highLighTS OF iFC'S 2006 annuaL rePOrT increasing impact The year in review 2006 working with business partners, iFC OperatiOnal results summary invests in sustainable private enterprises Fy06 Fy05 in developing countries without accepting investment prOjects new projects committed 284 236 government guarantees. Over the past 50 Total financing committed and mobilized $ 9.5 billion $ 7.5 billion years, we have committed over $56 billion Financing committed for iFC's own account $ 6.7 billion $ 5.4 billion of our own funds and arranged over Mobilization: syndicated loans for other $25 billion in syndications for more than financial institutions $ 1.6 billion $ 1.1 billion 3,500 companies in 140 developing Mobilization: structured finance transactions $ 1.3 billion $ 1.1 billion countries. in the past 20 years, we have also provided over $1 billion worth of Total disbursed loan and equity portfolio* $13.4 billion $12.3 billion technical assistance and advisory equity as a % of disbursed portfolio 19% 19% programs--funded primarily through the Loans as a % of disbursed portfolio 81% 81% generosity of donor nations. technical assistance and advisOry prOjects Today we are building on our solid Total expenditures $134 million $109 million track record of investments and private sector advisory work to increase our * For iFC's own account as of the end of the fiscal year. Loans include loan-type, quasi-equity products. equity includes equity-type, quasi-equity products. impact. iFC has set ambitious growth goals in five key areas: · Strengthening our focus on countries and regions where needs are greatest · Building long-term partnerships with emerging global players Key Financial indicatOrs · ensuring environmental and social sustainability Fy06 Fy05 Operating income* $ 1.4 billion $ 2.0 billion · Promoting private sector growth in key sectors, including infrastructure net income $ 1.3 billion $ 2.0 billion · Supporting the development of local Liquid assets (net of associated derivatives) $12.7 billion $13.3 billion financial markets Loan and equity investments, net $12.7 billion $11.5 billion iFC's Fy06 results make this 50th Borrowings withdrawn and outstanding $15.0 billion $15.4 billion anniversary year a cause for celebration. Our Total capital $11.1 billion $ 9.8 billion five decades of experience demonstrate return on average assets 3.6% 5.4% the private sector's capacity to improve return on average net worth 13.7% 22.6% lives in developing countries. we have Cash and liquid investments as a percentage of helped create jobs by building and next 3 years' estimated net cash requirements 112% 142% expanding enterprises, encouraged Debt to equity ratio 1.5:1 1.8:1 private equity funds to invest where Capital adequacy ratio 54% 50% they have never invested before, and Total reserve against losses on loans to total disbursed loan portfolio 8.3% 9.9% helped privatize and restructure entire economic sectors. * Operating income is income after expenditures for technical assistance, advisory services, and performance- based grants. Overview OF Fy06 aCCOMPLiShMenTS Investment Projects: IFC Committed Measuring IFC's and Mobilized More Than $9 Billion Development Impact technical assistance and · we committed $6.7 billion in funds from · This year we introduced a new development advisOry service prOjects our own account and mobilized an outcome tracking system for investment About $200 million in approved funding.* additional $1.6 billion through syndications operations, to measure and track results and $1.3 billion through structured finance. throughout the life of a project. By regiOn · Based on total costs of the projects we · we implemented a similar approach to global 2% helped finance this year, every $1 iFC monitor the development impact of all South asia 5% Sub-Saharan Latin america & committed for our own account resulted our active technical assistance and africa 42% the Caribbean 7% in an additional $2.88 in funding from advisory projects. Middle east & north africa 10% other sources. · we are establishing regular reporting on · we committed financing for 284 the impact of our activities. we will east asia & investment projects in 66 countries. publish our first results in 2007. the Pacific 17% europe & Central asia 17% Technical Assistance and Advisory Leadership in Social, Environmental, and Projects: Strategic Alignment Disclosure Policies By prOject type · Our expenditures for technical assistance · we improved our standards for the social and advisory service work increased and environmental performance of our environment & Social access to by more than 23 percent in Fy06 to investments, and a new policy to disclose Sustainability 3% Finance 37% infrastructure 12% $134 million. more information about our activities. · Most of this work is in low-income or · The new standards are the basis of the value addition to Firms 12% high-risk countries. about 40 percent of revised equator Principles, which more project funding approved this year was for than 40 of the world's leading commercial work in Sub-Saharan africa. banks are adopting; these institutions Business enabling environment 36% · Our focus is on key business lines where supply more than 80 percent of project we have a competitive advantage. Over finance lending in developing countries. * The data presented is unaudited and is based on 70 percent of funding approved was to · Through the equator Principles, iFC has technical assistance and advisory service projects help increase access to finance or improve set the de facto global standard for approved in IFC's corporate system between July 1, 2005 and June 30, 2006. Some projects approved in investment climates. environmental and social performance FY06 have not been processed and are not included here, but this does not materially affect the business in project finance. line and regional distributions. investment prOjects Total of $8.3 billion committed for IFC's own account and mobilized through syndicated loans for FY06. By regiOn By sectOr global 0.2% Middle east & north africa 8.1%* Other 7.4% Collective investment vehicles 3.7% Finance & Sub-Saharan africa 8.5%* Latin america & the Caribbean insurance 33.2% information 4.1% 31.8% Primary Metals 4.6% South asia 8.5%* Pulp & Paper 5.1% Chemicals 5.4% east asia & the Pacific 14.8%* Food & Beverages 5.9% nonmetallic Mineral Product utilities 9.6% europe & Central Manufacturing 6.1% asia 28.1% Transportation & warehousing 