International Bank for Reconstruction andDevelopment

Management’s Discussion & Analysis
andFinancial Statements
June 30, 2022

Management’s Discussion and Analysis

Section I: Executive Summary

Contents
Section I: Executive Summary

Summary Financial Results

4

Section II: Overview

Introduction
Presentation
Financial Business Model
Basis of Reporting

6
6
6
8

Section III: Financial Results

Financial Results and Portfolio Performance
Net Income
Net Income Allocation

10
11
17

Section IV: Lending Activities

Net Lending Commitments and Gross Disbursements
Lending Categories
Currently Available Lending Products
Discontinued Lending Products
Waivers

20
21
22
24
24

Section V: Other Development Activities

Guarantees
GrantsExternally-Funded Activities

26
27
28

Section VI: Investment Activities

Liquid Asset Portfolio
Other Investments

31
32

Section VII: Borrowing Activities

Borrowing Portfolio
Short-Term Borrowings
Medium- and Long-Term Borrowings

33
34
35

Section VIII: Capital Activities

Capital Structure
Usable Equity

36
38

Section IX: Risk Management

Risk GovernanceRisk Oversight and Coverage
Management of IBRD’s Risks
Geopolitical Events and COVID-19 Pandemic
Capital Adequacy
Credit Risk
Market Risk
Operational Risk

39
39
42
42
43
44
51
57

Section X: Contractual Obligations

Contractual Obligations

58

Section XI: Pension and Other Post-Retirement Benefits

GovernanceFunding and Investment Policies
Environmental, Social and Governance (ESG) Policies
Projected Benefit Obligation

59
59
60
60

Section XII: Critical Accounting Policies and the Use of
Estimates

Fair Value of Financial Instruments
Provision for Losses on Loans and Other Exposures
Pension and Other Post-Retirement Benefits

61
62
62

Section XIII: Governance and Controls

Business Conduct
General Governance
Executive Directors
Audit Committee
Auditor Independence
External Auditors
Senior Management Changes
Internal Control

63
63
63
64
65
65
65
65

Appendix

Glossary of Terms
Abbreviations and Acronyms
Eligible Borrowing Member Countries by Region
List of Tables, Figures and Boxes

67
68
69
69

IBRD Management’s Discussion and Analysis: June 30, 2022 1

Management’s Discussion and Analysis

Section I: Executive Summary

This Management’s Discussion and Analysis (MD&A) discusses the financial results of the International Bank for
Reconstruction and Development (IBRD) for the fiscal year ended June 30, 2022 (FY22). IBRD undertakes noobligation to update any forward-looking statements. Certain reclassifications of prior years’ information have been
made to conform with the current year’s presentation. For discussion of IBRD’s financial results for the year ended
June 30, 2021, as compared to the year ended June 30, 2020, see Section III – Financial Results in IBRD’s MD&A
and Financial Statements for the fiscal year ended June 30, 2021. For information relating to IBRD’s development
operations’ results and corporate performance, refer to the World Bank Corporate Scorecard and Sustainability
Review.

Box 1: Selected Financial Data
In millions of U.S. dollars, except ratios which are in percentages
As of and for the fiscal years ended June 30
2022

2021

2020

Lending Highlights (Section IV)
Net commitments a
Gross disbursements
Net disbursements
Income Statement (Section III)
Board of Governors-approved and other transfers
Net income (loss)
Balance Sheet
Total assets
Net investment portfolio (Section VI)
Net loans outstanding (Section IV)
Borrowing portfolio b (Section VII)
Total equity$

33,072
28,16814,876$30,523
23,691
13,590$27,976
20,238
10,622

$

(354)
3,990

$

(411)
2,039

$

(340)
(42)

$

317,542
82,057227,092
256,909
55,320$317,301
85,831
218,799
253,656
48,078$296,804
82,485202,158
237,231
40,387

$

806

$

1,248

$

1,381

Non-GAAP Measures:
Allocable Income (Section III)
Allocable income
Allocated as follows:
General Reserve cInternational Development Association
SurplusUsable Equity e f (Section VIII)

589
117
100

$

Equity-to-loans ratio g (See Section IX)

50,481

22.0%

874
274
100

$

49,997

22.6%

950
431 d

$

47,13822.8%

a. Amounts include guarantee commitments and guarantee facilities that have been approved by the Executive Directors (referred toas “the Board” in this document) and are net of full terminations and cancellations relating to commitments approved in the same
fiscal year.
b. Includes associated derivatives.
c. The June 30, 2022 amount represents the transfer to the General Reserve from FY22 net income, which was approved by the
Board on August 4, 2022.
d. On January 25, 2021, the Board of Governors approved a transfer of $331 million to IDA from Surplus, which was made on February
1, 2021.
e. Excludes amounts associated with unrealized mark-to-market gains/losses on non-trading portfolios, net and related cumulativetranslation adjustments.
f. As defined in Table 28: Usable Equity. Usable Equity includes the transfer to the General Reserve from FY22 net income, which
was approved by the Board on August 4, 2022.
g. As defined in Table 29: Equity-to-Loans Ratio.

2

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section I: Executive Summary

Section I: Executive Summary
With its many years of experience and its depth of knowledge in the international development arena, IBRD plays a
key role in achieving the World Bank Group’s (WBG 1 ) goal of helping countries achieve better development
outcomes. IBRD contributes to both the WBG’s twin goals of ending extreme poverty and promoting sharedprosperity, and to the Forward Look2, by providing countries with loans, advisory services and analytical support.
IBRD and its affiliated organizations seek to help countries achieve improvements in growth, job creation, poverty
reduction, governance, the environment, climate adaptation and resilience, human capital, infrastructure and debt
transparency, among others. To meet its development goals, the WBG has been increasing its focus on country
programs in order to improve growth and development outcomes. Further, in response to the ongoing coronavirus
disease (COVID-19) pandemic and other geopolitical events, IBRD continues to work in solidarity with partners at
global and country levels to support its borrowing countries.
Further, the last fiscal year brought new challenges to the global outlook – high inflation and the rise in food insecurity
that came on top of growing inequality, global fragility, the coronavirus disease (COVID-19) pandemic and othergeopolitical events, rising debt, and macroeconomic imbalances. In response, IBRD, as part of the WBG efforts,
continues to work with partners at global and country levels to support its borrowing countries in addressing the impactof these multiple crises, to enhance resilience, and lay the groundwork for rebuilding better. The responses all remain
in compliance with IBRD’s existing financial, operational and risk management policies.

1

The other WBG institutions are the International Development Association (IDA), the International Finance Corporation (IFC), theMultilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). The
World Bank consists of IBRD and IDA.

2

The Forward Look: A Vision for the WBG in 2030, describes how the WBG will deliver on its twin goals and its three priorities ofsustainable and inclusive growth, human capital, and resilience. The Forward Look rests on four pillars: serving all clients; mobilizing
resources for development and creating markets; leading on global issues; and improving the business model.

IBRD Management’s Discussion and Analysis: June 30, 2022 3

Management’s Discussion and Analysis

Section I: Executive Summary

Summary Financial Results
Net Income
IBRD recorded net income of $3,990 million for the fiscal year ended June 30, 2022, an increase of $1,951 million,
compared with net income of $2,039 million for the fiscal year ended June 30, 2021. The increase in FY22 was largely
due to higher unrealized mark-to-market gains on IBRD’s non-trading portfolios compared to FY21, primarily fromderivatives in the loan portfolio. Given IBRD’s intention to maintain its non-trading portfolio positions to maturity,
unrealized mark-to-market gains and losses are not included in IBRD’s allocable income.

Allocable Income
Allocable income is the measure IBRD uses for making net income allocation decisions. For the fiscal year ended
June 30, 2022, allocable income was $806 million, compared with $1,248 million for the fiscal year ended June 30,
2021. The decrease in allocable income was mainly due to higher provision for losses on loans and other exposures,primarily reflecting the increase in the loss given default (severity) due to the increase in the implied forward interest
rates during the year (See Section III).
In millions of U.S. dollars
Allocable income
Net Income/Loss
Unrealized gains/losses on non-trading portfolios
4,500
3,500
2,500
1,500
500
-500
-1,500
FY18

FY19

FY20

FY21

FY22

Lending Operations
IBRD’s lending operations during the fiscal year ended June 30, 2022 provided $33.1 billion of net commitments, thehighest annual amount in a decade, and $28.2 billion of gross loan disbursements. Net disbursements of $14.9 billion
were the key driver for the increase in net loans outstanding, from $218.8 billion at the end of the fiscal year ended
June 30, 2021, to $227.1 billion at the end of the fiscal year ended June 30, 2022.
In billions of U.S. dollars
Net Commitments

Disbursements

Gross
Net

Net Loans outstanding

40

40

250

32

32

200

24

24

150

16

16

100

8

8

50

0

0
Jun18 Jun19 Jun20 Jun21 Jun22

0
Jun18 Jun19 Jun20 Jun21 Jun22

Jun18 Jun19 Jun20 Jun21 Jun22

Net commitments were $2.6 billion higher compared with FY21 (Table 9), reflecting continued support for COVID19 related efforts, including $3.3 billion of financing for COVID-19 vaccines. The regions with the largest share ofcommitments during FY22 were Latin America and the Caribbean with 28% and Europe and Central Asia with 18%.

4

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section I: Executive Summary

Net Investment Portfolio
IBRD’s net investment portfolio decreased by $3.7 billion, from $85.8
billion as of June 30, 2021, to $82.1 billion as of June 30, 2022. The
investments remain concentrated in the upper end of the credit spectrum,with 77% rated AA or above (Table 30), reflecting IBRD’s objective ofprincipal protection and its preference for high-quality investments.

In billions of U.S. dollars
Net Investment Portfolio
120
90

60
30
0
Jun18 Jun19 Jun20 Jun21 Jun22

Borrowing Portfolio
As of June 30, 2022, the borrowings portfolio was $256.9 billion, $3.2
billion higher than June 30, 2021. The increase was mainly due to net new
debt issuances that financed development and lending operations andsatisfied liquidity requirements. The debt issuances were highly
diversified in terms of investor types and location, with an average
maturity of 7.6 years.

In billions of U.S. dollars

Borrowing Portfolio
300
240
180
120
60
0
Jun18 Jun19 Jun20 Jun21 Jun22

Equity-to-Loans Ratio
The Equity-to-Loans ratio was 22.0% as of June 30, 2022, above thepolicy minimum of 20%. It was lower compared with 22.6% as of June30, 2021, as the increase in the loan and other exposures outpaced theincrease in usable equity. In line with IBRD’s currency management
policy, exchange rate movements during the year did not have an impact
on IBRD’s equity-to-loans ratio.
In FY22, IBRD received $1.3 billion of paid-in capital subscribed underthe 2018 General and Selective Capital Increases (GCI and SCI), bringing
the cumulative amounts received to $4.0 billion, 54% of the total amount
expected over the subscription period.

Ratio in percentages
Equity to Loans ratio
Equity To Loans Ratio
Policy Minimum
40%
30%
20%
10%
0%

Jun18 Jun19 Jun20 Jun21 Jun22

IBRD Management’s Discussion and Analysis: June 30, 2022 5

Management’s Discussion and Analysis

Section II: Overview

Section II: Overview
Introduction
IBRD, an international organization owned by its 189-member countries, is one of the five institutions of the WBG.
Each institution is legally and financially independent, with separate assets and liabilities. IBRD is not liable for the
obligations of the other institutions.
IBRD is a multilateral development bank that combines knowledge services and financing with a global reach. IBRD’s
value derives from its ability to help eligible borrowing members address their development challenges and meet theirrising demand for innovative products. IBRD provides loans, guarantees, and other financial products fordevelopment-focused projects and programs to creditworthy middle-income and lower-income countries to support
sustainable development. By operating across a full range of country clients, IBRD maintains a depth of development
knowledge, uses its convening power to promote development and advance the global public goods agenda, andcoordinates responses to regional and global challenges.
Member countries use IBRD’s technical advice and analysis and convening power to develop or implement better
policies, programs, and reforms that help sustain development over the long term. The products delivered range fromdevelopment data, to reports in key social economic and social issues at the local, country, regional and global levels.
The products also include knowledge-sharing workshops focused on local issues, to flagship events and fora to address
the most pressing global development challenges.

Presentation
This document provides management’s discussion and analysis of the financial condition and results of operations for
IBRD for the fiscal year ended June 30, 2022. At the end of this document there is a Glossary of Terms and a list of
Abbreviations and Acronyms. Certain reclassifications of prior years’ information have been made to conform to thecurrent year’s presentation.

Financial Business Model
IBRD’s objective is not to maximize profits, but to earn adequate income to ensure that it has the long-term financial
capacity necessary to support its development activities. IBRD seeks to generate sufficient revenue to finance its
operations as well as to be able to set aside funds in reserves to strengthen its financial position.
It also seeks to provide support to IDA and trust funds via income transfers for other developmental purposes.
IBRD’s financial strength rests on the support it receives from its shareholders, and on its array of financial policies
and practices. Shareholder support for IBRD is reflected in the capital backing it continues to receive from its members
and in the record of its borrowing member countries in meeting their debt service obligations to IBRD. Sound financial
and risk management policies and practices have enabled IBRD to maintain adequate capital, diversify its funding
sources, hold a portfolio of liquid investments to meet its financial commitments, and limit its risks, including credit
and market risks.
IBRD offers its borrowers, in creditworthy middle-income and lower-income countries, long-term loans withmaturities up to 35 years. Borrowers may customize their repayment terms to meet their debt management or projectneeds, and loans have fixed or variable spread terms in multiple currencies. Effective April 1, 2021, IBRD’s offeringof loans on fixed spread terms has been suspended in the context of the global markets’ transition away from theLondon Interbank Offer Rate (LIBOR). Borrowers have generally preferred loans denominated in U.S dollars andeuros. IBRD also supports its borrowers by providing access to risk management products such as derivative
instruments, including currency and interest rate swaps and interest rate caps and collars.

6

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section II: Overview

To meet its development goals, IBRD intermediates funds for lending from the international capital markets. IBRD’s
loans are financed through its equity, and from borrowings raised in the capital markets. IBRD is rated triple-A by the
major rating agencies and its bonds are viewed as high-quality securities by investors. IBRD’s funding strategy is
aimed at achieving the best long-term value on a sustainable basis for its borrowing members. This strategy has
enabled IBRD to borrow at favorable market terms and pass the savings on to its borrowing members. IBRD’s annual
funding volumes vary from year to year, and funds raised are used to finance IBRD’s development projects andprograms in member countries. Funds not deployed for lending are maintained in IBRD’s investment portfolio tosupply liquidity for its operations. Figure 1 below illustrates IBRD’s financial business model.
Figure 1: IBRD’s Financial Business Model

IBRD uses derivatives to manage its exposure to various market risks from the above activities. These are used toalign the interest and currency composition of its assets (loan and investment trading portfolios) with that of its
liabilities (borrowing portfolio), and to stabilize earnings on the portion of the loan portfolio funded by equity. See
Section IX: Risk Management for additional details on how IBRD uses derivatives.
Management believes that these risk management strategies, taken together, effectively manage market risk in IBRD’soperations from an economic perspective. However, these strategies entail the use of derivatives, which introduce thepotential for volatility in net income through unrealized mark-to-market gains and losses (particularly given the longterm nature of some of IBRD’s assets and liabilities). Accordingly, management makes decisions on income allocation
without reference to unrealized mark-to-market gains and losses on risk management instruments in the non-trading
portfolios – see Basis of Reporting – Allocable Income.

Financial Performance
IBRD’s primary sources of revenue are from loans and investments, both net of funding costs (see Figure 2). Theserevenues cover administrative expenses, provisions for losses on loans and other exposures 3 (LLP), as well as transfers
to Reserves, Surplus, and for other development purposes, including transfers to IDA.
In addition, other development activities generate non-interest revenue that is classified as Revenue from externally
funded activities. These external funds include trust funds, reimbursable funds and revenues from fee-based services
to member countries. Noninterest revenue from externally funded activities provides additional capacity to support
the development needs of client countries.

3

Other exposures include deferred drawdown options (DDO), irrevocable commitments, exposures to member countries’ derivatives
and guarantees.

IBRD Management’s Discussion and Analysis: June 30, 2022 7

Management’s Discussion and Analysis

Section II: Overview

Figure 2: Sources and Uses of Revenue

Sources

Uses

Simplified
Balance Sheet

Revenue

Funding

Net Interest
RevenueLiquidInv.

Return on
Investments

Cost ofdebt

Investment
Revenue, net

Loan revenue

Cost ofdebt

Loan Interest
Revenue, net

D
e
b
t
L
o
a
n
s

Admin
Expenses

LLP

Reserves
Allocable
IncomeEquity

IDA, Other
transfers &Surplus

Basis of Reporting
Audited Financial Statements
IBRD’s financial statements conform with accounting principles generally accepted in the United States ofAmerica (U.S. GAAP). All financial instruments in the investment and borrowing portfolios and all other derivatives
are reported at fair value, with changes in fair value reported in the Statement of Income, except for changes in IBRD’s
own credit, which are reflected in Other Comprehensive Income. IBRD’s loans are reported at amortized cost, except
for loans with embedded derivatives, if any, which are reported at fair value. Management uses net income as the basis
for deriving allocable income, as discussed below.

Allocable Income
IBRD’s Articles of Agreement (the Articles) require that the Governors determine the allocation of income at the endof every fiscal year. Allocable income, which is a non-GAAP financial measure, is an internal management measurethat reflects income available for allocation. IBRD defines allocable income as net income after certain adjustments,that are approved by the Board at the end of every fiscal year. These adjustments primarily relate to unrealized markto-market gains and losses associated with its non-trading portfolios, as well as the expenses for Board of Governorsapproved and other transfers, which primarily relate to the allocation of the prior year’s net income.
See Financial Results Section (Section III) for details of the adjustments to reported net income to calculate allocable
income.

8

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section II: Overview

The volatility in IBRD’s reported net income is usually driven by the unrealized mark-to-market gains and losses on
the derivative instruments in IBRD’s non-trading portfolios: loans, borrowings, and other asset/liability management(ALM). IBRD’s risk management strategy entails the use of derivatives to manage market risk. These derivatives areprimarily used to align the interest rate and currency bases of its assets and liabilities. IBRD has elected not to designate
any hedging relationships for accounting purposes. Rather, all derivative instruments are reported at fair value on the
Balance Sheet, with changes in fair values accounted for through the Statement of Income.
In line with its financial risk management policies, for the non-trading portfolios, unrealized gains and losses from
instruments carried at fair value (borrowings and associated derivatives, and derivatives in the loan and other ALM
portfolios) are excluded from allocable income.
For the trading portfolio (investment portfolio), allocable income generally includes both realized and unrealized
mark-to-market gains and losses. In some cases, the unrealized mark-to-market gains and losses on certain trades are
excluded from allocable income when the hedged item is a physical asset held at amortized cost.

IBRD Management’s Discussion and Analysis: June 30, 2022 9

Management’s Discussion and Analysis

Section III: Financial Results

Section III: Financial Results
Financial Results and Portfolio Performance
The following is a discussion of the key drivers of IBRD’s financial performance, including a reconciliation between
IBRD’s net income and allocable income.
Table 1: Condensed Statement of Income
In millions of U.S. dollars
For the fiscal year ended June 30,
Revenue on interest earning assets, net of funding costs
Loan interest revenue, net

2022$

Other ALM derivatives, net
Investment revenue, net a
Total revenue on interest earning assets, net$
Provision for losses on loans and other exposures b
Net non-interest expenses (Table 5)
Pension cost, other than service cost (Table 5)
Net other revenue (Table 4)
Board of Governors-approved and other transfers
Non-functional currency translation adjustments gains, net c
Unrealized mark-to-market gains on non- trading portfolios,
net d (Table 7)
Net income$
Adjustments to reconcile net income to allocable income:Pension e and other adjustments (Table 8)
Board of Governors-approved and other transfers
Non-functional currency translation adjustments gains, net c
Unrealized mark-to-market (gains) on non- trading
portfolios, net d
Allocable Income
$

1,892
583
(3)
2,472
(562)
(1,455)
280
103
(354)
150
3,356
3,990

2021
$

$

$

(32)
354
(150)
(3,356)806

Impact on income
Decrease Increase

1,754

138

604
86
2,444
(147)
(1,384)
(11)
295
(411)
35

(21)
(89)
28
(415)
(71)
291
(192)
57
115
2,138
1,951

1,218
2,039
(83)
(57)
(115)

51
411
(35)

$

(1,218)
1,248(2,138)(442)

a. Includes unrealized mark-to-market losses on the Investments-Trading portfolio of $21 million in FY22 (unrealized mark-to-market
gains of $62 million for FY21) and excludes Post-Employment Benefit Plan (PEBP) and Post-Retirement Contribution Reserve
Fund (PCRF) losses of $33 million in FY22 ($168 million gains for FY21) reported in Net other revenue (Table 4).
b. Includes changes on recoverable asset relating to Guarantee received under the Exposure Exchange Agreements (EEAs).
c. Translation adjustments relating to assets and liabilities denominated in non-functional currencies.
d. Adjusted to exclude amounts reclassified to realized gains (losses).
e. Adjustment to pension accounting expense to arrive at pension plan contributions. Pension plan and PCRF contributions were$250 million in FY22 and $245 million in FY21.

10

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: Financial Results

IBRD’s principal assets are its loans to member countries. These are financed by IBRD’s equity and borrowings fromthe capital markets.
Table 2: Condensed Balance Sheet
In millions of U.S. dollars
As of June 30,

2022

Investments and due from banks
Net loans outstanding a
Derivative Assets, net
Other assets
Total Assets
Borrowings
Derivative Liabilities, net
Other liabilities
EquityTotal Liabilities and Equity$

82,299$227,092
804
7,347
317,542$

235,173
20,041
7,008
55,320317,5422021$

90,251$

218,799
3,355
4,896
317,301$

260,076
1,222
7,925
48,078317,301

Decrease / Increase(7,952)8,293(2,551)2,451
241(24,903)
18,819
(917)
7,242
241

a. The fair value of IBRD’s loans was $225,046 million as of June 30, 2022 ($223,687 million – June 30, 2021).

The main drivers of the change in the Balance sheet items are: 1) decrease in investments and due from banks primarily
from translation adjustment losses and the reduction in cash collateral balances, 2) increase in net loans outstanding
due to net loan disbursements, partially offset by translation adjustment losses, and 3) decrease in borrowings frommark-to-market gains as a result of the increase in interest rates, with offsetting losses on derivatives that decreased
derivative assets and increased derivative liabilities.

Net Income
IBRD’s net income was $3,990 million in FY22, compared with net income of $2,039 million in FY21. The increase
was primarily due to net unrealized mark-to-market gains on the loan-related derivatives of $5,988 million in FY22
compared to gains of $2,415 million in FY21. The gains in both years were mainly driven by the increase in interest
rates, with a greater increase and resultant gains in FY22 (see Table 1 and Notes to Financial Statements, Note L: Fair
Value Disclosures, Table L11).

Results from Lending activities
Loan Interest Revenue, net
Under IBRD’s pricing policy, the lending rates for all of IBRD’s loans are based on the underlying cost of theborrowings funding these loans. After the effect of related derivatives (see Figure 24 and Figure 25), the loan andborrowing portfolios are based on variable interest rates, and the portion of the loan portfolio funded by equity issensitive to changes in short-term interest rates.
Figure 3: Loan interest revenue and funding cost (including
derivatives)
In millions of U.S. dollars

Figure 4: Loan interest revenue, net
In millions of U.S. dollars
Loan interest revenue, net

Loan interest revenue (Including derivatives)
Loan funding cost (Including derivatives)
6,000

Loan interest revenue, net and Other ALM
derivatives, net combined
3,500
3,000
2,500
2,000
1,500
1,000
500
0

5,000
4,000
3,000
2,000
1,000
0
FY18

FY19

FY20

FY21

FY22

FY18

FY19

FY20

FY21

FY22

The increase in IBRD’s loan interest revenue and corresponding increase in the loan funding cost in FY22 comparedto FY21 (Figure 3) was primarily due to the increase in the average balance of the loan and borrowing portfolios.

IBRD Management’s Discussion and Analysis: June 30, 2022 11

Management’s Discussion and Analysis

Section III: Financial Results

IBRD’s FY22 loan interest revenue, net of funding costs was $1,892 million, an increase of $138 million comparedwith $1,754 million in FY21. The increase was primarily due to the higher average balance, as well as the impact ofthe pricing measures previously adopted.
Other ALM derivatives moderate the impact of interest rate changes on the portion of the loan portfolio that is sensitive
to interest rate movements, thereby stabilizing the net interest revenue earned from these loans (see Figure 4). Other
ALM derivatives comprise interest rate swaps which are used to convert the variable rate cash flows from these loans
to fixed rate cash flows. The combined effect of the decrease in interest revenue from Other ALM derivatives, net of$21 million and the increase in loan interest revenue, net of $138 million from FY21 to FY22, resulted in a total
increase in net loan interest revenue of $117 million.

Provision for losses on loans and other exposures
During FY22, IBRD recorded a provision for losses on loans and other exposures of $562 million, $415 million higher
than the same period in FY21, primarily reflecting the increase in the loss given default (severity) due to the increasein the implied forward interest rates during the year. The severity reflects the expected losses from delays in receiving
interest payments since IBRD does not charge for overdue interest. As the majority of IBRD’s loans carry a variableinterest rate, increases in forward interest rates increase the expected losses that are recorded through the provision
for losses on loans and other exposures in the statement of income.
Table 3: Change in Net Loans Outstanding
In millions of U.S. dollars
Net Loans outstanding as of June 30, 2021
Activity during the period:
Gross loan disbursements
Loan repayments
Change in accumulated provision for loan losses a
Change in deferred loan income
Translation adjustments
Total activity
Net Loans outstanding as of June 30, 2022

Figure 5: Net Loans Outstanding
In billions of U.S. dollars$

218,799

250
202

$
$

a. See Notes to Financial Statements, Note D: Loans and Other
Exposures.

28,168(13,292)(509)(29)(6,045)
8,293
227,092

219

227

Jun 21

Jun 22

200
150
100
50
0

Jun 20

As of June 30, 2022, IBRD’s net loans outstanding totaled $227.1 billion, $8.3 billion or 4% higher than June 30,
2021 (see Figure 5). The increase was mainly attributable to $14.9 billion of net loan disbursements in FY22, partially
offset by currency translation loss of $6.0 billion, primarily due to the 12.5% depreciation of the euro against the U.S.
dollar during the year.
Gross disbursements were $28.2 billion, 19% higher compared to FY21, primarily due to higher disbursements for
Investment Project Financing (IPF) operations.

Results from Investing activities
Investment Portfolio
IBRD’s net investment portfolio was $82.1 billion as of June 30, 2022 ($85.8 billion as of June 30, 2021). Of thisamount $78.8 billion related to the liquid asset portfolio ($82.8 billion as of June 30, 2021). See Note C: Investmentsin the Notes to the Financial Statements. The decreased level of liquidity reflects the lower debt service requirements
and higher loan disbursements during the year (see Section VI).

12

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: Financial Results

Net Investment Revenue
During FY22, IBRD’s net investment revenue decreased by $89 million, compared to FY21. This was mainly due tothe unrealized mark-to market losses in FY22 compared to unrealized mark-to-market gains in FY21. The impact of
the increase in interest rates drove the unrealized mark-to-market losses in FY22, while FY21 saw a decline in interest
rates.
Figure 6: Net Investment Portfolio
In billions of U.S. dollars

100
80
60
40
20
0

Figure 7: Investment Revenue, net
In millions of U.S. dollars

Other investments portfolio

250

Liquid asset portfolio

200

2

3

150

3

100
80

83

50
79
0

Jun 20Jun 21-50

Jun 22

FY18

FY19

FY20

FY21

FY22

Results from Borrowing Activities
As of June 30, 2022, the borrowing portfolio was $256.9 billion, $3.2 billion higher than June 30, 2021 (see Note E:
Borrowings in the Notes to the Financial Statements). The increase was primarily due to new net short-term debt
issuances during the year. New issuances of medium-and long-term debt of $40.8 billion during the year (Table 24)
were highly diversified by currencies, with an average maturity of 7.6 years. The decrease in medium-and long-term
debt issuances in FY22 is primarily due to lower debt servicing and refinancing requirements.
Figure 8: Borrowing Portfolio (original maturities)
In billions of U.S. dollars
Short-term Borrowings

Medium-and long-term Borrowings

300
250

10

15

226

244

242

Jun 20Jun 21

Jun 22

11

200
150
100

50
0

IBRD Management’s Discussion and Analysis: June 30, 2022 13

Management’s Discussion and Analysis

Section III: Financial Results

Net Other Revenue
Net other revenue represents certain non-interest sources of revenue, which was lower by $192 million during FY22.
The decrease was mainly due to lower investment earnings from the PEBP and PCRF holdings, consistent withprevailing market conditions.
Table 4: Net Other Revenue
In millions of U.S. dollars
For the fiscal year ended June 30,
Loan commitment fees
Guarantee fees
Net Earnings from Post-Employment Benefit Plan (PEBP) and Post-Retirement
Contribution Reserve Fund (PCRF)
PEF and PAF a
OthersNet other revenue (Table 1)

$

$

2022
126
14

$

2021
115
14

$

Variance
11
-

(33)

168

(201)

(5)
1
103

(6)
4
295

1
(3)
(192)

$

$

a. Amounts are fully offset by fair value changes in trades (facing counterparties) related to the Pandemic Emergency Financing
Facility (PEF) and Pilot Auction Facility for Methane and Climate Change Mitigation (PAF), which are included in Unrealized markto market gains/(losses) on non-trading portfolios, net (Table 1). All PEF and PAF trades matured as of June 30, 2022.

Net Non-Interest Expenses
As shown in Table 5, IBRD’s net non-interest expenses primarily comprise administrative expenses, net of revenue
from externally funded activities. IBRD/IDA's administrative budget is a single resource envelope that funds the
combined work programs of IBRD and IDA. The allocation of net administrative expenses between IBRD and IDA
is based on an agreed cost and revenue sharing methodology, approved by their Boards, which is primarily driven by
the relative level of lending, knowledge services, and other services between these two institutions. The administrative
expenses shown in Table 5 include costs related to IBRD-executed trust funds and other externally funded activities.
On a GAAP basis, net non-interest expenses in FY22 decreased by $220 million compared to FY21. This is primarily
due to the decrease in pension costs, mainly driven by the higher return on plan assets in FY21, which resulted inlower amortization of unrecognized actuarial losses in FY22.
Figure 9: Net Non-Interest Expenses(GAAP basis)
In millions of U.S. dollars
1,800
1,500
1,200
900
600
300
0
FY18

FY19

FY20

FY21

FY22

IBRD’s net non-interest expenses for allocable income purposes were $1,245 million in FY22 compared to $1,182
million in FY21, an increase of $63 million. FY21’s net non-interest expenses were significantly impacted by COVIDrelated restrictions. FY22’s increase was driven by higher travel expenses due to the gradual easing of COVID-related
travel restrictions/office closures, inflationary cost pressures, acceleration of work programs from the high level oflending activities during the year as well as additional support and engagement in FCV countries to address thegrowing needs and the increase in conflict situations. As a result, travel costs increased by $47 million but are stillless than what they were before the COVID pandemic, approximately 33% of FY19 costs. The cost of operating in
FCV countries also affected expenses including costs associated with evacuations and security in dangerous situations.

