<PAGE>
International Bank for Reconstruction and
Development
[LOGO]
Quarterly Financial Statements
December 31, 1997
(Unaudited)
<PAGE>
International Bank for Reconstruction and
Development
<PAGE>
IBRD Financial Statements 3
- -------------------------------------------------------------------------------
Table of Contents
December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Balance Sheet ..................................................... 4
Statement of Income ............................................... 6
Statement of Changes in Retained Earnings ......................... 7
Statement of Changes in Cumulative Translation Adjustment ......... 7
Statement of Cash Flows ........................................... 8
Summary Statement of Loans ........................................ 10
Statement of Subscriptions to Capital Stock and Voting Power ...... 13
Notes to Financial Statements ..................................... 17
Review Report of Independent Accountants .......................... 49
</TABLE>
<PAGE>
4 IBRD Financial Statements
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Balance Sheet
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997 June 30, 1997
(Unaudited)
---------------- -------------
<S> <C> <C>
Assets
DUE FROM BANKS
Unrestricted currencies................................................................ $ 49 $ 26
Currencies subject to restrictions-Note A.............................................. 613 615
-------- --------
662 641
-------- --------
INVESTMENTS-Notes B and E
Trading................................................................................ 17,479 17,229
Held-to-maturity....................................................................... 1,267 1,279
-------- --------
18,746 18,508
-------- --------
SECURITIES PURCHASED UNDER RESALE AGREEMENTS-Trading-Note B............................... 162 97
NONNEGOTIABLE, NONINTEREST-BEARING DEMAND OBLIGATIONS ON ACCOUNT OF SUBSCRIBED CAPITAL ... 2,142 1,902
AMOUNTS RECEIVABLE FROM CURRENCY SWAPS-Notes B, D and E
Investments-Trading.................................................................... 9,648 4,571
Borrowings............................................................................. 41,642 29,031
-------- --------
51,290 33,602
-------- --------
AMOUNTS RECEIVABLE TO MAINTAIN VALUE OF CURRENCY HOLDINGS................................. 308 574
OTHER RECEIVABLES
Amounts receivable from investment securities traded................................... 36 29
Accrued income on loans................................................................ 1,844 1,932
Accrued interest on investments........................................................ 157 143
-------- --------
2,037 2,104
-------- --------
LOANS OUTSTANDING (see Summary Statement of Loans, Notes C and E)
Total loans............................................................................ 154,960 157,381
Less undisbursed balance............................................................... 48,105 51,576
-------- --------
Loans outstanding................................................................... 106,855 105,805
Less accumulated provision for loan losses............................................. 3,250 3,210
-------- --------
Loans outstanding net of accumulated provision...................................... 103,605 102,595
-------- --------
OTHER ASSETS
Unamortized issuance costs of borrowings............................................... 547 492
Miscellaneous-Notes I and J............................................................ 1,591 1,430
-------- --------
2,138 1,922
-------- --------
Total assets.............................................................................. $181,090 $161,945
-------- --------
-------- --------
<PAGE>
IBRD Financial Statements 5
- -------------------------------------------------------------------------------
Balance Sheet
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
Liabilities
BORROWINGS-Notes D and E
Short-term............................................................................. $ 13,670 $ 7,648
Medium- and long-term.................................................................. 84,646 89,031
--------- ---------
98,316 96,679
--------- ---------
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS AND PAYABLE FOR CASH COLLATERAL
RECEIVED-Trading-Note B................................................................ 590 294
AMOUNTS PAYABLE FOR CURRENCY SWAPS-Notes B, D and E
Investments-Trading.................................................................... 9,406 4,694
Borrowings............................................................................. 43,038 29,687
--------- ---------
52,444 34,381
--------- ---------
AMOUNTS PAYABLE TO MAINTAIN VALUE OF CURRENCY HOLDINGS.................................... 4 4
OTHER LIABILITIES
Amounts payable for investment securities purchased.................................... 132 135
Accrued charges on borrowings.......................................................... 2,248 2,167
Payable for Board of Governors-approved transfers-Note F............................... 150 201
Accounts payable and miscellaneous liabilities......................................... 942 856
--------- ---------
3,472 3,359
--------- ---------
Total liabilities 154,826 134,717
--------- ---------
Equity
CAPITAL STOCK (see Statement of Subscriptions to Capital Stock and Voting Power, Note A)
Authorized capital (1,558,478 shares-December 31, 1997 and June 30, 1997)
Subscribed capital (1,545,457 shares-December 31, 1997; 1,512,211 shares-June 30,
1997)............................................................................. 186,436 182,426
Less uncalled portion of subscriptions 175,148 171,378
--------- ---------
11,288 11,048
DEFERRED AMOUNTS TO MAINTAIN VALUE OF CURRENCY HOLDINGS................................... (504) (106)
PAYMENTS ON ACCOUNT OF PENDING SUBSCRIPTIONS-Note A....................................... 7 7
RETAINED EARNINGS (see Statement of Changes in Retained Earnings, Note F)................. 16,089 16,194
CUMULATIVE TRANSLATION ADJUSTMENT (see Statement of Changes in Cumulative Translation
Adjustment)............................................................................ (616) 85
--------- ---------
Total equity 26,264 27,228
--------- ---------
Total liabilities and equity $ 181,090 $ 161,945
--------- ---------
--------- ---------
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
6 IBRD Financial Statements
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Statement of Income
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
(UNAUDITED) (UNAUDITED)
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
INCOME
Income from loans--Note C
Interest................................................................. $ 1,652 $ 1,851 $ 3,319 $ 3,741
Commitment charges....................................................... 28 29 55 58
Income from investments--Note B
Trading
Interest................................................................ 264 170 520 327
Net gains/(losses)
Realized............................................................... 2 5 (2) 48
Unrealized............................................................. (3) -- -- (36)
Held-to-maturity
Interest............................................................... 43 26 83 51
Income from securities purchased under resale agreements--Note B.......... 15 20 21 38
Other income.............................................................. 2 2 4 5
--------- --------- --------- ---------
Total income............................................................. 2,003 2,103 4,000 4,232
--------- --------- --------- ---------
EXPENSES
Borrowing expenses--Note D
Interest................................................................. 1,469 1,495 2,913 3,028
Prepayment (gains)/losses................................................ (3) 4 (7) 13
Amortization of issuance and other borrowing costs....................... 28 25 52 44
Interest on securities sold under repurchase agreements and payable for
cash collateral received--Note B......................................... 24 14 46 26
Administrative expenses--Notes G, H, I and J.............................. 152 173 301 343
Provision for loan losses--Note C......................................... 168 8 180 39
Other expenses............................................................ 1 2 5 4
--------- --------- --------- ---------
Total expenses........................................................... 1,839 1,721 3,490 3,497
--------- --------- --------- ---------
OPERATING INCOME........................................................... 164 382 510 735
Less contributions to special programs--Note G............................. 31 30 61 60
--------- --------- --------- ---------
NET INCOME................................................................. $ 133 $ 352 $ 449 $ 675
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
IBRD Financial Statements 7
- -------------------------------------------------------------------------------
Statement of Changes in Retained Earnings
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
(UNAUDITED)
--------------------
<S> <C> <C>
1997 1996
--------- ---------
Retained earnings at beginning of the fiscal year........................................... $ 16,194 $ 16,099
Board of Governors-approved transfers to--Note F
International Development Association..................................................... (304) (600)
Trust Fund for Gaza and West Bank......................................................... -- --
Heavily Indebted Poor Countries Debt Initiative Trust Fund................................ (250) --
Net income for the period.................................................................. 449 675
--------- ---------
Retained earnings at end of the period...................................................... $ 16,089 $ 16,174
--------- ---------
--------- ---------
</TABLE>
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Statement of Changes in Cumulative Translation Adjustment
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
(UNAUDITED)
--------------------
<S> <C> <C>
1997 1996
--------- ---------
Cumulative translation adjustment at beginning of the fiscal year............................... $ 85 $ 1,056
Translation adjustment for the period.......................................................... (701) (423)
--------- ---------
Cumulative translation adjustment at end of the period.......................................... $ (616) $ 633
--------- ---------
--------- ---------
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
8 IBRD Financial Statements
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Statement of Cash Flows
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
(UNAUDITED)
---------------------
<S> <C> <C>
1997 1996
---------- ---------
Cash flows from lending and investing activities
Loans
Disbursements............................................................................. $ (11,245) $ (7,451)
Principal repayments...................................................................... 5,277 5,534
Principal prepayments..................................................................... 307 782
Investments: Held-to-maturity
Purchases................................................................................. (8,938) (3,889)
Maturities................................................................................ 8,956 3,907
---------- ---------
Net cash used in lending and investing activities....................................... (5,643) (1,117)
---------- ---------
Cash flows from Board of Governors-approved (transfers to)/refunds from
International Development Association...................................................... (298) (599)
Debt Reduction Facility for IDA-Only Countries............................................. 10 --
Trust Fund for Gaza and West Bank and Trust Fund for Bosnia and Herzegovina................ (59) (81)
Heavily Indebted Poor Countries Debt Initiative Trust Fund................................. (250) --
---------- ---------
Net cash used in Board of Governors-approved transfers.................................. (597) (680)
---------- ---------
Cash flows from financing activities
Medium- and long-term borrowings
New issues................................................................................ 8,542 8,123
Retirements............................................................................... (8,968) (6,976)
Net short-term borrowings.................................................................. 5,982 1,038
Net currency swaps......................................................................... 41 (197)
Net capital stock transactions............................................................. 77 44
---------- ---------
Net cash provided by financing activities............................................... 5,674 2,032
---------- ---------
Cash flows from operating activities
Net income................................................................................. 449 675
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization............................................................. 398 218
Provision for loan losses................................................................. 180 39
Changes in other assets and liabilities
Increase in accrued income on loans and investments...................................... (8) (51)
Increase in miscellaneous assets......................................................... (191) (98)
Increase (decrease) in accrued charges on borrowings..................................... 143 (39)
Increase in accounts payable and miscellaneous liabilities............................... 110 16
---------- ---------
Net cash provided by operating activities............................................... 1,081 760
---------- ---------
Effect of exchange rate changes on unrestricted cash and liquid investments................. (98) (131)
---------- ---------
Net increase in unrestricted cash and liquid investments.................................... 417 864
Unrestricted cash and liquid investments at beginning of the fiscal year.................... 16,829 14,730
---------- ---------
Unrestricted cash and liquid investments at end of the period............................... $ 17,246 $ 15,594
---------- ---------
---------- ---------
</TABLE>
<PAGE>
IBRD Financial Statements 9
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Statement of Cash Flows
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
(UNAUDITED)
--------------------
<S> <C> <C>
1997 1996
--------- ---------
Composition of unrestricted cash and liquid investments:
Investments held in trading portfolio...................................................... $ 17,479 $ 16,677
Unrestricted currencies.................................................................... 49 34
Net payable for investment securities traded/purchased..................................... (96) (474)
Net receivable from currency swaps--Investments............................................ 242 43
Net payable for securities purchased/sold under resale/repurchase agreements and payable
for cash collateral received............................................................. (428) (686)
--------- ---------
$ 17,246 $ 15,594
--------- ---------
--------- ---------
Supplemental disclosure
Increase (decrease) in ending balances resulting from exchange rate fluctuations
Loans outstanding......................................................................... $ (4,611) $ (2,802)
Investments: Held-to-maturity............................................................. 6 105
Borrowings................................................................................ (4,356) (1,879)
Currency swaps--Borrowings................................................................ 699 (360)
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
10 IBRD Financial Statements
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SUMMARY STATEMENT OF LOANS
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOANS UNDISBURSED PERCENTAGE
APPROVED BALANCE OF OF TOTAL
TOTAL BUT NOT YET EFFECTIVE LOANS LOANS
BORROWER OR GUARANTOR LOANS EFFECTIVE(1) LOANS(2) OUTSTANDING OUTSTANDING
- ------------------------------------------------- ---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Algeria.......................................... $ 2,383 $ -- $ 588 $ 1,795 1.68
Argentina........................................ 8,484 950 2,040 5,494 5.14
Armenia.......................................... 11 -- 1 10 0.01
Bahamas, The..................................... 7 -- -- 7 0.01
Bangladesh....................................... 38 -- -- 38 0.04
Barbados......................................... 30 -- 16 14 0.01
Belarus.......................................... 152 -- 28 124 0.12
Belize........................................... 53 -- 13 40 0.04
Bolivia.......................................... 37 -- -- 37 0.03
Bosnia and Herzegovina........................... 566 -- -- 566 0.53
Botswana......................................... 47 -- -- 47 0.04
Brazil........................................... 9,474 1,401 2,330 5,743 5.37
Bulgaria......................................... 837 100 236 501 0.47
Cameroon......................................... 415 -- 5 410 0.38
Chile............................................ 1,224 -- 244 980 0.92
China............................................ 15,878 1,320 6,319 8,239 7.71
Colombia......................................... 2,500 47 730 1,723 1.61
Congo, Democratic Republic of.................... 82 -- -- 82 0.08
Congo, Republic of............................... 73 -- -- 73 0.07
Costa Rica....................................... 240 -- 49 191 0.18
Cote d'Ivoire.................................... 1,056 -- 2 1,054 0.99
Croatia.......................................... 550 29 245 276 0.26
Cyprus........................................... 76 -- 22 54 0.05
Czech Republic................................... 473 -- 91 382 0.36
Dominica......................................... 4 -- 4 -- --
Dominican Republic............................... 353 -- 144 209 0.20
Ecuador.......................................... 1,128 60 217 851 0.80
Egypt, Arab Republic of.......................... 1,090 40 181 869 0.81
El Salvador...................................... 508 58 175 275 0.26
Estonia.......................................... 109 -- 38 71 0.07
Fiji............................................. 40 -- 10 30 0.03
Gabon............................................ 104 10 17 77 0.07
Ghana............................................ 30 -- -- 30 0.03
Grenada.......................................... 4 -- 4 -- --
Guatemala........................................ 369 157 24 188 0.18
Guyana........................................... 19 -- -- 19 0.02
Honduras......................................... 275 -- -- 275 0.26
Hungary.......................................... 2,040 35 485 1,520 1.42
India............................................ 12,086 530 3,379 8,177 7.65
Indonesia........................................ 14,418 121 4,306 9,991 9.35
Iran, Islamic Republic of........................ 757 -- 342 415 0.39
Iraq............................................. 43 -- -- 43 0.04
Jamaica.......................................... 597 -- 166 431 0.40
Jordan........................................... 937 30 158 749 0.70
Kazakhstan....................................... 1,121 -- 473 648 0.61
Kenya............................................ 213 -- -- 213 0.20
Korea, Republic of............................... 4,864 -- 359 4,505 4.22
Latvia........................................... 227 17 90 120 0.11
Lebanon.......................................... 577 46 380 151 0.14
Lesotho.......................................... 81 -- 23 58 0.05
</TABLE>
<PAGE>
IBRD Financial Statements 11
- -------------------------------------------------------------------------------
SUMMARY STATEMENT OF LOANS
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOANS UNDISBURSED PERCENTAGE
APPROVED BALANCE OF OF TOTAL
TOTAL BUT NOT YET EFFECTIVE LOANS LOANS
BORROWER OR GUARANTOR LOANS EFFECTIVE(1) LOANS(2) OUTSTANDING OUTSTANDING
- ------------------------------------------------- ---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Liberia.......................................... $ 136 $ -- $ -- $ 136 0.13
Lithuania........................................ 263 4 145 114 0.11
Macedonia, former Yugoslav Republic of........... 135 33 18 84 0.08
Madagascar....................................... 2 -- -- 2 *
Malawi........................................... 34 -- -- 34 0.03
Malaysia......................................... 848 -- 97 751 0.70
Mauritania....................................... 6 -- -- 6 0.01
Mauritius........................................ 165 -- 54 111 0.10
Mexico........................................... 14,136 545 2,235 11,356 10.63
Moldova.......................................... 249 12 102 135 0.13
Morocco.......................................... 4,168 79 818 3,271 3.06
Nicaragua........................................ 24 -- -- 24 0.02
Nigeria.......................................... 2,626 -- 253 2,373 2.22
Oman............................................. 13 -- -- 13 0.01
Pakistan......................................... 3,782 -- 736 3,046 2.85
Panama........................................... 342 50 83 209 0.20
Papua New Guinea................................. 327 -- 58 269 0.25
Paraguay......................................... 391 40 208 143 0.13
Peru............................................. 2,827 23 884 1,920 1.80
Philippines...................................... 5,289 114 996 4,179 3.91
Poland........................................... 3,127 502 546 2,079 1.95
Portugal......................................... 14 -- -- 14 0.01
Romania.......................................... 2,499 95 1,099 1,305 1.22
Russian Federation............................... 9,263 344 3,866 5,053 4.73
St. Kitts and Nevis.............................. 4 -- 3 1 *
St. Lucia........................................ 10 -- 6 4 *
St. Vincent and the Grenadines................... 2 -- 2 -- --
Senegal.......................................... 14 -- -- 14 0.01
Seychelles....................................... 6 -- 2 4 *
Sierra Leone..................................... 2 -- -- 2 *
Slovak Republic.................................. 250 -- 23 227 0.21
Slovenia......................................... 194 42 12 140 0.13
South Africa..................................... 46 46 -- -- --
Sri Lanka........................................ 31 -- -- 31 0.03
Sudan............................................ 6 -- -- 6 0.01
Swaziland........................................ 35 -- 25 10 0.01
Syrian Arab Republic............................. 85 -- -- 85 0.08
Tanzania......................................... 34 -- -- 34 0.03
Thailand......................................... 2,674 -- 946 1,728 1.62
Trinidad and Tobago.............................. 149 -- 74 75 0.07
Tunisia.......................................... 2,097 158 505 1,434 1.34
Turkey........................................... 4,672 20 1,065 3,587 3.36
Turkmenistan..................................... 89 -- 83 6 0.01
Ukraine.......................................... 1,884 3 770 1,111 1.04
Uruguay.......................................... 663 76 194 393 0.37
</TABLE>
<PAGE>
12 IBRD Financial Statements
- -------------------------------------------------------------------------------
SUMMARY STATEMENT OF LOANS (Continued)
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOANS UNDISBURSED PERCENTAGE
APPROVED BALANCE OF OF TOTAL
TOTAL BUT NOT YET EFFECTIVE LOANS LOANS
BORROWER OR GUARANTOR LOANS EFFECTIVE(1) LOANS(2) OUTSTANDING OUTSTANDING
- ------------------------------------------------- ---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Uzbekistan....................................... $ 297 $ -- $ 142 $ 155 0.15
Venezuela........................................ 1,874 28 633 1,213 1.14
Yugoslavia, Federal Republic of (Serbia/
Montenegro(3).................................. 1,112 -- -- 1,112 1.04
Zambia........................................... 62 -- -- 62 0.06
Zimbabwe......................................... 573 -- 100 473 0.44
---------- ----------- ------------ ----------- -----------
Subtotal(5)...................................... 154,212 7,165 40,717 106,330 99.51
Caribbean Development Bank(4).................... 35 -- 27 8 0.01
International Finance Corporation................ 713 -- 196 517 0.48
---------- ----------- ------------ ----------- -----------
Total--December 31, 19975........................ $ 154,960 $ 7,165 $ 40,940 $ 106,855 100.00
---------- ----------- ------------ ----------- -----------
---------- ----------- ------------ ----------- -----------
Total--June 30, 1997............................. $ 157,381 $ 9,027 $ 42,549 $ 105,805
---------- ----------- ------------ ----------- -----------
---------- ----------- ------------ ----------- -----------
</TABLE>
- ------------------------
NOTES
(1) Loans totaling $4,432 million ($6,417 million--June 30, 1997) have been
approved by IBRD, but the related agreements have not been signed. Loan
agreements totaling $2,733 million ($2,610 million-- June 30, 1997) have
been signed, but the loans do not become effective and disbursements
thereunder do not start until the borrowers and guarantors, if any, take
certain actions and furnish certain documents to IBRD.
