73048 v3 The World Bank Annual Report 2012 Responding with Global Knowledge and Experience The Regions World Bank for Results 2012 世界银行 2012 年度报告 利用全ç?ƒçŸ¥è¯†å’Œç»?验应对挑战 Financial Statements Banque mondiale • Rapport annuel 2012 Une action fondée sur la somme des connaissances et des expériences nationales Income by Region 世界銀行年次報告 2012 グローãƒ?ルã?ªçŸ¥è­˜ã?¨çµŒé¨“を用ã?„ã?Ÿå?–組ã?¿ Lending Data Banco Mundial • Relatório Anual de 2012 Resposta com Conhecimento e Experiência Globais New Operations Approved Ð’Ñ?емирный банк, Годовой отчет 2012 Глобальные знаниÑ? и опыт в ответ на вызовы Organizational Information Banco Mundial • Informe anual 2012 Responder con la experiencia y los conocimientos World Bank Lending 2012 adquiridos en todo el mundo (PowerPoint Presentation) Photo: Ray Witlin Africa Driven by higher commodity prices and exports, output in the Africa the Bank’s strategy for Africa, adopted in fiscal 2012, shifts from a more Region rose 4.9 percent in fiscal 2012. The forecast is for continued general focus on seeking economic stability and sound fundamentals. The growth, of 5.2 percent in 2012 and 5.6 percent in 2013. Growth has been new strategy is built on one foundation—governance and public sector widespread, with more than a third of countries posting annual growth capacity—and two pillars—competitiveness and employment, and vul­ rates of at least 6 percent and another 40 percent growing between nerability and resilience. 4–6 percent. Improving Governance and Public Sector Capacity World Bank Assistance In an effort to emphasize good governance and encourage citizens and Support from the Bank reached $7.5 billion this fiscal year, including their organizations to hold governments accountable, the Bank is building $7.4 billion from IDA and 147 million in IBRD commitments. The leading on citizens’ feedback with projects such as the Kenya Cash Transfer for sectors were Public Administration, Law, and Justice ($1.9 billion), Energy Orphans and Vulnerable Children Project. The Bank incorporates citizen and Mining ($1.4 billion), and Water, Sanitation, and Flood Protection report cards, participatory targeting and monitoring, citizen grievance and ($1.4 billion). appeal mechanisms, biannual social audits, and transparent posting of Africa has experienced improved outcomes across a variety of indi­ beneficiaries and targeting information. cators. The number of people living in extreme poverty has declined, In Sierra Leone, the Bank has been strongly engaged in reestablishing ­ under-five mortality and maternal mortality have both fallen, primary basic public finance management capacity in the Ministry of Finance while school completion rates have risen faster than anywhere else in the world, also using parallel interventions to strengthen check-and-balance institu­ and the rate of HIV infection has stabilized. The business climate is improv­ tions such as the Anti-Corruption Commission. ing, attracting investment in telecommunications, real estate, and retail. And remittances also increased, reaching a record high of $23 billion. Increasing Competitiveness Enormous development challenges remain in Africa, however, where The Bank’s work is closely aligned with the Comprehensive Africa Agri­ about half the population lives at the extreme poverty level, $1.25 a day, culture Development Program, an Africa-owned and -led initiative for and governance and transparency remain weak. To improve conditions, increasing productivity in agriculture. In fiscal 2012, the Bank provided $0.9 billion in development financing for agriculture. FIGURE 2.1 FIGURE 2.2 AFRICA AFRICA IBRD AND IDA LENDING BY SECTOR | FISCAL 2012 IBRD AND IDA LENDING BY THEME | FISCAL 2012 SHARE OF TOTAL OF $7.5 BILLION SHARE OF TOTAL OF $7.5 BILLION Water, Sanitation, and Environmental and Natural Flood protection 18% 10% Agriculture, Fishing, and Forestry Economic Management < 1% 13% Resources Management 3% Education Urban Development 17% Trade and Integration 5% Financial and Private Transportation 5% 18% Energy and Mining 16% Sector Development Social Protection and Risk Management 12% Public Administration, 9% Human Development Law, and Justice 25% 1% Finance Social Development, Health and Other Gender, and Inclusion 3% 15% Social Services 4% 12% Public Sector Goverance Information and Communications 1% 4% Industry and Trade Rural Development 12% < 1% Rule of Law 1 Countries Eligible for World Bank Borrowing IBRD 34941 AUGUST 20 Angola Cape Verde Republic of Gabon Liberia Namibia Senegal for 2012 Annual Report locator ma Swaziland Benin Central African Congo The Gambia Madagascar Niger Seychelles Tanzania Botswana Republic Côte d’Ivoire Ghana Malawi Nigeria Sierra Leone Togo Burkina Faso Chad Equatorial Guinea Mali Rwanda Republic of Uganda Comoros Guinea South Sudan Burundi Guinea-Bissau Mauritania São Tomé and Zambia Democratic Eritrea Principe South Africa Cameroon Kenya Mauritius Republic of Congo Ethiopia Lesotho Mozambique The Bank has also focused on improvements in infrastructure, espe­ cially transport corridors, to enhance trade facilitation, information and communication technologies, and energy. Bank support to energy proj­ ects provided an additional 1.4 million people with access to electricity in project countries during fiscal 2011. The Transportation sector con­ structed or rehabilitated an additional 6,646 kilometers of roads. The Water, Sanitation, and Flood Protection sector improved water sources for more than 8 million people. As a result of Bank-financed projects, 28.0 million people gained access to basic packages of health, nutrition, and population services, and 2.3 mil­ lion women received antenatal care for the first time. Bank support helped build or rehabilitate more than 12,000 primary school classrooms and In fiscal 2012, $165 million was disbursed and $944 million committed purchase and distribute some 25 million textbooks.  for fast-tracking drought prevention projects and programs throughout To improve job skills, the Bank launched a major partnership on service Africa. In addition to the above, in fiscal 2012, the regional Horn of Africa delivery indicators in the Education and Health and Other Social Services Emergency Health and Nutrition Project helped treat more than 35,000 sectors, so the public can demand better learning outcomes. malnourished children under age five living in refugee camps, with $30 million in funding from IDA’s Crisis Response Window. (See http://world Reducing Vulnerability and Increasing Resilience bank.org/afr.) Climate change–related and natural disasters contributed to massive losses this fiscal year. Drought in the Horn of Africa, for example, displaced millions of people. In response, in September 2011, the Bank nearly qua­ drupled the amount it allocated the previous July, increasing funding to $1.88 billion over three years. In addition to helping meet immediate food needs, the Bank will invest in better weather forecasting and early warning systems, drought resilience, and other risk management measures.  Africa Results Highlights In Burundi, the Bank’s results-based financing program is help­ •   ing to improve child and maternal health. In a single year, (from June 30, 2010 to June 20, 2011), the proportion of births at health facilities rose 25 percent, the proportion of women receiving AFRICA REGIONAL SNAPSHOT ­ antenatal care rose more than 20 percent, and the number of fully vaccinated children rose more than 10 percent. More than Total population 0.9 billion 1.6 million men, women, and children have benefited from the Population growth 2.5% program. (See http://go.worldbank.org/J0Z8NRGLN0.) Life expectancy at birth 54 years Average farm incomes in Malawi rose 60 percent, and 1.5 million •   Infant mortality per 1,000 live births 77 people achieved food security through horticulture diversifica­ Female youth literacy 69% tion projects that increased crop yields by as much as 75 percent Number of people living with HIV/AIDS 23.5 million in 11 targeted districts. As a result of the  Irrigation, Rural Livelihoods, and Agricultural Development Project, yields rose 2011 GNI per capita $1,254 from 1.6 tons to 2.8 tons per hectare for maize and from 1.0 tons GDP per capita index (2000 = 100) 125 to 1.6 tons per hectare for rice between 2006 and 2011. (See Note: Life expectancy at birth, infant mortality rate per 1,000 live births, and female youth http://go.worldbank.org/D6LFX7H6I0.) literacy are for 2010; other indicators are for 2011 from the World Development Indicators database. HIV/AIDS data are from the 2012 UNAIDS report, “Together We Will End AIDS.â€? In Niger, during the decade 2001–11, 541,000 people living in •   cities gained access to piped water, which is now supplied con­ tinuously throughout the service area and no longer rationed. Over the past five years, water losses decreased from 20 percent TOTAL FISCAL 2012 TOTAL FISCAL 2012 to 15 percent, and bill collection improved from 79 percent to 97 New commitments Disbursements percent. As a result of the Niger Water Project, 120,000 people IBRD $147 million IBRD $488 million also gained access to improved sanitation. (See http://go.world IDA $7,379 million IDA $5,746 million bank.org/4KTG64RCA0.) Portfolio of projects under implementation as of June 30, 2012: $40.2 billion 2 Photo: Stephan Bachenheimer east asia and pacific Growth in the East Asia and Pacific region remained strong and grew by 8.2 Reducing Poverty percent (4.3 percent, not including China) in 2011, although it has slowed While the region has made impressive gains in poverty reduction, about since post-crisis peaks. Poverty continues to fall, with the number of peo­ half a billion people still live on less than $2 a day. Economic crises and ple living on less than $2 a day expected to decrease by 24 million in 2012. natural disasters have given urgency to the need to help countries prepare With the global slowdown likely to continue, the region needs to reduce for volatility and shocks, and the need to expand safety nets to protect the its reliance on exports and find new sources of growth. poor is increasingly important. In the Philippines, the Bank is supporting the government with the expansion of its conditional cash transfer pro­ World Bank Assistance gram Pantawid Pamilyang, which has benefited more than 3 million fami­ The Bank approved $6.6 billion for East Asia and Pacific for 37 projects this lies to date. fiscal year. Support included $5.4 billion in IBRD loans and $1.2 billion in IDA commitments, including $125 million in grants. The leading sectors Managing Disaster Risk were Public Administration, Law, and Justice ($2.0 billion); Water, Sanita- Severe flooding in Thailand in 2011—which inundated large parts of the tion, and Flood Protection ($1.3 billion); and Transportation ($1.1 billion). country, including parts of Bangkok—highlighted the importance of di­ The Bank’s regional strategy continues to focus on climate change and saster risk management in a region prone to natural disasters and the ef­ disaster risk management, poverty reduction, urbanization and infrastruc­ fects of climate change. To help address the growing challenge of flooding ture challenges, and improved governance, while responding to emerging in cities, the Bank produced a guidebook to support government efforts to challenges and new opportunities. This year, the Bank moved ahead on build flood mitigation measures into urban planning. It is also working engagement in Myanmar, with the aim of supporting reforms that will with partners to help Association of Southeast Asian Nations (ASEAN) benefit all the people of Myanmar, especially the poor and vulnerable. member countries increase financial resilience as part of a broader pro­ gram to strengthen the capacity to reduce disaster risk. FIGURE 2.3 FIGURE 2.4 EAST ASIA AND PACIFIC EAST ASIA AND PACIFIC IBRD AND IDA LENDING BY SECTOR | FISCAL 2012 IBRD AND IDA LENDING BY THEME | FISCAL 2012 SHARE OF TOTAL OF $6.6 BILLION SHARE OF TOTAL OF $6.6 BILLION Water, Sanitation, and Urban Development 16% 5% Economic Management Flood Protection 20% 6% Agriculture, Fishing, and Forestry 4% Education Environmental and Natural 12% Resources Management 8% Energy and Mining Trade and Integration 4% 8% Finance Social Protection and Financial and Private Health and Other 16% Sector Development Risk Management 14% 6% Social Services Social Development, 1% Industry and Trade Gender, and Inclusion 1% Information and 7% Human Development 1% Communications Transportation 16% 30% Public Administration, Law, and Justice Rural Development 11% 14% Public Sector Goverance 3 Countries Eligible for World Bank Borrowing IBRD 34942 AUGUST 2 Cambodia Republic of Federated Papua New Thailand for 2012 Annual Report locator m China Korea States of Guinea Timor-Leste Lao People’s Micronesia Philippines Fiji Tonga Democratic Mongolia Samoa Indonesia Vanuatu Republic Myanmar Solomon Kiribati Vietnam Malaysia Palau Islands Marshall Islands Delivering Customized Solutions Reflecting the diversity in the region, priorities vary across countries or country groups. In China, knowledge transfer and experience sharing has become a vital part of the Bank’s partnership. China 2030, a joint research report with the Development Research Center of China’s State Council, was released in February 2012. The book offers policy recommendations to support China’s transition to a high-income economy. The majority of in­ vestment projects in China have an environmental focus, because inclu­ sive green growth is a top priority for the country. Poverty reduction, par­ ticularly in China’s interior and western provinces, remains a key challenge. Delivering innovative solutions to meet client demand is a strong focus for the region. In Mongolia, the Bank is helping to establish a nationwide Cooperation with countries and bilateral and multilateral institutions, “e-healthâ€? information system based on Internet and mobile technology. and collaboration within the Bank Group, are integral to the Bank’s work Indonesia received a loan of $175 million to increase power generation in the region. The Bank is working with the Association of Southeast Asian from renewable geothermal resources, and to reduce local and global Nations (ASEAN), the Asia-Pacific Economic Cooperation (APEC), the Pacific ­ environmental impacts. After tropical storm Washi, the Bank provided Island Forum, the Asian Development Bank, the Australian Government $500 million of immediate financial assistance to the Philippines from the Overseas Aid Program (AusAID), the Japan International Cooperation Disaster Risk Management Development Policy Loan with a Catastrophe Agency (JICA), and many other partners to expand development impact. Deferred Drawdown Option (Cat DDO), the first of its kind in the region. (See http://worldbank.org/eap.) In the Pacific Islands, the Bank is ramping up its activities on regional integration and connectivity, building resilience against external shocks, and promoting economic reform and private sector development. In fewer than five years, over one million people have gained access to affordable mobile phones. In line with World Bank corporate priorities, ef­ East Asia and Pacific Results Highlights forts to engage systematically with countries on gender were strength­ ened this year, and included the release of a regional companion volume With the support of the Avian and Human Influenza Control and •   for the World Development Report 2012: Gender Equality and Development. Preparedness Project, Lao PDR responded effectively to contain several avian flu outbreaks. Between 2006 and 2011, all 17 prov­ inces in Lao PDR established multisectoral avian influenza teams to mobilize in case of an outbreak; biosecurity training was con­ ducted for 305 slaughterhouses (compared with a target of 181), EAST ASIA AND PACIFIC REGIONAL SNAPSHOT 733 poultry traders, and 1,556 fighting-cock owners; and active disease surveillance was established in 156 markets (surpassing Total population 2.0 billion the target of 150 markets), entailing inspection at least twice a Population growth 0.7% month. One hundred percent of diagnostic tests were carried out Life expectancy at birth 72 years within 48 hours of samples reaching a laboratory, and 100 per­ Infant mortality per 1,000 live births 20 cent of samples reached a laboratory within 48 hours of the dis­ Female youth literacy 99% ease outbreak. (See http://go.worldbank.org/YVPD2RYIF0.) Number of people living with HIV/AIDS 2.3 million In Indonesia, the Female-Headed Household Empowerment •   2011 GNI per capita $4,235 Program has improved the lives of 20,000 women and 52,000 family members through training, scholarships, and organization GDP per capita index (2000 = 100) 224 and network development. The 61 early childhood education Note: Life expectancy at birth, infant mortality rate per 1,000 live births, and female youth literacy are for 2010; other indicators are for 2011 from the World Development Indicators centers built by the project have provided assistance to 2,343 database. HIV/AIDS data are from the 2012 UNAIDS report, “Together We Will End AIDS.â€? poor students, and the project’s 92 literacy centers have taught 2,562 poor women to read. (See http://go.worldbank.org/ KVT9OMX080.) TOTAL FISCAL 2012 TOTAL FISCAL 2012 By fiscal 2012, the Post-Tsunami Reconstruction Project in Samoa •   New commitments Disbursements had completely restored road access for communities, serving IBRD $5,431 million IBRD $3,970 million about 5,000 people. It is also rebuilding seawalls. (See http:// IDA $1,197 million IDA $1,484 million go.worldbank.org/67DLXQGMK0.) Portfolio of projects under implementation as of June 30, 2012: $30.3 billion 4 Photo: Kubat Sydykov europe and central asia The majority of countries in emerging Europe and Central Asia have recov­ Increasing Competitiveness ered from the 2008–09 global economic crisis, but growth remains slower Infrastructure and the need for skilled workers are the key bottlenecks to than before the crisis in most of the region. Estimated growth of 5.5 per­ private-sector growth in the region, according to the 2010 Business cent in 2011 is projected to slow to 3.4 percent in 2012, largely a result of Environment and Enterprise Performance Survey, which polled more than the sovereign debt problems in the Euro Area, which are reducing cross- 10,000 firms in 29 countries in the region. Increasing competitiveness and border financial capital flows, trade, and workers’ remittances. improving productivity require improvements to governance and the in­ vestment climate, stable and effective financial intermediation, upgraded World Bank Assistance labor-force skills, better energy and transport infrastructure, and more ef­ World Bank support to the region reached $6.6 billion in fiscal 2012. ficient public spending. Lending was targeted to support a regional strategy based on three pillars: Through operations in the region in fiscal 2012, the Bank helped stabi­ deepening reforms for improved competitiveness; supporting social lize the financial sector in Montenegro and FYR Macedonia and increase sector reforms for inclusive growth; and helping countries take action to access to finance for small- and medium-size enterprises in Armenia, improve energy efficiency and address climate change for sustainable Bosnia and Herzegovina, Moldova, and Turkey. Bank operations improved growth. critical transport infrastructure in Kazakhstan, the Kyrgyz Republic, Ukraine, Despite the need for adjustments, the resilience of Europe’s economic and the South Caucasus; provided advisory support for modernization ef­ growth model and its strong record of economic and social convergence forts in the public administration in Romania; and contributed to reform are the highlights of a 2012 regional flagship report, Golden Growth: efforts by Armenia, Kosovo, Poland, and the Russian Federation to improve Restoring the Lustre of the European Economic Model. The report underscores the business environment and spur innovation. the strong features of the European model, which has driven growth and convergence for the past five decades, notably financial and trade integra­ Supporting Social Sector Reforms tion as well as social inclusion, and equally highlights reforms needed to Countries that already had good safety nets in place before the 2009 restore competitiveness. crisis were best able to protect those in need during the crisis, which hit the region hard. To prepare countries to weather new turmoil linked to the Euro Area crisis, promote employment, and deal with the aging of the FIGURE 2.5 FIGURE 2.6 EUROPE AND CENTRAL ASIA EUROPE AND CENTRAL ASIA IBRD AND IDA LENDING BY SECTOR | FISCAL 2012 IBRD AND IDA LENDING BY THEME | FISCAL 2012 SHARE OF TOTAL OF $6.6 BILLION SHARE OF TOTAL OF $6.6 BILLION Water, Sanitation, and Urban Development 3% 9% Economic Management Flood Protection 2% 1% Agriculture, Fishing, and Forestry 1% Education Trade and Integration 18% Environmental and Natural Transportation 19% 8% Resources Management 24% Energy and Mining Social Protection and Risk Management 5% Social Development, Public Administration, Gender, and Inclusion 1% Financial and Private Law, and Justice 23% 7% Finance 26% Sector Development Rural Development 2% Information and Communications < 1% Rule of Law < 1% Industry and Trade 3% 18% Health and Other Social Services Public Sector Governance 14% 13% Human Development 5 Countries Eligible for World Bank Borrowing IBRD 34944R AUGUST 201 Albania Bulgaria Latvia Poland Turkey for 2012 Annual Report locator map Armenia Croatia Former Yugoslav Romania Turkmenistan Azerbaijan Georgia Republic of Russian Ukraine Macedonia Federation Belarus Kazakhstan Uzbekistan Moldova Serbia Bosnia and Kyrgyz Republic Herzegovina Montenegro Tajikistan Kosovo population, the Bank is working with countries to improve their social safety nets. In Romania, the Bank is working to make a comprehensive social assis­ tance program more equitable and efficient. In Tajikistan, it is supporting the government’s efforts to develop ways to identify the poor, so that it can more effectively channel support to them in times of need. Bank lend­ ing is protecting spending on social assistance and health care in several countries across the region, including Poland and Romania. It is support­ ing improvements to social safety nets and insurance in Albania and Armenia, and it is funding health care enhancements in Moldova. In Russia, the Bank is working with the Republic of Yakutia to modernize its early childhood network, including the latest design and technology for effec­ Key Partnerships tive and cost-efficient construction of early childhood centers. The Bank partnered with the International Monetary Fund (IMF), European Union (EU) institutions, and European international financial institutions Mitigating and Adapting to Climate Change to advance the Vienna 2 Initiative, which aims to improve banking sys- ECA has some of the highest energy intensity countries in the world as a tems and coordination in EU and non-EU countries. The Bank has a result of artificially low energy prices and limited investment in infrastruc­ close partnership with the EU, the largest trust fund donor to the ECA re­ ture over the past 25 years. To help the countries meet this massive chal­ gion. The Bank is working with the EU to improve the capacity of ECA’s lenge, the Bank is supporting investments to improve sustainability and EU-member clients to absorb EU funds, and supports EU candidate coun­ adaptability across the region. Bank operations are backing policy reforms tries’ reform efforts. The Bank also has a close partnership with Russia, to provide incentives for efficient energy use in Poland, Serbia, and Turkey, which is now the second-largest trust fund donor in the region, to support and are financing investments in energy efficiency and renewable energy education, public finance management, project preparation capacity, of­ projects in Poland, Turkey, Ukraine, and Uzbekistan. The Bank is supporting ficial statistics, and global public goods in the region and beyond. (See carbon finance operations in the Czech Republic, Poland, and Romania. In http://worldbank.org/eca.) addition, it is investing in improvements in the capacity to forecast climate change in Moldova, Russia, and Central Asia; disaster mitigation and cli­ mate risk management in Moldova; flood management in Poland; and ur­ ban development and water and sanitation services in multiple countries. Europe and Central Asia Results Highlights EUROPE AND CENTRAL ASIA REGIONAL SNAPSHOT Pensioners in Azerbaijan now receive their payments in full •   and on time as a result of the Pension and Social Assistance Total population 0.4 billion Project. The project increased the number of people contributing Population growth 0.5% to the social security system by 40 percent between 2003 and Life expectancy at birth 71 years 2011 to 1.87 million people. (See http://go.worldbank.org/ QN0LF5XP50.) Infant mortality per 1,000 live births 19 Female youth literacy 99% Three development policy operations strengthened the safety •   Number of people living with HIV/AIDS 1.5 million nets in Georgia. Between 2009 and 2011, the loans expanded coverage under the targeted medical insurance system from 2011 GNI per capita $7,610 750,000 to 900,000 people and increased the number of people GDP per capita index (2000 = 100) 162 receiving social assistance from 370,000 to 440,000. (See http:// Note: Life expectancy at birth, infant mortality rate per 1,000 live births, and female youth go.worldbank.org/OHLI96VRF0.) literacy are for 2010; other indicators are for 2011 from the World Development Indicators database. HIV/AIDS data are from the 2012 UNAIDS report, “Together We Will End AIDS.â€? Seventy-three million regional energy consumers have benefited •   from the introduction of wholesale markets for electricity in the Southeastern Europe Energy Community and Turkey, through the Europe and Central Asia Regional Energy APL TOTAL FISCAL 2012 TOTAL FISCAL 2012 Program. The program also financed the construction or rehabili­ New commitments Disbursements tation of 42 substations, 218 kilometers of transmission lines, and IBRD $6,233 million IBRD $5,654 million 165 kilometers of fiber-optic cable. (See http://go.worldbank IDA $362 million IDA $482 million .org/YFMHWQJYO0.) Portfolio of projects under implementation as of June 30, 2012: $23.0 billion 6 Photo: Maria Fleischmann Latin america and the caribbean Resilience to recent global turmoil allowed Latin America and the Carib­ ­ reation of quality jobs and assist people in need through conditional cash c bean to grow 4–5 percent in fiscal 2012. Growth is projected to slack to 3–4 transfers, which were pioneered in the region. percent as a result of the slowdown in China, the region’s key trading part­ ner and the engine behind the solid growth and market diversification of Creating Opportunities the past few years. Even more modest growth is projected in the Caribbean To contribute to the region’s demands for sustainable and socially inclusive and Central American countries. growth, the World Bank has upped its strategic support to individual coun­ Unprecedented growth and economic stability over the past decade tries in the region. pulled some 73 million people in the region out of poverty. In spite of the Conscious of the region’s diverse development needs, the Bank delivers global financial crisis, the region remained stable. a suite of financial, advisory, and convening services that are tailored to each country. From straight financing of development projects, including World Bank Assistance sophisticated contingency lines of hazard-related credit, to in-depth de­ Bank support for Latin America and the Caribbean reached $6.6 billion velopment research, the World Bank Group has supported the region’s this fiscal year, of which $6.2 billion came from IBRD and $448 million from social and economic agendas to the tune of $14.7 billion in fiscal 2012. ­ IDA, including $202 million in grants. Brazil ($3.2 billion), Mexico ($1.5 bil­ New strategies for Brazil and Bolivia are aligned with the countries’ ef­ lion), and Colombia ($660 million) were the largest borrowers. The sectors forts to create more economic opportunities for the underprivileged and of Public Administration, Law, and Justice ($2.0 billion); Transportation are built on advances of previous partnerships that expanded access to ($1.2 billion); and Education ($1.0 billion) received the most funding. basic services, education, and health to many. The development agenda in the region needs a stronger focus on in­ Brazil’s $8 billion Country Partnership Strategy (CPS) 2012–2015 calls for creasing productivity, reducing dependence on low value-added com­ close coordination with its new national extreme poverty eradication modity exports, addressing production capacity constraints, modernizing program, Brasil sem Miséria (Brazil without Poverty), which focuses on the infrastructure, boosting innovation, and making the state more effective. northeastern states, to improve social and economic opportunities for 16 The Bank supports efforts to sustain the region’s economic growth while million of the country’s most vulnerable people. (See http://documents opening up opportunities for all through programs that increase the .worldbank.org/curated/en/2011/09/15273914/brazil-country- FIGURE 2.7 FIGURE 2.8 LATIN AMERICA AND THE CARIBBEAN LATIN AMERICA AND THE CARIBBEAN IBRD AND IDA LENDING BY SECTOR | FISCAL 2012 IBRD AND IDA LENDING BY THEME | FISCAL 2012 SHARE OF TOTAL OF $6.6 BILLION SHARE OF TOTAL OF $6.6 BILLION Water, Sanitation, and Flood Protection 5% 11% Agriculture, Fishing, and Forestry Urban Development 12% 4% Economic Management Environmental and Natural Trade and Integration < 1% Transportation 19% 16% Resources Management 16% Education Social Protection and Risk Management 12% Financial and Private < 1% Energy and Mining 6% Sector Development Social Development, 4% Finance Gender, and Inclusion 3% Health and Other 9% Rural Development 12% Social Services 5% Industry and Trade Rule of Law 1% Public Administration, Law, and Justice 31% < 1% Information and Communications Public Sector Governance 13% 21% Human Development 7 Countries Eligible for World Bank Borrowing IBRD 3494 AUGUST 2 for 2012 Annual Report locator m Antigua and Chile Ecuador Honduras Peru Trinidad and Barbuda Colombia El Salvador Jamaica St. Kitts and Tobago Argentina Costa Rica Grenada Mexico Nevis Uruguay Belize Dominica Guatemala Nicaragua St. Lucia República Plurinational State St. Vincent and Bolivariana de Dominican Guyana Panama Venezuela of Bolivia Republic the Grenadines Haiti Paraguay Brazil Suriname partnership-strategy-cps-period-fy2012-2015.) In turn, Bolivia’s CPS will affect the lives of 3 million people, largely from rural areas, and support directly 1 million farmers in the country’s impoverished north. ­ On the second anniversary of Haiti’s tragic earthquake, a new interim strategy provided $225 million in grants toward the country’s reconstruc­ tion efforts. This funding supports the safe return from camps of more than 22,000 displaced persons, improves neighborhoods for 75,000 people, and finances tuition waivers for about 100,000 schoolchildren. Children continued to top the Bank’s human development agenda. Five million mothers, and children from birth to age 6, benefited from pro­ grams developed throughout Latin America under the Early Childhood Initiative: An Investment for Life. After two years of operation, the initiative The impact of crime and violence is so profound that experts fear de­ has approved $400 million worth of projects, doubling the initial projected velopment can be set back many years as a consequence. funding, and surpassed the original total commitment of $300 million for This year, for the first time in the region, a CPS approved by the Board the period 2010–13. included a pillar on citizen security. The new CPS for Honduras, the country In fiscal 2012, several countries took out lines of credit as insurance with the highest murder rate in the world, will support, among other against unforeseen economic circumstances and the risk of natural disas­ things, the distribution of violence-prevention toolkits in at least 200 ters. El Salvador activated a $50 million line of financing after massive schools, as well as the implementation of a comprehensive security plan in flooding left thousands of Salvadorians homeless and caused widespread at least 10 municipalities in the country’s center, north, and east regions. It damage. will also help build institutional capacity against money laundering and an improved database for crime and violence. (See http://documents.world Improving Citizen Security bank.org/curated/en/2011/11/15506299/honduras-country- Crime and violence are key development challenges throughout Latin partnership-strategy-period-fy2012-2014.) America and the Caribbean. In parts of the region, this scourge has taken a The Bank has also contributed to addressing this issue by providing steep toll on people and local economies. In Central America, for instance, technical assistance to SICA (Central America Integration System) in devel­ 14,257 lives are claimed annually by crime—an average of 40 people per oping the prevention pillar of the Central America Citizen Security Strategy day—costing countries up to 8 percent of their GDP. and by convening key players from the private and public sectors to gen­ erate practical responses to the region’s increasingly lax security. (See http://worldbank.org/lac.) LATIN AMERICA AND THE CARIBBEAN REGIONAL SNAPSHOT Latin America and the Caribbean Results Total population 0.6 billion Highlights Population growth 1.1% The Rio Grande do Norte Rural Poverty Reduction Project in •   Life expectancy at birth 74 years Brazil has helped 90,000 poor rural families, created 12,000 jobs, Infant mortality per 1,000 live births 18 provided 53,000 families with access to water, and more than Female youth literacy 97% tripled the agricultural productivity of beneficiaries of joint water ­ Number of people living with HIV/AIDS 1.7 million and productive investments. The project also created 2,100 com­ 2011 GNI per capita $8,544 munity associations, which are improving the relationship be­ tween poor communities and state and local authorities. (See GDP per capita index (2000 = 100) 128 http://go.worldbank.org/3VC16UY3R0.) Note: Life expectancy at birth, infant mortality rate per 1,000 live births, and female youth literacy are for 2010; other indicators are for 2011 from the World Development Indicators In Honduras—one of the most vulnerable countries in the •   database. HIV/AIDS data are from the 2012 UNAIDS report, “Together We Will End AIDS.â€? world to natural disasters—the Natural Disaster Mitigation Project helped improve the country’s capacity for managing disaster risk and ­ reduced local disaster vulnerability in participating munici­ palities. The project improved the flood early warning systems TOTAL FISCAL 2012 TOTAL FISCAL 2012 for four of the main watersheds destroyed by Hurricane Mitch and New commitments Disbursements helped complete structural mitigation measures in 58 munici­ IBRD $6,181 million IBRD $6,726 million palities, benefiting more than 500,000 people. (See http://go IDA $448 million IDA $342 million .worldbank.org/CKKYM2YDT0.) Portfolio of projects under implementation as of June 30, 2012: $33.2 billion 8 Photo: Arne Hoel Middle east and north Africa Dramatic political changes occurred throughout the Middle East and World Bank Assistance North Africa in fiscal 2012, marked by revolutions, elections, and violent Bank support reached $1.5 billion in fiscal 2012, including $1.4 billion from conflict in some countries and significant reforms in some others. A com­ IBRD and $80 million from IDA—entirely in the form of grants. The Bank mon thread across many of the countries that have witnessed the Arab also allocated $63 million in special financing for the West Bank and Gaza, Spring has been a consistent call led by the region’s thousands of ener­ and delivered 123 Economic and Sector Work and non-lending Technical gized youth. They are demanding respect, dignity, and good governance Assistance activities. and asking for jobs and socioeconomic opportunities that an inclusive In response to the Arab Spring, the Bank is implementing a new frame­ growth path would bring. work for engagement and support to the MNA countries. This framework The Bank also needs to operate differently in this region, as it focuses on is based on four pillars: strengthening governance; increasing social and deeper consultations with a wider group of stakeholders, particularly civil economic inclusion; creating jobs, including for youth and women; and society. The consultative process is a critical foundation of the Bank’s sup­ accelerating sustainable growth. These pillars are underpinned by the port of efforts by these countries to progress toward appropriate gover­ cross-cutting themes of gender, regional integration, and fostering a com­ nance mechanisms—a move away from the cronyism and corruption of petitive private sector. previous regimes—and a renewed focus on the role effective private sec­ tor actors can play. Creating Jobs Given this localized background and broader economic turbulence, Jobs—particularly jobs for youth and women—are critical to develop­ especially in developed countries, economic growth in the region fell to ment. But the region is providing too few of them. In the 2000s, Middle just 3 percent in fiscal 2012. However, rising oil prices, and some economic East and North Africa created only 3.2 million jobs per year. It needed to recovery in countries affected by the revolutions are expected to increase create 1 million more to bring unemployment down.  regional growth to 4.2 percent this fiscal year. Countries that are oil export­ The growing attention to employment is reflected in the fiscal 2012 ers are expected to grow by 5.7 percent, while oil importers likely will grow program for the region. The Arab Republic of Egypt’s $200 million by only 2.8 percent, leaving their fiscal situation tenuous. Emergency Labor Intensive Project focuses on temporary jobs. Tunisia’s FIGURE 2.9 FIGURE 2.10 MIDDLE EAST AND NORTH AFRICA MIDDLE EAST AND NORTH AFRICA IBRD AND IDA LENDING BY SECTOR | FISCAL 2012 IBRD AND IDA LENDING BY THEME | FISCAL 2012 SHARE OF TOTAL OF $1.5 BILLION SHARE OF TOTAL OF $1.5 BILLION Water, Sanitation, and Flood Protection 5% < 1% Agriculture, Fishing, and Forestry Urban Development 16% 2% Economic Management Transportation < 1% Environmental and Natural 8% Education 13% Resources Management Public Administration, Law, and Justice 19% 29% Energy and Mining Social Protection and Financial and Private Industry and Trade 4% Risk Management 16% 20% Sector Development Social Development, Gender, and Inclusion 7% Rural Development 9% 8% Human Development Health and Other Social Services 26% 9% Finance Rule of Law 1% 7% Public Sector Governance 9 Countries Eligible for World Bank Borrowing IBRD 34946 AUGUST 20 Algeria Islamic Republic Jordan Morocco Republic of for 2012 Annual Report locator ma Djibouti of Iran Lebanon Tunisia Yemen Arab Republic Iraq Libya of Egypt This section also reports on the West Bank and Gaza. $50 million Micro and Small and Medium Enterprises (MSME) Project and Morocco’s $50 million MSME Project concentrates on generating private sector employment. Morocco’s $100 million First Skills and Employment Development Policy Loan also directly targets labor market challenges. In fiscal 2012, a $61 million Labor Intensive Public Works Project was approved for the Republic of Yemen. Strengthening Governance Work on governance issues in Tunisia was completed at the end of fiscal 2012, in the wake of a $500 million Governance Loan delivered in 2011. In Morocco, a $16 million Judicial Performance Project was approved, as Development Policy Loan ($250 million) was approved, as was Morocco’s was a $6 million Institutional Strengthening Project for Djibouti. In Jordan, innovative $200 million Ouarzazate Concentrated Solar Power Project. In the Bank is supporting technical assistance to strengthen legal aid ser- Djibouti, the $5.2 million Power Access and Diversification Project will help vices and community-based initiatives. In West Bank and Gaza, a $3 million with energy sector bottlenecks. In West Bank and Gaza, a $40.0 million Second Land Administration Special Financing Project was approved. special financing Palestinian Reconstruction and Development Plan Support Program was approved, and an $8.0 million Electricity Special Increasing Social and Economic Inclusion Financing Project and the $3.7 million recipient-executed Gaza Wadi Fukin Morocco’s $300 million National Initiative for Human Development Loan, Water and Wastewater Technical Assistance Program were all given the approved in late June 2012, was the first Program for Results (PforR) for the green light. region and one of the Bank’s first two PforR loans. It focuses on enhancing services for the rural and urban poor and targets income-generating ac­ Knowledge and Technical Assistance Work tivities. Tunisia’s $5 million participatory Service Delivery for Reintegration in the Gulf Cooperation Council Countries Project, as well as projects in Health totaling $5.5 million and Community The multisectoral programs in both Kuwait and Saudi Arabia grew in fiscal Public Works ($3 million), were delivered in fiscal 2012—all targeting 2012. Work is proceeding on social safety nets in Bahrain, fiscal capacity poorer, excluded sections of the population. In Djibouti, the Bank ap­ and labor markets in the United Arab Emirates, education in Oman, and proved the $5 million Crisis Response Social Safety Net and the $3 million fiscal management and trade and business facilitation in Qatar. (See http:// Rural Community Driven Development and Water Project. worldbank.org/mna.) Accelerating Sustainable Growth Middle East and North Africa Results Highlights The $240 million Giza North Additional Financing energy project is de­ signed to contribute to Egypt’s growth. In Jordan, the first programmatic In Egypt, the Enhancing Access to Finance for Micro and Small •   Enterprises investment loan has provided credit since April 2011 MIDDLE EAST AND NORTH AFRICA REGIONAL SNAPSHOT to more than 4,000 small and medium-size enterprises, includ- ing about 1,000 owned by women entrepreneurs. The project Total population 0.3 billion also removed the ceilings on the interest rate microfinance Population growth 1.7% institutions, and NGOs can now charge end beneficiaries. (See Life expectancy at birth 72 years http://go.worldbank.org/ 93BSSF2E30.) Infant mortality per 1,000 live births 27 In Morocco, the Second National Program of Rural Roads helped •   Female youth literacy 88% raise the country’s Rural Road Accessibility Index from 50 percent Number of people living with HIV/AIDS 0.3 million in 2005 to 70 percent in 2010. The project benefited 1.9 million 2011 GNI per capita $3,530 rural people. (See http://go.worldbank.org/L6115RKTJ0.) GDP per capita index (2000 = 100) 128 In the Republic of Yemen, the Secondary Education Develop­ment •   Note: Life expectancy at birth, infant mortality rate per 1,000 live births, and female youth and Girls Access Program has increased the gender parity index of literacy are for 2010; other indicators are for 2011 from the World Development Indicators database. HIV/AIDS data are from the 2012 UNAIDS report, “Together We Will End AIDS.â€? secondary education in the selected districts from 0.42 to 0.61. As of May 2012, the project had trained some 30,000 teachers, 90 female staff in 50 secondary schools have been contracted, and civil works TOTAL FISCAL 2012 TOTAL FISCAL 2012 programs have been initiated in 44 schools. (See http://www-wds New commitments Disbursements .worldbank.org/external/default/WDSContentServer/WDSP/ IBRD $1,433 million IBRD $1,901 million IB/2012/04/09/000386194_20120409041337/Rendered/PDF/ IDA $80 million IDA $102 million 664630PJPR0v100April04020120final0.pdf.) Portfolio of projects under implementation as of June 30, 2012: $8.4 billion 10 Photo: Deshan Tennekoon south asia Real GDP growth in South Asia has slowed considerably, following a prom­ Borrow Limit. This new instrument will enable India to continue accessing ising start to fiscal 2012. Regional industrial production, exports, and capi­ IBRD funding for key development projects aimed at improving the lives of tal flows began to show signs of weakness at the end of the first quarter of its people. 2012, reflecting a slowdown in economic activity in the region’s traditional export markets of the United States and Europe as well as a lack of progress Honing a New Regional Update on structural reforms. The renewed slowdown comes on the heels of a The 2012 Regional Update summarizes the Bank’s approach to addressing sharp deceleration in economic growth in the second half of 2011, which challenges in South Asia and provides a roadmap of country-specific strat­ saw regional GDP growth decline to an estimated 7.1 percent for the year, egies. The approach focuses on creating more and better jobs by loosen­ from 8.6 percent in 2010. ing constraints to growth; building skills and improving health and nutri­ Strong growth averaging 6 percent a year over the past 20 years has tion outcomes, both closely linked to a focus on women; promoting translated into declining poverty and impressive improvements in human regional cooperation; and strengthening governance. development. Still, South Asia is home to 44 percent of the developing world’s poor, with about 571 million people in the region surviving on less Creating More and Better Jobs than $1.25 a day, the extreme-poverty level. South Asia has a young population and the second-lowest female labor force participation rate. To reduce poverty and to sustain growth in the re­ World Bank Assistance gion, South Asia faces the extraordinary challenge of creating 1.0 million– The Bank is a key development partner in South Asia. In fiscal 2012, it ap­ 1.2 million additional jobs every month for the next 20 years. Fortunately, its proved 30 projects in the region, financing $1.2 billion in IBRD loans and young population can reap a demographic dividend if appropriate policies $5.3 billion in IDA commitments, including $181 million in grants. are adopted. In fiscal 2012, the World Bank announced a new innovative financing The Bank’s regional flagship report, More and Better Jobs in South Asia, arrangement for India, which allows the Central Bank to hold a $4.3 billion identifies three main priorities: reforming the electricity sector, in order to bond as collateral for additional IBRD financing beyond India’s Single attract more private investment and improve the governance of utilities; FIGURE 2.11 FIGURE 2.12 SOUTH ASIA SOUTH ASIA IBRD AND IDA LENDING BY SECTOR | FISCAL 2012 IBRD AND IDA LENDING BY THEME | FISCAL 2012 SHARE OF TOTAL OF $6.4 BILLION SHARE OF TOTAL OF $6.4 BILLION Water, Sanitation, and Environmental and Natural Flood Protection 6% 19% Agriculture, Fishing, and Forestry Urban Development 9% 7% Resources Management Transportation 8% Social Protection and Financial and Private Risk Management 4% 1% Sector Development Public Administration, Law, and Justice 16% Social Development, 23% Human Development Gender, and Inclusion 9% Information and 19% Education Communications < 1% Industry and Trade 4% Public Sector 5% Governance Health and Other Social Services 7% Finance 3% 17% Energy and Mining Rural Development 43% < 1% Rule of Law 11 Countries Eligible for World Bank Borrowing IBRD 34943R AUGUST 20 Afghanistan India Nepal for 2012 Annual Report locator ma Bangladesh Maldives Pakistan Bhutan Sri Lanka improving the quality of education, with an emphasis on early childhood development, to reduce the world’s highest rates of child malnutrition; and increasing the flexibility of labor laws (to make entry and exit of labor less costly) and strengthening safety net and training programs (to help workers adjust to shocks and enhance their future earning potential). Promoting Regional Cooperation Regional economic cooperation can lead to major increases in growth and security in the region. To ensure that the region is part of the Asian Century, the Bank is supporting regional networks that share information and build institutional capacity through analysis, dialogue, and capacity building. It is financing projects that facilitate trade in goods, services, and electricity; Bank support for Afghanistan in the next two years will help ease the strengthen regional cooperation in wildlife protection, water resource transition to government-led responsibility for security and development management, food security, and disaster risk management; and leverage by the end of 2014. Support will focus on building the legitimacy and ca­ partnerships with the donor community as well as women entrepreneurs, pacity of local government and civil society, providing equitable service youth and industry groups, think tanks, and the media. delivery, and spurring inclusive growth and job creation. (See http:// worldbank.org/sar.) Supporting Conflict and Post-conflict Areas The World Bank–administered Afghanistan Reconstruction Trust Fund (ARTF) is the largest single-country multidonor trust fund administered by the World Bank and one of the main instruments for financing Afghanistan’s recurrent budget and investment needs. The fund, supported by 33 donor countries, has generated more than $5.3 billion since its inception in 2002. SOUTH ASIA REGIONAL SNAPSHOT Total population 1.7 billion South Asia Results Highlights Population growth 1.4% School enrollment in Afghanistan rose from 1.0 million to 7.2 •   Life expectancy at birth 65 years million students between 2002 and 2011, as a result of the Edu­ Infant mortality per 1,000 live births 52 cation Quality Improvement Project. In 2001, girls in Afghanistan Female youth literacy 73% were not permitted to attend school; by 2011, 2.7 million girls, 37 percent of all students, were enrolled. (See http://go Number of people living with HIV/AIDS 2.7 million .worldbank.org/FZ7MZCVSG0.) 2011 GNI per capita $1,305 In India, the National AIDS Control Project helped cut the num­ •   GDP per capita index (2000 = 100) 172 ber of new HIV infections in half between 2000 and 2009. Thanks Note: Life expectancy at birth, infant mortality rate per 1,000 live births, and female youth to targeted prevention interventions, an estimated 3 million literacy are for 2010; other indicators are for 2011 from the World Development Indicators database. HIV/AIDS data are from the 2012 UNAIDS report, “Together We Will End AIDS.â€? HIV infections will have been averted by 2015. (See http://go .worldbank.org/MVIKK16G20.) The Pakistan Earthquake Emergency Recovery Project con­ •   structed 80,000 seismic-resistant homes between 2006 and 2010 TOTAL FISCAL 2012 TOTAL FISCAL 2012 and received $300 million in additional financing in 2010 New commitments Disbursements to continue the housing program following the unprece- IBRD $1,158 million IBRD $1,037 million dented floods across Pakistan. (See http://go.worldbank.org/ IDA $5,288 million IDA $2,904 million 46DF5P6U70.) Portfolio of projects under implementation as of June 30, 2012: $37.8 billion 12 world bank for results 2012 Overview The World Bank has made significant improvements in managing and monitoring development results and sharpening its focus on results in its operations and strategies. It has increased its ability to collect and aggre- gate results data, conduct performance assessments, establish clear re- sults reporting mechanisms, and use lessons from impact evaluations. The Bank has also improved the way it communicates development out- comes, publishing more than 645 results stories in multiple languages, using the Web, multimedia, and social media tools—putting a human face on development data. In September 2011, the Bank released its first integrated results and performance framework, known as the Corporate Scorecard. In April 2012, the Bank launched an interactive, Web-based electronic Corporate Score­ card, giving online access to the Bank’s shareholders and stakeholders. In the same year, the Bank’s use of the Corporate Scorecard continued to expand rapidly: the Bank institutionalized the Scorecard by including key ­ performance indicators in the Memoranda of Understanding between Colombia Senior Management and Vice Presidents; quarterly Scorecard Days led by Photo: Scott Wallace Senior Management to discuss key priorities were organized; and starting the current fiscal year (fiscal 2013), the Board and Management will discuss the Scorecard twice a year. (See corporatescorecard.worldbank.org.) In the same spirit, other Multilateral Development Banks (MDBs)—such as the African Development Bank, Asian Development Bank, European ondary school enrollment reached about 97 percent in 2010. The Bank for Reconstruction and Development, Inter-American Development Millennium Development Goal (MDG) targets of halving extreme poverty Bank, International Fund for Agricultural Development, and the Islamic ($1.25 a day) and halving the proportion of people without access to drink- Development Bank—have also institutionalized multitier Corporate Score­ ing water by 2015 as compared to 1990 levels appear to have been met in cards. This has brought the MDBs into a common framework of integrated 2010, five years ahead of schedule. Progress and the benefits achieved vary results and performance-based development. substantially across and within countries, however, and the number of This section of the Annual Report serves as a companion to the people living on less than $2 a day fell only slightly. More than 75 percent Corporate Scorecard, which covers the full spectrum of IBRD and IDA ac- of people who lack access to drinking water and basic sanitation live in tivities. It facilitates dialogue between Management and the Board on rural areas, a major challenge going forward. Important gains were made progress made and areas that need attention, all organized in four tiers. in several other areas. Tier I provides indicators related to the Global Development Context. To support country results, the Bank provides financial, knowledge, These indicators show the long-term development outcomes that coun- and convening support, as well as analysis and institutional and capacity tries are achieving and provide the context and direction of the Bank’s support, to more than 140 countries. It works across six main areas of work. These high-level outcomes cannot be attributed directly to the Bank, engagement: institutions and governance, human development and because countries and their development partners all contribute to these gender, infrastructure, agriculture and food security, environment and cli- achievements over the long term through a combination of multisector mate change, and financial and private sector development and trade. interventions, actions, and policy decisions. These indicators are also af- The Bank supports the establishment of effective institutions, recogniz- fected by external factors such as global crises. Tier II indicators measure ing that they are essential to achieving sustainable development out- Country Results Supported by the Bank and highlight development results comes. Between 2010−12, Bank support strengthened 64 countries in that countries have achieved with Bank support. Tier III indicators measure public sector management systems including civil service and public ad- Development Outcomes and Operational Effectiveness, and as such pro- ministration systems, public financial management systems, tax policy and vide information on the effectiveness of the Bank’s operations and services. administration systems, and procurement systems; 85 countries in 2012 Tier IV indicators measure the Bank’s Organizational Effectiveness and were supported on asset, liability, and risk management. The Bank contrib- Modernization and assess how well the Bank is functioning and adapting uted significant results in education, health, and social protection, espe- in order to better support countries in achieving development results. cially as they pertain to women and girls. The Bank has also taken the lead Countries have continued to make progress on development priorities in promoting global collective action in these areas. Over the decade in spite of slower global growth in both 2011 and 2012 than in 2010. 2002−11, nearly 66 million people received basic packages of health, nutri- Average annual GDP per capita for developing countries reached $2,080 tion, or reproductive health services. Bank support for social protection (constant year 2000 dollars) in 2011, and gender parity in primary and sec- benefited about 267 million people in 83 countries during 2005−11. 1 Bank support for infrastructure continued to grow rapidly as well. ance, and support to local currency bond markets. At the apex level, the Since 2002, Bank projects have helped to provide 145 million people with Corporate Scorecard is making the Bank more accountable and transpar- improved access to water and helped finance the construction and reha- ent to its shareholders and stakeholders. bilitation of about 190,000 kilometers of roads. Over the past decade, the Bank has also supported more than 100 countries to develop information Global Development Context and Key Development and communication technology. In agriculture, the Bank-managed Outcomes: Tier I $1.5 billion Global Food Crisis Response Program reached an estimated Tier I indicators of the Corporate Scorecard show the long-term develop- 40 million people in 47 countries. In the climate change arena, the Bank is ment outcomes that countries are achieving and provides the context and working with 130 countries on mitigation and adaptation programs and direction for the Bank’s work. These high-level outcomes, such as those with 74 countries on disaster risk management in the past three years. The monitored as part of the Millennium Development Goals (MDGs), cannot broadening and deepening of financial markets is bringing s ­ ervices to be attributed directly to the Bank only, because they reflect multisector underserved populations, and expanding micro-, small-, and medium- interventions, actions, and policy decisions of countries and their develop- size enterprises remains a cornerstone of Bank support in more than 50 ment partners. countries. Based on the Bank’s internal reviews of projects’ development out- Growth and Poverty comes, the quality of project design and implementation remained stable, Countries continued to make progress on development priorities, despite as did the percentage of projects with well-formulated objectives and in- the slowdown of global growth to 3.8 percent in 2011. Average annual dicators and the percentage of projects that reported on results achieved GDP per capita in developing countries reached $2,080 (constant 2000 at completion. The Bank’s portfolio performance was stable between 2008 US$) in 2011. For the first time, by 2010, every region of the world saw the and 2012, with 85.5 percent of projects considered to be performing in a percentage as well as the absolute number of extremely poor people in satisfactory manner in 2012. developing countries decline. The percentage of the world’s population To strengthen development outcomes—which fell to 70.5 percent living on less than $1.25 a day declined from 43 percent in 1990 to 22.7 of projects considered satisfactory at exit in 2010, based on partial percent, and the absolute number declined from 1.9 billion in 1990 to 1.29 Independent Evaluation Group (IEG) reviews, below the institutional billion in 2008. A preliminary survey-based estimate for 2010—based on a standard—the Bank is revamping its quality assurance system, which will smaller sample than the global update—indicates that the global poverty be rolled out in fiscal 2013. Disbursement levels in fiscal 2011 remained rate of $1.25 a day fell to less than half of its 1990 value by 2010. If these robust at $32.2 billion, but declined in fiscal 2012 to $30.8 billion as quick results are confirmed by follow-up studies, the first target of the MDGs— response crisis projects exited the portfolio. About 71 percent of the Bank’s cutting the extreme poverty rate to half of its 1990 level—would have economic and sector work and nonlending technical assistance accom- been already achieved on the global level before the 2015 target year, de- plished its objectives, but could achieve greater impact and could be en- spite the 2008 food, fuel, and financial crises. The recent World Bank projec- hanced through improved dissemination. tions also suggest that the global extreme poverty rate is expected to fall The Bank has made major advances in sharing knowledge and data below 16 percent by 2015. more effectively with its clients. The Open Data Initiative has facilitated The progress in poverty reduction has been uneven across and within better informed development decisions, the Open Knowledge Repository regions (see figure 1). In the East Asia and Pacific region, the proportion of opened in April 2012, and geomapping for all Bank-supported projects people living on less than $1.25 a day fell to 14.3 percent in 2008, down has been completed. The Bank has focused on gender mainstreaming as from 77 percent in 1981, largely due to the progress in China. In Africa, it implements the recommendations of the World Development Report the share of the population living on $1.25 a day fell to 47 percent in 2008, 2012: Gender Equality and Development. The use of country systems in the first time it has ever fallen below 50 percent. Extreme poverty rates Bank operations has also improved over time, as evidenced by the 2011 declined between 2005 and 2008, reversing the upward trend from 1981 Paris Survey on Aid Effectiveness. The Bank met the Paris Declaration to 2005. Less encouraging is the number of people living on less than $2 a Survey targets for procurement and financial management in 2010, day, which declined only modestly, from 2.59 billion in 1981 to 2.47 billion although there is still room for improvement. ­ in 2008. Moreover, as income growth brought several populous countries The Bank continues to improve its organizational effectiveness by im- into middle-income status, about 70 percent of the poor living below plementing its modernization program. Operating with a real flat budget $1.25 a day are now in middle-income countries, indicating poverty reduc- since fiscal 2006, it has made continuous improvements to allocate and tion remains important even as countries become richer. use its resources more efficiently. It is also working to better align the skills and capacity of its staff with its strategic priorities. In particular, it is aiming Progress on the MDGs to increase staff time allocated to activities outside of their units. Staff di- In addition to poverty reduction, a second MDG target was also met in versity has increased, as the Bank moves toward its goal of gender parity in 2010, as the proportion of people without access to improved drinking management. water sources declined by more than half, falling from 28 percent in 1990 In support of its Global Mobility approach to staff decentralization, the to 13.6 percent in 2010. The increase in access to improved water sources Bank has opened two hubs, one in Nairobi, Kenya, to support its work on demonstrates what countries can achieve with sustained commitment, fragile and conflict-affected countries, and the other in Singapore, to pro- adequate resources, and effective implementation approaches. As with vide special expertise in such areas as public-private infrastructure partner- poverty reduction, progress in meeting the water MDG has, however, been ships. In the results area, the Bank has expanded the use of Core Sector uneven, and large disparities remain across and within countries. Progress Indicators to 24 sectors and themes. In fiscal 2012, the Bank also launched in providing access to drinking water to the poorest has been limited to a new lending instrument, Program for Results (PforR), which disburses Africa, and more than 75 percent of people without access to improved funds upon achievement of pre-agreed results. The Bank is also expanding drinking water live in rural areas. The danger of slippage against the its menu of instruments, which now includes guarantees, weather insur- MDG target is real unless many countries improve their maintenance of 2 FIGURE 1 POVERTY DATA, 1981–2008 a. Number of poor people by region, 1981–2008 b. Number of people living in poverty, 1981–2008 c. Poverty rates for the developing world, 1981–2008 2,500 3,000 80 % of people below the poverty line $1.25 a day in 2005 PPP (millions) Population living on less than 2,500 70 2,000 60 population, millions 2,000 1,500 50 1,500 40 1,000 30 1,000 20 500 500 10 0 0 0 1981 1990 1999 2008 1981 1990 1999 2008 1981 1990 1999 2008 Rest of the world Africa Between $1.25 and $2 a day $2 per day South Asia East Asia and Paci c Between $1 and $1.25 a day $2 per day (not including China) $1 a day or less $1.25 per day $1.25 per day (not including China) Source: World Development Indicators (2012) as compared from PovcalNet (http://iresearch.worldbank.org/PovcalNet). existing assets to sustain services, which can be as important as building Part of this effort will involve systematic reform and restructuring of these new infrastructure. sectors, which will help bring medium- to longer-term gains. Important gains were made on several other MDG targets. Gender In the shorter run, well-targeted safety nets and social protection pro- parity in primary and secondary enrollment reached nearly 97 percent ­ grams could be useful in supporting the poorest. Dozens of countries have in 2010, with primary school completion rates reaching over 89 percent in created new or improved existing safety nets since 2008. In the past de- 2010. Thirty-two IDA-supported countries have achieved gender parity cade, more than 40 countries have followed in the footsteps of Brazil and in primary and secondary enrollment. Yet more than 60 million primary Mexico by using conditional cash transfer programs to encourage poor school-age children are still out of school, with more than half of them parents to send their children to school and take them for medical check- living in Africa and more than a fifth in South Asia. ups. The cash payments are often given to the woman of the household, In contrast, progress on other MDGs has fallen short of the targets. In based on evidence that women are more likely than men to spend money 2010, the maternal mortality ratio was 230 per 100,000 live births, the child on their children. The extra cash helps households buy essentials such as mortality rate was 63 per 1,000 live births, and only 56.4 percent of the better food and pay for schooling. In some cases, it also increases their ac- world’s population had access to improved sanitation. cess to microfinance, seeds, fertilizer, and other farming inputs, and stimu- lates entrepreneurial activity. Progress in Other Areas Tier I of the World Bank Corporate Scorecard has been further strength- Improved transport and communications infrastructure have increased ened by introducing three more indicators: domestic credit to the private connectivity: about 51 percent of all roads were paved during 2005–09, sector as a percentage of GDP, an index measuring country statistical ca- and there were 73 mobile cellular phone subscriptions for every 100 peo- pacity to monitor progress related to the 2011 Busan building blocks, and ple in developing countries in 2010. Combined with reductions in the an indicator on women’s economic empowerment and equality through number of days it takes to set up a business (which fell to an average of 36 measuring the gap between formal bank accounts held by men and those days in 2011 from 50 in 2007), these improvements have helped reduce by women. costs and logistic barriers to international and regional trade. Progress in other areas, especially employment, governance, and bio­ Country Results Supported by World Bank diversity, remains mixed. Youth unemployment remains a chronic issue in Operations and Activities: Tier II several regions. Governance reforms have proved difficult to implement in The Bank provides financial resources, shares knowledge and analysis, sup- many countries. Deforestation rates have declined, but there has been no ports institutions and country capacity, and facilitates partnerships and increase in protected areas, and oceans are under increasing pressure, with knowledge exchanges among developing countries to help them address an estimated 85 percent of fish stocks fully exploited or depleted, 40 per- development challenges. It supports countries’ national development pri- cent of coral reefs destroyed or degraded, and 405 ocean zones identified orities, which evolve as country circumstances change. With offices in as dead. more than 120 countries, the Bank often plays a coordinating and conven- ing role for development partners, involving other parts of the World Bank Expected Progress in 2012 Group as needed. Weaker global growth and volatile food prices may impede progress to- This section discusses progress on results achieved by countries sup- ward the MDGs in 2012. Slower than expected growth in key emerging ported by Bank operations under the respective country programs. Results economies or a larger and more protracted bank deleveraging in East Asia in four main areas of engagement are reviewed. could further impede progress. Going forward, the global community will continue to work toward improved macroeconomic stability through sus- Support for Institutions and Governance tained policy adjustments. In addition, it will focus on closing the gaps in An important aspect of the Bank’s engagement with countries is its long- access to food, health care, gender equality, education, finance, and jobs. term support for strengthening their institutions that are critical to a coun- 3 tems that result in improved learning outcomes for the entire population. It also paid increasing attention to the poorest countries to help them reach universal primary completion and gender parity in primary and sec- ondary education by 2015. To achieve these twin objectives, the Bank has supported the recruitment and training of more than 4 million teachers since 2002. It has supported learning assessments in 29 countries during 2008−11 to measure the effectiveness of national education systems. In 2012, it financed 21 projects (including those in other sectors with educa- tion components) supporting disadvantaged children, including girls and children with disabilities, and introduced the Systems Approach for Better Education Results (SABER), a new suite of analytic tools used in a growing number of developing countries. Going forward, the current output indicator (based on counting the number of countries that have benefited from a learning assessment) will be replaced in the Corporate Scorecard by an outcome indicator. The new indicator will measure the number of students who have benefited from a Sri Lanka Bank-supported national learning assessment. Photo: Dominic Sansoni Health The Bank remains committed to helping countries improve the health and nutrition of their people, especially women and children, by strengthening health systems, expanding access and quality, and controlling disease. Its try’s ability to plan and manage resources effectively and deliver services support and advice aim to buttress countries’ efforts to achieve health re- that improve development outcomes. Specifically, the Bank supports insti- sults in ways that contribute to their overall fiscal sustainability, economic tutional strengthening of policy formulation and implementation, public growth, global competitiveness, and good governance. financial management, procurement, tax, civil service reform and good The health sector was an early adopter of results-based financing as a governance, and anticorruption measures. way to implement the Bank’s 2007 Healthy Development strategy. Results- In order to further improve results measurement, the Bank introduced based financing focuses on paying for outputs and outcomes (such as the outcome indicators in its current Corporate Scorecard, replacing the percentage of women receiving antenatal care or having trained health output indicators. The new measures report the number of countries workers deliver their babies) rather than inputs or processes (such as train- that have effectively strengthened the performance of their public ing, salaries, and medicine). In addition, since 2007, Country Pilot Grants sector management systems as relevant for achieving broader develop- have been made available from the Health Results Innovation Trust Fund ment outcomes. (HRITF). So far, 12 have been approved by the Board, and 7 are in the pipe- According to these measures, during fiscal 2010−12, with Bank sup- line for fiscal 2013 and 2014. port, 28 countries strengthened civil service and public administration In the past 10 years, the Bank has supported countries to provide systems, 57 countries strengthened public financial management systems, nearly 66 million people with basic packages of health, nutrition, or repro- 27 countries strengthened tax policy and administration systems, and 11 ductive health services, and helped immunize 497 million children, as countries strengthened procurement systems. well as offered antenatal care to more than 188 million pregnant women. In addition, in fiscal 2012, the Bank supported 85 countries on asset, In the same period, Bank commitments have supported the delivery of ­ liability, and/or risk management, which included services and transac- antiretroviral therapies to 1.4 million adults and children with HIV, pro- tions to preserve/enhance the value of national financial assets and vided 125 million children with doses of vitamin A, and purchased or dis- strengthen official sector asset managers’ capacity to manage pools of tributed about 35 million mosquito nets to prevent malaria. In addition, national assets, including foreign currency reserves, national pension 2.7 million health personnel were trained to improve the quality of service funds, and sovereign wealth funds; strengthening sovereign and sub- delivery. sovereign governments’ debt and risk-management capacity; and mitigat- To complement the third dimension of food security—nutrition—the ing financial and other exogenous risks such as interest rate and currency Bank will introduce a new indicator in its Corporate Scorecard: the number risks, natural disasters, and food price volatility. of pregnant/lactating women, adolescent girls, and children under the age of five reached by basic nutrition services. The new indicator will also fur- Support for Human Development and Gender ther strengthen gender dimensions in the Scorecard. Bank support has contributed to significant results in education, health, and social protection, especially for women and girls. The Bank has also Social Protection taken the lead in promoting global collective action in these areas. It The Bank’s social protection activities are designed to help countries shield will continue to engage strongly as part of its Post-Crisis Directions, which poor and vulnerable people from systemic shocks, reduce poverty and focuses on support for the poor and vulnerable. ­ income insecurity, and provide economic opportunities, especially for women, young people, and children. In the wake of the lingering food, Education fuel, and financial crises, demand for Bank support from both middle- and Since 2000, the Bank’s support for education has focused on increasing low-income countries jumped. During 2005−11, Bank-supported safety children’s access to school and enabling girls to attend school. In 2011, the net projects have directly benefited more than 266 million people, mainly Bank stepped up its focus on the development of quality education sys- through conditional cash transfer programs (94.5 million), other cash as- 4 sistance transfers (78.5 million), and public works (13.1 million), although the average coverage on a three-year rolling basis has remained un- changed at 114 million beneficiaries. Gender The Bank’s approach to gender has evolved over the past decades from a focus on human development to a more holistic framework encompass- ing gender in all economic activities and sectors as well as a rights-based approach with more of a focus on equality. Its gender operations and ana- lytic work focus on enhancing economic opportunity, jobs, social status, inclusion, voice, and leadership. The effects of its $70 million Gender Action Plan, implemented in 2007–10, continue to be felt in programs such as the Adolescent Girls Initiative and in rural development operations. Over the past 10 years, the Bank has supported the provision of antenatal care to more than 188 million pregnant women. Since 2006, it has supported so- cial protection programs and targeted schemes that have benefited 183 million women and girls. Tajikistan An IEG assessment of Bank support for gender found that the Bank made progress in gender integration from 2002–08, integrating ­ gender Photo: Gennadily Ratushenko concerns in more than half of the relevant projects. However, IEG also iden- tified the need to establish a results framework and to restore a broader requirement for gender mainstreaming. water supply and sanitation infrastructure, irrigation and drainage systems, The gender strategy laid out following the release of the World Develop­ river basin management, and transboundary water programs. Since 2002, ment Report 2012: Gender Equality and Development incorporates both rec- Bank-supported projects have provided 145 million people with access to ommendations. There has been accelerated progress on gender equality, improved water sources and provided 10 million people with access to but it has been uneven across the Bank. Changing norms associated with improved sanitation facilities, through the construction or rehabilitation of gender is a long-term proposition that requires addressing structural in- 340,000 improved community water points, 2 million new piped house- equalities, cultural change, and attitudes. hold water connections, and extended support to 302 water utilities. To increase the focus on women’s economic empowerment, a new In more than 100 countries, the Bank has financed the development of indicator will be introduced in the Corporate Scorecard that will measure ­ information and communication technology—through privatization, reg- the percentage of women participating in Bank-supported labor market ulatory reform, institutional capacity building, and system expansions that programs. The new indicator will also be useful for measuring the Bank’s have included regional connectivity. Improved connectivity and access efforts to promote gender equality. cause prices to fall, spurring growth and poverty reduction. Support for Infrastructure Support for Agriculture and Food Security Bank support for infrastructure in the past five years vastly exceeded prior With 75 percent of the world’s poor living in rural areas and most involved levels in response to the financial crisis and investment backlog in emerg- in farming, supporting agriculture remains a fundamental instrument for ing and developing countries, which need infrastructure to boost growth, achieving economic growth, poverty reduction, economic transformation, reduce poverty, and create jobs. The Bank’s support focuses on helping and food security, especially in Africa. In response to the 2008 food crisis, countries get on a more sustainable development path for infrastructure the Bank ramped up its support to agriculture, focusing on raising agri­ by refocusing Bank engagement on access to basic infrastructure services cultural productivity, reducing risk and vulnerability, improving nonfarm and delivering transformational investments that optimize spatial, low- rural income, and strengthening the governance of natural resource use. carbon, inclusive growth and cobenefits. Such projects can be regional, or Projects were funded under the $1.5 billion Global Food Crisis Response can connect countries with power grids, broadband, transportation corri- Program (GFRP) established in 2008. Since then, the program has reached dors, and large-scale renewable energy. A second focus is on mobilizing an estimated 40 million people in 47 countries. With GFRP support in IDA additional private capital through expanded public-private partnership countries, 381,874 people were employed under cash or food-for-work arrangements and greater use of guarantee instruments. programs; 342,886 children benefited from school feeding programs; Bank support (IBRD/IDA and trust funds) for country infrastructure 287,503 pregnant and lactating women received nutritional supplements ­investments rose to an average of $19.5 billion a year during 2009–12 from and education; 582,434 children received nutritional interventions; 173,332 an average of $8.2 billion from 2004−07. In the sector of Transport, the households benefited from cash transfer programs; and 529,873 tons of Bank emphasizes integrated transport solutions and safe, clean, and af- fertilizer and 3,223 tons of seeds were distributed to farmers. fordable transport to support expanded trade and enhanced human A new indicator (discussed above) to cover the nutritional dimension development. During 2002−11, the Bank-supported projects constructed ­ of food security will be included in the Corporate Scorecard in its next or rehabilitated 189,493 kilometers of roads. Energy projects aided by the iteration. Bank resulted in the construction or rehabilitation of 114,516 kilometers of transmission and distribution lines and about 19,000 megawatts of gener- Support for Climate Change and the Environment ating capacity to improve access to reliable energy. The Bank seeks to help the global community and countries increase resil- In the Water, Sanitation and Flood Protection sector, the Bank sup- ience to the impacts of climate change; develop clean energy solutions; ported countries’ efforts to improve governance and management of the adopt climate-smart plans in land use, agriculture, and infrastructure; and 5 protect vulnerable groups from environment-related health risks such as air and water pollution. All of the Country Assistance/Country Partnership Strategies (CASs/ CPSs) approved in 2011 and 2012 addressed climate change, and the Bank is supporting adaptation and mitigation programs in 130 countries. The Bank is working with clients to mobilize and leverage resources to advance climate-smart development with the Climate Investment Funds and other financing instruments. The Bank also supports market-based mechanisms for mitigation in 63 countries. Over the past 20 years, the Bank has sup- ported biodiversity projects in 122 countries with protected area manage- ment; natural resource management; and mainstreaming of biodiversity into forestry, coastal zone management, and agriculture. Through the Global Facility for Disaster Reduction and Recovery (GFDRR), a trust fund established in 2006, and other mechanisms, the Bank helps countries recover after natural disasters and develop institutions, programs, and instruments to better withstand future shocks. Between 2006 and 2012, the Bank and GFDRR have supported 102 countries. In the Burkina Faso next update of the Corporate Scorecard, the current output indicator will be replaced with an outcome indicator that will measure the progress of a Photo: Curt Carnemark country on meeting standards set by the Hyogo Framework for Action (HFA), which is the first plan to explain, describe, and detail the work that is required from all different sectors and actors to reduce disaster losses. The HFA outlines five priorities for action and offers guiding principles and goals. It also examines the effectiveness of Bank operations, including the practical means for achieving disaster resilience. (See http://www.unisdr quality and results orientation of its operations and knowledge activities, .org/we/coordinate/hfa.) the performance of its lending portfolio, the mainstreaming of gender in its operational work, client feedback on its operations, and the use of Support for Finance, Private Sector Development, and Trade country systems. In more than 50 countries, the Bank continues to support the broadening and deepening of financial markets to better serve underserved popula- Development Outcomes tions through the expansion of micro-, small-, and medium-size enterprises; Countries own and implement the operations supported by the Bank. the development of payment and remittance systems, collateral registries, Country factors, external events, risks (anticipated and unanticipated), and credit bureaus; and the creation of supportive regulatory environ- and the quality of design and implementation affect the outcome of ments. During 2009-12, microfinance and financial institutions benefiting these operations. IEG’s evaluations of projects exiting the portfolio indicate from Bank support had an average of 31 million active micro­ finance loan that the share of operations that achieved their development objectives accounts per year worldwide. The Bank continues to participate in the declined from 76.8 percent in 2008 to 70.5 percent in 2010—which is global dialogue on reforming the international financial system and based on the partial review of 78 percent Implementation Completion helping countries conduct evaluations that measure their performance and Results Reports (ICRs). Furthermore, over fiscal 2009−12, the four-year national standards in order to identify and implement needed against inter­ rolling average of IEG’s satisfactory outcome ratings for results-based CAS/ changes. Its trade logistics advisory program continues to advise govern- CPS was 63 percent, an improvement from the fiscal 2010 baseline of 59 ments on how to reduce the time and costs involved in trade and to ratio- percent but still significantly below the targeted level of 70 percent. This nalize trade logistics systems and services. These systems include border may reflect the fact that many of these CASs/CPSs were first-generation clearance processes; electronic payment systems; and interagency coordi- results-based strategies, some of which set ambitious objectives, and that nation on a variety of issues, including customs, product standards, phyto- country priorities often change during the implementation period of strat- sanitary veterinary standards, health standards, and “greenâ€? supply chains. egies—as they did during the recent crises—requiring the Bank to reori- The old output indicator on trade in the Scorecard has been replaced ent its support to new priorities. Management is redoubling efforts to by an outcome indicator to measure progress in countries applying trade- strengthen the focus and realism of CASs/CPSs. For countries in fragile and related diagnostic tools. These tools allow a comprehensive assessment of conflict-affected situations, the Bank is implementing the recommenda- the constraints to competitiveness and trade facilitation. During 2011−12, tions of the World Development Report 2011: Conflict, Security, and Develop­ the Bank has supported 15 countries in successfully applying Trade-related ment by introducing new procedures and approaches that align its en- diagnostic tools. gagement more closely with realities on the ground. To improve outcomes, Bank management is currently revamping its Development Outcomes and Operational quality assurance system to strengthen the quality processes governing Effectiveness: Tier III Bank-financed operations and thus help ensure that these operations can The Bank’s policies, systems, and processes reinforce its emphasis on re- deliver the expected development results. The immediate actions focus on sults. They include quality assurance, real-time monitoring of results and clarifying and harmonizing accountabilities and processes in operations, performance, and systematic self-evaluation, complemented by ex post improving the mechanisms for technical support to teams, and putting in independent evaluation of strategies and activities by IEG. This section re- place checks and balances for strategic and timely quality monitoring and views the overall success of Bank activities in achieving their development reporting to senior management. 6 disbursement ratio for investment lending projects, which disburse over a period of four to six years, declined from 21.3 percent in 2008 to 20 percent in 2012, on par with the Bank’s performance standard of 20 percent. A sign that the Bank is more responsive to clients, the average time from approval to first disbursement fell to 7.5 months in 2011, from 12 months in 2008. A new indicator to monitor integration of beneficiary feedback in Bank operations has been introduced in the Corporate Scorecard. Current analy- sis shows that of fiscal 2011 approved projects, about 22 percent engage beneficiaries in the design and/or implementation stages. Knowledge Services The Bank offers a broad array of knowledge and convening services to global and country audiences and clients. Knowledge products contribute to better development results and underpin the quality of operations. The Bank has made major advances in sharing knowledge and data India more effectively with its clients. Under the Open Data Initiative, its data website received more than 6.8 million visits during 2011. The Bank’s new Photo: Scott Wallace Open Access Policy for Research and Knowledge went into effect July 1, 2012. The centerpiece of the policy is the Open Knowledge Repository, which places all of the Bank’s research and knowledge products under a Creative Commons attribution copyright license, making them accessible Country-level client surveys, which are often carried out at the same to a wide audience. The Bank also completed geomapping of all Bank- time as Country Assistance Strategy/Country Partnership Strategy Com­ supported projects in 2012, providing an easy-to-understand and search- tion Reports, measure clients’ impressions of Bank effectiveness. They ple­ able database of project locations for external audiences. The Bank is now reveal a slight decline in perceived effectiveness, from 6.9 in 2008 to 6.7 in making progress on mapping results supported by its operations. 2011, where 10 is the most favorable rating. The Bank is increasingly conducting analytic and technical assistance Self-evaluations indicate that about 71 percent of the Bank’s economic services in collaboration with clients and partners. In 2011, 59 percent of and sector work and nonlending technical assistance accomplished their the work was done collaboratively, a figure the Bank aims to continue rais- objectives in 2011. Areas for improvement include greater strategic rele- ing closer to its performance standard of 66 percent. vance and better dissemination of findings and recommendations. Going forward, the Bank will introduce a new indicator in its Corporate Scorecard to measure the degree by which clients perceive that the Bank Operational Effectiveness has made a significant contribution through its knowledge and research As mentioned above, the Bank is currently revamping its quality assurance to achieve development results in their respective countries. The indicator system to strengthen the quality processes. Once completed, the reformed will be measured through Country Surveys in all Bank client countries in a system will be rolled out over the current fiscal year with improved moni- cohort of around 30−40 per year, thus covering all clients in a period of toring of its operational effectiveness. Implementation support to the three years. The first cohort of surveys has been completed and relevant countries is being given high priority because IEG evaluations indicate data will be included in the next update of the Scorecard. that projects with satisfactory ratings had high-quality implementation support. Gender Mainstreaming A well-articulated results framework linking project activities to results Gender mainstreaming was an important focus in the past fiscal year, as on the ground is a key design element for project success. Among projects the Bank incorporated the findings of the World Development Report 2012: approved in 2012, 91 percent clearly formulated their development objec- Gender Equality and Development into its activities. In both 2011 and 2012, tives and included measureable outcome indicators to assess achieve- all CASs/CPSs drew on and discussed the findings of a gender assessment, ment of these development objectives—an improvement of 8 percentage meeting the Corporate Scorecard target of 100 percent. points over 2009. Management continues to highlight the importance of integrating In managing its portfolio performance, the Bank emphasizes imple- gender into the Bank’s operations as a corporate priority. The institutional mentation support and risk management. Overall portfolio performance target for gender-informed operations (those that discuss gender issues in in 2012 slightly declined, with 85.5 percent of active projects rated satisfac- their contextual or sector analysis, and/or include gender considerations tory in terms of the likelihood of meeting their development objectives. in their actions, and/or monitor and evaluate the operation’s impact on Experience has shown that problems affecting the 14.5 percent of projects gender) in the Corporate Scorecard is 55 percent. In 2012, 80 percent of ­ rated as unsatisfactory are often resolved within a year. The Bank continues Bank operations were gender informed—a significant improvement since to focus on making its portfolio ratings more realistic. Among other mea- 2008. About 78 percent of development policy operations were gender sures, it is taking steps to ensure that staff pays more attention to realism informed, compared to 47 percent in 2010. The methodology for assessing and candor about problems and risks during implementation. the extent to which operations are gender informed was revised in 2012 to Disbursement levels are linked to implementation performance. be consistent with the methodology used to rate CAS/CPS products. The During and immediately after the global financial crisis, disbursements next iteration of the Corporate Scorecard will include an indicator in Tier II more than doubled, rising from $19.6 billion in 2008 to $40.3 billion in that measures women’s economic empowerment as the share of women 2010, which declined moderately in 2012 to a still robust $30.8 billion. The participants in Bank-supported labor market programs. 7 Use of Country Systems By using country systems, the Bank places a high priority on helping coun- tries strengthen their country institutions and systems. It does this in col- laboration with other development partners (multilateral development banks, other multilateral organizations, and bilateral donors). The use of country systems in Bank operations has improved over time. The Bank has surpassed the Paris Declaration Survey targets for procurement (50 per- cent) by 5 percentage points and for financial management (51 percent) by 20 percentage points in 2010. In 2012, 77 percent of IBRD/IDA projects used country monitoring and evaluation systems, and most also strength- ened current sector capacity. The new PforR lending instrument, which disburses against results achieved rather than payment for inputs, provides an additional opportunity to expand the use of country systems at the sector and program level. The Bank increased its support for efforts to build country statistical capacity through financing and partnerships such as the Partnership in Malawi Statistics for Development in the 21st Century. There is significant room for improvement, however, especially in low-income countries, on which the Photo: Francis Dobbs Bank will focus on going forward. Organizational Effectiveness and Business Modernization: Tier IV has been at 6.8 percent, well below the Bank’s goal of 10 percent. New The Bank continues to work to improve its organizational efficiency, to bet- organizational models aimed at increasing this percentage of staff time ­ ter align the skills and capacity of its staff with its strategic priorities, and to spent working in other units or regions are being piloted. implement its modernization agenda in order to become more responsive The staff diversity index rating rose from 0.85 in 2008 to 0.89 in 2012, and accountable to its stakeholders. and the share of women in management marginally grew from 36.1 per- cent in 2011 to 36.8 percent in 2012, as the Bank moved toward its goal of Resources and Alignment achieving gender parity in management. The Bank has been steadily improving its organizational effectiveness. The Bank opened two global hubs. The hub in Nairobi, Kenya, focuses Working with a flat annual administrative budget in real terms since fiscal on support to fragile and conflict-affected countries. The hub in Singa- 2006, it has made continuous improvements in the way it allocates and pore provides expertise in areas such as public-private partnerships in uses its resources. It significantly scaled up its response to the recent crises infrastructure. by doubling lending between 2008 and 2010, accelerating project prepa- The Bank’s next priorities are to further review its compensation and ration (from 17 months in 2008 to 14 months in 2012), and shifting benefits package, revamp its performance and talent management sys- r­ esources to support project implementation by increasing the average tems, and increase the diversity of its staff, with the objectives, among supervision budget from $115,000 per project in 2008 to $132,000 in 2012. others, to ensure it continues to attract highly qualified staff to support its The Bank is also rebuilding its budget flexibility, which was fully allocated clients, while reaching the target of gender parity throughout manage- to support the crisis response, in order to remain prepared for unexpected ment. The Bank will also review its renewable-term appointments to en- developments and demands in the future. These actions are aimed at in- sure that they provide sufficient flexibility to meet changing business creasing the value for money the Bank offers its clients and shareholders in needs while allowing the institution to grow and invest in staff. supporting results on the ground. Large Recipient-Executed Trust Funds—which provide additional fi- Business Modernization nance to developing countries, and are now integrated into CASs/CPSs Strengthening the focus on results, transparency, and accountability repre- and the Bank’s portfolio management systems—increased from $2.9 bil- sents the three overarching aspects of business modernization at the Bank. lion in 2008 to $3.9 billion in 2012. The use of Bank-Executed Trust Funds This effort aims to improve the institution’s ability to measure, report on, (funds provided by donors to the Bank) for the Bank’s own knowledge and learn from results; share data, knowledge, and expertise effectively work has increased, complementing the institution’s own administrative and generate knowledge with others; and respond to countries with budget and augmenting the services it delivers to clients. To ensure effec- agility. A results-focused and open institution also strengthens account- ­ tive management of this category of trust funds, the Bank is implement- ability to shareholders, partners, and citizens. In each of these areas, the ing reforms to integrate them into its budget and business-planning Bank has achieved milestones. processes. After the approval of the new PforR instrument in January 2012, the Board approved two operations, and management is aiming for about ten Capacity and Skills more operations in fiscal 2013. Through its business modernization program, the Bank is working to bet- In the results measurement area, the Bank significantly expanded the ter align the skills and capacity of its staff with its strategic priorities. To number of sectors and themes in which it has Core Sector Indicators maximize the use of its global knowledge and ensure such is made widely to measure results, covering 24 sectors and themes with the addition available across its client countries, the Bank is increasing the share of time of 17 new ones: Agriculture Research and Extension, Biodiversity, Con- staff allocates to activities outside their units or regions. In 2012, this share flict Prevention and Post-Conflict Reconstruction, Forestry, Hydropower, 8 Irrigation and Drain­ age, Land Administration and Management, Other Next Steps in the Results Agenda Renewable Energy, Participation and Civic Engagement, Pollution The Corporate Scorecard is making the Bank more accountable to its Management and Environ­ mental Health, Sanitation, Social Inclusion, shareholders and stakeholders. In fiscal 2013, the Bank will focus on the Social Protection, Thermal Power Generation, Transmission and Distribution following priorities: of Electricity, Wastewater Collection and Transportation, and Wastewater  oving the results agenda forward in three areas: expanding client • M Treatment and Disposal. These indicators join the sectors that adopted and beneficiary feedback to improve the focus on project results and Core Indicators in 2009 (Education; Health; Roads; Water Supply; Access to design; increasing the number of formal impact evaluations con- Urban Services and Housing for the Poor; Information, Communications, ducted at the project level to measure operational quality, efficiency, and Technology; Micro-, Small-, and Medium-size Enterprise Financing; and effectiveness; and testing new long-term institutional develop- and Project Beneficiaries). All of these indicators’ data are collected at the ment impact indicators. project level and then ­ aggregated for reporting purposes. • Rolling out a Quality Assurance system to strengthen the processes Building on last year’s Access to Information Policy and Open Data governing preparation and implementation of Bank-financed opera- Initiative, the Bank is working on new ways to convene and build knowl- tions; the portfolio reporting mechanisms for early detection of prob- edge with partners, including on global public goods. It created open lems; and improve learning loops. The new system is designed to platforms, such as the Jobs Knowledge Platform; sponsored crowd- provide support for operations to deliver their intended develop- sourcing activities, such as the Water Hackathon; and scaled up South- ment results. South exchanges. The Open Development agenda seeks to democratize Continuing preparing new Program for Results operations during the •  development information. The next frontier of this agenda is to more current fiscal year. The Bank will closely monitor progress and docu- systematically crowd-source development solutions and enhance benefi- ment lessons learned from the preparation and implementation of ciary feedback. the initial operations. Under its modernization agenda, the Bank has also made significant Working to align results measurement and management in the Trust •  progress in operationalizing identification of risks and constraints to results Funds (TF) with IDA/IBRD operations. This is part of the overall TF re- supported by Bank projects. The new revamped quality assurance system forms of the Bank, and when completed, the alignment will ensure is being built on the nexus between results and risks. A recent review of a that the results achieved through TF operations are better integrated sample of about 25 percent of active project’s ISRs found that there is a into the Bank’s results management system. statistically significant relationship between operational risk rating and the Supporting client countries and international partnerships focused •  rating (satisfactory/unsatisfactory) of a project’s development outcomes on development results by further developing country statistical ca- and the implementation performance. pacity and scaling up Bank support to countries in assessing the ca- pacity of their main government institutions to carry out their man- Support to Sector Actions Related to Post-Crisis Directions date with a focus on development results. Starting in the current During fiscal 2009–12, the Bank met its lending commitment projections fiscal year, the Bank has transferred the chairmanship and secretariat in key sectors to support post-crisis initiatives in the Agriculture, Educa- of the African Community of Practice to the African Development tion, Health, and Infrastructure sectors—averaging $4.3 billion per year Bank (an example of the Bank’s incubation role in building partner- (including special financing) for Agriculture, $2.4 billion per year for Health, ships to develop capacity to manage with a focus on development and $19.5 billion for Infrastructure (including special financing). The results and to expand and share development knowledge). The Bank Education sector’s commitment for IDA remains on track with $1.7 billion will continue to support the international results agenda by chairing per year. Going forward, the Bank will continue to monitor investments in the Multilateral Development Bank Working Group on Results and these sectors. engaging in the post-Busan agenda on Managing for Development Results. Improving metrics and measurement and developing new relevant •  results indicators. 9 Bank-Supported Results in Gender Bank-Supported Results in Human Development In Argentina, in the period from late 1998 through September In Bangladesh, between 2005 and 2011, more than 750,000 out- 2012, the Small Farmer Development Project benefited close to of-school children, more than half of them girls, enrolled in more 74,000 small farm families in 23 provinces. In all, the project helped than 22,500 learning centers. more than 355,000 people, of which about half were women. Fifteen percent of all subprojects had women as primary titleholders. In Brazil, provision of free, universal access to antiretroviral drugs led to a decline in mother-to-child HIV transmission from 16 per- In Bangladesh, the Secondary Education Quality and Access cent in 1998 to around 3 percent in 2011. Enhancement Project from 2008 to 2011 helped benefit about 2.1 million students, 54 percent of them girls, out of 4.0 million girls In Kenya, since September 2011, the polio immunization cam- and 3.5 million boys attending secondary school. paign achieved 100 percent coverage among children from birth to 59 months of age. In India, with the help of the Tamil Nadu Health Systems Project, more than 99.5 percent of deliveries in Tamil Nadu now take place Since 2007, the Cash-for-Works Temporary Employment Program in in a network of medical facilities including 80 obstetric and neona- Liberia provided more than 640,000 days of employment to more tal care centers and free ambulance services. The maternal mortal- than 17,000 beneficiaries. ity rate has also fallen, from 109 per 100,000 births in 2004–05 to 79 per 100,000 births in 2008–09. In Malawi, 3 million pupils in primary schools benefited from the IDA Direct Support to Schools program from 2005 to 2010. In Liberia, with the support of the Adolescent Girls Initiative, 1,131 girls received business, job, and life skills training in the first round. In the Philippines, from 2008 to 2011, 2.3 million poor households About 95 percent of the beneficiaries completed the training, and benefited from cash grants to encourage them to keep their chil- 85 percent of those trained have been placed in jobs or are en- dren in school and have regular health checks. gaged in self-employment activities. The second round of training started in July 2011 with 1,300 adolescent girls and young women. Bank-Supported Results in Sustainable Development In Tajikistan, by mid-2011, the Bank-supported community and In Afghanistan, more than 750 irrigation schemes were imple- basic health project had trained about 1,000 primary health care mented, benefiting more than 840,000 people between 2003 and workers and 300 community volunteers to deliver education on 2011. breastfeeding, good nutrition, and care of sick children to around 1,000 pregnant women, and micronutrient supplements and vita- In Kenya, between 2009 and 2011, IDA contributed to an increase mins had been delivered to approximately 44,000 women and in the number of electricity connections by 350,000 households children. (at 5 people per household) and constructed 1,200 kilometers of transmission and distribution lines. photos (left to right): Alan Gignoux, Yosef Hadar, Michael Foley 10 From 2006 to 2011 in Kiribati, approximately 0.5 kilometer of sea Bank-Supported Results in Collaborative walls had been built along the main road, more than 37,000 man- Economic and Sector Work (ESWs) grove seedlings had been planted, and several water management In Guangdong Province, China, the Bank partnered in a 2008–09 improvements had been carried out, all helping to increase resil- study to examine inequality issues and develop a strategic policy ience to the effects of climate change for Kiribati’s 98,000 residents. for intervention, which resulted in the provincial policy document titled “The Outline of Equalization of Basic Public Services in In Lao PDR, from 2003 to 2011, 86 bridges had been constructed Guangdong (2009–2020).