World Bank Group Releases FY21 Audited Financial Statements
WASHINGTON: The Executive Boards of the World Bank Group on August 5 approved the audited financial statements for fiscal year 2021 (July 1, 2020 – June 30, 2021). The statements highlighted the strength of the financial position of the World Bank Group entities, strong demand for financing from our client countries, including due to COVID-19 and increased poverty, and the continued backing from shareholders and capital markets.
A significant portion of the FY21 commitments supported measures related to the health and economic impacts of COVID-19. In response to the global outbreak, World Bank Group commitments rose to $84.3 billion in fiscal year 2021, 15% higher than FY20.
The World Bank Group’s support in FY21 included $4.7 billion of newly approved financing for vaccines benefiting 54 countries. Despite the high level of business activity, the World Bank Group continued to maintain fiscal prudence, with a reduction in gross administrative expenses in FY21 compared to FY20.
“World Bank Group support to client countries surged to $157 billion over the last 15 months to address increased poverty, inequality, and the impacts of COVID-19,” said World Bank Group President David Malpass. “This unprecedented level of commitments helped countries strengthen health systems, protect the poor and vulnerable, support jobs and businesses, promote economic growth, and lay the foundation for a green, resilient and inclusive recovery.”
Also now available are the Management’s Discussion and Analysis of financial results for the four World Bank Group institutions: the International Bank for Reconstruction and Development (IBRD), which provides loans and advice to middle-income countries; the International Development Association (IDA), the World Bank’s fund for the poorest; the International Finance Corporation (IFC), the Bank Group’s private sector arm; and the Multilateral Investment Guarantee Agency (MIGA), whose mandate is to help drive impactful foreign direct investment to developing countries.
Key highlights by institution of the financial statements are as follows.
IBRD’s net commitments increased 9% to $30.5 billion in FY21 and gross disbursements increased 17% to $23.7 billion. Commitments to lower-middle-income countries in FY21 represented 42% of the total.
Considering loan repayments, net disbursements to support developing economies were $13.6 billion in FY21. This increased IBRD’s loan portfolio to $218.8 billion, an 8% increase from the prior year.
IBRD’s net investment portfolio increased to $85.8 billion as of June 30, 2021, from $82.5 billion a year earlier. The increase is primarily due to proceeds from debt issuances partially offset by net loan disbursements during the year.
IBRD raised medium and long-term debt of $67.4 billion during FY21. The funds raised from capital markets financed development lending, bolstered liquidity and were used to replace maturing debt.
The equity to loans (E/L) ratio, IBRD’s capital adequacy measure, was 22.6%, slightly lower than a year ago, as the increase in total exposures slightly outpaced receipt of capital subscription payments of $1.2 billion.
IBRD reported net income of $2.0 billion in FY21, compared to a net loss of $42 million in the prior year, primarily due to net unrealized mark-to-market gains on the non-trading portfolios.
Allocable income, the measure that IBRD uses for net income allocation decisions, was $1.2 billion, $0.1 billion lower than the previous year, which was primarily attributable to the increase in provision for losses.
FY21 was the first year of the implementation of the Nineteenth Replenishment (IDA19) and coincided with the onset of the COVID-19 crisis. To enable IDA to continue meeting the heightened financing needs for IDA resources, in April 2021 IDA members agreed to launch the Twentieth IDA replenishment (IDA20), one year earlier, in FY23.
In FY21, IDA net commitments were $36.0 billion, 19% higher than the previous year. Net disbursements in FY21 were $16.5 billion, a 9% increase compared to the previous year, increasing the net outstanding loan balance to $177.8 billion, a 10% increase over FY20.
IDA’s net investment portfolio increased to $37.9 billion as of June 30, 2021, from $35.6 billion a year earlier. The increase is primarily due to member contributions and proceeds from net new debt issuances partially offset by net loan and grant disbursements during the year.
As part of its funding activities, IDA raised medium and long-term debt of $9.4 billion during FY21 in the international capital markets.
IDA’s capital adequacy measure, the deployable strategic capital (DSC) ratio, was 30.4% as of June 30,2021, 5.4% lower from a year earlier. IDA’s capital continues to be adequate to support its operations.
IDA reported a net loss of $0.4 billion compared to a net loss of $1.1 billion in the prior year. The decrease in net loss is primarily driven by the increase in unrealized mark-to-market gains on the non-trading portfolios partially offset by an increase in development grant expenses during the year.
Adjusted Net Income, the financial sustainability measure that IDA uses to monitor the economic results of its operations, was $0.4 billion, $0.3 billion lower than the prior year. This decrease was primarily due to lower net investment revenue, higher provision for losses on loans and other exposures, partially offset by higher net interest revenue on loans.
IFC’s total commitments in FY21 reached $31.5 billion, an increase of 11 percent from the previous year, 37% of which was in low-income and fragile and conflict affected states. Long-term finance commitments increased to a record $23.3 billion, of which $12.5 billion was for IFC’s own account and $10.8 billion for core mobilization. Additionally, IFC delivered a record high of $8.2 billion in short-term finance, a 26 percent increase compared to the previous year.
IFC reported net income of $4.2 billion for FY21 compared to a net loss of $1.7 billion for FY20. Net unrealized gains in the equity portfolio totaled $2.6 billion in FY21 (unrealized losses of $1.6 billion in FY20) mainly driven by the rebound in equity valuations. Release of provisions for losses on the loan portfolio totaled $201 million in FY21 (a provision charge of $638 million in FY20) reflecting an overall improvement in credit quality of the portfolio.
IFC’s capital adequacy measure, the deployable strategic capital ratio, increased to 23.4% at the end of FY21, up by 5.5% from 17.9% at the end of FY20, largely resulting from an increase in Capital Available due to capital subscription payments, an increase in retained earnings, and a decrease in the funded status of the pension plans .
IFC raised medium- and long-term debt of $12.7 billion during FY21.
MIGA’s commitments totaled $5.2 billion in FY21.
FY21 commitments include $3.5 billion of guarantees under the Agency’s COVID-19 Response Fast-track Facility to support private sector investors and lenders in emerging economies and developing countries to address the impacts of the pandemic.
Gross guarantee exposure increased by $364 million to $23 billion as of June 30, 2021, despite the $5.2 billion in new guarantees, due principally to the offsetting impact of commensurate portfolio run-off.
MIGA reported net income of $81.5 million in FY21 compared to $57.2 million in FY20. The increase reflects the effect of $8.2 million release from the reserve for claims in FY21 compared to $37.4 million increase in the reserve for claims in FY20 combined with $6.6 million higher operating income, partially offset by $34.6 million lower investment income.
The capital utilization ratio, MIGA’s key capital adequacy measure, decreased to 44.5% from 47.5% as of June 30, 2020, largely reflecting the impact of the increase in Operating Capital.