WASHINGTON, August 10, 2020-World Bank Group commitments to help countries achieve better development outcomes and address the health and economic impacts of the coronavirus disease (COVID-19) rose to $73.4 billion in fiscal year 2020, 23 percent higher than the prior year and the highest level in a decade. The financial statements from the fiscal year highlighted the strength of the financial position of the World Bank Group, strong demand for financing including due to COVID-19, and the continued backing from shareholders and capital markets.
These statements include the Management’s Discussion and Analysis of financial results for four World Bank Group institutions: the International Bank for Reconstruction and Development (IBRD), which provides loans and advice to middle-income countries; the International Development Association (IDA), the World Bank’s fund for the poorest; the International Finance Corporation (IFC), the Bank Group’s private sector arm; and the Multilateral Investment Guarantee Agency (MIGA), whose mandate is to help drive impactful foreign direct investment to developing countries.
In response to the global outbreak of COVID-19, the World Bank Group worked to respond quickly and intends to deploy up to $160 billion in the 15 months ending June 30, 2021. The WBG provided a total of approximately $21 billion in COVID-19 related support in FY20.
“As developing countries face an unprecedented health, social and economic crisis that is jeopardizing decades of development progress and pushing millions into poverty, the mission of the World Bank Group is as urgent as ever. The four sets of FY20 financial statements issued today show that the World Bank Group has the tools and financial strength to help support countries in their efforts to reinforce healthcare systems, protect the poorest households, maintain the foundations of the economy, fight inequality and build a resilient and sustainable recovery,” said World Bank Group President David Malpass. “To improve growth and development outcomes, the Group is increasing its focus on country programs. The Bank’s operational realignment places country-driven development at the center of program delivery, while strengthening thought leadership on development issues. We continue to work toward increasing our support to lower-income countries and to shift resources toward countries suffering from fragility, conflict and violence. Over the long term, our priorities are centered on creating broad-based growth and raising median incomes via broadening access to critical infrastructure such as electricity and clean water, widening the reach of digital financial services, enhancing the rule of law and private sector growth and development, and promoting debt and investment transparency and sustainability,” added President Malpass.
Key highlights by institution of the financial statements are as follows.
- IBRD’s net commitments rose to $28 billion in FY20 while disbursements remained strong at $20.2 billion. Commitments to lower-middle-income countries in FY20 represented 55 percent of the total.
- Considering loan repayments, net disbursements to support developing economies were $10.6 billion in FY20. This increased IBRD’s loan portfolio to $202.2 billion, 5 percent above a year ago.
- Despite the portfolio growth, IBRD’s capital adequacy measure, the equity to loans (E/L) ratio, remained stable at 22.8 percent, partly due to receipt of capital subscription payments of $1 billion and the retention of $1 billion in the general reserve.
- IBRD raised medium and long-term debt of $75 billion during FY20, $21 billion more than the previous year. The funds raised from capital markets financed development lending, bolstered liquidity and were used to replace maturing debt.
- IBRD reported a net loss of $42 million for FY20, compared to a net income of $505 million in the prior year, primarily due to net unrealized mark-to-market losses on the non-trading portfolio, partially offset by strong net interest revenue.
- Allocable income, the measure that IBRD uses to make net income allocation decisions, was $1.4 billion, $0.2 billion higher than the previous year, which was primarily attributable to the increase in net interest revenue.
- IDA’s Nineteenth Replenishment of resources (IDA19) was approved by the Board of Governors in March 2020. Members have agreed that IDA will make $82 billion in new commitments over the FY21 – FY23 three-year replenishment period, including to countries that strengthen debt transparency and adopt sustainable borrowing practices.
- In FY20, IDA net commitments were $30.4 billion, 39 percent higher than the previous year. Net disbursements in FY20 were $15.1 billion, a 24 percent increase compared to the previous year, increasing the net outstanding loan balance to $161 billion, 6 percent above a year ago.
- As part of its funding activities, IDA also issues bonds in the international capital markets and raised medium and long-term debt of $5 billion during FY20.
- IDA reported a net loss of $1.1 billion compared to a net loss of $6.7 billion in the prior year. The change in net loss is explained by the adoption of a new accounting standard affecting the recognition of grant expenses.
- IDA’s capital adequacy measure, the deployable strategic capital ratio, was 35.8 percent, marginally higher than a year ago. IDA’s capital continues to be adequate to support its operations.
- Adjusted Net Income, the financial sustainability measure that IDA uses to monitor the economic results of its operations, was $724 million, $499 million higher than the prior year. This increase was primarily due to the decrease in the loan loss provision and higher loan interest revenue, reflecting arrears clearance activity, partially offset by lower unrealized mark-to-market gains on Investments Trading portfolio.
- IFC’s long-term finance commitments increased to $22.0 billion in FY20. Own account commitments reached $11 billion and mobilization, $11 billion. In addition, IFC extended $6.5 billion in short-term finance.
- IFC’s total commitments includes $2.1 billion under its COVID-19 support package ; $1.5 billion of own account and $0.6 billion of mobilization. Short-term trade finance includes $2.0 billion of COVID response.
- IFC reported a net loss of $1.672 billion for FY20. Net unrealized losses in the equity portfolio totaled $1.603 billion in FY20 ($918 million in FY19). Provisions for losses on the loan portfolio totaled $638 million in FY20 ($87 million in FY19).
- IFC’s capital adequacy measure, the deployable strategic capital ratio, increased to 17.9 percent at the end of FY20, up from 11.6 percent at the end of FY19, largely due to reduction in capital required to support IFC’s business.
- IFC raised medium- and long-term debt of $12 billion during FY20.
- MIGA’s commitments totaled $4.0 billion in FY20 in support of 47 projects compared to $5.5 billion in FY19 in support of 37 projects, reflecting the Agency’s focus on IDA-eligible countries and Fragile and Conflict-Affected Situations.
- As part of its COVID-19 response, the Agency issued $2.1 billion of guarantees (representing 53 percent of MIGA’s FY20 new business volume) to support private sector investors and lenders in emerging economies and developing countries to address the impacts of COVID-19.
- MIGA’s net guarantee exposure reached $9.2 billion as of end-FY20, reflecting an 11 percent increase from $8.3 billion as of end-FY19.
- MIGA reported a net income of $57.2 million in FY20 compared to $82.4 million in FY19. The decrease is attributable to $25.9 million higher reserve for claims and $1.3 million lower operating income (net premium income less administrative expenses), partially offset by $1.8 million higher investment income.
- The capital utilization ratio, MIGA’s key capital adequacy measure, of 47.5 percent was not much changed from the prior year, reflecting the continued deployment of private sector reinsurance capacity to manage the Agency’s capital.
For full versions of the Financial Statements and Management’s Discussion & Analysis of the four World Bank Group institutions, please visit:
- IBRD FY20 Financial Statements and Management’s Discussion and Analysis
- IDA FY20 Financial Statements and Management’s Discussion and Analysis
- IFC FY20 Financial Statements and Management’s Discussion and Analysis
- MIGA FY20 Financial Statements and Management’s Discussion and Analysis