14

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: Financial Results

IBRD monitors its net administrative expenses as a percentage of its loan spread revenue (Box 2) and certain fee
revenue, using an efficiency measure referred to as the Budget Anchor. In FY22, IBRD’s Budget Anchor was 65.4%,
a decline of 0.3 percentage point compared with 65.7% in FY21. The decline was due to increase in loan spreadrevenue partially offset by an increase in net non-interest expenses during the year due to the gradual easing of COVID
related travel restrictions/office closures and acceleration of work programs in FY22 compared to FY21 (see Table 6
and Figure 10 for details of the Budget Anchor components).
Table 5: Net Non-Interest Expenses
In millions of U.S. dollars
For the fiscal year ended June 30,
Administrative expenses
Staff costs
TravelConsultant fees and contractual services
Pension and other post-retirement benefits a
Communications and Technology
Premises and equipment
Other expenses
Total administrative expenses
Grant Making Facilities (See Section V)
Revenue from externally funded activities (See Section V)
Reimbursable revenue – IBRD executed trust funds
Reimbursable advisory services
Revenue - Trust fund administration
Restricted revenue (primarily externally financed outputs)
Revenue - Asset management services
Other revenue
Total Revenue from externally funded activities
Net non-interest expenses (Table 1)
Pension cost, other than service cost b (Table 1)
Net non-interest expenses - GAAP basis
Adjustments to arrive at net non-interest expenses - allocable income basis
Pension, EFO and RAMP adjustments c
Net non-interest expenses - Allocable income basis

2022

2021

1,003
60
490
451
73
128
20
2,225
17

$ 1,006
13
473
441
63
123
23
$ 2,142
18

$

(494)
(47)
(50)
(4)
(18)
(174)
(787)
1,455
(280)
1,175

$

(470)
(53)
(44)
(18)
(18)
(173)
(776)
1,384
11
1,395

$

70
1,245

$

(213)
1,182

$

$

$

$

Variance
$

(3)
47
17
10
10
5
(3)
83
(1)

$

$

(24)
6
(6)
14
(1)
(11)
71
(291)
(220)

$

283
63

$

a. Represents the service cost component of net periodic pension cost. See Notes to Financial Statements, Note J: Pension andOther Post-Retirement Benefits.
b. Amount is included in Other Non-interest expenses in the Condensed Statement of Income (see Table 1).
c. Adjustments are included in the Pension and other adjustments line in Table 1. RAMP adjustment applies from FY22 prospectively.
Table 6: Budget Anchor Ratio
In millions of U.S. dollars
For the fiscal year ended June 30,
Total net Non-Interest Expenses (From Table 5)
Pension adjustment (From Table 8) a
RAMP adjustment a
EFO adjustment a
Net administrative expenses - for Budget Anchor
Loan spread revenue, net
Loan commitment fees (From Table 4)
Guarantee fees (From Table 4)
Budget anchor revenue

$

2022
1,175
79
7
(16)
1,245

$

1,765
126
14
1,905

$

$

2021
1,395
(207)
(6)
1,182

$

1,671
115
14
1,800

$

$

Variance
(220)
286
7
(10)
63

$

94
11
105

$

Budget Anchor
65.4%
65.7%
a. These adjustments are made to arrive at net administrative expenses used for allocable income purposes. For more information,
see Table 8 in Net Income Allocation section.

IBRD Management’s Discussion and Analysis: June 30, 2022 15

Management’s Discussion and Analysis

Section III: Financial Results

Figure 10: Budget Anchor
In millions of U.S. dollars
74%

2,000

75%
66%

1,500

70%

65%

65%
1,000
60%
500

55%

-

50%
FY20
Net administrative expenses

FY21
Budget anchor revenue

FY22
Budget anchor ratio

Unrealized mark-to-market gains and losses on non-trading portfolios
Unrealized mark-to-market gains and losses associated with the non-trading portfolios are excluded from reported net
income to arrive at allocable income. As a result, from a long-term financial sustainability perspective, income
allocations are generally based on amounts that have been realized (except for the Investments-Trading portfolio, as
previously discussed). For FY22, $3,356 million of net unrealized mark-to-market gains ($1,218 million net unrealized
mark-to-market gains in FY21) were excluded from reported net income to arrive at allocable income (see Table 1).
Table 7: Unrealized Mark-to-Market gains/losses on non-trading portfolios, net
In millions of U.S. dollars
For the fiscal year ended June 30, 2022
Unrealized gains
Realized gains
Total(losses)a(losses)Borrowings, including related derivatives
$
747
$
12
$
759
Loan related derivatives
5,988
6
5,994
Other asset/liability management derivatives, net(3,392)(3,392)
Client operations derivatives
8
8
Others, net
5
5
Total
$
3,356
$
18
$
3,374

Borrowings, including related derivatives
Loan related derivatives
Other asset/liability management derivatives, net
Client operations derivatives
Total

For the fiscal year ended June 30, 2021
Unrealized gains
Realized gains
Total(losses)a(losses)
$
140
$
14
$
154
2,415
2,415
(1,351)(1,351)
14
14
$
1,218
$
14
$
1,232

a. Excludes amounts reclassified to realized mark-to-market gains (losses).

Loan Portfolio
Loans are reported at amortized cost, whereas the derivatives which convert the loans from fixed-rate to variable-rate
instruments for asset liability management purposes, are reported at fair value. As a result, while from an economic
perspective, IBRD’s loans after the effect of derivatives carry variable interest rates, and therefore have a low
sensitivity to interest rates, the mark to market effect is not reflected in the reported net income. Net income includes
only the unrealized mark to market gains and losses on loan related derivatives, which in FY22 was a gain of $5,988
million, primarily due to the increase in the interest rates during the year. See Section IX: Risk Management for
additional details on how IBRD uses derivatives in the loan portfolio.

16

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section III: Financial Results

Borrowing Portfolio
IBRD’s bonds and the related derivatives are reported at fair value. IBRD recorded $747 million of net unrealized
mark-to-market gains on IBRD’s bonds and associated derivatives for the year ended June 30, 2022. The gains on thebonds, due to the increase in interest rates, exceeded the losses on the bond-related derivatives as the bonds are moresensitive to changes in interest rates (Figure 23). The net unrealized mark-to-market gains on IBRD’s bonds exclude
changes in IBRD’s own credit, referred to as the Debit Valuation Adjustment (DVA), which is recorded inAccumulated Other Comprehensive Income (AOCI). In FY22, the DVA was $582 million of unrealized mark-tomarket gains, resulting mainly from the widening of IBRD’s credit spreads relative to the applicable reference rateduring the year. As of June 30, 2022, IBRD’s Balance Sheet included a cumulative DVA of $364 million of mark-tomarket gains reflected in AOCI (See Notes to the Financial Statements, Note L –Fair Value Disclosures).

Other ALM Portfolio
IBRD uses derivatives to stabilize its interest revenue from the portion of loans which are sensitive to changes in shortterm interest rates. The Other ALM portfolio consists of derivatives which convert variable rate cash flows to fixed
rate cash flows. In FY22, IBRD recorded unrealized mark-to-market losses of $3,392 million on this portfolio,
primarily due to the increase in interest rates during the year. As of June 30, 2022, the duration of this portfolio was
3.4 years, within the Board established limit of 5 years.

Net Income Allocation
Net income allocation decisions are based on allocable income. Management recommends allocations out of net
income to the Board at the end of each fiscal year to augment reserves and support developmental activities. As
illustrated in Table 8, the key differences between allocable income and reported net income relate to unrealized markto-market gains and losses on IBRD’s non-trading portfolios, and expenses related to Board of Governors-approved
and other transfers.
Table 8: Allocable Income
In millions of U.S. dollars
For the fiscal years ended June 30,
Net Income
Adjustments to Reconcile Net Income to Allocable Income:
Board of Governors-approved and other transfers
Non-functional currency translation adjustments gains, net a
Unrealized mark-to-market gains on non-trading portfolios, net b
Pension c
PEBP and PCRF adjustment
Other
Allocable Income
Recommended Allocations
General Reserve
SurplusTransfer to IDA
Total Allocations

$

2022
3,990

354
(150)
(3,356)
(79)
33
14
$
806

$

589
100
117
806

$

2021
2,039

$

411
(35)
(1,218)
207
(168)
12
1,248

$

874
100
274
1,248

a. Translation adjustments relating to assets and liabilities in non-functional currencies.
b. Adjusted to exclude amounts reclassified to realized gains (losses).
c. Represents the difference between the pension cost incurred and pension contributions.

IBRD Management’s Discussion and Analysis: June 30, 2022 17

Management’s Discussion and Analysis

Section III: Financial Results

All of the adjustments between reported net income and allocable income are recommended by management andapproved by the Board:
Board of Governors-approved and other transfers
Board of Governors-approved and other transfers refer to the allocations recommended by the Board and approved by
the Governors, as part of the prior year’s net income allocation process and subsequent decisions on uses of surplus,
as well as on payments from restricted retained earnings.
Since these amounts primarily relate to allocations out of IBRD’s FY21 allocable income, Surplus, or restricted
retained earnings, they are excluded from FY22 reported net income in calculating FY22 allocable income.
Non-functional currency translation adjustment gains/losses
Translation gains and losses relating to non-functional currencies are reflected in reported net income. Since these are
unrealized gains/losses that relate to asset/liability positions still held by IBRD, they are excluded from reported net
income to arrive at allocable income.
Unrealized mark-to-market gains/losses on non-trading portfolios
These mainly comprise unrealized mark-to-market gains and losses on the loan, borrowing, and other ALM portfolios
as discussed previously.
Unrealized mark-to-market gains/losses on certain positions in the investments-trading portfolio, net
This adjustment applies to trades where the unrealized gains and losses on derivative forward contracts are recordedin the statement of income and the underlying physical assets being purchased and sold are recorded at amortized cost
during the holding period. In these cases, the unrealized gains and losses on the forward contract at the end of thereporting period (if any) are excluded from net income when calculating allocable income. As of June 30, 2022, there
were no active trades requiring adjustment.
Pension, PEBP and PCRF adjustments
The Pension adjustment reflects the difference between the accounting expense and IBRD’s cash contributions to thepension plans, the Post-Employment Benefit Plan (PEBP) and the Post-Retirement Contribution Reserve Fund(PCRF). It also includes investment revenue earned on pension plan, PEBP, and PCRF assets. The PCRF wasestablished by the Board to stabilize contributions to the pension and post-retirement benefits plans. Management
bases allocation decisions on IBRD’s cash contributions to the pension plans, PEBP and PCRF, rather than pension
accounting expenses. In addition, Management has designated the income from these assets to meet the future needsof the pension plans. As a result, PEBP and PCRF investment revenues are excluded from allocable income.
Other Adjustments• Under certain arrangements (such as Externally Financed Outputs), IBRD enters into agreements with donors
under which it receives grants to finance specified IBRD outputs or services. These funds may be utilized only
for the purposes specified in the agreements and are, therefore, considered restricted until IBRD has fulfilled
those purposes. Management excludes amounts arising from these arrangements from allocable income, because
IBRD has no discretion over the use of the related funds. In line with this, the income is transferred out of
restricted retained earnings and in FY22, the net balance of these restricted funds decreased by $16 million.
•

4

The income recognized for the right to receive reimbursement from the FIF related to the PAF for Methane andClimate Change Mitigation4 is excluded, as this is required for the payout for the changes in market value on put
options under the PAF. Therefore, it is not available for other uses. In FY22, $5 million of expense wasrecognized in reported net income, and thus excluded to arrive at the FY22 allocable income. The change in themarket value of the put option is also excluded from reported net income to arrive at allocable income, as partof the unrealized mark-to market gains/(losses) on non-trading portfolios. All PAF trades matured during FY22.

In FY16, IBRD issued put options for methane and climate change mitigation. The PAF is a climate finance model developed by
IBRD to stimulate investment in projects that reduce greenhouse gas emissions in developing countries. The PAF is a pay-forperformance mechanism which uses auctions to allocate public funds and attract private sector investment to projects that reduce
methane emissions by providing a medium-term guaranteed floor price on emission rights.

18

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis•

Section III: Financial Results

Effective from FY22, the difference between fee revenue and expenses from the Reserve Advisory andManagement Partnership (RAMP) program is excluded from the reported net income to arrive at allocable
income. Under the Board-approved framework, RAMP fees are dedicated for the purpose of providing technicalassistance and asset management services to external clients. Due to the potential timing mismatch between fee
revenue (recognized as earned) and program expenditures (recognized when incurred), fees earned in a given
fiscal year may be used to provide services in a future fiscal year. To ensure that RAMP revenues are only used
for the delivery of RAMP services, and not allocated for other purposes, any difference between fee revenue andexpenses from RAMP included in reported net income are excluded to arrive at allocable net income. In FY22,
the difference between fee revenue and expenses from RAMP of $7 million was excluded to arrive at the FY22
allocable income.

Income Allocation
Since 1964, IBRD has made transfers to IDA from its net income, upon approval by the Board of Governors. In FY17,
the Board approved a formula-based approach for determining IBRD’s transfers to IDA. The approach links transfers
to IBRD’s allocable income for the year, ensuring that most allocable income is retained to grow IBRD’s reserves. In
addition, as part of the commitment made under the 2018 capital package, the incremental revenue from the 2018
price increase is excluded from the formula used to calculate the amount to be transferred to IDA, and fully retainedin IBRD’s reserves.
IBRD’s strong support of IDA is reflected in the $16.4 billion of cumulative income transfers it has made since IDA’s
first replenishment.
Annual IDA transfer recommendations are subject to approval by the Governors as part of the net income allocation
process in accordance with IBRD’s Articles. In making their decisions, Governors will continue to take the overall
financial standing of IBRD into consideration.
Allocable income in FY22 was $806 million, and of this, the Board approved the allocation of $589 million to theGeneral Reserve on August 4, 2022, and the Board recommended to IBRD’s Governors a transfer of $117 million to
IDA and $100 million to Surplus.
Figure 11: FY22 Allocable Income and Income Allocation
In millions of U.S. dollars
Investment Income(3)
Revenue

Loan Interest Revenue,
net
1,892

Other ALM, net
583
IDA Transfers 117

Uses

-10

Administrative Expenses,
net of Other Revenue
1,104

LLP
562
490

990

Surplus 100

General Reserves 589
1,490

1,990

2,490

Allocable Income
806

IBRD Management’s Discussion and Analysis: June 30, 2022 19

Management’s Discussion and Analysis

Section IV: Lending Activities

Section IV: Lending Activities
IBRD provides financing instruments and knowledge services to middle-income and creditworthy low-income
countries to reduce poverty and promote shared prosperity, while ensuring that social, environmental, and governanceconsiderations are taken into account. Country teams with an understanding of each country’s circumstances workwith clients to tailor the mix of instruments, products, and services.
Engagements with borrowing members are aligned with IBRD’s strategic priorities, including engagements that
support global public goods such as climate, fragility and gender.
Projects and programs supported by IBRD are designed to achieve a positive social impact and undergo a rigorous
review and internal approval process, aimed at safeguarding equitable and sustainable economic growth, that includes
early screening to identify environmental and social impacts and designing mitigation actions.
Identifying and appraising a project, and approving and disbursing a loan, can often take several years. However,
IBRD has shortened the preparation and approval cycle for countries in emergency situations (e.g., natural disasters)
and in crises (e.g., food, fuel, and global economic crises).
Loan disbursements must meet the requirements set out in loan agreements. During implementation of IBRDsupported operations, IBRD’s staff review progress, monitor compliance with IBRD policies, and help resolve any
problems that may arise. The Independent Evaluation Group, an IBRD unit whose Director General reports to theBoard, evaluates the extent to which operations have met their development objectives.
All IBRD loans, are made to, or guaranteed by, member countries. IBRD may also make loans to IFC without any
guarantee. In most cases, IBRD’s Board approves each loan and guarantee after appraisal of a project by staff. Under
the Multiphase Programmatic Approach, the Board may approve an overall program framework, its financing
envelope and the first appraised phase, and then authorize Management to appraise and commit financing for later
program phases.
For FY23, eligible countries with 2021 per capita Gross National Income (GNI) of more than $1,255 are eligible toborrow from IBRD.

Net Lending Commitments and Gross Disbursements
IBRD provided $33.1 billion of new net loan commitments in FY22, through 136 operations (including blend
operations), an increase of $2.6 billion (8%) compared to FY21, mainly driven by the increase in Development Policy
Financing (DPF) commitments (Figure 12).
Table 9: Net Commitments by Region
In millions of U.S. dollars
For the fiscal year ended June 30,
Eastern and Southern Africa
Western and Central Africa
East Asia and Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
Total

20

$

$

2022
2,907
386
5,482
5,974
9,407
4,135
4,781
33,072% of total
9%
1
17
18
28
13
14
100%

IBRD Management’s Discussion and Analysis: June 30, 2022

$

$

2021
1,525
500
6,753
4,559
9,464
3,976
3,746
30,523% of total
5%
2
22
15
31
13
12
100%

$

$

Variance
1,382
(114)
(1,271)
1,415
(57)
159
1,035
2,549

Management’s Discussion and Analysis

Section IV: Lending Activities

Table 10: Gross Disbursements by Region
In millions of U.S. dollars
For the fiscal year ended June 30,
Eastern and Southern Africa
Western and Central Africa
East Asia and Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
Total

2022
2,441
261
5,439
4,580
8,911
3,407
3,129
28,168$$% of total
9%
1
19
16
32
12
11
100%

$

$

2021
325
132
4,439
3,625
8,741
2,764
3,665
23,691% of total
1%
1
19
15
37
12
15
100%

$

$

Variance
2,116
129
1,000
955
170
643
(536)
4,477

Lending Categories
IBRD’s lending is classified in three categories: investment project financing, development policy financing, andprogram-for-results (Figure 12).

Investment Project Financing (IPF)
IPF provides financing for a wide range of activities aimed at creating the physical and social infrastructure necessary
to reduce poverty and create sustainable development. IPF is usually disbursed over the long-term (roughly a 5 to 10year horizon). FY22 net commitments under this lending category were $14.1 billion, compared with $14.5 billion in
FY21.

Development Policy Financing (DPF)DPF aims to support borrowers in achieving sustainable development through a program of policy and institutional
actions. Examples of DPF projects include strengthening public financial management, improving the investment
climate, addressing bottlenecks to improve service delivery, and diversifying the economy. DPF supports reforms
through non-earmarked general budget financing. DPF provides fast-disbursing financing (roughly 1 to 3 years) tohelp borrowers address actual or anticipated financing requirements. FY22 net commitments under this lending
category were $13.2 billion, compared with $10.8 billion in FY21.

Program-for-Results (PforR)
PforR helps countries improve the design and implementation of their development programs and achieve specificresults by strengthening institutions and building capacity. PforR disburses when agreed results are achieved andverified. Results are identified and agreed upon during the loan preparation stage.
FY22 net commitments under this lending category were $5.8 billion compared with $5.2 billion in FY21.
Figure 12: Share of Lending Categories for Annual Net Commitments
Percent
100%
75%

$23

$23

$28

$31

$33

15

11

10

17

18

39

36

35

40

22

billions

50%
25%

63

50

54

48

42

FY19

FY20

FY21

FY22

0%
FY18
Investment Project

Development Policy

Program-for-Results

IBRD Management’s Discussion and Analysis: June 30, 2022 21

Management’s Discussion and Analysis

Section IV: Lending Activities

Currently Available Lending Products
As of June 30, 2022, 85 member countries were eligible to borrow from IBRD. See Appendix for a list of eligible
countries.

IBRD Flexible Loans (IFLs)
IFLs allow borrowers to customize their repayment terms (i.e., grace period, repayment period, and amortization
profile) to meet their debt management or project needs. The IFL previously offered two types of loan terms: variablespread terms and fixed-spread terms. Effective April 1, 2021, IBRD’s offering of loans on fixed spread terms as well
as a related conversion feature from the variable spread terms to fixed spread terms was suspended (see section IX:
Risk Management). As of June 30, 2022, 71% of IBRD’s loans outstanding carried variable-spread terms and 29%
had fixed-spread terms. See Table 13 for details of loan terms for IFL loans.
IFLs include options to manage the currency and/or interest rate risk over the life of the loan. The outstanding balanceof loans, for which currency or interest rate conversions have been exercised was $41.6 billion as of June 30, 2022
and $38.8 billion as of June 30, 2021. IFLs may be denominated in the currency or currencies chosen by the borrower
if IBRD can efficiently intermediate in that currency. Using currency conversions, some borrowing member countries
have converted their IBRD loans into domestic currencies to reduce their foreign currency exposure for projects orprograms that do not generate foreign currency revenue. These local currency loans may carry fixed or variable-spread
terms. The balance of such loans outstanding was $3.7 billion as of June 30, 2022 and $3.5 billion as of June 30, 2021.
Box 2 below shows the components of the spread on IBRD’s IFLs and how these are determined.
Box 2: Components of Loan spread
Contractual lending spread
Maturity PremiumMarket Risk Premium
Funding Cost Margin

Subject to the Board’s periodic review
Set by Management

The ability to offer long-term financing distinguishes development banks from other sources of funding for member
countries. Since IBRD introduced maturity-based pricing in 2010, most countries continue to choose loans with thelonger maturities with a higher maturity premium, highlighting the value of longer maturities to member countries.
However, in FY22, due to the ongoing multiple crises, some countries requested more fast-disbursing loans withshorter maturities (See Table 11).
Table 11: Net Commitments by Maturity
In millions of U.S. dollars

Maturity< 8 years
8-10 years
10-12 years
12-15 years
15-18 years>18 years
Guarantee Commitments
Total Net Commitments

For the fiscal year
ended June 30, 2022
Variable
Spread
$
2,992
5,885
15,716
1,922
3,330
3,227
$
33,072For the fiscal year ended June 30, 2021

$

$

Fixed
Spread a
4,680
187
1,225
1,326
280
663
8,361

a. Effective April 1, 2021, IBRD’s offering of loans on fixed spread terms has been suspended.

22

IBRD Management’s Discussion and Analysis: June 30, 2022$$

Variable
Spread
3,188
3,492
7,337
637
2,489
5,014
22,157

Total
$

$

7,868
3,679
8,562
1,963
2,769
5,677
5
30,523

Management’s Discussion and Analysis

Section IV: Lending Activities

Other Lending Products Currently Available
In addition to IFLs, IBRD offers loans with a deferred drawdown option, Special Development Policy Loans (SDPLs),loan-related derivatives, and loans to IFC (See Box 3).
Box 3: Other Lending Products Currently Available
Lending Product
Description

Loans with a
Deferred Drawdown
Option

The Development Policy Loan Deferred Drawdown Option (DPL DDO) gives borrowers the flexibility to
rapidly obtain the financing they require. For example, such funds could be needed owing to a shortfall
in resources caused by unfavorable economic events, such as declines in growth or unfavorable shifts
in commodity prices or terms of trade. The Catastrophe Risk DDO (CAT DDO) enables borrowers toaccess immediate funding to respond rapidly in the wake of a natural disaster. Under the DPL DDO,
borrowers may defer disbursement for up to three years, renewable for an additional three years. The
CAT DDO has a revolving feature, and the three-year drawdown period may be renewed up to four times,
for a total maximum drawdown period of 15 years (Table 13). As of June 30, 2022, the amount of DDOs
disbursed and outstanding was $8.8 billion (compared to $9.6 billion on June 30, 2021), and theundisbursed amount of effective DDOs were $0.6 billion, compared to Nil a year earlier.

SpecialDevelopment Policy
Loans (SDPLs)

SDPLs support structural and social reforms by creditworthy borrowers that face a possible global
financial crisis or are already in a crisis and have extraordinary and urgent external financing needs. As
of June 30, 2022 and June 30, 2021, the outstanding balance of such loans was Nil. IBRD made no new
SDPL commitments in either FY22 or FY21.

Loan-Related
Derivatives

IBRD assists its borrowers with access to better risk management tools by offering derivative
instruments, including currency and interest rate swaps and interest rate caps and collars, associatedwith their loans. These instruments may be executed either under a master derivatives agreement, which
substantially conforms to industry standards, or under individually negotiated agreements. Under thesearrangements, IBRD passes through the market cost of these instruments to its borrowers. The balanceof loans outstanding for which borrowers had entered into currency or interest rate derivative transactions
under a master derivatives agreement with IBRD was $9 billion as of June 30, 2022, compared with
$11.1 billion a year earlier.

Loans with IFC

IBRD provides loans to IFC in connection with the release of a member's National Currency Paid-In
Capital (NCPIC) to IBRD. (See Section VIII for explanation of NCPIC). There was no outstanding amountas of June 30, 2022 and June 30, 2021.

Lending Terms Applicable to IBRD Products
Until the end of FY19, loans for all eligible members were subject to the same pricing. However, as part of the 2018
capital package, IBRD implemented a new pricing structure that classifies member countries into four pricing groups,
based on income and other factors, and relates the maturity premium to the exemptions, discounts or surcharges
applicable to each pricing group (See Table 12 below).
Table 12: Country Pricing Group and Maturity Premium (in basis points)
Country pricing group

Description

Maturity
Premium aA

Blends b, small states, countries in fragile and conflict-affected situations (FCS) and recent
IDA graduates. These countries are exempt from the maturity premium increase
regardless of their income levels.

0-50 cB

Countries below-GDI which do not qualify for an exemption listed in Group A.

0-70

C

Countries above-GDI, but below high-income status and which do not qualify for an
exemption listed in Group A.

0-90

D

Countries with high income status and which do not qualify for an exemption listed inGroup A.

5-115

a. Based on the weighted average maturity of the loan, borrower’s income, and other factors, approved by the Board and reviewed
annually.
b. Countries eligible for IDA and IBRD loans.
c. Member countries in group A are exempt from the maturity premium increase applicable from July 1, 2018.

IBRD Management’s Discussion and Analysis: June 30, 2022 23

Management’s Discussion and Analysis

Section IV: Lending Activities

Table 13: Loan Terms Available During Fiscal Year Ended June 30, 2022
Basis points, unless otherwise noted
IBRD Flexible Loan (IFL) a
Variable-spread Terms
Fixed-spread Terms b
Final maturity
35 years
35 years
Maximum weighted average maturity
20 years
20 yearsMarket-based variable
Market-based variable
Reference market rate
rate index
rate index
SpreadContractual lending spread
50
50
Maturity premium
0-115 c0-115 cMarket risk premium–
10-15 dActual average
Projected funding spread
funding cost incurred
Funding cost margin
to six-month variable rateduring the preceding
index esix-month period
Charges
Front-end fee
25
25
Late service charge on principal payments
received after 30 days of due date f
50
50Commitment Fee g i
25
25Special Development
Policy Loans (SDPL)
10 years
7.5 years
Market-based variable
rate index
min. 200
–
–
–

100
–
25

Development Policy Loan
Catastrophe Risk
Deferred Drawdown Option
Deferred Drawdown Option
Reference market rate
Market-based variable rate index
Market-based variable rate index
Contractual lending spread
IFL variable in effect at the time of withdrawal
Front-end fee
25
50 h
Renewal fee–
25Stand-by fee
50 g–a. There is an implicit floor of zero on the overall interest rate in IBRD’s loans.
b. Effective April 1, 2021, IBRD suspended offering loans with fixed spread terms.
c. Based on the weighted average maturity of the loan and on country pricing group.
d. Based on the weighted average maturity of the loan.
e. Projected funding spread to variable rate index was based on the weighted average maturity of the loan.
f. See Box 7 in Section IX for a discussion of overdue payments.
g. Certain waivers of commitment / stand-by fees payable during the first year of financing for health-related COVID-19 operations
are approved under the Fast-Track COVID-19 Facility.
h. For CAT-DDOs approved under the Fast-Track COVID-19 Facility, the Front-End Fee is reduced to 25bps.
i. For operations approved under the Additional Financing to the COVID-19 Strategic Preparedness and Response Program (SPRP),
the commitment fee is waived for a period of up to 18 months starting from the date of approval of the relevant operation.

Discontinued Lending Products
IBRD’s loan portfolio includes lending products whose terms are no longer available for new commitments. These
products include currency pool loans and fixed-rate single-currency loans. As of June 30, 2022, loans outstanding of$468 million (0.2% of the portfolio) carried terms no longer offered, with final maturity in May 2026.

Waivers
Loan terms offered prior to September 28, 2007 included a partial waiver of interest and commitment charges on
eligible loans. For these loans, waivers are approved annually by the Board. For FY23, the Board has approved thesame waiver rates as in FY22 for all eligible borrowers with eligible loans. The foregone income in FY22 due topreviously approved waivers was $20 million (FY21: $31 million).
Figure 13 illustrates a breakdown of IBRD’s loans outstanding and undisbursed balances by loan terms, as well as
loans outstanding by currency composition. The interest and currency profile of loans outstanding after the use ofderivatives for risk management purposes is discussed under Market Risk in Section IX.

24

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IV: Lending Activities

Table 14: Loans outstanding by interest rate structure, excluding derivatives
In millions of U.S. dollars, except for ratios
June 30, 2022
June 30, 2021
Of which
Of which
Product% of% of
Product% of
Total
reference
Total
Total
reference
Total
terms
Total
Total
terms
Total
rate israte is
Fixed
Fixed
Fixed
$ 33,097 14%
Fixed$ 33,151
Spread $ 66,075 29%
Spread$ 66,226 30%
Variable
32,978 15
Variable
33,075Loans
Loans
Variable
Variable
Fixed
7,150
3
Fixed
4,479
Spread163,269 71
Spread154,338 70
Variable
156,119 68
Variable
149,859
Loans
Loans
Total
$ 220,564 100%
$ 220,564
Total$ 229,344 100%
$ 229,344 100%

% of
Total
15%
15
2
68
100%

Figure 13: Loan Portfolio
Figure 13a. Undisbursed Balances by Loan Terms
In millions of U.S. dollars, except for ratios
June 30, 2022
Fixed Spread
terms, 18%

June 30, 2021

Fixed Spread
terms, 27%$74,523$74,441
Variable Spread
terms, 73%

Variable Spread
terms, 82%

Figure 13b. Loans Outstanding by Currency
June 30, 2022

Euro, 18%

June 30, 2021
Other, 2%

Other, 2%
Euro, 19%

U.S. Dollars, 80%

U.S. Dollars, 79%

IBRD Management’s Discussion and Analysis: June 30, 2022 25

Management’s Discussion and Analysis

Section V: Other Development Activities

Section V: Other Development Activities
IBRD continues to deliver value to its client countries through its knowledge services, convening power, and capacity
to implement solutions that address global issues where coordinated action is critical.
IBRD also assists clients with designing financial products and structuring transactions to help mobilize resources fordevelopment projects and mitigate the financial effects of market volatility and disasters.
Other financial products and services provided to borrowing member countries, and to affiliated and non-affiliatedorganizations, include financial guarantees, grants, externally-funded activities (described below), and advisory
services and analytics.

Guarantees
IBRD’s exposure on its guarantees was $6.3 billion as of June 30, 2022 compared to $6.7 billion as of June 30, 2021
(see Table 15). Exposure is measured by discounting each guaranteed amount from its next call date.
IBRD offers project-based and policy-based guarantees for priority projects and programs in member countries.
Project-based guarantees are provided to mobilize private financing for projects; they are also used to mitigate
projects’ payment- and performance-related risks. Policy-based guarantees are provided to mobilize private financing
for sovereigns or sub- sovereigns. IBRD’s guarantees are partial and are intended to provide only the coverage
necessary to obtain the required private financing, considering country, market and, if appropriate, project
circumstances. All guarantees require a sovereign counter-guarantee and indemnity, comparable to the requirement ofa sovereign guarantee for IBRD lending to sub-sovereign and non-sovereign borrowers (see Box 4). The Corporate
Risk Guarantee Committee reviews the choice of instrument for all proposed new guarantee operations.
Box 4: Types of Guarantees Provided by IBRD
Guarantee
Description
Two types of project-based guarantees are offered:1.

Loan guarantees: these cover loan-related debt service defaults caused by the government’s
failure to meet specific payment and/or performance obligations arising from contract, law or
regulation, in relation to a project. Loan guarantees include coverage for debt service defaults on:(i) commercial debt, normally for a private sector project where the cause of debt service default
is specifically covered by IBRD’s guarantee; and, (ii) a specific portion of commercial debt
irrespective of the cause of such default, normally for a public-sector project.

2.

Payment guarantees: These cover payment default on non-loan related government payment
obligations to private entities and foreign public entities arising from contract, law or regulation.

Project-based
guarantees

Policy-based
guarantees

These cover debt service default, irrespective of the cause of such default, on a specific portion ofcommercial debt owed by national or sub national government and associated with the supported
government’s program of policy and institutional actions.

Guarantees forenclave operations

IBRD extends guarantees for projects in IDA-only member countries that (i) are expected to generatelarge economic benefits with significant developmental impact in the member country; and (ii) cannot
be fully financed out of the country’s own resources, IDA resources, or other concessional financing.
Those projects are known as enclave operations. The provision of IBRD support to enclave operations
is subject to credit enhancement features that adequately mitigate IBRD’s credit risk.

Table 15: Guarantees Exposure
In millions of U.S. dollars
As of June 30,
Guarantees (project, policy and enclave)
Exposure Exchange Agreements
Total

26

IBRD Management’s Discussion and Analysis: June 30, 2022

$
$

2022
2,703
3,630
6,333

$
$

2021
3,079
3,640
6,719

Management’s Discussion and Analysis

Section V: Other Development Activities

Table 16: Pricing for IBRD Project-Based and Policy-Based Guarantees
Basis Points
Charges
FY22
FY21
Front-end fee
25
25
Processing fee a b
5050
Initiation fee c b
1515Standby fee
25
25
Guarantee fee d50-16550-165a. Determined on a case-by-case basis. In exceptional cases, projects can be charged over 50 bps of the guarantee amount.
b. Not applicable for public projects.
c. The initiation fee is 15 basis points of the guaranteed amount or $100,000, whichever is greater.
d. Based on the weighted average maturity of the guarantee and country pricing group.

In addition, IBRD has entered into the following arrangements, which are treated as financial guarantees under U.S.
GAAP:•

Advance Market Commitment (AMC): AMC is a multilateral initiative to accelerate the creation of a market
and sustainable production capacity for pneumococcal vaccines for developing countries. IBRD provides afinancial platform for AMC by holding donor-pledged assets as an intermediary agent and passing them on to
the Global Alliance for Vaccines and Immunization (GAVI) when appropriate conditions are met. Moreover,should a donor fail to pay, or delay paying any amounts due, IBRD has committed to pay from its own funds
any amounts due and payable by the donor, to the extent there is a shortfall in total donor funds received. During
FY22, the AMC initiative concluded and there was no exposure for IBRD as of June 30, 2022.

