91499 2014 Insuring investments r Ensuring opportunities World Bank Group 2014 Summary Results Message from the President of the World Bank Group and Chairman of the Board of Executive Directors “We are focused on Our financial structure has been updated and strengthened, improving the lives of roughly growing our financial capacity while reducing expenditures a billion people now living in and directing the savings to our clients. This year, the World Bank Group committed $65.6 billion in loans, grants, equity extreme poverty, and seek investments, and guarantees to its members and private to build a world that is more businesses. Commitments from IBRD totaled $18.6 billion, sustainable, prosperous, and while IDA, the World Bank’s fund for the poorest, made just—for all of us.” commitments of $22.2 billion. Thanks to a record $52 billion replenishment pledged by donors for the next three years, IDA will continue to make crucial investments in people so that the benefits of growth are shared by all. Over the past two decades, 90 percent of new jobs were MIGA’s Mission Two years ago, the World Bank Group began down a path created by the private sector—and good jobs were by far the of renewal and change to prepare our organization to take most effective path to escaping poverty. Our private sector on its toughest challenge yet—to end extreme poverty in a arm IFC and our political risk insurance arm MIGA are ramping To promote foreign direct investment into developing single generation. At the 2013 Spring Meetings, we adopted up their efforts to leverage private sector investment and countries to support economic growth, reduce poverty, two ambitious goals: to end extreme poverty by 2030 and create more jobs and economic opportunities for the poor. to boost shared prosperity for the poorest 40 percent in This year, IFC provided more than $22 billion in financing and improve people’s lives. developing countries. for private sector development, about $5 billion of which was mobilized from investment partners. MIGA issued $3.2 To make us fit for this purpose, at our Annual Meetings last billion in political risk and credit enhancement guarantees October, our Board of Governors approved the first strategy underpinning investments, including in transformational for the entire World Bank Group. This strategy focuses on projects. delivery of transformational solutions, marshals our combined resources more effectively, and accelerates our collaboration To have a lasting impact, our investments have to be with the private sector and other development partners. environmentally sustainable. If we don’t confront climate change, we won’t end extreme poverty. The poor are the The challenge is immense. To reach our end poverty goal, we first impacted and suffer the most from the effects of climate have to help tens of millions of people lift themselves out of change. Last year we announced our plan to address climate poverty each year. It is a daunting task, but if we effectively change, and we are making investments that will protect our implement our strategy, we know we can achieve it. environment while creating a more sustainable future for our children and grandchildren. In this Annual Report, you will learn how we have been implementing the strategy over the past year. Our The World Bank Group leadership and staff are united in four principal institutions—the International Bank for pursuing our urgent mission, and are implementing the critical Reconstruction and Development (IBRD), the International changes needed to deliver results for our clients. We are Development Association (IDA), the International Finance focused on improving the lives of roughly a billion people Corporation (IFC), and the Multilateral Investment Guarantee now living in extreme poverty, and seek to build a world that Agency (MIGA)—now work together as one World Bank is more sustainable, prosperous, and just—for all of us. Group to accomplish our mission. We have made great progress. Engagement with our country partners is now more selective, as we work closely with them to identify the best opportunities to reach our common goals. Our new global practices and cross-cutting solution areas are improving our ability to bring our clients the best global Dr. Jim Yong Kim knowledge to solve their toughest challenges—and with President of the World Bank Group and fewer transaction costs. Chairman of the