(2) Of the undisbursed balance, IBRD has entered into irrevocable commitments to
disburse $1,495 million ($1,937 million-June 30, 1997).
(3) See Notes to Financial Statements-Notes A and C.
(4) These loans are for the benefit of The Bahamas, Barbados, Grenada, Guyana,
Jamaica, Trinidad and Tobago, and territories of the United Kingdom
(Associated States and Dependencies) in the Caribbean Region, who are
severally liable as guarantors to the extent of subloans made in their
territories.
(5) May differ from the sum of individual figures shown due to rounding.
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
IBRD Financial Statements 13
- -------------------------------------------------------------------------------
Statement of Subscriptions to
Capital Stock and Voting Power
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUBSCRIPTIONS VOTING POWER
------------------------------------------------------------ ----------------------
AMOUNTS
PERCENTAGE SUBJECT NUMBER PERCENTAGE
OF TOTAL AMOUNTS TO OF OF
MEMBER SHARES TOTAL AMOUNTS PAID IN(1) CALL(1),(2) VOTES TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------- --------- ----------- --------- ----------- ------------ --------- -----------
Afghanistan.............................. 300 0.02 $ 36.2 $ 3.6 $ 32.6 550 0.03
Albania.................................. 830 0.05 100.1 3.6 96.5 1,080 0.07
Algeria.................................. 9,252 0.60 1,116.1 67.1 1,049.0 9,502 0.60
Angola................................... 2,676 0.17 322.8 17.5 305.4 2,926 0.18
Antigua and Barbuda...................... 520 0.03 62.7 1.3 61.5 770 0.05
Argentina................................ 17,911 1.16 2,160.7 132.2 2,028.4 18,161 1.14
Armenia.................................. 1,139 0.07 137.4 5.9 131.5 1,389 0.09
Australia................................ 24,464 1.58 2,951.2 181.8 2,769.5 24,714 1.55
Austria.................................. 11,063 0.72 1,334.6 80.7 1,253.9 11,313 0.71
Azerbaijan............................... 1,646 0.11 198.6 9.7 188.8 1,896 0.12
Bahamas, The............................. 1,071 0.07 129.2 5.4 123.8 1,321 0.08
Bahrain.................................. 1,103 0.07 133.1 5.7 127.4 1,353 0.09
Bangladesh............................... 4,854 0.31 585.6 33.9 551.6 5,104 0.32
Barbados................................. 948 0.06 114.4 4.5 109.9 1,198 0.08
Belarus.................................. 3,323 0.22 400.9 22.3 378.5 3,573 0.22
Belgium.................................. 28,983 1.88 3,496.4 215.8 3,280.6 29,233 1.84
Belize................................... 586 0.04 70.7 1.8 68.9 836 0.05
Benin.................................... 868 0.06 104.7 3.9 100.8 1,118 0.07
Bhutan................................... 479 0.03 57.8 1.0 56.8 729 0.05
Bolivia.................................. 1,785 0.12 215.3 10.8 204.5 2,035 0.13
Bosnia and Herzegovina................... 549 0.04 66.2 5.8 60.4 799 0.05
Botswana................................. 615 0.04 74.2 2.0 72.2 865 0.05
Brazil................................... 24,946 1.61 3,009.4 185.1 2,824.2 25,196 1.58
Brunei Darussalam........................ 2,373 0.15 286.3 15.2 271.1 2,623 0.16
Bulgaria................................. 5,215 0.34 629.1 36.5 592.6 5,465 0.34
Burkina Faso............................. 868 0.06 104.7 3.9 100.8 1,118 0.07
Burundi.................................. 716 0.05 86.4 3.0 83.4 966 0.06
Cambodia................................. 214 0.01 25.8 2.6 23.2 464 0.03
Cameroon................................. 1,527 0.10 184.2 9.0 175.2 1,777 0.11
Canada................................... 44,795 2.90 5,403.8 334.9 5,068.9 45,045 2.83
Cape Verde............................... 508 0.03 61.3 1.2 60.1 758 0.05
Central African Republic................. 862 0.06 104.0 3.9 100.1 1,112 0.07
Chad..................................... 862 0.06 104.0 3.9 100.1 1,112 0.07
Chile.................................... 6,931 0.45 836.1 49.6 786.6 7,181 0.45
China.................................... 44,799 2.90 5,404.3 335.0 5,069.3 45,049 2.83
Colombia................................. 6,352 0.41 766.3 45.2 721.1 6,602 0.42
Comoros.................................. 282 0.02 34.0 0.3 33.7 532 0.03
Congo, Democratic Republic of............ 2,643 0.17 318.8 25.4 293.5 2,893 0.18
Congo, Republic of....................... 927 0.06 111.8 4.3 107.5 1,177 0.07
Costa Rica............................... 233 0.02 28.1 1.9 26.2 483 0.03
Cote d'Ivoire............................ 2,516 0.16 303.5 16.4 287.1 2,766 0.17
Croatia.................................. 2,293 0.15 276.6 17.3 259.3 2,543 0.16
Cyprus................................... 1,461 0.09 176.2 8.4 167.9 1,711 0.11
Czech Republic........................... 6,308 0.41 761.0 45.9 715.0 6,558 0.41
Denmark.................................. 10,251 0.66 1,236.6 74.6 1,162.0 10,501 0.66
Djibouti................................. 559 0.04 67.4 1.6 65.9 809 0.05
Dominica................................. 504 0.03 60.8 1.1 59.7 754 0.05
Dominican Republic....................... 2,092 0.14 252.4 13.1 239.3 2,342 0.15
Ecuador.................................. 2,771 0.18 334.3 18.2 316.1 3,021 0.19
Egypt, Arab Republic of.................. 7,108 0.46 857.5 50.9 806.6 7,358 0.46
</TABLE>
<PAGE>
14 IBRD Financial Statements
- -------------------------------------------------------------------------------
Statement of Subscriptions to
Capital Stock and Voting Power (Continued)
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUBSCRIPTIONS VOTING POWER
------------------------------------------------------------ ----------------------
AMOUNTS
PERCENTAGE SUBJECT NUMBER PERCENTAGE
OF TOTAL AMOUNTS TO OF OF
MEMBER SHARES TOTAL AMOUNTS PAID IN(1) CALL(1),(2) VOTES TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------- --------- ----------- --------- ----------- ------------ --------- -----------
El Salvador.............................. 141 0.01 $ 17.0 $ 1.7 $ 15.3 391 0.02
Equatorial Guinea........................ 715 0.05 86.3 2.7 83.5 965 0.06
Eritrea.................................. 593 0.04 71.5 1.8 69.7 843 0.05
Estonia.................................. 923 0.06 111.3 4.3 107.1 1,173 0.07
Ethiopia................................. 978 0.06 118.0 4.7 113.3 1,228 0.08
Fiji..................................... 987 0.06 119.1 4.8 114.3 1,237 0.08
Finland.................................. 8,560 0.55 1,032.6 61.9 970.8 8,810 0.55
France................................... 69,397 4.49 8,371.7 520.4 7,851.3 69,647 4.38
Gabon.................................... 987 0.06 119.1 5.1 113.9 1,237 0.08
Gambia, The.............................. 543 0.04 65.5 1.5 64.0 793 0.05
Georgia.................................. 1,584 0.10 191.1 9.3 181.8 1,834 0.12
Germany.................................. 72,399 4.68 8,733.9 542.9 8,190.9 72,649 4.57
Ghana.................................... 1,525 0.10 184.0 12.7 171.2 1,775 0.11
Greece................................... 1,684 0.11 203.1 14.1 189.1 1,934 0.12
Grenada.................................. 531 0.03 64.1 1.4 62.7 781 0.05
Guatemala................................ 2,001 0.13 241.4 12.4 229.0 2,251 0.14
Guinea................................... 1,292 0.08 155.9 7.1 148.8 1,542 0.10
Guinea-Bissau............................ 540 0.03 65.1 1.4 63.7 790 0.05
Guyana................................... 1,058 0.07 127.6 5.3 122.3 1,308 0.08
Haiti.................................... 1,067 0.07 128.7 5.4 123.3 1,317 0.08
Honduras................................. 641 0.04 77.3 2.3 75.0 891 0.06
Hungary.................................. 8,050 0.52 971.1 58.0 913.1 8,300 0.52
Iceland.................................. 1,258 0.08 151.8 6.8 144.9 1,508 0.09
India.................................... 44,795 2.90 5,403.8 333.7 5,070.1 45,045 2.83
Indonesia................................ 14,981 0.97 1,807.2 110.3 1,697.0 15,231 0.96
Iran, Islamic Republic of................ 23,686 1.53 2,857.4 175.8 2,681.5 23,936 1.50
Iraq..................................... 2,808 0.18 338.7 27.1 311.6 3,058 0.19
Ireland.................................. 5,271 0.34 635.9 37.1 598.8 5,521 0.35
Israel................................... 4,750 0.31 573.0 33.2 539.8 5,000 0.31
Italy.................................... 44,795 2.90 5,403.8 334.8 5,069.0 45,045 2.83
Jamaica.................................. 2,578 0.17 311.0 16.8 294.2 2,828 0.18
Japan.................................... 127,000 8.22 15,320.6 944.0 14,376.7 127,250 8.00
Jordan................................... 1,388 0.09 167.4 7.8 159.6 1,638 0.10
Kazakhstan............................... 2,985 0.19 360.1 19.8 340.3 3,235 0.20
Kenya.................................... 2,461 0.16 296.9 15.9 281.0 2,711 0.17
Kiribati................................. 465 0.03 56.1 0.9 55.2 715 0.04
Korea, Republic of....................... 9,372 0.61 1,130.6 67.9 1,062.7 9,622 0.60
Kuwait................................... 13,280 0.86 1,602.0 97.4 1,504.6 13,530 0.85
Kyrgyz Republic.......................... 1,107 0.07 133.5 5.7 127.9 1,357 0.09
Lao People's Democratic Republic......... 178 0.01 21.5 1.5 20.0 428 0.03
Latvia................................... 1,384 0.09 167.0 7.8 159.2 1,634 0.10
Lebanon.................................. 340 0.02 41.0 1.1 39.9 590 0.04
Lesotho.................................. 663 0.04 80.0 2.3 77.6 913 0.06
Liberia.................................. 463 0.03 55.9 2.6 53.3 713 0.04
Libya.................................... 7,840 0.51 945.8 57.0 888.8 8,090 0.51
Lithuania................................ 1,507 0.10 181.8 8.7 173.1 1,757 0.11
Luxembourg............................... 1,652 0.11 199.3 9.8 189.5 1,902 0.12
Macedonia, former Yugoslav Republic of... 427 0.03 51.5 3.2 48.3 677 0.04
Madagascar............................... 1,422 0.09 171.5 8.1 163.5 1,672 0.11
Malawi................................... 1,094 0.07 132.0 5.6 126.4 1,344 0.08
</TABLE>
<PAGE>
IBRD Financial Statements 15
- -------------------------------------------------------------------------------
Statement of Subscriptions to
Capital Stock and Voting Power
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUBSCRIPTIONS VOTING POWER
------------------------------------------------------------ ----------------------
AMOUNTS
PERCENTAGE SUBJECT NUMBER PERCENTAGE
OF TOTAL AMOUNTS TO OF OF
MEMBER SHARES TOTAL AMOUNTS PAID IN(1) CALL(1),(2) VOTES TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------- --------- ----------- --------- ----------- ------------ --------- -----------
Malaysia................................. 8,244 0.53 $ 994.5 $ 59.5 $ 935.0 8,494 0.53
Maldives................................. 469 0.03 56.6 0.9 55.7 719 0.05
Mali..................................... 1,162 0.08 140.2 6.1 134.1 1,412 0.09
Malta.................................... 1,074 0.07 129.6 5.4 124.1 1,324 0.08
Marshall Islands......................... 469 0.03 56.6 0.9 55.7 719 0.05
Mauritania............................... 900 0.06 108.6 4.1 104.4 1,150 0.07
Mauritius................................ 1,242 0.08 149.8 6.7 143.1 1,492 0.09
Mexico................................... 18,804 1.22 2,268.4 139.0 2,129.4 19,054 1.20
Micronesia, Federated States of.......... 479 0.03 57.8 1.0 56.8 729 0.05
Moldova.................................. 1,368 0.09 165.0 7.6 157.4 1,618 0.10
Mongolia................................. 466 0.03 56.2 2.3 53.9 716 0.05
Morocco.................................. 4,973 0.32 599.9 34.8 565.1 5,223 0.33
Mozambique............................... 930 0.06 112.2 4.8 107.4 1,180 0.07
Myanmar.................................. 2,484 0.16 299.7 16.1 283.6 2,734 0.17
Namibia.................................. 1,523 0.10 183.7 8.8 174.9 1,773 0.11
Nepal.................................... 968 0.06 116.8 4.6 112.1 1,218 0.08
Netherlands.............................. 35,503 2.30 4,282.9 264.8 4,018.1 35,753 2.25
New Zealand.............................. 7,236 0.47 872.9 51.9 821.0 7,486 0.47
Nicaragua................................ 608 0.04 73.3 2.1 71.3 858 0.05
Niger.................................... 852 0.06 102.8 3.8 99.0 1,102 0.07
Nigeria.................................. 12,655 0.82 1,526.6 92.7 1,433.9 12,905 0.81
Norway................................... 9,982 0.65 1,204.2 72.6 1,131.6 10,232 0.64
Oman..................................... 1,561 0.10 188.3 9.1 179.2 1,811 0.11
Pakistan................................. 9,339 0.60 1,126.6 67.8 1,058.9 9,589 0.60
Palau, Republic of....................... 16 0.00 1.9 0.2 1.8 266 0.02
Panama................................... 385 0.02 46.4 3.2 43.2 635 0.04
Papua New Guinea......................... 1,294 0.08 156.1 7.1 149.0 1,544 0.10
Paraguay................................. 1,229 0.08 148.3 6.6 141.6 1,479 0.09
Peru..................................... 5,331 0.34 643.1 37.5 605.6 5,581 0.35
Philippines.............................. 6,844 0.44 825.6 48.9 776.7 7,094 0.45
Poland................................... 10,908 0.71 1,315.9 79.6 1,236.3 11,158 0.70
Portugal................................. 5,460 0.35 658.7 38.5 620.2 5,710 0.36
Qatar.................................... 1,096 0.07 132.2 9.0 123.3 1,346 0.08
Romania.................................. 4,011 0.26 483.9 30.5 453.4 4,261 0.27
Russian Federation....................... 44,795 2.90 5,403.8 333.9 5,070.0 45,045 2.83
Rwanda................................... 1,046 0.07 126.2 5.2 120.9 1,296 0.08
St. Kitts and Nevis...................... 275 0.02 33.2 0.3 32.9 525 0.03
St. Lucia................................ 552 0.04 66.6 1.5 65.1 802 0.05
St. Vincent and the Grenadines........... 278 0.02 33.5 0.3 33.2 528 0.03
Samoa.................................... 531 0.03 64.1 1.4 62.7 781 0.05
Sao Tome and Principe.................... 495 0.03 59.7 1.1 58.6 745 0.05
Saudi Arabia............................. 44,795 2.90 5,403.8 335.0 5,068.9 45,045 2.83
Senegal.................................. 2,072 0.13 250.0 13.0 237.0 2,322 0.15
Seychelles............................... 263 0.02 31.7 0.2 31.6 513 0.03
Sierra Leone............................. 718 0.05 86.6 3.0 83.6 968 0.06
Singapore................................ 320 0.02 38.6 3.9 34.7 570 0.04
Slovak Republic.......................... 3,216 0.21 388.0 23.0 365.0 3,466 0.22
Slovenia................................. 1,261 0.08 152.1 9.5 142.6 1,511 0.09
Solomon Islands.......................... 513 0.03 61.9 1.2 60.7 763 0.05
Somalia.................................. 552 0.04 66.6 3.3 63.3 802 0.05
</TABLE>
<PAGE>
16 IBRD Financial Statements
- -------------------------------------------------------------------------------
Statement of Subscriptions to
Capital Stock and Voting Power (Continued)
December 31, 1997 (Unaudited)
Expressed in millions of U.S. dollars
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUBSCRIPTIONS VOTING POWER
------------------------------------------------------------ ----------------------
AMOUNTS
PERCENTAGE SUBJECT NUMBER PERCENTAGE
OF TOTAL AMOUNTS TO OF OF
MEMBER SHARES TOTAL AMOUNTS PAID IN(1) CALL(1),(2) VOTES TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------- --------- ----------- --------- ----------- ------------ --------- -----------
South Africa............................. 13,462 0.87 $ 1,624.0 $ 98.8 $ 1,525.2 13,712 0.86
Spain.................................... 23,686 1.53 2,857.4 175.6 2,681.7 23,936 1.50
Sri Lanka................................ 3,817 0.25 460.5 26.1 434.3 4,067 0.26
Sudan.................................... 850 0.05 102.5 7.2 95.3 1,100 0.07
Suriname................................. 412 0.03 49.7 2.0 47.7 662 0.04
Swaziland................................ 440 0.03 53.1 2.0 51.1 690 0.04
Sweden................................... 14,974 0.97 1,806.4 110.2 1,696.2 15,224 0.96
Switzerland.............................. 26,606 1.72 3,209.6 197.2 3,012.4 26,856 1.69
Syrian Arab Republic..................... 2,202 0.14 265.6 14.0 251.7 2,452 0.15
Tajikistan............................... 1,060 0.07 127.9 5.3 122.5 1,310 0.08
Tanzania................................. 1,295 0.08 156.2 10.0 146.2 1,545 0.10
Thailand................................. 6,349 0.41 765.9 45.2 720.7 6,599 0.41
Togo..................................... 1,105 0.07 133.3 5.7 127.6 1,355 0.09
Tonga.................................... 494 0.03 59.6 1.1 58.5 744 0.05
Trinidad and Tobago...................... 2,664 0.17 321.4 17.6 303.7 2,914 0.18
Tunisia.................................. 719 0.05 86.7 5.7 81.1 969 0.06
Turkey................................... 7,379 0.48 890.2 52.9 837.2 7,629 0.48
Turkmenistan............................. 526 0.03 63.5 2.9 60.5 776 0.05
Uganda................................... 617 0.04 74.4 4.4 70.1 867 0.05
Ukraine.................................. 10,908 0.71 1,315.9 79.3 1,236.6 11,158 0.70
United Arab Emirates..................... 2,385 0.15 287.7 22.6 265.1 2,635 0.17
United Kingdom........................... 69,397 4.49 8,371.7 539.5 7,832.2 69,647 4.38
United States............................ 264,969 17.15 31,964.5 1,998.4 29,966.2 265,219 16.67
Uruguay.................................. 2,812 0.18 339.2 18.6 320.7 3,062 0.19
Uzbekistan............................... 2,493 0.16 300.7 16.1 284.7 2,743 0.17
Vanuatu.................................. 586 0.04 70.7 1.8 68.9 836 0.05
Venezuela................................ 20,361 1.32 2,456.2 150.8 2,305.5 20,611 1.30
Vietnam.................................. 968 0.06 116.8 8.1 108.7 1,218 0.08
Yemen, Republic of....................... 2,212 0.14 266.8 14.0 252.8 2,462 0.15
Zambia................................... 2,810 0.18 339.0 20.0 319.0 3,060 0.19
Zimbabwe................................. 3,325 0.22 401.1 22.4 378.7 3,575 0.22
--------- ----------- --------- ----------- ------------ --------- -----------
Total--December 31, 19972................ 1,545,457 100.00 $ 186,436 $ 11,288 $ 175,148 1,590,707 100.00
--------- ----------- --------- ----------- ------------ --------- -----------
--------- ----------- --------- ----------- ------------ --------- -----------
Total--June 30, 1997..................... 1,512,211 100.00 $ 182,426 $ 11,048 $ 171,378 1,557,211
--------- ----------- --------- ----------- ------------ ---------
--------- ----------- --------- ----------- ------------ ---------
</TABLE>
- ------------------------
NOTES:
(1) See Notes to Financial Statements--Note A.