•

Exposure Exchange Agreements (EEA): IBRD has an exposure exchange agreement outstanding with MIGA
under which IBRD and MIGA exchanged selected exposures through reciprocal guarantees, with each divesting
itself of exposure in countries where their lending capacities are limited, in return for exposure in countries
where they had excess lending capacity.
IBRD also has an EEA with the African Development Bank (AfDB) and the Inter-American Development
Bank (IADB), a Multilateral Development Bank (MDB) EEA. Under this EEA, each MDB exchanged credit
risk exposure of a reference portfolio supported by underlying loans to borrowing member countries. For each
MDB, EEAs through diversification benefits, help reduce credit risk at the portfolio level; improve the riskweighted capital ratios especially by addressing exposure concentration concerns; and create lending headroom
for individual borrowing countries where MDBs may be constrained. The EEA involved the receipt of aguarantee and the provision of a guarantee against nonpayment in the reference portfolio by each MDB to theother. The guarantee received and the guarantee provided are two separate transactions: (a) a receipt of an asset
for the right to be indemnified and receive risk coverage (recoverable asset) and (b) the provision of a financial
guarantee, respectively (see Notes to the Financial Statements, Note D: Loans and Other Exposures).

•

Other guarantee arrangements: As of June 30, 2022, IBRD had received guarantees totaling $2,116 million($1,544 million for FY21) on borrowing member loans. These guarantees serve as a credit enhancement toincrease IBRD’s lending capacity in certain countries.

Table 17: Exposure Exchange Agreements
In millions of U.S. dollars
As of June 30,

2022
Guarantee
Received

Exposure Exchange Agreement
MIGA
IADB
AfDB
Total notional

$

$

21
2,021
1,588
3,630

2021
Guarantee
Provided

$

$

21
2,021
1,588
3,630

Guarantee
Received
$

$

31
2,021
1,588
3,640

Guarantee
Provided
$

$

31
2,021
1,588
3,640

GrantsGrant-Making Facilities (GMFs) are complementary to IBRD’s work. In FY22, IBRD deployed $17 million under
this program, compared with $18 million in FY21. These amounts are reflected in contributions to special programson IBRD’s Statement of Income, after IDA’s share is determined in accordance with the cost sharing ratio.

IBRD Management’s Discussion and Analysis: June 30, 2022 27

Management’s Discussion and Analysis

Section V: Other Development Activities

Externally-Funded Activities
Mobilization of external funds from third-party partners includes trust funds. Additional external funds include
reimbursable funds and revenues from fee-based services to member countries, which are related to RAS, EFOs, andother financial products and services, including RAMP.

Trust Funds
Trust Funds provide development solutions that serve member recipients and donors. Trust funded partnerships often
serve as a platform for IBRD and the partners to access WBG’s diverse technical and financial resources, and achieve
development goals whose complexity, scale, and scope exceed any individual partner’s capabilities. IBRD’s roles
and responsibilities in managing trust funds depend on the type of fund, outlined as follows:•

IBRD-Executed Trust Funds (BETFs): IBRD, alone or jointly with one or more of its affiliated organizations,manages the funds and implements the activities financed. These trust funds support IBRD’s work program.
IBRD disbursed $494 million in FY22 ($470 million in FY21) of trust fund program funds.

•

Recipient-Executed Trust Funds (RETFs): Funds are provided to a third party, normally in the form of project
grant financing, and are supervised by IBRD.

•

Financial Intermediary Funds (FIFs): IBRD, as trustee, administrator, or treasury manager, offers specificadministrative or financial services with a limited operational role. Arrangements include the administration ofdebt service trust funds, fiscal agency funds and other more specialized limited fund management roles.
IBRD uses a cost recovery framework for trust funds, which aims to recover the costs of performing agreed roles inadministering trust funds, and is guided by principles of transparency, fairness, simplification, standardization,
predictability and consistent treatment across all trust fund donors.
Management continues to implement measures to improve planning, support sustainability and enhance alignment ofExternal Funds with mission priorities through greater use of umbrella trust fund programs, increased cost recovery,
and new budgetary measures to manage External Funds usage.
During FY22, IBRD’s share of revenue and fees from trust fund administration was $50 million ($44 million in FY21)(see Notes to Financial Statements, Note I: Management of External Funds and Other Services).

Reimbursable Advisory Services (RAS)
While most of IBRD’s advisory and analytical work is financed by its own budget or donor contributions (e.g., trust
funds), clients may also pay for services. IBRD offers technical assistance and other advisory services to its member
countries, in connection with, and independent of, lending operations. Available services include, for example,
assigning qualified professionals to survey developmental opportunities in member countries; analyzing member
countries fiscal, economic, and developmental environments; helping members devise coordinated development
programs; and improving their asset and liability management techniques. In FY22, IBRD earned revenue of $47
million ($53 million in FY21) from RAS.

Externally Financed Outputs (EFOs)
IBRD offers donors the ability to contribute to specific projects and programs. EFO contributions are recorded as
restricted revenue when received because they are for contractually specified purposes. In FY22, IBRD had $4 millionof restricted revenue, compared with $18 million in FY21, which are included in Net non-interest expenses – GAAP
basis in Table 5.
Restrictions are released once the funds are used for the purposes specified by donors. In FY 22, there was a releaseof $20 million ($24 million in FY21).

Other Financial Products and Services
Managing Financial Risks for Clients
IBRD helps member countries build resilience to shocks by facilitating access to risk management solutions to mitigate
the financial effects of currency, interest rate, and commodity price volatility, disasters, and extreme weather events.

28

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section V: Other Development Activities

Box 5 below lists some financial solutions and disaster risk financing instruments IBRD offers:
Box 5: Financing Instruments
Hedging Transactions
Interest Rate
Currency
Commodity Price

Disaster Risk Financing
Catastrophe Derivatives and Bonds
Insurance and Reinsurance
Regional Pooling Facilities

IBRD also intermediates the following risk management transactions for clients:•

Affiliated Organization: To assist IDA with its asset/liability management, IBRD executes currency forward
contracts on its behalf.

•

Unaffiliated Organization: To assist the International Finance Facility for Immunization (IFFIm) with its
asset/liability management strategy, IBRD executes currency and interest rate swaps on its behalf. In addition,
IBRD, as Treasury Manager, is a counterparty to IFFIm and enters into offsetting swaps with market
counterparties. During FY22, IBRD executed currency swaps with notional amounts of $250 million under thisagreement.
(See Risk Management, Section IX, for a detailed discussion of IBRD’s risk mitigation of these derivativetransactions).

Asset Management
The Reserves Advisory and Management Partnership (RAMP) provides services that build clients’ capacity to support
the sound management of their official sector assets. Clients include central banks, sovereign wealth funds, national
pension funds, and supranational organizations. RAMP helps clients to upgrade their asset management capabilities,
including portfolio and risk management, operational infrastructure, and human resources capacity. Under most ofthese arrangements, IBRD is responsible for managing a portion of the institution’s assets and, in return, receives a
fee based on the average value of the portfolio managed (see Table 18). The fees earned are used to provide training
and capacity-building services. In addition to RAMP, IBRD invests and manages investments on behalf of IDA,
MIGA, and trust funds; those investments are not included in IBRD’s assets.
Table 18: RAMP – Assets and Revenues
In millions of U.S. dollars
As of June 30,
Assets managed under RAMP
Revenue from RAMP a

$
$

2022
23,884 $15 $2021
27,87317

a. RAMP revenue of $7 million was excluded to arrive at the FY22 allocable income.

As noted in the discussion of Trust Fund Activities above, IBRD, alone or jointly with one or more of its affiliatedorganizations, administers on donors’ behalf funds restricted for specific uses. Such administration is governed byagreements with donors, who include members, their agencies and other entities. These funds are held in trust andare not included on IBRD’s Balance Sheet, except for $566 million of undisbursed third-party contributions made to
IBRD-executed trust funds, which are recognized on the Balance Sheet as an asset and a liability. The cash andinvestment assets held in trust by IBRD as administrator and trustee totaled $33.7 billion in FY22, of which $108
million ($93 million in FY21) relates to IBRD contributions to these trust funds (Table 19).

IBRD Management’s Discussion and Analysis: June 30, 2022 29

Management’s Discussion and Analysis

Section V: Other Development Activities

Table 19: Cash and Investment Assets Held in Trust
In millions of U.S. dollars
As of June 30,
IBRD-administered
Jointly administered with affiliated organizations
Recipient-executed
Financial intermediary funds
Execution not yet assigned a
Total fiduciary assets

$

$

2022
249
1,004
2,965
22,3997,114
33,731

$

$

2021
263
1,025
3,082
19,757
7,187
31,314a. These represent assets held in trust for which the determination as to the type of execution is yet to be finalized.

Other Financing Solutions
From time to time, IBRD uses its debt issuance platform for other financing support for clients and other development
organizations with complementary objectives. For example, during FY22, IBRD issued a five-year $150 million
Wildlife Conservation bond (WCB) which contains features aimed to protect and increase black rhino populations inprotected areas in South Africa. The pay-for-success financial structure enables private sector investment in global
public goods such as biodiversity conservation.

30

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section VI: Investment Activities

Section VI: Investment Activities
IBRD’s investment portfolio consists mainly of the liquid asset portfolio. As of June 30, 2022, the net investment
portfolio totaled $82.1 billion with $78.8 billion representing the liquid asset portfolio. This compares with $85.8
billion a year earlier, of which $82.8 billion represented the liquid asset portfolio (see Note C: Investments in theNotes to the Financial Statements). The decreased level of liquidity reflects the lower debt service requirements andhigher loan disbursements during the year.

Liquid Asset Portfolio
Funds raised through IBRD’s borrowing activities that have not yet been deployed for lending are held in the liquid
asset portfolio to provide liquidity for IBRD’s operations. The portfolio is managed with the goal of ensuring sufficient
cash flows to meet all IBRD’s financial commitments. While it seeks a reasonable return on this portfolio, IBRD
restricts its liquid assets to high-quality investments, consistent with its investment objective of prioritizing principal
protection over yield. Liquid assets are managed conservatively and are primarily held against any disruptions in
IBRD’s access to capital markets.
IBRD’s liquid assets are held mainly in highly rated, fixed-income instruments (see Box 8: Eligibility Criteria for
IBRD's Investments) and include the following:• Government and agency obligations•

Time deposits and other unconditional obligations of banks and financial institutions•

Asset-backed securities (including agency mortgage-backed securities)•

Currency, interest rate and other risk management derivatives•

Exchange-traded options and futures

Figure 14: Liquid Asset Portfolio by Asset Class
In millions of U.S. dollars, except for ratios

June 30, 2022

June 30, 2021

Asset-backed
Securities & Others
5%

Asset-backed
Securities & Others
4%$78,796
Time
Deposits
48%

Government andagency obligations
47%$82,751
Time
Deposits
40%

Government andagency obligations
56%

IBRD keeps liquidity volumes above a Prudential Minimum which is defined as 80% of the twelve-month Target
Liquidity Level. The twelve- month Target Liquidity Level is calculated before the end of each fiscal year based on
Management’s estimates of projected net loan disbursements approved at the time of projection and twelve months ofdebt-service for the upcoming fiscal year. This twelve-month estimate becomes the target for the upcoming fiscal year
and the Prudential Minimum is 80% of this target (see Section IX for details of how IBRD manages liquidity risk).
The liquid asset portfolio is composed largely of assets denominated in, or swapped into, U.S. dollars, with net
exposure to short-term interest rates after derivatives. The portfolio has an average duration of less than three months,
and the debt funding these liquid assets has a similar currency and duration profile. This is a direct result of IBRD’s
exchange-rate and interest-rate-risk-management policies (see Section IX), combined with appropriate investment
guidelines (see Box 8).

IBRD Management’s Discussion and Analysis: June 30, 2022 31

Management’s Discussion and Analysis

Section VI: Investment Activities

The maturity profile of IBRD’s liquid asset portfolio reflects a high degree of liquidity. As of June 30, 2022, $69.6
billion (approximately 88% of total volume) was due to mature within six months, of which $29.3 billion was expected
to mature within one month.
The liquid asset portfolio is held in three sub-portfolios: Stable, Operational, and Discretionary, each may havedifferent risk profiles and performance guidelines (see Table 20).
•

Stable portfolio is mainly an investment portfolio holding all or a portion of the Prudential Minimum level ofliquidity, set at the start of each fiscal year.

•

Operational portfolio is used to meet IBRD’s day-to-day cash flow requirements.

•

Discretionary portfolio gives IBRD the flexibility to execute its borrowing program and can be used to tap
attractive market opportunities. Additional portions of the Prudential Minimum may also be held in thisportfolio.

Table 20: Liquid Asset Portfolio Composition
In millions of U.S. dollars, except ratios which are in percentages
As of June 30,
Liquid asset portfolio
StableOperational
Discretionary
Total

$

$

2022

%

2021

49,296
13,345
16,15578,796

63 %
17
20
100 %

$ 57,143
17,502
8,106$ 82,751

%
69 %
21
10
100 %

Table 21: Liquid Asset Portfolio - Average Balances and Returns
In millions of U.S. dollars, except rates which are in percentages
Average Balances
2022
Liquid asset portfolio
StableOperational
Discretionary
Total

$

$

55,925
13,736
9,398
79,0592021$$

56,842
20,026
7,892
84,760Financial Returns %
2022

2021

0.31 %
0.24
0.61
0.32 %

0.44 %
0.03
0.31
0.33 %

During FY22, IBRD’s total return of 0.32% on the liquid asset portfolio was relatively stable, compared to last year.
In addition to monitoring gross investment returns relative to their benchmarks, IBRD also monitors overall earnings
from the investment portfolio, net of funding costs. In FY22, IBRD had $3 million of losses, net of funding costs on
the investment portfolio as discussed in Section III.

Other Investments
In addition to the liquid asset portfolio, the investment portfolio also includes holdings related to AMC, PCRF, PEBP
and the Local Currency Market Development program (LCMD, see Notes to Financial Statements Note C:
Investments for additional details). Table 22 below summarizes the net carrying value of other investments (see Notes
to Financial Statements, Note I: Management of External Funds and Other Services for additional details on AMC):
Table 22: Net Carrying Value of Other Investments
In millions of U.S. dollars
As of June 30,
AMC
PEBP
PCRF
LCMD

$

Total

$

32

2022
2,456
766
39
3,261

IBRD Management’s Discussion and Analysis: June 30, 2022

$

$

2021
10
2,476
555
39
3,080

Management’s Discussion and Analysis

Section VII: Borrowing Activities

Section VII: Borrowing Activities
IBRD has been issuing bonds in the international capital markets since 1947. The proceeds of these bonds support
IBRD’s lending operations which are aimed at promoting sustainable development for IBRD’s borrowing member
countries.

Borrowing Portfolio
IBRD borrows at attractive rates underpinned by its strong financial profile and shareholder support that together are
the basis for its triple-A credit rating. As a result of its financial strength and triple-A credit rating, IBRD is recognized
as a premier borrower and its bonds and notes are viewed as a high credit quality investment in the global capital
markets.
IBRD uses the proceeds to finance development activities in creditworthy middle-income and low-income countries
eligible to borrow from IBRD at market-based rates. Funding raised in any given year is used for IBRD’s operations,
including loan disbursements, replacement of maturing debt, and prefunding for lending activities. IBRD determines
its funding requirements based on a three-year rolling horizon and funds about one-third of the projected amount in
the current fiscal year.
As discussed in Section II, IBRD uses currency and interest rate derivatives in connection with its borrowings for
asset and liability management purposes. New medium- and long-term funding is swapped into variable-rate U.S.
dollar instruments, with conversion to other currencies carried out subsequently. This is in accordance with loan
funding requirements, so that IBRD can minimize interest rate and currency risk. IBRD also uses derivatives tomanage the re-pricing risks between loans and borrowings. Further discussion on how IBRD manages this risk is
included in the Risk Management Section, Section IX.
IBRD issues short-term debt (maturing in one year or less), and medium- and long-term debt (with a maturity greaterthan one year). From time to time, IBRD exercises the call option in its callable bond issues; it may also repurchaseits debt to meet other operational or strategic needs such as providing liquidity to its investors (Table 24). In FY22,
IBRD raised a total of $40.8 billion of medium- and long-term debt (Table 24).
As of June 30, 2022, the borrowing portfolio totaled $256.9 billion, $3.2 billion higher than June 30, 2021 (see Note
E: Borrowings in the Notes to the Financial Statements). The increase was primarily due to new net short-term debt
issuances during the year (Table 23).
Figure 15: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2022

Borrowings excluding derivatives
Euro
12%

US Dollar
64%

Borrowings Including derivatives
Euro
12%

Others*Others24%
US Dollar
88%* Denotes percentage less than 0.5%.

As of June 30, 2022, IBRD’s total borrowing portfolio, after the effects of derivatives, carried variable rates, with aweighted average cost of 1.0% (0.1% as of June 30, 2021). The increase in the weighted average cost from the prioryear reflects the increase in the short-term market interest rates during the year. The increase in short-term market
interest rates also resulted in an increase in IBRD’s weighted average loan rates, which are also based on IBRD’s
funding cost. IBRD’s lending spread was therefore not impacted by the increase in short-term interest rates (Figure
3).

IBRD Management’s Discussion and Analysis: June 30, 2022 33

Management’s Discussion and Analysis

Section VII: Borrowing Activities

Short-Term Borrowings
Table 23 summarizes IBRD’s short-term borrowings, which mainly include discount notes, securities lent or soldunder securities lending and repurchase agreements, and other short-term borrowings.

Discount Notes
IBRD’s short-term borrowings consist mainly of discount notes issued in U.S. dollars. These borrowings have aweighted average maturity of approximately 136 days. As of June 30, 2022, the outstanding balance of discount notes
was $15.0 billion, $5.0 billion higher compared with the previous year.

Securities Lent or Sold under Repurchase Agreements
These short-term borrowings are secured mainly by highly-rated collateral in the form of securities, including
government-issued debt, and have an average maturity of less than 30 days.

Other Short-Term Borrowings
Other short-term borrowings have maturities of one year or less. The outstanding balance of $199 million as of June30, 2022, remains stable compared to last year ($199 million in FY21).
Table 23: Short-Term Borrowings
In millions of U.S. dollars, except rates which are in percentages
As of June 30,
Discount notes a
Balance at year-end
Average daily balance during the fiscal year
Maximum month-end balance
Weighted-average rate at the end of fiscal year
Weighted-average rate during the fiscal year
Securities lent or sold under repurchase agreements b
Balance at year-end
Average monthly balance during the fiscal year
Maximum month-end balance

2022
$
$
$

14,973
10,276
14,973
1.12%
0.29%

$
$
$

10,022
10,392
11,344
0.07%
0.16%

$
$
$

145
614

$
$
$

-

Weighted-average rate at the end of fiscal year
Weighted-average rate during the fiscal year
Other short-term borrowings a
Balance at year-end
Average daily balance during the fiscal year
Maximum month-end balance
Weighted-average rate at the end of the fiscal year
Weighted-average rate during the fiscal year
a. At amortized cost which approximates fair value.
b. Excludes securities related to PEBP.

34

IBRD Management’s Discussion and Analysis: June 30, 2022

2021

$
$
$

-

-

0.02%

-

199
199
199
1.22%
0.28%

$
$
$

199
177
199
0.11%
0.17%

Management’s Discussion and Analysis

Section VII: Borrowing Activities

Medium- and Long-Term Borrowings
In FY22, medium- and long-term debt raised directly by IBRD in the capital markets amounted to $40.8 billion withan average maturity to first call of 7.6 years (Table 24). The decrease in medium-and-long-term debt issuances in
FY22 is primarily due to lower debt servicing and refinancing requirements. IBRD called and repurchased a lower
volume of debt in FY22, compared with FY21.
Table 24: Funding Operations Indicators
In millions of U.S. dollars, except maturities which are in years
For the fiscal year ended June 30,
Issuances aMedium- and long-term funding raised
Average maturity to first call date
Average maturity to contractual final maturity

2022

Maturities
Medium- and long-term funding matured
Average maturity of debt matured
Called/Repurchased
Medium- and long-term funding called/repurchased

2021

$

40,8207.6
8.8$

67,4718.1
8.8$

35,0575.7$

41,281
5.0

$

2,797

$

11,321a. Expected life of IBRD’s bonds are generally between first call date and the contractual final maturity.
Table 25: Maturity Profile of Medium and Long-Term Debt
In millions of U.S. dollars
Less than 1
year
Medium and Long-Term Debt $27,135$

1 to 2
years
28,483 $As of June 30, 2022
2 to 33 to 4
years
years
32,274 $27,479 $4 to 5Due After 5
years
years
19,163 $85,485 $Total
220,019

As shown below, 56% of IBRD’s medium-and long-term borrowings issued during the year were in U.S. dollars:
Figure 16: Medium- and Long-Term Borrowings Raised by Currency during the year, Excluding Derivatives
June 30, 2022

June 30, 2021
Others20%

Others31%

US Dollar
56%
Euro 13%Euro 12%US Dollar
68%

IBRD Management’s Discussion and Analysis: June 30, 2022 35

Management’s Discussion and Analysis

Section VIII: Capital Activities

Section VIII: Capital Activities
Capital Structure
Principal Shareholders and Voting PowerAs of June 30, 2022, IBRD had 189 member countries, with the top six accounting for 41% of the total voting power(Figure 17). The percentage of votes held by members rated AA and above by at least two major rating agencies was
37% (Figure 18).
The United States is IBRD’s largest shareholder, with 16% of total voting power. Accordingly, it also has the largest
share of IBRD’s uncalled capital, $47,785 million, or 17% of total uncalled capital.

Subscribed Capital
Total subscribed capital is comprised of paid-in capital and uncalled subscribed capital. See Statement of Subscriptions
to Capital Stock and Voting Power in IBRD’s Financial Statements for balances by country.
Figure 17: Voting Power of Top Six Members as of June 30, 2022

Figure 18: Percentage of Votes held by Member
Countries, as of June 30, 2022

15.79%

United States
7.44%

Japan

5.33%

China
Germany

4.10%

France

3.92%

United Kingdom

3.92%
0%

5%

10%

15%

20%

25%

Table 26: Breakdown of IBRD Subscribed Capital
In millions of U.S. dollars, except ratios which are in percentages
As of June 30,%
Subscribed capital
Uncalled Subscribed capital
Paid-in capital
Total subscribed capital

AA &
Above
37%

Below
AA, 63%

93%
7
100%

2022
$
$

286,636
20,499307,135

2021$$

278,612
19,244
297,856

Variance
$
$

8,024
1,255
9,279

Uncalled Subscribed Capital
As of June 30, 2022, the total uncalled portion of subscriptions was $286,636 million. The amount may be called only
when required to meet IBRD’s obligations for funds borrowed or loans guaranteed and is, thus, not available for use
by IBRD in making loans. Of this amount, $40,928 million was restricted pursuant to resolutions of the Governors(though such conditions are not required by IBRD’s Articles). While these resolutions are not legally binding on future
Governors, they do record an understanding among members that this amount will not be called for use by IBRD in
its lending activities or for administrative purposes.
No call has ever been made on IBRD’s capital. Any such calls are required to be uniform, but the obligations of
IBRD’s members to make payment on such calls are independent of one another. If the amount received on a call isinsufficient to meet the obligations of IBRD for which the call is made, IBRD has the right to make further calls until
the amounts received are sufficient to meet such obligations. On any such call or calls, however, no member is required
to pay more than the unpaid balance of its capital subscription.

36

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section VIII: Capital Activities

Under the Bretton Woods Agreements Act and other U.S. legislation, the Secretary of the U.S. Treasury is permitted
to pay approximately $7,663 million of the uncalled portion of the subscription of the United States, if called for use
by IBRD, without need for further congressional action.
The balance of the uncalled portion of the U.S. subscription, $40,122 million, has been authorized but not appropriatedby the U.S. Congress. Further action by the U.S. Congress is required to enable the Secretary of the Treasury to pay
any portion of this balance. The General Counsel of the U.S. Treasury has rendered an opinion that the entire uncalled
portion of the U.S. subscription is an obligation backed by the full faith and credit of the U.S., notwithstanding those
congressional appropriations have not been obtained with respect to certain portions of the subscription.

Capital Increases
In October 2018, the Governors approved a new GCI and SCI as part of a capital package endorsed by the Governors
in April 2018 that includes institutional and financial reforms designed to ensure long-term financial sustainability.
The capital increases will result in additional subscribed capital of up to $60.1 billion, with $7.5 billion of paid-in
capital and $52.6 billion of callable capital.

Paid-In Capital
Paid-in capital has two components:• The U.S. dollar portion, which is freely available for use by IBRD.
•

National Currency Paid-In Capital (NCPIC) portion, usage of which is subject to certain restrictions under
IBRD’s Articles and is subject to Maintenance-Of-Value (MOV) requirements. For additional details see theNotes to the Financial Statements, Note A: Summary of Significant Accounting and Related Policies.

Usable Paid-in Capital
Usable paid-in capital represents the portion of paid-in capital that is available to support IBRD’s risk bearing capacity
and includes all U.S. dollar paid-in capital, as well as NCPIC for which use restrictions have been lifted (referred toas released NCPIC). The adjustments made to paid-in capital to arrive at usable paid-in capital are provided in Table
27.
The $769 million increase in usable paid-in capital between FY22 and FY21 was primarily due to the receipt of $998
million for GCI and $257 million for SCI during FY22, partially offset by the NCPIC adjustment.
Table 27: Usable Paid-In Capital
In millions of U.S. dollars
As of June 30,
Paid-in Capital
Adjustment on released NCPIC for net deferred MOV (receivable) payable a
Adjustments for unreleased NCPIC:
Restricted cash
Demand notes
MOV receivable
MOV payable
Total Adjustments for unreleased NCPIC
Usable paid-in capital

$

$

2022
20,499
(424)
(55)
(316)
(354)
2
(723)
19,352$$2021
19,244
67
(60)
(332)
(343)
7
(728)
18,583$$

Variance
1,255
(491)
5
16
(11)
(5)
5
769

a. The MOV on released NCPIC is considered to be deferred.

IBRD Management’s Discussion and Analysis: June 30, 2022 37

Management’s Discussion and Analysis

Section VIII: Capital Activities

Usable Equity
Usable equity represents the amount of equity that is available to support IBRD’s lending operations. Usable equity
is central to the three frameworks IBRD uses to manage its capital adequacy, credit risk, and equity earnings. Theseframeworks, described in Section IX, are:•Strategic Capital Adequacy Framework•

Credit Risk and Loan Loss Provisioning Framework•

Other ALM Framework

Usable equity consists of usable paid-in capital, and elements of retained earnings and reserves (see Table 28). The
components of retained earnings and reserves included in usable equity are as follows:
Special Reserve: Amount set aside pursuant to IBRD’s Articles, held in liquid form and to be used only for meeting
IBRD’s liabilities on its borrowings and guarantees;
General Reserve: Generally consists of earnings from prior fiscal years which the Board has approved for retention
in IBRD’s equity. On August 4, 2022, the Board approved the transfer of $589 million to the General Reserve from
FY22 net income;Cumulative Translation Adjustments: Comprise translation adjustments that arise upon revaluing currency balances
to U.S. dollars for reporting purposes. IBRD’s functional currencies are the U.S. dollar and euro and changes incumulative translation adjustments only relate to translation adjustments on euro-denominated balances. Translation
adjustments associated with non-functional currencies are reflected in other adjustments in Table 28. Usable equity
excludes cumulative translation adjustments associated with unrealized mark-to-market gains/losses on non-trading
portfolios;
Other Adjustments: These adjustments relate to the income earned on PEBP assets before FY11, and currencytranslation adjustments on non-functional currencies. These also reflect the measure of the under-funded status of thepension plans, if any, which is based on the funding methodology used by the Pension Finance Committee to determine
sustainable funding levels for the pension plans.
The increase in usable equity in FY22 primarily reflects the increase in reserve retention out of the FY22 allocable
income and the increase in usable paid-in capital.
Table 28: Usable Equity
In millions of U.S. dollars

As of June 30,
Usable paid-in capitalSpecial reserve
General reserve a
Cumulative translation adjustment
Other adjustments b
Equity (usable equity)

$

$

2022
19,352
293
32,053(1,342)125
50,481$$2021
18,583
293
31,464(268)(75)
49,997

Total
$

769
589
(1,074)
200

$

484

Variance
Due toDue toTranslation
Activities
Adjustment
$
1,257
$
(488)
589
(1,074)
200
$

1,846

$

(1,362)a. Includes transfer to the General Reserve, which for FY22 (FY21) was approved by the Board on August 4, 2022 (August 5, 2021).
b. Includes cumulative translation gains on non-functional currencies of $173 million for FY22 ($27 million losses for FY21).

38

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Section IX: Risk Management
Risk Governance
IBRD’s risk management processes and practices evolve to reflect changes in activities in response to market, credit,
product, operational, and other developments. The Board, particularly Audit Committee (AC) members, periodicallyreview trends in IBRD’s risk profiles and performance, and any major developments in risk management policies andcontrols.
Management believes that effective risk management is critical for its overall operations. Accordingly, the risk
management governance structure is designed to manage the principal risks IBRD assumes in its activities, andsupports Management in its oversight function, particularly in coordinating different aspects of risk management andin connection with risks that are common across functional areas.
IBRD’s financial and operational risk governance structure is built on the “Three Lines Model” (Figure 19) where:
i.
ii.
iii.

Business units are responsible for directly managing risks in their respective functional areas;
The Vice President and WBG Chief Risk Officer (CRO) provides direction, challenge, and oversight overfinancial and operational risk activities; andInternal Audit provides independent oversight.

IBRD’s risk management process comprises risk identification, assessment, response and risk monitoring andreporting. IBRD has policies and procedures under which risk owners and corporate functions are responsible for
identifying, assessing, responding to, monitoring and reporting risks.
Figure 19: Financial and Operational Risk Management StructureInternal Audit

3rd LineCRO

2 LineRisk Oversight

Financial Risk

Risk Coverage

Operational Risk

Business Units

Risk Owners

Risk Processnd

Identify

AssessRespond

st

1 LineMonitor &ReportRisk Oversight and Coverage
Financial and Operational Risk Management
The CRO oversees both financial and operational risks. These risks include (i) country credit risks in the core
sovereign-lending business, (ii) market and counterparty risks, including liquidity risk, and (iii) operational risks
relating to people, processes and systems. In addition, the CRO works closely with IFC, MIGA, and IDA’s
Management, to review, measure, aggregate, and report on risks, and share best practices across the WBG. The CRO
also helps enhance cooperation between the entities and facilitates knowledge sharing in the risk management
function.

IBRD Management’s Discussion and Analysis: June 30, 2022 39

Management’s Discussion and Analysis

Section IX: Risk Management

The following three departments report directly to the CRO:
Credit Risk Department•••

Identifies, measures, monitors, and manages country credit risk faced by IBRD. By agreement with the Board,the individual country credit risk ratings are not shared with the Board and are not made public.
Assesses loan portfolio risk, determines the adequacy of provisions for losses on loans and other exposures,and monitors borrowers that are vulnerable to crises in the near term. These reviews are taken into account indetermining the overall country programs and lending operations, and they are included in the assessment of
IBRD’s capital adequacy.
Reviews proposed new financial products for any implications for country credit risk.

Market and Counterparty Risk Department••

Responsible for market, liquidity, and counterparty credit risk oversight, assessment, and reporting. It does
these in coordination with IBRD’s financial managers who are responsible for the day-to-day execution of
trades for the liquid asset and derivative portfolios, within applicable policy and guideline limits.
Ensures effective oversight, including: (i) maintaining sound credit assessments, (ii) addressing transaction andproduct risk issues, (iii) providing an independent review function, (iv) monitoring market and counterparty
risk in the investment, borrowing and client operation portfolios, and (v) implementing the model risk
governance framework. It also provides reports to the Audit Committee and the Board on the extent and natureof risks, risk management, and oversight.

Operational Risk Department•••

Provides direction and oversight for operational risk activities by business function.
Key operational risk management responsibilities include: (i) administering the Operational Risk Committee(ORC) for IBRD, (ii) implementing the operational risk management framework which is aligned with Baselprinciples and provides direction to business unit partners to ensure consistent application, (iii) assisting andguiding business units in identifying and prioritizing significant operational risks and enabling monitoring andreporting of risks through suitable metrics (or risk indicators), (iv) helping identify emerging risks and trends
through monitoring of internal and external risk events, (v) supporting risk response and mitigating actions, andprepares a corporate Operational Risk Report for review and discussion by the ORC.
Responsible for business continuity management, enterprise risk management functions and corporate
insurance.

