IFC Board approves initiatives for financial crisis
IFC's Board approved a package of crisis response initiatives to
support the private sector in emerging markets hit by the global
financial crisis.
It also approved a Sovereign Funds Initiative, which will enable IFC,
a member of the World Bank Group, to raise and manage commercial capital
from sovereign funds for equity investments in some of the poorest
developing countries.
The initiatives will support the private sector, which is critical to
employment, recovery, and growth.
The crisis response facilities consist of a doubling of the IFC
Global Trade Finance Program to $3 billion, a new $3 billion Bank
Recapitalization Fund, and an Infrastructure Crisis Facility which is
expected to mobilize at least $1.5 billion. These will be supported by
advisory services addressing the needs of clients affected by the
crisis.
The goal of the Sovereign Funds Initiative is to connect long-term
commercial capital from state-owned investors with the substantial
investment needs of private companies in developing countries.
"We are pleased that the Board approved and endorsed these important
initiatives," said Lars Thunell, IFC's Executive Vice President and CEO.
"With the support of donors and partners, these IFC facilities will
provide critical assistance to many businesses and entrepreneurs and
reduce the impact of the crisis on the poor. In addition, our new
Sovereign Funds Initiative should mobilize new sources of commercial
capital for long-term investment in frontier regions and countries."
The four crisis response facilities are expected to deploy about $30
billion over the next three years. IFC will fund the facilities and has
invited other donors, including governments and international financial
institutions to contribute financing and expertise. The Japanese
government has announced that it will become a founding partner and
invest $2 billion in the Bank Recapitalization Fund.
IFC's Board of Directors is a permanent board that represents IFC's
181 member countries and guides its programs and activities.
IFC will double its existing Global Trade Finance Program from $1.5
billion to $3.0 billion over a three-year period to meet a large
increase in demand for short-term trade finance. The expanded facility
will benefit participating banks, including those in some of the world's
poorest countries.
IFC will launch a global equity fund to recapitalize banks, as bank
failures would further damage economic activity and worsen poverty in
developing countries. IFC expects to invest $1 billion over three years
and Japan has announced it will invest $2 billion in the fund.
This new IFC facility will bridge the gap in available financing for
viable, privately funded infrastructure projects facing financial
distress. IFC expects over three years to invest a maximum of $300
million and that other sources will invest between $1.2 billion and $10
billion.
IFC is scaling up and refocusing its advisory services geared to
financial institutions and governments, and reform of the financial
infrastructure-banking for small and medium enterprises, leasing,
microfinance, housing, investment policy and promotion, and business
operation and regulation.
IFC, a member of the World Bank Group, creates opportunity for people
to escape poverty and improve their lives.
We foster sustainable economic growth in developing countries by
supporting private sector development, mobilizing private capital, and
providing advisory and risk mitigation services to businesses and
governments.
Their new investments totaled $16.2 billion in fiscal 2008, a 34
percent increase over the previous year. |