Board of Executive Directors MIGA ANNUAL REPORT 2014 | 1 europe & central asia global $11.0 billion commitments east asia & the pacific $10.0 billion The World Bank Group’s Latin america & the caribbean support for developing $9.8 billion 65.6 countries grew sharply over the past year as the organization focused on $ delivering results more quickly, increasing its relevance for billion its clients and partners, and bringing global solutions to local challenges. in loans, grants, equity investments, and middle east & north africa guarantees to partner $4.8 billion countries and private businesses. south asia Total includes multiregional $13.6 billion and global projects. sub-saharan africa $16.1 billion Regional breakdowns reflect World Bank country classifications. our impact Driving Economic Growth Promoting Inclusiveness Ensuring Sustainability ibrd/ida iFC ibrd/ida iFC ibrd/ida iFC The entire World Bank Group leveraged its strengths, expertise, 95,000 kilometers of roads constructed 2.6 million jobs provided 250.9 million people received health, nutrition, 2.9 million farmers assisted 903 million tons of CO2 equivalent emissions 5.5 million metric tons of greenhouse and resources to help countries and rehabilitated and population services expected to be reduced annually emissions expected to be reduced and other partners make a real impact on development—by driving 15.3 million 94 million customers supplied with 37.4 million 2.5 million students received educational 57 $18.7 billion economic growth, promoting people and micro, small, and power, water, and gas beneficiaries covered by social benefits countries with strengthened public in government revenues inclusiveness, and ensuring medium enterprises reached safety net programs financial management systems generated by IFC clients with financial services sustainability. MIGA MIGA MIGA 52,100 47 million people provided access 3.3 million people provided access jobs provided to power to clean water $6.1 billion new business loans issued 15 million people provided access $1.6 billion in government revenues by MIGA clients to transport generated by MIGA clients 2 | MIGA ANNUAL REPORT 2014 MIGA ANNUAL REPORT 2014 | 3 12.4 FY14 The Institutions of the World Bank Group MIGA Highlights 10.8 10.3 FY13 In fiscal year 2014, we issued a total of $3.2 billion 9.1 FY12 in guarantees for projects in MIGA’s developing member countries. An ■■ International Bank for Reconstruction and Development (IBRD) additional $1.8 million in guarantees was issued under MIGA-administered trust funds. This year marked the fourth consecutive Lends to governments of middle-income and creditworthy low-income countries of this new issuance falling into at least one of MIGA’s priority areas. At the year of record issuance by MIGA, with 51 percent FY11 7.7 end of the year, MIGA’s gross exposure was $12.4 billion. ■■ International Development Association (IDA) ■■ MIGA’s Board of Directors approved FY10 the Agency’s strategy for fiscal years 2015-2017 Provides interest-free loans, or credits, and grants to governments of the poorest countries ■■ The Board also approved an administrative budget for MIGA for fiscal year 2015 ■■ Myanmar became the Agency’s 180th member ■■ MIGA used its non-honoring of financial obligations product for a capital markets transaction for the first time ■■ International Finance Corporation (IFC) Provides loans, equity, and advisory services to stimulate private sector investment in developing countries ■■ Multilateral Investment Guarantee Agency (MIGA) Amount of 3.2 Provides political risk insurance or guarantees against losses caused by non-commercial risk new issuance 2.8 in FY14 2.7 to facilitate foreign direct investment (FDI) in developing countries $ 3.2 2.1 FY14 FY12 FY13 1.5 ■■ International Centre for Settlement of Investment Disputes (ICSID) FY11 Provides international facilities for conciliation and arbitration of investment disputes FY10 billion World Bank Group Financing for Partner Countries Priority areas By fiscal year, in millions of dollars Share of projects supported in percent* IDA-eligible countries World Bank Group 2014 2013 2012 2011 2010 Fragile and IDA-eligible conflict-affected countries countries Commitments1 65,579 57,587 57,450 61,120 76,482 Fragile and conflict-affected countries Disbursements2 44,399 40,370 42,390 42,028 50,234 70 IBRD 55 70 50 Commitments 18,604 15,249 20,582 26,737 44,197 