The risk of IBRD’s operations not meeting their development outcomes (development outcome risk) in IBRD’s
lending activities is monitored at the corporate level by Operations Policy and Country Services (OPCS). Where fraudand corruption risks may impact IBRD-financed projects, OPCS, the regions and practice groups, and the Integrity
Vice Presidency jointly address such issues.

40

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Figure 20 depicts IBRD’s management risk committee structure for financial and operational risks.
Figure 20: Risk Committee Structure for Financial and Operational Risks

Financial Risk
FRC
Finance and Risk Committee
Chair: MDCFO

Operational Risk

ALCO
Asset and Liability Management
Committee

ERC
Enterprise Risk Committee

Chair: MDCFO

Chair: MDCAO

NBC

ORC

New Business Committee

Operational Risk Committee
Chair: CRO

Financial Risk Committees:
The Finance and Risk Committee (FRC), a Vice President level committee, provides a high-level governancestructure for decisions that may have financial risks. The FRC was created under the authority of the Managing
Director and WBG Chief Financial Officer (MDCFO) to approve, clear, or discuss: (a) risk policy and procedure
documents related to financial integrity, income sustainability and balance sheet strength, and (b) issues new businessinitiatives with policy implications related to IBRD’s financial risks, including country credit, market, counterparty,
liquidity and model risks; and operational risks related to the finance business functions. The FRC helps to integrate
individual components of finance and risk management activities by building on mechanisms and processes alreadyin place and provides a forum for discussing and communicating significant risk related issues. The FRC meetsregularly to discuss new products and services, and financial risk management of IBRD.
New Business Committee (NBC) is a standing subcommittee of the FRC. The NBC provides advice, guidance andrecommendations to the FRC, by performing due diligence over new financial products or services to ensure thatManagement has a full understanding of the rationale, costs, risks and rewards of the product or service being
considered.
Asset Liability Management Committee (ALCO), a Vice President-level committee chaired by the MDCFO,
provides a high-level forum to ensure prudent balance sheet management of IBRD by: a) monitoring its financial
positions and Asset-Liability Management (ALM) activities for compliance with its respective guidelines, policies
and procedures, including borrowing and investment activities; b) identifying and providing recommendations on
emerging ALM issues for IBRD, as well as those related to capital, balance-sheet planning, and financial sustainability
and c) serving as reviewing and recommending body for ongoing decisions as part of implementing the ALM policies
and procedures of IBRD, including those that impact lending rates and net income.

Operational Risk Committees:
The Enterprise Risk Committee (ERC) is a corporate committee that has oversight over operational and nonfinancial risks across IBRD. Chaired by the Managing Director and Chief Administrative Officer (MDCAO), it
consists of a Vice President level committee to review and discuss enterprise risk matters. Specifically, the Committee
has a governance role over risk matters relating to corporate security, business continuity and IT security.
Operational Risk Committee (ORC) is the main governance committee for operational risk and provides a mechanism
for an integrated review and response across IBRD units on operational risks associated with people, processes, andsystems, including business continuity, and recognizing that business units remain responsible for managing
operational risks. The Committee’s key responsibilities include monitoring significant operational risk matters andevents on a quarterly basis to ensure that appropriate risk-response measures are taken and reviewing and concludingon IBRD’s overall operational risk profile. The ORC is chaired by the CRO and escalates significant risks/decisions
to the FRC and ERC.

IBRD Management’s Discussion and Analysis: June 30, 2022 41

Management’s Discussion and Analysis

Section IX: Risk Management

Box 6: Summary of IBRD's Specific Risk Categories
Types of Risk

How the Risk is Managed

Credit Risk
Country Credit Risk

IBRD’s credit-risk-bearing capacity and individual country exposure limits

Counterparty Credit Risk

Counterparty credit limits and collateral

Market Risk
Interest Rate Risk

Interest rate derivatives to match the sensitivity of assets and liabilities

Exchange Rate Risk

Currency derivatives to match the currency composition of assets and liabilities

Liquidity Risk

Prudential minimum liquidity level

Operational Risk

Risk assessment and monitoring of key risk indicators and internal and external
operational risk events

Management of IBRD’s Risks
IBRD assumes financial risks in order to achieve its development and strategic objectives. IBRD’s financial risk
management framework is designed to enable and support the institution in achieving its goals in a financiallysustainable manner. IBRD manages credit, market and operational risks for its financial activities, which includelending, borrowing and investing (Box 6). The primary financial risk to IBRD is the country credit risk inherent in its
loan portfolio. IBRD is also exposed to risks in its liquid asset and derivative portfolios, where the major risks areinterest rate, exchange rate, commercial counterparty, and liquidity risks. IBRD’s operational risk management
framework is based on a structured and uniform approach to identify, assess and monitor key operational risks acrossbusiness units.
In an effort to maximize IBRD’s capacity to lend to member countries for development purposes, IBRD limits its
exposure to market and counterparty credit risks. In addition, to ensure that the financial risks associated with its loans
and other exposures do not exceed its risk-bearing capacity, IBRD uses a strategic capital adequacy framework as a
key medium-term capital planning tool.

Geopolitical Events and COVID-19 Pandemic
Ukraine
The war in Ukraine that began in February 2022 has negatively impacted regional and global financial markets andeconomic conditions. It has also created significant needs for humanitarian and other critical support. From theoutbreak of the conflict, through June 30, 2022, IBRD committed $1,073 million and disbursed $1,428 million(including commitments made prior to the start of the war) to help the government of Ukraine provide critical services.
As of June 30, 2022, IBRD’s loans outstanding to Ukraine and the Russian Federation were $7.8 billion and $0.1
billion, respectively (3.4% and 0.1% of the total loans outstanding, respectively). Of the total loans outstanding to
Ukraine, $1.1 billion are guaranteed by third parties. In addition, IBRD issued $685 million of guarantees to Ukrainethat were outstanding as of June 30, 2022.

COVID-19
As a result of the ongoing COVID-19 pandemic, IBRD continues to respond to client needs and operate its corebusiness functions effectively by utilizing technology for remote work, where needed. IBRD will continue to prioritize
the health and safety of its staff through mitigation measures, including vaccination, masking, and testing.
As of June 30, 2022, despite the broad impact of geopolitical events and the COVID-19 pandemic on macroeconomic
conditions, IBRD had sufficient resources to meet its liquidity requirements and continues to have access to capital
market resources. The liquid asset portfolio was 138% of the Target Liquidity Level.
Management remains vigilant in assessing funding needs in the medium and longer-term to manage the effect ofpossible severe market movements.
IBRD’s capital adequacy, as indicated by Equity-to-Loans ratio, remains stable (Figure 21 and Table 29) and above
the minimum level.

42

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

As of the reporting date, country credit risk and counterparty credit risk remain in line with the existing governanceframework and established credit limits. The loan loss provisions include IBRD’s current assessment of country credit
risk. The fair values of related financial instruments reflect counterparty credit risk in IBRD’s portfolios.
Developments in the market continue to be closely monitored and managed.

Capital Adequacy
IBRD holds capital to cover the credit, market and operational risks inherent in its operating activities and financial
assets. Country credit risk is the most substantive risk covered by IBRD’s equity.
IBRD’s capital adequacy is the degree to which its equity is sufficient to withstand unexpected shocks. IBRD’s Board
monitors IBRD’s capital adequacy within a strategic capital adequacy framework and uses the equity-to-loans ratio
as a key indicator of capital adequacy. The framework seeks to ensure that IBRD’s equity is aligned with the financial
risk associated with its loan portfolio as well as other exposures over a medium-term capital-planning horizon. Under
the currency management policy, to minimize exchange rate risk, IBRD matches its borrowing obligations in any one
currency (after derivatives) with assets in the same currency. In addition, IBRD periodically undertakes currency
conversions to align the currency composition of its equity with that of its outstanding loans, across major currencies.
Figure 21: Equity-to-Loans Ratio
26%

23%

20%

policy minimum
17%
Jun-18Jun-19Jun-20Jun-21

Jun-22

Table 29: Equity-to-Loans Ratio
In millions of U.S. dollars

As of June 30,

2022

Usable paid-in capitalSpecial reserve
General reserve a
Cumulative translation adjustment b
Other adjustments c
Equity (usable equity)$

Loans exposure
Present value of guarantees
Effective but undisbursed DDOs
Relevant accumulated provisions
Deferred loan income
Other exposures
Loans (total exposure)

$

$

$

2021

19,352
293
32,053(1,342)125
50,481$

229,3442,703
598(2,142)(510)(743)
229,250

$

$

$

Total

18,583
293
31,464(268)(75)
49,997$

220,564
3,079(1,630)(495)(723)
220,795

$

$

$

769
589
(1,074)
200
484
8,780
(376)
598
(512)
(15)
(20)
8,455

Variance
Due toDue toTranslation
Activities
Adjustment
$
1,257
$
(488)
589
(1,074)
200
$
1,846
$
(1,362)$$

14,874
(159)
598
(562)
(29)
(20)
14,702$$(6,094)(217)
50
14(6,247)

Equity-to-Loans Ratio
22.0%
22.6%
a. Includes transfer to the General Reserve, which for FY22 (FY21) was approved by the Board on August 4, 2022 (August 5, 2021).
b. Excludes cumulative translation amounts associated with the unrealized mark-to-market gains/losses on non-trading portfolios, net.
c. Includes cumulative translation gains on non-functional currencies of $173 million for FY22 ($27 million losses for FY21).

IBRD Management’s Discussion and Analysis: June 30, 2022 43

Management’s Discussion and Analysis

Section IX: Risk Management

IBRD’s equity-to-loans ratio decreased to 22.0% as of June 30, 2022, compared with 22.6% as of June 30, 2021,
above the 20% minimum threshold level (Table 29). The decline was due to the increase of approximately $14.7
billion in total exposure, partially offset by the receipt of capital subscription payments of $1.3 billion and the retentionof $0.6 billion in the General Reserve out of FY22 allocable income.

Credit Risk
IBRD faces two types of credit risk: country credit risk and counterparty credit risk. Country credit risk is the risk ofloss due to a country not meeting its contractual obligations, and counterparty credit risk is the risk of loss attributable
to a counterparty not honoring its contractual obligations. IBRD is exposed to commercial as well as non-commercial
counterparty credit risk.

Country Credit Risk
IBRD’s mandate is to take only sovereign credit risk in its lending activities. Within country credit risk, three distinct
types of risks can be identified: idiosyncratic risk, correlation risk, and concentration risk. Idiosyncratic risk is the riskof an individual borrowing country’s exposure falling into nonaccrual status for country-specific reasons (such aspolicy slippage or political instability). Correlation risk is the risk that exposure to two or more borrowing countries
will fall into nonaccrual in response to common global or regional economic, political, or financial developments.
Concentration risk is the risk resulting from having a large portion of exposure outstanding which, if the exposure fell
into nonaccrual, would result in IBRD’s financial health being excessively impaired. Concentration risk needs to beevaluated both on a stand-alone basis (exposure of one borrowing country) and when taking into account correlation
when more than one borrowing country is affected by a common event, such that when combined, IBRD’s exposure
to a common risk is elevated.
To estimate idiosyncratic risk and stand-alone concentration risk, the Credit Risk Department looks at IBRD’s
exposure to each borrowing country and each borrowing country’s expected default to IBRD as captured in its credit
rating. Credit ratings and default probabilities reflect country economic, financial and political circumstances, andalso consider environmental, social and governance (ESG) risk factors. For correlation risk, the Credit Risk
Department models the potential common factors that could impact borrowing countries simultaneously. The
existence of correlation increases the likelihood of large nonaccrual events, as most of these nonaccrual events involvethe joint default of two or more obligors in the portfolio.
IBRD manages country credit risk by using individual country exposure limits and produces credit risk ratings for all
its borrowing countries. In addition, IBRD conducts stress tests of the effects of changes in market variables and of
potential geopolitical events on its portfolio to complement its capital adequacy framework.

Portfolio Concentration Risk
Portfolio concentration risk, which arises when a small group of borrowers, accounts for a large share of loans
outstanding, is a key concern for IBRD. It is carefully managed for each borrowing country, in part, through an
exposure limit for the aggregate balance of loans outstanding, the present value of guarantees, and the undisbursed
portion of Deferred Drawdown Options (DDOs) that have become effective, among other potential exposures. Under
current guidelines, IBRD’s exposure to a single borrowing country is restricted to the lower of an Equitable Access
Limit (EAL) or the Single Borrower Limit (SBL).

Equitable Access Limit
The EAL is equal to 10% of IBRD’s Statutory Lending Limit (SLL). Under IBRD’s Articles, as applied, total loans
outstanding, including participations in loans and callable guarantees, may not exceed the sum of unimpaired
subscribed capital, reserves and surplus, referred to as the SLL. The SLL seeks to ensure that sufficient resources areavailable to meet IBRD's obligations to bondholders in the highly unlikely event of substantial and historically
unprecedented losses on IBRD's loans. As of June 30, 2022, the SLL totaled $339.0 billion, of which the outstandingloans and callable guarantees totaled $235.7 billion, or 69.5% of the SLL. The EAL was $34.0 billion, as of June 30,
2022.

44

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Single Borrower Limit
The SBL amount is established, in part, by assessing its impact on overall portfolio risk relative to equity. The SBL
caps the maximum exposure to IBRD’s most creditworthy and largest borrowing countries in terms of population andeconomic size. The SBL framework reflects a dual-SBL system, with the SBL for countries above the Graduation
Discussion Income (GDI) threshold set lower than the SBL for countries below GDI. GDI is the level of GNI per
capita of a member country above which graduation from IBRD starts being discussed. The GDI threshold was $7,155
as of July 1, 2021. Under the dual-SBL system, the SBL for FY22 was $24.9 billion for highly creditworthy countries
below the GDI and $21.2 billion for highly creditworthy countries above the GDI. The SBL framework also contains
a 50-basis point surcharge (SBL surcharge) payable on the incremental exposure in excess of the SBL surcharge
threshold (defined as $2.5 billion below the SBL for the respective GDI group). In the event that a borrowing country
eligible for one of the limits set under the SBL framework is downgraded to the high-risk category, management may
determine that the borrowing country continue to be eligible for borrowing at the currently applicable limit, but theborrowing country would not be eligible for any future increases in the SBL approved by the Board. During FY22,
there were two countries below-GDI and two countries above-GDI, which have their exposure limits set at theapplicable SBLs. For all other countries, the individual country exposure limits were set below the relevant SBL. In
the context of IBRD’s overall response to the impact of the COVID 19 crisis, on June 17, 2021, the Board approved
temporary relief from the SBL surcharge by excluding all financings approved between May 20, 2021 and the end of
FY22 for purposes of calculating whether a country’s exposure exceeds the SBL surcharge threshold. Operations
excluded from the SBL surcharge calculation will continue to count towards SBL compliance.
As of June 30, 2022, the ten countries with the highest exposures accounted for about 61% of IBRD’s total exposure(Figure 22: Country Exposures as of June 30, 2022). IBRD’s largest exposure to a single borrowing country was $18.7
billion on June 30, 2022. Monitoring these exposures relative to the limits, however, requires consideration of therepayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.

Sustainable Annual Lending Limit (SALL)The Financial Sustainability Framework (FSF) requires IBRD to align its annual lending levels to its long-termsustainable capacity, while retaining flexibility to respond to crises by maintaining a crisis buffer.
The SALL is the maximum annual commitment level sustainable, in real terms, for 10 years in line with IBRD’s
capital adequacy framework and the Statutory Lending Limit set out in IBRD’s Articles, as determined bymanagement. Under the FSF, the Board annually approves a crisis buffer. The crisis buffer-adjusted sustainable annual
lending limit (SALL-Adj) serves as the upper bound for regular lending in the next year. For the fiscal year ending
June 30, 2022 the SALL-Adj was $28.0 billion. On June 28, 2022, the Board approved a crisis buffer of $5.0 billion,
resulting in a SALL-Adj of $27.0 billion for FY23. Based on the final lending outcome for FY22, resulting in acarryover of $4.5 billion from the FY22 crisis buffer, the applicable FY23 lending ceiling is $36.5 billion.
Figure 22: Country Exposures as of June 30, 2022
In billions of U.S. dollars

Top Ten Country Exposures
India
Indonesia
BrazilChina
MexicoColombia
Egypt
Philippines
TürkiyeArgentina

18.7
18.2
15.9
15.8
15.0
14.6
12.0
10.9
10.5

9.1
0

2

4

6

8

10

12

14

16

18

20

IBRD Management’s Discussion and Analysis: June 30, 2022 45

Management’s Discussion and Analysis

Section IX: Risk Management

Credit-Risk-Bearing Capacity
Management uses risk models to estimate the size of a potential nonaccrual shock that IBRD could face over the next
three years at a given confidence level. The model-estimated nonaccrual shock is a single measure of the credit qualityof the portfolio that combines the following:•

IBRD’s country-credit-risk ratings and their associated expected risk of default;•

Covariance risks;•

The loan portfolio’s distribution across risk rating categories; and• The exposure concentration.
The shock estimated by this risk model is used in IBRD’s capital adequacy testing to determine the impact of potential
nonaccrual events on equity and income earning capacity.

Expected Losses, Overdue Payments, and Non-Performing Loans
The loan loss provision is calculated by taking into account IBRD’s total estimated exposure, the Expected Default
Frequency (EDF), i.e. probability of default, and the assumed loss in the event of default. Expected losses inherent in
the loan portfolio attributable to country credit risk are covered by the accumulated provision for losses on loans andother exposures, while unexpected losses owing to country credit risk are covered by equity (see Notes to the Financial
Statements, Note A: Summary of Significant Accounting and Related Policies and Note D: Loans and Other
Exposures).
When a borrower fails to make payments due to IBRD on any principal, interest, or other charges, IBRD may suspend
disbursements immediately on all loans to that borrower. IBRD’s current practice is to exercise this option using a
graduated approach (Box 7). These practices also apply to member countries eligible to borrow from both IBRD and
IDA, and whose payments on IDA loans may become overdue. 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. As of June 30,
2022, there were no principal or interest amounts on loans in accrual status, that were overdue by more than threemonths.
As of June 30, 2022, 0.2% of IBRD’s loans were in nonaccrual status and all related to Zimbabwe. The exposures toZimbabwe were $428 million as of June 30, 2022, compared with $432 million as of June 30, 2021. IBRD received apayment of $3 million from Zimbabwe in FY22 (FY21: $1.5 million).
Box 7: Treatment of Overdue Payments
Where the borrower is the member country, no new loans to the member country, or to any other borrower in the
country, will be presented to the Board for approval, nor will any previously approved loan be signed, until payments
for all amounts 30 days overdue or longer have been received. Where the borrower is not the member country, no newloans to that borrower will be signed or approved. In either case, the borrower will lose its eligibility for any waiver ofOverdueinterest charges in effect at that time for loans signed before May 16, 2007, and those loans signed between May 16,
by 30 days 2007, and September 27, 2007, if the borrowers elected not to convert the terms of their loans to the pricing terms
effective September 27, 2007. For loans with the pricing terms applicable from May 16, 2007, an overdue interest
penalty will be charged at a rate of 50 basis points on the overdue principal. In addition, if an overdue amount remains
unpaid for a period of 30 days, then the borrower will pay a higher interest rate (LIBOR + fixed spread) plus 50 basis
points on the overdue principal amount until the overdue amount is fully paid.
In addition to the provisions cited above for payments overdue by 30 days, to avoid proceeding further on the
notification process leading to suspension of disbursements, the country as borrower or guarantor and all borrowers
in the country must pay not only all payments overdue by 30 days or more, but also all payments due regardless of
Overdueby 45 days the number of days since they have fallen due. Where the borrower is not the member country, no new loans to, or
guaranteed by, the member country, will be signed or approved. Additionally, all borrowers in the country will loseeligibility for any waivers of interest in effect at the time.
In addition to the suspension of approval for new loans and signing of previously approved loans, disbursements on
Overdue
all loans to, or guaranteed by, the member country are suspended until all overdue amounts are paid. This policyby 60 days applies even when the borrower is not the member country. Under exceptional circumstances, disbursements can bemade to a member country upon the Board’s approval.

Overdueby morethan sixmonths46

All loans made to, or guaranteed by, a member of IBRD are placed in nonaccrual status, unless IBRD determines thatthe overdue amount will be collected in the immediate future. Unpaid interest and other charges not yet paid on loans
outstanding are deducted from the income for the current period. To the extent that these payments are received, they
are included in income. At the time of arrears clearance, if collectability risk is considered to be particularly high, themember’s exposures may not automatically emerge from nonaccrual status. In such instances, a decision is made on
the restoration of accrual status on a case-by-case basis; in certain cases, this decision may be deferred until after asuitable period of payment performance has passed.

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Counterparty Credit Risk
IBRD is exposed to commercial and non-commercial counterparty credit risk.

Commercial Counterparty Credit Risk
Commercial counterparty credit risk is the risk that counterparties fail to meet their payment obligations under theterms of the contract or other financial instruments. Effective management of counterparty credit risk is vital to thesuccess of IBRD’s funding, investment, and asset/liability management activities. The monitoring and managementof these risks is continuous as the market environment evolves.
IBRD mitigates the counterparty credit risk from its investment and derivative holdings through the credit approval
process, the use of collateral agreements and risk limits, and other monitoring procedures. The credit approval process
involves evaluating counterparty and product-specific creditworthiness, assigning internal credit ratings and limits,and determining the risk profile of specific transactions. Credit limits are set and monitored throughout the year.
Counterparty exposure is updated daily, considering the current market values of assets held, estimates of potential
future movements of exposure for derivative instruments, and related counterparty collateral agreements, wherecollateral posting requirements are based on thresholds driven by public credit ratings. Collateral held includes cash
and highly rated liquid investment securities. Commercial credit risk management includes ESG related assessmentsin the approval and monitoring of higher exposure counterparties for the liquid asset portfolio and for derivative
counterparties. In addition, third-party ESG scores of the liquid asset portfolio and derivative exposures aremonitored.
IBRD’s liquid asset investment portfolio consists mostly of sovereign government bonds, debt instruments issued bysovereign government agencies, and bank time deposits. More than half of these investments are with issuers andcounterparties rated triple-A and AA (Table 30).

Derivative Instruments
In the normal course of its business, IBRD enters into various derivative instruments to manage foreign exchange andinterest rate risks. These derivatives are used mainly to meet the financial needs of IBRD borrowers and to manage
the institution’s exposure to fluctuations in interest and exchange rates. These transactions are conducted with otherfinancial institutions and, by their nature, entail commercial counterparty credit risk.
While the volume of derivative activity can be measured by the contracted notional value of derivatives, notional
value is not an accurate measure of credit or market risk. IBRD uses the estimated replacement cost of the derivative
instrument, or potential future exposure to measure counterparty credit risk with these trading partners.
Under IBRD’s collateral arrangements, IBRD receives collateral when mark-to-market exposure is greater than theratings based collateral threshold. As of June 30, 2022, IBRD had received collateral of cash and securities totaling$0.6 billion.
IBRD is not required to post collateral under its derivative agreements as long as it maintains a triple-A credit rating.
(For the contractual value, notional amounts, related credit risk exposure amounts, and the amount IBRD would be
required to post in the event of a downgrade, see Notes to Financial Statements, Note F: Derivative Instruments).

Investment Securities
The Board-approved General Investment Authorization provides the basic authority for IBRD to invest its liquid
assets. Furthermore, all investment activities are conducted in accordance with a more detailed set of Investment
Guidelines. The Investment Guidelines are approved by the MDCFO and implemented by the Treasurer. These
Investment Guidelines set out detailed trading and operational rules, including which instruments are eligible forinvestment, and establish risk parameters relative to benchmarks. These include an overall consultative loss limit andduration deviation, specifying concentration limits on counterparties and instrument classes, as well as clear lines of
responsibility for risk monitoring and compliance. Credit risk is controlled by applying eligibility criteria (Box 8).
The overall market risk of the investment portfolio is subject to a consultative loss limit to reflect a level of tolerance
for the risk of underperforming the benchmark in any fiscal year. IBRD has procedures in place to monitor
performance against this limit and potential risks, and it takes appropriate actions if the limit is reached. All
investments are subject to additional conditions specified by the Chief Risk Officer, as deemed necessary.

IBRD Management’s Discussion and Analysis: June 30, 2022 47

Management’s Discussion and Analysis

Section IX: Risk Management

IBRD’s exposure to futures and options and resale agreements is marginal. For futures and options, IBRD generally
closes out open positions prior to expiration. Futures are settled on a daily basis. In addition, IBRD monitors the fairvalue of resale securities received and, if necessary, closes out transactions and enters into new repriced transactions.
Management has broadened its universe of investment assets in an effort to achieve greater diversification in theportfolio and better risk-adjusted investment performance. This exposure is monitored by the Market and Counterparty
Risk Department.
Box 8: Eligibility Criteria for IBRD's Investments a
Instrument Securities
Sovereigns

Description
IBRD may only invest in obligations issued or unconditionally guaranteed by governmentsof member countries with a minimum credit rating of AA-. However, no rating is required
if government obligations are denominated in the national currency of the issuer.

Agencies

IBRD may invest only in obligations issued by an agency or instrumentality of agovernment of a member country, a multilateral organization, or any other official entity(other than the government of a member country), with a minimum credit rating of AA-.

Corporates and asset-backed
securities

IBRD may only invest in securities with a triple-A credit rating.

Time deposits b

IBRD may only invest in time deposits issued or guaranteed by financial institutions,whose senior debt securities are rated at least A-.

Commercial Paper

IBRD may only invest in short-term borrowings (less than 190 days) from commercial
banks, corporates, and financial institutions with at least two Prime-1 ratings.

Securities lending, and borrowing,
repurchases, resales, and reverse
repurchases

IBRD may engage in securities lending against adequate collateral, repurchases andreverse repurchases, against adequate margin protection, of the securities describedunder the sovereigns, agencies, and corporates and asset-backed security categories.

Collateral Assets

IBRD may engage in collateralized forward transactions, such as swap, repurchase,
resale, securities lending, or equivalent transactions that involve certain underlying
assets not independently eligible for investment. In each case, adequate margin
protection needs to be received.

a.
b.

48

All investments are subject to approval by the Market and Counterparty Risk Department and must appear on the “Approved
List” created by the department.
Time deposits include certificates of deposit, bankers’ acceptances, and other obligations issued or unconditionally guaranteedby banks or other financial institutions.

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Commercial Counterparty Credit Risk Exposure
As a result of IBRD’s use of collateral arrangements for swap transactions, its residual commercial counterparty credit
risk is concentrated in the investment portfolio, in instruments issued by sovereign governments and non-sovereign
holdings (including agencies and asset-backed securities) (Table 30).
Table 30: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
In millions of U.S. dollars
As of June 30, 2022
Investments
Counterparty Rating a
AAA
AA
A
BBB
BB or lower/unrated
Total

Sovereigns$
21,582
1,520
6,060
39
$
29,201

Non-Sovereigns$
10,39828,413
11,89048
5$50,754

Net Swap
Exposure
$
68
88
2
$
158

Total
Exposure$
31,98030,001
18,03848
46$
80,113

% of
Total
40%
37
23
*
*
100%

Total
Exposure$
35,322
26,981
24,37856
48$
86,785

% of
Total
41%
31
28
*
*
100%

As of June 30, 2021
Investments
Counterparty Rating a
AAA
AA
A
BBB
BB or lower/unrated
Total

Sovereigns$
25,186
2,828
12,18840$
40,242

Non-Sovereigns$
10,13623,525
11,99956
8$45,724

Net Swap
Exposure
$
628
191
$
819

a. Average rating is calculated using available ratings from the three major rating agencies; however, if ratings are not available fromeach of the three rating agencies, IBRD uses the average of the ratings available from any of such rating agencies or a single rating
to the extent that an instrument or issuer (as applicable) is rated by only one rating agency.
* Indicates amount less than $0.5 million or percentage less than 0.5%.

IBRD’s overall commercial counterparty credit exposure, net of collateral held, was $80.1 billion as of June 30, 2022.
As shown on Table 30, the credit quality of IBRD’s portfolio remains concentrated in the upper end of the credit
spectrum, with 77% of the portfolio rated AA or above and the remaining portfolio primarily rated A. The A rated
counterparties primarily consisted of sovereigns and financial institutions (limited to short-term deposits and swaps).

Non-Commercial Counterparty Credit Risk
In addition to its derivative transactions with commercial counterparties, IBRD offers derivative-intermediation andother services to borrowing member countries, as well as to affiliated and non-affiliated organizations, to help meettheir development needs or to carry out their development mandates (see Table 31).
Table 31: Non-Commercial Counterparty Credit Risk
In millions of U.S. dollars
Exposures as of June 30, 2022
Non-Commercial
Counterparty
Borrowing Member
Countries
Affiliated Organization
Non-Affiliated
Organization

Instrument
used

Purpose of derivative transaction

Derivatives

Assist borrowing member countries with managing risks

Derivatives

Intermediation on behalf of IDA

278

8

Derivatives

Assist IFFIm with managing risks

3,236

4

Notional$

8,467$ 11,981

Net Exposure
$

$

272

284

IBRD Management’s Discussion and Analysis: June 30, 2022 49

Management’s Discussion and Analysis

Section IX: Risk Management•

Borrowing Member Countries: Currency and interest rate swap transactions are executed between IBRD and
its borrowers under master derivative agreements. As of June 30, 2022, the notional amounts and net fair value
exposures under these agreements were $8.5 billion and $0.3 billion, respectively. Expected losses inherent inthese exposures due to country credit risk are incorporated in the fair value of these instruments.

•

Affiliated Organizations: Derivative contracts are executed between IBRD and IDA, under an agreement
allowing IBRD to intermediate derivative contracts on behalf of IDA. As of June 30, 2022, the notional amountunder this agreement was $0.3 billion. As of June 30, 2022, IBRD had exposure of $8 million to IDA. Under
its derivative agreement with IBRD, IDA is not required to post collateral as long as it maintains liquidity
holdings at pre-determined levels. As of June 30, 2022, IDA was not required to post any collateral with IBRD.

•

Non-Affiliated Organizations: IBRD has a master derivatives agreement with IFFIm, under which severaltransactions have been executed. As of June 30, 2022, the notional amounts and net fair value exposures under
this agreement were $3.2 billion and $4 million, respectively. IBRD has the right to call for collateral above anagreed specified threshold. As of June 30, 2022, IBRD had not exercised this right, but it reserves the rightunder the existing terms of the agreement. Rather than calling for collateral, IBRD and IFFIm have agreed to
manage IBRD’s exposure by applying a risk management buffer to the gearing ratio limit. The gearing ratio
limit represents the maximum amount of IFFIm’s net financial obligations less cash and liquid assets, as apercentage of the net present value of its financial assets.

Credit and Debit Valuation Adjustments
Most outstanding derivative positions are transacted over the counter and therefore valued using internally developed
valuation models. For commercial and non-commercial counterparties where IBRD has a net exposure (net receivable
position), IBRD calculates a Credit Valuation Adjustment (CVA) to reflect credit risk. For net derivative positions
with commercial and non-commercial counterparties where IBRD is in a net payable position, IBRD calculates a
Debit Valuation Adjustment (DVA) to reflect its own credit risk.
The CVA is calculated using the fair value of the derivative contracts, net of collateral received under credit support
agreements, and the probability of counterparty default based on the Credit Default Swaps (CDS) spread and, whereapplicable, proxy CDS spreads. IBRD does not currently hedge this exposure. The DVA calculation is generally
consistent with the CVA methodology and incorporates IBRD’s own credit spread as observed through the CDS
market. As of June 30, 2022, IBRD recorded a CVA on its Balance Sheet of $2 million, and a DVA of $571 million.

Effect of Changes in Credit Spreads
The sensitivity of IBRD’s portfolios to changes in credit spreads is shown in Table 32, where the amount represents
the dollar change in fair value which corresponds to a one basis point parallel upward shift in credit spreads.
•

Investments: IBRD purchases investment-grade securities for its liquid asset portfolio. Credit risk is controlled
through appropriate eligibility criteria (see Box 8). The overall risk of the investment portfolio is also
constrained by a consultative loss limit. In line with these risk management strategies, the potential effect ofdefault risk on IBRD’s investment portfolio is therefore small. The effect of credit changes on the market valueof the investment portfolio is also relatively limited; a one-basis-point change in the credit spreads of theinvestment assets would have an estimated impact of $1 million on the market value of the portfolio.

•

Borrowings: IBRD had $564 million of unrealized mark-to-market gains due to the change in IBRD’s own
credit relative to LIBOR in FY22. As shown in Table 32, the dollar value change corresponding to a one basispoint upward parallel shift in credit spreads (IBRD’s own credit relative to LIBOR) is $92 million of unrealized
mark-to-market gains.

