evaluation of the Tucuman Equity 0.3 0.3 power project Project cost £1.5 million. Cerveceriay Malteria Quilmes S.A. will build a new malt plantwith an annual Loan 15.0 capacity of 85,W00 tons. Project cost $45.0 million. Syndications 15.0 30.0 Compania General de Combustibles S.A will develop hydrocarbon reserves, Loan 25.0 expand and modernize its marketing operations and petroleum product Syndications 40.0 handling facilities, and increase its working capital. Project cost: Equity 15.0 80.0 $251.6 million. Edenor SA will improve productivity, promote energy conservation, and Loan 30.0 enhance reliability in the electricity supply for 2 million customers in Buenos Syndications 128.0 Aires. Project cost S410.4 million. Quasi-equity 15.0 173.0 Maderas v Sinteticas SA will construct a particleboard plant at Concordia to Loan 11.0 produce raw, melamine-laminated, and veneered particleboard for furniture Syndications 6.0 17.0 manufacturing. Project cost: $56.2 million. IFC participated in the financial and corporate restructuring of Massuh SA* Equity 0.2 0.2 and its subsidiary Brillapel SA, which are integrated pulp and paper producers. Project cost: £1.2 million. Maxima SAL AFJP, La Buenos Aires SAVida, and La Buenos Aires SA Equity 15A 15.4 Retiro will provide pension fund management and pension-related insurance services in Argentina's new integrated pension system. Project cost $100.0 million. LATIN AMERICA AND THE CARIBEAN . t - :-=-- --85 PROJECTS APPROVED IN FISCAL 1994 LATIN AMERICA AND THE CARIBBEAN conaiiuied FINANCING (milflion of U.S. iollrs) PROJECT DESCRIPTION TYPE TOTAL Argentina I PC cxercised its pre-cmptive rights in a share issue by Molinos Rio de la Pata Equity 3.0 3.0 annritdllJe S.A., Argentina's leading food producer and Bunge y Born'.s most profitable subsidiary. Project cost: $80.0 million. PETROKEN - Petroquimica Ensenada S.A.'A which produces 100,000 tons of Loan 20.0 20.0 polypropylene annually, is restructuring and changing ownership. Project cost: $20.0 million. Transportadora de Gas del Norte, S.A., and Gasinvest, S.A., are considering Loan 25.0 an investment program to raise the technical and operating standards of gas Syndications 80.0 transmission. Project cost: $530.0 million. Equity 20.0 125.0 Bolivia Compainia Minera del Sur, S.A.I' will increase its zinc production by 65 per- Loan 11.0 cent by installing new equipment at its Asientos zinc mine and, in partnership Quasi-equity 1.3 12.3 with Comibol, developing the Bolivar zinc mine. Project cost: S55.5 million. Brazil Bacell S.A."will build the first totally chlorine-free dissolving pulp mill in Lat- Syndications 6.0 6.0 in America. The mill will meet the highest international environmental stan- dards. Project cost: $6.0 million.] Cerimica Portobcilo S.A., a specialized producer of high-quality ceramic Loan 17.0 tiles, is expanding its p;ant at Florianopol is, in southern Brazil. Project cost: Equity 5.0 22.0 $53.8 million. Chapeo Companhia Industrial Alimentos and S.A. Indiistria e Comercio Loan 10.0 Chapeco will moderni7e and expand their Facilities for poultry and pork Equity 5.0 15.0 processing. Project cost $46.0 million. Cavea Hotelaria e Turismo SA. will build and operate the Sao Pau.o Loan 11.3 InterContinental Hotel. The sponsors have agreed to open the company to Syndications 7.5 the Brazilian public. Project cost: $55.7 million. Quasi-equitv 5.5 24.3 G.P. Capital Partners, LP., a new private equity fund, will provide share cap- Equity 20.0 20.0 ital and professional management to medium-sized companies. Project cost: S200.0 million. Rio Capim Quimica SA. is developing a world-dass kaolin mining project to Loan 25.0 produce 660,000 tons of paper-coating kaolin annually. largely for export. Syndications 40.0 Project cost: $183.0 million. Quasi-equity 9.0 74.0 Sadia Conc6rdia S.A.Ind6stria eComercio is modernizing and expanding its Loan 40.0 poultry, pork, beef, soya, vegetable, and dry food production and distribution Syndications 20.0 60.0 facilities. Project cost: $212.1 million. IFC is providing Uniio de Bancos Brasileiros S.A.', Brazil's fourth largest Loan 25.0 25.0 bank, with a line of credit to help support the undervriting of U.S. dollar- indexed debenturcs of small and medium-sized Brazilian companies. Project cost $25.0 million. LATIN AMBRICA AN)D THE CARIBBEAN 86 PROJECTS APPROVED IN FISCAL 1994 LATIN AMERICA AND THE CARIBBEAN FINANCING mitliooFL u'f U.S. dollaIrsJ PROJECT DESCRIPTION TYPE TO7AL Chile FC e.xercised its pre-emptive rights in a share issue by Bosques y Maderas Quasi-equity 2.8 2.8 S.A.', which is diversifying its operations from plywood to integratL'd wood products, including particleboard. Project cost: $15.5 million. IFC exercised its pre-emptive rights in a share issuc by Celulosa del Pacifico, Equity 4.7 4.7 S.A.', which is building a pulp plant. Project cost: $55.9 million. IFC approved additional financing for a hydroelectric powvcr project under- Syndications 50.0 50.0 taken by Empresa Elctrica Pangue S.A.' Project cost: S50.0 million.a I FC is supporting the launch of Fondo Pionero de Inversidn Mobiliaria, a Equity 10.2 10.2 closed-end equity fund that will invest in small capitalization companies on Chilcan stock exchanges. IFC is also investing in Moneda Asset Management S.A., the asset management holding company. Project cost 551.0 million. IFC is providing Leasing Andino S.A. with a credit line to finance dollar- Loan 15.0 denominated leases to small and medium-sized Chilean companies. Syndications 15.0 30.0 Project cost: 530.0 million. Mercado Mayorista S.A. will build and operate a modern, self-contained Loan 5.0 wholesale market in Santiago. Project cost: $30.0 million. Quasi-equity 3.0 Standby 2.0 10.0 Colombia [FC is providing Corporacidn Financiera de Santander S.A with a credit Loan 5.0 line for onlending to small and medium-sized enterprises. Project cost: Equity 1.2 6.2 $6.2 million. El Bosque Port will be a private cargo and container port fcilitywith a capac- Loan 5.0 ity of about 350,000 metric tons per year. Project cost: $20.0 million. Quasi-equity 0.4 5.4 IFC will extend a credit line to enable Leasing Bolivar S.A.' to offer dollar- Loan 10.0 10.0 denominated leases to small and medium-sized local enterprises. Project cost: $10.0 million. Promigas SA' will increase its gas transportation capacity and build a Loan 5.0 64-kilometer pipeline from Santa Marta to Rio San Diego and about Syndications 25.0 30.0 300 kilometers of regional pipelines to connect more than 51,000 house- holds to the gas supply system. Project cost: $50.8 million. Costa Rica Hidroel&tricaAguas Zarcas S.A. will build, own, and operatc an I 1. I-mega- Loan 3.3 watt hydroelectric generation plant in San Carlos. The project will sell Syndications 6.1 electricity directly to Instituto Costarricense de Electricidad, Costa Rica's Swrap 0.4 4 main public electric utility- Project cost: $15.0 million. Quasi-equity 0.7 10.5 Dominican Melia Bavaro Hotel, a four-star hotel in the Punta Cana region of the Loan 6.0 6.0 Republic country's east coast, will increase the number of its rooms from 504 to 760. Project cost $20.9 million. LATIN AMERICA AND THE CARIBBEAN - .-: -.. . . ., .-- : --. - . . . --- ,87 PROJECTS APPROVED IN FISCAL 1994 LATIN AMERICA AND THE, CARIBBEAN colatiulifi, FINANCING PROJECT DESCRIPTION TYPE 701AL; El Salvador Telemovil El Salvador, S.A., will construct and operate a cellular tclephoic Loan 1.7 system in metropolitan San Salvador and oilier imajor ciiics. Project cost: Syndications 2.5 $57.1 million. Equity 0.2 4.4 Guatemala Basic Petroleum International Limited will develop its oil reserves and build Loan 10.0 a 120-kilometer pipeline to transport crude oil. lProject cost: $33.0 million. Syndications 6.0 Equity 4.0 20.0 Fabrigas S.A., which produces and markets industrial gases, plans to build, Loan 6.0 own, and operate a 10-megawatt hydroelectric facility on the Bobos River, and Quasi-equity 1.0 7.0 expand its gas production capacity. Project cost: S17.1 million. Mexico Aurum-Heler Factoraic. S.A de CU., is a Mexican company that provides Equity 1.0 1.0 factoring services primarily to small and medium-sized enterpriscs. Project cost: $5.1 million. rompafiia Tratadora de Aguas Negras de Puerto Vallarta, S.A. de C.V., will Loan 5.0 build and operate a wastewater treatment plant on a BOT basis in Puerto Quasi-equity 2.0 7.0 Vallarta. Project cost: $33.2 million. Grupo IRSA SAL de CV. will modernize and consolidate its petrochemicals Loan 30.0 operations to improve efficiency, reduce energy use, and streamline produc- Syndications 30.0 60.0 tion. The project will reduce environmental hazards and make the companv more competitive. Project cost: S 1 00.0 million. Internacional dc Ceramica, S.A. dc CV., is undertaking an investment Loan 15.0 program that includes a new wall-tile plant. Project cost: S55.8 million. Syndications 17.5 Quasi-equity 6.0 38.5 Metalsa, S.A. de C.V.S, Mexico's leading producer of stamped auto parts and Loan 18.0 structural automotive components, is expanding its production of chassis Syndications 35.0 frames and gas tanks. Project cost S79.7 million. Quasi-equity 6.0 59.0 Mexicana de Cobre S.A. de CV. will develop facilities to recover 21,900 tons Loan 25.0 of copper per year by heap leaching ores from La Caridad copper mine. Syndications 35.0 60.0 Project cost 575.0 million. Sigma Alimentos, S.A. de CY.', which produces, mark-ets, and distributes Loan 20.0 branded processed meats, will upgrade, modernize. and expand its existing Syndications 20.0 facilities, cc -mpletc a new meat-processing fhcility, and build a yogurt plant. Quasi-equitv 5.0 Project cost $68.0 million. Swap 0.7 § 45.7 Tereftalatos Mcxicanos S.A.* will expand the capacity of its purified tercph- Loan 20.0 thalic acid plant from 310,000 to 510.000 metric tons per vear. Project cost Syndications 20.0 40.0 $82.7 million. Peru IFC will extend a line of credit to Banco de Crtdito del Peru for onlending to Loan 15.0 15.0 small and medium-sized private enterprises. Project cost: S 15.0 million. LATIN' AMERICA ND THE CARIBBEAN' - 8 PROJECTS APPROVED IN FISCAL 1994 LATIN AMERICA AND THE CAR IBBEAN FINANCINC; "'uIflti"'Ib I'f I IS. IlIaifihnpI PROJECT DESCRIPTiON TYPE TMIYL Peru IFC is providing a line of credit that will enable Banow Interandino to make loan 10.0 continiuedj long-term funds available to small and medium-sized entcrprises. Project Equity 3.0 13.0 cost: $13.0 million. IFC exercised its pre-emptive rights and invested in additional capital of Equity 0.7 0.7 HorizonteAFP S.A., a limited liability private pension fund management company. Project cost: $10.0 million. IFC participated in an additional rights issue by Horiwonte AFP S.A. Project Equity 0.4 0.4 cost: $5.0 million. MineraYanacochaS.A.* will increasegold production by 184,000 ounces per Loan 10.0 year by developing the Maqui Maqui ore body and integrating its operations Syndications 5.0 with the Carachugo mine. Project cost $53.8 million. Swap 0.9 § 15.9 The Peru Privatization Fund will be capitalized hy converting eligible Equity 20.0 20.0 Peruvian debt with a face value of up to $300 miliion into the equity of Peruvian companies. Project cost: $300.0 million. Trinidad Bella Form' Resorts Limited will privatize, rehabilitate, and upgrade the Loan 2.0 and Tobago defunct 115-room Tobago Crown Reef Hotel, which used to be wholly owned Quasi-equity 1.3 3.3 bv the Government. Project cost: $11.3 million. Venezuela IFC exercised its pre-emptive rights and subscribed to additionai shares of Equity 1.1 1.1 Grupo Zuliano, CAL S.A.C.A.* Project cost: $11.0 million. IFC will support the expansion and financial restructuring program of Loan 3.0 Terminales Quimicos de Puerto Cabello C.A., which operates a marine Syndications 8.0 terminal and tank farm in the port of Puerto Cabello. Project cost: Quasi-equity 1.3 12.3 $13.5 million. 'IFClhasmade one or norePrCViOUs ons Mr Or investments in, rhis company. 