IFC International Finance Corporation/Annuatl Report 1978

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"The purpose of the Corporation isto further economic development byencouraging the growth of productiveprivate enterprise in member countries,particularly in the less developed areas,thus supplementing the activities of theInternational Bank for Reconstructionand Development.... In carrying outthis purpose, the Corporation shall:

i. in association with privateinvestors, assist in financing tlheestablishment, improvement andexpansion of productive privateenterprises which would contributeto the development of its membercountries by making investments,without guarantee of repayment bythe member government concerned,in cases where sufficient privatecapital is not available on reasonableterms;

ii. seek to bring together investmentopportunities, domestic and foreignprivate capital, and experiencedmanagement; and

iii. seek to stimulate, and to help createconditions conducive to, the flow ofprivate capital, domestic andforeign, into productive investmentin member countries.

"The Corporation shall be guided in allits decisions by the provisions of thisArticle."

Article OneArticles of AgreementInternational Finance Corporation

1978 Annual Report

InternationalFinanceCorporation

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IFC is...an international development institu-tion with 108 member couniries ofwhich 88 are less developed. Its specialpurpose is to promote the growth ofthe private sector and to assist produc-tive private enterprises in its less de-veloped member countries where suchenterprises can advance economic de-velopment. IFC is an affiliate of theWorld Bank and, as such, shares with itcommon objectives and policies forimproving the well-being of the peoplesof less developed member countries.

IFC is not limited as to the form inwhich it may provide financing and itsterms are flexible. Such financing nor-mally consists of subscriptions to sharecapital or long-term loans withoutguarantee of repayment by govern-ments, or both. It helps mobilize othercapital and technical expertise for pro-ductive ventures that contribute toeconomic development and meet soundinvestment criteria. IFC also has a re-sponsibility to promote such venturesby identifying and bringing togetherinvestment opportunities and qualifiedinvestors.

In addition, IFC seeks to encouragethe flow of private capital in the coun-tries it assists. To this end, it supportsthe establishment or expansion of localcapital markets and financial institu-tions. It also offers technical assistanceto member governments in support oftheir efforts to create an investmentclimate which will encourage produc-tive and beneficial domestic and foreigninvestment.

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The Directors of the International Finance Corporation have had prepared thisAnnual Report for the fiscal year July 1, 1977, to June 30, 1978, in accordance with theBy-Laws of the Corporation.

Mr. Robert S. McNamara, President of the Corporation and Chairman of the Boardof Directors, has submitted this Report, together with the audited financial state-ments, to the Board of Governors.

Directors Alternates

Jacques de Groote Tung BilgetEarl G. Drake Edward M. AgostiniSaid E. El-Naggar Saleh A. Al-HegelanErnesto Franco-Holguin Ram6n Martinez-AponteEdward R. Fried William P. DixonJulio C. Gutierrez Eduardo R. ConesaHans Janssen Hans-Dieter HanflandR. A. Johnston Gerald S. AburnYahia Khelif Kwaku Gyasi-TwumThavil Khutrakul Bharat B. PradhanAnthony IJ. A. Looijen Gavra D. PopovicEinar Magnussen Valgeir ArsaelssonSusumu Murayama Fumiya IwasakiM. Narasimham M. Syeduz-ZamanEduardo Pesqueira Oscar G. EspinosaArmand Razafindrabe (vacant)Giorgio Rota Miguel Martin-FernandezWilliam S. Ryrie Ronald F. R. DeareTimothy T. Thahane A. H. MadingaJacques Henri Wahl Pierre-Henri Cassou

The Directors express their appreciation to the staff of IFC forthe high standards of their performance during the year andtheir dedication to the purposes of the Institution.

June 30, 1978

Contents

IFC in BriefKey Indicators 2The Year's Highlights 3

The World Investment and Trade Climate 4

IFC's Year_.II.p Policies and Objectives 10

Operations 13The Year's Investments 18Financial Record 20

Development Perspective * A photographic essay 22-i Financial StatementsBalance Sheet 26Statement of Income 27Statement of Changes in Financial Position 28Statement of Loan and Equity Investments 29Statement of Cumulative Gross Commitments 35

AppendicesVoting Power and Subscriptions of Members 40Governors and Alternates 41Directors and Alternates and Voting Power 43Officers and Department Heads 44

IFC in Brief/Key Indicators

(US$ millions)

1977 1978

OPERATIONS

Approved Investmentsnumber of projects 34 41number of countries 21 31amount 259 338 . ; ttotal project costs 1,228 1,872 . tN

Cumulative Approvalsnumber of projects 383 424amount 1.764 2,103 'itotal project costs 9.033 10,904 (participations 451 592

Investments Heldloans 704 799 b *equity 160 184total 864 983

RESOURCES AND INCOME

Capitalization Fborrowings 445 462paid-in capital 108 14 t!-4 retained earnings 87 100

Earningsnet income 8.9 12.5 . ,.

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2

IFC in Brief/The Year's Highlights

Reclaimed paper (left) and During the Fiscal Year 1978, IFC sig- percent were in countries with a perworkers skills (lower left) nificantly expanded both the volume capita gross national product of lessare important elements in and scope of its activities and at the than $520 per annum and some 70 per-two IFC-assisted ventures same time reoriented its operations to cent of the projects were in countriesin the pulp and paper and prepare for the capital increase ap- whose per capita GNP was liess than

consumer appliances proved by the Board of Governors. $1,075 per annum.sectors. The Board of Directors approved A sector breakdown of IFC, invest-

$338.4 million in loan and equity in- ments approved shows that 16 were investments for 41 projects in 31 coun- light manufacturing, of which half weretries throughout the developing world. companies producing basic consumerThe dollar volume of approved invest- goods; 10 were for development financements increased 31.0 percent and the corporations or capital market institu-number of projects increased 21 per- tions, 8 were for companies extractingcent over the previous year. The Cor- and processing earth resources, and 7poration made $32 million worth of were for agriculture and food process-equity investments in 25 firms, an 85 ing projects. Over 20 different types ofpercent increase in dollar volume over businesses were represented in thethe previous year. projects approved, ranging from stone

The Corporation undertook invest- quarrying to petrochemicals, from agri-ments for the first time in Mali, Lesotho, cultural farming projects to large, highlySwaziland, the Yemen Arab Republic, integrated agro-industrial complexes.and Trinidad and Tobago. Of the total projects approved, $250

The total cost of projects approved by million went to establish new opera-the Board during the Fiscal Year was tions; $71 million to expand and mod-$1,872 million as compared to $1,228 ernize existing plants; and $13 millionmillion the previous year. The por- to support financial institutions. Thetion of the projects financed by IFC balance, $4 million, involved the exer-amounted to 18 percent of the total cost cise of stock rights and went to assistwhich was only slightly lower than in companies mobilize additionail neededprevious years. Other investors pro- capital.vided $1,447 million, or 77 percent of thetotal-the balance was financed through With the decision of the Board ofinternal cash generation. Governors in November 1977, the Cor-

The Corporation also mobilized addi- poration is undertaking a major increasetional resources for these projects of its share capital. A total of $468.8 mil-through the sale of participations in its lion has been allocated to memberloans. During the Fiscal Year, the Cor- countries for subscription.poration sold or has pending $140.1 mil- With the admission of Mali and thelion in participations. This compares United Arab Emirates, IFC's member-with the previous year's total of $67.7 ship increased to 108.million. The Corporation's financial position

A large number of approved projects remained strong. Earnings increased 41were in the least advanced of the Cor- percent over the previous year to $12.5poration's member countries. Some 50 million.

3

The World Investment and Trade Climate

GNP Real Growth In 1977 and early 1978, the developing privatebusiness investmenthave helped%Change world exhibited broad-based economic negate the effects of the stimnulatory8 - strength in the face of a pronounced measures which have been taken. As a

6 e DCountried pause in economic growth experienced result of these developments and the tenta-6 Counres / by the industrial nations. In the latter tive nature of corrective policies, the esti-

countries, the consumption-led re- mated unemployment rate in the OECD4 ~ \ / covery which had gained momentum in nations remained in 1977 and early 1978

2 / 1976 gave way to reduced rates of GNP at around the same average level of 5.42 D growth, coupled with new dislocations percent experienced during the trough of

0 _ t /Countries in international trade and payments the 1975 recession, and capacity utiliza-and the onset of heavy turbulence in tion rates remained somewhat below

-2 foreign exchange markets. By contrast, historical levels in industry. Reflecting-72 '74 '76 '78- developing countries generally con- domestic conditions in the industrial

'Forecast tinued their growth and have further nations, the volume of world trade grewbroadened their international trade by about 4 percent in 1977 cornpared tobase as well as their borrowing capacity 12 percent in 1976, and the rate is notin international financial markets. forecast to improve in 1978.Moreover, developmental gains appear As hopes for sustained broad eco-recently to be somewhat more evenly nomic recovery failed to materializedistributed within the developing in the industrial nations, domesticworld, even though the average for policy coordination amongst them be-country groups masks severe problems came difficult and pressures mountedin particular countries. Both the indus- to adopt inward-looking policies to dealtrial and developing worlds will con- with unemployment, low growth, infla-tinue, in the months ahead, to be strong- tion and balance of payments adjust-ly tested in their commitment to seek ment. While the industrialized coun-broad international rather than nar- tries are trying to deal with them, theserow national solutions to economic problems have nevertheless begun toproblems. cast a shadow over the otherwise gen-

The average growth rate of industrial erally satisfactory economic outlookcountries' GNP slipped in real terms to and investment climate of the develop-around 3.5 percent in 1977, from a more ing nations.robust 5.2 percent in 1976 and the out- In this troubled global setting, it waslook for 1978 is only modestly improved. a remarkable indication of the growingA generalized slowdown in the growth economic strength and flexibility of de-of private consumption in the major veloping countries' that they were, byindustrial countries, falling from an and large, able to prosper in 1977 andaverage rate of 4.9 percent in 1976 to early 1978. As a group they mraintained3.5 percent in 1977 with a similar rate in 1977 their overall GNP growth rate atprojected by the OECD for 1978, was almost the 6 percent level achieved insuperimposed on continued sluggish in- 1976, and despite protectionism andvestment behavior outside the United slackening growth of world trade, theirStates. The growth of gross fixed invest- overall deficit in international trade in-ment improved on average to an esti- creased only slightly from $25,100 mil-mated 6.5 percent in 1977 as against lion to $28,900 million. Similar GNP5.5 percent the previous year, but is pro- growth is expected in 1978, though atjected by the OECD to return to arel'nd the cost of a substantial increase inthe 1976 level in 1978 because the rate their combined current account deficit,of investment growth in the U.S. is ex- somewhere in the order of $5,000-pected to decline. $10,000 million, according to IMF and

Stimulatory measures by industrial OECD projections. The overall per-nation governments to restore economic formance of developing countries sincegrowth were restrained during 1977 and 1973, in fact, has been one of broad-1978 by a combination of inflationary based strength, most prominent in thefears and balance of payments difficul-ties, fueled in some cases by budget 'Excluding only the capital surplus oil exportingdeficits. Rising private household sav- countries (Kuwait, Saudi Arabia, Libya, Qatar andings rates and a continued hesitancy of the United Arab Emirates).

4

areas of trade, investment and finance. direct foreign private investment in im-Developing countries'exports in 1977 portance and is now second only to

experienced an overall nominal growth official flows as the major source of ex-of 14 percent, despite relatively poor ternal financing of developing countryexport growth by Southern European programs. It is now the principal sourceand oil exporting countries. Poor export of their total external indebtedness.performance in the latter two groups New flows (gross) from internationalwas due to generally depressed market commercial banks ih the form of Euro-conditions in the industrial nations, currency credits and from internationalespecially in Europe, and to sluggish oil capital markets in foreign and inter-market conditions in particular. None- national bond financings reached newtheless, developing country exports to highs in 1977 and early 1978, as develop-the industrial nations grew in 1977 by ing countries took advantage of attrac-17 percent overall (around 7 percent tive financing and refinancing oppor-in real terms), improving their net trade tunities. Bond markets were penetratedbalance with the latter by an estimated further, country coverage was extended$4,000 million. These developments re- dramatically, and longer averageflected windfall gains in beverage crop maturities were obtained at only slightlyexports, whose international prices higher average cost for Eurocurrencypeaked in mid-1977 at twice the level of credits and at a lower average cost formid-1976 in current terms, and more bonds.fundamental underlying strength in Altogether, developing countries inmanufactured exports whose share of 1977 raised their annual borrowings intotal exports appears (on the basis of such markets by 27 percent to overincomplete data) to have risen once $23,000 million, and accounted for one-again, from 21 percent in 1976. third of total volume. They took. $18,700

The developing world has not only million or 55 percent of total publicizedmanaged to hold its own in an uncertain Eurocredits, and $4,400 million, or al-economic environment, but its gains ap- most 13 percent, of total bond issues.pear to be more widely shared than in However, such borrowings continue tothe past. The lowest income countries- be concentrated in the hands of a few ofwith 1976 per capita GNP of $280 or the most advanced and/or resource richless-seem to have maintained in 1977 countries. In 1977, the largest 10 bor-the strong trade and growth perform- rowers accounted for 75 percent of theance they have demonstrated since 1975. total Eurocredits and 75 percent of theIn 1976 and 1977, these countries as a total bond financings of developinggroup achieved export gains in real countries. Direct borrowing by privateterms of 15 percent and 12 percent, re- industry and financial institutions con-spectively. And preliminary indica- tinued to play a very minor role, withtions are that their GNP growth in 1977 most borrowing being conducted underwill exceed their average of 5.5 percent government guarantee. Fifty-six devel-in the previous two years. oping countries had recourse to inter-

national financial markets, a sharp risefrom 40 the previous year, and 20 of

International Private these issued bonds, compared to 15 theCapital Flows previous year. Eurocredit terms and

international bond maturities length-International private lending to de- ened over the year from an average of 5

veloping countries2 continued the rapid to 7 years and foreign bonds maintainedexpansion begun in the early 1970s, slightlylongeraveragematuritieswhichfacilitated by the continued healthy lengthened to 7-10 years at year's end.economic growth and international Higher base interest rates on Euro-trade performance of these countries. credits were partially offset in someSuch lending has long since displaced cases by a slightly lower cost in spreads

and fees. The difference between initial'2Lendmg for a term of one year or more, and exclud- yields on dollar-denominated bond

ing private lending included in direct investment issues and the cost of Eurocredits nar-data. rowed so much over the year that by

5

Developing Country Borrowings year's end such bond issues cost bor- 11 percent of total outstanding interna-Current USS. Thousand Millions rowers about the same as Eurocurrency tional credit,:' while they had thlemselves25 - credits. borrowed roughly $95,000 million of

El Eurocredtds There are indications in early 1978 of that credit.20 - Bonds some major further expansion of total In other ways, too, the changing pro-

borrowings by developing countries, file of international financial markets15 - along with further modest lengthening augurs well for developing country bor-

of maturities, reduction of spreads, and rowers. In particular, the significant in-10 _ _ increases in interest rates on dollar- roads made by developing countries

denominated borrowings. First half into foreign and international bond5 - _ Eurocurrency borrowings of $14,300 markets in the past two years have wide

million were around three-fourths the implications. While the countries issu-7 74 75 76 7 78 1977 total and bond issues of $3,000 mil- ing bonds have thereby strengthened

'First 6 months lion were more than two-thirds of the the structure of their own debi and their1977 figure. A projected increase uuring future credit-worthiness, they have also1978 of between $5,000 and $10,000 mil- indirectly enhanced the quality of thelion in the combined current account portfolios of the international banks.deficit of the developing countries is This process may therefore help tolikely to be financed largely through broaden lending capacity to other de-Euroborrowings, if access to these veloping countries as well. Further-markets continues to be as easy and as more, the bond financing processattractive as in the recent past. This engenders increased confidence in theraises anew the question. addressed in borrowers, as investors become moreprevious IFC annual reports, of how familiar with them and are assured of aassured future access will be, and how certain measure of public disclosureit can be further improved for all devel- and discipline from them. The moreoping countries. readily developing countries can sub-

mit to that discipline, the easier will beFuture Borrowing Prospects their access to international money and

Some assurance for the future can be capital markets.drawn from the increasing reliance that Nonetheless, there has been consider-parties on both sides have come to place able debate in recent years over theon financial intermediation through financial and economic implications,private lending institutions. It is clear, both for lenders and borrowers, of theon the one hand, that a growing number seemingly extraordinary growth of de-of developing countries are relying on veloping country private indebtedness.financial Euromarkets as an integral It is true that between the end of 1972and even indispensable element in their and the end of 1976, the total disburseddevelopment finance strategy. This re- external debt (of maturity longer thanliance is a product of the speed, volume one year) of the developing countriesand nonconditionality with which in- more than doubled, from around $90,000ternational commercial banks can re- million to just under $200,000 million,spond to financing requirements. It is and the share of debt from privateequally evident, on the other hand, that sources increased from 30-35 percent tosuch lending to developing countries 55-60 percent. Over the same period,has become an integral and profitable however, the combined GNP of the de-activity for these lending institutions. veloping countries increased in currentSpreads and fees, though narrowing, U.S. dollar terms, at almost the samestill leave attractive margins to coverbank overhead costs after relatively in-significant charge-offs due to defaultsand provisions for expected losses.Moreover, developing countries have 3 Estimated from Bank for International Settlementsbecome important clients of the interna- data on external positions in domestic and foreigncurrency of banks in the Group of Ten countriestional commercial banks as depositors and Switzerland and of the foreign branches ofin the international money market. By U.S. banks in the Caribbean and the Far East.