6.8% Oil, gas, & Mining 8.1% * Includes regional share of global projects. regiOnaL Overview Sub-Saharan Africa Commitments for IFC's own account: $700 million Funding approved for technical assistance and advisory services: $83 million we committed a total of $185 million to projects in the power, water and sanitation, and transportation sectors in Sub-Saharan africa in Fy06. To expand the number of viable infrastructure projects in africa, iFC and the world Bank have combined financing with technical and policy advice in Côte d'ivoire, ghana, rwanda, Senegal, and uganda. Our largest infrastructure commitment to date in africa is for a financing package equivalent to $89.3 million to aeS Sonel, nerra Cameroon's integrated electricity utility. Part of a package of w.J loans from several development financial institutions, this will be niLOC used to improve the reliability of electricity supply and connect new customers over the next five years. iFC worked closely with the world Bank and Cameroon's government. East Asia and the Pacific Commitments for IFC's own account: $982 million Funding approved for technical assistance and advisory services: $33 million iFC's strategy in the region is to find solutions South Asia to the challenges of rapid growth through innovative combinations of financing, technical Commitments for IFC's own account: $507 million assistance, and public-private partnerships. Funding approved for technical assistance and advisory services: $11 million iFC provided its largest local currency loan Our investments this year helped South asian clients expand capacity and this year to PT Bank Danamon, the leading develop new products and services. infrastructure development, where bank for small and medium enterprises and progress is critical to economic growth and quality of life, is another consumer financing in the indonesian market. focus of our regional investment strategy. The financing, unavailable in the private iFC's Southasia enterprise Development Facility worked with the market, will help the bank increase its Bangladesh Knitware Manufacturers and exporters association to help microfinance and small business lending. local manufacturers expand their market share and their understanding of The support for Bank Danamon is part of market channels and requirements. Changes in trade agreements have a broader commitment to increase our created an increasingly competitive environment for the garment industry, investments and technical assistance in which accounts for more than 75 percent of Bangladesh's export earnings indonesia with a focus on development and over 2 million jobs. SeDF organized a trade mission to take knitwear of small and medium enterprises. iFC's manufacturers to the united States, helping them develop market contacts, investment is expected to encourage other sales opportunities, and marketing skills. SeDF is following up with a institutions to invest in these areas as well. program to enhance collaboration and competitiveness in the industry. regiOnaL Overview avOKahzuhC aneLe Europe and Central Asia Middle East and North Africa Commitments for IFC's own account: $2.1 billion Commitments for IFC's own account: $668 million Funding approved for technical assistance and advisory services: $34 million Funding approved for technical assistance and Throughout the region, development of financial institutions remained a advisory services: $20 million priority, accounting for half of our Fy06 investment projects and much of our Commitments for iFC's own account more than technical assistance. doubled in the region between Fy05 and Fy06. iFC signed an agreement to provide a $2.2 million financing package this Our technical assistance for client companies, year to Micro Credit agency Bai Tushum Financial Foundation, one of the government entities, and business associations Kyrgyz republic's leading microlending institutions. iFC financing will help also increased substantially. transform Bai Tushum from a not-for-profit entity into a more sustainable, To support the construction and commercially oriented financial institution, expanding its lending to farmers, nationwide operation of a digital cellular private entrepreneurs, and small enterprises in remote regions. as a regulated network, iFC signed an agreement for a microfinance company, Bai Tushum will be able to provide a range of credit $40 million loan and an equity investment and savings products that are not widely available to local microentrepreneurs. of up to $5 million with areeba afghanistan. an estimated 3,200 new Kyrgyz microentrepreneurs are expected to benefit, The country has one of the world's lowest boosting private sector wealth and job creation. telephone density rates, with less than 0.5 fixed lines and four mobile lines per 100 people as of 2005. The project will increase the availability of reliable and affordable service and extend geographic coverage to rural and underserved areas. areeba Latin America and the Caribbean afghanistan is owned by investcom (recently acquired by MTn), a leading mobile phone Commitments for IFC's own account: $1.7 billion operator with a successful track record in Funding approved for technical assistance and advisory services: $14 million frontier markets, including Benin, ghana, Through equity investments, loans, technical assistance, and advisory products, guinea-Bissau, Liberia, Sudan, Syria, and iFC is nurturing long-term partnerships with client companies in the region, yemen. it expects to have 700,000 supporting the global expansion of leading companies, and improving market subscribers by 2009. access and the business environment for small businesses. iFC and the world Bank's Doing Business reports have raised awareness of business and investment constraints across the region, and iFC is supporting reform agendas in several countries. in Peru, we helped small businesses enter the formal sector by reducing the time needed to start a business in Lima from inTernaTiOnaL FinanCe COrPOraTiOn more than 60 days to two or fewer. By improving the process for registering a 2121 Pennsylvania avenue, nw business, Bolivia has seen more businesses come into the formal economy and washington, DC 20433 uSa has increased municipal revenue from business registration by 25 percent. we Telephone 202-473-3800 also trained municipal employees and upgraded information technology Fax 202-974-4384 infrastructure in a number of Bolivian cities. www.ifc.org