(2) May differ from the sum of individual figures shown due to rounding.
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
IBRD Financial Statements 17
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
PURPOSE AND AFFILIATED ORGANIZATIONS
The International Bank for Reconstruction and Development (IBRD) is an
international organization which commenced operations in 1946. The principal
purpose of IBRD is to promote economic development in its member countries,
primarily by providing loans and related technical assistance for specific
projects and for programs of economic reform in developing member countries.
The activities of IBRD are complemented by those of three affiliated
organizations, the International Development Association (IDA), the
International Finance Corporation (IFC), and the Multilateral Investment
Guarantee Agency (MIGA). Each of these organizations is legally and
financially independent from IBRD, with separate assets and liabilities, and
IBRD is not liable for their respective obligations. IDA's purpose is to
promote economic development in the less developed areas of the world
included in IDA's membership by providing financing on concessionary terms.
IFC's purpose is to encourage the growth of productive private enterprises in
its member countries through loans and equity investments in such enterprises
without a member's guarantee. MIGA was established to encourage the flow of
investments for productive purposes among member countries and, in
particular, to developing member countries by providing guarantees against
noncommercial risks for foreign investment in its developing member countries.
SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIES
IBRD's financial statements are prepared in conformity with the
accounting principles generally accepted in the United States and with
International Accounting Standards.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from these estimates.
Significant judgments have been used in the computation of estimated and fair
values of loans and borrowings, the determination of the adequacy of the
Accumulated Provision for Loan Losses, the determination of net periodic
pension cost and the present value of obligations under the Staff Retirement
and Retired Staff Benefits Plans.
In 1996 the Financial Accounting Standards Board issued the Statement of
Financial Accounting Standards No. 125, entitled "Accounting for Transfers of
Assets and Servicing of Financial Assets and Extinguishments of Liabilities",
which requires new accounting and reporting standards for transfers of
assets, securitizations, collateral, and servicing of receivables and other
financial assets, and extinguishments of liabilities. While the standard was
effective for fiscal year 1997, the provisions which would impact IBRD
relating to transfers involving repurchase/resale agreements, collateral
agreements and securities lending for transfers of financial assets are
effective for such transfers from January 1, 1998. The adoption of this
standard is expected to have no material impact on IBRD's financial
statements.
Certain reclassifications of the prior year's information have been made
to conform to the current period's presentation.
Translation of Currencies: IBRD's financial statements are expressed in
terms of U.S. dollars solely for the purpose of summarizing IBRD's financial
position and the results of its operations for the convenience of its members
and other interested parties.
IBRD is an international organization which conducts its operations in
the currencies of all of its members. IBRD's resources are derived from its
capital, borrowings, and accumulated earnings in those various currencies.
IBRD has a number of general policies aimed at minimizing exchange-rate risk
in a multicurrency environment. IBRD matches its borrowing obligations in any
one currency (after swaps) with assets in the same currency, as prescribed by
its Articles of Agreement, primarily by holding or lending the proceeds of
its borrowings (after swaps) in the same currencies in which they are
borrowed. In addition, IBRD periodically undertakes currency conversions to
more closely match the currencies underlying its Retained Earnings with those
of the outstanding loans.
<PAGE>
18 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
Assets and liabilities are translated at market exchange rates at the end
of the period. Income and expenses are translated at the market exchange
rates on the dates on which they are recognized or at average market exchange
rates in effect during each month. Translation adjustments are charged or
credited to Equity.
Valuation of Capital Stock: In the Articles of Agreement, the capital
stock of IBRD is expressed in terms of "U.S. dollars of the weight and
fineness in effect on July 1, 1944" (1944 dollars). Following the abolition
of gold as a common denominator of the monetary system and the repeal of the
provision of the U.S. law defining the par value of the U.S. dollar in terms
of gold, the pre-existing basis for translating 1944 dollars into current
dollars or into any other currency disappeared. The Executive Directors of
IBRD have decided, until such time as the relevant provisions of the Articles
of Agreement are amended, that the words "U.S. dollars of the weight and
fineness in effect on July 1, 1944" in Article II, Section 2(a) of the
Articles of Agreement of IBRD are interpreted to mean the Special Drawing
Right (SDR) introduced by the International Monetary Fund, as the SDR was
valued in terms of U.S. dollars immediately before the introduction of the
basket method of valuing the SDR on July 1, 1974, such value being $1.20635
for one SDR.
Maintenance of Value: Article II, Section 9 of the Articles of Agreement
provides for maintenance of the value, at the time of subscription, of such
restricted currencies (see Note A), requiring (1) the member to make
additional payments to IBRD in the event that the par value of its currency
is reduced or the foreign exchange value of its currency has, in the opinion
of IBRD, depreciated to a significant extent in its territories and (2) IBRD
to reimburse the member in the event that the par value of its currency is
increased.
Since currencies no longer have par values, maintenance of value amounts
are determined by measuring the foreign exchange value of a member's currency
against the standard of value of IBRD capital based on the 1974 SDR. Members
are required to make payments to IBRD if their currencies depreciate
significantly relative to the standard of value. Furthermore, the Executive
Directors have adopted a policy of reimbursing members whose currencies
appreciate significantly in terms of the standard of value.
The net maintenance of value amounts relating to restricted currencies out
on loan are included in Deferred Amounts to Maintain Value of Currency Holdings
and shown as a component of Equity since maintenance of value becomes effective
only as such currencies are repaid to IBRD.
Retained Earnings: Retained Earnings consists of allocated amounts (Special
Reserve, General Reserve, Pension Reserve and Surplus) and unallocated Net
Income.
The Special Reserve consists of loan commissions set aside pursuant to
Article IV, Section 6 of the Articles of Agreement, which are to be held in
liquid assets. These assets may be used only for the purpose of meeting
liabilities of IBRD on its borrowings and guarantees in the event of defaults on
loans made, participated in, or guaranteed by IBRD. The Special Reserve assets
are included under Investments held in the Trading portfolio, comprising
obligations of the United States Government, its agencies, and other official
entities. The allocation of such commissions to the Special Reserve was
discontinued in 1964 with respect to subsequent loans and no further additions
are being made to it.
The General Reserve consists of earnings from prior fiscal years which,
in the judgment of the Executive Directors, should be retained in IBRD's
operations.
The Pension Reserve consists of the difference between actual funding of
the Staff Retirement Plan (the Plan) and the Plan's accounting expenses for
the fiscal year 1997. This Pension Reserve would be reduced if in any future
fiscal year pension accounting expenses were to exceed the actual funding of
the Plan.
Surplus consists of earnings from prior fiscal years which are retained by
IBRD until a further decision is made on their disposition or the conditions of
transfer for specified uses have been met.
<PAGE>
IBRD Financial Statements 19
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Unallocated Net Income consists of earnings in the current fiscal year.
Commencing in 1950, a portion or all of the unallocated Net Income has been
allocated to the General Reserve. The Board of Governors, consisting of one
Governor appointed by each member, periodically approves transfers out of
unallocated Net Income and Surplus, components of Retained Earnings, after an
assessment by the Executive Directors of IBRD's reserve needs, to various
entities for development purposes consistent with IBRD's Articles of
Agreement.
Loans: All of IBRD's loans are made to or guaranteed by members, except
loans to IFC. The majority of IBRD's loans have repayment obligations in
various currencies determined on the basis of a currency pooling system,
which is designed to equalize exchange-rate risks among borrowers. IBRD also
offers single currency loans. Except for certain loans which were converted
to the currency pooling system, loans negotiated prior to July 1980 and all
single currency loans are repayable in the currencies disbursed.
Any loan origination fees incorporated in a loan's terms are deferred and
recognized over the life of the loan as an adjustment of yield. However,
incremental direct costs associated with originating loans are expensed as
incurred as such amounts are considered immaterial.
It is IBRD's practice not to reschedule interest or principal payments on
its loans or participate in debt rescheduling agreements with respect to its
loans. In exceptional cases, however, such as when implementation of a
financed project has been delayed, the loan amortization schedule may be
modified to avoid substantial repayments prior to project completion. Delays
in receiving loan payments result in present value losses to IBRD since it
does not charge fees or additional interest on any overdue interest or loan
charges. These present value losses are equal to the difference between the
present value of payments for interest and charges made according to the
related loan's contractual terms and the present value of its expected future
cash flows discounted at the loan's contractual interest rate. Such present
value losses are considered in the determination of the Accumulated Provision
for Loan Losses.
It is the policy of IBRD to place in nonaccrual status all loans made to
or guaranteed by a member of IBRD if principal, interest, or other charges
with respect to any such loan are overdue by more than six months, unless
IBRD management determines that the overdue amount will be collected in the
immediate future. In addition, if development credits made by IDA to a member
government are placed in nonaccrual status, all loans made to or guaranteed
by that member government will also be placed in nonaccrual status by IBRD.
On the date a member's loans are placed in nonaccrual status, unpaid interest
and other charges accrued on loans outstanding to the member are deducted
from the income of the current period. Interest and other charges on
nonaccruing loans are included in income only to the extent that payments
have actually been received by IBRD. If collectibility risk is considered to
be particularly high at the time of arrears clearance, the member's loans may
not automatically emerge from nonaccrual status, even though the member's
eligibility for new loans may have been restored. A decision on the
restoration of accrual status is made on a case-by-case basis after a
suitable period of payment performance has passed from the time of arrears
clearance.
IBRD determines the Accumulated Provision for Loan Losses based on an
assessment of collectibility risk in the total loan and callable guarantees
portfolio, including loans in nonaccrual status. The accumulated provision is
periodically adjusted based on a review of the prevailing circumstances.
Adjustments to the accumulated provision are recorded as a charge or credit to
income. In the context of determining the adequacy of the Accumulated Provision
for Loan Losses, IBRD considers the present value of expected cash flows
relative to the contractual cash flows for loans in making the required
assessment.
Investments: Investment securities are classified based on IBRD
management's intention on the date of purchase. Securities which management
has the intention and ability to hold until maturity are included in the
Held-to-maturity portfolio and reported at amortized cost. All other
investment securities are held in a Trading portfolio and classified as an
element of liquidity in the Statement of Cash Flows due to their nature and
IBRD's policies governing the level and use of such investments. Investment
securities and related financial instruments held in IBRD's Trading portfolio
are carried and reported
<PAGE>
20 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
at market value. Unrecognized gains and losses for financial instruments held
in the Trading portfolio are included in income. Derivative instruments are
used in liquidity management to take advantage of profitable trading
opportunities and as a proxy for cash securities. These instruments include
short-term, over-the-counter foreign exchange forwards, currency swaps,
cross-currency interest rate swaps, and exchange-traded futures and options
on fixed income instruments. These derivatives are carried at market value.
From time to time, IBRD enters into forward contracts for the sale or
purchase of investment securities; these transactions are recorded at the
time of commitment.
Securities Purchased Under Resale Agreements and Securities Sold Under
Repurchase Agreements: Securities purchased under resale agreements and
securities sold under repurchase agreements are recorded at historical cost.
Borrowings: To ensure funds are available for lending and liquidity
purposes, IBRD borrows in the worldwide capital markets offering its
securities to private and governmental buyers. IBRD issues short-term and
medium- and long-term debt instruments denominated in various currencies with
both fixed and adjustable interest rates. Borrowings are carried on the
balance sheet at their par value (face value) adjusted for any unamortized
premiums or discounts. Issuance costs associated with a bond offering are
deferred and amortized over the period during which the related indebtedness
is outstanding. The unamortized balance of the issuance costs is included in
Other Assets on the balance sheet, and the issuance costs amortization is
presented as a separate element under Borrowing Expenses on the income
statement. Amortization of discounts and premiums is included in interest
under Borrowing Expenses on the income statement.
IBRD uses derivatives in its borrowing and liability management
activities to create synthetic debt instruments to take advantage of cost
saving opportunities across capital markets and lower its funding costs, to
delink the time at which its borrowing costs are fixed from the timing of the
actual market borrowings, and to establish an appropriate match between the
currency and interest rate characteristics of its assets and liabilities.
These instruments include currency and interest rate swaps, swap
spread-locks, foreign exchange forwards, exchange-traded futures, options and
deferred and anticipatory rate setting contracts. These derivatives are used
to modify the interest rate and/or currency characteristics of the borrowing
portfolio and are linked to the related borrowings at inception and remain so
throughout the terms of their contracts. The interest component of these
derivatives is recognized as an adjustment to the borrowing cost over the
life of the derivative contract and included in Interest under Borrowing
Expenses on the income statement. Upon termination, the change in the
derivative's market value is recorded as an adjustment to the carrying value
of the underlying borrowing and recognized as an adjustment of the borrowing
cost over the remaining life of the borrowing. In instances where the
underlying borrowing is prepaid, the change in the associated derivative's
market value is recognized immediately as an adjustment to the cost of the
underlying borrowing instrument and accordingly in the determination of net
income. Currency swap payables and receivables are recorded on a historical
cost basis and are separate items on the balance sheet. The notional
principal on interest rate swaps is treated as an off-balance sheet item.
Fair Value Disclosures: Financial instruments for which market quotations
are available have been valued at the prevailing market value. Financial
instruments for which market quotations are not readily available have been
valued using methodologies and assumptions that necessarily require the use
of subjective judgments. Accordingly, the actual value at which such
financial instruments could be exchanged in a current transaction or whether
they are actually exchangeable is not determinable.
NOTE A-CAPITAL STOCK, RESTRICTED CURRENCIES AND MEMBERSHIP
Capital Stock: At December 31, 1997, IBRD's capital comprised 1,558,478
(1,558,478-June 30, 1997) authorized shares, of which 1,545,457
(1,512,211-June 30, 1997) shares had been subscribed. Each share has a par
value of 0.1 million 1974 SDRs, valued at the rate of $1.20635 per 1974 SDR.
Of the subscribed capital, $11,288 million ($11,048 million-June 30, 1997)
has been paid in, and the remaining $175,148 million ($171,378 million-June
30, 1997) is subject to call only when required to meet the obligations of
IBRD created by borrowing or guaranteeing loans. As to $149,149 million
($145,940
<PAGE>
IBRD Financial Statements 21
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
million-June 30, 1997) the restriction on calls is imposed by the Articles of
Agreement and as to $25,999 million ($25,438 million-June 30, 1997) by
resolutions of the Board of Governors.
Restricted Currencies: The portion of capital subscriptions paid in to
IBRD is divided into two parts: (1) $1,129 million ($1,105 million-June 30,
1997) initially paid in gold or U.S. dollars and (2) $10,159 million ($9,943
million-June 30, 1997) paid in cash or noninterest-bearing demand obligations
denominated either in the currencies of the respective members or in U.S.
dollars. The amounts mentioned in (1) above, and (i) $778 million ($777
million-June 30, 1997) which were repurchased by members with U.S. dollars,
and (ii) $453 million ($435 million-June 30, 1997) which were the proceeds
from encashments of U.S. dollar-denominated notes which are included in the
amounts mentioned in (2) above, are freely usable by IBRD in any of its
operations. The portion of the amounts paid in U.S. dollar-denominated notes
are encashed by IBRD in accordance with the schedules agreed between the
members and IBRD. The remaining amounts paid in the currencies of the
members, referred to as restricted currencies, are usable by IBRD in its
lending operations only with the consent of the respective members, and for
administrative expenses. The equivalent of $5,104 million ($5,299
million-June 30, 1997) has been used for lending purposes, with such consent.
Membership: In February 1993 IBRD's Executive Directors decided that the
SFRY had ceased to be a member of IBRD and that the Republic of Bosnia and
Herzegovina (now called Bosnia and Herzegovina), the Republic of Croatia, the
former Yugoslav Republic of Macedonia, the Republic of Slovenia and the Federal
Republic of Yugoslavia (Serbia and Montenegro) (FRY) are authorized to succeed
to the SFRY's membership when certain requirements are met, including entering
into a final agreement with IBRD on IBRD's loans made to or guaranteed by the
SFRY which the particular successor Republic would assume. Four of the five
successor Republics-Bosnia and Herzegovina, Croatia, Slovenia and the former
Yugoslav Republic of Macedonia-have become members of IBRD. The paid-in portion
of the SFRY's subscribed capital allocated to the FRY is included under Payments
on Account of Pending Subscriptions until the requirements of succession are
met.
NOTE B-INVESTMENTS
As part of its overall portfolio management strategy, IBRD invests in
government and agency obligations, time deposits, asset-backed securities and
related financial instruments with off-balance sheet risk including futures,
forward contracts, currency swaps, cross-currency interest rate swaps, options
and short sales.
Government and Agency Obligations: These obligations include marketable
bonds, notes and other obligations. IBRD can only invest in obligations issued
or unconditionally guaranteed by governments of countries with a minimum credit
rating of AA; however, if such obligations are denominated in the home currency
of the issuer, no rating is required. IBRD can only invest in obligations issued
by an agency or instrumentality of a government of a country, a multilateral
organization or any other official entity with a minimum credit rating of AA.
Time Deposits: Time deposits include certificates of deposit, bankers'
acceptances, and other obligations issued or unconditionally guaranteed by banks
and other financial institutions.
Asset-backed Securities: Asset-backed securities are instruments whose cash
flow is based on the cash flows of a pool of underlying assets managed by a
trust. IBRD can only invest in such securities with a AAA credit rating.
Futures and Forwards: Futures and forward contracts are contracts for
delayed delivery of securities or money market instruments in which the seller
agrees to make delivery at a specified future date of a specified instrument, at
a specified price or yield. Futures contracts are traded on regulated United
States and international exchanges. IBRD generally closes out most open
positions in futures contracts prior to maturity. Therefore, cash receipts or
payments are mostly limited to the change in market value of the futures
contracts. Futures contracts generally entail daily settlement of the net cash
margin.
<PAGE>
22 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
Options: Options are contracts that allow the holder of the option the
right, but not the obligation to purchase or sell a financial instrument at a
specified price within a specified period of time from or to the seller of the
option. The purchaser of an option pays a premium at the outset to the seller of
the option, who then bears the risk of an unfavorable change in the price of the
financial instrument underlying the option. IBRD only invests in exchange-traded
options. The initial price of an option contract is equal to the premium paid by
the purchaser and is significantly less than the contract or notional amount.
IBRD does not write uncovered option contracts.
Repurchase and Resale Agreements and Securities Loans: Repurchase agreements
are contracts under which a party sells securities and simultaneously agrees to
repurchase the same securities at a specified future date at a fixed price. The
reverse of this transaction is called a resale agreement. Securities loans are
contracts under which securities are lent for a specified period of time at a
fixed price.