â€? and 3,042 kilometers of rural access roads had been upgraded. More than 668 villages had received access to clean water systems Informed by the report “Transition to a Low Emission Economy in and 154 irrigation schemes had been developed, improving the Poland,â€? produced by the World Bank, in partnership with other in- quality of life for 650,000 beneficiaries. stitutions, the government of Poland adopted new guidelines for their National Program of Greenhouse Gas Abatement in August In Mexico, since the approval of the Efficient Lighting and 2011. Appliances Project in 2011, over 14 million incandescent light bulbs and 1.4 million appliances had been replaced. Bank-Supported Results in Community-Driven Development Projects Through the Solomon Islands’ Rural Development Program, 207 Started in 2004, the Nepal Poverty Alleviation Fund is now operat- infrastructure projects had been implemented between 2009 and ing in 59 of the country’s 75 districts to the benefit of 650,021 2011, including classroom buildings, health clinics, water supply people. Households have seen a 10 percent improvement in food systems, and foot bridges, benefiting nearly 100,000 people, ap- security and a 31.4 percent increase in per capita consumption. proximately 20 percent of the population. In Indonesia, as a result of the National Program for Community South Africa, between 2004 and 2011, increased the area of en- Empower­ ment started in 2008, real per capita consumption gains dangered and critically endangered ecosystems under conserva- are 9.1 percent higher among poor households in the program tion by 282 percent to 61,603 hectares. areas. The procurement cost of tertiary infrastructure is also 30–50 ­ In Tanzania, IDA is providing support to 124 small-scale irrigation percent less expensive than when procured through standard local subprojects and three soil fertility management demonstrations. government processes. During the 2010−11 season, agricultural input vouchers were suc- cessfully distributed to 2 million farmers, and distribution has started for the 2011−12 season to 1.8 million farmers. photos (left to right): Curt Carnemark, Curt Carnemark, Jamie Martin 11 Letter of Transmittal The Annual Report, which covers the period from July 1, 2011, to June 30, 2012, has been prepared by the Executive Directors of both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA)—collectively known as the World Bank—in accordance with the respective bylaws of the two institutions. Dr. Jim Yong Kim, President of IBRD and IDA, and Chairman of the Board of Executive Directors, has submitted this report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors. Annual Reports for the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes are published separately. Executive Directors Alternates Ian H. Solomon Sara M. Aviel Nobumitsu Hayashi Yasuo Takamura Ingrid G. Hoven Wilhelm M. Rissmann Susanna Moorehead Stewart James Ambroise Fayolle Anne Touret-Blondy Konstantin Huber Gino Alzetta Marta Garcia Juan Jose Bravo Rudolf Treffers Stefan Nanu Marie-Lucie Morin Kelvin Dalrymple Anna Brandt Jens Haarlov Rogerio Studart Vishnu Dhanpaul John Whitehead In-Kang Cho Mukesh N. Prasad Kazi M. Aminul Islam Shaolin Yang Bin Han Piero Cipollone Nuno Mota Pinto Jorg Frieden Wieslaw Szczuka Javed Talat Sid Ahmed Dib Merza H. Hasan Ayman Alkaffas Abdulrahman M. Almofadhi Ibrahim Alturki Vadim Grishin Eugene Miagkov Hekinus Manao Dyg Sadiah Binti Abg Bohan Felix Alberto Camarasa Varinia Cecilia Daza Foronda Agapito Mendes Dias Mohamed Sikieh Kayad Hassan Ahmed Taha Denny H. Kalyalya Renosi Mokate Mansur Muhtar As of June 30, 2012 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2012 SECTION I: EXECUTIVE SUMMARY 3 SECTION II: LENDING AND OTHER DEVELOPMENT ACTIVITIES 9 LENDING 9 OTHER DEVELOPMENT ACTIVITIES 14 SECTION III: INVESTMENT ACTIVITIES 16 LIQUID ASSET PORTFOLIO 16 LONG-TERM INCOME PORTFOLIO 17 SECTION IV: FUNDING ACTIVITIES 18 EQUITY 18 BORROWINGS 20 SECTION V: FINANCIAL RISK MANAGEMENT 22 GOVERNANCE STRUCTURE 22 CAPITAL ADEQUACY 24 CREDIT RISK 25 MARKET RISK 28 SECTION VI: REPORTED BASIS ANALYSIS 30 BASIS OF REPORTING 30 REPORTED BASIS BALANCE SHEET 30 REPORTED BASIS OPERATING INCOME 31 SECTION VII: FAIR VALUE ANALYSIS 32 BASIS OF REPORTING 32 FAIR VALUE BALANCE SHEET 32 NET INCOME ON A FAIR VALUE COMPREHENSIVE BASIS 33 SECTION VIII: CONTRACTUAL OBLIGATIONS 34 SECTION IX: CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES 35 SECTION X: GOVERNANCE AND CONTROL 36 GENERAL GOVERNANCE 36 AUDIT COMMITTEE 36 BUSINESS CONDUCT 37 AUDITOR INDEPENDENCE 37 INTERNAL CONTROL 37 GLOSSARY OF TERMS 39 LIST OF BOXES, TABLES, FIGURES, AND CHARTS Boxes 1 Five-Year Summary of Selected Financial Data 2 2 Treatment of Overdue Payments 26 3 Eligibility Criteria for IBRD’s Investment Securities 27 Tables 1 Lending Status at June 30, 2012 and 2011 9 2 Currently Available Loan Terms 11 3 Guarantee Exposure 14 4 Cash and Investment Assets held in Trust 15 5 Liquid Asset Portfolio and LTIP Returns and Average Balances 16 6 Subscribed Capital 18 7 Capital Subscriptions of DAC Members of OECD Countries — June 30, 2012 19 8 Short-term Borrowings 20 9 Funding Operations Indicators 21 10 Equity used in Equity-to-Loans Ratio 25 11 Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating 28 12 Condensed Balance Sheets at June 30, 2012 and 2011 30 13 Reported Basis Operating Income 31 14 Net Noninterest Expense 31 15 Condensed Statements of Income for the years ended June 30, 2012 and 2011 32 16 Summary of Fair Value Adjustment on Non-Trading Portfolios, net 33 17 Summary of Changes to AOCI (Fair Value Basis) 34 18 Contractual Obligations 34 Figures 1 Commitments and Gross Disbursements 9 2 Commitments by Region 9 3 IBRD Lending Commitments 10 4a Loans Outstanding by Loan Terms 13 4b Undisbursed Balances by Loan Terms 13 4c Loans Outstanding by Currency 13 4d Effect of Derivatives on Interest Rate Structure of the Loan Portfolio —June 30, 2012 13 5 Liquid Asset Portfolio at June 30, 2012 and 2011 16 6 Liquid Asset Portfolio Composition at June 30, 2012 and 2011 17 7 Medium- and Long-term Borrowings Raised Excluding Derivatives by Currency 21 8 Effect of Derivatives on Interest Rate Structure on Borrowings —June 30, 2012 22 9 Effect of Derivatives on Currency Composition on Borrowings —June 30, 2012 22 10 Equity-to-Loans Ratio 24 11 Top Eight Country Exposures at June 30, 2012 26 12 Six-Month LIBOR Interest Rates U.S. Dollar 32 13 U.S. Dollar Swap Curve 33 Charts 1 Finance Committee Governance Structure 23 2 IBRD’s Specific Risk Categories 25 Throughout Management’s Discussion and Analysis, terms in boldface type are defined in the Glossary of Terms on page 39. The Management Discussion and Analysis contains forward looking statements, which may be identified by such terms as “anticipates,â€? “believes,â€? “expects,â€? “intends,â€? or words of similar meaning. Such statements involve a number of assumptions and estimates that are based on current expectations, which are subject to risks and uncertainties beyond IBRD’s control. Consequently, actual results in the future could differ materially from those currently anticipated. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2012 IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 1 Box 1: Five-Year Summary of Selected Financial Data As of or for the fiscal years ended June 30 In millions of U.S. dollars, except ratio and return data which are in percentages Lending (Discussed in Section II) 2012 2011 2010 2009 2008 a Commitments $20,582 $26,737 $44,197 $ 32,911 $ 13,468 b Gross disbursements 19,777 21,879 28,855 18,565 10,490 b Net disbursements 7,798 7,994 17,230 8,345 (2,129) Reported Basis Income statement (Discussed in Section VI) c Operating income $ 783 $1,023 $ 800 $ 572 $ 2,271 Board of Governors-approved transfers (650) (513) (839) (738) (740) Net (loss) income (676) 930 (1,077) 3,114 1,491 Balance sheet (Discussed in Section VI) Total assets $338,178 $314,211 $282,137 $277,008 $231,965 Net Investment Portfolio 35,119 30,324 36,114 38,210 23,008 Net loans outstanding 134,209 130,470 118,104 103,657 97,268 d Borrowing portfolio 133,075 122,501 119,775 103,568 88,284 Total equity 36,685 39,683 36,261 38,659 39,973 Performance Ratios (Discussed in Section V) Return on equity Based on operating income 2.04% 2.77% 2.21% 1.59% 6.39% Based on net (loss) income (1.73) 2.44 (2.88) 8.35 3.97 e Equity-to-Loans ratio 26.98 28.59 29.37 34.28 37.62 Fair Value Basis Income statement (Discussed in Section VII) f Net (loss) income $ (4,679) $ 1,704 $ (870) $ (225) $ 1,135 Net (loss) income excluding Board of Governors- approved transfers (4,029) 2,217 (31) 513 1,875 Balance sheet (Discussed in Section VII) Total assets $336,167 $313,188 $281,969 $275,269 $233,089 Net Investment Portfolio 35,119 30,324 36,114 38,210 23,008 Net loans outstanding 132,198 129,447 117,936 101,918 98,392 d Borrowing portfolio 133,073 122,482 119,761 103,550 90,828 Total equity 34,676 38,679 36,107 36,938 38,553 Performance Ratios (Discussed in Section V) Return on equity Based on net (loss) income excluding Board of Governors-approved transfers (10.79)% 5.87% (0.09)% 1.46% 5.28% e Equity-to-Loans ratio 25.95 28.99 29.97 35.00 36.71 a. Commitments include guarantee commitments and guarantee facilities. b. Amounts include transactions with the International Finance Corporation (IFC), capitalized front-end fees and interest. c. Operating income is defined as Income before fair value adjustment on non-trading portfolios, net and Board of Governors- approved transfers. d. Net of derivatives. e. As defined in Table 10: Equity used in Equity-to-Loans Ratio. f. Fair value net income on a comprehensive basis comprises net income on a reported basis, additional fair value adjustment on the loan portfolio, and changes in AOCI. 2 THE WORLD BANK ANNUAL REPORT 2012 SECTION I: EXECUTIVE SUMMARY Introduction The International Bank for Reconstruction and Development (IBRD), an international organization established in 1945, is owned by its member countries. IBRD’s main goals are promoting sustainable economic development and reducing poverty in its developing member countries. It pursues these goals primarily by providing loans, guarantees and related technical assistance for projects and programs for economic reform. IBRD’s ability to intermediate funds from the international capital markets for lending to its developing member countries is an important element in achieving its development goals. IBRD’s financial objective is not to maximize profit, but to earn adequate income to ensure its financial strength and to sustain its development activities. Box 1 presents selected financial data for the last five fiscal years. The financial strength of IBRD is based on the support it has received from its shareholders and on its financial policies and practices. Shareholder support for IBRD is reflected in the capital subscriptions it has received from its members and in the record of its borrowing members in meeting their debt-service obligations to it. IBRD’s financial policies and practices have led it to build reserves, diversify its funding sources, hold a large portfolio of liquid investments, and limit a variety of risks, including credit, market and liquidity risks. Basis of Reporting IBRD prepares its financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) referred to in this document as the “reported basisâ€?. Under the reported basis, all instruments in the investment, borrowing and asset-liability management portfolios are carried at fair value with changes in fair value reported in the income statement. The loan portfolio is reported at amortized cost (with the exception of loans with embedded derivatives, which are reported at fair value). Due to this asymmetry under the reported basis, IBRD also provides its financial statements on a fair value basis. Under the fair value basis, the loan portfolio is also reported at fair value. See Section VII: Fair Value Analysis for details. When making decisions on income allocation and distribution, reported net income is adjusted to exclude certain items in order to arrive at amounts realized during the year and that are available for use (referred to as Allocable Income). For further discussion on income allocation see page 6. Certain reclassifications of prior year’s information have been made to conform to the current year’s presentation. See Note A—Summary of Significant Accounting and Related Policies in the Notes to the Financial Statements. Reported Basis Balance Sheet The following table is a condensed version of IBRD’s reported basis balance sheet. Reported Basis Condensed Balance Sheets In millions of U.S. dollars As of June 30, 2012 2011 Variance Investments and due from banks $ 39,481 $ 35,107 $ 4,374 Net loans outstanding 134,209 130,470 3,739 Receivable from derivatives 160,814 144,711 16,103 Other assets 3,674 3,923 (249) Total Assets $338,178 $314,211 $23,967 Borrowings $145,339 $135,242 $10,097 Payable for derivatives 144,837 130,429 14,408 Other liabilities 11,317 8,857 2,460 Equity 36,685 39,683 (2,998) Total Liabilities and Equity $338,178 $314,211 $23,967 During FY 2012, IBRD experienced an increase in the borrowing, investment and loan portfolios. These are discussed further on the following pages. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 3 Lending Activities Highlights (Discussed in Section II) IBRD’s principal assets are its loans to member countries. USD Bns Commitments ï‚· Since July 1, 2008 (FY 2009), in response to the global financial crisis, IBRD’s 50 commitments totaled approximately $124 billion, in comparison to $54 billion in the 40 proceeding four year period. 30 20 ï‚· For the fiscal year ended June 30, 2012 (FY 2012), loan commitments were $20,582 10 0 million, a decrease of $6,155 million compared to the fiscal year ended June 30, 2011 FY2010 FY2011 FY2012 (FY 2011). Despite the downward trend in annual commitments after peaking in the Development Policy fiscal year ended June 30, 2010 (FY 2010), demand for IBRD’s loan products still Investment Lending Program-for-Results remains strong and substantially above pre-FY 2009 levels. USD Commitment and ï‚· As of June 30, 2012, on a reported basis, IBRD’s net loan portfolio increased by Bns Disbursement Trend $3,739 million over June 30, 2011, primarily due to $7,798 million in net loan 50 disbursements made in FY 2012, partially offset by currency translation losses of 25 $3,939 million, consistent with the depreciation of the euro against the U.S. dollar in 0 FY 2012. FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 During FY 2012, the Board of Executive Directors approved the following: Commitments Gross Disbursements ï‚· A new lending instrument called Program-for-Results that links the disbursement of funds directly to the delivery of defined, verifiable results. FY 2012 commitments Net Loans Oustanding USD under this new lending instrument totaled $300 million. Bns 140 ï‚· Extending the interest rate and currency risk management features, previously offered 130 by IBRD on loans with a fixed spread, to new and existing loans with a variable 120 spread, without first converting such loans to a fixed spread. 110 100 ï‚· A new pricing structure for Development Policy Loans with a Deferred Drawdown FY2010 FY2011 FY2012 Option (DPL-DDO), with the objective of aligning the charges for undrawn balances with the actual period for which the DPL-DDO remains undrawn. Under the new pricing terms: (a) front-end fees have been reduced, (b) the renewal fee has been eliminated and (c) an annual stand-by fee on undisbursed balances has been introduced. Investment Activities Highlights (Discussed in Section III) Until April 24, 2012, IBRD managed its investments in two portfolios: a liquid asset portfolio and a Long-Term Income Portfolio (LTIP). USD Net Investment Liquid asset portfolio: The objective of the liquid asset portfolio is to ensure the Portfolio Bns availability of sufficient cash flows to meet all of IBRD’s financial commitments. This 40 35 portfolio is comprised of three sub portfolios: stable, operational and discretionary. The 30 discretionary portfolio was re-activated on November 30, 2011. 25 20 As of June 30, 2012, the liquid asset portfolio totaled $34,189 million, an increase of 15 FY2010 FY2011 FY2012 $6,035 million compared to June 30, 2011, primarily reflecting Management’s decision to Liquidity LTIP bolster liquidity. The prudential minimum liquidity level has been set at $22 billion for FY 2013, reflecting an increase of $1.0 billion from FY 2012. As of June 30, 2012, the liquid asset portfolio was 163% of the prudential minimum liquidity level in effect for FY 2012. LTIP: The objective of this portfolio was to seek enhanced returns by investing part of IBRD’s equity that was not needed to support its lending activities, in a portfolio of fixed income instruments and listed equities. Following the global financial crisis, IBRD experienced an increase in lending activity. In order to maximize resources available for its lending activities, on April 24, 2012, the Board of Executive Directors approved the liquidation of LTIP. At the time of liquidation, the market value of this portfolio was $1.4 billion, compared with the $1 billion initial investment. As of June 30, 2012, LTIP was fully liquidated. 4 THE WORLD BANK ANNUAL REPORT 2012 Funding Activities Highlights (Discussed in Section IV) IBRD’s lending and investment activities, as well as general operations, are funded by equity and proceeds from debt issuances. ï‚· Equity: IBRD’s equity is primarily comprised of paid-in capital and retained earnings. Following the Board of Governors’ approval of the General and Selective Capital Increase (GCI/SCI) resolutions in FY 2011, $15,278 million had been subscribed as of June 30, 2012, resulting in additional paid-in capital of $917 million as of that date. In addition, during FY 2012, IBRD’s Board of Governors approved an amendment to its Articles of Agreement to change the number of basic votes of each member. This was part of the reforms to enhance the voice and participation of Developing and Transition Countries (DTCs) in IBRD. This amendment, along with the SCI will result in an increase in voting power of the DTCs to 47.19%, an increase of 4.59% Borrowing Portfolio since 2008. USD Bns 150 ï‚· Borrowings: To raise funds, IBRD issues debt securities in a variety of currencies to 125 both institutional and retail investors. During FY 2012, IBRD raised medium- and long- 100 term debt of $38,406 million, an increase of $9,616 million from FY 2011, in part 75 reflecting Management’s decision to bolster IBRD’s liquidity levels. IBRD raised debt in FY 2012 in 23 different currencies. 50 FY2010 FY2011 FY2012 Summary of Reported Basis Operating Income and Income Allocation Reported Basis Operating Income (Discussed in Section VI) The primary drivers of IBRD’s reported basis operating income are interest earned (net of funding cost) on the loan and investment portfolios, income from the Reported Basis Condensed Operating Income equity duration extension strategy, net non- In millions of U.S. dollars interest expense, and the provision for losses on For the fiscal years ended June 30, 2012 2011 Variance loans and other exposures. Interest income, net of funding cost Interest margin $ 744 $ 556 $ 188 Reported basis operating income was lower in Equity-funded loans 196 196 - Equity duration extension strategy 1,095 1,139 (44) FY 2012 by $240 million as compared to FY Investments 80 112 (32) 2011, primarily as a result of the following: Net Interest Income $ 2,115 $ 2,003 $ 112 Provision for losses on loans and other Provision for losses on loans and other exposures –(charge) release (189) 45 (234) exposures (Discussed in Sections VI and IX) LTIP income 31 169 (138) Other income, net 38 39 (1) For FY 2012, there was a $189 million Net non-interest expense (1,212) (1,233) 21 Reported Basis Operating Income $ 783 $ 1,023 $ (240) provisioning charge due to the decline in the Board of Governors-approved transfers (650) (513) (137) credit quality of the loan portfolio. In contrast, Fair value adjustments on non-trading in FY 2011, there was a $45 million release of portfolios, net (809) 420 (1,229) the provision due to the improvement in the Reported Basis (Loss) Net Income $ (676) $ 930 $(1,606) credit quality of the loan portfolio. a. Other exposures include: deferred drawdown option, irrevocable commitments, exposures to member countries’ derivatives and guarantees. LTIP (Discussed in Sections III and VI) For FY 2012, the $138 million decrease in income from LTIP was primarily due to lower returns from the equity portfolio as compared to FY 2011. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 5 These factors were partially offset by: Interest income, net of funding cost (Discussed in Section VI) One component of IBRD’s reported basis operating income is interest earned (net of funding cost) on the loan and investment portfolios. During FY 2012, there was an increase in interest income (net of funding cost) of $112 USD Bns Net Interest Income million as compared to FY 2011. This was primarily due to the $188 million increase in 2.4 interest margin, reflecting higher spreads from the increased proportion of loans carrying 2.1 1.8 the new loan pricing terms approved in FY 2010 and the increase in loan volume. 1.5 1.2 The shift by IBRD’s borrowers to variable rate loans over the last several years has 0.9 0.6 increased the sensitivity of IBRD’s income to short-term interest rates. In order to reduce 0.3 0.0 this sensitivity, IBRD implemented the equity duration extension strategy in FY 2008. FY2010 FY2011 FY2012 Through this strategy, IBRD increased the duration of its equity from three months to approximately five years. This was achieved by entering into interest rate swaps with a 10- Interest Margin Equity-Funded Loans Equity Duration Extension Strategy year ladder re-pricing profile. Income from this strategy was $1,095 million in FY 2012, Investments compared with $1,139 million in FY 2011. Income Allocation Income Allocation It is Management’s practice to recommend each year In millions of U.S. dollars the allocation of net income to augment reserves and For the year ended June 30, 2012 2011 support developmental activities. Net income Reported net (loss) income $(676) $ 930 allocation decisions are made on the basis of reported Board of Governors approved transfers 650 513 net income, adjusted to exclude certain items Fair value adjustment on non-trading portfolios, net 809 (420) Reported operating income 783 1,023 discussed below, in order to arrive at amounts realized Adjustments: during the year and that are available for use. Pension 3 86 Temporary restricted income (3) (4) On August 9, 2012, the Executive Directors approved LTIP 225 (109) the allocation of $390 million out of FY 2012 net Financial remedies (10) - income to the General Reserve. In addition, the Allocable Net Income $ 998 $ 996 Executive Directors recommended to IBRD’s Board of Governors, the transfer from FY 2012 unallocated Recommended Allocations General reserve 390 401 income of $608 million to the International Surplus - 75 Development Association (IDA). Transfer to IDA 608 520 Total Allocations $ 998 $ 996 With the approval of IBRD’s Executive Directors, the following are the adjustments made to reported net income to arrive at allocable income: ï‚· Board of Governors-approved transfers are excluded as they represent distributions from Surplus or prior year’s income. ï‚· Fair value adjustment on non-trading portfolios is excluded since the income allocation is based on realized amounts. ï‚· Pension adjustment reflects the difference between IBRD’s pension contributions and the accounting expense, as well as investment income earned on the Post-Employment Benefit Plan (PEBP) assets. Management believes the allocation decision should be based on actual cash contributions to the pension plans, as IBRD’s contributions are irrevocable and the assets are held in trust. In addition, Management believes that the PEBP investment income should be excluded from the allocation decision, since this income is only available to meet the PEBP liabilities. The Board of Executive Directors approved a budget stabilization fund at the end of FY 2012 to stabilize IBRD’s contributions to the pension plans. Under the plan documents for these plans, IBRD is obligated to make contributions to the plans on the basis of funding requirements determined on an actuarial basis by the Pension Finance Committee, the governing body for the plans. While this governance process ensures that the plans are funded on an actuarially sound basis, it creates volatility in IBRD’s administrative budget. Once it has reached sufficient scale, the stabilization fund is designed to reduce such administrative budget volatility by partially funding the pension contribution in years in which the required amount is greater than a specified target. As a result, commencing in FY 2013, the pension adjustment will also include any contributions made to the stabilization fund, as well as any investment income earned on the fund. Draw downs from the fund will also be included in this adjustment. 6 THE WORLD BANK ANNUAL REPORT 2012 ï‚· Temporarily restricted income is excluded as IBRD has no discretion on the use of such funds. ï‚· Financial remedies are a new adjustment effective for FY 2012, and represent restitution and financial penalties from sanctions imposed by IBRD on debarred firms. Funds received by IBRD under this sanctions regime (including restitution payments and financial penalties) are reflected in income; however, Management believes that such funds should be excluded from the allocation decision, since this income is only available for specific purposes, such as fighting corruption and strengthening governance for the benefit of affected members. ï‚· Up until FY 2011, the LTIP adjustment reflected the difference between the actual portfolio return and a fixed draw amount, based on the long-term expected return on the portfolio. This adjustment was negative as the actual returns have been consistently higher than the fixed draw. The liquidation of the LTIP in FY 2012 resulted in a positive adjustment reflecting the balance in the LTIP reserve as of June 30, 2012. Financial Risk Management (Discussed in Section V) IBRD uses its capital adequacy as a key indicator for financial risk management. The Equity-to-Loans Ratio- Executive Directors monitor IBRD’s capital adequacy based on a variety of metrics, % Reported Basis including stress testing and the equity-to-loans ratio, within a Strategic Capital 40 Adequacy Framework. IBRD’s equity-to-loans ratio decreased during FY 2012 from 30 28.59% at June 30, 2011 to 26.98% at June 30, 2012, due to the increase in the loan 20 portfolio and decrease in usable equity. 10 IBRD is exposed to credit risk as well as various market risks, including interest, foreign FY08 FY09 FY10 FY11 FY12 exchange and liquidity. These risks are managed in a variety of ways, as discussed below: Credit Risk: IBRD is exposed to two primary types of credit risk, namely, country credit risk and commercial credit risk: ï‚· Country Credit Risk: This risk includes potential losses arising from protracted arrears on payments from borrowers on loans and other exposures. IBRD manages country credit risk through the use of individual country exposure limits. In particular, IBRD is exposed to portfolio concentration risk, which arises when a small group of borrowers account for a large share of loans outstanding. This risk is managed by restricting IBRD’s exposure to any single borrower to the lower of the Single Borrower Limit or the Equitable Access Limit. The Single Borrower Limit for FY 2013 will remain unchanged from FY 2012; $17.5 billion for India and $16.5 billion for all other qualifying borrowers. The Equitable Access Limit at June 30, 2012 was $23 billion. ï‚· Commercial Credit Risk: IBRD’s commercial credit exposure increased in FY 2012, consistent with the increase in IBRD’s liquidity levels. However, the credit quality of IBRD’s portfolio is still concentrated in the upper end of the credit spectrum, with 90% of the portfolio rated AA or above. This reflects IBRD’s continued preference for highly rated securities and counterparties across all categories of investments. Market Risk: IBRD uses various strategies to keep its exposure to market risk at a minimal level. ï‚· Interest Rate Risk: IBRD seeks to match the interest-rate sensitivity of its assets (loan and investment portfolios) and its liabilities (borrowing portfolio) with the use of derivatives such as interest rate swaps. These derivatives effectively transform IBRD’s financial assets and liabilities to variable rate instruments. The interest rate risk attributable to IBRD’s equity earnings is managed through the equity duration extension strategy. While these strategies address most of IBRD’s interest rate risk, residual exposure to other interest rate risks still remains, including refinancing risk, interest rate lag risk and debt overhang risk. ï‚· Foreign Exchange Risk: To minimize exchange rate risk in a multicurrency environment, IBRD periodically undertakes currency conversions to match its borrowing obligations in any one currency (after the use derivatives such as currency swaps) with assets in the same currency. In addition, to minimize the exchange rate sensitivity of its equity-to-loans ratio, IBRD aligns the currency composition of its loan portfolio with that of its equity through the use of derivatives. As a result, while the depreciation of the euro against the U.S. dollar during FY 2012 impacted the individual portfolios by currency, there was no material impact on the overall equity-to-loans ratio. ï‚· Liquidity Risk: IBRD continues to maintain a high level of liquidity. Presently, IBRD’s liquid assets exceed the 150% prudential minimum guideline, in keeping with Management’s decision increase liquidity. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 7 Summary of Fair Value Results (Discussed in Section VII) Fair value measures reflect short-term volatility based on the market environment. As a result, given that IBRD intends to hold its instruments to maturity (with the exception of the investment portfolio), these measures are not used for income allocation purposes. Rather, Management monitors the fair value results to assess the underlying trends in the market and the impact on its risk management policies. Under the fair value basis, in addition to the instruments in the investment, borrowing and asset-liability management portfolios, all loans are reported at fair value. Net income on a fair value comprehensive basis comprises net income on a reported basis, the additional fair value adjustment on the loan portfolio, and changes in accumulated other comprehensive income (AOCI), which are related to currency translation adjustments and changes in the value of the pension plans. The primary drivers of the fair value adjustments are the movements of the yield curves, the impact of IBRD’s own credit, and the credit quality of the loan portfolio Condensed Net Income on a Comprehensive Basis as measured by Credit Default Swap (CDS) In millions of U.S. dollars spreads after adjustments to reflect IBRD’s For the fiscal years ended June 30, 2012 2011 Variance recovery experience. Reported Basis Operating Income $ 783 $1,023 $ (240) Board of Governors-approved transfers (650) (513) (137) Fair value net loss in FY 2012 was primarily due Fair value adjustments on non-trading to the following: portfolios, net (809) 420 (1,229) Reported Basis Net (Loss) Income $ (676) $ 930 $(1,606) ï‚· The negative effect of the changes relating Fair value adjustment on loans, net (1,072) (807) (265) to AOCI of $2,931 million. The changes in Changes in accumulated other AOCI related to the fair value adjustment comprehensive income (loss) (2,931) 1,581 (4,512) on pension plans primarily due to the Fair Value Net (Loss) Income $(4,679) $1,704 $(6,383) decrease in discount rate used to determine projected benefit obligations, and the negative currency translation adjustments resulting from the depreciation of the euro against the U.S. dollar. ï‚· A net negative fair value adjustment of $1,881 million on the non-trading and loan portfolios due to the changes in interest rates and credit. For further analysis on the movement in IBRD’s fair value income, see Section VII: Fair Value Analysis. 8 THE WORLD BANK ANNUAL REPORT 2012 SECTION II: LENDING AND OTHER accounted for the largest share of commitments (See DEVELOPMENT ACTIVITIES Figure 2). Lending Figure 2: Commitments by Region All of IBRD’s loans are made to, or guaranteed by, countries that are members of IBRD. In addition, 16,000 IBRD may also make loans to IFC, an affiliated 14,000 In millions of U.S. dollars organization, without any guarantee. IBRD does not 12,000 currently sell its loans, nor does Management 10,000 believe there is a market for loans comparable to 8,000 those made by IBRD. 6,000 4,000 From its establishment through June 30, 2012, 2,000 IBRD’s approved loans, net of cancellations, totaled 0 $505,742 million to 138 borrowing member FY08 FY09 FY10 FY11 FY12 countries. A summary of cumulative lending is Africa East Asia and Pacific presented in Table 1 below. Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia Table 1: Lending Status at June 30, 2012 and 2011 In millions of U.S. dollars 2012 2011 Under IBRD’s Articles of Agreement (the Articles), Cumulative approvals a $505,742 $486,480 as applied, the total amount outstanding of loans Cumulative repayments b 307,934 296,082 made by IBRD, including participation in loans and Loans outstanding 136,325 132,459 callable guarantees, may not exceed the statutory Undisbursed amounts 62,916 64,435 lending limit. At June 30, 2012, outstanding loans a. Net of cumulative cancellations of $71,830 million, as of June 30, 2012 ($70,724 million – June 30, 2011). and callable guarantees totaled $136,325 million, Cumulative amount excludes guarantees. equal to 59% of the statutory lending limit of b. Multicurrency pool loan repayments are included at $232,209 million. exchange rates in effect on the date of original disburse- ment. All other amounts are based on U.S. dollar Lending Cycle equivalents at the time of repayment by borrowers. The process of identifying and appraising a project, Figure 1 presents the commitments and gross and approving and disbursing a loan, often extends disbursements from FY 2008 to FY 2012. During over several years. However, on numerous FY 2012, new loan commitments were $20,582 occasions, IBRD has shortened the preparation and million (including guarantees of $214 million), as approval cycle in response to emergency situations compared to $26,737 million in FY 2011 (including (such as natural disasters) and crises (such as food, guarantees of $400 million), a decrease of $6,155 fuel and global economic crises). IBRD acts million. Following the peak in FY 2010 of $44,197 prudently and pays due regard to the prospects of million in new loan commitments in response to the repayment on its loans. IBRD’s decisions to make global financial crisis, the declining commitment loans are based upon, among other things, studies of levels are in line with the expected reversion to pre- a member country's economic structure, including crisis levels of approximately $15 billion annually. assessments of its resources and ability to generate Figure 1: Commitments and Gross sufficient foreign exchange to meet debt-service Disbursements obligations. With certain exceptions1, each loan 50,000 must be approved by IBRD’s Executive Directors. In millions of U.S. dollars 40,000 Loan disbursements are subject to the fulfillment of 30,000 requirements set out in the loan agreement. The loan agreement requires borrowers to: (a) submit documentation establishing, to IBRD’s satisfaction, 20,000 10,000 that the expenditures financed with the proceeds of 0 loans are made in conformity with the applicable FY08 FY09 FY10 FY11 FY12 lending agreements and (b) maximize competition in the procurement of goods and services by using, Commitments Gross Disbursements wherever possible, international competitive bidding or, when it is not appropriate, other procedures that 1 During the five-year period from FY 2008 to FY For Adaptable Program Loans (APLs), the Executive Directors approve all first-phase APLs and delegate to Management the 2012, the Latin America and the Caribbean and approval of subsequent phases subject to agreed procedures. In Europe and Central Asia regions, combined, addition, Learning and Innovation Loans are loans of $5 million or less and are approved by Management. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 9 ensure maximum economy and efficiency. In programs, disbursement of funds upon achievement addition, under pilot programs approved by the of results, focus on strengthening institutional Executive Directors, IBRD considers the use of capacity, and providing assurance that IBRD’s borrower country procurement, and environmental financing is used appropriately and that the and social safeguard systems in selected operations environmental and social impacts of the program are where these systems are assessed by IBRD as being adequately addressed. FY 2012 commitments under equivalent to IBRD’s systems and where the this new lending instrument totaled $300 million. borrower's policies and procedures, implementation Figure 3 shows the percentage of IBRD loans practices, track record, fiduciary and safeguard risks approved for investment lending, development and capacity are considered acceptable to IBRD. policy operations and Program-for-Results over the During implementation of IBRD-supported past five years. operations, IBRD staff review progress, monitor Figure 3: IBRD Lending Commitments compliance with IBRD policies and assist in resolving any problems that may arise. The Percent Independent Evaluation Group, an IBRD unit whose 100% director reports to the Executive Directors rather than to the President, evaluates the extent to which 75% operations have met their major objectives. Lending Instruments 50% IBRD lending generally falls into one of three 25% categories: investment lending, development policy operations and Program-for-Results. IBRD’s loan terms are summarized in Table 2. 0% FY08 FY09 FY10 FY11 FY12 Investment Lending Development Policy Investment Lending Investment lending2 is generally used to finance Program-for-Results goods, works, and services in support of economic and social development projects and programs in a In FY 2012, new IBRD commitments for investment broad range of sectors. FY 2012 commitments under lending, development policy operations and this lending instrument totaled $9,949 million (FY Program-for-Results were 48% (FY 2011 – 64%), 2011: $17,213 million). 50% (FY 2011 – 36%), and 2% (FY 2011 – nil), respectively. Development Policy Operations Development policy operations are generally Currently Available Loan Products provided in exchange for commitments by IBRD does not differentiate between the credit borrowers to implement social, structural, and quality of member countries eligible for loans, with institutional reforms. FY 2012 commitments under all member countries eligible for IBRD lending this lending instrument totaled $10,334 million (FY subject to the same pricing. As of June 30, 2012, 79 2011: $9,524 million). member countries were eligible to borrow from Program-for-Results IBRD. Table 2 summarizes the currently available loan terms as of June 30, 2012. On January 24, 2012, the Board of Executive IBRD Flexible Loans Directors approved Program-for-Results, a new lending instrument that links the disbursement of IBRD Flexible Loans (IFL) allow borrowers to funds directly to the delivery of defined, verifiable customize the repayment terms (i.e., grace period, results. Through Program-for-Results, IBRD will repayment period and amortization profile) to meet help member countries improve the design and their debt management or project needs, and also implementation of their development programs and include options to manage the currency and/or increase accountability. The new instrument's key interest rate risk over the life of the loan. Final features include: financing and support for borrower maturity of an IFL can be up to 30 years, provided that its weighted average maturity does not exceed 2 18 years. Investment lending loans include enclave loans which are made in exceptional cases to IDA qualifying member countries (who are not eligible for IBRD financing) for projects generating foreign exchange and projects with appropriate foreign exchange-related credit enhancements. These loans carry the same terms and conditions as IBRD loans. As of June 30, 2012 and June 30, 2011, IBRD’s enclave loans totaled $17 million and $23 million, respectively. 10 THE WORLD BANK ANNUAL REPORT 2012 Table 2: Currently Available Loan Terms As of June 30, 2012 Basis points, unless otherwise noted IBRD Flexible Loan (IFL) Special Development Fixed-spread Terms Variable-spread Terms Policy Loans (SDPL) Final maturity 30 years 30 years 5 to 10 years Maximum weighted average maturity 18 years 18 years 7.5 years Six-month floating rate Six-month floating rate Six-month floating rate Reference market rate index index index Spread a Contractual lending spread 50 50 200 b b Maturity premium 0-20 0-20 – c Market risk premium 10-15 – – Actual funding spread to Projected funding floating rate index of Funding cost margin spread to six-month IBRD borrowings in the – d floating rate index previous six-month period Charges e Front-end fee 25 25 100 Late service charge on principal payments received after 30 days of due date f 50 50 - Development Policy Loan Catastrophe Risk Deferred Drawdown Option Deferred Drawdown Option Reference market rate Six-month floating rate index Six-month floating rate index Contractual lending spread IFL variable or fixed-spread in effect at the time of withdrawal Front-end fee 25 50 Renewal fee – 25 Stand-by fee 50 – Pricing for IBRD Partial Risk, Partial Credit, and Policy-Based Guarantees Front-end fee 25 g Guarantee fee 50-70 a. Minimum of 200 basis points. b. A maturity premium of nil is charged for loans with an average maturity less than 12 years, 10 basis points is charged for loans with an average maturity greater than 12 years and up to 15 years, and 20 basis points for loans with an average maturity greater than 15 years. c. A market risk premium of 10 basis points is charged for loans with an average maturity of up to15 years, and 15 basis points for loans with an average maturity greater than 15 years. d. Projected funding spread to floating rate index (e.g. LIBOR) is based on the average repayment maturity of the loan. e. There are no waivers on interest and front-end fee under the current pricing terms. f. See Box 2 in Section V for treatment of overdue payments. g. A guarantee fee of 50 basis points is charged for guarantees with an average maturity less than 12 years, 60 basis points for guarantees with an average maturity of greater than 12 years and up to15 years, and 70 basis points for guarantees with an average maturity greater than 15 years. The IFL has the following two basic types of loan premium, has declined from 90% in FY 2010 to terms: variable-spread terms and fixed-spread terms. 47% in FY 2012. The spread on IBRD’s IFLs has four components: IFLs may be denominated in the currency or contractual lending spread, a maturity premium, a currencies chosen by the borrower provided that market risk premium, and a funding cost margin. IBRD can efficiently intermediate in that currency. The contractual lending spread and maturity IFLs with variable-spread terms have a variable- premium, which apply to all IFLs, are subject to the spread over a floating rate index (e.g. LIBOR) that Executive Directors' annual pricing review. For is adjusted every six months and IFLs with fixed- fixed-spread IFLs, the projected funding cost and the spread terms have a fixed-spread over a floating rate market risk premium are reviewed and set by index (e.g. LIBOR) that is fixed for the life of the Management based on market conditions and are loan. communicated quarterly to the Executive Directors. On March 12, 2012, the Executive Directors The maturity premium was introduced as part of the approved a proposal to extend the interest rate and loan maturity reform at the end of FY 2010 and is currency risk management features previously based on the cost of the incremental capital needed offered by IBRD on loans with a fixed spread, to for the longer maturities. Since its introduction, the new and existing loans with a variable spread, share of the longest average maturities (15 -18 without first having to convert such loans to a fixed years), which accounted for most of the new loan spread. approvals prior to the introduction of the maturity IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 11 Loans with a Deferred Drawdown Option million, aimed at increasing the usability of local The Development Policy Loan Deferred Drawdown currency paid-in capital. Under this agreement, Option (DPL DDO) provides the borrower with the IBRD lends local currencies of its member flexibility to rapidly fund its financing requirements, countries, funded from paid-in capital, to IFC. These for example, following a shortfall in resources due currencies are subsequently used by IFC to finance to adverse economic events such as downturns in projects in those member countries. Loan economic growth or unfavorable changes in commitments under this facility are subject to the commodity prices or terms of trade. The Catastrophe consent of the respective IBRD member countries Risk DDO (CAT DDO) enables the borrower to whose currency is involved. At June 30, 2012, loans access an immediate source of funding to respond outstanding under this facility were $42 million. rapidly in the aftermath of a natural disaster. Under IBRD Discontinued Loan Products the DPL DDO, the borrower may defer IBRD no longer offers the following loan products: disbursement for up to three years, renewable for an (i) Pre-pool Fixed Rate loans, (ii) Fixed Rate additional three years. The CAT DDO has a Currency Pool Loans, (iii) B-loans, (iv) Variable revolving feature; the three-year drawdown period Rate Currency Pool Loans (v) Single Currency Pool may be renewed up to four times, for a total loans, (vi) Fixed Rate Single Currency Loans, (vii) maximum drawdown period of 15 years. Variable-Spread Loans, and (viii) Fixed-Spread On February 3, 2012, the Board of Executive Loans. Directors approved the following changes to DPL- Waivers DDO fees with the objective of aligning the charge for undrawn balances with the undrawn period: (a) Waivers applicable to the previously available loan reduction of the front-end fee from 75 to 25 basis products include a portion of interest on loans and a points, (b) introduction of an annual stand-by fee of portion of the commitment charge on undisbursed 50 basis points on undisbursed balances to accrue balances on all eligible loans, and are approved from the date of effectiveness of the loan, and (c) annually by the Executive Directors of IBRD. For elimination of the 50 basis points renewal fee. These FY 2012, the approved waiver rates were: 5 basis changes are applicable to all new DPL DDOs points on interest charges on loans for which the approved on or after February 3, 2012. invitation to negotiate was issued prior to July 31, The terms of DPLs with regular terms and the CAT 1998 and 25 basis points on loans issued thereafter, DDOs, remained unchanged. See Table 2 for but signed prior to the effectiveness of loan pricing currently available loan terms as of June 30, 2012. terms introduced in September 2007; and 50 basis points on commitment charges. For FY 2013, the As of June 30, 2012, the amount of DDOs disbursed Executive Directors have approved the same waiver and outstanding totaled $3,265 million ($2,732 rates as FY 2012 for all eligible borrowers with million – June 30, 2011). eligible loans. Special Development Policy Loans (SDPL) Risk management SDPLs support structural and social reforms by For IBRD’s outstanding loans as of June 30, 2012, credit worthy borrowers that are approaching a 80% carried variable interest rates and 20% carried possible global financial crisis, or are already in a fixed interest rates. IBRD uses derivatives to crisis and have extraordinary and urgent external manage the re-pricing risks between loans and financial needs. Borrowers seeking SDPLs must borrowings. After considering the effects of these have a disbursing International Monetary Fund- derivatives, virtually the entire loan portfolio carried supported program in place, and be seeking IBRD variable interest rates, as illustrated by Figure 4d. lending as part of a coordinated international support Other risk management techniques are discussed in package. Section V, Financial Risk Management. In FY 2012, IBRD made no new SDPL Figure 4 presents a breakdown of IBRD’s loan commitments, compared to one SDPL committed in portfolio by loan product, undisbursed balances, FY 2011 for $142 million. currency composition, and interest rate structure. Local Currency Loan Facility Agreement with IFC See the Notes to the Financial Statements-Note D- Loans and Other Exposures for more information. IBRD has a Local Currency Loan Facility Agreement with IFC, which is capped at $300 12 THE WORLD BANK ANNUAL REPORT 2012 Figure 4: Loan Portfolio In millions of U.S. dollars Figure 4a: Loans Outstanding by Loan Terms June 30, 2012 June 30, 2011 Variable-Spread Variable-Spread Termsa Termsa 56% 53% Other Terms Other Terms 3% 5% Fixed-Spread Termsb Fixed-Spread 41% Termsb 42% Total loans outstanding: $136,325 Total loans outstanding: $132,459 Figure 4b: Undisbursed Balances by Loan Terms June 30, 2012 June 30, 2011 Other Terms Variableâ€?Spread  *% Variable-Spread Termsa Termsa 80% 80% Fixedâ€? Spread  Fixed-Spread Termsb Termsb 20% 20% Total undisbursed balances: $62,916 Total undisbursed balances: $64,435 Figure 4c: Loans Outstanding by Currency June 30, 2012 June 30, 2011 Euro Euro U.S. Dollars 20% 19% 79% U.S. Dollars 77% Japanese Yen Japanese Yen 1% Other 1% Other 1% 2% Figure 4d: Effect of Derivatives on Interest Rate Structure of the Loan Portfolio—June 30, 2012 Before Derivatives After Derivatives Fixed 2% Fixed 20% Variable Variable 98% 80% a. Includes IFL variable-spread loans. b. Includes IFL fixed-spread loans. * Denotes percentage less than 0.5% IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 13 Other Development Activities Guarantees IBRD offers derivatives, guarantees, and/or grants to IBRD offers guarantees on loans from private its borrowing member countries, as well as affiliated investors for projects in countries eligible to borrow and non-affiliated organizations, to help meet their from IBRD. These guarantees can also be offered on development needs or to carry out their development securities issued by entities eligible for IBRD loans, mandates. IBRD also provides technical assistance, and in exceptional cases offered in countries only advisory and other services to support poverty eligible to borrow from IDA. IBRD applies the same reduction. The section below discusses these country creditworthiness and project evaluation products in more detail. criteria to guarantees as it applies to loans. Each Derivatives guarantee requires the counter-guarantee of the member government. Table 2 summarizes the IBRD offers derivative products to its borrowing guarantee pricing terms. member countries, as well as affiliated and non- affiliated organizations as part of its financial IBRD generally provides the following types of intermediation services. guarantees: Borrowers: IBRD is able to respond to borrowers' Partial risk guarantees: These cover private lenders needs for access to better risk management tools, by against the risk of a public entity or a government offering them derivative instruments; these include failing to perform its obligations with respect to a currency and interest rate swaps, and interest rate private project. caps and collars. IBRD passes through its market Partial credit guarantees: These cover private cost of the instrument to the borrower, and charges a lenders against nonpayment of the loans provided transaction fee comparable to the conversion fee for public investments. Such guarantees allow charged on the fixed-spread loans. These public sector projects to raise financing, extend instruments may be executed either under a master maturities and lower spreads. derivatives agreement, which substantially conforms to industry standards, or under individually Policy-based guarantees: These extend the partial negotiated agreements. credit guarantee instrument beyond public investment projects to sovereign borrowings from In addition, IBRD also offers its borrowers products private foreign creditors, in support of agreed to convert their IBRD loans into their domestic structural, institutional, and social policies and currencies to reduce their foreign currency exposure reforms. with respect to projects or programs that do not generate foreign currency revenues. These local Enclave guarantees: These partial risk guarantees currency loans carry fixed-spread terms. The balance are offered in exceptional cases to IDA qualifying of such loans outstanding at June 30, 2012 was member countries (who are not also eligible for $1,709 million ($1,794 million – June 30, 2011). IBRD financing) for projects generating foreign exchange and projects with appropriate foreign Affiliated Organizations: To assist IDA with its exchange-related credit enhancements. Fees and asset/liability management strategy, IBRD executed charges pertaining to enclave guarantees are higher a number of currency forward transactions with than those charged for non-enclave guarantees. IDA. Concurrently, IBRD entered into offsetting transactions with market counterparties. IBRD Other Instruments: As discussed in Other Activities charges an intermediation fee for these currency below, IBRD has also committed to pay any donor forward transactions. shortfalls associated with the Advance Market Commitment (AMC) for Vaccines against Non-affiliated Organizations: IBRD and the Pneumococcal Diseases. International Finance Facility for Immunisation (IFFIm), a non-affiliated organization, with whom IBRD’s exposure at June 30, 2012 on its guarantees IBRD has a master derivatives agreement and a (measured by discounting each guaranteed amount treasury management contract, have entered into a from its first call date) is detailed in Table 3. number of currency swaps and interest rate swaps. Table 3: Guarantee Exposure Concurrently, IBRD entered into offsetting swap In millions of U.S. dollars transactions with market counterparties. IBRD At June 30, 2012 2011 charges an intermediation fee for these derivative a Partial risk $ 116 $ 213 transactions. Partial credit 179 141 Policy based 470 359 Further details on derivatives for clients are Other instruments 880 986 provided in the Notes to Financial Statements- Note Total $1,645 $1,699 F-Derivative Instruments. a. Includes enclave guarantees totaling $8 million (June 30, 2011: $12 million). 14 THE WORLD BANK ANNUAL REPORT 2012 For additional information see the Notes to Financial Table 4 summarizes the cash and investment assets Statements-Note D-Loans and Other Exposures. held in trust by IBRD as administrator and trustee, of which $155 million ($204 million—June 30, Grants 2011), relates to IBRD’s contributions to these trust IBRD also supports development activities by funds. making grants to various recipients through the During the fiscal year ended June 30, 2012, IBRD, Development Grant Facility and through as an executing agency, disbursed $341 million mechanisms such as Board of Governors-approved ($300 million—June 30, 2011) of trust fund program transfers. funds. For additional information, see the Notes to Other Activities Financial Statements-Note I-Management of External Funds and Other Services. In addition to its financial operations, IBRD is also involved in the following other activities: Investment Management: IBRD offers investment management services to several types of external Consultation: IBRD provides technical assistance to institutions, including central banks of member its member countries, both in connection with, and countries. One objective of providing the services to independent of, lending operations. There is a central banks is to assist them in developing growing demand from borrowers for strategic portfolio management skills. Under these advice, knowledge transfer, and capacity building. arrangements, IBRD is responsible for managing Such assistance includes assigning qualified investment assets on behalf of these institutions, and professionals to survey developmental opportunities in return receives a fee based on the average value of in member countries, analyzing their fiscal, the portfolios. economic and developmental environment, assisting member countries in devising coordinated At June 30, 2012, the assets managed under these development programs, appraising projects suitable agreements had a value of $23,968 million ($21,324 for investment, and assisting member countries in million—June 30, 2011). These funds are not improving their asset and liability management included in the assets of IBRD. For additional techniques. information, see the Notes to Financial Statements- Note I-Management of External Funds and Other Research and Training: To assist its developing Services. member countries, IBRD, through the World Bank Institute and its partners, provides courses and other Externally Financed Outputs (EFOs): IBRD offers training activities related to economic policy donors the ability to contribute to IBRD’s projects development and administration for governments and programs. Contributions received must be and organizations that work closely with IBRD. utilized for the purposes specified by the donors and are therefore considered restricted until utilized for Trust Fund Administration: IBRD, alone or jointly the donor-specified purposes. with one or more of its affiliated organizations, administers on behalf of donors, including members, Global Public Goods: AMC is a multi-lateral their agencies and other entities, funds restricted for initiative to accelerate the creation of a market and specific uses in accordance with administration sustainable production capacity for pneumococcal agreements with donors. These funds are held in vaccines for developing countries. IBRD provides a trust and with the exception of third party financial platform for the AMC by holding donor- contributions made to IBRD-executed trust funds pledged assets as an intermediary agent and passing which have not been disbursed, are not included on them on to the Global Alliance for Vaccines and IBRD’s balance sheet. Immunization when the conditions of the AMC are Table 4: Cash and Investment Assets held in Trust met. In addition, should a donor fail to pay or delay In millions of U.S dollars in paying any amounts coming due, IBRD has Total fiduciary assets At June 30, committed to paying from its own funds any 2012 2011 amounts due and payable by the donor, to the extent IBRD-executed $ 177 $ 197 there is a shortfall in total donor funds received. For Jointly executed with affiliated organizations 533 548 further details on AMC, see the Notes to Financial Recipient-executed 3,047 2,659 Statements-Note I-Management of External Funds Financial intermediary funds 14,473 13,812 and Other Services. a Execution not yet assigned 3,521 3,206 Total $21,751 $20,422 a. These represent assets held in trust for which the agreement as to the type of execution is to be finalized jointly by the donors and IBRD. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 15 SECTION III: INVESTMENT ACTIVITIES activities are conducted in accordance with a more detailed set of Investment Guidelines. The Up until April 24, 2012, IBRD managed its Investment Guidelines are approved by the Chief investments in two portfolios: a liquid asset portfolio Financial Officer (CFO) and implemented by the and LTIP, both of which are designated as trading Treasurer. These Investment Guidelines set out portfolios. LTIP was fully liquidated as of June 30, detailed trading and operational rules, including 2012. Box 3 in Section V - Financial Risk providing criteria for eligible instruments for Management, summarizes the eligibility criteria for investment, establishing risk parameters relative to IBRD’s investment securities. benchmarks; such as an overall stop-loss limit and The financial returns and average balances of duration deviation, specifying concentration limits IBRD’s investment portfolios in FY 2012 compared on counterparties and instrument classes, as well as with FY 2011 are presented in Table 5. The returns establishing clear lines of responsibility for risk of IBRD’s overall portfolio are lower than FY 2011, monitoring and compliance. primarily due to the underperformance of the listed IBRD’s liquid assets are held principally in highly- equities in the LTIP portfolio. rated fixed income securities. These securities Liquid Asset Portfolio include government and agency obligations, time deposits and other unconditional obligations of The objective of the liquid asset portfolio is to banks and financial institutions. Additionally, IBRD protect the principal amount of these investments holds currency and interest rate swaps (including and in doing so ensuring the availability of sufficient currency forward contracts), asset-backed cash flows to meet all of IBRD’s financial securities (including mortgage-backed securities), commitments. In addition, IBRD seeks to achieve a and futures, options and swaption contracts. IBRD reasonable return on the liquid asset portfolio using only invests in exchange-traded options and futures. prudent asset and risk management techniques. The Figure 5 presents the liquid asset portfolio holdings General Investment Authorization for IBRD at the end of FY 2012 and FY 2011. approved by the Executive Directors provides the basic authority under which the liquid assets of IBRD can be invested. Further, all investment Table 5: Liquid Asset Portfolio and LTIP Returns and Average Balances In millions of U.S. dollars Average Balances Financial Returns (%) FY 2012 FY 2011 FY 2012 FY 2011 a IBRD overall portfolio $35,571 $30,260 0.57% 1.18% Liquid asset portfolio Stable 20,850 20,964 0.60 0.78 Operational 9,758 8,009 0.18 0.29 Discretionary 3,770 – 0.72 – LTIP 1,193 1,287 2.83 13.15 a. Excludes PEBP and AMC holdings of $604 million (FY 2011: $531 million) and $326 million (FY 2011: 291 million), respectively. Figure 5: Liquid Asset Portfolio at June 30, 2012 and 2011 In millions of U.S. dollars June 30, 2012 June 30, 2011 Time Time Deposits Asset- Deposits backed Asset- 35% 44% Securities backed 8% Securities 13% Government Government and agency and agency obligations obligations 57% 43% Total: $34,189 Total: $28,154 16 THE WORLD BANK ANNUAL REPORT 2012 Under IBRD’s liquidity management guidelines, 2011, excluding investment assets associated with aggregate liquid asset holdings are kept at or above a PEBP and AMC. specified prudential minimum in order to At June 30, 2012, the aggregate size of IBRD’s safeguard against cash flow interruptions. This liquid asset portfolio was $34,189 million, reflecting minimum is equal to the highest consecutive six an increase of $6,035 million from June 30, 2011. months of projected debt service obligations plus This increase reflects management’s decision to one-half of projected net loan disbursements on increase IBRD’s liquidity levels. approved loans (if positive) for the relevant fiscal year. The FY 2013 prudential minimum liquidity IBRD’s liquid asset portfolio is largely composed of level has been set at $22 billion, reflecting an assets denominated in or hedged into U.S. dollars, increase of $1 billion from FY 2012. In general, the with net exposure to short-term interest rates. The size of the liquid asset portfolio should not exceed debt funding these liquid assets has similar currency 150% of the prudential minimum liquidity level. and duration profiles. This is a direct result of From time to time, IBRD may, however, hold liquid IBRD’s exchange rate and interest rate risk assets over the specified maximum level to provide management policies, discussed further in Section flexibility in timing its borrowing transactions and to V-Financial Risk Management, combined with meet working capital needs. At June 30, 2012, the appropriate investment guidelines. In addition to liquid asset portfolio was 163% of the prudential monitoring gross investment returns compared to minimum liquidity level. their benchmarks, IBRD also monitors overall investment earnings net of funding costs, discussed As of June 30, 2012, the liquid assets were held in further in Section VI-Reported Basis Analysis. three sub-portfolios: stable, operational and discretionary, each with different risk profiles and Long-Term Income Portfolio (LTIP) performance guidelines. The discretionary portfolio was re-activated on November 30, 2011. The LTIP program was adopted prior to the global financial crisis in November 2008 with the objective Stable Portfolio is principally an investment of seeking enhanced returns by investing part of portfolio holding the prudential minimum level of IBRD’s equity that was not needed to support its liquidity, which is set at the beginning of each fiscal lending activities, in a portfolio of fixed income year. instruments and listed equities. While the original program was approved for an investment of up to $3 Operational Portfolio provides working capital for billion, the program was capped at $1 billion at the IBRD’s day-to-day cash flow requirements. end-FY 2009, following the onset of the global Discretionary Portfolio provides flexibility for the financial crisis, which resulted in a surge in IBRD’s execution of IBRD’s borrowing program and can be lending volumes. In order to maximize IBRD’s used to take advantage of attractive market lending capacity to borrowing member countries, on opportunities. April 24, 2012, the Board of Executive Directors approved the liquidation of LTIP. Figure 6 represents IBRD’s liquid asset portfolio size and structure at the end of FY 2012 and FY Figure 6: Liquid Asset Portfolio Composition at June 30, 2012 and 2011 In millions of U.S. dollars June 30, 2012 June 30, 2011 Stable Portf olio 61% Stable Portf olio 75% Operational Discretionary Portfolio 22% 25% Operational Portf olio 17% Total: $34,189 Total: $28,154 IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 17 SECTION IV: FUNDING ACTIVITIES sum of the voting power of all members. This amendment was part of the reforms to enhance the IBRD’s lending and investment activities, as well as voice and participation of developing countries and general operations, are funded by equity and countries in transition in IBRD. This amendment, as proceeds from debt issuance. well as the SCI, will result in a shift of the voting Equity: IBRD’s equity is primarily comprised of power to DTCs to 47.19%, an increase of 4.59% paid-in capital and retained earnings. since FY 2008. The amendment became effective on June 27, 2012. Borrowings: IBRD issues securities to institutional and retail investors around the world, both through As part of these reforms, 16 members are entitled to global offerings and by way of bond issues designed subscribe to additional shares. These members have to meet the needs of specific markets or types of until December 27, 2012 to subscribe to the investors. These funds are then used for lending to additional shares. member countries. Subscribed Capital Equity At June 30, 2012, the authorized capital of IBRD was $278,377 million, of which $205,394 million IBRD’s equity base plays a critical role in securing had been subscribed. Of the subscribed capital, its financial objectives. It enables IBRD to absorb $12,418 million had been paid-in with the remaining risk through the use of its own resources and thereby $192,976 million as the uncalled portion of protects shareholders from a possible call on callable subscriptions. See Table 6. capital. IBRD’s capital adequacy is judged on the basis of its ability to absorb potential risks and Table 6: Subscribed Capital support normal loan growth. In millions of U.S. dollars FY 2012 FY 2011 In FY 2011, in order to enhance IBRD’s lending Originally paid in national capacity following its response to the global currencies Of which: economic crisis, the Board of Governors approved Converted to U.S. dollars $ 3,357 $ 2,551 resolutions increasing IBRD’s authorized capital. Remaining in national Specifically; a General Capital Increase (GCI), a currencies 7,819 7,997 Selective Capital Increase (SCI), and additional Total 11,176 10,548 shares to be held for new members. Under the terms Originally paid in U.S dollars 1,242 1,172 of the resolutions, subscribed capital is expected to Total paid-in capital 12,418 11,720 increase by $86.2 billion, of which $5.1 billion will Uncalled portion of subscriptions 192,976 182,012 be paid-in over a five year period. Total subscribed capital $205,394 $193,732 The $86.2 billion expected capital increase comprises the following: The terms of payment of IBRD’s capital and the 1. A general capital increase of $58.4 billion, of restrictions on its use that are derived from the which $3.5 billion will be paid-in – $698 Articles and from resolutions of IBRD’s Board of million has been received as of June 30, 2012. Governors are as follows: 2. A selective capital increase of $27.8 billion, of Paid-in Capital which $1.6 billion will be paid-in – $219 All of the $1,242 million of IBRD’s capital which million has been received as of June 30, 2012. was originally paid in gold or U.S. dollars may be The above capital increases, including additional freely used by IBRD in its operations. shares to be held for new members, increased Of the $3,357 million of IBRD’s capital, which was IBRD’s authorized capital to $278.4 billion. Total originally paid in national currency and capital subscriptions received and paid-in as of June subsequently converted into U.S. dollars or U.S. 30, 2012 relating to these increases were $15,278 dollar denominated notes, $3,139 million was million and $917 million, respectively. (See the converted into cash and is freely available for use in Notes to the Financial Statements-Note B-Capital IBRD’s operations, and $218 million was converted Stock, Maintenance of Value and Membership). to U.S. denominated notes, which will become On March 26, 2012, the Board of Governors freely available upon encashment. approved an amendment to IBRD’s Articles to The remainder of IBRD’s paid in capital, $7,819 change the basic votes of each member. Voting million, is in the national currencies of the power for each member will now be determined as subscribing members. Except for amounts used to follows: one vote for each share held in IBRD plus fund administrative expenses and national currency their share of basic votes. Basic votes are calculated expenses, paid in capital in national currency is as the equal distribution of 5.55% of the aggregate subject to maintenance of value obligations. If the 18 THE WORLD BANK ANNUAL REPORT 2012 national currency is used to fund national currency be required on any such call or calls to pay more lending, investments or swapped into another than the unpaid balance of its capital subscription. currency for investment or lending purposes, the At June 30, 2012, $116,249 million (60%) of the maintenance of value obligation is deferred until uncalled capital was callable from the member such time as the national currency no longer funds countries that are also members of the Development these activities. At June 30, 2012, $1,496 million Assistance Committee (DAC) of the Organization had been used to fund national currency for Economic Cooperation and Development administrative expenses and $6,086 million was (OECD). Table 7 sets out the capital subscriptions being used in IBRD’s lending and investment of those countries and the callable amounts. operations, including $42 million under the local currency loan facility agreement with IFC. The Table 7: Capital Subscriptions of DAC Members of remaining $237 million is subject to restriction and OECD Countries — June 30, 2012 In millions of U.S. dollars therefore, not available for lending or investment Total Capital Uncalled Portion operations. Member Country a Subscription of Subscription Under the current Board of Governors resolutions United States $ 33,921 $ 31,805 relating to the General and Selective Capital Japan 19,958 18,736 Increases, each subscription to shares is conditioned Germany 9,946 9,331 upon the free and immediate use of national France 8,890 8,339 United Kingdom 8,890 8,320 currency paid-in capital. IBRD will accomplish this Canada 6,359 5,966 by converting members' paid-in capital in national Italy 5,404 5,069 currencies into U.S. dollars. By subscribing to Netherlands 4,283 4,018 shares, members will provide their irrevocable Belgium 3,496 3,281 Spain 3,809 3,576 consent for the free and immediate use of their Switzerland 3,453 3,241 national currencies. Australia 3,168 2,973 Denmark 2,147 2,018 Uncalled portion of subscriptions Korea, Republic of 1,908 1,793 As of June 30, 2012, total uncalled portion of Sweden 1,806 1,696 Austria 1,423 1,337 subscriptions was $192,976 million. Of this amount, Norway 1,377 1,294 $164,315 million may be called only when required Finland 1,105 1,038 to meet obligations of IBRD for funds borrowed or New Zealand 873 821 on loans guaranteed by it. This amount is thus not Portugal 659 620 Ireland 636 599 available for use by IBRD in making loans. Payment Greece 203 189 on any such call may be made, at the option of the Luxembourg 199 189 particular member, either in gold, in U.S. dollars or Total $123,913 $116,249 in the currency required to discharge the obligations of IBRD for which the call is made. a. See details regarding the capital subscriptions of all members of IBRD at June 30, 2012 in the Financial The remaining uncalled portion of subscriptions of Statements-Statement of Subscriptions to Capital $28,661 million is to be called only when required to Stock and Voting Power. meet obligations for funds borrowed or on loans The United States is IBRD’s largest shareholder. guaranteed by it, pursuant to resolutions of Board of Under the Bretton Woods Agreements Act and other Governors (though such conditions are not required U.S. legislation, the Secretary of the U.S. Treasury by the Articles). Of this amount, 10% would be is permitted to pay up to $7,663 million of the payable in gold or U.S. dollars and 90% in the uncalled portion of the subscription of the United national currencies of the subscribing members. States, if it were called by IBRD, without any While these resolutions are not legally binding on requirement of further congressional action. The future Boards of Governors, they do record an balance of the uncalled portion of the U.S. understanding among members that this amount will subscription, $24,142 million, has been authorized not be called for use by IBRD in its lending by the U.S. Congress but not appropriated. Further activities or for administrative purposes. action by the U.S. Congress would be required to No call has ever been made on IBRD’s capital. Any enable the Secretary of the Treasury to pay any calls on capital are required to be uniform, but the portion of this balance. The General Counsel of the obligations of the members of IBRD to make U.S. Treasury has rendered an opinion that the entire payment on such calls are independent of each other. uncalled portion of the U.S. subscription is an If the amount received on a call is insufficient to obligation backed by the full faith and credit of the meet the obligations of IBRD for which the call is United States, notwithstanding that congressional made, IBRD has the right and is bound to make appropriations have not been obtained with respect further calls until the amounts received are sufficient to certain portions of the subscription. For a further to meet such obligations. However, no member may discussion of capital stock, restricted currencies, IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 19 maintenance of value and membership refer to the Short-term borrowings Notes to Financial Statements-Note A-Summary of IBRD’s short-term borrowings consist primarily of Significant Accounting and Related Policies and discount notes issued in U.S. dollars, as shown in Note B—Capital Stock, Maintenance of Value and Table 8. Membership. Discount notes: As of June 30, 2012, discount notes Borrowings totaled $4,908 million, a decrease of $4,706 million Funding from June 30, 2011; this decrease was primarily due to the higher amount of issuance of medium- and IBRD raises funds by offering its securities to long-term borrowings. The average daily balance institutional and retail investors around the world. for the year was $9,814 million, with average Under its Articles, as applied, IBRD may borrow maturities of less than one year. only with the approval of the member in whose markets the funds are raised and the member in Securities lent or sold under repurchase whose currency the borrowing is denominated, and agreements: These are secured predominantly by only if each such member agrees that the proceeds high quality securities collateral, including may be exchanged for the currency of any other government issued debt. As of June 30, 2012, IBRD member without restriction. IBRD issues short-term did not have any securities that where lent or sold debt (debt issued with a maturity of one year or under repurchase agreements. less), and medium- and long-term debt (debt issued Other short-term borrowings: These instruments with a maturity of more than one year). The average consist of borrowings with maturities of one year or maturity to first call date of the medium- and long less. As of June 30, 2012, these borrowings totaled term debt issued during FY 2012 was approximately $1,601 million, an increase of $1,032 million over 4 years. In FY 2012, IBRD raised debt in 23 June 30, 2011. The average and year-end balances different currencies. have increased over FY 2011 mainly due to changes in investor demand and opportunities in newly developing currency markets. Table 8: Short-term Borrowings In millions of U.S. dollars, except rates in percentages June 30, 2012 June 30, 2011 June 30, 2010 a Discount notes Balance at year-end $ 4,908 $ 9,614 $18,183 Average daily balance during the fiscal year $ 9,814 $11,836 $11,426 Maximum month-end balance $14,495 $16,140 $18,355 Weighted-average rate at the end of fiscal year 0.10% 0.12% 0.34% Weighted-average rate during the fiscal year 0.12% 0.28% 0.24% b Securities lent or sold under repurchase agreements Balance at year-end $ – $ 232 $ 164 Average monthly balance during the fiscal year $ 240 $ 198 $ 236 Maximum month-end balance $ 790 $ 232 $ 564 Weighted-average rate at the end of fiscal year –% 0.60% 0.17% Weighted-average rate during the fiscal year 0.01% 0.48% 0.22% a Other short-term borrowings Balance at year-end $ 1,601 $ 569 $ 793 Average daily balance during the fiscal year $ 1,428 $ 836 $ 2,515 Maximum month-end balance $ 1,601 $ 924 $ 3,905 Weighted-average rate at the end of fiscal year 0.44% 0.22% 0.41% Weighted-average rate during the fiscal year 0.31% 0.32% 0.66% a. After swaps b. Excludes PEBP liabilities. 20 THE WORLD BANK ANNUAL REPORT 2012 Medium- and Long-term borrowings IBRD strategically repurchases or calls its debt to In FY 2012, medium- and long-term debt raised reduce the cost of borrowings, reduce exposure to directly in the capital markets by IBRD amounted to re-funding needs in a particular year, or to meet $38,406 million compared to $28,790 million in FY other operational or strategic needs. During FY 2011, as described below in Table 9. This increase 2012, IBRD repurchased or called $7,394 million of reflects Management’s decision to bolster IBRD’s its outstanding borrowings (FY 2011: $6,644 liquidity levels. million) for a realized gain of $67 million (FY 2011: $34 million). Table 9: Funding Operations Indicators FY 2012 FY 2011 Use of Derivatives Medium- and long-term funding raised (USD million) $38,406 $28,790 Generally, new medium- and long-term funding is a Average maturity (years) 3.85 3.87 initially swapped into variable-rate U.S. dollars, Number of transactions 289 329 with conversion to other currencies being carried out a. Average maturity to first call date. subsequently, in accordance with loan funding Medium- and long-term funding raised, excluding requirements, as illustrated by Figure 8. In derivatives, by currency for FY 2012 and FY 2011 is addition, IBRD uses derivatives to manage the re- shown in Figure 7. pricing risks between loans and borrowings. After considering the effects of these derivatives, virtually Figure 7: Medium- and Long-term Borrowings the entire loan and borrowing portfolios are carried Raised Excluding Derivatives by Currency FY 2012 at variable interest rates. Figure 9 illustrates the effect of derivatives on the currency composition of IBRD’s borrowings South African Others Rand 3% Euro 12% portfolio at June 30, 2012. 3% Japanese The weighted average cost of IBRD’s borrowing Yen 5% Pounds US Dollar portfolio, excluding the effects of derivatives, was 63% Sterling 5% 2.98% and 3.44% as of June 30, 2012 and June 30, Australian 2011, respectively. After the effect of borrowing- Dollar 9% related derivatives, the weighted average cost of the borrowing portfolio was 0.66% and 0.63% as of FY 2011 June 30, 2012, and June 30, 2011, respectively. A Brazilian more detailed analysis of borrowings outstanding is Real 4% Other 15% provided in the Notes to Financial Statements–Note Pounds E—Borrowings. Sterling 8% Derivatives are also used for asset/liability Australian Dollar US Dollar 62% management purposes to match the pool of liabilities 11% as closely as possible to the interest rate and currency characteristics of liquid assets and loans. IBRD does not enter into derivatives for speculative Funding raised in any given year is used for IBRD’s purposes. A more detailed analysis of derivatives general operations, including loan disbursements, used by IBRD is provided in the Notes to Financial replacement of maturing debt and prefunding for Statements- Note F-Derivative Instruments. future lending activities. IBRD determines its funding requirements based on a three year rolling horizon and funds approximately one-third of the projected amount in the current fiscal year. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 21 Figure 8: Effect of Derivatives on Interest Rate Structure on Borrowings—June 30, 2012 Borrowings Excluding Derivativesa Borrowings Including Derivativesa Fixed Variable 4% 18% Variable 96% Fixed 82% a. Excludes discount notes. Figure 9: Effect of Derivatives on Currency Composition on Borrowings—June 30, 2012 Borrowings Excluding Derivatives Borrowings Including Derivatives South African Rand 2% Others 12% Pounds Sterling 5% US Dollar US Dollar Euro Euro 51% 83% 9% 15% Japanese Japanese Yen Yen 10% Australian 1% Dollar Others 11% *% * Denotes percentage less than 0.5% SECTION V: FINANCIAL RISK that are specific to multilateral development banks MANAGEMENT and international financial institutions. The processes and procedures by which IBRD The Finance Committee, which is chaired by the manages its risk profile continually evolve as its CFO, reviews, evaluates and decides on matters activities change in response to market, credit, related to IBRD’s finances to ensure that these are product, operational and other developments. The aligned with corporate financial and risk tolerance Executive Directors, particularly the Audit objectives set by the Executive Directors.  The Committee members, periodically review trends in topics covered by the Finance Committee include IBRD’s risk profiles and performance, as well as the following: IBRD’s financial policies and any significant developments in risk management guidelines, new financial initiatives, setting of risk policies and controls. In addition, on an annual tolerances, and financial risk exposures. The basis, Management prepares an integrated risk Finance Committee makes recommendations and, monitoring report for the Executive Directors to where appropriate, makes decisions in the areas of provide a holistic picture of risk management financial policy, the adequacy and allocation of risk activities within IBRD. capital, and oversight of financial reporting. Governance Structure There are four subcommittees that report to the Finance Committee (See Chart 1). These The risk management governance structure supports subcommittees provide technical expertise and senior management in their oversight function, guidance on strategy, policy, risk management and particularly in the coordination of different aspects new initiative issues presented to the Finance of risk management and in connection with risks that Committee, enabling the group to make the run across functional areas. decisions necessary to conduct appropriate oversight IBRD’s Chief Risk Officer (CRO) reports directly to of IBRD’s financial issues. the CFO. The CRO is responsible for: (i) assessing risks; (ii) benchmarking existing risk management practices against major financial institutions; (iii) ensuring consistency of risk management activities with best practice; and (iv) considering unique risks 22 THE WORLD BANK ANNUAL REPORT 2012 Chart 1: Finance Committee Governance risk ratings of borrowing member countries and Structure movements between the accrual and nonaccrual The Strategy, portfolio and other factors including expected Performance and default frequencies. Whenever a new financial Risk Subcommittee product is being considered for introduction, it is submitted to this subcommittee for review The Finance and recommendation with respect to country Initiatives Subcommittee credit risk issues. In addition, the Audit Finance Committee of the Board of Executive Directors Committee is apprised by management at least twice a year The Credit Risk on the accumulated provision for losses on Subcommittee loans and other exposures. ï‚· The Operational Risk Subcommittee provides The Operational oversight on operational risks for financial Risk Subcommittee operations. The subcommittee meets on a quarterly basis to ensure key operational risks relating to financial operations are monitored ï‚· The Strategy, Performance and Risk and managed appropriately, recognizing that Subcommittee develops, approves and monitors primary responsibility for the management of the management policies under which market operational risk resides with business units. and commercial credit risks faced by IBRD are measured, reported and managed. Such policies In addition to the previously discussed committees, are ratified by the CFO. The subcommittee also the Corporate Finance Department, the Market and monitors compliance with policies governing Counterparty Risk Department and the Credit Risk commercial credit exposure and currency Department play key roles in financial risk management. Specific areas of activity include management. All three departments are independent reviewing and endorsing guidelines for limiting from IBRD’s operational business units and report balance sheet and market risks, the use of directly to the Vice-President, Corporate Finance derivative instruments, investing activities, and and Risk Management. monitoring matches between assets and their Corporate Finance Department: This department funding. In addition, the subcommittee assesses and manages the adequacy of IBRD’s risk periodically reviews loan pricing and approves capital and income-generating capacity, and seeks to the projected funding cost and market risk ensure that the financial management decisions are premium of IBRD’s IFLs with fixed-spread informed and guided by IBRD’s medium-term terms. The subcommittee meets quarterly to outlook for income and capital adequacy. formally review current and proposed business strategy and risk limits/policies, along with Market and Counterparty Risk Department: This business results and financial risk profiles to department is responsible for market and facilitate alignment between financial and risk counterparty credit risk oversight, assessment and management objectives, plan and activities . reporting. It works with IBRD’s financial managers, who are responsible for the day-to-day management ï‚· The Finance Initiatives Subcommittee reviews of market and counterparty risks. The department’s the financial and organizational implications of responsibilities include establishing and maintaining implementing new initiatives that may impact guidelines, volume limits and risk oversight IBRD. The subcommittee reviews all financial processes to facilitate effective monitoring and management, legal, reputational, financial control. Under the auspices of the Finance operations and reporting aspects including Committee and its subcommittee, The Strategy, risk/reward parameters and whether capital Performance and Risk subcommittee, policies and deployment is required. This subcommittee’s procedures for measuring and managing such risks approval is required before a new IBRD are formulated, approved and communicated initiative may be proposed to the Finance throughout IBRD. The department’s Management Committee or the Board of Executive Directors represented on the Finance Committee is responsible The subcommittee meets as needed. for ensuring effective oversight, which includes ï‚· The Credit Risk Subcommittee monitors the maintaining sound credit assessments, addressing measurement and reporting of country credit transaction and product risk issues, providing an risk. The subcommittee meets at least quarterly independent review function and monitoring the to review the impact on the provision for losses loan, investment and borrowing portfolios. on loans and other exposures of any changes in IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 23 Credit Risk Department: This department identifies, shareholder goals with regard to IBRD’s medium measures, monitors and manages country credit risk term lending plans, IBRD’s shareholders agreed in faced by IBRD. Country credit risk is the primary 2010 to a package of financial measures, including a risk faced by IBRD. By the agreement with the capital increase that would take effect over a five Executive Directors, the individual country credit year period starting in FY 2011, with the objective risk ratings are not shared with the Board and are not of keeping the equity-to-loans ratio aligned with made public. In addition, this unit is responsible for the Strategic Capital Adequacy Framework. assessing loan portfolio risk, determining the Under this framework IBRD’s equity-to-loans ratio adequacy of provisions for losses on loans and other is generally expected to remain within the target risk exposures, and monitoring borrowers that are coverage range. vulnerable to crises in the near term. These reviews As presented in Figure 10, IBRD’s reported basis are taken into account in determining the overall equity-to-loans ratio decreased during FY 2012, country programs and lending operations and are due to the increase in the loan portfolio and decrease included in the assessment of IBRD’s capital in usable equity, but remains close to the higher end adequacy. of the target risk coverage range. Capital Adequacy Figure 10: Equity-to-Loans Ratio IBRD uses its capital adequacy as a key indicator 39.0% for financial risk management. IBRD’s capital adequacy measure is the degree to which its risk 35.0% capital is sufficient for absorbing unexpected credit shocks from its loan portfolio and still being able to 31.0% lend for development purposes. This is intended both to protect shareholders from a possible call on 27.0% the callable capital and IBRD’s credit rating; and reduce borrowing costs and corresponding lending Target Risk Coverage Range rates for borrowers. The Executive Directors 23.0% monitor IBRD’s capital adequacy based on a variety of metrics, including stress testing and the 19.0% equity-to-loans ratio, within a Strategic Capital Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Adequacy Framework. Stress testing provides a basis for evaluating whether IBRD has sufficient financial capacity to be Table 10 presents the composition of the equity-to- able to (a) absorb the income loss due to a credit loans ratio at June 30, 2012 and 2011, respectively. shock, and (b) generate sufficient income to support The $1,053 million decrease in the usable equity loan growth in the following years. during FY 2012 was primarily due to the net The equity-to-loans ratio is guided by the Strategic negative adjustment in ‘Other adjustments’ Capital Adequacy Framework with a target risk reflecting the underfunded status of the pension coverage range of 23 to 27 percent. The Strategic plans; primarily resulting from the decrease in the Capital Adequacy Framework is a key discount rate, and the negative cumulative management tool for capital planning that seeks to translation adjustment; resulting from the ensure that over the medium term the volume of depreciation of the euro against the U.S. dollar. loans supported by equity does not exceed the These were partially offset by the increase in usable prudential level. capital resulting from the additional paid-in capital received under the GCI and SCI (Refer to Section As a result of the global financial crisis, IBRD IV—Funding for more details). experienced a strong surge in its lending activity. In order to reinforce IBRD’s capital adequacy and ensure it remains sufficiently robust to support 24 THE WORLD BANK ANNUAL REPORT 2012 Table 10: Equity used in Equity-to-Loans Ratio In millions of U.S. dollars June 30, 2012 June 30, 2011 Variance Usable capital Paid-in capital $ 12,418 $ 11,720 $698 Restricted paid-in capital (944) (1,273) 329 Net payable for maintenance of value 488 862 (374) Total usable capital $ 11,962 $ 11,309 $ 653 Special reserve 293 293 - a General reserve 26,741 26,351 390 b Cumulative translation adjustment (139) 611 (750) c Other adjustments (1,221) 125 (1,346) d Equity used in Equity-to-Loans Ratio (usable equity) $ 37,636 $ 38,689 $(1,053) Fair value adjustments (1,525) 236 (1,761) Equity used in Equity-to-Loans Ratio-fair value basis $ 36,111 $ 38,925 $(2,814) Loans outstanding, present value of guarantees, effective but undisbursed DDOs, net of relevant accumulated provisions, deferred loan income and LTIP assets $139,488 $135,310 $ 4,178 Fair value of loans outstanding, present value of guarantees, effective but undisbursed DDOs and LTIP assets $139,136 $134,291 $ 4,845 Equity-to-Loans Ratio—reported basis 26.98% 28.59% Equity-to-Loans Ratio—fair value basis 25.95% 28.99% a. The June 30, 2012 amount includes proposed transfers to the General Reserve out of FY 2012 net income. b. Excluding cumulative translation amounts associated with the fair value adjustment on non-trading portfolios, net. c. Other adjustments comprise the net underfunded status of IBRD’s pension plans, the cumulative income earned on LTIP assets adjusted by the fixed draw amount, and income earned on PEBP assets prior to FY 2011. d. Excludes the effects of fair value adjustment on non-trading portfolios, net. IBRD undertakes specific risk management is the risk of loss due to a counterparty not honoring activities for credit and market risk, which are its contractual obligations. discussed below (See Chart 2). The major financial Country Credit Risk risk to IBRD is the country credit risk inherent in the loan portfolio. This risk includes potential losses arising from Chart 2: IBRD’s Specific Risk Categories protracted arrears on payments from borrowers on loans and other exposures. IBRD manages country Financial Risk credit risk through the use of individual country Management exposure limits. These exposure limits take into account creditworthiness and performance. Probable losses inherent in the loan portfolio due to Credit Risk Market Risk country credit risk are covered by the accumulated provision for losses on loans and other exposures, while unexpected losses due to country credit risk are covered by equity. Country Credit Interest Rate Risk Risk Portfolio concentration risk, which arises when a small group of borrowers accounts for a large share of loans outstanding, is a key concern for IBRD and Commercial Exchange Rate is carefully managed, in part, through an exposure Credit Risk Risk limit for loans outstanding plus the present value of guarantees and the undisbursed portion of DDOs that have become effective to a single borrowing Liquidity Risk country. Under the current guidelines, IBRD’s exposure to a single borrowing country is restricted to the lower of an Equitable Access Limit or the Credit Risk Single Borrower Limit. The Equitable Access Limit IBRD faces two types of credit risk: country credit is equal to 10% of IBRD’s subscribed capital, risk and commercial credit risk. Country credit risk reserves and unallocated surplus. The Single is the risk of loss due to a country not meeting its Borrower Limit is established, in part, by assessing contractual obligations, and commercial credit risk its impact on the overall portfolio risk relative to the IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 25 level of usable equity. The Single Borrower Limit is Figure 11: Top Eight Country Exposures at June 30, determined by the Executive Directors each year at 2012 the time they consider the adequacy of IBRD’s In billions of U.S. dollars reserves and the allocation of its net income. For FY 2012 and FY 2013, the Single Borrower Limit was 16 $17.5 billion for India and $16.5 billion for all other 14 qualifying borrowers. The Equitable Access Limit 13.6 12 13.1 at June 30, 2012 was $23 billion. 12.7 11.7 10 As depicted in Figure 11, the eight countries with 10.1 9.9 8 the highest exposures accounted for approximately 7.5 6 62% of the loan portfolio. IBRD’s largest exposure 5.6 (including the present value of guarantees and other 4 exposures) to a single borrowing country was $13.6 2 billion at June 30, 2012. 0 China Indonesia India Colombia Poland Turkey Mexico Brazil Since the current exposure data presented are at a point in time, evaluating these exposures relative to the limit requires consideration of the repayment profiles of existing loans, as well as disbursement Overdue and Non-performing Loans profiles and projected new loans and guarantees. When a borrower fails to make payment on any Under certain circumstances, IBRD would be able to principal, interest or other charges due to IBRD, continue to lend to a borrower that was reaching the IBRD has an option to suspend disbursements single borrower exposure limit by entering into an immediately on all loans. IBRD’s current policy arrangement that would prevent its net exposure however, is to exercise this option through a from exceeding the limit. Any such arrangement graduated approach as summarized in Box 2. These would need to be approved in advance by IBRD’s policies also apply to those member countries who Executive Directors. Currently, IBRD has entered are eligible to borrow from both IBRD and IDA, and into one such arrangement with China. To date, whose payments on IDA credits may become China has not reached the single borrower exposure overdue. limit and therefore, activation of this arrangement has not been required. Box 2: Treatment of Overdue Payments Where the borrower is the member country, no new loans to the member country, or to any other borrower in the country, will be presented to the Executive Directors for approval, nor will any previously approved loan be signed, until payments for all amounts 30 days overdue or longer have been received. Where the borrower is not the member country, no new loans to that borrower will be signed or approved. In either case, the borrower will lose its eligibility for any waiver of interest charges in effect at that time for loans signed before May 16, 2007, Overdue by and those loans signed between May 16, 2007 and September 27, 2007 if the borrowers elected not to convert 30 days the terms of their loans to the pricing terms effective September 27, 2007. For loans with the pricing terms applicable from May 16, 2007, an overdue interest penalty will be charged at a rate of 50 basis points on the overdue principal. In addition, if an overdue amount remains unpaid for a period of 30 days, then the borrower shall pay a higher interest rate (LIBOR + fixed spread) plus 50 basis points on the overdue principal amount until the overdue amount is fully paid. In addition to the provisions cited above for payments overdue by 30 days, to avoid proceeding further on the notification process leading to suspension of disbursements, the country as borrower or guarantor and all borrowers in the country must pay not only all payments overdue by 30 days or more, but also all payments due Overdue by regardless of the number of days since they have fallen due. Where the borrower is not the member country, no 45 days new loans to, or guaranteed by, the member country, will be signed or approved. Additionally, all borrowers in the country will lose eligibility for any waivers of interest in effect at the time. In addition to the suspension of approval for new loans and signing of previously approved loans, disbursements on all loans to or guaranteed by the member country are suspended until all overdue amounts have been paid. Overdue by This policy applies even when the borrower is not the member country. Under exceptional circumstances, 60 days disbursements could be made to a member country upon approval by the Executive Directors. All loans made to or guaranteed by a member of IBRD are placed in nonaccrual status, unless IBRD determines that the overdue amount will be collected in the immediate future. Unpaid interest and other charges not yet paid Overdue by on loans outstanding are deducted from the income of the current period. To the extent that these payments are more than received, they are included in income. At the time of arrears clearance, a decision is made on the restoration of six months accrual status on a case-by-case basis; in certain cases that decision may be deferred until after a suitable period of payment performance has passed. 26 THE WORLD BANK ANNUAL REPORT 2012 See Notes to Financial Statements-Note D-Loans In the normal course of its business, IBRD utilizes and Other Exposures for a summary of countries various derivatives and foreign exchange financial with loans or guarantees in nonaccrual status at June instruments to meet the financial needs of its 30, 2012. borrowers and to manage its exposure to fluctuations Treatment of Protracted Arrears in interest and currency rates. In 1991, the Executive Directors adopted a policy to IBRD mitigates the counterparty credit risk arising assist members with protracted arrears to IBRD to from investments and derivatives through its credit mobilize sufficient resources to clear their arrears approval process, the use of collateral agreements and and to support a sustainable growth-oriented risk limits, and monitoring procedures. The credit adjustment program over the medium term. This approval process involves evaluating counterparty policy is conditional on members agreeing to and security-specific creditworthiness, assigning implement certain requirements including an credit limits, and determining the risk profile of acceptable structural adjustment program, adopting a specific transactions. Credit limits are calculated and financing plan to clear all arrears to IBRD and other monitored taking into consideration current market multilateral creditors, and continuing to service their values, estimates of potential future movements in obligations to IBRD and other multilateral creditors those values, and collateral agreements with on time. counterparties. If there is a collateral agreement with It is IBRD’s practice not to reschedule interest or the counterparty to reduce credit risk, then the amount principal payments on its loans or participate in debt of collateral obtained is based on the credit rating of rescheduling agreements with respect to its loans. the counterparty. Collateral held includes cash and During FY 1996 and FY 2002, exceptions were highly liquid investment securities. made to that practice with regard to Bosnia and For derivative products, IBRD uses the estimated Herzegovina (BiH) and Serbia and Montenegro, replacement cost of the derivative as the measure of formerly the Federal Republic of Yugoslavia, based credit risk exposure. While the contractual principal on criteria approved by the Executive Directors in amount of derivatives is the most commonly used connection with the financial assistance package for volume measure in derivative markets, it is not a BiH in 1996. See the Notes to Financial Statements- measure of credit or market risk. For all securities, Note A-Summary of Significant Accounting and IBRD limits trading to a list of authorized dealers and Related Policies, for additional information. counterparties. Credit risk is controlled through Commercial Credit Risk application of eligibility criteria (as summarized in Box 3), volume limits for transactions with individual The effective management of credit risk is vital to counterparties and through the use of mark-to-market the success of IBRD’s funding, investment and collateral arrangements for swap transactions. As a asset/liability management activities. The result of these mark-to-market collateral monitoring and managing of these risks is a arrangements, IBRD’s residual commercial credit risk continuous process due to changing market is concentrated in investments in debt instruments environments. issued by sovereign governments, agencies, time deposits and corporate entities. Box 3: Eligibility Criteria for IBRD’s Investment Securities Instrument Securities Description IBRD may only invest in obligations issued or unconditionally guaranteed by governments Sovereigns of member countries with a minimum credit rating of AA-. However, if government obligations are denominated in the national currency of the issuer, no rating is required. IBRD may only invest in obligations issued by an agency or instrumentality of a Agencies government of a member country, a multilateral organization or any other official entity other than the government of a member country, with a minimum credit rating of AA-. Corporates and asset-backed IBRD may only invest in securities with a AAA credit rating. securities IBRD may only invest in time deposits issued or guaranteed by financial institutions, a Time deposits whose senior debt securities are rated at least A-. IBRD may invest in any marketable equity security provided that the security is included in the Russell 3000 Index or MSCI World, ex-US Index, or similar indices, as well as any Equity securities in the LTIP other securities or financial instruments (including commingled or mutual funds and b portfolio Exchange Traded Funds) that are typically used by asset management firms or other financial institutions in portfolios that seek to track all or part of these indices. a. Time deposits include certificates of deposit, bankers’ acceptances and other obligations issued or unconditionally guaranteed by banks or other financial institutions b. The LTIP portfolio was fully liquidated as of June 30, 2012. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 27 Table 11: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Ratinga In millions of U.S. dollars As of June 30, 2012 Investments Agencies, Asset- Backed Securities, Total Exposure on Corporates and Time Net Swap Investments and Counterparty Rating Sovereigns Deposits Exposure Swaps % of Total AAA $ 8,842 $ 8,054 $ – $16,896 48% AA 6,086 8,030 550 14,666 42 A – 3,457 177 3,634 10 BBB – 4 – 4 * BB or lower – 8 – 8 * Total $14,928 $19,553 $727 $35,208 100% As of June 30, 2011 Investments Agencies, Asset- Backed Securities, Total Exposure on Corporates and Time Net Swap Investments and Counterparty Rating Sovereigns Deposits Exposure Swaps % of Total AAA $4,379 $ 6,698 $ – $11,077 34% AA 4,671 11,814 989 17,474 54 A 488 3,313 190 3,991 12 BBB – 4 – 4 * BB or lower – 11 – 11 * Total $9,538 $21,840 $1,179 $32,557 100% a. Excludes (a) externally managed portfolios including LTIP equities and Post-Employment Benefits Plan and (b) swap exposures executed with borrowing member countries, International Finance Facility for Immunisation (IFFIm) and IDA. * Indicates amounts less than 0.5%. IBRD’s exposure is marginal to futures and options categories of investments. Of the total commercial and resale agreements. With respect to futures and credit exposure, net of collateral held, as of June 30, options, IBRD generally closes out open positions 2012, $8.6 billion (24%) related to countries in the prior to expiration. Futures are settled on a daily Euro Zone, of which $7.3 billion (21%) is rated AA basis. With respect to resales, IBRD monitors the or above and none were rated below A. fair value of the securities received and, if necessary, Market Risk closes out transactions and enters into new repriced transactions. IBRD is exposed to changes in interest and exchange rates and uses various strategies to keep its exposure Under the mark-to-market collateral arrangements, to market risk at a minimal level. when IBRD is in a net receivable position higher than the agreed upon collateral threshold allocated to Interest Rate Risk the counterparty, counterparties are required to post There are four main sources of interest rate risk to collateral with IBRD. IBRD. The first is the interest rate sensitivity of the IBRD is not required to post collateral under its income earned from funding a portion of IBRD assets derivative agreements as long as it maintains a AAA with equity. The second is refinancing risk for fixed- credit rating. For the contractual value, notional spread loans. The third is the interest rate lag amounts, related credit risk exposure amounts, and associated with the net spread between the rate IBRD the amount IBRD would be required to post in an earns on its assets and the cost of borrowings, which event of a downgrade, see the Notes to Financial fund those assets. The fourth area of risk is debt Statements–Note F–Derivative Instruments. overhang in borrowings funding multicurrency loan pools. Table 11 provides details of IBRD’s estimated credit exposure on its investment and swap Equity Earnings Risk portfolios, net of collateral held, by counterparty The increase in the volume of loans with interest rates rating category. linked to floating rate indexes (e.g. LIBOR) has The increase in commercial credit exposure during increased the sensitivity of IBRD’s income to changes FY 2012 reflects Management’s decision to bolster in market interest rates. As a result, income from IBRD’s liquidity levels. The credit quality of equity invested in these variable interest rate loans is IBRD’s portfolio is concentrated in the upper end of sensitive to interest rates. As part of IBRD’s risk the credit spectrum due to a continued preference for management strategy to reduce the sensitivity of highly rated securities and counterparties across all income to short-term interest rates, IBRD has engaged 28 THE WORLD BANK ANNUAL REPORT 2012 in an equity duration extension strategy which re-set dates on its variable rate receivables and employs interest rate swaps to increase the duration payables. To mitigate its exposure to these timing of equity from three months to approximately five mismatches, IBRD has executed some overlay years. This strategy seeks to increase the stability of interest rate swaps. its income by aligning the repricing profile of equity Interest rate risk on non-cost pass-through products, to a 10-year uniform ladder. which accounted for 43% of the loan portfolio at June Refinancing Risk 30, 2012 (45% at June 30, 2011), is managed by using Refinancing risk for the funding of fixed-spread interest rate swaps to closely align the rate loans relates to the potential impact of any future sensitivity characteristics of the loan portfolio with deterioration in the Bank's funding spread, since those of their underlying funding, except for the loans are not funded to their final maturities. IBRD component of the loan portfolio affected by IBRD’s charges an associated risk premium and equity duration extension strategy. Management carries out periodic reviews of the The interest rate risk on IBRD’s liquid asset adequacy of the risk premium given future portfolio—which includes the risk that the value of expectations about IBRD’s funding levels. See assets in the liquid portfolio will fluctuate due to Table 2, for currently available terms. changes in market interest rates—is managed within Interest Rate Lag Risk specified duration-mismatch limits and is further limited by stop-loss limits. The borrowing cost-pass-through formulation incorporated in the lending rates charged on IBRD’s Exchange Rate Risk cost pass-through pool loan products (currency pool IBRD holds its assets and liabilities primarily in U.S. loans and variable-spread loans) poses an additional dollars, euro and Japanese yen. However, the reported interest rate lag risk. This risk exists as the cost pass- levels of its assets, liabilities, income and expenses in through formulation is done with a six-month lag. the financial statements are affected by exchange rate As of June 30, 2012, these loans accounted for movements in all the currencies in which IBRD approximately 57% of the portfolio (55% at June 30, transacts compared to IBRD’s reporting currency, the 2011). U.S. dollar. Debt Overhang Risk In order to minimize exchange rate risk in a This risk arises because the cost pass-through multicurrency environment, IBRD matches its currency pool products have traditionally been borrowing obligations in any one currency (after swap funded with a large share of medium- and long-term activities) with assets in the same currency, as fixed-rate debt, to provide the borrowers with a prescribed by the Articles. In addition, IBRD’s policy reasonably stable interest basis. The amount of debt is to minimize the exchange rate sensitivity of its allocated to the multicurrency debt pool slightly equity-to-loans ratio. It implements this policy by exceeded the balance of the multicurrency loan pool undertaking currency conversions periodically to as of June 30, 2012, and the overfunding position is align the currency composition of its equity to that of expected to increase as the outstanding balance of its outstanding loans. This policy is designed to the loan pool declines further. To manage this risk, minimize the impact of exchange rate fluctuations on IBRD executed forward-starting swaps from FY the equity-to-loans ratio, thereby preserving IBRD’s 2000 to change the interest rate characteristics of the ability to better absorb unexpected losses from arrears overfunded debt from fixed to variable. of loan repayments regardless of the market environment. As of June 30, 2012, the debt overhang was within Management’s expected parameters. Should the Liquidity Risk amount of debt overhang remain at the currently projected levels, IBRD does not anticipate executing Liquidity risk arises in the general funding of IBRD’s additional forward-starting swaps. activities and in the management of its financial positions. It includes the risk of being unable to fund Other Interest Rate Risks its portfolio of assets at appropriate maturities and Interest rate risk also arises from a variety of other rates and the risk of being unable to liquidate a factors, including differences in the timing between position in a timely manner at a reasonable price. For the contractual maturities or re-pricing of IBRD’s a discussion on how liquidity is managed, see Section assets, liabilities and derivative financial III - Investment Activities. instruments. On variable-rate assets and liabilities, IBRD is exposed to timing mismatches between the IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 29 SECTION VI: REPORTED BASIS pricing risks between loans and borrowings, IBRD ANALYSIS uses derivatives to convert virtually all of the fixed interest rate loans into variable interest rate loans. See Basis of Reporting Figure 4d for the interest rate structure of IBRD’s In IBRD’s balance sheet on the reported basis, the loan portfolio. borrowing and investment portfolios are carried at As of June 30, 2012, only 0.3% of IBRD’s loans were fair value, while the loan portfolio is carried at in nonaccrual status and were all related to one amortized cost (except for loans with an embedded country. IBRD’s total provision for losses on accrual derivative which are reported at fair value). See and nonaccrual loans accounted for 1.2% of the total Table 12 for IBRD’s condensed reported basis loan portfolio. balance sheet with a reconciliation to fair value basis. Net loans outstanding on a reported basis increased by $3,739 million in FY 2012. This increase was Reported Basis Balance Sheet primarily due to net disbursements of $7,798 million, Investment Portfolio which were driven by the increase in demand for IBRD’s loans, partially offset by currency translation As part of IBRD’s financial risk management, IBRD losses of $3,939 million, consistent with the primarily holds short-term U.S. dollar fixed-income depreciation of the euro against the U.S. dollar in FY securities, as well as other securities swapped into 2012. U.S. dollars. The portfolio has an average duration of less than three months. Borrowing Portfolio At June 30, 2012, the net asset value of the As of June 30, 2012, after the effects of derivatives, investment portfolio increased by $4,795 million as virtually all of IBRD’s borrowing portfolio (excluding compared to June 30, 2011 (See Notes to Financial discount notes) carried variable interest rates (See Statements–Note C–Investments), primarily Figure 8). As mentioned previously, derivatives are reflecting Management’s decision to bolster used to manage the re-pricing risk between IBRD’s liquidity. loan and borrowing portfolios. Loan Portfolio The borrowing portfolio, net of derivatives, increased by $10,574 million, as compared to June 30, 2011 In FY 2012, borrowing member countries exhibited (See Notes to Financial Statements–Note E– a preference for IFLs with variable-spread terms Borrowings). This was primarily due to net new versus those with fixed-spread terms, since the borrowing issuances of $10,626 million, consistent spreads for the latter were higher. As a result, for FY with Management’s decision to bolster liquidity levels 2012, 64% (FY 2011—89%) of the loan and unrealized mark-to-market losses of $2,247 commitments carried variable spreads and the million, primarily resulting from the downward shift remainder carried fixed spreads. in the major yield curves. This was partially offset by At June 30, 2012, 80% of the loans outstanding currency translation gains of $3,095 million, carried variable interest rates and the remaining consistent with the depreciation of the euro against carried fixed interest rates. To manage the re- the U.S. dollar in FY 2012. Table 12: Condensed Balance Sheets at June 30, 2012 and 2011 In millions of U.S. dollars June 30, 2012 June 30, 2011 Reported Fair Value Reported Fair Value Basis Adjustments Basis Basis Adjustments Basis Due from banks $ 5,806 $ 5,806 $ 2,462 $ 2,462 Investments 33,675 33,675 32,645 32,645 Net loans outstanding 134,209 $(2,011) 132,198 130,470 $(1,023) 129,447 Receivable from derivatives 160,814 160,814 144,711 144,711 Other assets 3,674 3,674 3,923 3,923 Total assets $338,178 $(2,011) $336,167 $314,211 $(1,023) $313,188 a a Borrowings $145,339 $ (2) $145,337 $135,242 $ (19) $135,223 Payable for derivatives 144,837 144,837 130,429 130,429 Other liabilities 11,317 11,317 8,857 8,857 Total liabilities 301,493 (2) 301,491 274,528 (19) 274,509 Paid in capital stock 12,418 12,418 11,720 11,720 Retained earnings and other equity 24,267 (2,009) 22,258 27,963 (1,004) 26,959 Total equity 36,685 (2,009) 34,676 39,683 (1,004) 38,679 Total liabilities and equity $338,178 $(2,011) $336,167 $314,211 $(1,023) $313,188 a. Amount represents amortization of transition adjustment relating to the adoption of FASB’s guidance on derivatives and hedging on July 1, 2000. 30 THE WORLD BANK ANNUAL REPORT 2012 Reported Basis Operating Income quality of the loan portfolio. In contrast, during FY 2011, there was a $45 million release in the IBRD’s operating income on a reported basis is provision due to the improvement in the credit broadly comprised of income from interest-earning quality of the loan portfolio. assets (net of funding cost) and the equity duration extension swap portfolio, less the provision for LTIP income: For FY 2012, the $138 million losses on loans and other exposures, and net non- decrease in income from LTIP was primarily due to interest expense. Table 13 shows a breakdown of lower returns from the equity portfolio compared to operating income, net of funding costs, on a reported FY 2011. basis. These factors were partially offset by: FY 2012 versus FY 2011 Net Interest income: The interest margin increased The decrease of $240 million in operating income is by $188 million reflecting higher spreads from the explained by the following factors: increased proportion of loans carrying the new loan Provision for losses on loans and other exposures: pricing terms which were approved in FY 2010, and For FY 2012, there was a $189 million provisioning an increase in loan volume. charge primarily due to the decline in the credit Table 13: Reported Basis Operating Income In millions of U.S. dollars FY 2012 vs. FY 2011 vs. FY 2012 FY 2011 FY 2010 FY 2011 FY 2010 Interest income, net of funding costs Interest margin $ 744 $ 556 $ 433 $ 188 $ 123 Equity-funded loans 196 196 324 _ (128) Equity extension duration strategy 1,095 1,139 994 (44) 145 Investments 80 112 95 (32) 17 Net interest income $2,115 $2,003 $1,846 $ 112 $ 157 Provision for losses on loans and other exposures–(charge) release (189) 45 32 (234) 13 LTIP Income 31 169 118 (138) 51 Other net income 38 39 52 (1) (13) Net non-interest expense (1,212) (1,233) (1,248) 21 15 Reported Basis Operating Income $ 783 $1,023 $ 800 $ (240) $ 223 Table 14: Net Noninterest Expense In millions of U.S. dollars FY 2012 vs. FY 2011 vs. FY 2012 FY 2011 FY 2010 FY 2011 FY 2010 Administrative expenses Staff costs $ 734 $ 696 $ 661 $ 38 $ 35 Operational travel 162 142 156 20 (14) Consultant fees 262 244 247 18 (3) Pension and other postretirement benefits 163 220 158 (57) 62 Communications and IT 44 41 39 3 2 Contractual services 123 115 118 8 (3) Equipment and buildings 111 111 109 – 2 Other Expenses 32 (5) 31 37 (36) Total administrative expenses $1,631 $1,564 $1,519 $ 67 $ 45 Contribution to special programs 133 147 168 (14) (21) Service fee revenue (179) (156) (151) (23) (5) Revenue related to IBRD executed trust funds (341) (300) (271) (41) (29) Restricted Income (27) (18) (12) (9) (6) Net other (income)expense (5) (4) (5) (1) 1 Total Net Noninterest Expense $1,212 $1,233 $1,248 $ (21) $(15) IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 31 FY 2011 versus FY 2010 LTIP income: The $51 million increase in income The increase of $223 million in operating income is from LTIP was due primarily to unrealized mark-to- explained by the following factors: market gains from the equity portfolio. Net Interest income: The $123 million increase in SECTION VII: FAIR VALUE ANALYSIS interest margin was primarily due to an increase in Basis of Reporting the loan balance. In addition, the lower short-term interest rate environment, in particular U.S. dollar As discussed previously Management monitors the six month LIBOR, (Figure 12), resulted in higher fair value results to assess the underlying trends in interest income from the equity duration extension the market and the impact on its risk management. swaps (where IBRD is a variable interest rate payer The Condensed Fair Value Balance Sheets in Table and a fixed interest rate receiver) of $145 million. 12 present IBRD’s estimates of the fair value of its This was partially offset by the $128 million decline financial assets and liabilities, taking into account in interest income from equity-funded loans (where interest rate, currency and credit risks. As non- IBRD is primarily a variable interest rate receiver). financial assets and liabilities are not reflected at fair value, IBRD’s equity is not intended to reflect fair Figure 12: Six-Month LIBOR Interest Rates U.S. value. The Condensed Fair Value Balance Sheets Dollar are presented with a reconciliation from the reported basis. 2.0 FY 2012 Fair Value Balance Sheet 1.5 FY 2011 FY 2010 Loan Portfolio 1.0 IBRD’s fair value model is based on a discounted Rate cash flow method. This model incorporates CDS 0.5 spreads as an indicator of the credit risk for each borrower. Recovery levels are modified to 0.0 incorporate IBRD’s recovery levels. Jun Sep Dec Mar Jun Table 15: Condensed Statements of Income for the years ended June 30, 2012 and 2011 In millions of U.S. dollars June 30, 2012 June 30, 2011 Fair Value Fair Value Reported Comprehensive Reported Comprehensive a a Basis Adjustments Basis Basis Adjustments Basis Income from loans $2,585 $ 2,585 $2,470 $2,470 b Income from investments, net 219 219 367 367 Equity duration extension swaps, net 1,095 1,095 1,139 1,139 Other income 490 490 401 401 Total income 4,389 4,389 4,377 4,377 Borrowing expenses 1,652 1,652 1,687 1,687 Administrative expenses including contributions to special programs 1,764 1,764 1,711 1,711 Provision for losses on loans and other exposures 189 $ (189) – (45) $ 45 – Other Expenses 1 1 1 1 Total expenses 3,606 (189) 3,417 3,354 45 3,399 Operating income $ 783 $ 189 $ 972 $1,023 $ (45) $ 978 Board of Governors-approved transfers (650) (650) (513) (513) Fair value adjustment on non-trading c portfolios, net (809) (809) 420 420 d Fair value adjustment on loans (1,261) (1,261) (762) (762) Changes to accumulated other comprehensive income (2,931) (2,931) 1,581 1,581 Net (Loss) Income $ (676) $(4,003) $(4,679) $ 930 $ 774 $1,704 a. Net income on a fair value comprehensive basis comprises net income on a reported basis, the additional fair value adjustment on the loan portfolio and changes to AOCI. b. Unrealized gains (losses) on derivatives in the investments trading portfolio are included in income from investments, net. c. Excludes the fair value adjustment on loans which are not carried at fair value under the reported basis. d. Excludes the reversal of the provision for losses on loans and other exposures. 32 THE WORLD BANK ANNUAL REPORT 2012 On a fair value basis, the loan portfolio increased by During FY 2011, consistent with the steepening of $2,751 million compared with June 30, 2011. This major yield curves, IBRD experienced net increase comprises net loan disbursements of unrealized gains on the borrowing portfolio, $7,798 million. This was partially offset by partially offset by net unrealized losses on the currency translation losses of $3,833 million, as derivatives held in the asset/liability management shown in Table 17, primarily due to the depreciation portfolio, where IBRD is a fixed interest rate of the euro against the U.S. dollar in FY 2012 and receiver. net negative fair value adjustment of $1,072 million. Figure 13: U.S. Dollar Swap Curve Net Income on a Fair Value Comprehensive Rate Basis 5.0 Net i ncome on a fai r v alue com prehensive basis 4.0 comprises net incom e on a re ported ba sis, the additional fair value adjustment on the loan portfolio 3.0 and changes in AOCI, which are related to currency 2.0 translation adjustments and the changes in fair value 6/30/2012 of pension plans. Table 15 provides a reconciliation 1.0 6/30/2011 from net i ncome on a rep orted basi s t o net i ncome 0.0 6/30/2010 on a fair value comprehensive basis. 1 2 3 4 5 6 7 8 9 10 15 20 30 Years The net loss on a fair value comprehensive basis was $4,679 million, compared to net income of $1,704 Fair Value Adjustment on Loans million in FY 2011. This was primarily due to the The fair value adjustment on loans for FY 2012 was following factors: a negative $1,072 million (including the reversal of Fair Value Adjustment on Non-Trading Portfolios the provision for losses on loans and other exposures of $189 million), compared to a negative $807 The fair value adjustment on non-trading portfolios, million (including the reversal of the release of net, consists of the fair value adjustments on the provision for losses on loans and other exposures of borrowing portfolio (including loan derivatives), all $45 million) during FY 2011. This adjustment other derivatives other than those in the investment reflects changes in both interest rates and credit risk. portfolio, and the fair value adjustment on loans The negative fair value adjustment for FY 2012 with embedded derivatives. was primarily driven by unrealized credit losses due During FY 2012, there were net unrealized losses of to the widening of CDS spreads, partially offset by $809 million, compared with net unrealized gains of unrealized gains from the lower interest rates. $420 million in FY 2011. See Table 16 for details. In contrast, the fair value adjustment on loans for FY Table 16: Summary of Fair Value Adjustment on 2011 was primarily driven by the steepening of the Non-Trading Portfolios, net yield curves of all major currencies. In addition, In millions of U.S. dollars loan disbursements also resulted in unrealized credit losses, as determined by CDS spread levels, due to June 30, June 30, IBRD’s policy of not differentiating between the Unrealized gains/(losses) 2012 2011 Borrowing Portfolio (including loan credit quality of member countries. derivatives) $(2,247) $ 663 Changes to Accumulated Other Comprehensive Derivatives held in the asset/liability management portfolio 1,437 (248) Income (AOCI) Derivatives held in the client operations portfolio 2 1 During FY 2012, IBRD experienced a loss of $2,931 million primarily due to the following factors: A loan with an embedded derivative (1) 4 $ (809) $ 420 Unrecognized net actuarial losses on benefits plans: $2,158 million of unrecognized net actuarial losses, During FY 2012, there were net unrealized losses in primarily due to the decrease in the discount rates the borrowing portfolio and net unrealized gains in used to determine the projected benefit obligation. the asset/liability management portfolio3 primarily Unrecognized net prior service cost on benefit due to the decline in interest rates, as shown in plans: $141 million of unrecognized prior service Figure 13. cost, primarily due to an amendment made to the pension plan. See Notes to Financial Statements- 3 Note J- Pension and Other Postretirement Benefits The derivatives held in the asset/liability management for further details. portfolio are presented in IBRD’s balance sheet under Derivative Assets–Other assets/liabilities and Derivative Liabilities–Other assets/liabilities. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 33 Currency translation adjustments: $627 million net compared to expected returns. negative currency translation adjustments, primarily Currency translation adjustments: $757 million net due to the 13% depreciation of the euro against the positive currency translation adjustments, primarily U.S. dollar in FY 2012. Table 17 provides a due to the 18% appreciation of the euro against the summary of currency translation adjustments by U.S. dollar in FY 2011. Table 17 provides a portfolio. The loan portfolio contributed negative summary of currency translation adjustments by $3,833 million. The total percentage of loans portfolio. The loan portfolio contributed positive denominated in currencies other than the U.S. dollar $4,256 million. The total percentage of loans at June 30, 2012 was 21%; loans denominated in denominated in currencies other than the U.S. dollar euro and Japanese yen accounted for approximately at June 30, 2011 was 23%; loans denominated in 19% and 1%, respectively, as illustrated by Figure euro and Japanese yen accounted for approximately 4c. The borrowing portfolio accounted for a positive 20% and 1%, respectively as illustrated by Figure adjustment of $3,203 million. The total percentage 4c. The borrowing portfolio accounted for a negative of the borrowing portfolio denominated in adjustment of $3,497 million. The total percentage currencies other than the U.S. dollar at June 30, of the borrowing portfolio denominated in 2012 was 17%; borrowings denominated in euro and currencies other than the U.S. dollar at June 30, Japanese yen accounted for approximately 15% and 2011 was 19%; borrowings denominated in euro and 1%, respectively, as illustrated by Figure 9. Japanese yen accounted for approximately 17% and Table 17: Summary of Changes to AOCI (Fair Value 2%, respectively. Basis) In millions of U.S. dollars SECTION VIII: CONTRACTUAL FY 2012 FY 2011 Variance OBLIGATIONS Unrecognized net actuarial (losses) gains In the normal course of business, IBRD enters into on benefit plans $(2,158) $ 834 $(2,992) Unrecognized net prior various contractual obligations that may require Service (cost) credit on future payments. Table 18 summarizes IBRD’s benefit plans (141) 8 (149) significant contractual obligations, by remaining Derivatives and hedging a maturity, at June 30, 2012. transition adjustment (5) (18) 13 Currency translation Debt includes all borrowings (excluding derivatives) adjustments (627) 757 (1,384) at fair value. See Notes to Financial Statements- Of which: Note E- Borrowings for additional information on Loans outstanding (3,833) 3,203 4,256 (3,497) (8,089) 6,700 the borrowing portfolio. Borrowing Portfolio Net other assets and Operating lease expenditures primarily represent liabilities 3 (2) 5 future cash payments for real estate-related Total $(2,931) $1,581 $(4,512) obligations and equipment. Other long-term a. Amount represents amortization of transition liabilities include accrued liabilities for staff adjustment relating to the adoption of FASB’s guidance compensation and benefits. Operating leases, on derivatives and hedging on July 1, 2000. contractual purchases and capital expenditures, and During FY 2011, IBRD experienced a gain of other long term obligations include amounts which $1,581 million primarily due to the following will be shared with IDA, IFC and The Multilateral factors: Investment Guarantee Agency (MIGA) in accordance with cost sharing and service Unrecognized net actuarial gains on benefits plans: arrangements (additional information can be found $834 million of unrecognized net actuarial gains, in the Notes to Financial Statements–Note H– primarily due to higher actual returns on plan assets Transactions with Affiliated Organizations). Table 18: Contractual Obligations In millions of U.S. dollars As of June 30, 2012 Due after 1 Due after Year 3 Year Due in 1 year through 3 through 5 Due After or Less Years Years 5 years Total Borrowings (at fair value) $22,071 $50,592 $35,161 $37,515 $145,339 Operating leases 64 108 59 240 471 Contractual purchases and capital expenditures 63 23 – – 86 Other long-term liabilities 78 123 99 201 501 Total $22,276 $50,846 $35,319 $37,956 $146,397 34 THE WORLD BANK ANNUAL REPORT 2012 Table 18 excludes the following obligations any of the factors that affect borrowers' presented in IBRD’s balance sheet: undisbursed creditworthiness. loans; payable for currency and interest rate The accumulated provision for loan losses is swaps; payable for investment securities purchased, separately reported in the balance sheet as a cash received under agency arrangements, and deduction from IBRD’s total loans. The payable for transfers approved by the Board of accumulated provision for losses on other exposures Governors. is included in accounts payable and miscellaneous SECTION IX: CRITICAL ACCOUNTING liabilities. Increases or decreases in the accumulated POLICIES AND THE USE OF provision for losses on loans and other exposures is ESTIMATES reported in the Statement of Income as provision for losses on loans and other exposures. Note A of IBRD’s financial statements contains a summary of IBRD’s significant accounting policies. Additional information on IBRD’s provisioning These policies, as well as estimates made by policy and the status of nonaccrual loans can be Management, are integral to the presentation of found in the Notes to Financial Statements-Note A- IBRD’s financial condition. While all of these Summary of Significant Accounting and Related policies require a certain level of Management Policies and Note D-Loans and Other Exposures. judgment and estimates, this section discusses the Fair Value of Financial Instruments significant accounting policies that require Management to make judgments that are difficult, All fair value adjustments are recognized through complex or subjective, and relate to matters that are the income statement. The fair values of financial inherently uncertain. instruments are based on a three level hierarchy. Provision for Losses on Loans and Other For financial instruments classified as Level 1 and 2, Exposures inputs are based on observable market data and less judgment is applied in arriving at a fair value IBRD’s accumulated provision for losses on loans measurement. For financial instruments classified and other exposures reflects the probable losses as Level 3, significant unobservable inputs are used. inherent in its accrual and nonaccrual portfolios. These inputs require Management to make There are several steps required to determine the significant assumptions and judgments in arriving at appropriate level of provisions for each portfolio. a fair value measurement. First, the total loan portfolio is segregated into the accrual and nonaccrual portfolios. In both portfolios, The majority of IBRD’s financial instruments are the loans and other exposures for each country are classified as Level 1 and Level 2, as the inputs are then assigned a credit risk rating. With respect to based on observable market data and less judgment loans in the accrual portfolio, these loans are is applied in arriving at fair value measures. grouped according to the assigned risk rating. Loans On a quarterly basis, the methodology, inputs and in the non-accrual portfolio are individually assigned assumptions are reviewed to assess the the highest risk rating. Second, each risk rating is appropriateness of the fair value hierarchy mapped to an expected default frequency using classification of each financial instrument. IBRD’s credit migration matrix. Finally, the provision required is calculated by multiplying the Some of IBRD’s financial instruments are valued outstanding exposure by the expected default using pricing models. The valuation and analytics frequency (probability of default to IBRD) and by group, which is independent of the treasury and risk the assumed severity of the loss given default. For management functions, reviews the models that loans that are carried at fair value, the credit risk IBRD uses and assesses model appropriateness and assessment is incorporated in the determination of consistency. The model reviews consider a number fair value. of factors about the model’s suitability for valuation of a particular product. These factors include The determination of a borrower's risk rating is whether the model accurately reflects the based on various factors, which include political characteristics of the transaction and its risks, the risk, external debt and liquidity, fiscal policy and suitability and convergence properties of numerical public debt burden, balance of payments risks, algorithms, reliability of data sources, consistency of economic structure and growth prospects, monetary the treatment with models for similar products, and and exchange rate policy, financial sector risks and sensitivity to input parameters and assumptions that corporate sector debt and other vulnerabilities. cannot be priced from the market. IBRD periodically reviews such factors and reassesses the adequacy of the accumulated Reviews are conducted of new and/or changed provision, accordingly. Actual losses may differ models, as well as previously validated models, to from expected losses due to unforeseen changes in assess whether there have been any changes in the IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 35 product or market that may affect the model’s The Executive Directors have established several validity and whether there are theoretical or Committees including: competitive developments that may require • Audit Committee reassessment of the model’s adequacy. • Budget Committee All the financial models used for input to IBRD’s • Committee on Development Effectiveness financial statements are subject to both internal and periodic external verification and review by • Committee on Governance and Executive qualified personnel. Directors’ Administrative Matters • Ethics Committee In instances where Management relies on instrument valuations supplied by external pricing vendors, • Human Resources Committee there are procedures in place to validate the The Executive Directors and their Committees appropriateness of the models used as well as the function in continuous session at the principal inputs applied in determining those values. offices of IBRD, as business requires. Each Committee's terms of reference establishes its Pension and Other Postretirement Benefits respective roles and responsibilities. As Committees IBRD participates, along with IFC and MIGA, in do not vote on issues, their role is primarily to serve pension and postretirement benefit plans that cover the Board in discharging its responsibilities. substantially all of their staff members. All costs, The Executive Directors are required to consider assets and liabilities associated with the plans are proposals made by the President on IBRD’s loans allocated between IBRD, IFC and MIGA based and guarantees, and other policies that impact upon their employees' respective participation in the IBRD’s general operations. The Executive Directors plans. Costs allocated to IBRD are subsequently are also responsible for presenting to the Board of shared between IBRD and IDA based on an agreed Governors, at the Annual Meetings, audited cost sharing ratio. The underlying actuarial accounts, an administrative budget, and an annual assumptions used to determine the projected benefit report on operations and policies as well as other obligations, accumulated benefit obligations and matters. funded status associated with these plans are based on financial market interest rates, past experience, Senior Management Changes and Management's best estimate of future benefit changes and economic conditions. For further On August 15, 2011, Ngozi Okonjo-Iweala retired details, refer to Notes to Financial Statements-Note J as Managing Director of IBRD. -Pension and Other Postretirement Benefits. On September 19, 2011, Caroline Anstey was appointed as Managing Director of IBRD. SECTION X: GOVERNANCE AND CONTROL On June 30, 2012, Robert B Zoellick retired as the President of IBRD. General Governance Effective July 1, 2012, Jim Yong Kim became the IBRD’s decision-making structure consists of the President of IBRD. Board of Governors, the Executive Directors (the Board) and the President and staff. The Board of Following the decision by Vincenzo La Via to retire Governors is the highest decision-making authority. as CFO of IBRD, Charles McDonough was Governors are appointed by their member appointed as acting CFO effective March 28, 2012. governments for a five-year term, which is A global search for a new CFO is in progress. renewable. The Board of Governors may delegate Audit Committee authority to the Executive Directors to exercise any of its powers, with the exception of certain powers Membership enumerated in IBRD’s Articles. The Audit Committee (Committee) consists of eight Board Membership Executive Directors. Membership on the Committee is determined by the Executive Directors, based In accordance with its Articles, members of the upon nominations by the Chairman of the Board, Board are appointed or elected every two years by following informal consultation with the Executive their member governments. Currently the Board is Directors. composed of 25 Executive Directors. These Executive Directors are neither officers nor staff of Key Responsibilities IBRD. The President is the only member of the The Committee is appointed by the Executive Board from management, serving as a non-voting Directors to assist it in the oversight and assessment member and as Chairman of the Board. of IBRD’s finances and accounting, including the effectiveness of financial policies, the integrity of 36 THE WORLD BANK ANNUAL REPORT 2012 financial statements, the system of internal control systems, policies, and procedures are consistently regarding finance, accounting and ethics (including aligned with the World Bank’s business conduct fraud and corruption), and financial and operational framework. risks. The Committee also has the responsibility for The World Bank has both an Ethics HelpLine and a reviewing the performance and recommending to the Fraud and Corruption hotline. A third-party service Executive Directors the appointment of the external offers numerous methods of worldwide auditor, as well as monitoring the independence of communication. Reporting channels include: the auditor. The Committee participates in oversight phone, mail, email, or through confidential of the internal audit function and reviews the annual submission through a website. internal audit plan. In the execution of its role, the Committee discusses with Management, the external IBRD has in place procedures for the receipt, auditors, and the internal auditors, financial issues retention and handling of recommendations and and policies which have a bearing on the institution's concerns relating to business conduct identified financial position and capital adequacy. The during accounting, internal control and auditing Committee also reviews with the external auditor the processes. financial statements prior to their publication and recommends the annual audited financial statements The World Bank’s Staff Rules clarify and codify for approval to the Executive Directors. The the obligations of staff in reporting suspected fraud, Committee monitors the evolution of developments corruption or other misconduct that may threaten the in corporate governance and the role of audit operations or governance of the World Bank. committees on an ongoing basis and updated its Additionally, these rules offer protection from terms of reference in July 2009. retaliation. Executive Sessions Auditor Independence Under the Committee's terms of reference, members The appointment of the external auditor of IBRD is of the Committee may convene in executive session governed by a set of Board-approved principles. Key at any time, without Management present. It meets features of those principles include: separately in executive session with the external and • Prohibition of the external auditor from the internal auditors. provision of all non audit-related services. Access to Resources and to Management • All audit-related services must be pre- approved on a case-by-case basis by the Throughout the year, the Committee receives a large Executive Directors, upon recommendation volume of information, which supports the of the Committee. execution of its duties. The Committee meets both formally and informally throughout the year to • Mandatory rebidding of the external audit discuss relevant matters. The Committee has contract every five years, with a limitation of two consecutive terms and mandatory complete access to Management and reviews and rotation thereafter. discusses with management topics contemplated in their terms of reference. External auditors are appointed to a five-year term of service. This is subject to annual reappointment The Committee has the capacity, under exceptional based on the recommendation of the Audit circumstances, to obtain advice and assistance from Committee and approval of a resolution by the outside legal, accounting or other advisors as Executive Directors. deemed appropriate. Communication between the external auditor and the Business Conduct Committee is ongoing, as frequently as is deemed The World Bank promotes a positive work necessary by either party. The Committee meets environment where staff members understand their periodically with the external auditor, and individual ethical obligations to the institution, which are members of the Committee have independent access embodied in its Core Values and Principles of Staff to the external auditor. IBRD’s auditors also follow Employment. In support of this commitment, the the communication requirements with audit institution has in place a Code of Conduct, entitled committees set out under generally accepted Living our Values (the Code). The Code applies to auditing standards accepted in the United States of all staff worldwide and is available on IBRD’s America and International Standards of Auditing. website, www.worldbank.org. Internal Control In addition to the Code, Staff and Administrative Manuals, guidance for staff is also provided through Internal Control Over Financial Reporting programs, training materials, and other resources. Management makes an annual assertion whether, as Managers are responsible for ensuring that internal of June 30 of each fiscal year, its system of internal IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 37 control over its external financial reporting has met Disclosure Control and Procedures the criteria for effective internal control over Disclosure control and procedures are those external financial reporting as described in the processes which are designed to ensure that Internal Control – Integrated Framework issued by information required to be disclosed is accumulated The Committee of Sponsoring Organizations of and communicated to Management as appropriate, the Treadway Commission (COSO). to allow timely decisions regarding required Concurrently, IBRD’s external auditor provides an disclosure by IBRD. Management has undertaken an attestation report on whether Management's evaluation of the effectiveness of such controls and assertion regarding the effectiveness of internal procedures. Based on that evaluation, the President control over external financial reporting is fairly and the acting CFO have concluded that these stated in all material respects. controls and procedures were effective as of June 30, 2012. For each fiscal year, Management performs an evaluation of internal control over external financial reporting for the purpose of determining if there are any changes made in internal control during the fiscal year covered by the report that materially affect, or would be reasonably likely to materially affect IBRD’s internal control over external financial reporting. As of June 30, 2012 no such changes had occurred. 38 THE WORLD BANK ANNUAL REPORT 2012 Glossary of Terms Asset-backed Securities: Asset-backed securities Equity-funded loans: Interest cost saved by are instruments whose cash flow is based on the deploying equity instead of debt to fund loans. cash flows of a pool of underlying assets managed Forward Starting Swaps: A forward starting swap by a trust. is an agreement under which the cash flow Capital Adequacy: Is a measure of IBRD’s ability exchanges of the underlying interest rate swaps to withstand unexpected losses, and is based on the would begin to take effect from a specified future amount of IBRD’s usable equity expressed as a date. percentage of its loans and other related exposures. Futures: Futures are contracts for delivery of COSO: Committee of Sponsoring Organizations of securities or money market instruments in which the the Treadway Commission. COSO was formed in seller agrees to make delivery at a specified future 1985 to sponsor the National Commission on date of a specified instrument at a specified price or Fraudulent Financial Reporting, an independent yield. Futures contracts are traded on U.S. and private-sector initiative which studied the causal international regulated exchanges. factors that can lead to fraudulent financial Government and Agency Obligations: These reporting. In 1992, COSO issued its Internal obligations include marketable bonds, notes and Control-Integrated Framework, which provided a other obligations issued by governments. common definition of internal control and guidance on judging its effectiveness. Interest Margin: The spread between loan returns and debt cost. Credit Default Swaps (CDS): A derivatives contract that provides protection against Interest Rate Cap: An option that provides a payoff deteriorating credit quality and allows one party to when a specified interest rate is above a certain receive payment in the event of a default or level. specified credit event by a third party. Interest Rate Collar: A combination of an interest- Currency Swaps (including Currency Forward rate cap and an interest rate floor. An interest rate Contracts): Currency swaps are agreements between floor is an option that provides a payoff when an two parties to exchange cash flows denominated in interest rate is below a certain level. different currencies at one or more certain times in Interest Rate Swaps: Interest rate swaps are the future. The cash flows are based on a agreements involving the exchange of periodic predetermined formula reflecting rates of interest interest payments of differing character, based on an and an exchange of principal. underlying notional principal amount for a specified Duration: Duration provides an indication of the time. interest rate sensitivity of a fixed income security to LIBOR: London interbank offered rate. changes in its underlying yield. Maintenance of Value: Agreements with members Equity Duration Extension Strategy: IBRD has provide for the maintenance of the value, from the reduced the sensitivity of its income to short-term time of subscription, of certain restricted currencies. interest rates by using derivatives to extend the Additional payments to (or from) IBRD are required duration of its equity from three months to in the event the par value of the currency is reduced approximately five years. This strategy uses a 10- (or increased) to a significant extent. year ladder repricing profile. Net Loan Disbursements: Loan disbursements net Equity-to-Loans Ratio: This ratio is the sum of of repayments and prepayments. usable capital plus the special and general reserves, Options: Options are contracts that allow the holder cumulative translation adjustment (excluding of the option the right, but not the obligation, to amounts associated with fair value adjustment on purchase or sell a financial instrument at a specified non-trading portfolios, net), the proposed transfer price within a specified period of time from or to the from unallocated net income to general reserves seller of the option. The purchaser of an option pays (where there are firm estimates available), net a premium at the outset to the seller of the option, underfunded status of IBRD’s pension plans, the who then bears the risk of an unfavorable change in cumulative income earned on LTIP assets adjusted the price of the financial instrument underlying the by the fixed draw down amount and income earned option. on PEBP assets prior to FY 2011 divided by the sum of loans outstanding, the present value of Prudential Minimum: The minimum amount of guarantees, effective but undisbursed DDOs, net of liquidity that IBRD is required to hold. The amount the accumulated provision for losses on loans and is equal to the highest consecutive six months of other exposures, deferred loan income and LTIP projected debt service obligations plus one-half of assets. projected net disbursements on approved loans (if positive) for the relevant fiscal year. IBRD MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 39 Return on Equity: This return is computed as net not exceed the sum of subscribed capital, reserves income divided by the average equity balance during and surplus. the year. Stop-loss limits: Stop-loss limits are levels of mark- Strategic Capital Adequacy Framework: to-market losses against the benchmark, at which Evaluates IBRD’s capital adequacy as measured by Management will revert to passive management of stress test and appropriate long term equity-to-loan the portfolio. target range. This target equity-to-loans range Swaptions: A swaption is an option which gives the provides a background framework in the context of holder the right to enter into an Interest Rate Swap annual net income allocation decisions, as well as in or Currency Swap at a future date. the assessment of the initiatives for the use of capital. The capital adequacy framework has been Time Deposits: Time deposits include certificates of approved by the Executive Directors. deposit, bankers' acceptances, and other obligations issued or unconditionally guaranteed by banks and Statutory Lending Limit: Under IBRD’s Articles, other financial institutions. as applied, the total amount outstanding of loans, participations in loans, and callable guarantees may World Bank: Refers collectively to IBRD and IDA in this document. 40 THE WORLD BANK ANNUAL REPORT 2012 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT FINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS JUNE 30, 2012 Management’s Report Regarding Effectiveness of Internal Control Over External Financial Reporting 42 Independent Auditors’ Report on Management’s Assertion Regarding Effectiveness of Internal Control Over Financial Reporting 44 Independent Auditors’ Report 45 Balance Sheet 46 Statement of Income 48 Statement of Comprehensive Income 49 Statement of Changes in Retained Earnings 49 Statement of Cash Flows 50 Summary Statement of Loans 52 Statement of Subscriptions to Capital Stock and Voting Power 55 Notes to Financial Statements 59 MANAGEMENT’S REPORT REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER EXTERNAL FINANCIAL REPORTING 42 THE WORLD BANK ANNUAL REPORT 2012 IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 43 INDEPENDENT AUDITORS’ REPORT ON MANAGEMENT’S ASSERTION REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING 44 THE WORLD BANK ANNUAL REPORT 2012 INDEPENDENT AUDITORS’ REPORT IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 45 BALANCE SHEET June 30, 2012 and June 30, 2011 Expressed in millions of U.S. dollars 2012 2011 Assets Due from Banks Unrestricted currencies $ 5,682 $ 2,312 Currencies subject to restrictions 124 150 5,806 2,462 Investments-Trading (including securities transferred under repurchase or securities lending agreements of $7 million—June 30, 2012; $151 million— June 30, 2011)—Note C 33,466 32,598 Securities Purchased Under Resale Agreements—Note C 209 47 Derivative Assets Investments—Notes C and F 18,554 12,423 Client operations—Notes F and H 27,560 31,978 Borrowings—Notes E and F 110,103 97,199 Others—Note F 4,597 3,111 160,814 144,711 Other Receivables Receivable from investment securities traded—Note C 18 83 Accrued income on loans 836 827 854 910 Loans Outstanding (Summary Statement of Loans, Notes D and H) Total loans 199,241 196,894 Less undisbursed balance 62,916 64,435 Loans outstanding (including loans at fair value of $125 million—June 30, 2012; $139 million—June 30, 2011) 136,325 132,459 Less: Accumulated provision for loan losses 1,690 1,549 Deferred loan income 426 440 Net loans outstanding 134,209 130,470 Other Assets Assets under retirement benefits plans—Note J — 328 Premises and equipment, net 930 885 Miscellaneous—Notes A, H and I 1,890 1,800 2,820 3,013 Total assets $338,178 $314,211 46 THE WORLD BANK ANNUAL REPORT 2012 2012 2011 Liabilities Borrowings—Note E $145,339 $135,242 Securities Sold Under Repurchase Agreements, Securities Lent under Securities Lending Agreements, and Payable for Cash Collateral Received—Note C 3,700 2,184 Derivative Liabilities Investments—Notes C and F 18,631 13,275 Client operations—Notes F and H 27,551 31,964 Borrowings—Notes E and F 97,839 84,458 Others—Note F 816 732 144,837 130,429 Payable to Maintain Value of Currency Holdings on Account of Subscribed Capital 5 66 Other Liabilities Payable for investment securities purchased—Note C 137 1,320 Accrued interest on borrowings 1,185 1,227 Liabilities under retirement benefits plans—Note J 2,895 866 Accounts payable and miscellaneous liabilities—Notes A, D, H and I 3,395 3,194 7,612 6,607 Total liabilities 301,493 274,528 Equity Capital Stock (Statement of Subscriptions to Capital Stock and Voting Power, Note B) Authorized capital (2,307,600 shares—June 30, 2012, and June 30, 2011) Subscribed capital (1,702,605 shares—June 30, 2012, and 1,605,930 shares— June 30, 2011) 205,394 193,732 Less uncalled portion of subscriptions 192,976 182,012 Paid-in capital 12,418 11,720 Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Subscribed Capital (845) (1,137) Receivable Amounts to Maintain Value of Currency Holdings—Note B (79) (52) Deferred Amounts to Maintain Value of Currency Holdings—Note B 561 848 Retained Earnings (Statement of Changes in Retained Earnings, Note G) 29,047 29,723 Accumulated Other Comprehensive Loss—Note K (4,417) (1,419) Total equity 36,685 39,683 Total liabilities and equity $338,178 $314,211 The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 47 STATEMENT OF INCOME For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Income Loans—Note D Interest $2,572 $2,449 $ 2,458 Commitment charges 13 21 33 Investments, net—Trading—Notes C and F 219 367 367 Interest on equity duration extension swaps, net—Note F 1,095 1,139 994 Other—Notes A, H and I 490 401 354 Total income 4,389 4,377 4,206 Expenses Borrowings, net—Note E 1,652 1,687 1,750 Administrative—Notes A, H, I, and J 1,631 1,564 1,519 Contributions to special programs 133 147 168 Provision for losses on loans and other exposures, charge (release)—Note D 189 (45) (32) Other 1 1 1 Total expenses 3,606 3,354 3,406 Income before fair value adjustment on non-trading portfolios, net and Board of Governors-approved transfers 783 1,023 800 Fair value adjustment on non-trading portfolios, net—Notes D, E, F and L (809) 420 (1,038) Board of Governors-approved transfers—Note G (650) (513) (839) Net (loss) income $ (676) $ 930 $(1,077) The Notes to Financial Statements are an integral part of these Statements. 48 THE WORLD BANK ANNUAL REPORT 2012 STATEMENT OF COMPREHENSIVE INCOME For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Net (loss) income $ (676) $ 930 $(1,077) Other comprehensive income (loss)—Note K Reclassification to net income: Derivatives and hedging transition adjustment 5 (11) (5) Net actuarial (losses) gains on benefit plans (2,158) 834 (724) Prior service (cost) credit on benefit plans, net (141) 8 6 Currency translation adjustments (704) 793 (637) Total other comprehensive (loss) income (2,998) 1,624 (1,360) Comprehensive (loss) income $(3,674) $2,554 $(2,437) STATEMENT OF CHANGES IN RETAINED EARNINGS For the fiscal years ended June 30, 2012, June 30, 2011, and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Retained earnings at beginning of the fiscal year $29,723 $28,793 $29,870 Net (loss) income for the fiscal year (676) 930 (1,077) Retained earnings at end of the fiscal year $29,047 $29,723 $28,793 The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 49 STATEMENT OF CASH FLOWS For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Cash flows from investing activities Loans Disbursements $(19,733) $(21,839) $(28,775) Principal repayments 9,246 10,769 10,488 Principal prepayments 2,733 3,116 1,137 Loan origination fees received 22 26 32 Other investing activities, net (116) (312) (73) Net cash used in investing activities (7,848) (8,240) (17,191) Cash flows from financing activities Medium and long-term borrowings New issues 44,351 30,291 33,025 Retirements (26,778) (22,378) (32,987) Net short-term borrowings (7,659) (8,079) 13,835 Net derivatives-Borrowings 604 301 102 Net derivatives-Other assets/liabilities — — 17 Capital subscriptions 690 228 1 Other capital transactions, net 215 235 554 Net cash provided by financing activities 11,423 598 14,547 Cash flows from operating activities Net (loss) income (676) 930 (1,077) Adjustment to reconcile net (loss) income to net cash (used in) provided by operating activities Fair value adjustment on non-trading portfolios, net 809 (420) 1,038 Depreciation, amortization and other non-cash items 880 815 879 Provision for losses on loans and other exposures, charge (release) 189 (45) (32) Changes in: Investments-Trading (2,288) 5,709 4,431 Net investment securities traded/purchased (1,123) 1,028 (2,193) Net derivatives-Investments 494 (1,274) 283 Net securities purchased/sold under resale/repurchase agreements and payable for cash collateral received 1,341 1,420 (1,580) Accrued income on loans (47) (48) 101 Miscellaneous assets 299 (439) 387 Accrued interest on borrowings (7) 27 (285) Accounts payable and miscellaneous liabilities (76) 646 (113) Net cash (used in) provided by operating activities (205) 8,349 1,839 Effect of exchange rate changes on unrestricted cash — 24 6 Net increase (decrease) in unrestricted cash 3,370 731 (799) Unrestricted cash at beginning of the fiscal year 2,312 1,581 2,380 Unrestricted cash at end of the fiscal year $ 5,682 $ 2,312 $ 1,581 50 THE WORLD BANK ANNUAL REPORT 2012 Expressed in millions of U.S. dollars 2012 2011 2010 Supplemental disclosure (Decrease) Increase in ending balances resulting from exchange rate fluctuations Loans outstanding $(3,939) $4,347 $(2,846) Investment portfolio (169) 323 (29) Borrowing portfolio (3,095) 3,430 (2,072) Capitalized loan origination fees and interest included in total loans 44 40 80 Interest paid on borrowings 646 499 1,148 The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 51 SUMMARY STATEMENT OF LOANS June 30, 2012 Expressed in millions of U.S. dollars Loans approved Undisbursed Percentage of but not yet balance of Loans total loans a b Borrower or guarantor Total loans effective effective loans outstanding outstanding Albania $ 138 $ 48 $ 37 $ 53 0.04% Algeria 8 – – 8 * Argentina 9,437 400 3,455 5,582 4.09 Armenia 328 15 106 207 0.15 Azerbaijan 1,864 – 1,289 575 0.42 Barbados 43 – 24 19 0.01 Belarus 687 – 325 362 0.27 Belize 22 – 13 9 0.01 Bolivia – – – – * Bosnia and Herzegovina 621 113 47 461 0.34 Botswana 373 – 296 77 0.06 Brazil 15,606 2,261 3,250 10,095 7.41 Bulgaria 1,402 – 206 1,196 0.88 Cameroon 16 – – 16 0.01 Cape Verde 51 – 51 – * Chile 170 40 10 120 0.09 China 19,734 1,160 5,515 13,059 9.58 Colombia 8,483 360 669 7,454 5.47 Costa Rica 717 – 129 588 0.43 Croatia 2,028 – 448 1,580 1.16 Dominica – – – – * Dominican Republic 1,081 20 133 928 0.68 Ecuador 338 – 6 332 0.24 Egypt, Arab Republic of 6,157 740 2,476 2,941 2.16 El Salvador 1,226 80 146 1,000 0.73 Estonia 7 – – 7 * Gabon 94 58 2 34 0.02 Georgia 409 – 86 323 0.24 Grenada 12 – – 12 0.01 Guatemala 1,560 32 137 1,391 1.02 Hungary 9 – – 9 0.01 India 21,355 320 9,382 11,653 8.55 Indonesia 14,551 140 4,492 9,919 7.28 Iran, Islamic Republic of 810 – 65 745 0.55 Iraq 250 – – 250 0.18 Jamaica 727 – 58 669 0.49 Jordan 1,243 – 105 1,138 0.83 Kazakhstan 4,996 1,068 1,614 2,314 1.70 Korea, Republic of 304 – – 304 0.22 Kosovo 278 – – 278 0.20 Latvia 512 – – 512 0.38 Lebanon 584 267 38 279 0.20 Lesotho 1 – – 1 * Lithuania 16 – – 16 0.01 Macedonia, former Yugoslav Republic of 487 52 103 332 0.24 Mauritius 319 – 64 255 0.19 Mexico 16,706 1,358 1,719 13,629 10.00 Moldova 65 – – 65 0.05 Montenegro 338 – 44 294 0.22 Morocco 3,755 622 381 2,752 2.02 Pakistan 2,421 100 750 1,571 1.15 Panama 715 – 220 495 0.36 Papua New Guinea 120 – – 120 0.09 Paraguay 570 100 237 233 0.17 Peru 4,031 – 1,451 2,580 1.89 Philippines 4,383 323 758 3,302 2.42 Poland 6,702 944 152 5,606 4.11 Romania 5,572 1,258 761 3,553 2.61 Russian Federation 2,234 – 436 1,798 1.32 Serbia 2,214 – 382 1,832 1.34 Seychelles 16 – – 16 0.01 Slovak Republic 119 – – 119 0.09 Slovenia 3 – – 3 * South Africa 3,753 – 2,772 981 0.72 Sri Lanka 213 213 – – * St. Kitts and Nevis 7 – – 7 0.01 St. Lucia 17 – – 17 0.01 52 THE WORLD BANK ANNUAL REPORT 2012 Expressed in millions of U.S. dollars Loans approved Undisbursed Percentage of but not yet balance of Loans total loans a b Borrower or guarantor Total loans effective effective loans outstanding outstanding St. Vincent and the Grenadines $ 7 $ – $ 1 $ 6 *% Swaziland 48 – 46 2 * Thailand 1,142 1,000 79 63 0.05 Trinidad and Tobago 15 – – 15 0.01 Tunisia 2,000 – 314 1,686 1.24 Turkey 14,534 – 1,876 12,658 9.29 Turkmenistan 9 – – 9 0.01 Ukraine 4,165 – 994 3,171 2.33 Uruguay 1,437 – 349 1,088 0.80 Uzbekistan 504 180 102 222 0.16 Vietnam 1,868 100 943 825 0.60 Zimbabwe 462 – – 462 0.34 c Subtotal $199,199 $13,372 $49,544 $136,283 99.97% International Finance Corporation 42 – – 42 0.03% Total–June 30, 2012 $199,241 $13,372 $49,544 $136,325 100.00 % Total–June 30, 2011 $196,894 $19,430 $45,005 $132,459 *Indicates amount less than $0.5 million or less than 0.005 percent. NOTES a. Loans totaling $9,326 million ($12,614 million – June 30, 2011) have been approved by IBRD, but the related agreements have not been signed. Loan agreements totaling $4,046 million ($6,816 million – June 30, 2011) have been signed, but the loans are not effective and disbursements do not start until the borrowers and guarantors, if any, take certain actions and furnish certain documents to IBRD. b. Of the undisbursed balance, IBRD has entered into irrevocable commitments to disburse $110 million ($121 million – June 30, 2011). c. May differ from the sum of individual figures shown due to rounding. The Notes to Financial Statements are an integral part of these Statements. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 53 SUMMARY STATEMENT OF LOANS June 30, 2012 Expressed in millions of U.S. dollars This page intentionally left blank. 54 THE WORLD BANK ANNUAL REPORT 2012 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER June 30, 2012 Expressed in millions of U.S. dollars d Subscriptions Voting Power Amounts Number Percentage of Total Amounts subject of Percentage a a, b Member Shares total Amounts paid in to call votes of total Afghanistan 300 0.02% $ 36.2 $ 3.6 $ 32.6 832 0.05% Albania 830 0.05 100.1 3.6 96.5 1,362 0.08 Algeria 9,252 0.54 1,116.1 67.1 1,049.0 9,784 0.54 Angola 2,676 0.16 322.8 17.5 305.4 3,208 0.18 Antigua and Barbuda 520 0.03 62.7 1.3 61.5 1,052 0.06 Argentina 17,911 1.05 2,160.7 132.2 2,028.4 18,443 1.02 Armenia 1,139 0.07 137.4 5.9 131.5 1,671 0.09 Australia 26,263 1.54 3,168.2 194.8 2,973.4 26,795 1.49 Austria 11,796 0.69 1,423.0 86.0 1,337.0 12,328 0.68 Azerbaijan 1,646 0.10 198.6 9.7 188.8 2,178 0.12 Bahamas, The 1,071 0.06 129.2 5.4 123.8 1,603 0.09 Bahrain 1,103 0.06 133.1 5.7 127.4 1,635 0.09 Bangladesh 4,854 0.29 585.6 33.9 551.6 5,386 0.30 Barbados 948 0.06 114.4 4.5 109.9 1,480 0.08 Belarus 3,596 0.21 433.8 24.3 409.5 4,128 0.23 Belgium 28,983 1.70 3,496.4 215.8 3,280.6 29,515 1.64 Belize 586 0.03 70.7 1.8 68.9 1,118 0.06 Benin 868 0.05 104.7 3.9 100.8 1,400 0.08 Bhutan 479 0.03 57.8 1.0 56.8 1,011 0.06 Bolivia 1,785 0.10 215.3 10.8 204.5 2,317 0.13 Bosnia and Herzegovina 549 0.03 66.2 5.8 60.4 1,081 0.06 Botswana 615 0.04 74.2 2.0 72.2 1,147 0.06 Brazil 33,287 1.96 4,015.6 245.5 3,770.1 33,819 1.88 Brunei Darussalam 2,373 0.14 286.3 15.2 271.1 2,905 0.16 Bulgaria 5,215 0.31 629.1 36.5 592.6 5,747 0.32 Burkina Faso 868 0.05 104.7 3.9 100.8 1,400 0.08 Burundi 716 0.04 86.4 3.0 83.4 1,248 0.07 Cambodia 214 0.01 25.8 2.6 23.2 746 0.04 Cameroon 1,527 0.09 184.2 9.0 175.2 2,059 0.11 Canada 52,709 3.10 6,358.6 392.3 5,966.3 53,241 2.95 Cape Verde 508 0.03 61.3 1.2 60.1 1,040 0.06 Central African Republic 862 0.05 104.0 3.9 100.1 1,394 0.08 Chad 862 0.05 104.0 3.9 100.1 1,394 0.08 Chile 6,931 0.41 836.1 49.6 786.6 7,463 0.41 China 58,864 3.46 7,101.1 436.9 6,664.2 59,396 3.29 Colombia 8,166 0.48 985.1 58.3 926.8 8,698 0.48 Comoros 282 0.02 34.0 0.3 33.7 814 0.05 Congo, Democratic Republic Of 2,643 0.16 318.8 25.4 293.5 3,175 0.18 Congo, Republic of 927 0.05 111.8 4.3 107.5 1,459 0.08 Costa Rica 233 0.01 28.1 1.9 26.2 765 0.04 Cote d'Ivoire 2,516 0.15 303.5 16.4 287.1 3,048 0.17 Croatia 2,416 0.14 291.5 18.2 273.3 2,948 0.16 Cyprus 1,461 0.09 176.2 8.4 167.9 1,993 0.11 Czech Republic 6,308 0.37 761.0 45.9 715.0 6,840 0.38 Denmark 17,796 1.05 2,146.8 129.2 2,017.6 18,328 1.02 Djibouti 559 0.03 67.4 1.6 65.9 1,091 0.06 Dominica 504 0.03 60.8 1.1 59.7 1,036 0.06 Dominican Republic 2,092 0.12 252.4 13.1 239.3 2,624 0.15 Ecuador 2,771 0.16 334.3 18.2 316.1 3,303 0.18 Egypt, Arab Republic of 7,108 0.42 857.5 50.9 806.6 7,640 0.42 IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 55 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER (continued) June 30, 2012 Expressed in millions of U.S. dollars d Subscriptions Voting Power Amounts Number Percentage of Total Amounts subject of Percentage a a, b Member Shares total Amounts paid in to call votes of total El Salvador 141 0.01% $ 17.0 $ 1.7 $ 15.3 673 0.04% Equatorial Guinea 715 0.04 86.3 2.7 83.5 1,247 0.07 Eritrea 593 0.03 71.5 1.8 69.7 1,125 0.06 Estonia 923 0.05 111.3 4.3 107.1 1,455 0.08 Ethiopia 978 0.06 118.0 4.7 113.3 1,510 0.08 Fiji 987 0.06 119.1 4.8 114.3 1,519 0.08 Finland 9,157 0.54 1,104.7 66.2 1,038.5 9,689 0.54 France 73,695 4.33 8,890.2 551.5 8,338.7 74,227 4.12 Gabon 987 0.06 119.1 5.1 113.9 1,519 0.08 Gambia, The 543 0.03 65.5 1.5 64.0 1,075 0.06 Georgia 1,584 0.09 191.1 9.3 181.8 2,116 0.12 Germany 82,450 4.84 9,946.4 615.7 9,330.7 82,982 4.60 Ghana 1,525 0.09 184.0 12.7 171.2 2,057 0.11 Greece 1,684 0.10 203.1 14.1 189.1 2,216 0.12 Grenada 531 0.03 64.1 1.4 62.7 1,063 0.06 Guatemala 2,001 0.12 241.4 12.4 229.0 2,533 0.14 Guinea 1,292 0.08 155.9 7.1 148.8 1,824 0.10 Guinea-Bissau 540 0.03 65.1 1.4 63.7 1,072 0.06 Guyana 1,058 0.06 127.6 5.3 122.3 1,590 0.09 Haiti 1,067 0.06 128.7 5.4 123.3 1,599 0.09 Honduras 641 0.04 77.3 2.3 75.0 1,173 0.07 Hungary 8,505 0.50 1,026.0 61.3 964.7 9,037 0.50 Iceland 1,258 0.07 151.8 6.8 144.9 1,790 0.10 India 50,552 2.97 6,098.3 375.4 5,722.9 51,084 2.83 Indonesia 14,981 0.88 1,807.2 110.3 1,697.0 15,513 0.86 Iran, Islamic Republic of 23,686 1.39 2,857.4 175.8 2,681.5 24,218 1.34 Iraq 2,808 0.16 338.7 27.1 311.6 3,340 0.19 Ireland 5,271 0.31 635.9 37.1 598.8 5,803 0.32 Israel 4,750 0.28 573.0 33.2 539.8 5,282 0.29 Italy 44,795 2.63 5,403.8 334.8 5,069.0 45,327 2.51 Jamaica 2,578 0.15 311.0 16.8 294.2 3,110 0.17 Japan 165,444 9.72 19,958.3 1,222.2 18,736.1 165,976 9.21 Jordan 1,388 0.08 167.4 7.8 159.6 1,920 0.11 Kazakhstan 2,985 0.18 360.1 19.8 340.3 3,517 0.20 Kenya 2,461 0.14 296.9 15.9 281.0 2,993 0.17 Kiribati 465 0.03 56.1 0.9 55.2 997 0.06 Korea, Republic of 15,817 0.93 1,908.1 114.5 1,793.5 16,349 0.91 Kosovo 966 0.06 116.5 5.2 111.4 1,498 0.08 Kuwait 13,280 0.78 1,602.0 97.4 1,504.6 13,812 0.77 Kyrgyz Republic 1,107 0.07 133.5 5.7 127.9 1,639 0.09 Lao People's Democratic Republic 178 0.01 21.5 1.5 20.0 710 0.04 Latvia 1,384 0.08 167.0 7.8 159.2 1,916 0.11 Lebanon 340 0.02 41.0 1.1 39.9 872 0.05 Lesotho 663 0.04 80.0 2.3 77.6 1,195 0.07 Liberia 463 0.03 55.9 2.6 53.3 995 0.06 Libya 7,840 0.46 945.8 57.0 888.8 8,372 0.46 Lithuania 1,507 0.09 181.8 8.7 173.1 2,039 0.11 Luxembourg 1,652 0.10 199.3 9.8 189.5 2,184 0.12 Macedonia, Former Yugoslav Republic Of 427 0.03 51.5 3.2 48.3 959 0.05 Madagascar 1,422 0.08 171.5 8.1 163.5 1,954 0.11 Malawi 1,094 0.06 132.0 5.6 126.4 1,626 0.09 56 THE WORLD BANK ANNUAL REPORT 2012 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER June 30, 2012 Expressed in millions of U.S. dollars d Subscriptions Voting Power Amounts Number Percentage of Total Amounts subject of Percentage a a, b Member Shares total Amounts paid in to call votes of total Malaysia 8,244 0.48% $ 994.5 $ 59.5 $ 935.0 8,776 0.49% Maldives 469 0.03 56.6 0.9 55.7 1,001 0.06 Mali 1,162 0.07 140.2 6.1 134.1 1,694 0.09 Malta 1,074 0.06 129.6 5.4 124.1 1,606 0.09 Marshall Islands 469 0.03 56.6 0.9 55.7 1,001 0.06 Mauritania 900 0.05 108.6 4.1 104.4 1,432 0.08 Mauritius 1,242 0.07 149.8 6.7 143.1 1,774 0.10 Mexico 18,804 1.10 2,268.4 139.0 2,129.4 19,336 1.07 Micronesia, Federated States Of 479 0.03 57.8 1.0 56.8 1,011 0.06 Moldova 1,368 0.08 165.0 7.6 157.4 1,900 0.11 Mongolia 466 0.03 56.2 2.3 53.9 998 0.06 Montenegro 688 0.04 83.0 3.2 79.8 1,220 0.07 Morocco 5,252 0.31 633.6 36.9 596.7 5,784 0.32 Mozambique 930 0.05 112.2 4.8 107.4 1,462 0.08 Myanmar 2,484 0.15 299.7 16.1 283.6 3,016 0.17 Namibia 1,523 0.09 183.7 8.8 174.9 2,055 0.11 Nepal 968 0.06 116.8 4.6 112.1 1,500 0.08 Netherlands 35,503 2.09 4,282.9 264.8 4,018.1 36,035 2.00 New Zealand 7,236 0.42 872.9 51.9 821.0 7,768 0.43 Nicaragua 608 0.04 73.3 2.1 71.3 1,140 0.06 Niger 852 0.05 102.8 3.8 99.0 1,384 0.08 Nigeria 12,655 0.74 1,526.6 92.7 1,433.9 13,187 0.73 Norway 11,414 0.67 1,376.9 82.9 1,294.0 11,946 0.66 Oman 1,561 0.09 188.3 9.1 179.2 2,093 0.12 Pakistan 9,339 0.55 1,126.6 67.8 1,058.9 9,871 0.55 Palau 16 0.00 1.9 0.2 1.8 548 0.03 Panama 385 0.02 46.4 3.2 43.2 917 0.05 Papua New Guinea 1,294 0.08 156.1 7.1 149.0 1,826 0.10 Paraguay 1,229 0.07 148.3 6.6 141.6 1,761 0.10 Peru 5,331 0.31 643.1 37.5 605.6 5,863 0.33 Philippines 6,844 0.40 825.6 48.9 776.7 7,376 0.41 Poland 10,908 0.64 1,315.9 79.6 1,236.3 11,440 0.63 Portugal 5,460 0.32 658.7 38.5 620.2 5,992 0.33 Qatar 1,389 0.08 167.6 11.1 156.5 1,921 0.11 Romania 4,011 0.24 483.9 30.5 453.4 4,543 0.25 Russian Federation 44,795 2.63 5,403.8 333.9 5,070.0 45,327 2.51 Rwanda 1,046 0.06 126.2 5.2 120.9 1,578 0.09 St. Kitts and Nevis 275 0.02 33.2 0.3 32.9 807 0.04 St. Lucia 552 0.03 66.6 1.5 65.1 1,084 0.06 St. Vincent and the Grenadines 278 0.02 33.5 0.3 33.2 810 0.04 Samoa 531 0.03 64.1 1.4 62.7 1,063 0.06 San Marino 595 0.03 71.8 2.5 69.3 1,127 0.06 Sao Tome and Principe 495 0.03 59.7 1.1 58.6 1,027 0.06 Saudi Arabia 44,795 2.63 5,403.8 335.0 5,068.9 45,327 2.51 Senegal 2,072 0.12 250.0 13.0 237.0 2,604 0.14 Serbia 2,846 0.17 343.3 21.5 321.9 3,378 0.19 Seychelles 263 0.02 31.7 0.2 31.6 795 0.04 Sierra Leone 718 0.04 86.6 3.0 83.6 1,250 0.07 Singapore 320 0.02 38.6 3.9 34.7 852 0.05 Slovak Republic 3,216 0.19 388.0 23.0 365.0 3,748 0.21 IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 57 STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER (continued) June 30, 2012 Expressed in millions of U.S. dollars d Subscriptions Voting Power Amounts Number Percentage of Total Amounts subject of Percentage a a, b Member Shares total Amounts paid in to call votes of total Slovenia 1,261 0.07% $ 152.1 $ 9.5 $ 142.6 1,793 0.10% Solomon Islands 513 0.03 61.9 1.2 60.7 1,045 0.06 Somalia 552 0.03 66.6 3.3 63.3 1,084 0.06 South Africa 14,241 0.84 1,718.0 104.5 1,613.5 14,773 0.82 c South Sudan 1,437 0.08 173.4 8.6 164.8 1,969 0.11 Spain 31,573 1.85 3,808.8 232.7 3,576.1 32,105 1.78 Sri Lanka 3,817 0.22 460.5 26.1 434.3 4,349 0.24 Sudan 850 0.05 102.5 7.2 95.3 1,382 0.08 Suriname 412 0.02 49.7 2.0 47.7 944 0.05 Swaziland 440 0.03 53.1 2.0 51.1 972 0.05 Sweden 14,974 0.88 1,806.4 110.2 1,696.2 15,506 0.86 Switzerland 28,619 1.68 3,452.5 211.8 3,240.7 29,151 1.62 Syrian Arab Republic 2,202 0.13 265.6 14.0 251.7 2,734 0.15 Tajikistan 1,060 0.06 127.9 5.3 122.5 1,592 0.09 Tanzania 1,295 0.08 156.2 10.0 146.2 1,827 0.10 Thailand 6,349 0.37 765.9 45.2 720.7 6,881 0.38 Timor-Leste 517 0.03 62.4 1.9 60.4 1,049 0.06 Togo 1,105 0.06 133.3 5.7 127.6 1,637 0.09 Tonga 494 0.03 59.6 1.1 58.5 1,026 0.06 Trinidad and Tobago 2,664 0.16 321.4 17.6 303.7 3,196 0.18 Tunisia 719 0.04 86.7 5.7 81.1 1,251 0.07 Turkey 15,418 0.91 1,860.0 111.2 1,748.8 15,950 0.88 Turkmenistan 526 0.03 63.5 2.9 60.5 1,058 0.06 Tuvalu 211 0.01 25.5 1.5 23.9 743 0.04 Uganda 617 0.04 74.4 4.4 70.1 1,149 0.06 Ukraine 10,908 0.64 1,315.9 79.3 1,236.6 11,440 0.63 United Arab Emirates 2,385 0.14 287.7 22.6 265.1 2,917 0.16 United Kingdom 73,695 4.33 8,890.2 570.6 8,319.6 74,227 4.12 United States 281,183 16.51 33,920.5 2,115.7 31,804.8 281,715 15.63 Uruguay 2,812 0.17 339.2 18.6 320.7 3,344 0.19 Uzbekistan 2,493 0.15 300.7 16.1 284.7 3,025 0.17 Vanuatu 586 0.03 70.7 1.8 68.9 1,118 0.06 Venezuela, Republica Bolivariana de 20,361 1.20 2,456.2 150.8 2,305.5 20,893 1.16 Vietnam 968 0.06 116.8 8.1 108.7 1,500 0.08 Yemen, Republic of 2,212 0.13 266.8 14.0 252.8 2,744 0.15 Zambia 2,810 0.17 339.0 20.0 319.0 3,342 0.19 Zimbabwe 3,325 0.20 401.1 22.4 378.7 3,857 0.21 b Total-June 30, 2012 1,702,605 100.00% $205,394 $12,418 $192,976 1,802,621 100.00% Total-June 30, 2011 1,605,930 $193,732 $11,720 $182,012 1,652,680 * Indicates amounts less than 0.005 percent. NOTES a. See Notes to Financial Statements, Note B—Capital Stock, Restricted Currencies, Maintenance of Value, and Membership. b. May differ from the sum of individual figures shown due to rounding. th c. South Sudan became the 188 member of IBRD on April 18, 2012. d. Effective June 27, 2012, the Articles of Agreement of IBRD have been amended to reflect changes in the allocation of votes to members. See Notes to Financial Statements, Note B—Capital Stock, Restricted Currencies, Maintenance of Value, and Membership. The Notes to Financial Statements are an integral part of these Statements. 58 THE WORLD BANK ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS PURPOSE AND AFFILIATED provisions for losses on loans and other exposures ORGANIZATIONS (deferred drawdown options-DDOs, irrevocable commitments, exposures to member countries’ The International Bank for Reconstruction and derivatives and guarantees), the determination of net Development (IBRD) is an international periodic cost from pension and other postretirement organization which commenced operations in 1946. benefits plans, and the present value of benefit The principal purpose of IBRD is to promote obligations. sustainable economic development and reduce poverty in its member countries, primarily by Certain reclassifications of the prior years’ providing loans, guarantees and related technical information have been made to conform with the assistance for specific projects and for programs of current year’s presentation. In particular, effective economic reform in developing member countries. July 1, 2011, as part of the move toward a more The activities of IBRD are complemented by those integrated reporting of IBRD’s trust fund activities of three affiliated organizations, the International and as permitted under U.S. GAAP, certain income Development Association (IDA), the International and the related expenses pertaining to IBRD- Finance Corporation (IFC), and the Multilateral executed trust funds are now presented on a gross Investment Guarantee Agency (MIGA). Each of basis; previously these amounts were presented on a these organizations is legally and financially net basis. For the fiscal years ended June 30, 2011 independent from IBRD, with separate assets and and June 30, 2010, the impact of this change was an liabilities, and IBRD is not liable for their respective increase in Other income of $300 million, and $271 obligations. Transactions with these affiliated million, respectively, and corresponding increases in organizations are disclosed in the notes that follow. Administrative expenses. In line with the change in IDA’s main goal is to reduce poverty through reporting of trust fund related expenses, IBRD also promoting sustainable economic development in the changed the presentation of income and expenses less developed countries who are members of IDA, jointly earned and incurred with IDA, respectively. by extending grants, development credits, Previously, IBRD allocated IDA’s share of both guarantees and related technical assistance. IFC’s income and expenses through Administrative purpose is to encourage the growth of productive expenses on a net basis. Under the new presentation, private enterprises in its member countries through IBRD now reflects IDA’s share of these amounts on loans and equity investments in such enterprises a gross basis. For the fiscal years ended June 30, without a member’s guarantee. MIGA was 2011 and June 30, 2010, the impact of this change established to encourage the flow of investments for was a decrease in Other income of $193 million, and productive purposes between member countries and, $173 million, respectively, and corresponding in particular, to developing member countries by decreases in Administrative expenses. These providing guarantees against noncommercial risks changes in presentation had no effect on IBRD's for foreign investment in its developing member income before fair value adjustment on non-trading countries. portfolios, net and Board of Governors-approved transfers, or Net income (loss) for the fiscal years IBRD is immune from taxation pursuant to Article ended June 30, 2011 and June 30, 2010. VII, Section 9, Immunities from Taxation, of IBRD’s Articles of Agreement. In addition, IBRD now recognizes on its balance sheet all undisbursed contributions made by third NOTE A—SUMMARY OF SIGNIFICANT party donors to IBRD-executed trust funds. The ACCOUNTING AND RELATED POLICIES impact of this change in presentation on the June 30, IBRD’s financial statements are prepared in 2011 balance sheet was an increase in Miscellaneous conformity with accounting principles generally assets of $340 million and a corresponding increase accepted in the United States of America (U.S. in Accounts payable and miscellaneous liabilities, GAAP). but no effect on IBRD’s Equity or cash from operating activities. The preparation of financial statements in conformity with U.S. GAAP requires management On August 9, 2012, the Executive Directors to make estimates and assumptions that affect the approved these financial statements for issue. reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the Translation of Currencies: IBRD’s financial date of the financial statements and the reported statements are expressed in terms of U.S. dollars for amounts of income and expenses during the the purpose of summarizing IBRD’s financial reporting period. Actual results could differ from position and the results of its operations for the these estimates. Significant judgment has been used convenience of its members and other interested in the valuation of certain financial instruments, the parties. determination of the adequacy of the accumulated IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 59 IBRD is an international organization which members whose national currencies appreciate conducts its operations in the currencies of all of its significantly in terms of the standard of value. members. IBRD’s resources are derived from its All MOV receivable balances and amounts from capital, borrowings, and accumulated earnings in those countries who have been in arrears for two those various currencies. IBRD has a number of years or more are shown as components of equity, general policies aimed at minimizing exchange rate under Receivable Amounts to Maintain Value of risk in a multicurrency environment. Under these Currency Holdings. The net receivable or payable policies, IBRD endevours to match its borrowing MOV amounts relating to restricted currencies used obligations in any one currency (after swaps) with in IBRD's lending and investing operations are also assets in the same currency, as prescribed by its included as a component of Equity under Deferred Articles of Agreement. In addition, IBRD Amounts to Maintain Value of Currency Holdings. periodically undertakes currency conversions to All MOV payable balances are included in more closely match the currencies underlying its Liabilities, under Payable to Maintain Value of Equity with those of the net loans outstanding. Currency Holdings on Account of Subscribed Assets and liabilities are translated at market Capital. exchange rates in effect at the end of the accounting period. Income and expenses are translated at either Transfers Approved by the Board of the market exchange rates in effect on the dates on Governors: In accordance with IBRD’s Articles of which they are recognized or at an average of the Agreement, as interpreted by the Executive market exchange rates in effect during each month. Directors, the Board of Governors may exercise its Translation adjustments are reflected in reserved power to approve transfers to other entities Accumulated Other Comprehensive Income. for development purposes. These transfers, referred to as “Board of Governors-approved transfersâ€?, are Valuation of Capital Stock: In the Articles of reported as expenses when incurred, upon approval. Agreement, the capital stock of IBRD is expressed The transfers are funded either from the immediately in terms of “U.S. dollars of the weight and fineness preceding fiscal year’s Unallocated Net Income or in effect on July 1, 1944â€? (1944 dollars). Following Surplus. the abolition of gold as a common denominator of the monetary system and the repeal of the provision Retained Earnings: Retained Earnings consist of of the U.S. law defining the par value of the U.S. allocated amounts (Special Reserve, General dollar in terms of gold, the pre-existing basis for Reserve, Pension Reserve, Surplus, Cumulative Fair translating 1944 dollars into current dollars or into Value Adjustments, Long-Term Income Portfolio any other currency was eliminated. The Executive (LTIP) reserve, and Restricted Retained Earnings) Directors of IBRD have decided, until such time as and Unallocated Net Income (Loss). the relevant provisions of the Articles of Agreement The Special Reserve consists of loan commissions are amended, that the words “U.S. dollars of the set aside pursuant to Article IV, Section 6 of the weight and fineness in effect on July 1, 1944â€? in Articles of Agreement, which are to be held in liquid Article II, Section 2(a) of the Articles of Agreement assets. These assets may be used only for the of IBRD are interpreted to mean the Special purpose of meeting liabilities of IBRD on its Drawing Right (SDR) introduced by the borrowings and guarantees in the event of defaults International Monetary Fund, as valued in terms of on loans made, participated in, or guaranteed by U.S. dollars immediately before the introduction of IBRD. The Special Reserve assets are included the basket method of valuing the SDR on July 1, under Investments— Trading, and comprise 1974, such value being $1.20635 for one SDR (1974 obligations of the United States Government, its SDR). agencies, and other official entities. The allocation Maintenance of Value: Article II, Section 9 of of such commissions to the Special Reserve was the Articles of Agreement provides for maintenance discontinued in 1964 with respect to subsequent of the value (MOV), at the time of subscription, of loans and no further additions are being made to it. restricted currencies (see Note B—Capital Stock, The General Reserve consists of earnings from prior Maintenance of Value, and Membership). fiscal years which, in the judgment of the Executive Maintenance of value amounts are determined by Directors, should be retained in IBRD’s operations. measuring the foreign exchange value of a member’s national currency against the standard of The Pension Reserve consists of the difference value of IBRD capital based on the 1974 SDR. between the cumulative actual funding of the Staff Members are required to make payments to IBRD if Retirement Plan (SRP) and other postretirement their currencies depreciate significantly relative to benefits plans, and the cumulative accounting the standard of value. Furthermore, the Executive income or expense for these plans, from prior fiscal Directors have adopted a policy of reimbursing years. This reserve is reduced when pension accounting expenses exceed the actual funding of 60 THE WORLD BANK ANNUAL REPORT 2012 these plans. In addition, commencing in the fiscal Federal Republic of Yugoslavia (SFRY). These year ended June 30, 2012, the pension reserve also exceptions were based on criteria approved by the includes investment income earned on the Post- Executive Directors in fiscal year 1996 which limit Employment Benefits Plan (PEBP) portfolio. eligibility for such treatment to a country: (a) that has emerged from a current or former member of Surplus consists of earnings from prior fiscal years IBRD; (b) that is assuming responsibility for a share which are retained by IBRD until a further decision of the debt of such member; (c) that, because of a is made on their disposition or the conditions of major armed conflict in its territory involving transfer for specified uses have been met. extensive destruction of physical assets, has limited The Cumulative Fair Value Adjustments consist of creditworthiness for servicing the debt it is the effects associated with the application of assuming; and (d) for which rescheduling/ Financial Accounting Standards Board’s (FASB’s) refinancing would result in a significant fair value guidance relating to prior fiscal years. improvement in its repayment capacity, if This amount includes the cumulative effect of the appropriate supporting measures are taken. This adoption of this guidance, the reclassification and treatment was based on a precedent established in amortization of the transition adjustments, and the 1975 after Bangladesh became independent from unrealized gains or losses on non-trading portfolios. Pakistan. Currently, there are no borrowers with loans in nonaccrual status that meet these eligibility The LTIP Reserve consists of the cumulative criteria. difference between the actual portfolio return and the fixed draw amount, representing the long-term When modifications are made to the terms of average return on the portfolio. existing loans, IBRD performs an evaluation to determine the required accounting treatment, Restricted Retained Earnings consists of including whether the modifications would result in contributions or income from prior years which are the affected loans being accounted for as new loans, restricted as to their purpose. or as a continuation of the existing loans. Unallocated Net Income (Loss) consists of the It is the policy of IBRD to place into nonaccrual current fiscal year’s net income (loss) adjusted for status all loans made to or guaranteed by a member Board of Governors-approved transfers. of IBRD if principal, interest, or other charges with Loans: All of IBRD’s loans are made to or respect to any such loan are overdue by more than guaranteed by members, except loans to IFC. The six months, unless IBRD management determines majority of IBRD’s loans have repayment that the overdue amount will be collected in the obligations based on specific currencies. IBRD also immediate future. In addition, if development credits holds multicurrency loans which have repayment made by IDA to a member government are placed in obligations in various currencies determined on the nonaccrual status, all loans made to or guaranteed by basis of a currency pooling system. that member government will also be placed in nonaccrual status by IBRD. On the date a member’s Loans are carried at amortized cost, except those loans are placed into nonaccrual status, unpaid which contain embedded derivatives that require interest and other charges accrued on loans bifurcation, which IBRD has elected to measure at outstanding to the member are deducted from the fair value. income of the current period. Interest and other Any loan origination fees incorporated in a loan’s charges on nonaccruing loans are included in terms are deferred and recognized over the life of the income only to the extent that payments have been loan as an adjustment of yield. The unamortized received by IBRD. If collectability risk is considered balance of loan origination fees is included as a to be particularly high at the time of arrears reduction of Loans Outstanding on the balance clearance, the member’s loans may not sheet, and the loan origination fee amortization is automatically emerge from nonaccrual status, even included in Interest under Income from Loans on the though the member’s eligibility for new loans may Statement of Income. have been restored. In such instances, a decision on the restoration to accrual status is made on a case- It is IBRD’s practice not to reschedule interest or by-case basis after a suitable period of payment principal payments on its loans or participate in debt performance has passed from the time of arrears rescheduling agreements with respect to its loans. clearance. Exceptions were made to this practice during fiscal Guarantees: Financial guarantees are years 1996 and 2002 with regard to Bosnia and commitments issued by IBRD to guarantee payment Herzegovina (BiH) and Serbia and Montenegro performance to a third party. (SaM), formerly the Federal Republic of Yugoslavia, respectively, in connection with their Guarantees are regarded as outstanding when the succession to membership of the former Socialist underlying financial obligation of the debtor is IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 61 incurred, and called when a guaranteed party the assumed severity of the loss given default. The demands payment under the guarantee. IBRD would severity of loss, which is assessed periodically, is be required to perform under its guarantees if the dependent on the borrower’s eligibility, namely: payments guaranteed were not made by the debtor IBRD, Blend (IBRD and IDA) and IDA, with the and the guaranteed party called the guarantee by highest severity of loss associated with IDA. The demanding payment from IBRD in accordance with borrower’s eligibility is assessed at least annually. the terms of the guarantee. In the event that a This methodology is also applied to countries with guarantee of a member country is called, IBRD has exposures in nonaccrual status. Generally, all the contractual right to require payment from the exposures in nonaccrual status have the same risk member country that has provided the counter rating. guarantee to IBRD on demand, or as IBRD may The determination of borrowers' ratings is based on otherwise direct. various factors (see Note D— Loans and Other IBRD records the fair value of the obligation to Exposures). IBRD periodically reviews these factors stand ready, and a corresponding asset in the and reassesses the adequacy of the accumulated financial statements. provision for losses on loans and other exposures accordingly. Adjustments to the accumulated Guarantee fee income received is deferred and provision are recorded as a charge or addition to amortized over the life of the guarantee. income. IBRD records a contingent liability for the probable For loans that are reported at fair value, the losses related to guarantees outstanding. This determination of the fair values takes credit risk into provision, as well as the unamortized balance of the consideration. deferred guarantee fee income, and the unamortized balance of the obligation to stand ready, are included Statement of Cash Flows: For the purpose of in Accounts payable and miscellaneous liabilities on IBRD's Statement of Cash Flows, cash is defined as the Balance Sheet. the amount of unrestricted currencies Due from Banks. Accumulated Provision for Losses on Loans and Other Exposures: Delays in receiving loan Currencies Subject to Restrictions: These payments result in present value losses to IBRD include amounts which have been received from since it does not charge additional interest on any members as part of their capital subscriptions, as overdue interest or loan charges. These present value well as from donors and other sources, which are losses are equal to the difference between the restricted for speficied purposes. For capital present value of payments of interest and charges subscriptions, a portion of these subscriptions have made according to the related loan's contractual been paid to IBRD in the national currencies of the terms and the present value of its expected future members. These amounts, referred to as restricted cash flows. It is IBRD’s practice not to write off its currencies, are usable by IBRD in its lending and loans. investing operations, only with the consent of the Management determines the appropriate level of respective members, and for administrative accumulated provisions for losses on loans and other expenses. exposures (exposures), which reflects the probable Investments: Investment securities are classified losses inherent in IBRD’s exposures. Other based on management’s intention on the date of exposures include: Deferred Drawdown Options purchase, their nature, and IBRD’s policies (DDOs), Irrevocable Commitments, Exposures to governing the level and use of such investments. member Countries’ Derivatives, and Guarantees. Throughout the fiscal years ended June 30, 2012 and There are several steps required to determine the June 30, 2011, all investment securities were held in appropriate level of provisions. First, the exposures a trading portfolio. Investment securities and related are disaggregated into two groups: exposures in financial instruments held in IBRD’s trading accrual status and exposures in nonaccrual status. In portfolio are carried and reported at fair value. The each group, exposures for each borrower are then first-in first-out method is used to determine the cost assigned a credit risk rating of that borrower. With of securities sold in computing the realized gains respect to countries with exposures in accrual status, and losses on these instruments. Unrealized gains these exposures are grouped according to the and losses for investment securities and related assigned borrower risk rating. Second, each risk financial instruments held in the trading portfolio are rating is mapped to an expected default frequency included in income. Derivative instruments are used using IBRD's credit migration matrix. Finally, the in liquidity management to manage interest rate and provision required is calculated by multiplying the currency risks. outstanding exposure, by the expected default frequency (probability of default to IBRD) and by IBRD may require collateral in the form of approved liquid securities from individual counterparties or 62 THE WORLD BANK ANNUAL REPORT 2012 cash in order to mitigate its credit exposure to these the leased facility or the estimated economic life of counterparties. For collateral received in the form of the improvement. cash from counterparties, IBRD records the cash and Maintenance and repairs are charged to expense as a corresponding obligation to return the cash. incurred, while major improvements are capitalized Collateral received in the form of liquid securities is and amortized over the estimated useful life. only recorded on IBRD's Balance Sheet to the extent that it has been transferred under securities lending Borrowings: To ensure funds are available for agreements in return for cash. IBRD does not offset lending and liquidity purposes, IBRD borrows in the the fair value amounts recognized for derivative international capital markets offering its securities to instruments that have been executed with the same private and governmental buyers. IBRD issues debt counterparty under master netting agreements; as a instruments of varying maturities denominated in result, the fair value amounts recognized for the various currencies with both fixed and variable obligation to return cash collateral received from interest rates. counterparties are not offset with the fair value amounts recognized for these derivative instruments. IBRD fair values all the financial instruments in the borrowing portfolio with the changes in fair value Securities Purchased Under Resale recognized in the Statement of Income. Agreements, Securities Lent Under Securities Interest expense relating to the debt instruments Lending Agreements and Securities Sold carried at fair value is measured on an effective yield Under Repurchase Agreements and Payable basis and is reported as part of the Borrowings for Cash Collateral Received: Securities expenses in the Statement of Income. purchased under resale agreements, securities lent For presentation purposes, amortization of discounts under securities lending agreements, and securities and premiums is included in Borrowing expenses in sold under repurchase agreements are recorded at the Statement of Income. face value which approximates fair value. IBRD receives securities purchased under resale IBRD uses derivatives in its borrowing and agreements, monitors the fair value of the securities asset/liability management activities. In the and, if necessary, closes out transactions and enters borrowing portfolio, derivatives are used to modify into new repriced transactions. The securities the interest rate and/or currency characteristics of the transferred to counterparties under the repurchase borrowing portfolio, and are carried at fair value and security lending arrangements and the securities (see Note F— Derivative Instruments). The interest transferred to IBRD under the resale agreements component of these derivatives is recognized as an have not met the accounting criteria for treatment as adjustment to the borrowing cost over the life of the a sale. Therefore, securities transferred under derivative contract and included in Borrowing repurchase agreements and security lending expenses on the Statement of Income. arrangements are retained as assets on the Balance Sheet, and securities received under resale Accounting for Derivatives: IBRD has elected agreements are not recorded on the Balance Sheet. not to designate any hedging relationships for accounting purposes. Rather, all derivative Nonnegotiable, Noninterest-bearing Demand instruments are marked to fair value on the Balance Obligations on Account of Subscribed Capital: Sheet, with changes in fair values accounted for All demand obligations are held in bank accounts through the Statement of Income. The presentation which bear IBRD’s name and are carried and of derivative instruments is consistent with the reported at face value as a reduction to equity. manner in which these instruments are settled. Payments on some of these instruments are due to Interest rate swaps are settled on a net basis, while IBRD upon demand. Others are due to IBRD on currency swaps are settled on a gross basis. demand but only after the Bank’s callable For the purpose of the Statement of Cash Flows, subscribed capital has been entirely called pursuant IBRD has elected to report the cash flows associated to Article IV, Section 2 (a) of the Articles of with the derivative instruments that are used to Agreement. economically hedge borrowings, in a manner Premises and Equipment: Premises and consistent with the presentation of the borrowings- equipment, including leasehold improvements, are related cash flows. carried at cost less accumulated depreciation and Valuation of Financial Instruments: IBRD has amortization. IBRD computes depreciation and an established and documented process for amortization using the straight-line method over the determining fair values. Fair value is based upon estimated useful lives of the owned assets, which quoted market prices for the same or similar range between two and fifty years. For leasehold securities, where available. Financial instruments for improvements, depreciation and amortization is which quoted market prices are not readily available computed over the lesser of the remaining term of IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 63 are valued based on discounted cash flow models. Accounting for Grant Expenses: IBRD These models primarily use market-based or recognizes an expense for grants, such as independently-sourced market parameters such as Contributions to Special Programs, and Board of yield curves, interest rates, volatilities, foreign Governors-approved transfers, when incurred. exchange rates and credit curves, and may incorporate unobservable inputs, some of which may Donor Receivables: Donors’ conditional promises be significant. Selection of these inputs may involve to give are not recognized until the conditions to some judgment. which they are subject are substantially met and the promise to give is considered unconditional. To ensure that the valuations are appropriate where Donors’ unconditional promises to give are internally-developed models are used, IBRD has recognized upon receipt as income, unless the donor various controls in place, which include both specifies a third party beneficiary. In those cases internal and periodic external verification and IBRD is deemed to be acting as an intermediary review. In instances where management relies on agent and assets held on behalf of the specified valuations supplied by external pricing vendors, beneficiaries are recognized with corresponding there are procedures in place to validate the liabilities. If the contributions that IBRD receives appropriateness of the models used as well as the can only be used for purposes specified by the inputs applied in determining those values. donor, the proceeds are considered restricted until As of June 30, 2012 and June 30, 2011, IBRD had applied by IBRD for the donor-specified purposes. no financial assets or liabilities measured at fair Donor promises to give which are expected to be value on a non-recurring basis. collected within one year are recorded at face value, Fair Value Hierarchy while promises expected to be collected over a period greater than one year are recorded initially at Financial instruments are categorized based on the fair value, with subsequent measurement on an priority of the inputs to the valuation technique. The amortized cost basis. fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or Donor Contributions to Trust funds: For those liabilities (Level 1), the next highest priority to IBRD-executed trust funds where IBRD acts as an observable market-based inputs or inputs that are intermediary agent, third party donor contributions corroborated by market data (Level 2) and the are recorded as assets held on behalf of the specified lowest priority to unobservable inputs that are not beneficiaries, with corresponding liabilities. For corroborated by market data (Level 3). recipient-executed trust funds, since IBRD acts as a trustee, no assets or liabilities relating to these Financial assets and liabilities recorded at fair value activities are recorded on the Balance Sheet. on the Balance Sheet are categorized based on the inputs to the valuation techniques as follows: Accounting and Reporting Developments Level 1: Financial assets and liabilities whose values In March 2010, the Patient Protection and are based on unadjusted quoted prices for Affordable Care Act and the Health Care and identical assets or liabilities in active Education Reconciliation Act of 2010 became law. markets. These Acts seek to reform the U.S. health care system and their various provisions will become Level 2: Financial assets and liabilities whose values effective over the next several years. While the Acts are based on quoted prices for similar assets have no impact on IBRD as of June 30, 2012, IBRD or liabilities in active markets; quoted continues to evaluate the potential future prices for identical or similar assets or implications of these Acts. liabilities in markets that are not active; or pricing models for which all significant In July 2010, the Dodd-Frank Wall Street Reform inputs are observable, either directly or and Consumer Protection Act (the Act) became law indirectly for substantially the full term of in the United States. The Act seeks to reform the the asset or liability. U.S. financial regulatory system by introducing new regulators and extending regulation over new Level 3: Financial assets and liabilities whose values markets, entities, and activities. The implementation are based on prices or valuation techniques of the Act is dependent on the development of that require inputs that are both various rules to clarify and interpret its unobservable and significant to the overall requirements. Pending the development of these fair value measurement. rules, no impact on IBRD has been determined as of IBRD’s policy is to recognize transfers in and June 30, 2012. IBRD continues to evaluate the transfers out of levels as of the end of the reporting potential future implications of the Act. period in which they occur. 64 THE WORLD BANK ANNUAL REPORT 2012 In April 2011, FASB issued Accounting Standards 2011-05. For IBRD, the ASUs are effective for Update (ASU) 2011-02, Receivables: A Creditor’s fiscal years beginning after December 15, 2011, and Determination of Whether a Restructuring Is a interim periods within those years. IBRD is Troubled Debt Restructuring. The ASU clarifies currently evaluating the impact of these ASUs on its criteria to be considered in evaluating whether a financial statements. restructuring of a receivable constitutes a troubled In December 2011, the FASB issued ASU 2011-11, debt restructuring. For IBRD, this ASU was Balance Sheet (Topic 210): Disclosures about effective from the quarter ended September 30, Offsetting Assets and Liabilities. The ASU requires 2011. As it is IBRD's practice not to restructure its entities to disclose both gross information and net loans, this ASU had no impact on its financial information about instruments and transactions statements. eligible for offset in the statement of financial In April 2011, the FASB issued ASU 2011-03, position, and instruments and transactions subject to Transfers and Servicing (Topic 860): a master netting agreement and agreements similar Reconsideration of Effective Control for Repurchase to master netting agreements. The new disclosure Agreements. The ASU changes the assessment of requirements will facilitate comparison between effective control by focusing on the transferor’s U.S. GAAP and IFRS. This ASU is effective for contractual rights and obligations and removing the annual reporting periods beginning on or after criterion to assess its ability to exercise those rights January 1, 2013, and interim periods within those or honor those obligations. For IBRD, this ASU was annual periods. IBRD is currently evaluating the effective for the quarter ended March 31, 2012 and impact of this ASU on its financial statements. did not have an impact on IBRD’s financial NOTE B—CAPITAL STOCK, MAINTENANCE statements, as IBRD accounts for transfers of OF VALUE, AND MEMBERSHIP securities as secured borrowings. In May 2011, the FASB issued ASU 2011-04, Fair Capital Stock: The following table provides a Value Measurement (Topic 820): Amendments to summary of the changes in IBRD's authorized and Achieve Common Fair Value Measurement and subscribed shares during the fiscal years ended June Disclosure Requirements in U.S. GAAP and 30, 2012 and June 30, 2011: International Financial Reporting Standards (IFRS). Authorized Subscribed The amendments result in common fair value shares shares measurement and disclosure requirements in U.S. As of June 30, 2010 1,581,724 1,574,526 GAAP and IFRS. While many of the amendments General and selective relate to the harmonization of terminology and do capital increase (GCI/SCI) 725,876 31,404 not significantly impact current practice, some of the As of June 30, 2011 2,307,600 1,605,930 amendments have changed the existing fair value GCI/SCI — 95,238 measurement and disclosure requirements. IBRD New membership — 1,437 adopted this ASU during the quarter ended March As of June 30, 2012 2,307,600 1,702,605 31, 2012. For the related additional fair value disclosures, see Note C-Investments, Note D-Loans The following table provides a summary of the and Other Exposures, Note E-Borrowings, Note F- changes in subscribed capital, uncalled portion of Derivative Instruments, Note J-Pension and Other subscriptions, and paid-in capital during the fiscal Postretirement Benefits and Note L-Other Fair years ended June 30, 2012 and June 30, 2011: Value Disclosures. In millions of U.S. dollars In June 2011, the FASB issued ASU 2011-05, Uncalled Comprehensive Income (Topic 220): Presentation of Subscribed portion of Paid-in capital subscriptions capital Comprehensive Income. The ASU requires comprehensive income to be reported in either a As of June 30, 2010 $189,943 $(178,451) $11,492 GCI/SCI 3,789 (3,561) 228 single statement or in two consecutive statements. As of June 30, 2011 $193,732 $(182,012) $11,720 The ASU does not change which items are reported GCI/SCI 11,489 (10,800) 689 in other comprehensive income or existing New membership 173 (164) 9 requirements to reclassify items from other As of June 30, 2012 $205,394 $(192,976) $12,418 comprehensive income to net income. Subsequently, The uncalled portion of subscriptions is subject to in December 2011, the FASB issued ASU 2011-12, call only when required to meet the obligations Deferral of the Effective Date for Amendments to the incurred by IBRD as a result of borrowing, or Presentation of Reclassifications of Items Out of guaranteeing loans. Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, which Under IBRD’s Articles of Agreement, in the event a deferred certain reclassification provisions in ASU member withdraws from IBRD, the withdrawing IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 65 member is entitled to receive the value of its shares years or more. Although these amounts are used to payable to the extent the member does not have any reduce equity, IBRD still considers these MOV in outstanding obligations to IBRD. IBRD’s Articles arrears as obligations due from the members of Agreement also state that the former member has concerned. continuing obligations to IBRD after withdrawal. Deferred demand obligations relate to notes that are Specifically, the former member remains fully liable due on demand only after IBRD's callable capital for its entire capital subscription, including both the has been entirely called pursuant to Article IV, previously paid-in portion and the callable portion, Section 2 (a) of the Articles of Agreement. so long as any part of the loans or guarantees contracted before it ceased to be a member are NOTE C—INVESTMENTS outstanding. IBRD’s investments included a liquid assets Membership: On April 18, 2012, South Sudan portfolio, LTIP, and holdings relating to the became the 188th member country of IBRD with a Advance Market Commitment for Pneumococcal subscribed capital of $173 million, of which $9 Vaccines Initiative (AMC) and PEBP, up until April million has been paid-in, including $1 million in 24, 2012, when the Executive Directors approved cash. the liquidation of LTIP. As of June 30, 2012, LTIP Amounts To Maintain the Value of Currency had been fully liquidated. Holdings The composition of IBRD’s net investment portfolio The following table summarizes the amounts to as of June 30, 2012 and June 30, 2011 was as maintain the value of currency holdings classified as follows: components of equity: In millions of U.S. dollars In millions of U.S. dollars Net investments portfolio 2012 2011 Payable (Receivable) 2012 2011 Liquid assets portfolio $34,189 $28,154 MOV receivable $(79) $ (52) LTIP — 1,348 Net Deferred MOV payable 833 1,111 AMC holdings 326 291 MOV receivable in arrears (142) (133) PEBP holdings 604 531 Deferred demand obligations (130) (130) Total $35,119 $30,324 Deferred MOV $561 $ 848 The investment securities held by IBRD are MOV receivable relates to amounts due from designated as trading and are carried and reported at members on account of movements in exchange fair value, or at face value which approximates fair rates from the date of initial subscription, resulting value. As of June 30, 2012, the majority of in the reduction in the value of their paid-in capital Investments-Trading is comprised of government denominated in national currencies. These amounts and agency obligations and time deposits (59% and may be settled either in cash or a demand note. 32%, respectively), with almost all the instruments being classified as Level 1 and Level 2 within the Net deferred MOV payable relates to restricted fair value hierarchy. currencies being used in IBRD’s operations which are either being invested, swapped, or loaned to The majority of the instruments in Investments- members by IBRD or through IFC. Once these Trading are denominated in U.S. dollars (USD), restricted currencies are no longer being used in Euro (EUR) and Japanese yen (JPY) (45%, 21% and operations, the related MOV is no longer deferred, 17%, respectively). IBRD uses derivative but rather, becomes payable by IBRD on the same instruments to manage the associated currency and terms as other MOV obligations. interest rate risk in the portfolio. After considering the effects of these derivatives, IBRD’s investment MOV receivable in arrears represents receivables for portfolio has an average repricing of 0.2 years, and countries that have amounts outstanding for two is predominantly denominated in USD (94%). A summary of IBRD’s Investments-Trading at June 30, 2012 and June 30, 2011, is as follows: In millions of U.S. dollars 2012 2011 Carrying Value Carrying Value Investments—Trading Equity securities $ 165 $ 833 Government and agency obligations 19,742 14,101 Time deposits 10,811 14,057 Asset-backed securities 2,748 3,607 Total $33,466 $32,598 66 THE WORLD BANK ANNUAL REPORT 2012 The following table summarizes the currency composition of IBRD’s Investments-Trading, at June 30, 2012 and June 30, 2011: In millions of U.S. dollars equivalent 2012 2011 Average Repricing Average Repricing a a Currency Carrying Value (years) Carrying Value (years) Euro $ 7,038 0.68 $ 4,120 1.67 Japanese yen 5,668 0.43 5,488 1.31 U.S. dollars 15,013 0.79 18,419 0.95 Others 5,747 0.47 4,571 0.61 Total $33,466 0.64 $32,598 1.06 a. Equity securities are not subject to repricing. The average repricing represents the remaining period to the contractual repricing or maturity date, whichever is earlier. This indicates the average length of time for which interest rates are fixed. IBRD manages its investments on a net portfolio basis. The following table summarizes IBRD’s net portfolio position as of June 30, 2012 and June 30, 2011: In millions of U.S. dollars Carrying Value 2012 2011 Investments—Trading $ 33,466 $ 32,598 Securities purchased under resale agreements 209 47 Securities sold under repurchase agreements, securities lent under securities lending agreements, and payable for cash collateral received (3,700) (2,184) Derivative assets Currency forward contracts 6,542 6,529 Currency swaps 11,876 5,823 Interest rate swaps 135 71 a Other * * Total 18,554 12,423 Derivative liabilities Currency forward contracts (6,448) (6,603) Currency swaps (11,876) (6,469) Interest rate swaps (307) (202) a Other — (1) Total (18,631) (13,275) b Cash held in investment portfolio 5,340 1,952 Receivable from investment securities traded 18 83 Payable for investment securities purchased (137) (1,320) Net Investment Portfolio $ 35,119 $ 30,324 a. These relate to Mortgage Back Securities To-Be-Announced (TBA securities). b. This amount is included in Unrestricted Currencies under Due from Banks on the Balance Sheet. * Indicates amount less than $0.5 million The following table summarizes the currency composition of IBRD’s net investment portfolio at June 30, 2012 and June 30, 2011: In millions of U.S. dollars equivalent 2012 2011 Average Repricing Average Repricing a a Currency Carrying Value (years) Carrying Value (years) U.S. dollars $32,945 0.20 $29,182 0.37 Others 2,174 0.03 1,142 0.80 Total $35,119 0.19 $30,324 0.41 a. Equity securities are not subject to repricing. The average repricing represents the remaining period to the contractual repricing or maturity date, whichever is earlier. This indicates the average length of time for which interest rates are fixed. IBRD uses derivative instruments to manage currency and interest rate risk in the investment portfolio. For details regarding these instruments, see Note F–Derivative Instruments. As of June 30, 2012 and June 30, 2011, there were no short sales included in Payable for investment securities purchased on the Balance Sheet. For the fiscal year ended June 30, 2012, IBRD’s income included $2 million of net unrealized gains (net unrealized gains of $150 million—fiscal year ended June 30, 2011 and net unrealized gains of $100 million— fiscal year ended June 30, 2010). IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 67 Fair Value Disclosures The following tables present IBRD’s fair value hierarchy for investment assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and June 30, 2011: In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2012 Level 1 Level 2 Level 3 Total Assets: Investments – Trading Equity securities $ 150 $ 15 $— $ 165 Government and agency obligations 2,559 17,133 50 19,742 Time deposits 1,073 9,738 — 10,811 Asset-backed securities — 2,739 9 2,748 Total Investments – Trading $3,782 $29,625 $59 $33,466 Securities purchased under resale agreements 9 200 — 209 Derivative assets-Investments Currency forward contracts — 6,542 — 6,542 Currency swaps — 11,876 — 11,876 Interest rate swaps — 135 — 135 a Other — * — * Total Derivative assets-Investments — 18,554 — 18,554 Total Assets $3,791 $48,379 $59 $52,229 Liabilities: Securities sold under repurchase agreements and b securities lent under security lending agreements $ — $ 7 $— $ 7 Derivative liabilities-Investments Currency forward contracts — 6,448 — 6,448 Currency swaps — 11,876 — 11,876 Interest rate swaps — 307 — 307 a Other — — — — Total Derivative liabilities-Investments — 18,631 — 18,631 Total Liabilities $ — $18,638 $— $18,638 a. These relate to TBA securities. b. Excludes $3,693 million relating to payable for cash collateral received. * Indicates amount less than $0.5 million In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2011 Level 1 Level 2 Level 3 Total Assets: Investments – Trading Equity securities $ 833 $ — $— $ 833 Government and agency obligations 1,671 12,430 — 14,101 Time deposits 2,601 11,456 — 14,057 Asset-backed securities — 3,594 13 3,607 Total Investments – Trading $5,105 $27,480 $13 $32,598 Securities purchased under resale agreements 14 33 — 47 Derivative assets-Investments Currency forward contracts — 6,529 — 6,529 Currency swaps — 5,823 — 5,823 Interest rate swaps — 71 — 71 a Other — * — * Total Derivative assets-Investments — 12,423 — 12,423 Total Assets $5,119 $39,936 13 $45,068 Liabilities: Securities sold under repurchase agreements and b securities lent under security lending agreements $ — $ 246 $— $ 246 Derivative liabilities-Investments Currency forward contracts — 6,603 — 6,603 Currency swaps — 6,469 — 6,469 Interest rate swaps — 202 — 202 a Other — 1 — 1 Total Derivative liabilities-Investments — 13,275 — 13,275 Total Liabilities $ — $13,521 $— $13,521 a. These relate to TBA securities. b. Excludes $1,938 million relating to payable for cash collateral received. * Indicates amount less than $0.5 million. 68 THE WORLD BANK ANNUAL REPORT 2012 The following tables provide a summary of changes in the fair value of IBRD’s Level 3 Investments – Trading assets during the fiscal year ended June 30, 2012 and June 30, 2011: In millions of U.S. dollars Investments–Trading June 30, 2012 June 30, 2011 Government Asset-backed and Agency Asset-backed Securities Obligations Total Securities Beginning of the fiscal year $13 $— $13 $18 Total realized/unrealized gains (losses) in: Net income 1 — 1 4 Purchases 1 — 1 3 Sales/Settlements (5) — (5) (4) Transfers (out of) into, net (1) 50 49 (8) End of the fiscal year $ 9 $50 $59 $13 The following table provides information on the The transfers from Level 2 to Level 3 reflect the unrealized gains or losses included in income for the unavailability of quoted prices for similar fiscal years ended June 30, 2012, June 30, 2011 and instruments resulting from a decreased volume of June 30, 2010, relating to IBRD’s Level 3 trading for these instruments. Conversely, the Investments – Trading still held as of these dates, as transfers from Level 3 to Level 2 reflect the well as where those amounts are included in the availability of quoted prices for similar instruments Statement of Income. resulting from increased volume of trading for these instruments. In millions of U.S. dollars Fiscal Year Ended June 30, The fair value of Level 3 instruments in the investment portfolio is estimated using valuation Unrealized Gains 2012 2011 2010 Statement of Income Line models that incorporate observable market inputs Investments, net – Trading $(1) $2 $3 and unobservable inputs. The significant unobservable inputs include constant prepayment rates, probability of default, and loss severity. The The table below provides the details of all inter-level constant prepayment rate is an annualized expected transfers for the fiscal year ended June 30, 2012 and rate of principal prepayment for a pool of asset- June 30, 2011: backed securities. The probability of default is an estimate of the expected likelihood of not collecting In millions of U.S. dollars June 30, 2012 contractual amounts owed. Loss severity is the Level 2 Level 3 present value of lifetime losses (both interest and Investments-Trading principal) as a percentage of the principal balance. Government and Agency Obligations Significant increases (decreases) in the assumptions Transfers (out of) into $(50) $50 used for these inputs in isolation would result in a significantly lower (higher) fair value measurement. Asset-backed Securities Generally, a change in the assumption used for the Transfers (out of) into (21) 21 probability of default is accompanied by a Transfers into (out of) 22 (22) directionally similar change in the assumption used 1 (1) for the loss severity and a directionally opposite $(49) $49 change in the assumption used for constant prepayment rates. In millions of U.S. dollars June 30, 2011 Level 2 Level 3 Investments-Trading Asset-backed Securities Transfers (out of) into $(16) $ 16 Transfers into (out of) 24 (24) $ 8 $ (8) IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 69 The following table provides a summary of the valuation technique applied in determining fair values of these Level 3 instruments and quantitative information regarding the significant unobservable inputs used: In millions of U.S. dollars Fair Value at June 30, Portfolio 2012 Valuation Technique Unobservable input Range (weighted average) Probability of default 0% to 18% (5.77%) Investments $9 Discounted cash flow Constant prepayment rate 0.50% to 15% (4.80%) (Asset-backed Securities) Loss severity 0% to 100% (76.19%) Valuation Methods and Assumptions require collateral in the form of cash or other approved liquid securities from individual Summarized below are the techniques applied in counterparties in order to mitigate its credit determining the fair values of investments. exposure. Investment securities IBRD has entered into master derivatives Where available, quoted market prices are used to agreements which contain legally enforceable close- determine the fair value of trading securities. out netting provisions. These agreements may Examples include most government and agency further reduce the gross credit risk exposure related securities, mutual funds, futures contracts, to the swaps. Credit risk with financial assets subject exchange-traded equity securities and ABS. to a master derivatives arrangement is further reduced under these agreements to the extent that For instruments for which market quotations are not payments and receipts with the counterparty are available, fair values are determined using model- netted at settlement. The reduction in exposure as a based valuation techniques, whether internally- result of these netting provisions can vary due to the generated or vendor-supplied, that include the impact of changes in market conditions on existing standard discounted cash flow method using market and new transactions. The extent of the reduction in observable inputs such as yield curves, credit exposure may therefore change substantially within spreads, and constant prepayment rates. Where a short period of time following the balance sheet applicable, unobservable inputs such as constant date. prepayment rates, probability of default and loss severity are used. Unless quoted prices are available, The following is a summary of the collateral time deposits are reported at face value which received by IBRD in relation to swap transactions as approximates fair value. of June 30, 2012 and June 30, 2011. Securities purchased under resale agreements, In millions of U.S. dollars Securities sold under agreements to repurchase, and June 30, 2012 June 30, 2011 Collateral received Securities lent under securities lending agreements Cash $ 3,693 $ 1,938 Securities 10,238 11,841 These securities are reported at face value which Total collateral received 13,931 $13,779 approximates fair value. Collateral permitted to be Commercial Credit Risk repledged $13,931 $13,779 Amount of collateral For the purpose of risk management, IBRD is party repledged — — to a variety of financial transactions, certain of which involve elements of credit risk. Credit risk Securities Lending: IBRD may engage in securities exposure represents the maximum potential loss due lending and repurchases, against adequate collateral, to possible nonperformance by obligors and as well as securities borrowing and reverse counterparties under the terms of the contracts. For repurchases (resales) of government and agency all securities, IBRD limits trading to a list of obligations, and corporate and asset-backed authorized dealers and counterparties. securities. Transfers of securities by IBRD to counterparties are not accounted for as sales as the Swap Agreements: Credit risk is mitigated through accounting criteria for the treatment as a sale have the application of eligibility criteria and volume not been met. Counterparties are permitted to limits for transactions with individual counterparties repledge these securities until the repurchase date. and through the use of mark-to-market collateral arrangements for swap transactions. IBRD may 70 THE WORLD BANK ANNUAL REPORT 2012 The following is a summary of the carrying amount of the securities transferred under repurchase or securities lending agreements, and the related liabilities: In millions of U.S. dollars June 30, June 30, 2012 2011 Financial Statement Presentation Securities transferred under repurchase $7 $151 Included under Investments-Trading on the Balance Sheet or securities lending agreements Included under Securities Sold Under Repurchase Liabilities relating to securities Agreements, Securities Lent Under Securities Lending transferred under repurchase or $7 $212 Agreements, and Payable for Cash Collateral Received, on securities lending agreements the Balance Sheet. At June 30, 2012, there were no liabilities relating to reported at amortized cost, with the exception of one securities transferred under repurchase or securities loan which is carried and reported at fair value, lending agreements that had not settled at that date. because it contains an embedded derivative. At June 30, 2011, the liabilities relating to securities IBRD’s loan portfolio includes loans with transferred under repurchase or securities lending multicurrency terms, single currency pool terms, agreements included $59 million of repurchase variable spread terms and fixed spread terms. At agreement trades that had not settled at that date. Of June 30, 2012, only loans with variable spread terms this amount, $44 million represented replacement and fixed spread terms (including special trades entered into in anticipation of maturing trades. development policy loans), were available for new IBRD receives collateral in connection with resale commitments under the IBRD Flexible Loan (IFL). agreements as well as swap agreements. This As of June 30, 2012, 80% of IBRD’s loans carried collateral serves to mitigate IBRD's exposure to variable interest rates. IBRD uses derivatives to credit risk. manage the repricing risk between loans and In the case of resale agreements, IBRD receives borrowings. These derivatives are included under collateral in the form of liquid securities and is borrowing derivatives and other derivatives on the permitted to repledge these securities. While these Balance Sheet. After considering the effects of these transactions are legally considered to be true derivatives, the loan portfolio carried variable purchases and sales, the securities received are not interest rates, with a weighted average interest rate recorded on IBRD’s Balance Sheet as the of 1.3% as of June 30, 2012. accounting criteria for treatment as a sale have not The majority of the loans in the loan portfolio are been met. As of June 30, 2012, IBRD had received denominated in USD (79%) while the EUR and JPY securities with a fair value of $209 million ($47 account for 19% and 1% of the loan portfolio, million—June 30, 2011). None of these securities respectively. had been transferred under repurchase or security lending agreements as of that date ($33 million— As of June 30, 2012, only 0.3% of IBRD’s loans June 30, 2011). were in nonaccrual status and were all related to one borrower. The total provision for losses on accrual NOTE D—LOANS AND OTHER EXPOSURES and nonaccrual loans accounted for 1.2% of the total IBRD’s loans and other exposures (exposures) are loan portfolio. generally made to, or guaranteed by member Based on the IBRDs’ internal quality indicators, the countries of IBRD. In addition, IBRD may also majority of loans outstanding are in the Medium risk make loans to the IFC, an affiliated organization and High risk classes. without any guarantee. IBRD’s loans are carried and IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 71 A summary of IBRD’s outstanding loans by currency and by interest rate characteristics (fixed or variable) at June 30, 2012 and June 30, 2011 follows: In millions of U.S. dollars equivalent June 30, 2012 Euro Japanese yen U.S. dollars Others Loans Outstanding Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Total a Multicurrency terms Amount $ 193 $ 273 $235 $333 $ 174 $ 612 $111 $ 99 $ 713 $ 1,317 $ 2,030 Weighted average b rate (%) 3.77 6.38 3.54 6.33 4.65 7.26 3.69 6.33 3.90 6.77 5.76 Average Maturity (years) 2.65 1.25 2.75 1.30 2.35 0.45 2.74 1.30 2.62 0.89 1.50 Single currency pool terms Amount $ — $ 74 $— $— $ 545 $ 27 $ — $ — $ 545 $101 $ 646 Weighted average b rate (%) — 2.13 — — 3.68 2.56 — — 3.68 2.24 3.46 Average Maturity (years) — 1.08 — — 0.99 0.86 — — 0.99 1.02 0.99 Variable-spread terms Amount $ 22 $13,418 $— $187 $ 360 $63,268 $ — $44 $382 $76,917 $ 77,299 Weighted average b rate (%) 4.30 1.39 — 0.75 5.16 1.09 — 1.32 5.12 1.14 1.16 Average Maturity (years) 0.46 11.51 — 3.28 0.88 9.60 — 9.19 0.86 9.91 9.87 Fixed-spread terms c Amount $4,154 $ 7,990 $ 36 $395 $21,317 $20,746 $756 $956 $26,263 $30,087 $ 56,350 Weighted average b rate (%) 4.65 1.76 2.55 0.84 4.31 1.29 7.87 4.10 4.46 1.50 2.88 Average maturity (years) 6.57 8.87 8.59 7.32 8.01 9.34 8.85 12.28 7.81 9.28 8.59 Loans Outstanding Amount $4,369 $21,755 $271 $915 $22,396 $84,653 $867 $1,099 $27,903 $108,422 $136,325 Weighted average b rate (%) 4.61 1.59 3.40 2.82 4.31 1.18 7.33 4.19 4.44 1.31 1.95 Average Maturity (years) 6.37 10.37 3.52 4.31 7.68 9.47 8.06 11.16 7.45 9.62 9.18 Loans Outstanding $136,325 Less accumulated provision for loan losses and deferred loan income 2,116 Net loans outstanding $134,209 Note: For footnotes see the following page. 72 THE WORLD BANK ANNUAL REPORT 2012 In millions of U.S. dollars equivalent June 30, 2011 Euro Japanese yen U.S. dollars Others Loans Outstanding Fixed Variable Fixed Variable Fixed Variable Fixed Variable Fixed Variable Total a Multicurrency terms Amount $ 386 $ 479 $ 409 $ 507 $ 288 $ 703 $ 177 $ 158 $ 1,260 $ 1,847 $ 3,107 Weighted average b rate (%) 3.69 6.13 3.55 6.09 4.22 6.91 3.67 6.09 3.76 6.41 5.34 Average Maturity (years) 2.30 1.64 2.34 1.67 2.12 0.77 2.59 1.67 2.31 1.32 1.72 Single currency pool terms Amount $ — $171 $ — $ — $ 968 $55 $ — $ — $ 968 $ 226 $ 1,194 Weighted average b rate (%) — 3.47 — — 3.59 3.58 — — 3.59 3.50 3.57 Average Maturity (years) — 1.23 — — 1.32 1.08 — — 1.32 1.19 1.30 Variable-spread terms Amount $ 45 $ 12,701 $ — $ 208 $ 727 $ 58,177 $ — $ 45 $ 772 $ 71,131 $ 71,903 Weighted average b rate (%) 4.34 1.83 — 0.74 5.55 0.78 — 1.18 5.48 0.97 1.02 Average Maturity (years) 1.02 11.63 — 3.45 1.17 9.08 — 10.22 1.16 9.52 9.43 Fixed-spread terms d Amount $4,341 $ 8,892 $ 32 $ 382 $ 20,842 $ 19,968 $ 698 $ 1,100 $ 25,913 $ 30,342 $ 56,255 Weighted average b rate (%) 4.76 2.06 2.49 0.86 4.37 0.98 7.50 4.22 4.52 1.41 2.84 Average maturity (years) 7.30 9.10 8.04 8.03 8.08 9.60 10.78 13.23 8.02 9.57 8.85 Loans Outstanding Amount $4,772 $ 22,243 $ 441 $ 1,097 $ 22,825 $ 78,903 $ 875 $ 1,303 $28,913 $103,546 $132,459 Weighted average b rate (%) 4.67 2.03 3.47 3.26 4.37 0.89 6.72 4.34 4.48 1.20 1.92 Average Maturity (years) 6.84 10.32 2.75 4.22 7.49 9.14 9.15 11.73 7.36 9.37 8.93 Loans Outstanding $ 132,459 Less accumulated provision for loan losses and deferred loan income 1,989 Net loans outstanding $ 130,470 a. Include loans to IFC, in addition to multicurrency pool loans. Variable rates for multicurrency loans are based on the weighted average cost of allocated debt. b. Excludes effects of any waivers of loan interest. c. Includes loans at fair value of $125 million. d. Includes loans at fair value of $139 million. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 73 The maturity structure of IBRD’s loans at June 30, 2012 and June 30, 2011 is as follows: In millions of U.S. dollars June 30, 2012 July 1, 2012 through July 1, 2013 through July 1, 2017 through Terms/Rate Type June 30, 2013 June 30, 2017 June 30, 2022 Thereafter Total Multicurrency terms Fixed $ 307 $ 291 $ 64 $ 51 $ 713 Variable 836 481 — — 1,317 Single currency pool terms Fixed 328 217 — — 545 Variable 57 44 — — 101 Variable-spread terms Fixed 264 118 — — 382 Variable 4,888 17,887 18,564 35,578 76,917 Fixed-spread terms a Fixed 1,595 8,779 7,871 8,018 26,263 Variable 1,232 7,766 8,697 12,392 30,087 All Loans Fixed 2,494 9,405 7,935 8,069 27,903 Variable 7,013 26,178 27,261 47,970 108,422 Total loans outstanding $9,507 $35,583 $35,196 $56,039 $136,325 a. Includes loans at fair value of $125 million. In millions of U.S. dollars June 30, 2011 July 1, 2011 through July 1, 2012 through July 1, 2016 through Terms/Rate Type June 30, 2012 June 30, 2016 June 30, 2021 Thereafter Total Multicurrency terms Fixed $ 551 $ 567 $ 75 $ 67 $ 1,260 Variable 898 937 12 — 1,847 Single currency pool terms Fixed 423 543 2 — 968 Variable 114 112 — — 226 Variable-spread terms Fixed 387 385 — — 772 Variable 5,101 18,678 16,256 31,096 71,131 Fixed-spread terms a Fixed 1,258 8,274 8,613 7,768 25,913 Variable 1,097 7,276 9,892 12,077 30,342 All Loans Fixed 2,619 9,769 8,690 7,835 28,913 Variable 7,210 27,003 26,160 43,173 103,546 Total loans outstanding $9,829 $36,772 $34,850 $51,008 $132,459 a. Includes a loan at fair value of $139 million. 74 THE WORLD BANK ANNUAL REPORT 2012 Credit Quality of Sovereign Exposures analyzing the risk characteristics of IBRD’s Based on an evaluation of IBRD’s exposures, exposures, these exposures are grouped into three management has determined that IBRD has one classes in accordance with assigned borrower risk portfolio segment – Sovereign Exposures. IBRD’s ratings which relate to the likelihood of loss: Low, loans constitute the majority of the Sovereign Medium and High risk classes, as well as exposures Exposures portfolio segment. in nonaccrual status. IBRD considers all exposures in nonaccrual status to be impaired. IBRD’s country risk ratings are an assessment of its borrowers’ ability and willingness to repay IBRD IBRD’s borrowers’ country risk ratings are key on time and in full. These ratings are internal credit determinants in the provision for losses. Country quality indicators. Individual country risk ratings risk ratings are determined in review meetings that are derived on the basis of both quantitative and take place several times a year. All countries are qualitative analyses. The components considered in reviewed at least once a year, or more frequently, if the analysis can be grouped broadly into eight circumstances warrant, to determine the appropriate categories: political risk, external debt and ratings. liquidity, fiscal policy and public debt burden, IBRD considers loans to be past due when a balance of payments risks, economic structure and borrower fails to make payment on any principal, growth prospects, monetary and exchange rate interest or other charges due to IBRD on the dates policy, financial sector risks, and corporate sector provided in the contractual loan agreement. debt and vulnerabilities. For the purpose of The following tables provide an aging analysis of the loan portfolio as at June 30, 2012 and June 30, 2011: In millions of U.S. dollars June 30, 2012 Days past due Up to 45 46-60 61-90 91-180 Over 180 Total Past Due Current Total Risk Class Low $— $— $— $— $ — $ — $ 14,799 $ 14,799 Medium — — — — — — 68,191 68,191 High 10 — — — — 10 52,738 52,748 a Loans in accrual status 10 — — — — 10 135,728 135,738 Loans in nonaccrual a status — — — 13 428 441 21 462 b Loan at fair value — — — — — — 125 125 Total $ 10 $— $— $ 13 $428 $451 $135,874 $136,325 In millions of U.S. dollars June 30, 2011 Days past due Up to 45 46-60 61-90 91-180 Over 180 Total Past Due Current Total Risk Class Low $— $— $— $— $ — $ — $ 14,763 $ 14,763 Medium — — — — — — 68,737 68,737 High 6 — — — — 6 48,348 48,354 a Loans in accrual status 6 — — — — 6 131,848 131,854 Loans in nonaccrual a status — — 2 15 400 417 49 466 b Loan at fair value — — — — — — 139 139 Total $6 $— $2 $15 $400 $423 $132,036 $132,459 a. At amortized cost b. For the loan that is reported at fair value, and which is in accrual status, credit risk assessment is incorporated in the determination of fair value. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 75 Accumulated Provision for Losses on Loans charges made according to the related instrument's and Other Exposures contractual terms and the present value of its expected future cash flows. It is IBRD’s practice not Management determines the appropriate level of to write off its loans. All contractual obligations accumulated provisions for losses, which reflects associated with exposures in nonaccrual status have the probable losses inherent in IBRD’s eventually been cleared, thereby allowing borrowers exposures. Probable losses comprise estimates of to eventually emerge from nonaccrual status. To potential losses arising from default and date, no loans have been written off. nonpayment of principal amounts due, as well as present value losses. Delays in receiving loan Notwithstanding IBRD’s historical experience, the payments result in present value losses to IBRD risk of losses associated with nonpayment of since it does not charge fees or additional interest principal amounts due is included in the on any overdue interest or charges. These present accumulated provision for losses on loans and other value losses are equal to the difference between exposures. the present value of payments of interest and Changes to the Accumulated provision for losses on loans and other exposures for the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 are summarized below: In millions of U.S. dollars June 30, 2012 June 30, 2011 June 30, 2010 Loans Other Total Loans Other Total Loans Other Total Accumulated provision, beginning of the fiscal year $1,549 $29 $1,578 $1,553 $23 $1,576 $1,632 $10 $1,642 Provision - charge (release) 181 8 189 (50) 5 (45) (45) 13 (32) Translation adjustment (40) (2) (42) 46 1 47 (34) — (34) Accumulated provision, end of the fiscal year $1,690 $35 $1,725 $1,549 $29 $1,578 $1,553 $23 $1,576 Composed of accumulated provision for losses on: Loans in accrual status $1,459 $1,316 $1,324 Loans in nonaccrual status 231 233 229 Total $1,690 $1,549 $1,553 Loans, end of the fiscal year: Loans at amortized cost in accrual status $135,738 $131,854 $119,537 Loans at amortized cost in nonaccrual status 462 466 457 Loan at fair value in accrual status 125 139 109 Total $136,325 $132,459 $120,103 Reported as Follows Balance Sheet Statement of Income Accumulated Provision for Losses on: Loans Accumulated provision for losses on Provision for losses on loans and other loans exposures Other exposures (excluding Exposures Accounts payable and miscellaneous Provision for losses on loans and other to Member Countries’ Derivatives) liabilities exposures Exposures to Member Countries’ Derivative Assets – Client Operations Provision for losses on loans and other Derivatives exposures Overdue Amounts will also be placed in nonaccrual status by IBRD. On the date a member’s loans and other exposures It is the policy of IBRD to place in nonaccrual status are placed into nonaccrual status, unpaid interest and all loans and other exposures made to or guaranteed other charges accrued on exposures to the member by a member of IBRD if principal, interest, or other are deducted from the income of the current period. charges with respect to any such exposures are Interest and other charges on nonaccruing exposures overdue by more than six months, unless IBRD’s are included in income only to the extent that management determines that the overdue amount payments have been received by IBRD. If will be collected in the immediate future. In collectibility risk is considered to be particularly addition, if development credits and other exposures high at the time of arrears clearance, the member’s made by IDA to a member government are placed in exposures may not automatically emerge from nonaccrual status, all loans and other exposures nonaccrual status. In such instances, a decision on made to or guaranteed by that member government, 76 THE WORLD BANK ANNUAL REPORT 2012 the restoration of accrual status is made on a case- amount of undiscounted future payments that IBRD by-case basis and in certain cases that decision may could be required to make under these guarantees, be deferred until a suitable period of payment and is not included in the Balance Sheet. These performance has passed. guarantees have original maturities ranging between 4 and 19 years, and expire in decreasing amounts At June 30, 2012, there were no principal or interest through 2029. amounts on loans in accrual status, which were overdue by more than three months. The following At June 30, 2012, liabilities related to IBRD's tables provide a summary of selected financial obligations under guarantees of $50 million ($56 information related to loans in nonaccrual status as million—June 30, 2011), have been included in of and for the fiscal years ended June 30, 2012, June Accounts payable and miscellaneous liabilities on 30, 2011 and June 30, 2010: the Balance Sheet. These include the accumulated In millions of U.S. dollars provision for guarantee losses of $18 million ($18 2012 2011 million—June 30, 2011). Recorded investment in nonaccrual loans a $462 $466 During the fiscal years ended June 30, 2012 and Accumulated provision for loan losses June 30, 2011, no guarantees provided by IBRD on nonaccrual loans 231 233 were called. Average recorded investment in b nonaccrual loans for the fiscal year 464 463 Waivers of Loan Charges Overdue amounts of nonaccrual loans: 761 701 Principal 441 417 IBRD provides waivers on eligible loans, which Interest and charges 320 284 include a portion of interest on loans, a portion of the commitment charge on undisbursed balances and a. A loan loss provision has been recorded against each of a portion of the front-end fee charged on all eligible the loans in the nonaccrual portfolio. b. For the fiscal year ended June 30, 2010: $462 million loans. Waivers are approved annually by the Executive Directors of IBRD. In millions of U.S. dollars Fiscal year ended June 30, The reduction in net income for the fiscal years 2012 2011 2010 ended June 30, 2012, June 30, 2011 and June 30, Interest income not recognized as 2010 resulting from waivers of loan charges, is a result of loans being in summarized in the following table: nonaccrual status $37 $36 $35 In millions of U.S. dollars Fiscal years ended June 30, During the fiscal years ended June 30, 2012, June 2012 2011 2010 30, 2011, and June 30, 2010 no interest income was Interest waivers $139 $157 $163 recognized on loans in nonaccrual status. Commitment charge waivers 26 41 64 Front-end fee waivers 25 19 20 Information relating to the sole borrowing member Total $190 $217 $247 with loans or guarantees in nonaccrual status at June 30, 2012 follows: In millions of U.S. dollars Segment Reporting Principal, Interest and Based on an evaluation of IBRD’s operations, Principal Charges Nonaccrual management has determined that IBRD has only one Borrower outstanding overdue since reportable segment since IBRD does not manage its Zimbabwe $462 $761 October 2000 operations by allocating resources based on a determination of the contribution to net income from individual borrowers. During the fiscal years ended June 30, 2012 and June 30, 2011 there were no loans placed into Loan income comprises interest, commitment fees, nonaccrual status or restored to accrual status. loan origination fees and prepayment premia, net of waivers. For the fiscal year ended June 30, 2012, Guarantees loans to one country individually generated in Guarantees of $1,753 million were outstanding at excess of 10 percent of loan income and totaled June 30, 2012 ($1,969 million—June 30, 2011). $260 million in aggregate. This amount represents the maximum potential IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 77 The following table presents IBRD’s loan income and associated outstanding loan balances, by geographic region, as of and for the fiscal years ended June 30, 2012 and June 30, 2011: In millions of U.S. dollars 2012 2011 Region Loan Income Loans Outstanding Loan Income Loans Outstanding Africa $ 12 $ 1,843 $ 8 $ 1,413 East Asia and Pacific 490 27,592 505 26,115 Europe and Central Asia 683 37,553 566 37,741 Latin America and the Caribbean 1,080 46,272 1,107 45,027 Middle East and North Africa 195 9,799 168 9,101 South Asia 123 13,224 114 13,012 a Other 2 42 2 50 Total $2,585 $136,325 $2,470 $132,459 a. Represents loans to IFC, an affiliated organization. Fair Value Disclosures The table below presents the fair value of all IBRD’s loans al ong w ith t heir res pective carry ing amounts The loan carried at fair value is classified as Level 3. as of June 30, 2012 and June 30, 2011: This loan has an embedded derivative and its fair value is estimated on a matrix basis against the In millions of U.S. dollars related bond. As IBRD’s loans are not traded, the 2012 2011 Carrying Fair Carrying Fair yield which is used as a key input to determining the Value Value Value Value fair value of this loan is not observable. The yield Net Loans applied in determining the fair value of the loan at Outstanding $134,209 $132,198 $130,470 $129,447 June 30, 2012 was 3.32%. An increase (decrease) in the yield would result in a decrease (increase) in the Valuation Methods and Assumptions fair value of the loan. All of IBRD’s loans are made to or guaranteed by The following table provides a summary of changes countries that are members of IBRD, except for in the fair value of IBRD’s Level 3 loan during the those loans made to IFC. IBRD does not currently fiscal year ended June 30, 2012 and June 30, 2011: sell its loans. In millions of U.S. dollars As of June 30, 2012 and June 30, 2011, except for 2012 2011 the one loan which is reported at fair value, all other loans are carried at amortized cost. The fair value of Beginning of the fiscal year $139 $109 these loans is calculated using a discounted cash Total realized/unrealized gains (losses) in: flow method. This method incorporates Credit Default Swap spreads for each borrower. Basis Net income 8 14 Other comprehensive adjustments are applied to market recovery levels to income (22) 16 reflect IBRD’s recovery experience. End of the fiscal year $125 $139 NOTE E—BORROWINGS IBRD issues unsubordinated and unsecured fixed The following table reflects the fair value and variable rate debt in a variety of currencies. adjustment on the loan and provides information on Some of these debt instruments are callable. the unrealized gains or losses, relating to IBRD’s Variable rates may be based on, for example, Level 3 loan, included in income, for the fiscal years exchange rates, interest rates or equity indices. ended June 30, 2012, June 30, 2011, and June 30, Borrowings issued by IBRD are carried and reported 2010. at fair value. As at June 30, 2012, the majority of the In millions of U.S. dollars instruments in the portfolio were classified as Level Fiscal Year Ended June 30, 2, within the fair value hierarchy. In addition, most of these instruments were denominated in USD, Unrealized Gains (Losses) 2012 2011 2010 Australian dollar (AUD), JPY and EUR (50.6%, Statement of Income Line 11.2%, 9.5% and 8.7%, respectively). Fair value adjustment on non-trading portfolios, net $(1) $4 $15 IBRD uses derivatives to manage the repricing risk between loans and borrowings. These derivatives also include derivatives which convert fixed interest rate loan repayments to floating interest rate loan repayments. After the effect of these derivatives 78 THE WORLD BANK ANNUAL REPORT 2012 (excluding those which convert fixed interest rate Fair Value Disclosures loan repayments to floating interest rate loan IBRD’s fair value hierarchy for borrowings repayments), the borrowing portfolio carried measured at fair value on a recurring basis as of June variable interest rates, with a weighted average cost 30, 2012 and June 30, 2011 is as follows: of 0.66% as of June 30, 2012 (0.63% as of June 30, 2011). In millions of U.S. dollars June 30, 2012 June 30, 2011 The following table provides a summary of the Level 1 $ — $ — interest rate characteristics of IBRD’s borrowings at Level 2 134,371 122,826 June 30, 2012 and June 30, 2011: Level 3 10,968 12,416 $145,339 $135,242 In millions of U.S. dollars a a June 30, WAC June 30, WAC 2012 (%) 2011 (%) The following table provides a summary of changes Fixed $113,608 3.28 $104,717 3.78 in the fair value of IBRD’s Level 3 borrowings Variable b 25,259 1.65 28,093 2.17 during the fiscal years ended June 30, 2012 and June Borrowings $138,867 2.98% $132,810 3.44% 30, 2011: Fair value adjustment 6,472 2,432 In millions of U.S. dollars Borrowings at 2012 2011 fair value $145,339 $135,242 Beginning of the fiscal year $12,416 $12,087 a. WAC refers to weighted average cost. Total realized/unrealized b. At amortized cost. (gains) losses in: Net income 982 (137) At June 30, 2012 and June 30, 2011, the currency Other comprehensive composition of debt in IBRD’s borrowing portfolio income (32) 1,145 before derivatives was as follows: Issuances 145 574 Settlements (1,424) (817) June 30, 2012 June 30, 2011 U.S. dollar 50.6% 51.3% Transfers out of, net (1,119) (436) Australian dollar 11.2 9.9 End of the fiscal year $10,968 $12,416 Japanese yen 9.5 9.2 Euro 8.7 9.2 Pounds sterling 5.4 4.3 The following table provides information on the South African Rand 2.2 2.8 unrealized gains or losses included in income for the Others 12.4 13.3 100.0% 100.0% fiscal years ended June 30, 2012, June 30, 2011, and June 30, 2010, relating to IBRD’s Level 3 The maturity structure of IBRD’s borrowings borrowings still held at June 30, 2012, June 30, outstanding at June 30, 2012 and June 30, 2011 was 2011, and June 30, 2010 as well as where those as follows: amounts are included in the Statement of Income. In millions of U.S. dollars In millions of U.S. dollars Fiscal Year Ended June 30, Period June 30, 2012 June 30, 2011 Unrealized Gains (Losses) 2012 2011 2010 Less than1 year $ 22,071 $ 26,552 Statement of Income Line Between Fair value adjustment on non- 1 - 2 years 25,970 17,233 trading portfolios, net $(880) $209 $(347) 2 - 3 years 24,622 16,395 3 - 4 years 16,021 20,177 4 - 5 years 19,140 15,523 The following table provides information on the Thereafter 37,515 39,362 unrealized gains or losses included in income for the $145,339 $135,242 fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 relating to IBRD’s borrowings held at IBRD’s borrowings have original maturities ranging June 30, 2012, June 30, 2011, and June 30, 2010, as from 11 days to 40 years, with the final maturity well as where those amounts are included in the being in 2042. Statement of Income. In millions of U.S. dollars Fiscal Year Ended June 30, Unrealized Gains (Losses) 2012 2011 2010 Statement of Income Line Fair value adjustment on non-trading portfolios, net $(4,558) $1,505 $(3,024) IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 79 During the fiscal years ended June 30, 2012 and generally results in an increase in the fair value of June 30, 2011, IBRD’s credit spreads remained the instrument. The magnitude and direction of the largely unchanged. fair value adjustment will depend on whether the holder is short or long the option. IBRD’s Level 3 borrowings primarily relate to structured bonds. The fair value of these bonds is Interest rate volatility is the extent to which the level estimated using valuation models that incorporate of interest rates change over time. For purchased model parameters, observable market inputs, and options, an increase in volatility will generally result unobservable inputs. The significant unobservable in an increase in the fair value. In general, the inputs used in the fair value measurement of volatility used to price the option depends on the structured bonds are correlations and long-dated maturity of the underlying instrument and the option interest rate volatilities. Generally, the movements in strike price. For IBRD, interest rate volatilities are correlations are considered to be independent from considered an unobservable input for maturities the movements in long-dated interest rate greater than ten years for certain currencies. volatilities. The following table provides a summary of the Correlation is the statistical measurement of the valuation technique applied in determining fair relationship between two variables. For contracts values of these Level 3 instruments and quantitative where the holder benefits from the convergence of information regarding the significant unobservable the underlying index prices (e.g. interest rates and inputs used. foreign exchange rates), an increase in correlation In millions of U.S. dollars Fair Value at Portfolio June 30, 2012 Valuation Technique Unobservable input Range (average) Correlations -44% to 83% (13%) Borrowings $10,968 Discounted cash flows Long-dated interest rate volatilities 17% to 35% (26%) The table below provides the details of all inter-level transfers for the fiscal year ended June 30, 2012 and June 30, 2011. Transfers from Level 3 to Level 2 are due to increased price transparency. In millions of U.S. dollars June 30, 2012 June 30, 2011 Level 2 Level 3 Level 2 Level 3 Borrowings Transfers into (out of) $1,119 $(1,119) $ 536 $(536) Transfers (out of) into — — (100) 100 $1,119 $(1,119) $ 436 $(436) 80 THE WORLD BANK ANNUAL REPORT 2012 Presented below is the difference between the discounted cash flow method based on estimated aggregate fair value and aggregate contractual future pay-offs determined by applicable models and principal balance of borrowings: computation of embedded optionality such as caps, floors and calls. A wide range of industry standard In millions of U.S. dollars Principal models such as one factor Hull-White, Libor Market Amount Due Model and Black-Scholes are used depending on the Fair Value Upon Maturity Difference specific structure. These models incorporate market observable inputs, such as yield curves, foreign June 30, 2012 $145,339 $149,655 $(4,316) June 30, 2011 $135,242 $144,323 $(9,081) exchange rates, basis spreads, funding spreads, interest rate volatilities, equity index volatilities and Valuation Methods and Assumptions equity indices. Where applicable, the models also incorporate significant unobservable inputs such as Techniques applied in determining the fair values of correlations and long-dated interest rate volatilities. debt instruments are summarized below. The following table summarizes IBRD’s borrowings Discount notes and vanilla bonds portfolio after derivatives as of June 30, 2012 and Discount notes and vanilla bonds are valued using June 30, 2011. the standard discounted cash flow method which In millions of U.S. dollars relies on market observable inputs such as yield June 30, 2012 June 30, 2011 curves, foreign exchange rates, basis spreads and Borrowings $145,339 $135,242 funding spreads. Currency swaps, net (9,663) (9,858) Interest rate swaps, net (2,601) (2,883) Structured bonds $133,075 $122,501 Structured bonds issued by IBRD have coupon or repayment terms linked to the level or the IBRD uses derivative contracts to manage the performance of interest rates, foreign exchange repricing risk between its loans and borrowings. For rates, equity indices or commodities. The fair value details regarding Currency swaps and Interest rate of the structured bonds is derived using the swaps, see Note F – Derivative Instruments. NOTE F—DERIVATIVE INSTRUMENTS IBRD uses derivative instruments in its investment and borrowing portfolios, and for asset/liability management purposes. It also offers derivatives intermediation services to clients and concurrently enters into offsetting transactions with market counterparties. The following table summarizes IBRD’s use of derivatives in its various financial portfolios: Portfolio Derivative instruments used Purpose / Risk being managed Risk management purposes: Currency swaps, interest rate Investments swaps, currency forwards, Manage currency and interest rate risk in the portfolio options and futures contracts Currency swaps, interest rate Manage currency risk as well as repricing risks between loans and Borrowings swaps, and structured swaps borrowings Other Currency swaps, and interest Manage currency risk as well as extend the duration of IBRD’s assets/liabilities rate swaps equity Other purposes: Client operations Currency swaps, and interest Assist clients in managing their interest rate and currency risks rate swaps Under client operations, derivative intermediation Facility for Immunisation (IFFIm), under which services are provided to the following: several transactions have been executed. Borrowing Countries: Currency and interest rate Affiliated Organizations: Derivative contracts are swap transactions are executed between IBRD and executed between IBRD and IDA, under an its borrowers under master derivatives agreements. agreement allowing IBRD to intermediate derivative contracts on behalf of IDA. Non-Affiliated Organizations: IBRD has a master derivatives agreement with the International Finance IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 81 IBRD engages in an equity duration extension Upon adoption of this guidance, $500 million was strategy which employs interest rate swaps to reported in other comprehensive income, increase the duration of its equity from representing the difference between the carrying approximately three months to approximately five value and the fair value of those derivatives that years. This strategy seeks to increase the stability of were hedging a cash flow exposure prior to income by taking greater exposure to long-term adoption. This amount is being reclassified into interest rates. earnings in the same period or periods in which the hedged forecasted transactions affect earnings. On July 1, 2000, IBRD adopted FASB’s guidance on derivatives and hedging. This guidance requires Any gains or losses on those borrowings for which a that derivative instruments be recorded on the fair value exposure was being hedged prior to balance sheet at fair value. IBRD has elected not to adoption of the guidance, were recorded in income designate any qualifying hedging relationships for at the time of implementation, and were offset by the accounting purposes. Rather, all derivative fair value adjustments on the related derivative instruments are marked to fair value, with the instruments. The fair value adjustments on those changes in fair value recognized in net income. bonds are being amortized into earnings over the While IBRD believes that its hedging strategies remaining lives of the related bonds, through the achieve its objectives, the application of qualifying Fair value adjustment on non-trading portfolios, net hedging criteria for accounting purposes would not in the Statement of Income. appropriately reflect IBRD’s risk management strategies. The following tables provide information on the fair value amounts and the location of the derivative instruments on the Balance Sheet, as well as notional amounts and credit risk exposures of those derivative instruments as of June 30, 2012 and June 30, 2011: Fair value of derivative instruments on the Balance Sheet: In millions of U.S. dollars Derivative assets Derivative liabilities Balance Sheet June 30, June 30, Balance Sheet June 30, June 30, Location 2012 2011 Location 2012 2011 Derivatives not designated as hedging instruments Options and Futures Receivable from Receivable from contracts – Investment investment investment – Trading securities traded $ 5 $ * securities traded $ — $ — Interest rate swaps Derivative assets 12,140 7,635 Derivative liabilities 6,153 2,708 Currency swaps (including currency forward Derivative assets 148,673 137,076 Derivative liabilities 138,684 127,720 contracts and structured swaps) a Other Derivative assets * * Derivative liabilities — 1 Total Derivatives $160,819 $144,711 $144,837 $130,429 a. These relate to TBA securities * Indicates amount less than $0.5 million 82 THE WORLD BANK ANNUAL REPORT 2012 Notional amounts and credit risk exposure of the derivative instruments: In millions of U.S. dollars June 30, 2012 June 30, 2011 Type of contract Investments—Trading Interest rate swaps Notional principal $ 7,319 $ 6,889 Credit exposure 135 71 Currency swaps (including currency forward contracts) Credit exposure 413 23 a Exchange traded Options and Futures Notional long position 272 638 Notional short position 2,009 88 b Other derivatives Notional long position 95 169 Notional short position — 4 Credit exposure * * Client operations Interest rate swaps Notional principal 18,215 23,406 Credit exposure 1,720 499 Currency swaps Credit exposure 1,446 1,354 Borrowing portfolio Interest rate swaps Notional principal 147,872 130,089 Credit exposure 6,647 4,885 Currency swaps Credit exposure 15,506 15,758 Other derivatives Interest rate swaps Notional principal 38,563 38,032 Credit exposure 4,021 2,589 Currency swaps Credit exposure 229 214 a. Exchange traded instruments are generally subject to daily margin requirements and are deemed to have no material credit risk. All options and futures contracts are interest rate contracts. b. These relate to TBA securities. * Indicates amount less than $0.5 million. IBRD is not required to post collateral under its If the credit-risk related contingent features underlying derivative agreements as long as it maintains a AAA these agreements were triggered to the extent that credit rating. The aggregate fair value of all derivative IBRD would be required to post collateral as of June instruments with credit-risk related contingent features 30, 2012, the amount of collateral that would need to that are in a liability position on June 30, 2012 is $440 be posted would be $115 million. million. IBRD has not posted any collateral with these counterparties due to its AAA credit rating. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 83 Amounts of gains and losses on non-trading derivatives and their location on the Statement of Income during the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 is as follows: In millions of U.S. dollars Fiscal Year ended June 30, Income Statement Location Gains (Losses) 2012 2011 2010 Derivatives not designated as hedging instruments, and not held in a trading a portfolio Fair value adjustment on non- Interest rate swaps trading portfolios, net $1,092 $ (139) $1,322 Currency swaps (including currency forward contracts and structured Fair value adjustment on non- swaps) trading portfolios, net 2,658 (950) 649 Total $3,750 $(1,089) $1,971 a. For alternative disclosures about trading derivatives see the following table. All of the instruments in IBRD's investment In millions of U.S. dollars portfolio are held for trading purposes. Within the Fiscal Year ended June 30, a Investments, net-trading , investment portfolio, IBRD holds highly rated fixed Statement of Income Line gains (losses) income securities, equity securities as well as 2012 2011 2010 derivatives. Type of instrument The following table provides information on the Fixed income $ (5) $ 17 $ 55 location and amount of gains and losses on the net Equity (16) 138 71 investment portfolio and their location on the $(21) $155 $126 Statement of Income during the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010: a. Amounts associated with each type of instrument includes realized and unrealized gains and losses on both derivative instruments and non-derivative instruments 84 THE WORLD BANK ANNUAL REPORT 2012 Fair Value Disclosures IBRD’s fair value hierarchy for derivative assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and June 30, 2011 is as follows: In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2012 Level 1 Level 2 Level 3 Total Derivative Assets: Investments Currency forward contracts $— $ 6,542 $ — $ 6,542 Currency swaps — 11,876 — 11,876 Interest rate swaps — 135 — 135 a Other — * — * — 18,554 — 18,554 Client operations Currency swaps — 25,891 — 25,891 Interest rate swaps — 1,669 — 1,669 — 27,560 — 27,560 Borrowings Currency swaps — 89,614 13,962 103,576 Interest rate swaps — 6,520 7 6,527 — 96,134 13,969 110,103 Other assets / liabilities Currency swaps — 788 — 788 Interest rate swaps — 3,809 — 3,809 — 4,597 — 4,597 Total derivative assets $— $146,845 $13,969 $160,814 Derivative Liabilities: Investments Currency forward contracts $— $ 6,448 $ — $ 6,448 Currency swaps — 11,876 — 11,876 Interest rate swaps — 307 — 307 a Other — — — — — 18,631 — 18,631 Client operations Currency swaps — 25,889 — 25,889 Interest rate swaps — 1,662 — 1,662 — 27,551 — 27,551 Borrowings Currency swaps — 81,915 11,998 93,913 Interest rate swaps — 3,903 23 3,926 — 85,818 12,021 97,839 Other assets / liabilities Currency swaps — 558 — 558 Interest rate swaps — 258 — 258 — 816 — 816 Total liabilities $— $132,816 $12,021 $144,837 a. These relate to TBA securities. * Indicates amount less than $0.5 million IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 85 In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2011 Level 1 Level 2 Level 3 Total Derivative Assets: Investments Currency forward contracts $— $ 6,529 $ — $ 6,529 Currency swaps — 5,823 — 5,823 Interest rate swaps — 71 — 71 a Other — * — * — 12,423 — 12,423 Client operations Currency swaps — 31,550 — 31,550 Interest rate swaps — 428 — 428 — 31,978 31,978 Borrowings Currency swaps — 78,254 14,152 92,406 Interest rate swaps — 4,736 57 4,793 — 82,990 14,209 97,199 Other assets / liabilities Currency swaps — 768 — 768 Interest rate swaps — 2,343 — 2,343 — 3,111 — 3,111 Total derivative assets $— $130,502 $14,209 $144,711 Derivative Liabilities: Investments Currency forward contracts $— $ 6,603 $ — $ 6,603 Currency swaps — 6,469 — 6,469 Interest rate swaps — 202 — 202 a Other — 1 — 1 — 13,275 13,275 Client operations Currency swaps — 31,545 — 31,545 Interest rate swaps — 419 — 419 — 31,964 — 31,964 Borrowings Currency swaps — 69,699 12,849 82,548 Interest rate swaps — 1,893 17 1,910 — 71,592 12,866 84,458 Other assets / liabilities Currency swaps — 555 — 555 Interest rate swaps — 177 — 177 — 732 — 732 Total liabilities $— $117,563 $12,866 $130,429 a. These relate to TBA securities. * Indicates amount less than $0.5 million 86 THE WORLD BANK ANNUAL REPORT 2012 The following tables provide a summary of changes where those amounts are included in the Statement in the fair value of IBRD’s Level 3 derivatives, net, of Income, are presented in the following table: during the fiscal years ended June 30, 2012 and June In millions of U.S. dollars 30, 2011: Fiscal Year Ended June 30, In millions of U.S. dollars Fiscal Year Ended Unrealized (Losses) Gains 2012 2011 2010 June 30, 2012 Statement of Income Line Interest Fair value adjustment on Currency Rate non-trading portfolios, net $1,002 $(172) $(24) Swaps Swaps Total Beginning of the fiscal The table below provides the details of all inter-level year $1,303 $ 40 $1,343 transfers during the fiscal year ended June 30, 2012 Total realized/unrealized gains (losses) in: and June 30, 2011: Net income 1,072 (41) 1,031 In millions of U.S. dollars Other comprehensive June 30, 2012 income 25 — 25 Level 2 Level 3 Issuances (69) — (69) Derivatives, net Sales/Settlements (321) — (321) Transfer into (out of) $61 $(61) Transfers (out of) in, net (46) (15) (61) End of the fiscal year $1,964 $(16) $1,948 In millions of U.S. dollars June 30, 2011 In millions of U.S. dollars Level 2 Level 3 Fiscal Year Ended June 30, 2011 Derivatives, net Interest Transfer into (out of) $196 $(196) Currency Rate Transfers (out of) into (1) 1 Swaps Swaps Total $195 $(195) Beginning of the fiscal year $ 714 $(9) $ 705 Transfers from Level 3 to Level 2 are due to Total realized/unrealized increased price transparency. gains or (losses) in: The fair value of IBRD’s Level 3 borrowings related Net income (159) 49 (110) derivatives is estimated using valuation models that Other comprehensive incorporate model parameters, observable market income 1,126 — 1,126 inputs and unobservable inputs. The significant Issuances (1) — (1) unobservable inputs used in the fair value Sales/Settlements (182) — (182) measurement of these derivatives are correlations Transfers in (out of), net (195) * (195) and long dated interest rate volatilities. See Note E – End of the fiscal year $1,303 $40 $1,343 Borrowings for details on these unobservable inputs. * Indicates amount less than $0.5 million The following table provides a summary of the valuation technique applied in determining fair Unrealized gains or losses included in income for values of these Level 3 instruments and quantitative the fiscal years ended June 30, 2012, June 30, 2011, information regarding the significant unobservable and June 30, 2010 relating to IBRD’s Level 3 inputs used. derivatives, net, still held as at these dates as well as In millions of U.S. dollars Fair Value at Valuation Portfolio June 30, 2012 Technique Unobservable input Range (average) Correlations -44% to 83% (13%) Currency swaps, interest Discounted cash $1,948 rates swaps flows Long-dated interest rate volatilities 17% to 35% (26%) IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 87 Valuation Methods and Assumptions exchange rates, basis spreads and funding spreads. Derivative contracts include currency forward For structured currency and interest rate swaps, contracts, TBA securities, currency swaps and which primarily consist of callable swaps linked to interest rate swaps. Currency swaps and interest rate interest rates, foreign exchange rates, and equity swaps are either plain vanilla or structured. Currency indices, valuation models and inputs similar to the forward contracts and plain vanilla currency and ones applicable to structured bonds valuation are interest rate swaps are valued using the standard used. Where applicable, the models also incorporate discounted cash flow methods using market significant unobservable inputs such as correlations observable inputs such as yield curves, foreign and long-dated interest rates volatilities. NOTE G—RETAINED EARNINGS, ALLOCATIONS AND TRANSFERS The changes in the components of Retained Earnings for each of the fiscal periods from June 30, 2009 to June 30, 2012, are summarized below: In millions of US dollars Cumulative Unallocated Restricted Special General Pension Fair Value LTIP Net Income Retained c c Reserve Reserve Reserve Surplus Adjustments Reserve (Loss) Earnings Total As of June 30, 2009 $293 $25,670 $1,255 $ 595 $(1,805) $ — $ 3,852 $ 10 $29,870 a Net income allocation — — 25 — 3,280 36 (3,352) 11 — Board of Governors- approved transfers b funded from Surplus — — — (338) — — 338 — — Net income for the year — — — — — — (1,077) — (1,077) As of June 30, 2010 $293 $25,670 $1,280 $ 257 $ 1,475 $ 36 $ (239) $ 21 $28,793 a Net income allocation — 281 (32) 100 (1,038) 80 621 (12) — Board of Governors- approved transfers b funded from Surplus — — — (130) — — 130 — — Net loss for the year — — — — — — 930 — 930 As of June 30, 2011 $293 $25,951 $1,248 $ 227 $ 437 $116 $1,442 $ 9 $29,723 a Net income allocation — 401 (86) 75 420 109 (923) 4 — Board of Governors- approved transfers b funded from Surplus — — — (130) — — 130 — — Net income for the year — — — — — — (676) — (676) As of June 30, 2012 $293 $26,351 $1,162 $ 172 $ 857 $225 $ (26) $ 13 $29,047 a. Amounts retained as Surplus from net income allocation are approved by the Board of Governors. b. A concurrent transfer is made from Surplus to Unallocated Net Income (Loss) for all transfers reported on the Statement of Income and authorized to be funded from Surplus. c. May differ from the sum of individual figures due to rounding. IBRD makes net income allocation decisions on the Reserve by $86 million, an increase in Restricted basis of reported net income, adjusted to exclude the Retained Earnings by $4 million and an increase in fair value adjustment on non-trading portfolios, net, LTIP Reserve by $109 million. restricted income, LTIP adjustment and Board of On September 23, 2011, IBRD’s Board of Governors-approved transfers, and after considering Governors approved the transfer of $520 million to the allocation to the pension reserve. IDA and $75 million to Surplus, from the net On July 20, 2011, IBRD’s Board of Governors income earned in the fiscal year ended June 30, approved the immediate transfer of $75 million from 2011. The transfer to IDA was made on September Surplus to the South Sudan Transition Trust Fund, 27, 2011. by way of a grant. On May 24, 2012, IBRD’s Board of Governors On August 4, 2011, IBRD’s Executive Directors approved the immediate transfer of $55 million from approved the allocation of $401 million of the net Surplus to the Trust Fund for Gaza and West Bank, income earned in the fiscal year ended June 30, 2011 by way of grant. to the General Reserve. In addition, the Executive Directors also approved a reduction in Pension 88 THE WORLD BANK ANNUAL REPORT 2012 Transfers approved during the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010, are included in the following table. In millions of U.S. dollars Fiscal Years Ended June 30, Transfers funded from: 2012 2011 2010 Unallocated Net Income: IDA $520 $383 $501 Surplus: IDA — — 283 Trust Fund for Gaza and West Bank 55 130 55 South Sudan Transition Trust Fund 75 — — 130 130 338 Total $650 $513 $839 There were no amounts payable for the transfers approved by the Board of Governors at June 30, 2012 and June 30, 2011. NOTE H—TRANSACTIONS WITH AFFILIATED ORGANIZATIONS IBRD transacts with affiliated organizations by providing loans, administrative and derivative intermediation services, as well as through its pension and other postretirement benefit plans. At June 30, 2012 and June 30, 2011, IBRD had the following receivables from (payables to) its affiliated organizations. In millions of U.S. dollars 2012 a Derivative Transactions Pension and Other Administrative Postretirement Loans Services Receivable Payable Benefits Total IDA $— $375 $7,714 $(7,327) $(1,006) $(244) IFC 42 48 — — (120) (30) MIGA — 1 — — (5) (4) $42 $424 $7,714 $(7,327) $(1,131) $(278) In millions of U.S. dollars 2011 a Derivative Transactions Pension and Other Administrative Postretirement Loans Services Receivable Payable Benefits Total IDA $— $370 $9,893 $(9,886) $ (999) $(622) IFC 50 32 — — (100) (18) MIGA — 3 — — (5) (2) $50 $405 $9,893 $(9,886) $(1,104) $(642) a. For details on derivative transactions relating to the swap intermediation services provided by IBRD to IDA see Note F— Derivative Instruments The (payables) receivables balances to (from) these affiliated organizations are reported in the Balance Sheet as follows: Receivables / Payables related to: Reported as: Loans Loans outstanding Receivable for Administrative Services Other Assets – Miscellaneous Receivables (payables) for Derivative Transactions Derivative Assets/Liabilities – Client operations Payable for Pension and Other Postretirement Benefits Accounts payable and miscellaneous liabilities Loans rate of 3.96% and weighted average maturity of 2.7 years. This loan is not eligible for interest waivers. IBRD has a Local Currency Loan Facility Agreement with IFC which is capped at $300 million. At June 30, 2012, the loan balance under this facility amounted to $42 million at an interest IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 89 Administrative services donors. Specified uses could include, for example, co-financing of IBRD lending projects, debt Expenses jointly incurred by IBRD and IDA are reduction operations, technical assistance including allocated based on an agreed cost sharing ratio, and feasibility studies and project preparation, global amounts are settled quarterly. For the fiscal year and regional programs, and research and training ended June 30, 2012, IBRD’s administrative programs. These funds are held in trust with IBRD expenses are net of the share of expenses allocated and/or IDA, and are held in a separate investment to IDA of $1,365 million ($1,427 million—fiscal portfolio which is not commingled with IBRD year ended June 30, 2011, and $1,323 million— and/or IDA funds. fiscal year ended June 30, 2010). Trust fund execution may be carried out in one of Other income two ways: Recipient-executed or IBRD-executed. Income jointly earned by IBRD and IDA is allocated Recipient-executed trust funds involve activities based on the same agreed cost sharing ratio that is carried out by a recipient third-party “executing used to allocate administrative expenses. Amounts agencyâ€?. IBRD enters into agreements with and are settled quarterly. For the fiscal year ended June disburses funds to those recipients, who then 30, 2012, IBRD’s other income is net of income exercise spending authority to meet the objectives allocated to IDA of $209 million ($193 million— and comply with terms stipulated in the agreements. fiscal year ended June 30, 2011, and $173 million— fiscal year ended June 30, 2010). IBRD-executed trust funds involve IBRD execution of activities as described in relevant administration For the fiscal years ended June 30, 2012, June 30, agreements with donors which define the terms and 2011 and June 30, 2010, the amount of fee revenue conditions for use of the funds. Spending authority associated with services provided to affiliated is exercised by IBRD, under the terms of the organizations is included in Other Income on the administration agreements. The executing agency Statement of Income, as follows: services provided by IBRD vary and include for In millions of U.S. dollars example, activity preparation, analytical and Fiscal year ended June 30 advisory activities and project-related activities, 2012 2011 2010 including procurement of goods and services. The Fees charged to IFC $38 $36 $33 Fees charged to MIGA 6 5 4 following table summarizes the expenses pertaining to IBRD-executed trust funds during the fiscal years Pension and Other Postretirement Benefits ended June 30, 2012, June 30, 2011 and June 30, 2010: The payable to IDA represents IDA’s net share of prepaid cost for pension and other postretirement In millions of U.S. dollars Fiscal Year Ended June 30, benefit plans and PEBP assets. These will be 2012 2011 2010 realized over the life of the plan participants. IBRD-executed trust funds expenses $341 $300 $271 The payables to IFC and MIGA represent their respective share of PEBP assets. The PEBP assets These amounts are included in Administrative are managed by IBRD and are a part of the expenses and the corresponding income is included investment portfolio. in Other income in the Statement of Income. For Pension and Other Post Retirement Benefits The following table summarizes all undisbursed related disclosures see Note J—Pension and Other contributions made by third party donors to IBRD- Post Retirement Benefits. executed trust funds, recognized on the Balance Derivative transactions Sheet as of June 30, 2012 and June 30, 2011: These relate to currency forward contracts entered In millions of U.S. dollars into by IDA with IBRD acting as the intermediary June 30, 2012 June 30, 2011 IBRD-executed trust with the market. funds $354 $340 NOTE I—MANAGEMENT OF EXTERNAL FUNDS AND OTHER SERVICES These amounts are included in Other Assets - Miscellaneous and the corresponding liabilities are Trust Funds included in Accounts payable and miscellaneous IBRD, alone or jointly with one or more of its liabilities on the Balance Sheet. affiliated organizations, administers on behalf of In some trust funds, execution is split between donors, including members, their agencies and other Recipient-executed and IBRD-executed portions. entities, funds restricted for specific uses in Decisions on assignment of funding resources accordance with administration agreements with between the two types of execution may be made on 90 THE WORLD BANK ANNUAL REPORT 2012 an ongoing basis; therefore the execution of a by GAVI in accordance with the terms of the AMC portion of these available resources may not yet be which require that the funds be used to make assigned. payments for qualifying vaccines. Should a donor fail to pay, IBRD has committed to pay the shortfall. IBRD also acts as a financial intermediary to For this commitment, IBRD charges an annual 30 provide specific administrative or financial services basis point premium on outstanding grant payments with a limited fiduciary or operational role. These not yet paid by AMC donors. arrangements include, for example, administration of debt service trust funds, financial intermediation As of June 30, 2012, investments and receivables and other more specialized limited fund from donors relating to AMC, had a net carrying management roles. Funds are held and disbursed in value of $844 million ($863 million—as of June 30, accordance with instructions from donors or, in 2011). Amounts relating to investments totaled $326 some cases, an external governance structure or a million ($291 million—as of June 30, 2011) and are body operating on behalf of donors. included in IBRD’s investment holdings. Receivables from donors are reported in Other Revenues Assets (Miscellaneous). The corresponding payables During the fiscal year ended June 30, 2012, June 30, are reflected in Accounts payable and miscellaneous 2011 and June 30, 2010, IBRD’s revenues for the liabilities. Fee income recognized from these administration of trust fund operations were as arrangements in the amount of $3 million ($3 follows: million—June 30, 2011) is included in Other In millions of U.S. dollars Income. Amounts recorded for the non-contingent Fiscal Year Ended June 30, and contingent obligations arising from IBRD’s 2012 2011 2010 obligation to pay in the event of a donor default are Revenues $64 $55 $56 included in Note D—Loans and Other Exposures. These amounts are included in Other income in the NOTE J—PENSION AND OTHER Statement of Income. POSTRETIREMENT BENEFITS Revenue collected from donor contributions but not IBRD, IFC and MIGA participate in SRP, a Retired yet earned by IBRD totaling $66 million at June 30, Staff Benefits Plan (RSBP) and a PEBP that cover 2012 ($66 million—June 30, 2011) is included in substantially all of their staff members. Other Assets (Miscellaneous) and in Accounts The SRP provides pension benefits and includes a payable and miscellaneous liabilities, cash balance plan. The RSBP provides certain health correspondingly on the Balance Sheet. and life insurance benefits to eligible retirees. The Investment Management Services PEBP provides certain pension benefits administered outside the SRP. IBRD offers treasury and investment management services to affiliated and non-affiliated IBRD uses a June 30 measurement date for its organizations. pension and other postretirement benefit plans. In addition, IBRD offers asset management and All costs, assets and liabilities associated with these technical advisory services to central banks of plans are allocated between IBRD, IFC, and MIGA member countries, under the Reserves Advisory and based upon their employees’ respective participation Management Program, for capacity building and in the plans. Costs allocated to IBRD are then shared other development purposes and receives a fee for between IBRD and IDA based on an agreed cost these services. sharing ratio. IDA, IFC and MIGA reimburse IBRD for their proportionate share of any contributions The fee income from all of these investment made to these plans by IBRD. Contributions to these management activities in the amount of $23 million plans are calculated as a percentage of salary. ($21 million —June 30, 2011) is included in Other Income on the Statement of Income. As of June 30, 2012, the SRP and RSBP each had a Other Services negative funded status of $1,423 million and $765 million, respectively. The funded status of the Donors to AMC have provided IBRD with PEBP, after reflecting IBRD and IDA’s share of commitments to give $1.5 billion over a ten year assets which are included in the IBRD’s investment period, with the GAVI Alliance (GAVI) as the portfolio ($478 million), was negative $229 million. named beneficiary. The assets will be drawn down IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 91 The following table summarizes the benefit costs associated with the SRP, RSBP, and PEBP for IBRD and IDA for the fiscal years ended June 30, 2012, June 30, 2011, and June 30, 2010: In millions of U.S. dollars SRP RSBP PEBP 2012 2011 2010 2012 2011 2010 2012 2011 2010 Benefit Cost Service cost $ 303 $ 275 $ 221 $ 62 $ 55 $ 43 $23 $20 $15 Interest cost 618 631 655 102 103 99 28 25 27 Expected return on plan assets (780) (728) (757) (106) (94) (91) — — — Amortization of prior 7 7 7 — (*) (2) * * * service cost Amortization of unrecognized 35 117 68 25 37 29 19 13 11 net loss Net periodic pension cost $ 183 $ 302 $ 194 $ 83 $101 $ 78 $70 $58 $53 of which: IBRD’s share $ 89 $ 144 $ 94 $ 40 $ 48 $ 38 $34 $28 $26 IDA’s share $ 94 $ 158 $ 100 $ 43 $ 53 $ 40 $36 $30 $27 * Indicates amount less than $0.5 million IBRD’s share of the benefit costs is included in Administrative Expenses. IDA’s share of the benefit costs is included as a payable to/receivable from IDA in Accounts payable and miscellaneous liabilities on the Balance Sheet (see Note H—Transactions with Affiliated Organizations). The following table summarizes the projected benefit obligations, fair value of plan assets, and funded status associated with the SRP, RSBP, and PEBP for IBRD and IDA for the fiscal years ended June 30, 2012, and June 30, 2011. While contributions made to the SRP and RSBP are irrevocable, contributions made to the PEBP are revocable. As a result, the assets for the PEBP do not qualify for off-balance sheet accounting and are therefore included in IBRD's investment portfolio. The assets of the PEBP are invested in fixed income and equity instruments. In millions of U.S. dollars SRP RSBP PEBP 2012 2011 2012 2011 2012 2011 Projected Benefit Obligations Beginning of year $12,044 $11,249 $1,871 $1,741 $554 $ 450 Service cost 303 275 62 55 23 20 Interest cost 618 631 102 103 28 25 Participant contributions 81 80 16 15 1 1 Federal subsidy received n.a n.a 2 3 n.a n.a Plan amendments — — 149 — — — Benefits paid (536) (495) (60) (60) (27) (23) Actuarial loss 1,504 304 247 14 128 81 End of year 14,014 12,044 2,389 1,871 707 554 Fair value of plan assets Beginning of year 12,372 10,950 1,559 1,326 Participant contributions 81 80 16 15 Actual return on assets 495 1,686 33 203 Employer contributions 179 151 76 75 Benefits paid (536) (495) (60) (60) End of year 12,591 12,372 1,624 1,559 a Funded status $(1,423) $ 328 $(765) $ (312) $(707) $(554) Accumulated Benefit Obligations $12,580 $10,519 $2,389 $1,871 $614 $ 486 a. Positive funded status is reflected in Assets under retirement benefits plans; negative funded status is included in Liabilities under retirement benefits plans, on the Balance Sheet Currently, IBRD is enrolled in the U.S. Government Retiree Drug Subsidy (RDS) program. Effective January 1, 2013, IBRD will be moving from RDS to an Employer Group Waiver Plan (EGWP), an employer-sponsored prescription drug plan that further enhances coordination with Medicare prescription drug coverage under Medicare Part D. During the fiscal year ended June 30, 2012, amendments were made to the RSBP. These include the integration of the prescription drug coverage with EGWP, thereby providing reimbursements for standard and income related premiums paid for medical insurance under Medicare Part B to all eligible plan participants effective on July 1, 2012, and providing reimbursements of Medicare Part D income-related premium amounts once the plan is integrated with EGWP, for all eligible plan participants effective January 1, 2013. The effect of these changes is a $149 million increase to the projected benefit obligation at June 30, 2012. 92 THE WORLD BANK ANNUAL REPORT 2012 The following tables present the amounts included in Accumulated Other Comprehensive Income relating to Pension and Other Postretirement Benefits. Amounts included in Accumulated Other Comprehensive Loss at June 30, 2012: In millions of U.S. dollars SRP RSBP PEBP Total Net actuarial loss $3,429 $778 $336 $4,543 Prior service cost 20 148 2 170 Net amount recognized in Accumulated Other Comprehensive Loss $3,449 $926 $338 $4,713 Amounts included in Accumulated Other Comprehensive Loss at June 30, 2011: In millions of U.S. dollars SRP RSBP PEBP Total Net actuarial loss $1,675 $484 $226 $2,385 Prior service cost 27 — 2 29 Net amount recognized in Accumulated Other Comprehensive Loss $1,702 $484 $228 $2,414 * Indicates amount less than $0.5 million The estimated amounts that will be amortized from Accumulated Other Comprehensive Income (Loss) into net periodic benefit cost in the fiscal year ending June 30, 2013 are as follows: In millions of U.S. dollars SRP RSBP PEBP Total Net actuarial loss $191 $45 $30 $266 Prior service cost 7 14 * 21 Amount estimated to be amortized into net periodic benefit cost $198 $59 $30 $287 * Indicates amount less than $0.5 million. Assumptions bond yield, and risk premium/spread (as The actuarial assumptions used are based on appropriate). Other asset class returns are derived financial market interest rates, past experience, and from their relationship to equity and bond markets. management’s best estimate of future benefit The expected long-term rate of return for the RSBP changes and economic conditions. Changes in these is computed using procedures similar to those used assumptions will impact future benefit costs and for the SRP. The discount rate used in determining obligations. the benefit obligation is selected by reference to the year-end yield of AA corporate bonds. The expected long-term rate of return for the SRP assets is a weighted average of the expected long- Actuarial gains and losses occur when actual results term (10 years or more) returns for the various asset are different from expected results. Amortization of classes, weighted by the portfolio allocation. Asset these unrecognized gains and losses will be included class returns are developed using a forward-looking in income if, at the beginning of the fiscal year, they building block approach and are not strictly based on exceed 10 percent of the greater of the projected historical returns. Equity returns are generally benefit obligation or the market-related value of plan developed as the sum of expected inflation, expected assets. If required, the unrecognized gains and losses real earnings growth and expected long-term are amortized over the expected average remaining dividend yield. Bond returns are generally service lives of the employee group. developed as the sum of expected inflation, real IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 93 The following tables present the weighted-average assumptions used in determining the projected benefit obligations and the net periodic pension costs for the fiscal years ended June 30, 2012, June 30, 2011, and June 30, 2010: Weighted average assumptions used to determine projected benefit obligation In percent SRP RSBP PEBP 2012 2011 2010 2012 2011 2010 2012 2011 2010 Discount rate 3.90 5.30 5.75 4.10 5.50 6.00 3.90 5.20 5.75 Rate of compensation increase 5.40 5.90 6.20 5.40 5.90 6.20 Health care growth rates - at end of fiscal year 6.30 6.90 7.00 Ultimate health care growth rate 3.60 4.00 4.25 Year in which ultimate rate is reached 2022 2022 2022 Weighted average assumptions used to determine net periodic pension cost In percent SRP RSBP PEBP 2012 2011 2010 2012 2011 2010 2012 2011 2010 Discount rate 5.30 5.75 7.00 5.50 6.00 7.00 5.20 5.75 7.00 Expected return on plan assets 6.40 6.75 7.75 6.70 7.75 7.75 Rate of compensation increase 5.90 6.20 6.70 5.90 6.20 6.70 Health care growth rates - at end of fiscal year 6.90 7.00 7.00 Ultimate health care growth rate 4.00 4.25 4.75 Year in which ultimate rate is reached 2022 2022 2017 The medical cost trend rate can significantly affect the reported postretirement benefit income or costs and benefit obligations for the RSBP. The following table shows the effects of a one-percentage-point change in the assumed healthcare cost trend rate: In millions of U.S. dollars One percentage point One percentage point increase decrease Effect on total service and interest cost $ 41 $ 31 Effect on projected benefit obligation $508 $393 Investment Strategy horizons of the SRP and RSBP, and the relatively The investment policies establish the framework for modest liquidity needs over the short-term to pay investment of the plan assets based on long-term benefits and meet other cash requirements, the focus investment objectives and the trade-offs inherent in of the investment strategy is on generating seeking adequate investment returns within sustainable long-term investment returns through acceptable risk parameters. A key component of the various asset classes and strategies including equity, investment policy is to establish a Strategic Asset quasi-equity, private equity and real estate. Allocation (SAA) representing the policy portfolio The SAA is derived using a mix of quantitative (i.e., neutral mix of assets) around which the plans analysis that incorporates expected returns and are invested. The SAA for the plans is reviewed in volatilities by asset class as well as correlations detail and reset about every three to five years, with across the asset classes, and qualitative an annual review of key assumptions. considerations such as the desired liquidity needs of The key long-term objective is to target and secure the plans. The SAA is comprised of a diversified asset performance that is reasonable in relation to portfolio drawn from among fixed-income, equity, the growth rate of the underlying liabilities and the real assets and absolute return strategies. assumed sponsor contribution rates. This is particularly so in the case of the SRP, which has The revised target asset allocations for the SRP and liabilities that can be projected with a reasonable RSBP were approved in December 2010 and April level of confidence based on the actuarial 2011, respectively. assumptions. Given the relatively long investment 94 THE WORLD BANK ANNUAL REPORT 2012 The following tab le presen ts th e actu al and targ et asset allocation at J une 3 0, 2 012 and Ju ne 30, 2011 by asset category for the SRP an d RSBP. Th e portfolios are still in a period of transition to the new SAA, esp ecially with regard to private equity, and hedge funds and real assets, which explains for the most part, the differences between the target allocation and the actual allocation as of June 2012. In percent SRP RSBP Target Allocation % of Plan Assets Target Allocation % of Plan Assets Asset Class 2012 (%) 2012 2011 2012 (%) 2012 2011 Fixed Income & Cash 31 33 33 24 32 33 Public Equity 27 24 24 29 27 27 Private Equity 15 20 20 20 24 25 Hedge Funds 15 11 11 15 8 8 a Real assets 12 12 12 12 9 7 Total 100 100 100 100 100 100 a. Real assets are primarily comprised of Real Estate and Real Estate Investment Trusts (REITS), with a small allocation to infrastructure and timber. Significant Concentrations of Risk in Plan Assets respect to the investment policy, manager benchmarks, and liabilities of the Plans. Stress tests The assets of the SRP and RSBP are diversified are performed periodically using relevant market across a variety of asset classes. Investments in these scenarios to assess the impact of extreme market asset classes are further diversified across funds, events. Monitoring of performance (at both manager managers, strategies, geographies and sectors, to and asset class levels) against benchmarks, and limit the impact of any individual investment. In compliance with investment guidelines, is carried spite of such level of diversification, equity market out on a regular basis as part of the risk monitoring risk remains the primary source of the overall return process. Risk management for different asset volatility of the Plans. classes is tailored to their specific characteristics and Risk management practices is an integral part of the external managers’ due diligence and monitoring processes. Managing investment risk is an integral part of managing the assets of the Plans. Liability driven Credit risk is monitored on a regular basis and investment management and asset diversification are assessed for possible market event impacts. The central to the overall investment strategy and risk liquidity position of the Plans is analyzed at regular management approach for the SRP. The surplus intervals and periodically tested using various stress volatility risk (defined as the annualized standard scenarios to ensure that the Plans have sufficient deviation of asset returns relative to that of liquidity to meet all cash flow requirements. In liabilities) is considered the primary indicator of the addition, the long-term cash flow needs of the Plans overall investment risk of the Plans. It is used to are considered during the SAA exercise and are one define the risk tolerance level and establish the of the main drivers in determining maximum overall level of investment risk. allocation to the illiquid investment vehicles. Investment risk is regularly monitored at the absolute level, as well as at the relative levels with IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 95 Fair Value Measurements and Disclosures All plan assets are measured at fair value on a recurring basis. The following table presents the fair value hierarchy of major categories of plan assets as of June 30, 2012 and June 30, 2011. In millions of U.S. dollars June 30, 2012 SRP RSBP Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Debt securities Time deposits $ — $ 42 $ — $ 42 $ — $ 21 $ — $ 21 Securities purchased under resale agreements 78 — — 78 19 — — 19 Government and agency securities 3,085 540 — 3,625 206 263 — 469 Corporate and convertible bonds — 142 1 143 — 18 — 18 Asset backed securities — 41 2 43 — 2 1 3 Mortgage backed securities — 255 2 257 — 7 * 7 Total Debt securities 3,163 1,020 5 4,188 225 311 1 537 Equity securities Stocks 1,625 — — 1,625 222 — — 222 Mutual funds 554 — — 554 49 — — 49 REITS 291 — — 291 19 — — 19 Total Equity securities 2,470 — — 2,470 290 — — 290 Commingled funds — 723 — 723 — 152 — 152 Private equity — — 2,539 2,539 — — 389 389 Real estate (including infrastructure and timber) 335 903 1,238 — 12 123 135 Hedge funds — 899 354 1,253 — 81 39 120 Derivative assets / liabilities (1) (7) — (8) 1 (3) — (2) a Other assets / liabilities , net — — — 188 — — — 3 Total Assets $5,632 $2,970 $3,801 $12,591 $516 $553 $552 $1,624 a. Includes receivables and payables carried at amounts that approximate fair value. * Indicates amount less than $0.5 million In millions of U.S. dollars June 30, 2011 SRP RSBP Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Debt securities Time deposits $ — $ 225 $ — $ 225 $ — $ 23 $ — $ 23 Securities purchased under resale agreements 283 — — 283 20 — — 20 Government and agency securities 2,478 938 — 3,416 64 280 — 344 Corporate and convertible bonds — 247 2 249 — 123 — 123 Asset backed securities — 115 25 140 — 6 2 8 Mortgage backed securities — 408 14 422 — 8 1 9 Total Debt securities 2,761 1,933 41 4,735 84 440 3 527 Equity securities Stocks 1,482 — — 1,482 188 — — 188 Mutual funds 249 — — 249 38 — — 38 Real estate investment trusts (REITS) 250 — — 250 3 — — 3 Total Equity Securities 1,981 — — 1,981 229 — — 229 Commingled funds — 726 — 726 — 181 — 181 Private equity — — 2,504 2,504 — — 388 388 Real estate (including infrastructure and timber) — 309 733 1,042 — 11 101 112 Hedge funds — 1,150 322 1,472 — 92 34 126 Derivative assets / liabilities 17 (24) — (7) * (6) — (6) a Other assets / liabilities , net — — — (81) — — — 2 Total Assets $4,759 $4,094 $3,600 $12,372 $313 $718 $526 $1,559 a. Includes receivables and payables carried at amounts that approximate fair value. * Indicates amount less than $0.5 million 96 THE WORLD BANK ANNUAL REPORT 2012 The following tables present a reconciliation of Level 3 assets held during the year ended June 30, 2012 and 2011. For the fiscal year ended June 30, 2011, investments in certain real estate funds that were identified as redeemable within 90 days of the period end were transferred out of Level 3 into Level 2. In millions of US dollars June 30, 2012 SRP Corporate and Asset- Mortgage- Convertible backed backed Private Hedge Debt Securities Securities Equity Real Estate Funds Total Beginning of the fiscal year $2 $25 $14 $2,504 $733 $322 $3,600 Actual return on plan assets: Relating to assets still held at the reporting date * (1) 5 (238) 18 (7) (223) Relating to assets sold during the period * * (4) 194 27 (4) 213 Purchases, issuance and settlements, net (1) (22) (8) 79 125 51 224 Transfers in — — 1 — — 20 21 Transfers out — (*) (6) — — (28) (34) End of fiscal year $1 $2 $2 $2,539 $903 $354 $3,801 * Indicates amount less than $0.5 million In millions of US dollars June 30, 2011 SRP Corporate and Asset- Mortgage- Convertible backed backed Private Hedge Debt Securities Securities Equity Real Estate Funds Total Beginning of the fiscal year $4 $50 $ 23 $2,177 $ 729 $ 416 $3,399 Actual return on plan assets: Relating to assets still held at the reporting date * 5 1 53 146 41 246 Relating to assets sold during the period — (3) (1) 240 17 25 278 Purchases, issuance and settlements, net * 3 (2) 34 153 (166) 22 Transfers (out) in (2) (30) (7) — (312) 6 (345) End of fiscal year $2 $25 $14 $2,504 $ 733 $ 322 $3,600 * Indicates amount less than $0.5 million In millions of US dollars June 30, 2012 RSBP Corporate and Asset- Mortgage- Convertible backed backed Private Hedge Debt Securities Securities Equity Real Estate Funds Total Beginning of the fiscal year $— $2 $1 $388 $101 $34 $526 Actual return on plan assets: Relating to assets still held at the reporting date — (*) * (32) 16 (1) (17) Relating to assets sold during the period — (*) * 33 11 (*) 44 Purchases, issuance and settlements, net — (1) (1) * (5) 10 3 Transfers in — — — 2 2 Transfers out — (*) (*) — — (6) (6) End of fiscal year $— $1 $* $389 $123 $39 $552 * Indicates amount less than $0.5 million IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 97 In millions of US dollars June 30, 2011 RSBP Corporate and Asset- Mortgage- Convertible backed backed Private Hedge Debt Securities Securities Equity Real Estate Funds Total Beginning of the fiscal year $ * $ 2 $ 1 $340 $ 74 $ 44 $461 Actual return on plan assets: Relating to assets still held at the reporting date * 1 * 16 12 3 32 Relating to assets sold during the period (*) * (*) 32 3 4 39 Purchases, issuance and settlements, net (*) 1 * * 22 (17) 6 Transfers out — (2) — — (10) * (12) End of fiscal year $— $ 2 $ 1 $388 $101 $ 34 $526 * Indicates amount less than $0.5 million Valuation methods and assumptions Equity securities The following are general descriptions of asset Equity securities (including REITS) are invested in categories, as well as the valuation methodologies companies in various industries and countries. and inputs used to determine the fair value of each Investments in public equity listed on securities major category of Plan assets. It is important to note exchanges are valued at the last reported sale price that the investment amounts in the asset categories on the last business day of the fiscal year. shown in the table above may be different from the Commingled funds asset category allocation shown in the Investment Strategy section of the note. Asset classes in the Commingled funds are typically common or table above are grouped by the characteristics of the collective trusts reported at net asset value (NAV) as investments held. The asset class break-down in the provided by the investment manager or sponsor of Investment Strategy section is based on the fund based on valuation of underlying management’s view of the economic exposures after investments, and reviewed by management. considering the impact of derivatives and certain trading strategies. Private equity Debt securities Private equity includes investments primarily in leveraged buyouts, distressed investments and Debt securities include time deposits, U.S. treasuries venture capital funds across North America, Europe and agencies, debt obligations of foreign and Asia in a variety of sectors. A large number of governments and debt obligations in corporations of these funds are in the investment phase of their life domestic and foreign issuers. Fixed income also cycle. Private Equity investments do not have a includes investments in asset backed securities such readily determinable fair market value and are as collateralized mortgage obligations and mortgage reported at NAV provided by the fund managers, backed securities. These securities are valued by and reviewed by management, taking into independent pricing vendors at quoted market prices consideration the latest audited financial statements for the same or similar securities, where available. of the funds. The underlying investments are valued If quoted market prices are not available, fair values using inputs such as cost, operating results, are based on discounted cash flow models using discounted future cash flows and trading multiples market-based parameters such as yield curves, of comparable public securities. interest rates, volatilities, foreign exchange rates and credit curves. Some debt securities are valued using Real estate techniques which require significant unobservable Real estate includes several funds which invest in inputs. The selection of these inputs may involve core real estate as well as non-core type of real some judgment. Management believes its estimates estate investments such as debt, value add, and of fair value are reasonable given its processes for opportunistic equity investments. Real estate obtaining securities prices from multiple investments do not have a readily determinable fair independent third-party vendors, ensuring that market value and are reported at NAV provided by valuation models are reviewed and validated, and the fund managers, and reviewed by management, applying its approach consistently from period to taking into consideration the latest audited financial period. Unless quoted prices are available, money statements of the funds. The valuations of market instruments and securities purchased under underlying investments are based on income and/or resale agreements are reported at face value which cost approaches or comparable sales approach, and approximates fair value. 98 THE WORLD BANK ANNUAL REPORT 2012 taking into account discount and capitalization rates, can typically be redeemed at NAV within the near financial conditions, local market conditions among term while investments in private equity and most others. real estate are inherently long term and illiquid in nature with a quarter lag in reporting by the fund Hedge fund investments managers. Reporting of those asset classes with a Hedge fund investments include those seeking to reporting lag, management estimates are based on maximize absolute returns using a broad range of the latest available information taking into account strategies to enhance returns and provide additional underlying market fundamentals and significant diversification. Hedge Funds include investments in events through the balance sheet date. equity, event driven, fixed income, multi strategy Investment in derivatives and macro relative value strategies. These investments do not have a readily determinable fair Investment in derivatives such as equity or bond market value and are reported at NAVs provided by futures, TBA securities, swaps, options and currency external managers or fund administrators (based on forwards are used to achieve a variety of objectives the valuations of underlying investments) on a that include hedging interest rates and currency monthly basis, and reviewed by management, taking risks, gaining desired market exposure of a security, into consideration the latest audited financial an index or currency exposure and rebalancing the statements of the funds. portfolio. Over-the-counter derivatives are reported using valuations based on discounted cash flow Investments in hedge funds and commingled funds methods incorporating market observable inputs. Estimated Future Benefit Payments The following table shows the benefit payments expected to be paid in each of the next five years and subsequent five years. The expected benefit payments are based on the same assumptions used to measure the benefit obligation at June 30, 2012: In millions of U.S. dollars SRP RSBP PEBP a Before Federal Subsidy Federal Subsidy July 1, 2012 - June 30, 2013 $ 634 $ 58 $ 1 $ 38 July 1, 2013 - June 30, 2014 667 63 — 41 July 1, 2014 - June 30, 2015 701 69 — 43 July 1, 2015 - June 30, 2016 733 75 — 45 July 1, 2016 - June 30, 2017 763 81 — 47 July 1, 2017 - June 30, 2022 4,198 504 — 266 a. Effective January 1, 2013, IBRD will be moving from RDS to EGWP. See page 92 for further discussion. Expected Contributions NOTE K—COMPREHENSIVE INCOME IBRD’s contribution to the SRP and RSBP varies Comprehensive income consists of net income and from year to year, as determined by the Pension other gains and losses affecting equity that, under Finance Committee, which bases its judgment on the U.S. GAAP, are excluded from net income. results of annual actuarial valuations of the assets Comprehensive income (loss) comprises the and liabilities of the SRP and RSBP. The best cumulative effects of a change in accounting estimate of the amount of contributions expected to principle related to the implementation of FASB’s be paid to the SRP and RSBP by IBRD and IDA derivatives and hedging guidance, currency during the fiscal year beginning July 1, 2012 is $201 translation adjustments, pension-related items, and million and $72 million, respectively. net income. These items are presented in the Statement of Comprehensive Income. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 99 The following tables present the changes in Accumulated Other Comprehensive Loss for the fiscal years ended June 30, 2012, June 30, 2011, and June 30, 2010: In millions of U.S. dollars 2012 Cumulative Unrecognized Unrecognized Total Effect of Net Actuarial Prior Service Accumulated Cumulative Change in (Losses) Gains (Costs) Other Translation Accounting on Benefit Credits on Comprehensive a a Adjustment Principle Reclassification Plans Benefit Plans Loss Balance, beginning of the fiscal year $1,016 $500 $(521) $(2,385) $ (29) $(1,419) Changes from period activity (704) — 5 (2,158) (141) (2,998) Balance, end of the fiscal year $312 $500 $(516) $(4,543) $(170) $(4,417) In millions of U.S. dollars 2011 Cumulative Unrecognized Unrecognized Total Effect of Net Actuarial Prior Service Accumulated Cumulative Change in (Losses) Gains (Costs) Other Translation Accounting on Benefit Credits on Comprehensive a a Adjustment Principle Reclassification Plans Benefit Plans Loss Balance, beginning of the fiscal year $223 $500 $(510) $(3,219) $(37) $(3,043) Changes from period activity 793 — (11) 834 8 1,624 Balance, end of the fiscal year $1,016 $500 $(521) $(2,385) $(29) $(1,419) In millions of U.S. dollars 2010 Cumulative Unrecognized Total Effect of Unrecognized Prior Service Accumulated Cumulative Change in Net Actuarial (Costs) Other Translation Accounting Losses on Credits on Comprehensive a a Adjustment Principle Reclassification Benefit Plans Benefit Plans Loss Balance, beginning of the fiscal year $ 860 $500 $(505) $(2,495) $(43) $(1,683) Changes from period activity (637) — (5) (724) 6 (1,360) Balance, end of the fiscal year $223 $500 $(510) $(3,219) $(37) $(3,043) a. The Cumulative effect of change in accounting principle and subsequent reclassification to net income relates to the adoption of FASB’s guidance on derivatives and hedging on July 1, 2000. 100 THE WORLD BANK ANNUAL REPORT 2012 NOTE L—OTHER FAIR VALUE DISCLOSURES The table below presents IBRD’s estimates of fair value of its financial assets and liabilities along with their respective carrying amounts as of June 30, 2012 and June 30, 2011. In millions of U.S. dollars 2012 2011 Carrying Value Fair Value Carrying Value Fair Value Due from Banks $ 5,806 $ 5,806 $ 2,462 $ 2,462 Investments (including Securities purchased under resale agreements) 33,675 33,675 32,645 32,645 Net Loans Outstanding 134,209 132,198 130,470 129,447 Derivative Assets Investments 18,554 18,554 12,423 12,423 Client operations 27,560 27,560 31,978 31,978 Borrowings 110,103 110,103 97,199 97,199 Other Asset/Liability 4,597 4,597 3,111 3,111 a a Borrowings 145,339 145,337 135,242 135,223 Securities sold/lent under repurchase agreements/securities lending agreements and payable for cash collateral received 3,700 3,700 2,184 2,184 Derivative Liabilities Investments 18,631 18,631 13,275 13,275 Client operations 27,551 27,551 31,964 31,964 Borrowings 97,839 97,839 84,458 84,458 Other Asset/Liability 816 816 732 732 a. Includes $2 million relating to transition adjustment on adoption of a new accounting standard on derivatives and hedging on July 1, 2000 ($19 million — June 30, 2011). As of June 30, 2012, IBRD’s loans, including the one loan reported at fair value on a recurring basis, are classified as Level 3 within the fair value hierarchy. Valuation Methods and Assumptions Loans – Notes A and D As of June 30, 2012 and June 30, 2011, IBRD had no Borrowings – Notes A and E assets or liabilities measured at fair value on a non- Derivative assets and liabilities – Notes A, C, E and F recurring basis. Due from Banks For valuation methods and assumptions of the following items refer to the respective notes as follows: The carrying amount of unrestricted and restricted currencies is considered a reasonable estimate of the Investments – Notes A and C fair value of these positions. Fair Value Adjustment on Non-Trading Portfolios, Net The following table reflects the components of the fair value adjustment on non-trading portfolios, net for the fiscal years ended June 30, 2012, June 30, 2011, and June 30, 2010. In millions of U.S. dollars Fiscal years ended June 30, 2012 2011 2010 Fair value adjustments— gains (losses): Borrowings—Note E $(4,558) $1,505 $(3,024) Derivatives—Note F a Borrowing derivatives 2,311 (842) 868 Other assets/liabilities derivatives 1,437 (248) 1,097 Client operations derivatives 2 1 6 Loan—Note D (1) 4 15 Total $ (809) $ 420 $(1,038) a. Includes derivatives associated with the loan portfolio which are used to manage the repricing risk between loans and borrowings. IBRD FINANCIAL STATEMENTS: JUNE 30, 2012 101 INTERNATIONAL DEVELOPMENT ASSOCIATION MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2012 SECTION 1: INTRODUCTION AND OVERVIEW OF FINANCIAL RESULTS 106 SECTION 2: FINANCIAL RESOURCES 112 COMMITMENT AUTHORITY 112 DONOR RESOURCES 112 OTHER RESOURCES 113 IDA16 COMMITMENT AUTHORITY 113 SECTION 3: ALLOCATION OF RESOURCES 114 PERFORMANCE BASED ALLOCATION (PBA) SYSTEM 114 SECTION 4: DEVELOPMENT ACTIVITIES, PRODUCTS AND PROGRAMS 114 DEVELOPMENT CREDITS 116 DEVELOPMENT GRANTS 118 OTHER DEVELOPMENT ACTIVITIES AND PROGRAMS 118 DEBT RELIEF 119 TRUST FUNDS ADMINISTRATION 120 SECTION 5: INVESTMENT PORTFOLIO MANAGEMENT 120 LIQUIDITY TRANCHING 121 SHORT-TERM BORROWINGS 122 SECTION 6: FINANCIAL RISK MANAGEMENT 122 GOVERNANCE STRUCTURE 122 RISK-BEARING CAPACITY 123 FUNDING RISK 123 LIQUIDITY RISK 124 CREDIT RISK 124 MARKET RISK 125 SECTION 7: REPORTED BASIS RESULTS 127 SECTION 8: CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES 128 SECTION 9: GOVERNANCE AND CONTROLS 129 GENERAL GOVERNANCE 129 AUDIT COMMITTEE 130 BUSINESS CONDUCT 130 AUDITOR INDEPENDENCE 131 INTERNAL CONTROLS 131 GLOSSARY OF TERMS 132 LIST OF BOXES, TABLES, AND CHARTS Boxes 1 Five-Year Summary of Selected Financial Data 105 2 Financing Principles 115 3 Treatment of Overdue Payments 125 4 Eligibility Criteria for IDA’s Investment Securities 126 Tables 1 Statement of Activities for the fiscal years ended June 30, 2012 and June 30, 2011 108 2 Condensed Balance Sheet 110 3 Changes in the net asset value of the investment portfolio 111 4 Summary of Repayment Terms for Development Credits, effective July 1, 2012 117 5 Summary of Guarantee Pricing Terms for Partial Risk Guarantees, effective July 1, 2012 119 6 Cash and Investment Assets Held In Trust by IDA 120 7 Average Balances and Returns by Tranches 121 8 Short-term Borrowings 122 9 Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating 126 10 Condensed Statement of Income for the fiscal years ended June 30, 2012 and June 30, 2011 128 11 Net Administrative Expenses for the fiscal years ended June 30, 2012 and June 30, 2011 128 Charts 1 IDA16 Commitment Authority Status 114 2 Share of Financing Categories 116 3 Commitments of Development Credits by Region 117 4 Gross Disbursements of Development Credits by Region 117 5 Commitments of Development Grants by Region 118 6 Gross Disbursements of Development Grants by Region 118 7 Finance Committee Governance Structure 122 Throughout Management’s Discussion and Analysis, terms in boldface type are defined in the Glossary of Terms. The Management Discussion and Analysis contains forward looking statements which may be identified by such terms as “anticipates,â€? “believes,â€? “expects,â€? “intends,â€? or words of similar meaning. Such statements involve a number of assumptions and estimates that are based on current expectations, which are subject to risks and uncertainties beyond IDA’s control. Consequently, actual results in the future could differ materially from those currently anticipated. 