This estimate thus excludes international sourcesthe end of 1977, developing countries' and uses of funds from branches of non-U.S.deposits had reached $60,000 million or banks located outside the Group of Ten region.

6

Developing Country Indicators rate so that total external debt as a per- The Outlook-InternationalCurrent US$,ThousandMillons cent of GNP changed only marginally Trade and Protectionism1,400 - from slightly above 16 percent to just

under 18 percent. Meanwhile, develop-ing country exports grew from just over The outlook for 1978 and beyond for

1,200 - $70,000 million in 1972 to almost $210,000 the developing countries is thereforemillion in 1976, closely approximating clouded somewhat by recent and pro-the growth of total external indebted- spective developments in the industrial

1,000 - ness. As a result, total debt service actu- nations. Real growth rates of GNP andally declined as a percentage of exports, investment in the industrial countries

GNP from around 16.5 percent in 1972 to just are forecast to be relatively low in 1978,800 / under 15 percent in 1976. averaging around 4 percent and slightly

This underlines the importance of the over 5 percent, respectively. Growth incontinued maintenance by the develop- the volume of world trade is conse-

600 ing world of the healthy rates of both quently expected to be no higher thanGNP and export growth characteristic the 4 percent rate achieved in 1977.of recent years. Even if that economic These low rates seem to portend only

400 performance can be sustained in the modest growth of developing countryyears ahead, and on this there hinges exports.

Expons great uncertainty, there are other rea- There are other reasons for concernExports sons to expect that developing coun- arising from a review of present indus-

200 tries will have to make even greater trial country trends. Unemployment is

-x ter\al debt efforts in the future in order merely to likely to increase in the industrial72 F \ C L f :; maintain the gains so far made in finan- nations if GNP growth rates fall below

72 =73 74 75 76 '77 cial markets. Substantial borrowings 4.5 percent, according to the OECD. Butwill be necessary just to refinance exist- inflation may also worsen in many in-ing private indebtedness, most of which dustrial countries, as pressures grow towill mature in the early and mid-1980s. correct past declines in real industrialMoreover, long-term borrowing may wages and farm incomes, and if capa-become more difficult and costly, in the city shortages begin to emerge in indus-event of the resumption of higher rates tries where productive new investmentof inflation or the return in greater vol- has been lagging since the early 1970s.ume of industrial country borrowers, Born of these circumstances, protec-private and governmental, to finance tionist attitudes seem to be gaining newlong delayed business investments or footholds in many industrial countries,balance of payments shortfalls. For tarnishing an already dull export out-example, bond markets could shrink look for the developing countries. Pro-once again if higher rates of inflation longed worldwide recession in the 1970swere to resume or if capital controls has brought in its wake a variety ofwere reimposed in key industrial specialized non-tariff barriers, promi-nations. The foreign and international nently including the so-called "volun-bond markets handled a combined vol- tary" agreements to restrict exports inume of only around $10,000-$12,000 one or another fashion. Under evolvingmillion a year in 1973 and 1974, during GATT practice, industries in developeda period of double digit inflation and nations are now finding it less difficultdouble digit short-term interest rates. to claim injury from import competi-Only in 1975, when the outlook for in- tion and to be granted shelter. Someflation had improved and short-term major countries are moreover seekinginterest rates dropped abruptly in inter- stronger rights under revised GATTnational money markets, did combined rules to impose, on a discriminatoryannual volume in these bond markets basis, unilateral retaliatory tracde restric-exceed the $20,000 million level. Thus, tions against the country of origin ofchanging economic circumstances in the offending imports.the industrial as well as in the develop- The most recent major decisions toing worlds will critically determine the restrict trade have centered, amongstextent and terms of developing country industrial countries, on items such asaccess to private international financial steel and television sets, but have alsomarkets in the future.- been directed increasingly against the

7

exports of the developing countries, or The incentive to industrial nations tohave affected them indirectly. These collaborate in such efforts lies not onlyinclude, for example, new quotas on in sound developmental considerations,clothing and textiles imports from the but in commercial gains as well. This isdeveloping countries and "voluntary" evident when one considers the impor-restraints on footwear exports. To- tance to the industrial nation,s of theirgether these items account for over a trade with the developing countries.third of the manufactured exports of Overall, such trade now accounts fordeveloping countries. Even restrictions around one-fifth of both the exports andsuch as those on steel have potentially imports of the industrial nations. More-adverse implications for the steel ex- over, it is today the most dynamic seg-ports of several developing countries, ment of industrial nation trade,4 grow-such as Korea, Brazil, India, Mexico and ing in 1977 at almost twice t'he rate ofVenezuela. Such restrictions may also the total.lead to contraction of export marketsfor raw materials supplied by the devel- Developing Country Policiesoping countries to manufacturers of the For their part, the developing coun-affected products. Indeed, global trade tries must be willing to shoulder somerestrictionism tends to bring about a of the burden of adjustment and to docontraction of aggregate demand, dimin- more to promote their exports moreishing the export prospects of all nations effectively. In relation to the industrialand eroding the climate for even do- countries, they must be prepared, asmestic market oriented investments. their economies mature, to graduate

If intensified, the trend toward pro- progressively from the preferentialtectionism would thus have serious treatment they are accorded by inter-consequences for the developing as national trade rules-such as the free-well as the industrial countries-in par- dom to apply extensive import restric-ticular, for the emerging industrializing tions themselves while benefiting fromnations which have newly laid the non-reciprocal preferences grantedgroundwork for entering international under the Generalized System of Pref-markets, and whose future develop- erences and the EEC's Lome and Medi-ment is dependent upon increasing terranean Conventions. The progressiveaccess to those markets. Recent con- opening up of import markets in thecessions to protectionist pressures in developing countries will be increas-the industrial nations may be a tran- ingly necessary as a quid pro quo forsient phenomenon dictated by depressed their gaining improved access to exportmarket conditions, but their growing market opportunities in the industrialprevalence warrants both recognition nations.and action on many fronts. After as much as a quarter century of

industrialization in a number of devel-Industrial Country Policies oping countries, greater reciprocity in

On the side of the industrial coun- trading arrangements is now more fea-tries, more realistic and updated adjust- sible and necessary for them, both inment assistance programs appear more relation to the industrial countries andnecessary than ever, as basic changes to the less industrially advanced devel-occur in the structure of domestic oping countries. The structural differ-economies, and in patterns of inter- ences which are now evident amongstnational trade between the developing the developing countries themselvesand industrialized nations. At the same underscore the need for greater speciali-time, improved safeguard rules within zation in capital-intensive manufactur-the GATT framework are necessary to ing by the more industrially advanced,preserve in a realistic way the legiti- leaving the more labor-intensive indus-mate rights of exporting as well as im- tries to the newer entrants. Moreover, aporting nations, so that the growth ofmarkets and international trade canevolve in an orderly fashion within that Exports of the industrial nations to oil exportingand not increasingly out- capital surplus countries are in fact growing faster,framework, and not increasingly out- but from a very low bass equivalent to only 3 per-side of it as in recent years. cent of their total exports.

8

greater degree of outward orientation are inflated by import protecticn, andand exposure of domestic industry to export revenues are lower than theyinternational competition is possible should be by virtue of the overvaluedand desirable in those developing coun- exchange rate.tries where import protection is still The exports of the developing coun-high for established industries and ex- tries could continue to grow substan-change rates are overvalued. Foreign tially in coming years if further reformstrade and investment policies can in- and improvements are undertaken inincreasingly be directed away from the their own trade and investment policyinward orientation of the past with regimes. Such changes can be realizedbenefits to all countries in terms of only slowly, but they must clearly begreater economic efficiency and growth part of the development agenda for theof production and trade. Benefits in the future, and a growing concern of inter-growth of export Industries could be national investment agencies such as IFC.most pronounced since these are nowpenalized where local production costs July 1978

"Developing countries'exports in 1977 experienced

an overall nominal growthof 14 percent...." _i

s =. - _ ~~~~~~~~~~~~~~~~~~~~

IFC's Year/Policies and Objectives

Fundamental to the World Bank Group's member countries of the Internationalstrategy for providing development as- Bank for Reconstruction and Developmentsistance is the belief that development (IBRD) or Switzerland.must improve the economic well-being Even though it might hold an equityof the mass of the people. It is a strategy interest in a venture, IFC does not as athat recognizes that if this is to occur general rule take part in managementgreat efforts will be required both to nor is it represented on its board ofraise their productivity and to improve directors. The Corporation does main-income distribution. It also recognizes tain a continuing interest in those enter-that even the goal of eliminating the prises by field visits and periodicworst excesses of absolute poverty can consultations with management. Butnot be reached in the near future unless only in exceptional circumstances doesall resources, both public and private, IFC exercise its voting rights as aare mobilized to this end and used in an shareholder.efficient and socially beneficial manner. The Corporation is constantly revolv-

ing its funds by selling from its port-IFC's Special Role folio to other investors. The Corpora-

As well over half of the Gross Do- tion prefers to sell its equity shares tomestic Product of developing countries investors in the country in which theis generated by the private sector, its enterprise is located.potential contribution is an importantelement in the Bank Group's strategy IFC's Approachfor economic development. With its IFC is a financial institution but itsspecial role of helping mobilize resources purpose goes beyond that of just mak-on commercial terms for development ing funds available. In helping financeprojects where a market-oriented ap- productive private sector enterprises,proach is not only applicable but eco- the Corporation also provides theirnomically preferable, IFC is thus an sponsors with financial, legal, and tech-integral part of this strategy. nical advice. Its functions include bring-

ing together and harmonizing the oftenBasic Policies diverse interests of the parties involved

IFC conducts its operations in accord- -the sponsors, domestic and foreignance with the f ollowing basic principles. financial institutions and investors,

In the projects it assists, the Corpora- technical partners, and the host govern-tion always invests with others as its ments-and thus helping to provide anfunction is to mobilize and supplement element of confidence to the venturesprivate capital, not replace it. Thus, IFC the Corporation supports.will not finance ventures where, in its Concurrently, the Corporation has aopinion, sufficient capital can be ob- special responsibility to identify andtained on reasonable terms from other promote projects and encourage otherssources. to invest capital and expertise in such

IFC does not require nor will it accept enterprises along with IFC and the spon-government guarantees of repayment on sors. This function is often described asits investments and will make an invest- IFC's "catalytic" role and is the hall-ment only if the member country gov- mark of its distinctive approach to de-ernment has no objections. By the same velopment assistance.token, the Corporation wi!1 undertakean investment only when appropriate Development Objectivesarrangements exist for the repatriation Through its support of productiveof its investments and earnings. enterprises, IFC contributes to the

IFC financing is not earmarked in that efforts of its less developed memberit can be used to buy equipment, to countries to develop their nationalcover foreign exchange or local costs, resources-both labor and material; anfor working capital or for any other important part of building the economiclegitimate business purpose. Also, IFC strength and self-sufficiency needed tomoney is untied. The only requirement support their development objectives.is that it be spent in one of the 132 The Corporation also assists its member

10

countries to introduce and build new supportprojectpromotionandtechnicalfinancial institutions that will encour- assistance programs, and are an impor-age savings and direct funds into pro- tant source of funds for expanding theductive enterprises. volume of the Corporation's business.

The assistance provided by IFC alsoyields more immediate and direct bene- The Private Sectorfits. The businesses and institutions In supporting the development of itshelped by IFC provide opportunities for member countries through the promo-employment, foreign exchange earn- tion of their private sectors, the Corpo-ings or savings, acquisition of tech- ration is prepared to assist all ventures,nology, and access to capital. Likewise, irrespective of their ownership struc-by producing needed goods and ser- ture. Not only does the Corporationvices, they directly affect the welfare of work with wholly private owned andthe people. mixed private/public enterprises, but

also, where circumstances justify, withFinancial Orientation wholly-owned government enterprises

As a financial institution, IFC's per- as channels for assistance to the privateformance must also be measured against sector.financial criteria. The ventures it assists This policy reflects the diverse naturemust therefore be financially sound and and circumstances of its member coun-potentially profitable. Only by main- tries and in particular permits the Cor-taining and applying these investment poration to be of assistance in thosecriteria can the Corporation attract busi- countries where their private sector isness and financial partners to its invest- still at an early stage of development.ments, turn over its capital by selling its For example, one way the Corporationinvestments, and take every precaution can reach smaller private entrepre-that the projects it supports do not be- neurs is through local developmentcome economic liabilities to its member finance corporations which are verycountries. often sponsored and predominately

In addition, the earnings from its in- government financed.vestments defray administrative costs, In line with its objective of encour-

Many enterprises supportedby the Corporation, such as

this cement venture in LatinAmerica, supply essential

materials for otherindustries and development

projects.

11

aging and supporting local ownership, financing, including co-financing, de-IFC's investments must be done in con- signed to enhance its catalytic impact,junction with local interests. At the attempt to maintain, in the aggregate,same time, attracting foreign capital. the one-to-four historical ratio betweentechnology and management to devel- IFC's investments and the amountsoping countries on appropriate and mobilized from other sources.equitable terms is and will continue to (4) Reflecting the importance and thebe an important element of IFC's opera- difficulty of obtaining equity financingtions. In these instances, IFC can and in the lesser developed regions, IFC willdoes facilitate negotiations between aim at a major increase in the level ofparticipants and works to improve the its equity financing.environment for project implementa- (5) To relate as closely as possible totion and operations. the economic needs and priorities of

member countries, the program fore-

Operational Objectives sees a greater sectoral diversification ofIFC's operations with a much greaterThe action taken by IFC's Board of emphasis on the development of natural

Governors in November 1977 t6 increase resources, both renewable and non-IFC's authorized capital from $110 mil- renewable, and a more active role inlion to $650 million was an important support of commercial agriculture andmilestone in the Corporation's history. service sectors.

In response to its changed circum- (6) In support of its fundamental rolestances, the Corporation developed a of promoting the flow of both domesticFive-Year Program to not only achieve and foreign capital, the Corporationan orderly expansion of the Corpora- will expand its financial markets de-tion, but to direct its activities in such a velopment program. In addition to in-way as to maximize their contribution tensifying its on-going programs ofto economic development. promoting new financial institutions,

The major elements of the program, especially in the smaller and leastwhich was considered and approved developed countries, and providingby IFC's Board of Directors in April of technical assistance to institutions andthis year, are: governments, an important element in

(1) Over the next five years the Cor- the Corporation's strategy will be to ac-poration's objectives are to greatly ex- celerate its efforts to facilitate maturepand the scope of its investment activi- financial institutions to gain access toties, to more than double the current international capital markets. Speciallevel of its investments, and to extend emphasis will also be given to develop-its operations to a much larger number ing new ways of meeting the financialof developing country members on a needs of small and meditLm scaleregular basis. enterprises.

(2) The program calls for a major rela- (7) The Corporation will strengthentive shift in the focus of IFC's opera- its on-going promotional and project re-tions toward less developed regions, lated technical assistance programs andand toward the lesser developed coun- new initiatives are contemplated in thetries within regions without reducing area of non-project related policy as-its activities in the more advanced de- sistance. The latter is to be aimedveloping countries. primarily at improving the environ-

(3) Even with the -shift toward the ment for private enterprise and enhanc-lesser developed countries, the Corpo- ing its contribution to economic andration will, by seeking new forms of social development.

12

IFC's Year/Operations

IFC's Board approved 41 IFC invests in productive enterprises, ing agricultural processing. storage andinvestments in 31 countries. helps develop capital markets, and pro- transportation, and to expanding the sup-

The value of equity and loan vides technical support where needed. ply of lower cost basic consumer goods,investments approved was Each of these programs is supported by such as food, clothing, and shelter.