Short Sales: Short sales are sales of securities not held in IBRD's
portfolio at the time of the sale. IBRD must purchase the security at a later
date and bears the risk that the market value of the security will move
adversely between the time of the sale and the time the security must be
delivered.
Currency Swaps: Currency swaps are privately negotiated agreements between
two parties to exchange cashflows denominated in different currencies at one or
more certain times in the future. The cashflows are based on a predetermined
formula reflecting fixed rates of interest and an exchange of principal.
Cross-Currency Interest Rate Swaps: Cross-currency interest rate swaps are
currency swaps where one set of cashflows reflects a fixed rate of interest and
the other reflects a floating rate of interest.
<PAGE>
IBRD Financial Statements 23
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Liquid Portfolio: A summary of IBRD's position in trading and other liquid
portfolio instruments at December 31, 1997 and June 30, 1997 is as follows:
In millions of U.S. dollars equivalent
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deutsche mark Japanese yen
-------------------- --------------------
Dec. Jun. Dec. Jun.
1997 1997 1997 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Trading:
Government and agency obligations:
Carrying value...................................................................... 904 642 1,893 --
Average balance during fiscal year to date.......................................... 757 429 594 324
Net gains (losses) for the fiscal year to date...................................... (4) (2) (5) (2)
Average yield (%)................................................................... 3.50 3.22 0.65 --
Average maturity (years)............................................................ 3.28 2.03 2.11 --
Time deposits:
Carrying value...................................................................... 1,813 1,311 2,851 3,569
Average balance during fiscal year to date.......................................... 1,986 578 3,738 2,126
Net gains (losses) for the fiscal year to date...................................... -- -- -- --
Average yield (%)................................................................... 3.59 3.11 0.44 0.49
Average maturity (years)............................................................ 0.09 0.23 0.10 0.20
Asset-backed securities:
Carrying value...................................................................... -- -- -- --
Average balance during fiscal year to date.......................................... -- -- -- --
Net gains (losses) for the fiscal year to date...................................... -- -- -- --
Average yield (%)................................................................... -- -- -- --
Average maturity (years)............................................................ -- -- -- --
Futures and forwards:
Carrying value...................................................................... 2 1 * *
Average balance during fiscal year to date.......................................... 1 1 * 2
Net gains (losses) for the fiscal year to date...................................... (1) (*) (*) 1
Options:
Carrying value...................................................................... -- -- * *
Average balance during fiscal year to date.......................................... -- -- * *
Net gains (losses) for the fiscal year to date...................................... -- (*) (*) (*)
<CAPTION>
Other
U.S. dollars currencies
-------------------- --------------------
Dec. Jun. Dec. Jun.
1997 1997 1997 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Trading:
Government and agency obligations:
Carrying value...................................................................... 1,227 2,873 2,035 20
Average balance during fiscal year to date.......................................... 2,168 2,237 999 182
Net gains (losses) for the fiscal year to date...................................... 27 (13) (*) 10
Average yield (%)................................................................... 5.77 5.92 6.32 3.52
Average maturity (years)............................................................ 2.72 5.35 3.04 0.19
Time deposits:
Carrying value...................................................................... 4,932 7,664 1,424 1,149
Average balance during fiscal year to date.......................................... 6,737 6,847 1,602 1,055
Net gains (losses) for the fiscal year to date...................................... -- -- -- --
Average yield (%)................................................................... 6.20 5.91 2.84 3.76
Average maturity (years)............................................................ 0.11 0.13 0.10 0.17
Asset-backed securities:
Carrying value...................................................................... 393 -- -- --
Average balance during fiscal year to date.......................................... 216 -- -- --
Net gains (losses) for the fiscal year to date...................................... (*) -- -- --
Average yield (%)................................................................... 5.96 -- -- --
Average maturity (years)............................................................ 3.54 -- -- --
Futures and forwards:
Carrying value...................................................................... -- -- 5 --
Average balance during fiscal year to date.......................................... -- -- 3 *
Net gains (losses) for the fiscal year to date...................................... (29) 11 4 *
Options:
Carrying value...................................................................... -- * -- --
Average balance during fiscal year to date.......................................... * * (*) *
Net gains (losses) for the fiscal year to date...................................... (*) (1) -- *
<CAPTION>
All
currencies
--------------------
Dec. Jun.
1997 1997
--------- ---------
<S> <C> <C>
Trading:
Government and agency obligations:
Carrying value...................................................................... 6,059 3,535
Average balance during fiscal year to date.......................................... 4,518 3,172
Net gains (losses) for the fiscal year to date...................................... 18 (7)
Average yield (%)................................................................... 4.01 5.40
Average maturity (years)............................................................ 2.71 4.71
Time deposits:
Carrying value...................................................................... 11,020 13,693
Average balance during fiscal year to date.......................................... 14,063 10,606
Net gains (losses) for the fiscal year to date...................................... -- --
Average yield (%)................................................................... 3.67 4.05
Average maturity (years)............................................................ 0.10 0.16
Asset-backed securities:
Carrying value...................................................................... 393 --
Average balance during fiscal year to date.......................................... 216 --
Net gains (losses) for the fiscal year to date...................................... (*) --
Average yield (%)................................................................... 5.96 --
Average maturity (years)............................................................ 3.54 --
Futures and forwards:
Carrying value...................................................................... 7 1
Average balance during fiscal year to date.......................................... 4 3
Net gains (losses) for the fiscal year to date...................................... (27) 12
Options:
Carrying value...................................................................... * *
Average balance during fiscal year to date.......................................... * *
Net gains (losses) for the fiscal year to date...................................... (*) (1)
</TABLE>
<PAGE>
24 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
LIQUID PORTFOLIO (continued)
IN MILLIONS OF U.S. DOLLARS EQUIVALENT
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deutsche mark Japanese yen
-------------------- --------------------
Dec. Jun. Dec. Jun.
1997 1997 1997 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Total Trading Investments**
Carrying value.................................................................. 2,719 1,954 4,744 3,569
Average balance during fiscal year to date...................................... 2,744 1,008 4,333 2,452
Net gains (losses) for the fiscal year to date(a)............................... (5) (2) (5) (*)
Repurchase agreements and Securities loans:
Carrying value.................................................................. (164) -- -- --
Average balance during fiscal year to date...................................... (65) (34) -- --
Average yield (%)............................................................... 3.65 -- -- --
Average maturity (years)........................................................ 0.06 -- -- --
Resale agreements:
Carrying value.................................................................. 127 2 -- --
Average balance during fiscal year to date...................................... 113 305 -- --
Average yield (%)............................................................... 3.46 2.90 -- --
Average maturity (years)........................................................ 0.08 0.02 -- --
Short sales:(b)
Carrying value.................................................................. (69) -- -- --
Average balance during fiscal year to date...................................... (61) (42) -- --
Net currency swaps:
Carrying value.................................................................. (1,484) (908) (3,106) (3,226)
Average balance during fiscal year to date...................................... (1,651) (198) (3,474) (694)
Average yield (%)............................................................... 3.48 3.10 0.45 0.48
Average maturity (years)........................................................ 0.13 0.33 0.11 0.21
Net cross-currency interest rate swaps:(c)
Carrying value.................................................................. -- -- (1,882) --
Average balance during fiscal year to date...................................... -- -- (410) --
Net gains (losses) for the fiscal year to date(a)............................... -- -- 5 --
Average yield (%)............................................................... -- -- 0.65 --
Average maturity (years)........................................................ -- -- 2.11 --
<CAPTION>
Other
U.S. dollars currencies
-------------------- --------------------
Dec. Jun. Dec. Jun.
1997 1997 1997 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Total Trading Investments**
Carrying value.................................................................. 6,552 10,537 3,464 1,169
Average balance during fiscal year to date...................................... 9,121 9,084 2,603 1,237
Net gains (losses) for the fiscal year to date(a)............................... (2) (3) 3 10
Repurchase agreements and Securities loans:
Carrying value.................................................................. (262) (294) (164) --
Average balance during fiscal year to date...................................... (505) (716) (58) (80)
Average yield (%)............................................................... 5.43 5.73 6.62 --
Average maturity (years)........................................................ 0.08 0.02 0.02 --
Resale agreements:
Carrying value.................................................................. -- 95 35 --
Average balance during fiscal year to date...................................... 653 721 20 92
Average yield (%)............................................................... -- 5.46 6.88 --
Average maturity (years)........................................................ -- 0.06 0.01 --
Short sales:(b)
Carrying value.................................................................. (*) (92) (36) --
Average balance during fiscal year to date...................................... (72) (134) (17) (15)
Net currency swaps:
Carrying value.................................................................. 5,611 4,571 (711) (560)
Average balance during fiscal year to date...................................... 6,318 1,047 (1,058) (142)
Average yield (%)............................................................... 5.79 5.78 2.34 3.69
Average maturity (years)........................................................ 0.12 0.24 0.09 0.27
Net cross-currency interest rate swaps:(c)
Carrying value.................................................................. 3,681 -- (1,867) --
Average balance during fiscal year to date...................................... 1,176 -- (819) --
Net gains (losses) for the fiscal year to date(a)............................... 1 -- 1 --
Average yield (%)............................................................... 5.88 -- 6.14 --
Average maturity (years)........................................................ 2.41 -- 2.73 --
<CAPTION>
All
currencies
--------------------
Dec. Jun.
1997 1997
--------- ---------
<S> <C> <C>
Total Trading Investments**
Carrying value.................................................................. 17,479 17,229
Average balance during fiscal year to date...................................... 18,801 13,781
Net gains (losses) for the fiscal year to date(a)............................... (9) 4
Repurchase agreements and Securities loans:
Carrying value.................................................................. (590) (294)
Average balance during fiscal year to date...................................... (628) (830)
Average yield (%)............................................................... 5.27 5.73
Average maturity (years)........................................................ 0.06 0.02
Resale agreements:
Carrying value.................................................................. 162 97
Average balance during fiscal year to date...................................... 786 1,118
Average yield (%)............................................................... 4.20 5.41
Average maturity (years)........................................................ 0.06 0.06
Short sales:(b)
Carrying value.................................................................. (105) (92)
Average balance during fiscal year to date...................................... (150) (191)
Net currency swaps:
Carrying value.................................................................. 310 (123)
Average balance during fiscal year to date...................................... 135 13
Average yield (%)............................................................... 3.76 3.55
Average maturity (years)........................................................ 0.12 0.24
Net cross-currency interest rate swaps:(c)
Carrying value.................................................................. (68) --
Average balance during fiscal year to date...................................... (53) --
Net gains (losses) for the fiscal year to date(a)............................... 7 --
Average yield (%)............................................................... 4.62 --
Average maturity (years)........................................................ 2.42 --
</TABLE>
- ------------------------
a. Included in Net gains/losses on the trading portfolio in the income
statement.
b. Included in Amounts payable for investment securities purchased on the
Balance Sheet.
c. Included in Currency Swaps-Trading on the Balance Sheet.
* Less than $0.5 million; ** May differ from the sum of individual figures
due to rounding.
<PAGE>
IBRD Financial Statements 25
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Held-to-maturity portfolio: The carrying and fair values of investment
securities in the Held-to-maturity portfolio at December 31, 1997 and June 30,
1997 are as follows:
IN MILLIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE GROSS GROSS
CARRYING YIELD UNREALIZED UNREALIZED FAIR
VALUE (%) GAINS LOSSES VALUE
----------- ----------- ------------- ------------- ---------
Government and agency obligations........................... $ 1,144 8.74 $ 156 $ -- $ 1,300
Time deposits............................................... 123 7.31 -- -- 123
----------- --- ----- --- ---------
Total....................................................... $ 1,267 8.61 $ 156 $ -- $ 1,423
----------- --- ----- --- ---------
----------- --- ----- --- ---------
</TABLE>
- -------------------------------------------------------------------------------
IN MILLIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30
--------------------------------------------------------------
AVERAGE GROSS GROSS
CARRYING YIELD UNREALIZED UNREALIZED FAIR
VALUE (%) GAINS LOSSES VALUE
----------- ----------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Government and agency obligations........................... $ 1,140 8.74 $ 110 $ -- $ 1,250
Time deposits............................................... 139 6.38 -- -- 139
----------- --- ----- --- ---------
Total....................................................... $ 1,279 8.49 $ 110 $ -- $ 1,389
----------- --- ----- --- ---------
----------- --- ----- --- ---------
</TABLE>
- -------------------------------------------------------------------------------
At December 31, 1997 and June 30, 1997, the Held-to-maturity portfolio
comprised investments in pounds sterling only. The annualized rate of return on
average investments in the Held-to-maturity portfolio held during the six months
ended December 31, 1997 was 8.45 percent (8.28 percent-December 31, 1996).
<PAGE>
26 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
The expected maturities of investment securities in the Held-to-maturity
portfolio at December 31, 1997 and June 30, 1997 are summarized below:
IN MILLIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------
<S> <C> <C> <C>
NET
CARRYING FAIR UNREALIZED
VALUE VALUE GAINS
----------- --------- -------------
January 1, 1998 through December 31, 1998......................................... $ 219 $ 220 $ 1
January 1, 1999 through December 31, 2002......................................... 75 78 3
January 1, 2003 through December 31, 2007......................................... 836 958 122
Thereafter........................................................................ 137 167 30
----------- --------- -----
Total............................................................................. $ 1,267 $ 1,423 $ 156
----------- --------- -----
----------- --------- -----
</TABLE>
- -------------------------------------------------------------------------------
IN MILLIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30
-------------------------------------
<S> <C> <C> <C>
NET
CARRYING FAIR UNREALIZED
VALUE VALUE GAINS
----------- --------- -------------
July 1, 1997 through June 30, 1998................................................ $ 139 $ 139 $ --
July 1, 1998 through June 30, 2002................................................ 172 177 5
July 1, 2002 through June 30, 2007................................................ 255 277 22
Thereafter........................................................................ 713 796 83
----------- --------- -----
Total............................................................................. $ 1,279 $ 1,389 $ 110
----------- --------- -----
----------- --------- -----
</TABLE>
<PAGE>
IBRD Financial Statements 27
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note C-Loans, Cofinancing and Guarantees
Multicurrency Loans
Fixed rate loans: On loans negotiated prior to July 1982, IBRD charges interest
at fixed rates.
Adjustable rate loans: In 1982 IBRD mitigated its interest rate risk by moving
from fixed rate to adjustable rate lending. This rate, reset twice a year, is
based on IBRD's own cost of qualified borrowings plus a 50 basis point spread,
resulting in a pass-through of its average borrowing costs to those members that
benefit from IBRD loans.
Single Currency Loans
Fixed rate loans: IBRD introduced fixed rate single currency loans in 1995. The
rates charged on fixed rate single currency loans are set on semi-annual rate
fixing dates for loan amounts disbursed during the preceding six-month period
and remain fixed for such disbursed amounts until they are repaid. For the
interim period from the date each disbursement is made until its rate fixing
date, interest accrues at a variable rate equal to the rate on LIBOR-based
single currency loans (PIBOR-based for French franc denominated loans)
applicable for such interim period. The fixed lending rate comprises a base rate
reflecting medium- to long-term market rates on the rate fixing date, plus a
total spread consisting of (a) IBRD's funding cost margin for these loans, (b) a
risk premium (intended to compensate IBRD for market risks incurred in funding
these loans), and (c) a spread of 50 basis points.
LIBOR-based loans: IBRD introduced LIBOR-based single currency loans in 1993.
The rates charged on LIBOR-based single currency loans are a direct pass-through
of IBRD's cost of funding for these loans, and are reset semi-annually. They
comprise a base rate equal to the six-month reference interbank offered rate for
the applicable currency on the rate reset date and a total spread consisting of
(a) IBRD's average funding cost margin for these loans and (b) a spread of 50
basis points.
In December 1997 IBRD approved and disbursed a LIBOR-based single currency loan
for $3,000 million. This loan carries an interest rate based on U.S. dollar
six-month LIBOR plus a fixed spread of 100 basis points, and has a loan
origination fee comprising 2 percent of the principal amount of the loan payable
on effectiveness, 1 percent of the principal amount payable one year after
effectiveness and 1/2 of 1 percent of the principal amount payable two years
after effectiveness.
Loan Conversion Options
Since September 1996 IBRD has offered its borrowers the option to convert
undisbursed amounts on existing multicurrency pool loans, for which the
invitation to negotiate was issued prior to September 1, 1996, to single
currency loan terms. At December 31, 1997, $14,531 million of undisbursed
multicurrency pool loans had been converted to single currency loan terms, and
$25 million remained to be converted at that date. Borrowers also have the
option to convert disbursed multicurrency pool loan amounts (and undisbursed
amounts not converted to single currency loan terms) on existing multicurrency
pool loans, for which the invitation to negotiate was issued prior to September
1, 1996, to new single currency pool terms. Borrowers selecting single currency
pool terms have a choice of four different pools (U.S. dollars, Japanese yen,
Deutsche mark or Swiss francs). Each single currency pool is a multicurrency
pool at inception, but will be adjusted to reach a level of at least 90 percent
in the designated currency by July 1, 1999 and will be maintained at or above
that level thereafter. The rates that will be charged on single currency pool
loans will be variable based on the average cost of outstanding borrowings
allocated to fund loans in each individual single currency pool plus a 50 basis
point spread. The first date for conversions to single currency pool terms was
July 1, 1997. The remaining conversion dates are January 1, 1998 and July 1,
1998, depending upon the date the conversion request is approved by IBRD. At
December 31, 1997, borrowers had requested that $19,388 million of outstanding
multicurrency pool loan amounts and $140 million of undisbursed multicurrency
pool loan amounts be converted to single currency pool loan terms on January 1,
1998.
<PAGE>
IBRD Financial Statements 28
- -------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- -------------------------------------------------------------------------------
Waivers of Loan Interest and Charges
On July 31, 1997, IBRD's Executive Directors approved a one-year interest waiver
of 25 basis points on disbursed and outstanding loans for all payment periods
commencing in the fiscal year ending June 30, 1998 for all eligible borrowers. A
similar waiver of 25 basis points was in effect for the fiscal year ended June
30, 1997. In fiscal year 1995 IBRD's Executive Directors approved a one-time 10
basis point interest waiver, for two consecutive six-month interest periods, on
multicurrency pool loans which a borrower converts from loan interest rate terms
in effect between 1982 and 1989 to interest rate terms in effect since 1989. For
the three and six months ended December 31, 1997, the combined effect of these
waivers was to reduce Net Income by $61 million and $122 million, respectively,
compared to $64 million and $131 million, for the respective fiscal year 1997
periods.
Further, on July 31, 1997, the Executive Directors approved a one-year
commitment fee waiver of 50 basis points on undisbursed loans to all borrowers
for all payment periods commencing in the fiscal year ending June 30, 1998. A
similar waiver of 50 basis points was in effect for the fiscal year ended June
30, 1997. For the three and six months ended December 31, 1997, the effect of
the commitment fee waiver was to reduce Net Income by $55 million and $109
million, respectively, compared to $58 million and $115 million, for the
respective fiscal year 1997 periods.