7 Thisjiprcrreprcntrs JICE initial uposre isN a creumcy or inrterst rate swap. £ This vroject is not irsdued in the total number ofprojets approved it; FY94. LATIN AMERICA ANDITHE CARIBBEAN - ------ . g j z89 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS LATI N AME-R ICA AND T1I CAIRIBB1EAN FOCLUS )I-iSCR IPTION Argentina Capital market developmenit IPC provided pro ect-related advice on Argentina's new private pension fund system. Foreign direct investment FIAS assisted in the institutionial development of the inv%stment promotion agenicy. Technical and finanicial advice 1I1C reviewed the feasibility of expanding and modernizing the Buenos Aires water and wastewater system and assisted the sponsors with structuring the financing for the project. Technical and financial advice IFC is assisting Benito Roggio in the assessment of its waste collection business and exploration of newv ventures in toxic wsaste treatment. Brazil Project technical assistance With funding secured through its Technical Assistance Trust Funds Program, IFC provided technical assistance and recommendations on modernizing and expanding a zinc smelter in an environmenitally sound manner. Technical advice IFC is advising INGA, the third largest producer of zinc in Brazil, on doubling its production by using a proprietary ore concentration process and expanding refining facilities. Colombia Capital market development lFC is advising the Government on the development of a secondary market for mortgages, and has advised the securities and exchange commission on regula- tions for rating agencies. Privatization I FC is advising the Government on the privatization of Central Hidroelctrica de Betania, a hydroelectric generating plant located south of Bogota. Costa Rica Capital market development IFC provided advice on regulations for securities markets and the drafting of a leasing law. Project technical assistance Through its Technical Assistance Trust Funds Program, IFC secured funding for a feasibilitv study for three small hydropower projects. Dominican Foreign direct investment FIAS reviewed the legal framevork for foreign investment and made recommen- Republic dations on fonnulating a promotion strategy. Ecuador Capital mariket development IFC provided technical assistance to the Quito Stock Exchange. El Salvador Foreign direct investment FiAS prepared a report on legal obstacles to lending to private firms, including foreign investors. Mexico Technical and financial advice Following the successful restructuring of Sanfandila's operations based on IFC's recommendations in FY93, the company has retained IFC to draw up a business plan to increase product integration toward processed poultry. focus its market- ing strategy, and determine diversification opportunities Technical assistance Mexicana deCobreSXdeC.V.hasasked IFC to assist in designing an integrated and evaluati- n development strategy for its copper operations at Cananea. -LATIN AMERICA .&;r. THE CARIBBEAN 90 TECHNICAL ASSISTANCE AND ADVISORY PROJECTS LATIN A MERICA AND TI-Il1 CAR lIl1 EAN FOCUS l)ESCRIP'TION lParagtiay F:oreign direct investment l'IAS helped in the development of legal, policy, and institutional changes, after ideintifyinig the opportunities for foreign investment. Peru Capital marklet developmeint iFC advised on the countrys new private pension fund sysiemll. Privatizationi II:C is advising the Government in the privatization of Electrolima, the eleciricity generation and distribution company serving metropolitan Lima. Trinidad Foreign direct investment FIAS coiducted a diagnostic study of the investment cliimate. and Tobago Privatization IFC is advising the Government on the privatization of theTrinidad and Tobago Methanol Company. Privatization IFC is advising the Government on the formation and divestment of a new company comprising the generating assets of the Trinidad and Tobago Electricity Commission. Uruguay Projict technical assistance IFC supported, through its Technical Assistance Trust Funds Program, a feasibil- ity study and technical advice on the modernizing of a pork-processing plant. Venezuela Capital market development IFC is assisting with,the establishment of an electronic stock exchange and central depository agent, and has advised the Caracas stock exchange on alterna- tives to the current stock market inde. IFC has also advised the securities and exchange commission on rating regulations. Privatization IFC advised the Government in the assessment and review of the liquid asset portfolio of its Fondo de Inversiones de Venezuela. L-. -N: AMERICA AND THE CARIBBEAN S91' CAPITAL MARKET DEVELOPMENT A VIEW FROM IFC AAP= A/o m - A4t x4. t ,_ __ _ _ _ _ sharr cerri koreatrrprises = = be'iulpriintizrtl in - ...= ; = '. . -2' %'sA'Igorvd. - - Imiuu!rct4peRiessiaD t--iw L 1W is turisflnq- r - n e< iln,o *w sess Ad- -i __- py6_____P rte Gipowsrueae po * o -. oese on:anen .-; on ihe crnnh'n - dR&ILHS C&K atfhr AD m.ortmrzoueu MY tuhoryf nra/re for ; ariosis mis pecs of ap corporate shuegr oNnership ua traldingas Iu rslt of site laryr-snole ( c -. f3-- privan ianion effort it Riascin...% %r ~ . -~ . .%'.. . - '%- r1he importance of capital markets for IFC's emphasis on developing domestic capital mar- financing the productive investments nec- kets in member countries is based on the view that, essary for sustained economic growth is now while long-term foreign capital flows are critical to a _ . ; widely recognized. This was not the case country's investment needs, the bulk of such needs when IFC began its capital markets activities over 20 have ultimately to be met by mobilizing domestic years ago; at that time it wvas generally believed that resources. With rare exceptions, domestic savings capital markets plaved only a marginal role in develop- always exceed foreign savings flow,s. For a domestic menL Appreciation of the importance of the financial market to be able to mobilize and allocate these sav- sector for economic development spread only gradu- ings cfficiently, it must be appropriately'broadened" ally at first, but has grown rapidly over the past five and 'deepened." This requires the establishment and years or so. Today the evidence is dear that the critical growth of different types of financial instruments and contribution of a country's private sector to invest- institutions capable of attracting domestic savings ment and growth is directly related to the health and and channeling them to productive investments. The development of its financial sector. Reflecting this efficient allocation of domestic savings also entails increased awareness, IFC's capital markets activities mechanisms for the pricing, intermediation, and have become an important part of the Corporation's settlement of financial transactions. A wide range efforts to foster private sector development in devel- of financial instruments is needed to meet varying oping member countries. While IFC's capital market risk/reward and liquidity needs and preferences of activities have included significant efforts to help issuers and investors. An enabling legal and regula- supplement domestic resources by mobilizing exter- tory environment, with well-designed regulations nal savings flows to emerging markets, much of IFC's and effective enforcement, is necessary for financial work has been focused on developing domestic finan- institutions and mark-ets to work3 in a fair, efficient, cial institutions and capital markets and transparent manner. CAPITAL MARKET DEVELOPMENT: A VIEW FROM IFC 92 IIrC has sotight to help member countries achieve securities market institutions and stock exchanges these goals tlhrouEgh a broad r ange of capital in a small number Ol cLuntries. The situationn hlas market activities, including the provision o f equilty clhanged dramat ically in the past live years as capital investments and loa;ns to new and existingg financial markets have comile to the hirefronit ol thc develop- institutions, and tel chiical assistance to meniher meile agenda worldwide. In fiscal 1 994 capital govermilents anid supervisory aulhoriiies. Ovvr thc marakets operations approved 1by I FC included past 23 years, 11C has helped establish or imrpnve insltitltio1-bLiilding investments, credit Iines for nearly 200 linancial institutionis, maiking equity intermlediaries, and securities transactions, anid investmentsanld loniis exceeding $1.1 billion in the accountedl fan r34 percent ol'lhc number if projects process. These finaincial institutions cover the entinv approved (79 of 231), and 24 percent of the dollar gamut of the financial scrvices industry, from basic volume ($579 million of $2.5 billion) approved. institutions involved in savings mobilization, such as In addilioni I I C unidertakes about 30 advisnry and commercial banks, housing banks, leasing compa- technical assistance engagemenits each year. This nics, insLirance companies, and venture capital funlds, dramatic increase in the scale of lIFC's capital markets to institutions orien ted toward the securities m;rkets, operations has been driven by several factors, among such as broker/dealers, mutual funds, credit rating which three-privatization, liberalization, and gIo- agencies, and stock exchianges. In addition I FC has balization-are perhaps the most important. supplemented and encouraged domestic resource mobilization by providing over $800 millionl in The worldwidc trend toward privatizaLion has had agency and credit lines to 57 local, mostly private, a profound effect on capital markets in developing financial intermediarics, for onlending to small and cointrics and has also stimulated demand for lFC's medium-sized enterpriscs. IFC has also helped investiment and advisory services. Privati7ation has develop appropriatc legal and regulatory regimes for crcated new opportunities and unprecedented chal- capital markets and institutions through its techinical lcngcs. Several countries are opCIling financial activi- assistancc activitics in more than 70 countries. tics such as commercial banking, insurance, mutual funds, and pension funds to the private sector for the In addition to helping to develop domestic capital first time, both by privatizing state-owned institu- markets, IFC has stinmulated portfolio investment tions and by encouraging the cst:blishment of new in emerging markets by promoting over 35 pooled private sector institutions. Privatization of state investment vehicles-"country funds"-which have enterprises in several countries has led to a spurt in mobilized more than $3 billion for these markets. demand for investment banking, enterprise valua- FC's initiative in this arca wYas seminal to the creation tion, and other capital markct services, and has of a whole new financial industry of foreign portfolio resulted in a sharp increase in sharc offerings in the funds and management companies, which have domestic markets. At the same timc, the incrcased themselves become major proponents ou creating financing needs of the private sector are putting pres- more open and efficient equity markets in developing sure on domestic capital marketsL countries. As a joinlt lead manager responsible for structuring, underwriting, and placing initernational LiberalizAtion of the financial sector has accompa- securities issues with an aggregate value of about $1.5 nied privatization in most developing countries. As billion, IFC has also helped 18 companies in emerg- governments have developed grcater faith in the efi- ing markets to gain access to the international capital ciency of the market, they have progressively liberal- markets. These international securities issues have ized controls that had created sevcre distortions and helped encourage local practices in connection with impeded capital market functioning in the past. securities issuance, disclosure, and trading to be more Liberalization macsures havc included freeing inter- in line with international standards. Through its cst rates; relying on open-mark-et operations and Emerging Markets Data Base IF has incrcased indirect methods of implementing monetary policy appreciation of the potential of emerging markets. rather than direct, quantitative credit controls; grant- Today, EMDB tracks price and share data for the ing greater autonomv to financial institutions to stocks of more than 1,400 companies in 25 emerging make their credit decisions instead of sectoral credit markets, and IFC publishes more than 100 indexes. allocation by administrative fiat; and permitting pri- vatc sector institutions to enter into newr lines of In the early years, IFC's capital markers program financial business. The removal of tax, corporate was fairly limited, dedicated mainly to developing law, and accounting impediments to capital market .93. *- _ ;;- : , . *-; .-.-9;.; -;;--;--=-- -.