$338 million. Total cost of one or more of three octivities which In countries at a somewhat advancedprojects is estimated to muke up the doy-to-doy operotions of stage of development, the Corporation's

be $1,872 million. the Corporation-investment, financing investment patterns gradually shiftand technical assistance. towards assisting the production of in-

termediate goods, establishing the con-Investment Activities ditions for more direct financing by

[l________________* _____. _local enterprises, supporting more in-tensive development of renewable and

As the focus and intensity of IFC's nonrenewable natural resources, and,investment activities in each of its mem- especially in some of the larger coun-ber countries is tailored specifically to tries, increasing import substittution.their stage of economic development In the semi-industrial developing coun-and their priorities and potential for de- tries, a greater emphasis is placed onvelopment, there are difficulties in char- building up essential industrial infra-acterizing IFC's investment objectives structural sectors, redirecting industriesby groups of countries. towards external markets, assisting in-

In general, however, in the smaller, least stitutions and enterprises gain access todeveloped countries, IFC is most con- international capital markets, and sup-cerned with helping establish the pre- portingspecializedfinancial institutionsconditions for industrial growth by required to meet emerging new patternsdeveloping entrepreneurs and improv- of production and commerce.ing the functioning of existing financialand other institutions. In these countries Food/AgribusinessIFC's investments tend to concentrate First IFC investments were made inon projects which are based on the de- three countries in supporting sugar canevelopment of natural resources, includ- cultivation and milling in Swaziland,

Cumulative Proiects Approved poultry raising and processing in Trini-dad and Tobago, and a milk and juice

S; ; 0 ;f; ; 9USMiions& X 0; / plant in the Yemen Arab Republic.sO0 S fS ; 0000 \ ;2,000 : . ':.'. : /In Swaziland, the Corporation is as-

sisting a large sugar growing and proc-- E C,, ''.' ';EV0 / essing complex that will employ up to

4,000 workers and result in substantial4M ~~~~~~~~~~~~~~~~~foreign exchange earnings.

The poultry venture in Trinidad andA Tobago will almost quadruple a locally-

owned company's annual production ofchicken, the major source of protein inTrinidad and Tobago; improve the qual-ity and range of products marketed; andcreate more than 400 jobs. The Yemenproject also will improve nutrition bymarketing domestically more than 10,000gallons of sterilized milk products and

At *" 'fruit juices a year.In Egypt a new enterprise will intro-

duce sugar beet as an alternative source- ~~~~~~~~of sugar and benefit an estimated 100,00(