•

Loans. IBRD’s fair value model represents a hypothetical exit price of the loan portfolio. It incorporates CDS
spreads as an indicator of the credit risk for each borrower, after adjusting recovery levels to incorporate IBRD’s
institutional experience and assumptions. These assumptions are reviewed annually. The dollar value change
corresponding to a one-basis-point parallel rise in CDS rates on the loan portfolio is $2 million of unrealized
mark-to-market losses. IBRD does not hedge its sovereign credit exposure, but Management assesses its credit
risk through a proprietary loan-loss provisioning model. Loan-loss provision represents the expected losses
inherent in its accrual and nonaccrual portfolios. As discussed earlier, IBRD’s country credit risk is managedby using individual country exposure limits and by monitoring its credit-risk-bearing capacity.

50

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis•

Section IX: Risk Management

Derivatives. IBRD uses derivatives to manage exposures to currency and interest rate risks in its investment,
loan, other ALM and borrowing portfolios. It is therefore exposed to commercial counterparty credit risk onthese instruments. This risk is managed through:o Stringent selection of commercial derivative counterparties,o Daily marking-to-market of derivative positions, ando Use of collateral and collateral thresholds for all commercial counterparties.

Table 32: Effect of Credit on IBRD’s Portfolios
In millions of U.S. dollars
As of June 30, 2022
Borrowing portfolio
Loan portfolio b
Other ALM portfolio
Investment portfolio
Total gains

Credit Effect on Portfolio
Sensitivity a
$
92
(2)
(*)
(1)
$
89

a. Excludes CVA and DVA on derivatives.
b. If loans were measured at fair value* Sensitivity is marginal.

Market Risk
IBRD is exposed to changes in interest and exchange rates, and it uses various strategies to minimize its exposure tomarket risk.

Interest Rate Risk
Under its current interest rate risk management strategy, IBRD seeks to match the interest rate sensitivity of its assets(loan and investment trading portfolios) with those of its liabilities (borrowing portfolio) by using derivatives, such as
interest rate swaps. These derivatives effectively convert IBRD’s financial assets and liabilities into variable-rate
instruments. After considering the effects of these derivatives, virtually the entire loan and borrowing portfolios arecarried at variable interest rates (Figure 24 and Figure 25).
The sensitivity of these portfolios to interest rate movements, after the effect of derivatives, is shown in Table 33
below where the amount represents the dollar change in fair value corresponding to a one basis point parallel upward
shift in interest rates as of June 30, 2022.
•

Investment Trading Portfolio: After the effects of derivatives, the duration of the investment trading portfolio
is less than three months. As a result, the portfolio has a low sensitivity to changes in interest rates, resulting insmall fair value adjustments to income.

•

Loan and Borrowing Portfolios: In line with IBRD’s financial risk management strategies, the sensitivity of
IBRD’s loan and borrowing portfolios to changes in interest rates is relatively small. As noted earlier, IBRD
intends to maintain its positions for these portfolios and thus manages these instruments on a cash flow basis.
The resulting net unrealized mark-to-market gains and losses on these portfolios, associated with the small
sensitivity to interest rates, are therefore not expected to be realized.
Other ALM Portfolio: At the end of FY22, a one basis-point increase in interest rates would result in unrealized
mark-to-market losses of $15 million on the other ALM portfolio (unrealized mark-to-market losses of $16
million at the end FY21).

•

IBRD Management’s Discussion and Analysis: June 30, 2022 51

Management’s Discussion and Analysis

Section IX: Risk Management

Table 33: Effect of Interest Rates on IBRD’s Portfolios
In millions of U.S. dollars
Interest Rate Effect on Portfolio
Sensitivity a
$
5
(7)
(15)
(1)
$
(18)

As of June 30, 2022
Borrowing portfolio
Loan portfolio b
Other ALM portfolio
Investment portfolio
Total losses
a. After the effects of derivatives.
b. If loans were measured at fair value.

Figure 23 depicts how the use of derivatives affects the overall sensitivity of the borrowing, loan, other ALM andinvestment portfolios. It indicates the extent to which each portfolio is economically hedged. For example, for the
borrowing portfolio, a one basis point increase in interest rates would result in $92 million of unrealized mark-tomarket gains on bonds, which would be offset by $87 million of unrealized mark-to-market losses on swaps. Loan
sensitivities are illustrative as loans are carried at amortized cost on the Balance Sheet.
Figure 23: Sensitivity to Interest Rates(Dollar change in fair value corresponding to a one-basis-point upward parallel shift in interest rates)
In millions of U.S. dollars
Borrowing Portfolio
Loan Portfolio
Other ALM
Loans Swaps

Swaps Bonds
FY22
FY21

-87
-109

-120 -80 -40

0

92
115

FY22

40 80 120

-60 -40 -20 0 20 40 60

FY21

-34
-38

Swaps

Investments

-15

27
35

FY22

-16

-20

-10

Investment Portfolio

FY21
0

10

-20

20

-1

FY22

-1

FY21

-10

0

10

Figure 24: Effect of Derivatives on Interest Rate Structure of the Borrowing Portfolio - June 30, 2022
In millions of U.S. dollars, except for ratios
Borrowing Portfolio excluding Derivatives a

Borrowing Portfolio including Derivatives a
Fixed*

Variable
13%

Fixed
87%

a. Excludes discount notes.
* Denotes percentage less than 0.5%.

52

IBRD Management’s Discussion and Analysis: June 30, 2022

Variable100%

20

Management’s Discussion and Analysis

Section IX: Risk Management

Figure 25: Effect of Derivatives on Interest Rate Structure of the Loan Portfolio - June 30, 2022
In millions of U.S. dollars, except for ratios
Loans Excluding Derivatives

Loans Including Derivatives
Fixed
*

Fixed
14%

Variable
100%

Variable86%* Denotes percentage less than 0.5%.

Alignment of Assets and Liabilities – IBRD borrows in multiple currency and interest rate bases worldwide and lends
the proceeds of those borrowings to eligible member countries. IBRD offers its borrowers the option of convertingthe currency and interest rate bases on their loans where there is a liquid swap market, thereby enabling them to selectloan terms that are best suited to their circumstances. Such options meet borrowers’ preferences and help mitigate
their currency and interest rate risk. In the absence of active risk management, IBRD would be exposed to substantial
market risk and asset-liability management imbalances. To address such imbalances, IBRD uses derivatives to swap
its payment obligations on bonds to a currency and interest rate basis that is aligned with its loan portfolio. Likewise,
when a borrower exercises a conversion option on a loan to change its currency or interest rate basis, IBRD uses
derivatives to convert its exposure back to a currency and interest rate basis that is aligned with its loan portfolio.
Thus, IBRD’s payment obligations on its borrowings are aligned with its loans funded by such borrowings – generally,
after the effect of derivatives, IBRD primarily pays U.S. dollar, short-term variable rates on its borrowings, andreceives U.S. dollar, short-term variable rates on its loans. Figure 26 below illustrates the use of derivatives in the loan
and borrowing portfolios:
Figure 26: Use of Derivatives for Loans and Borrowings
Market Debt

After Derivatives
Currency
Swaps

Non-US
Currencies

Loans

In US dollars andeuros

Currency
Swaps

Reference ratebased floating rate

Interest Rate
Swaps

In multiple
interest ratebases or fixedcoupon rate
Interest Rate
Swaps

In multiple
currencies ofborrowers’
preference

In multiple
interest ratebases or fixedcoupon rate

Derivatives are also used to manage market risk in the liquidity portfolio. In line with its development mandate, IBRD
maintains a large liquidity balance to ensure that it can make payments on its borrowing obligations and loan
disbursements, even in the event of severe market disruptions. Pending disbursement, the liquidity portfolio is invested
on a global basis in multiple currencies and interest rates. Derivatives are also used to align the currency and durationof investments with the debt funding the liquidity portfolio. Figure 27 below illustrates the use of derivatives in theliquidity portfolio:
Figure 27: Use of Derivatives for Investments
Market Debt
Non-US
Currencies

In multiple
interest ratebases or
fixed
coupon rate

After Derivatives
Currency
Swaps

Interest Rate
Swaps

In US Dollars

Reference
rate-based
floating rate

Liquidity Portfolio
Currency
Swaps

In multiple
currencies

In multiple
interest rate
Interest Rate bases or
fixed coupon
Swaps
rate

IBRD Management’s Discussion and Analysis: June 30, 2022 53

Management’s Discussion and Analysis

Section IX: Risk Management

Other ALM – Given most loans carry variable rates, for the portion of loans that are funded by equity, loan interest
revenue, if left unmanaged, would be highly sensitive to fluctuations in short-term interest rates. The equity-to-loans
ratio of 22.0% indicates the portion of loans funded by equity. To manage this exposure, Management has put in placea framework with the primary goal of stabilizing this revenue. Under this framework, IBRD uses derivatives to convert
the variable rate cash flows on loans funded by equity back to fixed rate cash flows, thereby stabilizing loan interest
revenue over time. See Figure 28 below.
Figure 28: Use of Derivatives for Other ALM

Although interest rates have been rising, low and negative interest rates present a challenge for various IBRD
portfolios.

Loans to borrowing countries:
Under IBRD’s loan agreements, if an interest rate formula yields a negative rate, the interest rate charged is zero.

Liquid Asset Portfolio:
IBRD’s existing guidelines allow for the investment in a wide variety of credit products in both developed andemerging market economies (see investment eligibility criteria in Box 8). However, even markets with negative rates
can provide positive spread returns once the investment is swapped back into a U.S. dollar floating rate basis. In FY22,
IBRD’s liquid asset portfolio incurred unrealized mark-to-market losses due to the sharp increase in interest rates.
However, excluding these unrealized mark-to-market losses, IBRD was able to generate a positive spread on its liquid
asset portfolio.
The interest rate risk on IBRD’s liquid asset portfolio, including the risk that the value of assets in the portfolio willfluctuate in response to changes in market interest rates, is managed within specified duration-mismatch limits. The
liquid asset portfolio has spread exposure because IBRD holds instruments other than the short-term bank deposits
represented by the portfolios’ London Interbank Bid Rate (LIBID) benchmark. These investments generally yieldpositive returns over the benchmark but can generate mark-to-market losses if their spreads relative to LIBOR widen.

Fixed Spread Loan Refinancing Risk
Refinancing risk for funding fixed-spread loans relates to the potential impact of any future deterioration in IBRD'sfunding spread relative to what was computed in the fixed spread. IBRD does not match the maturity of its funding
with that of its fixed spread loans as this would result in significantly higher financing costs for all loans. Instead,
IBRD targets a shorter average funding maturity and manages the refinancing risk through two technical componentsof the fixed spread loans pricing, both of which can be changed at Management’s discretion for new loan offers. (seeTable 13):
• Projected funding cost: Management’s best estimate of average funding costs over the life of the loan.
• Risk premium: A charge for the risk that actual funding costs are higher than projected Liquid Asset Portfolio
Spread Exposure.
Effective April 1, 2021, IBRD’s offering of loans on fixed spread terms has been suspended.

Other Interest Rate Risks
Interest rate risk also arises from other variables, including differences in timing between the contractual maturities
or re-pricing of IBRD’s assets, liabilities, and derivative instruments. On variable-rate assets and liabilities, IBRD is
exposed to timing mismatches between the re-set dates on its variable-rate receivables and payables. IBRD monitorsthese exposures and may execute overlay interest rates swaps to reduce sizable timing mismatches.

54

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Alternative Reference Rate
In July 2017, the Financial Conduct Authority (FCA), the regulator of LIBOR, announced that it would no longer
compel panel banks to submit rates required to calculate LIBOR after December 31, 2021, and therefore, market
participants, including IBRD and its borrowers needed to move to alternative reference rates. In March 2021, the FCA
confirmed that all the LIBOR settings will either cease to be provided by any administrator or no longer be
representative, as follows:
Type of LIBOR
GBP LIBOR
EUR LIBOR
CHF LIBOR
JPY LIBOR
USD LIBOR
USD LIBOR

Setting
All settings
1-week, 2-monthRemaining settings, including 6-month

Date of cessation

December 31, 2021

June 30, 2023

In consideration of the regulatory guidance and in preparation for the global markets’ transition away from LIBOR,IBRD took the necessary steps to facilitate a smooth and orderly transition of its financial instruments effected byalternative reference rates.
In FY20, the Board endorsed an omnibus amendment process with borrowers for certain existing loan agreements toaddress inadequate fallback provisions for LIBOR replacement and a notification process, allowing IBRD to maintainand preserve the pre-existing relationship between its funding costs and lending rates and maintain the principles offairness and equivalence for any replaced reference rate. The majority of IBRD loans were denominated in USD,
EUR, GBP and JPY as of December 31, 2021. IBRD adopted the following alternative reference rates: SOFR for USD
denominated loans, Euro Interbank Offered Rate (EURIBOR) for EUR denominated loans, Sterling Overnight Index
Average (SONIA) for GBP denominated loans, and Tokyo Overnight Average Rate (TONA) for JPY denominatedloans. Through these processes, the vast majority of its borrowers’ loans were ready for transition by December 31,
2021. Effective January 1, 2022, IBRD offers new loans with alternative reference rates and ceased to offer LIBOR
based loans.
Out of the total loans outstanding of $229,344 million as of June 30, 2022, approximately 62% have transitioned and
10% are still subject to transition to alternative reference rates. The remaining 28% of the total loans outstanding are
not required to transition to alternative reference rates. The switch over of existing variable spread and non-USD fixed
spread loans to alternative reference rates began in January 2022, at the loan reset dates, which concluded as of June30, 2022. The remaining USD fixed spread loans will begin transitioning in July 2023, as the loans reset.
Out of the total derivative portfolio notional value as of June 30, 2022, less than 1% have transitioned and 71% arestill subject to transition to alternative reference rates. The remaining 29% of the total derivative portfolio notional is
not subject to transition to alternative reference rates. For the vast majority of these trades, IBRD either has sufficient
provisions in the derivative agreements with its counterparties, has adhered to the International Swaps and Derivatives
Association (ISDA) 2020 IBOR Fallbacks Protocol (IBOR Protocol) or works bilaterally with counterparties, toensure a smooth transition to alternative reference rates.
As of June 30, 2022, about 98% of IBRD’s borrowing portfolio either carries fixed interest rates or is not subject totransition to alternative reference rates.
IBRD will continue to work with key stakeholders, including internal subject matter experts, senior management,
borrowers, industry groups and other market participants, to mitigate potential financial and operational risks to which
IBRD is exposed, and to ensure an orderly transition to the alternative reference rates.

IBRD Management’s Discussion and Analysis: June 30, 2022 55

Management’s Discussion and Analysis

Section IX: Risk Management

Exchange Rate Risk
IBRD holds the majority of its assets and liabilities in U.S. dollars and euro. However, the reported levels of its assets,
liabilities, income, and expenses in the financial statements are affected by exchange rate movements in all thecurrencies in which IBRD transacts, relative to its reporting currency, the U.S. dollar. IBRD’s functional currencies
are the U.S. dollar and euro. Currency translation adjustments relating to euro-denominated balances are reflected inother comprehensive income, a component of equity. Currency translation adjustments relating to non-euro
denominated balances (non-functional currencies) are reported in the Statement of Income. While IBRD’s equity
could be affected by exchange rate movements, IBRD’s risk management policies work to minimize the exchange
rate risk in its capital adequacy, by immunizing the equity-to-loans ratio against exchange rate movements.
To minimize exchange rate risk, IBRD matches its borrowing obligations in any one currency (after derivative
activities) with assets in the same currency (Figure 29). In addition, IBRD undertakes periodic currency conversions
to align the currency composition of its equity with that of its outstanding loans across major currencies. Together,
these policies are designed to minimize the impact of exchange rate fluctuations on the equity-to-loans ratio; thereby
preserving IBRD’s ability to better absorb unexpected losses from arrears on loan repayments, regardless of exchange
movements. As a result, exchange rate movements during the year generally do not have a material impact on theoverall equity-to-loans ratio.
Figure 29: Currency Composition of Loan and Borrowing Portfolios as of June 30, 2022

Loans outstanding (including Derivatives)
Euro
17%

Others*Borrowings funding loans (including Derivatives)
Euro
17%

Others*U.S. Dollars
83%

U.S. Dollars
83%* Denotes percentage less than 0.5%.

Liquidity Risk
Liquidity risk arises in the general funding of IBRD’s activities and in managing its financial position. It includes therisk of IBRD being unable to fund its portfolio of assets at appropriate maturities and rates, and the risk of being
unable to liquidate a position in a timely manner at a reasonable price.
Under IBRD’s liquidity management guidelines, aggregate liquid asset holdings are kept at or above a specified
Prudential Minimum to safeguard against cash flow interruptions.
The Target Liquidity Level represents twelve-months’ coverage as calculated at the start of every fiscal year. The
Prudential Minimum is defined as 80% of the Target Liquidity Level. The maximum guideline of 150% of Target
Liquidity Level continues to function as a guideline rather than a hard ceiling (see Table 34).
Table 34: Liquidity Levels
Effective for FY22
Target Liquidity Level
Guideline Maximum Liquidity Level
Prudential Minimum Liquidity Level
Liquid Asset Portfolio as of June 30,2022

In billions of
U.S. dollars
$
57.0
85.5
45.6
$
78.8

% of Target
Liquidity Level
150%
80%
138%

The FY23 Target Liquidity Level is set at $54 billion, $3 billion lower than the FY22 Target Liquidity Level due tothe lower projected debt service for FY23.

56

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section IX: Risk Management

Operational Risk
Operational risk is defined as the risk of financial loss or damage to IBRD’s reputation resulting from inadequate or
failed internal processes, people and systems, or from external events.
IBRD recognizes the importance of operational risk management activities, which are embedded in its financial
operations. As part of its business activities, IBRD is exposed to a range of operational risks including physical security
and staff health and safety, data and cyber security, business continuity, and third-party vendor risks. IBRD’s approach
to identifying and managing operational risk includes a dedicated program for these risks and a robust process that
includes assessing and prioritizing operational risks, monitoring and reporting relevant key risk indicators, aggregating
and analyzing internal and external events, and identifying emerging risks that may affect business units anddeveloping risk response and mitigating actions.

Cybersecurity Risk Management
IBRD’s operations rely on the secure processing, storage and transmission of confidential and other information incomputer systems and networks. As is the case for financial institutions generally, cybersecurity risk continues to besignificant for IBRD due to the evolving sophistication and complexity of the cyber threat landscape. These risks areunavoidable and IBRD seeks to manage them on a cost-effective basis consistent with its risk appetite.
To protect the security of its computer systems, software, networks and other technology assets, IBRD has developed
its cybersecurity risk management program, consisting of cybersecurity policies, procedures, compliance andawareness programs. IBRD deploys a multi-layered approach for cybersecurity risk management to help prevent anddetect malicious activity, both from within the organization and from external sources. In managing emerging cyberthreats such as malware including ransomware, denial of service and phishing attacks, IBRD strives to adapt its
technical and process-level controls and raise the level of user awareness to mitigate the risk.
IBRD periodically assesses the maturity and effectiveness of its cyber defenses through risk mitigation techniques,
including but not limited to, targeted testing, internal and external audits, incident response tabletop exercises andindustry benchmarking.

IBRD Management’s Discussion and Analysis: June 30, 2022 57

Management’s Discussion and Analysis

Section X: Contractual Obligations

Section X: Contractual Obligations
In conducting its business, IBRD takes on contractual obligations that may require future payments. These include
borrowings, operating leases, contractual purchases, capital expenditures, and other long-term liabilities. Table 35
shows IBRD’s contractual obligations for the next five years and thereafter; it excludes the following obligations
reflected on IBRD’s balance sheet: undisbursed loans, amounts payable for currency and interest rate swaps, amounts
payable for investment securities purchased, guarantees, and cash received under agency arrangements.
•

Borrowings: IBRD issues debt in the form of securities to private and governmental buyers.

•

Operating Leases: IBRD leases real estate and equipment under lease agreements for varying periods.
Operating lease expenditures represent future cash payments for real estate-related obligations and equipment,
based on contractual amounts.

•

Contractual Purchases: IBRD is a party to various obligations to purchase products and services, which arepurchase commitments in the ordinary course of business.

•

Other Long-Term Liabilities: IBRD provides a variety of benefits to its employees. As some of these benefits
are of a long-term nature, IBRD records the associated liability on its balance sheet. The obligations payable
represents expected benefit payments as well as contributions to the pension plans. These include future service
and pay accruals for current staff and new staff projections for the next 10 years.

Operating leases, contractual purchases and capital expenditures, and other long-term obligations, include obligations
shared with IDA, IFC, and MIGA under cost-sharing and service arrangements. These arrangements reflect the WBG
strategy of maximizing synergies, to best leverage resources for development (see Notes to Financial Statements, Note
H: Transactions with Affiliated Organizations).
Table 35: Contractual Obligations
In millions of U.S. dollars
Due in 1
year or Less
Borrowings (at fair value)
Operating leases
Contractual purchases
Other long-term liabilities
Total

$

$

42,28958
49
686
43,082

Due after 1
Year through3 Years$
60,757
112
60
144$
61,073As of June 30, 2022
Due after 3
Years through5 Years$
46,642 $95
96$
46,833 $Contractual Obligations

58

IBRD Management’s Discussion and Analysis: June 30, 2022

Due After 5
years
85,4851,232
181
86,898

Total$$

235,173
1,497
109
1,107
237,886

Management’s Discussion and Analysis

Section XI: Pension and Other Post-Retirement Benefits

Section XI: Pension and Other Post-Retirement Benefits
Governance
IBRD participates, along with IFC and MIGA, in pension and post-retirement benefit plans. The Staff Retirement Plan
(SRP), Retired Staff Benefits Plan (RSBP), and PEBP (collectively called the “Plans”) are defined benefit plans andcover substantially all WBG employees, retirees and their beneficiaries. Costs, assets, and liabilities associated with
the Plans are allocated among IBRD, IFC, and MIGA, based on their employees' respective participation in the Plans.
Costs allocated to IBRD are subsequently shared with IDA, based on an agreed cost-sharing ratio (see Notes toFinancial Statements, Note J: Pension and Other Post-Retirement Benefits).
The benefits of the Plans at retirement are determined pursuant to the Plan Documents adopted by the Board (PlanDocument). IBRD has a contractual obligation to make benefit payments to the Plans’ beneficiaries. The governancemechanism of the Plans, including the funding and investment policies described here, are designed to support thisobjective.
There are two committees that govern the Plans. From a governance standpoint, both committees are independent of
IBRD and the Board.
•

The Pension Finance Committee (PFC), which is responsible for the financial management of the Plans andis supported by the Pension Finance Administrator.

•

The Pension Benefits Administration Committee (PBAC), which is responsible for the administration of thebenefits of the Plans.

Contributions to the SRP and RSBP are irrevocable, with assets held in separate trusts, and the PEBP assets are includedin IBRD's investment portfolio. IBRD acts as trustee for the Plans and the assets are used for the exclusive benefit of
the participants and their beneficiaries. The objective of the Plans is to accumulate sufficient assets to meet future
pension benefit obligations. As of June 30, 2022, IBRD and IDA’s share of the assets amounted to $29.6 billion (seeTable 36). This represents the accumulated contributions paid into the plans net of benefit payments, together with theaccumulated value of investment earnings, net of related expenses.

Funding and Investment Policies
The key policies underpinning the financial management of the Plans, including the determination of WBG
contributions and the investment of Plan assets, are the funding and investment policies. The objective of these policies
is to ensure that the Plans have sufficient assets to meet benefit payments over the long term. The funding policy, as
approved by the PFC, establishes the rules that determine the WBG’s contributions. The policy seeks to fund the Plans
in a consistent and timely manner, while at the same time avoiding excessive volatility in WBG contributions. The
funding policy determines how much the WBG must contribute annually to sustain and ensure the accumulation of
sufficient assets over time to meet the expected benefit payments. Under the Plan Document, the PFC determines the
WBG contribution based on actuarial valuations. IBRD is required to make the contribution determined by the PFC.
In FY22, the WBG’s rate for contributions to the Plans was 19.33% of net salaries.
The Projected Benefit Obligation (PBO) is derived from AA-rated corporate bonds, as required by U.S. GAAP. The
selection of this rate as the basis for the discount rate is to establish a liability equivalent to an amount that if invested
in high-quality fixed income securities would match the benefit payment stream. While this measure is based on an
objective, observable market rate, it does not necessarily reflect the realized or expected returns of the Plan which
depend on how the Plans are managed and invested. The PBO for funding purposes is discounted using a 3.5% real
discount rate since the funding strategy for the Plans is based on a target of 3.5% real return on investments. This rate
constitutes the long-term return objective for the Plan’s assets, referred to as the Long-Term Real Return Objective(LTRRO), which Management has followed since the year ended June 30, 1999 and recently reaffirmed under the
strategic asset allocation review in April 2021. If the return on pension assets is 3.5% in real terms and contributions
are made at the actuarially required rates (which reflect the long- term cost of the plan benefit), the Plan benefits will
be funded over time.
The assets of the Plans are diversified across a variety of asset classes, with the objective of achieving returns consistent
with the LTRRO over the long term without taking undue risks. The returns on investments for the Plans have met or
exceeded the LTRRO on a consistent basis in the long term as well as in recent years. The PFC periodically reviews

IBRD Management’s Discussion and Analysis: June 30, 2022 59

Management’s Discussion and Analysis

Section XI: Pension and Other Post-Retirement Benefits

the LTRRO for appropriateness. See Notes to Financial Statements, Note J: Pension and Other Post-Retirement
Benefits for asset allocation, expected return on Plan assets and assumptions used to determine the PBO.

Environmental, Social and Governance (ESG) Policies
The Plan has a long-standing ESG policy that reflects the latest developments and an understanding of responsible
investments and ESG integration. The ESG policy is based on a principled and pragmatic approach in accordance withand subject to the fiduciary standard applicable to the administration and investment of Plan assets. The Plan’s ESG
policy states that consideration of ESG factors, including but not limited to environmental practices, worker safety
and health standards, and corporate governance, can add value to the investment process and affect assessment of therisk and return characteristics of investments.

Projected Benefit Obligation
Given that pension plan liabilities can be defined and measured in different ways, it is possible to have different funded
status measures for the same plans. The most widely used and publicly disclosed measure of pension plan liabilities
is the PBO measure required under U.S. GAAP. It reflects the present value of all retirement benefits earned byparticipants (adjusted for assumed inflation) as of a given date, including projected salary increases to retirement.
Therefore, the PBO measure is an appropriate metric for assessing the ability of the Plans to cover expected benefits
as of a certain date. The underlying actuarial assumptions used to determine the PBO, accumulated benefit obligations,and funded status associated with the Plans are based on financial market interest rates, experience, and Management's
best estimate of future benefit changes, economic conditions and earnings from plan assets.
Table 36: Funded Status of the Plans
In millions of U.S. dollars

PBO
Plan assets
Net position

SRP$ (21,831)$ 23,745
$
1,914

$
$
$

As of June 30, 2022
RSBP
PEBP
(3,666)$(2,107)
4,061
$
1,791
395
$
(316)

$
$
$

IBRD's funded status

PBO
Plan assets
Net position

Total(27,604)
29,597
1,993
941

SRP
$ (24,728)$ 24,408
$
(320)

$
$
$

IBRD's funded status

As of June 30, 2021
RSBP
PEBP
(4,235)$(2,339)
4,145
$
1,806
(90)
$
(533)

$
$
$

Total
(31,302)30,359(943)(451)

The discount rate used to convert future obligations into today’s dollars is derived from high-grade, AA-rated
corporate bond yields as required by U.S. GAAP. The overall overfunded status of the pension plans for IBRD and
IDA of $2 billion as of June 30, 2022, net of PEBP assets, was primarily due to the actuarial gains in the projected
benefit obligations as a result of the increase in the real discount rate. As the Plans are managed with a long-termhorizon, results over shorter time periods may be impacted positively or negatively by market fluctuations.

60

IBRD Management’s Discussion and Analysis: June 30, 2022

Section XII: Critical Accounting Policies and the Use of
Estimates

Management’s Discussion and Analysis

Section XII: Critical Accounting Policies and the Use of Estimates
IBRD’s significant accounting policies, as well as estimates made by Management, are integral to its financial
reporting. While all of these policies require a certain level of judgment and estimates, significant policies requireManagement to make highly difficult, complex, and subjective judgments as these relate to matters inherently
uncertain and susceptible to change. Note A to the financial statements contains a summary of IBRD’s significant
accounting policies including a discussion of recently issued accounting pronouncements.

Fair Value of Financial Instruments
The fair values of financial instruments are based on a three-level hierarchy. For financial instruments classified as
Level 1 or 2, less judgment is applied in arriving at fair value measures as the inputs are based on observable market
data. For financial instruments classified as Level 3, unobservable inputs are used. These require Management to makeimportant assumptions and judgments in determining fair value measures. Investments measured at net asset value pershare (or its equivalent) are not classified in the fair value hierarchy.
Most of IBRD’s financial instruments which are recorded at fair value are classified as Levels 1 and 2. Table 37
presents the summary of the fair value of financial instruments recorded at fair value on a recurring basis, and theamounts measured using significant Level 3 inputs. IBRD’s level 3 instruments are mainly structured bonds andrelated swaps held in the borrowing portfolio; these use market observable inputs and unobservable inputs such ascorrelations and interest rate volatilities. There were no Level 3 instruments in IBRD’s investment or loan portfolios
as of June 30, 2022. All of IBRD’s loans were carried at amortized cost as of June 30, 2022.
Table 37: Fair Value Level 3 Summary
In millions of U.S. dollars
For the fiscal year ended June 30,

2022

2021

Total Assets at fair value
As a percentage of total assets

$

120
0.13%

$

Total
Balance
93,312

Total Liabilities at fair value
As a percentage of total liabilities

$

4,596
1.73%

$

266,344

Level 3

$

616
0.58%

$

Total
Balance
106,654

$

4,877
1.78%

$

273,487

Level 3

IBRD reviews the methodology, inputs, and assumptions on a quarterly basis to assess the appropriateness of the fairvalue hierarchy classification of each financial instrument.
Some financial instruments are valued using pricing models. The valuation group, which is independent of the treasury
and risk management functions, reviews all financial instrument models affecting financial reporting through fairvalue and assesses model appropriateness and consistency. The review looks at whether the models accurately reflect
the characteristics of the transaction and its risks, the suitability and convergence properties of numerical algorithms,
the reliability of data sources, the consistency of the treatment with models for similar products, and sensitivity to
input parameters and assumptions that cannot be priced from the market.
Reviews are conducted of new and/or changed models, as well as previously validated models, to assess whether any
changes in the product or market may have affected the model’s continued validity and whether any theoretical orcompetitive developments may require reassessment of the model’s adequacy.
The financial models used for input to IBRD’s financial statements are subject to both internal and periodic externalverification and review by qualified personnel.
In cases where Management relies on instrument valuations supplied by external pricing vendors, procedures are inplace to validate the appropriateness of the models used, as well as the inputs applied in determining those values.

IBRD Management’s Discussion and Analysis: June 30, 2022 61

Management’s Discussion and Analysis

Section XII: Critical Accounting Policies and the Use of
Estimates

Provision for Losses on Loans and Other Exposures
IBRD evaluates estimated exposures over the life of loans and other exposures, to incorporate undisbursed loan
commitments in the measure of exposure, and to incorporate estimations of future market conditions for a reasonable
and supportable forecast period along with historical experience. The overall provision for expected losses is the sumof the computed annual losses, taking into account borrower risk ratings and associated expected default frequencies,
estimates of exposure, and severity of loss given default.
For loans carried at fair value, if any, the credit risk assessment is a determinant of fair value.
The determination of a borrower's risk rating is based on complex variables such as: political risk, external debt andliquidity, fiscal policy and the public debt burden, balance of payments risks, economic structure and growth prospects,
monetary and exchange rate policy, and financial sector risks and corporate sector debt and other vulnerabilities.
Additionally, estimations of disbursements and repayments of exposures are made, as well as estimations of futureinterest cash flows based on forward looking market variables.
IBRD periodically reviews these variables and reassesses the adequacy of the accumulated provision accordingly.
Actual losses may differ from expected losses owing to unforeseen changes in any of the variables affecting thecreditworthiness or estimates inherent in the exposure measurements of borrowers.
The Credit Risk Committee monitors aspects of country credit risk, in particular, reviewing the provision for losses
on loans and guarantees taking into account, among other factors, any changes in exposure, risk ratings of borrowing
member countries, or movements between the accrual and nonaccrual portfolios.
The accumulated provision for loan losses is reported separately in the balance sheet as a reduction from IBRD’s totalloans outstanding. The accumulated provision for losses on loan commitments and other exposures is included inaccounts payable and miscellaneous liabilities. Increases or decreases in the accumulated provision for losses on loans
and other exposures are reported in the Statement of Income as a provision for losses on loans and other exposures(see Notes to Financial Statements: Note A: Summary of Significant Accounting and Related Policies and Note D:
Loans and Other Exposures).