--: PRIVATE PENSION FUNDS AND CAP[TAL MARKET DEVELOPMENT Private pension plans car. make an important contribution to a country's copital markets, as they encourage long-term savings and generate demand for new lang-term instruments. As institutional investors, pension funds widen public parficipation in capital morkets, improve corporate governnce, promote bolter market practices, and encourage stricter accounting and disclosure standards. They can help finance privatization programs as well as large private sector projects. Developing private pension systems is, however, a chollenging tasl. It requires, among dher things, advanced invest- ment manogement skilkl and actuarial expertise; an appropriate regulatoy regime to ensure prudent asset manage- ment and protecion of plan beneficaries' interesis; acceptable accounting and disdosure standards for recording and reporting corporate pension obligalions; and the availability of sound long4erm debt and equity instruments to offset the long-erm liabilities oF pension plans. Severcl developing countries, particularly in latin America, are moving toward private pension systems. This trend owes its origin, in part, to the priatfiation oF Chile's pension system in the early 1 980s. In Argentina and Peru IFC is supporting the development of private pension systems by helping to esablish credible, efficient, and financially sound pension fund management cmpanies. IFC, together with. agroup of bcal sponsors and CAF, o development istution for ihe Andean countries, has pro- moted a pension Fund management company in Peru, Horizonte AFP S a, in which it has made equity investments oF $1 1 million. Howizonte will have access to the pension furnc management expertise of Provido, a leading Chilean pension fond monagement company, which has taken a significant equity participotion. Horizonte expects to cover 12 to 15 percent of the market, and to be managing about $1 billon in pension funds by the year 2003. In Argentina IK, along with Banco Roberts, Deutsche Bank, Banco Quilmes, and New York Life, a U.S. insurance company, has promoted a group of pension fund management and insurance companies, the Moaxma SA AFJP Group- In addition to a $15 million equity investment, IFC provided technical assistance in studying the projec's Feasibility and in deveping the structure, monagernent, and operational standards for the new companies. New York Life will serve as technical pariner and provide expertise on insurmnce IK will be helping other developing membei countries to establish private pension systems through similar instituion- building projects and advisoy and technical assistance work. CAPITAL MARKET DEVELOPMEN. A VIEW FROM IFC 94 development has also been a key feature of this finan- an attractive long-term investment alternative. cial liberalization process. And many governments Relaxation of restrictions on foreign investment, have relaxed their foreign investment restrictions to development of impmoved dearing and settlement permit foreign direct and portfolio investment in arrangements, and attractive taxation regimes have domestic financial institutions and capital markets, facilitated such investments through collective invest- which has assumed great importance in light of ment vehides sudh as country funds, as well as globalization. through investments in direct corporate issues of debt and equity securities. This has resulted in an Until the mid- to late 1980s, the international inves- estimated increase in foreign portfolio investment tors interested in developing countries were few in fowvs (induding debt issues) to emerging markets number-primarily large multinational corpora- from less tian S7 billion in L989 to over $60 bfllion in dons making direct investments in industries in 1993, exceeding foreign direct investment and official countries with certain advantages, such as access to development assistance for the first time and far sur- raw materials and inexpensive labor. Foreign direct passing commercial bank lending at its peak in 1982. investment in the financial sector in developing countries was even more limited, for the most part It is important, howvever, to remember that, wshie involving only the branch and affiliate operations of these trends are sweeping the world, their importance large commercial banks. Recent developments in in the developing countries is very uneven, for histor- both the industrial and the developing countries have ical, policy, and other reasons. While countries such altered this scenario almost completely. As global as Argentina, Chile, Malaysia, Mexico, Thailand, and trade and financial barriers have been dismantled, Turkey now have comparatvely advanced private and the revolution in telecommunications has capital markets and financial institutions, several spread, major international invetors and leading countries in Asia. sub-Saharan Africa, Central corporations have come to think about their business and Eastern Europe, and the former Soviet Union and investment strategies in a global context Like lack the most basic financial institutions and have their industrial counterparts, financial firms wish to only rudimentary capital mares be global players, by, setting up offices in key interna- tional locations or by entering into strategic alliances The chalenge posed by the situation in the former worldwide, including in emerging markets. Interma- Soviet republics is particularly formidable. For over tional financial finns are increasingly seeking to 70 years these countries had a unique financial system establish a presence in emerging markets not only to consisting of administrative arrangements and prac- support home-country clients expanding overseas tices with no commerci;a basis that were intended to but also because they viewv growing business in facilitate central control of all financial flows. Sud- emerging mar;kets as an important long-term compo- denly, these counties are faced with the necessity of nent of their global business stategy. The globaliza- developing modern payments and clearing systemns, tdon phenomenon is not confined to the movemnent basic banking fimctions, and equity secuities mar- of capital and financial know-how from the industrial kets, from scratch. Traditionally, payment and bank- to the developing countries, but can also be seen in ing systems have been developed long before equity transfers of know-how between developing countries markets; however, these must be developed simulta- at different stages of advancement-for example, neously in the former Soviet republics, which firms from the Republic of Korea are establishing urgently need a mechanism to faciitate the transfer presences in other Asian countries, and Chilean pen- of ownership of a large number of state enterprises to sion fund companies are entering into joint ventures private hands. in Argentina. In response to the significant changes in market The impact of glob-lization on foreign portfolio needs resulting from these trends and developments, investment in emerging markets has been even more IFCs capital market activities have inacesed gready, dramatic Easing of internal contmls on international not only in scale, as noted above, but also in scope investment, greater appreciation of the perfonnance and complexity. IFC's capital markets program now and diversification potential of emerging markets, spans more than rIW countries. In countries with and consistently lower yields in markers in the more advanoed markets, IEC is supporting the devel- industrial countries have encouraged interational opment of domestic capital markets by setting up institational investors to see emerging markets as institutions that are new in the host country-for CAPrrAL MARKET DEVELOPMENTK A VIEW FROM IFC .- :- .- . : : -95 example, credit rating agencies, securtization institu- institutional investors are only beginning to develop tions, pension-find management companies, and in emerging markets and could become one of the domestic mutual finds. In addition, in such markets most important driving forces of capital market IFC is helping domestic institutions to offer more development. Pension funds, insurance companies, sophisticated financial services by providing them and mutual funds stimulate market development by with such financial products as underwvriting lines supporting the demand for securities and by provid- and risk management facilities. In other countries ing small investors with an effective mechanism for IFC is hdping to set up more basic financial institu- participating in domestic mar;ets. Institutional tions-for example, private sector commercial banks, investors can also help to improve corporate gover- leasing companies, and discount houses. IFC is con- nance, given their large shareholding positions. The tinuing to provide tedcnical assistance in securities creation of a strong private sector contractual savings marlet regulation and leasmg company regulation and mutual fund industry howsever, is a complex and In addition IFC has begun to help governments in challenging taskl that needs strong policy commit- areas such as asset-securitization and the develop- ment and vigorous, sstained effort on the part of meat of futures and options mark-ets governments, as wedl as other market participants. IFC has also continued to help companies in develop- Tfhae is a strong need to broaden emerging markets ing countries through its resource mobilization activ- to indude a wider range of financial instruments, ities, but with a new emphasis. In the past IFC partiaclarly long-term debt instruments. While fairly mobiized portfolio investment mainly through active and developed equity markets exist in a rela- country funds; now it is inceasingly helping compa- tively larg number of developing countries bond nies tap the international markets through diret markets are practically non-existent, Continued securities issues. IC is also engaged in mobilizing monetary and macrocoDnomic uncertainty, lack of ecxtenal resourcs through spedalized investment benchmark rates and liquid secondary mark the fimds that focus on key sectors or regions with lim- absence of rating agencies, and the generalyshort- ited aOccss to portfolio inestment flows, term outlook of bondholders have been the princdpal factors impeding the development of bond markers OBSERVAIONS The development of domestic curencybond markets While several emerging markets have made consider- has become increasingly important in the context of able progress, even the most advanced of them have a the need to source domestic financing for capital- longway to go to meet the financing needs of their intensive prate sector infrastructure projects that icreasingly dynanic and private sector-oriented typically do not generate foreign exchange earnings, economies. In several emerging markets, the private need debt funding with maturities as long as 15 to sector has been permitted to provide certain types of 20 years or more, and have long payback periods. financial services (leasing, secunties brokerage, Apart from deep markets in straight bonds, there is a investment banldng)l but other important financial need to encourage innovative financing techniques activities remain largely in government hands (com- such as revenue bonds, receivables-backed securities, mercial banking, insurance, pension funds). Most and lhmited-recourse financing. [n some countries, government-run financal entities suffer from ineff- progress is being made in this direcion. In Mexico, ciency, high costs, and doubtfil financial soundness. for example, several infrstructure projects-indud- If such problems are not effectively and adequately ing constuction and operation ofthe Toluca and dealt with, the financial sector in these countries Tnibasa toll mads-have been financed by the issu- could suffer serious consequences. Dealing with such ance of long-term debt securities in domestic cur- problems requires difficult decsions that are often renqc, which are badced by receivables generated by politicalLy unpopulai, leading many countries to the projects. postpone action. Howevei, it is dear that action can- not be postponed indefinitelry sooner or later, coun- Even in the case of equity markets, most countries tries will have to make difficult choices if the progress need to make substantial headwvay, especially in con- achieved thus far is to be sustained. nection with the legal and regulatory framework and infrastructurl facilities. While several countries have The development of a strong base of domestic been able to develop fiirly good legal and regulatory institutional investors, non-existent in the past, regimes for securities markets, the supervisory is a critical issue in this connection. Private sector and enforcement capabilitv is still lacking. In mamy CAPITAL MARKEr DEVELOPMENT: A VIEW FROM IFC 96 THE AFRICAN SECURITIES MARKET INMATIVE The lack of depth of domesfic financial and capital markets is one of the major obstades that has hindered subSaharan Africa's drive to inaease the level and efficient use of domestic savings and investment, aifract private foreign direct and portFolio investment, and, ultimately, achieve stable economic growth. While direct and portfolio equity investment flows to developing countries soared to $130 billion by the end of 1992, Africa's shatre of these privote flows dedined from a high of 12 percent in 1985 to o low of 3 percent by the end oF 1992. SubSahoran Aica largely missed out on porifolio flows, mainly becouse of the lw level of development of its capital markets and absence of suitable entry and exit regimes and mechanisms. Moreover, the current level of subSoharan Africa's gross domesticsovings and investment (currently 14.3 percent and 16.8 percent of GDP, respeciey is borely enough to replce existing copioal Private investment (which aver- ages 8 percent of total invesimen', compared wilh 12 percent in LaIn America and 22 percent in East Asia] is the lowest in the world. Many countries ore taking measures to remedy this situadion, frmn improving the macroeconomic, legal, and regulatory framework to [arming or upgrading stock, exchanges. IFC has been the preeminent organization helping countries in the region to develop domestic capital markets. Since its crucial role in the creation of the Ghana Stock Exchange in 1990, IFK has worked on a number of securities market development assignments, from the reation of new market to the modernization and srucdural upgrading of elder ones. These activities are corded out under FC's African Securities Market Initiative (ASM). UC helped aeate the Zambian Stock Exdcage and is currently woxrkng on the aeotion oF new markets in The Gambia and Uganda. IFC has alo taken the lead in modernizing and upgrading market mechanisms in the countries oF the West African Monetary Union as well as in Ghana, Kenya, Mauritius, Nigefia, Swanland, and Zimbabwe IK also advises various African countres an an ongoing