World Bank Group Releases FY22 Audited Financial Statements

New Delhi : On August 4, the Boards of the World Bank Group approved the audited financial statements for the fiscal year ended June 30, 2022.

World Bank Group commitments (including short-term finance, mobilization and Recipient-Executed Trust Funds) rose to $115 billion in fiscal year 2022, $5.3 billion or 5% higher than FY21. A significant portion of the FY22 commitments supported measures addressing the impact of global overlapping crises, food insecurity, increasing fragility and conflict as well as climate change.

“World Bank Group support to client countries increased to $115 billion over the last fiscal year,” said World Bank Group President David Malpass. “The results reflect strong demand for financing from our client countries, continued backing from our shareholders and capital markets, and our strong financial position.”

The financial statements are accompanied by the Management’s Discussion and Analysis of financial results for the four World Bank Group institutions: the International Bank for Reconstruction and Development (IBRD), which provides loans and advice to middle-income countries; the International Development Association (IDA), the World Bank’s fund for the poorest and most vulnerable; the International Finance Corporation (IFC), the Bank Group’s private sector arm; and the Multilateral Investment Guarantee Agency (MIGA), whose mandate is to help drive impactful foreign direct investment to developing countries.

Key highlights by institution of the financial statements are as follows:

IBRD

IBRD’s net commitments increased 8% to $33.1 billion in FY22, the highest annual amount in a decade; gross disbursements increased 19% to $28.2 billion. FY22 Commitments to lower-middle-income countries represented 50% of the total.
Considering loan repayments, net disbursements were $14.9 billion in FY22. IBRD’s loan portfolio increased to $227.1 billion, 4% growth from the prior year.
IBRD’s net investment portfolio was $82.1 billion as of June 30, 2022, compared to $85.8 billion a year earlier, with the liquid asset portfolio remaining well above the prudential minimum liquidity level.
IBRD raised medium- and long- term market debt of $40.8 billion during FY22, taking the total borrowings to $235.2 billion as of June 30, 2022. The funds raised financed development lending, supported liquidity, and were used to replace maturing debt.
The equity to loans (E/L) ratio, IBRD’s capital adequacy measure, was 22.0%, 0.6% lower than a year ago, as the increase in total exposures outpaced the increase in usable equity.
IBRD’s reported net income was $4.0 billion in FY22, compared to net income of $2.0 billion in the prior year, primarily due to the unrealized mark-to-market gains on IBRD’s non-trading portfolios.
Allocable income, the measure that IBRD uses for net income allocation decisions, was $0.8 billion, $0.4 billion lower than the previous year, which was primarily attributable to the increase in the provision for loan losses and other exposures driven mostly by the increase in the implied forward rates. The allocable income was used to augment reserves and support development activities including transfers to IDA.

IDA

To meet the heightened financing needs for IDA resources, and with strong support from its shareholders, IDA’s Twentieth Replenishment (IDA20) was advanced by one year, starting in FY23. The financing envelope of $93 billion over the three-year replenishment period, FY23-FY25, is supported by $23.5 billion in member contributions.
In FY22, IDA net commitments were $37.7 billion, the highest annual level in IDA’s history. IDA’s gross disbursements were $21.2 billion in FY22, higher than the average of the past five years and pre-COVID levels.
The net outstanding loan balance was $174.5 billion as of June 30, 2022, $3.3 billion lower than FY21, mainly due to currency translation of $12.5 billion, partially offset by net disbursements.
IDA’s net investment portfolio grew to $39.6 billion as of June 30, 2022, from $37.9 billion a year earlier, with the liquid asset portfolio remaining well above the FY22 prudential minimum.
As part of its funding activities, IDA raised medium- and long-term debt of $9.8 billion during FY22, taking the total borrowings to $32.9 billion as of June 30, 2022.
IDA’s capital adequacy measure, the deployable strategic capital (DSC) ratio, was 26.4% as of June 30, 2022, 4.0 percentage points lower from a year earlier, reflecting the record commitment levels.
IDA’s reported net income was $12 million compared to a net loss of $433 million in the prior year. The increase in net income was primarily driven by currency translation adjustment gains due to the strengthening of the U.S. dollar during the year.
Adjusted Net Income, the measure that IDA uses to monitor the economic results of its operations, was $0.3 billion, $0.1 billion lower than the prior year. This lower outturn for FY22 is against a significant one-time increase in interest revenue in FY21 when a borrowing country cleared its arrears.

IFC

IFC’s total commitments in FY22 reached $32.8 billion, an increase of 4% from the previous year. Long-term finance commitments were $23.2 billion, of which $12.6 billion was for IFC’s own account and $10.6 billion for core mobilization. Additionally, IFC delivered a record high of $9.7 billion in short-term finance, an 18% increase compared to the previous year.
IFC reported a net loss of $464 million for FY22, primarily driven by lower treasury income as a result of sharply rising yields for U.S. Treasuries since January 2022. Unrealized losses on equity investments were $617 million (unrealized gains of $2.6 billion in FY21) mainly due to reclassifying gains from unrealized to realized upon sales of investments, and to a lesser extent driven by valuation changes. In comparison, IFC’s net income of $4.2 billion in FY21 had a substantial component of unrealized gains on investments of $3.3 billion, when the markets rebounded post the immediate effect of COVID-19.
IFC’s capital adequacy, as measured by the Capital Utilization Ratio (CUR), decreased to 62.0% at FY22-end, down by 4.6% from 66.6% at the end of FY21. The reduction (improvement) in CUR was largely attributed to a decrease in Capital Required as well as an increase in Capital Available.
IFC raised medium- and long-term debt of $9.1 billion during FY22.

MIGA

MIGA’s commitments totaled $4.9 billion in FY22 in support of a record high 54 projects.
Of the projects supported, 85% addressed one or more of the Agency’s Strategic Priority Areas, namely, IDA Countries, FCS and Climate Finance.
Gross guarantee exposure increased to a record high $24.4 billion at end-FY22. The $1.5 billion increase reflects the new business volume exceeding the portfolio run-off by $2.2 billion, partially offset by the negative translation adjustment of $0.8 billion largely from the Euro-denominated portfolio.
MIGA reported net income of $27.6 million in FY22 compared to $81.5 million in FY21, a decrease of $54 million. The decrease reflects the combined effect of higher reserve for claims in FY22, an investment loss in FY22 of $8.5 million vs investment income of $5.6 million in FY21, and $11.4 million lower operating income.
The capital utilization ratio, MIGA’s key capital adequacy measure, decreased to 42.7% from 44.5% as of June 30, 2021, largely reflecting the impact of the increase in Operating Capital.