104 THE WORLD BANK ANNUAL REPORT 2012 Box 1: Five-Year Summary of Selected Financial Data As of or for the fiscal years ended June 30, In millions of US dollars, except ratios and return data in percentages and months 2012 2011 2010 2009 2008 Development Operations (Discussed in Section 4) Commitments of development credits, grants and a guarantees $ 14,753 $ 16,269 $ 14,550 $ 14,041 $ 11,235 of which development grants 2,225 2,822 2,678 2,600 3,216 Gross Disbursements 11,061 10,282 11,460 9,219 9,160 of which development grants (including PPA grant activity) 2,398 2,261 2,124 2,208 2,626 b Net Disbursements including development grants 7,037 7,781 9,111 7,010 6,978 Balance Sheet (Discussed in Section 1) Total Assets $160,028 $162,544 $138,070 $137,709 $141,715 Net Investment portfolio 26,333 24,872 21,639 21,287 19,053 of which core liquidity 9,698 11,987 9,811 8,594 5,364 Development credits outstanding 123,576 125,287 113,474 112,894 113,542 Development grants payable 6,161 6,830 5,837 5,652 5,522 Subscriptions and Contributions paid-in 175,587 167,610 157,413 150,085 142,416 Income Statement (Discussed in Section 7) Income from development credits and guarantees $ 914 $ 897 $ 837 $ 801 $ 921 Investment income, net 1,006 305 910 1,499 1,006 Transfers and grants 858 991 990 1,037 1,104 Development grants (2,062) (2,793) (2,583) (2,575) (3,151) Net (Loss) Income (210) (2,332) (1,077) 1,850 (283) Funding Position (Discussed in Section 6) Investment portfolio and unrestricted demand notes as a percentage of undisbursed commitments of credits and development grants payable 81% 77% 78% 83% 82% Liquidity Position (Discussed in Section 6) Months of average monthly gross disbursements covered by core liquidity 11 14 10 11 N/A a. FY 2009 commitments of credits and grants include Heavily Indebted Poor Countries (HIPC) grants totaling $46 million. b. FY 2012 net disbursements includes $940 million of prepayments. The associated funds were received in June 2011 but were effective for July, 2011.. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 105 SECTION 1: INTRODUCTION AND OVERVIEW OF FINANCIAL RESULTS Introduction The International Development Association (IDA) is an international organization established in 1960 and is owned by its member countries. It is the largest multilateral channel for providing concessional financing to the world’s poorest countries. Since its inception, IDA has played a pivotal role in the global aid architecture and in efforts to foster economic growth, lower poverty, and improve the living conditions of people. IDA pursues these goals by providing concessional development credits, development grants and guarantees to its recipient member countries for programs and operations that help meet development needs. It also provides technical assistance, policy advice, and global knowledge services through economic sector work and country studies. Sources and Applications of IDA’s Funds IDA’s lending, grant financing and guarantee activities are funded by donor and internal resources, and transfers and grants from affiliated organizations. These key activities are presented and discussed below. Sources of Funds Applications of Funds Donor resources Internal resources Disbursement of development credits and development grants and guarantees Transfers and grants from affiliated organizations Service and commitment charge income on development credits, complemented by donor compensation for forgone Administrative Expenses service charge due to debt relief and grant financing Sources of Funds Donor Resources (Subscriptions and Contributions): IDA finances its new commitments for development credits and development grants primarily through contributions from donor countries. IDA’s financial assistance is highly concessional and its resources must therefore be periodically replenished, normally every three years. The donor resources are in the form of subscriptions and contributions with assigned voting rights. Internal Resources: These comprise contractual principal repayments (including any accelerated repayments and voluntary prepayments), income from the investment portfolio, and interest income from Blend and Hard-term credits, see Table 4, Summary of Repayment terms for Development Credits. Transfers and Grants from affiliated organizations: These are transfers from the International Bank for Reconstruction and Development’s (IBRD) net income and grants from the International Finance Corporation’s (IFC) retained earnings. Applications of Funds Disbursement of development credits and grants: Through its development operations, IDA’s development credits, development grants and guarantees benefit the poorest and least creditworthy countries. 106 THE WORLD BANK ANNUAL REPORT 2012 Basis of Reporting IDA prepares its financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), referred to in this document as the “reported basisâ€?. Under the reported basis, IDA’s Statement of Income does not reflect the true economic results of IDA due to a number of asymmetries, as discussed in detail in Section 7: Reported Basis Results. These include the following: • The recording of development grants as charges to net income, while the associated funding resources are recorded as equity through members’ subscriptions and contributions. • The reporting of the translation adjustments on the non-SDR currencies (non functional currencies) associated with IDA’s currency forward contracts on the Statement of Income; the economic offset, represented by the translation adjustment on the future donor inflows being hedged, is not reported in the financial statements. • The reporting of the unrealized mark-to-market gains/losses on the donor asset and liability management component of (see Section 5: Investment Portfolio Management) of the investment portfolio on the Statement of Income; the economic offset, represented by the change in the present value of the associated future net cash outflows reflected in the immunization strategy, is not reported in IDA’s financial statements. • The donor compensation received for forgone charges which would have funded part of the net administrative expenses, is recorded as equity through members’ contributions. Statement of Activities Analysis To partly address the asymmetries embedded in IDA’s reported results; management believes that a Statement of Activities (Table 1), better reflects the operating results of IDA. The Statement of Activities categorizes activities under two broad headings, namely: operating activities and risk management activities. In addition, the following adjustments have been made to the Statement of Income to arrive at the Statement of Activities: The following are reflected as operating activities: ï‚· Cash inflows from members in the form of subscriptions and contributions, including those inflows relating to donor compensation for forgone charges, as detailed earlier. ï‚· Cash inflows from principal repayments and prepayments of development credits. ï‚· Cash outflows relating to development credit disbursements. The following are reflected as risk management activities: ï‚· The translation adjustment on the non functional currencies of the currency forward contracts, together with any associated unrealized mark-to-market gains or losses. ï‚· The translation adjustment on future cash inflows, relating to donor contributions being hedged. The impact of the immunization strategy (see Section 5: Investment Portfolio Management for details) under which the donor asset and liability management component of the investment portfolio is managed, has not been shown separately as a risk management activity, however the amount of investment income related to it is included in the relevant discussions below. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 107 The table below presents the Statement of Activities, designed to show the financial impact of IDA’s cash and non cash operating and risk management activities. Table 1 : Statement of Activities for the fiscal years ended June 30, 2012 and June 30, 2011 Expressed in millions of U.S. dollars FY 2012 FY 2011 Variance Operating Activities Contributions and Other Support Subscriptions and Contributions $ 8,958 $ 7,580 $1,378 Transfers and Grants from affiliated organizations and trust funds 858 991 (133) 9,816 8,571 1,245 Development Operations Development Credit Disbursements (8,650) (8,021) (629) Principal Repayments 3,041 2,501 540 Discount on Prepaid Development Credits (113) – (113) Write-off on buydown of Development Credits (45) – (45) Proceeds from buydown of Development Credits 42 – 42 Development Grant Disbursements (2,398) (2,261) (137) Provision for Debt Relief and for losses on Development Credits and other exposures, net – (charge)/release (66) 44 (110) (8,189) (7,737) (452) Investments Investment Income, net 1,006 305 701 Administrative and Other activities Service and Interest Charges 912 895 17 Administrative Expenses, net (1,156) (1,234) 78 PPA Grants and other (7) 16 (23) (251) (323) 72 Results from Operating Activities 2,382 816 1,566 Risk Management Activities Non functional currency translation adjustment gains/(losses), net 424 (455) 879 Translation adjustment on non functional currency donor inflows (losses)/gains, net (449) 457 (906) Fair Value adjustment on non-trading portfolios, net 39 (101) 140 Results from Risk Management Activities 14 (99) 113 Results from Operating and Risk Management Activities $ 2,396 $ 717 $1,679 Reconciliation to Reported Basis Net Loss Expressed in millions of U.S. dollars FY 2012 FY 2011 Results from Operating and Risk Management Activities $ 2,396 $ 717 Subscriptions and Contributions (8,958) (7,580) Development Credit Disbursements 8,650 8,021 Principal Repayments and Prepayments (3,041) (2,501) Proceeds from buydown of development credits (42) – Development Grant Disbursements 2,398 2,261 Development Grants (2,062) (2,793) Translation adjustment on donor inflows being hedged 449 (457) Reported Basis Net Loss $ (210) $(2,332) Results from Operating and Risk Management Activities The overall results from IDA’s Operating and Risk Management Activities show a positive result of $2,396 million. This increase contributed to the increase in IDA’s funding position from 77% as of June 30, 2011 to 81% as of June 30, 2012, and was primarily due to the $9.8 billion of cash receipts relating to donor contributions and transfers and grants from IBRD and IFC, significantly offset by the $8 billion of net cash outflows for development credit and development grant disbursements. Results from Operating Activities The key drivers of IDA’s Results from Operating Activities are: (i) Contributions and Other Support, (ii) Development Operations, (iii) Investments, and (iv) Administrative Expenses. The impact of these activities on IDA’s Results from Operating Activities between FY 2012 and FY 2011 are discussed below. 108 THE WORLD BANK ANNUAL REPORT 2012 Contributions and Other Support Subscriptions and Contributions The subscriptions and contributions of $8,958 million represent the cash contributions received from members of $1,655 million and the encashment of demand obligations of $7,303 million. The increase of $1,378 million as compared to FY 2011 is primarily due to an increase in note encashments. The timing of encashments is driven by the schedule agreed upon for each replenishment, however members are able to accelerate their encashments and receive discounts for early payment (see Section 2: Financial Resources). In FY 2012, the cash inflows from IDA16 contributions of $4,230 million included a significant portion of accelerated encashments. Included in the subscriptions and contributions received during FY 2012 is $282 million relating to the financing by members of forgone charges relating to the Multilateral Debt Relief Initiative (MDRI) and the HIPC Debt Initiative and development grant financing. Development Operations Development Credit Disbursements Gross disbursements of development credits in FY 2012 were $8,650 million, an increase of $629 million (7.8%) from FY 2011. In terms of regional focus, Africa and East Asia and Pacific accounted for $714 million of the increase. Africa and the South Asian Region accounted for 76% of the total FY 2012 gross disbursements. Of the $8,650 million in development credit disbursements, 11% relate to commitments made under IDA16, 54% under IDA15, 27% under IDA14 and the remaining 8% relate to commitments made under earlier replenishments. Principal Repayments Principal repayments in FY 2012 were $3,041 million, an increase of $540 million from FY 2011. This amount excludes the prepayment of $940 million for certain development credits under IDA16 by two graduate members, as the related funds were received in July 2011 but were effective for July 1, 2011. These voluntary prepayments by IDA graduate members have increased the resources that IDA can redistribute to countries most in need of concessional funding. Discount on Prepaid Development Credits During FY 2012, the total amount prepaid by the two IDA graduate members of $940 million, reflected the present value of the development credits as of the date of the prepayment, resulting in an aggregate discount of $113 million. Development Grants Most of the $137 million increase in development grants disbursed between FY 2012 and FY 2011 is attributable to the Africa region. Investments Investment Income IDA’s investment portfolio has two components: core liquidity and donor and asset and liability management, and had a duration of approximately 3 years as of June 30, 2012 (see Section 5: Investment Portfolio Management for details). The increase of $701 million in investment income (of which $627 million relates to the donor and asset and liability management component), was primarily driven by the unrealized mark-to-market gains experienced as a result of the decrease in the yield curves for all major currencies in FY 2012, as compared to the unrealized mark-to-market losses incurred as a result of the increase in the yield curves in FY 2011. Administrative and Other Activities Administrative Expenses, net The decrease of $78 million was primarily due to lower pension costs in FY 2012 compared to FY 2011 driven by lower amortization of unrecognized losses, higher expected asset returns and lower interest cost. IDA’s policy is to maintain its service and commitment charges at a level that will cover its administrative expenses. Commitment charges, of between zero and 50 basis points, are set annually taking into account the extent to which service charges, adjusted for the donor compensation for forgone charges on development credits forgiven under MDRI and HIPC, and development grant financing, cover administrative expenses. In FY 2012, IDA’s service charges and compensation received from donors were sufficient to cover its administrative expenses. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 109 Risk Management Activities The key drivers of IDA’s Results from Risk Management Activities are the results of the hedging of future donor contributions. IDA uses currency forward contracts to economically hedge those donor contributions which are denominated in non-functional currencies, to SDR denominated currencies. There are certain non-functional currencies, which, due to the relatively small size of the contribution or the unpredictability of the expected payment date, are not being hedged. The payable leg of the currency forward contracts economically hedging donor pledges are composed of non- functional currencies. Appreciation (depreciation) of these currencies against the U.S. dollar results in exchange rate losses (gains). The translation adjustment gains on non-functional currencies of $424 million in FY 2012 were primarily due to the significant depreciation of the majority of the non-functional currencies against the U.S. dollar. In contrast, the significant appreciation of the non-functional currencies against the U.S. dollar in FY 2011 resulted in $455 million of translation adjustment losses. The translation adjustment on the economic offset to the currency forward contracts; the future inflows from donors , was a loss of $449 million in FY 2012 and a gain of $457 million in FY 2011. The differences between the reported translation adjustments and the related economic offsets primarily represent the donor contributions in non functional currencies that are not hedged due to the reasons outlined above. Balance Sheet Analysis The principal components of IDA’s balance sheet are development credits outstanding, investment assets net of liabilities, and subscriptions and contributions paid-in. Movements in these principal components between FY 2011 and FY 2012 are discussed further below. Table 2: Condensed Balance Sheet In millions of U.S. dollars As of June 30, 2012 2011 Variance Assets Investment assets including derivatives $ 34,079 $ 32,479 $ 1,600 Derivatives relating to asset-liability management 7,327 9,886 (2,559) Receivables and other assets, including non-investment cash 1,769 1,839 (70) Development credits outstanding 123,576 125,287 (1,711) Accumulated provision for debt relief and losses on development credits (6,723) (6,947) 224 Total assets $160,028 $162,544 $(2,516) Liabilities and equity Liabilities and derivatives relating to investments $ 7,746 $ 7,607 $ 139 Derivatives relating to asset-liability management 7,714 9,893 (2,179) Payables and other liabilities, including maintenance of value 6,788 8,399 (1,611) Subscriptions and contributions paid-in 175,587 167,610 7,977 Demand obligations (8,678) (9,663) 985 Accumulated deficit (39,306) (39,096) (210) Accumulated other comprehensive income 10,177 17,794 (7,617) Total liabilities and equity $160,028 $162,544 $(2,516) Development Credits Outstanding Development Credits USD Development credits outstanding decreased by $1,711 million in FY 2012. This was Bns Outstanding primarily due to negative currency translation adjustments of $6,175 million due to 126 the 5.18% depreciation of the SDR against the U.S. dollar, partially offset by positive 125 net disbursements of $4,627 million, (including prepayments of $940 million). 124 123 Investment Assets, net of related Liabilities 122 2011 2012 As noted above, IDA’s investment portfolio has two main components: donor and asset and liability management, and core liquidity, and is managed in three separate tranches. This separation of tranches improves transparency and allows for better tailoring of investment objectives to the purpose of holding the investments (see Section 5: Investment Portfolio Management for details). 110 THE WORLD BANK ANNUAL REPORT 2012 The net investment portfolio increased from $24,872 million as of June 30, 2011 to $26,333 million as of June 30, 2012, reflecting the net results of IDA’s cash related activities as follows: Table 3: Changes in the net asset value of the investment portfolio In millions of U.S. dollars As of June 30, 2012 2011 Beginning of fiscal year $24,872 $21,636 Net cash used in development activities (5,567) (5,520) Net cash from contributions and other support 8,958 7,580 Net cash used in operating activities (796) (458) Effects of exchange rates (1,128) 1,638 Others (6) (4) End of fiscal year $26,333 $24,872 Subscriptions and Contributions The $7,977 million increase in subscriptions and contributions paid in is primarily due to the receipt from members of $6,848 million of demand notes and $1,655 million of cash contributions. Funding and Liquidity Position Management monitors IDA’s funding and liquidity positions as key indicators to assess IDA’s ability to conduct its operations. Since IDA does not borrow from the capital markets, even though it is allowed to do so under its Articles of Agreement, it is important that it has sufficient funding resources and liquidity to meet its contractual obligations to disburse approved development credits and grants in a timely manner. See Section 6: Financial Risk Management for more details. Funding Position Core Liquidity Position USD bIllions Months 60 30 25 40 20 20 Undisbursed commitments of credits and grants 15 Investment portfolio & unrestricted demand notes 10 0 100% 5 75% 0 50% 30-Jun-09 30-Jun-10 30-Jun-11 30-Jun-12 Funding position percentage 25% 0% Months of gross disbursements covered by Core Liquidity 30-Jun-08 30-Jun-09 30-Jun-10 30-Jun-11 30-Jun-12 As of June 30, 2012, the investment portfolio and As of June 30, 2012, core liquidity accounted for $9,698 unrestricted demand notes covered 81% of all million, comprising short-term and medium-term undisbursed commitments of development credits and investments, and was sufficient to cover nearly 11 grants, compared with 77% as at June 30, 2011. months of average monthly gross disbursements, based on FY 2012 volume. As shown above, IDA’s funding position has been relatively stable for the last 5 years, ranging from 77% As shown above, IDA’s core liquidity position has been to 83%. relatively stable for the last 4 years, ranging from 10 to 14 months of average monthly gross disbursements since FY 2009. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 111 SECTION 2: FINANCIAL RESOURCES rate, agreed upon early in the replenishment process. Commitment Authority (b) Replenishment Effectiveness. The effective The resources available to IDA for funding its date of a replenishment occurs when IDA lending activities constitute its commitment receives Instruments of Commitment authority. IDA finances its development credit, (IoCs) from donors whose aggregate development grant and guarantee commitments contributions account for not less than the primarily from contributions from donor countries. amount defined in the Replenishment Additional funds are obtained from IDA’s internal Resolution. IDA16 became effective on resources, including reflows (repayments of principal November 30, 2011 when IDA received on outstanding development credits), investment IoCs for subscriptions and contributions income, transfers by IBRD out of its net income, and from donors of SDR 10.4 billion, exceeding grants designated out of IFC’s retained earnings. the threshold level for effectiveness. Since IDA’s lending is highly concessional, its resources are periodically replenished. Since its (c) Advance Contribution Scheme. To avoid inception, IDA’s resources have been replenished disruption to IDA programs at the start of a sixteen times, including the Sixteenth Replenishment new replenishment, donors have the option of IDA’s Resources (IDA16), complemented by an of participating in an Advance Contribution additional replenishment agreed to in 2006 for Scheme. This scheme allows IDA to financing the MDRI. continue making new lending commitments without waiting for the new replenishment Starting from FY1989, the Executive Directors to become effective. The Advance authorized IDA to make advance commitments Contribution Scheme lapses once the new against future reflows and other internal resources. replenishment becomes effective. The Advance Commitment Scheme1 was established in recognition of the fact that credits disburse over (d) Commitment Authority. Donor several years and therefore cash in hand is not contributions become available for needed at the time of commitment.2 commitment in three equal tranches. Part of the first tranche becomes available for Donor Resources commitment under the Advance Contribution Scheme and the remainder of Donor resources constitute the principal component the first tranche becomes available upon of IDA’s financial resources, represented primarily effectiveness of the replenishment provided by member contributions. that donors have submitted unqualified IoCs. Replenishment Process The second and third tranches are subsequently released for commitment on the Donors normally replenish IDA’s resources every dates specified in the Replenishment three years. The regular replenishment process has Resolution. several steps: (e) Payment of Contributions. Typically, donor (a) Replenishment Discussions. These include contributions are made in cash or non- meetings between IDA’s management and interest bearing demand notes, on specific donor country representatives, called IDA dates in three equal annual installments. Deputies. Issues discussed include the size of the replenishment, relative burden-sharing (f) Encashment. Donor contributions which are among donors, and the policy framework for paid by non-interest bearing demand notes the replenishment. Contributions are are drawn down, on an approximately pro- negotiated in SDR terms, and translated into rata basis among donors, in accordance with national currencies using an average exchange the agreed encashment schedule. IDA16 has a nine-year encashment schedule. A discount may be provided for cash payments based on an accelerated schedule rather than the 1 Credits, which disburse over several years, do not have to be standard replenishment schedule. The fully cash funded at the time of their approval by the amount of discount is calculated so that the Executive Directors. This allows donor contributions to be encashed over several years and internal resources to be net present value of cash payments made committed in advance of their anticipated receipt. according to the revised schedule is equal to 2 To determine the appropriate level of internal resources the net present value of the cash payments during a replenishment period, long-term financial under the encashment schedule agreed for in projections are used to manage IDA’s cash flows on a going concern basis, under a set of underlying assumptions the replenishment. relating to future lending volumes and the level of future donor contributions. 112 THE WORLD BANK ANNUAL REPORT 2012 Other Resources spread across three installments for fiscal years 2012, 2013 and 2014. The installments are subject These comprise: internal resources, IBRD transfers to availability of funds and annual approval, and are and IFC grants. recognized upon IDA and IFC signing the Internal Resources respective grant agreements. Of the IDA16 indicative amount, $330 million was received in FY IDA’s internal resources include reflows (principal 2012, resulting in cumulative transfers of $2,230 repayments and prepayments), interest on blend and million as of June 30, 2012. hard term credits, investment income from a portion of the investment portfolio, and residual resources IDA16 Commitment Authority from past replenishments that become available to IDA during the current replenishment period. Chart 1 provides a breakdown of the principal Repayments and prepayments of outstanding credits sources making up the total lending envelope of constitute the largest component of internal SDR 33.9 billion (U.S. dollar equivalent 51.4 resources. billion) under the revised IDA16 Commitment IBRD Transfers Authority and the extent to which these sources have been used for commitment of development Since 1964, IDA has received regular financial credits and grants through June 30, 2012. support towards its replenishment resources from IBRD, in the form of direct transfers out of IBRD’s Of the $14 billion committed during FY 2012, net income. The IDA16 financing framework approximately $12 billion relates to development includes an indicative amount of IBRD transfers of credits and $2 billion relates to development grants. $1,824 million. Depending first on IBRD fulfilling The impact of the use of the IDA16 Commitment its reserve retention needs, it is expected that this Authority on IDA’s June 30, 2012 Balance Sheet is amount will be allocated in three installments during as follows: fiscal years 2012, 2013 and 2014. Each installment is ï‚· The $12 billion committed for required to be approved annually by IBRD’s Board development credits has increased total of Governors. If approved, each installment is development credits and, correspondingly, expected to be drawn down by IDA immediately. In the undisbursed balance, to the extent that FY 2012, IDA received $520 million from IBRD no related disbursements have been made. (net of a $75 million grant from IBRD to South Disbursements made relating to IDA16 Sudan Transition Trust Fund), the first of the three credit commitments result in an increase in installments, resulting in cumulative transfers Development Credits outstanding. In FY received from IBRD of $12,115 million as of June 2012, $0.9 billion of the total 30, 2012. disbursements related to development In addition, IBRD has made cumulative credits committed under IDA16 and the contributions of $2,330 million to the Debt Relief remainder related to earlier replenishments. Trust Fund, which were subsequently transferred to ï‚· The $2 billion committed for development IDA to compensate it for debt relief costs incurred grants has increased the payable for under the HIPC Debt Initiative. development grants, to the extent that no related disbursements have been made. IFC Grants Payments made relating to IDA16 development grant commitments result in a Since 2006, IDA has received financial support decrease in the payable for development towards its replenishment resources from IFC in the grants. In FY 2012, $0.6 billion of form of grants out of its retained earnings. The development grant disbursements related IDA16 financing framework includes an indicative to development grants committed under amount of $1,000 million in cash as designations out IDA16 and the remainder related to prior of IFC’s retained earnings for grants to IDA. These replenishments. grants are to be used by IDA for sectors and themes that contribute significantly to private sector growth and economic development in countries that are members of both IFC and IDA. These grants will be IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 113 Chart 1 : IDA16 Commitment Authority Status a In billions of U.S. dollars equivalent Full Commitment IBRD Internal Resources / Carryovers /IFC Donor Resourcesc Authority b $16.5 $2.9 $32.0 Commitment Available $27.5 Authority Committed d Not Yet Committed Not Yet Available $23.9 Availability $14.0 $13.5 0 10 20 30 40 50 60 a. Commitment Authority is measured and monitored in SDR. The chart represents the U.S. dollar equivalent amounts based on USD/SDR exchange rate at June 30, 2012 for presentational purposes only. Actual commitments are recorded based on historical USD rates. b. Amounts may not add due to rounding c. Includes U.S.dollar equivalent 5.3 billion of donor commitments for compensation of debt relief provided under MDRI. d. FY 2012 guarantee commitments totaled $448 million, of which only 25% ($112 million) is used for the purposes of the Commitment Authority. SECTION 3: ALLOCATION OF RESOURCES SECTION 4: DEVELOPMENT ACTIVITIES, PRODUCTS AND PROGRAMS Performance Based Allocation (PBA) IDA has a common framework which extends System across all of its development activities. The main A key concern for IDA is inequitable allocation of elements of this framework are eligibility criteria, resources to recipients. This risk of inequitable financing principles, financing cycles and financing allocation is managed using the PBA system. Under categories. the PBA system, one country’s gain in terms of more allocations would result in fewer resources available Eligibility Criteria for others for a given level of the resource envelope. Two basic criteria govern a country’s eligibility for The system has evolved over time with modifications IDA resources, namely: relative poverty defined as and enhancements being incorporated at successive Gross National Income per capita below an replenishments, including IDA16. The base established threshold (updated annually), and lack allocation per country increased to SDR 9 million of creditworthiness to borrow from both per replenishment (or SDR 3 million annually), in commercial sources and IBRD, and therefore a need order to better meet the fixed costs of country for concessional resources. As of July 1, 2012, 81 engagement and maintain an effective country countries are eligible to borrow from IDA. Of these, program. 64 are not considered sufficiently creditworthy to borrow from IBRD and are referred to as “IDA Under the PBA system, individual country onlyâ€? countries. The remaining 17 countries are allocations are derived substantially from the annual deemed to have limited IBRD creditworthiness. Country Performance Ratings (CPR), population These latter countries may receive both IDA and and, to a lesser extent, Gross National Income per IBRD financing and are referred to as “blendâ€? capita. Before arriving at a country’s final allocation, countries. With a few exceptions, IDA’s eligibility adjustments are made for any grant allocations to that cutoff for FY2013 has been set at a Gross National country. In addition, for those countries eligible for Income per capita in 2011 of $1,195 (the debt cancellation under the MDRI, the debt service “operational cutoffâ€?). The operational cutoff for FY due in the relevant fiscal year is netted against that 2012 was a Gross National Income per capita in year’s allocation. 2010 of $1,175. Under the IDA16 period, the PBA system has continued to balance performance with needs by Financing Principles allocating, consistent with performance, the majority IDA’s operations are required to conform with the of resources to Sub Saharan Africa. general principles derived from its Articles of Agreement. These principles are described in Box 2. Within the scope permitted by the Articles of Agreement, application of these financing principles must be developed and adjusted in light of experience and changing conditions. 114 THE WORLD BANK ANNUAL REPORT 2012 Box 2: Financing Principles (i) IDA may provide financing for its development operations in the form of development credits, development grants, and guarantees directly to its members, public or private entities and regional or public international organizations. (ii) IDA’s financing of its development operations is designed to promote economic development, increase productivity and thus raise standards of living in its member countries. Investment projects financed by IDA are required to meet IDA’s standards for technical, economic, financial, institutional and environmental soundness. Specific provisions apply to development policy financing, including the treatment of the macroeconomic framework, poverty and social impact, environment, forests and other natural resources. (iii) Decisions to approve financing are based upon, among other things, studies by IDA of a member country’s economic structure, including assessments of its resources and ability to generate sufficient foreign exchange to meet debt-service obligations. (iv) IDA must be satisfied that in the prevailing market conditions (taking into account the member’s overall external financing requirements), the recipient would be unable to obtain financing under conditions which, in the opinion of IDA, are reasonable for the recipient. This would include loans made by private sources or IBRD. (v) The use of funds by recipients is supervised. IDA makes arrangements intended to ensure that funds provided are used only for authorized purposes and, where relevant, with due attention to considerations of cost-effectiveness. This policy is enforced primarily by requiring recipients (a) to submit documentation establishing, to IDA’s satisfaction, that the expenditures financed with the proceeds of development credits or grants are made in conformity with the applicable financing agreements, and (b) to maximize competition in the procurement of goods and services by using, wherever possible, international competitive bidding procedures or, when it is not appropriate, other procedures that ensure maximum economy and efficiency. In addition, under pilot programs approved by the Executive Directors, IDA considers the use of recipient country procurement, and environmental and social safeguard systems in selected operations where these systems are assessed by IDA as being equivalent to IDA’s systems and where the recipient’s policies and procedures, implementation practices, track record, fiduciary and safeguard risks and capacity are considered acceptable to IDA. Financing Cycles range of sectors. Development policy financing provides quick disbursing credits or grants to The process of identifying and appraising a project members with external financing needs to support and approving and disbursing the funds often extends structural reforms in a sector or the economy as a over several years. However, on numerous whole. Program-for-Results, which was approved occasions, IDA has shortened the preparation and on January 24, 2012, is an innovative financing approval cycle in response to emergency situations, instrument that links the disbursement of funds such as natural disasters and financial crises. After directly to the delivery of defined, verifiable results. appraisal of a project by staff, with certain exceptions, IDA’s Executive Directors must approve Through Program-for-Results, IDA will help each development credit, development grant and member countries improve the design and guarantee. Disbursements are subject to the implementation of their development programs and fulfillment of conditions set out in the credit or grant increase accountability. The new instrument’s key agreement. During implementation of IDA-supported features include: financing and support for borrower operations, staff review progress, monitor programs, disbursement of funds upon achievement compliance with IDA policies, and assist in resolving of results, focus on strengthening institutional any problems that may arise. An independent unit, capacity, and providing assurance that IDA’s the Independent Evaluations Group, assesses the financing is used appropriately and that the extent to which operations have met their major environmental and social impacts of the program objectives, and these evaluations are reported are adequately addressed. directly to the Executive Directors. These three complementary categories support the Financing Categories policy and institutional changes needed to create an environment conducive to sustained and equitable IDA’s financing of its development operations in the growth. The share of investment financing has form of development credits and grants falls into one increased from 80 percent in FY 2009 to 88 percent of three categories – investment financing, in FY 2012 as illustrated in Chart 2. For the year development policy financing, and program-for- ended June 30, 2012 commitments made under the results. Investment financing is generally used to new Program-For-Results category amounted to $60 procure goods, works and services in support of million. economic and social development projects in a broad IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 115 Chart 2: Share of Financing Categories Charges on development credits Percentage Program-for-Results Development Policy IDA’s policy is to maintain its charges (service and Share Investment commitment charges) at a level that will cover its 100% administrative expenses. In addition, there is an interest charge for the more economically advanced 80% recipient countries. 60% Service Charge. A service charge is levied on the 40% principal amount disbursed and outstanding on all development credits, regardless of repayment terms, 20% at a SDR equivalent rate of 0.75% per annum. 0% Commitment Charge. A commitment charge, which FY 09 FY 10 FY 11 FY 12 is payable on the undisbursed amount of the development credit, is set by the Executive Development Credits Directors at the beginning of each fiscal year. Since Since August 1, 1980, all development credits FY 2009 to FY 2012, IDA’s Executive Directors approved are denominated in SDRs. Prior to that, have maintained the commitment charge on development credits were denominated in U.S. undisbursed development credits at nil. As noted dollars. Principal payments and service and previously, commitment charges are set at a level to commitment charges are due in the currency ensure that service charges (adjusted to include specified in the Development Credit Agreement in an income forgone from development credits forgiven amount equivalent to the SDRs required under the under HIPC and MDRI, and from providing agreement. development grant financing) cover administrative expenses. In June 2012, the Board of Executive Directors approved the introduction of a two-year pilot Interest. Interest is charged on all new credits program of up to SDR 3 billion for single-currency subject to blend terms approved under IDA16 and lending to IDA countries, aimed at reducing their on all hard-term credits. The interest charged on currency exposures, especially for countries with hard-term credits is more concessional than the national currencies pegged to one of the four SDR fixed-rate equivalent of IBRD’s lending rate. The component currencies. The program will take effect rate is determined annually prior to the start of each in FY2013 and will allow IDA to provide fiscal year and is applicable to all such credits development credits in the underlying currencies of approved during a fiscal year. Table 4 shows the the SDR basket (US dollars, Euro, Pounds sterling or applicable rates effective July 1, 2012. Japanese yen). The repayment terms will be the same Repayment Terms as those available for SDR-denominated development credits, see Table 4. Development credits approved through June 30, 1987 have a final maturity of 50 years, including a IDA will manage the currency risk associated with grace period of 10 years. More recently, the single currency development credits under the differentiation in IDA’s lending terms has been existing currency risk management framework (see introduced to recognize the variation in economic Section 6: Financial Risk Management). development of broad categories of IDA recipients. Table 4 provides a summary of the repayment terms of development credits based on eligibility, effective July 1, 2012. 116 THE WORLD BANK ANNUAL REPORT 2012 Table 4: Summary of Repayment Terms for Development Credits, effective July 1, 2012 Service Terms Eligibility Criteria Repayment Terms Interest Charge Not considered sufficiently creditworthy to borrow from IBRD (or a small island nation). For FY2013, “IDA-onlyâ€? recipients 40 years including a 75 IDA Only with a 2011 Gross National Income per grace period of 10 years. basis nil capita of $1,195 or less (the ‘operational’ points cutoff). Blend terms apply to both blend borrowers and IDA countries with Gross National Income per capita above the 25 years including a 75 Blend a 1.25 % operational cut-off for more than two grace period of 5 years. basis consecutive years, known previously as points "gap" or "hardened term" countries. A blend borrower will be eligible for an 25 years including a 75 additional window of IDA lending at hard- b Hard-terms grace period of 5 years. basis 1.50% terms (excluding small island nations points receiving credits on IDA-only terms). a. For credits approved during IDA15, 35-year maturity for blend borrowers, and 20 years maturity for hardened term countries, including a grace period of 10 years. b. For credits approved during IDA15, 35 year maturity including a grace period of 10 years. Commitments of Development Credits Gross Disbursements of Development Commitments of development credits in FY 2012 Credits were $12,080 million, a decrease of $1,366 million Gross disbursements of credits in FY 2012 reached (10%) over FY 2011. In terms of regional focus, $8,650 million, an increase of $629 million (8%) SAR accounted for $888 million of the decrease. from FY 2011. In terms of regional focus, AFR and AFR and SAR together accounted for 87% of the FY EAP accounted for $714 million of the increase. 2012 commitments (see Chart 3). AFR and SAR accounted for 76% of the total FY Chart 3: Commitments of Development Credits by 2012 gross disbursements (see Chart 4). Region Chart 4: Gross Disbursements of Development Credits by Region USD FY 2011 FY 2012 USD Million FY 2011 FY 2012 Million 6,000 4,000 5,000 3,500 4,000 3,000 2,500 3,000 2,000 2,000 1,500 1,000 1,000 500 0 AFR EAP ECA LCR MNA SAR 0 AFR EAP ECA LCR MNA SAR Regions: AFR Africa EAP East Asia and Pacific ECA Europe and Central Asia LCR Latin America and the Caribbean MNA Middle East and North Africa SAR South Asia IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 117 Development Grants Gross Disbursements Commitment Authority for Funding of Grants Gross disbursements of development grants in FY 2012 were $2,411 million, an increase of $150 Only funds that are provided with specific grant million (7%) from FY 2011. In terms of regional authorization may be used to finance IDA focus, AFR accounted for $350 million of the development grants.3 Beginning with the transfer out increase, partially offset by decrease in SAR of of IBRD’s FY1997 net income, funds received from $108 million. AFR and SAR accounted for 86% of IBRD as net income transfers have included explicit the total FY 2012 gross disbursements (see Chart authority that the funding could be used for 6). development grants. Recent replenishment resolutions have also authorized the financing of Chart 5: Commitments of Development Grants development grants from donor resources. In by Region addition, all grants received from IFC’s retained USD earnings have also included the explicit authorization Million FY 2011 FY 2012 that IDA could use such funding for development 2,000 grants. Charges on Development Grants 1,500 Commitment charges on the undisbursed balances of 1,000 development grants are set annually by the Executive Directors of IDA. From FY2003 through FY 2013, 500 IDA’s commitment charge on the undisbursed balances of development grants has been set at nil. 0 Allocation of Development Grants AFR EAP ECA LCR MNA SAR Development grants under IDA16 are available solely for IDA-only countries. The amount available Chart 6: Gross Disbursements of Development Grants by Region for each country is a function of the country’s performance-based IDA allocation (see Section 3: USD Allocation of Resources), and its eligibility for Million FY 2011 FY 2012 development grants is based on an assessment of the 2,000 risk of debt distress. Countries with low risk of debt distress receive 100 percent of their IDA allocation 1,500 as development credits. Countries with medium risk of debt distress receive 50 percent of their IDA 1,000 allocation as development credits, and the remaining as development grants. Countries with high risk of 500 debt distress will receive 100 percent of their allocation in the form of development grants, 0 however the initial allocation of resources is reduced AFR EAP ECA LCR MNA SAR by 20%. The 20% is then returned to the performance based allocation calculation and is used in part to fund hard term credits. Other Development Activities and Programs Commitments of Development Grants Guarantees Commitments of development grants in FY 2012 When IDA issues a guarantee, it obtains an were $2,225 million, a decrease of $597 million indemnity agreement from the host government. If (21%) over FY 2011. In terms of regional focus, the guarantee is called, IDA pays the project AFR accounted for $398 million of the decrease. lenders. Without limiting its rights under the AFR and SAR together accounted for 78% of the FY indemnity agreement (counter-guarantee), IDA 2012 commitments (see Chart 5). takes into account all relevant circumstances in deciding whether or not to exercise its right to 3 IDA’s Articles of Agreement (Article V, Section 2(a)) state, demand compensation from the host government “financing by the Association shall take the form of loans.â€? IDA may provide financing in different form, such as grants under the counter-guarantee, and what form the and guarantees, only if the funds for such financing are compensation will take. IDA currently only offers accompanied by express advance authorization for such partial risk guarantees. other form of financing. The restriction also applies to “funds derived therefrom as principal, interest or other charges,â€? i.e., reflows. 118 THE WORLD BANK ANNUAL REPORT 2012 Guarantee Exposure A provision is initially recorded for all of the estimated probable write-offs of development IDA’s exposure on its guarantees (measured by credits outstanding under the HIPC Debt Initiative, discounting each guaranteed amount from its first based on projected Decision and Completion Point call date) was $281 million at June 30, 2012 ($240 dates. This provision is included as part of the million—June 30, 2011). For additional information accumulated provision for debt relief and losses on see the Notes to Financial Statements–Note E– development credits as reported on the balance Development Credits and Other Exposures. sheet. As borrowers continue to service the eligible Guarantee Pricing development credits until these projected dates are reached, changes to these initially projected dates Table 5 provides a summary of the Guarantee result in a revision to the provision estimates. Pricing Terms for Partial Risk Guarantees, effective July 1, 2012. These guarantees cover private lenders Donors compensate IDA on a “pay-as-you-goâ€? against the risk of a public entity or government basis to finance IDA’s forgone credit reflows under failing to perform its obligations with respect to a the HIPC Debt Initiative. This means that for the private project. debt relief provided by writing off the principal and charges during a replenishment, the donors Table 5: Summary of Guarantee Pricing Terms for compensate IDA for the forgone reflows through Partial Risk Guarantees, effective July1, 2012 additional contributions in the relevant Type of Fee Amount replenishment and these are recorded in IDA’s a balance sheet as subscriptions and contributions. Annual guarantee fee 0.75% per annum Commitment charge b Nil-0.5% per annum During FY 2012, $5 million of development credits One time initiation fee Higher of 0.15% or and $2 million of charges were written off as debt $100,000 relief under the partial forgiveness of debt service as Processing fee c Nil – 0.5% it came due. During FY 2011, the comparable a. Based on IDA’s maximum exposure, being the full value of amounts were $15 million and $3 million the disbursed and outstanding balance under the guarantee respectively. On a cumulative basis, $2,082 million financing. of development credits and $329 million of charges b. Set at Nil for FY 2012 and FY 2011 c. For all private sector borrowings and is determined on a case had been written off as of June 30, 2012. by case basis. Multilateral Debt Relief Initiative (MDRI) Debt Relief The MDRI provides additional debt relief through Heavily Indebted Poor Countries (HIPC) Debt 100 percent cancellation of eligible debt owed to IDA, the African Development Bank and the IMF Initiative by countries that reach the HIPC Completion The HIPC Debt Initiative is a comprehensive Point. The objectives of MDRI are twofold: approach to reduce the external debt of the world’s deepening debt relief to HIPC countries while poorest, most heavily indebted countries, and it safeguarding the long-term financial capacity of represented an important step forward in placing debt IDA and other participating multilateral institutions; relief within an overall framework of poverty and encouraging the best use of additional donor reduction. The countries that qualify for HIPC resources for development, by allocating these assistance are the poorest countries that are eligible resources to low-income countries on the basis of for highly concessional assistance from IDA and policy performance. from the International Monetary Fund’s (IMF) A provision is initially recorded for all of the Poverty Reduction and Growth Facility. The list of estimated probable write-offs of eligible countries potentially eligible under the Enhanced development credits outstanding for debt relief to be HIPC Framework has been limited, whereby no new delivered under the MDRI based on projected countries are considered for eligibility unless they Completion Point dates. This provision is included meet the income and indebtedness criteria as of end as part of the accumulated provision for debt relief calendar year 2004 as specified in the Initiative. and losses on development credits as reported in the Implementation mechanisms of the Enhanced HIPC balance sheet. As borrowers continue to service the Framework include: (i) partial forgiveness of IDA eligible development credits until the Completion debt service as it comes due, and (ii) in the case of Points are reached, changes to the initially countries with a substantial amount of outstanding projected dates result in a revision to the provision IBRD debt, partial refinancing by IDA resources estimates. The eligible development credits are (excluding transfers from IBRD) of outstanding written off when a country reaches its Completion IBRD debt. Point and the related provision reduced accordingly. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 119 Donors have agreed to compensate IDA on a dollar- During the fiscal year ended June 30, 2012, IDA, as for-dollar basis for forgone credit reflows due to debt executing agency, disbursed $309 million ($289 cancellation under the MDRI. The value of the million—fiscal year ended June 30, 2011) for trust compensation is reassessed every three years, fund program funds. For additional information, see normally at the time of regular IDA replenishment. the Notes to Financial Statements-Note G-Trust In this context, donors have agreed to provide IDA Funds Administration. with additional resources of SDR 3.5 billion ($5.3 billion) to cover debt relief costs due to MDRI SECTION 5: INVESTMENT PORTFOLIO during the IDA16 disbursement period. The donor MANAGEMENT compensation received is recorded in the balance sheet as subscriptions and contributions. IDA’s primary objective in the management of its investment portfolio is to ensure that funds will be As of June 30, 2012, donor commitments to the available on a timely basis in the amount needed to MDRI stood at $31,286 million at the agreed meet future cash flow requirements, including replenishment foreign exchange reference rates, disbursements for development credits, grants and representing 88% of the total financing requirements, administrative expenses. Consistent with the based on the latest updated cost estimates for the primary objective, IDA also seeks to maximize MDRI. returns, subject to loss constraints, to generate Cote d’Ivoire reached the Completion Point under investment income, which can be added to IDA’s HIPC on June 26, 2012, allowing for the cancellation internal resources. of eligible development credits under the MDRI IDA faces timing mismatches between cash receipts totaling $1,559 million on July 1, 2012. On a from donors and recipients and disbursements of cumulative basis, $36,992 million of development new development credits and development grants. credits have been written off under the MDRI as of To manage these timing mismatches between cash June 30, 2012. inflows and outflows, and to ensure optimal use of development resources, IDA employs a number of Trust Funds Administration financial practices, namely: IDA, alone or jointly with one or more of its ï‚· Use of hedging strategies to minimize affiliated organizations, administers on behalf of currency mismatches of cash flows. donors, including members, their agencies and other entities, funds restricted for specific uses in ï‚· Encashment of donor contributions over time accordance with administration agreements with so as to match the eleven year average donors. These funds are held in trust and are not disbursement profile of development credits included in IDA’s Balance Sheet, except for and development grants during a given undisbursed third party contributions to IDA- replenishment. For both IDA15 and IDA16, executed trust funds,. The cash and investment assets donors have agreed to a nine year standard held in trust by IDA as administrator and trustee at encashment period, which is an acceleration June 30, 2012 and June 30, 2011 are summarized in of the 11-year disbursement profile in order Table 6. IDA’s contribution to these trust funds for for IDA to generate additional investment the year ended June 30, 2012 and June 30, 2011 was income. Nil. ï‚· Provision of incentives in the form of Table 6: Cash and Investment Assets Held In discounts to donors for early encashments, Trust by IDA provided that the present value of their In millions of U.S. dollars contributions remains intact. Total fiduciary assets ï‚· A portion of expected principal repayments June 30, June 30, 2012 2011 on disbursed and outstanding credits are committed in advance of new credits and IDA-executed $ 58 $ 60 grants, so that resulting disbursements match Jointly administered with the time profile of credit reflows. affiliated organizations 533 547 Recipient-executed 2,709 2,409 Additionally, IDA needs to be able to address any Financial intermediary funds 735 1,224 Execution not yet assigned a 3,754 3,756 unexpected demands on its core liquidity by Total $7,789 $7,996 maintaining a sufficient level of liquid assets. a. These represent assets held in trust for which the agreement as to the type of execution is to be finalized jointly by the donors and IDA. 120 THE WORLD BANK ANNUAL REPORT 2012 Minimum Liquidity whereby the tranche duration benchmark is aligned with the weighted average duration of future net Minimum liquidity represents the liquidity that IDA cash outflows, such that the variation in investment holds as a reserve against cash flow volatility. earnings is largely matched by equivalent changes Liquidity planning is essential for IDA since IDA in the present value of future net cash outflows. The does not borrow from capital markets as a matter of duration is periodically reviewed and reset at least policy, other than for short-term cash management annually to reflect prevailing conditions. purposes. Minimum liquidity serves the dual purpose of cushioning against expected future cash flow Core Liquidity volatility; and meeting unexpected liquidity demands. Tranches 2 and 3 constitute IDA’s core liquidity to 40% of the minimum liquidity is held in Tranche 2 meet working capital requirements, as well as and 60% is held in Tranche 3. expected and unexpected cashflow volatility. Core For the IDA16 period, IDA’s minimum liquidity is liquidity as a proportion of IDA’s total liquidity targeted at 33 percent of a three-year annual moving holding at June 30, 2012 was 37% (48%—June 30, average of gross disbursements, representing 2011). approximately $3.9 billion. Tranche 2 – Medium-term Investment tranche. This General Investment Authorization tranche includes the core liquidity of IDA which is expected to be available over at least a three year The General Investment Authorization for IDA, horizon. This tranche is managed in accordance approved by the Executive Directors, provides the with a return maximization strategy subject to pre- basic authority under which the investment portfolio specified risk constraints over a medium-term (three of IDA can be invested. Further, all investment years) investment horizon. activities are conducted in accordance with a more detailed set of Investment Guidelines. The Tranche 3 – Short-term Investment tranche. This Investment Guidelines are approved by the Chief tranche is used for managing the operational Financial Officer (CFO) and implemented by the liquidity for IDA. The investment objective of this Treasurer. These Investment Guidelines provide tranche is to ensure liquidity and timely availability detailed trading and operational rules including: of the investment balances when needed, with criteria for eligible instruments for investment, investment returns being a secondary consideration. establishing risk parameters relative to benchmarks, The tranche is invested in overnight and very short- such as an overall stop-loss limit and duration term cash investments. deviation, specifying concentration limits on Table 7 provides a breakdown of the average counterparties and instrument classes, as well as balances and returns by tranches of IDA’s liquidity establishing clear lines of responsibility for risk portfolio for FY 2012 and FY 2011. For an monitoring and compliance. See Box 4 for the range explanation of the increase in financial returns of of instruments permitted for investments under the the total portfolio, refer to Section 7: Reported existing General Investment Authorization for IDA. Basis Results. Liquidity Tranching Table 7: Average Balances and Returns by All of IDA’s investments are held in a trading Tranches portfolio but invested in three separate tranches which improves transparency and allows for better In millions of U.S. dollars FY 2012 FY 2011 tailoring of investment objectives, risk tolerances and Average Financial Average Financial investment horizon to the purpose of holding the Tranches Balance Return Balance Return investments. 1 $14,452 5.72% $12,626 1.59% Donor Asset and Liability Management 2 4,163 3.40% 4,643 1.59% 3 6,344 0.39% 5,211 0.46% This tranche, also referred to as Tranche 1, primarily consists of accelerated encashments of donor Total $24,959 4.00% $22,480 1.33% contributions, transfers and grants from IBRD and IFC, and voluntary credit prepayments under IDA16. It is managed under an immunization strategy, IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 121 Table 8: Short-term Borrowings In millions of U.S. dollars, except ratios data in percentages June 30, 2012 June 30, 2011 June 30, 2010 Securities sold under repurchase agreements and securities lent under securities lending agreements, Balance at year-end $3,824 $6,013 $4,968 Average monthly balance during the year $3,992 $5,450 $4,538 Maximum month-end balance $4,938 $7,984 $6,139 Weighted-average rate at June 30, 0.28% 0.38% 0.15% Weighted-average rate during the year 0.26% 0.38% 0.25% Short-term Borrowings The Finance Committee (Chart 7) which is chaired by the CFO, reviews, evaluates and decides on IDA does not borrow long-term from the capital matters related to IDA finances to ensure that these markets but it is allowed to do so under its Articles. are aligned with corporate financial and risk IDA’s short-term borrowings consist primarily of tolerance objectives set by the Board. Topics securities sold under repurchase agreements and covered by the Finance Committee include: securities lent under securities lending agreements. These agreements are secured predominantly by high ï‚· financial policies and guidelines quality securities collateral, including government ï‚· new financial initiatives issued debt, and are used both to enhance returns and ï‚· financial risks under the CFO’s purview and for liquidity management purposes. setting risk tolerances As of June 30, 2012, securities lent or sold under The four subcommittees that report to the Finance repurchase agreements totaled $3,824 million, a Committee are shown in Chart 7. decrease of $2,189 million over June 30, 2011. Chart 7: Finance Committee Governance Table 8 provides data on short-term borrowings Structure activities. The Strategy, SECTION 6: FINANCIAL RISK MANAGEMENT Performance and Risk Subcommittee The processes and procedures by which IDA manages its risk profile continually evolve as its activities change in response to market, credit, The Finance product, operational and other developments. The Initiatives Executive Directors, particularly the Audit Subcommittee Finance Committee members, periodically review trends in Committee IDA’s risk profiles and performance, as well as any significant developments in risk management The Credit Risk policies and controls. In addition, on an annual basis, Subcommittee Management prepares an integrated risk monitoring report for the Executive Directors to provide a holistic picture of risk management activities within Finance Complex Operational Risk IDA. Subcommittee The Chief Risk Officer (CRO) reports to the CFO, and is responsible for: (i) assessing risks; (ii) The Strategy, Performance and Risk Subcommittee benchmarking existing risk management practices develops, approves and monitors the policies under against major financial institutions; (iii) ensuring which market and commercial credit risks faced by consistency of risk management activities with best IDA are measured, reported and managed. Such practice; and (iv) considering unique risks that are policies are ratified by the CFO. The subcommittee specific to multilateral development banks and also monitors compliance with policies governing international financial institutions. commercial credit exposure and currency management. Specific areas of activity include Governance Structure reviewing and endorsing guidelines for limiting The governance structure supports senior balance sheet and market risks, the use of derivative management in their oversight function, particularly instruments, investing activities, and monitoring the in the coordination of different aspects of risk alignment between assets and their funding. The management, and in connection with risks that run subcommittee meets quarterly to formally review across functional areas. current and proposed business strategy and risk 122 THE WORLD BANK ANNUAL REPORT 2012 policies, along with business results and financial financial managers, who are responsible for the day- risk profile to facilitate alignment between IDA’s to-day management of market and counterparty financial and risk management objectives, plans and risks. The department’s responsibilities include activities. establishing and maintaining guidelines, volume limits and risk oversight processes to facilitate The Finance Initiatives Subcommittee provides a effective monitoring and control. Under the comprehensive review of new business initiatives auspices of the Finance Committee and the related to IDA. The review covers all financial Strategy, Performance and Risk subcommittee, management, legal/reputational, financial operations policies and procedures for measuring and and reporting perspectives including risk/reward managing such risks are formulated, approved and parameters. This subcommittee’s approval is communicated throughout IDA. The department’s required before a new IDA initiative may be management represented on the Finance Committee proposed to the Finance Committee or the Board of is responsible for ensuring effective oversight, Executive Directors. The subcommittee meets as which includes maintaining sound credit needed. assessments, addressing transaction and product risk The Credit Risk Subcommittee: The subcommittee issues, providing an independent review function meets at least quarterly to review the impact on the and monitoring the development credit and provision for losses on development credits and other investment portfolios. exposures of any changes in risk ratings of borrowing member countries and developments in Risk-Bearing Capacity the nonaccrual portfolio and other factors including The risk bearing capacity of IDA falls under four expected default frequencies. In addition, the Audit main categories. The first is the extent to which Committee of the Board of Executive Directors is IDA can commit to new financing of development apprised by management at least twice a year on the credits, grants and guarantees given its financial accumulated provision for losses on development position at any point in time and whether there are credits and other exposures. sufficient resources to meet undisbursed The Operational Risk Subcommittee provides commitments of credits and grants, the funding risk. oversight on operational risks for financial The second is whether IDA has sufficient core operations. The subcommittee meets on a quarterly liquidity to meet disbursements of approved credits basis to ensure key operational risks relating to and grants, the liquidity risk. The third is the risk of financial operations are monitored and managed default by recipient countries and market appropriately, recognizing that primary responsibility counterparties, the credit risk. The fourth is the for the management of operational risk resides with exposure to currency and interest rate risks, the the business units. market risk. In addition to the previously discussed committees, Funding Risk the following departments are also involved in IDA’s IDA’s capacity to commit to new financing of financial risk management: credits, grants and guarantees at any point in time is The IDA Resource Mobilization Department which defined by the Commitment Authority Framework reports to the Vice President of Concessional of the particular replenishment which is effective Finance and Global Partnerships, manages IDA at that time (see Section 2: Financial Resources for replenishments. This department discusses policy details). and funding frameworks with donors, and allocates As previously discussed, (see Section 1: concessional resources between borrowing member Introduction and Overview of Financial Results) countries based on the agreed performance based management monitors IDA’s funding position as a allocation system. Responsibility for financial key indicator to assess IDA’s ability to conduct its management, including asset-liability management operations. Funding risk relates to whether there are and the management of liquidity, currency and sufficient resources (investment portfolio and interest rate risks, also lies with this department. demand notes) to meet undisbursed commitments of The Credit Risk Department, which reports to the credits and grants. Vice-President, Corporate Finance and Risk Further details on IDA’s funding risk management, Management, is responsible for determining the including details of the three tranches which adequacy of provisions for losses on credits and comprise IDA’s investment portfolio, together with other exposures. a description of the General Investment The Market and Counterparty Risk Department is Authorization are provided in Section 5: responsible for market and credit risk oversight, Investment Portfolio Management. assessment and reporting. It works with IDA’s IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 123 Liquidity Risk policy however, is to exercise this right through a graduated approach as summarized in Box 3. These Liquidity risk is also a key risk to IDA’s operations. policies also apply to those member countries who It is managed through a combination of IDA’s daily are eligible to borrow from both IBRD and IDA, cash flow monitoring and management, timing of and whose payments on IBRD loans may become donor contributions, and prudent investment policies overdue. For borrowers with IDA development under an established financial framework. A key credits who become overdue in their debt service indicator of liquidity management is the core payments on IBRD loans, IDA also applies the liquidity position which reflects the number of treatment described in Box 3. As of June 30, 2012, months of gross disbursements (based on the average IDA had $123,576 million of development credits for a particular year) that can be met out of the core of which credits in non-accrual status represent liquidity (tranches 2 and 3) available at a point in 2.8% of total development credits outstanding. For a time (see Section 1: Introduction and Overview of summary of countries with development credits or Financial Results). guarantees in nonaccrual status at June 30, 2012, Further details on IDA’s liquidity risk management, see Notes to Financial Statements–Note E– including details of the three tranches which Development Credits and Other Exposures. comprise IDA’s investment portfolio, together with a Commercial Credit Risk description of the General Investment Authorization, are provided in Section 5: Investment Portfolio In the normal course of its business, IDA utilizes Management. various derivatives and foreign exchange financial transactions to manage its exposure to fluctuations Credit Risk in interest and currency rates. Derivative and IDA has two types of credit risk: country credit risk foreign exchange transactions also involve credit and commercial credit risk. Country credit risk is the risk. The effective management of credit risk is vital risk of loss due to a country not meeting its to the success of IDA’s investment and contractual obligations and commercial credit risk is asset/liability management activities. The the risk of loss due to a counterparty not honoring its monitoring and managing of these risks is a contractual obligation. continuous process due to changing market environments. Country Credit Risk IDA mitigates the counterparty credit risk arising The IDA Resource Mobilization Department from investments, derivatives and asset/liability regularly reviews the credit risk of its recipient management activities through its credit approval member countries in terms of the country’s debt process and monitoring procedures. The credit sustaining capacity. These reviews provide an input approval process involves evaluating counterparty into the composition of development credits versus creditworthiness, assigning credit limits and grants for new operations. Section 4: Development determining the risk profile of specific transactions. Activities, Products and Programs describes how Credit limits are calculated and monitored on the funds are allocated for development grants based on basis of potential exposures taking into a country’s risk of debt distress. consideration current market values and estimates of potential future movements in those values, and Overdue and non-performing development credits collateral agreements with counterparties. If there is When a borrower fails to make payment on any a collateral agreement with the counterparty to principal, interest or other charges, IDA has the reduce credit risk, then the amount of collateral contractual right to suspend disbursements obtained is based on the credit rating of the immediately on all credits and grants. IDA’s current counterparty. 124 THE WORLD BANK ANNUAL REPORT 2012 Box 3: Treatment of Overdue Payments Overdue by 30 days Where the borrower is the member country, no new development credits or grants to the member country, or to any other borrower in the country, will be presented to the Executive Directors for approval; nor will any previously approved credits or grants be signed, until payments for all amounts 30 days overdue or longer have been received. Where the borrower is not the member country, no new credits or grants to that borrower will be signed or approved. Overdue by 45 days In addition to the provisions cited above for payments overdue by 30 days, to avoid proceeding further on the notification process leading to suspension of disbursements, the country as borrower or guarantor and all borrowers in the country must pay not only all payments overdue by 30 days or more, but also all payments due regardless of the number of days since they have fallen due. Where the borrower is not the member country, no new development credits or grants to, or guaranteed by, the member country, will be signed or approved. Overdue by 60 days In addition to the suspension of approval for new development credits or grants and signing of previously approved credits or grants, disbursements on all grants or credits to or guaranteed by the member country are suspended until all overdue amounts have been paid. This policy applies even when the borrower is not the member country. Under exceptional circumstances, disbursements could be made to a member country upon approval by the Executive Directors. Overdue by more than All development credits made to or guaranteed by a member of IDA are placed in nonaccrual status, six months unless IDA determines that the overdue amount will be collected in the immediate future. Unpaid service charges and other charges not yet paid on development credits outstanding are deducted from the income of the current period. To the extent that these payments are received, they are included in income. At the time of arrears clearance, a decision is made on the restoration of accrual status on a case-by-case basis; in certain cases that decision may be deferred until after a suitable period of payment performance has passed. For derivative products, IDA uses the estimated IDA’s commercial credit risk is concentrated in replacement cost of the derivative as the measure of investments in debt instruments issued by sovereign credit exposure. While the contractual principal governments, agencies, banks and corporate amount of derivatives is the most commonly used entities. The majority of these investments are in volume measure in the derivative markets, it is not a AAA and AA rated instruments (see Table 9). measure of credit or market risk. With respect to futures and options, IDA generally For all securities, IDA limits trading to a list of closes out most open positions prior to expiration. authorized dealers and counterparties. With the Futures are settled on a daily basis. exception of transactions with IBRD, credit risk is For the contractual value, notional amounts and managed through application of eligibility criteria, related credit risk exposure amounts by instrument (see Box 4) volume limits and through the use of see the Notes to Financial Statements-Note D- mark-to-market collateral arrangements for swap Derivative Instruments. transactions. Table 9 provides details of IDA’s estimated credit Under the mark-to-market collateral arrangements, exposure on its investments by counterparty rating when IDA is in a net receivable position higher than category. the agreed upon collateral threshold, counterparties are required to post collateral with IDA. Collateral Market Risk posted is in the form of certain approved highly liquid investment securities or cash. IDA faces risks which result from market movements, primarily changes in currency As of June 30, 2012 and 2011, the outstanding swap exchange rates and interest rates. The manner in transactions with counterparties other than IBRD, did which these market risks impact IDA’s finances and not exceed the threshold amount for either requiring the steps taken by IDA to counter them are counterparties to post collateral with IDA, or for IDA described below. to post collateral with counterparties. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 125 Box 4: Eligibility Criteria for IDA’s Investment Securities Instrument Securities Description IDA may only invest in obligations issued or unconditionally guaranteed by governments of member countries with a minimum credit rating of AA-. However, if government obligations Sovereigns are denominated in the national currency of the issuer, no rating is required. IDA may only invest in obligations issued by an agency or instrumentality of a government of a member country, a multilateral organization or any other official entity other than the Agencies government of a member country, with a minimum credit rating of AA-. Corporates and asset-backed IDA may only invest in securities with an AAA credit rating. securities (ABS) IDA may only invest in time deposits issued or guaranteed by financial institutions, whose a Time deposits senior debt securities are rated at least A-. a. Time deposits include certificates of deposit, bankers’ acceptances and other obligations issued or unconditionally guaranteed by banks or other financial institutions Table 9: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating In millions of U.S. dollars At June 30, 2012 At June 30, 2011 Agencies, ABS, Swaps,Corporate and Counterparty Rating Sovereigns Time Deposits Total % of Total Total % of Total AAA $18,233 $3,259 $21,492 70 $17,849 59 AA 3,507 3,379 6,886 22 8,963 30 A – 2,173 2,173 7 3,235 11 BB or below – 81 81 * 14 * Total $21,740 $8,892 $30,632 100 $30,061 100 * Denotes less than 0.5%. Of IDA’s total commercial credit exposure, net of Interest Rate Risk any collateral held of $30,632 million as of June 30, 2012, $10,768 million (35%) relates to countries in IDA funds a portion of its development credits and the Euro Zone, of which $9,877 million (92%) is grants with internal resources, including income on rated AA or above, and none are rated below A+. its investment portfolio. IDA’s liquid assets are invested in separate tranches each with its own set Currency Exchange Rate Risk of duration benchmarks. Changes in interest rates have a direct impact on the mark-to-market values IDA faces currency exchange rate risk exposure as a of the investment portfolio and hence on the result of the currency mismatch between its investment income reported by IDA. Further details commitments for development credits and grants, of the three tranches which comprise IDA’s which are denominated in SDRs; donor investment portfolio are discussed in Section 5: contributions, which are typically denominated in Investment Portfolio Management. national currencies; and the portion of IDA’s internal resources and expenditures that is denominated in Additional Risks Associated with Donor U.S. dollars. Resources IDA uses currency forward contracts to convert Delays in the timing of encashment affect IDA’s donors’ encashments provided in national currencies liquidity. If encashment delays occur, IDA may into the four currencies of the SDR basket. These agree with the donor on a revised encashment transactions are intermediated by IBRD for schedule that yields at least an equivalent value. efficiency purposes. Another risk is the potential for delays in declaring Under this arrangement, IDA enters into foreign effectiveness of a replenishment due to a delay in exchange forwards with IBRD, and IBRD receipt of IoCs. It is only upon the effectiveness of simultaneously enters into off-setting foreign a replenishment that donor contributions become exchange forwards with market counterparts. For payable to IDA. further details, see Notes to Financial Statements– Note D–Derivative Instruments. IDA mitigates the currency exchange rate risk by aligning the currency composition of its liquid asset portfolio and the hedges of its non-SDR cash flows with the SDR composition. 126 THE WORLD BANK ANNUAL REPORT 2012 SECTION 7: REPORTED BASIS RESULTS Condensed Statement of Income Analysis Under the reported basis, IDA’s Statement of Income Table 10: Condensed Statement of Income provides does not reflect the true economic results of IDA due a comparison of the main sources of income and to of a number of asymmetries as discussed below. expenses between FY 2012 and FY 2011. The net loss of $210 million in FY 2012 is $2,122 million Development grants: Development grants are lower than the net loss of $2,332 million in FY recorded as charges to net income under U.S. GAAP. 2011. The primary factors contributing to the In contrast, the significant inflows of resources from improvement in the net results are as follows: IDA’s donors, which fund these expenses, are recorded as equity through members’ subscriptions Investment income, net: The $701 million increase and contributions and therefore do not flow through was primarily driven by the significant unrealized the income statement. mark-to-market gains associated with the downward shift in the yield curves of the major currencies. In Currency forward contracts: As part of its currency contrast, IDA experienced unrealized mark-to- risk management strategy, IDA uses currency market losses in FY 2011 due to the steepening of forward contracts at the start of each replenishment the applicable yield curves. IDA’s investment to hedge its exposure to potential changes in the portfolio is sensitive to interest rate movements as a value of donor contributions. The translation result of having a longer duration to help it adjustment on the non-functional currency forward immunize interest rate risk. The duration of the contracts, together with the related unrealized mark- portfolio was approximately 3 years as of June 30, to-market gains/losses, are reported in the income 2012. statement. However, the economic offset represented by the change in value of the related donor pledges Translation adjustment gains on the non-functional are not reported in the Statement of Income, since currencies: The $424 million of translation donor pledges do not meet the definition of assets. adjustment gains on the non-functional currency liabilities were due to the depreciation of the Investment Income: Tranche 1 of the investment majority of the non-functional currencies against the portfolio is managed under an immunization U.S. dollar in FY 2012. In contrast, the significant strategy, whereby its duration is aligned with the appreciation of these currencies against the U.S. average duration of the future net cash outflows. dollar in FY 2011 resulted in $455 million of Accordingly, this tranche has a long duration of translation adjustment losses. These liabilities arise between 4 and 6 years and is sensitive to interest rate out of the payable leg of currency forwards used to movements. An asymmetry arises due to the fact that hedge the SDR value of future donor commitments. the significant unrealized mark-to-market gains or losses on this tranche are reported in the Statement of Development grants: The $731 million lower in Income, however, the economic offset, represented development grant approvals was primarily by the change in the present value of the associated accounted for by the Africa and South Asia regions, future net cash outflows is not reported in IDA’s combined, which constituted 78% of the total financial statements. development grant approvals in FY 2012. Administrative expenses: IDA’s administrative Fair value adjustment on non-trading portfolios: expenses are expected to be covered by both charge The positive fair value adjustment of $39 million in income and the donor compensation for forgone FY 2012 was primarily due to the effect of the charges on cancelled credits under the HIPC Debt downward shift in the euro yield curve on the Initiative and MDRI, and for development grants currency forward contracts used to hedge donor provided. Under the reported basis, IDA’s commitments of IDA16 and prior replenishments. administrative expense net of related other income is In contrast, in FY 2011, the net negative fair value included in the Statement of Income. However, the adjustment of $101 million was primarily due to the net amount is only partially covered by the charge steepening of the euro yield curve on these currency income, with the additional contributions for forgone forward contracts. charges recorded as equity. Administrative expenses, net: The decrease of $78 The asymmetries relating to development grants, million was primarily due to lower pension costs. administrative expenses, and the translation For a breakdown of IDA’s administrative expenses adjustment on currency hedges, have been addressed for the last three years see Table 11: Net in the Statement of Activities as discussed in Section Administrative Expenses. 1: Introduction and Overview of Financial Results. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 127 Table 10: Condensed Statement of Income for the fiscal years ended June 30, 2012 and June 30, 2011 Expressed in millions of U.S. dollars FY 2012 FY 2011 Variance Income Income from development credits and guarantees $ 914 $ 897 $ 17 Investment income, net 1,006 305 701 Transfers and grants from affiliated organizations and trust funds 858 991 (133) Other income 518 482 36 Expenses Administrative expenses (1,674) (1,716) 42 Development grants (2,062) (2,793) 731 Provision for debt relief and losses on credits and other exposures, net (66) 44 (110) Other expenses (2) (2) – Effect of exchange rate changes on non functional currencies 424 (455) 879 Net unrealized losses on non-trading derivatives 39 (101) 140 Discount on prepaid development credits (113) – (113) Write-off on buydown of development credits (45) – (45) Project preparation advances (PPA) grants (7) 16 (23) Net Loss $ (210) $(2,332) $ 2,122 Table 11: Net Administrative Expenses for the fiscal years ended June 30, 2012 and June 30, 2011 Expressed in millions of U.S. dollars FY 2012 FY 2011 Variance Administrative expenses Staff costs $ 750 $ 752 $ (2) Operational travel 163 151 12 Consultant fees 274 263 11 Pension and other post-retirement benefits 174 241 (67) Communications and IT 46 44 2 Contractual services 127 125 2 Equipment and buildings 117 124 (7) Other expenses 23 16 7 Total administrative expenses 1,674 1,716 (42) Service fee revenues (191) (173) (18) Revenue related to IDA Executed Trust Funds (309) (289) (20) Restricted income (18) (20) 2 Total Net Administrative Expenses $1,156 $1,234 $(78) Condensed Balance Sheet Analysis Fair Value of Financial Instruments Variances between June 30, 2012 and June 30, 2011 All fair value adjustments are recognized through balances in IDA’s condensed balance sheet are the income statement. The fair values of financial discussed in Section 1: Introduction and Overview instruments are based on a three level hierarchy. of Financial Results. For financial instruments classified as Level 1 and 2, SECTION 8: CRITICAL ACCOUNTING inputs are based on observable market data and less POLICIES AND THE USE OF ESTIMATES judgment is applied in arriving at a fair value measurement. For financial instruments classified as Note A of IDA’s financial statements contains a Level 3, significant unobservable inputs are used. summary of IDA’s significant accounting policies. These inputs require management to make These policies, as well as significant estimates made significant assumptions and judgments in arriving at by management, are integral to the presentation of a fair value measurement. IDA’s financial position. While all of these policies require a certain level of management judgment and In instances where management relies on instrument estimates, this section discusses the significant valuations supplied by external pricing vendors, accounting policies that require management to there are procedures in place to validate the make judgments that are difficult, complex or appropriateness of the models used as well as the subjective and relate to matters that are inherently inputs applied in determining those values. uncertain. The majority of IDA’s financial instruments are classified as Level 1 and Level 2, as the inputs are 128 THE WORLD BANK ANNUAL REPORT 2012 based on observable market data and less judgment SECTION 9: GOVERNANCE AND is applied in arriving at fair value measures. CONTROLS On a quarterly basis, the methodology, inputs and assumptions are reviewed to assess the General Governance appropriateness of the fair value hierarchy IDA’s decision-making structure consists of the classification of each financial instrument. All the Board of Governors, Executive Directors (the financial models used for input to IDA’s financial Board) and the President and staff. The Board of statements are subject to both internal and periodic Governors is the highest decision-making authority. external verification and review by qualified Governors are appointed by their member personnel. governments for a five-year term which is renewable. The Board of Governors may delegate Provision for HIPC Debt Initiative and MDRI authority to the Board to exercise any of its powers, The adequacy of the accumulated provision for the with the exception of certain powers enumerated in HIPC Debt Initiative and MDRI is based on both IDA’s Articles of Agreement (Article VI, Section quantitative and qualitative analyses of various 2(c)). factors, including estimates of Decision and The Board is responsible for IDA’s general Completion Point dates. IDA periodically reviews operations. It reviews and approves IDA’s financial these factors and reassesses the adequacy of the policies and practices, including: accumulated provision for the HIPC Debt Initiative and MDRI. Adjustments to the accumulated ï‚· financial products and programs, such as the provision are recorded as a charge against or terms and conditions of development credits, addition to income. grants and guarantees, and the provision and modalities of debt relief; and Provision for Losses on Development Credits and Other Exposures ï‚· financial management policies, such as investment authority and policy, the method IDA’s accumulated provision for losses on credits of apportioning administrative expenses and other exposures reflects the probable losses between IDA and IBRD, and the use of IDA’s inherent in its nonaccrual and accrual portfolios after internal resources. taking into consideration the expected relief under the HIPC Debt Initiative and MDRI. The provision Board Membership required is a function of the expected default In accordance with its Articles of Agreement, frequency and the assumed severity of the loss given members of the Board are appointed or elected every default for each of the borrowers. two years by their member governments. Currently The expected default frequency is based on the the Board is composed of 25 Executive Directors. borrower’s assigned risk rating. The determination These Executive Directors are neither officers nor of a borrower’s risk rating is based on a quantitative staff of IDA. The President is the only member of framework which relies primarily on considerations the Board from management, serving as a non- of political risk, external debt and liquidity, fiscal voting member and as Chairman of the Board. The policy and public debt burden, balance of payments Executive Directors have established several risks, economic structure and growth prospects, committees including: monetary and exchange rate policy, financial sector ï‚· Audit Committee risks and corporate sector debt and other vulnerabilities. IDA periodically reassesses the ï‚· Budget Committee adequacy of the accumulated provision for losses on credits and other exposures accordingly. ï‚· Committee on Development Effectiveness Adjustments to the accumulated provision are ï‚· Committee on Governance and Executive recorded as a charge against or addition to income. Directors’ Administrative Matters Actual losses may differ from expected losses due to unforeseen changes in any of the factors that affect ï‚· Ethics Committee borrowers’ creditworthiness. ï‚· Human Resources Committee Additional information on IDA’s provisioning The Board and its committees function in policy and the status of nonaccrual loans can be continuous session at the principal offices of IDA, as found in the Notes to Financial Statements-Note A- business requires. Each committee’s terms of Summary of Significant Accounting and Related reference establishes its respective roles and Policies and Note E-Development Credits and Other responsibilities. Exposures. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 129 As committees do not vote on issues, their role is statements, the system of internal controls regarding primarily to serve the Board in discharging its finance, accounting and ethics (including fraud and responsibilities. corruption), and financial and operational risks. The Audit Committee also has the responsibility for The Board is required to consider proposals made by reviewing the performance and recommending to the the President on IDA’s development credits, grants Board the appointment of the external auditor, as and guarantees, and other policies that impact IDA’s well as monitoring the independence of the external general operations. The Board is also responsible for auditor. The Audit Committee participates in presenting to the Board of Governors, at the Annual oversight of the internal audit function and reviews Meetings, audited accounts, an administrative the annual internal audit plan. In the execution of its budget, and an annual report on operations and role, the Audit Committee discusses with policies as well as other matters. management, the external auditors, and the internal Senior Management Changes auditors, financial issues and policies which have a bearing on IDA’s financial position. The Audit On August 15, 2011, Ngozi Okonjo-Iweala retired Committee also reviews with the external auditor as Managing Director of IDA. IDA’s annual financial statements prior to their On September 19, 2011, Caroline Anstey was publication and recommends them for approval to appointed as Managing Director of IDA. the Board. The Audit Committee monitors the evolution of developments in corporate governance On June 30, 2012, Robert B Zoellick retired as the and the role of audit committees on an ongoing basis President of IDA. and updated its terms of reference in July 2009. Effective July 1, 2012, Jim Yong Kim became the Executive Sessions President of IDA. Members of the Audit Committee may convene in Following the decision by Vincenzo La Via to retire executive session at any time, without management as Chief Financial Officer (CFO) of IDA, Charles present. Under the Audit Committee’s terms of McDonough was appointed as acting CFO effective reference, it meets separately in executive session March 28, 2012. A global search for a new CFO is with the external and internal auditors. in progress. Access to Resources and to Management Audit Committee Throughout the year, the Audit Committee receives Membership a large volume of information, which supports the preparation of the financial statements. The Audit The Audit Committee consists of eight members Committee meets both formally and informally drawn from the Board. Membership on the Audit throughout the year to discuss financial and Committee is determined by the Board, based upon accounting matters. Executive Directors have nominations by the Chairman of the Board, complete access to management. The Audit following informal consultation with the Executive Committee reviews and discusses with management Directors. In addition, membership of the Audit topics contemplated in their terms of reference. Committee is expected to reflect the economic and geographic diversity of IDA’s member countries and The Audit Committee has the capacity, under a balanced representation between recipient and exceptional circumstances, to obtain advice and non-recipient member countries. Generally, Audit assistance from outside legal, accounting or other Committee members are appointed for a two year advisors as deemed appropriate. term; reappointment to a second term, when possible, is desirable for continuity. Audit Business Conduct Committee meetings are generally open to any The World Bank promotes a positive work member of the Board who may wish to attend, and environment where staff members understand their non-Audit Committee members of the Board may ethical obligations to the institution, which are participate in the discussion. In addition, the embodied in its Core Values and Principles of Staff Chairman of the Audit Committee may speak in that Employment. In support of this commitment, the capacity at meetings of the Board, with respect to institution has in place a Code of Conduct, entitled discussions held in the Audit Committee. Living our Values (the Code). The Code applies to Key Responsibilities all staff worldwide and is available on the World Bank’s website, www.worldbank.org. Staff, The Audit Committee is appointed by the Board to including consultants, are required to complete an assist it in the oversight and assessment of IDA’s acknowledgment that they will abide by the tenets of finances and accounting, including the effectiveness the Code. of financial policies, the integrity of financial 130 THE WORLD BANK ANNUAL REPORT 2012 The business conduct obligations of staff are External auditors are appointed to a five year term of articulated in the Staff Manual (Principles of Staff service. This is subject to annual reappointment Employment, Staff Rules), Administrative Manual based on the recommendation of the Audit and other guidelines. The Principles and Staff Rules Committee and approval of a resolution by the require that all staff avoid or properly manage Executive Directors. conflicts of interest. In accordance with the Staff Communication between the external auditor and the Rules, senior managers must complete a confidential Audit Committee is ongoing, as frequently as financial disclosure instrument with the Office of deemed necessary by either party. The Audit Ethics and Business Conduct. Committee meets periodically with the external In addition to the Code, Staff and Administrative auditor and individual members of the Audit Manuals, guidance for staff is also provided through Committee have independent access to the external programs, training materials, and other resources. auditor. IDA’s external auditors follow the Managers are responsible for ensuring that internal communication requirements with audit committees systems, policies, and procedures are consistently set out under U.S. generally accepted auditing and aligned with the World Bank’s business conduct attestation standards and International Standards on framework. Auditing. The World Bank has both an Ethics Help Line and Internal Controls a Fraud and Corruption hotline. A third-party service offers numerous methods of worldwide Internal Control over Financial Reporting communication. Other reporting channels include: Management makes an annual assertion that, as of phone, mail, email or through the units’ respective June 30 of each fiscal year, its system of internal websites. Callers may also visit the offices in person. control over its external financial reporting has met IDA has in place procedures for the receipt, the criteria for effective internal control over retention and handling of recommendations and external financial reporting as described in the concerns relating to business conduct identified Internal Control-Integrated Framework issued by during accounting, internal control and auditing The Committee of Sponsoring Organizations of processes. the Treadway Commission (COSO). Concurrently, IDA’s external auditor provides an attestation report The World Bank’s Staff Rules clarify and codify that management’s assertion regarding the the obligations of staff in reporting suspected fraud, effectiveness of internal control over external corruption or other misconduct that may threaten its financial reporting is fairly stated in all material operations or governance. Additionally, these rules respects. offer protection from retaliation. For each fiscal year, Management performs an Auditor Independence evaluation of internal control over external financial reporting for the purpose of determining if there The appointment of the external auditor for IDA is were any changes made in internal control during governed by a set of Board-approved principles. Key the fiscal year covered by this report that materially features of these principles include: affected, or would be reasonably likely to materially ï‚· Prohibition of the external auditor from the affect IDA’s internal control over external financial provision of all non audit-related services. reporting. As of June 30, 2012, no such changes had occurred. ï‚· All audit-related services must be pre- approved on a case-by-case basis by the Board, upon recommendation of the Audit Committee. ï‚· Mandatory rebidding of the external audit contract every five years, with a limitation of two consecutive terms and mandatory rotation thereafter. IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2012 131 GLOSSARY OF TERMS Asset-Backed Securities (ABS): Asset-Backed Hedging: Hedging is a risk management technique of Securities are instruments whose cash flows are based entering into offsetting commitments to eliminate or on a pool of underlying assets managed by a trust. minimize the impact of adverse movements in value or Mortgage-backed securities are a type of ABS whose cash flow of the underlying instrument or economic cash flows are based on the repayments of the condition. mortgages. Instrument of Commitment (IoC): The instrument Blend Borrower: IDA Member that is eligible to through which a government commits to make a borrow from IDA on the basis of per capita income and subscription or a subscription and contribution to is also eligible to borrow from IBRD on the basis of IDA’s resources. limited creditworthiness. Given the access to both Membership votes: Voting rights accorded to IDA sources of funds, blend borrowers are expected to limit members are based on participation in the initial IDA funding to social sector projects and to use IBRD subscription and subsequent replenishments. All resources for projects in the ‘harder’ sectors. members whether they are Part I or Part II have the Commitment Authority: Total value of resources same number of membership votes. available during a particular replenishment including Net Disbursements: Credit disbursements net of donor contributions, internal resources, IBRD transfers, repayments and prepayments. IFC grants and other resources. The Commitment Part I and Part II Members: IDA’s Articles Authority level is monitored periodically to ensure that distinguish between two categories of original funding is available to meet commitments and to members - Part I and Part II - and provide for a provide early warning signs of any problems in terms different treatment of the initial subscription payments of resource availability. by each group. Part I members were originally those Completion Point: When conditions specified in the countries, generally developed countries that contribute legal notification sent to a country are met and the to the resources of IDA, whose economic and financial country’s other creditors have confirmed their full situation justified making the entire amount of their participation in the HIPC debt relief initiative. When a subscriptions available on a freely convertible basis. country reaches its Completion Point, IDA’s Part II members are mostly developing countries who commitment to provide the total debt relief for which subscribe to IDA replenishments for voting rights. the country is eligible, becomes irrevocable. Some Part II members also contribute to the resources Committee of Sponsoring Organizations of the of IDA. Treadway Commission (COSO): Committee of Replenishment: The process of periodic review of the Sponsoring Organizations of the Treadway adequacy of IDA resources and authorization of Commission. COSO was formed in 1985 to sponsor the additional subscriptions. Under IDA’s Articles, National Commission on Fraudulent Financial replenishments are required to be approved by IDA’s Reporting, an independent private-sector initiative Board of Governors by a two-thirds majority of the which studied the causal factors that can lead to total voting power. fraudulent financial reporting. In 1992, COSO issued Special Drawing Rights (SDR): The SDR is an its Internal Control-Integrated Framework, which international reserve asset, created by the International provided a common definition of internal control and Monetary Fund in 1969 to supplement the existing guidance on judging its effectiveness. official reserves of member countries. The SDR is Decision Point: Decision by the Executive Directors defined as a basket of currencies, consisting of the of IDA to provide debt relief under the HIPC Initiative. euro, Japanese yen, pound sterling, and U.S. dollar. Deputies: Representatives of countries who contribute The basket composition is reviewed every five years to to the resources of IDA. They include representatives ensure that it reflects the relative importance of from both Part I members and those Part II members currencies in the world’s trading and financial systems. who contribute to IDA’s replenishments. Stop-loss limits: Stop-loss limits are levels of mark-to- Development Committee: The Development market losses against the benchmark, at which Committee is a forum of the World Bank and the management will revert to passive management of the International Monetary Fund that facilitates portfolio. intergovernmental consensus building on development Subscription votes: Voting rights accorded to IDA issues. members are based on subscriptions. Subscription votes Duration: Duration provides an indication of the are calculated at a specific cost per vote for each interest rate sensitivity of a fixed income security to replenishment and are dependent on each member’s changes in its underlying yield. subscription amount. Additional subscription votes are Encashment: Draw down (payment in cash) of a provided to members who contribute to the promissory note in accordance with a schedule agreed replenishment. for each replenishment. Voting Rights: IDA’s voting rights consist of a Graduate Member: A member country that was once combination of membership and subscription votes. only eligible to borrow from IDA, however due to World Bank: Refers collectively to IBRD and IDA in improvements in the member’s economic results is no this document. longer eligible to borrow from IDA, and is deemed to have “graduatedâ€? to IBRD. 132 THE WORLD BANK ANNUAL REPORT 2012 INTERNATIONAL DEVELOPMENT ASSOCIATION FINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS JUNE 30, 2012 Management’s Report Regarding Effectiveness of Internal Control Over External Financial Reporting 134 Independent Auditors’ Report on Management’s Assertion Regarding Effectiveness of Internal Control Over Financial Reporting 136 Independent Auditors’ Report 137 Balance Sheet 138 Statement of Income 140 Statement of Comprehensive Income 141 Statement of Changes in Accumulated Deficit 141 Statement of Cash Flows 142 Summary Statement of Development Credits 143 Statement of Voting Power and Subscriptions and Contributions 146 Notes to Financial Statements 149 MANAGEMENT’S REPORT REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER EXTERNAL FINANCIAL REPORTING 134 THE WORLD BANK ANNUAL REPORT 2012 IDA FINANCIAL STATEMENTS: JUNE 30, 2012 135 INDEPENDENT AUDITORS’ REPORT ON MANAGEMENT’S ASSERTION REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING 136 THE WORLD BANK ANNUAL REPORT 2012 INDEPENDENT AUDITORS’ REPORT IDA FINANCIAL STATEMENTS: JUNE 30, 2012 137 BALANCE SHEET June 30, 2012 and June 30, 2011 Expressed in millions of U.S. dollars 2012 2011 Assets Due from Banks Unrestricted currencies $ 78 $ 20 Currencies subject to restrictions 28 30 106 50 Investments—Trading (including securities transferred under repurchase or securities lending agreements of $2,691 million- June 30, 2012; $4,375 million-June 30, 2011)—Note C 30,424 29,818 Securities Purchased Under Resale Agreements—Note C 441 - Derivative Assets Investments—Notes C and D 1,905 304 Asset-liability management—Notes D and F 7,327 9,886 9,232 10,190 Receivable from Affiliated Organization—Note F 1,006 999 Other Receivables Receivable from investment securities traded—Note C 1,255 2,355 Accrued service and commitment charges 236 259 1,491 2,614 Development Credits Outstanding (Summary Statement of Development Credits, and Note E) Development credits 160,720 163,346 Less: Undisbursed balance 37,144 38,059 Development credits outstanding 123,576 125,287 Less: Accumulated provision for debt relief and losses on development credits 6,723 6,947 Plus: Deferred development credits origination costs 27 28 Net development credits outstanding 116,880 118,368 Other Assets—Notes A and G 448 505 Total Assets $160,028 $162,544 138 THE WORLD BANK ANNUAL REPORT 2012 2012 2011 Liabilities Securities Sold Under Repurchase Agreements, Securities Lent under Securities Lending Agreements, and Payable for Cash Collateral Received—Note C $ 3,824 $ 6,013 Derivative Liabilities Investments—Notes C and D 1,898 309 Asset-liability management—Notes D and F 7,714 9,893 9,612 10,202 Payable for Development Grants—Note H 6,161 6,830 Payable to Affiliated Organization—Note F 375 370 Other Liabilities Payable for investment securities purchased—Note C 2,024 1,285 Accounts payable and miscellaneous liabilities—Notes A, E and G 486 1,428 2,510 2,713 Total Liabilities 22,482 26,128 Equity Members’ Subscriptions and Contributions (Statement of Voting Power and Subscriptions and Contributions, and Note B) Unrestricted 224,412 204,014 Restricted 320 318 Subscriptions and Contributions committed 224,732 204,332 Less: Subscriptions and Contributions receivable 46,571 34,510 Cumulative discounts on Subscriptions and Contributions 2,574 2,212 Subscriptions and Contributions paid-in 175,587 167,610 Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Members’ Subscriptions and Contributions Unrestricted (8,627) (9,610) Restricted (51) (53) (8,678) (9,663) Deferred Amounts to Maintain Value of Currency Holdings (234) (229) Accumulated Deficit (Statement of Changes in Accumulated Deficit) (39,306) (39,096) Accumulated Other Comprehensive Income—Note I 10,177 17,794 Total Equity 137,546 136,416 Total Liabilities and Equity $160,028 $162,544 The Notes to Financial Statements are an integral part of these Statements. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 139 STATEMENT OF INCOME For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Income Development credits and guarantees—Note E Service and interest charges $ 912 $ 895 $ 835 Guarantee fee income 2 2 2 914 897 837 Investments—Trading, net—Notes C and D 1,013 320 921 Transfers and grants from affiliated organizations and trust funds—Notes F and G 858 991 990 Other income—Notes A, F and G 518 482 435 Total Income 3,303 2,690 3,183 Expenses Administrative expenses—Notes A, F, G and J 1,674 1,716 1,585 Development grants—Note H 2,062 2,793 2,583 Interest expense on securities sold under repurchase agreements 7 15 11 Provision for debt relief and for losses on development credits and other exposures, net—charge (release)—Note E 66 (44) (90) Non-functional currency translation adjustment (gains) losses, net (424) 455 167 Discount on prepaid development credits—Note E 113 – – Write-off on buydown of development credits—Note E 45 – – Fair value adjustment on non-trading portfolios, net—Note D (39) 101 3 Project Preparation Advances (PPA) grants 7 (16) - Other expenses 2 2 1 Total Expenses 3,513 5,022 4,260 Net Loss $ (210) $(2,332) $(1,077) The Notes to Financial Statements are an integral part of these Statements. 140 THE WORLD BANK ANNUAL REPORT 2012 STATEMENT OF COMPREHENSIVE INCOME For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Net Loss $ (210) $(2,332) $(1,077) Other Comprehensive (Loss) Income—Note I Currency translation adjustments on functional currencies (7,617) 9,935 (5,924) Comprehensive (Loss) Income $(7,827) $ 7,603 $(7,001) STATEMENT OF CHANGES IN ACCUMULATED DEFICIT For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Accumulated Deficit at beginning of the fiscal year $(39,096) $(36,764) $(35,687) Net loss for the year (210) (2,332) (1,077) Accumulated Deficit at end of the fiscal year $(39,306) $(39,096) $(36,764) The Notes to Financial Statements are an integral part of these Statements. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 141 STATEMENT OF CASH FLOWS For the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 Expressed in millions of U.S. dollars 2012 2011 2010 Cash flows from investing activities Development credits Disbursements $(8,650) $(8,021) $(9,336) Principal repayments 3,041 2,501 2,349 Proceeds from buydown of development credits 42 – – Net cash used in investing activities (5,567) (5,520) (6,987) Cash flows from financing activities Members’ subscriptions and contributions 8,958 7,580 8,730 Cash flows from operating activities Net loss (210) (2,332) (1,077) Adjustments to reconcile net loss to net cash used in operating activities Provision for debt relief and for losses on development credits and other exposures, net—charge (release) 66 (44) (90) Non-functional currency translation adjustment (gains) losses, net (424) 455 167 Discount on prepaid development credits 113 – – Write-off on buydown of development credits 45 – – Fair value adjustment on non-trading portfolios, net (39) 101 3 PPA grants/Development credits origination costs 9 (14) – Changes in: Investments—Trading (1,964) (1,245) (778) Net investment securities traded/purchased 1,826 (1,139) (1,073) Net derivatives—Investments 95 (59) (10) Net derivatives—Asset/liability management (71) (90) (104) Net securities purchased/sold under resale/repurchase agreements and payable for cash collateral received (2,495) 834 548 Net receivable from affiliated organizations (4) 103 62 Payable for development grants (336) 532 444 Accrued service and commitment charges 8 (32) 12 Other assets 47 (106) (17) Accounts payable and miscellaneous liabilities – 969 61 Net cash used in operating activities (3,334) (2,067) (1,852) Effect of exchange rate changes on unrestricted cash 1 12 (3) Net increase (decrease) in unrestricted cash 58 5 (112) Unrestricted cash at beginning of the fiscal year 20 15 127 Unrestricted cash at end of the fiscal year $ 78 $ 20 $ 15 Supplemental disclosure (Decrease) increase in ending balances resulting from exchange rate fluctuations: Development credits outstanding $(6,175) $ 8,772 $(5,251) Investment portfolio (1,128) 1,638 (939) Derivatives - Asset/liability management (489) 61 (533) Principal repayments written off under Heavily Indebted Poor Countries (HIPC) Debt Initiative (5) (15) (48) Development credits written off under HIPC Debt Initiative and Multilateral Debt Relief Initiative (MDRI) upon countries reaching their Completion Points – (2,464) (1,108) Amounts received in prior year relating to current year’s development credit prepayments 940 – – Buydown of development credits – nominal value 87 – – The Notes to Financial Statements are an integral part of these Statements 142 THE WORLD BANK ANNUAL REPORT 2012 SUMMARY STATEMENT OF DEVELOPMENT CREDITS June 30, 2012 Expressed in millions of U.S. dollars Total Undisbursed Development Percentage of development development credits development credits a Borrower or guarantor credits credits outstanding outstanding Afghanistan $ 421 $ 10 $ 411 0.33% Albania 930 72 858 0.69 Angola 781 374 407 0.33 Armenia 1,260 39 1,221 0.99 Azerbaijan 1,096 287 809 0.66 Bangladesh 13,699 2,866 10,833 8.77 Benin 701 289 412 0.33 Bhutan 148 12 136 0.11 Bolivia 712 303 409 0.33 Bosnia and Herzegovina 1,269 91 1,178 0.95 Botswana 4 – 4 * Burkina Faso 964 102 862 0.70 Burundi 175 4 171 0.14 Cambodia 645 68 577 0.47 Cameroon 1,198 746 452 0.37 Cape Verde 325 28 297 0.24 Central African Republic 60 38 22 0.02 Chad 895 69 826 0.67 China 7,050 – 7,050 5.71 Comoros 109 – 109 0.09 Congo, Democratic Republic of 988 51 937 0.76 Congo, Republic of 143 54 89 0.07 Cote d'Ivoire 1,678 8 1,670 1.35 Djibouti 151 1 150 0.12 Dominica 29 2 27 0.02 Dominican Republic 6 – 6 0.01 Ecuador 8 – 8 0.01 Egypt, Arab Republic of 1,250 6 1,244 1.01 El Salvador 6 – 6 0.01 Equatorial Guinea 41 – 41 0.03 Eritrea 481 7 474 0.38 Ethiopia 4,531 2,003 2,528 2.05 Gambia, The 63 – 63 0.05 Georgia 1,282 85 1,197 0.97 Ghana 3,738 1,400 2,338 1.89 Grenada 78 31 47 0.04 Guinea 1,164 26 1,138 0.92 Guinea-Bissau 56 – 56 0.05 Guyana 23 13 10 0.01 Honduras 965 207 758 0.61 India 33,234 7,043 26,191 21.19 Indonesia 2,243 26 2,217 1.79 Iraq 513 343 170 0.14 Jordan 29 – 29 0.02 Kenya 5,806 2,372 3,434 2.78 Kosovo 43 37 6 0.01 Kyrgyz Republic 751 91 660 0.53 Lao People's Democratic Republic 623 1 622 0.50 Lesotho 347 32 315 0.26 Liberia 304 274 30 0.02 Macedonia, former Yugoslav Republic of 347 – 347 0.28 Madagascar 1,363 150 1,213 0.98 Malawi 706 411 295 0.24 Maldives 111 9 102 0.08 Mali 1,435 443 992 0.80 IDA FINANCIAL STATEMENTS: JUNE 30, 2012 143 SUMMARY STATEMENT OF DEVELOPMENT CREDITS (continued) June 30, 2012 Expressed in millions of U.S. dollars Total Undisbursed Development Percentage of development development credits development credits Borrower or guarantor credits credits a outstanding outstanding Mauritania $ 428 $ 63 $ 365 0.30 % Mauritius 6 - 6 0.01 Moldova 553 107 446 0.36 Mongolia 527 77 450 0.36 Montenegro 88 4 84 0.07 Morocco 11 – 11 0.01 Mozambique 2,510 762 1,748 1.41 Myanmar 777 – 777 0.63 Nepal 1,983 531 1,452 1.17 Nicaragua 576 92 484 0.39 Niger 696 314 382 0.31 Nigeria 7,649 3,262 4,387 3.55 Pakistan 12,894 1,957 10,937 8.85 Papua New Guinea 259 147 112 0.09 Paraguay 11 – 11 0.01 Philippines 157 – 157 0.13 Rwanda 595 193 402 0.33 Samoa 121 22 99 0.08 Sao Tome and Principe 14 – 14 0.01 Senegal 1,743 532 1,211 0.98 Serbia 733 32 701 0.57 Sierra Leone 266 45 221 0.18 Solomon Islands 39 – 39 0.03 Somalia 438 – 438 0.35 Sri Lanka 3,181 507 2,674 2.16 St. Kitts and Nevis 1 – 1 * St. Lucia 87 24 63 0.05 St. Vincent and the Grenadines 44 22 22 0.02 Sudan 1,277 – 1,277 1.03 Swaziland 2 – 2 * Syrian Arab Republic 14 – 14 0.01 Tajikistan 371 2 369 0.30 Tanzania 5,385 1,578 3,807 3.08 Togo 14 14 – * Tonga 23 - 23 0.02 Tunisia 15 - 15 0.01 Turkey 33 - 33 0.03 Uganda 3,053 1,105 1,948 1.58 Uzbekistan 517 347 170 0.14 Vanuatu 10 – 10 0.01 Vietnam 12,763 4,341 8,422 6.81 Yemen, Republic of 2,217 120 2,097 1.70 Zambia 926 390 536 0.43 Zimbabwe 505 – 505 0.41 Subtotal - MembersC 160,490 37,114 123,376 99.84 144 THE WORLD BANK ANNUAL REPORT 2012 SUMMARY STATEMENT OF DEVELOPMENT CREDITS June 30, 2012 Expressed in millions of U.S. dollars Total Undisbursed Development Percentage of development development credits development credits a Borrower or guarantor credits credits outstanding outstanding b African Trade Insurance Agency $ 11 $ – $ 11 0.01 % Bank of The States of Central Africa b 49 23 26 0.02 Caribbean Development Bank b 20 – 20 0.02 West African Development Bank b 150 7 143 0.12 Subtotal - Regional development banks 230 30 200 0.16 Total—June 30, 2012c $160,720 $37,144 $123,576 100.00 % Total—June 30, 2011 $163,346 $38,059 $125,287 * Indicates amounts less than $0.5 million or 0.005 percent. NOTES a. Of the undisbursed balance at June 30, 2012, IDA has entered into irrevocable commitments to disburse $450 million ($463 million—June 30, 2011). b. The development credits to these regional development banks and agencies are for the benefit of members of IDA or territories of members of IDA. c. May differ from the sum of individual figures shown due to rounding. The Notes to Financial Statements are an integral part of these Statements. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 145 STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS June 30, 2012 Expressed in millions of U.S. dollars Subscriptions and Number of Percentage of contributions a Member votes total votes committed Part I Members Australia 260,654 1.18 % $ 4,156.05 Austria 168,527 0.77 2,458.80 Belgium 235,983 1.07 4,022.93 Canada 562,221 2.55 10,260.50 Denmark 201,655 0.92 3,357.00 Estonia 42,040 0.19 8.31 Finland 132,974 0.60 1,629.12 France 833,247 3.79 15,821.84 Germany 1,219,662 5.54 24,095.61 Greece 53,182 0.24 201.94 Iceland 52,405 0.24 59.01 Ireland 72,255 0.33 611.60 Italy 489,675 2.23 8,497.17 Japan 1,882,463 8.55 42,443.87 Kuwait 101,027 0.46 949.07 Latvia 48,584 0.22 10.47 b Lithuania 42,004 0.19 7.91 Luxembourg 60,707 0.28 278.78 Netherlands 400,828 1.82 8,119.16 New Zealand 63,274 0.29 321.46 Norway 218,157 0.99 3,609.80 Portugal 55,655 0.25 283.20 Russian Federation 68,902 0.31 581.63 Slovenia 50,330 0.23 37.42 South Africa 61,963 0.28 204.93 Spain 206,661 0.94 3,141.66 Sweden 420,129 1.91 7,362.58 Switzerland 238,415 1.08 3,953.60 United Arab Emirates 1,367 0.01 5.58 United Kingdom 1,215,716 5.52 25,183.12 United States 2,372,764 10.78 46,543.24 c Subtotal Part I Members 11,833,426 53.76% $218,217.37 Part II Members Afghanistan 54,983 0.25 % $ 1.48 Albania 45,667 0.21 0.34 Algeria 83,313 0.38 5.47 Angola 66,873 0.30 8.30 Argentina 134,439 0.61 69.78 Armenia 54,615 0.25 0.69 Azerbaijan 58,826 0.27 1.16 Bahamas, The 52,341 0.24 4.47 Bangladesh 123,773 0.56 7.79 Barbados 52,347 0.24 2.34 Belize 13,653 0.06 0.26 Benin 54,711 0.25 0.77 Bhutan 43,467 0.20 0.08 Bolivia, Plurinational State of 63,414 0.29 1.58 Bosnia and Herzegovina 51,994 0.24 2.50 Botswana 51,149 0.23 1.64 Brazil 312,509 1.42 863.94 Burkina Faso 54,710 0.25 0.78 Burundi 52,038 0.24 1.09 Cambodia 61,049 0.28 1.53 Cameroon 60,782 0.28 1.62 Cape Verde 43,840 0.20 0.13 Central African Republic 48,910 0.22 0.77 Chad 48,910 0.22 0.77 Chile 40,499 0.18 38.97 China 449,652 2.04 236.37 Colombia 92,384 0.42 24.96 146 THE WORLD BANK ANNUAL REPORT 2012 Expressed in millions of U.S. dollars Subscriptions and Number of Percentage of contributions a Member votes total votes committed Comoros 43,840 0.20 % $ 0.13 Congo, Democratic Republic of 79,399 0.36 4.59 Congo, Republic of 48,910 0.22 0.74 Costa Rica 18,689 0.08 0.27 Côte d’Ivoire 54,982 0.25 1.52 Croatia 73,491 0.33 5.86 Cyprus 58,205 0.26 13.59 Czech Republic 98,214 0.45 106.63 Djibouti 44,816 0.20 0.26 Dominica 49,640 0.23 0.14 Dominican Republic 27,780 0.13 0.58 Ecuador 50,151 0.23 0.94 Egypt, Arab Republic of 101,470 0.46 11.28 El Salvador 46,464 0.21 0.49 Equatorial Guinea 6,167 0.03 0.41 Eritrea 43,969 0.20 0.14 Ethiopia 48,923 0.22 0.71 Fiji 19,462 0.09 0.77 Gabon 2,093 0.01 0.63 Gambia, The 51,908 0.24 0.42 Georgia 58,401 0.27 1.03 Ghana 71,336 0.32 3.09 Grenada 26,427 0.12 0.13 Guatemala 37,396 0.17 0.55 Guinea 33,987 0.15 1.31 Guinea-Bissau 44,500 0.20 0.22 Guyana 52,674 0.24 1.17 Haiti 52,038 0.24 1.11 Honduras 52,855 0.24 0.44 Hungary 151,761 0.69 121.95 India 661,909 3.01 60.92 Indonesia 203,606 0.93 16.18 Iran, Islamic Republic of 15,455 0.07 5.69 Iraq 52,038 0.24 1.04 Israel 67,473 0.31 69.38 Jordan 24,865 0.11 0.41 Kazakhstan 12,518 0.06 4.88 Kenya 72,127 0.33 2.45 Kiribati 43,592 0.20 0.10 Korea, Republic of 161,879 0.74 1,568.47 Kosovo, Republic of 48,357 0.22 0.86 Kyrgyz Republic 54,311 0.25 0.58 Lao People’s Democratic Republic 48,910 0.22 0.73 Lebanon 8,562 0.04 0.56 Lesotho 44,816 0.20 0.23 Liberia 52,038 0.24 1.12 Libya 44,771 0.20 1.43 Macedonia, former Yugoslav Republic of 46,885 0.21 1.10 Madagascar 54,982 0.25 1.39 Malawi 52,038 0.24 0.99 Malaysia 73,397 0.33 5.88 Maldives 49,126 0.22 0.05 Mali 53,345 0.24 1.32 Marshall Islands 4,902 0.02 0.01 Mauritania 48,910 0.22 0.77 Mauritius 60,782 0.28 1.32 Mexico 142,236 0.65 168.26 Micronesia, Federated States of 18,424 0.08 0.03 Moldova 56,582 0.26 0.90 Mongolia 45,667 0.21 0.32 Montenegro 52,896 0.24 0.75 Morocco 98,017 0.45 5.57 Mozambique 59,370 0.27 2.05 Myanmar 76,958 0.35 2.54 Nepal 54,710 0.25 0.74 Nicaragua 46,457 0.21 0.43 Niger 48,910 0.22 0.75 Nigeria 95,536 0.43 4.74 IDA FINANCIAL STATEMENTS: JUNE 30, 2012 147 STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND CONTRIBUTIONS June 30, 2012 Expressed in millions of U.S. dollars Subscriptions and Number of Percentage of contributions a Member votes total votes committed Oman 52,997 0.24 % $ 1.41 Pakistan 194,020 0.88 14.44 Palau 3,804 0.02 0.03 Panama 10,185 0.05 0.03 Papua New Guinea 55,805 0.25 1.34 Paraguay 29,968 0.14 0.43 Peru 71,557 0.33 18.06 Philippines 113,158 0.51 18.88 Poland 432,258 1.96 98.54 Rwanda 52,038 0.24 1.13 St. Kitts and Nevis 13,778 0.06 0.17 St. Lucia 30,532 0.14 0.23 St. Vincent and the Grenadines 40,587 0.18 0.12 Samoa 43,901 0.20 0.14 São Tomé and Principe 49,519 0.23 0.12 Saudi Arabia 696,582 3.17 2,498.33 Senegal 63,143 0.29 2.57 Serbia 79,477 0.36 7.08 Sierra Leone 57,838 0.26 1.05 Singapore 22,339 0.10 109.73 Slovak Republic 73,195 0.33 24.98 Solomon Islands 43,901 0.20 0.13 Somalia 10,506 0.05 0.95 d South Sudan 52,447 0.24 0.58 Sri Lanka 85,236 0.39 4.33 Sudan 54,982 0.25 1.52 Swaziland 19,022 0.09 0.42 Syrian Arab Republic 11,027 0.05 1.20 Tajikistan 53,918 0.24 0.54 Tanzania 68,943 0.31 2.38 Thailand 90,945 0.41 4.85 Timor-Leste 45,123 0.21 0.44 Togo 57,838 0.26 1.18 Tonga 43,714 0.20 0.11 Trinidad and Tobago 59,184 0.27 2.00 Tunisia 2,793 0.01 1.89 Turkey 130,681 0.59 171.09 Tuvalu 504 0.00 0.02 Uganda 47,092 0.21 2.36 Ukraine 1,762 0.01 7.61 Uzbekistan 65,964 0.30 1.95 Vanuatu 50,952 0.23 0.31 Vietnam 61,168 0.28 2.24 Yemen, Republic of 68,976 0.31 2.23 Zambia 75,427 0.34 3.61 Zimbabwe 105,982 0.48 6.41 c Subtotal Part II Members 10,172,921 46.24 % $6,514.72 c Total—June 30, 2012 22,006,347 100.00 % $224,732 Total—June 30, 2011 20,579,262 100.00 % $204,332 * Indicates less than 0.005 percent. NOTES a. See Notes to Financial Statements—Note A for an explanation of the two categories of membership. b.. Lithuania became a member of IDA on September 23, 2011. c. May differ from the sum of individual figures shown due to rounding. d. South Sudan became a member of IDA on April 18, 2012. The Notes to Financial Statements are an integral part of these Statements. 148 THE WORLD BANK ANNUAL REPORT 2012 NOTES TO FINANCIAL STATEMENTS PURPOSE AND AFFILIATED the determination of the adequacy of the ORGANIZATIONS accumulated provisions for debt relief and losses on development credits and other exposures The International Development Association (IDA) is (irrevocable commitments, guarantees and repaying an international organization established in 1960. project preparation facilities). IDA’s main goal is reducing poverty through promoting sustainable economic development in the Certain reclassifications of the prior year’s less developed countries of the world that are information have been made to conform with the members of IDA, by extending concessionary current year’s presentation. In particular, effective financing in the form of grants, development credits July 1, 2011, as part of the move toward a more and guarantees, and by providing related technical integrated reporting of IDA’s trust fund activities assistance. The activities of IDA are complemented and as permitted under U.S. GAAP, certain income by those of three affiliated organizations, the and the related expenses pertaining to IDA-executed International Bank for Reconstruction and trust funds are now presented on a gross basis; Development (IBRD), the International Finance previously these amounts were presented on a net Corporation (IFC), and the Multilateral Investment basis. For the fiscal years ended June 30, 2011 and Guarantee Agency (MIGA). Each of these June 30, 2010, the impact of this change was an organizations is legally and financially independent increase in Other income of $289 million and $262 from IDA, with separate assets and liabilities, and million, respectively, and corresponding increases in IDA is not liable for their respective obligations. Administrative expenses. In line with the change in Transactions with these affiliates are disclosed in the reporting of trust fund related expenses, IDA also notes that follow. The principal purpose of IBRD is changed the presentation of income and expenses to promote sustainable economic development and jointly earned and incurred with IBRD, respectively, reduce poverty in its member countries, primarily by from a net basis to a gross basis. For the fiscal years providing loans, guarantees and related technical ended June 30, 2011 and June 30, 2010, the impact assistance for specific projects and for programs of of this change was an increase in Other income of economic reform in developing member countries. $193 million and $173 million, respectively, and IFC's purpose is to encourage the growth of corresponding increases in Administrative expenses. productive private enterprises in its member These changes in presentation had no effect on the countries through loans and equity investments in net loss for the fiscal years ended June 30, 2011 and such enterprises without a member's guarantee. June 30, 2010. MIGA’s purpose is to encourage the flow of In addition, IDA now recognizes on its balance investments for productive purposes between sheet all undisbursed contributions made by third member countries and, in particular, to developing party donors to IDA-executed trust funds. The member countries by providing guarantees against impact of this change on the June 30, 2011 Balance noncommercial risks for foreign investment in its Sheet was an increase in Other Assets of $343 developing member countries. million and a corresponding increase in Other IDA is immune from taxation pursuant to Article Liabilities-Accounts payable and miscellaneous VIII, Section 9, Immunities from Taxation, of IDA’s liabilities, but no effect on Equity or cash from Articles of Agreement. operating activities. NOTE A—SUMMARY OF SIGNIFICANT On August 9, 2012, the Executive Directors ACCOUNTING AND RELATED POLICIES approved these financial statements for issue, which was also the date through which IDA’s management IDA’s financial statements are prepared in evaluated subsequent events. conformity with accounting principles generally accepted in the United States of America (U.S. Translation of Currencies GAAP). IDA’s financial statements are expressed in terms of The preparation of financial statements in U.S. dollars for the purpose of summarizing its conformity with U.S. GAAP requires management financial position and the results of its operations for to make estimates and assumptions that affect the the convenience of its members and other interested reported amounts of assets and liabilities and parties. disclosure of contingent assets and liabilities at the IDA conducts its operations in Special Drawing date of the financial statements and the reported Rights (SDRs) and its component currencies of U.S. amounts of income and expenses during the dollar, euro, Japanese yen and pound sterling. These reporting period. Actual results could differ from constitute the functional currencies of IDA. these estimates. Significant judgment has been used in the valuation of certain financial instruments and IDA FINANCIAL STATEMENTS: JUNE 30, 2012 149 Assets and liabilities are translated at market The Subscriptions and Contributions receivable are exchange rates in effect at the end of the accounting settled through payment of cash or deposit of period, except Members’ Subscriptions and nonnegotiable, noninterest-bearing demand notes. Contributions which are translated in the manner The notes are encashed by IDA on an approximately described below. Income and expenses are pro rata basis either as provided in the relevant translated at either the market exchange rates in replenishment resolution over the disbursement effect on the dates of income and expense period of the development credits and grants recognition, or at an average of the exchange rates committed under the replenishment, or as needed. in effect during each month. Translation adjustments In certain replenishments, donors have had the relating to the revaluation of development credits, option of paying all of their subscription and development grants payable and all other assets and contribution amounts in cash before they become liabilities denominated in either SDR or the due, and thereby receiving discounts. In addition, component currencies of SDR, are reflected in some replenishment arrangements have incorporated Accumulated Other Comprehensive Income. accelerated encashment schedules, and the related Translation adjustments relating to non-functional discounts. In these cases, IDA retains the related currencies are reported in the Statement of Income. income, with the donor receiving voting rights for Members’ Subscriptions and Contributions the full undiscounted amount. Subscriptions and Recognition Contributions committed are recorded at the full undiscounted amount. The discounts are deducted in Members’ Subscriptions and Contributions arriving at the Subscriptions and Contributions paid- committed for each IDA replenishment are initially in. recorded both as Subscriptions and Contributions committed and, correspondingly, as Subscriptions For the purposes of its financial resources, the and Contributions receivable. Prior to effectiveness, membership of IDA is divided into two categories: only a portion of the value of Instruments of (1) Part I members, which make payments of Commitment (IoCs) received as specified in the subscriptions and contributions provided to IDA in replenishment resolution is recorded as convertible currencies that may be freely used or Subscriptions and Contributions committed. Upon exchanged by IDA in its operations and (2) Part II effectiveness, the remainder of the value of IoCs members, which make payments of ten percent of received is subsequently recorded as Subscriptions their initial subscriptions in freely convertible and Contributions committed. currencies, and the remaining 90 percent of their initial subscriptions, and all additional subscriptions IoCs can contain unqualified or qualified and contributions in their own currencies or in freely commitments. Under an unqualified commitment, a convertible currencies. Certain Part II members contributing member agrees to pay a specified provide a portion of their subscriptions and amount of its subscription and contribution without contributions in the same manner as mentioned in requiring appropriation legislation. A qualified (1) above. IDA’s Articles of Agreement and commitment is subject to the contributing member subsequent replenishment resolutions provide that obtaining the necessary appropriation legislation. the currency of any Part II member paid in by it may Subscriptions and contributions made under IoCs not be used by IDA for projects financed by IDA become available for commitment for development and located outside the territory of the member credits, grants, and guarantees by IDA for a except by agreement between the member and IDA. particular replenishment in accordance with the IDA The national currency portion of subscriptions of commitment authority framework as approved by Part II members is recorded as restricted under the Executive Directors. Members’ Subscriptions and Contributions unless A replenishment becomes effective when IDA released under an agreement between the member receives IoCs from members whose subscriptions and IDA or used for administrative expenses. The and contributions aggregate to a specified portion of cash paid and notes deposited in nonconvertible the full replenishment. Amounts not yet paid in at local currencies for the subscriptions of Part II the date of effectiveness, are recorded as members are recorded either as currencies subject to Subscriptions and Contributions receivable and restriction under Due from Banks, or as restricted shown as a reduction of Subscriptions and notes included under Non-negotiable, noninterest- Contributions committed. These receivables become bearing demand obligations on account of member due throughout the replenishment period (generally subscriptions and contributions. three years) in accordance with an agreed payment Following adoption by the Board of Governors on schedule. The actual payment of receivables when April 21, 2006 of a resolution authorizing additions they become due may be subject to the budgetary to IDA’s resources to finance the MDRI, pledges appropriation processes for certain members. received in the form of IoCs for financing the MDRI 150 THE WORLD BANK ANNUAL REPORT 2012 are recorded and accounted for in their entirety. The subscriptions and contributions provided under Therefore, the full value of all IoCs received is the Fourth Replenishment and thereafter are recorded as Subscriptions and Contributions expressed in members’ currencies or SDRs and are committed. Correspondingly, the IoCs are also payable in members’ currencies. Subscriptions and recorded as Subscriptions and Contributions contributions made available for disbursement in Receivable and deducted from equity. cash to IDA are translated at market exchange rates in effect on the dates they were made available. Under IDA’s Articles of Agreement, a member may Subscriptions and contributions not yet available for withdraw from membership in IDA at any time. disbursements are translated at market exchange When a government ceases to be a member, it rates in effect at the end of the accounting period. remains liable for all financial obligations undertaken by it to IDA, whether as a member, Maintenance of Value borrower, guarantor or otherwise. The Articles Article IV, Section 2(a) and (b) of IDA’s Articles of provide that upon withdrawal, IDA and the Agreement provides for maintenance of value government shall proceed to a settlement of payments on account of the local currency portion accounts. If agreement is not reached within six of the initial subscription whenever the par value of months, standard arrangements are provided. Under the member’s currency or its foreign exchange value these arrangements, IDA would pay to the has, in the opinion of IDA, depreciated or government the lower of the member’s total paid-in appreciated to a significant extent, so long as, and to subscriptions and contributions or the member’s the extent that, such currency shall not have been proportionate share of IDA’s net assets. These funds initially disbursed or exchanged for the currency of would be paid as a proportionate share of all another member. The provisions of Article IV, principal repayments received by IDA on Section 2(a) and (b) have by agreement been development credits made during the period of the extended to cover additional subscriptions and government’s membership. contributions of IDA through the Third Valuation of Subscriptions and Contributions Replenishment, but are not applicable to those of the The subscriptions and contributions provided Fourth and subsequent replenishments. through the Third Replenishment are expressed in The Executive Directors decided on June 30, 1987 terms of “U.S. dollars of the weight and fineness in that settlements of maintenance of value, which effect on January 1, 1960â€? (1960 dollars). Following would result from the resolution of the valuation the abolition of gold as a common denominator of issue on the basis of the 1974 SDR, would be the monetary system and the repeal of the provision deferred until the Executive Directors decide to of the U.S. law defining the par value of the U.S. resume such settlements. These amounts are shown dollar in terms of gold, the pre-existing basis for as Deferred Amounts to Maintain Value of Currency translating 1960 dollars into current dollars or any Holdings and deducted from equity; any changes other currency disappeared. The Executive Directors relate solely to translation adjustments. of IDA decided, that until such time as the relevant provisions of the Articles of Agreement are Nonnegotiable, Noninterest-bearing Demand amended, the words “U.S. dollars of the weight and Obligations on Account of Members’ fineness in effect on January 1, 1960â€? in Article II, Subscriptions and Contributions Section 2(b) of the Articles of Agreement of IDA Payments on these instruments are due to IDA upon are interpreted to mean the SDR introduced by the demand and are held in bank accounts which bear International Monetary Fund as the SDR was valued IDA’s name. These instruments are carried and in terms of U.S. dollars immediately before the reported at face value as a reduction to equity on the introduction of the basket method of valuing the Balance Sheet. SDR on July 1, 1974, such value being equal to $1.20635 for one SDR (the 1974 SDR). The Development Credits Executive Directors also decided to apply the same In fulfilling its mission, IDA makes concessional standard of value to amounts expressed in 1960 development credits to the poorest countries. These dollars in the relevant resolutions of the Board of development credits are made to, or guaranteed by, Governors. member governments or to the government of a The subscriptions and contributions provided territory of a member (except for development through the Third Replenishment are expressed on credits which have been made to regional the basis of the 1974 SDR. Prior to the decision of development institutions for the benefit of members the Executive Directors, IDA had valued these or territories of members of IDA). In order to subscriptions and contributions on the basis of the qualify for lending on IDA terms, a country’s per capita income must be below a certain cut-off level SDR at the current market value of the SDR. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 151 ($1,175 for FY2012 and $1,165 for FY2011) and Replenishment and thereafter are denominated in the country may have only limited or no SDRs; the principal amounts disbursed under such creditworthiness for IBRD lending. development credits are to be repaid in currency amounts currently equivalent to the SDRs disbursed. Development credits are carried in the financial statements at amortized cost, less an accumulated Sale of Credits Under Buy-down Mechanism provision for debt relief and development credit The Investment Partnership for Polio program to losses, plus the deferred development credits fund the immunization of children in high-risk polio origination costs. countries has a funding mechanism that allows the Commitment charges on the undisbursed balance of purchase of oral vaccines from the proceeds of development credits, when applicable, are development credits, which are subsequently recognized in income as accrued. converted to grant terms under the “buy-down mechanismâ€?, upon attainment of agreed Incremental direct costs associated with originating performance goals. development credits are capitalized and amortized over the term of the credit. Pursuant to the applicable buy-down terms, IDA enters into an arrangement with third party donors It is IDA’s practice not to reschedule service charge, who make payments on the borrower’s service and interest or principal payments on its development commitment charges through a trust fund until the credits or participate in debt rescheduling borrower reaches agreed performance goals. At that agreements with respect to its development credits. time, IDA sells the related credits to the trust fund It is the policy of IDA to place in nonaccrual status for an amount equivalent to the present value of the all development credits made to, or guaranteed by, a remaining cash flows of the related credits, based on member government or to the government of a appropriate discount rates. The trust fund territory of a member if principal or charges with subsequently cancels the purchased credits, thereby respect to any such development credit are overdue converting them to grant terms. by more than six months, unless IDA’s management The difference between the carrying amount of the determines that the overdue amount will be development credit bought down and the amount collected in the immediate future. In addition, if received is written-off as an expense in the loans by IBRD to a member government are placed Statement of Income. in nonaccrual status, all development credits to that member government will also be placed in Development Grants nonaccrual status by IDA. On the date a member’s Development grants are charged to income, and a development credits are placed in nonaccrual status, liability recognized, upon approval by the Executive outstanding charges that had accrued on Directors. development credits that remained unpaid are deducted from the income from development credits Project Preparation Advances of the current period. Income on nonaccrual Project preparation advances (PPAs) are advances development credits is included in income only to made to borrowers to finance project preparation the extent that payments have actually been received costs pending the approval of follow-on by IDA. If collectability risk is considered to be development operations. These amounts are charged particularly high at the time of arrears clearance, the to income upon approval by management. To the member’s development credits may not extent there are follow-on development credits or automatically emerge from nonaccrual status, even grants, these PPAs are refinanced out of the though the member’s eligibility for new credits may proceeds of the development credits and grants. have been restored in such instances. In such Accordingly, the PPA grant expenses initially instances, a decision on the restoration of accrual charged to income are reversed upon approval of the status is made on a case-by-case basis after a follow-on development grants, or at the suitable period of payment or policy performance effectiveness of the follow-on development credits. has passed from the time of arrears clearance. Guarantees The repayment obligations of development credits funded from resources through the Fifth IDA provides guarantees for credits issued in Replenishment are expressed in the development support of projects located within a member country credit agreements in terms of 1960 dollars. In June that are undertaken by private entities. These 1987, the Executive Directors decided to value those financial guarantees are commitments issued by development credits at the rate of $1.20635 per 1960 IDA to guarantee payment performance by a dollar on a permanent basis. Development credits borrowing member country to a third party in the funded from resources provided under the Sixth event that a member government (or government- 152 THE WORLD BANK ANNUAL REPORT 2012 owned entity) fails to perform its contractual the debt relief initiative. When the country reaches obligations with respect to a private project. its Completion Point, IDA’s commitment to provide the total debt relief for which the country is eligible, Guarantees are regarded as outstanding when the becomes irrevocable. underlying financial obligation of the borrower is incurred, and called when a guaranteed party Donors compensate IDA on a “pay-as-you-goâ€? basis demands payment under the guarantee. IDA would to finance IDA’s forgone credit reflows under the be required to perform under its guarantees if the HIPC Debt Initiative. This means that for the debt payments guaranteed are not made by the borrower relief provided by writing off the principal and and the guaranteed party called the guarantee by charges during a replenishment, the donors demanding payment from IDA in accordance with compensate IDA for the forgone reflows through the terms of the guarantee. additional contributions in the relevant replenishment. At inception of the guarantees, IDA records the fair value of the obligation to stand ready and a MDRI corresponding asset, included in Accounts payable Debt relief provided under the MDRI, which is and miscellaneous liabilities and Other Assets, characterized by the write-off of eligible respectively, on the Balance Sheet. development credits upon qualifying borrowers In the event that a guarantee is called, IDA has the reaching the HIPC Completion Point date, is in contractual right to require payment from the addition to existing debt relief commitments member country that has provided the counter provided by IDA and other creditors under the HIPC guarantee to IDA, on demand, or as IDA may Debt Initiative. Specifically, for forgone reflows otherwise direct. under MDRI, donors established a separate MDRI replenishment spanning four decades (FY2007-44) Guarantee fee income received is deferred and and pledged to compensate IDA for the costs of amortized over the life of the guarantee. providing debt relief under MDRI on a “dollar-for- IDA records a contingent liability for the probable dollarâ€? basis. These additional resources are losses related to guarantees outstanding. This accounted for as subscriptions and contributions. provision, as well as the unamortized balance of the Accumulated Provision for Debt Relief and deferred guarantee fee income, and the unamortized Losses on Development Credits and Other balance of the obligation to stand ready, are Exposures included in Accounts payable and miscellaneous liabilities on the Balance Sheet. Accumulated Provision for HIPC Debt Initiative and MDRI HIPC Debt Initiative The adequacy of the accumulated provision for the The HIPC Debt Initiative was launched in 1996 as a HIPC Debt Initiative and MDRI is based on both joint effort by bilateral and multilateral creditors to quantitative and qualitative analyses of various ensure that reform efforts of HIPCs would not be factors, including estimates of decision and put at risk by unsustainable external debt burdens. completion point dates. IDA periodically reviews Under the Enhanced HIPC Framework, these factors and reassesses the adequacy of the implementation mechanisms include: (i) partial accumulated provision for the HIPC Debt Initiative forgiveness of IDA debt service as it comes due, and and MDRI. Adjustments to the accumulated ii) in the case of countries with a substantial amount provision are recorded as a charge against or of outstanding IBRD debt, partial refinancing by addition to income. IDA resources (excluding transfers from IBRD) of Upon approval by the Executive Directors of IDA of outstanding IBRD debt. debt relief for a country under the Enhanced HIPC Upon signature by IDA of the country specific legal Initiative, the principal component of the estimated notification, immediately following the decision by debt relief costs is recorded as a reduction of the the Executive Directors of IDA to provide debt disbursed and outstanding development credits relief to the country (the Decision Point), the under the accumulated provision for debt relief, and country becomes eligible for debt relief up to the as a charge to income. This estimate is subject to nominal value equivalent of one third of the net periodic revision. The accumulated provision for present value of the total HIPC debt relief HIPC Debt Initiative is written off as and when debt committed to the specific country. A Completion relief is provided. Point is reached when the conditions specified in the Following the Executive Directors' approval of legal notification are met and the country’s other IDA's participation in the MDRI in June 2006, IDA creditors have confirmed their full participation in provided in full for the estimated probable write-off IDA FINANCIAL STATEMENTS: JUNE 30, 2012 153 of the principal component of debt relief to be rating. Second, each risk rating is mapped to an delivered under the MDRI for the HIPC eligible expected default frequency (probability of default) countries confirmed by the Executive Directors as based on historical experience. Finally, the eligible for relief at that time. provision required is calculated by multiplying the net exposures by the expected default frequency and The provision is recorded as a reduction of the by the assumed severity of loss given default. The disbursed and outstanding development credits severity of loss given default, which is assessed under the accumulated provision for debt relief and periodically, is dependent on the borrower’s as a charge against income. The applicable eligibility, namely: IDA, Blend (IBRD and IDA) development credits are written off when the and IBRD, with the highest severity associated with country reaches the Completion Point and the IDA. Borrower’s eligibility is assessed at least related provision reduced accordingly. annually. This methodology is also applied to Accumulated Provision for Losses on Development countries with exposures in nonaccrual status. Credits and Other Exposures Generally, all exposures in nonaccrual status have the same risk rating. Delays in receiving development credit payments result in present value losses since IDA does not The determination of borrowers' ratings is based on charge fees or additional interest on any overdue both quantitative and qualitative factors. IDA service charges or interest. These present value periodically reviews these factors and reassesses the losses are equal to the difference between the adequacy of the accumulated provision accordingly. present value of payments of service charges, Adjustments to the accumulated provision are interest and other charges made according to the recorded as a charge against or addition to income. related development credit’s contractual terms and Statement of Cash Flows the present value of its expected future cash flows. Except for debt relief provided under the HIPC Debt For the purpose of IDA's Statement of Cash Flows, Initiative and MDRI, it is IDA’s practice not to cash is defined as the amount of unrestricted write off its development credits. To date, no currencies Due from Banks. development credits have been written off, other Investments than under the HIPC Debt Initiative and MDRI. Notwithstanding IDA’s historical experience, the Investment securities are classified based on risk of losses associated with nonpayment of management’s intention on the date of purchase, principal amounts due is included in the their nature, and IDA’s policies governing the level accumulated provision for losses on development and use of such investments. At June 30, 2012 and credits and other exposures (exposures). Other June 30, 2011, all investment securities were held in exposures include irrevocable commitments, a trading portfolio. Investment securities and related guarantees and repaying project preparation financial instruments held in a trading portfolio are facilities. carried and reported at fair value. The first-in first- out method is used to determine the cost of Management determines the appropriate level of securities sold in computing the realized gains and accumulated provision for losses, which reflects the losses on these instruments. Unrealized gains and probable losses inherent in IDA’s exposures. losses for investment securities and related financial Probable losses comprise estimates of losses arising instruments held in the trading portfolio are included from default and nonpayment of principal amounts in income. Derivative instruments used in liquidity due, as well as present value losses due to delay in management are not designated as hedging receiving payments when compared to the schedule instruments. of payments. Securities Purchased Under Resale Agreements, Several steps are taken to determine the appropriate Securities Lent Under Securities Lending level of provision. First, the exposures are Agreements and Securities Sold Under disaggregated into two groups: exposures in accrual Repurchase Agreements and Payable for Cash status and exposures in nonaccrual status. In each Collateral Received group, the net exposures for each borrower (defined as the nominal amount of development credits Securities purchased under resale agreements, disbursed and outstanding less the accumulated securities lent under securities lending agreements, provision for debt relief under the HIPC Debt Relief and securities sold under repurchase agreements are Initiative and MDRI plus other applicable recorded at face value which approximates fair exposures) are then assigned the credit risk rating of value. IDA receives securities purchased under that borrower. With respect to countries with resale agreements, monitors the fair value of the exposures in accrual status, these exposures are securities and, if necessary, closes out transactions grouped according to the assigned borrower risk and enters into new repriced transactions. The 154 THE WORLD BANK ANNUAL REPORT 2012 securities transferred to counterparties under the quoted prices in active markets for identical assets repurchase and security lending arrangements and or liabilities (Level 1), the next highest priority to the securities transferred to IDA under the resale observable market-based inputs or inputs that are agreements have not met the accounting criteria for corroborated by market data (Level 2) and the treatment as a sale. Therefore, securities transferred lowest priority to unobservable inputs that are not under repurchase agreements and security lending corroborated by market data (Level 3). arrangements are retained as assets on the Balance Financial assets and liabilities recorded at fair value Sheet, and securities received under resale on the Balance Sheet are categorized based on the agreements are not recorded on the Balance Sheet. inputs to the valuation techniques as follows: Accounting for Derivatives Level 1: Financial assets and liabilities whose IDA has elected not to designate any hedging values are based on unadjusted quoted relationships for accounting purposes. Rather, all prices for identical assets or liabilities in derivative instruments are marked to fair value on active markets. the Balance Sheet, with changes in fair value accounted for through the Statement of Income. Level 2: Financial assets and liabilities whose The presentation of derivative instruments is values are based on quoted prices for consistent with the manner in which these similar assets or liabilities in active instruments are settled. Currency swaps are settled markets; quoted prices for identical or on a gross basis, while interest rate swaps are settled similar assets or liabilities in non-active on a net basis. markets; or pricing models for which all significant inputs are observable, either Valuation of Financial Instruments directly or indirectly for substantially the Derivative financial instruments and investment full term of the asset or liability. securities are recorded in the financial statements at Level 3: Financial assets and liabilities whose fair value. values are based on prices or valuation IDA has an established and documented process for techniques that require inputs that are both determining fair values. Fair value is based upon unobservable and significant to the overall quoted market prices for the same or similar fair value measurement. securities, where available. IDA’s policy is to recognize transfers in and Financial instruments for which quoted market transfers out of levels as of the end of the reporting prices are not readily available are valued based on period in which they occur. discounted cash flow models. These models Transfers and Grants primarily use market-based or independently sourced market parameters such as yield curves, Transfers from IBRD’s net income and grants made interest rates, foreign exchange rates and credit from the retained earnings of IFC to IDA are curves, and may incorporate unobservable inputs. recorded through the Statement of Income and are Selection of these inputs may involve some receivable upon approval by the Board of Governors judgment. In instances where management relies on of IBRD and execution of a grant agreement instrument valuations supplied by external pricing between IFC and IDA, respectively. In addition, vendors, there are procedures in place to validate the IDA periodically receives transfers from trust funds appropriateness of the models used as well as the and private institutions. IDA does not assign any inputs applied in determining those values. voting rights for these transfers and grants. To ensure that the valuations are appropriate where Temporary restrictions relating to these transfers internally-developed models are used, IDA has may arise from the timing of receipt of cash, or various controls in place, which include both donor imposed restrictions as to use. When the cash internal and periodic external verification and is received and any other restrictions on the transfers review. and grants are complied with, the temporary restrictions are removed. As of June 30, 2012 and June 30, 2011, IDA had no financial assets or liabilities measured at fair value Donor Contributions to Trust funds: For those on a non-recurring basis. IDA-executed trust funds where IDA acts as an intermediary agent, third party donor contributions Fair Value Hierarchy are recorded as assets held on behalf of the specified Financial instruments are categorized based on the beneficiaries, with corresponding liabilities. For priority of the inputs to the valuation technique. The recipient-executed trust funds, since IDA acts as a fair value hierarchy gives the highest priority to IDA FINANCIAL STATEMENTS: JUNE 30, 2012 155 trustee, no assets or liabilities relating to these Subsequently, in December 2011, the FASB issued activities are recorded on the Balance Sheet. ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications Accounting and Reporting Developments of Items Out of Accumulated Other Comprehensive In July 2010, the Dodd-Frank Wall Street Reform Income in Accounting Standards Update No. 2011- and Consumer Protection Act (the Act) became law 05, which deferred certain reclassification in the United States. The Act seeks to reform the provisions in ASU 2011-05. For IDA, the ASUs are U.S. financial regulatory system by introducing new effective for fiscal years ending after December 15, regulators and extending regulation over new 2012, and interim and annual periods thereafter, markets, entities, and activities. The with early adoption permitted. IDA is currently implementation of the Act is dependent on the evaluating the impact of these ASUs on its financial development of various rules to clarify and interpret statements. its requirements. Pending the development of these In December 2011, the FASB issued ASU 2011-11, rules, no impact on IDA has been determined as of Balance Sheet (Topic 210): Disclosures about June 30, 2012. IDA continues to evaluate the Offsetting Assets and Liabilities. The ASU requires potential future implications of the Act. entities to disclose both gross information and net In April 2011, the FASB issued ASU 2011-03, information about instruments and transactions Transfers and Servicing (Topic 860): eligible for offset in the statement of financial Reconsideration of Effective Control for Repurchase position, and instruments and transactions subject to Agreements. The ASU changes the assessment of a master netting agreement and agreements similar effective control by focusing on the transferor’s to a master netting agreement. The new disclosure contractual rights and obligations and removing the requirements will facilitate comparison between US. criterion to assess its ability to exercise those rights GAAP and IFRS. This ASU is effective for annual or honor those obligations. This ASU was effective reporting periods beginning on or after January 1, for IDA from the quarter ended March 31, 2012. 2013, and interim periods within those annual The ASU did not have an impact on IDA’s financial periods. IDA is currently evaluating the impact of statements, as IDA accounts for transfers of this ASU on its financial statements. securities as secured borrowings. NOTE B—MEMBERS’ SUBSCRIPTIONS AND In May 2011, the FASB issued ASU 2011-04, Fair CONTRIBUTIONS Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and The Sixteenth Replenishment of IDA’s Resources Disclosure Requirements in U.S. GAAP and (IDA16): IDA16 became effective on November 30, International Financial Reporting Standards 2011. This followed the receipt of IoCs for (IFRS). The amendments result in common fair subscriptions and contributions which exceeded the value measurement and disclosure requirements in threshold level of SDR 10,395 million required for U.S. GAAP and IFRSs. While many of the effectiveness as specified in the resolution of IDA’s amendments relate to the harmonization of Board of Governors authorizing IDA16. terminology and do not significantly impact current Subscriptions and Contributions Paid-In: The practice, some of the amendments have changed the movement in Subscriptions and Contributions Paid- existing fair value measurement and disclosure In during the fiscal years ended June 30, 2012 and requirements. Although this ASU is effective for June 30, 2011 is summarized below: annual periods beginning after December 15, 2011 for non-public entities, IDA early adopted this ASU In millions of U.S. dollars from the quarter ended March 31, 2012. For the June 30, June 30, 2012 2011 related additional fair value disclosures, see Note Beginning of the fiscal year $167,610 $157,413 C—Investments and Note K—Other Fair Value Cash contributions received 1,655 1,724 Disclosures. Demand obligations received 6,848 7,549 Translation adjustment (526) 924 In June 2011, the FASB issued ASU 2011-05, End of the fiscal year $175,587 $167,610 Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The ASU requires comprehensive income to be reported in either a During the fiscal year ended June 30, 2012, IDA single statement or in two consecutive statements. encashed demand obligations totaling $7,303 The ASU does not change which items are reported million ($5,856 million—fiscal year ended June 30, in other comprehensive income or existing 2011). requirements to reclassify items from other comprehensive income to net income. 156 THE WORLD BANK ANNUAL REPORT 2012 Membership: On September 23, 2011, Lithuania million at the agreed replenishment foreign became the 171st member country of IDA with a exchange reference rates, representing 88% of the subscription of $1.6 million. total financing requirements based on the latest cost estimates for the MDRI. Of the cumulative donor On April 18, 2012, South Sudan became the 172nd commitments, $9,388 million were unqualified and member country of IDA with a subscription of $0.6 $21,898 million were qualified, with unqualified million. donor commitments covering 26% of the total costs. Cumulative Discounts on Subscriptions and NOTE C—INVESTMENTS Contributions: At June 30, 2012, the cumulative discounts on Subscriptions and Contributions totaled The investment securities held are designated as $2,574 million ($2,212 million—June 30, 2011) and trading and are carried and reported at fair value, or comprised the following: at face value which approximates fair value. In millions of U.S. dollars As of June 30, 2012, the majority of Investments- June 30, 2012 June 30, 2011 Trading is comprised of government and agency Discounts on Advance Subscriptions and obligations (76%), with almost all the instruments Contributions $2,062 $1,700 being classified as either Level 1 or Level 2 within Allocation to Switzerland 512 512 the fair value hierarchy. Cumulative discounts $2,574 $2,212 The majority of the instruments in Investments- Trading are denominated in U.S. dollars (44%), The allocation to Switzerland represents the Euro (31%), Pounds sterling (11%) and Japanese discount given to Switzerland when they became a yen (12%). IDA uses derivative instruments to align member of IDA. Switzerland had provided $580 the currency composition of the investment portfolio million in co-financing grants to IDA borrowers to the SDR basket of currencies and to manage other before it became a member of IDA. These grant currency and interest rate risks in the portfolio. contributions were converted to subscriptions and After considering the effects of these derivatives, contributions upon membership at $512 million, the investment portfolio has an average repricing of representing the present value of the future reflows 3.9 years and the following currency composition: of the co-financing grants had they been made U.S. dollars (49%), Euro (29%), Pounds sterling through IDA on its repayment terms existing then. (10%) and Japanese yen (12%). Donor Financing of MDRI: As of June 30, 2012, donor commitments to the MDRI stood at $31,286 Investments–Trading A summary of IDA’s Investments-Trading and the currency composition at June 30, 2012 and June 30, 2011 is as follows: In millions of U.S. dollars Carrying Value June 30, 2012 June 30, 2011 Investments—Trading Government and agency obligations $23,140 $18,683 Time deposits 6,104 9,651 Asset-backed securities 1,180 1,484 Total $30,424 $29,818 In millions of U.S. dollars June 30, 2012 June 30, 2011 Average Repricing Average Repricing a a Carrying value (years) Carrying value (years) Euro $ 9,423 3.55 $ 9,804 2.53 Japanese yen 3,531 2.72 2,587 2.15 Pounds sterling 3,478 3.05 3,052 2.28 U.S. dollars 13,262 4.09 14,051 2.03 Other 730 0.39 324 0.06 Total $30,424 3.51 $29,818 2.21 a. The average repricing represents the remaining period to the contractual repricing or maturity date, whichever is earlier. This indicates the average length of time for which interest rates are fixed. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 157 Net Investment Portfolio IDA manages its investments on a net portfolio basis. The following tables summarize the net portfolio position and currency composition as of June 30, 2012 and June 30, 2011: In millions of U.S. dollars Carrying Value June 30, 2012 June 30, 2011 Investments—Trading $30,424 $29,818 Securities purchased under resale agreements 441 – Securities sold under repurchase agreements, securities lent under securities lending agreements, and payable for cash collateral received (3,824) (6,013) Derivatives Assets Currency forward contracts 743 302 Currency swaps 1,159 – Interest rate swaps 2 2 a Other 1 * Total 1,905 304 Derivatives Liabilities Currency forward contracts (747) (305) Currency swaps (1,149) – Interest rate swaps (2) (3) a Other (*) (1) Total (1,898) (309) b Cash held in investment portfolio 54 2 Receivable from investment securities traded 1,255 2,355 Payable for investment securities purchased (2,024) (1,285) Net Investment Portfolio $26,333 $24,872 a. These relate to TBA securities. b. This amount is included in Unrestricted currencies under Due from Banks on the Balance Sheet. * Indicates amount less than $0.5 million. In millions of U.S. dollars June 30, 2012 June 30, 2011 Average Average Carrying value Repricing Carrying value Repricing a a (years) (years) Euro $ 7,647 3.91 $ 8,268 3.18 Japanese yen 3,145 3.33 2,109 2.72 Pounds sterling 2,581 4.90 2,540 3.30 U.S. dollars 12,948 3.83 11,935 2.36 Other 12 0.01 20 * Total $26,333 3.88 $24,872 2.73 * Indicates amounts not meaningful. a. The average repricing represents the remaining period to the contractual repricing or maturity date, whichever is earlier. This indicates the average length of time for which interest rates are fixed. IDA uses derivative instruments to manage currency and interest rate risk in the investment portfolio. For details regarding these instruments, see Note D–Derivative Instruments. As of June 30, 2012 there were short sales totaling $32 million (Nil million—June 30, 2011) included in Payable for investment securities purchased on the Balance Sheet. For the fiscal year ended June 30, 2012, IDA’s income included $334 million of net unrealized gains (net unrealized losses of $340 million—fiscal year ended June 30, 2011 and net unrealized gains of $151 million— fiscal year ended June 30, 2010). 158 THE WORLD BANK ANNUAL REPORT 2012 Fair Value Disclosures The following tables present IDA’s fair value hierarchy for investment assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and June 30, 2011: In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2012 Level 1 Level 2 Level 3 Total Assets: Investments–Trading Government and agency obligations $7,131 $16,009 $– $23,140 Time deposits 997 5,107 – 6,104 Asset-backed securities – 1,176 4 1,180 Total Investments – Trading 8,128 22,292 4 30,424 Securities purchased under resale agreements 335 106 – 441 Derivative assets-Investments Currency forward contracts – 743 – 743 Currency swaps – 1,159 – 1,159 Interest rate swaps – 2 2 a Other – 1 – 1 – 1,905 – 1,905 Total Investment assets $8,463 $24,303 $4 $32,770 Liabilities: Securities sold under repurchase agreements and securities lent under security lending agreements $ 97 $ 3,727 $– $ 3,824 Derivative liabilities-Investments Currency forward contracts – 747 – 747 Currency swaps – 1,149 – 1,149 Interest rate swaps – 2 – 2 a Other – * – * – 1,898 – 1,898 Total Investment liabilities $ 97 $ 5,625 $- $ 5,722 a. These relate to TBA securities. * Indicates amount less than $0.5 million. In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2011 Level 1 Level 2 Level 3 Total Assets: Investments–Trading Government and agency obligations $4,936 $13,747 $ – $18,683 Time deposits 3,170 6,481 – 9,651 Asset-backed securities – 1,466 18 1,484 Total Investments – Trading 8,106 21,694 18 29,818 Derivative assets-Investments Currency forward contracts – 302 – 302 Interest rate swaps – 2 – 2 a Other – * – * – 304 – 304 Total Investment assets $8,106 $21,998 $18 $30,122 Liabilities: Securities sold under repurchase agreements and securities lent under security lending agreements $ – $ 6,013 $ – $6,013 Derivative liabilities-Investments Currency forward contracts – 305 – 305 Interest rate swaps – 3 – 3 a Other – 1 – 1 – 309 – 309 Total Investment liabilities $ – $ 6,322 $– $6,322 a. These relate to TBA securities. * Indicates amount less than $0.5 million. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 159 Level 3 Financial Instruments The following table provides a summary of changes in the fair value of the Level 3 financial instruments relating to Investments-Trading during the fiscal years ended June 30, 2012 and June 30, 2011: In millions of U.S. dollars Level 3 Financial Instruments Investments – Trading (Asset-backed securities) Fiscal Year Ended June 30, 2012 2011 Beginning of the period $ 18 $13 Total unrealized/realized gains (losses) in: Net income: * 5 Purchases – 2 Sales/Settlements (2) (4) Transfers (out) in, net (12) 2 End of the period $ 4 $18 * Indicates amount less than $0.5 million. The following table provides information on the unrealized gains or losses included in income for the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010, relating to the Level 3 financial instruments still held as of those dates, as well as where those amounts are included in the Statement of Income. In millions of U.S. dollars Level 3 Financial Instruments Still Held as of the reporting date Unrealized Gains (Losses) Investments – Trading (Asset-backed securities) Statement of Income Location Fiscal Year Ended June 30, 2012 2011 2010 Income: Investments—Trading, net $* $5 $6 * Indicates amount less than $0.5 million. The fair value of Level 3 instruments (Asset-backed interest and principal) as a percentage of the principal securities) in the investment portfolio is estimated balance. using valuation models that incorporate observable Significant increases (decreases) in the assumptions market inputs and unobservable inputs. The used for these inputs in isolation would result in a significant unobservable inputs include constant significantly lower (higher) fair value measurement. prepayment rates, probability of default, and loss Generally, a change in the assumption used for the severity rate. The constant prepayment rate is an probability of default is accompanied by a annualized expected rate of principal prepayment for directionally similar change in the assumption used a pool of asset-backed securities. The probability of for the loss severity and a directionally opposite default is an estimate of the expected likelihood of change in the assumption used for constant not collecting contractual amounts owed. Loss prepayment rates. severity is the present value of lifetime losses (both The following table provides a summary of the valuation technique applied in determining fair values of these Level 3 instruments and quantitative information regarding the significant unobservable inputs used: In millions of U.S. dollars Fair value at Instrument type June 30, 2012 Valuation Technique Unobservable input Range (weighted average) Asset-backed securities $4 Discounted Cash Constant prepayment rate 0.5% to 5.0% (4.48%) Flow Probability of default 0% to 8.0% (1.14%) Loss severity 0% to 100% (45.9%) 160 THE WORLD BANK ANNUAL REPORT 2012 Inter-level transfers The transfers from Level 1 to Level 2 reflect the unavailability of quoted prices for identical instruments resulting from a decreased volume of trading for these instruments. The transfers from Level 2 to Level 3 reflect the unavailability of quoted prices for similar instruments resulting from a decreased volume of trading for these instruments. Conversely, transfers from Level 3 to Level 2 reflect the availability of quoted prices for similar instruments resulting from increased volume of trading for these instruments. The table below provides the details of all gross inter-level transfers during the fiscal years ended June 30, 2012 and June 30, 2011: In millions of U.S. dollars Fiscal Year Ended June 30, 2012 Level 1 Level 2 Level 3 Investments-Trading Asset-backed securities Transfers (out of) into $– $ (5) $ 5 Transfers into (out of) – 17 (17) $– $12 $(12) In millions of U.S. dollars Fiscal Year Ended June 30, 2011 Level 1 Level 2 Level 3 Investments-Trading Government and Agency obligations Transfers (out of) into $(404) $404 $ – Asset-backed securities Transfers into (out of) – 10 (10) Transfers (out of) into – (12) 12 $(404) $402 $ 2 Valuation Methods and Assumptions Securities Purchased under Resale Agreements, Securities Sold under Agreements to Repurchase Summarized below are the techniques applied in and Securities Lent Under Securities Lending determining the fair values of investments. Agreements Investment securities These securities are reported at face value which Where available, quoted market prices are used to approximates fair value. determine the fair value of trading securities. Examples include futures contracts and most Commercial Credit Risk government and agency securities. For the purpose of risk management, IDA is party to For instruments for which market quotations are not a variety of financial transactions, certain of which available, fair values are determined based on involve elements of credit risk. Credit risk exposure model-based valuation techniques, whether represents the maximum potential loss due to internally-generated or vendor-supplied, that include possible nonperformance by obligors and the standard discounted cash flow method using counterparties under the terms of the contracts. For market observable inputs such as yield curves, credit all securities, IDA limits trading to a list of spreads, and prepayment speeds. Where applicable, authorized dealers and counterparties. In addition, unobservable inputs such as constant prepayment credit limits have been established for counterparties rates, probability of default, and loss severity are by type of instrument and maturity category. used. Swap Agreements: Credit risk is mitigated through a Unless quoted prices are available, time deposits are credit approval process, volume limits, monitoring reported at face value which approximates fair procedures and the use of mark-to-market collateral value. arrangements. IDA may require collateral in the form of cash or other approved liquid securities from individual counterparties to mitigate its credit exposure. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 161 IDA has entered into master derivatives agreements Securities Lending: IDA may engage in securities which contain legally enforceable close-out netting lending and repurchases, against adequate collateral, provisions. These agreements may further reduce the as well as securities borrowing and reverse gross credit risk exposure related to the swaps. The repurchases (resales) of government and agency reduction in exposure as a result of these netting obligations, and corporate and asset-backed provisions can vary as additional transactions are securities. Transfers of securities by IDA to entered into under these agreements. The extent of counterparties are not accounted for as sales as the the reduction in exposure may therefore change accounting criteria for the treatment as a sale have substantially within a short period of time following not been met. Counterparties are permitted to the balance sheet date. repledge these securities until the repurchase date. The following is a summary of the carrying amount of the securities transferred under repurchase or securities lending agreements, and the related liabilities: In millions of U.S. dollars June 30, 2012 June 30, 2011 Financial Statement Presentation Securities transferred under repurchase or Included under Investments-Trading on the $2,691 $4,375 securities lending agreements Balance Sheet Included under Securities Sold Under Liabilities relating to securities transferred Repurchase Agreements, Securities Lent under under repurchase or securities lending $3,772 $6,013 Securities Lending Agreements, and Payable for agreements Cash Collateral Received on the Balance Sheet. At June 30, 2012, the liabilities relating to securities the securities received are not recorded on the transferred under repurchase or securities lending Balance Sheet as the accounting criteria for agreements included $1,046 million ($1,599 treatment as a sale have not been met. As of June million—June 30, 2011) of repurchase agreement 30, 2012, IDA had received securities with a fair trades that had not settled at that date. Of this value of $442 million (Nil—June 30, 2011) in amount, $685 million ($1,162 million—June 30, connection with resale agreements. Of these 2011) represented replacement trades entered into in securities, $52 million of these securities (Nil— anticipation of maturing trades. June 30, 2011) had been transferred under repurchase or security lending agreements. IDA receives collateral in connection with resale agreements. This collateral serves to mitigate IDA's NOTE D—DERIVATIVE INSTRUMENTS exposure to credit risk. The collateral received is in IDA uses derivative instruments in its investment the form of liquid securities and it is permitted to portfolio and for asset/liability management repledge these securities. While these transactions purposes. All derivative instruments are classified are legally considered to be true purchases and sales, as Level 2 within the fair value hierarchy. The following table summarizes IDA’s use of authorized derivatives in its various financial portfolios: Portfolio Derivative instruments used Purpose/Risk being managed Risk management purposes: Interest rate swaps, currency forward Manage currency and interest rate risk in the Investments—Trading contracts, currency swaps, options, portfolio. swaptions and futures contracts Currency forward contracts and currency Manage foreign exchange risks of future cash Other assets/liabilities swaps flows in non-SDR component currencies. Other purposes: Assist clients in managing commodity output Client operations Structured swaps risks. Under its derivative agreement with IBRD, IDA is proxy for AAA credit rating. As of June 30, 2012, not required to post collateral as long as it maintains IDA had not posted any collateral with IBRD. liquidity holdings at pre-determined levels that are a 162 THE WORLD BANK ANNUAL REPORT 2012 The following tables provide information on the fair value amounts and the location of the derivative instruments on the Balance Sheet, as well as the notional amounts and credit risk exposures of those derivative instruments, as of June 30, 2012 and June 30, 2011: Fair value amounts of the derivative instruments on the Balance Sheet: In millions of U.S. dollars Derivative assets Derivative liabilities Balance Sheet June 30, June 30, Balance Sheet June 30, June 30, Location 2012 2011 Location 2012 2011 Derivatives not designated as hedging instruments Options, Swaptions and Futures-Investments Other assets $ * $ * Other liabilities $ 1 $ 1 Derivative Derivative Interest rate swaps assets 2 2 liabilities 2 3 Derivative Derivative Currency forward contracts assets 8,070 10,188 liabilities 8,461 10,198 Derivative Derivative Currency swaps assets 1,159 – liabilities 1,149 – Derivative Derivative a Other assets 1 * liabilities * 1 Total Derivatives $9,232 $10,190 $9,613 $10,203 a. These relate to TBA securities. * Indicates amount less than $0.5 million. Notional amounts and credit risk exposure of the derivative instruments: In millions of U.S. dollars Type of contract June 30, 2012 June 30, 2011 Investments—Trading Interest rate swaps Notional principal $ 60 $ 40 Credit exposure 2 2 Currency swaps (including currency forward contracts) Credit exposure 28 – a Swaptions, exchange traded Options and Futures contracts Notional long position 1,251 698 Notional short position 4,778 3,756 Credit exposure 2 – b Other Notional long position 203 246 Notional short position 26 13 Credit exposure 1 * Derivatives—Asset/liability management Currency forward contracts Credit exposure 57 174 a. Exchange traded instruments are generally subject to daily margin requirements and are deemed to have no material credit risk. All options and futures contracts are interest rate contracts. b These relate to TBA securities. * Indicates amount less than $0.5 million. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 163 Amounts of gains and losses on the non-trading derivative instruments and their location on the Statement of Income for the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010 are as follows: a Derivatives not designated as hedging instruments and not held in a trading portfolio In millions of U.S. dollars Gains (Losses) Fiscal Year Ended June 30, Statement of Income Location 2012 2011 2010 Currency forward contracts, currency Fair value adjustment on non- swaps and structured swaps trading portfolios, net $39 $(101) $(3) a. For alternative disclosures about trading derivatives, see the following table. All instruments in IDA's investment portfolio are portfolio is primarily held to ensure the availability held for trading purposes. Within the investment of funds to meet future cash flow requirements and portfolio, IDA holds highly rated fixed income for liquidity management purposes. instruments as well as derivatives. The investment The following table provides information on the amount of gains and losses on the net investment portfolio (derivative and non-derivative instruments), and their location on the Statement of Income for the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010: Investments—Trading portfolio In millions of U.S. dollars Gains (Losses) Fiscal Year Ended June 30, Statement of Income Location 2012 2011 2010 Type of instrument Fixed income Investments—Trading, net $521 $(167) $392 164 THE WORLD BANK ANNUAL REPORT 2012 Fair Value Disclosures IDA’s fair value hierarchy for derivative assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and June 30, 2011 is as follows: In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2012 Level 1 Level 2 Level 3 Total Derivative assets: Derivative assets Investments Currency forward contracts $– $ 743 $– $ 743 Currency swaps – 1,159 – 1,159 Interest rate swaps – 2 – 2 a Other – 1 – 1 – 1,905 – 1,905 Asset-liability management Currency forward contracts – 7,327 – 7,327 Total derivative assets $– $9,232 $– $9,232 Derivative liabilities: Derivative Liabilities Investments Currency forward contracts $– $ 747 $– $ 747 Currency swaps – 1,149 – 1,149 Interest rate swaps – 2 – 2 a Other – * – * – 1,898 – 1,898 Asset-liability management Currency forward contracts – 7,714 – 7,714 Total derivative liabilities $– $9,612 $– $9,612 a.These relate to TBA securities. * Indicates amount less than $0.5 million. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 165 In millions of U.S. dollars Fair Value Measurements on a Recurring Basis As of June 30, 2011 Level 1 Level 2 Level 3 Total Derivative assets: Derivative assets Investments Currency forward contracts $– $ 302 $– $ 302 Interest rate swaps – 2 – 2 a Other – * – * – 304 – 304 Asset-liability management Currency forward contracts – 9,886 – 9,886 Total derivative assets $– $10,190 $– $10,190 Derivative liabilities: Derivative Liabilities Investments Currency forward contracts $– $ 305 $– $ 305 Interest rate swaps – 3 – 3 a Other – 1 – 1 – 309 309 Asset-liability management Currency forward contracts – 9,893 9,893 Total derivative liabilities $– $10,202 $– $10,202 a.These relate to TBA securities. * Indicates amount less than $0.5 million During the fiscal years ended June 30, 2012 and June Development credits are carried and reported at 30, 2011, there were no inter-level transfers in the amortized cost. Of the total development credits derivatives portfolio. outstanding as of June 30, 2012, 89% were to the South Asia, Africa, and East Asia and Pacific Valuation Methods and Assumptions regions, combined. Derivative contracts include currency forward Based on IDA’s internal credit quality indicators, the contracts, swaptions, plain vanilla swaps, and majority of the development credits outstanding are structured swaps, and are valued using the standard in the Medium and High risk classes. discounted cash flow methods using market As of June 30, 2012, IDA’s development credits are observable inputs such as yield curves, foreign predominantly denominated in SDR (representing exchange rates and basis spreads. about 95% of the portfolio) and carry a service charge of 75 basis points. NOTE E—DEVELOPMENT CREDITS AND OTHER EXPOSURES As of June 30, 2012, six borrowers with development credits outstanding totaling $3,486 million Development credits and other exposures are (representing about 2.8% of the portfolio) were in generally made directly to member countries of IDA. nonaccrual status. 166 THE WORLD BANK ANNUAL REPORT 2012 Maturity Structure The maturity structure of development credits outstanding at June 30, 2012 and June 30, 2011 was as follows: In millions of U.S. dollars June 30, 2012 June 30, 2011 a b July 1, 2012 through June 30, 2013 $ 6,006 July 1, 2011 through June 30, 2012 $ 5,280 July 1, 2013 through June 30, 2017 15,992 July 1, 2012 through June 30, 2016 15,872 July 1, 2017 through June 30, 2022 25,091 July 1, 2016 through June 30, 2021 25,329 Thereafter 76,487 Thereafter 78,806 Total $123,576 Total $125,287 a. Includes $1,559 million to be written off on July 1, 2012 under the MDRI. b. Includes development credits totaling $1,000 million prepaid by China on July 1, 2011. As of June 30, 2011, the liability relating to the funds received in advance was included in Accounts payable and miscellaneous liabilities. Currency Composition Development credits outstanding had the following currency composition at June 30, 2012 and June 30, 2011: In millions of U.S. dollars June 30, 2012 June 30, 2011 USD-denominated $ 6,690 $ 7,190 SDR-denominated 116,886 118,097 $123,576 $125,287 Credit Quality of Sovereign Development Credits assigned borrower risk ratings which relate to the likelihood of loss: Low, Medium and High classes, as Based on an evaluation of IDA’s development well as exposures in nonaccrual status. IDA credits, management has determined that IDA has considers all exposures in nonaccrual status to be one portfolio segment – Sovereign Exposures. impaired. Development credits constitute the majority of sovereign exposures. IDA’s borrowers’ country risk ratings are key determinants in the provisions for development credit IDA’s country risk ratings are an assessment of its losses. borrowers’ ability and willingness to repay on time and in full. These ratings are internal credit quality IDA considers a development credit to be past due indicators. Individual country risk ratings are derived when a borrower fails to make payment on any on the basis of both quantitative and qualitative principal, service, interest or other charges due to factors. For the purpose of analyzing the risk IDA, on the dates provided in the contractual characteristics of IDA’s exposures, exposures are development credit agreements. grouped into three classes in accordance with The following tables provide an aging analysis of development credits outstanding as of June 30, 2012 and June 30, 2011: In millions of U.S. dollars June 30, 2012 Days past due Up to 45 46-60 61-90 91-180 Over 180 Total Past Due Current Total Risk Class Low $ – $– $– $ – $ – $ – $ 7,074 $ 7,074 Medium – – – – – – 33,611 33,611 High * – – – – * 79,405 79,405 Credits in accrual status * – – – – * 120,090 120,090 Credits in nonaccrual status 12 2 6 28 1,072 1,120 2,366 3,486 Total $12 $2 $6 $28 $1,072 $1,120 $122,456 $123,576 * Indicates amounts less than $0.5 million. IDA FINANCIAL STATEMENTS: JUNE 30, 2012 167 In millions of U.S. dollars June 30, 2011 Days past due Up to 45 46-60 61-90 91-180 Over 180 Total Past Due Current Total Risk Class Low $ – $– $– $ – $ – $ – $ 9,239 $ 9,239 Medium – – – – – – 34,219 34,219 High 1 1 1 – – 3 78,711 78,714 Credits in accrual status 1 1 1 – – 3 122,169 122,172 Credits in nonaccrual status 12 1 4 28 1,006 1,051 2,064 3,115 Total $13 $2 $5 $28 $1,006 $1,054 $124,233 $125,287 Accumulated Provision for Losses on Provision for Debt Relief Development Credits, Debt Relief (HIPC Debt HIPC Debt Initiative and MDRI provisions are based Initiative and MDRI) and Other Exposures on quantitative and qualitative analyses of various Provision for Losses on Development Credits and factors, including estimates of Decision Point and Other Exposures Completion Point dates. These factors are reviewed Management determines the appropriate level of periodically as part of the reassessment of the accumulated provision for losses, which reflects the adequacy of the accumulated provision for debt probable losses inherent in IDA’s exposures. relief. Provisions are released as qualifying debt Probable losses comprise estimates of losses arising service becomes due under the HIPC Debt Initiative from default and nonpayment of principal amounts and are reduced by the amount of the eligible due, as well as present value losses. Management development credits written off when the country reassesses the adequacy of the accumulated provision reaches Completion Point, and becomes eligible for on a periodic basis and adjustments are recorded as a MDRI debt relief. charge against or addition to income. Changes to the accumulated provision for losses on development credits and other exposures, as well as the debt relief under HIPC Debt Initiative and MDRI for the fiscal years ended June 30, 2012 and June 30, 2011 are summarized below: In millions of U.S. dollars June 30, 2012 June 30, 2011 Develop- Debt relief Develop- Debt relief ment under ment under credits Other HIPC/MDRI Total credits Other HIPC/MDRI Total Accumulated provision, beginning of the fiscal year $ 1,333 $15 $5,614 $6,962 $ 1,224 $ 4 $ 7,724 $ 8,952 Provision, net – charge (release) 70 (1) (3) 66 20 10 (74) (44) Development credits written off under HIPC – – (5) (5) – – (15) (15) Development credits written off under MDRI – – – – – – (2,464) (2,464) Translation adjustment (64) (1) (222) (287) 89 1 443 533 Accumulated provision, end of the fiscal year $ 1,339 $13 $5,384 $6,736 $ 1,333 $15 $ 5,614 $ 6,962 Composed of accumulated provision for losses on: Development credits in accrual status $ 1,131 $ 1,135 Development credits in nonaccrual status 208 198 Total $ 1,339 $ 1,333 Development credits, end of the fiscal year: Development credits in accrual status $120,090 $122,172 Development credits in nonaccrual status 3,486 3,115 Total $123,576 $125,287 168 THE WORLD BANK ANNUAL REPORT 2012 Reported as Follows Balance Sheet Statement of Income Accumulated Provision for Losses on: Accumulated provision for debt relief and Provision for debt relief and for losses on Development Credits losses on development credits development credits and other exposures Accumulated provision for debt relief and Provision for debt relief and for losses on Debt Relief under HIPC/MDRI losses on development credits development credits and other exposures Other Liabilities-Accounts payable and Provision for debt relief and for losses on Other Exposures miscellaneous liabilities development credits and other exposures Development credits to be written off under MDRI On June 26, 2012, Cote d’Ivoire r eached the Completion Point under the HIPC Debt Initiative, allowing for the cancellation of elig ible development cred its to taling $1 ,559 million on July 1, 2012. The accumulated provision for debt relief under HIPC and MDRI of $5,384 million as of June 30, 2012 includes a provision for this amount. Overdue Amounts to the member are deducted from the income from development credits in the current period. Charge It is the policy of IDA to place in nonaccrual status income on nonaccrual exposures is included in all development credits and other exposures made to, income only to the extent that payments have actually or guaranteed by, a member of IDA if principal, been received. If collectability risk is considered to service charges, or other charges with respect to any be particularly high at the time of arrears clearance, a such exposures are overdue by more than six months, borrowing member’s exposures may not unless IDA’s management determines that the automatically emerge from nonaccrual status. In overdue amount will be collected in the immediate such instances, a decision on the restoration of future. IDA considers the exposures in nonaccrual accrual status is made on a case-by-case basis, and in status to be impaired. In addition, if exposures by certain cases that decision may be deferred until a IBRD to a member government are placed in suitable period of payment or policy performance has nonaccrual status, all development credits and other passed. exposures made to, or guaranteed by, that member government will also be placed in nonaccrual status As of June 30, 2012, there were no principal or by IDA. On the date a member’s development charges under development credits in accrual status credits and other exposures are placed into which were overdue by more than three months. nonaccrual status, unpaid service charges and other charges accrued on development credits outstanding The following tables provide a summary of selected financial information related to development credits in nonaccrual status as of and for the fiscal years ended June 30, 2012, June 30, 2011 and June 30, 2010: In millions of U.S. dollars Average Overdue amounts Nonaccrual Recorded recorded Principal Provision for Provision for a b c Borrower Since investment investment Outstanding debt relief credit losses Principal Charges Eritrea March 2012 $ 474 $ 147 $ 474 $ 352 $ 25 $ 7 $ 3 Myanmar September 1998 777 790 777 – 155 306 84 Somalia July 1991 438 447 438 423 3 176 71 Sudan January 1994 1,277 1,301 1,277 1,205 15 508 171 Syrian Arab Republic June 2012 14 1 14 – * 1 * Zimbabwe October 2000 506 520 506 – 10 122 47 Total – June 30, 2012 $3,486 $3,206 $3,486 $1,980 $208 $1,120 $376 Total – June 30, 2011 $3,115 $3,055 $3,115 $1,652 $198 $1,051 $363 a. A credit loss provision has been recorded against each of the credits in nonaccrual status. b. Represents the average for the fiscal years. For the fiscal year ended June 30, 2010: $3,222 million. c. Credit loss provisions are determined after taking into account accumulated provision for debt relief. * Indicates amount less than $0.5 million. In millions of U.S. dollars Fiscal Year Ended June 30, 2012 2011 2010 Service charge income not recognized as a result of development credits being in nonaccrual status $27 $23 $32 IDA FINANCIAL STATEMENTS: JUNE 30, 2012 169 On June 2, 2012, development credits made to, or by IDA have original maturities ranging between guaranteed by, the Syrian Arab Republic were placed 10 and 23 years, and expire in decreasing amounts into nonaccrual status. Development credit income through 2035. for the fiscal year ended June 30, 2012 would have At June 30, 2012, liabilities related to IDA’s been higher by $0.1 million, had these development obligations under guarantees of $26 million (June 30, credits not been placed into nonaccrual status. 2011—$18 million), have been included in Accounts On March 15, 2012, development credits made to, or payable and miscellaneous liabilities on the Balance guaranteed by, Eritrea were placed into nonaccrual Sheet. These include the accumulated provision for status. Development credit income for the fiscal year guarantee losses of $7 million (June 30, 2011—$6 ended June 30, 2012 would have been higher by $3 million). million, had these development credits not been During the fiscal years ended June 30, 2012 and June placed into nonaccrual status. 30, 2011, no guarantees provided by IDA were During the fiscal year ended June 30, 2011, Guinea called. cleared all of its overdue principal and charges due to Segment Reporting IDA and the development credits to Guinea were restored to accrual status. As a result of this event, Based on an evaluation of its operations, income from development credits increased by $17 management has determined that IDA has only one million, including $9 million that would have been reportable segment. accrued in the previous fiscal year had these credits not been in nonaccrual status. Charge income comprises service charges and interest charges on outstanding development credit During the fiscal years ended June 30, 2012, June 30, balances and guarantee fee income. For the fiscal 2011, and June 30, 2010 no service charge income year ended June 30, 2012, charge income from one was recognized on credits in nonaccrual status. country totaling $203 million was in excess of ten percent of total charge income. Guarantees The following table presents development credits Guarantees of $299 million were outstanding at June outstanding and associated charge income as of and 30, 2012 ($258 million—June 30, 2011). This for the fiscal years ended June 30, 2012 and June 30, amount represents the maximum potential 2011, by geographic region. undiscounted future payments that IDA could be required to make under these guarantees, and is not included on the Balance Sheet. The guarantees issued In millions of U.S. dollars June 30, 2012 June 30, 2011 Development Credits Development Credits Outstanding Charge Income Outstanding Charge Income Africa $ 36,604 $244 $ 34,983 $241 East Asia and Pacific 20,555 154 22,212 157 Europe and Central Asia 8,080 62 8,240 59 Latin America and the Caribbean 1,872 14 1,745 12 Middle East and North Africa 3,729 29 3,958 29 South Asia 52,736 411 54,149 399 Total $123,576 $914 $125,287 $897 Buydown of Development Credits Discount on Development Credits prepaid under IDA16 During the fiscal year ended June 30, 2012, two development credits (Nil—fiscal year ended June During the fiscal year ended June 30, 2012, two IDA 30, 2011) with outstanding nominal value of $87 graduate countries prepaid development credits with million were purchased for a present value outstanding nominal values totaling $1,053 million equivalent of $42 million under the buydown as part of IDA16 (Nil—fiscal year ended June 30, mechanism by the Global Program to Eradicate 2011). The total amount prepaid of $940 million Poliomyelitis Trust Funds, resulting in a $45 million reflected the present value of the development write-off. credits as of the date of the prepayment, resulting in an aggregate discount of $113 million. 170 THE WORLD BANK ANNUAL REPORT 2012 Fair Value Disclosures The table below presents the fair v alue of development credits along with their respective carrying amounts as of June 30, 2012 and June 30, 2011: In millions of U.S. dollars June 30, 2012 June 30, 2011 Carrying Carrying Value Fair Value Value Fair Value Net Development Credits Outstanding $116,880 $79,917 $118,368 $73,165 Valuation Methods and Assumptions The fair values of development credits are calculated using market-based methodologies which incorporate the respective borrowers’ Credit Default Swap (CDS) spreads and, where applicable, proxy CDS spreads. Basis adjustments are applied to market recovery levels to reflect IDA’s recovery experience. NOTE F—AFFILIATED ORGANIZATIONS Cumulative transfers and grants made to IDA as of June 30, 2012 were $14,518 million ($13,660 IDA transacts with affiliated organizations as a million—June 30, 2011). Details by transferor are as recipient of transfers and grants, administrative and follows: derivative intermediation services as well as through cost sharing of IBRD’s sponsored pension and other In millions of U.S. dollars postretirement plans. Transfers Transfers Beginning of during End of Transfers and Grants from the fiscal year the fiscal year the fiscal year On September 23, 2011, IBRD’s Board of Total $13,660 $858 $14,518 Of which Governors approved an immediate transfer to IDA from: of $520 million. This transfer was received on IBRD 11,595 520 12,115 September 27, 2011. IFC 1,900 330 2,230 On December 16, 2011, IFC and IDA signed an agreement for IFC to provide a grant to IDA of $330 million. This grant was received on December 21, 2011. Receivables and Payables At June 30, 2012, and June 30, 2011, the total amounts receivable from or (payable to) affiliated organizations comprised: In millions of U.S. dollars June 30, 2012 Pension and Other Administrative Postretirement Derivative Services Benefits transactions Total Receivable from: IBRD $ – $1,006 $ 7,327 $ 8,333 Payable to: IBRD $(375) $ – $(7,714) $(8,089) In millions of U.S. dollars June 30, 2011 Pension and Other Administrative Postretirement Derivative Services Benefits transactions Total Receivable from: IBRD $ – $999 $ 9,886 $ 10,885 Payable to: IBRD $(370) $ – $(9,893) $(10,263) IDA FINANCIAL STATEMENTS: JUNE 30, 2012 171 Administrative Services: The payable to IBRD Trust fund execution may be carried out in one of represents IDA’s share of joint administrative two ways: Recipient-executed or IDA-executed. expenses, net of other income jointly earned. The Recipient-executed trust funds involve activities allocation of expenses is based upon an agreed cost carried out by a recipient third-party “executing sharing formula, and amounts are settled quarterly. agencyâ€?. IDA enters into agreements with and During the fiscal year ended June 30, 2012, IDA’s disburses funds to such recipients, who then exercise share of joint administrative expenses totaled $1,365 spending authority to meet the objectives and million ($1,427 million - fiscal year ended June 30, comply with terms stipulated in the agreements. 2011 and $1,323 million - fiscal year ended June 30, IDA-executed trust funds involve execution of 2010). activities by IDA as described in relevant Other income: Includes IDA’s share of other income administration agreements with donors which define jointly earned with IBRD during the fiscal year the terms and conditions for use of the funds. ended June 30, 2012 totaling $209 million (fiscal Spending authority is exercised by IDA, under the year ended June 30, 2011—$193 million and fiscal terms of the administration agreements. The year ended June 30, 2010—$173 million). Other executing agency services provided by IDA vary income is allocated on the basis consistent with that and include for example, activity preparation, applied to joint administrative expenses. analytical and advisory activities and project-related activities, including procurement of goods and For the fiscal years ended June 30, 2012, June 30, services. The following table summarizes the 2011 and June 30, 2010, the amount of fee revenue expenses pertaining to IDA-executed trust funds associated with services provided to other affiliated during the fiscal years ended June 30, 2012, June 30, organizations is included in Other income on the 2011 and June 30, 2010: Statement of Income, as follows: In millions of U.S. dollars In millions of U.S. dollars Fiscal Year Ended June 30, Fiscal Year Ended June 30, 2012 2011 2010 2012 2011 2010 IDA-executed trust Fees charged to IFC $40 $40 $35 funds expenses $309 $289 $262 Fees charged to MIGA 6 5 4 These amounts are included in Administrative Pension and Other Postretirement Benefits: The expenses and the corresponding income is included receivable from IBRD represents IDA’s net share of in Other income in the Statement of Income. prepaid costs for pension and other postretirement benefit plans and Post-Employment Benefits Plan The following table summarizes undisbursed (PEBP) assets. These will be realized over the life contributions made by third party donors to IDA- of the plan participants. executed trust funds, recognized on the Balance Sheet as of June 30, 2012 and June 30, 2011: Derivative transactions: These relate to currency forward contracts entered into by IDA with IBRD In millions of U.S. dollars acting as the intermediary with the market and June 30, 2012 June 30, 2011 IDA-executed trust primarily convert donors’ expected contributions in funds $334 $343 national currencies under the Sixteenth and prior replenishments of IDA’s resources into the four These amounts are included in Other Assets and the currencies of the SDR basket. corresponding liabilities are included in Accounts NOTE G—TRUST FUNDS ADMINISTRATION payable and miscellaneous liabilities on the Balance Sheet. IDA, alone or jointly with one or more of its affiliated organizations, administers on behalf of In some trust funds, execution is split between donors, including members, their agencies and other Recipient-executed and IDA-executed portions. entities, funds restricted for specific uses in Decisions on assignment of funding resources accordance with administration agreements with between the two types of execution may be made on donors. Specified uses include, for example, co- an ongoing basis; therefore the execution of a financing of IDA lending projects, debt reduction portion of these available resources may not yet be operations for IDA members, technical assistance assigned. for borrowers including feasibility studies and IDA also acts as a financial intermediary to provide project preparation, global and regional programs, specific administrative or financial services with a and research and training programs. These funds are limited fiduciary or operational role. These held in trust by IDA and/or IBRD, and are held in a arrangements include, for example, administration separate investment portfolio which is not of debt service trust funds, financial intermediation commingled with IDA and/or IBRD funds. and other more specialized limited fund 172 THE WORLD BANK ANNUAL REPORT 2012 management roles. Funds are held and disbursed in adjustments on functional currencies. These items accordance with instructions from donors or, in are presented in the Statement of Comprehensive some cases, an external governance structure or a Income. body operating on behalf of donors. The following table presents the changes in Revenues Accumulated Other Comprehensive Income balances for the fiscal years ended June 30, 2012 During the fiscal year ended June 30, 2012, June 30, and June 30, 2011: 2011 and June 30, 2010, IDA’s revenues for the administration of trust fund operations were as In millions of U.S. dollars follows: June 30, 2012 2011 In millions of U.S. dollars Balance, beginning of the fiscal year $ 17,794 $ 7,859 Fiscal Year Ended June 30, Currency translation adjustments on 2012 2011 2010 functional currencies (7,617) 9,935 Revenues $68 $61 $60 Balance, end of the fiscal year $10,177 $17,794 These amounts are included in Other income in the Statement of Income. NOTE J—PENSION AND OTHER Revenues collected from donor contributions but not POSTRETIREMENT BENEFITS yet earned totaling $77 million at June 30, 2012 ($75 IDA and IBRD are jointly called The World Bank. million—June 30, 2011) are included in Other The staff of IBRD perform functions for both IBRD Assets and in Accounts payable and miscellaneous and IDA, but all staff compensation is paid directly liabilities, correspondingly, on the Balance Sheet. by IBRD. Accordingly, a portion of IBRD's staff and Transfers Received associated administrative costs is allocated to IDA based on an agreed cost sharing ratio computed Under the agreements governing the administration every year using various indicators. The of certain trust funds, IDA may receive any surplus methodology for computing this share ratio is assets as transfers upon the termination of these trust approved by the Executive Directors for both funds. In addition, as development credits are repaid institutions. to trust funds, in certain cases they are transferred to IDA. During the fiscal year ended June 30, 2012, IBRD, along with IFC and MIGA sponsor a Staff surplus funds received under these arrangements Retirement Plan (SRP), a Retired Staff Benefits Plan totaled $7 million ($8 million – fiscal year ended (RSBP) and a PEBP that cover substantially all of June 30, 2011). their staff members. NOTE H—DEVELOPMENT GRANTS The SRP provides regular defined pension benefits and also includes a cash balance component. The A summary of changes to the amounts payable for RSBP provides certain health and life insurance development grants is presented below: benefits to eligible retirees. The PEBP provides In millions of U.S. dollars certain pension benefits administered outside the June 30, June 30, SRP. 2012 2011 Balance, beginning of the fiscal A June 30 measurement date is used for these year $ 6,830 $ 5,837 pension and other postretirement benefit plans. All Commitments 2,062 2,793 costs, assets and liabilities associated with these Disbursements (including PPA grant activity) (2,398) (2,261) plans are allocated between IBRD, IFC, and MIGA Translation adjustment (333) 461 based upon their employees’ respective participation Balance, end of the fiscal year $ 6,161 $ 6,830 in the plans. While IDA is not a participating entity to these For the fiscal years ending June 30, 2012 and June benefit plans, IDA shares in the costs and 30, 2011, the commitment charge rate on the reimburses IBRD for its proportionate share of any undisbursed balances of IDA grants was set at nil contributions made to these plans by IBRD, as part percent. of IBRD’s allocation of staff and associated administrative costs to IDA based on an agreed cost NOTE I—ACCUMULATED OTHER sharing ratio. During the fiscal year ended June 30, COMPREHENSIVE INCOME 2012, IDA’s share of IBRD’s costs relating to all the Comprehensive income consists of net income/loss three plans totaled $173 million ($241 million - and other gains and losses affecting equity that, fiscal year ended June 30, 2011 and $167 million - under U.S. GAAP, are excluded from net income fiscal year ended June 30, 2010). (loss). For IDA, comprehensive income (loss) is comprised of net loss and currency translation IDA FINANCIAL STATEMENTS: JUNE 30, 2012 173 The cost of any potential future liability arising from and IDA’s share of assets which are included in these plans would be shared by IBRD and IDA IBRD’s investment portfolio ($478 million), was using the applicable share ratio. As of June 30, 2012, negative $229 million. the SRP and the RSBP had negative funded status of $1,423 million and $765 million, respectively. The funded status of the PEBP, after reflecting IBRD NOTE K—OTHER FAIR VALUE DISCLOSURES The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with their respective carrying amounts as of June 30, 2012 and June 30, 2011. In millions of U.S. dollars 2012 2011 Carrying Carrying Value Fair Value Value Fair Value Due from Banks $ 106 $ 106 $ 50 $ 50 Investments (including Securities Purchased Under Resale Agreements) 30,865 30,865 29,818 29,818 Net Development Credits Outstanding 116,880 79,917 118,368 73,165 Derivative Assets Investments 1,905 1,905 304 304 Other Asset/Liability Management 7,327 7,327 9,886 9,886 Securities sold/lent under repurchase agreements/ securities lending agreements and payable for cash collateral received 3,824 3,824 6,013 6,013 Derivative Liabilities Investments 1,898 1,898 309 309 Other Asset/Liability Management 7,714 7,714 9,893 9,893 As of June 30, 2012, IDA’s development credits are classified as Level 3 within the fair value hierarchy. Valuation Methods and Assumptions As of June 30, 2012 and June 30, 2011, IDA had no financial assets or liabilities measured at fair value on a non- recurring basis. For valuation methods and assumptions of the following items refer to the respective notes as follows: Investments: See Note C Derivative assets and liabilities: See Note D Development Credits Outstanding: See Note E Due from Banks: The carrying amount of unrestricted and restricted currencies is considered a reasonable estimate of the fair value of these positions. 