basis on improving the regulatory and legal frameworks of securities markets. IFCs inmlement in securities market development in AFrica has shown encouraging results some morkels have been opened to foreign investors, ond in some countries governments have privatied state enterprises ithrough public offerings on local stock exchanges. Above all, IFC has played a key role in generating international investor interest in Africa-frign portolio investment in the region, nonexistent at the end of 1991, had surpassed $A5 million by the end of 1993. This wos partly due to the crealion in November 1993 by IFC and the Emerging Markets Inestment Corporafton of the first find to invest in Africa's stock markets, the Africa Emerging Markets Fund. CAPITAL ARKErT DEVELOPMENt A VIEW FROM IPC 97 countries, the regulatory framewvork is being ren- likey to have been driven, and may continue to be dered inadequate by the introduction of new types dre, primariy by local investors, who are closer to of financial instruments and contracts. The rapid their domestic markets and have the most influence entry of the private sector into newr and complex on them. financial services presents substantial challenges to the existing legal and regulatory structures and is stretching supervisory and enforcement capacitt. For example, ne w legislation and regulations are needed in several countries to govern private sector collective investment vehicles such as mutual fimds and contractual savings institutions such as pension fuids and insurance companies Effectiv regulatory regimes are needed for the growing derivatives markes Most emerging markets need to upgrade their trading, dearance, and settlement systms and procedures to cope with the rapid increase in transaction volume. It is becoming increasingly dear that portfolio flows to emerging mar;ets, barring cyclical disruptions, are lik-ely to be sustainable over the long term. Emerg- ing mark-et holdings still represent less than 1 percent of the investment portfolios of international mistitu- tional investors With 8 percent of total market capitalization and continued potential for good reuns on equity, emerging market are liey to remain a viable and promising alternative for international investors seeking geographical diversification. Developing countries should continue to strengthen their efforts to attract foreign portfolio flows not only because they supplement domestic savings but also because they help develop the domestic capitl mar- kets. Foreign portfolio investmnent and international securities issues closely link emerging markets with international marke, primarilybecause sophisticated institutional investors seek international standards in local markets and thus encourage transparent trading practices, efficient dearing and setdtement proce- dures, higher auditing and accounting standards, greater disclosure of financial and business informa- tion, and effective market regulation and supervision. Often, foreign portfolio invtment stimulates for- eign direct investment in local securities firms, bring- ing in much-needed capital and tecdmical expertis Fmally, fears of some of the potential negative effects of foreign porfolio investment may be misplacedL For example, although foreign portfolio investment is often blamed for market overvaluation, the fact is that in 1993 foreign investors held only4 percent of the capitalization of all of theworld's emerging markets. This suggests that changes in valuation are CAPITAL MARKET DEVELOPMENT. A VIEW FROM IFC 98 INTERNATIONAL SECURMES DIVISION Strengthening the linkages beiween the capitol markets of the industrial countries and those of the developing coun-. tries is a key aspect of IFC's copital markets activities. In addition to supplementing domestic savings of develping countries, closer linkages with international copital markets help develop domestic capital markets. IFC encourages portFolio investment in emerging markets by sponsoring and placing different types of emerging market investment vehices ond helps companies in emerging markets gain access to internofional capitl markets through securifies offerings. IFC's International Secunites Division PSD) is the focal point oF the Corporaton's efforts to help its diens gain access to international capital markets and to promote portfolio investment vehicles. ISD has played a pioneering role in stimuating international investor interest in emerging markets, and hos so for completed 52 investment fund and international securities transactions, mobilizing a total of $4.3 bilion. Several of the invstent funds ond inter- national corporate securities issues handied by ISD were tie fit of their type Examples include the Korea Fund, the first country fund for an emerging market; the Energing Market Growth Fund, the first global fund to invest in emerging markets; the Chile Investnent Comnpany, the first debt-equity convesion hand; the first Latin Americon debt issue since the debt crisis begun (Banco Lotinoomericano de Exportaciones, SA]; the firt Venezuelan international equity issue (Corporci6n Industrial Montana, CA, SA-Corimon); ihe firt Latin American secrities issue to be listed on the New York Stock Exchange (Comnpoiia de Tel6fonos de Chile SA); and the first Colombian international equity issue (Corporaci6n Financiera del Valle]. Recently, ISD has helped to encourage portfolio investment in regions where such flows are sfill -weak with funds such as the Africa Emerging Markets Fund and the Maudiius Fund. ISD is also promoting portfolio investnent through specilized investmentvehides-For example, the Emerging Markets Gold Fund, which is specialized in equities of gold-mining companies in developing countries; the State StrestBank and Trust Company/IFC Emewrging Markes Index Common Trust Fund, which frocks IFCs Investble Index; and the latin America Corporate Bond Fund, which ivests in dollar-denominted issues of private sector companies in Latin America. wnA. MdAM-E-r DEVELOPMENfl A VIEW PROM IPC 99~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ IFC AND THE ENVIRONMENT ANNUAL REVIEW 1994 JrFCappnveda loan and eqaizy inwmetzo hdp izuio ofKuinda a cemet wmpmny is apcted to red=c the mupanys by 98 pncc B usinesses and goviernments, awar of the companies hare made a strategic shift from merely high costs and potentia liabilities of envi- complying with enviromnmental regulations to iute- ronmeatal deanup> are inceasingly consid- grating environmental Factors into their operations ering enviromnmental fatctors when they by beconming more energy-efficdent; minmiin make decisions about prodtuction, investment, and resource use, waste, and pollton; improving the trade2rxofounddchngesare taking placemimidustries workplace environment; and identfyjrig new environ- and markets around the world because of stricter mentally driven products. Eco-efficiency has become environmental regulations and stronger enforcement, the hallmark of good management and profitability. public pressure, consumer demand or0green" products more realistic pricing of inputs that takes New industrial projects in developing countries environmental costs into account, and a more corn- should make use of new, environmentally sound, and petitive international enviroinment- Forward-looking energy-efficient technologies, bypassing theCdirty" IFC AND THE ENXVIRON.MENEr ANNUAL REVEW 1994 100 stage of industrial devdopment Govermnments ENVIRONMENTAL RISK MANAGEMENT seeking to privatize enterprises are aware that many IFCls environmental risk management activities enterpriss-epeciall in the economies in transi- indude the environmental review of aU projects tion-have severe environmental problems; privati- financed by the Corporation and the Africa Enter- zation usua requires assessment of liabilities, prise Fund (AEF). Projects are examined by the Envi- preparation of a cleanup plan, and the evaluation ronment Division for their environmental impact of cleaner technologies. The private sector in devel- and compliance with applicable World Bankl policies oping countries is increasinglybeing called upon to and guidelnes and host country requirements. They provide environmental services, once the domain of are monitored and supervised dunng implementa- the public sector. tion for continuing compliance with host country requirements, World Bank policies and guidelines, In response to these developments and growing and measures agreed upon to mitigate potential demand for its e.xrtise and project finance, IFC has environmental impacts, ensuring that adverse envi- developed an extnsive enioirnent program that ronmental inpacts are minimized and that any unan- addresses not only the physical impact of economic ticipated envirormental damage is arested quiddy. development-use of land, minerals, water, and air; wraste and pollution resulting from production and In fiscal 1994 the Environment Division reviewed consumption-but also the sodioeconomic and cul- about 450 project proposalIs of which 231 were tural aspects. In addition to protecting the physical approved by IFCs Board of Direcltrs, including AEF evironmen, iFC seeks to safegard the cultures of projects. Of the projects approved for IFC fin. acing, indigenous peoples and to foster concern for issues eight projects fell into Category &_ These are projects such as worker health and safety: that could have diverse and significant ewironmental impacts and thus require a fill Environmental The Environment Division in ICs Technical and Assessment, a fomal document summarizing the Environment Department is the focal point for the process and results of the environmental analysis. Corporation's diverse environmental activities Sponsors of Category A projects must consult with local affected groups and interested parties during * Ensuring that projects financed by IFC are envi- preparation of the Enviomental Assessment, which ronmenta susainable is subsequently made public. There were 123 Cate- gory B projects-projects that may havc a limited * Providing technical assistance to project spon- number of specific environmental impacts forwhich ors and training to financial intermediaries o there are predetermined performance standards, stegthen their environmental capabflity guidelines, or design criteria to avoid or mitigate impacts. Category B projects require an environmen- * Helping sponsors to improve pojects by using tal analysis, but not a full EnvironmentalAsessment efficient, dean technologies and taking measures Sixty-nine projeccts were in Category C-projects that to enhance environmental and socioeconomic do not have an environmental impact and thus benefits require no environmental analysis. The raining 31 were Category Fl projects (projects financed by * Investing in the environmental business sector IFC through financial intermediaries) that may have an environmental impact In these cases, IFC requires * Assisting the IBRD in an industrvwide review of verification that the financial intermediary is both industrial pollution prevention and abatement capable of, and committed to, carrying out environ- guidelines mental reviews. * Addressing global environmental challenges by IFC also carried out project reviews for the Multi- participating in the Global Environment Facility lateral Investment Guarantee Agency (MIGA), pro- (GEF), the Multilateral Fund for the Implemen- viding comments and guidance on MIGXs decisions. tation of the Montreal Protocol (MFMP), and other international initiatives IFC strengthened the monitoring and supervision of -- projects dunng the yvea EFC requires annual reports During fiscal 1994 the Division increased its staff to on inplementation from project sponsors. These are accommodate the growth of all of these activities. reviewed thoroughlr, any problems are investigated IFC MID THE ENVIRC.ONAME ANN-UAL REVIEW 1994 101 KUNDA NORDIC CEMENT A/S In fiscal 1994 IFC approved its first project in Estonia-o $6 million loon and $4 million equity investment to help finance the modemization of Kunda Nordic Cement A/S KNCNq. KNC's plont accounts for one-third of all parficulate emissions in Estonia-1 40,000 tons per year-and is considered the counry's single largest source of particulate ermissions. [he modemizofion of the plant, which wos construded in the 1 960s using Russian technology, will reduce particulate emissions by 98 percenL KNC, which is located on the Gulf of Finlond coast, about 100 kilometers east oF Tallinn, Estonia's capital, is jointly owned by the Goverinment of Estonia and Atlas Nordic Cement Ltdo, a osorium of foreign cement producers that indude Sconcem Intemational, Holderbank of Switzerland, and Atlas Cement of the United Stoles. The feasibility study for the prolect was financed by IK through its trust Funds with Finland and Switzerland. The total cost of the modernization prolect is estimated at $60 million, of which $75 million is earmarked for environmental improvwents- The first phase oF the modernmation indudes improving pollution and environmental control systems, upgrading plent equipment to meet compefitive production standords, reducing energy consump- tion, and developing a new port l6olity, which will reduce port handling costs by some 90 percent. IFC's