individuals by increasing the productivity and earnings of some 20,000 ou

- ~~~ grower families, provide direct emplo'ment for 3,000 and improve domestfood supplies. The venture, which is t

5!10 ~ ~~~~largest currently under way in Egyr

agro-industrial sector, will rehabilitate $27.6 million was approved for sixapproximately 48,000 acres. projects costing $152.1 million.

A milling project in Bolivia supportedby IFC will introduce the large-scale use Manufacturingof a high-protein flour made from lo- IFC invested in three new manufac-cally grown quinoo and blended with turing sub-sectors for the first time in theother flour in the local production of Philippines, Tanzania and Yugoslavia.bakery goods and pasta. The venture will IFC financing is helping to establishhelp meet domestic food needs by pro- a 13,000 tons-a-year soap factory in theducing 52,000 metric tons of flour for lo- southern Tanzania to alleviate shortagescal consumption and 19,000 tons of bran in that region, reduce distribution costs,and shorts. provide more efficient and hygienic

The first modern, fully integrated, washing products to rural areas, andlivestock and meat processing operation help develop one of the country's lessin the Sudan is being assisted by IFC fi- advanced regions.nancing. It will process some 8,300 tons Another new type of venture for theof beef and mutton annually, princi- Corporation is a shipyard expansionpally for export to neighboring countries. project near Cebu City, the Philippines.

Including a corn growing venture in The project will double the company'sCameroon, IFC approved investments ship repair capacity, upgrade technicalof $50.6 million in seven food and agri- standards and permit improvement andbusiness projects with a total cost of expansionofservicetoocean-goingves-$331.7 million. The previous fiscal year sels and to the domestic inter-island fleet.

And in Yugoslavia a compressorventure introduces a new technologyinto the country, substitutes for imports

Approvals by Business Sector and assures a domestic source of supply.The company is a well established, di-versified Yugoslav enterprise that will

3SiirIFC Participations expand to produce 1.2 million compres-:US Mi.lis .1978 sors of up to 1/3 horsepower for use

50.6 ~ ~ ~ 197mainly in household refrigerators man-W,12.7J 50.6 i 1i1 11 ufactured in the country.

Food/Agriculture The largest IFC investment of the fis-

cal year was $73.2 million in a Jordanianfertilizer enterprise that will processabout 1.3 million tons of phosphate rockannually. It will be one of the biggest

- -. -_ n 64.6 W 141.7 plants of its type in the world and gen-Manufactunng erate estimated foreign exchange reve-

- '- ' 61.7 nues of $190 million a year at full capacity.i2 A Panamanian glass container project

. .: S 4.2 assisted by IFC features new technologybeing introduced into the country, im-port substitution and assured domestic

*_...129.2 supplies. The Panamanian enterprise willprovide the country with its first domes-tic production of glass containers-22,000 tons a year-thereby establishing

o,.+ -'N ai+v) bjjS; | . .a new industry and substituting for im-ports with estimated foreign exchangesavings of $6 million annually at fullproduction.

{.: - i f _ 108.8 One of the three textile projects this_______________________________year involved forward integration. The

Sudan normally exports cotton and im-. .I.'lnchdes 54Omfflhorlo ma7t'pr' 'whichl the investment agreement has not yet been signed. ports textiles. An IFC assisted project

will convert some of that cotton into

14

Total Project Costs textiles for domestic use, moving the country. Production will substjitute forcountry closer to self-sufficiency in fab- crushed rock imports, save some $575,000

USSMillions By Years rics while creating 900 jobs, improving in foreign exchange annually, assist

the earnings opportunities for 94,000 Lesotho in the early stages of its indus-tenant farmers, and reducing foreign trial development, provide jcbs and

.Y1,500 . a0_ exchange expenditures. training for workers, and assure a re-A supplementary loan was made to liable domestic supply of an important

,ooo -a Lebanon textile venture that IFC as- material at reasonable cost.sisted in 1974. Despite disturbances IFC invested in a $98.4 million nickelbreaking out during the initial imple- mining and smelting enterprise in cen-

500 mentation of the project, the company tral Brazil. The project will help meetwas able to continue construction, col- growing domestic demand, support thelect and transport equipment to the site, expanding domestic special steels in-

'74 '75 '76 '77 '78 train the staff, and complete the project. dustry, create approximately 600 direct

Cumulative And, in Honduras, an IFC assisted ex- jobs in a less developed region of theUS$ Thousand Millions pansion and diversification project will country, and result in net foreign ex-

12 help meet local textile demand, reduce change savings of about $20 million

10 imports, save some $4 million in foreign a year.exchange and create approximately 400 Financing was also provided to a

8 jobs. Brazilian steel venture. With the help of6 The first IFC investment in Mali was IFC financial assistance, 540,000 tons a

6 S made for the expansion, modernization year of new cement making capacity is-4 _ 0 and diversification of an established, being built in Argentina and 430,000

locally owned manufacturer. The com- tons in Ecuador. Both ventures include2 pany is increasing its production capac- the quarrying of limestone and other

ity for sodium hypochlorite, used in raw materials and clinker operations.'74 '75 '76 -'77 X78 water purification and by the textile in- The Corporation supported a petro-

dustry; expanding plastic goods produc- chemical project in Argentina whichtion; and diversifying into extruding will better utilize the country's naturalrigid plastic pipes for water supply, gas resources, and one in Mexico, basedsewage and irrigation. on large hydrocarbon resources re-

InEgypt,lFChelpedfinanceanexport cently proven in the Tehuantepec Isth-oriented,ready-madegarmentmanufac- mus. Both projects are key elements inturing enterprise based on domestically highly integrated petrochemical com-woven fabrics. The project will generate plexes in the two countries.estimated foreign exchange earnings A standby loan for a large Brazilianof $2.5 million a year and increase the special steel/capital goods complex indomestic value added to Egyptian cotton the State of Sao Paulo brought the Cor-exports. poration's earth resources approvals to

Three pulp and paper projects in $129.2 million for eight projects with aArgentina, Costa Rica and Mexico, a total cost of $1,039.5 million ELS com-second expansion of a joint Yugoslav- pared with $58.2 million for 10 projectsAustrian tire manufacturing project, costing $565.5 million in Fiscal 1977.a supplementary investment in a Mexi-can steel project, and the exercise ofa rights issue in a Turkish foundry Domestic Capital Markets andbrought IFC approvals for manufactur- Financial Institutionsing enterp_rises in Fiscal Year 1978 to IFC expanded the scope of its domes-$141.7 million for 16 projects costing a tic capital markets financing with antotal of $480.7 million. The comparative investment in the first venture capitalfigures for a year earlier were $61.7 mil- company in Spain. The company willlion in 9 projects costing $392.0 million. assist medium scale enterprises by sup-

porting their use of industrial innova-Earth Resources tions and commercial production of prod-

One of the smallest IFC-assisted pro- ucts developed by Spanish researchjects during the fiscal year was a $1 mil- efforts. It will provide financing in thelion quarrying venture in Lesotho-the form of equity and equity-type instru-Corporation's first invpstment in that ments and aid clients in various aspects

15

of financial and general management. Financing ActivitiesFinancing for small and medium scale

enterprises was provided through lines As a matter of policy, IFC limits theof credit for three financial institutions amount of project financing it will pro-in the Dominican Republic, Sri Lanka vide for its own account to that whichand Thailand. The institutions offer is needed to fill the gap between fundsIFC's long-term financing together with available on reasonable terms from othertheir own short and medium-term funds sources and the total cost of the project.and business advisory services to assist Thus, in projects IFC undertakes, oneenterprises smaller than those IFC can of its principal functions is to help ob-reach through its normal direct financing. tain financing from other sources-

The establishment of the first private whether by helping firms obtain loansmortgage bank in India was supported and suppliers' credits from local andby an equity investment, a line of credit foreign institutions, or through assis-and an underwriting commitment. The tance in obtaining equity either by un-bank will help fill a gap in long-term derwriting or by private placementsloan finance for middle and lower in- with foreign or domestic investors. Income residential housing and broaden addition, IFC also raises outside financ-the range of instruments available to ing through the sale of participations inindividual and institutional investors. its own loans at the time of the invest-

In Sri Lanka, the Corporation joined ment or shortly after and thereby freesOwnership in IFC Investments the International Development Associa- part of its own funds for other invest-Fiscal 1978 tion in financing a domestic develop- ments. Through these co-financing efforts,

ment finance company by taking an IFC tries to meet the total needs of theequity participation while the IDA project while at the same time keepingprovided a credit. its exposure as low as possible.

-̂ f ... . .-. '> Supplemental equity investments were This year, of the total cost of $1,872made by IFC in Ivory Coast, Korean, million of projects approved by IFC'sMoroccan and Tunisian development Board of Directors, IFC provided $338finance companies in connection with million, or 18 percent, compared to 21the exercise of preemptive rights to sup- percent the previous year ancl about 19

' -" ~ | port increases in capital. percent historically.t .;' | These brought the number of IFC in- The degree to which IFC vvill finan-

Maoreityn~ned 546 Jbtntventues vestments approved for developing cially support a project and its effortsforeign owned 54 Jloint -e,t.es 3% member countries' capital markets and to mobilize other resources depend on

financial institutions to 10 for a total the nature of the project. For example,of $16.8 million compared with 8 total- larger projects, often with the help of

Regional Distribution: Fiscal 1978 ling $108.8 million the previous fiscal and as a result of IFC's involvement,year. are more likely to be able to attract a

Number of ProjectS s ' -. > - greater part of their financing f'rom com-mercial sources. Likewise, in these pro-jects there are more opportunities forIFC to help the project sponsors gain

.- .Investment Distribution access to international financial markets.IFC's approved investments were As indicated in the adjacent chart,

_ ; o. 1| ' 'broadly distributed geographically with 83 percent of project financing in which16 in Latin America and the Caribbean IFC participated came from developing

' Xi}¢- - t (of which 8 were in South America), countries, including project internal cash12 in Africa, 6 in Asia, 4 in Europe, and generation, and IFC.3 in the Middle East. If IFC's equity holding in the projects

-'- '.-U2 ->~ -:Of the cumulative total of IFC invest- is excluded, 68 percent of the year'sments since 1956, $604 million (29 per- approved ventures were majority owned

LAC I countries include cent) has been invested in Europe and by sponsors in the developing coun-Mexico, Colombia, the Middle East; $587 million (28 per- tries, predominantly private investors;

Venezuela, Guyana, Central cent) in LAC II; $423 million (20 percent) 24 percent were majority locally owned,America and the Caribbean; in Asia; $248 million (12 percent) in predominantly by government interests;

LAC II includes all other LAC I; and $241 million (11 percent) in 3 percent were jointly ownecl by localLatin American countries. Africa. and foreign investors, and 5 percent of

16

Sources of Funds the projects were majority foreign owned. nificant portion of the time of IFC'sin IFC Assisted Projects Of the total required loan financ- engineering and investment staff.

ing, including suppliers' credits, IFC In the legal area IFC staff spend aUSS Millions provided 18 percent; 57 percent was considerable amount of time providing

obtained through domestic sources, in- advice, upon request, on difficult legal$ S148.1 79% |European cluding development finance institutions; problems which arise with arrange-

; Comnmunity and 25 percent was obtained through ments involving foreign investors andofficial and private foreign sources. Of technical partners. This effort is con-

$156.7 United the latter, the majority came from com- tinued in the normal course of appraisalStates mercial sources in the developed coun- and portfolio supervision work.

$13.4 Other tries, with the European community More recently, with IFC's deepening.7% countries providing 8 percent and the involvement in the area of financial

United States 8 percent. sector and capital market develcpment,Participations areone of the principal IFC's management and staff have be-

$338.4 IFC ways by which the Corporation helps come increasingly involved in thecompanies gain access to international dialogue with member country govern-capital markets and increase the oppor- ments on matters not directly related totunities for lenders from developed investment operations. In this connec-countries to make sound commercial tion, they have provided advice, wheninvestments in the LDCs. IFC sold or has it has been actively solicited, on- manypending sale $140.1 million of partici- aspects (both institutional and policypations, of which $131.3 million is from related) of financial sector developmentnew loans made during Fiscal 1978. in several countries.

7-.,0. d Comparable figures for the previous In addition, this year's promotionalyear were $67.7 million and $66.2 mil- missions to smaller, economically les-

0 2 ' 7: - t'00:3; lion, respectively. ser developed countries in Africa gen-This year's participations brought the erated requests from several govern-

cumulative total to $592 million. IFC ments for IFC's services to analyze andsold participations in more than one- advise on the impact of prevalent pol-

51; 2152. quarter of this year's projects. Ventures icies on private sector activities and to,Countries70 in which participations were sold or recommend alternatives for better

pending sale were located in Argentina, mobilizing private resources in theirBrazil, Bolivia, Egypt, Honduras, Jordan, development efforts. Similar requestsLebanon, Mexico, Sudan and the Yemen were received from Asian countries.Arab Republic. The Corporation's technical assist-

ance activities during Fiscal 1978included: studies on financial and

Technicl Assisance Acivities securities markets for Argentina, Brazil,_ __Te-chnical_Assistance_ Activities Egypt, Jordan and Mexico; assistance

for commercial banks in Kenya, SriThe Corporation provides a variety Lanka and Thailand on technical as-

of technical assistance in response to pects of their medium and small-scaleparticular needs of individual develop- enterprise programs; a survey of theing countries, organizations and pro- financial sector of Indonesia and a hous-jects. There are two broad categories of ing sector survey in Costa Rica; and,assistance: project-related and general. for the Yemen Arab Republic, an analy-

Many of the activities undertaken by sis on the use of bond issues to utilizeIFC staff in the course of project iden- workers' remitLailces.tification, promotion and appraisal work The staff also provided assistance toinvolve consulting and advisory serv- emerging financial institutions on oper-ices such as the preparation of projects, ating policies and procedures, legalthe evaluation of feasibility studies, the practices and documentation, and pro-setting up of internal information sys- vided training facilities at the Corpora-tems, financial analysis (and packaging). tion's headquarters. Assistance wasThese efforts are especially concentrated provided member countries on indus-in countries which are at an earlier stage trial sector analysis, technology selec-of business and industrial development. tion, and on reviewing investment codesIt is an effort which accounts for a sig- for private investment.

17

The Year's Investments

Total ProjectInvestments Approved by Board of Directors Loan Equity IFC Cost

ArgentinaIpako Industrias Petroquimicas Argentinas S.A.

(chemical and petrochemical) ........ ....................... $ 10,000,000 $ - $ 10,000,000 $ 117.000,000Juan Minetti S.A. (cement) .......... .......................... 9,000,000 - 9,000,000 82,175,000Massuh S.A. (pulp and paper) ......... ........................ 8,000,000 - 8,000,000 26,207,000

BoliviaMolino Andino S.R.L. (grain milling) ....... .................... 2,300,000 - 2,300,000 7,860,000

BrazilEmpresa de Desenvolvimento de Recursos Minerais "CODEMIN"

S.A. (nickel mining/smelting) ........ ....................... 59,000,000 3,940,000 62,940,000 98.400,000Cimetal Siderurgia S.A. (iron and steel) ..... .................. 7,000,000 3,000,000 10,000,000 42,090,000Villares Industrias de Base S.A. (iron and steel) ..... ............ 5,000,000 - 5,000,000 544,700,000

CameroonLa Maiserie de lIOuest (pilot project farming) ..... .............. - 138.843 138,843 1,270,000

Costa RicaScott Paper Company de Costa Rica, S.A. (pulp and paper) ...... 2,500,000 - 2,500,000 11,950,000

Dominican RepublicLoans to Medium Scale Industries in Dominican

Republic in cooperation with Financiera Empresarial S.A.(capital markets) ............... ............................ 3,000,000 - 3,000,000 3,000,000

EcuadorLa Cemento Nacional, C.E.M. (cement) ....... .................. 12,000,000 1,000,000 13,000,000 55,000,000

Egypt, Arab Republic ofDelta Sugar Company S.A.E. (farming/sugar processing) ..... .... 20,000,000 3,000,000 23,000,000 125,871,000Nile Clothing Company, S.A. (garment manufacturing) ..... ..... 433,000 158,500 591.500 2,679,000

HondurasTextiles Rio Lindo, S.A. de C. V. (textiles) ...... ................. 9,000,000 1,000,000 10,000,000 15.000,000

IndiaHousing Development Finance Corporation Limited (capital

markets) ................................................... 4,000,000 1,214,000 5,214,000 5,214,000

Ivory CoastBanque Ivoirienne de Developpement Industriel, S.A. (DFC)

(second commitment) ........... ........................... - 219,467 219,467 219,000

JordanJordan Fertilizer Industry Company, Ltd. (fertilizer) (second

commitment) .............................................. 70,000,000 3,246,750 73,246,750 236,500,000

Korea, Republic ofKorea Development Finance Corporation (DFC)

(fifth commitment) ............. ............................ - 1,075,971 1,075,971 1,076,000

LebanonLebanon Textiles (Libtex) S.A.L. (textiles)

(second commitment) ........... ........................... 2,325,000 - 2,325,000 3,900,000

LesothoLesotho Quality Aggregate Industries (Proprietary) Limited

(stone quarrying and crushing) ........ ...................... 299,000 31,050 330,050 1,011,000

MaliSociete Mamadou Sada Diallo et Freres SARL (SOMACI)

(plastics manufacturing) .......... ............... ......... 600,000 - 600,000 2,791,000

18

Total ProjectInvestments Approved by Board of Directors Loan Equity IFC Cost