<PAGE>
IBRD Financial Statements 29
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
A summary of IBRD's outstanding loans by currency and product at December 31,
1997 and June 30, 1997 follows:
In millions of U.S. dollars equivalent
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------
MULTICURRENCY SINGLE CURRENCY
LOANS(A) POOLS(B)
------------------- ------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
RATE RATE
CURRENCY/RATE TYPE AMOUNT (%)(C) AMOUNT (%)(C)
- ----------------------------- ------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Deutsche mark
Fixed $1,447 8.74 $ 17 11.55
Adjustable 24,651 6.54 2,178 6.54
Japanese yen
Fixed 1,307 8.79 -- --
Adjustable 23,576 6.54 -- --
Netherlands guilders
Fixed 117 8.41 -- --
Adjustable 727 6.54 -- --
Swiss francs
Fixed 771 7.95 -- --
Adjustable 2,233 6.54 -- --
U.S. dollars
Fixed 1,266 8.65 141 10.86
Adjustable 24,969 6.54 6,638 6.54
Others
Fixed 125 9.13 -- --
Adjustable 1,968 6.54 -- --
------- --- ------ -----
Loans outstanding
Fixed 5,033 8.61 158 10.93
Adjustable 78,124 6.54 8,816 6.54
------- --- ------ -----
Total $83,157 6.67 $8,974 6.62
------- --- ------ -----
------- --- ------ -----
Less accumulated provision for loan losses
Loans outstanding net of accumulated provision
<CAPTION>
SINGLE CURRENCY LOANS TOTAL LOANS
------------------------------ --------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RATE MATURITY RATE
CURRENCY/RATE TYPE AMOUNT (%)(C) (YEARS) AMOUNT (%)(C)
- ----------------------------- ------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Deutsche mark
Fixed $ 32 5.94 6.67 $ 1,496 8.71
Adjustable 212 3.85 7.88 27,041 6.52
Japanese yen
Fixed -- -- -- 1,307 8.79
Adjustable 15 0.70 3.82 23,591 6.53
Netherlands guilders
Fixed -- -- -- 117 8.41
Adjustable -- -- -- 727 6.54
Swiss francs
Fixed -- -- -- 771 7.95
Adjustable -- -- -- 2,233 6.54
U.S. dollars
Fixed 3,085 6.99 6.36 4,492 7.58
Adjustable 11,243 6.25 8.31 42,850 6.46
Others
Fixed 135 6.34 6.68 260 7.68
Adjustable 2 3.60 7.79 1,970 6.54
------- --- --- -------- ---
Loans outstanding
Fixed 3,252 6.95 6.37 8,443 8.02
Adjustable 11,472 6.19 8.29 98,412 6.50
------- --- --- -------- ---
Total $14,724 6.36 7.87 106,855 6.62
------- --- --- ---
------- --- --- ---
Less accumulated provision fo 3,250
--------
Loans outstanding net of accu $103,605
--------
--------
</TABLE>
- ------------------------
(a) See page 30.
(b) See page 31.
(c) See page 31.
<PAGE>
IBRD Financial Statements 30
Notes to Financial Statements
In millions of U.S. dollars equivalent
<TABLE>
<CAPTION>
JUNE 30
---------------------------------------------------
MULTICURRENCY
LOANS(a) SINGLE CURRENCY LOANS(b)
------------------- -----------------------------
WEIGHTED WEIGHTED AVERAGE
AVERAGE AVERAGE MATURITY
CURRENCY/RATE TYPE AMOUNT RATE (%)(C) AMOUNT RATE (%)(C) (YEARS)
- ----------------------------- ------- ---------- ------ ---------- --------
<S> <C> <C> <C> <C> <C>
Deutsche mark
Fixed $1,937 8.77 $-- -- --
Adjustable 27,269 6.70 83 3.48 7.07
Japanese yen
Fixed 1,954 8.87 -- -- --
Adjustable 30,154 6.70 5 0.81 3.51
Netherlands guilders
Fixed 179 8.42 -- -- --
Adjustable 1,155 6.70 -- -- --
Swiss francs
Fixed 1,064 8.02 -- -- --
Adjustable 3,438 6.70 -- -- --
U. S. dollars
Fixed 1,578 8.78 2,315 7.03 6.63
Adjustable 27,848 6.70 4,515 6.01 8.99
Others
Fixed 154 9.11 133 6.35 7.17
Adjustable 2,020 6.70 4 3.53 7.80
------- --- ------ --- ---
Loans outstanding
Fixed 6,866 8.68 2,448 6.99 6.66
Adjustable 91,884 6.70 4,607 5.96 8.95
------- --- ------ --- ---
Total $98,750 6.84 $7,055 6.32 8.16
------- --- ------ ---
Less accumulated provision for loan losses
Loans outstanding net of accumulated provision
<CAPTION>
TOTAL LOANS
--------------------
WEIGHTED
AVERAGE
CURRENCY/RATE TYPE AMOUNT RATE (%)(C)
- ----------------------------- -------- ----------
<S> <C> <C>
Deutsche mark
Fixed $ 1,937 8.77
Adjustable 27,352 6.69
Japanese yen
Fixed 1,954 8.87
Adjustable 30,159 6.70
Netherlands guilders
Fixed 179 8.42
Adjustable 1,155 6.70
Swiss francs
Fixed 1,064 8.02
Adjustable 3,438 6.70
U. S. dollars
Fixed 3,893 7.74
Adjustable 32,363 6.60
Others
Fixed 287 7.83
Adjustable 2,024 6.69
-------- ---
Loans outstanding
Fixed 9,314 8.24
Adjustable 96,491 6.66
-------- ---
Total 105,805 6.80
--------
Less accumulated provision fo 3,210
--------
Loans outstanding net of accu $102,595
--------
--------
</TABLE>
- ------------------------
(a) Average Maturity--Multicurrency loans. IBRD maintains a targeted currency
composition in its multicurrency loans. The present target ratio is one U.S.
dollar for every 125 Japanese yen and two Deutsche mark equivalents
(consisting of Deutsche mark, Netherlands guilders and Swiss francs). These
five major currencies comprise at least 90 percent of the multicurrency
loans' U.S. dollar equivalent value, with the remainder in other currencies.
This ratio has been maintained since 1991, and is reviewed periodically. The
composition of the multicurrency loans is affected by the selection of
currencies for disbursements on those loans and by the currencies selected
for the billing of the principal repayments. Along with the selection of
disbursement currencies, IBRD manages the selection of repayment currencies
to maintain the alignment of the multicurrency loans' composition with the
target ratio. The selection of currencies for repayment billing by IBRD
precludes the determination of average maturity information for
multicurrency loans by individual currency. Accordingly, IBRD only discloses
the maturity periods for its multicurrency loans on a combined U.S. dollars
equivalent basis.
<PAGE>
IBRD Financial Statements 31
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
(b) Average Maturity--Single Currency Pools. Each single currency pool is a
multicurrency at inception, but will be adjusted to reach a level of at
least 90% in the designated currency by July 1, 1999 and will be maintained
at that level thereafter. The currency composition of these single currency
pools is affected by IBRD's management of the selection of repayment
currencies to the extent non-designated currencies remaining in these pools
are selected for repayment. This varying selection of currencies for
repayment precludes the determination of average maturity information for
the single currency pools loans by individual currencies. Accordingly, IBRD
only discloses the maturity periods for its single currency pool loans on a
combined U.S. dollar equivalent basis.
(c) Excludes effects of any waivers of loan interest.
The maturity structure of IBRD's loans at December 31, 1997 and June 30, 1997 is
as follows:
In millions
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------------------------------
MULTICURRENCY SINGLE CURRENCY SINGLE CURRENCY
LOANS POOLS LOANS
RATE ------------------ ------------------ -------------------
PERIOD TYPE: FIXED ADJUSTABLE FIXED ADJUSTABLE FIXED ADJUSTABLE
- ------------------------- ----- ------ ---------- ----- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1998 through
December 31, 1998...... $2,127 $ 7,979 $103 $1,051 $ -- $ 31
January 1, 1999 through
December 31, 2002...... 2,659 30,951 55 3,839 1,128 1,662
January 1, 2003 through
December 31, 2007...... 242 28,537 -- 2,845 1,835 6,898
Thereafter............... 5 10,657 -- 1,081 289 2,881
------ ---------- ----- ---------- ------- ----------
Loans outstanding........ $5,033 $78,124 $158 $8,816 $ 3,252 $11,472
------ ---------- ----- ---------- ------- ----------
------ ---------- ----- ---------- ------- ----------
<CAPTION>
ALL LOANS
-----------------------------
PERIOD FIXED ADJUSTABLE TOTAL
- ------------------------- ------ ---------- --------
<S> <C> <C> <C>
January 1, 1998 through
December 31, 1998...... $2,230 $ 9,061 $ 11,291
January 1, 1999 through
December 31, 2002...... 3,842 36,452 40,294
January 1, 2003 through
December 31, 2007...... 2,077 38,280 40,357
Thereafter............... 294 14,619 14,913
------ ---------- --------
Loans outstanding........ $8,443 $98,412 $106,855
------ ---------- --------
------ ---------- --------
</TABLE>
In millions
<TABLE>
<CAPTION>
JUNE 30
---------------------------------------
MULTICURRENCY SINGLE CURRENCY
LOANS POOLS
RATE ------------------ ------------------
PERIOD TYPE: FIXED ADJUSTABLE FIXED ADJUSTABLE
- ------------------------------ ----- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
July 1, 1997 through June 30,
1998........................ $2,844 $ 9,150 $ -- $ 4
July 1, 1998 through June 30,
2002........................ 3,675 37,141 773 774
July 1, 2002 through June 30,
2007........................ 335 33,585 1,365 2,283
Thereafter.................... 12 12,008 310 1,546
------ ---------- ------ ----------
Loans outstanding............. $6,866 $91,884 $2,448 $4,607
------ ---------- ------ ----------
------ ---------- ------ ----------
<CAPTION>
ALL LOANS
-----------------------------
PERIOD FIXED ADJUSTABLE TOTAL
- ------------------------------ ------ ---------- --------
<S> <C> <C> <C>
July 1, 1997 through June 30,
1998........................ $2,844 $ 9,154 $ 11,998
July 1, 1998 through June 30,
2002........................ 4,448 37,915 42,363
July 1, 2002 through June 30,
2007........................ 1,700 35,868 37,568
Thereafter.................... 322 13,554 13,876
------ ---------- --------
Loans outstanding............. $9,314 $96,491 $105,805
------ ---------- --------
------ ---------- --------
</TABLE>
<PAGE>
32 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
ESTIMATED VALUE OF LOANS
All of IBRD's loans are made to or guaranteed by countries that are members
of IBRD, except for those loans made to IFC. IBRD does not currently sell its
loans, nor is there a market of loans comparable to those made by IBRD.
Multicurrency loans and Single Currency Pools: The estimated value of fixed
rate loans negotiated prior to July 1982 has been based on discounted future
cash flows using the rate at which IBRD could undertake borrowings of comparable
maturities at December 31, 1997 plus a 50 basis point spread. The estimated
value of adjustable rate multicurrency loans and single currency pools is based
on the relationship of the fair value to the carrying value of the underlying
qualified borrowings, since the interest rate for such loans is based on the
interest rate of the qualified borrowings.
Single Currency Loans: The estimated value of fixed rate single currency
loans has been based on discounted future cash flows using the rate at which
IBRD could make similar loans of comparable maturities at December 31, 1997. The
estimated value of LIBOR-based single currency loans has been based on the
relationship of the fair value to the carrying value of the underlying
borrowings funding these loans.
The following table reflects the carrying and estimated values of the loan
portfolio based on current borrowing rates net of the Accumulated Provision for
Loan Losses at December 31, 1997 and June 30, 1997:
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
------------------------- -------------------------
CARRYING VALUE CARRYING VALUE
IN MILLIONS VALUE ESTIMATED VALUE ESTIMATED
- ---------------------------------------------------------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Multicurrency loans
Fixed................................................... $ 5,033 $ 5,578 $ 6,866 $ 7,655
Adjustable.............................................. 78,124 83,650 91,884 99,775
Single currency pools
Fixed... ............................................... 158 172 -- --
Adjustable.............................................. 8,816 9,686 -- --
Single currency loans
Fixed................................................... 3,252 3,368 2,448 2,497
Adjustable.............................................. 11,472 11,790 4,607 4,844
------------- ---------- ------------- ----------
Total loans
Fixed................................................... 8,443 9,118 9,314 10,152
Adjustable.............................................. 98,412 105,126 96,491 104,619
------------- ---------- ------------- ----------
106,855 114,244 105,805 114,771
Less accumulated provision for loan losses.............. 3,250 3,250 3,210 3,210
------------- ---------- ------------- ----------
Loans outstanding net of accumulated provision.......... $ 103,605 $ 110,994 $ 102 ,595 $ 111,561
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------
</TABLE>
<PAGE>
IBRD Financial Statemetns 33
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
COFINANCING AND GUARANTEES
IBRD has taken direct participations in, or provided partial guarantees of,
loans syndicated by other financial institutions for projects or programs also
financed by IBRD through regular loans. IBRD also has provided partial
guarantees of securities issued by an entity eligible for IBRD loans. IBRD's
partial guarantees of bond issues are included in the guarantees amount
mentioned below. IBRD's direct participations in syndicated loans are included
in the reported loan balances.
Guarantees of loan principal of $1,946 million at December 31, 1997 ($1,593
million-June 30, 1997) were not included in reported loan balances. At December
31, 1997, $385 million of these guarantees were subject to call ($148
million-June 30, 1997). IBRD has partially guaranteed the timely payment of
interest amounts on certain loans that have been sold. At December 31, 1997,
these guarantees, approximating $0.06 million ($0.5 million-June 30, 1997), were
subject to call.
STATUTORY LENDING LIMIT
Under the Articles of Agreement, the total amount outstanding of callable
guarantees, participations in loans, and direct loans made by IBRD may not be
increased to an amount exceeding 100 percent of the sum of Subscribed Capital,
reserves, and surplus. At December 31, 1997 and June 30, 1997, the status of the
statutory lending limit is as follows:
<TABLE>
<CAPTION>
IN MILLIONS DECEMBER 31 JUNE 30
- ---------------------------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Statutory lending limit
Subscribed capital.................................................................... $ 186,436 $ 182,426
Retained earnings..................................................................... 15,9391 16,194
Cumulative translation adjustment..................................................... (616) 85
------------ ----------
$ 201,759 $ 198,705
------------ ----------
------------ ----------
Loans and guarantees outstanding
Loans outstanding..................................................................... $ 106,855 $ 105,805
Principal guarantees callable......................................................... 385 148
Interest guarantees callable.......................................................... -- --
------------ ----------
$ 107,240 $ 105,954
------------ ----------
------------ ----------
Loans and guarantees outstanding as a percentage of statutory lending limit........... 53% 53%
</TABLE>
- ------------------------
a. Excludes allocations of $150 million for transfer to MIGA recommended by
the Executive Directors to the Board of Governors. See Note F.
OVERDUE AMOUNTS
At December 31, 1997, principal installments of $0.2 million and interest
and other charges of $0.07 million payable to IBRD on loans, other than those
referred to in the following paragraph, were overdue by more than three months,
and the aggregate principal amounts outstanding on these loans were $2 million.
<PAGE>
34 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
At December 31, 1997, the loans made to or guaranteed by certain member
countries and the FRY with an aggregate principal balance outstanding of $2,103
million ($2,360 million-June 30, 1997), of which $1,102 million ($1,314
million-June 30, 1997) was overdue, were in nonaccrual status. At such date,
overdue interest and other charges in respect of these loans totaled $929
million ($893 million-June 30, 1997). If these loans had not been in nonaccrual
status, income from loans for the three and six months ended December 31, 1997
would have been higher by $25 million and $56 million, respectively, compared to
$36 million and $80 million for the respective fiscal year 1997 periods.
A summary of countries with loans or guarantees in nonaccrual status
follows:
<TABLE>
<CAPTION>
IN MILLIONS
- --------------------------------------------------------------------------------------------------------------------
DECEMBER 31
-----------------------------------------------------------
PRINCIPAL PRINCIPAL AND NONACCRUAL
BORROWER OUTSTANDING CHARGES OVERDUE SINCE
- ------------------------------------------------------ ------------ ------------------ --------------
<S> <C> <C> <C>
With overdues
Congo, Democratic Republic of....................... $ 82 $ 80 November 1993
Congo, Republic of.................................. 73 16 November 1997
Iraq................................................ 43 68 December 1990
Liberia............................................. 136 254 June 1987
Sudan............................................... 6 4 January 1994
Syrian Arab Republic............................... 85 248 February 1987
Yugoslavia, Federal Republic of (Serbia/
Montenegro)....................................... 1,112 1,361 September 1992
------ ------
Total............................................... 1,537 2,031
Without overdues
Bosnia and Herzegovina.............................. 566 -- September 1992
------ ------
Total................................................. $ 2,103 $ 2,031
------ ------
------ ------
</TABLE>
- ------------------------
On July 27, 1997, the Syrian Arab Republic and IBRD entered into an
agreement covering, among other things, the application of payments by Syria of
its overdue principal, interest, and charges. Under this agreement, Syria paid
the overdue principal to IBRD in one payment of $263 million on September 2,
1997.
On November 3, 1997, loans made to or guaranteed by the Republic of Congo
were placed in nonaccrual status.
On January 15, 1998, loans made to or guaranteed by Sierra Leone were placed
in nonaccrual status. The aggregate principal balance outstanding on these loans
at December 31, 1997 was $2 million, of which $0.2 million was overdue. At
December 31, 1997, overdue interest and other charges in respect of these loans
totalled $0.07 million. Income previously accrued on these loans but not yet
received at December 31, 1997, amounting to $0.1 million, was included in
Retained Earnings and Income from loans for the six months ended December 31,
1997.
In connection with the cessation of the membership of the SFRY discussed in
Note A, in February 1993 IBRD reached an agreement with the FRY for the
apportionment and service of debt due to IBRD on loans made to or guaranteed by
the SFRY and assumed by the FRY, which confirmed a February 1992 interim
agreement between the SFRY (then consisting of the
<PAGE>
IBRD Financial Statements 35
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
Republics of Bosnia and Herzegovina, Macedonia, Montenegro and Serbia) and
IBRD pertaining, among other things, to such loans. As of the date hereof, no
debt-service payments have been received by IBRD from the FRY.
In June 1996 the accumulated arrears on loans to the former SFRY assumed by
Bosnia and Herzegovina were cleared through three new consolidation loans
extended by IBRD. These new loans consolidated all outstanding principal and
overdue interest on the loans assumed by Bosnia and Herzegovina. This resulted
in an increase in loans outstanding of $168 million and the deferral of the
recognition of the related interest income.
The average recorded investment in nonaccruing loans during the three and
six months ended December 31, 1997 was $2,086 million and $2,188 million,
respectively, compared to $2,476 million and $2,506 million for the respective
fiscal year 1997 periods.
During the six months ended December 31, 1997 and December 31, 1996, no
loans came out of nonaccrual status.
ACCUMULATED PROVISION FOR LOAN LOSSES
IBRD has never suffered a loss on any of its loans, with the exception of
losses resulting from the difference between the present value of payments for
interest and charges made according to the related loan's contractual terms and
the present value of its expected future cash flows discounted at the loan's
contractual rates. Certain borrowers have found it difficult to make timely
payments for protracted periods, resulting in their loans being placed in
nonaccrual status. Several borrowers have emerged from nonaccrual status after a
period of time by bringing up-to-date all principal payments and all overdue
service payments, including interest and other charges. In an attempt to
recognize the risk inherent in these and any other potential overdue payments,
IBRD maintains a provision for loan losses.