Pension and Other Post-Retirement Benefits
The underlying actuarial assumptions used to determine the PBO, accumulated benefit obligations, and funded status
associated with IBRD pension and other post-retirement benefit plans are based on financial market interest rates,
experience, and Management's best estimate of future benefit changes and economic conditions. All costs, assets andliabilities associated with these plans are allocated between IBRD, IFC, and MIGA based upon their employees’
respective participation in the plans. Costs allocated to IBRD are then shared between IBRD and IDA based on anagreed cost-sharing ratio. IDA, IFC and MIGA reimburse IBRD for their proportionate share of any contributions
made to these plans by IBRD. Contributions to the plans are calculated as a percentage of salary (see Notes to Financial
Statements, Note J: Pension and Other Post-Retirement Benefits).

62

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section XIII: Governance and Controls

Section XIII: Governance and Controls
Figure 30: Governance Structure

Business Conduct
The WBG promotes a positive work environment in which staff members understand their ethical obligations to theinstitution. In support of this commitment, the institution has a Code of Conduct in place. The WBG has both an
Ethics Help Line and a Fraud and Corruption hotline. A third-party service offers many methods of worldwide
communication. Reporting channels include telephone, mail, email, or confidential submission through a website.
IBRD has in place procedures for receiving, retaining, and handling recommendations and concerns relating tobusiness conduct identified during the accounting, internal control, and auditing processes.
WBG staff rules clarify and codify the staff’s obligations in reporting suspected fraud, corruption, or other misconductthat may threaten the operations or governance of the WBG. These rules also offer protection from retaliation.

General Governance
IBRD’s decision-making structure consists of the Board of Governors, Executive Directors, the President,
Management, and staff. The Board of Governors is the highest decision-making authority. Governors are appointed
by their member governments for a five-year term, which is renewable. The Board of Governors may delegate
authority to the Executive Directors to exercise any of its powers, except for certain powers enumerated in IBRD’s
Articles. IBRD has its own policies and frameworks that are carried out by staff that share responsibilities over both
IBRD and IDA.
In addition, IBRD and IDA have joint internal institutional oversight units which play an assurance role to shareholders
and management that IBRD’s work is impactful and accountable, informed by best practices, and delivered to thehighest ethical standards with risk management controls and governance processes that are functioning effectively.
Expenses for these oversight units, including the Executive Directors, were $116.6 million in FY22 (and $111.7
million FY21) shared between IBRD and IDA.

Executive Directors
In accordance with IBRD’s Articles, Executive Directors are appointed or elected every two years by their member
governments. The Board currently has 25 Executive Directors, who represent all 189 member countries. Executive
Directors are neither officers nor staff of IBRD. The President is the only member of the Board from management,
and he serves as a non-voting member and as Chairman of the Board.
The Board is required to consider proposals made by the President on IBRD loans, grants and guarantees and on otherpolicies that affect its general operations. The Board is also responsible for presenting to the Governors, at the Annual
Meetings, audited accounts, an administrative budget, and an annual report on operations and policies and othermatters.

IBRD Management’s Discussion and Analysis: June 30, 2022 63

Management’s Discussion and Analysis

Section XIII: Governance and Controls

The Board and its committees are in continuous session based in Washington DC, as business requires. Eachcommittee's terms of reference establish its respective roles and responsibilities. As committees do not vote on issues,
their role is primarily to serve the Board in discharging its responsibilities.
The committees are made up of eight members and function under their respective stipulated terms of reference. These
committees are as follows:
•
•

•

•

•

Audit Committee - assists the Board in overseeing IBRD’s finances, accounting, risk management and internal
controls (see further explanation below).
Budget Committee - assists the Board in approving the World Bank’s budget and in overseeing the preparationand execution of IBRD’s business plans. The committee provides guidance to management on strategic
directions of IBRD.
Committee on Development Effectiveness - supports the Board in assessing IBRD’s development
effectiveness, providing guidance on strategic directions of IBRD, monitoring the quality and results ofoperations.
Committee on Governance and Executive Directors’ Administrative Matters - assists the Board on issues
related to the governance of IBRD, the Board’s own effectiveness, and the administrative policy applicable to
Executive Directors’ offices.
Human Resources Committee - strengthens the efficiency and effectiveness of the Board in discharging its
oversight responsibility on the World Bank’s human resources strategy, policies and practices, and theiralignment with the business needs of the organization.

Audit Committee
Membership
The Audit Committee consists of eight Executive Directors. Membership in the Committee is determined by the
Board, based on nominations by the Chairman of the Board, following informal consultation with Executive Directors.

Key Responsibilities
The Audit Committee is appointed by the Board for the primary purpose of assisting the Board in overseeing IBRD’s
finances, accounting, risk management, internal controls and institutional integrity. Specific responsibilities include:•

Oversight of the integrity of IBRD’s financial statements.

•

Appointment, qualifications, independence and performance of the External Auditor.

•

Performance of the Group Internal Audit Department.

•

Adequacy and effectiveness of financial and accounting policies and internal controls and the mechanisms todeter, prevent and penalize fraud and corruption in IBRD operations and corporate procurement.

•

Effective management of financial, fiduciary and compliance risks in IBRD.

• Oversight of the institutional arrangements and processes for risk management across IBRD.
In carrying out its role, the Audit Committee discusses financial issues and policies that affect IBRD’s financial
position and capital adequacy with Management, external auditors, and internal auditors. It recommends the annual
audited financial statements for approval to the Board. The Audit Committee monitors and reviews developments incorporate governance and its own role on an ongoing basis.

Executive Sessions
Under the Audit Committee's terms of reference, it may convene an executive session at any time, without
Management’s presence. The Audit Committee meets separately in executive sessions with the external and internal
auditors.

64

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Section XIII: Governance and Controls

Access to Resources and to Management
Throughout the year, the Audit Committee receives a large volume of information to enable it to carry out its duties
and meets both formally and informally throughout the year to discuss relevant matters. It has complete access toManagement, and reviews and discusses with Management topics considered in its terms of reference.
The Audit Committee has the authority to seek advice and assistance from outside legal, accounting, or other advisors
as it deems necessary.

Auditor Independence
The appointment of the external auditor for IBRD is governed by a set of Board-approved principles. These include:•

Limits on the external auditor’s provision of non-audit-related services•

Requiring all audit-related services to be pre-approved on a case-by-case basis by the Board, uponrecommendation of the Audit Committee, and•Renewal of the external audit contract every five years, with a limit of two consecutive terms and mandatory
rotation thereafter.

The external auditor may provide non-prohibited, non-audit related services subject to monetary limits. Broadly, thelist of prohibited non-audit services include those that would put the external auditor in the roles typically performedby management and in a position of auditing their own work, such as accounting services, internal audit services, andprovision of investment advice. The total non-audit services fees over the term of the relevant external audit contract
shall not exceed 70 percent of the audit fees over the same period.
Communication between the external auditor and the Audit Committee is ongoing and carried out as often as deemednecessary by either party. The Audit Committee meets periodically with the external auditor and individual committee
members have independent access to the external auditor. IBRD’s external auditors also follow the communication
requirements with the Audit Committee as set out under generally accepted auditing standards in the United States.

External Auditors
The external auditor is appointed to a five-year term, with a limit of two consecutive terms, and is subject to annual
reappointment based on the recommendation of the Audit Committee and approval of a resolution by the Board.
Following a mandatory rebidding of the external audit contract, IBRD’s Board approved the appointment of Deloitte& Touche LLP as IBRD’s external auditor for a five-year term from FY19 through FY23, subject to annual
reappointment. In addition, in May 2022, IBRD’s Board approved Deloitte & Touche LLP as IBRD’s external auditor
for a second five-year term commencing in FY24.

Senior Management Changes
The following changes were effective January 1, 2022:•

Jingdong Hua, Vice President and Treasurer of the World Bank, retired.

•

Jorge Familiar was appointed to the role of Vice President and Treasurer of the World Bank.

•

Pamela O’Connell was appointed as the Vice President and World Bank Group Controller, succeeding Jorge
Familiar in that role.

Internal Control
Internal Control Over Financial Reporting
Each fiscal year, Management evaluates the internal controls over financial reporting to determine whether any
changes made in these controls during the fiscal year materially affect, or would be reasonably likely to materiallyaffect, IBRD’s internal control over financial reporting. The internal control framework promulgated by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated
Framework (2013)” provides guidance for designing, implementing and conducting internal control and assessing its
effectiveness. IBRD uses the 2013 COSO framework to assess the effectiveness of the internal control over financial
reporting. As of June 30, 2022, management maintained effective internal control over financial reporting. See“Management’s report regarding effectiveness of Internal Control over Financial Reporting” on page 72.

IBRD Management’s Discussion and Analysis: June 30, 2022 65

Management’s Discussion and Analysis

Section XIII: Governance and Controls

IBRD’s internal control over financial reporting was audited by Deloitte & Touche LLP, and their report expresses anunqualified opinion on the effectiveness of IBRD’s internal control over financial reporting as of June 30, 2022. See
Independent Auditor’s Report on page 74.

Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed is gathered andcommunicated to Management as appropriate, to allow timely decisions regarding required disclosure by IBRD.
Management conducted an evaluation of the effectiveness of such controls and procedures and the President and the
MDCFO have concluded that these controls and procedures were effective as of June 30, 2022.

66

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Appendix

Appendix
Glossary of Terms
Articles: IBRD’s Articles of Agreement
Below GDI Country: Country whose Gross National Income per capita is below the Graduation Discussion Income as publishedin the Per Capita Income Guidelines for Operational Purposes.
Board: The Executive Directors as established by IBRD’s Articles of Agreement.
Budget Anchor: Efficiency measure that IBRD uses to monitor the coverage of its net administrative expenses by its loan spreadrevenue.
Capital Adequacy: A measure of IBRD’s ability to withstand unexpected shocks and is based on the amount of IBRD’s usable
equity expressed as a percentage of its loans and other related exposures.
Credit Default Swaps (CDS): A derivative contract that provides protection against deteriorating credit quality and allows one
party to receive payment in the event of a default or specified credit event by a third party.
Credit Valuation Adjustment (CVA): The CVA represents the counterparty credit risk exposure and is reflected in the fair valueof derivative instruments.
Debit Valuation Adjustment (DVA): DVA on Fair Value Option (FVO) Elected Liabilities that corresponds to the change in fairvalue of the liability presented under the FVO that relate to the instrument specific credit risk (“own-credit risk”).
Duration: Provides an indication of the sensitivity of underlying yield to changes in interest rates.
Equity-to-Loans Ratio: The Board monitors IBRD’s capital adequacy within a Strategic Capital Adequacy Framework, using
the equity-to-loans ratio as a key indicator of IBRD’s capital adequacy. For details on the ratio, see Table 29.
Loan Spread Revenue, Net: The spread between loan returns and associated debt cost, assuming loans are fully funded by debt.
Lower-Middle-Income Countries: For FY22 income groups are classified according to the 2020 gross national income (GNI) per
capita. For lower-middle-income countries, the GNI range was $1,046 to $4,095.
Maintenance of Value (MOV): Under IBRD’s Articles, members are required to maintain the value of their subscriptions ofnational currency paid-in, which is subject to certain restrictions. MOV is determined by measuring the foreign exchange value ofa member’s national currency against the standard of value of IBRD’s capital based on the 1974 SDR.
Lending Operations: Total projects from a fiscal year based on project approval date as of June 30 of the fiscal year.
Net Commitments: Commitments net of full terminations and cancellations approved in the same fiscal year and include guarantee
commitments and guarantee facilities that have been approved by the Executive Directors.
Net Loan Disbursements: Loan disbursements net of repayments and prepayments.
Prudential Minimum: The minimum amount of liquidity that IBRD is required to hold and is defined as 80% of the Target
Liquidity Level.
Sustainable Annual Lending Limit (SALL): The level of lending that can be sustained in real terms over 10 years.
Strategic Capital Adequacy Framework: Evaluates IBRD’s capital adequacy as measured by stress tests and an appropriate
minimum level for the long-term equity-to-loans ratio. The equity-to-loans ratio provides a background framework in the context
of annual net income allocation decisions, as well as in the assessment of the initiatives for the use of capital. The framework has
been approved by the Board.
Single Borrower Limit (SBL): The maximum authorized exposure to IBRD’s most creditworthy and largest borrowing countries
in terms of population and economic size.
Statutory Lending Limit (SLL): Under IBRD’s Articles, as applied, the total amount outstanding of loans, participations in loans,and callable guarantees may not exceed the sum of unimpaired subscribed capital, reserves and surplus.
Target Liquidity Level (TLL): The twelve- month Target Liquidity Level is calculated before the end of each fiscal year basedon Management’s estimates of projected net loan disbursements approved at the time of projection and twelve months of debtservice for the upcoming fiscal year. This twelve-month estimate becomes the target for the upcoming fiscal year.
U.S. GAAP: Accounting principles generally accepted in the United States of America.
World Bank: The World Bank consists of IBRD and IDA.
World Bank Group (WBG): The World Bank Group consists of IBRD, IDA, IFC, MIGA, and ICSID.

IBRD Management’s Discussion and Analysis: June 30, 2022 67

Management’s Discussion and Analysis

AppendixAbbreviations and Acronyms
AFDB: African Development Bank

IFLs: IBRD Flexible Loans

AMC: Advance Market Commitment for Vaccines against
Pneumococcal Diseases

IPF: Investment Project Financing

AOCI: Accumulated Other Comprehensive Income
BETF: IBRD-Executed Trust Funds
BOG: Board of Governors

LIBID: London Interbank Bid Rate
LIBOR: London Interbank Offered Rate
LLP: Loan Loss Provision
LTRRO: Long-Term Real Return Objective

COSO: Committee of Sponsoring Organizations of theTreadway Commission

MDB: Multilateral Development BankCCSAs: Cross-Cutting Solution Areas

MDCAO: Managing Director and World Bank Group Chief
Administrative Officer

CDS: Credit Default Swaps
CVA: Credit Valuation Adjustment

MDCFO: Managing Director and World Bank Group
Chief Financial Officer

CRO: Vice President and WBG Chief Risk Officer

MDCOO: Managing Director and Chief Operating Officer

DDO: Deferred Drawdown Option

MIGA: Multilateral Investment Guarantee Agency

DPF: Development Project Financing

MOV: Maintenance-Of-Value

DTCs: Developing and Transitional Countries

NBC: New Business Committee

DVA: Debit Valuation Adjustment

NCPIC: National Currency Paid-in Capital

EAL: Equitable Access Limit

ORC: Operational Risk Committee

EDF: Expected default frequency

PAF: Pilot Auction Facility for Methane and Climate
Change Mitigation

EEA: Exposure Exchange Agreement
EFOs: Externally Financed Outputs

PEF: Pandemic Emergency Financing Facility

ESG: Environmental, Social and Governance

PBAC: Pension Benefits Administration Committee

FASB: Financial Accounting Standards Board

PBO: Pension Benefit Obligation

FIFs: Financial Intermediary Funds

PCRF: Post Retirement Contribution Reserve Fund

FRC: Finance and Risk Committee

PEBP: Post-Employment Benefit Plan

GAVI: Global Alliance for Vaccines and Immunization

PFC: Pension Finance Committee

GCI: General Capital Increase

PforR: Program-for-Results

GDI: Graduation Discussion Income

RAS: Reimbursable Advisory Services

GNI: Gross National Income

RAMP: Reserves Advisory Management Partnership

GMFs: Grant-Making Facilities

RETF: Recipient-Executed Trust Funds

GPs: Global Practices

RSBP: Retired Staff Benefits Plan

IADB: Inter‐American Development BankSALL: Sustainable Annual Lending Limit

IBRD: International Bank for Reconstruction andDevelopment

SCI: Selective Capital Increase

ICSID: International Centre for Settlement of Investment
Disputes

SDPL: Special Development Policy Loans
SBL: Single Borrower Limit

IFC: International Finance Corporation

SLL: Statutory Lending Limit

IDA: International Development Association

SRP: Staff Retirement Plan

IFFIm: International Finance Facility for Immunization

68

IBRD Management’s Discussion and Analysis: June 30, 2022

Management’s Discussion and Analysis

Appendix

Eligible Borrowing Member Countries by Region
RegionCountries

Eastern and Southern Africa

Angola, Botswana, Eswatini, Kenya*, Mauritius, Namibia, Seychelles, South Africa, Zimbabwe*

Western and Central Africa

Republic of Cabo Verde*, Cameroon*, Republic of Congo*, Equatorial Guinea, Gabon, Nigeria*

East Asia and Pacific

China, Fiji*, Indonesia, Malaysia, Mongolia, Nauru, Palau, Papua New Guinea*, Philippines,
Thailand, Timor-Leste*, Vietnam

Europe and Central Asia

Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia,
Kazakhstan, North Macedonia, Moldova, Montenegro, Poland, Romania, Russian Federation,
Serbia, Türkiye, Turkmenistan, Ukraine, Uzbekistan*

Latin America and Caribbean

Argentina, Antigua and Barbuda, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominica*,
Dominican Republic, Ecuador, El Salvador, Grenada*, Guatemala, Jamaica, Mexico, Panama,Paraguay, Peru, St. Kitts and Nevis, St. Lucia*, St. Vincent and the Grenadines*, Suriname,
Trinidad and Tobago, Uruguay, Venezuela

Middle East and North Africa

Algeria, Arab Republic of Egypt, Islamic Republic of Iran, Iraq, Jordan, Lebanon, Libya, Morocco,
TunisiaSouth Asia

India, Pakistan*, and Sri Lanka* Blend countries eligible for IDA and IBRD loans

List of Tables, Figures and Boxes
TablesTable 1: Condensed Statement of Income
Table 2: Condensed Balance Sheet
Table 3: Change in Net Loans Outstanding
Table 4: Net Other Revenue
Table 5: Net Non-Interest Expenses
Table 6: Budget Anchor Ratio
Table 7: Unrealized Mark-to-Market gains/losses on non-trading portfolios, net
Table 8: Allocable Income
Table 9: Net Commitments by Region
Table 10: Gross Disbursements by Region
Table 11: Net Commitments by Maturity
Table 12: Country Pricing Group and Maturity Premium (in basis points)
Table 13: Loan Terms Available During Fiscal Year Ended June 30, 2022
Table 14: Loans outstanding by interest rate structure, excluding derivatives
Table 15: Guarantees Exposure
Table 16: Pricing for IBRD Project-Based and Policy-Based Guarantees
Table 17: Exposure Exchange Agreements
Table 18: RAMP – Assets and Revenues
Table 19: Cash and Investment Assets Held in Trust
Table 20: Liquid Asset Portfolio Composition
Table 21: Liquid Asset Portfolio - Average Balances and Returns
Table 22: Net Carrying Value of Other Investments
Table 23: Short-Term Borrowings
Table 24: Funding Operations Indicators
Table 25: Maturity Profile of Medium and Long-Term Debt
Table 26: Breakdown of IBRD Subscribed Capital
Table 27: Usable Paid-In Capital
Table 28: Usable Equity
Table 29: Equity-to-Loans Ratio
Table 30: Commercial Credit Exposure, Net of Collateral Held, by Counterparty Rating
Table 31: Non-Commercial Counterparty Credit Risk
Table 32: Effect of Credit on IBRD’s Portfolios
Table 33: Effect of Interest Rates on IBRD’s Portfolios
Table 34: Liquidity Levels
Table 35: Contractual Obligations
Table 36: Funded Status of the Plans
Table 37: Fair Value Level 3 Summary

10
11
12
14
15
15
16
17
20
21
22
23
24
25
26
27
27
29
30
32
32
32
34
35
35
36
37
38
43
49
49
51
52
56
58
60
61

IBRD Management’s Discussion and Analysis: June 30, 2022 69

Management’s Discussion and Analysis

Appendix

FiguresFigure 1: IBRD’s Financial Business Model
Figure 2: Sources and Uses of Revenue
Figure 3: Loan interest revenue and funding cost (including derivatives)
Figure 4: Loan interest revenue, net
Figure 5: Net Loans Outstanding
Figure 6: Net Investment Portfolio
Figure 7: Investment Revenue, net
Figure 8: Borrowing Portfolio (original maturities)
Figure 9: Net Non-Interest Expenses
Figure 10: Budget Anchor
Figure 11: FY22 Allocable Income and Income Allocation
Figure 12: Share of Lending Categories for Annual Net Commitments
Figure 13: Loan Portfolio
Figure 14: Liquid Asset Portfolio by Asset Class
Figure 15: Effect of Derivatives on Currency Composition of the Borrowing Portfolio–June 30, 2022
Figure 16: Medium- and Long-Term Borrowings Raised by Currency during the year, Excluding Derivatives
Figure 17: Voting Power of Top Six Members as of June 30, 2022
Figure 18: Percentage of Votes held by Member Countries, as of June 30, 2022
Figure 19: Financial and Operational Risk Management Structure
Figure 20: Risk Committee Structure for Financial and Operational Risks
Figure 21: Equity-to-Loans Ratio
Figure 22: Country Exposures as of June 30, 2022
Figure 23: Sensitivity to Interest Rates
Figure 24: Effect of Derivatives on Interest Rate Structure of the Borrowing Portfolio - June 30, 2022
Figure 25: Effect of Derivatives on Interest Rate Structure of the Loan Portfolio - June 30, 2022
Figure 26: Use of Derivatives for Loans and Borrowings
Figure 27: Use of Derivatives for Investments
Figure 28: Use of Derivatives for Other ALM
Figure 29: Currency Composition of Loan and Borrowing Portfolios as of June 30, 2022
Figure 30: Governance Structure

7
8
11
11
12
13
13
13
14
16
19
21
25
31
33
35
36
36
39
41
43
45
52
52
53
53
53
54
56
63

Boxes
Box 1: Selected Financial Data
Box 2: Components of Loan spread
Box 3: Other Lending Products Currently Available
Box 4: Types of Guarantees Provided by IBRD
Box 5: Financing Instruments
Box 6: Summary of IBRD's Specific Risk Categories
Box 7: Treatment of Overdue Payments
Box 8: Eligibility Criteria for IBRD's Investments a

70

IBRD Management’s Discussion and Analysis: June 30, 2022

2
22
23
26
29
42
46
48

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTFINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS
JUNE 30, 2022

Management’s Report Regarding Effectiveness of Internal Control Over Financial Reporting72

Independent Auditors’ Report on Effectiveness of Internal Control Over Financial Reporting74

Independent Auditors’ Report76

Balance Sheet

80

Statement of Income

82

Statement of Comprehensive Income

83Statement of Changes in Retained Earnings

83

Statement of Cash Flows84

Supplementary Information
Summary Statement of Loans

86

Statement of Subscriptions to Capital Stock and Voting Power

88

Notes to Financial Statements

92

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022 71

MANAGEMENT’S REPORT REGARDING EFFECTIVENESS OF
INTERNAL CONTROL OVER EXTERNAL FINANCIAL REPORTING

Management’s Report Regarding Effectiveness ofInternal Control over Financial Reporting
August 5, 2022

The management of the International Bank for Reconstruction and Development (IBRD) is
responsible for the preparation, integrity, and fair presentation of its published financial statements.
The financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and include amounts based on informed judgments andestimates made by management.
The financial statements have been audited by an independent audit firm, which was given
unrestricted access to all financial records and related data, including minutes of all meetings ofthe Executive Directors and their Committees. Management believes that all representations madeto the independent auditors during their audit of IBRD’s financial statements and audit of its
internal control over financial reporting were valid and appropriate. The independent auditors’
reports accompany the audited financial statements.
Management is responsible for establishing and maintaining effective internal control overfinancial reporting for financial statement presentations in conformity with accounting principles
generally accepted in the United States of America. Management maintains a comprehensive
system of controls intended to ensure that transactions are executed in accordance withmanagement’s authorization, assets are safeguarded, and financial records are reliable. The system
of internal control contains monitoring mechanisms, and actions are taken to correct deficiencies
identified. Management believes that internal control over financial reporting supports theintegrity and reliability of the external financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibilityof human error and the circumvention or overriding of controls. Accordingly, even effective
internal controls can provide only reasonable assurance with respect to financial statement
preparation. Further, because of changes in conditions, the effectiveness of internal controls mayvary over time.
IBRD assessed its internal control over financial reporting for financial statement presentation in
conformity with accounting principles generally accepted in the United States of America as ofJune 30, 2022. This assessment was based on the criteria for effective internal control overfinancial reporting described in the Internal Control-Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission. Based upon thisassessment, management believes that IBRD maintained effective internal control over financial
reporting presented in conformity with accounting principles generally accepted in the UnitedStates of America as of June 30, 2022. The independent audit firm that audited the financial

72 IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

statements has issued an Independent Auditors Report which expresses an opinion on IBRD’s
internal control over financial reporting.
The Executive Directors of IBRD have appointed an Audit Committee responsible for monitoring
the accounting practices and internal controls of IBRD. The Audit Committee is comprised
entirely of Executive Directors who are independent of IBRD’s management. The Audit
Committee is responsible for recommending to the Executive Directors the selection of
independent auditors. It meets periodically with management, the independent auditors, and theinternal auditors to ensure that they are carrying out their responsibilities. The Audit Committee
is responsible for performing an oversight role by reviewing and monitoring the financial,accounting and auditing procedures of IBRD in addition to reviewing IBRD’s financial reports.
The independent auditors and the internal auditors have full and free access to the Audit
Committee, with or without the presence of management, to discuss the adequacy of internal
control over financial reporting and any other matters which they believe should be brought to theattention of the Audit Committee.

________________________David Malpass
President_______________________
Anshula Kant
Managing Director and World Bank Group Chief Financial Officer________________________
Pamela O'Connell
Vice President and World Bank Group Controller

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022 73

INDEPENDENT AUDITORS’ REPORT ON MANAGEMENT’S ASSERTIONREGARDING EFFECTIVENESS OF INTERNAL CONTROL OVERFINANCIAL REPORTING
Deloitte & Touche LLP
7900 Tysons One Place
Suite 800
McLean, VA 22102
USA

INDEPENDENT AUDITOR'S REPORT
President and Board of Executive Directors
International Bank for Reconstruction and Development

Tel: +1 703 251 1000
Fax: +1 703 251 3400
www.deloitte.com

Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of International Bank for Reconstruction
and Development (“IBRD”) as of June 30, 2022, based on the criteria established in the Internal Control —Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). In our opinion, IBRD maintained, in all material respects, effective internal control
over financial reporting as of June 30, 2022, based on the criteria established in the Internal Control —Integrated Framework (2013) issued by COSO.
We also have audited, in accordance with auditing standards generally accepted in the United States ofAmerica (GAAS), the financial statements as of and for the year ended June 30, 2022 of IBRD, and ourreport dated August 5, 2022, expressed an unmodified opinion on those financial statements.
Basis for Opinion
We conducted our audit in accordance with GAAS. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting
section of our report. We are required to be independent of IBRD and to meet our other ethicalresponsibilities, in accordance with the relevant ethical requirements relating to our audit. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Responsibilities of Management for Internal Control over Financial Reporting
Management is responsible for designing, implementing, and maintaining effective internal control overfinancial reporting, and for its assessment about the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report Regarding Effectiveness of Internal
Control over Financial Reporting.
Auditor’s Responsibilities for the Audit of Internal Control over Financial Reporting
Our objectives are to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects and to issue an auditor’s report that includes ouropinion on internal control over financial reporting. Reasonable assurance is a high level of assurance but
is not absolute assurance and therefore is not a guarantee that an audit of internal control over financial
reporting conducted in accordance with GAAS will always detect a material weakness when it exists.
In performing an audit of internal control over financial reporting in accordance with GAAS, we:•74

Exercise professional judgment and maintain professional skepticism throughout the audit.

•Obtain an understanding of internal control over financial reporting, assess the risks that amaterial weakness exists, and test and evaluate the design and operating effectiveness of internal
control over financial reporting based on the assessed risk.

Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity’s internal control over financial reporting is a process effected by those charged withgovernance, management, and other personnel, designed to provide reasonable assurance regarding the
preparation of reliable financial statements in accordance with accounting principles generally acceptedin the United States of America. An entity’s internal control over financial reporting includes thosepolicies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America,
and that receipts and expenditures of the entity are being made only in accordance with authorizations ofmanagement and those charged with governance; and (3) provide reasonable assurance regarding
prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of theentity’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detectand correct, misstatements. Also, projections of any assessment of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.

August 5, 2022

75

INDEPENDENT AUDITORS’ REPORT
Deloitte & Touche LLP
7900 Tysons One Place
Suite 800
McLean, VA 22102
USA
Tel.: +1 703 251 1000
Fax: +1 703 251 3400
www.deloitte.com

INDEPENDENT AUDITOR'S REPORT
President and Board of Executive Directors
International Bank for Reconstruction and Development
OpinionWe have audited the accompanying financial statements of the International Bank for Reconstruction andDevelopment ("IBRD"), which comprise the balance sheets as of June 30, 2022 and 2021, and the related
statements of income, comprehensive income, changes in retained earnings, and cash flows for each of
the three years in the period ended June 30, 2022, and the related notes to the financial statements(collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of IBRD as of June 30, 2022 and 2021, and the results of its operations and its cash flows for eachof the three years in the period ended June 30, 2022, in accordance with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with auditing standards generally accepted in the United States ofAmerica (GAAS), IBRD's internal control over financial reporting as of June 30, 2022, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated August 5, 2022, expressed anunmodified opinion on IBRD's internal control over financial reporting.
Basis for Opinion
We conducted our audits in accordance with GAAS. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are required to be independent of IBRD and to meet our other ethical responsibilities, in accordancewith the relevant ethical requirements relating to our audits. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion.
Change in Accounting Principle
As described in Note A to the financial statements, IBRD changed its method of accounting for theaccumulated provision for loan losses and other exposures on July 1, 2020, due to the adoption of
Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments. Our opinion is not modified with respect to thismatter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in the United States of America, and for thedesign, implementation, and maintenance of internal control relevant to the preparation and fair76

presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about IBRD’s ability to continue as agoing concern for one year after the date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance andtherefore is not a guarantee that an audit conducted in accordance with GAAS will always detect amaterial misstatement when it exists. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of thefinancial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, thatraise substantial doubt about IBRD’s ability to continue as a going concern for a reasonable period oftime.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Report on Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole.
The supplementary information listed in the table of contents is presented for the purpose of additional
analysis and are not a required part of the financial statements. These schedules are the responsibility
IBRD's management and were derived from and relate directly to the underlying accounting and other77

records used to prepare the financial statements. Such schedules have been subjected to the auditing
procedures applied in our audits of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used
to prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with GAAS. In our opinion, such information is fairly stated in all material
respects in relation to the financial statements as a whole.
Other Information Included in Management’s Discussion & Analysis and Financial Statements
Management is responsible for the other information included in Management’s Discussion & Analysis
and Financial Statements. The other information comprises the information included in Management’s
Discussion & Analysis and Financial Statements but does not include the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other information,
and we do not express an opinion or any form of assurance thereon.
In connection with our audits of the financial statements, our responsibility is to read the otherinformation and consider whether a material inconsistency exists between the other information and thefinancial statements, or the other information otherwise appears to be materially misstated. If, based on
the work performed, we conclude that an uncorrected material misstatement of the other information
exists, we are required to describe it in our report.