Technical and Environment Deportment provided guidance for the development of an Environmental Management Plan, which integrates environmental, heolh, and safety concerns identified in an environmental audit completed before project approisal. The plan will be Lsed to assess progress in enviromnental improvemenkts. Equipment will be installed to reduce emissions from the Idlns, cement mils, and oil shale mils to comply with 'Nbrld Bank guidelines. KNC has employed an environmental manager to oversee implementation of the plan, which indudes a program to reduce ir emissions, treat liquid efluents, dispose of solid wastes, prevent spills, monitor ihe impacts assciated with the dredging of the port facility and disposal of dredged material as well as the impact on fisheries, prevent accidents, ond reduce employee exposure to dust and noise- The project is expected to generate significant economic benefits for the region and environmental and health beneFits for KNC's employees and the local population; deaner air could result in additional benefits, such as increased yields from agricullure, livestck, and 6restry. IFC is conducting a study to quantify ihe economic benefits to the region that are expected to flow From the environmental improvements. In addition to [FCs own resources, the study is being supported by [PC's trust fund with Finland, KNC, Finnfund, and NEFCO, the Nordic Investment Bank's environmental affiliate . iFc AND THE EWV1RONMENVr ANNUAL REVIEW 1994 102 and recommendations are made on how to resolve projects and the institution's investments, and to out- them. Staff of the Environment Division and other line ways to manage environmental risks in collabo- IFC technical specialists made numerous visits to ration with project sponsors. A variety of risks could projects in fiscal 1994. For example, IFC audited 39 stem from environmentally unsound projects, for AEF projects in Benin, C6te d'lvoire, Ghana, Kenya, example Mauritius, Swaziland, Uganda, and Zimbabwet The projects involved a variety of sectors, induding agri- * Credit risk-delayed payment or write-off business, food-processing, tourism, manufacturing, of interest and principal wood-processing, metalworking, and plastics. The objective of these audits was to ensure compliance * Position risk-devaluation of comparry's with the World Bank's Occupational Health, Safety, securities and Environmental (OHS&E) policies and gutide- linesg assess the guidance given to sponsors on * Security risk-defunct or devalued collateral OHS&E issues; advise on measures to improve per- formance in these areas; recommend changes to the * Legal risk-liability for cleanup costs after project review system to ensure compliance with foreclosure OHS&E requirements; and identify additional assis- tance needed from the Corporation. * Funding risk-reduced access to, and increased cost of, capital from international marklets IFC is committed to greater transparency in the envi- ronmental issues raised by its investments, and dur- During the year IFC developed a program to help ing fiscal 1994 it revised its environmental review sponsors of small- and medium-sized projects meet procedure for proposed projects. Key changes involve high emvironmental standards in a aost-eftctive expanded public disclosure requirements forcategory manner and to increase the efficiency of project A and B projects, induding release of environmental appraisal and monitoring by IFC and financial information about projects through the World Banlks intermediaries- With funding support from the new sPublic Information Center Norwegian Agency for Development Cooperation, IFC and Norwegian consultants produced forms and To strengthen staff capability, early in fiscal 1994 IFC guidance materials to facilitate the exchange of infor- launched an intensive training program in environ- mation on environmental issues between IFC and mental risk management and the revised environ- project sponsors. Twvo brief reports, Environment mental review procedure for some 250 staff Management Systems and Environmental Improve- throughout the institution, including staff from the men Techniques were also prepared to provide investment depaments, the Legal Department, and sponsors with additional guidance the Economics Department. IFC also committed itself during the year to funding An innovative training program was also initiated for consultants to work with World Bank staff on draft- financial institutions in developing countries and ing guidelines for the prevention and abatement of countries in transition.A pilot training module was industrial pollution. developed early-in the year and tested in India with the management and staff of a venture capital firm ENVIRONMENTAL BUSINESS and a leasing company. Based on the results of the The worldwide market for environmental goods and pilot training, IFC conducted enviromnental risk services is expected to grow rapidly. IFC estimates management workshops for 96 financial institutions that it could double by the end of the decade, from in Argentina, Brazil, Colombia, Indonesia, Mexico, roughly $300 billion in the early 1990s to $600 billion Peru, the Philippines, Russia, Singapore, Slovenia, by the year 2000. For the past several years IFC has Tanzania, Thailand, and Ukraine. More than 350 staff encouraged private investment in environmental from the financial institutions participated in these projects in sectors such as water supply and waste- workshops dealing with the appraisal of the environ- water treatment, solid and hazardous waste manage- mental aspects of projects, such as pollution preven- ment, manufacture of clean. production technology tion, waste minimization, and energy efficienq. Th. and pollution control equipment, recycling, sustain- objective is to assess whcther there are unacceptable able forestry, and ecotourism. The Environment risks to the environment that could jeopardize the Division assists in identifying and developing IFC AND THE ENvIRONMENf. ANNUAL REVIEW 1994 103 environmental projects for IFC financing. It works population of nearly 9 million in an area of more closely with the Infrastructure Departnent on than 500 square kilometers. The projects capital pmjects in water supply and treatment, and waste requirements, which are substantial, will be funded management, as well as with other invstmnent by private sources. In the first 5 years of a 30-year departments on other types of projects. concession, Aguas Argentinas will invest $1 billion in improvements and construction of new facilities. In screening a project proposal IFC assesses the prjects viability and examines a variety of factors, During fiscal 1994 IFC also approved projects that such as the host country's support for private invest- involved process modification or the use of dean ment, the project sponsor's record and management technologies to reduce energy consumption. IFC capability, and the financial resources that can be financing wil help Edenor S.A. a recently privatized mobilized. Projects that appear satisfactory are Argentine company that provides electricity distnbu- dosely followed, and IFC provides technial assis- tion to the greater Buenos Aires area, to improve dec- tance to the sponsors as necessary. For a project that tridty distribution, decrease energy waste and loss, does not meet IFCls criteria, IFC can, if the sponsor and lower prices. In Thailand IFC approved financing wishes, help identifyrwealnesses in the business plan for the Star Petroleum Refining Company, Ltd, and provide guidance on ways to improve the which is building a new refinery that will produce project's viability. dean, high-quality petroleum products in response to increased domestic demand. In the Czech Republic In fiscal 1994 IFC received more than 100 expressions IFC financing for Vetropack Moravia Glass as will of interest in financial participation in environmental enable the company to continue a modernization and projects, of which 40 were considered appropriate for cxpansion program as it undergoes privatization. possible lFC involvement About 73 percent of the Two of the company's four furnaces will be replaced environmental project proposals considered 'bank- to complywith World Bank guidelines. The installa- able" by IFC were in Asia and Latin America. The tion of a new Vetroraelter regenerative furnace wil largest number originated in Chile and Mexico. increase energy efficiencyby about 13 percent The Twenty-nine of the project proposals seriously con- project sponsor,Vetropack of Switzerland, has one of sidered by IFC during fiscal 1994 are in areas in which the best environmental records among manufactur- the private sector in the industrial countries already ers of glass containrs l}C also approved an $8 mil- has substantial expenence, such as water supply, lion equity investment in the Alliance ScanEast Fund wastewater treatment, and waste management. Corn- LP., which will make investments in companies in panies from France, the United Kingdom, and the Central and Easten Europe to promote more effi- United States sponsored the largest number of waste dtentenergy use, finance enviromnmental technologies, management and water supply projects. reduce pollution in the pulp and paper industries, and modenize oil refineries so that they produce IFC approved its first wastewater management deaner fuels. project in fiscal 1994, the construction of a 750-liter- per-secnd wastewater plant to serve Puerto VaDarta, During fiscal 1994 IFC held discussions with the an international tourist resort in Mexico. In develop- major international private sector water and waste ing a financial structure that would attract foreign management companies in an effort to increase the investors, IFC worked dosely with the sponsor, sev- number, quality, and divrsity of projects eligible for eral Mexican financial institutions, and the Govern- IFC financing. IFC staff made presentations on envi- ment of Mexic. The project has become a model ronmental business opportunities at numerous con- for other private sector environmnental projects ferences and seminmas. IFC also began to assess the in Mexico. feasibility of developing venture capital and equity funds that would invest in the enviromnental busi- The second water and wastewater project approved ness sector and finance projects that promote biodi- by IFC involves Aguas Argentinas, a private sector versity, ecotourism, energy efficiency, and alterative consortium that wil operate, improve, and ecpand energy and renewable resource use. water and wastewater services in metropolitan Buenos Aires, Argentina This project represents GLOBAL ENVIRONMENTAL CHALLENGES the largest privateation of water services outside Concern about the depletion of the earth's non- of Western Europe. Aguas Argentinas serves a renewable resources and the limited capacity of the IFC AND THE ENVIRONMENTl ANNUAL REVIEW 1994 104 earth to absorb or reqcle wastes is rapidly changing The EC Asia Trust Fund also financed studies on the the way business is conducted. The replenishment of modernization of a lignite-based power plant in India the GEF and recent international agreements such as and on technical and environmental factors in the the Framework Convention on Climate Change expansion and modernization of t cement factory in (FCCC), the Convention on Biological Diversity, and Pakistan. The Canadian Trust Fund financed a tech- the Montreal Protocol on Substances that Deplete the nical assment of environmental and operational Ozone Layer demonstrate a growing awareness that fiactors in the modernization and expansion of a zinc efforts to address these issues need to be coordinated smelter in BraziL and that global cooperation is nccessary. IFC is engaged in a wide range of activities with busi- IFC is fostering this cooperation in a variety of ways. nesses and nongovernmental organizations world- For example, it is helping to develop private sector wide to promote environmentally sound business projects that promote some of the objectives of the practices and encourage communication on environ- international conventions, such as increasing energy mental issues IFC is in contact with, among others, efficiency, developing renewable sources of energy the Business Council for Sustainable Development and cleaner production of energy, reducing natural and its regional networks, the World Industry Coun- gas flaring, and phasing out the use of chlorofluoro- cil for Environment organized by the International carbons (CFCs), halons, and other ozone-depleting Chamber of Commerce. the Foundation for Sustain- substances. EFC is also increasing communication able Development in Latin America, the International with multilateral and bilateral development agencies, Network for Environmental Management, the Inter- environmental businesses, and nongovernmental national Institute for Energy Conservation, and the organizations. Earth CounciL In fiscal 1994 a dialogue continued between IFC and leading environmental nongovern- Two sources of multilateral grant funds for eligible mental organizations on working with the private priate sector projects are GEF and MFM. Consult- sector more effectively to achieve environmentally ants funded by GEF and MFMP are woring with lEC sustinable development staff to identifr pnvate sector projects and activities that would be eligible for GEF and MEMP grants. Projects that might be eligible for MFMP grants are being evaluated in India, the Slovakl Republic, Turkey, and in countries in Afica, Latin America, and the Caribbean. In support of the FCCC, IFC and the World Bank are collaborating on the development of a feasibility study and business plan to determine the role of private sector investment in the mitigation of greenhouse gases and carbon-offset activities and to assess capital requirements. A study on the possibty of exporting unsorted mixed waste paper from the European Community to South Asian countries with a shortage of paper and fiber was completed for IFC in fiscal 1994 by an inde- pendent consultant financed by the Commission of European Communities (EC) Asia Trust Fund. The recyvcing of imported waste paper in South and East Asia would help countries with a fiber deficit meet rapidly growing demand for high-value paper goods. A promising venture of this type is lkcelyto emerge in the near future and would solve a waste-disposal prob- lem in the industrial counties while saving resources in the developing coumtries, and would require coLab- oration between a European partner and South Asi govermments and private sector companies. IFC AND THE ENVIRONMENT ANNUAL REVIEW 1994 - -105 MANAGEMENT AND ORGANIZATION lanniklindbae, IFCExeacntir rice President. seued. center, with IFC VicePresidents Makbrand V Ddeja lef, and JoSE Camarlche. right Standing, franc left to righit. 