174 THE WORLD BANK ANNUAL REPORT 2012 Population Living below $1.25 and $2 a day | 1981–2008 View Excel Version percent Population living below $1.25 a day (2005 PPP) Developing-country groups 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 East Asia and Pacific 77.2 65.0 54.1 56.2 50.7 35.9 35.6 27.6 17.1 14.3 China 84.0 69.4 54.0 60.2 53.7 36.4 35.6 28.4 16.3 13.1 Europe and Central Asia 1.9 1.6 1.5 1.9 2.9 3.9 3.8 2.3 1.3 0.5 Latin America and the Caribbean 11.9 13.6 12.0 12.2 11.4 11.1 11.9 11.9 8.7 6.5 Middle East and North Africa 9.6 8.0 7.1 5.8 4.8 4.8 5.0 4.2 3.5 2.7 South Asia 61.1 57.4 55.3 53.8 51.7 48.6 45.1 44.3 39.4 36.0 India 59.8 55.7 54.1 51.3 49.7 47.2 45.6 44.5 40.8 37.4 Sub-Saharan Africa 51.5 55.2 54.4 56.5 59.4 58.1 57.9 55.7 52.3 47.5 Region Total 52.2 47.1 42.3 43.1 41.0 34.8 34.1 30.8 25.1 22.4 excluding China 40.5 39.1 38.1 37.2 36.6 34.3 33.6 31.5 27.8 25.2 Population living below $2 a day (2005 PPP) Developing-country groups 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 East Asia and Pacific 92.4 88.3 81.6 81.0 75.8 64.0 61.7 51.9 39.0 33.2 China 97.8 92.9 83.7 84.6 78.6 65.1 61.4 51.2 36.9 29.8 Europe and Central Asia 8.3 6.7 6.3 6.9 9.2 11.2 12.1 7.9 4.6 2.2 Latin America and the Caribbean 23.8 26.8 22.4 22.4 21.7 21.0 22.0 22.2 16.7 12.4 Middle East and North Africa 30.1 27.1 26.1 23.5 22.1 22.2 22.0 19.7 17.4 13.9 South Asia 87.2 85.6 84.5 83.6 82.7 80.7 77.8 77.4 73.4 70.9 India 86.6 84.9 84.1 82.6 81.9 80.2 78.9 77.9 75.0 72.4 Sub-Saharan Africa 72.2 74.7 74.3 76.0 78.1 77.5 77.4 76.1 74.1 69.2 Region Total 69.6 68.0 64.8 64.6 63.1 58.6 57.4 53.5 46.9 43.0 excluding China 59.3 59.1 58.2 57.7 57.8 56.4 56.1 54.2 49.9 47.0 Population Living below $1.25 and $2 a day | 1981–2008 millions Population living below $1.25 a day (2005 PPP) Developing country groups 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 East Asia and Pacific 1,097 970 848 926 871 640 656 523 332 284 China 835 720 586 683 633 443 446 363 212 173 Europe and Central Asia 8 7 7 9 14 18 18 11 6 2 Latin America and the Caribbean 43 53 49 53 53 54 60 63 48 37 Middle East and North Africa 16 15 15 13 12 12 14 12 10 9 South Asia 568 574 593 617 632 631 619 640 598 571 India 429 427 443 448 462 463 473 484 466 445 Sub-Saharan Africa 205 239 257 290 330 349 376 390 395 386 Region Total 1,938 1,858 1,768 1,909 1,910 1,704 1,743 1,639 1,389 1,289 excluding China 1,103 1,138 1,183 1,226 1,278 1,261 1,297 1,276 1,178 1,116 Population living below $2 a day (2005 PPP) Developing country groups 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 East Asia and Pacific 1,313 1,316 1,279 1,334 1,301 1,140 1,138 984 758 659 China 972 963 907 961 926 792 770 655 482 395 Europe and Central Asia 36 30 29 32 43 53 57 37 22 10 Latin America and the Caribbean 87 104 92 98 100 102 111 118 92 71 Middle East and North Africa 52 51 54 53 53 57 60 57 53 44 South Asia 811 855 906 959 1,010 1,047 1,069 1,120 1,113 1,125 India 621 651 689 722 760 788 818 848 857 862 Sub-Saharan Africa 288 324 350 389 434 466 503 533 559 562 Region Total 2,585 2,680 2,710 2,864 2,941 2,865 2,937 2,848 2,596 2,471 excluding China 1,613 1,717 1,803 1,903 2,015 2,073 2,168 2,194 2,114 2,077 Source: PovcalNet, World Bank. Note: PPP = purchasing power parity. Gross Domestic Product per Capita Index, 2001-11 Africa East Asia and Pacific 250 250 224 200 200 150 150 125 100 100 100 100 50 50 2001 2011 2001 2011 South Asia Europe and Central Asia 250 250 200 200 172 162 150 150 100 100 100 100 50 50 2001 2011 2001 2011 Latin America and the Caribbean Middle East and North Africa 250 250 200 200 150 128 150 128 100 100 100 100 50 50 2001 2011 2001 2011 Source: World Development Indicators database. World Bank Lending to Borrowers in Africa by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 95 139 183 285 109 23 Environment and Natural Resources Management 212 338 246 520 424 1,005 Financial and Private Sector Development 963 982 1,556 5,022 1,462 1,198 Human Development 1,105 572 1,259 870 744 676 Public Sector Governance 859 1,612 1,131 718 1,042 869 Rule of Law 13 23 12 18 7 22 Rural Development 780 526 2,048 1,557 989 907 Social Development, Gender, and Inclusion 314 275 237 82 131 260 Social Protection and Risk Management 272 169 349 754 251 939 Trade and Integration 450 407 423 655 790 372 Urban Development 735 642 759 955 1,112 1,253 Theme Total 5,797 5,686 8,203 11,437 7,060 7,525 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 370 368 1,249 617 843 739 Education 707 373 720 353 498 220 Energy and Mining 773 939 1,418 4,937 890 1,374 Finance 26 130 75 376 107 95 Health and Other Social Services 687 468 1,004 1,182 591 1,125 Industry and Trade 144 196 290 234 433 332 Information and Communications 146 1 144 55 259 63 Public Administration, Law, and Justice 1,352 1,748 1,602 1,562 1,856 1,874 Transportation 871 987 1,147 1,673 938 351 Water, Sanitation, and Flood Protection 721 478 554 447 646 1,352 Sector Total 5,797 5,686 8,203 11,437 7,060 7,525 Of which IBRD 38 30 362 4,258 56 147 Of which IDA 5,759 5,656 7,841 7,179 7,004 7,379 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in East Asia and Pacific by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 83 784 34 161 345 Environment and Natural Resources Management 565 746 550 827 1,510 781 Financial and Private Sector Development 999 1,133 1,928 1,038 1,029 1,048 Human Development 213 229 819 974 311 466 Public Sector Governance 705 644 1,568 919 1,596 941 Rule of Law 23 35 Rural Development 608 555 718 1,143 1,114 699 Social Development, Gender, and Inclusion 190 197 178 429 153 83 Social Protection and Risk Management 44 99 888 1,000 259 934 Trade and Integration 233 177 176 182 562 273 Urban Development 404 663 544 972 1,268 1,057 Theme Total 4,044 4,468 8,153 7,517 7,997 6,628 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 269 113 201 738 325 395 Education 125 234 941 1,127 164 249 Energy and Mining 118 666 946 643 1,695 508 Finance 230 263 1,009 166 32 537 Health and Other Social Services 133 213 581 778 290 391 Industry and Trade 102 190 754 147 246 90 Information and Communications 10 11 14 28 53 Public Administration, Law, and Justice 888 889 1,474 1,908 2,221 1,988 Transportation 1,555 1,532 1,205 1,155 1,942 1,070 Water, Sanitation, and Flood Protection 624 359 1,030 841 1,056 1,348 Sector Total 4,044 4,468 8,153 7,517 7,997 6,628 Of which IBRD 2,807 2,677 6,905 5,865 6,370 5,431 Of which IDA 1,237 1,791 1,247 1,652 1,627 1,197 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in Europe and Central Asia by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 6 3 693 861 363 616 Environment and Natural Resources Management 398 461 452 666 1,377 547 Financial and Private Sector Development 824 1,296 2,397 3,937 1,338 1,715 Human Development 258 229 1,286 1,350 601 837 Public Sector Governance 329 515 851 1,462 246 949 Rule of Law 230 171 1 27 33 17 Rural Development 150 260 180 513 199 104 Social Development, Gender, and Inclusion 23 24 17 4 88 48 Social Protection and Risk Management 347 125 890 1,430 1,302 355 Trade and Integration 539 498 2,359 208 368 1,206 Urban Development 658 589 236 360 208 201 Theme Total 3,762 4,171 9,363 10,816 6,125 6,595 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 53 126 9 167 121 60 Education 82 67 357 606 220 95 Energy and Mining 338 547 1,547 556 1,870 1,559 Finance 353 312 621 3,137 380 494 Health and Other Social Services 193 216 631 1,092 1,204 1,202 Industry and Trade 396 499 699 456 253 229 Information and Communications 24 9 28 14 Public Administration, Law, and Justice 813 919 2,347 3,267 1,663 1,545 Transportation 712 894 2,912 870 243 1,280 Water, Sanitation, and Flood Protection 822 568 239 657 142 119 Sector Total 3,762 4,171 9,363 10,816 6,125 6,595 Of which IBRD 3,340 3,714 8,978 10,196 5,470 6,233 Of which IDA 422 457 384 620 655 362 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in Latin America and the Caribbean by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 54 132 483 1,657 22 274 Environment and Natural Resources Management 353 665 3,438 1,404 1,266 1,032 Financial and Private Sector Development 499 623 1,570 1,496 1,114 382 Human Development 1,022 445 1,644 3,414 1,553 1,399 Public Sector Governance 520 943 2,181 1,964 776 864 Rule of Law 97 50 1 23 85 75 Rural Development 415 308 532 388 723 816 Social Development, Gender, and Inclusion 175 109 66 163 206 198 Social Protection and Risk Management 419 307 2,853 978 2,454 794 Trade and Integration 300 225 254 395 157 20 Urban Development 697 853 1,010 2,026 1,274 775 Theme Total 4,553 4,660 14,031 13,907 9,629 6,629 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 83 333 1,329 190 213 730 Education 369 525 711 1,351 348 1,038 Energy and Mining 20 267 502 1,340 592 12 Finance 286 250 1,921 868 282 287 Health and Other Social Services 649 437 3,190 2,926 3,089 606 Industry and Trade 236 462 696 324 750 364 Information and Communications 174 1 109 21 Public Administration, Law, and Justice 1,188 851 3,137 2,748 2,039 2,025 Transportation 1,224 1,083 204 3,362 1,120 1,235 Water, Sanitation, and Flood Protection 498 451 2,166 797 1,088 310 Sector Total 4,553 4,660 14,031 13,907 9,629 6,629 Of which IBRD 4,353 4,353 13,829 13,667 9,169 6,181 Of which IDA 200 307 202 240 460 448 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in the Middle East and North Africa by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 35 Environment and Natural Resources Management 180 65 149 174 295 200 Financial and Private Sector Development 167 778 371 2,109 377 308 Human Development 14 17 92 170 181 116 Public Sector Governance 60 208 18 291 197 110 Rule of Law 33 11 139 11 Rural Development 127 53 82 381 418 135 Social Development, Gender, and Inclusion 175 75 21 18 89 109 Social Protection and Risk Management 15 36 33 137 159 249 Trade and Integration 16 17 201 141 109 Urban Development 122 209 756 177 241 241 Theme Total 908 1,470 1,723 3,737 2,065 1,513 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 209 60 119 251 2 Education 14 32 68 78 40 119 Energy and Mining 292 280 676 676 445 Finance 39 500 50 1,485 50 135 Health and Other Social Services 84 27 6 176 234 390 Industry and Trade 10 29 200 16 109 59 Information and Communications 9 45 50 Public Administration, Law, and Justice 62 190 76 452 327 286 Transportation 27 105 390 416 483 4 Water, Sanitation, and Flood Protection 170 298 197 273 520 73 Sector Total 908 1,470 1,723 3,737 2,065 1,513 Of which IBRD 692 1,203 1,551 3,523 1,942 1,433 Of which IDA 216 267 172 214 123 80 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in South Asia by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 11 123 162 1,114 Environment and Natural Resources Management 310 387 250 746 1,230 431 Financial and Private Sector Development 810 1,345 1,873 4,124 2,660 92 Human Development 1,476 788 1,279 1,643 838 1,467 Public Sector Governance 917 424 360 397 661 303 Rule of Law 50 26 2 9 1 Rural Development 1,096 574 739 1,023 2,194 2,781 Social Development, Gender, and Inclusion 373 321 294 256 241 549 Social Protection and Risk Management 550 145 282 708 1,265 231 Trade and Integration 31 69 30 237 622 Urban Development 8 45 161 1,085 410 590 Theme Total 5,632 4,247 5,434 11,334 10,130 6,446 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 734 421 552 787 375 1,208 Education 725 695 648 1,429 464 1,237 Energy and Mining 244 1,481 1,179 1,774 760 1,103 Finance 678 87 559 3,104 46 216 Health and Other Social Services 1,006 247 892 638 1,299 477 Industry and Trade 293 168 167 74 376 278 Information and Communications 3 13 22 166 7 Public Administration, Law, and Justice 1,166 700 855 891 1,567 1,011 Transportation 560 230 403 1,525 3,913 506 Water, Sanitation, and Flood Protection 224 206 179 1,088 1,165 403 Sector Total 5,632 4,247 5,434 11,334 10,130 6,446 Of which IBRD 1,600 1,491 1,286 6,689 3,730 1,158 Of which IDA 4,032 2,756 4,148 4,645 6,400 5,288 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in Africa by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 95 139 183 285 109 23 Environment and Natural Resources Management 212 338 246 520 424 1,005 Financial and Private Sector Development 963 982 1,556 5,022 1,462 1,198 Human Development 1,105 572 1,259 870 744 676 Public Sector Governance 859 1,612 1,131 718 1,042 869 Rule of Law 13 23 12 18 7 22 Rural Development 780 526 2,048 1,557 989 907 Social Development, Gender, and Inclusion 314 275 237 82 131 260 Social Protection and Risk Management 272 169 349 754 251 939 Trade and Integration 450 407 423 655 790 372 Urban Development 735 642 759 955 1,112 1,253 Theme Total 5,797 5,686 8,203 11,437 7,060 7,525 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 370 368 1,249 617 843 739 Education 707 373 720 353 498 220 Energy and Mining 773 939 1,418 4,937 890 1,374 Finance 26 130 75 376 107 95 Health and Other Social Services 687 468 1,004 1,182 591 1,125 Industry and Trade 144 196 290 234 433 332 Information and Communications 146 1 144 55 259 63 Public Administration, Law, and Justice 1,352 1,748 1,602 1,562 1,856 1,874 Transportation 871 987 1,147 1,673 938 351 Water, Sanitation, and Flood Protection 721 478 554 447 646 1,352 Sector Total 5,797 5,686 8,203 11,437 7,060 7,525 Of which IBRD 38 30 362 4,258 56 147 Of which IDA 5,759 5,656 7,841 7,179 7,004 7,379 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in East Asia and Pacific by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 83 784 34 161 345 Environment and Natural Resources Management 565 746 550 827 1,510 781 Financial and Private Sector Development 999 1,133 1,928 1,038 1,029 1,048 Human Development 213 229 819 974 311 466 Public Sector Governance 705 644 1,568 919 1,596 941 Rule of Law 23 35 Rural Development 608 555 718 1,143 1,114 699 Social Development, Gender, and Inclusion 190 197 178 429 153 83 Social Protection and Risk Management 44 99 888 1,000 259 934 Trade and Integration 233 177 176 182 562 273 Urban Development 404 663 544 972 1,268 1,057 Theme Total 4,044 4,468 8,153 7,517 7,997 6,628 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 269 113 201 738 325 395 Education 125 234 941 1,127 164 249 Energy and Mining 118 666 946 643 1,695 508 Finance 230 263 1,009 166 32 537 Health and Other Social Services 133 213 581 778 290 391 Industry and Trade 102 190 754 147 246 90 Information and Communications 10 11 14 28 53 Public Administration, Law, and Justice 888 889 1,474 1,908 2,221 1,988 Transportation 1,555 1,532 1,205 1,155 1,942 1,070 Water, Sanitation, and Flood Protection 624 359 1,030 841 1,056 1,348 Sector Total 4,044 4,468 8,153 7,517 7,997 6,628 Of which IBRD 2,807 2,677 6,905 5,865 6,370 5,431 Of which IDA 1,237 1,791 1,247 1,652 1,627 1,197 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in Europe and Central Asia by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 6 3 693 861 363 616 Environment and Natural Resources Management 398 461 452 666 1,377 547 Financial and Private Sector Development 824 1,296 2,397 3,937 1,338 1,715 Human Development 258 229 1,286 1,350 601 837 Public Sector Governance 329 515 851 1,462 246 949 Rule of Law 230 171 1 27 33 17 Rural Development 150 260 180 513 199 104 Social Development, Gender, and Inclusion 23 24 17 4 88 48 Social Protection and Risk Management 347 125 890 1,430 1,302 355 Trade and Integration 539 498 2,359 208 368 1,206 Urban Development 658 589 236 360 208 201 Theme Total 3,762 4,171 9,363 10,816 6,125 6,595 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 53 126 9 167 121 60 Education 82 67 357 606 220 95 Energy and Mining 338 547 1,547 556 1,870 1,559 Finance 353 312 621 3,137 380 494 Health and Other Social Services 193 216 631 1,092 1,204 1,202 Industry and Trade 396 499 699 456 253 229 Information and Communications 24 9 28 14 Public Administration, Law, and Justice 813 919 2,347 3,267 1,663 1,545 Transportation 712 894 2,912 870 243 1,280 Water, Sanitation, and Flood Protection 822 568 239 657 142 119 Sector Total 3,762 4,171 9,363 10,816 6,125 6,595 Of which IBRD 3,340 3,714 8,978 10,196 5,470 6,233 Of which IDA 422 457 384 620 655 362 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in Latin America and the Caribbean by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 54 132 483 1,657 22 274 Environment and Natural Resources Management 353 665 3,438 1,404 1,266 1,032 Financial and Private Sector Development 499 623 1,570 1,496 1,114 382 Human Development 1,022 445 1,644 3,414 1,553 1,399 Public Sector Governance 520 943 2,181 1,964 776 864 Rule of Law 97 50 1 23 85 75 Rural Development 415 308 532 388 723 816 Social Development, Gender, and Inclusion 175 109 66 163 206 198 Social Protection and Risk Management 419 307 2,853 978 2,454 794 Trade and Integration 300 225 254 395 157 20 Urban Development 697 853 1,010 2,026 1,274 775 Theme Total 4,553 4,660 14,031 13,907 9,629 6,629 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 83 333 1,329 190 213 730 Education 369 525 711 1,351 348 1,038 Energy and Mining 20 267 502 1,340 592 12 Finance 286 250 1,921 868 282 287 Health and Other Social Services 649 437 3,190 2,926 3,089 606 Industry and Trade 236 462 696 324 750 364 Information and Communications 174 1 109 21 Public Administration, Law, and Justice 1,188 851 3,137 2,748 2,039 2,025 Transportation 1,224 1,083 204 3,362 1,120 1,235 Water, Sanitation, and Flood Protection 498 451 2,166 797 1,088 310 Sector Total 4,553 4,660 14,031 13,907 9,629 6,629 Of which IBRD 4,353 4,353 13,829 13,667 9,169 6,181 Of which IDA 200 307 202 240 460 448 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in the Middle East and North Africa by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 35 Environment and Natural Resources Management 180 65 149 174 295 200 Financial and Private Sector Development 167 778 371 2,109 377 308 Human Development 14 17 92 170 181 116 Public Sector Governance 60 208 18 291 197 110 Rule of Law 33 11 139 11 Rural Development 127 53 82 381 418 135 Social Development, Gender, and Inclusion 175 75 21 18 89 109 Social Protection and Risk Management 15 36 33 137 159 249 Trade and Integration 16 17 201 141 109 Urban Development 122 209 756 177 241 241 Theme Total 908 1,470 1,723 3,737 2,065 1,513 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 209 60 119 251 2 Education 14 32 68 78 40 119 Energy and Mining 292 280 676 676 445 Finance 39 500 50 1,485 50 135 Health and Other Social Services 84 27 6 176 234 390 Industry and Trade 10 29 200 16 109 59 Information and Communications 9 45 50 Public Administration, Law, and Justice 62 190 76 452 327 286 Transportation 27 105 390 416 483 4 Water, Sanitation, and Flood Protection 170 298 197 273 520 73 Sector Total 908 1,470 1,723 3,737 2,065 1,513 Of which IBRD 692 1,203 1,551 3,523 1,942 1,433 Of which IDA 216 267 172 214 123 80 Note: Numbers may not add to totals because of rounding. World Bank Lending to Borrowers in South Asia by Theme and Sector | Fiscal 2007–2012 millions of dollars View Excel Version Theme 2007 2008 2009 2010 2011 2012 Economic Management 11 123 162 1,114 Environment and Natural Resources Management 310 387 250 746 1,230 431 Financial and Private Sector Development 810 1,345 1,873 4,124 2,660 92 Human Development 1,476 788 1,279 1,643 838 1,467 Public Sector Governance 917 424 360 397 661 303 Rule of Law 50 26 2 9 1 Rural Development 1,096 574 739 1,023 2,194 2,781 Social Development, Gender, and Inclusion 373 321 294 256 241 549 Social Protection and Risk Management 550 145 282 708 1,265 231 Trade and Integration 31 69 30 237 622 Urban Development 8 45 161 1,085 410 590 Theme Total 5,632 4,247 5,434 11,334 10,130 6,446 Sector 2007 2008 2009 2010 2011 2012 Agriculture, Fishing, and Forestry 734 421 552 787 375 1,208 Education 725 695 648 1,429 464 1,237 Energy and Mining 244 1,481 1,179 1,774 760 1,103 Finance 678 87 559 3,104 46 216 Health and Other Social Services 1,006 247 892 638 1,299 477 Industry and Trade 293 168 167 74 376 278 Information and Communications 3 13 22 166 7 Public Administration, Law, and Justice 1,166 700 855 891 1,567 1,011 Transportation 560 230 403 1,525 3,913 506 Water, Sanitation, and Flood Protection 224 206 179 1,088 1,165 403 Sector Total 5,632 4,247 5,434 11,334 10,130 6,446 Of which IBRD 1,600 1,491 1,286 6,689 3,730 1,158 Of which IDA 4,032 2,756 4,148 4,645 6,400 5,288 Note: Numbers may not add to totals because of rounding. World Bank Lending to MDG-Related Operationsa | Fiscal 2012 View Excel Version Number of Operationsa Commitments (millions of dollars) IBRD IDA IBRD/IDA IBRD IDA IBRD/IDA Eradicate extreme poverty and hunger 12 37 49 2,696 3,406 6,101 Achieve universal primary education 11 15 26 3,131 1,993 5,124 Promote gender equality and empower women 15 30 45 4,047 4,132 8,179 Reduce child mortality 2 11 13 611 567 1,178 Improve maternal health 4 9 13 1,511 514 2,025 Combat HIV/AIDS, malaria, tuberculosis, and other diseases 0 8 8 0 241 241 Ensure environmental sustainability 45 78 123 7,470 9,979 17,450 Develop a global partnership for development 48 77 125 15,224 4,671 19,895 Note: MDGs = Millennium Development Goals a. Includes operations that are expected to have an impact on MDGs. Since operations are multisectoral in nature, parts of operations may also support non-MDG-related goals. Active Project Portfolio by Region, Theme, and Sector | June 30, 2012 View Excel Version Net commitments Region Billions of dollars Percent Africa 40.2 23.2 East Asia and Pacific 30.3 17.5 Europe and Central Asia 23.0 13.3 Latin America and the Caribbean 33.2 19.2 Middle East and North Africa 8.4 4.9 South Asia 37.8 21.9 Other 0.04 0.0 Total 173.0 100.0 Net commitments Theme Billions of dollars Percent Economic Management 1.6 0.9 Environment and Natural Resources Management 20.2 11.7 Financial and Private Sector Development 35.7 20.6 Human Development 20.0 11.5 Public Sector Governance 14.8 8.6 Rule of Law 1.0 0.6 Rural Development 25.0 14.4 Social Development, Gender, and Inclusion 6.4 3.7 Social Protection and Risk Management 14.6 8.4 Trade and Integration 10.9 6.3 Urban Development 22.9 13.3 Total 173.0 100.0 Net commitments Sector Billions of dollars Percent Agriculture, Fishing, and Forestry 13.2 7.7 Education 10.9 6.3 Energy and Mining 28.1 16.2 Finance 7.8 4.5 Health and Other Social Services 20.1 11.6 Industry and Trade 5.2 3.0 Information and Communications 1.1 0.7 Public Administration, Law, and Justice 28.7 16.6 Transportation 37.6 21.7 Water, Sanitation, and Flood Protection 20.3 11.7 Total 173.0 100.0 Note: Portfolio of projects includes IBRD/IDA operations as well as other trust funded operations (that is, special financing operations, global enviornment facility operations, large recipient-excuted operations, Montreal protocol operations) that are implemented by the World Bank. Africa: World Bank Commitments, Disbursements, and Net Transfers l Fiscal 2007–2012 View Excel Version millions of dollars Nigeria Ethiopia Kenya Total region Item 2012 2007-2012 2012 2007-2012 2012 2007-2012 2012 2007-2012 IBRD and IDA commitments 1,345 5,670 920 4,926 878 2,968 7,525 45,709 Undisbursed balance 3,262 3,262 2,212 2,212 2,372 2,372 24,580 24,580 Gross disbursements 736 3,322 725 3,889 266 1,168 6,235 30,942 Repayments 98 873 8 23 106 499 462 3,865 Net disbursements 638 2,449 718 3,866 160 669 5,773 27,077 Interest and charges 30 194 16 59 27 142 257 1,897 Net transfers 608 2,255 701 3,807 133 527 5,515 25,180 Note: The table shows the three countries with the largest lending commitments in the region over the past two fiscal years (2011 and 2012). IBRD and IDA commitments do not include HIPC grants. Effective fiscal 2005, IBRD and IDA commitments include guarantees and guarantee facilities. Commitments to regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved in the regional project. However, undisbursed balances, gross disbursements, repayments, net disbursements, interest and charges, and net transfers are reported or classified under the individual countries because the individual amounts are covered by separate loan, credit, grant, or guarantee agreements and are guaranteed by the individual countries. Disbursements are made to the individual countries, and principal, interest, and charges are billed to the individual countries. Repayments are made by the individual countries and also include payments from donors under debt service trust funds or debt relief under HIPC and MDRI. Numbers may not add to totals because of rounding. East Asia and Pacific: World Bank Commitments, Disbursements, and Net Transfers l Fiscal 2007–2012 View Excel Version millions of dollars Indonesia Vietnam China Total region Item 2012 2007–2012 2012 2007–2012 2012 2007–2012 2012 2007–2012 IBRD and IDA commitments 3,246 15,154 1,149 8,680 1,260 9,928 6,628 38,807 Undisbursed balance 4,657 4,657 5,384 5,384 6,675 6,675 19,495 19,495 Gross disbursements 1,543 9,922 1,406 6,114 1,362 8,006 5,454 27,582 Repayments 643 6,504 69 277 2,971 9,559 4,431 22,448 Net disbursements 900 3,418 1,336 5,837 -1,609 -1,553 1,023 5,133 Interest and charges 279 2,045 71 285 192 2,631 643 6,272 Net transfers 621 1,373 1,265 5,553 -1,802 -4,184 379 -1,139 Note: The table shows the three countries with the largest lending commitments in the region over the past two fiscal years (2011 and 2012). IBRD and IDA commitments do not include HIPC grants. Effective fiscal 2005, IBRD and IDA commitments include guarantees and guarantee facilities. Commitments to regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved in the regional project. However, undisbursed balances, gross disbursements, repayments, net disbursements, interest and charges, and net transfers are reported or classified under the individual countries, because the individual amounts are covered by separate loan, credit, grant, or guarantee agreements and are guaranteed by the individual countries. Disbursements are made to the individual countries, and principal, interest, and charges are billed to the individual countries. Repayments are made by the individual countries and also include payments from donors under debt service trust funds or debt relief under HIPC and MDRI. Numbers may not add to totals because of rounding. Europe and Central Asia: World Bank Commitments, Disbursements, and Net Transfers I Fiscal 2007–2012 View Excel Version millions of dollars Romania Turkey Poland Total region Item 2012 2007–2012 2012 2007–2012 2012 2007–2012 2012 2007–2012 IBRD and IDA commitments 1,894 3,890 1,100 9,896 991 6,171 6,595 40,832 Undisbursed balance 2,019 2,019 1,876 1,876 1,096 1,096 14,071 14,071 Gross disbursements 835 2,762 1,595 11,210 1,094 5,469 6,136 33,280 Repayments 314 1,574 776 4,185 198 1,323 2,876 17,454 Net disbursements 521 1,187 819 7,025 896 4,146 3,260 15,826 Interest and charges 65 561 224 1,719 120 540 727 6,063 Net transfers 456 626 595 5,307 776 3,606 2,533 9,763 Note: The table shows the three countries with the largest lending commitments in the region over the past two fiscal years (2011 and 2012). IBRD and IDA commitments do not include HIPC grants. Effective fiscal 2005, IBRD and IDA commitments include guarantees and guarantee facilities. Commitments to regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved in the regional project. However, undisbursed balances, gross disbursements, repayments, net disbursements, interest and charges, and net transfers are reported or classified under the individual countries, because the individual amounts are covered by separate loan, credit, grant, or guarantee agreements and are guaranteed by the individual countries. Disbursements are made to the individual countries, and principal, interest, and charges are billed to the individual countries. Repayments are made by the individual countries and also include payments from donors under debt service trust funds or debt relief under HIPC and MDRI. Numbers may not add to totals because of rounding. Latin America and the Caribbean: World Bank Commitments, Disbursements, and Net Transfers l Fiscal 2007–2012 View Excel Version millions of dollars Brazil Mexico Argentina Total region Item 2012 2007–2012 2012 2007–2012 2012 2007–2012 2012 2007–2012 IBRD and IDA commitments 3,208 15,294 1,458 14,769 0 6,549 6,629 53,409 Undisbursed balance 5,511 5,511 3,077 3,077 3,855 3,855 17,682 17,682 Gross disbursements 2,772 11,828 1,907 12,918 868 4,064 7,077 42,687 Repayments 3,063 11,570 350 8,481 649 5,086 5,245 31,895 Net disbursements -291 258 1,557 4,437 219 -1,022 1,832 10,792 Interest and charges 158 2,104 244 1,516 136 1,310 1,053 8,306 Net transfers -449 -1,846 1,313 2,920 83 -2,332 779 2,486 Note: The table shows the three countries with the largest lending commitments in the region over the past two fiscal years (2011 and 2012). IBRD and IDA commitments do not include HIPC grants. Effective fiscal 2005, IBRD and IDA commitments include guarantees and guarantee facilities. Commitments to regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved in the regional project. However, undisbursed balances, gross disbursements, repayments, net disbursements, interest and charges, and net transfers are reported or classified under the individual countries, because the individual amounts are covered by separate loan, credit, grant, or guarantee agreements and are guaranteed by the individual countries. Disbursements are made to the individual countries, and principal, interest, and charges are billed to the individual countries. Repayments are made by the individual countries and also include payments from donors under debt service trust funds or debt relief under HIPC and MDRI. Numbers may not add to totals because of rounding. Middle East and North Africa: World Bank Commitments, Disbursements, and Net Transfers l Fiscal 2007–2012 View Excel Version millions of dollars Morocco Egypt, Arab Rep. Tunisia Total region Item 2012 2007–2012 2012 2007–2012 2012 2007–2012 2012 2007–2012 IBRD and IDA commitments 666 2,559 440 5,112 50 1,160 1,513 11,416 Undisbursed balance 1,003 1,003 3,222 3,222 314 314 5,914 5,914 Gross disbursements 638 2,072 404 2,984 525 1,311 2,003 9,436 Repayments 202 1,444 139 819 141 1,244 802 5,363 Net disbursements 436 628 265 2,165 385 68 1,201 4,073 Interest and charges 71 519 51 340 45 346 213 1,702 Net transfers 366 109 214 1,825 340 -278 988 2,371 Note: The table shows the three countries with the largest lending commitments in the region over the past two fiscal years (2011 and 2012). IBRD and IDA commitments do not include HIPC grants. Effective fiscal 2005, IBRD and IDA commitments include guarantees and guarantee facilities. Commitments to regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved in the regional project. However, undisbursed balances, gross disbursements, repayments, net disbursements, interest and charges, and net transfers are reported or classified under the individual countries, because the individual amounts are covered by separate loan, credit, grant, or guarantee agreements and are guaranteed by the individual countries. Disbursements are made to the individual countries, and principal, interest, and charges are billed to the individual countries. Repayments are made by the individual countries and also include payments from donors under debt service trust funds or debt relief under HIPC and MDRI. Numbers may not add to totals because of rounding. South Asia: World Bank Commitments, Disbursements, and Net Transfers l Fiscal 2007–2012 View Excel Version millions of dollars India Pakistan Bangladesh Total region Item 2012 2007–2012 2012 2007–2012 2012 2007–2012 2012 2007–2012 IBRD and IDA commitments 3,178 26,132 1,790 6,783 866 6,063 6,446 43,223 Undisbursed balance 16,745 16,745 2,807 2,807 4,049 4,049 25,678 25,678 Gross disbursements 2,278 15,431 658 4,701 494 3,040 3,941 26,474 Repayments 1,564 7,625 347 2,413 264 1,365 2,295 12,017 Net disbursements 714 7,806 311 2,287 229 1,675 1,646 14,456 Interest and charges 305 2,443 108 816 83 468 532 3,933 Net transfers 409 5,364 203 1,472 146 1,207 1,114 10,524 Note: The table shows the three countries with the largest lending commitments in the region over the past two fiscal years (2011 and 2012). IBRD and IDA commitments do not include HIPC grants. Effective fiscal 2005, IBRD and IDA commitments include guarantees and guarantee facilities. Commitments to regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved in the regional project. However, undisbursed balances, gross disbursements, repayments, net disbursements, interest and charges, and net transfers are reported or classified under the individual countries, because the individual amounts are covered by separate loan, credit, grant, or guarantee agreements and are guaranteed by the individual countries. Disbursements are made to the individual countries, and principal, interest, and charges are billed to the individual countries. Repayments are made by the individual countries and also include payments from donors under debt service trust funds or debt relief under HIPC and MDRI. Numbers may not add to totals because of rounding. Projects Approved for IBRD and IDA Assistance in Fiscal 2012, by Region and Country View Excel Version millions of dollars IBRD IDA Total Region and Country Operations Amount Operations Amount Operations Amount Africa Benin 3 86 3 86 Burkina Faso 4 304 4 304 Burundi 2 50 2 50 Cameroon 3 244 3 244 Cape Verde 1 54 12 1 66 Central African Republic 1 17 1 17 Chad 1 25 1 25 Congo, Rep. 2 15 2 15 Côte d'Ivoire 3 300 3 300 Ethiopia 5 920 5 920 Gambia, The 1 6 1 6 Ghana 7 410 7 410 Guinea 2 53 2 53 Kenya 5 878 5 878 Lesotho 1 23 1 23 Liberia 4 47 4 47 Madagascar 1 6 1 6 Malawi 3 235 3 235 Mali 2 53 2 53 Mauritius 2 35 2 35 Mozambique 4 377 4 377 Niger 3 115 3 115 Nigeria 5 1,345 5 1345 Rwanda 4 250 4 250 São Tomé and Príncipe 1 4 1 4.2 Senegal 2 66 2 65.6 Sierra Leone 3 67 3 67 Tanzania 3 420 3 420 Togo 2 28 2 28 Uganda 2 235 2 235 Zambia 2 80 2 80 Africa (regional) 1 58 7 708 8 766 Total 4 147 88 7,379 92 7,525 East Asia and Pacific China 12 1,260 12 1,260 Indonesia 5 3,246 5 3,246 Kiribati 1 23 1 23 Lao PDR 1 9 1 9 Mongolia 1 15 1 15 Philippines 3 825 3 825 Samoa 1 8 1 8 Solomon Islands 1 2 1 2 Tonga 2 36 2 36 Tuvalu 1 12 1 12 Vietnam 1 100 6 1,049 7 1,149 East Asia and Pacific (regional) 2 43 2 43 Total 21 5,431 16 1,197 37 6,628 IBRD IDA Total Region and Country Operations Amount Operations Amount Operations Amount Europe and Central Asia Albania 2 72 2 72 Armenia 3 63 1 61 4 124 Azerbaijan 1 50 1 50 Bosnia and Herzegovina 1 120 1 40 2 160 Croatia 2 91 2 91 Georgia 2 90 2 123 4 213 Kazakhstan 1 1,068 1 1,068 Kyrgyz Republic 3 59 3 59 Macedonia, FYR 2 185 2 185 Moldova 3 29 3 29 Montenegro 3 180 3 180 Poland 1 991 1 991 Romania 2 1,894 2 1,894 Tajikistan 4 50 4 50 Turkey 2 1,100 2 1,100 Ukraine 1 150 1 150 Uzbekistan 1 180 1 180 Total 24 6,233 14 362 38 6,595 Latin America and the Caribbean Bolivia 2 79 2 79 Brazil 11 3,208 11 3,208 Chile 1 40 1 40 Colombia 3 660 3 660 Dominican Republic 1 90 1 90 El Salvador 2 140 2 140 Grenada 1 5 1 5 Haiti 3 170 3 170 Honduras 2 104 2 104 Jamaica 1 100 1 100 Mexico 6 1,458 6 1,458 Nicaragua 3 65 3 65 Panama 1 66 1 66 Paraguay 1 100 1 100 Uruguay 3 319 3 319 Latin America and the Caribbean (regional) 1 25 1 25 Total 30 6,181 12 448 42 6,629 Middle East and North Africa Djibouti 4 19 4 19 Egypt, Arab Rep. 2 440 2 440 Jordan 1 250 1 250 Lebanon 27 27 Morocco 5 666 5 666 Tunisia 1 50 1 50 Yemen, Rep. 1 61 1 61 Total 9 1,433 5 80 14 1,513 South Asia Afghanistan 2 144 2 144 Bangladesh 5 866 5 866 India 2 445 10 2,733 12 3,178 Nepal 3 143 3 143 Pakistan 2 500 3 1,290 5 1,790 Sri Lanka 1 213 2 111 3 324 Total 5 1,158 25 5,288 30 6,446 IBRD IDA Total Region and Country Operations Amount Operations Amount Operations Amount Overall Total 93 20,582 160 14,753 253 35,335 Note: Data includes guarantees. Supplemental and additional financing operations (except for projects scaled up through additional financing) are not counted as separate lending operations, although they are included in the amount. Joint IBRD-IDA operations are counted only once, as IBRD operations. A blank space indicates zero; OECS = Organization of Eastern Caribbean States. World Bank Development Policy Operations | Fiscal 2012 View Excel Version millions of dollars Country Project ID Operation IBRD IDA Total Armenia P122195 Third Development Policy Operation 30 50 80 Benin P122803 Seventh Poverty Reduction Support Credit 30 30 Brazil P106753 Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan 500 500 Brazil P126351 Bahia Inclusion and Economic Development Development Policy Loan 700 700 Brazil P126449 Piaui Green Growth and Inclusion Development Policy Loan 350 350 Burkina Faso P122805 Eleventh Poverty Reduction Support Credit 125 125 Burkina Faso P126207 First Growth and Competitiveness Credit 90 90 Burundi P119324 Fifth Economic Reform Support Grant 35 35 Cape Verde P122669 Third Development Policy Loan, Seventh Poverty Reduction Support Credit 12 12 Colombia P123267 First Programmatic Fiscal Sustainability and Growth Resilience Development Policy Loan 300 300 Côte d'Ivoire P122800 Post-Conflict Reconstruction and Recovery Grant 150 150 Dominican Republic P125806 Third Performance and Accountability of Social Sectors Development Policy Loan 70 70 Gambia, The P123679 Budget Support Development Policy Loan 6 6 Georgia P122202 Third Development Policy Operation 40 40 Ghana P122808 Fourth Agriculture Development Policy Operation 50 50 Ghana P127314 Eigth Poverty Reduction Support Grant 100 100 Honduras P127331 First Programmatic Reducing Vulnerabilities for Growth Development Policy Credit 86 86 Indonesia P122982 Eigth Development Policy Loan 400 400 Indonesia P130048 Program for Economic Resilience, Investment and Social Assistance 2,000 2,000 Jamaica P123241 Second Programmatic Debt and Fiscal Sustainability Development Policy Loan 100 100 Jordan P124441 First Programmatic Development Policy Loan 250 250 Kyrgyz Republic P125425 Economic Recovery Support Operation 30 30 Liberia P123196 Fourth Reengagement and Reform Support Program 5 5 Mauritius P125694 First Public Sector Performance Development Policy Loan 20 20 Mauritius P126903 Private Sector Competitiveness Development Policy Loan 15 15 Mexico P120170 Strengthening Social Resilience to Climate Change 301 301 Mexico P123505 Fiscal Risk Management Development Policy Loan 301 301 Mexico P126297 Second Programmatic Upper Secondary Education Development Policy Loan 301 301 Montenegro P116787 Programmatic Financial Sector Development Policy Loan 85 85 Morocco P120566 First Skills and Employment Development Policy Loan 100 100 Mozambique P126226 Eigth Poverty Reduction Support Credit 110 110 Niger P125272 First Shared Growth Credit 50 50 Niger P129793 Second Growth Policy Reform Credit Supplemental Financing 15 15 Nigeria P123353 Edo State First Development Policy Operation 75 75 Panama P122738 Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option 66 66 Paraguay P117043 Public Sector Development Policy Loan 100 100 Philippines P125943 Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option 500 500 Country Project ID Operation IBRD IDA Total Poland P127433 First Development Policy Loan 991 991 Romania P122222 Third Development Policy Loan 561 561 Romania P130051 Development Policy Loan with a Deferred Drawdown Option 1,333 1,333 Rwanda P122247 Eigth Poverty Reduction Support Financing 125 125 Rwanda P126877 First Support to Social Protection System 40 40 São Tomé and Príncipe P128023 First Governance and Competitiveness Development Policy Operation 4 4 Sierra Leone P126355 Fifth Governance Reform and Growth Credit 24 24 Solomon Islands P126740 Solomon Islands First Development Policy Operation 2 2 Tanzania P112762 Ninth Poverty Reduction Support Credit (1st of 3 in series) 100 100 Togo P126897 Fifth Economic Recovery and Governance Credit 14 14 Tonga P126453 Economic Recovery Operation 9 9 Turkey P121651 Third Environmental Sustainability and Energy Sector Development Policy Loan 600 600 Uganda P097325 Ninth Poverty Reduction Support Credit (2nd of 3 in series) 100 100 Uruguay P123242 Second Programmatic Public Sector, Competitiveness, and Social Inclusion 260 260 Development Policy Loan with Drawdown Option Vietnam P111183 Tenth Poverty Reduction Support Credit 150 150 Vietnam P122667 Climate Change Development Policy Loan 70 70 Vietnam P124174 Second Power Sector Reform Development Policy Operation 100 100 200 Zambia P126349 Third Poverty Reduction Support Credit 30 30 Total 10,333 1,827 12,160 Note: Numbers may not add to totals because of rounding. World Bank Development Policy Commitments | Fiscal 2007–2012 View Excel Version 2007 2008 2009 2010 2011 2012 Millions Millions Millions Millions Millions Millions Region of dollars Percent of dollars Percent of dollars Percent of dollars Percent of dollars Percent of dollars Percent Africa 970 15 1,780 27 1,613 9 1,503 7 1,357 12 1,325 11 East Asia and Pacific 1,085 17 975 15 3,690 20 2,477 11 2,545 22 3,331 27 Europe and Central Asia 975 16 786 12 4,810 26 8,027 35 2,766 24 3,720 31 Latin America and the Caribbean 1,388 22 1,427 21 7,172 39 6,820 30 3,613 31 3,434 28 Middle East and North Africa 200 3 751 11 383 2 1,710 7 1,100 10 350 3 South Asia 1,662 26 920 14 685 4 2,421 11 175 2 0 Total 6,280 100 6,639 100 18,352 100 22,958 100 11,556 100 12,160 100 IBRD/IDA Development Policy Loan Commitment IBRD Commitment 3,635 58 3,967 60 15,532 85 20,588 90 9,524 82 10,333 85 IDA Commitment 2,645 42 2,672 40 2,820 15 2,370 10 2,032 18 1,827 15 Total 6,280 100 6,639 100 18,352 100 22,958 100 11,556 100 12,160 100 Total World Bank Lending Commitments IBRD Commitment 12,829 13,468 32,911 44,197 26,737 20,582 IDA Commitment 11,867 11,235 13,995 14,550 16,269 14,753 Total 24,696 24,702 46,906 58,747 43,006 35,335 Share of Development Policy Commitments 25 27 39 39 27 34 Note: Numbers may not add to totals because of rounding. World Bank Expenditures by Program l Fiscal 2007–2012 View Excel Version millions of dollars Program 2007 2008 2009 2010 2011 2012 Regional 1,001.8 1,068.1 1,104.5 1,163.3 1,162.2 1,202.0 Networks 180.0 194.3 207.4 215.4 225.9 231.3 Other operational programs 32.7 35.7 40.4 39.9 39.6 43.6 Development economics and World Bank Institute 116.8 117.4 116.3 117.6 116.1 115.7 Financial 163.6 172.1 187.7 199.8 199.4 200.9 Administrativea 299.3 289.2 320.8 321.4 334.0 405.2 Corporate management and services 127.2 128.9 142.5 150.5 147.2 151.8 Less: Overheads, benefits, and contingenciesa,d (120.6) (135.8) (162.2) (122.5) (108.5) (179.2) Administrative budget 1,800.7 1,869.8 1,957.4 2,085.3 2,115.9 2,171.2 Less: Reimbursements and fee incomee (238.7) (244.2) (284.5) (310.9) (319.9) (347.8) Net administrative budget 1,562.1 1,625.6 1,673.0 1,774.4 1,796.0 1,823.4 Staff Retirement Accountb 224.9 223.1 187.7 260.0 268.6 306.7 Development Grant Facilityc 171.3 175.6 199.7 170.1 149.4 135.9 Corporate Secretariat/Board 87.1 87.0 88.4 92.0 92.0 95.4 Operations Evaluation 23.8 24.5 24.4 24.9 32.2 32.5 Less: Reimbursements and fee incomee (16.3) (20.1) (24.5) (20.2) (25.1) (29.9) Total administrative budget 2,052.9 2,115.7 2,148.6 2,301.1 2,313.0 2,364.2 NOTE: The FY12 expenditures reflect the current work program remaps. a. GSD's institutional expenses, previously recorded as "Overheads, Benefits, and Contingencies," are being shown as part of GSD's expenses and are included in the "Administrative" line starting with fiscal 2007. Two internal business simplification policy changes affect this figure starting FY12: (i) IMT depreciation was remapped from units to Central Accounts ($23 million), and (ii) Basic IT Package revenues were moved to Central Accounts ($79 million). Corresponding offsets appear in unit expenditures (primarily in Finance, Administrative, and Corporate units). b. Includes Staff Retirement Plan (SRP), Supplemental SRP, and Retired Staff Benefit Plan contributions. c. State and Peace Building Fund added to Development Grant Facility for FY09, FY10, FY11, and FY12. d. HQ Real Estate has been added to "Overheads, benefits, and contingencies" in FY10, FY11, and FY12. e. Reimbursables related to the Board, which were previously reported under the Net administrative budget, are now being reported under Corporate Secretariat/Board. World Bank Financing to Climate Change Adaptation and Mitigation | Fiscal 2012 World Bank Financing Contributing to Climate Change Adaptation Total Adaptation Financing: $4.6 billion of which IBRD: $2.3 billion 29% of which IDA: $2.3 billion 29% Agriculture, Fishing, and Forestry Energy and Mining Finance Health and Other Social Services <1% Industry and Trade 12% Public Administration, Law, and Justice Transportation 18% 1% Water, Sanitation, and Flood Protection <1% 10% World Bank Financing Contributing to Climate Change Mitigation Total Mitigation Financing: $7.1 billion of which IBRD: $4.8 billion 3% of which IDA: $2.3 billion 12% Agriculture, Fishing, and Forestry 19% Energy and Mining Health and Other Social Services Industry and Trade 7% 1% Information and Communications 2% <1% Public Administration, Law, and Justice 56% Transportation Water, Sanitation, and Flood Protection IBRD and IDA Cumulative Lending since Fiscal 1990 by Theme and Sector and by Region | June 30, 2012 View Excel Version millions of dollars IBRD commitments, by regiona Latin America Middle East East Asia Europe and and and Africa and Pacific Central Asia the Caribbean North Africa South Asia Total Theme Economic Management 236 2,055 7,607 10,640 725 1,480 22,742 Environment and Natural Resources Management 890 15,021 7,938 14,808 3,014 4,503 46,174 Financial and Private Sector Development 4,353 27,279 32,406 25,345 9,367 16,205 114,957 Human Develoment 330 5,378 7,557 18,796 2,140 1,054 35,255 Public Sector Governance 547 9,977 10,476 18,544 2,271 1,941 43,757 Rule of Law 25 534 1,887 1,960 602 331 5,340 Rural Development 475 10,470 4,685 9,578 3,059 4,196 32,462 Social Development, Gender, and Inclusion 90 2,369 982 4,337 824 484 9,085 Social Protection and Risk Management 83 5,061 8,905 16,743 1,378 580 32,751 Trade and Integration 402 3,602 8,669 4,777 1,374 1,186 20,011 Urban Development 574 10,896 5,292 13,302 3,623 4,132 37,820 Theme Total 8,006 92,643 96,406 138,830 28,378 36,091 400,354 Sector Agriculture, Fishing, and Forestry 288 5,656 2,969 7,413 2,797 2,776 21,898 Education 181 5,712 3,350 12,523 1,601 167 23,535 Energy and Mining 4,759 15,555 16,590 6,691 3,544 11,471 58,610 Finance 133 9,549 12,458 16,105 5,019 5,188 48,452 Health and Other Social Services 221 3,981 8,529 22,050 1,875 379 37,034 Industry and Trade 446 6,923 11,702 6,843 3,158 1,346 30,418 Information and Communications 275 1,709 774 807 374 122 4,061 Public Administration, Law, and Justice 734 13,499 23,955 36,499 3,570 2,867 81,124 Transportation 398 19,575 12,006 19,016 3,100 9,674 63,769 Water, Sanitation, and Flood Protection 570 10,485 4,074 10,882 3,339 2,101 31,452 Sector Total 8,006 92,643 96,406 138,830 28,378 36,091 400,354 IDA commitments, by regiona Latin America Middle East East Asia Europe and and and Africa and Pacific Central Asia the Caribbean North Africa South Asia Total Theme Economic Management 3,324 477 462 482 32 1,309 6,086 Environment and Natural Resources Management 5,382 3,162 696 326 401 4,401 14,369 Financial and Private Sector Development 17,809 3,537 2,655 1,085 510 6,697 32,294 Human Development 11,883 2,959 912 717 551 13,987 31,010 Public Sector Governance 14,479 1,904 1,158 999 298 5,691 24,527 Rule of Law 808 218 370 165 18 287 1,866 Rural Development 12,409 5,794 1,134 1,187 802 12,204 33,529 Social Development, Gender, and Inclusion 5,039 1,607 473 446 734 7,016 15,316 Social Protection and Risk Management 5,437 1,446 918 845 383 5,550 14,578 Trade and Integration 5,757 709 412 244 12 1,581 8,716 Urban Development 9,952 3,020 884 471 400 2,674 17,402 Theme Total 92,278 24,833 10,073 6,967 4,141 61,399 199,692 Sector Agriculture, Fishing, and Forestry 7,991 3,922 948 575 460 7,429 21,326 Education 7,637 2,506 431 676 654 10,336 22,240 Energy and Mining 10,952 2,760 1,125 255 302 4,040 19,434 Finance 3,433 1,619 803 341 199 2,929 9,325 Health and Other Social Services 11,726 2,287 1,238 878 595 10,996 27,721 Industry and Trade 5,895 1,230 1,262 398 266 3,831 12,882 Information and Communications 1,026 108 53 82 4 545 1,818 Public Administration, Law, and Justice 22,762 3,830 2,443 2,116 616 10,813 42,580 Transportation 13,259 3,666 948 1,179 472 6,150 25,674 Water, Sanitation, and Flood Protection 7,598 2,904 821 466 574 4,330 16,693 Sector Total 92,278 24,833 10,073 6,967 4,141 61,399 199,692 Note: Figures are cumulative since fiscal 1990, the first year for which reclassified sector and theme data are available. Starting fiscal 2005, lending includes guarantees and guarantee facilities. Amounts may not add to totals because of rounding. a. No account is taken of cancellations subsequent to the original commitment. IBRD loans to IFC are excluded. IBRD and IDA Cumulative Lendinga by Country | Fiscal 1945–2012b View Excel Version millions of dollars IBRD IDA IBRD/IDA Country Number Amount Number Amount Number Amount Afghanistan 74 2,716 74 2,716 Africa (regional) 13 324 64 5,366 77 5,690 Albania 9 228 62 950 71 1,178 Algeria 71 5,766 71 5,766 Angola 22 949 22 949 Argentina 160 29,277 160 29,277 Armenia 15 339 55 1,274 70 1,613 Australia 7 418 7 418 Austria 9 106 9 106 Azerbaijan 15 2,026 35 1,128 50 3,154 Bahamas, The 5 43 5 43 Bangladesh 1 46 231 18,090 232 18,136 Barbados 13 153 13 153 Belarus 12 865 12 865 Belgium 4 76 4 76 Belize 10 101 10 101 Benin 75 1,556 75 1,556 Bhutan 20 213 20 213 Bolivia 15 314 86 2,345 101 2,660 Bosnia and Herzegovina 5 295 59 1,250 64 1,545 Botswana 22 896 6 16 28 912 Brazil 380 53,192 380 53,192 Bulgaria 40 2,933 40 2,933 Burkina Faso 2 90 2,974 90 2,976 Burundi 1 5 74 1,598 75 1,602 Cambodia 39 899 39 899 Cameroon 45 1,348 46 1,939 91 3,287 Cape Verde 1 54 28 322 29 376 Caribbean (regional) 4 83 4 77 8 160 Central African Republic 37 651 37 651 Central America (regional) 1 8 1 8 Central Asia (regional) 2 46 2 46 Chad 1 40 53 1,164 54 1,204 Chile 75 4,156 19 75 4,175 China 278 40,905 71 9,947 349 50,852 Colombia 215 18,849 20 215 18,869 Comoros 23 148 23 148 Congo, Dem. Rep. 7 330 89 4,949 96 5,279 Congo, Rep. 10 217 26 529 36 745 Costa Rica 45 1,636 6 45 1,642 Côte d'Ivoire 62 2,888 38 3,253 100 6,140 Croatia 45 3,296 45 3,296 Cyprus 29 405 29 405 Czech Republic 3 776 3 776 Denmark 3 85 3 85 IBRD IDA IBRD/IDA Country Number Amount Number Amount Number Amount Djibouti 28 218 28 218 Dominica 3 7 5 23 8 29 Dominican Republic 49 2,033 3 22 52 2,055 Ecuador 82 3,240 5 37 87 3,277 Egypt, Arab Rep. 92 10,882 41 1,984 133 12,866 El Salvador 49 2,323 2 26 51 2,348 Equatorial Guinea 9 45 9 45 Eritrea 15 549 15 549 Estonia 8 151 8 151 Ethiopia 12 109 114 10,384 126 10,493 Fiji 12 153 12 153 Finland 18 317 18 317 France 1 250 1 250 Gabon 16 267 16 267 Gambia, The 36 322 36 322 Georgia 8 409 50 1,322 58 1,730 Ghana 9 187 151 7,456 160 7,643 Greece 17 491 17 491 Grenada 7 27 6 47 13 74 Guatemala 54 2,828 54 2,828 Guinea 3 75 68 1,561 71 1,637 Guinea-Bissau 34 367 34 367 Guyana 12 80 24 369 36 449 Haiti 1 3 68 1,264 69 1,266 Honduras 33 717 57 2,078 90 2,795 Hungary 41 5,661 41 5,661 Iceland 10 47 10 47 India 241 48,286 302 43,526 543 91,811 Indonesia 304 43,703 53 2,875 357 46,578 Iran, Islamic Rep. 48 3,413 48 3,413 Iraq 7 406 5 509 12 915 Ireland 8 153 8 153 Israel 10 255 10 255 Italy 8 400 8 400 Jamaica 80 2,211 80 2,211 Japan 31 863 31 863 Jordan 67 3,160 15 85 82 3,246 Kazakhstan 39 6,672 39 6,672 Kenya 45 1,181 111 6,726 156 7,906 Kiribati 2 43 2 43 Korea, Rep. 112 15,472 6 111 118 15,583 Kosovo 18 120 18 120 Kyrgyz Republic 57 1,089 57 1,089 Lao PDR 63 1,092 63 1,092 Latvia 22 985 22 985 Lebanon 24 1,522 24 1,522 Lesotho 2 155 42 537 44 692 Liberia 19 156 34 897 53 1,053 IBRD IDA IBRD/IDA Country Number Amount Number Amount Number Amount Lithuania 17 491 17 491 Luxembourg 1 12 1 12 Macedonia, FYR 33 939 15 379 48 1,318 Madagascar 5 33 107 3,429 112 3,462 Malawi 9 124 100 3,232 109 3,356 Malaysia 87 4,146 87 4,146 Maldives 13 152 13 152 Mali 2 92 2,723 92 2,725 Malta 1 8 1 8 Mauritania 3 146 62 952 65 1,098 Mauritius 42 793 4 20 46 813 Mexico 236 52,809 236 52,809 Moldova 9 303 36 607 45 910 Mongolia 38 579 38 579 Montenegro 7 234 9 75 16 309 Morocco 158 11,936 3 51 161 11,987 Mozambique 79 4,673 79 4,673 Myanmar 3 33 30 804 33 837 Namibia 2 15 2 15 Nepal 106 3,423 106 3,423 Netherlands 8 244 8 244 New Zealand 6 127 6 127 Nicaragua 27 234 57 1,662 84 1,895 Niger 74 1,927 74 1,927 Nigeria 84 6,248 65 8,558 149 14,806 Norway 6 145 6 145 c OECS countries 3 12 5 59 8 70 Oman 11 157 11 157 Pakistan 96 8,362 164 15,101 260 23,463 Panama 60 2,031 60 2,031 Papua New Guinea 35 787 18 321 53 1,107 Paraguay 50 1,406 6 46 56 1,451 Peru 127 9,309 127 9,309 Philippines 186 14,702 5 294 191 14,997 Poland 49 12,382 49 12,382 Portugal 32 1,339 32 1,339 Romania 93 11,138 93 11,138 Russian Federation 66 13,981 66 13,981 Rwanda 83 2,307 83 2,307 Samoa 17 140 17 140 São Tomé and Príncipe 16 99 16 99 Senegal 19 165 111 3,315 130 3,480 Serbia 13 1,365 19 689 32 2,054 Seychelles 4 29 4 29 Sierra Leone 4 19 51 1,054 55 1,073 Singapore 14 181 14 181 Slovak Republic 9 425 9 425 Slovenia 5 178 5 178 IBRD IDA IBRD/IDA Country Number Amount Number Amount Number Amount Solomon Islands 14 70 14 70 Somalia 39 492 39 492 South Africa 14 4,053 14 4,053 South Asia (regional) 3 140 3 140 South Eastern Europe (regional) 1 10 1 10 Spain 12 479 12 479 Sri Lanka 13 424 108 4,217 121 4,640 St. Kitts and Nevis 5 23 2 5 25 St. Lucia 12 37 3 70 15 107 St. Vincent and the Grenadines 5 12 2 23 7 35 Sudan 8 166 47 1,353 55 1,519 Swaziland 14 152 2 8 16 160 Syrian Arab Republic 16 580 3 47 19 627 Taiwan, China 14 329 4 15 18 345 Tajikistan 45 623 45 623 Tanzania 17 319 151 9,027 168 9,345 Thailand 120 9,107 6 125 126 9,232 Timor-Leste 11 58 11 58 Togo 1 20 54 1,101 55 1,121 Tonga 10 74 10 74 Trinidad and Tobago 22 334 22 334 Tunisia 135 6,670 5 70 140 6,740 Turkey 175 34,976 10 179 185 35,154 Turkmenistan 3 90 3 90 Tuvalu 1 12 1 12 Uganda 1 9 114 6,776 115 6,785 Ukraine 43 7,053 43 7,053 Uruguay 67 3,615 67 3,615 Uzbekistan 15 844 9 523 24 1,367 Vanuatu 5 19 5 19 Venezuela, RB 40 3,328 40 3,328 Vietnam 7 1,868 108 13,139 115 15,007 Yemen, Rep. 157 3,251 157 3,251 Yugoslavia, former 89 6,091 89 6,091 Zambia 27 679 72 3,333 99 4,012 Zimbabwe 24 983 12 662 36 1,645 East Asia (regional) 2 43 2 43 Overall Total 5,754 570,952 5,216 252,202 10,970 823,154 Note: A blank space indicates zero. a. Effective fiscal 2005, lending includes guarantees and guarantee facilities. Supplemental and additional financing operations (except for projects scaled up through additional financing) are not counted as separate lending operations, although they are included in the amount. b. Joint IBRD-IDA operations are counted only once, as IBRD operations. When more than one loan is made for a single project, the operation is counted only once. Commitments in regional projects are classified in this table as regional projects and are not counted as commitments of the individual countries involved under the regional project. IDA figures exclude the HIPC grants of $45.5 million to Côte d'Ivoire in fiscal 2009. c. OECS = Organization of Eastern Caribbean States. Summaries of Operations Approved During Fiscal 2012, Africa View Excel Version Principal amount Date of (millions) a b Country/Project name Network approval Maturities SDR US$ Africa IDA Horn of Africa Emergency Health and Nutrition Emergency Recovery Grant supports the United Nations High Commissioner for Refugees' response to targeted refugee camps in Kenya and Ethiopia by implementing emergency health and nutrition services. Total cost: $30 million. HDN 9/15/2011 n.a. 18.8 30.0 â—Š IBRD Fourth Central African Backbone Adaptable Program Loan increases geographical reach and use of regional broadband network services and reduces their prices in Gabon. Total cost: $109 million. SDN 3/28/2012 2018/2034 n.a. 58.0 â—Š IDA Kafue-Muzuma-Victoria Falls Regional Transmission Line Reinforcement Specific Investment Credit improves the reliability of the regional bulk power trade transmission network through upgraded infrastructure along the Kafue Town–Muzuma-Victoria Falls corridor. Total cost: $100 million. SDN 5/15/2012 2022/2052 37.1 60.0 â—Š IDA East Africa Public Health Laboratory Specific Investment Additional Financing Grant establishes a network of high-quality public health laboratories to diagnose communicable diseases and share information to mount an effective regional response. Total cost: $15 million. HDN 5/17/2012 n.a. 9.7 15.0 â—Š IDA West Africa Agricultural Productivity Adaptable Program Credit (Second Phase) increases the generation, dissemination, and adoption of improved technologies in priority commodity areas through regional 2022/2052 38.7 60.0 c cooperation and collaborative mechanisms. Total cost: $131.8 million. SDN 5/22/2012 2022/2052 38.7 60.0 c â—Š IDA West African Power Pool Integration and Technical Assistance Adaptable Program Credit/Grant increases utility-level electrical supply at a reduced cost through improved technical integration, and increases 2022/2052 93.3 144.5 c the export capability of Côte d’Ivoire. Total cost: $476 million. SDN 5/31/2012 n.a. 20.4 31.5 g â—Š IDA Abidjan-Lagos Trade and Transport Facilitation Adaptable Program Grant (Second Phase) reduces trade and transport barriers in the port and on the roads along the transportation corridor through the four-country region. Total cost: $148 million. SDN 5/31/2012 n.a. 57.9 90.0 â—Š IDA Improved Investment Climate within the Organization for the Harmonization of Business Law in Africa Technical Assistance Grant strengthens the organization’s institutional capacity to support selected investment climate reforms in member countries, including improved corporate financing reporting. Total cost: $15 million. FPD 6/26/2012 n.a. 9.7 15.0 â—Š IDA South Africa Power Market Adaptable Program Additional Financing Grant expands transmission capacity for better servicing domestic and regional power demand and supports regional power-market integration and telecommunication development. Total cost: $201.5 million. SDN 6/28/2012 n.a. 130 201.5 Benin â—Š IDA Seventh Poverty Reduction Support Grant accelerates economic growth and reduces incidents of poverty by strengthening the public sector to deliver more effective public services. Total cost: $30 million. PREM 12/19/2011 n.a. 19.0 30.0 â—Š IDA Heath System Performance Specific Investment Additional Financing Grant increases the coverage of and accessibility to quality maternal, neonatal, and child services in eight targeted districts. Total cost: $10 million. HDN 3/15/2012 n.a. 6.5 10.0 â—Š IDA Decentralized Community Driven Services Adaptable Program Credit improves access to decentralized basic social services through community infrastructure development, and mainstreams the community- driven development approach for services. Total cost: $46 million. HDN 5/3/2012 2022/2052 29.6 46.0 Burkina Faso â—Š IDA Eleventh Poverty Reduction Support Grant supports efforts for economic growth through improved country competitiveness and diversification, and the implementation of a revised poverty reduction strategy. Total cost: $125 million. PREM 7/26/2011 n.a. 78.9 125.0 â—Š IDA Local Government Support Adaptable Program Grant strengthens the Government’s decentralization commitments and the institutional capacities of six regional municipalities to improve local officials’ accountability to citizens. Total cost: $65 million. PREM 11/1/2011 n.a. 37.3 60.0 â—Š IDA Reproductive Health Specific Investment Grant improves the quality and availability of reproductive health and family planning services for women in five participating regional districts. Total cost: $41.6 million. HDN 12/20/2011 n.a. 18.3 28.9 â—Š IDA First Growth and Competitiveness Grant improves private sector growth and employment, strengthening governance and public resource management, and builds market resilience and reduces vulnerability. Total cost: $90 million. PREM 6/26/2012 n.a. 58.1 90.0 Burundi â—Š IDA Fifth Economic Reform Support Grant consolidates the Government’s current public finance management reforms and re- energizes private sector development reforms, including energy sector budgetary support. Total cost: $44.8 million. PREM 12/15/2011 n.a. 22.1 35.0 â—Š IDA Public Works and Urban Management Specific Investment Additional Financing Grant increase access to basic socioeconomic services and short-term employment opportunities through infrastructure rehabilitation, municipal capacity building, and institutional strengthening. Total cost: $15 million. SDN 5/8/2012 n.a. 9.7 15.0 Cameroon IDA Kribi Gas Power Local Loan Guarantee increases the electricity generation capacity from the Kribi Gas Power Project and improves its d access to private development financing. Total cost: $350 million. SDN 11/10/2011 n.a n.a. 82.0 â—Š IDA Mining Sector Capacity Building Technical Assistant Credit improves the efficiency and transparency of mining sector governance and management and the frameworks for sustainable regional mining development. Total cost: $30 million. SDN 12/15/2011 2022/2051 19.3 30.0 â—Š IDA Lom Pangar Hydropower Specific Investment Credit increases hydropower generation capacity and regional access to electricity, and reduces seasonal water flow variability in the Sanaga River. Total cost: $494 million. SDN 3/27/2012 2022/2052 85.2 132.0 Cape Verde â—Š IBRD Recovery and Reform of the Electricity Sector Specific Investment Loan supports increased electricity generation on São Vicente and Santiago islands and assists the state-owned utility provider to reduce electricity losses. Total cost: $58.5 million. SDN 1/19/2012 2017/2041 n.a. 53.5 â—Š IDA Seventh Poverty Reduction Support Credit improves the efficiency and transparency of public resource use, and implements a reform agenda for public finance management and procurement systems. Total cost: $12 million. PREM 6/26/2012 2022/2052 7.9 12.0 Central African Republic â—Š IDA Health System Support Specific Investment Credit/Grant increases access and utilization, and improves the quality of maternal and 2022/2052 6.05 9.35 c child health services in targeted rural areas. Total cost: $28.2 million. HDN 5/17/2012 n.a. 4.95 7.65 g Chad â—Š IDA Emergency Agriculture Production Support Emergency Recovery Credit supports communities and producer organizations in increasing the productivity of crops and livestock, and in using sustainable resource management practices. Total cost: $34.3 million. SDN 5/17/2012 2022/2052 16.2 25 Republic of Congo â—Š IDA Transparency and Governance Capacity Building Specific Investment Credit will strengthen the capacity of targeted public ministries, agencies, and accountability structures for improved management of human and financial resources. Total cost: $26.3 million. PREM 2/28/2012 2017/2036 3.3 5.0 â—Š IDA Forest and Economic Diversification Technical Assistance Grant increases the Government’s capacity to implement forestry legislation, and supports local communities and the private sector in sustainable forest management. Total cost: $32.6 million. SDN 5/24/2012 2017/2037 6.5 10.0 Côte d'Ivoire â—Š IDA Post-Conflict Reconstruction and Recovery Grant provides post- conflict financial support to ensure government progress on public expenditure management reforms in the key cocoa, finance, and energy sectors. Total cost: $150 million. PREM 9/15/2011 n.a. 93.9 150.0 â—Š IDA Emergency Youth Employment & Skills Development Emergency Recovery Grant improves access to temporary employment and skills development opportunities for young men and women in Cote d’Ivoire’s territory. Total cost: $50 million. HDN 9/15/2011 n.a. 31.3 50.0 â—Š IDA Emergency Infrastructure Renewal Emergency Recovery Grant improves transportation, public service, water, sanitation, and electricity infrastructure in targeted urban and rural areas, and finances project management costs. Total cost: $200 million. SDN 6/26/2012 n.a. 64.5 100.0 Ethiopia IDA Urban Local Government Development Project Specific Investment Additional Financing Credit supports administrative infrastructure development and improved institutional performance and provision of primary municipal services by Ethiopia’s urban local governments. Total cost: $208 million. SDN 7/5/2011 2021/2051 94.7 150.0 â—Š IDA Third Productive Safety Net Adaptable Policy Additional Financing Loan improves the effectiveness of programs to reduce household vulnerability and promotes sustainable community development in rural, food-insecure areas. Total cost: $370 million. HDN 3/29/2012 2022/2052 238.6 370.0 â—Š IDA Women Entrepreneurship Development Specific Investment Credit improves the profitability of female-owned enterprises by tailoring need-based financial instruments, developing entrepreneurial skills, and supporting technology and product development. Total cost: $53 million. SDN 5/24/2012 2022/2052 32.2 50.0 â—Š IDA Electricity Network Reinforcement and Expansion Specific Investment Credit improves the reliability of the electricity transmission and distribution network infrastructure, and expands access to electricity services in rural areas. Total cost: $250 million. SDN 5/29/2012 2022/2052 129.2 200.0 â—Š IDA Urban Water Supply and Sanitation Specific Investment Additional Financing Credit increases access to sustainable water supply and sanitation services in targeted cities, and improves operational efficiency and financial management of services. Total cost: $150 million. SDN 5/31/2012 2022/2052 96.6 150.0 The Gambia â—Š IDA First Economic Governance Reform Development Policy Grant strengthens transparency, accountability, and efficiency in public financial management; improves public management of key sectors; and promotes telecommunication sector competition. Total cost: $6 million. PREM 5/31/2012 n.a. 3.9 6.0 Ghana â—Š IDA West Africa Regional Fisheries Specific Investment Credit improves the sustainable management of Ghana’s fish and aquatic resources by supporting increased governance capacity and improving value-added return. Total cost: $53.5 million. SDN 7/14/2011 2021/2046 31.1 50.3 â—Š IDA Statistics Development Specific Investment Credit & Statistics for Results Facility Catalytic Fund Grant strengthens Ghana’s National Statistical System capacity to produce, manage, and disseminate relevant and robust statistics to support evidence-based policy-making. Total cost: $40 million. PREM 8/25/2011 2022/2051 18.8 30.0 â—Š IDA Eighth Poverty Reduction Support Grant supports Government reform policies to consolidate fiscal and macroeconomic stabilization efforts and promote greater public sector efficiency, transparency, and accountability. Total cost: $100 million. PREM 1/26/2012 n.a. 64.5 100.0 â—Š IDA Commercial Agriculture Specific Investment Credit increases access to land, private-sector finance, and markets by smallholder farms through commercial agriculture partnerships in the Northern and Greater Accra regions. Total cost: $145 million. SDN 3/22/2012 2022/2052 64.5 100.0 â—Š IDA Public Private Partnership Adaptable Program Credit improves the country’s legislative, institutional, financial, fiduciary, and technical frameworks to enhance the economic environment for private-public project generation. Total cost: $30 million. FPD 3/27/2012 2022/2052 19.4 30.0 â—Š IDA Urban Water Specific Investment Additional Financing Loan improves access, affordability, and service reliability, and restores financial sustainability to the piped water system in Ghana’s urban centers. Total cost: $50 million. SDN 3/27/2012 n.a. 32.3 50.0 â—Š IDA Fourth Agriculture Development Policy Credit enhances productivity through agricultural modernization reforms and improved market access among farmers, and improves agriculture-sector- management capacity and practices. Total cost: $50 million. SDN 5/15/2012 2022/2052 32.3 50.0 Guinea â—Š IDA Economic Governance Technical Assistance and Capacity Building Grant re-establishes and strengthens basic systems and practices to improve the management of public financial and human resources in Guinea. Total cost: $11.3 million. PREM 3/20/2012 n.a. 6.5 10.0 IDA Electricity Sector Efficiency Improvement Specific Investment Additional Financing Grant supports efforts to improve the technical, commercial, and operational efficiency of the power sector through critical investments and capacity building. Total cost: $30.3 million. SDN 5/31/2012 n.a. 11.9 18.3 â—Š IDA Productive Social Safety Net Specific Investment Grant provides income support to vulnerable groups, and lays the foundation for a social- safety-net strategy by implementing selected test programs. Total cost: $25 million. HDN 6/19/2012 n.a. 16.2 25.0 Kenya IDA Health Sector Support Emergency Recovery Additional Financing Loan strengthens the delivery of essential health services to poor and drought-affected Kenyans and improves financing and procurement of medical supplies. Total cost: $56.8 million. HDN 12/20/2011 2022/2051 35.9 56.8 IDA Private Sector Power Generation Partial Risk Guarantee increases reliable electricity generation through the construction of three thermal and one integrated geothermal independent power plants. Total cost: $623 million. SDN 2/28/2012 n.a. n.a. 166.0 IDA Kenya Transparency and Communications Infrastructure Adaptable Program Additional Financing Credit extends the geographic reach of broadband networks, and contributes to improved government efficiency and transparency through e-government applications. Total cost: $55.1 million. SDN 3/29/2012 2022/2052 35.6 55.1 â—Š IDA Nairobi Metropolitan Services Improvement Specific Investment Credit strengthens urban services and infrastructure through local infrastructure investment, institutional capacity building, and improvements in solid waste and sewerage management. Total cost: $330 million. SDN 5/10/2012 2022/2051 192.8 300.0 â—Š IDA Water Sanitation Services Improvement Specific Investment Additional Financing Credit increases access to reliable, affordable, and sustainable water supply and sanitation services, and improves water and wastewater services. Total cost: $425 million. SDN 5/10/2012 2022/2052 192.8 300.0 Lesotho â—Š IDA Smallholder Agriculture Development Specific Investment Credit aims to increase marketed output among Lesotho’s small-scale farmers by promoting market development and investing in resource management and technology. Total cost: $24.5 million. SDN 11/10/2011 2022/2051 6.3 10.0 IDA Water Sector Improvement, Phase 2 Adaptable Program Additional Financing Grant supports the viable framework development for the Metolong Dam and Water Supply Program to increase Teyateyaneng’s safe bulk water supply. Total cost: $44.8 million. SDN 11/10/2011 n.a. 8.4 13.0 Liberia â—Š IDA Fourth Reengagement and Reform Support Development Policy Credit supports Government reforms to improve private sector-led inclusive growth, including improved transparent public finance management, revenue administration, and land administration. Total cost: $5 million. PREM 10/18/2011 2021/2051 3.2 5.0 â—Š IDA Integrated Public Financial Management Reform Technical Assistance Credit supports strengthening Government fiscal policy and management, improving the quality of fiscal operations information, and developing transparent financial governance institutions. Total cost: $28.6 million. OPCS 12/15/2011 2022/2051 3.2 5.0 â—Š IDA Electricity System Enhancement Emergency Recovery Additional Financing Loan will improve and increase access to sustainable electricity in rural areas, while providing modern renewable energy services to off-grid users. Total cost: $57 million. SDN 1/26/2012 2022/2051 14.2 22.0 â—Š IDA Smallholder Tree Crop Revitalization Support Specific Investment Credit increases access to finance, inputs, technologies, and markets for smallholder tree crop farmers, and develops a long-term program for sector development. Total cost: $23.1 million. SDN 6/5/2012 2022/2052 9.7 15.0 Madagascar â—Š IDA Second Multisectoral STI/HIV/AIDS Prevention Specific Investment Additional Financing Credit increases utilization of STI/HIV/AIDS, maternal, and child health and nutrition services, and provides support for project management and capacity building. Total cost: $23.1 million. HDN 6/14/2012 2022/2051 3.9 6.0 Malawi â—Š IDA Agricultural Sector-Wide Approach Support Specific Investment Additional Financing Credit bolsters food security and sustainable agricultural growth investments through a doubling of land area under sustainable agricultural productivity management. Total cost: $80.8 million. SDN 3/22/2012 2022/2051 19.4 30.0 â—Š IDA Nutrition, HIV and AIDS Specific Investment Credit/Grant increases access to services that help reduce child stunting and maternal and child anemia, and help prevent HIV and AIDS. 2022/2051 20.7 32.0 c Total cost: $190.1 million. HDN 3/27/2012 n.a. 31.0 48.0 g â—Š IDA Shire River Basin Management Adaptable Program Credit/Grant increases sustainable social, economic, and environmental benefits by effectively developing a framework for managing the basin’s land and 2022/2052 60.6 93.75 c water resources. Total cost: $145.6 million. SDN 6/14/2012 n.a. 20.2 31.25 g Mali IDA Second Transport Sector Specific Investment Additional Financing Loan provides improved rural access and urban transport services through improvements of essential rural infrastructure and important Bamako transport infrastructure. Total cost: $27 million. SDN 7/5/2011 2021/2051 14.2 23.0 â—Š IDA Strengthening Reproductive Health Specific Investment Grant improves the quality and availability of reproductive health services for reproductive-age women in four of the country’s poorest regions. Total cost: $30 million. HDN 12/20/2011 n.a. 19.0 30.0 Mauritius â—Š IBRD Public Sector Performance Development Policy Loan assists the Government in implementing reforms to strengthen public services, streamline trade regulations, and improve civil-service human resource management. Total cost: $20 million. HDN 3/27/2012 2017/2030 n.a. 20.0 â—Š IBRD Private Sector Competitiveness Development Policy Loan strengthens the policy and institutional environment for competitive enterprise development by instituting reforms to finance access and communication sector improvements. Total cost: $15 million. FPD 3/27/2012 2017/2030 n.a. 15.0 Mozambique IDA Technical and Vocational Education Sector Investment Additional Financing Credit improves the quality and relevance of technical and vocational training in Mozambique, focusing on key TVE institutions and programs. Total cost: $37 million. HDN 7/12/2011 2021/2051 23.4 37.0 â—Š IDA National Water Resources Development Specific Investment Credit strengthens the management of national water resources and increases the Corumana Dam water supply for the Maputo metropolitan area. Total cost: $83.8 million. SDN 9/15/2011 2021/2051 43.8 70.0 â—Š IDA Eighth Poverty Reduction Support Credit supports Government reforms to improve public financial management, procurement, and auditing systems, and to enhance growth through simplified business policies. Total cost: $110 million. PREM 3/15/2012 2022/2052 71.7 110.0 IDA Cities and Climate Change Specific Investment Credit strengthens municipal capacity for sustainable urban infrastructure provision and environmental management, and enhances municipal resiliency to climate- related environmental risks. Total cost: $120 million. SDN 4/3/2012 2022/2052 78.2 120.0 â—Š IDA Education Sector Support Specific Investment Additional Financing Credit improves access to and quality and equity of education through enhanced, community-based early child development programming and strengthened administrative capacity. Total cost: $40 million. HDN 5/1/2012 2022/2052 25.8 40.0 Niger IDA Second Growth Policy Reform Operation Development Policy Credit alleviates constraints to growth by improving the private-sector business environment, rural sector growth, and public finance management reform. Total cost: $15 million. PREM 2/23/2012 2022/2051 9.8 15.0 â—Š IDA First Shared Growth Development Policy Credit supports government reforms to improve the business environment for investment and trade, increases agricultural productivity, and strengthens public financial management. Total cost: $50 million. PREM 6/26/2012 2022/2052 32.3 50.0 â—Š IDA Competitiveness and Growth Support Specific Investment Credit improves selected business environment aspects, supports the development of the meat industry, and increases extractive-industry sector participation by local businesses. Total cost: $65.2 million. FPD 6/26/2012 2022/2052 32.3 50.0 Nigeria IDA State Employment and Expenditure for Results Specific Investment Credit enhances opportunities for employment and access to socio-economic services, while improving public expenditure management systems in the Niger Delta region. Total cost: $200 million. PREM 3/6/2012 2022/2052 126.2 200.0 â—Š IDA First Edo State Growth and Employment Support Development Policy Credit supports Edo State’s reforms for improving public resource management and bolstering a socially accountable environment for economic growth and employment. Total cost: $75 million. PREM 3/29/2012 2022/2051 48.4 75.0 â—Š IDA State Health Investment Specific Investment Credit increases the availability of high-impact maternal and child health interventions, and improves the quality of care at designated health facilities. Total cost: $170 million. HDN 4/12/2012 2022/2052 96.4 150.0 â—Š IDA Erosion and Watershed Management Specific Investment Credit reduces vulnerability to soil erosion in targeted sub-watersheds through an integrated management approach that includes locally driven planning and investment. Total cost: $658.6 million. SDN 5/8/2012 2022/2052 321.4 500.0 IDA Second National Urban Water Sector Reform Specific Investment Additional Financing Credit improves water supply reliability and urban water utilities viability, and increases piped-water network access in Cross River and Lagos states. Total cost: $197.7 million. SDN 6/19/2012 2022/2052 77.5 120.0 â—Š IDA Nigeria Electricity and Gas Improvement Project Specific Investment Credit/Guarantee improves the reliability of gas supply to increase power generation, and strengthens the network’s capacity to 2022/2052 64.5 100.0 c transmit quality electricity. Total cost: $300 million. SDN 6/19/2012 n.a. n.a. 200.0 gt Rwanda IDA Eighth Poverty Reduction Support Financing Grant/Credit supports the Government’s development strategy for growth through increased private sector investment and greater public sector efficiency, n.a. 37.3 60.0 g transparency, and accountability. Total cost: $125 million. PREM 11/29/2011 2022/2051 40.4 65.0 c â—Š IDA Governance for Competitiveness Technical Assistance Credit strengthens the institutional capacity of public and private institutions to improve competitiveness and growth in the horticulture and tourism sectors. Total cost: $5 million. FPD 1/26/2012 2022/2051 3.3 5.0 â—Š IDA Third Rural Sector Support Adaptable Program Credit increases the environmentally sustainable agricultural productivity of farmers in sub- watershed marshlands and hillsides, and strengthens their participation in market-based value chains. Total cost: $85 million. SDN 3/1/2012 2022/2051 52.2 80.0 IDA Support to the Social Protection System Development Policy Grant supports Government efforts to improve the efficiency and effectiveness and expand coverage of social protections for the most vulnerable Rwandans. Total cost: $40 million. HDN 3/20/2012 n.a. 26.1 40.0 São Tomé and Príncipe â—Š IDA First Governance and Competitiveness Development Policy Grant strengthens State economic governance through improved fiscal management and transparency, and supports simplified business regulations and reduced international trade costs. Total cost: $4.2 million. PREM 3/29/2012 n.a. 2.8 4.2 Senegal â—Š IDA Nutrition Enhancement Project Adaptable Program Additional Financing Credit expands access to and enhances nutrition conditions of vulnerable urban and rural populations, in particular those affecting growth of children under age five. Total cost: $10 million. HDN 3/29/2012 2022/2051 6.5 10.0 â—Š IDA Storm water Management and Climate Change Adaptation Specific Investment Credit improves storm water drainage and flood prevention in peri-urban areas through investments in drainage channel and pumping operations, and enhanced risk management. Total cost: $72.9 million. SDN 5/10/2012 2022/2052 35.9 55.6 Sierra Leone â—Š IDA Decentralized Service Delivery Program II Adaptable Lending Grant supports decentralizing delivery of basic services through improved management capacity, predictable availability of Local Council funding, and improved inter-governmental fiscal transfers. Total cost: $137.6 million. HDN 12/20/2011 n.a. 16.7 26.0 â—Š IDA Fifth Governance Reform and Growth Development Policy Credit supports continuing growth and recovery through improved efficiency of poverty reduction spending, strengthened domestic resource management, and increased electricity delivery. Total cost: $24 million. PREM 1/26/2012 2022/2051 15.5 24.0 â—Š IDA Pay and Performance Specific Investment Credit increases staffing of middle and senior staff, and improves competitiveness in pay, performance management, and accountability of the state’s civil service. Total cost: $203 million. PREM 5/31/2012 2022/2051 11.0 17.0 Tanzania â—Š IDA Basic Health Services Specific Investment Credit assists the Government in improving the quality, availability, and local delivery of basic health services across all districts within Tanzania. Total cost: $2,721 million. HDN 12/20/2011 2022/2051 63.1 100.0 â—Š IDA Ninth Poverty Reduction Support Development Policy Credit improves the regional-transport sector investment climate for competitiveness and shared growth, and ensures macroeconomic stability through sound public finance management. Total cost: $100 million. PREM 3/15/2012 2022/2051 64.5 100.0 â—Š IDA Productive Social Safety Net Adaptable Program Credit creates a comprehensive, efficient, well-targeted, and productive social safety net system for the poor and vulnerable in the Tanzanian population. Total cost: $240.9 million. HDN 3/29/2012 2022/2052 141.9 220.0 Togo â—Š IDA Community Development and Safety Nets Specific Investment Grant provides poor communities across all five regions of Togo greater access to basic socio-economic infrastructures and social safety nets. Total cost: $14.4 million. HDN 3/22/2012 n.a. 9.2 14.0 â—Š IDA Fifth Economic Recovery and Governance Development Policy Credit supports Government-owned reforms to improve public financial- management capacity, as well as structural reforms in cotton, energy, telecommunications, and banking. Total cost: $14 million. PREM 5/24/2012 2022/2052 9.1 14.0 Uganda â—Š IDA Ninth Poverty Reduction Support Development Policy Credit improves access to public services through enhanced public infrastructure, greater human capital development, and support for good governance and accountability. Total cost: $100 million. PREM 2/28/2012 2022/2052 65.2 100.0 â—Š IDA Water Management and Development Specific Investment Credit strengthens integrated water resource planning, management, and development, and improves access to water and sanitation services in priority urban areas. Total cost: $135 million. SDN 6/26/2012 2022/2052 87.1 135.0 Zambia â—Š IDA Livestock Development and Animal Health Project Specific Investment Credit improves the productivity of targeted male and female smallholder livestock farmers and organized livestock production systems in select regions. Total cost: $64.8 million. SDN 2/28/2012 2022/2051 32.6 50.0 IDA Third Poverty Reduction Support Development Policy Credit supports broad-based growth and macroeconomic stability through improvements to public sector performance and increased efficiency in the energy sector. Total cost: $30 million. PREM 5/3/2012 2022/2052 19.3 30.0 Total: 4,448.40 7525.2 c Special Financing South Sudan Private Sector Development Emergency Recovery Trust Fund Grant improves access to finance for private sector development and increases employment opportunities in South Sudan. Total cost: $9 million. FPD 1/10/2012 n.a. n.a. 9.0 Rapid Results Health Emergency Recovery Trust Fund Grant improves delivery of high-impact primary health care services and strengthens the Ministry of Health’s coordination, monitoring, and evaluation capacities. Total cost: $28 million. HDN 4/13/2012 n.a. n.a. 28.0 Rural Roads Emergency Recovery Trust Fund Grant enhances all- season access and road connectivity to agricultural services for rural communities in areas of high-agricultural potential. Total cost: $38 million. SDN 4/26/2012 n.a. n.a. 38.0 Note: Numbers may not add to totals because of rounding. â—Š denotes projects with actual involvement of civil society organizations in identification, preparation, and/or appraisal, and with intended civil society participation in the implementation, monitoring, and evaluation phases. n.a. = not applicable; l = IBRD loan; c = IDA credit; g = IDA grant; gt = IDA guarantee. a. SDN = Sustainable Development Network; FPD = Financial and Private Sector Development; HDN = Human Development Network; PREM = Poverty Reduction and Economic Management; OPCS = Operations Policy and Country Services. b. IDA funds are denominated in Special Drawing Rights (SDRs), which are valued on the basis of a “basketâ€? of currencies. The U.S. dollar equivalent of the SDR amount reflects the exchange rates in effect at the time of the negotiations of the credit or grant. c. Financing provided by trust funds administered by the Bank. d. Guarantee calculated in CFAF, not SDR. Project guarantee equal to CFAF40 billion. Summaries of Operations Approved During Fiscal 2012, East Asia and Pacific View Excel Version Principal amount Date of (millions) a b Country/Project name Network approval Maturities SDR US$ China â—Š IBRD Energy Efficiency Financing Financial Intermediary Additional Financing Loan improves energy efficiency of an expanded pool of medium and large industrial enterprises to reduce their environmental impact. Total cost: $428 million. SDN 10/27/2011 2017/2029 n.a. 100.0 â—Š IBRD Sichuan Wudu Irrigated Agriculture Development Specific Investment Loan supports sustainable agriculture practices through the improved coverage of irrigation services and introduces community-based water management systems in rural communities. Total cost: $700.8 million. SDN 2/28/2012 2017/2036 n.a. 100.0 â—Š IBRD Zhanghu Railway Specific Investment Loan improves mobility along the Hohhot-Zhangjiakou corridor through the development of additional railway capacity to reduce passenger and freight transport time. Total cost: $4,482.3 million. SDN 3/15/2012 2017/2042 n.a. 200.0 â—Š IBRD Changzhi Sustainable Urban Transport Project improves transport services and mobility in the central city of Changzhi in a safe, efficient, and energy-saving manner. Total cost: $200 million. SDN 3/22/2012 2017/2036 n.a. 100.0 â—Š IBRD Hubei Xiangyang Urban Transport Specific Investment Loan improves public access to transportation and mobility in the Xiangchen District of Xiangyang in an integrated, efficiently managed, and safe manner. Total cost: $210.9 million. SDN 4/26/2012 2017/2037 n.a. 100.0 â—Š IBRD Water Conservation Specific Investment Loan improves agriculture water management and productivity by investing in irrigation systems and providing financial and technical support to farm communities. Total cost: $145.5 million. SDN 5/10/2012 2017/2042 n.a. 80.0 IBRD Yunnan Technical and Vocational Education and Training Specific Investment Loan improves the quality and relevance of technical and vocational education to produce skills that respond to the labor market demand. Total cost: $91 million. HDN 5/15/2012 2020/2037 n.a. 50.0 â—Š IBRD Ningxia Desertification Control and Ecological Protection Specific Investment Loan controls desertification and degradation, and protects key farmland and infrastructure in strategically selected locations in the Ningxia Hui Autonomous Region. Total cost: $89.4 million. SDN 5/17/2012 2017/2042 n.a. 80.0 â—Š IBRD Integrated Economic Development of Small Towns Specific Investment Loan improves public infrastructure and municipal services, governing capacity, and the development of an improved commercial d environment for residents in selected towns. Total cost: $296.6 million. SDN 5/24/2012 2017/2036 n.a. 150.0 â—Š IBRD Xinjiang Yining Urban Transport Improvement Specific Investment Loan improves safe, clean, and efficient transport mobility and accessibility in the central urban and other selected areas of Yining Municipality. Total cost: $208 million. SDN 5/29/2012 2017/2042 n.a. 100.0 â—Š IBRD Gansu Qingyang Urban Infrastructure Improvement Specific Investment Loan assists Qingyang Municipality to improve selected urban infrastructure services including urban roads, urban environmental services, and storm- and wastewater infrastructure. Total cost: $92.4 million. SDN 5/31/2012 2017/2036 n.a. 100.0 â—Š IBRD Chongqing Urban Rural Integration Project II-Health Specific Investment Loan improves the access of selected non-metropolitan populations to hospital-based services, improving service production efficiency and the quality of hospital care. Total cost: $155.5 million. HDN 6/14/2012 2018/2037 n.a. 100.0 Indonesia â—Š IBRD Fourth National Program for Community Empowerment in Rural Areas Specific Investment Loan improves the socio-economic and local governance conditions for rural villagers through targeted improvements in infrastructure and community empowerment programming. Total cost: $1,283.6 million. SDN 7/14/2011 2020/2035 n.a. 531.2 â—Š IBRD Geothermal Clean Energy Investment Specific Investment Loan develops and increases power generation from renewable geothermal and steam field resources, reducing local and global environmental impacts. Total cost: $574.7 million. SDN 7/26/2011 2020/2035 n.a. 175.0 â—Š IBRD Eighth Development Policy Loan supports the Government in achieving growth and poverty reduction goals through improved public financial management, service delivery, and investment climate. Total cost: $400 million. PREM 11/22/2011 2021/2036 n.a. 400.0 â—Š IBRD Jakarta Urgent Flood Mitigation Specific Investment Loan contributes to the improvement of the administrative operation and maintenance of priority sections of Jakarta’s flood management infrastructure. Total cost: $189.9 million. SDN 1/17/2012 2021/2036 n.a. 139.6 â—Š IBRD Program for Economic Resilience, Investment and Social Assistance Development Policy Loan enhances the Government’s preparedness to address potential adverse impacts from ongoing volatility in financial markets and to maintain public expenditures. Total cost: $2,000 million. PREM 5/15/2012 2015/2019 n.a. 2,000.0 Kiribati â—Š IDA Pacific Aviation Investment Adaptable Program Grant improves operational safety and oversight of international air transport material infrastructure and management capacity at Bonriki and Cassidy airports. Total cost: $26.7 million. SDN 12/13/2011 n.a. 14.5 22.9 Lao People’s Democratic Republic â—Š IDA Khammouane Development Specific Investment Additional Financing Grant bolsters the planning process and public financial management associated with the decentralized delivery of services and infrastructure in Khammouane Province. Total cost: $9.3 million. SDN 1/26/2012 n.a. 5.6 8.6 â—Š IDA Mekong Integrated Water Resources Management Adaptable Program Grants improves regional, national, and sub-national water resource management practices in the Lower Mekong Basin, contributing n.a. 11.8 18.0 g to sustainable river basin development. Total cost: $26.6 million. SDN 3/8/2012 n.a. 5.3 8.0 g Mongolia â—Š IDA Ulaanbaatar Clean Air Specific Investment Credit develops particulate-matter-abatement measures to enable consumer access in peri-urban areas to low particulate-matter-emitting heating appliances. Total cost: $21.9 million. SDN 4/3/2012 2017/2036 9.7 15.0 Pacific Islands IDA Regional Connectivity Adaptable Program Grant increases the availability of affordable international bandwidth for Tonga-Fiji to facilitate social and economic development in the Pacific region. Total cost: $34 million. SDN 8/30/2011 n.a. 10.8 17.2 The Philippines â—Š IBRD Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option enhances the capacity of the Government of the Philippines to monitor, manage, and counter the impacts of natural disasters. Total cost: $500 million. SDN 9/13/2011 2021/2036 n.a. 500.0 â—Š IBRD Regional Infrastructure for Growth Financial Intermediary Loan stimulates integrative investment through improved access for targeted local government units to finance credit for local public infrastructure and services. Total cost: $50.9 million. SDN 12/1/2011 2017/2030 n.a. 50.0 â—Š IBRD Metro Manila Wastewater Management Specific Investment Loan enhances wastewater services to improve water quality in streams and rivers in selected sub-catchments of Metro Manila and surrounding areas. Total cost: $371.7 million. SDN 5/15/2012 2019/2037 n.a. 275.0 Samoa IDA Samoa Agriculture Competitiveness Enhancement Specific Investment Grant supports fruit and vegetable growers and livestock producers to improve their productivity and take greater advantage of commercial market opportunities. Total cost: $16.2 million. SDN 3/29/2012 2022/2052 5.2 8.0 Solomon Islands â—Š IDA First Solomon Islands Development Policy Grant strengthens Government public financial management capacity, improves management of key state-owned enterprises, and increases transparency of revenues from extractive resources. Total cost: $2 million. PREM 4/26/2012 n.a. 1.3 2.0 Tonga â—Š IDA Economic Recovery Development Policy Grant assists the Government’s medium-term reform agenda with predictable resources to strengthen financial management and delivery of key public services. Total cost: $9 million. PREM 11/22/2011 n.a. 5.8 9.0 â—Š IDA Pacific Aviation Investment Adaptable Program Grant improves operational safety and oversight of international air transport material infrastructure and management capacity at Fua'amotu and Vav'u airports. Total cost: $32.8 million. SDN 12/13/2011 n.a. 17.2 27.2 Tuvalu â—Š IDA Pacific Aviation Investment Adaptable Program Grant improves operational safety and oversight of international air transport material infrastructure and management capacity at Funafuti Airport. Total cost: $13.8 million. SDN 12/13/2011 n.a. 7.5 11.9 Vietnam â—Š IDA Tenth Poverty Reduction Support Credit continues to support the Government’s medium-term reform plan as the fifth and final cycle of Vietnam’s Socio-Economic Development Plan. Total cost: $150 million. PREM 12/15/2011 2017/2036 94.6 150.0 â—Š IDA Third Rural Transport Specific Investment Additional Financing Credit assists the Government’s improvements in rural communities’ access to district roads through rehabilitation, improved maintenance, and strengthened management capacity. Total cost: $112.8 million. SDN 12/15/2011 2017/2036 62.2 97.0 â—Š IDA Medium Cities Development Specific Investment Credit increases access to improved and modernized urban infrastructure services in Lao Cai City, Phy Ly City, and Vinh City. Total cost: $258.9 million. SDN 12/15/2011 2017/2036 132.5 210.0 â—Š IDA First Climate Change Development Policy Credit supports the Government in addressing climate change by strengthening institutional capacity to promote resilient and low-carbon-intensity development and policies. Total cost: $70 million. SDN 2/2/2012 2017/2037 45.2 70.0 â—Š IDA Mekong Delta Region Urban Upgrading Specific Investment Credit improves the infrastructure and delivery of services in low-income areas in six project cities in the Mekong Delta region. Total cost: $398 million. SDN 3/22/2012 2017/2037 188.3 292.0 IBRD/IDA Second Power Sector Reform Development Policy Loan/Credit supports the Government in the design and implementation of a competitive and transparent market for efficient electricity generation 2018/2042 n.a. 100.0 l and use. Total cost: $200 million. SDN 3/22/2012 2017/2037 64.5 100.0 c â—Š IDA Forest Sector Development Specific Investment Additional Financing Credit develops programs for sustainable and profitable management of plantation forests and the conservation of biodiversity in special-use forests. Total cost: $31.5 million. SDN 3/22/2012 2017/2036 19.0 30.0 â—Š IDA Coastal Resources for Sustainable Development Specific Investment Credit improves institutional capacity for the sustainable management of coastal fisheries, benefitting smallholder aquaculture farms and fishing-dependent households. Total cost: $117.9 million. SDN 5/10/2012 2017/2037 64.6 100.0 Total: 765.60 6627.6 Note: Numbers may not add to totals because of rounding. â—Š denotes projects with actual involvement of civil society organizations in identification, preparation, and/or appraisal, and with intended civil society participation in the implementation, monitoring, and evaluation phases. n.a. = not applicable; l = IBRD loan; c = IDA credit; g = IDA grant; gt = IDA guarantee. a. SDN = Sustainable Development Network; FPD = Financial and Private Sector Development; HDN = Human Development Network; PREM = Poverty Reduction and Economic Management; OPCS = Operations Policy and Country Services. b. IDA funds are denominated in Special Drawing Rights (SDRs), which are valued on the basis of a “basketâ€? of currencies. The U.S. dollar equivalent of the SDR amount reflects the exchange rates in effect at the time of the negotiations of the credit or grant. c. Financing provided by trust funds administered by the Bank. d. One of the three combined loans for the Integrated Economic Development of Small Towns Specific Investment Loan for China has a loan maturity/repayment date of 2017/2041. Summaries of Operations Approved During Fiscal 2012, Europe and Central Asia View Excel Version Principal amount Date of (millions) a b Country/Project name Network approval Maturities SDR US$ Albania IBRD Dam Safety (Phase 5) Adaptable Program Additional Financing Loan safeguards hydroelectric plants on the Drin and Mat river cascades and improves their operational efficiency and power supply stability. Total cost: $21.6 million. SDN 12/20/2011 2018/2029 n.a. 21.6 â—Š IBRD Social Assistance Modernization Specific Investment Loan supports Government reforms to improve the transparency, equity, and efficiency of its poverty reduction and social assistance programs. Total cost: $185.8 million. HDN 4/3/2012 2019/2040 n.a. 50.0 Armenia â—Š IBRD Irrigation Rehabilitation Emergency Specific Investment Additional Financing Loan improves water use efficiency through rehabilitation of irrigation schemes and fosters rural employment in selected marzes (provinces). Total cost: $21.6 million. SDN 10/25/2011 2022/2036 n.a. 18.0 â—Š IBRD/IDA Third Development Policy Operation Loan/Credit aims to protect the poor and support human capital development, while improving competitiveness by alleviating select private sector and governance 2022/2037 n.a. 30.0 l constraints. Total cost: $80 million. PREM 2/14/2012 2017/2037 32.6 50.0 c â—Š IDA Third Social Investment Fund Sector Investment Additional Financing Credit improves the quality, access to and sustainability of community infrastructure in poor communities, develops capacity to sustain service delivery, and creates short-term employment. Total cost: $14.6 million. HDN 2/14/2012 2017/2036 7.1 11.0 â—Š IBRD Municipal Water Specific Investment Loan improves the quality and availability of the water supply in selected service areas of the Armenian Water and Sewerage Company. Total cost: $18 million. SDN 2/21/2012 2022/2037 n.a. 15.0 Azerbaijan â—Š IBRD Internally Displaced Persons Living Standards and Livelihoods Specific Investment Loan improves the living conditions and increases the economic self-reliance of targeted internally displaced persons. Total cost: 78.4 million. SDN 10/27/2011 2016/2031 n.a. 50.0 Bosnia and Herzegovina â—Š IDA Irrigation Development Specific Investment Credit improves the performance of the irrigation systems and the irrigation institutions to support commercial agricultural producers in the project areas. Total cost: $47 million. SDN 5/3/2012 2017/2037 25.8 40.0 â—Š IBRD Enhancing Small and Medium Enterprises Access to Finance Financial Intermediary Additional Financing Loan continues to enhance access to finance for small and medium enterprises in the context of the global financial crisis. Total cost: $120 million. FPD 5/17/2012 2022/2037 n.a. 120.0 Croatia IBRD Trade and Transport Integration Specific Investment Additional Financing Loan develops trade along Corridor Vc through increased capacity, efficiency, and quality of services. Total cost: $66.9 million. SDN 8/4/2011 2023/2034 n.a. 66.9 IBRD Integrated Land Administration System Specific Investment Loan further improves the Croatian Government’s real property registration system and supports the development of a national spatial data infrastructure. Total cost: $26.5 million. SDN 8/4/2011 2015/2031 n.a. 23.8 Georgia â—Š IDA Third Development Policy Operation Credit supports the Government’s policy reform program to facilitate post-economic crisis recovery through improved public finance management, social safety nets, and external competitiveness. Total cost: $40 million. PREM 7/21/2011 2016/2036 25.0 40.0 â—Š IBRD/IDA Second Secondary and Local Roads Specific Investment Loan/Credit improves local connectivity and travel time through road rehabilitation, and strengthens the Government’s network-management 2022/2037 n.a. 30.0 l capacity. Total cost: $87.5 million. SDN 3/15/2012 2017/2037 25.8 40.0 c â—Š IBRD Regional Development Specific Investment Loan supports the development of infrastructure and institutional capacity for a tourism-based economy and cultural heritage circuits in the Kakheti region. Total cost: $75 million. SDN 3/20/2012 2022/2037 n.a. 60.0 â—Š IDA Third East-West Highway Improvement Specific Investment Additional Financing Loan reduces road transport costs and improves access, ease of transit, and safety along the central part of the East-West Corridor. Total cost: $53.8 million. SDN 6/26/2012 2017/2037 27.7 43.0 Kazakhstan â—Š IBRD East-West Roads Project: Western Europe-Western China International Transit Corridor Specific Investment Loan increases transport efficiency within Almaty Oblast, and modernizes highway management on sections of the Western Europe-Western China Road Corridor. Total cost: $1,256 million. SDN 5/1/2012 2017/2031 n.a. 1,068.0 Kyrgyz Republic IDA Economic Recovery Support Development Policy Credit/Grant supports strengthened governance of public assets and revenues, and 2022/2051 10.4 16.5 c protection of essential social spending. Total cost: $30 million. PREM 8/2/2011 n.a. 8.5 13.5 g â—Š IDA Bishkek and Osh Urban Infrastructure Specific Investment Additional Financing Credit/Grant increases the availability of social infrastructure and basic urban services in the small towns and the cities of 2022/2051 5.5 8.7 c Bishkek and Osh. Total cost: $18.7 million. SDN 1/12/2012 n.a. 4.5 7.1 g IDA Financial Sector Development Specific Investment Credit/Grant enhances financial sector stability, and increases access to financial 2022/2052 4.7 7.2 c services. Total cost: $13 million. FPD 3/8/2012 n.a. 3.9 5.9 g The former Yugoslav Republic of Macedonia â—Š IBRD Policy Based Guarantee strengthens public finance sustainability and the financial sector, improves performance of social protection, and enhances incentives for formal labor market participation. Total cost: $134.9 million. PREM 11/10/2011 n.a. n.a. 134.9 â—Š IBRD Municipal Services Improvement Specific Investment Additional Financing Loan improves transparency, financial sustainability, and delivery of targeted municipal services in the participating municipalities. Total cost: $50 million. SDN 5/10/2012 2017/2030 n.a. 50.0 Moldova IDA Health Services and Social Assistance Specific Investment Additional Financing Credit increases access to quality and efficient health services to reduce mortality and disability for the local population and improves targeting of social transfers and services to the poor. Total cost: $34.2 million. HDN 12/8/2011 2017/2036 6.6 10.2 IDA Quality Education in the Rural Areas of Moldova Specific Investment Additional Financing Credit assists in improving the quality of education in rural areas through Technical Assistance in implementation of the Government’s Education Reform Program. Total cost: $1 million. HDN 3/20/2012 2017/2037 0.7 1.0 â—Š IDA Agriculture Competitiveness Specific Investment Credit enhances the modernization of the food safety management system, improves market access for farmers, and supports sustainable land- management practices. Total cost: $37.4 million. SDN 5/1/2012 2017/2037 11.6 18.0 Montenegro IBRD First Programmatic Financial Sector Development Policy Loan supports reforms in the legal, regulatory, and supervisory framework for the banking sector in line with international good practices and EU standards. Total cost: $85 million. FPD 9/1/2011 2017/2031 n.a. 85.0 â—Š IBRD Higher Education and Research for Innovation and Competitiveness Specific Investment Loan supports improvements in the quality and relevance of higher education and research through reforming the higher education finance and quality assurance systems and strengthening research and development capabilities. Total cost: $15.9 million. HDN 1/24/2012 2016/2026 n.a. 16.0 IBRD Financial Sector Policy Based Guarantee strengthens and reforms the banking sector, which is a critical pre-condition for sustainable economic recovery and balanced private-sector-led growth. Total cost: $79.2 million. FPD 6/28/2012 n.a. n.a. 79.2 Poland â—Š IBRD First Public Finance Development Policy Loan consolidates public finance to ensure decline of the public fiscal deficit, strengthens fiscal institutions through medium-term regulations, and advances long- term reforms. Total cost: $991.4 million. PREM 6/19/2012 2021/2032 n.a. 991.4 Romania â—Š IBRD Third Development Policy Loan supports the Government’s reforms to improve public expenditure management, increase the efficiency, targeting and sustainability of social assistance programs, and strengthen regulation and supervision in the financial sector. Total cost: $560.6 million. PREM 12/19/2011 2023/2023 n.a. 560.6 â—Š IBRD Development Policy Loan with a Deferred Drawdown Option supports the Government’s reforms for fiscal stability, improves public financial management and revenue-raising capacity, and strengthens energy and health sectors. Total cost: $1,333.3 million. PREM 6/12/2012 2024/2024 n.a. 1,333.0 Tajikistan â—Š IDA Energy Loss Reduction Specific Investment Additional Financing Grant assists the electric and gas sectors in reducing commercial losses, improving the utilities’ financial viability in a socially responsible manner. Total cost: $18 million. SDN 2/14/2012 n.a. 11.8 18.0 IDA Land Registration and Cadastre System for Sustainable Agriculture Specific Investment Additional Financing Grant expands farmland restructuring to increase the number of immovable properties with secure tenure rights, and supports institutional development of property registration. Total cost: $10.1 million. SDN 2/21/2012 n.a. 6.6 10.0 â—Š IDA Municipal Infrastructure Development Specific Investment Additional Financing Grant improves the delivery of basic municipal services, and contributes to the mitigation of anticipated floods with the supply of emergency materials. Total cost: $13 million. SDN 5/8/2012 n.a. 7.7 11.85 â—Š IDA Private Sector Competitiveness Specific Investment Grant removes constraints to business development and investment by simplifying registration processes, improving financial service regulations, and encouraging mining industry development. Total cost: $10 million. FPD 5/10/2012 n.a. 6.5 10.0 Turkey â—Š IBRD Private Sector Renewable Energy and Energy Efficiency Specific Investment Additional Financing Loan provides credit lines to financial institutions to support private energy production from indigenous renewable sources, enhance energy efficiency and reduce greenhouse 2018/2039 n.a. 200.0 l gas emissions. Total cost: $650 million. SDN 11/22/2011 2022/2036 n.a. 300.0 l IBRD Third Programmatic Environmental Sustainability and Energy Sector Development Policy Loan enhances energy security by promoting private-sector clean technology investments, integrates environmental sustainability principles in sectoral policies, and improves environmental management effectiveness and efficiency. Total cost: $600 million. SDN 3/27/2012 2020/2027 n.a. 600.0 Ukraine IBRD Second Export Development Financial Intermediary Additional Financing Loan provides working capital and investment finance to Ukraine’s private exporting sector and expands the banking sector’s available lending products. Total cost: $150 million. FPD 8/25/2011 2017/2041 n.a. 150.0 Uzbekistan IBRD Advanced Electricity Metering Specific Investment Loan reduces commercial losses of Uzbekenergo’s three regional power- distribution companies through improvements to metering, billing, and commercial management system. Total cost: $246.1 