An analysis of the changes to the Accumulated Provision for Loan Losses for
the six months ended December 31, 1997 and the fiscal year ended June 30, 1997
appears below:
<TABLE>
<CAPTION>
IN MILLIONS
- --------------------------------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
------------- ---------
<S> <C> <C>
Balance, beginning of the fiscal year..................................................... $ 3,210 $ 3,340
Provision for loan losses................................................................. 180 63
Translation adjustment.................................................................... (140) (193)
------ ---------
Balance, end of the period................................................................ $ 3,250 $ 3,210
------ ---------
------ ---------
</TABLE>
IBRD has endorsed a multilateral initiative for addressing the debt problems
of a group of countries identified as heavily indebted poor countries (HIPCs) to
ensure that the reform efforts of these countries will not be put at risk by
unsustainable external debt burdens. Under this initiative, creditors are to
provide enhanced debt relief for those countries that demonstrated good policy
performance over an extended period to bring their debt burdens to sustainable
levels. IBRD has taken the situation of these countries into account in its
review of the adequacy of the Accumulated Provision for Loan Losses.
FIFTH DIMENSION PROGRAM
Under IDA's Fifth Dimension program established in September 1988, a portion
of principal repayments to IDA are allocated on an annual basis to provide
supplementary IDA credits to IDA-eligible countries that are no longer able to
borrow on IBRD terms, but have outstanding IBRD loans approved prior to
September 1988 and have in place an IDA-supported structural adjustment program.
<PAGE>
36 IBRD Financial Statemetns
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- ------------------------------------------------------------------------------
Such supplementary IDA credits are allocated to countries that meet specified
conditions, in proportion to each country's interest payments due that year on
its pre-September 1988 IBRD loans. To be eligible for such IDA
supplemental credits, a member country must meet IDA's eligibility criteria
for lending, must be ineligible for IBRD lending and must not have had an
IBRD loan approved within the last twelve months. To receive a supplemental
credit from the program, a member country cannot be more than 60 days overdue
on its debt-service payments to IBRD or IDA. At December 31, 1997, IDA had
approved credits of $1,616 million ($1,526 million-June 30, 1997) under this
program from inception, of which $1,514 million ($1,435 million-June 30,
1997) had been disbursed to the eligible countries.
NOTE D-BORROWINGS
Providing liquidity and minimizing the cost of funds are key objectives to
IBRD's overall borrowing strategy. IBRD uses swaps in its borrowing strategy to
lower the overall cost of its borrowings for those members who benefit from IBRD
loans. IBRD undertakes swap transactions with a list of authorized
counterparties. Credit limits have been established for each counterparty.
Currency swaps: Currency swaps are privately negotiated agreements between
two parties to exchange cashflows denominated in different currencies at one or
more certain times in the future. The cashflows are based on a predetermined
formula reflecting fixed rates of interest and an exchange of principal.
Interest rate swaps: Interest rate swaps are agreements which transform a
fixed rate payment obligation in a particular currency into a floating rate
obligation in that currency or vice-versa.
Forward interest rate swaps: A forward interest rate swap is an agreement
under which the cash flow exchanges of the underlying interest rate swaps would
begin to take effect from a specified date.
Swaptions: A swaption is an option that gives the holder the right to enter
into an interest rate or currency swap at a certain future date.
Deferred rate setting (DRS) agreements: DRS allows an entity to fix the
effective interest cost of all or a portion of debt issues over a specified
period of time after the issue date of the respective debt issues. IBRD enters
into DRS agreements in conjunction with some of its bond issues. The agreements
provide for payments to be made to or by IBRD reflecting gain or loss on one or
more government securities or related financial instruments. The potential
credit loss to IBRD from nonperformance is limited to any amounts due, but
unsettled, from the financial intermediary. However, periodic mark-to-market
settlements on these agreements limit this risk. At December 31, 1997 and June
30, 1997, the effective interest cost of all principal amounts had been fixed.
<PAGE>
IBRD Financial Statements 37
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
A summary of IBRD's borrowings portfolio at December 31, 1997 and June 30,
1997 follows:
Medium- and Long-term Borrowings and Swaps at December 31, 1997
In millions of U.S. dollars equivalent
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENCY
DIRECT BORROWINGS SWAP AGREEMENTS
------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WGTD. WGTD.
AVG. AVERAGE AMOUNT AVG. AVERAGE
RATE COST MATURITY PAYABLE COST MATURITY
CURRENCY TYPE AMOUNT (%) (YEARS) (RECEIVABLE) (%) (YEARS)
- -------------------- ---------- ------- ----- -------- ------------ ----- --------
Deutsche mark....... Fixed $11,999 6.51 5.17 $ 4,242 7.43 2.41
(1,923) 6.08 6.35
Adjustable.. 197 7.07 5.61 9,321 3.50 2.51
(133) 3.30 3.89
Japanese yen........ Fixed 18,571 5.14 4.63 2,518 1.15 0.49
(3,010) 5.45 4.97
Adjustable.. 1,071 1.63 2.16 443 0.04 0.70
(204) 1.03 7.86
Netherlands
guilders.......... Fixed 1,248 7.14 4.12 -- -- --
(802) 7.53 2.77
Swiss francs Fixed 3,934 5.81 5.38 1,819 5.18 2.51
(3,893) 5.54 2.65
Adjustable.. -- -- -- 782 0.77 2.20
U. S. dollars Fixed 23,635 7.37 6.87 3,691 9.35 4.32
(3,476) 7.01 1.26
Adjustable.. 925 5.33 4.14 17,586 5.55 6.23
(4,480) 5.61 1.85
Others.............. Fixed 20,698 8.53 5.19 606 6.63 3.12
(19,164) 8.27 4.89
Adjustable.. 2,326 4.90 4.97 35 3.53 7.91
(2,649) 4.94 5.03
------- ----- -------- ------------
Total............... Fixed 80,085 6.94 5.55 12,876
(32,268)
Adjustable.. 4,519 4.30 4.16 28,167
(7,466)
------- ----- -------- ------------
Principal at face
value............. 84,604 6.80 5.47 1,309
Net unamortized
premium........... 42 --
------- ----- -------- ------------
Total............... $84,646 6.80 5.47 $1,309 $--
------- ----- -------- ------------
------- ----- -------- ------------
<CAPTION>
INTEREST RATE
SWAP AGREEMENTS NET CURRENCY OBLIGATIONS
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOTIONAL WGTD. WGTD.
AMOUNT AVG. AVERAGE AMOUNT AVG. AVERAGE
PAYABLE COST MATURITY PAYABLE COST MATURITY
CURRENCY (RECEIVABLE) (%) (YEARS) (RECEIVABLE) (%) (YEARS)
- -------------------- ------------ ----- -------- ------------ ----- --------
Deutsche mark....... $ 6,155 6.66 2.53 $ 22,396 6.73 3.92
(3,109) 5.23 4.13 (5,032) 5.55 4.98
3,165 3.61 4.17 12,683 3.58 2.97
(6,211) 3.40 2.56 (6,344) 3.40 2.59
Japanese yen........ 1,882 3.60 1.36 22,971 4.57 3.91
(2,708) 3.04 3.93 (5,718) 4.30 4.48
2,708 0.57 3.93 4,222 0.78 3.14
(1,882) 1.26 1.36 (2,086) 1.23 2.00
Netherlands
guilders.......... -- -- -- 1,248 7.14 4.12
(802) 7.53 2.77
Swiss francs 782 7.11 2.27 6,535 5.79 4.21
(3,893) 5.54 2.65
782 0.77 2.20
(782) 1.79 2.27 (782) 1.79 2.27
U. S. dollars 9,728 6.56 2.86 37,054 7.35 5.56
(12,678) 6.29 5.74 (16,154) 6.44 4.77
12,704 5.72 5.74 31,215 5.61 5.96
(9,753) 5.83 2.87 (14,233) 5.76 2.55
Others.............. 114 5.75 6.68 21,418 8.46 5.14
(412) 7.13 5.20 (19,576) 8.25 4.90
412 3.53 5.20 2,773 4.68 5.04
(115) 3.69 6.68 (2,764) 4.89 5.10
------------ ------------ ----- --------
Total............... 18,661 111,622 6.77 4.72
(18,907) (51,175) 6.75 4.61
18,989 51,675 4.60 4.89
(18,743) (26,209) 4.62 2.77
------------ ------------ ----- --------
Principal at face
value............. 85,913 6.13 5.48
Net unamortized
premium........... 42
------------ ------------ ----- --------
Total............... $ 85,955 6.13 5.48
------------ ------------ ----- --------
------------ ------------ ----- --------
</TABLE>
38 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Medium- and Long-term Borrowings and Swaps at June 30, 1997
In millions of U.S. dollars equivalent
<TABLE>
<CAPTION>
CURRENCY
DIRECT BORROWINGS SWAP AGREEMENTS
------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WGTD. WGTD.
AVG. AVERAGE AMOUNT AVG. AVERAGE
RATE COST MATURITY PAYABLE COST MATURITY
CURRENCY TYPE AMOUNT (%) (YEARS) (RECEIVABLE) (%) (YEARS)
- -------------------- ---------- ------- ----- -------- ------------ ----- --------
Deutsche mark....... Fixed $12,468 6.58 5.43 $ 3,071 7.47 2.33
(393) 5.93 14.05
Adjustable 203 7.54 6.12 8,921 3.05 2.98
(22) 5.58 0.99
Japanese yen........ Fixed 24,501 5.15 4.48 529 5.63 2.39
(1,251) 5.99 6.07
Adjustable 1,223 1.83 2.66 506 0.05 1.20
(44) 4.45 14.98
Netherlands
guilders.......... Fixed 1,873 7.25 3.28 80 6.31 0.19
(1,123) 7.62 2.05
Swiss francs........ Fixed 3,916 6.02 5.63 1,862 5.20 2.94
(3,050) 5.79 2.84
Adjustable -- -- -- 780 0.74 2.70
U. S. dollars....... Fixed 23,725 7.49 6.63 178 8.98 2.99
(1,023) 9.19 3.12
Adjustable 1,213 5.14 3.59 12,111 5.49 6.26
(2,511) 5.57 2.31
Others.............. Fixed 18,112 8.71 4.80 157 8.34 2.09
(16,029) 8.59 4.43
Adjustable 1,798 5.92 4.95 13 10.85 0.32
(2,149) 5.61 5.08
------- ----- -------- ------------
Total............... Fixed 84,595 6.86 5.32 5,877
(22,869)
Adjustable 4,437 4.65 4.00 22,331
(4,726)............. (16,122) (20,848) 4.31
------- ----- -------- ------------
Principal at face
value............. 89,032 6.75 5.25 613 89,645
Net unamortized
discount.......... (1 )
------- ----- -------- ------------
------- ----- -------- ------------
Total............... $89,031 6.75 5.25 $ 613 $--
------- ----- -------- ------------
------- ----- -------- ------------
<CAPTION>
INTEREST RATE
SWAP AGREEMENTS NET CURRENCY OBLIGATIONS
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOTIONAL WGTD. WGTD.
AMOUNT AVG. AVERAGE AMOUNT AVG. AVERAGE
PAYABLE COST MATURITY PAYABLE COST MATURITY
CURRENCY (RECEIVABLE) (%) (YEARS) (RECEIVABLE) (%) (YEARS)
- -------------------- ------------ ----- -------- ------------ ----- --------
Deutsche mark....... $ 6,800 6.93 2.74 $ 22,339 6.81 4.19
(2,878) 5.25 4.48 (3,271) 5.33 5.63
2,936 3.24 4.53 12,060 3.17 3.41
(6,858) 3.35 2.78 (6,880) 3.35 2.77
Japanese yen........ 2,148 3.60 1.87 27,178 5.04 4.23
(3,123) 3.02 4.39 (4,374) 3.85 4.86
3,123 0.57 4.39 4,852 0.83 3.62
(2,148) 1.34 1.87 (2,192) 1.41 2.13
Netherlands
guilders.......... -- -- -- 1,953 7.21 3.15
(1,123) 7.62 2.05
Swiss francs........ 780 7.11 2.77 6,558 5.91 4.52
(3,050) 5.79 2.84
780 0.74 2.70
(780) 1.73 2.77 (780) 1.73 2.77
U. S. dollars....... 6,095 6.81 3.67 29,998 7.36 6.01
(10,518) 6.29 5.69 (11,541) 6.55 5.46
10,646 5.77 5.64 23,970 5.59 5.85
(6,223) 5.78 3.62 (8,734) 5.72 3.24
Others.............. 113 5.77 7.17 18,382 8.68 4.79
(424) 7.12 5.73 (16,453) 8.55 4.46
424 3.35 5.73 2,235 5.46 5.07
(113) 3.46 7.17 (2,262) 5.50 5.18
------------ ------------ ----- --------
Total............... 15,936 106,408 6.79 4.82
(16,943) (39,812) 6.95 4.70
17,129 43,897 4.31 4.83
(4,726)............. 3.16
------------ ------------ ----- --------
Principal at face
value............. 6.07 5.26
Net unamortized
discount.......... -- (1)
------------ ------------ ----- --------
------------ ------------ ----- --------
Total............... $ 89,644 6.07 5.26
------------ ------------ ----- --------
------------ ------------ ----- --------
</TABLE>
Short-term Borrowings and Swaps at December 31, 1997 and June 30, 1997
<PAGE>
IBRD Financial Statements 39
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
In millions of U. S. dollars equivalent
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
--------------------------------------------------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST
CURRENCY RATE WGTG.
SWAP SWAP NET AVG.
RATE PRINCIPAL PAYABLE PAYABLE CURRENCY COST PRINCIPAL
CURRENCY TYPE OUTSTANDING (RECEIVABLE) (RECEIVABLE OBLIGATIONS (%) OUTSTANDING
- -------------------- ---------- ----------- ------------ ------------ ----------- ----- -----------
Czech koruny........ Fixed $ 233 $-- $-- $ 233 11.87 $ 220
(233) -- (233) 11.87
Deutsche mark....... Adjustable -- 614 -- 614 3.25 --
Italian lire........ Fixed 46 -- -- 46 6.43 148
(46) -- (46) 6.43
Adjustable 43 -- -- 43 6.79 --
(43) -- (43) 6.66
Japanese yen........ Fixed -- -- -- -- -- 95
(95)
New Zealand
dollars........... Fixed -- -- -- -- -- 137
(137)
Slovak koruny....... Fixed 65 -- -- 65 12.65 67
(65) -- (65) 12.65
U. S. dollars....... Fixed 10,352 46 -- 10,398 5.66 4,115
(100) (100) 5.72
Adjustable 1,850 1,335 100 3,285 5.35 2,200
(445) -- (445) 5.34 (112)
South African
rand.............. Fixed 1,076 -- -- 1,076 14.76 657
(1,076) -- (1,076) 14.76
----------- ------------ ----- ----------- ----- -----------
Total............... Fixed 11,772 46 -- 11,818 6.65 5,439
(1,420) (100) (1,520) 13.38
Adjustable 1,893 1,949 100 3,942 5.04 2,200
(488) (488) 5.45
----------- ------------ ----- ----------- ----- -----------
Principal at face
value............. 13,665 87 -- 13,752 5.49 7,639 43
Net unamortized
premium........... 5 5 9
----------- ------------ ----- ----------- ----- -----------
Total............... $13,670 $ 87 $-- 1$3,757 5.49 $7,648 $ 43
----------- ------------ ----- ----------- ----- -----------
----------- ------------ ----- ----------- ----- -----------
<CAPTION>
<S> <C> <C> <C> <C>
INTEREST
CURRENCY RATE WGTG.
SWAP SWAP NET AVG.
PAYABLE PAYABLE CURRENCY COST
CURRENCY (RECEIVABLE) (RECEIVABLE OBLIGATIONS (%)
- -------------------- ------------ ------------ ----------- ------
Czech koruny........ $-- $-- $ 220 10.88
(220) -- (220) 10.88
Deutsche mark....... 394 -- 394 2.80
Italian lire........ -- -- 148 6.80
(148) -- (148) 6.80
-- -- -- --
Japanese yen........ 88 -- 183 3.16
-- (95) 5.93
New Zealand
dollars........... -- -- 137 7.96
-- (137) 7.96
Slovak koruny....... -- -- 67 12.65
(67) -- (67) 12.65
U. S. dollars....... 120 -- 4,235 5.46
(900) (900) 4.65
877 900 3,977 5.31
-- (112) 5.40
South African
rand.............. -- -- 657 15.07
(657) -- (657) 15.07
------------ ------------ ----------- ------
Total............... 208 -- 5,647 6.90
(1,324) (900) (2,224) 8.99
1,271 900 4,371 5.09
(112) (112) 5.40
------------ ------------ ----------- ------
Principal at face
value............. -- 7,682 5.28
Net unamortized
premium........... 9
------------ ------------ ----------- ------
Total............... $-- $ 7,691 5.28
------------ ------------ ----------- ------
------------ ------------ ----------- ------
</TABLE>
<PAGE>
40 IBRD Financial Statements
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The maturity structure of IBRD's Medium-and Long-term borrowings outstanding
at December 31, 1997 and June 30, 1997 is as follows:
IN MILLIONS
<TABLE>
<CAPTION>
PERIOD DECEMBER 31
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
January 1, 1998 through December 31, 1998........................................................... $ 10,034
January 1, 1999 through December 31, 1999........................................................... 14,123
January 1, 2000 through December 31, 2000........................................................... 9,767
January 1, 2001 through December 31, 2001........................................................... 7,757
January 1, 2002 through December 31, 2002........................................................... 11,865
January 1, 2003 through December 31, 2007........................................................... 22,372
Thereafter.......................................................................................... 8,686
------------
Total............................................................................................... $ 84,604
------------
------------
</TABLE>
IN MILLIONS
<TABLE>
<CAPTION>
PERIOD JUNE 30
- ------------------------------------------------------------------------------------------------------- ---------
<S> <C>
July 1, 1997 through June 30, 1998..................................................................... $ 13,185
July 1, 1998 through June 30, 1999..................................................................... 9,492
July 1, 1999 through June 30, 2000..................................................................... 17,430
July 1, 2000 through June 30, 2001..................................................................... 8,173
July 1, 2001 through June 30, 2002..................................................................... 9,498
July 1, 2002 through June 30, 2007..................................................................... 21,806
Thereafter............................................................................................. 9,448
---------
Total.................................................................................................. $ 89,032
---------
---------
</TABLE>
<PAGE>
IBRD Financial Statements 41
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
The following table reflects the carrying and estimated fair values of the
borrowings portfolio at December 31, 1997 and June 30, 1997:
<TABLE>
<CAPTION>
IN MILLIONS
- ------------------------------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
--------------------- ---------------------
<S> <C> <C> <C> <C>
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
--------- ---------- --------- ----------
Short-term........................................................ $ 13,670 $ 13,741 $ 7,648 $ 7,699
Medium- and long-term............................................. 84,646 92,593 89,031 96,310
Swaps
Currency
Payable....................................................... 43,038 43,872 29,687 30,098
Receivable.................................................... (41,642) (43,708) (29,031) (30,375)
Interest rate................................................... -- (51) -- 654
Swaptions....................................................... -- -- -- 1
--------- ---------- --------- ----------
Total............................................................. $ 99,712 $ 106,447 $ 97,335 $ 104,387
--------- ---------- --------- ----------
--------- ---------- --------- ----------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The estimated fair values are based on quoted market prices where such
prices are available. Where no quoted market price is available, the fair
value is estimated based on the cost at which IBRD could currently undertake
borrowings with similar terms and remaining maturities, using the secondary
market yield curve. The fair value of swaps represents the estimated cost of
replacing these contracts on that date.