August 5, 2022

78

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTFINANCIAL STATEMENTS
JUNE 30, 2022

79

BALANCE SHEET
June 30, 2022 and June 30, 2021
Expressed in millions of U.S. dollars
2022

2021

AssetsDue from banks—Notes C and L
Unrestricted cash$

Restricted cash

392

$

2,240

87

107

479

2,347

81,78387,566

Securities purchased under resale agreements—Notes C and L

37

338

Derivative assets, net—Notes C, F and L

804

3,355

Other receivables
Receivable from investment securities traded—Note C

103

200

1,328

994

1,431

1,194

Total loans
Less undisbursed balance (including signed loan commitments of$56,951 million—June 30, 2022, and $59,837 million —June 30,
2021)

303,867

295,005(74,523)(74,441)

Loans outstanding
Less:
Accumulated provision for loan losses
Deferred loan income

229,344

220,564(1,742)(510)(1,270)(495)

227,092

218,799

2,309
1,821
1,786

1,775
1,927

5,916

3,702

317,542$ 317,301

Investments-Trading (including securities transferred under repurchaseor securities lending agreements of $36 million—June 30, 2022; $24
million—June 30, 2021)—Notes C and L

Accrued income on loans

Loans outstanding (Summary Statement of Loans, Notes D, H and L)

Net loans outstanding
Other assets
Assets under retirement benefits plans—Notes J and K
Premises and equipment, net
Miscellaneous—Notes H and I

Total assets

78

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

$

2022

2021

Liabilities
Borrowings—Notes E and L$

Securities sold under repurchase agreements, securities lent under
securities lending agreements, and payable for cash collateral
received—Notes C and L
Derivative liabilities, net—Notes C, F and L
Other liabilities
Payable for investment securities purchased—Note C
Liabilities under retirement benefits plans—Notes J and K
Accounts payable and miscellaneous liabilities—Notes D, H and I
Total liabilities

235,173$

260,0763762

20,041

1,222

51
2,107
4,813
6,971
262,222

521
2,749
4,593
7,863
269,223

307,135(286,636)
20,499297,856(278,612)
19,244

(316)
(354)

(332)
(343)

(424)

67

34,997918
55,320317,542

31,007(1,565)48,078317,301

EquityCapital stock (Statement of Subscriptions to Capital Stock andVoting Power, Note B)
Authorized capital (2,783,873 shares—June 30, 2022, andJune 30, 2021)
Subscribed capital (2,545,984 shares—June 30, 2022, and 2,469,065
shares—June 30, 2021)
Less uncalled portion of subscriptions
Paid-in capital
Nonnegotiable, noninterest-bearing demand obligations on accountof subscribed capital
Receivable amounts to maintain value of currency holdings—Note B
Deferred amounts to maintain value of currency holdings—Note B
Retained earnings (Statement of Changes in Retained Earnings andNote G)
Accumulated other comprehensive income (loss)—Note K
Total equity
Total liabilities and equity$$

The Notes to Financial Statements are an integral part of these Statements.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

79

STATEMENT OF INCOME
For the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
2022Interest revenue
Loans, net—Note D
Other asset/liability management derivatives, net—Notes F and L
Investments-Trading, net—Note C
Other, net

$

2,368
583
296
(2)

2021
$

2,213
604
211
(2)

2020
$

4,537
161
1,270
(116)

Borrowing expenses, net—Note E

(750)

(662)

(3,754)

Interest revenue, net of borrowing expenses

2,495

2,364

2,098

Provision for losses on loans and other exposures—Note D

(570)

(146)

(18)

787
126
43
956

776
115
36
927

802
115
56
973

(2,225)(17)
258(1,984)(2,142)(18)(33)(2,193)(2,080)(18)
35(2,063)

Board of Governors-approved and other transfers—Note G

(354)

(411)

(340)

Non-functional currency translation adjustment gains, net

150

35

57

Unrealized mark-to-market (losses) gains on InvestmentsTrading portfolio, net—Notes F and L

(77)

231

193

5,994
(3,392)
759
13

2,415
(1,351)154
14(1,971)
1,204
(216)
41

3,374

1,232

(942)

Non-interest revenue
Revenue from externally funded activities—Notes H and I
Commitment charges—Note D
Other, net—Note I
Total
Non-interest expenses
Administrative—Notes H, I and J
Contributions to special programs
Other—Note J
Total

Unrealized mark-to-market gains (losses) on non-trading
portfolios, net
Loan related derivatives—Notes D, F and L
Other asset/liability management derivatives, net—Notes F and L
Borrowings, including related derivatives—Notes E, F and L
Others, net —Note L
Total
Net income (loss)

$

3,990

$

2,039

The Notes to Financial Statements are an integral part of these Statements.

80

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

$

(42)

STATEMENT OF COMPREHENSIVE INCOME
For the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
2022
Net income (loss)
Other comprehensive income (loss)—Note K$

Net actuarial gains (losses) on benefit plans
Prior service credit on benefit plans, net
Net Change in Debit Valuation Adjustment (DVA) on fair value
option elected liabilities—Note L
Currency translation adjustments on functional currency
Total other comprehensive income (loss)
Total comprehensive income (loss)

$

2021

3,990

$

2020

2,039

$

(42)

3,027
23

5,105
23

(3,067)23582(1,149)(1,432)
465

509
(88)

2,483

4,161

(2,623)

6,473

$

6,200

$

(2,665)

STATEMENT OF CHANGES IN RETAINED EARNINGSFor the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
Retained earnings at the beginning of the fiscal year
Cumulative effect of a change in accounting principle—
Notes A, D and G
Adjusted retained earnings at the beginning of the
fiscal year
Net income (loss) for the fiscal year
Retained earnings at the end of the fiscal year2022
$ 31,007

2021$ 28,765$2020
28,807-203-

31,00728,96828,807

3,990

2,039

(42)

$ 34,997$ 31,007$

28,765The Notes to Financial Statements are an integral part of these Statements.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

81

STATEMENT OF CASH FLOWSFor the fiscal years ended June 30, 2022, June 30, 2021 and June 30, 2020
Expressed in millions of U.S. dollars
Cash flows from investing activities
Loans
Disbursements$
Principal repayments
Principal prepayments
Loan origination fees received
Net derivatives-loans
Other investing activities, net
Net cash used in investing activities
Cash flows from financing activities
Medium and long-term borrowings
New issues
Retirements
Short-term borrowings (original maturities greater than
90 days)
New issues
Retirements
Net short-term borrowings (original maturities less than
90 days)
Net derivatives-borrowings
Capital subscriptions
Other financing activities, net
Net cash provided by financing activities
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Unrealized mark-to-market (gains) losses on nontrading portfolios, net
Non-functional currency translation adjustment(gains), net
Depreciation and amortization
Provision for losses on loans and other exposures
Changes in:
Investments-Trading
Net investment securities purchased/traded
Net derivatives-investments
Net securities purchased/sold underresale/repurchase agreements and payable forcash collateral received
Accrued income on loans
Miscellaneous assets
Accrued interest on borrowings
Accounts payable and miscellaneous liabilities
Net cash provided by (used in) operating activities
Effect of exchange rate changes on unrestricted andrestricted cash
Net (decrease) increase in unrestricted and restricted
cash
Unrestricted and restricted cash at the beginning of
the fiscal year
Unrestricted and restricted cash at the end of the
fiscal year$

82

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

2022

2021

2020

(28,115)
12,797
495
28
147
(163)
(14,811)$ (23,651)
10,020
81
24
64
(175)
(13,637)$ (20,193)
9,365
251
15
69
(241)
(10,734)

40,715(36,255)

67,365(51,692)

75,055(64,982)

21,631(20,692)

21,937(20,469)

22,722(23,126)

3,996
(13)
1,255
2
10,639(2,270)
(758)
1,210
6
15,3291,202(1,229)973
2
10,617

3,990

2,039

(42)

(3,374)(1,232)

942

(150)
106
570

(35)
94
146

(57)
896
18

1,792
(371)
2,921

(2,359)137(1,406)(2,711)230
532(2,781)
(299)
87
(419)
299
2,371

1,171
449
(239)
(811)
761
(1,285)

1,602
403
(470)
(952)
718
1,109

(67)

70

(17)

(1,868)

477

975

2,347

1,870

895

479

$

2,347

$

1,870

Expressed in millions of U.S. dollars
2022
Supplemental disclosure(Decrease) increase in ending balances resulting fromexchange rate fluctuations
Loans outstanding
Investment portfolio
Borrowing portfolio
Capitalized loan origination fees included in total loans
Interest paid on borrowing portfolio$(6,094)(210)(4,527)
53
1,157

2021

$

2,742
277
(1,971)
39
1,488

2020

$

(1,178)
126
(274)
45
4,616

The Notes to Financial Statements are an integral part of these Statements.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

83

SUMMARY STATEMENT OF LOANS
June 30, 2022
Expressed in millions of U.S. dollars

Borrower or guarantor
Albania b
Angola a
Antigua and Barbuda
Argentina
Armenia b
Azerbaijan
Bahamas, The
Barbados
Belarus
BelizeBolivia, Plurinational State of a
Bosnia and Herzegovina b
Botswana aBrazil b
Bulgaria
Cabo Verde, Republic of
Cameroon
Chile aChina bColombia a
Congo, Republic of
Costa Rica a
Cote d'Ivoire
Croatia
Dominican Republic a
Ecuador a
Egypt, Arab Republic of b
El Salvador
Eswatini
Fiji
Gabon aGeorgia b
GrenadaGuatemalaIndia bIndonesia b
Iran, Islamic Republic of
Iraq bJamaica
Jordan b
Kazakhstan
Kenya
KosovoLebanonMauritius
MexicoMoldova
Mongolia
Montenegro b

84

Total loans a , b$ 1,095
4,610
412,326
1,018
1,543
100
123
1,398
67
1,015
964
629
18,462
483
41
860
152
21,603
14,910
257
1,955
169
1,854
1,841
4,627
14,689
1,587
283
200
762
2,126
15
2,386
31,79924,498
135
4,352
1,114
5,120
4,300
708
112
1,424
140
16,160262
234
258

Undisbursed balance
Loans approved
Signed loan
but not yet signed
commitment c
$
101
$
127
638
1,738
600
2,960
161
166
413
6
25
313
134
184
114
1,188
1,397
3
199
326
10
2,032
3,657
998
121
120
556
70
514
100
559
380
599
500
2,009
100
720
27
87
50
30
58
80
901
6
150
587
3,591
9,058
1,583
3,717
1
1,077
65
1,325
360
605
140
23
700
925
268
61
100
100
100
66

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Loans Outstanding
$
867
2,234
4
8,766
857
1,377
100
123
985
36
702
646
515
15,877
483
38
335
142
15,914
13,912
136
1,279
99
1,340
1,182
3,648
12,180
767
169
120
624
1,225
9
1,649
19,15019,198
134
3,275
1,049
3,795
3,335
568
112
701
140
14,967101
34
192

Percentage of
total loans
outstanding d0.38 %
0.97
*
3.82
0.37
0.60
0.04
0.05
0.43
0.02
0.31
0.28
0.22
6.92
0.21
0.02
0.15
0.06
6.94
6.07
0.06
0.56
0.04
0.58
0.52
1.59
5.31
0.33
0.07
0.05
0.27
0.53
*
0.72
8.35
8.37
0.06
1.43
0.46
1.65
1.45
0.25
0.05
0.31
0.06
6.53
0.04
0.01
0.08

SUMMARY STATEMENT OF LOANS (CONTINUED)
June 30, 2022
Expressed in millions of U.S. dollars
Undisbursed balance
Loans approved but Signed loan
not yet signed
commitment c
$
837
$
2,369
500
14
39
226
3,108
250
274
50
30
240
221
1,000
772
2,583
260
101
624
1,067
4
139
477
23
472
610
52
20
130
879
437
4,707
5
1,064
40
36
713
471
-

Percentage of
total loans
Loans Outstanding outstanding d$
7,671
3.35 %
486
0.21
572
0.25
2,139
0.93
1,379
0.60
2
*
863
0.38
4,520
1.98
10,614
4.63
6,149
2.68
4,668
2.04
149
0.06
2,317
1.01
110
0.05
2,503
1.09
720
0.31
3
*
6
*
708
0.31
15
0.01
*
3,919
1.71
10,734
4.68
15
0.01
7,787
3.40
1,435
0.63
2,121
0.92
2,220
0.98
428
0.19

Borrower or guarantor
MoroccoNigeria a
North Macedonia b
Pakistan b
Panama a
Papua New Guinea
Paraguay
Peru
Philippines
PolandRomania b
Russian Federation
Serbia b
Seychelles
South Africa a
Sri Lanka
St. Lucia
SurinameThailand
Timor-Leste
Trinidad and Tobago aTunisia
Türkiye b
Turkmenistan
Ukraine b
Uruguay
Uzbekistan
VietnamZimbabwe

Total loans a, b$
10,877
1,000
837
5,247
1,903
82
1,324
6,292
13,197
6,510
6,359
153
2,933
133
2,975
1,330
3
58
708
15
20
4,928
15,878
20
8,851
1,511
2,834
2,691
428

Total-June 30, 2022$

303,867$

17,572$

56,951$ 229,344

100 %Total-June 30, 2021$

295,005$

14,604$

59,837$ 220,564

100 %

Notes
a. Indicates a country for which a guarantee is provided under an Exposure Exchange Agreement (EEA) with a multilateraldevelopment organization (see Note D—Loans and Other Exposures). The amount of the guarantees is not included in the figures in
the Statement above.
b. Indicates a country for which a guarantee has been received, under an EEA with a multilateral development organization or fromanother guarantee provider (see Note D—Loans and Other Exposures). The effect of the guarantee is not included in the figures in
the Statement above.
c. Loan agreements totaling $5,401 million ($8,992 million—June 30, 2021) have been signed, but the loans are noteffective and disbursements do not start until the borrowers and/or guarantors take certain actions and furnish documents.
d. May differ from the calculated figures or sum of individual figures shown due to rounding.
* Indicates amount less than $0.5 million or 0.005 percent.

The Notes to Financial Statements are an integral part of these Statements.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

85

STATEMENT OF SUBSCRIPTIONS TO
CAPITAL STOCK AND VOTING POWER
June 30, 2022
Expressed in millions of U.S. dollars
Subscriptions

MemberAfghanistan
Albania
Algeria
AngolaAntigua and Barbuda
Argentina
Armenia
Australia cAustria c
Azerbaijan
Bahamas, The
Bahrain
Bangladesh
Barbados
BelarusBelgium c
BelizeBenin
BhutanBolivia, Plurinational State ofBosnia and Herzegovina
Botswana
BrazilBrunei Darussalam
Bulgaria
Burkina Faso
BurundiCabo Verde, Republic ofCambodia
Cameroon
Canada c
Central African Republic
Chad
Chile
China
Colombia
Comoros
Congo, Democratic Republic Of
Congo, Republic of
Costa Rica
Cote d'Ivoire
Croatia
CyprusCzech Republic c
Denmark c
Djibouti
Dominica
Dominican Republic
EcuadorEgypt, Arab Republic of86

Shares506
1,187
13,197
4,068
659
27,223
1,885
36,06818,143
2,623
1,357
1,585
7,381
948
4,547
38,586
586
1,459
680
2,846
918
916
53,509
2,373
6,608
1,397
1,043
729
568
2,202
70,455975
975
10,013142,907
10,421
369
3,416
1,051
1,274
4,080
3,187
1,851
8,869
19,644
801
644
2,651
3,828
10,682

Percentage
of total b
0.02 %
0.05
0.52
0.16
0.03
1.07
0.07
1.42
0.71
0.10
0.05
0.06
0.29
0.04
0.18
1.52
0.02
0.06
0.03
0.11
0.04
0.04
2.10
0.09
0.26
0.05
0.04
0.03
0.02
0.09
2.77
0.04
0.04
0.39
5.61
0.41
0.01
0.13
0.04
0.05
0.16
0.13
0.07
0.35
0.77
0.03
0.03
0.10
0.15
0.42

Total
Amounts
amounts b
paid in a, b$
61.0 $
5.1
143.2
5.4
1,592.0
110.0
490.7
28.8
79.5
2.3
3,284.1
206.3
227.4
12.0
4,351.1
298.6
2,188.7
157.4
316.4
17.2
163.7
7.5
191.2
10.9
890.4
59.7
114.4
4.5
548.5
34.6
4,654.8
297.4
70.7
1.8
176.0
8.8
82.0
2.0
343.3
18.9
110.7
9.3
110.5
5.4
6,455.1
386.8
286.3
15.2
797.2
46.6
168.5
7.9
125.8
4.6
87.9
2.3
68.5
5.1
265.6
12.4
8,499.3
619.5
117.6
3.9
117.6
3.9
1,207.9
71.9
17,239.6
1,178.4
1,257.1
80.2
44.5
1.0
412.1
31.0
126.8
4.3
153.7
10.6
492.2
30.4
384.5
26.6
223.3
11.2
1,069.9
72.4
2,369.8
159.3
96.6
2.8
77.7
2.2
319.8
17.2
461.8
24.1
1,288.6
76.8

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Voting Power
Amountssubject
to call a, b
$
55.9
137.8
1,482.0
461.9
77.2
3,077.8215.4
4,052.5
2,031.3
299.2
156.2
180.3
830.7
109.9
513.9
4,357.4
68.9
167.2
80.0
324.4
101.4
105.1
6,068.3
271.1
750.5
160.7
121.3
85.7
63.4
253.3
7,879.8
113.8
113.8
1,136.0
16,061.2
1,177.0
43.6
381.1
122.4
143.0
461.8
357.9
212.1
997.5
2,210.4
93.8
75.4
302.6
437.7
1,211.8

Number of Percentage
votes
of total b
1,298
0.05 %
1,979
0.07
13,989
0.52
4,860
0.18
1,451
0.05
28,015
1.04
2,677
0.10
36,8601.37
18,935
0.70
3,415
0.13
2,149
0.08
2,377
0.09
8,173
0.30
1,740
0.06
5,339
0.20
39,378
1.46
1,378
0.05
2,251
0.08
1,472
0.05
3,638
0.13
1,710
0.06
1,708
0.06
54,301
2.01
3,165
0.12
7,400
0.27
2,189
0.08
1,835
0.07
1,521
0.06
1,360
0.05
2,994
0.11
71,247
2.64
1,767
0.07
1,767
0.07
10,8050.40
143,699
5.33
11,213
0.42
1,161
0.04
4,208
0.16
1,843
0.07
2,066
0.08
4,872
0.18
3,979
0.15
2,643
0.10
9,661
0.36
20,436
0.76
1,593
0.06
1,436
0.05
3,443
0.13
4,620
0.17
11,474
0.43

STATEMENT OF SUBSCRIPTIONS TO
CAPITAL STOCK AND VOTING POWER (CONTINUED)
June 30, 2022
Expressed in millions of U.S. dollars
Subscriptions

MemberSharesEl Salvador
403
Equatorial Guinea
715
Eritrea593
Estonia
1,272
Eswatini
499
Ethiopia
1,470
Fiji
1,302
Finland c
12,582
France c104,969
Gabon
987
Gambia, The
777
Georgia
2,275
Germany c
109,776
Ghana
2,202
Greece c4,117
Grenada673
Guatemala
2,001
Guinea1,864
Guinea-Bissau
613
Guyana
1,526
Haiti
1,550
Honduras
641
Hungary c
12,040
Iceland c
1,916
India
82,124
Indonesia
25,363Iran, Islamic Republic of
34,963
Iraq
3,875
Ireland c
8,763
Israel
6,702
c
Italy
67,252
Jamaica
3,550Japan c
199,885
Jordan2,337
Kazakhstan
4,573
Kenya
3,435
Kiribati
680
c
Korea, Republic of
42,180
Kosovo, Republic of
1,538
Kuwait19,432
Kyrgyz Republic
1,107
Lao People's Democratic Republic
272
Latvia1,881
Lebanon
1,062
Lesotho945
Liberia
606
Libya
9,935
Lithuania
2,258
Luxembourg c2,806Madagascar
2,393

Percentage
of total b
0.02 %
0.03
0.02
0.05
0.02
0.06
0.05
0.49
4.12
0.04
0.03
0.09
4.31
0.09
0.16
0.03
0.08
0.07
0.02
0.06
0.06
0.03
0.47
0.08
3.23
1.00
1.37
0.15
0.34
0.26
2.64
0.14
7.85
0.09
0.18
0.13
0.03
1.66
0.06
0.76
0.04
0.01
0.07
0.04
0.04
0.02
0.39
0.09
0.11
0.09

Total
Amounts
amounts b
paid in a ,b$
48.6 $
3.9
86.3
2.7
71.5
1.8
153.5
7.8
60.2
2.0
177.3
8.3
157.1
7.7
1,517.8
100.6
12,662.9
899.7
119.1
5.1
93.7
2.7
274.4
12.7
13,242.8
913.3
265.6
16.1
496.7
34.2
81.2
2.4
241.4
12.4
224.9
9.9
74.0
1.4
184.1
7.7
187.0
7.8
77.3
2.3
1,452.5
100.0
231.1
13.7
9,907.0692.0
3,059.7200.3
4,217.8
254.3
467.5
33.0
1,057.1
70.3
808.5
52.5
8,112.9
562.9
428.3
27.0
24,113.1 1,751.9
281.9
16.5
551.7
31.3
414.4
21.1
82.0
1.9
5,088.4
342.0
185.5
11.5
2,344.2
141.0
133.5
5.7
32.8
2.2
226.9
12.7
128.1
6.3
114.0
3.8
73.1
3.6
1,198.5
72.1
272.4
17.3
338.5
22.1
288.7
16.3

Voting Power
Amountssubject
to call a, b
$
44.8
83.5
69.7
145.7
58.2
169.1
149.3
1,417.2
11,763.2
113.9
91.0
261.7
12,329.6
249.5
462.4
78.8
229.0
214.9
72.5
176.4
179.2
75.0
1,352.4217.5
9,215.0
2,859.4
3,963.4
434.5
986.9
756.0
7,550.0
401.3
22,361.2
265.4
520.4
393.2
80.1
4,746.4
174.1
2,203.2
127.9
30.6
214.2
121.8
110.2
69.5
1,126.4
255.1
316.4
272.4

Number of
votes
1,195
1,507
1,385
2,064
1,291
2,262
2,094
13,374
105,761
1,779
1,569
3,067
110,568
2,994
4,909
1,465
2,793
2,656
1,405
2,318
2,342
1,433
12,832
2,708
82,91626,15535,755
4,667
9,555
7,494
68,044
4,342
200,677
3,129
5,365
4,227
1,472
42,972
2,330
20,224
1,899
1,064
2,673
1,854
1,737
1,398
10,727
3,050
3,598
3,185

Percentage
of total b
0.04 %
0.06
0.05
0.08
0.05
0.08
0.08
0.50
3.92
0.07
0.06
0.11
4.10
0.11
0.18
0.05
0.10
0.10
0.05
0.09
0.09
0.05
0.48
0.10
3.08
0.97
1.33
0.17
0.35
0.28
2.52
0.16
7.44
0.12
0.20
0.16
0.05
1.59
0.09
0.75
0.07
0.04
0.10
0.07
0.06
0.05
0.40
0.11
0.13
0.12

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

87

STATEMENT OF SUBSCRIPTIONS TO
CAPITAL STOCK AND VOTING POWER (CONTINUED)
June 30, 2022
Expressed in millions of U.S. dollars
Subscriptions

MemberSharesMalawi
1,722
Malaysia
10,447
Maldives
497
Mali
2,035
Malta
1,361
Marshall Islands
469
Mauritania
1,308
Mauritius
1,656
Mexico40,119Micronesia, Federated States of479
Moldova
1,984
Mongolia
829
Montenegro
946
Morocco
7,807
Mozambique
1,332
Myanmar3,465
Namibia
1,930
Nauru
586
Nepal
1,466
Netherlands c
50,798
New Zealand c
10,511
Nicaragua
936
Niger
1,233
Nigeria
19,417
North Macedonia
615
Norway c
15,858Oman
1,978
Pakistan
12,870Palau
16
Panama891
Papua New Guinea
1,864
Paraguay
1,766
Peru
8,991
Philippines
10,695
Poland c
19,637
Portugal c
7,511
Qatar
1,389
Romania
7,538
Russian Federation
71,810
Rwanda1,502
St. Kitts and Nevis
275
St. Lucia
699
St. Vincent and the Grenadines
387
Samoa
883
San Marino
595
Sao Tome and Principe
705
Saudi Arabia
66,505Senegal2,942
Serbia3,816
Seychelles
263

88

Percentage
of total b
0.07 %
0.41
0.02
0.08
0.05
0.02
0.05
0.07
1.58
0.02
0.08
0.03
0.04
0.31
0.05
0.14
0.08
0.02
0.06
2.00
0.41
0.04
0.05
0.76
0.02
0.62
0.08
0.51
0.04
0.07
0.07
0.35
0.42
0.77
0.30
0.05
0.30
2.82
0.06
0.01
0.03
0.02
0.03
0.02
0.03
2.61
0.12
0.15
0.01

Total
Amounts
amounts b
paid in a, b$
207.7 $
10.2
1,260.3
75.4
60.0
1.5
245.5
14.1
164.2
7.5
56.6
0.9
157.8
6.1
199.8
10.7
4,839.8
291.1
57.8
1.0
239.3
10.7
100.0
5.6
114.1
6.0
941.8
62.8
160.7
6.8
418.0
21.4
232.8
11.7
70.7
2.4
176.9
7.7
6,128.0
421.1
1,268.0
83.5
112.9
4.3
148.8
5.6
2,342.4
168.0
74.2
5.2
1,913.0
132.3
238.6
12.1
1,552.6
102.2
1.9
0.2
107.5
6.9
224.9
9.9
213.1
9.3
1,084.6
75.8
1,290.2
83.4
2,368.9
163.8
906.1
53.3
167.6
11.1
909.4
61.8
8,662.8
611.5
181.2
7.5
33.2
0.3
84.3
2.6
46.7
1.6
106.5
4.1
71.8
2.5
85.1
2.2
8,022.8
484.6
354.9
17.5
460.3
30.8
31.7
0.2

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Voting Power
Amountssubject
to call a, b$
197.5
1,184.8
58.5
231.4
156.7
55.7
151.7
189.1
4,548.6
56.8
228.7
94.4
108.1
879.0
153.9
396.6
221.1
68.3
169.1
5,707.0
1,184.5
108.6
143.1
2,174.3
68.9
1,780.7226.5
1,450.4
1.8
100.6
214.9
203.7
1,008.8
1,206.8
2,205.1
852.7
156.5
847.6
8,051.3
173.7
32.9
81.7
45.1
102.4
69.3
82.9
7,538.2
337.4
429.6
31.6

Number of
votes
2,514
11,239
1,289
2,827
2,153
1,261
2,100
2,448
40,911
1,271
2,776
1,621
1,738
8,599
2,124
4,257
2,722
1,378
2,258
51,59011,303
1,728
2,025
20,2091,407
16,6502,770
13,662
808
1,683
2,656
2,558
9,783
11,487
20,429
8,303
2,181
8,330
72,602
2,294
1,067
1,491
1,179
1,675
1,387
1,497
67,297
3,734
4,608
1,055

Percentage
of total b
0.09 %
0.42
0.05
0.10
0.08
0.05
0.08
0.09
1.52
0.05
0.10
0.06
0.06
0.32
0.08
0.16
0.10
0.05
0.08
1.91
0.42
0.06
0.08
0.75
0.05
0.62
0.10
0.51
0.03
0.06
0.10
0.09
0.36
0.43
0.76
0.31
0.08
0.31
2.69
0.09
0.04
0.06
0.04
0.06
0.05
0.06
2.50
0.14
0.17
0.04

STATEMENT OF SUBSCRIPTIONS TO
CAPITAL STOCK AND VOTING POWER (CONTINUED)
June 30, 2022
Expressed in millions of U.S. dollars
Subscriptions

Voting Power

Member
Sierra Leone
Singapore
Slovak Republic c
Slovenia c
Solomon Islands
SomaliaSouth Africa
South Sudan
Spain cSri Lanka
Sudan
Suriname
Sweden c
Switzerland c
Syrian Arab Republic
Tajikistan
Tanzania
Thailand
Timor-Leste
Togo
Tonga
Trinidad and Tobago
Tunisia
TürkiyeTurkmenistan
TuvaluUgandaUkraineUnited Arab Emirates
United Kingdom cUnited States c
Uruguay
Uzbekistan
Vanuatu
Venezuela, Republica
Bolivariana de
Vietnam
Yemen, Republic ofZambiaZimbabwe
Total - June 30, 2022

Shares
1,043
7,109
4,642
1,971
729
632
19,725
1,437
51,570
5,717
1,989
412
23,02539,244
2,452
1,204
1,295
12,960
753
1,598
796
3,376
1,915
29,010
627
461
1,051
14,361
6,362
104,969
424,982
3,563
3,476
765

Percentage
of total b
0.04 %
0.28
0.18
0.08
0.03
0.02
0.77
0.06
2.03
0.22
0.08
0.02
0.90
1.54
0.10
0.05
0.05
0.51
0.03
0.06
0.03
0.13
0.08
1.14
0.02
0.02
0.04
0.56
0.25
4.12
16.69
0.14
0.14
0.03

Total
amounts b
$
125.8
857.6
560.0
237.8
87.9
76.2
2,379.5
173.4
6,221.2
689.7
239.9
49.7
2,777.6
4,734.2
295.8
145.3
156.2
1,563.4
90.9
192.8
96.0
407.3
231.0
3,499.6
75.6
55.6
126.8
1,732.4
767.5
12,662.9
51,267.7
429.8
419.3
92.3

Amounts
paid in a, b
$
4.6
63.0
38.6
16.9
2.3
3.3
154.2
8.6
440.4
42.5
15.5
2.0
189.7
330.9
14.0
5.3
10.0
106.6
3.1
8.1
3.5
22.8
16.0
224.5
3.6
1.5
8.5
108.5
57.4
918.9
3,483.0
24.0
21.4
3.1

Amountssubject
to call a, b
$
121.2
794.6
521.4
220.9
85.6
72.9
2,225.3
164.8
5,780.8
647.2
224.5
47.7
2,588.0
4,403.3
281.8
139.9
146.2
1,456.9
87.8
184.7
92.5
384.5
215.0
3,275.1
72.0
54.1
118.3
1,623.9
710.1
11,744.0
47,784.7
405.8
397.9
89.2

20,361
4,551
2,212
4,160
3,575
2,545,984

0.80
0.18
0.09
0.16
0.14
100

%

2,456.3
549.0
266.9
501.9
431.3
$ 307,135

$

150.8
36.5
14.0
30.2
22.4
20,499$2,305.5
512.5
252.8
471.7
408.9
286,636

21,153
5,343
3,004
4,952
4,367
2,695,672

0.79
0.20
0.11
0.19
0.16
100 %

Total - June 30, 2021

2,469,065

100%$ 297,856$

19,244$

278,6122,614,217

100 %Number of
votes
1,835
7,901
5,434
2,763
1,521
1,424
20,5172,229
52,362
6,509
2,781
1,204
23,81740,036
3,244
1,996
2,087
13,752
1,545
2,390
1,588
4,168
2,707
29,802
1,419
1,253
1,843
15,153
7,154
105,761
425,774
4,355
4,268
1,557

Percentage
of total b
0.07 %
0.29
0.20
0.10
0.06
0.05
0.76
0.08
1.94
0.24
0.10
0.04
0.88
1.49
0.12
0.08
0.08
0.51
0.06
0.09
0.06
0.16
0.10
1.11
0.05
0.05
0.07
0.56
0.27
3.92
15.79
0.16
0.16
0.06

NOTES
a. See Notes to Financial Statements, Note B—Capital Stock, Maintenance of Value, and Membership.
b. May differ from the calculated figures or sum of individual figures shown due to rounding.
c. A member of the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD).
* Indicates amount less than $0.5 million or 0.005 percent

The Notes to Financial Statements are an integral part of these Statements.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

89

NOTES TO FINANCIAL STATEMENTSPURPOSE AND AFFILIATED ORGANIZATIONSThe International Bank for Reconstruction and Development (IBRD) is an international organization which
commenced operations in 1946. The principal purpose of IBRD is to promote sustainable economic development andreduce poverty in its member countries, primarily by providing loans, guarantees and related technical assistance for
specific projects and for programs of economic reform in developing member countries. The activities of IBRD arecomplemented by those of three affiliated organizations, the International Development Association (IDA), theInternational Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). Each of theseorganizations is legally and financially independent from IBRD, with separate assets and liabilities, and IBRD is notliable for their respective obligations. Transactions with these affiliated organizations are disclosed in the notes that
follow.
IBRD is immune from taxation pursuant to Article VII, Section 9, Immunities from Taxation, of IBRD’s Articles ofAgreement.