million. SDN 3/27/2012 2017/2036 n.a. 180.0 Total 233.0 6,595.3 c Special Financing Kosovo Second Sustainable Employment Development Policy Trust Fund Grant strengthens fiscal management and increases transparency and accountability of public expenditures, and lays institutional foundations for sustainable employment and growth. Total cost: $36.5 million. HDN 5/3/2012 n.a. n.a. 30.0 Note: Numbers may not add to totals because of rounding. â—Š denotes projects with actual involvement of civil society organizations in identification, preparation, and/or appraisal, and with intended civil society participation in the implementation, monitoring, and evaluation phases. n.a. = not applicable; l = IBRD loan; c = IDA credit; g = IDA grant; gt = IDA guarantee. a. SDN = Sustainable Development Network; FPD = Financial and Private Sector Development; HDN = Human Development Network; PREM = Poverty Reduction and Economic Management; OPCS = Operations Policy and Country Services. b. IDA funds are denominated in Special Drawing Rights (SDRs), which are valued on the basis of a “basketâ€? of currencies. The U.S. dollar equivalent of the SDR amount reflects the exchange rates in effect at the time of the negotiations of the credit or grant. c. Financing provided by trust funds administered by the Bank. Summaries of Operations Approved During Fiscal 2012, Latin America and the Caribbean View Excel Version Principal amount Date of (millions) a b Country/Project name Network approval Maturities SDR US$ Bolivia â—Š IDA Agricultural Innovation and Services Specific Investment Credit strengthens Bolivia’s Agricultural and Forestry Innovation System to improve productivity, food security, sustainable rural development, and families’ income-earning potential. Total cost: $52.9 million. SDN 7/21/2011 2017/2036 24.4 39.0 â—Š IDA Community Investment in Rural Areas Specific Instrument Credit supports community capacity building for disadvantaged rural communities to assist with expanding local assessment and management abilities for development priorities. Total cost: $43 million. SDN 7/21/2011 2017/2036 25.0 40.0 Brazil â—Š IBRD Federal Integrated Water Sector Technical Assistance Loan supports the Government’s program to strengthen capacity of key federal institutions to integrate water sector management and improve water quality. Total cost: $143.1 million. SDN 7/12/2011 2016/2041 n.a. 107.3 IBRD Energy and Mineral Sectors Strengthening Specific Investment Loan strengthens public-sector institutions to manage, evaluate, and regulate energy and mining resources for increased social and environmental sustainability. Total cost: $53.6 million. SDN 12/20/2011 2029/2029 n.a. 49.6 â—Š IBRD Sergipe Water Specific Investment Loan improves the quality and sustainability of water in the Sergipe River Basin through enhanced Government sector and soil management practices. Total cost: $117.1 million. SDN 1/26/2012 2017/2036 n.a. 70.3 â—Š IBRD Upgrading and Greening the Rio de Janeiro Urban Rail System Specific Investment Additional Financing Loan improves the transport management, policy framework, and service of the metropolitan rail system, and institutes a lower carbon growth path. Total cost: $600 million. SDN 1/26/2012 2017/2041 n.a. 600.0 â—Š IBRD Pernambuco Rural Economic Inclusion Specific Investment Loan promotes investment in rural business initiatives, expansion of rural access to water, and improved management of other complementary infrastructure systems. Total cost: $179 million. SDN 3/6/2012 2018/2040 n.a. 100.0 â—Š IBRD Piauí Green Growth and Inclusion Development Policy Loan supports Government efforts to increase green growth rates through improved land-tenure security, sustainable agriculture practices, and improved statewide public education. Total cost: $350 million. SDN 3/6/2012 2017/2030 n.a. 350.0 â—Š IBRD Expanding Opportunities, Enhancing Equity in the State of Pernambuco Development Policy Loan strengthens public policies that expand economic opportunities and enhance equity of access to quality services for the people of Pernambuco. Total cost: $500 million. PREM 3/22/2012 2017/2041 n.a. 500.0 â—Š IBRD São Bernardo Integrated Water Management in São Paulo Adaptable Program Additional Financing Loan supports policies to reform land-use practices and reverse deterioration of the Alto Tietê River Basin, improving water sanitation for the region’s peri-urban poor. Total cost: $238.6 million. SDN 3/29/2012 2017/2042 n.a. 20.8 â—Š IBRD Ceará Rural Sustainable Development and Competitiveness Specific Investment Loan improves the sustainability of rural production and income generation, and contributes to Government efforts to universalize access to water services. Total cost: $150 million. SDN 4/5/2012 2017/2036 n.a. 100.0 â—Š IBRD Sector Wide Approach to Strengthen Public Investment Specific Investment Loan improves the planning and implementation of public investments by strengthening the capacity of the Government’s planning agency and selected sector secretariats. Total cost: $903.5 million. FPD 5/1/2012 2016/2041 n.a. 480.0 â—Š IBRD Recife Education and Public Management Specific Investment Loan expands coverage of early child education, creates conditions more conducive to learning in fundamental education, and improves municipal public management. Total cost: $921.6 million. HDN 5/29/2012 2019/2036 n.a. 130.0 â—Š IBRD Bahia Socio-Economic Development for Inclusive Growth Development Policy Loan supports the State’s program to reduce social inequality, develop more efficient institutional infrastructure and logistics, and strengthen public sector management. Total cost: $700 million. PREM 6/28/2012 2013/2042 n.a. 700.0 Caribbean â—Š IDA Caribbean Regional Communications Infrastructure Adaptable Program Credit/Grant increases access to regional-broadband networks, and advances the development of a region-wide service industry, enabled 2022/2052 14.3 22.0 c by information and communication technologies. Total cost: $98 million. SDN 5/22/2012 n.a. 2.0 3.0 g Chile â—Š IBRD Tertiary Education Finance for Results Specific Investment Loan improves the quality and relevance of tertiary education by strengthening the link between institutional funding and accountability for performance. Total cost: $160 million. HDN 3/13/2012 2016/2020 n.a. 40.0 Colombia â—Š IBRD Support to the National Urban Transit Program Specific Investment Loan enhances the efficiency, affordability, and environmental sustainability of select public transit services through integration and rehabilitation of existing systems. Total cost: $407 million. SDN 7/21/2011 2026/2026 n.a. 350.0 â—Š IBRD First Programmatic Fiscal Sustainability and Growth Resilience Development Policy Loan supports the Government’s fiscal management reform program to enhance economic resilience, financial predictability, and sustainability, and social spending management. Total cost: $300 million. PREM 7/21/2011 2029/2029 n.a. 300.0 â—Š IBRD Sustainable Development Specific Investment Additional Financing Loan supports the implementation of policy reforms and related investments to strengthen the capacity of regional authorities to address environmental problems. Total cost: $11.1 million. SDN 3/8/2012 2030/2030 n.a. 10.0 Dominican Republic â—Š IBRD Third Performance and Accountability of Social Sectors Development Policy Loan supports the redesign of the Government’s Solidaridad social program to enhance performance, and improve budget management, transparency, and accountability. Total cost: $70 million. HDN 11/17/2011 2016/2041 n.a. 70.0 â—Š IBRD Emergency Recovery and Disaster Management Specific Investment Additional Financing Loan restores and strengthens public infrastructure damaged by tropical storms Olga and Noel, and builds capacity for future risk assessment. Total cost: $20 million. SDN 11/17/2011 2016/2041 n.a. 20.0 El Salvador â—Š IBRD Strengthening Public Health Care System Specific Investment Loan supports improved coverage, quality, and equity of priority health services and strengthens the Government’s capacity to manage public health functions. Total cost: $80 million. HDN 7/21/2011 2016/2041 n.a. 80.0 â—Š IBRD Education Quality Improvement Specific Investment Loan improves access, retention and graduation rates for students in secondary education to reduce economic inequality and increase global competitiveness. Total cost: $70.4 million. HDN 12/13/2011 2017/2041 n.a. 60.0 Grenada IDA Safety Net Advancement Specific Investment Credit strengthens the Conditional Cash Transfer Program’s coverage of poor households receiving cash transfers and improves the monitoring of vulnerable households. Total cost: $23.2 million. HDN 7/5/2011 2021/2051 3.2 5.0 Haiti â—Š IDA Education for All (Phase II) Adaptable Program Grant improves access and quality of primary education for under-served populations and strengthens education institutions' capacity and governance in post- earthquake Haiti. Total cost: $70 million. HDN 12/1/2011 n.a. 43.5 70.0 â—Š IDA Disaster Risk Management and Reconstruction Emergency Recovery Grant improves capacity for disaster response management, coordination, implementation and monitoring, and enhances critical transport infrastructure and communications networks. Total cost: $60 million. SDN 12/1/2011 n.a. 37.6 60.0 â—Š IDA Re-launching Agriculture: Strengthening Agriculture Public Services II Specific Investment Grant increases access of small farmers to agriculture extension services and animal and plant health training in 14 priority watersheds. Total cost: $50 million. SDN 12/1/2011 n.a. 25.1 40.0 Honduras â—Š IDA Improving Public Sector Performance Technical Assistance Credit strengthens the capacity of the Government’s public finances management system, upgrades the e-procurement platform, and reforms internal expenditure controls. Total cost: $18.2 million. PREM 12/6/2011 2017/2036 11.7 18.2 â—Š IDA First Programmatic Reducing Vulnerabilities for Growth Development Policy Credit assists the Government’s fiscal and civil reform programs to strengthen its fiscal management and implements an integrated citizen security policy. Total cost: $86 million. PREM 12/6/2011 2017/2036 55.1 86.0 Jamaica IBRD Second Programmatic Debt and Fiscal Sustainability Development Policy Loan supports Government reforms to increase public spending controls, debt sustainability, and improvements to financial management and the tax system. Total cost: $100 million. PREM 9/8/2011 2021/2029 n.a. 100.0 Mexico â—Š IBRD Savings and Credit Sector Consolidation and Financial Inclusion Specific Investment Loan supports the consolidation of savings and credit institutions and deepening of financial inclusion for marginal and indigenous populations and women. Total cost: $209.6 million. SDN 12/1/2011 2023/2023 n.a. 100.0 â—Š IBRD Forests and Climate Change Sector Investment Loan supports rural communities to sustainably manage their forests, build social organizations, and generate additional income from forest products and services. Total cost: $725 million. SDN 1/31/2012 2024/2024 n.a. 350.0 â—Š IBRD Strengthening Social Resilience to Climate Change Development Policy Loan supports policies to improve State adaptation planning, municipal disaster risk reduction and territorial development actions, and community sustainable forest management. Total cost: $300.8 million. SDN 3/1/2012 2023/2023 n.a. 300.8 â—Š IBRD Second Programmatic Upper Secondary Education Development Policy Loan supports Government reforms to improve the internal efficiency and quality of upper secondary education and its responsiveness to the labor market. Total cost: $300.8 million. HDN 3/13/2012 2023/2023 n.a. 300.8 IBRD Fiscal Risk Management Development Policy Loan fosters the effective implementation of public expenditure programs to support the institutionalization of integrated risk management and mitigation frameworks. Total cost: $300.8 million. PREM 3/22/2012 2029/2029 n.a. 300.8 â—Š IBRD Modernization of the National Meteorological Service for Improved Climate Adaptation Specific Investment Loan strengthens the capacity of the national meteorological service to deliver timely weather and climate information for water-resource and disaster-risk management. Total cost: $171.3 million. SDN 5/17/2012 2024/2024 n.a. 105.3 Nicaragua â—Š IDA Rural Roads Infrastructure Improvement Specific Investment Grant/Credit improves rural populations’ access to markets and social and administrative services through infrastructure improvements and n.a. 18.6 29.0 g institutional risk management development. Total cost: $39.5 million. SDN 12/13/2011 2022/2051 3.9 6.0 c â—Š IDA Second Support to the Education Sector Specific Investment Credit improves student retention rates in primary schools across 40 municipalities and strengthen the Ministry of Education’s education management capacity. Total cost: $32.9 million. HDN 1/17/2012 2022/2051 15.8 25.0 â—Š IDA Rural Telecommunications Specific Investment Additional Financing Credit improves telecommunications infrastructure and strengthens sector regulation to increase access to and reduce costs of telecommunications services in rural areas. Total cost: $6.5 million. SDN 6/14/2012 2022/2052 3.3 5.0 Panama â—Š IBRD Disaster Risk Management Development Policy Loan with Catastrophe Deferred Drawdown Option enhances the Government’s capacity to implement its natural disaster Risk Management Program, providing a flexible source of emergency financing. Total cost: $66 million. SDN 10/18/2011 2014/2026 n.a. 66.0 Paraguay â—Š IBRD Public Sector Development Policy Loan strengthens the Government’s internal financial control administration, improves the tax administration system, and exerts oversight of state-owned enterprises. Total cost: $100 million. PREM 12/13/2011 2022/2036 n.a. 100.0 Uruguay â—Š IBRD Second Programmatic Public Sector, Competitiveness and Social Inclusion Development Policy Loan supports Government reforms to develop public sector administration, increase the quality of key social services, and improve trade investments. Total cost: $260 million. PREM 10/25/2011 2027/2032 n.a. 260.0 â—Š IBRD Sustainable Management of Natural Resources and Climate Change Specific Investment Loan supports the Government’s efforts to promote farmer adoption of improved environmentally sustainable agricultural and livestock practices that are climate smart. Total cost: $55 million. SDN 11/17/2011 2027/2032 n.a. 49.0 IBRD Institutions Building Technical Assistance Additional Financing Loan supports the Government’s public sector modernization program, strengthening institutions involved with policy reforms for taxation, business promotion, and social protection. Total cost: $10 million. PREM 12/6/2011 2027/2032 n.a. 10.0 Total 283.5 6,628.8 Note: Numbers may not add to totals because of rounding. â—Š denotes projects with actual involvement of civil society organizations in identification, preparation, and/or appraisal, and with intended civil society participation in the implementation, monitoring, and evaluation phases. n.a. = not applicable; l = IBRD loan; c = IDA credit; g = IDA grant; gt = IDA guarantee. a. SDN = Sustainable Development Network; FPD = Financial and Private Sector Development; HDN = Human Development Network; PREM = Poverty Reduction and Economic Management; OPCS = Operations Policy and Country Services. b. IDA funds are denominated in Special Drawing Rights (SDRs), which are valued on the basis of a “basketâ€? of currencies. The U.S. dollar equivalent of the SDR amount reflects the exchange rates in effect at the time of the negotiations of the credit or grant. c. Financing provided by trust funds administered by the Bank. Summaries of Operations Approved During Fiscal 2012, Middle East and North Africa View Excel Version Principal amount Date of (millions) a b Country/Project name Network approval Maturities SDR US$ Djibouti IDA Strengthening Institutional Capacity and Management of the Education System Specific Investment Grant strengthens the institutional capacity of the Ministry of National Education and Vocational Training for improved management of the education system. Total cost: $6 million. HDN 6/12/2012 n.a. 3.9 6.0 â—Š IDA Social Safety Net Emergency Recovery Grant supports short- term employment opportunities in community-based, labor-intensive works, and supports improvements in nutrition practices for pre-school children and pregnant women. Total cost: $5 million. HDN 6/12/2012 n.a. 3.3 5.0 IDA Power Access and Diversification Project Specific Investment Grant Additional Financing increases access of underserved populations to electricity services, and improves power provider efficiency through investments aimed at reducing electricity losses. Total cost: $5.2 million. SDN 6/12/2012 n.a. 3.4 5.2 â—Š IDA Rural Community Development and Water Mobilization Specific Investment Grant increases access of rural communities to water, and enhances their capacity to manage agro-pastoral resources using a community-based development approach. Total cost: $3.2 million. SDN 6/12/2012 n.a. 2.0 3.0 Arab Republic of Egypt â—Š IBRD Giza North Power Project Specific Investment Loan supports construction of thermal-power turbines and infrastructure to contribute to improved capacity, efficiency, and security of the electricity supply. Total cost: $792 million. SDN 2/14/2012 2019/2040 n.a. 240.0 â—Š IBRD Emergency Labor Intensive Investment Emergency Recovery Loan creates short-term employment opportunities for unemployed unskilled and semi-skilled workers, and provides access to basic infrastructure services to targeted poor areas. Total cost: $200 million. HDN 6/28/2012 2019/2041 n.a. 200.0 Jordan â—Š IBRD First Programmatic Development Policy Loan supports the Government’s medium-term development plan to improve transparency and accountability, enhance fiscal management efficiency, and support private sector-driven growth. Total cost: $250 million. PREM 1/24/2012 2017/2031 n.a. 250.0 Lebanon â—Š IBRD Cultural Heritage and Urban Development Specific Investment Additional Financing Loan rehabilitates historic city centers and urban infrastructures, expands archaeological site conservation and management, and strengthens municipal institutions and project- management capacity. Total cost: $117.3 million. SDN 4/12/2012 2023/2023 n.a. 27.0 Morocco â—Š IBRD Ouarzazate I Concentrated Solar Power Plant Specific Investment Loan supports the development of a 500 Megawatt solar power plant to improve local power supply while mitigating greenhouse gas emissions. Total cost: $1,427 million. SDN 11/17/2011 2017/2041 n.a. 200.0 â—Š IBRD First Skills and Employment Development Policy Loan supports Government reforms to improve skills, productivity, and quality of employment, and improve the quality of service delivery to citizens. Total cost: $200 million. HDN 6/12/2012 2018/2041 n.a. 100.0 â—Š IBRD Judicial Performance Enhancement for Service to Citizen Specific Investment Loan strengthens justice sector capacity to deliver efficient, timely, and transparent services through pilot reform programs and improved central oversight of courts. Total cost: $15.8 million. PREM 6/12/2012 2018/2041 n.a. 15.8 â—Š IBRD National Initiative for Human Development 2 Program for Results Loan improves access to enhanced participatory local governance mechanisms, basic infrastructure, social services, and economic opportunities across the country. Total cost: $1,115 million. SDN 6/28/2012 2018/2041 n.a. 300.0 â—Š Micro, Small and Medium Enterprise Development Adaptable Program Loan improves access to finance for micro, small, and medium enterprises. Total cost: $50 million. FPD 6/28/2012 2019/2041 n.a. 50.0 Tunisia IBRD Micro, Small and Medium Enterprise Development Adaptable Program Loan catalyzes credit financing, risk-sharing, and technical assistance for MSMEs to support improvements in employment, competitiveness, and incomes in Tunisia. Total cost: $100 million. FPD 7/14/2011 2017/2033 n.a. 50.0 The Republic of Yemen â—Š IDA Labor Intensive Public Works Specific Investment Grant assists Yemen’s twenty-one governorates to provide needed infrastructure to improve access to basic public services and to create short-term employment. Total cost: $65 million. SDN 5/1/2012 n.a. 39.3 61.0 Total 51.9 1,513.0 c Special Financing West Bank and Gaza Gaza Electricity Network Rehabilitation Specific Investment Trust Fund Grant rehabilitates and expands the electricity networks in Gaza in order to improve their reliability and performance. Total cost: $16 million. SDN 3/6/2012 n.a. n.a. 8.0 Fourth Palestinian National Development Policy Trust Fund Grant helps the Palestinian Authority implement the new National Development Plan by supporting efforts to improve its fiscal position and increase government transparency and accountability. Total cost: $40 million. PREM 3/6/2012 n.a. n.a. 40.0 Municipal Development Specific Investment Trust Fund Additional Financing Grant improves municipal management practices for better accountability to lay the foundation for improving service delivery in subsequent project phases. Total cost: $43.3 million. SDN 3/6/2012 n.a. n.a. 2.0 Second Land Administration Specific Investment Trust Fund Grant improves the design and implementation of the land registration system for municipalities, villages, and project committees in the Dura district. Total cost: $8.7 million. SDN 4/26/2012 n.a. n.a. 3.0 Government Services for Business Development Technical Assistance Trust Fund Grant improves the Ministry of National Economy’s ability to deliver timely and quality information, data, and services to promote business development. Total cost: $3 million. FPD 5/8/2012 n.a. n.a. 3.0 Education-to-Work Transition Specific Investment Trust Fund Grant improves youth education-to-work transitions through fostering partnerships with employers, and enhancing the capacity to collect, analyze, and disseminate education-policy data. Total cost: $6.5 million. HDN 5/15/2012 n.a. n.a. 6.5 Note: Numbers may not add to totals because of rounding. â—Š denotes projects with actual involvement of civil society organizations in identification, preparation, and/or appraisal, and with intended civil society participation in the implementation, monitoring, and evaluation phases. n.a. = not applicable; l = IBRD loan; c = IDA credit; g = IDA grant; gt = IDA guarantee. a. SDN = Sustainable Development Network; FPD = Financial and Private Sector Development; HDN = Human Development Network; PREM = Poverty Reduction and Economic Management; OPCS = Operations Policy and Country Services. b. IDA funds are denominated in Special Drawing Rights (SDRs), which are valued on the basis of a “basketâ€? of currencies. The U.S. dollar equivalent of the SDR amount reflects the exchange rates in effect at the time of the negotiations of the credit or grant. c. Financing provided by trust funds administered by the Bank. Summaries of Operations Approved During Fiscal 2012, South Asia View Excel Version Principal amount Date of (millions) a b Country/Project name Network approval Maturities SDR US$ Afghanistan IDA Financial Sector Rapid Response Specific Investment Loan will assist Da Afghanistan Bank to develop action plans for improved banking supervision and implement a modern national payment system. Total cost: $19 million. FPD 8/25/2011 n.a. 11.9 19.0 â—Š IDA Afghanistan Rural Access Emergency Recovery Grant rehabilitates and maintains secondary and tertiary roads to benefit rural communities for all-season road access to basic services and facilities. Total cost: $332 million. SDN 6/26/2012 n.a. 82.8 125.0 Bangladesh â—Š IDA Third Primary Education Development Specific Investment Credit will increase the number of children participating and completing primary education, and improve the quality and effectiveness of education resources. Total cost: $5,860 million. HDN 8/25/2011 2022/2051 187.5 300.0 IDA Rural Electification and Renewable Energy Development Additional Financing Credit will increase the access to energy-efficient electricity in rural Bangladesh through solar-home-system and renewable- energy mini-grid installations. Total cost: $255.1 million. SDN 10/4/2011 2021/2051 107.6 172.0 â—Š IDA Northern Areas Reduction-of-Poverty Initiative: Women's Economic Empowerment Specific Investment Credit facilitates access to urban employment for poor and vulnerable women through technical and life-skills training, and other social supports. Total cost: $39.7 million. SDN 10/27/2011 2022/2051 18.2 29.3 â—Š IDA Second Local Governance Support Specific Investment Credit will strengthen Union Parishads to provide accountable and responsive local services, supported by an efficient and transparent intergovernmental fiscal system. Total cost: $545.4 million. SDN 11/29/2011 2022/2051 185.8 290.0 â—Š IDA Rural Water Supply and Sanitation Specific Investment Credit will increase the hygienic sanitation and provision of safe water to rural areas of Bangladesh, and improve disaster response capacity. Total cost: $92.6 million. SDN 3/22/2012 2022/2052 48.4 75.0 India â—Š IDA National Rural Livelihoods Specific Investment Credit supports institutions enabling the rural poor to increase household income through sustainable livelihood enhancements and improved access to financial and public services. Total cost: $1,168.5 million. SDN 7/5/2011 2017/2036 635.8 1,000.0 â—Š IDA Capacity Building for Urban Development Technical Assistance Credit will strengthen capacity building for effective urban poverty alleviation through program implementation and training with select Indian Urban Local Bodies. Total cost: $60 million. SDN 7/21/2011 2017/2036 37.1 60.0 â—Š IBRD/IDA West Bengal Accelerated Development of Minor Irrigation Specific Investment Loan/Credit will enhance agricultural production of small and marginal farmers through development of community-managed, minor irrigation schemes, and agriculture support services. 2017/2029 n.a. 125.0 l Total cost: $300 million. SDN 10/4/2011 2017/2036 78.2 125.0 c â—Š IDA Second Kerala Rural Water Supply and Sanitation Specific Investment Credit supports the sustainable water supply services in Kerala through technical assistance and infrastructure development to implement a decentralized, demand-responsive system. Total cost: $241.2 million. SDN 12/15/2011 2017/2036 98.0 155.3 â—Š IDA Uttar Pradesh Health Systems Strengthening Specific Investment Credit will improve the quality and accountability of health services delivery in Uttar Pradesh by strengthening public management and system capacities. Total cost: $170 million. HDN 12/20/2011 2017/2036 95.9 152.0 â—Š IDA North East Rural Livelihoods Specific Investment Credit improves rural livelihoods in participating North Eastern States through social and economic empowerment programs targeting women, youths, and the disadvantaged. Total cost: $144.4 million. SDN 12/20/2011 2017/2036 80.8 130.0 â—Š IDA Assam Agricultural Competitiveness Additional Financing Credit will use holistic approaches to increase productivity and market access of farmers and community groups within the Assam agricultural economy. Total cost: $76.3 million. SDN 3/8/2012 2017/2037 32.6 50.0 â—Š IBRD Assam State Roads Specific Investment Loan will enhance road connectivity of Assam by assisting the Public Works Roads Department to improve and effectively manage its network. Total cost: $400 million. SDN 3/13/2012 2017/2030 n.a. 320.0 â—Š IDA National Dairy Support Specific Investment Credit will increase productivity and improve the nutrition of milk animals, and improve market access of small holder producers through infrastructure investments. Total cost: $453.9 million. SDN 3/15/2012 2017/2036 218.8 352.0 â—Š IDA Secondary Education Specific Investment Credit supports the Government’s framework to increase the access and equity of quality secondary education through infrastructure and human capital investments. Total cost: $12,896 million. HDN 3/22/2012 2017/2037 322.4 500.0 â—Š IDA Rajasthan Agricultural Competitiveness Specific Investment Credit will examine sustainably increasing agricultural productivity and farmer incomes through an integrated agricultural development and water management program across Rajasthan. Total cost: $166.5 million. SDN 3/27/2012 2017/2037 70.3 109.0 â—Š IDA Bihar Rural Livelihoods Specific Investment Additional Financing Credit continues to enhance social and economic empowerment of the rural poor through community-level investment and institution development. Total cost: $140 million. SDN 5/31/2012 2017/2037 64.6 100.0 Nepal â—Š IDA Modernization of Rani Jamara Kulariya Irrigation Specific Investment Credit/Grant will improve water delivery and management along the Karnali River by modernizing the Rani Jamara and Kulariya 2021/2051 14.9 23.6 c Irrigation Scheme. Total cost: $49 million. SDN 7/5/2011 n.a. 12.3 19.4 g â—Š IDA Sunaula Hazar Din - Community Action for Nutrition Specific Investment Credit/Grant improves public attitudes toward child malnutrition and practices known to improve nutrition of women of 2022/2052 14.2 22.0 c reproductive age and children under the age of 2. Total cost: $40 million. HDN 6/26/2012 n.a. 11.7 18.0 g â—Š IDA Bridges Improvement and Maintenance Program for Results Credit provides safe, reliable, and cost effective bridges on Nepal’s Strategic Roads Network. Total cost: $100 million. SDN 6/28/2012 2022/2052 38.7 60.0 Pakistan â—Š IDA Social Safety Net Technical Assistance Additional Financing Credit will expand and strengthen the administration of the country’s safety net, with particular focus on the national income support program. Total cost: $2,255 million. HDN 3/6/2012 2017/2036 96.7 150.0 â—Š IBRD/IDA Tarbela Fourth Extension Hydropower Specific Investment Loan/Credit will facilitate a sustainable expansion in electricity generation capacity, and also strengthen the Government’s administrative capacity to develop hydropower resources. 2023/2036 n.a. 400.0 l Total cost: $914 million. SDN 3/20/2012 2017/2036 283.7 440.0 c â—Š IDA Punjab Irrigated Agriculture Productivity Improvement Specific Investment Credit will increase agricultural production in Punjab through the development of efficient irrigation systems and improved agricultural practices, such as crop diversification. Total cost: $423.5 million. SDN 3/20/2012 2017/2036 161.2 250.0 â—Š IDA Second Punjab Education Sector Specific Investment Credit supports the Government of Punjab’s education sector reform program to increase child school participation and achievement at all education levels. Total cost: $4,407 million. HDN 4/26/2012 2017/2037 225.0 350.0 â—Š IBRD/ IDA Natural Gas Efficiency Specific Investment Loan/Credit enhances the efficient supply of natural gas by reducing the physical and 2021/2039 n.a. 100.0 l commercial losses of gas in the pipeline system. Total cost: $272 million. SDN 4/26/2012 2017/2037 64.5 100.0 c Sri Lanka â—Š IDA Transforming the School Education System as the Foundation of a Knowledge Hub Specific Investment Credit will improve the quality and availability of primary and secondary education and re-orient learning outcomes for economic and social development. Total cost: $100 million. HDN 11/29/2011 2017/2036 64.1 100.0 IDA E-Sri Lanka Development Specific Investment Additional Financing Credit will promote the development, access, and use of information and communication technology to enhance the competitiveness of private sector enterprises. Total cost: $11 million. FPD 1/31/2012 2017/2036 7.1 11.0 â—Š IBRD Metro Colombo Urban Development Specific Investment Loan will reduce flooding in the Colombo Water Basin by strengthening local capacity to rehabilitate, maintain, and improve infrastructure and services. Total cost: $321 million. SDN 3/15/2012 2017/2036 n.a. 213.0 Total 3,370.80 6,445.60 Note: Numbers may not add to totals because of rounding. â—Š denotes projects with actual involvement of civil society organizations in identification, preparation, and/or appraisal, and with intended civil society participation in the implementation, monitoring, and evaluation phases. n.a. = not applicable; l = IBRD loan; c = IDA credit; g = IDA grant; gt = IDA guarantee. a. SDN = Sustainable Development Network; FPD = Financial and Private Sector Development; HDN = Human Development Network; PREM = Poverty Reduction and Economic Management; OPCS = Operations Policy and Country Services. b. IDA funds are denominated in Special Drawing Rights (SDRs), which are valued on the basis of a “basketâ€? of currencies. The U.S. dollar equivalent of the SDR amount reflects the exchange rates in effect at the time of the negotiations of the credit or grant. c. Financing provided by trust funds administered by the Bank. Governors and Alternates of The World Bank | June 30, 2012 Member Governor Alternate Afghanistan Omar Zakhilwal Mohammad M. Mastoor Albania Ridvan Bode Elisabeta Gjoni Algeria Karim Djoudi Abdelhak Bedjaoui Angola Ana Afonso Dias Lourenco Manuel Neto da Costa Antigua and Barbudaa Harold E. Lovelle Whitfield Harris, Jr. Argentina Hernan Lorenzino Mercedes Marco del Pont Armenia Tigran Davtyan Vardan Aramyan Australia Wayne Swan Bernie Ripoll Austria Maria Fekter Edith Frauwallner Azerbaijan Elman Siradjogly Rustamov Shahin Mustafayev Bahamas, The Perry G. Christie Ehurd Cunningham Bahraina Ahmed Bin Mohammed Al-Khalifa Yousif Abdulla Humood Bangladesh Abul Maal A. Muhith Iqbal Mahmood Barbados Christopher P. Sinckler Grantley W. Smith Belarusa Sergey Nikolayevich Rumas Andrei M. Kharkovets Belgium Steven Vanackere Luc Coene Belize Dean O. Barrow Yvonne Sharman Hyde Benin Marcel A. de Souza Jonas A. Gbian Bhutan Lyonpo Wangdi Norbu Nim Dorji Bolivia Elba Viviana Caro Hinojosa Luis Alberto Arce Catacora Bosnia and Herzegovina Vjekoslav Bevanda Aleksandar Dzombic Botswana Ontefetse Kenneth Matambo Solomon M. Sekwakwa Brazil Guido Mantega Alexandre Antonio Tombini Brunei Darussalama Haji Hassanal Bolkiah Abd Rahman Ibrahim Bulgariaa Simeon Djankov Dimitar Kostov Burkina Faso Lucien Marie Noel Bembamba Lene Sebgo Burundi Tabu Abdallah Manirakiza Leon Nimbona Cambodia Chhon Keat Porn Moniroth Aun Cameroon Emmanuel Nganou Djoumessi Dieudonne Evou Mekou Canada James Michael Flaherty Margaret Biggs Cape Verde Cristina Duarte Sandro de Brito Central African Republic Abdou Karim Meckassoua Sylvain Ndoutingai Chad Bedoumra Kordje Bichara Doudoua Chile Felipe Larrain Bascunan Rosanna Costa Costa China Xuren Xie Xiaosong Zheng Colombia Juan Carlos Echeverry Garzon Mauricio Santamaria Comoros Mohamed Ali Soilihi S. Soifiat Tadjiddine Alfeine Congo, Democratic Republic of Patrice Kitebi Kibol Mvul Jean-Claude Masangu Mulongo Congo, Republic of Pierre Moussa Leon Raphael Mokoko Costa Rica Edgar Ayales Esna Rodrigo Bolanos Zamora Côte d'Ivoire Charles Koffi Diby Moussa Dosso Croatia Slavko Linic Boris Lalovac Cyprus Vassos Shiarly Christos Patsalides Czech Republic Miroslav Kalousek Tomas Zidek Denmark Christian Friis Bach Ib Petersen Djibouti Ilyas Moussa Dawaleh Amareh Ali Said Dominica Roosevelt Skerrit Rosamund Edwards Dominican Republic Juan Temistocles Montas Daniel Toribio Ecuador Patricio Rivera Yanez Jeannette Sanchez Zurita Egypt, Arab Republic of Fayza Aboulnaga Gouda Abdel Khalek El Salvador Alexander Ernesto Segovia Carlos Enrique Caceres Equatorial Guinea Jose Ela Oyana Montserat Afang Ondo Eritrea Berhane Abrehe Kidane Martha Woldegiorghis Estonia Jurgen Ligi Tanel Ross Ethiopia Sufian Ahmed Ahmed Shide Member Governor Alternate Fiji Josaia Voreqe Bainimarama Filimone Waqabaca Finland Jutta Urpilainen Heidi Hautala France Pierre Moscovici Ramon Fernandez Gabon Luc Oyoubi Roger Owono Mba Gambia, The Abdou Kolley Mod A.K. Secka Georgia Dimitri Gvindadze Vera Kobalia Germany Dirk Niebel Thomas Steffen Ghana Kwabena Duffuor Seth Terkper Greece Ioannis Stournaras Ioannis Drymoussis Grenada V. Nazim Burke Timothy Antoine Guatemala Pavel V. Centeno Lopez Edgar Baltazar Barquin Duran Guinea Kerfalla Yansane Souleymane Cisse Guinea-Bissau (vacant) (vacant) Guyana Ashni Kumar Singh Clyde Roopchand Haiti Marie Carmelle Jean-Marie Charles Castel Honduras Hector Guillermo Guillen Gomez Maria Elena Mondragon Ordonez Hungary Gyorgy Matolcsy Andras Karman Iceland Ossur Skarphedinsson Oddny G. Hardardottir India Pranab Mukherjee R. Gopalan Indonesia Agus D.W. Martowardojo Armida S. Alisjahbana Iran, Islamic Republic of Seyyed Shams Al-din Hosseini Behrouz Alishiri Iraq Rafe H. Al-Eissawi Ali Gh. Baban Ireland Michael Noonan (vacant) Israel Stanley Fischer Haim Shani Italy Ignazio Visco Carlo Monticelli Jamaicaa Peter Phillips Wesley George Hughes Japan Jun Azumi Masaaki Shirakawa Jordan Jafar Hassan Saleh Al-Kharabsheh Kazakhstan Yerbol Orynbayev Madina Abylkassymova Kenya Robinson Githae Joseph Kanja Kinyua Kiribati Tom Murdoch Atanteora Beiatau Korea, Republic of Jaewan Bahk Choongsoo Kim Kosovo Bedri Hamza (vacant) Kuwait Nayef Falah Mubarak Al Hajraf Abdulwahab Ahmed Al-Bader Kyrgyz Republic Djoomart Otorbayev Akylbek Japarov Lao People's Democratic Republic Phouphet Khamphounvong Bounsong Sommalavong Latvia Andris Vilks Daniels Pavluts Lebanon Mohammad Safadi Nicolas Nahas Lesotho Timothy T. Thahane Mosito Khethisa Liberia Amara M. Konneh (vacant) Libya Hasan Mukhtar Zaklam (vacant) Lithuania Ingrida Simonyte Rolandas Krisciunas Luxembourg Luc Frieden Arsene Joseph Jacoby Macedonia, former Yugoslav Republic of Zoran Stavreski Vladimir Pesevski Madagascar (vacant) (vacant) Malawi Atupele Muluzi Randson Mwadiwa Malaysia Mohd. Najib Abdul Razak Wan Abdul Aziz Wan Abdullah Maldives Abdulla Jihad Ismail Ali Maniku Mali Tiena Coulibaly Marimpa Samoura Maltaa Tonio Fenech Alfred S. Camilleri Marshall Islands Dennis Momotaro Alfred Alfred, Jr. Mauritania Sidi Ould Tah Mohamed Lemine Ould Ahmed Mauritius Charles Gaetan Xavier Luc Duval Ali Michael Mansoor Mexico Jose Antonio Meade-Kuribrena Gerardo Rodriguez Regordosa Micronesia, Federated States of (vacant) Rose Nakanaga Moldova Veaceslav Negruta Veaceslav Mamaliga Mongolia Damdin Khayankhyarvaa Purevdorj Lkhanaasuren Member Governor Alternate Montenegro Milorad Katnic Nemanja Pavlicic Morocco Nizar Baraka Mohamed Najib Boulif Mozambique Aiuba Cuereneia Ernesto Gouveia Gove Myanmar Hla Tun Myat Myat So Namibiaa Saara Kuugongelwa-Amadhila Ipumbu Shiimi Nepal Barshaman Pun Krishnahari Baskota Netherlands Jan Kees De Jager Ben Knapen New Zealand Bill English Gabriel Makhlouf Nicaragua Ivan Acosta Montalvan Francisco J. Mayorga Niger Amadou Boubacar Cisse Ouhoumoudou Mahamadou Nigeria Ngozi Okonjo-Iweala Danladi Kifasi Norway Heikki Holmas Arvinn Gadgil Oman Darwish bin Ismail Al Balushi (vacant) Pakistan Abdul Hafeez Shaikh Waqar Masood Khan Palau Kerai Mariur Dennis Oilouch Panama Frank De Lima Mahesh Khemlani Papua New Guinea Don Polye Simon Tosali Paraguay Dionisio Borda Manuel Vidal Caballero Gimenez Peru Luis Miguel Castilla Rubio Carlos Augusto Oliva Neyra Philippines Cesar V. Purisima Amando M. Tetangco, Jr. Poland Marek Belka Piotr Wiesiolek Portugal Vitor Gaspar Maria Luis Albuquerque Qatara Yousef Hussain Kamal Abdullah Bin Saoud Al-Thani Romaniaa Florin Georgescu Cristian Popa Russian Federation Anton Siluanov Elvira S. Nabiullina Rwanda John Rwangombwa Kampeta Sayinzoga Samoa Faumuina Tiatia Liuga Iulai Lavea San Marinoa Marco Arzilli Renato Clarizia São Tomé and Príncipe Americo d'Oliveira Dos Ramos Ana Maria da Conceicao Silveira Saudi Arabia Ibrahim A. Al-Assaf Fahad A. Almubarak Senegal Amadou Kane Abdoulaye Daouda Diallo Serbia Mirko Cvetkovic Verica Kalanovic Seychellesa Pierre Laporte Caroline Abel Sierra Leone Samura Mathew Wilson Kamara Sheku S. Sesay Singapore Tharman Shanmugaratnam Peter Ong Boon Kwee Slovak Republic Peter Kazimir Viliam Ostrozlik Slovenia Janez Sustersic Mitja Mavko Solomon Islands Rick Nelson Houenipwela Shadrach Fanega Somalia (vacant) (vacant) South Africa Pravin J. Gordhan Lungisa Fuzile South Sudan Kosti Manibe Ngai Kornelio Koryom Spain Luis De Guindos Fernando Jimenez Latorre Sri Lanka Mahinda Rajapaksa P. B. Jayasundera St. Kitts and Nevis Denzil Douglas Janet Harris St. Lucia Kenny D. Anthony Isaac Anthony St. Vincent and the Grenadines Ralph E. Gonsalves Len Ishmael Sudan Ali Mahmoud Mohamed Abdelrasoul Elfatih Ali Siddig Surinamea Gillmore Hoefdraad Adelien Wijnerman Swaziland Hlangusemphi Dlamini Dumisani E. Masilela Sweden Anders Borg Gunilla Carlsson Switzerland Johann N. Schneider-Ammann Didier Burkhalter Syrian Arab Republic Mohamad Nedal Al-Chaar Mohammad Hamandosh Tajikistan Safarali Najmudinov Negmatdzhon Buriev Tanzania William A. Mgimwa Ramadhan Mussa Khijjah Thailand Kittiratt Na-Ranong Areepong Bhoocha-Oom Timor-Leste Emilia Pires Joao Goncalves Togo Dede Ahoefa Ekoue Aheba Johnson Member Governor Alternate Tonga Lisiate 'Aloveita 'Akolo Tiofilusi Tiueti Trinidad and Tobago Larry Howai Bhoendradatt Tewarie Tunisia Riadh Bettaieb Lamia Zribi Turkey Ibrahim H. Canakci Evren Dilekli Turkmenistana Dovletgeldy Sadykov Merdan Annadurdyyev Tuvalu Lotoala Metia Minute Alapati Taupo Uganda Maria Kiwanuka Chris M. Kassami Ukraine Sergiy Tigipko Vasyl Tsushko United Arab Emirates Hamdan bin Rashid Al-Maktoum Obaid Humaid Al Tayer United Kingdom Andrew Mitchell George Osborne United States Timothy F. Geithner Robert D. Hormats Uruguaya Fernando Lorenzo Pedro Buonomo Uzbekistan Ravshan Gulyamov Shukhrat Vafaev Vanuatu Moana Kalosil Carcasses George Maniuri Venezuela, República Bolivariana dea Jorge Giordani (vacant) Vietnam Binh Van Nguyen Minh Hung Le Yemen, Republic of Mohammed Saeed Al-Sadi Mutahar Abdulaziz Al-Abbasi Zambia Alexander B. Chikwanda Fredson K. Yamba Zimbabwe Tendai Biti Willard L. Manungo Source: Corporate Secretariat, June 30, 2012. a. Not a member of IDA Country Eligibility for Borrowing from The World Bank | June 30, 2012 a IBRD only Per capita income of more than $7,035 Korea, Rep. 20,870 Mexico 9,240 Trinidad and Tobago 15,040 Lebanon 9,110 Equatorial Guinea 14,540 Argentina 9,740 Croatia 13,850 Malaysia 8,420 Poland 12,480 Mauritius 8,240 St. Kitts and Nevis 12,480 Kazakhstan 8,220 Chile 12,280 Gabon 7,980 Antigua and Barbuda 12,060 Panama 7,910 Venezuela, R.B. 11,920 Romania 7,910 Uruguay 11,860 Costa Rica 7,660 Turkey 10,410 Botswana 7,480 Russian Federation 10,400 Palau 7,250 Seychelles 11,130 Montenegro 7,060 Brazil 10,720 Suriname — Per capita income of $1,195–$7,035 South Africa 6,960 Tunisia 4,070 Bulgaria 6,550 Albania 3,980 Colombia 6,110 Belize 3,690 Belarus 5,830 Fiji 3,680 Serbia 5,680 El Salvador 3,480 Peru 5,500 Swaziland 3,300 Azerbaijan 5,290 Ukraine 3,120 Dominican Republic 5,240 Morocco 2,970 Jamaica 4,980 Paraguay 2,970 China 4,930 Indonesia 2,940 Macedonia, FYR 4,730 Guatemala 2,870 Namibia 4,700 Iraq 2,640 Algeria 4,470 Egypt, Arab Rep. 2,600 Thailand 4,420 Philippines 2,210 Jordan 4,380 Iran, Islamic Rep. — Ecuador 4,140 Libya — Turkmenistan 4,110 Syrian Arab Republic — Blendb Per capita income of more than $7,035 Grenada 7,220 Dominica 7,090 Per capita income of $1,195–$7,035 St. Lucia 6,680 Mongolia 2,320 St. Vincent and the Grenadines 6,100 Bolivia 2,040 Bosnia and Herzegovina 4,780 Papua New Guinea 1,480 Cape Verde 3,540 Uzbekistan 1,510 Armenia 3,360 India 1,420 Georgia 2,860 Vietnam 1, 260 Sri Lanka 2,580 Per capita income of $1,195 or less Pakistan 1,120 Per capita income of $1,025 or less Zimbabwec 640 IDAb Per capita income of $1,195–$7,035 Maldives 6,530 Moldova 1,980 Tuvalu 5,010 Honduras 1,970 Angola 4,060 Ghana 1,410 Marshall Islands 3,910 São Tomé and Príncipe 1,360 Tonga 3,580 Lesotho 1,220 Kosovo 3,520 Cameroon 1,210 Samoa 3,190 Nigeria 1,200 Micronesia, Fed. Sts. 2,900 Djibouti — Vanuatu 2,870 Guyana — c Congo, Rep. 2,270 Sudan — Kiribati 2,110 Timor-Leste — Bhutan 2,070 Per capita income of $1,195 or less Nicaragua 1,170 Côte d'Ivoire 1,100 Zambia 1,160 Senegal 1,070 Lao PDR 1,130 Yemen, Rep. 1,070 Solomon Islands 1,110 Per capita income of $1,025 or less Mauritania 1,000 Tanzania 540 Kyrgyz Republic 920 Uganda 510 Tajikistan 870 Central African Republic 470 Cambodia 830 Mozambique 470 Kenya 820 Guinea 440 Benin 780 Eritrea 430 Bangladesh 770 Madagascar 430 Comoros 770 Ethiopia 400 Haiti 700 Niger 360 Chad 690 Malawi 340 Gambia, The 610 Sierra Leone 340 Mali 610 Burundi 250 Guinea-Bissau 600 Liberia 240 Burkina Faso 570 Congo, Dem. Rep. 190 Rwanda 570 Afghanistan — c Togo 560 Myanmar — c Nepal 540 Somalia — Changes during previous fiscal year 1. Sri Lanka changed from IDA-only borrower to Blend borrower status, effective July 18, 2011. 2. The GNI per capita for Timor-Leste was revised as a result of recent revisions to national statistics. 3. Tuvalu was granted access to IDA resources on IDA-only terms, effective fiscal 2012. 4. Mongolia changed from IDA-only borrower to Blend borrower status, effective May 17, 2012. — = not available. Estimates are available in ranges only . a. World Bank Atlas methodology; 2011 per capita GNI (gross national income, formerly GNP) figures are in U.S. dollars. b. Countries are eligible for IDA on the basis of (a) relative poverty and (b) lack of creditworthiness. The operational cutoff for IDA eligibility for fiscal 13 is a 2011 GNI per capita of US$1,195, using Atlas methodology. To receive IDA resources, countries must also meet tests of performance. An exception has been made for small island economies. In exceptional circumstances, IDA extends eligibility temporarily to countries that are above the operational cutoff and are undertaking major adjustment efforts but are not creditworthy for IBRD lending. c. Loans/credits in nonaccrual status as of June 30, 2012. General information on countries with loan/credits in nonaccrual status is available from the Credit Risk Department in Finance (CFRCR). Top Ten Trust Fund Donors | Fiscal 2012 millions of dollars Donor 2011 2012 United States 1,852 2,563 United Kingdom 1,344 2,061 Japan 851 862 Germany 505 738 Australia 524 667 France 891 631 Canada 620 601 Norway 495 599 European Commission 298 491 Netherlands 460 741 Others 2,461 2,185 Total 10,301 11,869 Note: Contribution to ICSID escrow accounts are excluded. Executive Directors and Alternates of The World Bank and their Voting Power | June 30, 2012 IBRD IDA Executive Director Alternate Casting votes on behalf of Total % of Total % of votes total votes total Appointed Ian H. Solomon Sara M. Aviel United States 281,715 15.69 2,372,764 10.86 Nobumitsu Hayashi Yasuo Takamura Japan 165,976 9.24 1,882,463 8.61 Ingrid G. Hoven Wilhelm M. Rissmann Germany 82,982 4.62 1,219,662 5.58 Susanna Moorehead Stewart James United Kingdom 74,227 4.13 1,215,716 5.56 Ambroise Fayolle Anne Touret-Blondy France 74,227 4.13 833,247 3.81 Elected Konstantin Huber Gino Alzetta Austria, Belarus,a Belgium, Czech 87,021 4.85 1,017,755 4.66 (Austria) (Belgium) Republic, Hungary, Kosovo, Luxembourg, Slovak Republic, Slovenia, Turkey Marta Garcia Juan Jose Bravo Costa Rica, El Salvador, Guatemala, 78,618 4.38 550,758 2.52 (Spain) (Mexico) Honduras, Mexico, Nicaragua, Spain, a Republica Bolivariana de Venezuela Rudolf Treffers Stefan Nanu Armenia, Bosnia and Herzegovina, 76,935 4.28 923,132 4.22 (Netherlands) (Romania) Bulgaria,a Croatia, Cyprus, Georgia, Israel, former Yugoslav Republic of Macedonia, Moldova, Montenegro, a Netherlands, Romania, Ukraine Marie-Lucie Morin Kelvin Dalrymple Antigua and Barbuda,a The Bahamas, 73,797 4.11 966,455 4.42 (Canada) (Barbados) Barbados, Belize, Canada, Dominica, Grenada, Guyana, Ireland, Jamaica,a St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines Anna Brandt Jens Haarlov Denmark, Estonia, Finland, Iceland, 62,669 3.49 1,157,948 5.30 (Sweden) (Denmark) Latvia, Lithuania, Norway, Sweden Rogerio Studart Vishnu Dhanpaul Brazil, Colombia, Dominican Republic, 62,476 3.48 717,389 3.28 (Brazil) (Trinidad and Tobago) Ecuador, Haiti, Panama, Philippines, a Suriname, Trinidad and Tobago John Whitehead In-Kang Cho Australia, Cambodia, Kiribati, Republic 62,008 3.45 858,308 3.93 (New Zealand) (Republic of Korea) of Korea, Marshall Islands, Federated States of Micronesia, Mongolia, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tuvalu, Vanuatu Mukesh Prasad Kazi M. Aminul Islam Bangladesh, Bhutan, India, Sri Lanka 61,830 3.44 914,385 4.18 (India) (Bangladesh) Shaolin Yang Bin Han China 59,396 3.31 449,652 2.06 (China) (China) Piero Cipollone Nuno Mota Pinto Albania, Greece, Italy, Malta,a Portugal, 58,679 3.27 689,302 3.15 (Italy) (Portugal) San Marino,a Timor-Leste Executive Directors and Alternates of The World Bank and their Voting Power | June 30, 2012 IBRD IDA Executive Director Alternate Casting votes on behalf of Total % of Total % of votes total votes total Jorg Frieden Wieslaw Szczuka Azerbaijan, Kazakhstan, Kyrgyz 56,978 3.17 995,687 4.56 (Switzerland) (Poland) Republic, Poland, Serbia, Switzerland, Tajikistan, Turkmenistan,a Uzbekistan Javed Talat Sid Ahmed Dib Afghanistan, Algeria, Ghana, Islamic 53,797 3.00 519,917 2.38 (Pakistan) (Algeria) Republic of Iran, Morocco, Pakistan, Tunisia Merza H. Hasan Ayman Alkaffas Bahrain,a Arab Republic of Egypt, Iraq, 51,001 2.84 516,226 2.36 (Kuwait) (Arab Republic of Jordan, Kuwait, Lebanon, Libya, Egypt) Maldives, Oman, Qatar,a Syrian Arab Republic, United Arab Emirates, Republic of Yemen Abdulrahman M. Ibrahim Alturki Saudi Arabia 45,327 2.52 696,582 3.19 Almofadhi (Saudi Arabia) (Saudi Arabia) Vadim Grishin Eugene Miagkov Russian Federation 45,327 2.52 68,902 0.32 (Russian Federation) (Russian Federation) Hekinus Manao Dyg Sadiah Binti Brunei Darussalam,a Fiji, Indonesia, 44,198 2.46 695,209 3.18 (Indonesia) Abg Bohan Lao People’s Democratic Republic, (Malaysia) Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga, Vietnam Felix Alberto Varinia Cecilia Daza Argentina, Bolivia, Chile, Paraguay, 39,191 2.18 339,877 1.56 Camarasa Foronda Peru, Uruguaya (Argentina) (Bolivia) Agapito Mendes Mohamed Sikieh Benin, Burkina Faso, Cameroon, Cape 33,664 1.87 1,019,017 4.66 Dias Kayad Verde, Central African Republic, Chad, (São Tomé and (Djibouti) Comoros, Democratic Republic of Príncipe) Congo, Republic of Congo, Côte d’Ivoire, Djibouti, Equatorial Guinea, Gabon, Guinea-Bissau, Mali, Mauritania, Mauritius, Niger, São Tomé and Príncipe, Senegal, Togo Hassan Ahmed Denny H. Kalyalya Botswana, Burundi, Eritrea, Ethiopia, 32,583 1.81 1,009,700 4.62 Taha (Zambia) The Gambia, Kenya, Lesotho, Liberia, (Sudan) Malawi, Mozambique, Namibia,a a Rwanda, Seychelles, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe Renosi Mokate Mansur Muhtar Angola, Nigeria, South Africa 31,168 1.74 224,372 1.03 (South Africa) (Nigeria) Executive Directors and Alternates of The World Bank and their Voting Power | June 30, 2012 In addition to the executive directors and alternates shown in the foregoing list, the following also served after June 30, 2011: Executive director End of period of service Alternate director End of period of service Pulok Chatterji September 26, 2011 Michal Tomasz Krupinski August 31, 2011 (India) (Poland) James Hagan July 31, 2011 Tamara Solyanyk July 31, 2011 (Australia) (Ukraine) Ruediger von Kleist August 4, 2011 (Germany) Ciyong Zou October 14, 2011 (China) Note: Guinea (1,824 votes in IBRD and 33,987 votes in IDA), Madagascar (1,954 votes in IBRD and 54,982 votes in IDA), and Somalia (1,084 votes in IBRD and 10,506 votes in IDA) did not participate in the 2010 Regular Election of Executive Directors. South Sudan (1,969 votes in IBRD and 52,447 in IDA) became a member after that Election. a. Member of the IBRD only. Officers of The World Bank | June 30, 2012 Robert B. Zoellick President Caroline Anstey Managing Director Sri Mulyani Indrawati Managing Director Mahmoud Mohieldin Managing Director Charles McDonough Acting World Bank Group Chief Financial Officer Anne-Marie Leroy Senior Vice President and World Bank Group General Counsel Martin Ravallion Acting Chief Economist and Senior Vice President, DEC Inger Andersen Vice President, Middle East and North Africa Madelyn Antoncic Vice President and Treasurer Tamar Manuelyan Atinc Vice President and Network Head, Human Development Clare Brady Vice President and Auditor-General, Internal Auditing Jorge Familiar Calderon Vice President and Corporate Secretary Otaviano Canuto Vice President and Network Head, Poverty Reduction and Economic Management Pamela Cox Vice President, East Asia and Pacific Janamitra Devan Vice President and Network Head, Financial and Private Sector Development Makhtar Diop* Vice President, Africa Isabel Guerrero Vice President, South Asia Robert Kopech Vice President and Group Chief Risk Officer Rachel Kyte Vice President and Network Head, Sustainable Development Philippe Le Houerou Vice President, Europe and Central Asia Leonard McCarthy Vice President for Institutional Integrity Charles McDonough Vice President and Controller Sean McGrath Vice President, Human Resources Cyril Muller Vice President, External Affairs Sanjay Pradhan Vice President, World Bank Institute Van Pulley Vice President, Corporate Finance and Risk Management Hasan Tuluy Vice President, Latin America and the Caribbean Axel van Trotsenburg Vice President, Concessional Finance and Global Partnerships Joachim von Amsberg Vice President and Network Head, Operations Policy and Country Services Stephanie von Friedeburg Vice President, Information Management and Technology and World Bank Group Chief Information Officer Xian Zhu Vice President and WBG Chief Ethics Officer Caroline Heider Director General, Independent Evaluation Group *Succeeded Obiageli Katryn Ezekwesili on May 5, 2012 ORGANIZATION CHART OF THE WORLD BANK EFFECTIVE JULY 1, 2012 Board of Governors Executive Directors Roberto Lenton Caroline Heider Jim Yong Chairperson Director-General Independent Kim Inspection Leonard McCarthy Clare Brady Panel Evaluation President Vice President Vice President and Institutional Auditor-General Integrity Internal Audit Xian Zhu Jorge Familiar Charles Sri Mulyani Caroline Anstey Calderon Vice President & Martin Ravallion Mahmoud McDonough Anne-Marie Leroy WBG Chief Ethics Indrawati Managing Vice President Acting WBG Chief Acting Sr. Vice Mohieldin & Corporate Sr. Vice President & Officer Managing Director Financial Officer President & Managing Secretary WBG General Counsel Chief Economist Director Director Stephanie von Axel Van Tamar Manuelyan Joachim von Charles Rachel Kyte Hasan Tuluy Inger Andersen Friedeburg Trotsenburg Atinc Amsberg McDonough Vice President & Vice President Vice President Vice President & Vice President Vice President & Vice President & Vice President & Network Head Latin America and Middle East and WBG Chief Information Concessional Network Head Network Head Controller Sustainable Caribbean North Africa Officer Finance & Global Human Development Operations Policy & Development Information Management Partnerships Country Services & Technology Van Pulley Otaviano Canuto* Madelyn Antoncic Vice President Janamitra Devan** Philippe Le Houerou Vice President Corporate Finance Vice President & Pamela Cox Cyril Muller Vice President & Vice President Sean McGrath & Treasurer & Risk Network Head Vice President Vice President Network Head Europe and Central Management Poverty Reduction & East Asia and Pacific Vice President Financial and Private Asia External Affairs Economic Human Resources Sector Development Management TV Somanathan Director Robert Kopech*** General Makhtar Diop Isabel Guerrero Vice President & Services Vice President Vice President Department Sanjay Pradhan* Group Chief Risk Africa South Asia Vice President Officer World Bank Institute * Dotted line to Sr. Vice President & Chief Economist ** Reports to IFC Executive Vice President on IFC Business ***Dotted line to the President Offices of The World Bank | June 30, 2012 Washington, D.C. Rome Armenia 1818 H Street N.W. Mr. Massimiliano Paolucci Mr. Jean-Michel Happi Washington, D.C. 20433, U.S.A. The World Bank The World Bank Group Tel: (202) 473 1000 Via Labicana 110 9 Grigor Lousavorich Street, 6th floor Fax: (202) 477 6391 00184 Rome, Italy Yerevan 0015, Armenia E-mail: Feedback@worldbank.org Tel: (39-06) 77 71 02 04 Tel: (374-10) 520 992 Web: http://www.worldbank.org Fax: (39-06) 70 96 046 Fax: (374-10) 521 787 E-mail: mpaolucci@worldbank.org E-mail: Jhappi@worldbank.org New York Web: http://www.worldbank.org/europe Web: http://www.worldbank.org/am Ms. Dominique Bichara The World Bank Group Tokyo * Australia 1 Dag Hammarskjold Plaza Mr. Kazushige Taniguchi Mr. Ferid Belhaj 885 2nd Avenue, 26th Floor The World Bank Group, Office of the The World Bank Group New York, N.Y. 10017, U.S.A. Special Representative, Japan Level 19, 14 Martin Place Tel: (212) 317 4720 10th Floor, Fukoku Seimei Building CML Building Fax: (212) 317 4733 2-2-2 Uchisaiwai-cho, Chiyoda-ku Sydney NSW 2000, Australia E-mail: dbichara@worldbank.org Tokyo 100-0011 Japan Tel: (61-2) 9223 7773 Web: http://www.worldbank.org Tel: (81-3) 3597 6650 Fax: (61-2) 9235 6593 Fax: (81-3) 3597 6695 E-mail: Fbelhaj@worldbank.org * Europe E-mail:ktaniguchi@worldbank.org Web: http://www.worldbank.org/eap Mr. Carlos Primo Braga Web: http://www.worldbank.org/japan/jp Special Representative and Director, EXT Austria The World Bank Group * Afghanistan Mr. Henri Fortin 66 avenue d’Iéna Mr. Robert J. Saum The World Bank Group 75116 Paris, France The World Bank Group Centre for Financial Reporting Reform Tel: (33-1) 40 69 30 57 Street No. 15, House No. 19 Europe and Central Asia Region Fax: (33-1) 40 69 30 64 Wazir Akbar Khan Praterstrasse 31 - 19th Floor E-mail: Cbraga@worldbank.org Kabul, Afghanistan A-1020 Vienna, Austria Web: http://www.worldbank.org/europe Tel: (93-700) 276 002 Tel: (43-1) 217 0700 E-mail: rsaum@worldbank.org Fax: (43-1) 217 0701 Berlin Web: http://www.worldbank.org/af E-mail: hfortin@worldbank.org Mr. Rainer Stefan Venghaus Web: http://www.worldbank.org/cfrr The World Bank Albania Reichpietschufer 20 Ms. Kseniya Lvovsky Azerbaijan 10785 Berlin, Germany The World Bank Group The World Bank Group Tel: (49-30) 7261 4254 Deshmoret e 4 Shkurtit Street, Villa No. 34 90A Nizami Street Fax: (49-30) 7261 4255 Tirana, Albania The Landmark III E-mail: rvenghaus@worldbank.org Tel: (355-4) 2280 650/51 Baku, AZ1010, Azerbaijan Web: http://www.worldbank.org/eu Fax: (355-4) 2240 590 Tel.: (994-12) 492 1941 E-mail: klvovsky@worldbank.org Fax: (994-12) 492 6873 Brussels Web: http://www.worldbank.org.al Web: http://www.worldbank.org.az Mr. Sandor Sipos Special Representative to the Algeria * Bangladesh European Union Institutions Mr. Moukim Temourov Ms. Ellen Goldstein The World Bank Group The World Bank Group The World Bank Avenue Marnix 17 5 bis, Chemin Mackley Plot E-32, Agargaon 1000 Brussels, Belgium Ben Aknoun 16306 Sher-e-Bangla Nagar Tel: (32-2) 552 00 52 Algiers, Algeria Dhaka 1207, Bangladesh Fax: (32-2) 552 00 25 Tel: (213-21) 94.54.81 - 84 Postal address: G.P.O. Box 97 E-mail: Ssipos@worldbank.org Fax: (213-21) 94.54.93 Tel: (880-2) 815 9001 Web: http://www.worldbank.org/eu E-mail: mtemourov@worldbank.org Fax: (880-2) 815 9029 Web: http://www.worldbank.org/dz E-mail: egoldstein@worldbank.org Geneva Web: http://www.worldbank.org.bd Ms. Selina Elizabeth Jackson Angola Special Representative to WTO and UN Mr. Eleoterio Codato Belarus The World Bank Banco Mundial Mrs. Elena Klochan 3 chemin Louis-Dunant Largo Albano Machado The World Bank P.O. Box 66 N° 23/25, Maculusso 2A Gertsen Street, 2nd Floor 1211 Geneva 20, Switzerland Luanda, Republica de Angola Minsk, 220030, Republic of Belarus Tel: (41-22) 748 1000 Postal address: Caixa Postal 1331 Tel: (375-17) 226 5284 Fax: (41-22) 748 1030 Tel: (244-222) 394 677 Fax: (375-17) 211 0314 E-mail: sjackson2@worldbank.org Fax: (244-222) 394 784 E-mail: eklochan@worldbank.org E-mail: Ecodato@worldbank.org Web: http://www.worldbank.org.by London Web: http://www.worldbank.org/ao Mr. Andrew J. Felton Belgium The World Bank Group * Argentina Mr. Dirk Reinermann 12th Floor, Millbank Tower Ms. Penelope J. Brook Europe and Central Asia Unit 21-24, Millbank The World Bank Group The World Bank Group London SW1P 4QP, England Bouchard 547, 28 & 29 Floors Avenue Marnix 17 Tel: (44-20) 7592 8400 C1106ABG Buenos Aires, Argentina 1000 Brussels, Belgium Fax: (44-20) 7592 8420 Tel: (54-11) 4316 9700 / 44 / 43 Tel: (32-2) 504 09 95 E-mail: afelton@worldbank.org Fax: (54-11) 4313 1233 Fax: (32-2) 504 09 99 Web: http://www.worldbank.org/europe E-mail: pbrook@worldbank.org E-mail: Dreinermann@wroldbank.org Web: http://www.worldbank.org/ar Web: http://www.seerecon.org *Directors/Country Directors are in the country office. Note: Addresses that begin with “The World Bank Groupâ€? indicate the joint location of IFC and World Bank offices. Offices of The World Bank | June 30, 2012 Belgium * Brazil Chad Mr. Sandor Sipos Ms. Deborah L. Wetzel Mr. Jean-Claude Brou Special Representative to the European Banco Mundial The World Bank Group Union Institutions Setor Comercial Norte Quadra 02 Avenue Charles de Gaulle The World Bank Group Lote A – Edificio et Avenue Mahamat Ali Younousmi Jackson Avenue Marnix 17 Corporate Financial Center Quartier Bololo 1000 Brussels, Belgium 7o Andar N’Djamena, Chad Tel: (32-2) 552 00 52 Brasilia, DF 70712-900, Brasil Postal address: B.P. 146 Fax: (32-2) 552 00 25 Tel: (55-61) 3329 1000 Tel: (235) 2252 3247, 2252 3360 E-mail: Ssipos@worldbank.org Fax: (55-61) 3329 1010 Fax: (235) 2252 4484, 2252 5110 Web: http://www.worldbank.org/eu E-mail: Dwetzel@worldbank.org E-mail: jbrou@worldbank.org Web: http://www.worldbank.org/br Web: http://www.worldbank.org/td Benin Mr. Olivier P. Fremond Bulgaria Chile Banque Mondiale Mr. Markus Repnik Mr. Javier Zuleta Route de l'Aeroport The World Bank Group The World Bank Group Avenue Jean-Paul II World Trade Center - Interpred Dag Hammarskjod 3241 Face Hotel Marina ex-Sheraton 36 Dragan Tsankov Blvd. Vitacura, Santiago Cotonou, Bénin Block A, 5th Floor Chile Postal address: 03 B.P. 2112 1057 Sofia, Bulgaria Tel: (562) 654 1065 Tel: (229) 21 30 58 57 Tel: (359-2) 969 72 29 Fax: (562) 654 1099 Fax: (229) 21 30 17 44 Fax: (359-2) 971 20 45 E-mail: jzuleta1@worldbank.org E-mail: Ofremond@worldbank.org E-mail: mrepnik@worldbank.org Web: http://www.worldbank.org/en/country/chile Web: http://www.worldbank.org/bj Web: http://www.worldbank.bg/ * China Bhutan Burkina Faso Mr. Klaus Rohland Mr. Mark LaPrairie The World Bank Group The World Bank Group The World Bank Group 179, Avenue du Président Saye Zerbo 16th Floor, China World Office 2 Bhutan Development Bank Ltd Building Zone de Ambassades, Koulouba No. 1 Jian Guo Men Wai Avenue Norzin Lam Ouagadougou 01, Burkina Faso Beijing, 100004 Chubachu Postal address: BP 622 People's Republic of China Thimphu, Bhutan Tel: (226) 5049 6300 Tel: (86-10) 5861 7600 Tel: (975) 1762 7762 Fax: (226) 5049 6364 Fax: (86-10) 5861 7800 E-mail: mlaprairie@worldbank.org Web: http://www.worldbank.org/bf E-mail: Krohland@worldbank.org Web: http://www.worldbank.org/bhutan Web: http://www.worldbank.org/china Burundi Bolivia Ms. Mercy Miyang Tembon Colombia Mr. Faris H. Hadad-Zervos Banque Mondiale Mr. Geoffrey Bergen The World Bank Group Avenue de l’Aviation, Rohero 1 The World Bank Group Edificio Victor (WB) Piso 9/(IFC) Piso 8 Bujumbura, Burundi Carrera 7 No.71-21 Calle Fernando Guachalla #342 – Sopocachi Postal address: B.P. 2637 Torre A, piso 16 (WB) or Piso 14 (IFC) La Paz, Bolivia Tel: (257) 2222 6200, 2222 2443, 2224 5111 Apartado 10229 Postal address: Casilla 8692 Fax: (257) 2222 6005, 2220 6286 Bogota, Colombia Tel: (591-2) 261 3300 E-mail: mtembon@worldbank.org Tel: (57-1) 326 3600 Fax: (591-2) 261 3305 Web: http://www.worldbank.org/bi Fax: (57-1) 326 3480 E-mail: Fhadadzervose@worldbank.org E-mail: Gbergen@worldbank.org Web: http://www.worldbank.org/bo Cambodia Web: http://www.worldbank.org/co The World Bank Web: http://bancomundial.org/co Bosnia and Herzegovina 113 Norodom Boulevard Ms. Anabela Abreu Phnom Penh, Cambodia * Congo, Democratic Republic of The World Bank Tel: (855-23) 217301, 217304 Mr. Eustache Ouayoro UNITIC Tower B Fax: (855-23) 210504, 210373 The World Bank Group Fra Andjela Zvizdovica 1 Web: http//www.worldbank.org/kh Boulevard: Tshatshi, no. 49 71000 Sarajevo Kinshasa-Gombe Bosnia and Herzegovina * Cameroon Democratic Republic of the Congo Tel: (387-33) 251 500 Mr. Gregor Binkert Tel: (243) 9999 49015 Fax: (387-33) 226 945 Banque Mondiale Fax: (243) 880 7817, 9999 75019 E-mail: aabreu@worldbank.org rue 1. 792, No. 186 E-mail: eouayoro@worldbank.org Web: http://www.worldbank.org.ba/ Yaoundé, Cameroon Web: http://www.worldbank.org/cd Postal address: B.P. 1128 Botswana Tel: (237) 22 20 38 15 Congo, Republic of Mr. Constantine Chikosi Fax: (237) 22 21 07 22 Ms. Sylvie Dossou Kouame The World Bank E-mail: gbinkert@worldbank.org The World Bank Time Square Web: http://www.worldbank.org/cm Immeuble BDEAC, 2è étage Plot 134 Boulevard Denis Sassou Nguesso Independence Avenue Central African Republic P.O. Box 14536 Gaborone, Botswana Mr. Midou Ibrahima Brazzaville, Republic of Congo Postal address: P.O. Box 20976 The World Bank Group Tel: (242) 281 33 30, 281 46 38 Tel: (267) 310 5465 Rue des Missions Fax: (242) 281 53 16 Fax: (267) 310 5456 Bangui, République Centrafricaine E-mail: sdossoukouame@worldbank.org E-mail: cchikosi@worldbank.org Postal address: B.P. 819 Web: http://www.worldbank.org/cg Web: http://www.worldbank.org/botswana Tel: (236) 21 61 61 38 Fax: (236) 21 61 60 87 * Côte d’Ivoire E-mail: mibrahima@worldbank.org Mr. Madani M. Tall Web: http://www.worldbank.org/cf The World Bank Group Cocody - Angle des rues Booker Washington and Jacques Aka Abidjan, Côte d'Ivoire Postal address: B.P. 1850 Tel: (225) 22 40 04 00 Fax: (225) 22 40 04 61 E-mail: Mtall@worldbank.org Web: http://www.worldbank.org/ci *Directors/Country Directors are in the country office. Note: Addresses that begin with “The World Bank Groupâ€? indicate the joint location of IFC and World Bank offices. Offices of The World Bank | June 30, 2012 Croatia * France Guinea-Bissau Mr. Hongjoo J. Hahm Mr. Mats Karlsson Mr. Mamadou Woury Diallo The World Bank Group The World Bank The World Bank RadniÄ?ka cesta 80/IX Marseille Center for Mediterranean Integration (CMI) Avenida Francisco Mendes, C.P. 214 10000 Zagreb, Croatia Villa Valmer Bissau Codex 1124 Tel: (385-1) 2357 222 271 Corniche Kennedy Bissau, Guinea-Bissau Fax: (385-1) 2357 200 13007 Marseille, France Tel: (245) 320 59 04 E-mail: hhahm@worldbank.org Tel: (33-4) 91 99 24 51 Fax: (245) 320 59 09 Web: http://www.worldbank.org/en/country/croatia Fax: (33-4) 91 99 24 79 E-mail: mdiallo2@worldbank.org E-mail: mkarlsson@worldbank.org Web: http://www.worldbank.org/gw Dominican Republic Web: http://www.cmimarseille.org Mr. Roberto Senderowitsch Guyana The World Bank Group Gabon Mr. Giorgio Valentini (in Jamaica) Calle Virgilio Díaz Ordoñez #36 Ms. Zouera Youssoufou The World Bank esq. Gustavo Mejía Ricart Banque Mondiale 87 Carmichael Street Edificio Mezzo Tempo, Suite 401 Quartier: Derrière le Palais de Justice South Cummingsburg Santo Domingo, R.D. P.O. Box 4027 Georgetown, Guyana Tel: (809) 566-6815 Libreville, Gabon Tel: (592) 223 5036 Fax: (809) 566-7746, 566-7189 Tel: (241) 73 81 68 /71 /72 Fax: (592) 225 1384 E-mail: rsenderowitsch@worldbank.org Fax: (241) 73 81 69 E-mail: gvalentini@worldbank.org Web: http://www.worldbank.org/do E-mail: zyoussoufou@worldbank.org Web: http://www.worldbank.org/gy Web: http://www.worldbank.org/ga Ecuador Haiti Ms. Maria D. Arribas-Baños Gambia, The Mr. Alexandre V. Abrantes Banco Mundial Mr. Badara Alieu Joof Banque Mondiale Calle 12 de Octubre 1830 y Cordero The World Bank 7, rue Ogé World Trade Center c/o UN House Pétion-Ville, Haiti Torre B, Piso 13 5 Koffi Annan Street, Cape Point Tel: (509) 3798 0880 / 3798 0817 / 3798 0972 Quito, Ecuador P.O. 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Washington DC, USA) Fax: (996-312) 35 29 94 Lilongwe 3, Malawi Tel: + 964 7901 833354 E-mail: akremer@worldbank.org Postal address: P.O. Box 30557 E-mail: Mbricknell@worldbank.org Web: http://www.worldbank.org.kg Tel: (265-1) 770 611 Web: http://www.worldbank.org/iq Fax: (265-1) 771 158, 773 908 Lao People’s Democratic Republic E-mail: Sbloemenkamp@worldbank.org Jamaica Ms. Keiko Miwa Web: http://www.worldbank.org/mw Mr. Giorgio Valentini The World Bank The World Bank Group Pathou Xay - Nehru Road Maldives Courtleigh Corporate Centre, 3rd Floor Postal address: P.O. Box 345 code 01004 Ms. Diarietou Gaye (in Sri Lanka) 6 St. Lucia Avenue Vientiane, Lao PDR The World Bank Kingston 5, Jamaica Tel: (856-21) 414 209, 450 010 2 Floor, Hithigasdhoshuge Aage Tel: (876) 960 0459 Fax: (856-21) 414 210 Hakuraa Goalhi Fax: (876) 960 0463 E-mail: kmiwa@worldbank.org Male', Republic of Maldives E-mail: gvalentini@worldbank.org Web: http://www.worldbank.org/lao Tel: (960) 334 1910 Web: http://www.worldbank.org/jm Fax: (960) 334 1911 * Lebanon E-mail: dgaye@worldbank.org * Kazakhstan Mr. Hedi Larbi Web: http://www.worldbank.org/maldives Mr. Saroj Kumar Jha The World Bank Group The World Bank Group Bourie House 119 * Mali Central Asia Regional Office Abdallah Bayhum Street Mr. Ousmane Diagana 41/A Kazybek bi Street, 4th Floor Marffaa, Solidere Banque Mondiale 050010 Almaty, Republic of Kazakhstan P.O. 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P. 1864 Web: http://www.worldbank.org/lb Tel: (223) 20 22 22 83 Kazakhstan, Astana Fax: (223) 20 22 66 82 Ms. Sebnem Akkaya Lesotho E-mail: Odiagana@worldbank.org The World Bank Astana Office The World Bank Liaison Office Web: http://www.worldbank.org/ml 12 Samal Microdistrict, 14th Floor UN House Astana Towers 13 United Nations Road Mauritania 010000 Astana, Republic of Kazakhstan Maseru, Lesotho Mr. Moctar Thiam Tel: (7-7172) 580 555 Tel: (266) 22 21 7000 Banque Mondiale Fax: (7-7172) 580 342 Fax: (266) 22 21 7034/5 Villa No. 30, Lot A E-mail: Sakkaya@worldbank.org Web: http://www.worldbank.org/ls Quartier Socogim Tevrragh Zaina Web: http://www.worldbank.org/kz Nouakchott, Mauritanie Liberia Postal address: B. P. 667 * Kenya Ms. Inguna Dobraja Tel: (222) 4525 10 17 Mr. Johannes Zutt The World Bank Group Fax: (222) 4525 13 34 The World Bank 2rd Floor, Bright Building, UN Drive E-mail: Mthiam@worldbank.org Hill Park Building (Corner of Sekou Toure Ave. & Gibson St.) Web: http://www.worldbank.org/mauritania Upper Hill Road Mamba Point Nairobi, Kenya Monrovia, Liberia Mauritius Postal address: P.O. Box 30577-00100 Tel: (231-886) 606 967/48 The World Bank Liaison Office Tel: (254-20) 322 6000, 322 6442 E-mail: Idobraja@worldbank.org 3rd Floor Médine Mews Fax: (254-20) 322 6382 Web: http://www.worldbank.org/lr Chaussée Street E-mail: jzutt@worldbank.org Port-Louis, Mauritius Web: http://www.worldbank.org/ke Macedonia, FYR Tel: (230) 203 2500 Ms. Lilia Burunciuc Fax: (230) 208 0502 Kosovo The World Bank Web: http://www.worldbank.org/mauritius Mr. Jan-Peter Olters 34 Leninova Street The World Bank 1000 Skopje, FYR Macedonia * Mexico Rruga Prishtinë-Fushë Kosovë Tel: (389-2) 3117 159 Ms. Gloria M. Grandolini 10060 Pristina Fax: (389-2) 3117 627 Banco Mundial Republic of Kosovo E-mail: Lburunciuc@worldbank.org Insurgentes Sur 1605, Piso 24 Tel: (381-38) 224 454 Web: http://www.worldbank.org.mk/ San Jose Insurgentes Fax: (381-38) 224 452 03900 Mexico, D. F., Mexico E-mail: jolters@worldbank.org Madagascar Tel: (52-55) 5480 4200 Web: http://www.worldbank.org/kosovo The World Bank Group Fax: (52-55) 5480 4222 Rue Andriamifidy L. Razafimanantsoa E-mail: Ggrandolini@worldbank.org Kuwait Anosy (près du Ministère des Affaires Etrangères) Web: http://www.worldbank.org/mx Mr. Bassam Ramadan Antananarivo 101, Madagascar The World Bank Group Postal address: B. P. 4140 Moldova 10th Commercial Area, Block 10 Tel: (261-20) 225 6000 Mr. Abdoulaye Seck Sahat Al-Safat Street Fax: (261-20) 223 3338 The World Bank Baitak Tower, floor 28 Web: http://www.worldbank.org/madagascar 20/1, Pushkin St. MD-2012 Kuwait City, Kuwait Chisinau, Republic of Moldova Postal address: P.O. Box 1015, Safat 13010 Tel: (373-22) 200 706 Tel: (965) 2291 3500/2/3 Fax: (373-22) 237 053 Fax: (965) 2291 3520 E-mail: Aseck1@worldbank.org E-mail: Bramadan@worldbank.org Web: http://www.worldbank.org/en/country/moldova Web: http://www.worldbank.org/mna *Directors/Country Directors are in the country office. Note: Addresses that begin with “The World Bank Groupâ€? indicate the joint location of IFC and World Bank offices. Offices of The World Bank | June 30, 2012 Mongolia * Nigeria Poland Ms. Coralie Gevers Ms. Marie-Françoise Marie-Nelly Mr. Xavier Devictor The World Bank Group The World Bank The World Bank Group MCS Plaza Building (WB 5th Floor/IFC 4th Floor) 102, Yakubu Gowon Crescent 53, Emilii Plater St. Seoul Street-4 Opposite ECOWAS Secretariat Warsaw Financial Center, 9th Floor Ulaanbaatar 210644, Mongolia Asokoro District 00-113 Warsaw, Poland Tel: (976-11) 312 647 or 312 654 Abuja, Nigeria Tel: (48-22) 520 8000 Fax: (976-11) 312 645 Postal address: P.O. Box 2826, Garki Fax: (48-22) 520 8001 E-mail: CGevers@worldbank.org Tel: (234) 8058205408, 8058205422 E-mail: xdevictor@worldbank.org Web: http://www.worldbank.org/en/country/mongolia Tel: (234) 7035830641-44, 7089996090-1 Web: http:/www.worldbank.org/en/country/poland Fax: (234-9) 314 5267 Montenegro E-mail: Mmarienelly@worldbank.org Romania The World Bank (Svjetska banka) Web: http://www.worldbank.org/ng Mr. François Rantrua c/o Central Bank of Montenegro (CBCG) The World Bank Group Bulevar Svetog Petra Cetinjskog 6 * Pakistan UTI Building, 6th floor MNE - 81000 Podgorica, Montenegro Mr. Rachid Benmessaoud 31 Vasile Lascar Street, Sector 2 Tel: (382-20) 403 295 The World Bank Group Bucharest, Romania 020492 Fax: (382-20) 665 353 20 A Shahrah-e-Jamhuriyat Tel: (40-21) 201 0311 Web: http://www.worldbank.org/montenegro Sector G-5/1, Islamabad, Pakistan Fax: (40-21) 201 0338 (WB postal address: P.O. Box 1025) E-mail: Frantrua@worldbank.org * Morocco (IFC postal address: Post Bag 3033) Web: http://www.worldbank.org/en/country/romania Mr. Neil Simon M. Gray Tel: (92-51) 227 9641-6 The World Bank Group Fax: (92-51) 227 9648/9 * Russian Federation 7, rue Larbi Ben Abdellah E-mail: Rbenmessaoud@worldbank.org Mr. Michal Rutkowski Rabat-Souissi, Morocco Web: http://www.worldbank.org.pk The World Bank Group Tel: (212-537) 63 60 50 36/1 Bolshaya Molchanovka st., Fax: (212-537) 63 60 51 Panama 121069 Moscow, Russia E-mail: Ngray@worldbank.org Ms. Ludmilla Butenko Tel: (7-495) 745 70 00 Web: http://www.worldbank.org/ma The World Bank Fax: (7-495) 745 70 02 Avenida Aquilino De La Guardia y calle 47 Marbella E-mail: Mrutkowski @worldbank.org * Mozambique Edificio Ocean Business Plaza Web: http://www.worldbank.org/en/country/russia Mr. Laurence C. Clarke Piso 21, Oficina 2111 The World Bank Group Panamá City, Panamá Rwanda Avenue Kenneth Kaunda, 1224 Tel: (507) 831 2000 Ms. Omowunmi Ladipo Maputo, Mozambique E-mail: Lbutenko@worldbank.org The World Bank Group Postal address: Caixa Postal 4053 Web: http://www.worldbank.org/panama Blvd. de la Révolution Tel: (258-21) 482 300 SORAS Building Fax: (258-21) 492 893 Papua New Guinea Kigali, Rwanda E-mail: lclarke@worldbank.org Ms. Laura E. Bailey Postal address: P.O. Box 609 Web: http://www.worldbank.org/mz The World Bank Group Tel: (250) 252 591 300 Level 13, Deloitte Tower, P.O. Box 1877 Fax: (250) 252 591 385 Nepal Port Moresby, National Capital District E-mail: Oladipo@worldbank.org Ms. Tasheen Sayed Khan Papua New Guinea Web: http://www.worldbank.org/rw The World Bank Group Tel: (675) 321 7111 Yak & Yeti Hotel Complex Fax: (675) 321 7730 Samoa Durbar Marg E-mail: Lbailey@worldbank.org Ms. Maeva Betham-Va’ai Kathmandu, Nepal Web: http://www.worldbank.org/pg The World Bank Group Postal address: P.O. Box 798 Level 6, Central Bank Building Tel: (977-1) 4226792 Paraguay Beach Road Fax: (977-1) 4225112 Ms. Rossana Polastri Apia, Samoa E-mail: TSayed@worldbank.org Banco Mundial Postal address: P.O. Box 3999 Web: http://www.worldbank.org/np Av. España 2028 c/ Av. Brasilia 5o. Piso Tel: (685) 24229 Edificio Urano Fax: (685) 24228 Nicaragua Asunción, Paraguay E-mail: mvaai@worldbank.org Mrs. Camille Anne Nuamah Tel: (595-21) 231 155 The World Bank Group Fax: (595-21) 231 196 * Saudi Arabia Plaza Santo Domingo E-mail: Rpolastri@worldbank.org Mr. Farrukh Iqbal Kilómetro 6.5 Carretera a Masaya Web: http://www.worldbank.org/py The World Bank Group Edificio Cobirsa, Quinto Piso 1st Floor, UNDP Building, Diplomatic Quarter Managua, Nicaragua * Peru Riyadh, Saudi Arabia Tel: (505) 2270 0000 Ms. Susan G. Goldmark Postal address: P.O. Box 5900, Fax: (505) 2270 0077 The World Bank Group Riyadh 11432, Saudi Arabia E-mail: clampart@worldbank.org Av. Alvarez Calderón 185, Piso 7 Tel: (966-1) 483 4956 Web: http://www.worldbank.org/ni San Isidro Fax: (966-1) 488 5311 Lima 27, Peru E-mail: fiqbal@worldbank.org Niger Tel: (511) 622 2300 Web: http://www.worldbank.org/sa Mr. Nestor Coffi Fax: (511) 421 7241 Banque Mondiale E-mail: sgoldmark@worldbank.org * Senegal 187, rue des Dallols Web: http://www.worldbank.org/en/country/peru Ms. Vera Songwe B.P. 12402 Banque Mondiale Niamey, Niger * Philippines Corniche Ouest X, David Diop Tel: (227) 73 59 29 Mr. Motoo Konishi Dakar, Sénégal Fax: (227) 20 73 55 06 The World Bank Postal address: B. P. 3296 E-mail: ncoffi@worldbank.org 23/F, The Taipan Place Building Tel: (221) 33 859 4100 Web: http://www.worldbank.org/ne F. Ortigas Jr. Road, Ortigas Center Fax: (221) 33 859 4283 Pasig City, Metro Manila, Philippines E-mail: Vsongwe@worldbank.org Tel: (63-2) 637 5855 Web: http://www.worldbank.org/sn Fax: (63-2) 637 5870 E-mail: Mkonishi@worldbank.org Web: http://www.worldbank.org/en/country/philippines *Directors/Country Directors are in the country office. Note: Addresses that begin with “The World Bank Groupâ€? indicate the joint location of IFC and World Bank offices. Offices of The World Bank | June 30, 2012 Serbia, Republic of * Sri Lanka Tunisia Mr. Loup Brefort Ms. Diarietou Gaye Ms. Eileen Murray The World Bank Group The World Bank Bureau de la Banque mondiale Bulevar Kralja Aleksandra 86-90 1st Floor, DFCC Building Immeuble Zahrabed - BAD 11000 Belgrade, Republic of Serbia 73/5, Galle Road Jardins du Lac - Tunis Tel: (381-11) 3023 700 Colombo 3, Sri Lanka BP 323 Fax: (381-11) 3023 732 Postal address: P.O. Box 1761 1002 Tunis Belvédère E-mail: Lbrefort@worldbank.org Tel: (94-11) 2448070/1 Tunisia Web: http://www.worldbank.org/en/country/serbia Fax: (94-11) 2440357 Tel: (216-71) 19 44 68 E-mail: dgaye@worldbank.org Fax: (216-71) 19 44 75 Sierra Leone Web: http://www.worldbank.org/srilanka E-mail: Emurray@worldbank.org Mr. Vijay Pillai Web: http://www.worldbank.org/tn The World Bank Group Sudan, Khartoum Africanus House Ms. Bella Bird, Country Director (in Kenya) * Turkey 13A Howe Street Mr. Alassane Sow, Country Manager Mr. Martin Raiser Freetown, Sierra Leone The World Bank The World Bank Tel: (232-22) 227555 Plot 39, Street 39 Ugur Mumcu Caddesi No.88, Kat: 2 Tel: (232-76) 806467, 806468 Khartoum East (II) 06700 Gaziosmanpasa Fax: (232-22) 228555 Khartoum, Sudan Ankara, Turkey E-mail: vpillai@worldbank.org Postal address: P.O. Box 229, 11111 Tel: (90-312) 459 83 00 Web: http://www.worldbank.org/sl Tel: (249) 156 553 000 Fax: (90-312) 446 24 42 Fax: (249)156 553 064 E-mail: mraiser@worldbank.org * Singapore E-mail: bbird@worldbank.org Web: http://www.worldbank.org.tr Mr. Bert Hofman E-mail: Asow@worldbank.org The World Bank Group Web: http://www.worldbank.org/sd Turkmenistan 10 Shenton Way The World Bank Liaison Office MAS Building #15-08/09 Tajikistan United Nations Building Singapore, 079117 Ms. Marsha McGraw Olive Galkynysh Street, 40 Tel: (65) 6517 1240 Aini 48 Str., Business Center “Sozidanie,â€? 3rd Floor Ashgabat 744013, Turkmenistan Direct: (65) 6517 1250 734024, Dushanbe, Tajikistan Tel: (993-12) 26 20 99 Fax: (65) 6517 1244 Tel: (992-48) 701 58 00 Fax: (993-12) 49 16 33 E-mail: Bhofman@worldbank.org Fax: (992-48) 701 58 37 Web: http://www.worldbank.org/tm Web: www.worldbank.org/sg E-Mail: molive@worldbank.org Web: http://www.worldbank.org/tj Uganda Solomon Islands Mr. Ahmadou Moustapha Ndiaye Mr. Naresha Duraiswamy * Tanzania The World Bank Group The World Bank Group Mr. Philippe Dongier Plot 1, Lumumba Avenue Mud Alley The World Bank Rwenzori House Honiara, Solomon Islands 50 Mirambo Street Kampala, Uganda Postal address: G.P.O. Box 1744 Dar-es-Salaam, Tanzania Postal address: P.O. Box 4463 Tel: (677) 21444 Postal address: P.O. Box 2054 Tel: (256-414) 230 094 Fax/ADSL Line: (677) 21448 Tel: (255-22) 2163200 Tel: (256-312) 221 416/7 E-mail: Nduraiswamy@worldbank.org Fax: (255-22) 2113039, 2163295 Fax: (256-414) 230 092 Web: www.worldbank.org/pi E-mail: pdongier@worldbank.org E-mail: andiaye@worldbank.org Web: http://www.worldbank.org/tz Web: http://www.worldbank.org/ug South Africa, Johannesburg The World Bank Group * Thailand * Ukraine Regional Processing Center Ms. Annette Dixon Mr. Qimiao Fan 4 Fricker Road, Illovo Boulevard The World Bank Group The World Bank Illovo 2196 30th Floor, Siam Tower 1, Dniprovsky Uzviz Johannesburg, South Africa 989 Rama 1 Road, Pathumwan Kyiv 01010, Ukraine Postal address: P.O. Box 41283, Bangkok 10330, Thailand Tel: (380-44) 490 6671 Craighall 2024 Tel: (66-2) 686 8300 Fax: (380-44) 490 6670 Tel: (27-11) 219 5102 Fax: (66-2) 686 8301 E-mail: Qfan@worldbank.org E-mail: adixon@worldbank.org Web: http://www.worldbank.org/en/country/ukraine * South Africa, Pretoria Web: http://www.worldbank.org/en/country/thailand Mr. Asad Alam Uruguay The World Bank Timor-Leste Mr. Peter Siegenthaler 442 Rodericks Road Mr. Luis F. Constantino The World Bank Corner Lynnwood and Rodericks Roads, 0081 The World Bank Group Buenos Aires 570, 3rd Floor Pretoria, South Africa Avenida Dos Direitos Humanos CP11000 Postal address: P.O. Box 12629, Dili, Timor-Leste Montevideo, Uruguay Hatfield 0028, Pretoria Postal address: World Bank Mission, Tel: (598) 2916 9400 Tel: (27-12) 742 3100 Timor-Leste, G.P.O. Box 3548, Darwin Fax: (598) 2916 9400 ext. 3701 Fax: (27-12) 742 3134 NT 0801, Australia E-mail: psiegenthaler@worldbank.org E-mail: Aalam@worldbank.org Tel: (670) 332 4649, 332 4648 Web: http://www.worldbank.org/uy Web: http://www.worldbank.org/za Fax: (670) 332 1178 E-mail: Lconstantino@worldbank.org Uzbekistan South Sudan, Republic of, Juba Web: http://www.worldbank.org/tl Mr. Takuya Kamata Ms. Bella Bird, Country Director (in Kenya) The World Bank Group Ms. Laura Kullenberg, Country Manager Togo International Business Center, 15th floor The World Bank Group Mr. Hervé Assah 107 B, Amir Timur Street Ministries Complex Banque Mondiale Tashkent 100084, Uzbekistan Kololo Road, Adjacent to Ministry of Health Cité de l'OUA (entre la Résidence Ambassadeur du Tel: (998-71) 238 5950 Juba, Republic of South Sudan Ghana et la Primature) Fax: (998-71) 238 5951, 238 5952 Tel: (211) 959 002 666/667/668 Lomé, Togo E-mail: tkamata@worldbank.org E-mail: bbird@worldbank.org Postal address: Boite Postale 3915 Web: http://www.worldbank.org.uz E-mail: LKullenberg@worldbank.org Tel: 22 53 33 00 Web:http://www.worldbank.org/en/country/southsudan Fax: 22 26 78 56 E-mail: hassah@worldbank.org Web: http://www.worldbank.org/tg *Directors/Country Directors are in the country office. Note: Addresses that begin with “The World Bank Groupâ€? indicate the joint location of IFC and World Bank offices. Offices of The World Bank | June 30, 2012 Vanuatu * West Bank and Gaza * Zambia Mr Ferid Belhaj (in Australia) Ms. Mariam Sherman Ms. Kundhavi Kadiresan The World Bank Group & ADB The World Bank Group The World Bank Level 5, Reserve Bank Building P.O. Box.54842 BancABC House P.O. Box 3221 Jerusalem, 97200 Plot #746 Church Road Port Vila, Vanuatu Tel: (972-2) 236 6500 Cathedral Hill Tel: (67-8) 25581 Fax: (972-2) 236 6543 P.O. Box 35410 Fax: (67-8) 22636 Gaza Tel: (972-8) 282 3422 Lusaka, Zambia E-mail: Fbelhaj@worldbank.org Gaza Fax: (972-8) 282 4296 Tel: (260-21) 137 3200 Web: http://www.worldbank.org/eap E-mail: Msherman@worldbank.org Fax: (260-21) 137 3248 Web: http://www.worldbank.org/ps E-mail: Kkadiresan@worldbank.org * Vietnam Web: http://www.worldbank.org/zm Ms. Victoria Kwakwa Yemen, Republic of The World Bank Group Mr. Wael Zakout Zimbabwe 63 Ly Thai To (WB: 8th Floor/IFC: 3rd Floor) The World Bank Group Mr. Nginya Mungai Lenneiye Hoan Kiem District Dhahr Hemiar, Berlin Street The World Bank Hanoi, Vietnam Moevenpick Hotel Old Lonrho Building Tel: (84-4) 3934 6600 Sana’a, Republic of Yemen 88 Nelson Mandela Avenue Fax: (84-4) 3935 0752/3 Postal address: P.O. Box 18152 Harare, Zimbabwe E-mail: Vkwakwa@worldbank.org Tel: (967-1) 546 039 Postal address: P.O. Box 2960 Web: http://www.worldbank.org/en/country/vietnam Fax: (967-1) 546 036 Tel: (263-4) 701 233/4 Mobile: (967) 734 000 167 Fax: (263-4) 705 935 E-mail: Wzakout@worldbank.org E-mail: nlenneiye@worldbank.org Web: http://www.worldbank.org/ye Web: http://www.worldbank.org.zw *Directors/Country Directors are in the country office. Note: Addresses that begin with “The World Bank Groupâ€? indicate the joint location of IFC and World Bank offices. Public Information Centers Public Information Centers (PICs), maintained at various World Bank Country Offices, serve as the central contact for individuals seeking information on Bank operations and related documents. They offer project documents specific to their country in which the office is located and most often offer a library of recent Bank publications. They may also offer Internet access in order to browse through the World Bank's online resources, videos produced by the World Bank or access to popular journals and periodicals. Centers in Paris and Tokyo offer a more extensive selection of operational documents and maintain libraries of recent World Bank Publications. To view all PICs by country, visit http://go.worldbank.org/U39STT8DZ0. Please note, not all Country Offices have PICs as yet. Please check this website for future updates. International Development Association Membership | June 30, 2012 (172 members) Part I Countries Part II Countries Australia Afghanistan Guyana Austria Albania Haiti Belgium Algeria Honduras Canada Angola Hungary Denmark Argentina India Estonia Armenia Indonesia Finland Azerbaijan Iran, Islamic Republic of France Bahamas, The Iraq Germany Bangladesh Israel Greece Barbados Jordan Iceland Belize Kazakhstan Ireland Benin Kenya Italy Bhutan Kiribati Japan Bolivia Korea, Republic of Kuwait Bosnia and Herzegovina Kosovo Latvia Botswana Kyrgyz Republic Lithuania Brazil Lao People's Democratic Luxembourg Burkina Faso Republic Netherlands Burundi Lebanon New Zealand Cambodia Lesotho Norway Cameroon Liberia Portugal Cape Verde Libya Russian Federation Central African Republic Macedonia, Former Yugoslav Slovenia Chad Republic of South Africa Chile Madagascar Spain China Malawi Sweden Colombia Malaysia Switzerland Comoros Maldives United Arab Emirates Congo, Democratic Republic of Mali United Kingdom Congo, Republic of Marshall Islands United States Costa Rica Mauritania Côte d’Ivoire Mauritius Croatia Mexico Cyprus Micronesia, Federated States of Czech Republic Moldova Djibouti Mongolia Dominica Montenegro Dominican Republic Morocco Ecuador Mozambique Egypt, Arab Republic of Myanmar El Salvador Nepal Equatorial Guinea Nicaragua Eritrea Niger Ethiopia Nigeria Fiji Oman Gabon Pakistan Gambia, The Palau Georgia Panama Ghana Papua New Guinea Grenada Paraguay Guatemala Peru Guinea Philippines Guinea-Bissau Poland International Development Association Membership | June 30, 2012 (172 members) Part II Countries (continued) Rwanda Samoa São Tomé and Príncipe Saudi Arabia Senegal Serbia Sierra Leone Singapore Slovak Republic Solomon Islands Somalia South Sudan Sri Lanka St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Sudan Swaziland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad and Tobago Tunisia Remuneration of Executive Management, Executive Directors, and Staff Members To recruit and retain highly qualified staff, the World Bank Group has developed a compensation and benefits system designed to be internationally competitive, to reward performance, and to take into account the special needs of a multinational and largely expatriate staff. The Bank Group's staff salary structure is reviewed annually by the Executive Directors and, if warranted, is adjusted on the basis of a comparison with salaries paid by private financial and industrial firms and by representative public sector agencies in the U.S. market. After analyses of updated comparator salaries, the Board approved an average increase in the salary structure of 1.9 percent for fiscal 2012, effective July 1, 2011, for Washington-based staff. The annual salaries (net of taxes) of executive management of the World Bank Group were as follows for the period July 1, 2011 through June 30, 2012: Executive Management: Annual Salaries (net of taxes, US$) Annual Bank Annual Bank Group Group Contribution Annual Net Contribution to to Other Name and Position Salarya Pension Planb Benefitsc Robert B. Zoellick, President d 467,940 109,779 204,956 Sri Mulyani Indrawati, Managing Director 378,599 88,819 85,563 Lars Thunell, Executive Vice President, IFC 365,948 85,851 82,704 Vincenzo La Via, Chief Financial Officer e 364,609 85,537 82,402 Ngozi N. Okonjo-Iweala, Managing Director f 361,646 144,622l 81,732 Anne-Marie Leroy, Senior Vice President and World 359,454 84,328 81,237 Bank Group General Counsel Izumi Kobayashi, Executive Vice President, MIGA 358,497 84,103 81,020 Mahmoud Mohieldin, Managing Director 358,456 84,094 81,011 Vinod Thomas, Director General, IEG g 337,936 135,141l 87,525 h Yifu Lin, Senior Vice President and Chief Economist 334,066 78,372 75,499 i l Caroline Anstey, Managing Director 315,164 126,034 81,627 Caroline Heider, Director General j 298,600 70,052 67,484 k Executive Directors 244,350 n.a. n.a. k Alternate Executive Directors 211,370 n.a. n.a. a. The salaries are set on a net-of-tax basis as the World Bank Group (WBG) staff, other than U.S. citizens, are usually not required to pay income taxes on their WBG compensation. b. Approximate annualized WBG contribution made to the Staff Retirement Plan and deferred compensation plans from July 1, 2011 through June 30, 2012. c. “Other Benefitsâ€? includes annual leave, medical, life and disability insurance, accrued termination benefits, and other nonsalary benefits. d. Mr. Zoellick, as part of WBG contribution to other benefits, receives a supplemental allowance of $83,760 to cover expenses. As a U.S. citizen, Mr. Zoellick's salary is taxable and he received a tax allowance to cover the estimated taxes on his Bank salary and benefits. In addition to his pension, Mr. Zoellick received a supplemental retirement benefit equal to 5 percent of annual salary. e. Mr. Vincenzo La Via terminated effective April 25, 2012, and his actual salary for the period July 1, 2011 to April 25, 2012 was $299,698. The WBG contributed approximately $70,309 to his pension and $67,732 to other benefits during the period he worked for the WBG. f. Ms. Ngozi Okonjo-Iweala terminated effective August 15, 2011, and her actual salary for the period July 1, 2011 to August 15, 2011 was $45,206. The WBG contributed approximately $18,078 to her pension and $10,216 to other benefits during the period she worked for the WBG. g. Mr. Vinod Thomas terminated effective August 12, 2011, and his actual salary for the period July 1, 2011 to August 12, 2011 was $40,962. The WBG contributed approximately $16,381 to his pension and $10,609 to other benefits during the period he worked for the WBG. h. Mr. Yifu Lin terminated effective June 1, 2012, and his actual salary for the period July 1, 2011 to June 1, 2012 was $307,493. The WBG contributed approximately $72,138 to his pension and $69,493 to other benefits during the period he worked for the WBG. i. Ms. Caroline Anstey's salary was adjusted to $315,164 effective September 19, 2011, and her actual salary for the period July 1, 2011 to June 30, 2012 was $309,068. The WBG contributed approximately $123,596 to her pension and $80,049 to other benefits during the fiscal year. j. Ms. Caroline Heider's appointment was effective October 2, 2011, and her actual salary for October 2, 2011 through June 30, 2012 was $223,950. The WBG contributed approximately $52,539 to her pension and $50,613 to other benefits during the period she worked for the WBG. k. These figures do not apply to the U.S. Executive Director and Alternate Executive Director, who are subject to U.S. congressional salary caps. l. Pension benefits for these staff members are based on Staff Retirement Plan (SRP) provisions in effect prior to April 15, 1998. Staff Salary Structure (Washington, DC) During the period July 1, 2011 to June 30, 2012, the salary structure (net of tax) and average net salaries/benefits for World Bank Group staff were as follows: Staff at Market Grade Average Minimum Reference Maximum Level Salary/ Average a Grades Representative Job Titles ($) ($) ($) (%) Grade Benefits GA Office Assistant 25,100 32,600 42,400 0.0 43,090 24,152 GB Team Assistant, 31,700 41,200 57,700 0.6 42,136 23,617 Information Technician GC Program Assistant, 39,100 50,900 71,300 9.5 53,698 30,098 Information Assistant GD Senior Program Assistant, 46,200 60,100 84,200 7.9 67,671 37,929 Information Specialist, Budget Assistant GE Analyst 62,100 80,700 113,000 9.8 76,179 42,698 GF Professional 82,500 107,300 150,200 19.6 98,249 55,069 GG Senior Professional 111,300 144,700 202,500 31.6 135,238 75,801 GH Manager, Lead 151,700 197,200 245,900 17.7 187,019 104,824 Professional GI Director, Senior Advisor 202,200 264,500 303,300 2.8 244,806 137,214 GJ Vice President 271,800 304,500 340,900 0.4 302,422 169,508 GK Managing Director, 298,600 338,600 372,400 0.1 292,656 177,705 Executive Vice President Note: Because World Bank Group (WBG) staff, other than U.S. citizens, usually are not required to pay income taxes on their WBG compensation, the salaries are set on a net-of-tax basis, which is generally equivalent to the after-tax take-home pay of the employees of the comparator organizations and firms from which WBG salaries are derived. Only a relative small minority of staff will reach the upper third of the salary range. a. Includes medical, life, and disability insurance; accrued termination benefits; and other nonsalary benefits. FOR IMMEDIATE RELEASE DEVELOPMENT COMMITTEE JOINT MINISTERIAL COMMITTEE OF THE BOARDS OF GOVERNORS OF THE BANK AND THE FUND ON THE TRANSFER OF REAL RESOURCES TO DEVELOPING COUNTRIES 1818 H Street, N.W., Washington, D.C. 20433 Telephone: (202) 458-2980 Fax: (202) 522-1618 Washington, DC September 24, 2011 1. The Development Committee met today, September 24, 2011, in Washington DC. 2. We note with concern the turbulence in global financial markets and widespread fiscal strains, which put at risk the robustness and sustainability of global economic recovery. Volatile commodity prices and pressures on food security are critical challenges. We are alert to the possible global impacts of these issues, particularly for the poor. While developing countries have been the main contributors to recent global economic growth, the economic crisis has reduced their capacity to withstand further shocks. We commit to do everything within our means to support strong, sustainable, balanced and inclusive growth in all our member countries. We reaffirm the need to work cooperatively to meet our development commitments to achieve the Millennium Development Goals by 2015 and to support the poor in developing and emerging countries through this period of instability, as well as in the long term. We commend the G20 for anchoring development in its agenda. 3. Jobs are vital in translating growth into lasting poverty reduction and broad-based economic opportunities. We reiterate our commitment to job creation, especially by supporting the expansion of a vibrant private sector. In this connection, we recognize the important role IFC and MIGA play in poorer countries and in challenging markets. We welcome and encourage the cooperation of the World Bank Group (WBG) with member governments and other partners, such as the G20, the International Labor Organization and the International Monetary Fund (IMF), to pursue a comprehensive approach to job creation for women and men. We look forward to discussing the next World Development Report (WDR) on jobs. 4. The WBG must continue to help member countries build resilience and respond to crises. To do this effectively, the WBG must remain prepared with human, knowledge and financial capacity. We welcome the WBG’s enhanced focus on innovative approaches to support countries in the Middle East and North Africa region to address the social and economic consequences of their current transition. We call on the WBG to scale up support and strengthen collaboration with all relevant stakeholders, in particular other Multilateral Development Banks. 5. We are saddened by the scale of human tragedy caused by the drought and famine in the Horn of Africa. We welcome the WBG’s $1.88 billion contribution to tackling the crisis and its underlying causes, including $250 million from the recently created IDA Crisis Response Window, as well as the steps the IMF is taking to provide additional concessional financing. An emergency of this magnitude needs swift, coordinated and effective international action to save as many lives and livelihoods as possible. We also need to build national capacity and resilience to speed recovery, reduce the risk of future disasters and create longer-term solutions. We must put agriculture and food security at the top of our development priorities. To do this, we need to harness the creativity and resources of the private sector. We call for continued innovation to tackle longer-term challenges, including climate change and infrastructure investment. 6. We strongly welcome the WBG’s World Development Report on Gender Equality and Development and its clear message that equality between women and men is smart economics and an essential ingredient in poverty reduction. We agree that the WDR has important lessons globally and that gender equality requires specific action from governments, the private sector and development partners. To this end, we endorse the recommendations for the WBG set out in the accompanying implications note and look forward to reviewing its implementation in a year. We urge the WBG to integrate further equality between women and men into its operations and reporting, working within its mandate and respecting national values and norms. 7. We welcome progress the WBG has made in institutional reform to meet new challenges. Greater transparency through the Open Data, Open Knowledge, Open Solutions Initiative and improved accountability via the new Corporate Scorecard will contribute to a more efficient and effective WBG. We call on the WBG to continue to promote staff diversity. We urge the WBG to maintain the momentum on its modernization agenda and look forward to discussing further progress at our next meeting. 8. We welcome the addition of the 25th Chair to the WBG Boards and look forward to a proposal in the spring to align the Development Committee with the new structure. 9. We thank Mr. Ahmed bin Mohammed Al Khalifa for his valuable leadership and guidance as Chairman of the Committee during the past two years. 10. The Development Committee’s next meeting is scheduled for April 21, 2012, in Washington DC. 2 FOR IMMEDIATE RELEASE 69402 DEVELOPMENT COMMITTEE JOINT MINISTERIAL COMMITTEE OF THE BOARDS OF GOVERNORS OF THE BANK AND THE FUND ON THE TRANSFER OF REAL RESOURCES TO DEVELOPING COUNTRIES 1818 H Street, N.W., Washington, D.C. 20433 Telephone: (202) 458-2980 Fax: (202) 522-1618 Washington, DC April 21, 2012 1. The Development Committee met today, 21 April 2012, in Washington DC. 2. The global economic outlook remains challenging. Policy adjustments and improved economic activity have reduced the threat of a sharp global slowdown. Growth in emerging and developing economies continues to be relatively strong, but poor countries still need support. Implementing policies and structural reforms to promote poverty reduction and inclusive growth must continue. 3. The likely achievement of the Millennium Development Goal (MDG) to halve global poverty by 2015 is welcome news, but we remain vigilant and continue to work with all stakeholders to advance the other MDGs and to learn from experience. We call on the World Bank Group (WBG) and the International Monetary Fund (IMF) to support the implementation of the New Deal for Engagement in Fragile States. We call on the WBG to develop more innovative and stronger partnerships with middle income countries. Providing knowledge and financing for global public goods will also remain key. We welcome steps being taken by the IMF to implement the agreed funding package for the Poverty Reduction and Growth Trust, which should enable it to meet likely demand for the IMF’s concessional support through 2014. 4. Higher, more volatile food prices threaten poverty reduction and other lagging MDGs, especially reducing hunger and child and maternal mortality. Food insecurity and malnutrition have devastating effects, especially on women and children. The Global Monitoring Report: Food Prices, Nutrition and the MDGs is timely and builds on our discussion last spring and the G20 conclusions at Cannes. We call on the WBG to continue to pursue multi-sectoral solutions to food insecurity and malnutrition through instruments such as the Global Agriculture and Food Security Program. 5. Social protection makes sound development sense. Social safety nets bolstered poor people’s resilience to the last financial crisis and are also an important component of longer-term poverty reduction when they are well-targeted, affordable, gender sensitive and sustainable. The WBG has increased support for social safety nets, including conditional cash transfers, public works, and school feeding. We welcome the report Safety Nets Work: During Crisis and Prosperity, with its focus on improving the design and efficiency of existing social safety net programs and building new ones where needed, particularly in low income countries. We urge the WBG to promote south-south learning and to allocate sufficient resources to this work, continuing to collaborate with relevant institutions such as the IMF, the regional development banks and the International Labor Organization. 6. A vibrant private sector is crucial for growth, jobs and poverty reduction. We therefore welcome the report on the WBG’s Innovations in Leveraging the Private Sector for Development. Building on its mandate of poverty reduction, the WBG is uniquely placed to innovate and advise clients about how to harness the private sector for development and to promote an enabling environment. The IFC has effectively supported development through the private sector and grown its investment portfolio and advisory services, and innovative products such as local currency and short term finance, while maintaining its focus on IDA countries and frontier markets. MIGA has also expanded its guarantee portfolio. We ask management to prepare a group-wide approach that assesses the implications for priorities and use of resources, and optimizes synergies between IBRD, IDA, IFC and MIGA to enhance responsiveness to clients and provide integrated solutions. 7. We are encouraged by progress on the modernization agenda, designed to improve the Bank’s effectiveness and efficiency to deliver more and better results. Cultural and organizational change will be needed and we fully support management in bringing this about. The Update on the Bank’s Business Modernization: Results, Openness and Accountability indicates a clear way forward. Critical areas for reform include human resources and knowledge building and sharing. Promoting staff diversity is vital to enhance operational effectiveness and attract motivated talent. The Corporate Scorecard is beginning to drive a results culture through the organization. Building on recent World Development Reports, the incorporation of gender equality and greater focus on fragile and conflict affected situations (FCS) will incentivize improved WBG performance. The momentum behind modernization must be maintained, and we look forward to a progress report next spring and to an updated Corporate Scorecard this autumn. Modernization, innovation, and greater creativity in the use of capital will achieve a more efficient WBG and contribute to its long term financial sustainability. 8. The Ministerial Dialogue on Sustainable Development, with the participation of the United Nations Secretary General Ban Ki-moon, sent an important signal about the need for global partnership to advance this demanding agenda. We look forward to continued discussion about inclusive, green growth in the context of poverty reduction and sustainable development, natural capital accounting and oceans, feeding into the Rio + 20 and G20 processes. 9. We express our profound appreciation and gratitude to Robert B. Zoellick for his leadership of the WBG over the last five years. He has positioned the WBG at the forefront of effective and timely responses to food and financial crises and natural disasters, as well as reinvigorating delivery of longer-term poverty reduction and tangible results. He has championed gender equality, better performance in FCS, adaptation to climate change, and renewed attention to agriculture and infrastructure. Under his leadership, the Bank secured the first capital increase in over twenty years and two unprecedented IDA replenishments, and launched a host of private sector initiatives, such as the IFC’s Asset Management Company. He has helped transform the WBG, making it more open, transparent, accountable and ready for a new era of “modernized multilateralismâ€?. Reflecting this change, Mr. Zoellick has overseen the rise in the voting share of developing countries to 47%, to be followed by a further review of voice by 2015. 10. We congratulate Dr. Jim Yong Kim on his selection as President of the WBG and commit to working in close partnership with him. We thank Dr. Ngozi Okonjo-Iweala and Dr. José Antonio Ocampo for their candidacies and for sharing their valuable ideas for the WBG. 11. We welcome Mr. Marek Belka as the new Chair of the Development Committee and look forward to working with him. We also note with satisfaction the proposed revision of the Development Committee’s membership to reflect the addition of a third chair for Sub-Saharan Africa in the WBG’s Board. 12. The Development Committee’s next meeting is scheduled for 13 October 2012, in Tokyo. 2 FOLLOW-UP TO SPRING 2012 DEVELOPMENT COMMITTEE MEETING Subject/Work Area DC Communiqué Output Timeline (para. 3, Fall 2011) “Jobs are vital in translating growth March 27 (Inf. Meeting) into lasting, poverty reduction and broad-based economic Jobs WDR 2013: Jobs Preliminary Findings and opportunities….We look forward to discussing the next Messages World Development Report (WBDR) on jobs.â€? July 17 Draft Report (para. 4, Spring 2012) “We call on the WBG to continue to Food Insecurity and pursue multi-sectoral solutions to food insecurity and Agriculture Action Plan (FY13-15) – Malnutrition malnutrition through instruments such as the Global Concept Note May 30 (CODE) Agriculture and Food security Program.â€? Briefing on Food Price Volatility (para. 5, Spring 2012) “We urge the WBG to promote south-south learning and to allocate sufficient resources to Partnership Programs Management Social Safety Nets this work, continuing to collaborate with relevant FY13 QII undated Framework institutions such as the IMF, the regional development banks and the International Labor Organization.â€? (para. 3, Spring 2012) “We call on the WBG to develop Middle Income Countries more innovative and stronger partnerships with middle Middle Income Countries’ Agenda FY13 QI undated (EDs’ income countries.â€? Seminar) (para. 8, Spring 2012) “We look forward to continued discussion about inclusive, green growth in the context of Oral Briefing Rio + 20 July 10 Sustainable Development poverty reduction and sustainable development, natural capital accounting and oceans, feeding into the Rio+20 and GMR – Outline September 11 (Inf. Mtg.) G20 processes.â€? (para. 6, Spring 2012) “We ask management to prepare a group-wide approach that assesses the implications for Performance Standards for Private Sector June 26 Private Sector priorities and use of resources, and optimizes synergies Projects Supported by IBRD/IDA between IBRD, IDA, IFC and MIGA to enhance FY13 QI undated IFC Private Sector Evaluation System responsiveness to clients and provide integrated solutions.â€? FOLLOW-UP TO SPRING 2012 DEVELOPMENT COMMITTEE MEETING Subject/Work Area DC Communiqué Output Timeline (para. 4, Fall 2011) “We call on the WBG to scale up support and strengthen collaboration with all relevant Disaster Risk Management Note on Disaster Risk Management Fall 2012 Annual Meetings stakeholders, in particular other Multilateral Development Banks.â€? (para. 6, Fall 2011) “…we endorse the recommendations for Gender Equality and Implications Follow Up Report September undated the WBG set out in the accompanying implications note and Development look forward to reviewing its implementation in a year.â€? June 18 (Tech. Briefing) (para. 7, Spring 2012) “…we look forward to … an updated Corporate Scorecard Annual Report Annual Report- Final text (Q1 Corporate Scorecard this autumn.â€? FY13) (para. 7, Spring 2012) “The momentum behind Spring 2013 Modernization Modernization Agenda modernization must be maintained, and we look forward to a Modernization Progress Report Progress Report progress report next spring … .â€?