MexicoTereftalatos Mexicanos, S.A. (chemical and petrochemical) ...... $ 19,000,000 $ - $ 19,000,000 $ 99,100,000Papeles Ponderosa, S.A. (pulp and paper) ...... ................ 9,000,000 2,621,441 11,621,441 28,829,000Mexinox, S.A. (stainless steel) (second commitment) .......... - 407,080 407,080 407,000

MoroccoBanque Nationale pour le Developpement Economique (DFC)

(second commitment) ........... ........................... - 1,198,826 1,198,826 1,199,000

PanamaVidrios Panamenos, S.A. (glass manufacturing) ....... ......... 2,400,000 1,400,000 3,800,000 14,000,000

PhilippinesCebu Shipyard and Engineering Works, Inc. (ship-repairing) .... 2,100,000 - 2,100,000 8,830,000

SpainSociedad Espanola de Financiacion de la Innovacion, S.A.

(venture capital) ............... ............................ - 876,786 876,786 .3,880,000

Sri LankaBank of Ceylon (small business financing) ...... ................ 2,000,000 - 2,000,000 2,000,000Development Finance Corporation of Ceylon (DFC) ............. - 103,430 103,430 103,000

SudanSeleit Food Production Limited (livestock and meat processing) . 11,164,000 1,217,628 12,381,628 42,152,000Gezira Managil Textile Company Limited (textiles) ..... ......... 6,687,500 1,387,500 8,075,000 40,000,000

SwazilandThe Royal Swaziland Sugar Corporation Limited (sugar

growing and processing) .......... .......................... 8,000,000 460,000 8,460,000 140,220,000

TanzaniaHighland Soap and Allied Products Limited

(soap manufacturing) ........... ........................... 1,375,000 384,258 1,759,258 7,000,000

ThailandLoans to Small and Medium Scale Industries in Thailand in

cooperation with Siam Commercial Bank Limited (capitalmarkets) .................................................. 2,000,000 - 2,000,000 :2,000,000

The Siam Cement Co., Ltd. (cement) (third commitment) ......... - 95,461 95,461 95,000

Trinidad and TobagoCanning and Company, Limited (poultry) ...... ............... 1,150,000 - 1,150,000 4,700,000

TunisiaBanque de Developpement Economique de Tunisie (DFC) (third

commitment) .............................................. - 1,150,101 1,150,101 1,150,000

TurkeyDoktas Dokumculuk Ticaret ve Saiiayii A.S. (foundry)

(second commitment) ........... .................... ...... - 277,228 277,228 277,000

Yemen Arab RepublicYemen Dairy and juice Industries (milk and juice processing) .... 3,150,000 - 3,150,000 9,510,000

YugoslaviaTovarna Avtopnevmatike "Sava-Semperit" (motor vehicles,

tires) (second commitment) ......... ........................ 7,300,000 2,053,823 9,353,823 41,900,000Radna Organizacija Hermeticki Kompresori u Osnivanju, Mostar

(compressor manufacturing) ........ ........................ 7,000,000 - 7,000,000 40,500,000

TOTALS ................................................ $306,783,500 $31,658,143 $338,441,643 $1,871,765,000

19

IFC's Year/Financial Record

Net Income Source of Funds Receipts: Fiscal Year 1978

SuS Millions12 ~- | Income

10 IFC's gross income which includes capi- Borrowings

8 _ g * tal gains, increased 27 percent from8 g g $55.7 million in Fiscal Year 1977 to $71.0

6 million in Fiscal Year 1978. The increaseresulted primarily from growth in the 15% Capital

4 loan portfolio and from an increase in2 the number of mature investments. In-

terest income accounted for $54.1 mil-lion (76percent), dividends $10.1 million

'74 '75 '76 '77 '78 (14 percent). and other sources such ascommitment fees and capital gains ac- Income from

Participations counted for the remaining $6.8 million Loans/EquityParticipations ~(10 percent).

US$ Million The Corporation's net income amounted150 to $12.5 million; an increase of about

125 41 percent over that of the previous fis-cal year and the largest in the Corpora-

1 00- tion's history.

Capital and General ReservesIn November 1977, IFC's Board of

Governors approved a resolution to in- Repaymentscrease the Corporation's authorized - iSale

.s 74 '75 '7- ~7capital stock from $110 million to $650 -'

million and provided for an increase inmember country subscriptions totaling$468.8 million. As of June 30, 1978, $181.3million had been subscribed and $35.4million paid in by member countries.

As of the close of the fiscal year, cu-mulative net earnings of the Corpora-tion amounting to $99.8 million had TheCorporationdebt:equityratioonbeen transferred to surplus and allo- the basis of borrowings drawn downcated to General Reserve. equaled 1.9.

Borrowings Repayments, Sales and ParticipationsThe Corporation has extended its Repayments of loans amounted to

lehding program beyond its equity base $49.5 million as compared with $38.6by borrowing from others-mainly the million in Fiscal Year 1977. In additionIBRD. Borrowings outstanding, limited the Corporation sold $2 million of loansto four times the Corporation's net from its portfolio.worth so long as it is indebted to the The year's equity sales receiptsIBRD, were well under the authorized amounted to$8.7million including capi-limit. As a result of an increased cash tal gains of $3.2 million. Consistent withflow from operations and the receipt of IFC's policy to encourage and broadencapital subscription payments, the Cor- local ownership in the private sector,poration did not contract for additional 13 of the 15 transactions undertaken inborrowings during the fiscal year. Fiscal Year 1978 represented sales to

With repayments and exchange ad- domestic investors in the developingjustments of $12.7 million, total borrow- countries where the projects are located.ings, including undisbursed balances, Participations in IFC's loans sold ordeclined from $551.9 million as of June 30, pending sale were $140.1 million, bring-1977, to $539.2 million as of June 30, 1978. ing the cumulative total to $592 million.

20

portfolio Use of Funds PortfolioSUS Millions1,500 _ . , Disbursements At the end of the fiscal year the Cor-

t!,25O _ : :Disbursements during the fiscal year poration's total investment portfoliofor IFC's and participants' accounts (including undisbursed commitments)

1,000 _ , amounted to $155.0 million. Cumulative amounted to $1,315 million, of whichdisbursements totaled $1,474 million as $332 million was held for the accountof the end of the fiscal year. of participants. The total portfolio in-

500 ~~~~~~~~~~~~~~~~creased by 13 percent and the portionRepayment of Borrowings held for participants by 11 percent from

250 _ gv l During the fiscal year the Corpora- the previous year.tion repaid $15.0 million on funds bor- The portion of the investment port-

'74 '75 '76 '77 '78 rowed from the Wqrld Bank. folio held for the Corporation's accountAs of June 30, 1978 the Corporation's amounted to $983 million as compared

debt service coverage ratio was 2.3. with $864 million at the end of the pre-Portfolio vious year, a year-to-year growth of 14

Number oVeOperating Expenses percent. The portfolio consisted of $799Number of Ventures by Region Interest charges on borrowings out- million in loans and $184 million in

standing during the year amounted to equity investments. Of the total, $271$34.3 million as compared with $27.8 million, or 28 percent, remained undis-million the previous year. bursed as of June 30, 1978.

Administrative and other expenses The Corporation rescheduled twoamounted to $16.2 million. loans where unforeseen events caused

F: S X l zM~iZdleEast/0. delayed payments but where, in the10 a _ t896 /4.;Corporation's judgement, the long-run

prospects of the firm were sound.

As of June 30, 1978 Payments: Fiscal Year 1978

Reserve Against Losses

The Corporation follows the generallyaccepted accounting practice of provid- Xnsting for a Reserve Against Losses by an S S aniaannual charge against current income.

In determining the amount to be charged,consideration is given to establishing a Slevel of reserves that will provide for:mature investments in which an im- oecpairment in value is recognized, and,secondly, an amount calculated as afixed percent of loan and equity invest-ments disbursed for relatively new t tprojects in which losses cannot yet be _ _identified.

The net cumulative Reserve at the endof the fiscal year amounted to $35.1million.

Charges against the Reserve, deter-mined from an annual review of eachinvestment in the Corporation's port-folio, amounted to $3.0 million for thisfiscal year. Cumulative losses writtenoff by the Corporation on investmentsheld for its account in relation to totaldisbursements equaled 1.2 percent forits loans and 3.0 percent for its equityinvestments.

21

U Development Perspective~~. ~, ~~. A photographic essay

.'.--'A The benefits of IFC's assistance to industrial en-v .- - terprises extend beyond those directly related

to establishing viable, self-sustaining businesses.Through them, however, the Corporation sup-ports economic development in other ways; in-cluding the development of human and naturalresources, support for related business sectors,and enriching the quality of life in developing

_ &* - - 'Wa ~ 3tt~ ~ ] countries.

__ /;* ' §3Developing Natural ResourcesThe Corporation is placing increased emphasis

.I ¢,,, * ,; ., . 3, _ ~on developing renewable and non-renewable re--~t, iW ; C ; sources. This year financial and technical assist-

ance went to support an integrated textile opera-L ^ . o ] .z tion which, in addition to employing 900 workers

L '~* ~ .X$, f , ,Sj directly, will provide additional income and;Orsc *i^ - - steady demand for the cotton grown by over

90,000 owner-tenant farmers. Resources them-u/i . -. selves may be enhanced: part of IFC financing

for a Latin American paper enterprise went todevelop a forestry operation which is makinguse of otherwise unproductive lands and is intro-ducing a new variety of fast growing trees to sup-ply additional raw material while creating jobsand controlling soil erosion.

4 , r'_ Minerals from the earth are processed into fin-ished metals, fuel and related products for both

3-_ ' 'i * 1! ' domestic use and export; or, as in an IFC financed, ~ ^ =---^- '' cement plant in Latin America, earth resources

if M~ *,.. . ~ are being converted into construction materialsfor home building, roads, bridges, office build-

_~ s g .ings and factories.

-n _r ., Z \ . _ ~ ~ ~ ~ ~ ~ -:

.~~~~~~~~~~~ .&

ly _

(; .'. ~~~~~~~~~~~~~~~~~~~-7 _>.rt x

- .. . : , . s ,

Developing Human ResourcesIn helping structure projects the Corporation

takes special account of the social environment:how the labor force can contribute to and be en-hanced by the venture. When projects assistedby lFC require advanced technology such as oneproducing lubricating oils and greases in Asia,suitable training programs are always providedto assure proper utilization and maintenance ofthe new equipment and processes. Or in a metalworking enterprise in Africa that took advantageof existing workers' skills to begin operations,and then upgraded those skills to the advantageof both.

Productivity is multiplied as training is intro-duced, skills developed and abilities passed on-as where the trained employe initiates anotherworker into a more complex process in a Cen-tral American textile mill when the mill wasexpanded with IFC financial and technical as-sistance. Improved capabilities matched to newjoh opportunities result in higher employmentand better earnings and, as importantly, provide4stability, purpose and dignity to the lives of hu-man beings.

4'~ ~ ~~V~~ ~ 4v s

_ 0

A~ ~ 4''

-,El - Developing Industrial InfrastructureIFC projects support and affect related busi-

ness sectors because the enterprises fill a gap in_.O w °an industrial process, add value to resources or

_ -r | 5* o o;* *.r ~~~~~~products, or support the development or opera-tion of an entirely different activity. Logs thatwere once exported from an Asian countrv arenow processed into higher value plywood andother products by a processing mill the Corpora-tion assisted. Or a country that sells raw cottonabroad but must import textiles may be helped

I @ t - Fi _ . to convert raw material to finished fabrics, add-ing value to its own production while reducingimports, controlling costs and assuring its sourceof supply. And a South American gas pipeline

-W_ i J ' provides fuel for local homes and industries,including a glass container manufacturer.

Satisfying Consumer NeedsIFC's contribution to development is most visi-

ble in the ventures it supports which producegoods and services nee6ed to improve the qual-ity of life; such as housing, clothing and food.

Not only are housing projects made pcssiblebecause the building materials from IFC assisted

- t: '- enterprises are available, but the Corporationsupports financial institutions, such as the onebeing established this year in Asia, to provide the

' 1 8 v,3- ~ 1 needed mortgage financing. Garments for localuse are being made from textiles domeslicallywoven and processed from fibers which, again,are produced in the region.

Through its support of agricultural related3is t -' / ;i ~~~~~~~~projects, IFC contributes to the health andI well

being of peoples. For example, this year an IFCassisted venture in a Caribbean country will in-crease the availability and quality of poultryproducts. the staple meat of the country.

Financial Statements

@ @%% 26 Balance Sheet

a j I IJ w ;E_ 27 Statement of Income

28 Statement of Changes-- ,iw _ in Financial Position

29 Statement of Loan and4 ,4: _<t Equity Investments

35 Statement of Cumulative_wt>!^ Y7 _ [ 0 Gross Commitments

36 Notes to Financial Statemenits

37 Report of Independent Accountants

9/ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~25

Balance Sheet Exhibit AInternational Finance Corporation

June 30,1978 and June 30,1977

Expressed in United States Dollars-See Notes to Finoncial Statements, Exhibit F

1978 1977

ASSETS

Due from Banks-Note B .$ 697,362 $ 956,304

Investments

Short-term obligations of governments(At cost or amortized cost, which approximates market) .24,811,875 2,793,586

Loan and Equity Investments (at cost)-Note A (See Exhibit D)

Investments held for the Corporation ...... ................ $983,049,938 864,215,532Less-Undisbursed investments ....... .................. 271,374,326 201,133,445Disbursed and outstanding ........ ..................... 711,675,612 663,082,087

Less-Reserve against losses-Note A ..................... 35,400,000 30,400,000676,275,612 6:32,682,087

Accrued Income on Loans-Note A ........................................ 13,038,806 '10,812,667

Receivable from Purchasers of Loan and EquityInvestments Sold or Agreed to be Sold ........ ............ $ 35,646,671 22,141,470

Less-Undisbursed investments sold or agreed to be sold ... 30,381,568 '16,819,235

5,265,103 5,322,235

Other Assets .703,026 1,251,853

TOTAL .$720,791,784 $653,818,732

LIABILITIES, CAPITAL AND SURPLUS

Liabilities and Deferred Income

Accrued charges on borrowings ....... .................... $ 12,020,510 $ 9,997,026

Accounts payable and other liabilities ...... ............... 1,250,522 2,145,007

Deferred income . ....................................... 1,425,791 1,384,354

$ 14,696,823 .13,526,387

Borrowings-Note C

Loans from the International Bank for Reconstructionand Development ............. ......................... $499,213,517 511,910,302

Less-Undrawn ...................................... 76,909,391 107,352,115

Withdrawn and outstanding ....... ................... 422,304,126 404,558,187

Loans from others-Withdrawri and outstanding ............ $ 40,000,000 40,000,000462,304,126 4414,558,187

Capital and Surplus

Capital Stock-Note DAuthorized 650,000 shares of $1,000 par value each

110,000 shares-1977Subscribed 289,880 shares, 108,342 shares-1977 .... ..... $289,880,000Less-Portion for which payment is not yet due

145,900 shares, nil-1977 .................. .......... 145,900,000143,980,000 108,342,000

Payment on account of pending subscriptions - 86,000General Reserve-Note A ............................................... 99,810,835 87,306,158

TOTAL .$720,791,784 $6E53,818,732

26

Statement of Income Exhibit BInternational Finance Corporation

June 30, 1978 and June 30, 1977

Expressed in United States Dollars-See Notes to Financial Statements, Exhibit F

1978 1977

Operating IncomeIncome from obligations of governments .................................. $ 1,936,123 $ 285,699

Income from loan and equity investments and standbyand underwriting commitments:

Interest . ............................................. $ 54,069,335 43,965,909Dividends and profit participations ...... ................ 10,210,336 8,612,276Commitment charges .......... ......................... 1,251,751 1,579,120Commissions .......................................... 312,414 398,029

65,843,836 54,555,334Other operating income ................................................ (42,769) _ (335,084)

$67,737,190 $54,505,949

Operating ExpensesCharges on borrowings ............................. I ....... $ 34,251,902 $27,771,918Administrative expenses"' II. ................................. 16,178,729 13,131,898

50,430,631 40,903,816

Income from Operations . .................................................. $17,306,559 $13,602,133

Realized Gain on Sales of Loan and Equity Investments ....................... 3,176,118 1,242,432

Provision for Losses-Note A ............................................... (7,978,000) X,948,001)

Net Income-Transferred to General Reserve-Note A ........................ $12,504,677 $ 8,896,564

'The International Bank for Reconstruction and Development is charging the Corporation an annual "Service and Support Fee" which for the year ended June 30,1978 was fixed at $2,158,000 ($1,657,000-1977).

27

Statement of Changes In Financial Position Exhibit CInternational Finance Corporation

June 30, 1978 and June 30, 1977

Expressed in United States Dollars-See Notes to Financial Statements, Exhibit F

1978 1977

Funds Provided

Net income ............................................................. $ 12,504,677 $ 8,896,564Items not requiring current outlay of funds:

Provision for losses on investments ..................................... 7,978,000 5,948,001Changes in accrued income and expenses ................................ (166,588) 1,721,550Other .............................................................. (108,446) (171,860)

Funds provided from operations ...................................... $ 20,207,643 $ 16,394,255Capital subscriptions . ................................................... 35,638,000 18,000Borrowings ............................................................. 30,442,724 127,440,813Repayment of loans . ..................................................... 49,491,731 38,644,755Sales and participations . ................................................. 59,170,500 75,642,168

Total Funds Provided ................................................ $194,950,598 $258,139,991

Funds Used

Disbursements on loan and equity investments ............................. $155,041,509 $25,9.937,771Repayments on loans from the International Bank

for Reconstruction and Development .................................... 14,976,746 11,806,038Other .............................................................. 3,172,996 1,047,294

Total Funds Used . .................................................. $173,191,251 $272,791,103

Increase (decrease) in Cash and Short-Term Obligations of Governments ....... $ 21,759,347 ($ 14,651,112)

28

Statement of Loan and Equity Investments Exhibit DInternotionol Finance Corporation

June 30, 1978

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit FInvestments held for the Corporation

(including undisbursed balances)

Total loansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

ArgentinaAlpargatas. S.A.I.C ........................................ Textiles and fibers $ 7,000 $ 3,500 $ - $ 3,500Calera Avellaneda, S.A ........................ -......... Cement and construction