1FC ViePresidents oenml-wd-dinr ;gum, Ridhard H. Frank, Danie AdEAmt, ltrdfiiedE. QKabfaergc J F(-: prgrams and activities are guided by its IFC has five regional invstment departments. Sub- 161 member countries through its Board of Saharan Africa; Asia; Central Asia, the Middle East, Governors and Board of Diectors. Each coun- and North Afica; Europe; and Latin America and try appoints a Governor, generally the Minister the Carbbean These departments are responsible of Finance or equivalent position, and an Altemate. for the development of overall strategies and imvest- [FC's corporate powves are vested in its Board of ment programs for the countries they cover, as well Governors, which delegates most of these powers as for business promotion, relationships with mem- to the Board of Directors. The 24 Directors, who ber governments, and coordination with the IBRD approve IFCs projec financing operations, meet at in their regions. They also process all projects not World Bank Group headquarters in Washington, handled by the specialist departments and supervise D.C. Lewis T. Preston, the President of the World the facllities providing advisory services to small Bank, is also President of IFC. Janmlk Lindbaek IFC's and medium-sized businesses. ExecutiveVIce President, is responsible for overall management of IFC and day-to-day operations. On Four speialist departments handle projects in areas January 1, 1994, Mr. Lindbaek succeeded Sir William where IFC can make a strong developmental contri- Ryrie, who retired after nine years of distinguished butionmAgnbusiness; Chemicals, Petrochemicals, and service. Fertilizers; Infitrucure and Oil, Gas, and Mining. These departments, which are staffed byboth finan- IFC is headquartered in Washington, D.C., and has cial and technical staffwith in-depth knowledge of the representatives in more than 20 countries industries they cover, are responsible for building con- tacts with companies in these industries and imple- OPERATIONS menting investment projects in all developing regions. IFCs Vice Presidents for Operations oversee the activities of IFCs regional and specialist depart- The Central Capital Markets Department works with ments. IFCs Vice President for Capital Markets the regional departments to design strategies for supervises the financial sector activities of the capital market development It is also responsible for regional departments, as well as the Central Capital a number of IFC's capital markets operations: struc- Markets DepartmenL turing, underwriting, and placing international MANAGEAMENT AND ORGANIZATION 106 securities issues for companies in developing coun- The Technical and Environment Department and the tries as well as investment funds; coordinating advice Special Operations Unit report to both Vice Presi- to member governments; monitoring emerging stock dents for Operations. The Technical and Environ- markets and maintaining the Emerging Markets Data ment Department provides technical support to the Base, developing new capital markets products and regional departments and supervises technical staff in services; and handling capital markets projects that the specialist departments. The activities of its Envi- are global or cross-regional in scope. ronment Division, which reviews all IPC investment projects to ensure compliance with environmental The Corporate Finance Services Department provides regulations and guidelines, are described in the fee-based advisory services. It advises state enter- chapter entitled IFC and the Eetvirotanmaet: Ainual prises and governments on privatization, and private Review 1994. companies on corporate and financial restructuring. The Special Operations Unit has expertise in FINANCE AND PLANNING workouts of problem projects and is responsible TheVice President for Finance and Planning serves as for helping companies in IFC's portfolio that are the Corporation's chief financial officer, supervising experiencing serious difficulties three departments: Treasury and Financial Policy, Corporate Planning, anid Controller's and Budgeting. BUSINESS DEVELOPMENT Treasury and Financial Policy is responsible for IFCs The Vice President for Corporate Business Develop- financial and liquidity policies, borrowings in the ment is responsible for initiating ideas for IFC opera- international markets, liquid asset investment asset tions in all areas except capital markets, handling and liability management, loan syndications, and promotional activities in North America, and development of risk-management techniques and overseeing IFC's representative offices in Frankfurt, execution of transactions for client companies. Cor- London, Paris, and Tokyo. This Vice Presidency also porate Planning prepares the annual and three-year manages IFCs Technical Assistance Trust Funds business plans. It also coordinates IFC's private sector Program development activities with the IBRD, induding the preparation of private sector assessments in individ- PERSONNEL AND ADMINISTRATION ual member countries, and formulates strategies of The Personnel and Administration Department is assistance based on these assessments. Controller's responsible to the Executive Vice President fir peson- and Budgeting prepares and manages the budget, nel and administration matters. The Director of the is responsible for portfolio accounting, disburse- Department acts as the Executive Vice President's ments, and billings; monitors IFC's financial and adviser in management and organizational matters operating performance and loan and equity port- generally. The department is responsible for the recruit- folio; prepares IFC's financial statements; and ment, training, and career development of IFC staff, handles information technology. and for personnel management generally, in confor- mity with the policies of the World Bankl Group. OPERATIONAL SUPPORT The Legal Department, under the direction of the IFC's staff come from 94 countries. At June 30, 1994, Vice President and General Counsel, provides legal there were 846 regular staff on the Corporatiores pay- advice in connection with IFCs activities, prepares roll, compared with 831 on June 30, 1993. A total of legal documentation, and assists in negotiating 1,203 staff were employed by IFC at the end of the investments. fiscal year, induding long-term consultants and tem- porary stafE staff in IFC's overseas missions, who are The Economics Department, which reports directy generally nationals of the host countries; and other to the Executive Vice President, assists investment specialized staff. departments in reviewing the cconomic merit of investment proposals, prepares country risk assess- IFC HEADQUARTERS ments and studies of particular industries, and per- 1FC has expanded substantially over the past ten vears forms IFCs economic intelligence functions. The and outgrown its office space in the building it Economics Department includes the Corporationts currendy leases from the iBBRD. It has therefore been Operations Evaluations Uit, which carries out anal- necessary to lease additional office space. In 1992, yses of past IFC investnents. after examining the problem and determining that MANAGEMENIT AND OQGANIZATlON 107 FOREIGN INVESTMENT ADVISORY SERVICE In response to the strong interest of developing member countries in attracting foreign direct investment, IFC created FIAS in 1986. The primary objective of FIAS is to help governments fill long-term development needs by getting the greatest possible benefit from foreign investment-not only capitol, but also technology ond managerial expertise. To dote, FIAS has worked in more Ihcn 75 developing countries, advising governments on the lows, policies, regulo- fions, ond procedures needed to create an attractive investment clirnate and to increase inflows of productive foreign direct investment. FIAS has also helped govemments to build efkfive institutional frameworks for interocting with investors, and to develop investment promotion strtegies for those institulions that focus on investment promotion. FIAS completed 28 advisory projects in 25 countries and conducted a number of seminars on foreign investment poL- icy during the fiscal year. Twelve of these projects were in the poorest developing countries-those with annual per capita incomes below $635 FIAS has been porticularly active in economies in transition and in subSaharan Africa. Details on FIAS's activities can be found in the Regional Reports. In fiscal 1994 FIAS was supervised by a committee chaired by IFC's Executive Vice President and also composed of the Executive Vice President of the Multilateral Investment Guarantee Agency (MIGA) and the Vice President of Finance and Private Sector Development of the IBRD. The World Bank Group funded approximately 50 percent of FIAS's operating costs, wilh IFC providing holf of this amount, and MIGA and IBRD each providing one-fourth. Thle remaining 50 percent was funded by contributions to the general HAS Trust Fund (from Fnland, France, Japan, the Netherands, Sweden, Switzerland, and the United Kingdom), by.targeted support from mulfibleral and bilateral agencies (CIDA, EEC, IDB, UNDP, UNIDO, and USAID), and by reimbursement from client countries. These arrange- ments for the supervision and funding of FIAS will change in fiscal 1995, when MIGA will withdraw as a contributor to FRASs budget and as a formal member of its supervisory committee. none of the available office space near World Bank Group headquarters was suited to IFC's needs, IFC management, with the approval of IFCs Board of Directors, decided to purchase a site and construct new headquarters that would be large enough to house al staff under the same roof and allow for future growth as well. Excavation of the site began in fiscal 1994; it is expected that IFC will move into its newheadquarters in fiscal 1997. The Vice Presi- dent for Finance and Planning has overall responsi- bility for the building project Fmancial details can be found in the Notes to the Financial Statements in this annual reporL MANAGEMENT AND ORGANIZATION 108 ORGANIZATIONAL STRUCTURE President E NC Ut;V ':cc Prcsident Sector DemdVeMM IBRO.