55 48 50 Disbursements 18,761 15,830 19,777 21,879 28,855 48 IDA 32 32 29 Commitments 22,239 16,298 14,753 16,269 14,550 24 23 18 29 Disbursements 13,432 11,228 11,061 10,282 11,460 11 24 23 18 IFC 11 FY2010 FY2011 FY2012 FY2013 FY2014 Commitments3 17,261 18,349 15,462 12,186 12,664 * Some projects address more than one area. Disbursements 8,904 9,971 7,981 6,715 6,793 MIGA 12.4 Gross Issuance 3,155 2,781 2,657 2,099 1,464 Gross outstanding FY14 Recipient Executed Trust Funds exposure* 10.8 $ 12.4 Commitments 4,319 4,910 3,996 3,829 3,607 10.3 FY13 Disbursements 3,302 3,341 3,571 3,152 3,126 FY12 9.1 1. Includes IBRD, IDA, IFC, Recipient-Executed Trust Funds (RETF) commitments, and MIGA gross issuance. RETF commitments include billion all recipient-executed grants and therefore may differ from the amount reported in the World Bank Group Corporate Scorecard, which includes only selected trust-fund commitment amounts. FY11 2. Includes IBRD, IDA, IFC, and RETF disbursements. 7.7 3. IFC’s own account, not including funds mobilized from third parties. FY10 * As of June 30, 2014 4 | MIGA ANNUAL REPORT 2014 MIGA ANNUAL REPORT 2014 | 5 Message From Keiko Honda, MIGA Executive Vice President and CEO Business and Operational Overview In 2014, the World Bank This past fiscal year, MIGA worked with various stakeholders MIGA continues to be most active in the higher-risk countries and mobilizes substantial additional capacity for clients and Group adopted a joint to develop our own strategy that aligns our objectives with the governments by partnering with public and private insurance providers. The Agency’s gross exposure was $12.4 billion strategy for dealing World Bank Group’s twin goals and underscores our aspiration as of June 30, 2014. Of this, $5.3 billion was ceded to MIGA’s reinsurance partners. with impediments to achieve significant development impact beyond what we to ending extreme can do alone. To achieve this, MIGA will need to be financially poverty and boosting sustainable by prudently managing our risks, covering shared prosperity. One operating costs, and creating financial latitude by growing the of the strategy’s key Agency’s capital base. elements underscores the essential role At the same time, MIGA will continue to work with its private sector reinsurance partners and other external entities to provide Number of Projects Supported by Region in FY2014 in Percent investment can play support on projects. Internally, we will enhance collaboration working alongside across the World Bank Group through engagement in the public sector support to bear down on the most challenging Country Partnership Framework discussions to identify high development issues client countries face, such as job creation, impact opportunities where we can make a difference. Latin America and the Caribbean infrastructure deficits, and climate change. Additionally, we continue to underpin our investment Europe and Central Asia guarantees with strong environmental and social standards to 8 MIGA’s role has become increasingly valuable in delivering ensure long-term sustainability of the projects we support. Asia and the Pacific results to achieve these twin goals as demonstrated by the 13 33 increased demand for our political risk insurance and credit We will optimize opportunities presented by our expanded enhancement products that facilitate the expansion of private political risk insurance and credit enhancement products, as investment into emerging markets. In fiscal year 2014, MIGA well as broadened client base, to support investment in fragile issued a record $3.2 billion in new guarantees while our and conflict-affected markets, IDA countries, middle-income 17 gross exposure reached $12.4 billion. MIGA’s added value countries, and transformational projects through increased stems from our ability to mobilize private sector investment Middle East and North Africa business development across sectors and regions. In this way, in environments that are often beyond the risk tolerance of MIGA will further increase its contribution to the twin goals commercial sources of capital. pursued by the World Bank Group. 