material 5,500 1,273 - 1,273Celulosa Argentina, S.A .................................... Pulp and paper products 12,500 5,050 - 5,050Dalmine Siderca, S.A.I.C ................................... Iron and steel 17,000 13,067 - 13,067Ipako Industrias Petroquimicas Argentinas S.A ....... ....... Chemicals and petrochemicals 10,000 10,000 - 10,000Juan Minetti S.A ......................................... Cement and construction

materi al 9,000 9,000 - 9,(000Massth S.A .............................................. Pulp and paper products 8,000 5,000 - 5.000Sovex S.A ................................................ Food and food processing 9,000 9,000 - 9,000

TOTAL 55,890 - 55,890

BoliviaBanco Hipotecario Nacional ............................... Money and capital market 338 - 308 308Banco Industrial, S.A ...................................... Development finance 550 - 550 550Molino Andino S.R.L .............................. ..... Food and food processing 2,300 1.300 - 1,300Plasmar. S.A .............................................. Plastic products 400 104 100 204

TOTAL 1,404 958 2,362

BrazilAcos Villares, S.A ........................................ Iron and steel 9,926 1,195 121 1,316Capital Market Development Fund (FUMCAP) ..... .......... Money and capital market 5,000 1,000 - 1,000Capuava Carbonos Industriais, Ltda . . Chemicals and petrochemicals 7,262 2,342 841 3,183Champion Papel e Celulose, S.A . . Pulp and paper products 4,000 - (Note 1) -Cimetal Siderurgia S.A ..................... Iron and steel 10,000 7,000 3,000 10,000Ciminas-Cimento Nacional de Minas. S.A . ......... Cement and construction

material 32,340 4,000 3,200 7,200Companhia Siderurgica da Guanabara (Cosigua) ............. Iron and steel 84,468 8,999 7,436 16,435Empresa de Desenvolvimento de Recursos Minerais

"CODEMIN" S.A ............. Mining 93,340 5,000 3,940 8,940Fabrica de Tecidos Tatuape, S.A . ............... .......... Textiles and fibers 31,000 6,199 - 6,199FMB S.A. Produtos Metalurgicos ..... . ...................... Iron and aluminum castings 20,000 20,000 - 20,000Industrias Villares, S.A ....................... ............ Machinery 6,000 2,120 - 2,120Mineracao Rio do Norte S.A ......... ...................... Mining 15,000 15,000 - 15,000Oxiteno Nordeste, S.A .................. I................. Chemicals and petrochemicals 10,000 10,000 - 10,000Oxiteno, S.A. Industria e Comercio ........... .............. Chemicals and petrochemicals 6,040 2,588 1,240 3,828Papel e Celulose Catarinense, S.A . ............... Pulp and paper products 7,192 - 3,408 3,408Petroquimica Uniao S.A . .. ................ Chemicals and petrochemicals 8,380 894 2,046 2,940Poliolefinas, S.A. Industria e Comercio .......... ............ Chemicals and petrochemicals 8,377 1,613 2,000 3,613Rio Grande-Companhia de Celulose do Sul . ..... . . Pulp and paper products 4,900 3,185 - 3,185Santista Industria Textil do Nordeste, S.A . ............ Textiles and fibers 7,450 3,692 1,000 4,692Tecanor S.A. Textil Catarinense do Nordeste ......... ...... Textiles and fibers 6,000 5,647 - 5,647Ultrafertil, S.A. Industria e Comercio de Fertilizantes ......... Fertilizers 11,250 - 2,946 2,946

TOTAL 100,474 31,178 131,652

CameroonBata Societe Anonyme Camerounaise ............ .......... Shoes 380 - 127 127S.A.F.A. Cameroun, S.A.C .................................. Food and food processing 810 - 810 810

TOTAL - 937 937

ChileEmpresa Minera de Mantos Blancos, S.A ................... Mining 4,338 - 1,237 1,237Fideos y Alimentos Carozzi, S.A ......................... Food and food processing 1,654 - 154 154

TOTAL - 1,391 1,391

China, Republic ofAsia Cement Corporation .................................. Cement and construction

material 4,219 - 767 767Oriental Chemical Fiber Corporation ...... ................. Textiles and fibers 5,625 1,333 612 1,945

TOTAL 1,333 1,379 2,712

ColombiaCementos Boyaca, S.A ..................................... Cement and construction

material 1.500 1,147 - 1,147Cementos del Caribe, S.A .................................. Cement and construction

material 3.600 2,700 - 2,700Compania Colombiana de Clinker, S.A. . ..................... Cement and construction

material 2,432 2,432 - 2,432Corporaci6n Financiera Colombiana ......... ............ Development finance 2,024 - 1,004 1,004Corporacion Financiera de Caldas ... . ..................... Development finance 812 - 701 701Corporaci6n Financiers del Norte ....... ................... Development finance 454 - 449 449Corporaci6n Financiera del Valle ....... .................... Development finance 431 - 235 235Corporacion Financiera Nacional ....... ................... Development finance 2,042 - 596 596Enka de Colombia, S.A .................................... Textiles and fibers 7,605 766 - 766Pro-Hoteles, S.A . .......................................... Tourism 1,044 480 140 620Promigas, S.A ................................ ............ Utilities 15,000 6,000 2,000 8,000

TOTAL 13,525 5,125 18,650

29

Statement of Loan and Equity Investments (continued)

International Finance Corporation

June 30, 1978

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit FInvestments held for the Corporation

(including undisbursed balances)

Total loansCOUNTRY Original and equilyand Obligor Type of business conmmitments Loans Equity (at cost)

Costa RicaScott Paper Company de Costa Rica, S.A ..................... Pulp and paper products $ 2,500 $ 2,500 $ - $ 2,500

CyprusThe Cyprus Cement Company Limited .... -................. Cement and construction

material 2,884 1,279 528 1,807The Cyprus Pipes Industries Limited ... .................... Cement and construction

material 742 500 242 742

TOTAL 1,779 770 2,549

Dominican RepublicCementos Nacionales. S.A . ................................ Cement and construction

material 7,380 5,667 1,380 7,047Loans to Medium Scale Industries in Dominican Republic

in cooperation with Financiera Empresarial S.A ............ Money and capital market 3,000 3.000 - 3.000

TOTAL 8,667 1,380 10,047

EcuadorEcuatoriana de Desarrollo, S.A. (Compania Financiera) ....... Development finance 413 - 207 207La Cemento Nacional. C.E.M ........... .......... ....... Cement and construction

material 13,000 12,000 1,000 13,000La Internacional, S.A ......................... Textiles and fibers 3,963 875 - 875Sociedad Agricola e Industrial San Carlos, S.A ........... Food and food processing 5,000 5,000 - 5,000

TOTAL 17,875 1,207 19,082

Egypt, Arab Republic ofArab Ceramic Company S.A ................ ......... ..... Ceramics 5,652 3,225 926 4,151Delta Sugar Company S.A.E .................... ... ....... Food and food processing 23,000 14,000 3,000 17,000Nile Clothing Company, S.A .............. . ................ Ready-made garments 592 433 159 592

TOTAL 17,658 4.085 21,743

El SalvadorHoteles de Centro America, Sociedad Anonima ..... ......... Tourism 934 327 234 561

EthiopiaEthiopian Pulp and Paper, S.C ....... ...................... Pulp and paper products 1,909 - 121 121H.V.A.-Metahara, S.C ................ ................. Food and food processing 9,045 1,380 1,622 3,002Textile Mills of Dire Dawa ................. ............... Textiles and fibers 4,815 7Z5 837'' 1,562

TOTAL 2,105 2,580 4,685

GreeceAluminium de Crece, Socidte Anonyme Industrielle

et Commerciale . ....................................... Non ferrous metal 8,653 319 577 896.Hellenic Food Industries, S.A ............................. Food and food processing 1,238 643 238 881National Investment Bank for Industrial

Development. S.A ....................................... Development finance 40,719 5.000 102 5,102

TOTAL 5,962 917 6.879Guatemala

Cementos Progreso. S-A .............. . ....... .......... Cement and constructionmaterial 3,000 3,000 - 3,000

Exploraciones y Explotaciones Mineras Izabal.Sociedad Anonima ............ ......................... Mining 15,000 15,000 - 15,000

TOTAL 18,000 - 18,000

HondurasTextiles Rio Lindo. S.A. de C.V . ..... ........... .......... Textiles and fibers 10,000 3.000 1,000 4,000

IndiaEscorts Limited ................ ................... ...... Engine parts 6.600 6.600 - 6,600Housing Development Finance Corporation Limited ..... ..... Money and capital market 5,214 4,000 1,214 5,214Indian Explosives. Ltd ........................... ......... Fertilizers 11.462 30 2.263 2.293Lakshmi Machine Works, Ltd ........... ................... Machinerv 1,312 - 315 315Mahindra Ugine Steel Company, Ltd ........................ Iron and steel 12,797 9,610 830 10,440Zuari Agro Chemicals, Ltd . ................................ Fertilizers 18,911 6,683 3,039 9,722

TOTAL 26,923 7.661 34,584Indonesia

P.T. Daralon Textile Manufacturing Corporation ............. Textiles and fibers 6,350 3,725 1,125 4,850P.T. Jakarta International Hotel ............. ............... Tourism 11,000 3,278 - 3,278P.T. Kabel Indonesia-Kabelindo ............. ............ Cable manufacturing 3.172 787 372 1,159P.T. Kamaltex ............................................ Textiles and fibers 4,500 2,710 750 3,460P.T. Monsanto Pan Electronics ............. ................ Electronic products 900 365 - 365P.T. Primatexco Indonesia ................................. Textiles and fibers 4.801 1,548 801 2,349P.T. Private Development Finance Company of Indonesia .. . Development finance 483 - 483 483P.T. Semen Cibinong .......... ........................... Cement and construction

material 26,816 10,832 4,500 15,332P.T. Unitex ............................................. Textiles and fibers 3,300 448 800 1,248

TOTAL 23,693 8,831 32,524

30

Exhibit D

Investments held for the Corporation(including undisbursed balances)

Total loansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

IranGorouh Sanaye Kaghas Pars Sherkate Sahami Aam ........... Pulp and paper products $ 14,193 $ 6,250 $ 1,944 $ 8,194Sherkate Sahami Carbon Iran, Sahami Khass ..... ........... Chemicals and petrochemicals 3,553 1,779 348 2,127

TOTAL 8,029 2,292 10.321

IsraelMakhteshim Chemical Works Ltd ........................... Chemicals and petrochemicals 10,500 8,358 - 8.358

Ivory CoastBanque Ivoirienne de Developpement Industriel, S.A .......... Development finance 423 - 423 423Ets. R. Gonfreville, SA ................. .................. Textiles and fibers 885 - 885 885

TOTAL - 1,308 1,308

JamaicaPegasus Hotels of Jamaica, Ltd .............................. Tourism 2,913 1,154 669 1,823

JordanJordan Ceramic Industries Company Ltd ..................... Ceramics 1.826 1,350 226 1,576Jordan Fertilizer Industry Company, Ltd ..................... Fertilizers 76.494 20,000 6,493 . 26,493

TOTAL 21,350 6,719 28,069

KenyaKenya Hotel Properties, Ltd ................................ Tourism 5,880 3,467 718 4,185Panafrican Paper Mills (E.A.). Ltd ........................... Pulp and paper products 19,414 8,206 4,510 12,716Rift Valley Textiles Limited ................... ........... Textiles and fibers 9,069 5,300 2,770 8,070Tourism Promotion Services (Kenya) Ltd .. .................. Tourism 2,420 1.510 - 1,510Loans to Small and Medium Scale Industries in Kenya,

in cooperation with Kenya Commercial Bank Limited ....... Money and capital market 2,000 2,000 - 2.000TOTAL 20,483 7,998 28,481

Korea, Republic ofChonju Paper Manufacturing Co., Ltd ....................... Pulp and paper products 5,534 4,667 533 5,200Gold Star Company, Ltd ........................ .......... Electric products 27,853 11,000 1,853 12,853Hae Un Dae Development Company. Ltd ..................... Tourism 3,450 2,750 700 3,450Honam Silk Industry Company ............................. Textiles and fibers 1,677 560 276 836Korea Development Finance Corporation .................... Development finance 20,284 8,900 2,163 11,063Korea Development Leasing Corporation ..... .......... Money and capital market 15,373 5,000 373 5,373Korea Investment and Finance Corporation .................. Money and capital market 1,394 - 1,240 1,240Korea Securities Finance Corporation ...... ............... Money and capital market 6,078 4,062 1,078 5,140Korea Zinc Company, Ltd .................................. Non ferrous metal 19,017 13,000 4,017 17,017Tong Yang Nylon Company, Limited .......... ...... ...... Textiles and fibers 9,000 5,630 2,071 7.701

TOTAL 55,569 14,304 69,873

LebanonBank of the Near East, S.A.L ........ ...... ... Money and capital market 1,250 - 1,250 1,250Lebanon Textiles (Libtex) S.A.L ............................. Textiles and fibers 5,725 4,125 - 4,125

TOTAL 4,125 1,250 5,375

LesothoLesotho Quality Aggregate Industries (Proprietary) Cement and constructioni

Limited ........ ...................................... material 330 299 31 330

LiberiaLiberian Bank for Development and Investment .. ............. Development finance 555 - 555 555

MadagascarSociete Textile de Majunga S.A ............................. Textiles and fibers 11,300 11,000 300 11,300

MalawiDavid Whitehead and Sons (Malawi) Ltd. ....... ........... Textiles and fibers 6,000 6,000 - 6,000Dwangwa Sugar Corporation Limited ...... ................. Food and food processing 9,000 9,000 - 9,000

TOTAL 15,000 - 15,000Malaysia

India-Malaysia Textiles, Berhad ....... ............... ..... Textiles and fibers 1,498 890 248 1,138Malayawata Steel, Berhad ........... ..................... Iron and steel 3,693 203 - 203

TOTAL 1,093 248 1,341Mali

Societe Mamadou Sada Diallo et Freres SARL (Somaci) ....... Bleach and plastic products 600 600 - 600Mauritius

Dinarobin Inns and Hotels Limited ........... ..... Tourism 615 195 - 195Mexico

Cancun Aristos Hotel ........... .......................... Tourism 1,240 830 264 1,094Celanese Mexicana, S.A . .................................. Textiles and fibers 12,000 6,285 - 6,285Cementos Veracruz, S.A ................................... Cement and construction

material 10,500 5,496 - 5,496Fundidora Monterrey, S.A I.................................. ron and steel 23,741 948 1,420 2,368Mexinox, S.A ............................................. Iron and steel 15,180 12,000 3,180 15,180Papeles Ponderosa, S.A .................................... Pulp and paper products 11,621 4,500 2,621 7,121Tereftalatos Mexicanos, S.A ..................... Chemicals and petrochemicals 19,000 19,000 - 19,000

TOTAL 49,059 7,485 56,544

31

Statement of Loan and Equity Investments (continued)

International Finance Corporation

June 30, 1978

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit F

Investments held for the Corporation(including undisbursed balances)

Total loansCOUNTRY Origin.t and equityand Obligor Type of bthsiness commitments Loans Equity (at cost)

MoroccoAsment de Temara S.A ................ ........ ...... Cement and construction

material 7,169 4,755 2,414 7,169Banque Nationale pouLr le Developpement Economique ....... Development finance 2.695 - 1,544 1,544Compahia Industrial del Lukus, S.A ................. ....... Food and food processing 1.388 - 399 399Societe des Ciments de Marrakech, SA .... .. ............... Cement and construction

material 1.350 - 1.350 1,350TOTAL 4,755 5,707 10,462

NepalSoaltee Hotel Limited .................. .. Tourism 3,124 2,700 424 3.124

NicaraguaNicaragua Sugar Estates, Ltd ........ ... ........ Food and food processing 6,500 4,000 - 4,000Posada del Sol. S.A ............... ......... ......... Tourism 900 700 200 900Textiles Fabricato de Nicaragua, S.A .. .... . Textiles and fibers 2,071 132 - 132

TOTAL 4,832 200 5,032Nigeria

Arewa Textiles, Ltd . ............ ........... Textiles and fibers 1,575 - 442 442Funtua Cottonseed Crushing Company Limited ......... . .. Cottonseed oil 1,580 732 - 732Lafiagi Sugar Estate ................... ........ ........ Food and food processing 114 - 114 114Nigerian Aluminium Extrusions Limited ................ Non ferrous metals 1,328 945 326 1,271

TOTAL 1,677 882 2,559Pakistan

Dawood Hercules Chemicals, Ltd ....... ................ Fertilizers 3,923 - 2,923 2,923Gharibwal Cement, Ltd .............. ....... ....... Cement and construction

material 5,668 - 418 418Packages, Ltd .................................... ..... Pulp and paper products 3,152 93 605 698Pakistan Industrial Credit and Investment

Corporation, Ltd ....................... ...... Development finance 520 - 483 483Pakistan Paper Corporation, Ltd .......... _ ..... ....... Pulp and paper products 7,401 4,511 2,019 6,530

TOTAL 4,604 6,448 11,052Panama

Corporacion de Desarrollo Hotelero, S.A ............. ..... Tourism 1.473 1,030 266 1,296Vidrios Panamenos, S.A ......... ... ... ................. Glass containers 3,800 2,400 1,400 3,800

TOTAL 3,430 1,666 5,096Paraguay

Finap, S.A ......................... ...... ...... Lumber products 5,400 4,400 1,000 5,400Peru

Cemento Andino, S.A ...................................... Cement and constructionmaterial 2,462 - 192'2 192

Compania de Cemento Pacasmayo, S.A .. ......... .... .. Cement and constructionmaterial 1,605 - 93 93

Southern Peru Copper Corporation ....... .................. Mining 15,000 13.500 - 13,500TOTAL 13,500 285 13,785

PhilippinesAcoje Mining Company, Inc ................................ Mining 3.521 2,300 1,221 3,521Cebu Shipyard and Engineering Works, Inc . . ..... Ship-repairing 2,100 2,100 - 2,100Filipinas Synthetic Fiber Corporation .......... ............ Textiles and fibers 1,500 1,105 - 1,105Manila Electric Company ............. .................. Utilities 8.000 1,823 - 1,823Maria Cristina Chemical Industries, Inc ............... I..... Iron and steel 1.986 1,185 436 1,621Marinduque Mining and Industrial Corporation _ . ........... Mining 15,000 11,250 - 11,250Mariwasa Manufacturing, Inc ... ....... Cement and construction

material 1,193 - 239 239Philagro Edible Oils, Inc ................................... Coconut oil and copra 2,839 2,650 190 2,840Philippine Long Distance Telephone Company ..... .......... Utilities 4,500 2,659 - 2,659Philippine Petroleum Corporation ....... ................... Chemicals and petrochemicals 8,272 4,030 872 4,902Philippine Polyamide Industrial Corporation ...... .......... Textiles and fibers 7,000 6,125 - 6,125Private Development Corporation of the Philippines ..... ..... Development finance 19,359 6,232 - 6,232RFM Corporation ......................................... Food and food processing 1,200 885 - 885Sarmiento Industries, Inc .................. ............ Plywood 3,500 3,500 - 3,500Victorias Chemical Corporation ........ ................... Chemicals and petrochemicals 2,196 1,058 346 1,404

TOTAL 46,902 3,304 50,206Rwanda

Societe d'Investissement Rwandaise du The S.A.R.L ........... Food and food processing 535 535 - 535Senegal

Bud Senegal, S.A .......................................... Food and food processing 844 - 162 162Societe Financiere Senegalaise pour le Ddveloppement

de l'Industrie Tourisme .............. ................... Development finance 238 - 238 238Societe Industrielle d'Engrais au Senegal ............. ...... Fertilizers 3,460 - 810 810

TOTAL - 1,210 1,210

32

Exhibit D

Investments held for the Corporation(including undisbursed balarlces)

Total loansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at res

SpainIndustrias de Tableros y Derivados de la Madera, SA ......... Furniture 5,250 4,073 864 4,937Sociedad Espanola de Financiaci6n de la Innovaci6n, S.A ..... Money and capital market 877 - 877 877

TOTAL 4,073 1,741 5.814

Sri LankaDevelopment Finance Corporation of Ceylon ..... ........... Development finance 103 - 103 103Bank of Ceylon ............................. Money and capital market 2,000 2,000 - 2,000

TOTAL 2,000 103 2,103

SudanCotton Textile Mills, Ltd .............. .................... Textiles and fibers 9,979 8,714 1,265 9,979Gezira Managil Textile Company Limited ..... ............. Textiles and fibers 8,075 6,688 1,387 8,075Khartoum Spinning and Weaving Company, Ltd ......... .... Textites and fibers 2,212 131 273 404Seleit Food Production Limited ................. .......... Food and food processing 12,382 6,154 1,207 7,361