Note E--Credit Risk
Country Credit Risk: This risk includes potential losses arising from
protracted arrears on payments from borrowers. IBRD manages country credit
risk through individual country exposure limits according to
creditworthiness. These exposure limits are tied to performance on
macroeconomic and structural policies. In addition, IBRD establishes absolute
limits on the share of outstanding loans to any individual borrower. The
country credit risk is further managed by financial incentives such as
pricing loans using IBRD's own cost of borrowing and partial interest charge
waivers conditioned on timely payment that give borrowers self-interest in
IBRD's continued strong intermediation capacity. Collectibility risk is
covered by the Accumulated Provision for Loan Losses. IBRD also uses a
simulation model to assess the adequacy of its reserves in the case a major
borrower, or group of borrowers, stops servicing its loans for an extended
period of time.
Commercial Credit Risk: For the purpose of risk management, IBRD is party
to a variety of financial instruments, certain of which involve elements of
credit risk in excess of the amount recorded on the balance sheet. Credit
risk exposure represents the maximum potential accounting loss due to
possible nonperformance by obligors and counterparties under the terms of the
contracts. Additionally, the nature of the instruments involve contract value
and notional principal amounts that are not reflected in the basic financial
statements. For both on-and off-balance sheet securities, IBRD limits trading
to a list of authorized dealers and counterparties. Credit risk is controlled
through application of eligibility criteria and volume limits for
transactions with individual counterparties and through the expanding use of
mark-to-market collateral arrangements for swap transactions. IBRD may also
accept collateral in the form of cash or other approved liquid securities
from individual counterparties in order to mitigate its credit exposure.
<PAGE>
42 IBRD Financial Statements
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL SATEMENTS(Continued)
The contract value/notional amounts and credit risk exposure, as applicable,
of these financial instruments at December 31, 1997 and June 30, 1997 are given
below:
<TABLE>
<CAPTION>
IN MILLIONS
- --------------------------------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
------------- ---------
<S> <C> <C>
INVESTMENTS--TRADING PORTFOLIO
Futures and forwards
- Long position......................................................................... $ 8,082 $ 6,620
- Short position........................................................................ 3,167 6,675
- Credit exposure due to potential nonperformance by counterparties..................... 4 1
Options
- Long position......................................................................... -- 134
Currency Swaps
- Credit exposure due to potential nonperformance by counterparties..................... 319 36
BORROWINGS PORTFOLIO
Currency swaps
- Credit exposure due to potential nonperformance by counterparties..................... 1,748 1,255
Interest rate swaps
- Notional principal.................................................................... 37,750 33,965
- Credit exposure due to potential nonperformance by counterparties..................... 938 393
Swaptions
- Notional principal.................................................................... 30 74
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Note F--Retained Earnings, Allocations and Transfers
Retained Earnings: Retained Earnings comprises the following elements at
December 31, 1997 and June 30, 1997:
<TABLE>
<CAPTION>
IN MILLIONS
-----------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
------------ ---------
<S> <C> <C>
Special reserve...................................................... $ 293 $ 293
General reserve...................................................... 14,659 14,159
Pension reserve...................................................... 112 --
Surplus.............................................................. 576 457
Unallocated net income............................................... 449 1,285
------------ ---------
Total................................................................ $ 16,089 $ 16,194
------------ ---------
------------ ---------
-----------------------------------------------------------------------------------------------
</TABLE>
On July 31, 1997, the Executive Directors allocated $500 million of the
net income earned in the fiscal year ended June 30, 1997 to the General
Reserve and $112 million to the Pension Reserve, representing the difference
between actual funding of the Staff Retirement Plan (the Plan) and the Plan's
accounting expenses for the fiscal year 1997. On September 25, 1997, the
<PAGE>
IBRD Financial Statements 43
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
Board of Governors approved the following transfers out of unallocated Net
Income: an amount equivalent to $304 million in SDRs (valued at June 30,
1997) to IDA by way of grant, an immediate grant of $250 million to the
Heavily Indebted Poor Countries Debt Initiative Trust Fund, and $119 million
to Surplus. On December 18, 1997 the Executive Directors recommended that the
Board of Governors approve a transfer from Surplus, by way of grant, in the
amount of $150 million to MIGA to be used as part of MIGA's capital resources
to strengthen its financial position. As this recommendation had not been
approved by the Board of Governors at December 31, 1997, no payable has been
recognized.
Transfers to International Development Association: The Board of
Governors had approved aggregate transfers through June 30, 1997 to IDA
totaling $5,431 million from unallocated Net Income. On September 25, 1997,
the Board of Governors approved a transfer to IDA, by way of grant, of $304
million in an equivalent amount in SDRs out of unallocated Net Income. At
December 31, 1997, there was no payable to IDA.
Transfers to Debt Reduction Facility for IDA-Only Countries: The Board of
Governors had approved aggregate transfers through June 30, 1997 to the Debt
Reduction Facility for IDA-Only Countries totaling $300 million. At December
31, 1997, $128 million ($118 million--June 30, 1997) remained payable.
Transfer to Trust Fund for Gaza and West Bank: The Board of Governors had
approved aggregate transfers through June 30, 1997 to the Trust Fund for Gaza
and West Bank, totaling $230 million. At December 31, 1997, $22 million ($83
million--June 30, 1997) remained payable.
Transfers to the Heavily Indebted Poor Countries Debt Initiative Trust
Fund: At June 30, 1997, the Board of Governors had approved aggregate
transfers to the HIPC Debt Initiative Trust Fund totaling $500 million. On
September 25, 1997, the Board of Governors approved a transfer to the HIPC
Debt Initiative Trust Fund, by way of grant, of $250 million out of
unallocated Net Income. At December 31, 1997, there was no payable to the
HIPC Debt Initiative Trust Fund.
Note G--Administrative Expenses and Contributions to Special Programs
In fiscal year 1995 the Executive Directors authorized expenditures for
costs associated with planned staff reductions. The total cost of this
program was $112 million, of which $45 million was charged to IDA. At
December 31, 1997, $74 million ($64 million--June 30, 1997) has been charged
against the accrual of $112 million. This accrual included costs associated
with job search assistance, training, outplacement consulting, pension plan
contributions, medical insurance contributions and related tax allowances.
In March 1997 the Executive Directors approved a multiyear program of
institutional renewal to improve IBRD's and IDA's business processes,
products and services, strengthen their human resources through more skilled
and better trained staff, and achieve a higher level of development
effectiveness. Implementation of this program is expected to result in costs
associated with staff reductions during the fiscal years 1997 through 1999.
At December 31, 1997, 161 staff had been identified for separation at a cost
of $27 million. Included in the total charge of $27 million are costs
associated with outplacement consulting, job search assistance, training,
medical insurance plan contributions and related tax allowances. Of the total
cumulative charge of $27 million, $11 million has been charged to IDA. Of the
total fiscal year to date charge of $17 million, $4 million and $7 million
have been charged to IDA for the three and six months ended December 31,
1997, respectively, consistent with normal cost apportionment procedures
applied in the calculation of the management fee.
Administrative Expenses for the three and six months ended December 31,
1997 are net of IDA management fee charges of $99 million and $199 million,
respectively, compared to $122 million and $244 million for the respective
fiscal year 1997 periods. For the three and six months ended December 31,
1997, Administrative Expenses are also net of charges to reimbursable
programs of $26 million and $52 million, respectively, compared to $37
million and $52 million for the respective fiscal year 1997 periods. Included
in the amounts charged to reimbursable programs are allocated charges to IFC
of $3 million and $7 million, respectively, compared to $6 million and $12
million for the respective fiscal year 1997 periods
<PAGE>
44 IBRD Financial Statements
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- -----------------------------------------------------------------------------
and allocated charges to MIGA of $0.2 million and $0.4 million, respectively,
compared to $0.2 million and $0.4 million for the respective fiscal year 1997
periods.
Contributions to special programs represent grants for agricultural
research, the control of onchocerciasis, and other developmental activities.
Note H--Trust Funds
IBRD, alone or jointly with IDA, administers on behalf of donors,
including members, their agencies and other entities, funds restricted for
specific uses which include the cofinancing of IBRD lending projects, debt
reduction operations, technical assistance for borrowers including
feasibility studies and project preparation, global and regional programs and
research and training programs. These funds are placed in trust and are not
included in the assets of IBRD. The distribution of trust fund assets by
executing agent at December 31, 1997 and June 30, 1997 is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
-------------------------- --------------------------
<S> <C> <C> <C> <C>
TOTAL NUMBER OF TOTAL
FIDUCIARY TRUST FIDUCIARY NUMBER OF
ASSETS FUND ASSETS TRUST FUND
(IN MILLIONS) ACCOUNTS (IN MILLIONS) ACCOUNTS
------------- ----------- ------------- -----------
IBRD executed............................. $ 412 1,337 $ 552 1,622
Recipient executed........................ 1,557 1,173 1,513 1,236
------ ----- ------ -----
Total..................................... $ 1,969 2,510 $ 2,065 2,858
------ ----- ------ -----
------ ----- ------ -----
-------------------------------------------------------------------------------------------------
</TABLE>
The responsibilities of IBRD under these arrangements vary and range from
services normally provided under its own lending projects to full project
implementation including procurement of goods and services. During the three
and six months ended December 31, 1997, IBRD received $4 million and $8
million, respectively, compared to $4 million and $8 million for the
respective fiscal year 1997 periods as fees for administering trust funds.
These fees have been recorded as a reduction of Administrative Expenses.
Note I--Staff Retirement Plan
IBRD has a defined benefit retirement plan (the Plan) covering
substantially all of its staff. The Plan also covers substantially all the
staff of IFC and MIGA. Under the Plan, benefits are based on the years of
contributory service and the highest three-year average of pensionable
remuneration as defined in the Plan, with the staff contributing a fixed
percentage of pensionable remuneration, and IBRD contributing the remainder
of the actuarially-determined cost of future Plan benefits. The actuarial
present values of Plan obligations throughout the fiscal year are determined
at the beginning of the fiscal year by the Plan's actuary. All contributions
to the Plan and all other assets and income held for the purposes of the Plan
are held by IBRD separately from the other assets and income of IBRD, IDA,
IFC and MIGA and can be used only for the benefit of the participants in the
Plan and their beneficiaries, until all liabilities to them have been paid or
provided for. Plan assets consist primarily of equity and fixed income
securities, with smaller holdings of cash, real estate and other investments.
<PAGE>
IBRD Financial Statements 45
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
Net periodic pension income for IBRD participants for the six months
ended December 31, 1997 consisted of the following components:
<TABLE>
<CAPTION>
IN MILLIONS
-------------------------------------------------------------------------------------------------
DECEMBER 31
-------------
<S> <C>
Service cost--benefits earned during the period................................. $ 92
Interest cost on projected benefit obligation................................... 178
Actual return on plan assets.................................................... (222)
Net amortization and deferral................................................... (200)
-----
Net periodic pension income..................................................... $ (152)
-----
-----
-------------------------------------------------------------------------------------------------
</TABLE>
The portion of this pension income related to IBRD that has been included
in Administrative Expense for the three and six months ended December 31,
1997 is $46 million and $91 million, respectively. The balance has been
included as a reduction to the management fee charged to IDA. IBRD had not
charged any pension expense, nor recognized any pension income, for the three
and six months ended December 31, 1996 because management was awaiting the
completion of a review of the pension expense accrual methodology. This
re-evaluation was completed in March 1997 at which time IBRD recorded pension
income of $49 million for the nine months ended March 31, 1997. The
management fee for the nine months ended March 31, 1997 was reduced by $28
million for pension income allocated to IDA upon completion of this
re-evaluation.
<PAGE>
46 IBRD Financial Statements
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- -----------------------------------------------------------------------------
The following table sets forth the Plan's funded status at December 31,
1997 and June 30, 1997:
<TABLE>
<CAPTION>
IN MILLIONS
- ----------------------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
------------ ---------
<S> <C> <C>
Actuarial present value of benefit obligations
Accumulated benefit obligation
Vested...................................................................... $ (3,898) $ (3,760)
Nonvested................................................................... (51) (49)
------------ ---------
Subtotal.................................................................. (3,949) (3,809)
Effect of projected compensation levels....................................... (1,891) (1,783)
------------ ---------
Projected benefit obligation................................................ (5,840) (5,592)
Plan assets at fair value....................................................... 8,876 8,698
------------ ---------
Plan assets in excess of projected benefit obligation........................... 3,036 3,106
Remaining unrecognized net transition asset..................................... (72) (78)
Unrecognized prior service cost................................................. 62 66
Unrecognized net gain from past experience different from that
assumed and from changes in assumptions....................................... (2,635) (2,881)
------------ ---------
Prepaid pension cost............................................................ $ 391 $ 213
------------ ---------
------------ ---------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Of the $391 million prepaid at December 31, 1997 ($213 million--June 30,
1997), $203 million is attributable to IBRD ($112 million--June 30, 1997) and
is included in Miscellaneous Assets on the balance sheet. The remainder has
been attributed to IDA, IFC and MIGA.
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5 percent (7.5
percent--June 30, 1997). The effect of projected compensation levels was
calculated based on a scale that provides for a decreasing rate of salary
increase depending on age, beginning with 11.0 percent (11.0 percent--June
30, 1997) at age 20 and decreasing to 5.5 percent (5.5 percent--June 30,
1997) at age 64. The expected long-term rate of return on assets was 9
percent (9 percent--June 30, 1997).
Note J--Retired Staff Benefits Plan
IBRD has a Retired Staff Benefits Plan (RSBP) that provides certain
health care and life insurance benefits to retirees. All staff who are
enrolled in the insurance programs while in active service and who meet
certain requirements are eligible for benefits when they reach early or
normal retirement age while working for IBRD. The RSBP also covers the staff
of IFC and MIGA.
Retirees contribute a level amount toward life insurance based on the
amount of coverage. Retiree contributions toward health care are based on
length of service and age at retirement. IBRD annually contributes the
remainder of the actuarially-determined cost for future benefits. The
actuarial present values of RSBP obligations throughout the fiscal year are
determined at the beginning of the fiscal year by the RSBP's actuary. All
contributions to the RSBP and all other assets and income held for purposes
of the RSBP are held by IBRD separately and are not included in the assets
and income of IBRD, IDA, IFC, and MIGA and are to be used to meet the
benefits described in the RSBP. RSBP assets consist primarily of fixed income
and equity securities.
<PAGE>
IBRD Financial Statements 47
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
Net periodic postretirement benefits cost for IBRD participants for the
six months ended December 31, 1997 and December 31, 1996 consisted of the
following components:
<TABLE>
<CAPTION>
IN MILLIONS
- ------------------------------------------------------------------------------------------------------------------------
1997 1996
----- -----
<S> <C> <C>
Service cost--benefits earned during the period..................................................... $ 12 $ 19
Interest cost on accumulated postretirement benefit obligation...................................... 25 24
Actual return on plan assets........................................................................ (36) (70)
Net amortization and deferral....................................................................... (8) 39
--- ---
Net periodic postretirement benefits (income) cost.................................................. $ (7) $ 12
--- ---
--- ---
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The portion of this (income)/cost that relates to IBRD and is included in
Administrative Expenses for the three and six months ended December 31, 1997
is $2 million and $4 million, respectively, compared to $4 million and $8
million for the respective fiscal year 1997 periods. The balance has been
included in the management fee charged to IDA.
The following table sets forth the RSBP's funded status at December 31,
1997 and June 30, 1997:
<TABLE>
<CAPTION>
IN MILLIONS
- ----------------------------------------------------------------------------------------------------------------------
DECEMBER 31 JUNE 30
------------- -----------
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees................................................................................ $ (335) $ (320)
Fully eligible active plan participants................................................. (148) (142)
Other active plan participants.......................................................... (290) (277)
----- -----
(773) (739)
Plan assets at fair value................................................................. 1,225 1,177
----- -----
Plan assets in excess of accumulated postretirement benefit obligation.................... 452 438
Unrecognized prior service costs.......................................................... (9) (10)
Unrecognized net loss from past experience different from that assumed and from changes in
assumptions............................................................................. (93) (99)
----- -----
Prepaid postretirement benefit (income) cost.............................................. $ (350) $ 329
----- -----
----- -----
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Of the $350 million prepaid at December 31, 1997 ($329 million--June 30,
1997), $306 million is attributable to IBRD ($296 million--June 30, 1997) and
is included in Miscellaneous Assets on the balance sheet. The remainder has
been attributed to IDA, IFC and MIGA.
<PAGE>
48 IBRD Financial Statements
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- -----------------------------------------------------------------------------
For December 31, 1997, the accumulated plan benefit obligation (APBO) was
determined using health care cost trend rates of 13.7 percent to 10.8
percent, decreasing gradually to 5.5 percent in 2009 and thereafter. The
health care cost trend rates used for June 30, 1997 were 13.7 percent to 10.8
percent decreasing gradually to 5.5 percent in 2009 and thereafter.
The health care cost trend rates assumption has a significant effect on
the amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point would increase the APBO at December 31,
1997 by $145 million and the net periodic postretirement benefit cost for the
six months then ended by $9 million.
The weighted average discount rate used in determining the APBO was 7.5
percent (7.5 percent--June 30, 1997). The expected long-term rate of return
on plan assets was 9 percent (7.5 percent--June 30, 1997).
<PAGE>
IBRD Financial Statements 49
- -------------------------------------------------------------------------------
Report of Independent Accountants
- -------------------------------------------------------------------------------
[LETTERHEAD]
President and Board of Governors
International Bank for Reconstruction and Development
We have reviewed the accompanying balance sheet of the International Bank for
Reconstruction and Development (IBRD), including the summary statement of
loans and the statement of subscriptions to capital stock and voting power,
as of December 31, 1997, and the related statements of income, changes in
retained earnings, changes in cumulative translation adjustment, and cash
flows for the three-month and six-month periods then ended. These financial
statements are the responsibility of IBRD's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants and International
Standards on Auditing. A review of interim financial information consists
principally of applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
auditing standards generally accepted in the United States of America or with
International Standards on Auditing, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America and
with International Accounting Standards.
The balance sheet as of June 30, 1997 was audited by other auditors whose
report dated July 28, 1997, expressed an unqualified opinion on the financial
statements from which such balance sheet was derived.