29 Sub-Saharan Africa Keiko Honda MIGA Management Top 10 Host Countries* Top 10 Investor Countries* Gross exposure $12.4 billion Gross exposure $12.4 billion Country % Country % Croatia 7.9 Austria 16.2 Russia 7.0 UK 13.6 Serbia 6.9 France 13.2 Côte d’Ivoire 6.8 US 10.5 Ukraine 6.1 Greece 5.0 Vietnam 5.5 Ireland 4.7 Panama 5.1 South Africa 4.7 Hungary 4.6 Germany 4.5 Angola 4.4 Japan 4.5 Turkey 3.6 Netherlands 3.0 Top 10 Total 57.9 Top 10 Total 79.9 * As of June 30, 2014 ravi vish ana-mita betancourt keiko honda michel wormser edith p. quintrell Director, Economics Director and General Executive Vice Vice President and Director, Operations and Sustainability Counsel, Legal Affairs President and CEO Chief Operating Officer and Claims 6 | MIGA ANNUAL REPORT 2014 MIGA ANNUAL REPORT 2014 | 7 impact miga backs power generation and distribution in cameroon $ 290 With demand for electricity growing by 5 to 6 percent per year, Cameroon urgently needs greater efficiencies. MIGA is supporting investments in three power sector projects in the West African country that will contribute to the power sector’s stability, continuity, and recovery. million The investments in the national electric utility and two existing power generation projects will of guarantees help meet growing demand for electricity, enhance the distribution network, extend service to unserved areas, and improve the overall efficiency and operation of the sector. miga insures first wind power plant in honduras $ 82 MIGA is supporting clean energy generation in Honduras by insuring the 24-megawatt expansion of the existing 102-megawatt Cerro de Hula wind project located 20 kilometers south of Tegucigalpa. By providing additional energy to the grid, the project will further reduce million the country’s dependence on traditional fossil fuel generation and avoid the creation of of guarantees 280,000 tons per year of carbon emissions. Cerro de Hula remains the largest wind power plant in Central America. miga support to hungary exim assists country’s exporters $ 575 MIGA’s credit enhancement support to Hungary’s Export-Import Bank (Exim) helped Exim achieve savings that it will use to directly assist Hungarian exporters. MIGA’s backing for a €400-million bond issue by Exim raised the bond issue from non-investment to investment million grade. Covering this bond issue represented an important milestone for MIGA, representing of guarantees the first time the Agency used its non-honoring of financial obligations cover for a capital markets transaction. It demonstrated how MIGA’s products can be used innovatively to support market-based approaches to enhance development. world bank group helps transform lebanon’s power sector $ 35 Lebanon’s power sector suffers from chronic supply shortages in the face of growing demand and poor infrastructure. As part of the government’s reform program, upgrading of the transmission distribution network and installation of advanced metering infrastructure is being million carried out by the private sector—with considerable results. MIGA is providing guarantees of guarantees to Butec International Cyprus and El Sewedy Electrometer Group of Egypt, which are implementing service upgrades in northern Lebanon. world bank group collaborates on vietnam national highway 20 $ 500 Vietnam’s National Highway 20 connects Ho Chi Minh City, the political and economic center of southern Vietnam, with the Central Highlands, one of the country’s poorest regions that has tremendous potential as a source of agricultural products, mineral deposits, and tourism million destinations. MIGA is providing a guarantee covering a loan from a syndicate of commercial of guarantees banks to finance the rehabilitation of a severely deteriorated section of the road. This project leverages the World Bank’s technical support, local presence, and capacity building and MIGA’s ability to mobilize commercial bank lending to achieve maximum results for Vietnam. Visit www.miga.org/FY14projects for more project information. 8 | MIGA ANNUAL REPORT 2014 MIGA ANNUAL REPORT 2014 | 9 Development Results Governance MIGA’s mission is to support economic growth, reduce poverty, and improve people’s lives. In order to achieve this, the Agency needs a clear understanding of the development outcomes of the projects it supports. MIGA’s Development Effectiveness Indicator MIGA’s Board System (DEIS) collects a common set of indicators from clients to demonstrate results across all projects: volume of investment A Council of Governors and a Board of Directors, representing 180 member countries, guide the programs and activities catalyzed, direct employment, taxes paid, and value of locally procured goods. It