TOTAL 21,687 4,132 25,819

SwazilandThe Royal Swaziland Sugar Corporation Limited ..... ........ Food and food processing 8,460 8,000 460 8,460

Tan;taniaHighland Soap and Allied Products Limited ..... ............ Soap 1,759 1,375 384 1,759

ThailandThe Mutual Fund Company Limited .... ................... Money and capital market 294 - 294 294The Siam Cement Co., Ltd .................................. Cement and construction

material 32,177 7,892 1,669 9,561United Sugar Terminal Limited ....... ..................... Food and food processing 2,700 2,500 200 2,700Loans to Small and Medium Scale Industries in Thailand

in cooperation with Siam Commercial Bank, Limited ....... Money and capital market 2,000 2,000 - 2,000

TOTAL 12,392 2,163 14,555

Trinidad and TobagoCanning and Company, Limited ........... I ................ Food and food processing 1,150 1,150 - 1,150

TunisiaBanque de Developpement Economique de Tunisie ..... ..... Development finance 2,358 - 2,358 2,358Compagnie Financiere et Touristique, SA ................... Tourism 10,248 6,400 2,248 8,648Industries Chimiques du Flour, SA ........ .. ............... Chemicals and petrochemicals 640 - 640 640Societe d'Etudes et de D1veloppement de Sousse-Nord . ....... Tourism 3,161 2,530 631 3,161Societe Touristique et Hoteliere Rym, S.A .................... Tourism 1,930 1,261 298 1,559

TOTAL 10,191 6,175 16,366

TurkeyAkdeniz Turistik Tesisler A.S .... ........................... Tourism 603 135 268 403Aksa Akrilik Kimya Sanayii, A.S ............................ Textiles and fibers 10,000 6,W00 - 6,000Anadolu Cam Sanayii, A.S ........... I................... Glass 11,583 5,230 1,583 6,813Asil Celik Sanayl ve Ticaret A.S ............................ Iron and steel 14,178 12,000 2,178 14,178Asian ve Eskihisar Muttehit Cimento ve su Kireci

Fabrikalari, A.S ........................ ......... ...... Cement and constructionmaterial 10,600 5,500 - 5,500

Borusan Gemlik Boru Tesisleri, A.S ......................... Iron and steel 4,195 2,292 595 2,887Doktas Dokumculuk Ticaret ve Sanayii, A.S ............ ..... Iron and steel 9,149 7,500 1,592 9,092Kartaltepe Mensucat Fabrikasi, T.A.S . ...................... Textiles and fibers 1,300 928 - 928Nasas-Aluminyum Sanayii ve Ticareti A.S ...... ........... Non ferrous metal 9,946 4,008 1,371 5,379Sasa Sun'i ve Sentetik Elyaf Sanayii, A.S .............. ..... Chemicals and petrochemicals 15,000 4,886 - 4,886Sentetik Iplik Fabrikalari, A.S ........................ ..... Textiles and fibers 4,568 422 555 977Turkiye Sinai Kalkinma Bankasi. A.S ........... ........... Development finance 63,321 15,000 1,249 16,249Viking Kagit ve Seluloz, A.S .......................... Pulp and paper products 3,169 1,719 669 2,388

TOTAL 65,620 10,060 75,680Uruguay

Fabrica Uruguaya de Neumaticos, S.A ....................... Motor vehicles and accessories 3,800 3.800 - 3,800

VenezuelaSociedad Financiera Promotora del Mercado de

Capitales, CA .................. ....................... Money and capital market 701 - 701 701Sociedad Financiera Valinvenca, S.A ........................ Money and capital market 351 -35 351

TOTAL - 1,052 1,052Yemen Arab Republic

Yemen Dairy and luice Industries .......................... Food and food processing 3,150 2,400 - 2,400Yugoslavia

Belisce-Bel Tvornica Papira,Poluceluloze I Kartonaze-Belisce ...... .................. Pulp and paper products 13,259 12,364 - 12,364

Fap-Famos Belgrade/Daimler-Benz, A.G ................. ... Motor vehicles and accessories 16,763 10,454 2,610 13,064

Statement of Loan and Equity Investments (continued) Exhibit DInternational Finance Corporation

June 30, 1978

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit F

Investments held for the Corporationlincluding undisbursed balances)

Total loansCOUNTRY Ornginal and equityand Obligor Type of business commitments Loans Equity (at cost)

Yugoslavia (continued)Frikom Ro Industrija Smrznute Hrane ...................... Food and food processing $ 6,240 $ 3,000 $ 2,23(1 $ 5,239International Investment Corporation for Yugoslavia .Development finance 2.000 - 2,000i 2,000Radna Organizacija Hermeticki Kompresori u

Osnivanju, Mostar . ....................... . .......... Hermetic compressors 7,000 7,000 - 7,000Rudarsko Metalurski Kombinat Zenica ....... . .......... Iron and steel 50,000 5,000 5,000Salonit Anhovo Industrila Gradbenega Materiala .Cement and construction

material 10,000 Z,188 - 2,188Tovarna Avtomobilov in Motorjev Maribor/Klockner

Humboldt-Deutz, A.G. Motor vehicles and accessories 10,108 4.875 1,73'1 6,614Tovarna Avtopnevmatike "Sava-Semperit .... .......... .... Motor vehicles and accessories 14,874 9.800 3.233 13,033Tvornica Kartona I Ambalaze Cazin .Pulp and paper products 17,641 7.806 2,426 10,232Z.P. Slovenske Zelezarne Zelezarna jesenice .Iron and steel 10,000 8,750 -- 8.750Zavodi Crvena Zastava/Fiat S.PA .Motor vehicles and accessories 13,000 2,667 7,400 10,067

TOTAL 73,904 21,647 95,551

ZaireSociete Financi&e de Developpement ............. . ....... Development finance 756 - 756i 756

ZambiaCentury Packages Limited ................... ... ......... Plastic wrappings 1,086 856 211 1,067Development Bank of Zambia .Development finance 545 - 545 545Zambia Bata Shoe Company Limited ................ ...... Shoes 2,278 229 227 456

TOTAL 1,085 98:3 2,068

Regional InvestmentsAfrica

SIFIDA Investment Company, S.A .... . .................. Development finance 680 - 63.; 635Latin America

ADELA Investment Company. SA .Development finance 10,000 6,400 -- 6,400TOTAL 6,400 635 7,035

INVESTMENTS HELD FOR THE CORPORATION $ 798,841 $ 184,209 $ 983,050Undisbursed balances 232,669 38,70.5 271,374

Disbursed balances $ 566,172 $ 145,504 $ 711,676

INVESTMENTS HELD BY THE CORPORATIONFOR PURCHASERS AND PARTICIPANTS

Total $ 329,800 $ 2,618 $ 332,418Undisbursed balances 30,347 35 30,382

Disbursed balances $ 299,453 $ 2.583 $ 302,036

TOTAL INVESTMENTS HELD FOR FOR THE CORPORATIONAND FOR PURCHASERS AND PARTICIPANTS

Total $1,128,641 $ 186,827 $1,315,468Undisbursed balances 263,016 38,740 301,756

Disbursed balances $ 865,625 $ 148,087 $1,013,712

Note (1): Equity investment in this company was acquired at no cost.Note (2): IFC's equity investment has been the subject of acquisition procedures by the Government: the matter of payment is pending.General: The operational investments are represented by loans and equity, as stated. In addition, in certain investments, the Corporation has the right to acquireshares and/or participate in the profits of the enterprise.

34

Statement of Cumulative Gross Commitments Exhibit EInternational Finance Corporation

June 30, 1978

Expressed in United States Dol]ars (in thousands)-See Notes to Finoncial Statements, Exhibit F

Cumulative Gross Cumulative GrossCommitments Commitments

Number of (including exchange Number of (including exchangeCOUNTRY Enterprises adjustments) COUNTRY Enterprises adjustments)

Afghanistan .................... 1 $ 322 Mali ........................... 1 $ 600Argentina ... .................. 13 96,210 Mauritania ............ ......... 1 20,007Australia ....................... 2 975 Mauritius ...................... 1 615Bolivia ......................... 4 3,588 Mexico ......................... 15 100,119Brazil .......................... 26 395,224 Morocco ........................ 4 12,602Cameroon ...................... 2 1,189 Nepal .......................... 1 3,124Chile .5 21,191 Nicaragua ....................... 3 9,471China, Republic of ....... ....... 2 9,844 Nigeria ......................... 5 5,998Colombia ....................... 24 53,657 Pakistan ........................ 9 30,224Costa Rica ...................... 2 3,089 Panama ........................ 2 5,273Cyprus ......................... 2 3,626 Paraguay ....................... 1 5,400Dominican Republic ............. 2 10,380 Peru ........................... 7 23,980Ecuador ........................ 4 22,376 Philippines ..................... 17 88,374Egypt, Arab Republic of ..... .... 3 29,243 Rwanda ........................ 1 535El Salvador ..................... 2 1,074 Senegal ........................ 3 4,541Ethiopia .. .. 3 15,768 Spain .......................... 5 19,637Finland ........................ 4 3,148 Sri Lanka ....................... 3 5,353Greece ..... ................... 6 56,236 Sudan .......................... 4 32,648Guatemala ..................... 3 18,200 Swaziland ...................... 1 8,460Honduras ... .................. 3 10,453 Tanzania ....................... 2 6,417India .......................... 13 63,617 Thailand ....................... 6 37,855Indonesia ... .................. 9 61,322 Trinidad and Tobago ...... ...... 1 1,150Iran .......................... 7 42,536 Tunisia ......................... 6 21,838Israel .......................... 1 10,500 Turkey ......................... 13 157,613Italy .......................... 1 960 Uganda ....................... . 2 4,618Ivory Coast .............. ....... 2 1,308 Uruguay . ...................... 1 3,800Jamaica ........................ 2 3,137 Venezuela ....................... 8 32,121Jordan ......................... 2 78,319 Yemen Arab Republic ...... ..... 1 3,150Kenya .. 5 38,784 Yugoslavia .12 170,884Korea, Republic of .............. 11 114,638 Zaire ........................... 1 756Lebanon ...................... . 4 9,105 Zambia ....................... . 3 3,908Lesotho ........................ 1 330 Regional:Liberia ......................... 1 556 Africa ........................ 1 680Madagascar .................... 1 11,300 Latin America ................ 1 10,000Malawi ......................... 2 15,000Malaysia ....................... 4 8,691 TOTAL 321 $2,047,647

Summary June30 June30 Increase1978 1977 Ices

Investments held for the Corporation ......................................... $ 983,050 $ 864,215 $ 118,835Principal repayments to the Corporation ....... .......... .. ................... 230,221 180,729 49,492Investments sold or agreed to be sold ....................... 587,649 515,576 72,073Syndicate sales pending ............................. 113,750 39,000 74,750Cancellations ................................. 120,846 101,001 19,845Investments written off ............................ .......................... 15,424 12,446 2,978Revaluation of disbursed non-US dollar loans ............... .. ................ (3,293) (1,022) (2,271)

Total Commitments ................................................. $2,047,647 $1,711,945 $ 335,702

Revaluation of undisbursed non-US dollar

commitments made in prior years . ................................. ................................. , (2,731)Commitments-Fiscal Year 1978 . . . . .$ 332,971

35

Notes to Financial Statements Exhibit FInternational Finance Corporation

June 30, 1978 and June 30, 1977

Note A-Significant Accounting Policies Note B-Amounts Due Within One YearTranslation of Currencies-Equity investments disbursed in cur- Asset balances due the Corporation within one year are sum-rencies other than United States dollars are expressed in United marized as follows:States dollars at the exchange rates which applied at the time of As at June 30disbursement. Other assets and liabilities not denominated in ($ thousands)United States dollars are expressed in terms of United States dol- 1978 1977lars at the approximate market rates prevailing at the fiscal year- Due from banks ........... ..... $ 697 $ 956end. Exchange gains and losses are credited or charged to income Short-term obligations of governments . 24,812 2,794as they occur. Principal instalments on loans ........... 66,37a 52,322

Reserve Against Losses-The Corporation charges income directly Accrued income on loans .13,039 10,813with a provision for losses on investments with a corresponding Receivable from purchasers of loan andcredit to the Reserve Against Losses. The annual charge is based equity investments sold ...... ........ 2,971 1,333on the Corporation's historical loss experience, the amount of in- Other ............................... 351 1,054vestments in respect of which a significant and relatively perma- $108,241 $69,272nent decline in value is recognized and the amount of investmentsin respect of which losses cannot yet be identified. Note C-Borrowings

Net income remaining after the above charge to income is trans- The Corporation's borrowings comprise the following:ferred to Surplus and allocated to a General Reserve. Losses on in- (1) Loans from the International Bank for Reconstruction andvestments when written off are charged directly to the Reserve Development totaling $499 million ($512 million-1977). A commit-Against Losses. Changes in the Reserve Against Losses are sum- ment charge is payable on the undrawn balances of the loans atmarized as follows: the rate of ¾4 of 1% per annum. The loans are repayable in semi-

Fiscal Year Ended June 30 annual instalments summarized below:1978 1977 Principal Amount Interest Rate Maturity

Balance beginning of period ....... $30,400,000 $30,700,000 ($ millions) Per Annum DatesProvision charged to income ...... 7,978,000 5,948,001 1978 1977Investments written off ........... (2,978,000) (6,248,001 $160 $168 7.00% 1978 to 1989Balance end of period ............. $35,400,000 $30,400 000 $199 $204 7.25% 1978 to 1994

$120 $120 8.50% 1978 to 1996Investment Transactions-Investments are recorded at the date $ 20 $ 20 8.20% 1980 to 1992investment commitments are signed by the Corporation and are The principal amounts repayable during the fiscal years endingreflected as assets when disbursed. As of June 30, 1978 investments June 30, 1979 and 1980 are $18.3 and $21.6 million, respectively.approved by the Board of Directors but not signed as investmentcommitments totalled $58.4 million ($52.7 million-1977) of which The proceeds of these loans may only be used by the Corporation$40.0 million ($40.0 million-1977) are to be placed with partici- in its lending operations.pants and $18.4 million ($12.7 million-1977) are to be held by the (2) Loans from others totaling $40 million ($40 million-1977). ACorporation. The market value of equity investments in the Cor- loan of $5 million from the State of the Netherlands presentlyporation's portfolio is estimated to exceed the cost of such in- provides for an interest rate equal to the rate of cash dividend, ifvestments. Gains or losses on sales of investments are measured any, paid by the Corporation on its capital stock.against the average cost of the investments sold. Gains on invest-ments are credited directly to income when realized and losses are Principal Amount Interest Rate Maturity

provide forasdescr in the preceding paragraph. ($ millions) Per Annum O Datesprovided for as described m tne preceamg paragraps, 1978 1977Revenue Recognition-Dividends, profit participations and com- $ 5 $ 5 _ 1979 to 2000missions are recorded as income when received. Interest, com- $ 35 $ 35 7.875% 1985mitment and other charges on loans are recorded as income onan accrual basis except that the Corporation does not currently The principal amounts repayable during the fiscal years endingaccrue interest where collectibility is in doubt. June 30, 1979 and 1980 are $0.1 and $0.2 million, respectively.Staff Retirement Plan-The International Bank for Reconstruction The Corporation may use the proceeds of these loans in anyand Development has a contributory retirement plan for its staff operation authorized by its Articles of Agreement.which also covers the staff of the Corporation. All contributionsto the Plan and all other assets and income of the Plan are held by Note D-Capital Stockthe Bank separately from the other assets of the Bank and the Cor- On November 2, 1977 the Board of Governors approved a resolu-poration and can be used only for the benefit of the participants in tion increasing the authorized capital to $650,000,000. The resolu-the Plan and their beneficiaries. The total cost of the Plan includes tion, as amended, also allocated $468,829,000 for additional sub-amortization of unfunded liabilities. The Bank and the Corpora- scriptions by members during a subscription period endingtion's policy is to fund pension costs accrued. The cost of the Plan August 1, 1978. At June 30, 1978, twenty-one members had sub-to the Corporation for the fiscal year ended June 30, 1978 was scribed $181,336,000 of the allocated additional subscription.$1,539,506 ($1,263,881-1977) which included amortization of un- Members may elect to pay subscriptions in full or in instalmentsfunded liabilities over periods from 15 to 40 years. payable not later than February 1, 1982.

36

- Report of Independent Accountants Financial StatementsCovered by theForegoing Report

1801 K Street, N.W. Balance SheetWashington, D.C. 20006 Statement of Income

July 31, 1978 Statement of Changes in Financial PositionStatement of Loan and Equity Investments

To Statement of Cumulative Gross CommitmentsInternational Finance Corporation Notes to Financial StatementsWashington, D.C.

In our opinion, the accompanying financial statements presentfairly, in terms of United States currency, the financial position ofInternational Finance Corporation at June 30, 1978 and 1977, theresults of its operations and the changes in its financial positionfor the years then ended, in conformity with generally acceptedaccounting principles consistently applied. Our examinations ofthese statements were made in accordance with generally'ac-cepted auditing standards and accordingly included such tests ofthe accounting records and such other auditing procedures as weconsidered necessary in the circumstances.

PRICE WATERHOUSE & CO.

37

Appendices

40 Voting Power and Subscriptionsof Member Countries

41 Governors and Alternates

43 Directors and Alternates andTheir Voting Power

44 Officers and DepartmentDirectors

39

Voting Power and Subscriptions of Member Countries/Appendix A

As of June 30,1978

Voting Power Total Subscription Voting Power Total Subscription

No. Percent AmDunt Percent No. Percent Amount Percentof of (in Thousands of of of (in Thousands of

Member Votes Total Df Dollars) Total Member Votes Total of Dollars) Total

Afghanistan .361 .21 111 .08 Malawi ................. 390 .23 140 .10

Argentina .1,912 1.12 1,662 1.15 Malaysia ............... 527 .31 277 .19

Australia .2,465 1.44 2,215 1.54 Mali ................... 366 .21 116 .08

Austria .804 .47 554 .38 Mauritania .............. 305 .18 55 .04Bangladesh .1,083 .63 833 .58 Mauritius ............... 345 .20 95 .07Belgium .4,989 2.92 4,739 3.29 Mexico ................. 970 .57 '720 .50Bolivia 410 .24 160 .11 Morocco ................ 638 .37 388 .27Brazil .3,214 1.88 2,964 2.06 Nepal .......... ....... 305 .18 55 .04Burma .416 .24 166 .12 Netherlands .... ........ 3,296 1.93 3,046 2.12Cameroon .361 .21 ill .08 New Zealand ............ 1,173 .69 923 .64Canada .7,320 4.28 7,070 4.91 Nicaragua .............. 259 .15 9 .01Chile .638 .37 388 .27 Nigeria ................. 619 .36 369 .26China, Republic of. 4,404 2.58 4,154 2.89 Norway ................ 804 .47 554 .38Colombia .638 .37 388 .27 Oman .................. 340 .20 90 .06Costa Rica .272 .16 22 .02 Pakistan ................ 2,018 1.18 1,768 1.23Cyprus .349 .20 99 .07 Panama ................ 252 .15 2Denmark .1,003 .59 753 .52 Papua New Guinea ...... 364 .21 114 .08Dominican Republic 329 .19 79 .05 Paraguay ............... 266 .16 16 .01Ecuador .924 .54 674 .47 Peru ................... 444 .26 194 .13Egypt, Arab Republic of 840 .49 590 .41 Philippines ............. 1,033 .60 783 .54El Salvador .261 .15 11 .01 Portugal ................ 693 .41 443 .31Ethiopia .283 .17 33 .02 Rwanda ......... ...... 350 .20 100 .07Finland .671 .39 421 .29 Saudi Arabia ............ 361 .21 111 .08France. 6,065 3.55 5.815 4.04 Senegal ................. 434 .25 184 .13Gabon. 305 .18 55 .04 Sierra Leone ............ 333 .19 83 .06Germany, Federal Singapore .427 .25 177 .12