/s/ Deloitte Touche Tohmatsu (International Firm)
February 10, 1998
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 1
SEC REPORT ON CHANGES IN BORROWINGS
NEW BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
DESCRIPTION ISSUE # CURRENCY TRANCHE BOND AMOUNT US$ EQUIVALENT SETTLEMENT DATE
- --------------------------------------- ----------- ----------- ------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Swiss francs
- ------------
Reopening CHF 100 million 2.5% notes,
due 12/28/2001....................... 246 CHF 2 100,000,000 67,654,421 28-OCT-1997
Deutsche mark
- -------------
DEM 100 MILLION STEP-UP CALLABLE 5 YR
NOTES DUE 30 DEC 2002................ 47 DEM 1 100,000,000 56,390,447 30-DEC-1997
DEM 500 million 5.0% 5-year notes due
12/30/2002........................... 633 DEM 1 500,000,000 280,347,631 12-DEC-1997
-----------
** Total By Currency................... 336,738,078
-----------
Hong Kong dollars
- -----------------
HKD 500 Million 7.07% Notes, due
October 8, 2002...................... 618 HKD 1 500,000,000 64,632,885 08-OCT-1997
Italian lire
- ------------
ITL 500 BILLION EQUITY LINKED NOTES
MATURING 2002........................ 28 ITL 1 500,000,000,000 287,650,585 23-OCT-1997
ITL 300 BIL CALLABLE FLOATING/FIXED
BOND DUE OCT. 16, 2007............... 40 ITL 1 300,000,000,000 174,637,917 16-OCT-1997
ITL EQUITY LINKED BONDS DUE OCTOBER 28,
2002................................. 42 ITL 1 150,000,000,000 86,250,518 28-OCT-1997
ITL 150 BIL Fixed/Reverse Floater Bonds
due 2007............................. 43 ITL 1 150,000,000,000 87,890,968 31-OCT-1997
ITL FIXED/REVERSE FLOATER BONDS DUE
OCTOBER 31, 2007..................... 43 ITL 2 100,000,000,000 58,593,979 31-OCT-1997
ITL FIXED/REVERSE FLOATER BONDS DUE
OCTOBER 31, 2007..................... 43 ITL 3 100,000,000,000 58,593,979 31-OCT-1997
ITL 50 BILLION(fixed/reverse-floater
bonds)............................... 43 ITL 4 50,000,000,000 29,296,989 31-OCT-1997
</TABLE>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
ACT RPT 025 03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 2
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 2
SEC REPORT ON CHANGES IN BORROWINGS
NEW BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
DESCRIPTION ISSUE # CURRENCY TRANCHE BOND AMOUNT US$ EQUIVALENT SETTLEMENT DATE
- -------------------------------------- ----------- ----------- ------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ITL 200 BILLION FIXED REVERSE FLOATER
BONDS DUE DEC 18, 2007................. 45 ITL 1 200,000,000,000 114,502,287 18-DEC-1997
ITL fixed/reverse floater Bonds due
Dec. 18, 2007.......................... 45 ITL 2 100,000,000,000 57,251,144 18-DEC-1997
ITL 200 BILLION FIXED/REVERSE FLOATER
(DUE DEC. 18, 2007).................... 45 ITL 3 100,000,000,000 57,251,144 18-DEC-1997
Reop. ITL StepDown Notes from ITL 1
tr. to ITL 1.25 tr..................... 606 ITL 2 250,000,000,000 145,055,353 08-OCT-1997
ITL 200 billion FRNs, due October 2,
2000................................... 619 ITL 1 200,000,000,000 115,848,007 02-OCT-1997
ITL 300 billion 5% bonds due October
16, 2000............................... 620 ITL 1 300,000,000,000 174,637,917 16-OCT-1997
-------------
** Total By Currency..................... 1,447,460,787
-------------
Japanese yen
- ------------
JPY 10 bill 3.50% JPY/USD dual
currency notes due 10/30/01............ 627 JPY 1 10,000,000,000 83,263,947 30-OCT-1997
New Zealand dollars
- -------------------
NZD 100 million 6.75% Euronotes, due
October 29, 1999....................... 624 NZD 1 100,000,000 62,325,100 29-OCT-1997
NZD 50 Million 6.5% Notes due
11/20/2000............................. 626 NZD 1 50,000,000 31,250,000 12-NOV-1997
-------------
** Total By Currency..................... 93,575,100
-------------
Polish Zlotys
- -------------
PLZ 50 million 19.5% Euronotes of
1997, due June 17, 1999................ 591 PLN 2 50,000,000 14,609,204 06-OCT-1997
PLN 100 million 20% notes due November 6,
1999................................... 621 PLN 1 100,000,000 29,112,082 06-NOV-1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 3
SEC REPORT ON CHANGES IN BORROWINGS
NEW BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
DESCRIPTION ISSUE # CURRENCY TRANCHE BOND AMOUNT US$ EQUIVALENT SETTLEMENT DATE
- ----------------------------------------- --------- ----------- ------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
---------------
** Total By Currency..................... 43,721,286
---------------
United States dollars
- ---------------------
USD 100 MILLION 10NC1 BOND DUE OCTOBER
15, 2007............................... 41 USD 1 100,000,000 100,000,000 15-OCT-1997
US$50 MILLION 7.18%, 1 yr. CALLABLE DUE
OCTOBER 15, 2007....................... 41 USD 2 50,000,000 50,000,000 15-OCT-1997
USD 100 million 10nc1 Bond due November
14, 2007............................... 44 USD 1 100,000,000 100,000,000 14-NOV-1997
USD 30 million 6.015% Notes due November
10, 2002............................... 625 USD 1 30,000,000 30,000,000 10-NOV-1997
USD 25 million 5.45% Notes due December
12, 2001............................... 629 USD 1 25,000,000 25,000,000 25-NOV-1997
USD 10 million 6% Notes due November 18,
2004................................... 632 USD 1 10,000,000 10,000,000 18-NOV-1997
USD 10 Million 6.0% Notes of 1997, due
November 18, 2004...................... 632 USD 2 10,000,000 10,000,000 01-DEC-1997
USD 20 million 5.30% Notes due December
19, 2001............................... 635 USD 1 20,000,000 20,000,000 15-DEC-1997
USD 300 million 6% Notes due December 4,
2002................................... 636 USD 1 300,000,000 300,000,000 04-DEC-1997
USD 200 million 6.0% Notes due December
4, 2002................................ 636 USD 2 200,000,000 200,000,000 04-DEC-1997
USD 20 million 5.95% Notes due December
13, 2004............................... 639 USD 1 20,000,000 20,000,000 11-DEC-1997
USD 750 Million 6.125% Euronotes of 1997,
due Dec. 19, 2007...................... 641 USD 1 750,000,000 750,000,000 19-DEC-1997
---------------
** Total By Currency..................... 1,615,000,000
---------------
South African Rand
- ------------------
ZAR 150 million Reopening of Step-Down
5-Year Notes,9/4/2002.................. 610 ZAR 2 150,000,000 31,938,678 23-OCT-1997
ZAR 2 billion zero coupon notes, due
December 29, 2017...................... 623 ZAR 1 2,000,000,000 413,393,960 30-OCT-1997
ZAR 1 billion Zero coupon Euronotes, due
December 29, 2017...................... 623 ZAR 2 1,000,000,000 206,696,980 30-OCT-1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 4
SEC REPORT ON CHANGES IN BORROWINGS
NEW BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
DESCRIPTION ISSUE # CURRENCY TRANCHE BOND AMOUNT US$ EQUIVALENT SETTLEMENT DATE
- ----------------------------------- ----------- ----------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ZAR 100 million 14.125% 5-year
notes due 12/17/1997............. 637 ZAR 1 100,000,000 20,443,627 17-DEC-1997
ZAR 2 billion zero coupon 31-year
notes due 12/29/2028............. 638 ZAR 1 2,000,000,000 411,395,660 29-DEC-1997
ZAR 1 billion 31-year zero coupon
notes due 12/29/2028............. 638 ZAR 2 1,000,000,000 205,697,830 29-DEC-1997
---------------
** Total By Currency............... 1,289,566,735
---------------
---------------
** Total By Source................. 5,041,613,239
---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 4
SEC REPORT ON CHANGES IN BORROWINGS
NEW BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PRIVATE
DESCRIPTION ISSUE # CURRENCY TRANCHE BOND AMOUNT US$ EQUIVALENT SETTLEMENT DATE
- ------------------------------------------- ----------- ----------- ------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong dollars
- -----------------
HKD 350 million 10% p.a.(pay s.a.)Notes,
due 12/19/2000........................... 628 HKD 1 350,000,000 45,167,118 19-DEC-1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 6
SEC REPORT ON CHANGES IN BORROWINGS
NEW BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : LOANS
DESCRIPTION ISSUE # CURRENCY TRANCHE BOND AMOUNT US$ EQUIVALENT SETTLEMENT DATE
- ----------------------------------------- ----------- ----------- ------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Japanese yen
- ------------
JPY 1 BILLION MULTI-UP CALLABLE
LOAN,11/25/98,DUE 11/26/2007........... 221 JPY 1 1,000,000,000 7,936,508 25-NOV-1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 7
SEC REPORT ON CHANGES IN BORROWINGS
MATURED BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : OFFICIAL
DESCRIPTION ISSUE # CURRENCY TRANCHE REDEMPTION AMOUNT US$ EQUIVALENT REDEMPTION DATE
- ------------------------------------------- ---------- -------- ---------- ------------------ -------------- ---------------
<C> <C> <S> <C> <C> <C> <C>
Japanese yen
- ------------
5.60% JPY Bonds of 1987, due Dec. 17, 1997 149 JPY 1 15,000,000,000 114,285,714 17-DEC-1997
</TABLE>
* Indicates Partial Maturity
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 8
SEC REPORT ON CHANGES IN BORROWINGS
MATURED BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
DESCRIPTION ISSUE # CURRENCY TRANCHE REDEMPTION AMOUNT US$ EQUIVALENT REDEMPTION DATE
- ------------------------------------------- ---------- -------- ---------- ------------------ -------------- ---------------
<C> <C> <S> <C> <C> <C> <C>
Canadian dollars
- ----------------
DEM Libor-Linked Inverse CAD FRNs
due 10/23/97............................ 33 CAD 1 81,400,000 58,514,844 23-OCT-1997
Swiss francs
- ------------
5.25% SwF Bonds of 1987, due
December 10, 1997....................... 202 CHF 2 100,000,000 68,941,744 10-DEC-1997
Italian lire
- ------------
10.625% ITL 300 BILLION BONDS OF 1994,
DUE NOVEMBER 25, 1997................... 24 ITL 1 300,000,000,000 174,929,154 25-NOV-1997
Japanese yen
- ------------
5.625% JPY Bonds of 1987, due Nov. 27, 1997
(3rd Offering A)........................ 146 JPY 1 49,770,000,000 389,741,582 27-NOV-1997
4.5% JPY Global Bonds OF 1992, Due 12/22/97 206 JPY 1 225,000,000,000 1,766,091,052 22-DEC-1997
---------------
** Total By Currency 2,155,832,634
---------------
Netherlands guilders
- --------------------
7% f. Bonds of 1987, due 1997............. 89 NLG 1 300,000,000 150,897,842 01-DEC-1997
7-5/8% NLG Bond of 1992, due 1997......... 95 NLG 1 750,000,000 379,727,609 15-OCT-1997
</TABLE>
* Indicates Partial Maturity
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 9
SEC REPORT ON CHANGES IN BORROWINGS
MATURED BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
DESCRIPTION ISSUE # CURRENCY TRANCHE REDEMPTION AMOUNT US$ EQUIVALENT REDEMPTION DATE
- ------------------------------------------- ---------- -------- ---------- ------------------ -------------- ---------------
<C> <C> <S> <C> <C> <C> <C>
--------------
** Total By Currency................ 530,625,451
--------------
United States dollars
- -----------------------
9.875% US$ Notes of 1987, due
1997.............................. 214 USD 1 693,250,000 693,250,000 01-OCT-1997
Inverse USD FRNs of 1992, due
10/1/97........................... 252 USD 1 28,000,000 28,000,000 01-OCT-1997
DEM LIBOR Inverse Floating Rate USD
Notes due Nov. 1997............... 253 USD 1 50,000,000 50,000,000 20-NOV-1997
Sterling LIBOR-linked USD Notes of
93, due 10/15/97.................. 263 USD 1 25,000,000 25,000,000 15-OCT-1997
--------------
** Total By Currency................ 796,250,000
--------------
--------------
** Total By Source.................. 3,785,093,827
--------------
</TABLE>
* Indicates Partial Maturity
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 10
SEC REPORT ON CHANGES IN BORROWINGS
MATURED BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : Private
DESCRIPTION ISSUE # CURRENCY TRANCHE REDEMPTION AMOUNT US$ EQUIVALENT REDEMPTION DATE
- ------------------------------------------- ---------- -------- ---------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Netherlands guilders
- --------------------
7.25% NLG Private Placement of '85,
Due 1991-2000...................... 75 NLG 1 20,000,000 10,126,070 15-OCT-1997 *
United States dollars
- ---------------------
Zero-coupon US$ Bonds of 1987, due
2037/38............................ 215 USD 1 5,700,000 5,700,000 17-NOV-1997
Zero-coupon US$ Bonds of 1987, due
2037/38............................ 215 USD 5 2,400,000 2,400,000 09-DEC-1997
Zero-coupon US$ Bonds of 1987, due
2037/38............................ 215 USD 6 5,850,000 5,850,000 28-NOV-1997
-------------
** Total By Currency................. 13,950,000
-------------
-------------
** Total By Source................... 24,076,070
-------------
</TABLE>
* Indicates Partial Maturity
<PAGE>
<TABLE>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 11
SEC REPORT ON CHANGES IN BORROWINGS
MATURED BORROWINGS (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE : LOANS
<CAPTION>
DESCRIPTION ISSUE # CURRENCY TRANCHE REDEMPTION AMOUNT US$ EQUIVALENT
- ------------------------------------- ----------- ----------- ------------- ------------------- --------------
<S> <C> <C> <C> <C> <C>
Japanese yen
5.80% JPY Loan of 1987, due
1995/2000.......................... 124 JPY 1 3,600,000,000 28,257,457
JAPANESE YEN LOAN OF 1987, DUE
1994-1999 (Ref. #29)............... 129 JPY 1 2,700,000,000 21,193,093
JAPANESE YEN LOAN OF 1987, DUE
1994-1999 (REF #29)................ 129 JPY 2 3,600,000,000 28,257,457
JAPANESE YEN LOAN OF 1987, DUE
1994-1999.......................... 130 JPY 1 5,000,000,000 39,840,637
JAPANESE YEN LOAN OF 1987, DUE
1995-2000.......................... 132 JPY 1 2,700,000,000 22,258,862
JAPANESE YEN LOAN OF 1987, DUE
1993-1998.......................... 134 JPY 1 6,300,000,000 51,681,706
-
--------------
** Total By Currency................. 191,489,212
--------------
--------------
** Total By Source................... 191,489,212
--------------
<CAPTION>
REDEMPTION DATE
----------------
<C>
22-DEC-1997 *
22-DEC-1997 *
22-DEC-1997 *
20-NOV-1997 *
17-OCT-1997 *
09-OCT-1997 *
</TABLE>
- ------------------------
* Indicates Partial Maturity
<PAGE>
<TABLE>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 12
SEC Report On Changes in Borrowings
MATURED BORROWINGS (COLTS) 01-OCT-1997 thru 31-DEC-1997
SOURCE : PUBLIC
<CAPTION>
DESCRIPTION ISSUE # CURRENCY TRANCHE REDEMPTION AMOUNT US$ EQUIVALENT REDEMPTION DATE
- ---------------------------- ------- -------- ------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
United States dollars
- ---------------------
10.2% COLTS DUE 06-OCT-1997 142 USD 1 4,000,000 4,000,000 06-OCT-1997
10.4% COLTS DUE 16-OCT-1997 145 USD 1 1,500,000 1,500,000 16-OCT-1997
9.8% COLTS DUE 30-OCT-1997 148 USD 1 1,000,000 1,000,000 30-OCT-1997
9.8% COLTS DUE 31-OCT-1997 156 USD 1 2,000,000 2,000,000 31-OCT-1997
9.8% COLTS DUE 31-OCT-1997 157 USD 1 1,000,000 1,000,000 31-OCT-1997
8.375% COLTS DUE 15-NOV-1997 160 USD 1 2,000,000 2,000,000 15-NOV-1997
10% COLTS DUE 10-NOV-1997 168 USD 1 1,850,000 1,850,000 10-NOV-1997
9.6% COLTS DUE 18-NOV-1997 179 USD 1 12,500,000 12,500,000 18-NOV-1997
9.43% COLTS DUE 01-DEC-1997 187 USD 1 200,000 200,000 01-DEC-1997
9.61% COLTS DUE 03-DEC-1997 190 USD 1 6,000,000 6,000,000 03-DEC-1997
7.05% COLTS DUE 15-DEC-1997 300 USD 1 3,000,000 3,000,000 15-DEC-1997
0% COLTS DUE 14-NOV-1997 1066 USD 1 643,000 643,000 14-NOV-1997
0% COLTS DUE 17-NOV-1997 1112 USD 1 1,000,000 1,000,000 17-NOV-1997
8.42% COLTS DUE 31-OCT-1997 1180 USD 1 2,000,000 2,000,000 31-OCT-1997
8.25% COLTS DUE 15-OCT-1997 1327 USD 1 2,250,000 2,250,000 15-OCT-1997
0% COLTS DUE 31-DEC-1997 1341 USD 1 60,000 60,000 31-DEC-1997
9.14% COLTS DUE 15-OCT-1997 1467 USD 1 200,000 200,000 15-OCT-1997
8.91% COLTS DUE 27-OCT-1997 1471 USD 1 50,000 50,000 27-OCT-1997
8.93% COLTS DUE 07-NOV-1997 1474 USD 1 25,000 25,000 07-NOV-1997
8.87% COLTS DUE 10-NOV-1997 1475 USD 1 1,000,000 1,000,000 10-NOV-1997
8.73% COLTS DUE 21-NOV-1997 1478 USD 1 1,000,000 1,000,000 21-NOV-1997
8.33% COLTS DUE 29-DEC-1997 1488 USD 1 25,000 25,000 29-DEC-1997
8.32% COLTS DUE 31-DEC-1997 1491 USD 1 150,000 150,000 31-DEC-1997
--------------
** Total By Currency 43,453,000
--------------
--------------
** Total By Source 43,453,000
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 13
SEC Report On Changes in Borrowings
PREPAYMENT ADVICES (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE; Public
DESCRIPTION ISSUE # CURRENCY TRANCHE PREPAYMENT AMOUNT US$ EQUIVALENT PREPAYMENT DATE
- ------------------------------------- -------- ----------- ------------- ------------------ -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Australian dollars
- -------------------
Zero-Coupon Euro-Australian $
Notes of 1995 due Oct 18, 1999..... 16 AUD 1 132,000,000 95,436,000 09-OCT-1997
Pounds sterling
- ---------------
GBP 350 million Zero-coupon Notes,
due July 17, 2000.................. 31 GBP 1 70,000,000 113,561,000 09-OCT-1997
Italian lire
- -------------[caad 214]
10.6 PERCENT CALLABLE NOTES DUE
1998............................... 3 ITL 1 150,000,000,000 89,639,470 13-NOV-1997
ITL 1 trillion zero-coupon notes, due
February 1, 2007................... 25 ITL 1 40,000,000,000 23,227,320 15-OCT-1997
ITL 800 billion 6.5% notes due on
March 4, 2004...................... 26 ITL 1 35,775,000,000 21,116,036 07-NOV-1997
-----------
** Total By Currency................... 133,982,826
-----------
United States dollars
USD 100 MILLION STEP-UP CALLABLE
NOTES DUE NOV 1999................. 26 USD 1 100,000,000 100,000,000 18-NOV-1997
USD 20 Million Step Up Callable
Notes, due November 1999........... 26 USD 2 20,000,000 20,000,000 18-NOV-1997
-----------
** Total By Currency................... 120,000,000
-----------
-----------
** Total By Source..................... 462,979,826
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEBRUARY 13, 1998 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ACT RPT 025
03:32:56 LIABILITIES MANAGEMENT SYSTEM Page 14
SEC Report On Changes in Borrowings
PREPAYMENT ADVICES (MLT) 01-OCT-1997 thru 31-DEC-1997
SOURCE: LOANS
DESCRIPTION ISSUE # CURRENCY TRANCHE PREPAYMENT AMOUNT US$ EQUIVALENT PREPAYMENT DATE
- ------------------------------------- ----------- ----------- ------------- ------------------ -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Japanese yen
JPY 1 BILLION CALLABLE MULTI-UP
LOAN............................. 219 JPY 1 1,000,000,000 8,324,315 21-OCT-1997
</TABLE>