also measures sector-specific indicators. of MIGA. Each country appoints one governor and one alternate. MIGA’s corporate powers are vested in the Council of MIGA’s $3.2 billion issuance in fiscal year 2014 is expected to catalyze an additional $2.6 billion in public and private co-investment. Governors, which delegates most of its powers to a Board of 25 Directors. The Directors meet regularly at the World Bank Group headquarters in Washington, DC, where they review and decide on investment projects and oversee general Here are highlights of the development results expected from projects supported by MIGA guarantees signed in fiscal year 2014: management policies. Visit the World Bank’s Board of Governors page at www.worldbank.org/en/about/leadership/governors for more information. Provided with power Accountability 26million people Independent Evaluation Group The Independent Evaluation Group (IEG) assesses MIGA’s strategies, policies, and projects to improve the Agency’s development results. IEG is independent of MIGA management and reports its findings to MIGA’s Board of Directors and the Committee on Development Effectiveness. Locally procured goods IEG’s reports and recommendations are publicly disclosed on its website at ieg.worldbankgroup.org. $ 597 million Compliance Advisor Ombudsman The Office of the Compliance Advisor Ombudsman (CAO) is the independent accountability mechanism for MIGA and IFC and Gross issued reports directly to the President of the World Bank Group. The CAO responds to complaints from people affected by MIGA $ 3.2 billion and IFC-supported business activities, with the goal of enhancing social and environmental outcomes on the ground and fostering greater public accountability of both agencies. Visit www.cao-ombudsman.org for more information. Investment catalyzed Direct $ 5.8 employment billion 7,635 people Yearly taxes and fees $ 462 million Visit www.miga.org/development-results for more information. 10 | MIGA ANNUAL REPORT 2014 MIGA ANNUAL REPORT 2014 | 11 Financial Highlights in $ millions FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Income Net Premium Income 46.0 50.8 61.7 66.3 72.5 Investment Income 24.1 13.9 36.9 33.6 53.4 72.5 66.3 Administrative Expenses1 36.2 41.1 43.9 61.747.1 45.6 Contact Information FY14 Operating Income 2 9.8 9.7 50.8 17.8 19.2 26.9 FY13 46.0 FY12 Administrative Expenses/ Senior Management Net Premium Income Ratio 79% 81% FY11 71% 71% 63% FY10 Keiko Honda khonda@worldbank.org 1 Administrative expenses include expenses from pension and other post-retirement benefit plans. Executive Vice President and CEO 2 Operating income equals net premium income minus administrative expenses. Ana-Mita Betancourt abetancourt@worldbank.org Director and General Counsel, Legal Affairs 72.5 Edith P. Quintrell equintrell@worldbank.org 66.3 Director, Operations Net premium income 61.7 Ravi Vish FY14 rvish@worldbank.org $ million 50.8 FY13 Director, Economics and Sustainability 46.0 FY12 Regional Hubs FY11 FY10 Asia Pacific — Muhamet Fall mfall3@worldbank.org Head, Asia Hub Europe — Elena Palei epalei@worldbank.org Head, Europe Hub in $ millions FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Guarantees Total Economic Capital (EC)* 360 414 508 572 620 Antonio Barbalho abarbalho@worldbank.org Shareholder's Equity 875 924 905 911 974 Energy and Extractive Industries Portfolio Gross Exposure 7,723 9,122 10,346 10,758 12,409 Carlo Bongianni cbongianni@worldbank.org Infrastructure (Telecommunications, Transportation, and Water) Total Economic Capital Nabil Fawaz 35% 38% 45% 49% 49% nfawaz@worldbank.org to Operating Capital Ratio Agribusiness and General Services Gross Exposure/Operating Capital Ratio 7.5 8.3 9.2 9.1 9.8 Olga Sclovscaia osclovscaia@worldbank.org Finance and Capital Markets * Total economic capital equals capital consumption from the guarantee portfolio, plus capital required for operational risk and investment risk. Reinsurance Marc Roex mroex@worldbank.org Business Inquiries migainquiry@worldbank.org Media Inquiries shareholder’s equity to gross Mallory Saleson msaleson@worldbank.org exposure 1:13 Gross exposure Shareholder’s equity $ Net exposure 7.1 $ 12.4 billion 0.97 $ billion billion Visit www.miga.org/financial-statement-FY14 for more information. 12 | MIGA ANNUAL REPORT 2014 2014 miga.org Multilateral Investment Guarantee Agency World Bank Group 1818 H Street, NW Washington, DC 20433 USA