Republic of .9,815 5.74 9,565 6.64 Somalia ................ 333 .19 83 .06Ghana .416 .24 166 .12 South Africa ............ 1,358 .79 1,108 .77Greece .527 .31 277 .19 Spain ................... 1,358 .79 1,108 .77Grenada .261 .15 11 .01 Sri Lanka ............... 416 .24 166 .12Guatemala .272 .16 22 .02 Sudan .................. 361 .21 Ill .08Guinea-Bissau .268 .16 18 .01 Swaziland .............. 285 .17 35 .02Guyana .339 .20 89 .06 Sweden ................. 1,358 .79 1,108 .77Haiti .272 .16 22 .02 Syrian Arab Republic . . 322 .19 72 .05Honduras .261 .15 11 .01 Tanzania ............... 434 .25 184 .13Iceland .261 .15 11 .01 Thailand ......... ...... 924 .54 674 .47Ina. .4,681 2.74 4,431 3.08 Togo ................... 333 .19 83 .06Indonesia .1,468 .86 1,218 .85 Trinidad and Tobago .... 398 .23 148 .10Iran .622 .36 372 .26 Tunisia ................. 383 .22 133 .09Iraq .317 .19 67 .05 Turkey ................. 726 .42 .476 .33Ireland ... ... 582 .34 332 .23 Uganda .434 .25 184 .13Israel .300 .18 50 .03 United Arab Emirates .... 336 .20 86 .06Italy. 2,244 1.31 1,994 1.38 United Kingdom ......... 14,650 8.57 14,400 10.00Ivory Coast .361 .21 111 .08 United States ........... 54,418 31.83 54,168 37.62Jamaica .398 .23 148 .10 Upper Volta ........... 305 .18 55 .04Japan .3,019 1.77 2,769 1.92 Uruguay ................ 405 .24 155 .11Jordan .283 .17 33 .02 Venezuela .............. 366 .21 116 .08Kenya .605 .35 355 .25 Viet Nam .............. 416 .24 166 .12Korea, Republic of 389 .23 139 .10 Western Samoa ......... 259 .15 9 .01Kuwait .619 .36 369 .26 Yemen Arab Republic .... 297 17 47 .03Lebanon .300 .18 50 .03 Yugoslavia .............. 841 .49 591 .41Lesotho .268 .16 18 .01 Zaire ................... 582 .34 :332 .23Liberia .333 .19 83 .06 Zambiaamba.............. 545 .32 295 .20Libya .305 .18 55 .04 170,980 100.000t 143,980 100.ootLuxembourg .361 .21 111 .08Madagascar .361 .21 111 .08

'Less than .005 percent.tMay differ from the sum of the individualpercentages shown because of rounding.

40

Governors and Alternates/Appendix B

As of June 30,1978

Member Governor Alternate

Afghanistan .............. Abdul Karim Meesaqh ........... Mehrabudin PaktiawallArgentina ................ Jose Alfredo Martinez de Hoz .... Adolfo C. Diz

Australia ................. J. W. Howard ................... J. C. IngramAustria ................. Hannes Androsch ............... Walter Neudorfer'Bangladesh ............... M. N. Huda ..................... S. A. KhairBelgium . ............. Gaston Geens ................... Cecil de StryckerBolivia ................. David Blanco Zabala ............ Manuel Mercado MonteroBrazil ................. Mario Henrique Simonsen ....... Paulo H. Pereira LiraBurma ... ... U Tun Tin ...................... U Myo MyintCameroon ... ... Youssouffa Daouda .............. Amadou BelloCanada ... ... Jean Chr6tien ............ .. Michel DupuyChile .................. Sergio de Castro Spikula ......... Sergio Undurraga SaavedraChina, Republic of ........ Philip C. C. Chang ............... Chun-Heng TuColombia ................. Alfonso Palacio Rudas ........... German Botero de los RiosCosta Rica ................ Federico Vargas Peralta .......... Porfirio Morera BatresCyprus . ............. Andreas C. Patsalides ........... A. C. AfxentiouDenmark ................. K. B. Andersen .................. Lise 0stergaardDominican Republic ....... Fernando Periche Vidal .......... Luis M. Guerrero G6mezEcuador .................. Juan Reyna Drouet Santacruz .... Alfonso Arcos V.Egypt, Arab Republic of .. .Hamed Abdel Latif El Sayeh* .... Samir Koraiem*El Salvador ............... Roberto Ortiz Avalos ............ Eduardo ReyesEthiopia . ............ Teferra Wolde-Semait .......... Asfaw DamteFinland ................. Esko Rekola .................... Osmo KallialaFrance .................. Bernard Clappier ............... Marcel TheronGabon .................. Michel Anchouey ............... J. Felix MamalepotGermany, Fed. Republic of Hans Matthoefer . ........... Rainer OffergeldGhana ............. Anthony Kwesi Appiah .......... K. Anane-BinfohGreece ............. Constantine Mitsotakis .......... Stavros DimasGrenada ............. George F. Hosten ................ Franklin 0. DollandGuatemala ............. Ramiro Ponce Monroy ........... Jorge Lamport RodilGuinea-Bissau ............ Victor Freire Monteiro ........... Jose Lima BarberGuyana ............. F. E. Hope ................... Harold E. WilkinsonHaiti ...... ....... Emmanuel Bros ................. Antonio AndreHonduras ............. Porfirio Zavala Sandoval ........ (vacant)Iceland ............. Olafur Johannesson ............. Matthias A. MathiesenIndia ............ . H. M. Patel . .............. Manmohan SinghIndonesia ............. Rachmat Saleh .................. Julianto MoeliodihardjoIran ...... ....... Mohammed Yeganeh ............ Jahangir AmuzegarIraq .. ........... Fawzi El-Kaissi ................. (vacant)Ireland ............. George Colley ................... Tomas F. 0 CofaighIsrael . ............ Arnon Gafny . ............. Amiram SivanItaly . ............ Paolo Baffi . .............. Felice RuggieroIvory Coast ............. Abdoulaye Kone ................ Lon NakaJamaica ............. Eric Bell ................... Richard FletcherJapan ..... ........ Tatsuo Murayama ............... Teiichiro MorinagaJordan ............. Hanna Odeh ................... Hashim A. DabbasKenya ............. Mwai Kibaki ................... Leonard 0. KibingeKorea, Republic of ........ Yong Hwan Kim ................ Byong Hyun ShinKuwait . .. Abdul Rahman Salim Al-Ateeqy Abdlatif Y. Al-HamadLebanon .... .... Khattar Chibli .................. Sabah Al-HajLesotho ........ E. R. Sekhonyana . ........... A. M. MonyakeLiberia ........ James T. Phillips, Jr . ........... D. Franklin NealLibya .... .... Mohammad Zarrough Ragab ..... Abdulla A. SaudiLuxembourg ........ Jacques F. Poos ................. Raymond Kirsch

41

Governors and Alternates/Appendix B (continued)

As of June 30,1978

Member Governor Alternate

Madagascar ...... .. Rakotovao Razakaboana ......... Rajaona AndriamananjaraMalawi ... ..... D. T. Matenje ................... Alfred A. UpindiMalaysia ........ Tengku Razaleigh Hamzah ....... Abdullah bin AyubMali ................... Ahmed Mohamed Ag Hamani .... Tiecoura KoneMauritania .... .... Abdoulaye Baro ... .... Moustapha Ould AbeidarrahmaneMauritius ........ Rabindrah Ghurburrun ....... Devarajen SoopramanienMexico ........ David Jbarra Mufioz ....... Jorge Espinosa de los ReyesMorocco ........ Abdellatif Ghissassi ....... Mustapha FarisNepal ... ..... Bhekh B. Thapa ... .... Narakant AdhikaryNetherlands ...... .. F. H. J. J. Andriessen ..... .. J. de KoningNew Zealand ........ N. V. Lough .. ..... C. H. TerryNicaragua .... .... Guillermo Sevilla-Sacasa ....... R6ger Bland6n VelasquezNigeria ... ..... J. J. Oluleye .. ..... Musa BelloNorway ... ..... Per Kleppe .. ..... Hallvard BakkeOman ... ..... Qais A. Zawawi ... .... Sherif LotfyPakistan ... ..... (vacant) ....... A. G. N. KaziPanama ... ..... Nicolas Ardito Barletta ....... Luis M. Adames P.Papua New Guinea ........ Barry Blyth Holloway ........... Mekere MorautaParaguay ............... C6sar Romeo Acosta ............. Augusto Colman V.Peru ............... Javier Silva Ruete ............... Roberto Cornejo KlashenPhilippines ............... Cesar E. A. Virata ............... Placido Mapa, Jr.Portugal .... Vitor Manuel Ribeiro Constancio Herlander dos Santos EstrelaRwanda ............... Denis Ntirugirimbabazi .......... Jean-Damascene MunyarukikoSaudi Arabia ............. Mohamed Abalkhail ............. Khalid Al GosaibiSenegal ............... Louis Alexandrenne ............. Serigne Lamine DiopSierra Leone .............. A. B. Kamara ................... B. M. Strasser-KingSingapore ............... Hon Sui Sen .................... Howe Yoon ChongSomalia ............... Mohamud Yusuf Weyrah ......... Omar Ahmed OmerSouth Africa .............. T. W. de Jongh .................. G. P. C. de KockSpain ............... Francisco Fernandez Ordonez .... Jose Ram6n Alvarez RenduelesSri Lanka ............... Ronnie de Mel .................. W. M. TilakaratnaSudan ............... Nasr Eldin Mustafa .............. Abdel Rahman Abdel-WahabSwaziland ............... James Nxumalo ................. V. E. SikhondzeSweden ............... Gosta Bohman .................. Ola UllstenSyrian Arab Republic ..... Sadek Ayoubi .................. Abdul Hadi NehlawiTanzania ............... E. 1. M. Mtei .................... E. A. MulokoziThailand ............... Suphat Sutatum ................ Chanchai LeetavornTogo .......... ..... Koudjolou Dogo ................. Napo KakayeTrinidad and Tobago ...... Eric Williams ................... F. BarsottiTunisia ............... Mustapha Zaanouni ............. Rachid SfarTurkey ............... Ziya Muezzinoglu ............... Vural Guc,savasUganda ............... Moses Ali ...................... Jino GeriaUnited Arab Emirates ..... Hamdan Bin Rashid Al Maktoom Ahmed Humaid Al-TayerUnited Kingdom .......... Gordon Richardson ............. Sir Douglas WassUnited States ............. W. Michael Blumenthal .......... Richard N. CooperUpper Volta .............. Patrice Ouattara ................ Pierre TahitaUruguay ............... Valentin Arismendi ............. Juan Jose AnichiniVenezuela ............... Lorenzo Azpurua Marturet ....... Hector HurtadoViet Nam ............... Tran Duong .................... Mai Huu IchWestern Samoa ........... Vaovasamanaia R. P. Phillips ..... Maiava lulai TomaYemen Arab Republic ..... Mohamed Salem Basendwah ..... Ali Al-BaharYugoslavia ............... Petar Kostic* ................... Miodrag StojiljkovicZaire .......... ..... Emony Mondanga ............... Asa] B. IdzumbuirZambia ............... John M. Mwanakatwe ........... Lloyd C. Sichilongo

'Appointment effective after June 30, 1978.

42

Directors and Alternates and Their Voting Power/Appendix C

As of June 30, 1978

Director Alternate Casting votes of Total Votes

AppointedEdward R. Fried .................. William P. Dixon .......... United States ...................................... 54,418William S. Ryrie .................. Ronald F. R. Deare ......... United Kingdom .............. ..................... 14,650Hans Janssen' .................. Hans-Dieter Hanfland ...... Germany (Federal Republic of) ....... ............... 9,815Jacques Henri Wahl ............... Pierre-Henri Cassou ....... France ........................................... 6,065Susumu Murayama ............... Fumiya Iwasaki ........... Japan ............................................ 3,019

Elected

Earl G. Drake .................. Edward M. Agostini .... ... Canada, Grenada, Guyana, Ireland, Jamaica ...... ... 8,900(Canada) (Guyana)

Jacques de Groote ................ Tunc Bilget. . Austria, Belgium, Luxembourg, Turkey ..... .. 6,880(Belgium) (Turkey)

M. Narasimham ................. M. Syeduz-Zaman ......... Bangladesh, India, Sri Lanka .... .... 6,180(India) (Bangladesh)

Ernesto Franco-Holguin . .. . Ram6n Martinez-Aponte ... Brazil, Colombia, Dominican Republic, Ecuador,(Colombia) (Dominican Republic) Philippines ....................................... 6,138

Said E. El-Naggar . .Saleh A. Al-Hegelan ....... Egypt (Arab Republic of), Iraq, Jordan, Kuwait,(Arab Republic of Egypt) (Saudi Arabia) Lebanon, Pakistan, Saudi Arabia, Syrian Arab

Republic, United Arab Emirates, Yemen Arab Republic 5,693Timothy T. Thahane .............. A. H. Madinga .......... Ethiopia, Kenya, Lesotho, Liberia, Malawi, Nigeria,

(Lesotho) (Malawi) Sierra Leone, Sudan, Swaziland, Tanzania,Trinidad and Tobago, Uganda, Zambia .... .......... 5,288

Thavil Khutrakul ........... Bharat B. Pradhan ......... Burma, Indonesia, Korea (Republic of), Malaysia,(Thailand) (Nepal) Nepal, Singapore, Thailand, Viet Nam .... ........... 4,872

Anthony IJ. A. Looijen . .......... Gavra D. Popovid 2......... Cyprus, Israel, Netherlands, Yugoslavia .............. 4,786

(Netherlands) (Yugoslavia)Armand Razafindrab6 . .......... (vacant) .... Cameroon, Gabon, Ivory Coast, Madagascar, Mali,

(Madagascar) Mauritania, Mauritius, Rwanda, Senegal, Somalia,Togo, Upper Volta, Zaire ........................... 4,741

Giorgio Rota ...... ....... Miguel Martin-Fernandez ... Italy, Portugal, Spain ........... .................... 4,295(Italy) (Spain)

R. A. Johnston . . ....... Gerald S. Aburn ........... Australia, New Zealand, Papua New Guinea,(Australia) (New Zealand) Western Samoa .................................... 4,261

Einar Magnussen . ............ Valgeir Arsaelsson ......... Denmark, Finland, Iceland, Norway, Sweden ......... 4,097(Norway) (Iceland)

Julio C. Gutierrez ............. Eduardo R. Conesa ......... Argentina, Bolivia, Chile, Paraguay, Uruguay ..... .... 3,631(Paraguay) (Argentina)

Eduardo Pesqueira ............. Oscar G. Espinosa ......... Costa Rica, El Salvador, Guatemala, Haiti, Honduras,(Mexico) (Peru) Mexico, Nicaragua, Panama, Peru, Venezuela .......... 3,629

Yahia Khelif . . ...... Kwaku Gyasi-Twum ....... Afghanistan, Ghana, Greece, Iran, Libya, Morocco,(Algeria) (Ghana) Oman, Tunisia ..................................... 3,592

In addition to the Directors and Alternates shown in the foregoing list, the following also served after June 30, 1977:

Director End of period of service: Alternate Director End of period of service:

S. R. Sen .. . . February 28, 1978 Md. Matiul Islam (Bangladesh) ............... uly 19, 1977(India) Ren6-Paul Rigaud (France) .August 24, 1977

Hal F. Reynolds (United States) .September 30, 1977Eduardo A. McCullough (Panama) .October 31, 1977German Calvillo (Spain) .November 1, 1977

Note: Republic of China (4,404 votes), Guinea-Bissau (268 votes) and South Africa (1,358 votes) are not represented by a Director.'Has resigned effective August 13, 1978; to be succeeded by Eberhard Kurth.'Has resigned effective July 31, 1978; to be succeeded by Miodrag Stojiljkovic.

43

Officers and Department Heads/Appendix D

President ................................... * Robert S. McNamaraExecutive Vice President ................................... Moeen A. QureshiVice President .............................. Gordon F. McClureVice President ... ..... Judhvir ParmarGeneral Counsel ... ..... Jose E. CamachoDirector, Finance and Management Department .... .... Marshall BurkesSecretary .............................................. *P. N. Damry

Special Adviser for African Affairs ............................... Henri Konan BedieChief, Information Office ........................................ Carl T. BellDirector, Personnel Department . .................... *R. A. ClarkeDirector, Engineering Department ................................ Makarand V. DehejiaDirector, Department of Investments, Latin America & Caribbean I Kurt B. EckrichDirector, Programming and Budgeting Department ...... .......... *K. Georg GabrielDirector, Capital Markets Department .......... ................... David GillDirector, Department of Investments, Europe and Middle East ....... Douglas GustafsonSenior Adviser, Portfolio ......................................... Fawzi HabibSpecial Representative, Middle East ........... ................... Cherif HassanSenior Adviser, Technical ........................................ H. Geoffrey HiltonDirector, Department of Investments, Africa ....... ................ Gunter H. KreuterDirector, Marketing ............................................. Rolf Th LundbergSpecial Representative. Far East .............. .................... Naokado NishiharaSenior Adviser, Part I Countries and Special Projects ...... ......... Neil J. PatersonDirector, Development Department ........... .................... Richard W. RichardsonDirector, Department of Investments, Latin America & Caribbean 11 Jose M. RuisanchezDirector, Department of Investments, Asia .......... ........ ...... Torstein StephansenSpecial Representative, Europe ...................... J. W. StroblDirector, Administrative Services Department .......... .* James E. T'wining

Regional Mission in Eastern Africa .................. . Michael JordanRegional Mission in Western Africa ............................... Pho Ba QuanRegional Mission in East Asia .................................... Giovanni Vacchelli*These officers and department heads hold the same positions in the International Bank for Reconstructionand Development.

Advisory PanelIFC's international advisory panel met with the Corporation's officers and

management in Amsterdam in July 1977 and in Frankfurt in June 1978 to discussIFC activities and policies. Members of the panel are: J.R.M. van den Brink, Manag-ing Director, Amsterdam-Rotterdam Bank, N.V., Amsterdam; Jacques de Fouchier,President and Director General, Banque de Paris et des Pay-Bas, S.A., Paris; Dr.Wilfried Guth, Managing Director, Deutsche Bank, A.G., Frankfurt; SoheiNakayama, The Industrial Bank of Japan, Ltd., Tokyo; Lord Roll of Ipsden, Chair-man, S.G. Warburg and Co., Ltd., London; and Robert V. Roosa, Brown Brothers.Harriman and Co., New York. Mr. de Fouchier is retiring from the advisory panel.The Corporation wishes to express its deep appreciation for the valuable adviceand guidance he has given.

OrganizationHenri Konan Bedie, past Chairman of both the Board of Governors of the World

Bank Group and of the Development Committee and former Minister of Financeof the Government of the Ivory Coast, was named Special Adviser for AfricanAffairs to the Corporation.

Also during the Fiscal Year, Richard W. Richardson was named Director, De-velopment Department, and Carl T. Bell was appointed Chief, Information Office.Pho Ba Quan was named Chief of the newly established Regional Mission in WesternAfrica and Michael Jordan was named Chief of the Regional Mission in EasternAfrica.

At June 30, 1978, the staff of the Corporation numbered 268, including nationalsof 48 countries.

44

rhe Corporation wishes to express its sincereuppreciation to the following organizations for(heir assistonce in obtaining photographs toillustmote this Annual Report:

(Lanning and Company, Limited-Trinidad and TobagoCementos del Caribe, S.A.-Colombial.scorts Limited-India(old Star Company, Ltd.-KoreaKenva Commercial Bank LimitedKorea Development Finance CorporationThe Mutual Fund Company Limited-ThailandPanafrican Paper Mills (E.A.), Ltd.-KenyaP'hilagro Edible Oils, Inc.-the PhilippinesPhilippine Petroleum CorporationPromigas, S.A.-ColombiaRFM Corporation-the PhilippinesRift Valley Textiles Limited-KenyaSarmiento Industries, Inc.-the PhilippinesScott Paper Company de Costa Rica, S.A.Textiles Rio Lindo, S.A. de C.V.-HondurasThe World Bank

InternationalFinance - 4

Corporation *

r _ ,4 p | s Headquarters1818 H Street, N.W.Washington, D.C. 20433. U.S.A. iTelephone: (202) 477-1234Telex: ITT 440098

RCA 248423WU64145

New York Office r _120 Broadway INew York, N.Y. 10005, U.S.A. aTelephone: (212) 964-6100 .5

European OfficeNew Zealand House, HaymarketLondon SWI Y4TE, EnglandTelephone: 930-3886Telex: 919462

Paris Office66 Ave. d'16na75116 Parig, FranceTelephone: 723-54-21

Telex: 620628Tokyo Office45-1, Nibancho, Chiyoda-kuTokyo 102. JapanTelephone: (03) 261-3626Telex: 126554

Regional Mission in East AsiaWorld Bank GrouPCentral Bank of the PhilippinesManita. PhilippinesTelephone: 58-93-12Telex: 7420541 1j :...i IItal is R,l?nI.

Regional Mission in Eastern Africa F '_ .,Extelcorns HouseHaile Selassie AvenueNairobi, KenyaTelephone: 24726Telex: 22022

Regional Mission in the Middle East3 El Birgas StreetCairo, Arab Republic of EgyptTelephone: 23923 o

Regional Missiou in Western AfricaImmeuble Alpha 2000Rue Gourgas4Abidj an, Ivory CoastTelephone: 32-65-97 Telex: 533

Cable AddressCORINTFIN *SPCORINTFIN (Tokyo only)

* ;i A30 10