~~~~~~~~~~~~~~~~~~~~~~riiIiv-Iijv O _T T . i; 'W1 l<,.bl: \1<< 'rc'ijclni ', <'rcddcni i' c I'revickn: \ " Timber,pulp,andpaper FY90 - - 0.3 - 0.3 Bona Sp.z o.o. Food and agribusiness FY94 2.0 - 2.0 - 2.0 Chemagev, Limited Industrbial services FY92 4.1 7.6 2.9 1.1 4.0 ExportDcrelopmentBankl Capital markes FY90 18.7 - 11.9 - 11.9 hndlowy-Heller Capital markrt FY94 0.6 - - 0.6 0.6 Hula LW. Sp; z ao. Iron and steel FY93 4L0 - 363 4J7 41D) Itrnational Bank in Poland (IBP) Capital marks FY91 3.2 - - 3' 3.2 iTAL-POLCoGmpany Ltd General naunuacrg FY90 - - 02 - 0.2 MariruszMailewicrz- Food and agnbusiness FY90 - - t - t Philips Lihting Poland S.A. General manu&ctuzring FY92 15.0 - 15.0 - 15.0 Pllidngton Sandoglas, Sp. z o.o. Industrial equipment and macinery FY93 42.9 25.4 34.6 83 42.9 Piotr Ostuowis Partnership in Wedlina Tourism FY90 t - 0'2 - 0°2 przedsiebiortwo Przemyslu Miesnego W OpoluSpolklAkcyina Food and agribusiness FY94 5.5 - 4.5 1.0 55 Rotter Clothing Enterprises Industril services FY90 - - t - t Rybia Ironwork -- Ion and stel FY90 - - 0.2 - 0-2 Sar Papier International Limited Industrial services FY90 - - t - t Spolla Grasi- Industrial services FY90 - - 0.1 - 0.1 StarFoodsLimited Foodandagnibusiness FY94 - - 2.1 - 2.1 THF Hotd Orbis Bristol Limited liability Company Tourism FY91 10.7 - 10.1 - 10.1 Twsoraosc Textiles FY90 - - 0.1 - 0.1 Waldeman Machelewsld Food and agribusiness FY90 - - 0O2 - O2 120.9 18.8 139.7 Portugal Al Hil;ma Farmaceutica (Portugal), Limitada General manufacuring FY91 2.0 - 1.8 - 1.8 Banco Finantia S.A. Capital markets FY88, 90, 91,94 10.6 - - 10.6 10.6 Banco Portuguis de Invetimento Development financing FY82 85, 87,88,90,91 22.7 2.0 3.1 - 3.1 Inter-Risco - Sociedade de Capital de Risco SA Capitl markets FY89, 90 0.3 - - 03 0.3 Uniio IndustrialTextil e QumikaS.SA Chemicals and petrohemicals FY90 6.6 - 5.4 - 5.4 10.2 10.9 21.1 INVESTWIENT PORTFOLIO 145 International Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30,1994 conitinued Orjirnal lnwsa1enrm litd flrvr JF Cwniran (oft intinrnls (mintiading mnadisbunrAl blhanc) RIatzlynrs iniOlioms °rut SUlars I (miNiorn Iif U.S. AlIrs) in Isrlidh nmlirniermnw Total Total Epoity roral lavns CountrtrQdin dr adwr ari.anld olwr Snror -Wrr malt IC sWlicalions Loans (Irrcar? anmdeqiry Romania Akatel Network Systems Roomania S.A. Industril equipment and machinery FY92 6.4 - 4.6 0.7 5.3 4.6 0.7 5.3 Russian Federation Framlington Russian Investment Fund Financial servies FY94 8.0 - - 8.0 8.0 International Mosmc Bank Capital markets FY94 15.0 - 15.0 - 15.0 Polar lights Company Energy FY94 60.0 - 60.0 - 60.0 75.0 8.0 83.0 Slovenia Delo ike-Press Modernization Thnbei pulp, and paper FY91 3.9 - 29 - 2.9 ISKRA Industrial equipment and machinery FY85, 89 23.5 10.6 7.1 - 7.1 Ljubliansia Banka - Zdruzena Banka Fiancial servces FY83, 86 71.1 30.1 8.8 - 8.8 SalonitAnhovo Industrija Grad Materiala Cement and construction materials FY74,90 10.1 7.5 55 - 5.5 Tovama Avtomobilov in Motorjcv Maribor Automotive and accessories FY71, 87 36.0 0.9 12.7 - 12 J -Tovarna Avtopnevtnatile"Sava-Senperit" Automotive and accessories FY72, 78, 88 25.4 1.3 6.3 - 6.3 LtN[AL :- Tovarna Glinice in Aluminija Boris Cidric Nonferrous metals FY87 35.6 - 17.4 - 17.4 60.7 - 60.7 Tturkey Ar.dolu Cam Sanayfi AS. Industrial equipment FY70, 86, and machinery 87,90,92 19 7 3.2 1.2 2.3 35 Aytac Dis TicaretYatirirn SanayiA.S. Food and agnbusiness FY94 1. 101) tO 2.0 10.0 Cayeli Balir Isletmelen A.S. Nonferrous metals FY93 30.0 45.0 30.0 - 30.0 CBS Holding A.S. General manufacuring FY94 15.0 - 15.0 - 15.0 Cerrahogullari T.A.S. Industrial services FY94 8.8 - 8.8 - 8.8 Coats (Tuldiye) Iplik SanayiiA.S. Textiles FY89 72 - 4.4 - 44 Deniirbank TAS. Capital markets FY94 15.0 35.0 15.0 - 15.0 Dusa Endustriyel Iplik Sanayi Texies FY89 17.0 8.0 6.8 - 6.8 Ezbasi Ilac Sanayl ve TicaseA.S Industrial sevices FY90 - - 2.3 - 2.3 Elbo Gaz Mamuihcri ve Kontrol Cihazilari Sanayi veTicaret A.S. General manufacturing FY92 142 4.6 14J - 14.7 Elginkan Holding A.S. General manuiacturing FYS8 93 30.9 - 22.6 - 22.6 Esk-aTurismreTicaretA.S. Tourisn FY86,89 9.1 - 1.0 - 1.0 F S P Turizm veYatirim A.S. Tourism FY90 12.2 - 127 - 12.7 Finansbank,A.S. Financial services FY92 10.0 20.6 10.0 - 10.0 Global Securities A.S. Capital markets FY94 0.7 - - 0. O2 Guney Sanayi ve ricaret Isletnelei AS. Textiles FY87 16.5 - 79 - 7.9 Hdelr Factoring,A.S. Capital markets FY92 05 - - 0.5 0.5 Is Genel Finansal KlralamaA.S. Capital markets FY88,90.93 5.9 - 5.0 0.9 5.9 Isko Testil Sanayi verlcareA.S. Tiles FY89 33.2 - 20.4 - 20.4 Kepez Eleltrik LS. Industrial scrvices FY91 25.0 - 24.6 - 24.6 Kiris Otelcilk;Ve Turizn AS. Tounrsm FY89, 90 13.0 - 15.3 - 15.3 INVESTMENT PORTFOLIO 146 International Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30,1994 Onisinal Imnteots Jdifor the Corporatin r nait nnts' lithdin undilburrdha&am) Fiatl ar3s (l/ioiens of 5.1 doarsni (ifnillioru of US. datLarsO inn uhids canmirmens Tortal Totat Equint Totalloans Consort recien or o,hwr arm. and obligor Sector wet smidr TFC syndicitiem Loans (atrcosi) ad rquizy Turkey, com tintied Kirklarei Cam Sanayii A.S. General manuficturing FY81, 89 31.5 1.7 122 - 12.2 Kcy-TurHoldingA.S. Foodandagribusiness FY91,92 12.7 - 7.8 4.1 11.9 Kula Mensucat Fabrikasi AS. Textiles FY91 19A - 19.4 - 19.4 Man Kamyon ve Otobus Sanayi A.S. Automotive and xcessoriesFY85 6.5 - 1.7 - 1.7 Med-aH{oldingA5S. Tunber,putp,andpaper FY93 12.1 - 11.9 - 11.9 Mis Sut Sanavii, A.S. Food and agribusiness FY92 15.0 - 10.0 5.0 15.0 NASCO Naseddin Holding A.S. Texailes FY92 17.5 5.0 15.0 2.5 17.5 PinarEntegre EtveYem Sanavii AS. Food and agnbusiness FY84.94 10.9 - 7.0 - 7.0 PinarSutrMamulleriSanaviiA.S. Food and agribusiness FY94 7.5 - 7.5 - 7.5 RamDis T:caretA.S. - Capital markets FY89,92 18.2 56.5 15.0 - 15.0 Sanko Santral Konfeksiron Sanayiive Ticaret AS. Textiles FY89 6.4 - 6.0 - 6.0 SarivilleTuristikTesislerAS. Tourism FY89 48 - 2.0 2.2 4.1 Silkar Turizm Yatin ve Islettnelen AS. Tourism FY86,90 193 9.1 9.4 4.9 14.3 Simplot-BesikdogluA.S. Frech Fries (SB) Food and agribusiness FY90 9.4 - 9.4 - 9.4 Sise ve Cam FabrilkalariA.S Industrial equipment and machinery FY93 10.8 10.0 8.8 - 8.S Trakya Cam SanaviiA.S. Industril equipment and machinery FY79, 83, 84,89,91 65.1 31A 23.8 7.8 31.6 Turkiye Garnti BankasiA.S Capital markes FY93 20.0 80.0 20.0 - 20.0 Turkiye Sinai Kakima Bmnkasi,A.S. Development financing FY64,C67,69, 72,73,75,76, 80,83,92 19.7 45.0 - 0.7 0.7 Uluslarasi Endustri ve Ticaret Bankasi AS. Financial servicas FY88, 91,92 25.0 60.0 9.0 - 9.0 YeditepeBeynelmlelOtekilikTurizmveTicretA.S. Tourism FY90.,94 29.6 7.5 25.6 40 29.6 447.4 3/7.6 485.0 Ulraine Ukraine Fund Capital markets FY94 2.0 - 2.0 2.0 - 2.0 2.0 Yugoslavia (Serbia and Montenegro), Federal Republic of Institut Za Faikalnu Medicinu I Rehabilitaciju - Dr. Simon Miloser Industrial services FY82,88 19.1 - 10. - 10.7 lnwsticiona Bnnla n itograd-Udruena Banka Tourism FY80 21.0 - 2.0 - 2.0 Jugobanka - Udruzena Banka Beorad Financial services FY86 25A4 10.4 12.0 - 12.0 Small-Scale Enterprise Project (Laan to Eight Banks)c Financialservices FY80 26.0 42 1.3 - 1.3 Radoje Dakic Industial equipment and machinery FY80 18.7 - 1.2 - 1.2 Vojvodjanska Banka-Udnuzena Bank-a Financial services FY87, 89 56.0 31.2 50.4 - 50.4 77.6 - 77.6 Regional Alliance ScanEast Fund, LP. Financial services FY94 4.0 - - 4.0 4.0 Cntal Europe Telecom Investments, LP. Financial services FY94 10.0 - - 10.0 10.0 New Europe-East Investmet Fund Financial services FY93 10.0 - - 10.0 10.0 INVESTMIENT PORTFOLIO 147 International Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30,1994 conctinued I)rigini h/lar.eun'Isrs hIeld (,r sw ie 6qwIpratiumn ,v,rs,mrsmmns t uie,lsadanxj un:gislprzsed fina&usrrni EMisenwrmr llDuulIhsl5 of- ItS. a6h'llr) (mlihum iii o U.S. d1.1lhard cuIflhlllilJtsielis 1;iuiiI li l Ejllfi Wl,ie 1.1115s C!cusafn; It%ionI .iratherara.'rnj. .1,1.1 o,bfwrgSI &TldF IWW IlkSilt Z nwrilkrii.pi, lA IWO fill c.1't) .s11tubI r Regional. confi,iirucd Pam Gas BV Industrial services FY93,94 11.4 - - 11.4 114 Renaissance Capital Capital markets FY94 5.0 - - 5.0 5.0 - 40.4 404 Total for Europe 962.8 202.3 1,185.1 LATIN AMERICA AND THE CARIBBEAN Argentina Algodonera Santa Fe SA Textiles FY90 - - 0.6 - 0.6 AlpargatasS.A.LC. Textils FY77,84. 86,88,94 66.3 42.5 35.2 24 37.6 Atto Parana SA runber, pulp, and paper FY93 42 - - 19.5 19.5 Arcor SAI.C General manufiacturing FY88 12.0 - 3.0 - 3.0 Astra -Compaftia Argentina de Pctr6leo SA Energy FY89,92 50.0 43.0 30.6 - 30.6 Banco de CiEdtito Argentino SA Capital markets FY91 10.0 - 8.6 - 8.6 Bunco Franc&s dd Rio de la PLata SA Development financing FY89 15.0 - 12.3 - 12.3 Banco General de Negodos SA Capital markets FY94 15.0 - 15.0 - 15.0 Banco Rio de la Plaw, aA Capital markets FY88, 92 50.0 - 38.0 - 38.0 Boland & Cia,SA.t Tourism FY89,93 - - 0.4 - OA Bridas SA.P.LC. Energy FY93 50.0 60.0 35.0 15.0 50.0 Bungey Born SA Generalmanuactring FY88,93 63.0 57.5 23.0 - 23.0 CadipsaSA Energy FY93 20.0 13.0 15.0 5.0 20.0 Capri SA.LCI. C Food and agribusiness FY93 - - 1.0 - 1.0 CarbodorIndustias Quimnica S..C. Chemicals and perochenicals FY89 - - 0.3 - 0.3 Cattorini Hnos. SA) General manufactring FY86 - - 0.2 - 0.2 Cencosud, SA** Industril services FY89 - - 0.4 - 0.4 Ceryeriaay Malteria Quilmes A. Food and agnbusiness FY94 15.0 15.0 15.0 - 15.0 Ceraimica Pilar SACS. ** Geneal manufaturing FY86 - - 03 - 0-3 Cia ndustrial Lanera SA (Ciba) Textils FY88 - - 0.1 - 0.1 ColorxexSAt** Textiles FY88 - - 0.4 - 0.4 ComesiSAILC.** General manufiacturing FY89 - - 0.8 - 0.8 Compaiiia General de Combustibles SA. Energy FY94 40.0 40.0 25.0 15.0 40. Compafiia General de Inversiones Financial seravices FY89 0.1 - - 0.1 0.1 Compaiiia Sudameriana BTB SA Industrial equipment andmadcinery FY86 - - 0.3 - 03 Corporacion de Inversiones yPrivatisaci6n SA Financial services FY90 0.1 - - 0.1 0.1 Corporaci6n General deAlimentos Noroeste, SA t Food and agnbusiness FY8B - - 0.2 - 0.2 Diario La Nueva Provincia S.R.L r Tmxt. pulp, and paper FY86 - - 0.2 - 02 Empresa Distribuidora Norte Sociedad An6nima SA Industrial services FY94 45.0 125.0 45.0 - 45.0 Emprigas SAt Industrial services FY93 - - 1.3 - 1.3 Ferroexpreso Pampeano, SAC Industril quipment and machincry FY93 13.0 20.0 13.0 - 13.D Ferrum SA.'t Cement and construction materials FY94 - - 1.5 - 1.5 Fmca Flichman, SA General manufacturing FY88 89 - - 05 - 05 Fraccbia Hnos. SA.tt Industrial services FY89 - - 0.6 - 0.6 INVESTMENT PORTFOLIO 148 International Finance Corporation INVESTMENT PORTFOLIO AT JUN P 30,1994 Oria;irbl hiirnltntni helrfilwt11e QworaudiW n,i,inm,pwnaetll i {(iplte5millg wid idarlgel lwl' nrj Fihod o)urs (millian, of ts. uIU.11ru) tueilblls sf US.. SdfeFIa) in wini.i, fonimsrnenth Tt,Il T.a.Id Euitj Tokal lrklS Counaryu rnsigm rgnAor gnald. anudu Wf'Iar 'irt nwreiake IFC spudrieiioains fAunat ra nlntJ surlduhly Argentina, cotititied Frigorlfico Rioplatense S.A.l.C.I.F. Food and agribusiness FY92 13.0 6.0 11.3 1.0 12.3 Frigorffico Toba, S.A. " Food and agribusiness FY90 - - 0.3 - 0.3 Guilford Argentina SA' Textiles FY91 - - 0.5 - 0.5 Hidra OH Development Project Energy FY87, 90 80.0 27.6 1.5 - 1.5 Industrias Quimicas Lauril S.A. Chemicals and petrochemicals FY89 - - 0.3 - 0.3 Inta SA. Textiles FY89 - - 0.8 - 0.8 Interpack, S.A. Timber, pulp, and paper FY93 - - 1.7 - 1.7 Juan Minetti SA Cement and construction FY78, 81,86, materials 87,93,94 37.8 67.5 10.7 2.2 12.9 Jugos del Sur, SA. Food and agribusiness FY91 - - 0.4 - 0A La Industrial Alimenticia SA. Food and agribusiness FY93 - - 1.0 - 1.0 Longvie Parani, S.AL General manufacturing FY8B, 93 - - 1.1 - 1.1 MA Soprano S.A. Timber, pulp, and paper FY89 - - 0.2 - 0.2 Maleic SA. Chemicals and petrochemnicals FY89 - - 0.1 - 0.1 Malteua Pampa, SA Food and agribusiness FY89,93 12.0 12.0 12.0 - 12.0 Masisa-Argentina, S.A. Timber pulp, and paper FY94 11.0 - 11.0 - 11.0 MBA Sociedad de Bolsa SA Capital markets FY92 0.2 - - 0.2 0.2 Mendoza Refrescos, S-A2 General manufacturinz FY93 - - 1.3 - 1.3 Molinos Rio de la Plata SA Food and agnbusiness FY93, 94 2.3 - - 7;8 7.8 Nuevo Central Argentino S.A. Industrial equipment and machinery FY93 13.0 15.0 10.0 3.0 13.0 Oleaginosa Oeste, S.A. Food and agribusiness FY92 20.0 15.0 20.0 - 20.0 Parnfina del Plata, SLA. Chemicals and petrochemicals FY89 - - 1A - 1.4 Pastoril Santiaguena SA2 Food and agribusiness FY89 - - OA - 0.4 Petroquimica Ensenada SA (Petroken) Chemicals and petrochemicals FY90 20.0 11.0 17.5 - 17.5 Petrolera Argentina San Jorge SA Energy FY92,93 42.0 35.0 15.0 27.0 42.0 Petroquimnica Cuyo SAI.C. Chemicals and petrochemicals FY84 21.2 19.8 7.0 - 7.0 Piedra Grande' Mining FY86 - - 0.1 - 0.1 Polisur, S.M. Chemicals and petrochemicals FY92 7.0 - - 7.0 7.0 Productos Pulpa Moldeada, S.A.I.C. l imber, pulp, and paper FY88 - - 0.4 - OA Roberts Participaciones SA (Popasa) Capital markets FY86 0.1 - - 0.1 0.1 SA dc Inversioncs de Capital de Riesgo Capital mark-ets FY86 1.0 - - 0.4 GA SAL Genaro Garcia Limitada CJ.1. e. L. Food and agribusiness FY89 - - 1.5 - 1.5 San Sebastian S.l.C.I.F y A. Food and agribusiness FY88 - - OA - 0.4 Surfbcan SA. Chemicals and petrochemicals FY93 - - 0Q3 - 0.3 TBR, SA. a Industrial equipment and machinery FY91 - - 0.4 - 0.4 Terminal 6 SA Industrial services FY87, 90,91 123 - 5.7 - 5.7 Tevycom Fapeco S.A. Industrial equipment and machinery FY88 - - 0.1 - 0.1 The Argentine Equity InvestmentsI Limited Financal services FY94 4.0 - - 4.0 4.0 Valley Evaporating Company, SA. Food and agribusiness FY88 - - 0.2 - 0.2 Vandenfil, SA.C.F. yA. Textfiles FY88 - - 0.2 - 0.2 INVESTMENT PORTFOLIO 149 International Finance Corporation INVESTMENT PORTFOLIO AT TUNE 30, 1994 conitisaulcd Oreiisial hnh,rpnhts Irf& fiP r Caqmrisi ntia,umilrenrs" ri'Judieug ujnhndrsd b.ajpurrsc -IM a F i (iti)r5 nalimrJns a)-U. gid&srsJ stuvalu'n E%US elallars I in rindit1 - n 'natnilmctrnrs 76l! Total Fqaity Trata lapis Ceuntq regiau or Lit stru ami. and ohfi?r Snts' urre Madel IFC sldications (nuns (sat oftsJ tauslyqui Argentina, con5tinuLd Willmor S.A. Food and agribusiness FY90 - - 1.5 - 1.5 Yacylec S.A. Industrial services FY94 20.0 45.0 20.0 - 20.0 479.0 109.7 588.7 Barbados Caribbean Financial Services Corporation Capital markets FY84 0.3 - - 0.3 0.3 Town and Commercial Properties Limited Tourism FY87 1.3 - 0.7 - 0.7 0.7 0.3 1.0 Bclize Belize Electric Company Limited Industrial services FY93 15.0 11.0 15.0 - 15.0 Journeys End Caribbean Cub Limited Tourism FY91 1.0 - 1.0 - 1.0 16.0 - 16.0 Bolivia Banco Industrial, S.A Development financing FY76, 88, 91,92 10.6 - 5.0 - 5.0 Bermno Petroleum Development & Exploratirm Energy FY91 9.9 - 3.6 5.9 9.5 Central Aguirre Portuia, SA. Industrial services FY92 2.5 - 2.1 0.4 2.4 Compaiiia Minera Concepci6n