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IFC Report Shows Rapid Growth in Financial Markets Advisory Activities


In Washington, D.C.:
Desmond Dodd

Phone: +1 (202) 473 7194

Fax: +1 (202) 974 4384

Email:
ddodd@ifc.org


Washington, D.C., July 24, 2003—The International Finance Corporation, the private sector arm of the World Bank Group, is expanding its financial markets advisory services, establishing IFC as a major provider of technical assistance to emerging markets in creating sustainable, diversified financial systems.

According to Highlights 2002-03, the first annual publication on IFC’s Financial Markets Advisory Services, the advisory services portfolio has increased by $5 million each year since 1997. As of March 1, 2003, the portfolio amounted to nearly $26 million in 70 countries, with a pipeline of projects of another $28 million under review.


IFC’s technical assistance indirectly provides access to capital for corporations and financial institutions as well as entrepreneurs, small businesses, and home buyers around the globe. In Russia, for example, the Leasing Development Project undertaken by the IFC-managed Private Enterprise Partnership and completed earlier this year, involved drafting and promoting amendments to tax provisions affecting leasing that were enacted in 2001 and 2002. Those changes helped catalyze a competitive leasing industry in the country that today approaches $2.3 billion in size.


“We strongly adhere to the view that finance is critical to economic and private sector growth and that finance begins at home,” said Peter Woicke, executive vice president of IFC. He noted that global capital is beneficial but can create serious risks, can be volatile, and is often accessible only to the largest companies. Technical assistance helps countries create more stable, more diversified, and higher-quality financial systems that expand access to capital, helping to reduce poverty and improve people’s lives.


The report shows that IFC has targeted countries with the least developed financial systems, or frontier markets. Over 65 percent of the technical assistance was targeted at such markets. Other highlights include:


       
About 60 percent of technical assistance for financial markets was aimed at improving access to finance for small and medium borrowers.
       
IFC promotes sustainable financial institutions and markets through extensive institution-building efforts and corporate governance initiatives.
       
Projects in leasing, housing finance, securities markets, and insurance and contractual savings accounted for 40 percent of projects.
       
Key regions for projects underway were Southern Europe and Central Asia (35 percent of projects), East Asia (24 percent) and Africa (11 percent).

In the future, strengthening micro and small business finance is expected to continue to be a major focus of activity. Frontier markets are projected to receive an even larger share of future technical assistance. Housing finance is expected to play a larger role, particularly to improve access to housing finance loans in Africa, Latin America, the Middle East and North Africa, and Southern Europe and Central Asia. The full report can be viewed online at
http://www2.ifc.org/news/FMTA2002-03.pdf

The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.