Washington, D.C., September 15, 2003—The
International Finance Corporation played a key countercyclical role
this year in Latin America, providing much-needed long-term capital and
trade financing to the region’s private sector, according to IFC’s 2003
Annual Report released today in Washington.
IFC’s committed financing in Latin America and the Caribbean amounted
to $2.18 billion for 54 projects over 16 countries, the highest of any
region. This was an increase of $706 million from fiscal year 2002, and
the largest amount in recent years. Total financing included $918 million
mobilized from banks participating in IFC syndicated loans. IFC’s financing
to the region accounted for almost half–—44 percent—of IFC’s
global funding in the fiscal year 2003, which totaled $5.0 billion. IFC
is the private sector arm of the World Bank Group, and promotes sustainable
development in emerging markets.
Brazil, Colombia, Mexico and Argentina were the region’s largest recipients
of IFC financing in the fiscal year 2003. “Latin America is one
of our key priorities,” said Peter Woicke, head of IFC and Managing Director
of the World Bank Group. “We have been very active in responding to the
needs of the private sector during another challenging year. The retreat
of private capital, combined with the global economic slowdown, increased
demand for IFC lending and services in the region. IFC is a long-term partner,
and we intensified our efforts with innovative transactions and new ways
of doing business.”
For the second consecutive year, Brazil was the largest recipient of IFC
funds, both in the region and worldwide, with $888.4 million. Amid a liquidity
shortage and a rapid decline in credit, IFC helped leading Brazilian banks
Unibanco, Itaú, BBA, and Bradesco secure trade finance, which benefited
many companies and a broad cross-section of Brazil’s exporters.
In Colombia, where IFC’s financing reached $218.8 million, IFC’s role
in strengthening the domestic capital market, especially the secondary
mortgage market continued to be critical, with investments in Banco Davivienda
and the Colombian Home Mortgage Corp.
Mexico became the region’s third largest IFC partner with $151 million
in funding. Here the Corporation provided a partial bond guarantee to support
private sector financing for a water project in the Tlalnepantla municipality,
in metropolitan Mexico City. This was the first municipal water financing
in Mexico, and the first such transaction for IFC worldwide.
Argentina was the fourth largest recipient of IFC’s funds, with $120 million
centered on pre-export financing to agricultural export firms Molinos and
Vicentin. These operations continued IFC’s efforts to help Argentina emerge
from crisis. IFC was also very active in helping Argentine companies
restructure their debt.
IFC also financed regional projects for an amount of $228 million, as a
way of facilitating ‘south-south’ investments that encourage efficient
resource mobilization within the region. Examples include financing to
Brazilian bus manufacturer Marcopolo, to support its expansion plans in
Mexico, and to Red Sanitaria Hospiten to build and operate hospitals in
the Dominican Republic and Mexico.
Central American and Caribbean countries received funding for a
combined $291.4 million, with projects in Costa Rica, the Dominican Republic,
El Salvador, Guatemala, Jamaica, Panama and Trinidad and Tobago. IFC is
supporting here the process by which these countries seek to establish
economies of scale and increase their competitiveness in the face of accelerating
globalization. IFC’s financing to Cuscatlán Group in Central America is
a good example of this strategy and of IFC’s role facilitating “south-south”
Non-investment activities are becoming a key part of IFC’s operations
in the region. For example, IFC is supporting the Fome Zero (Zero Hunger)
project in Brazil by creating a mechanism to encourage contributions from
corporations to poor municipalities. Other non-investment activities include
IFC’s partnerships with Poema and Instituto Terra in Brazil, and IFC’s
support to the HIV/AIDS program that the Brazilian company Odebrecht has
established at its operations in Angola.
These activities not only reflect IFC’s role as a leading institution
in promoting a sustainable private sector development in Latin America,
but also bring added value to IFC clients. By working with IFC, companies
not only receive financing and technical assistance, but can also bring
the expertise and reputation of working with a partner recognized for its
strong social and environmental safeguards. Last year, ten international
banks acknowledged IFC’s role in these areas by adopting its safeguards
for their project financing in an initiative known as the Equator Principles.
In the Annual Report, Peter Woicke recognized that private sector development
in emerging markets “is not just about making investment. Companies, not
only in the developed world but also in China, India, Eastern Europe, and
Latin America –have recognized that long-term profitability is best enhanced
and guaranteed when these investments are made in an sustainable way.”
Bernard Pasquier, IFC’s Director of the Latin America and Caribbean Department
said: “IFC is a long-term partner for good and bad times. We will continue
providing the financing and services to help companies that share our values
to overcome the harsh situation of the last two years. We will encourage
the return of the private capital to Latin America. IFC –he said- also
seeks changes in the investment climate that will strengthen the region’s
IFC’s mission 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, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956, IFC has committed more than $37 billion of its own funds and arranged
$22 billion in syndications for 2,990 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY03 was $16.8 billion.