S.A. Mining FY88 1.2 - - 0.4 0.4 CompaiiiaMineradelSur,S.A. Nonferrous metals FY90,94 22.3 - 16.5 3.0 19.5 Compania Boliviana de Gas Naturl Comprimido SA Energy FY93 2.9 - 2.9 - 2.9 Empresa Minera Inti Paymi, SAL Mining FY92 40.0 - 35.0 - 35.0 Minproc Bolivia SA Nonferrous metals FY92 1.0 - - 03 0.7 Plasmar, S.A. General manufacturing FY73 OA - - 0.1 0.1 65.1 10.4 755 Brazil Amapa Florestal e Celulose S.A - AMCEL Timber, pulp, and paper FY87 14.0 - 7.0 - 7-0 Bacell S.A. Timber, pulp, and paper FY94 24.0 36.0 14.0 10.0 24.0 Bahia Sul Celulose. S.A. Timber, pulp, and paper FY90, 91, 93,94 61.0 60.0 41.1 21.0 62.1 Banco Bozano, Simonsen SA. Capital markets FYB 20.0 - 83 - 8.3 Banco Bradesco, SA. Capital markets FY92 60.0 - 48.5 - 48.5 Banco ftail S.A Capital markets FY8B 29.1 12.1 - 12.1 Brasilpar Com&cio e Participaoes S.A. Capital markets FY81 1.2 - - 0.6 0.6 Cebrace - Companhia Brasileira de Cristal Industrial equipment and miichinery FY8S 45.0 - 12.0 5.0 17.0 Ceval Alimentos SA Food and agribusiness FY93 45.0 - 45.0 - 45.0 Chapeco Companhia Industrial de Alimentos Food and agribusiness FY94 10.0 - 10.0 - 10.0 Cimento Caue SA Cement and construction materials FY82, 87 23.3 20.0 - 3.3 3.3 Companhia Alcoolquimica Nacional - Alcoolquimica Chemicals and petrochemicals FY84 15.7 - - 337 33 Companhia Brasilcira de Agmpeciria - COBRAPE Food and agribusiness FY81 7.5 - 2.1 - 2.1 Companhia Central Brasileira de Acabamentos Texteis Textiles FY93 10.0 - 6.0 4.0 10.0 COPENE - Petroquimica do Nordeste SA' Chemicals and petrochemicals FY89 45.0 5.0 33.5 - 33;5 INVESTMENT PORTFOLIO 150 International Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30, 1994 Original Iutun alnts esliUfr the Cowpvvrioan camirnacnznts' t indcluitla un"diulurai balanca) Fisclpurs (imicrnu sf U.lS olLars) Itrnillons oU- SoffarsJ in wlich cminina-nrs otal Taotal E quiy Tatalhuna Cowutry:, rqiea oranher area, naul ohb1iSr Stenr seen niasad IfC 11wfitiamJlra Loans (atsr tsr and lop Brazil, conitimnued Dende do Para SIA-DENPASA-Agricultura, Induistria e Comdrcio de Oleaginosas Food and agribusiness FY80, 94 5.3 - 1.3 1.1 2A Duratex, SA Timber, pulp, and paper FY88 7.4 - 3A4 - 3A Eluma 5A lndustria e Comercio Nonferrous metals FY89 15.0 - 13.0 - 13.0 Empresa de Desenvolvimento de Rtecursos Minerais (CODEMIN) SA Iron and steel FY73, 78.83 9.3 54.0 - 4.3 4.3 Engepol Engenhariade Polimeros General manufacturing FY91 3.5 - 3.1 - 3.1 Excel Indtstria e Pmnicipacoes SLA. (EXCEL) General manufacturing FY92 25.0 - 20.0 5.0 23.0 Fabrica Carioca de Catalisadores SA Chemicals and petrochemicals FY88 20.5 - 4.1 - 4.1 Gavea Hotelaria c Turismo S.A. Tourism FY94 16.8 7.5 16.8 - 16.8 GP. Capital Partners, L.P. Financial services FY94 20.0 - - 20.0 20.0 Industrias de Papel Simao SA. Timber, pulp, and paper FY93 24.0 15.0 24.0 - 24.0 Industrias Romi S.A. Industrial equipment and machinery FY93 - - 4.0 - 4.0 1. Macedo Alimentos SA. Food and agribusiness FY93 24.0 10.0 24.0 - 24.0 Minerav;es Brasileiras Reunidas SA. Iron and steel 1183,93 55.0 27.0 41.6 - 41.6 Nitroclor Produtos Quimicos SA Chemicals and petrochemicals FY86 7.4 - - 5.6 5.6 Pape] e Celulose Catarinense, SAt Timber. pulp, and paper FY66,69,89 19.5 2.6 8.1 - 8.1 Perdigaio SaL Comnrcio e Indcustria Food and agnbusiness FY88 20.0 - 8.6 - 8.6 Petroquimica Triunfo S$ Chemialsand petrochemicals FY82, 88 13.7 14.9 - 3.1 3.1 PISA - Papel de Imprensa SA. Timber, pulp, and paper FY83.85.88 55.9 31.7 16.5 3.9 0.4 Polisul Petrquimica Sat Chemicals and petrochemicals FY80,87 21.0 28.0 - 6.0 6.0 Politeno linear Indmistria e Comercio de Produtos Chemicals and Quimicos Ltda. petrochemicals FY89 25.0 - 12.9 6.5 19A PPH - Cornpanhia Industrial de Poliopropileno Chemicals and petrochemicals FY80,88 32.6 - 9.3 1.6 11.0 Quirnica da Bahia Indtistria e Comercio SA Chemicals and petrochemicals FY85 2.0 - - 1.0 1.0 Ripasa SA. Celulose e Papel Timber pulp, and paper FY91 25.0 - 17.1 5.0 22.1 SA. Induistria e Comercio Chapeco Food and agribusiness FY94 5.0 - - 5.0 5.0 S.A. Moinho Santista Induistrias Gerais Tcxtiles FY88 4.0 - 9.6 - 9.6 Sadia Conc6rdia SL Indistria e Comercio Food and agribusiness FY94 40.0 20.0 30.0 10.0 40.0 SOCOCO SIA - AgroinddCtrias da Amazonia Food and agribusiness FY83 5.5 - - 2.5 2.5 Sao Paulo Alpargatas SaL Textiles FY87 30.0 - 14.0 - 14.0 The Brazilian Investment Fund, Inc. Financial services FY92 3.0 - - 3.0 3.0 Unibanco - Uniao de Bancos Brasileiros Sat Capital mark FY88 24.8 - 10.3 - 10.3 531.3 131.3 662.6 Chile Bosques y Maderacs S.A). rimber, pulp, and paper FY92,94 10.3 6.0 5.0 4.8 9.7 Celulosa Arauco y Conszituci6n SJL Ttmber, pulp, and paper FY87, 88,89 85.0 45.5 313 - 51.3 Celulosa del Pacifico, S.A. Timber, pulp, and paper FY90,93,94 53.9 33.0 32.9 13.9 46.8 Compantia de Carbones de Chile COCAR SA. Mining FY86 11.7 - - 212 2.2 Companlia de Telefonos de Chile Industrial services FY91,92,94 99.1 113.0 80.0 - 80.0 Empresa El&ctrica Pangue Sat Industrial services FY94 74.7 100.0 70.0 4-7 74J7 Exportadora Frutas Naturales de Chile Ltd.* Food and agribusiness FY91 - - 0J - 0.7 Fibrmnova Sat Tmnber pulp, and paper FY92,93 17.5 - 14.0 1.5 15.5 INVESTMENT PORTFOLIO 151 International Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30, 1994 con;tinutced ortzgal n3l ,uneur,i heIl. frr rlie Corpwation .fmmuillnrur,' ( inciude .g and lshind Ialan?nl Ft rea r, IAuuhillom .f jt S. A.iLursI fn,duhiw, ifU S. .nlJarn) .aneulinnnria, Dnsl l 'aad E.iar T.raI l ans G(intmr reyi.'rilatr.Ir atE oIulbtipr SeIw wre made ]F. s,yndniaurnos Lu.ans far w'si andequisr Chile, conditued Hidroelectrica Aconcagna S.A Industrial services FY9'2 93 16.1 6.0 8.0 8.1 16.1 Industria Azucarera Nacional S.A Food and agnbusiness FY94 1.6 1.6 1.6 - 1.6 Investment Management Company Financial services FY88 0.1 - - 0.1 0.1 Leasing Andino SA Capital markets FY91.94 20.0 20.0 16.5 - 16.5 Minera Escondida Limitada Nonferrous metals FY89, 91 71.7 - 38.0 7.5 45.5 Nature's Farm Products (Chile) SA Food and agribusincss FY91 - - 2.3 - 2.3 Pionco Fondo de Inversi6n Mobiliaria Financial services FY94 10.0 - - 10.0 10.0 320.3 52.8 373.0 Colombia APEX,S- Capital markets FY93 IA - - 1A 1.4 CarboncsdelCaribee,SA Mining FY84,$7 12.8 - 0.3 - 0.3 Compafiia Colombiana de Tclidos Textiles FY63.91 22.9 1.7 19.7 - 19.7 Compaflua Suramericana de Seguros SA' Development financing FY93 8.0 - - 8.0 8.0 Corporaci6n Financiera de Santander Si.A Capital marlets FY94 62 - 5.0 1.2 6.2 Corporaci6n Fmanciera del Valle Development financing FY69,85, 88,93 11.1 - - 7.4 7.4 Enk-a de Colombia, SLA Textiles FY67. 70.74, 85. 86 87, 89 43.1 16.8 15.0 - 15.0 Frigorificos Colombianos SA. Food and agnbusiness FY83 1.6 - - 0. 7 0.7 Leasing Bolivar, S.A Capital markets FY81,85,87, 90,91.92 5A 6.3 - 0.3 0.3 Oleoducto de Colombia S.A. industrial services FY91, 92 35.0 75.0 44.0 - 44.0 Petr6leos Colombianos Limited Energ FY81, 82 6.3 9.3 1.8 3.4 5.2 Productos Derivados de Li Sal, SA (PRODESAL) Chemicals and, petrochemicals FY87 72 - - 0.6 0.6 Promotora de la Interconexi6n de los Industrial FY77. 89. Gasoductos de la Costa Athintica SA services 93,94 283 44.5 185 2.0 20.5 Proteinas del Pacifico, St Food and agribusiness FY8B 0.2 - - 0.2 0.2 104.3 25.2 129.5 Costa Rica Banco Interfin SAt Capital markets FY93 5.0 - 5.0 - 5.0 Corporaci6n Banex, SAL and Banec Internacional, SA Capital markets FY91 5.9 - 5.0 0.9 5.9 HidroelectriciAguas Zarcas SA Industrial services FY94 4.0 6.1 4.0 - 4.0 HotelCaminoReaaLSSA. Tourism FY93 7.0 - 7.0 - 7.0 Mlilicom Costa Rica, SA Industrial services FY93 3.5 3.5 2.5 1.0 3.5 23.5 1.9 25.3 Dominica FortYoung (1986) Ltd. Tourism FY89 0.7 - - 0.7 0.7 - 0.7 0.7 INVESTMENT PORTFOLIO 152 International Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30,1994 J.1~~~~~~~ IIg -110Iz1vI. hII N11 I;R,SW;} Fi . l wJ.rr;IIrfl,fin.. .i( IX I,bItar.; ..... i*iullia,i ,'I fI:5. i,lIr,I], Countri~~~~~~~~~~ r* Wr " 11 11 1 _ *.JiDIIatl.*.5,L, I,nlJI 710l1.1 I:qnfin' I'uulsl lewis. C''u .ifr: rl,reUI 'Fr .SIeIIC .55(11. .*i.s 1.ii fl, We le ill. jI'.r iurutii,arwI *.iI .3,5 I .ii ji Dominican Republic Cranberry Dominicana SA and Tianti mar SA Tourism FY93 6.8 - 6.8 - 6.8 Desarrollos Turisticos del Caribe, SA Tourism FY92,94 16.0 - 15.3 - 153 Transameican Hoteles, Dechiaro, Siskind, Vmcent &Co.S. enC.por A. Tourism FY87 6.0 - 26 - 2.6 Zona Franca San sidro SAL Industrialservices FY90 2.8 - 2.1 - 2.1 263 - 26.7 Ecuador Companiia Fmanaera Ecuatoriana Development FY69, 73,77, deDesarrolko,SA financing 81,82,88 3.0 - 1.3 0.3 1.6 Rey Banano del Pacifico CA. Food and agribusiness FY94 10.0 5.0 10.0 - 10.0 Tripetrol Exploration and Production Company Eneqrg FY93 10.0 - 10.0 - 10.0 213 0.3 21.6 S Salvador TelemovilE Salvador,SSA. Industrial services FY94 1.9 2.5 1.7 02 1.9 17 0.2 1.9 Grenada lsa Nicholas (Grenada) Limited Tourism FY86 4.5 - 2.3 - 2.3 2.3 - 2.3 Guatemala Basic Petroleum International Limited Energy FY94 14.0 6.0 10.0 4.0 14.0 Puerto Quetzal Power Corporation Industrial services FY93 20.0 51.0 18.6 - 18.6 VidrieraGuatemalteca,SA General manufacturing FY93 1I.0 - 11.0 - 11.0 39.6 40 43.6 Hondums Textiles Rio Lindo, SA de CV. Textiles FY78 4.8 6.0 1.2 1.0 2.2 1.2 1.0 2.2 Jamaica Caribbean Cement Company Limited Cement and construction materials FY93 8.0 - 8.0 - 8.0 Citizens Bank Limited Capital markets FY89 4.5 - 1.0 - 1.0 Mutual Security Bank Limited Capital markets FY89 3.8 0.3 - 0.3 St. Mary Banana Estates Limited Food and agribusiness FY87, 92 4.8 - 2.0 - 2.0 112 - 11.2 Mexico Aislantes de Le6n, SA de CV (ALSA) Automotive and accessories FY92 16.1 - 10.0 - 10.0 Alimentos Naturales Sabroza SA. de CV.'* Food and agribusiness FY94 - - 3.0 - 3.0 Apasco, SA dc CV. GCnent and FY88, 91. constuction materials 92,93 156.4 40.0 37.2 - 37.2 Aurum-Heller Factoraje, S.A. de CV. Capital markets FY94 1.0 - - 10 1.0 INVESTMENT PORTFOLIO 153 Intemational Finance Corporation INVESTMENT PORTFOLIO AT JUNE 30, 1994 continued Ornin ,al Inroawnts ladd ifor de Corponation cnnrrltpn,w' I nrhuehing "DnJn4flnnirl aanwoi Fu-aJl tlars (millioms of U5. .k,,, mail lionsf L .S ,1dolen) in w*e. eag,ueierrrnrnus Treal W,a1 itipily Tomrl Aua coanatry. :WQIn onother.are.a oatliw. .Sewrr were ,aiaaef fC SIY7IJiC.Iio [oats at) d.1an.! equll.dy Mvlexico, condtnrntd Banca Serfin, S.N`C. Capital markets FY89, 90 60.0 - 54.0 - 54.0 Banco Mercintil del Norte, S.N.C. Capital markets FY92 20.0 - 7.3 - 7.3 Banco Nacional de Mbico. S.N.C. Capital markets FY90 60.0 - 42.2 - 42.2 Celular deTeleronia, SA de C.V. Industrial scrvices FY92 16.0 36.7 15.0 1.0 16.0 Celulosa y Derivados, SA de CV. Textiles FY93 11.0 26.0 11.0 - 11.0 Celulosa y Papel de Durango, SA. de CMV limber, pulp, and paper FY86 13.1 - 5.0 - 5.0 Cemxe Group Cement and construction materials FY89 20.0 - 14.3 - 14.3 Conductores Monterrey, SA Industrial equipment and machinery Ft79.91 8.4 13.0 2.1 - 2.1 Crescnt Mlarket Aggregates Project Mining FY88 92 32.0 - 28.8 - 28.8 Fomento Econ6mico Mesicano S.A. de C.V. (Visa) General manufacturing FY89.92 107.6 - 52.0 17.6 69.6 GrupoCondumexSA.deCUV. General manufacturing FY90.92 44.5 11.0 28A - 28.4 Grupo Fuwanciero Probursa, SA. de C.V. Capital markets FY92 7.5 - - 7.5 7.5. Grupo Idesa S.A de CV. Chemicals and petrochemicals FY94 23.0 42.5 15.0 8.0 23.0 Grupo Industrial Bimbo, SA de C.V. Food and agribusiness FY92 25.0 75.0 25.0 - 25.0 Grupo Operador de Terminales Maritimas S.A. Industrial services FY94 6.0 6.0 4.0 2.0 6.0 Grupo Posadas. SA de CV. Tourism FY92. 93 23.7 33.5 20.0 - :0.0 Grupo Primex SA de CV. Chemicals and petrchemicals FY85. 90 26.0 2.2 14.8 - 14.8 Hotd Camino Real bdtapa, SA Tourism FY79, 81,87 4.2 - - 4-2 4.2 Indelpro, SA de CV. Chemials and petrochemicals FY90,91,94 31.0 3.0 29.4 - 29.4 Internacional de Cerimica SA. de C.V. Cement and construction materials FY94 21.0 17.5 21.0 - 21-0 Masterpak, SA. de C.V. limber, pulp, and paper FY93 120 2$.0 12.0 - 12.0 Metalsa, SA. Automotive and accessories FY84,88,94 33A 35.0 25.3 - 25.3 Mexicanw de Cobre, SA de CV. Nonferrous metals FY94 25.0 35.0 25.0 - 25.0 Petrocel. SaX Chemicals and petrochemicals FY91 32.0 - 30.0 30.0 Polimar, S.A de CUV Chemicals and petrochemicals FY89,92 19.1 - 11.0 - 11.0 Pyosa, SA de C.V' General manufacturing FY94 - - 9.7 - 9.7 Sealed Powver Mexicana, S.A. de CV. Automotive and accessories FY88 9.0 - 1.5 - 1.5 Sigma Alimentos, SA. de C.V. Food and agnbusiness FY88 23.0 - 3.5 - 3.5 The Mexico CityToluca Toll Road Industrial services FY92 13.8 - 9.7 - 9.7 Vitro Flotado. S.A. de CV. Industrial equipment and machinery FY91 25.0 101.0 24. - 24.7 Vitro S.A. General manufacturing FY91.92 1$2 - - 10.2 10.2 Vulica Shipping Company Ltd. Industrial services FY88 18.0 - 18.0 - 18.0 610.0 51.4 661.5 Panama Banco Continental de Panami,SSA Capital markets FY93 5.0 - 5.0 - 5.0 Banco Latinoatnericano de Exportaciones. SA Capital mar;ets FY79, 85, 86,88 49.8 - - 2.1 2.1 5.0 2.1 7.1 INVESTMENT PORTFOLIO 154 International Finance Corporation INVESTMENT PORTFOLIO AT J UNe 30, 1994 Origirtal Iuistinrens helfiwr the Corptrmaian .rantnmitBmneut (ipsdli ding unJiJhurani bahnnirs Fiscyl punr rai&,in of U. ilalAirs) ruaail&ms ufU. duA dlar) in wldrl,h coinsulmeults 'Tel Ttuld Epoily Tetal lans C.uNarj} mrqioan erwer eram. gauIanelebigr Setor were made IFC syndicatins Leans tft L:) uSES equfily P