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING AND RELATED POLICIESIBRD’s financial statements are prepared in conformity with accounting principles generally accepted in the UnitedStates of America (U.S. GAAP).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions 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 periods.
Due to the inherent uncertainty involved in making these estimates, actual results could differ from these estimates.
Significant judgment has been used in the valuation of certain financial instruments, the determination of the adequacyof the accumulated provisions for losses on loans and other exposures, the determination of the net periodic cost frompension and other postretirement benefits plans, and the present value of projected benefit obligations.
On August [4], 2022, the Executive Directors approved these financial statements for issue.
Certain reclassifications of the prior year’s information have been made to conform with the current year’s
presentation.
Translation of Currencies: IBRD’s financial statements are expressed in terms of U.S. dollars for the purpose ofreporting IBRD’s financial position and the results of its operations. IBRD’s functional currencies are the U.S. dollar
and euro.
Assets and liabilities are translated at market exchange rates in effect at the end of the reporting period. Revenue andexpenses are translated at either the market exchange rates in effect on the dates on which they are recognized or at
an average of the market exchange rates in effect during the month of the transaction. Translation adjustments relating
to non-functional currencies are reflected in the Statement of Income, while translation adjustments for assets andliabilities denominated in euro are reflected in the Statement of Comprehensive Income.
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 acommon denominator of the monetary system and the repeal of the provision of the U.S. law defining the par valueof the U.S. dollar in terms of gold, the pre-existing basis for translating 1944 dollars into current dollars or into any
other currency was eliminated. 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 effecton 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 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 (“1974 SDR”).
Maintenance of Value: Article II, Section 9 of the Articles of Agreement provides for maintenance of value (MOV),at the time of subscription, of national currencies paid-in, which are subject to certain restrictions. MOV is determinedby measuring the foreign exchange value of a member’s national currency against the standard of value of IBRD’s
capital based on the 1974 SDR. MOV receivable are amounts due from members on account of movements in
exchange rates from the date of initial subscription, resulting in the reduction in the value of their paid-in capitaldenominated in national currencies. Members are required to make payments to IBRD if their currencies depreciatesignificantly relative to the standard of value. These amounts may be settled either in cash or a nonnegotiable,
90

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

noninterest-bearing note, which is due on demand. Certain notes are due on demand only after IBRD's callable
subscribed capital has been entirely called pursuant to Article IV, Section 2 (a) of the Articles of Agreement.
Furthermore, the Executive Directors have adopted a policy of reimbursing members whose national currencies
appreciate significantly in terms of the standard of value.
MOV is deferred when the restriction of national currencies paid-in is lifted and these currencies are being used in
IBRD’s operations and/or are being invested, swapped, or loaned to members by IBRD or through IFC. Once theserestricted currencies are no longer being used in operations, the related MOV is no longer deferred, but rather, becomesdue on the same terms as other MOV obligations.
All MOV receivable balances are shown as components of Equity, under Receivable amounts to maintain value ofcurrency holdings. All MOV payable balances are included in Other liabilities-Accounts payable and miscellaneous
liabilities on the Balance Sheet. The net receivable or payable MOV amounts relating to national currencies used in
IBRD's lending and investing operations are also included as a component of Equity under Deferred amounts tomaintain value of currency holdings.
Withdrawal of Membership: Under IBRD’s Articles of Agreement, in the event a member withdraws from IBRD,
the withdrawing member is entitled to receive the value of its shares payable to the extent the member does not haveany outstanding obligations to IBRD. IBRD’s Articles of Agreement also state that the former member has continuing
obligations to IBRD after withdrawal. Specifically, the former member remains fully liable for its entire capitalsubscription, including both the previously paid-in portion and the callable portion, so long as any part of the loans orguarantees contracted before it ceased to be a member are outstanding.
Transfers Approved by the Board of Governors: In accordance with IBRD’s Articles of Agreement, as interpretedby the Executive Directors, the Board of Governors may exercise its reserved power to approve transfers to otherentities for development purposes. When unconditional, these transfers, which are included in the Board of Governorsapproved and other transfers line in the Statement of Income, are reported as expenses upon approval. If conditional,
these transfers are expensed when the conditions specified for the use by the beneficiaries have been met. The transfers
are funded from the preceding fiscal year’s Net Income, Surplus, Restricted Retained Earnings or Other Reserves.
Retained Earnings: Retained Earnings consist of allocated amounts (Special Reserve, General Reserve, Pension
Reserve, Surplus, Cumulative Fair Value Adjustments, Restricted Retained Earnings, Other Reserves) andUnallocated Net Income (Loss).
The Special Reserve consists of loan commissions set aside pursuant to Article IV, Section 6 of the Articles ofAgreement, 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 default on loans made, participated in, or guaranteed by
IBRD. The Special Reserve assets are included under Investments-Trading, and comprise obligations of the UnitedStates 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 the cumulative actual funding of the Staff Retirement Plan
and Trust (SRP) and other postretirement benefits plans, and the cumulative accounting income or expense for theseplans, from prior fiscal years. This reserve is reduced when pension accounting expenses exceed the actual funding ofthese plans. In addition, the Pension Reserve also includes investment revenue earned on the Post-Employment
Benefits Plan (PEBP) portfolio as well as Post Retirement Contribution Reserve Fund (PCRF), which is used tostabilize IBRD’s contributions to the pension plan.
Surplus consists of earnings from prior fiscal years which are retained by IBRD until a further decision is made on
their disposition.
Cumulative Fair Value Adjustments consist of the reclassification and amortization of transition adjustments and theunrealized mark-to-market gains or losses on non-trading portfolios.
Restricted Retained Earnings consists of contributions or revenue from prior years which are contractually restricted
as to their purpose.
Unallocated Net Income (Loss) consists of the current fiscal year’s net income (loss) adjusted for Board of Governorsapproved and other transfers made during the year.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

91

Other Reserves consist of allocations from Surplus and non-functional currency translation adjustment gains/losses
from prior fiscal years. Allocations from Surplus are retained by IBRD until the conditions specified for their use by
the beneficiaries have been met.
Loans and Other Exposures: All IBRD loans are made to or guaranteed by countries that are members of IBRD,
except for loans made to IFC. The majority of IBRD’s loans have repayment obligations based on specific currencies.
IBRD also holds multicurrency loans which have repayment obligations in various currencies determined on the basisof a currency pooling system. Other exposures comprise signed commitments (including deferred drawdown options
that are effective, and irrevocable commitments), exposures to member countries’ derivatives and guarantees.
Loans are reported on the balance sheet at amortized cost. Commitment charges on the undisbursed balance of loans
are recognized in revenue as earned. Any loan origination fees incorporated in the terms of a loan are deferred andrecognized over the life of the loan as an adjustment of the yield. The unamortized balance of loan origination fees is
included as a reduction of the Loans outstanding on the Balance Sheet, and the amortization of loan origination fees
are included in Interest revenue from Loans, net in the Statement of Income. Accrued interest is presented in the
Balance Sheet line item Other receivables - Accrued income on loans.
It is IBRD’s practice not to reschedule interest or principal payments on its loans or participate in debt reschedulingagreements with respect to its loans. Should modifications be made to the terms of existing loans, IBRD would perform
an evaluation to determine the required accounting treatment, including whether the modification would result in theaffected loans being accounted for as trouble debt restructuring, as a new loan, or as a continuation of the existingloan.
It is IBRD’s policy to place all loans and other exposures (collectively “exposures”) made to or guaranteed by amember of IBRD into nonaccrual status if principal, interest, or other charges with respect to any such exposures are
overdue by more than six months, unless IBRD’s management determines that the overdue amount will be collectedin the immediate future. In addition, if loans and other exposures made by IDA to a member government are placedin nonaccrual status, all loans and other exposures made to, or guaranteed by, that member government will also beplaced in nonaccrual status by IBRD. On the date a member’s exposures are placed into nonaccrual status, unpaid
interest and other charges accrued on exposures to the member are deducted from the revenue of the current period.
Interest and other charges on nonaccruing exposures are included in revenue only to the extent that payments havebeen received by IBRD. A decision on the restoration of accrual status is made upon arrears clearance. If collectability
risk is considered to be particularly high at the time of arrears clearance, the member’s exposures may not
automatically emerge from nonaccrual status until a suitable period of payment performance has passed.
Loan Commitments: Undisbursed loans relate to operations approved by the Executive Directors, for which
disbursements are yet to be made. IBRD records a provision for expected losses on undisbursed loan commitments
including Deferred Drawdown Options (DDOs), when signed by both parties. The signature of the loan agreement isa binding event that prevents IBRD from unconditionally withdrawing from the agreement.
Guarantees: Financial guarantees are commitments issued by IBRD to guarantee payment by a member country (thedebtor) to a third party in the event that a member government (or a government-owned entity) fails to perform its
contractual obligations to a third party.
Guarantees are regarded as outstanding when the underlying financial obligation of the debtor is incurred, and called
when a guaranteed party demands payment under the guarantee. IBRD would be required to perform under its
guarantees if the payments guaranteed were not made by the debtor and the guaranteed party called the guarantee by
demanding payment from IBRD in accordance with the terms of the guarantee. In the event that a guarantee of amember country is called, IBRD has the contractual right to require payment from the member country.
IBRD records the fair value of the obligation to stand ready in Other Liabilities - Accounts payable and miscellaneous
liabilities, and a corresponding fees receivable asset in the Other Receivables - Accrued income on loans line on
IBRD’s Balance Sheet. Upfront guarantee fees received are deferred and amortized over the life of the guarantee.
Accumulated Provision for Losses on Loans and Other Exposures: Management determines the appropriate levelof accumulated provisions for losses on exposures, which reflects the expected losses inherent in IBRD’s exposures.
Loans
Loan exposures are disaggregated into two groups: exposures in accrual status and exposures in nonaccrual status. In
each group, a credit risk rating is assigned to exposures for each borrower.
The total exposure for provisioning is the current exposure and the estimated future exposure, taking into accountexpected disbursements and repayments over the life of the instruments. The expected credit losses related to loans
92

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

and other exposures are calculated over the life of the instruments based on the annual estimated exposures, theexpected default frequency (probability of default to IBRD) and the estimated loss given default. The provision for
expected losses is the sum of the expected annual losses over the life of the instruments.
For countries in accrual status, these exposures are grouped in pools of borrowers with a similar risk rating. The
determination of a borrower’s ratings is based on various factors (see Note D—Loans and other exposures). Each risk
rating is mapped to an expected default frequency using IBRD's credit migration matrix, based on historicalobservations of credit ratings at the beginning and at the end of each year.
Expected losses on loan exposures comprise estimates of potential losses arising from the economic loss due to delays
in receiving payments. The estimated loss given default is determined at each balance sheet date, based on IBRD’s
historical experience, as well as parameters adjusted for current conditions during the reasonable and supportable
forecast period of IBRD. The loss given default is based on the borrower’s eligibility, namely: IBRD, Blend (IBRD
and IDA) and IDA, with the highest loss given default associated with IDA eligibility. The main factors used todetermine the loss given default are the estimated length of delays in receiving loan payments, and the effective interest
rate of the exposure. As the majority of IBRD’s loans carry a variable interest rate, the loss severity is impacted by
the changes in forward looking market interest rates.
For the calculation of expected credit losses, IBRD applies a three-year reasonable and supportable forecast period,
representing the most reliable and available economic data during this period. IBRD also applies a ten-year straightline reversion to the mean to reflect the historical pattern of rating migration to the mean of its loan portfolio.
This methodology is also applied to countries with exposures in nonaccrual status, although the expected default
frequency is equal to a hundred percent. At times, to reflect certain distinguishing circumstances of a particular
nonaccrual situation, different input assumptions may be used for a specific country.
All exposures for countries in nonaccrual status are individually assessed. Exposure for certain countries in accrual
status may be individually assessed on the basis that they do not share common risk characteristics with an existing
pool of exposures. It is IBRD’s practice not to write off loans. All contractual obligations associated with exposuresin nonaccrual status have eventually been cleared, and borrowers have emerged from nonaccrual status. To date, noloans have been written off.
Management reassesses the adequacy of the accumulated provision on a quarterly basis and adjustments to theaccumulated provision are recorded as a charge to or release of provision in the Statement of Income. In addition,
reasonableness of the inputs used is reassessed at least annually.
When IBRD receives a third-party guarantee in the form of a credit enhancement that is embedded in the loan
agreement with the borrower, it considers the benefit of the credit enhancement in the loan loss provisioning credit
risk assessment.
Loan Commitments
IBRD records the expected credit losses on loan commitments based on the projected disbursements of signed loan
commitments (adjusted by cancellations based on historical experience), the probability of default and loss given
default. The provision is included in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance
Sheet.
Guarantees
IBRD records a contingent liability for the expected losses related to guarantees over the projected life of the
instruments, which is determined based on the estimated exposure at default, multiplied by the corresponding loss
given default and expected default probability for the projected life of the guarantee. This provision, as well as theunamortized balance of the deferred guarantee fees, and the unamortized balance of the obligation to stand-ready, areincluded in Other Liabilities - Accounts payable and miscellaneous liabilities on the Balance Sheet.
Exposure Exchange Agreements (EEAs)
IBRD executes EEAs with various organizations. While these agreements are not legally considered guarantees, in
IBRD’s financial statements they are recognized as financial guarantees as they meet the accounting criteria forfinancial guarantees. Under an EEA, each party exchanges credit risk exposure of a portfolio supported by underlying
loans to borrowers, by providing and receiving guarantees from each other, for the amounts specified. The guarantee
provided and the guarantee received are two separate transactions; namely (a) the provision of a financial guarantee,and (b) the receipt of an asset. There is generally no exchange of cash between the organizations for these transactions.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

93For a guarantee provided under an EEA, IBRD records a liability equivalent to the fair value of the obligation to standready. This liability is included in Other liabilities - Accounts payable and miscellaneous liabilities on the Balance
Sheet and is amortized over the life of the EEA. IBRD also records a liability, and corresponding expense, inrecognition of the risk coverage provided (provision). The value of this liability reflects the credit quality of theunderlying loans in the portfolio and changes over the life of the EEA as the credit quality of these loans changes.
For a guarantee received under an EEA, IBRD records an asset equivalent to the fair value of the right to beindemnified. This asset is included in Other assets – Miscellaneous on the Balance Sheet and is amortized over thelife of the EEA. IBRD also records an asset, and corresponding income, in recognition of the risk coverage received(recoverable asset). The value of this asset reflects the credit quality of the underlying loans in the portfolio andchanges over the life of the EEA contract as the credit quality of these loans changes.
Segment Reporting: Based on an evaluation of IBRD’s operations, Management has determined that IBRD has one
reportable segment since financial results are reviewed and resource allocation decisions are made at the entity level.
Statement of Cash Flows: For the purpose of IBRD's Statement of Cash Flows, cash is defined as the amount ofUnrestricted cash and Restricted cash under the Due from banks line on the Balance Sheet.
Restricted Cash: This includes amounts which have been received from members as part of their capital subscriptions,as well as from donors and other sources, which are restricted for specified purposes. For capital subscriptions, aportion of these subscriptions have been paid to IBRD in the national currencies of the members. These amounts areusable by IBRD in its lending and investing operations, only with the consent of the respective members, and foradministrative expenses incurred in national currencies.
Investments: Investment securities are classified based on Management’s intention on the date of purchase, theirnature, and IBRD’s policies governing the level and use of such investments. As of June 30, 2022, all of the financial
instruments in IBRD’s investment portfolio were classified as trading. These securities are carried and reported at fairvalue, or at face value or net asset value (NAV), which approximate fair value.
Where available, quoted market prices are used to determine the fair value of trading securities. These include most
government and agency securities, exchange-traded equity securities, Asset-backed Securities (ABS), and Mortgagebacked Securities (MBS). For instruments for which market quotations are not available, fair values are determinedusing model-based valuation techniques, whether internally-generated or vendor-supplied, that include the discounted
cash flow method using observable market inputs such as yield curves, credit spreads, and conditional prepayment
rates. Where applicable, unobservable inputs such as conditional prepayment rates, probability of default and loss
severity are used. Unless quoted prices are available, time deposits are reported at face value which approximates fairvalue, as they are short term in nature. Purchases and sales of securities are recorded on a trade-date basis. Timedeposits and money market deposits are recorded at settlement. The first-in first-out method is used to determine thecost of securities sold in computing the realized gains and losses on these instruments. Derivative instruments used inliquidity management are not designated as hedging instruments for accounting purposes.
Interest revenue is included in the Investments-Trading, net line in the Statement of Income. Unrealized gains andlosses for investment securities and related financial instruments held in the trading portfolio are included in the
Unrealized mark-to-market gains (losses) on Investments-Trading portfolio, net line in the Statement of Income.
Realized gains and losses on trading securities are recognized in the Statement of Income when securities are sold.
IBRD may require collateral in the form of approved liquid securities from individual counterparties or cash, underlegal agreements that provide for collateralization, in order to mitigate its credit exposure to these counterparties. For
collateral received in the form of cash from counterparties, IBRD invests the amounts received and records theinvestment and a corresponding obligation to return the cash. Collateral received in the form of liquid securities isonly recorded on IBRD's Balance Sheet to the extent that it has been transferred under securities lending agreements
in return for cash.
Securities Purchased Under Resale Agreements, Securities Lent Under Securities Lending Agreements andSecurities Sold Under Repurchase Agreements and Payable for Cash Collateral Received: Securities purchased
under resale agreements, securities lent under securities lending agreements, securities sold under repurchaseagreements and payable for cash collateral received are reported at face value which approximates fair value, as they
are short term in nature. IBRD receives securities purchased under resale agreements, monitors the fair value of the
securities and, if necessary, closes out transactions and enters into new repriced transactions. The securities transferred
to counterparties under repurchase and security lending arrangements and the securities transferred to IBRD underresale agreements have not met the accounting criteria for treatment as a sale. Therefore, securities transferred under
repurchase agreements and security lending arrangements are retained as assets on the Balance Sheet, and securities
received under resale agreements are not recorded on the Balance Sheet. Securities lent under securities lending
94

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

agreements and sold under securities repurchase agreements as well as securities purchased under resale agreements
are presented on a gross basis which is consistent with the manner in which these instruments are settled. The interest
earned from securities purchased under resale agreements is included in Investments–Trading, net in the Statement of
Income. The interest expense pertaining to the securities sold under repurchase agreements and security lending
arrangements, is included in the Borrowing expenses, net line in the Statement of Income.
Nonnegotiable, Noninterest-bearing Demand Obligations on Account of Subscribed Capital: All demandobligations are held in bank accounts which bear IBRD’s name and are carried and reported at face value as a reduction
to equity. Payments on some of these instruments are due to IBRD upon demand. Others are due to IBRD on demand,but only after IBRD’s callable subscribed capital has been entirely called pursuant to Article IV, Section 2 (a) of the
Articles of Agreement.
Premises and Equipment: Premises and equipment, including leasehold improvements, and information technology
assets are carried at cost less accumulated depreciation and amortization. IBRD computes depreciation andamortization using the straight-line method over the estimated useful lives of the owned assets, which range between
three and fifty years. For leasehold improvements, depreciation is computed over the lesser of the remaining term of
the leased facility or the estimated economic life of the improvement.
Maintenance and repairs are charged to expense as incurred, while major improvements are capitalized and amortizedover the estimated useful life.
Lessee Arrangements: IBRD’s lessee arrangements are mostly real estate operating leases. Under these arrangements,
IBRD records right-of-use assets and lease liabilities at lease commencement. Right-of-use assets are reported in Other
assets - Premises and equipment, net and the related lease liabilities are reported in Other liabilities - Accounts payable
and miscellaneous liabilities. IBRD has elected to account for the lease and non-lease components together as a single
lease component. At lease commencement, lease liabilities are recognized based on the present value of the remaining
lease payments and discounted using IBRD’s incremental borrowing rate. All leases are recorded on the Balance Sheet
except short-term leases with an initial term of 12 months or less. Lease expense, including that for short-term leases,
is recognized on a straight-line basis over the lease term and is recorded in Administrative expenses in the Statementof Income.
Borrowings: To ensure funds are available for lending and liquidity purposes, IBRD borrows in the international
capital markets, offering its securities (discount notes, vanilla and structured bonds) to private and governmental
buyers. IBRD issues debt instruments of varying maturities denominated in various currencies with both fixed andvariable interest rates.
IBRD has elected the fair value option for all borrowings. All changes in fair value are recognized in the related
Unrealized mark-to-market gains and losses on non-trading portfolios, net, line in the Statement of Income, except forchanges in the fair value related to IBRD’s own credit risk, which are reported in Other Comprehensive Income (OCI)
as a Debit Valuation Adjustment (DVA). The DVA on fair value option elected liabilities is measured by revaluingeach borrowing instrument to determine the changes in fair value of that instrument arising from changes in IBRD’s
funding spread relative to the applicable reference rate.
Structured bonds issued by IBRD have coupon or repayment terms linked to the level or the performance of interest
rates, foreign exchange rates, equity indices, catastrophic events or commodities.
For the purpose of the Statement of Cash Flows, short-term borrowings, if any, with original maturities less than 90days, are presented net of new issuances and retirements. By contrast, short-term borrowings with original maturities
greater than 90 days and up to one year are presented on a gross basis.
Interest expense relating to all debt instruments in IBRD’s borrowing portfolio is measured on an effective yield basis
and is reported as part of Borrowing expenses, net in the Statement of Income.
Amortization of discounts and premiums is recorded using the effective interest method and is included in the
Borrowing expenses, net line in the Statement of Income.
Accounting for Derivatives: IBRD has elected not to designate any hedging relationships for accounting purposes.
Rather, all derivative instruments are reported at fair value on the Balance Sheet, with changes in fair values accounted
for through the Statement of Income.
The presentation of derivative instruments on IBRD’s Balance Sheet reflects the netting of derivative asset and liability
positions and the related cash collateral received from the counterparty, when a legally enforceable master netting
agreement exists, and the other conditions set out in ASC Topic 210-20, Balance Sheet—Offsetting, are met.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

95

In addition, in the Notes to the financial statements, unless stated differently, derivatives are presented on a net basis
by instrument.
A master netting agreement is an industry standard agreement with a counterparty that permits multiple transactions
governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency
in the event of a default (e.g., bankruptcy, failure to make a required payment or transfer security or deliver collateralwhen due). Obligations under master netting agreements are often secured by collateral posted under an industry
standard credit support annex to the master netting agreement. Upon default by the counterparty, the collateralagreement grants an entity the right to set-off any amounts payable by the counterparty against any posted collateral.
IBRD uses derivative instruments in its investment trading portfolio to manage interest rate and currency risks. These
derivatives are carried and reported at fair value. Interest revenue/expenses are reflected as part of Interest revenue,
while unrealized mark-to-market gains and losses on these derivatives are reflected as part of the Unrealized mark-tomarket gains (losses) in Investments-Trading, net line in the Statement of Income.
IBRD also uses derivatives in its loan, borrowing and asset/liability management activities. It also offers derivativeintermediation services to clients. In the loan and borrowing portfolios, derivatives are used to modify the interest rate
and/or currency characteristics of these portfolios. The interest component of these derivatives is recognized as an
adjustment to the related loan revenue and borrowing costs over the life of the derivative contracts and is included in
the related Interest revenue/expenses lines in the Statement of Income. Changes in fair values of these derivatives arerecorded in the Statement of Income as Unrealized mark-to-market gains and losses in non-trading portfolios, net.
For the purpose of the Statement of Cash Flows, IBRD has elected to report the cash flows associated with thederivative instruments that are used to economically hedge its loans, investments and borrowings, in a mannerconsistent with the presentation of the related loan, investment and borrowing cash flows.
Derivative contracts include currency forward contracts, TBA securities, swaptions, exchange traded options andfutures contracts, currency swaps and interest rate swaps. Currency swaps and interest rate swaps are either plain
vanilla or structured. Currency forward contracts and plain vanilla currency and interest rate swaps are valued using
the discounted cash flow methods using observable market inputs such as yield curves, foreign exchange rates, basis
spreads and funding spreads. For structured currency and interest rate swaps, which primarily consist of callable swaps
linked to interest rates, foreign exchange rates, and equity indices, valuation models and inputs similar to the ones
applicable to structured bond valuations are used. Where applicable, the models also incorporate significant
unobservable inputs such as correlations and long-dated interest rate volatilities.
Most outstanding derivative positions are transacted over-the-counter and therefore valued using internally developed
valuation models. For commercial and non-commercial counterparties where IBRD has a net receivable position,
IBRD calculates a Credit Valuation Adjustment (CVA) to reflect credit risk. For net derivative positions withcommercial and non-commercial counterparties where IBRD is in a net payable position, IBRD calculates a DVA toreflect its own credit risk. The CVA is calculated using the fair value of the derivative contracts, net of collateral
received under credit support agreements, and the probability of counterparty default based on the Credit Default
Swaps (CDS) spread and, where applicable, proxy CDS spreads. The DVA calculation is generally consistent with
the CVA methodology and incorporates IBRD’s own credit spread as observed through the CDS market.
Valuation of Financial Instruments: IBRD has an established and documented process for determining fair values.
Fair value is based upon quoted market prices for the same or similar securities, where available. Financial instruments
for which quoted market prices are not readily available are valued based on discounted cash flow models and otherestablished valuation models. These models primarily use market-based or independently-sourced market parameterssuch as yield curves, interest rates, volatilities, foreign exchange rates and credit curves, and may incorporate
unobservable inputs, some of which may be significant. Selection of these inputs may involve some judgment. In
instances where Management relies on instrument valuations supplied by external pricing vendors, there areprocedures in place to validate the appropriateness of the models used as well as inputs applied in determining thosevalues. The fair value of certain instruments is calculated using NAV as a practical expedient. To ensure that thevaluations are appropriate where internally-developed models are used, IBRD has various controls in place, which
include both internal and periodic external verification and review.
Fair Value Hierarchy: Financial instruments are categorized based on the priority of the inputs to the valuation
technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or
liabilities (Level 1), the next highest priority to observable market-based inputs or inputs that are corroborated bymarket data (Level 2) and the lowest priority to unobservable inputs that are not corroborated by market data (Level
3).

96

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Financial assets and liabilities recorded at fair value on the Balance Sheet are categorized based on the inputs to thevaluation techniques as follows:
Level 1: Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or
liabilities in active markets.
Level 2: Financial assets and liabilities whose values are based on quoted prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or
pricing models for which all significant inputs are observable, either directly or indirectly for substantiallythe full term of the asset or liability.
Level 3: Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs
that are both unobservable and significant to the overall fair value measurement.
IBRD’s policy is to recognize transfers in and transfers out of levels as of the end of the reporting period in which
they occur.
Investments measured at NAV (or its equivalent) are not classified in the fair value hierarchy.
Accounting for Grant Expenses: IBRD recognizes an expense for unconditional grants, such as Contributions toSpecial Programs and most Board of Governors-approved and other transfers, upon approval. IBRD recognizes an
expense for conditional grants when the conditions specified for use by the beneficiaries have been met.
Trust Funds: To the extent that IBRD acts as an agent for, or controls IBRD-executed trust funds, assets held on
behalf of specified beneficiaries are recorded on IBRD’s Balance Sheet, along with corresponding liabilities. Amounts
disbursed from these trust funds are recorded as expenses with corresponding amounts recognized as revenues. For
Recipient-executed trust funds, since IBRD acts as a trustee, no assets or liabilities relating to these activities arerecorded on the Balance Sheet. In some trust funds, execution is split between Recipient-executed and IBRD-executed
portions. Decisions on assignment of funding resources between the two types of execution may be made on an
ongoing basis, therefore, the execution of a portion of these available resources may not yet be assigned.
IBRD also acts as a financial intermediary to provide specific administrative or financial services with a limited
fiduciary or operational role. These arrangements, referred to as Financial Intermediary Funds, include, for example,
administration of debt service trust funds, financial intermediation and other more specialized limited fundmanagement roles. For these arrangements, funds are held and disbursed in accordance with instructions from donors
or, in some cases, an external governance structure or a body operating on behalf of donors. For Financial Intermediary
Funds, since IBRD acts as a trustee, no assets or liabilities relating to these activities are recorded on the Balance
Sheet.

Accounting and Reporting Developments
Evaluated Accounting Standards:
In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments – Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL ASU). The ASU and its
subsequent amendments introduce a new model for the accounting of credit losses on loans and other financial assets
measured at amortized cost. The CECL model, requires an entity to estimate the credit losses expected over the lifeof an exposure, considering historical information, current information, and reasonable and supportable forecasts.
Additionally, the ASUs require enhanced disclosures about credit quality and significant estimates and judgments
used in estimating credit losses.
For IBRD, the ASUs became effective on July 1, 2020. The transition adjustment increased retained earnings by $203
million, which reflects the decrease in the expected credit losses relating to loans and other exposures under CECL
compared to the previous “incurred loss” model. The impact was mainly driven by the use of implied forward interest
rates under CECL compared to historical average interest rates under the previous methodology. Implied forward
interest rates had declined to historically low levels in the context of the global pandemic. This impact was partially
offset by the inclusion of signed loan commitments in the determination of the provision and the requirement toprovision over the full life of IBRD’s long maturity profile credit exposures.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

97

See the table below for details of the CECL transition adjustment as of July 1, 2020. The transition adjustment had no
impact on the Statement of Income. See Note D — Loans and Other Exposures and Note G — Retained Earnings,
Allocations and Transfers, for additional details.
Location on the Balance
Sheet
Accumulated provision related to:Loans outstanding
Signed loan commitments
Other exposures
Total impact on accumulated provision
Recoverable asset relating to guarantees
received under EEAs
Retained earnings

Accumulated provision forloan losses$
Other liabilities
Other liabilities$
Other assets

Impact of the
adoption of the
CECL ASU

June 30, 2020
As reported

$
$

1,599
99
1,698

$

(28)
28,765

July 1, 2020
Adjusted

$

$

(465)
298
(47)
(214)

$

1,134
298
52
1,484

$
$

11
203

$
$

(17)
28,968

Accounting standards under evaluation:
In June 2022, FASB issued Accounting Standard Update (ASU) 2022-03, Fair Value Measurement (Topic 820) Fair
Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual
restriction on the sale of an equity security is not considered part of the unit of account of the equity security andshould not be factored in when measuring fair value. The ASU also clarifies that an entity cannot, as a separate unitof account, recognize and measure a contractual sale restriction. The ASU requires certain disclosures for equity
securities subject to contractual sale restrictions. For IBRD, the ASU will be effective from the quarter ending
September 30, 2024 (fiscal year 2025 for IBRD), with early adoption permitted. IBRD is currently evaluating theimpact of the ASU on its financial statements.
In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures, which
eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors and amends the guidance on“vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. This ASU is
effective from the quarter ending September 30, 2023 (fiscal year 2024 for IBRD), with early adoption permitted.
IBRD is currently evaluating the impact of the ASU on its financial statements.
In November 2021, the FASB issued ASU 2021-10, Disclosure by Business Entities about Government Assistance,
which requires entities to make annual disclosure about certain government assistance they received. This ASU is
effective for the annual period ending June 30, 2023 for IBRD (annual statements of fiscal year 2023 for IBRD), withearly adoption permitted. IBRD is currently evaluating the impact of the ASU on its financial statements.

NOTE B—CAPITAL STOCK, MAINTENANCE OF VALUE, AND MEMBERSHIPThe following table provides a summary of the changes in IBRD's authorized and subscribed shares:
Table B1: IBRD’s shares
As of June 30, 2020
General Capital Increase/Selective Capital Increase (GCI/SCI)
As of June 30, 2021
GCI/SCI
As of June 30, 2022

98

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Authorized shares
2,783,873
2,783,873
2,783,873

Subscribed shares
2,387,388
81,6772,469,065
76,9192,545,984

The following table provides a summary of the changes in subscribed capital, uncalled portion of subscriptions, andpaid-in capital:
Table B2: IBRD’s capital
In millions of U.S. dollars
Uncalled portionof subscriptions

Subscribed capital
As of June 30, 2020
GCI/SCI
As of June 30, 2021
GCI/SCI
As of June 30, 2022$$

288,0029,854
297,856
9,279
307,135$$

Paid-in capital(269,968)(8,644)(278,612)(8,024)(286,636)$$

18,034
1,210
19,244
1,255
20,499The uncalled portion of subscriptions is subject to call only when required to meet the obligations incurred by IBRD
as a result of borrowings or guaranteeing loans.
On October 1, 2018, IBRD’s Board of Governors approved two resolutions that increased IBRD’s authorized capital.
The total increase in authorized capital was $57.5 billion, of which, $27.8 billion and $29.7 billion relate to the GCI
and SCI, respectively. Under the terms of the 2018 GCI and SCI, paid-in capital is expected to increase by up to $7.5
billion. As of June 30, 2022, the cumulative subscription payments received under the 2018 capital increases was $4
billion.
Amounts to Maintain the Value of Currency Holdings
The following table summarizes the amounts for MOV classified as components of equity:
Table B3: MOV balances
In millions of U.S. dollars
June 30, 2022
MOV receivable
Net Deferred MOV (receivable)/payable
Deferred demand obligations
Deferred MOV (receivable)/payable

$

(354)

$

(294)
(130)
(424)

June 30, 2021
$

(343)

$

197
(130)
67

NOTE C—INVESTMENTS
As of June 30, 2022, IBRD’s investments include the liquid asset portfolio, the Post Employment Benefit Plan (PEBP),
the Post Retirement Contribution Reserve Fund (PCRF), and holdings relating to the Local Currency Market
Development (LCMD) investments. LCMD investments are sovereign bonds denominated in the local currencies ofless developed markets, and funded by borrowings in the same currency with matching volume, payment and maturity
characteristics.
Investments held by IBRD are designated as trading and reported at fair value, or at face value, which approximatesfair value. As of June 30, 2022, Investments were primarily comprised of government and agency obligations, andtime deposits (47% and 48% respectively), with all the instruments classified as Level 1 or Level 2 within the fairvalue hierarchy. As of June 30, 2022, the largest holdings of investments from a single counterparty was U.S.
Treasuries (8%).
A summary of IBRD’s Investments-Trading is as follows:
Table C1: Investments – Trading composition
In millions of U.S. dollars
June 30, 2022
June 30, 2021
Government and agency obligations$
38,727$
48,630Time deposits
39,45435,460Asset-backed Securities (ABS)
1,603
1,710
Alternative investments a
1,704
1,352
Equity securities a
295
414
Total
$
81,783$87,566
a. Related to PEBP holdings. Alternative investments are comprised of investments in hedge funds, private equity funds and realestate funds, at net asset value (NAV).

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

99

IBRD manages its investments on a net portfolio basis. The following table summarizes IBRD’s net portfolio position:
Table C2: Net investment portfolio position
In millions of U.S. dollars
Investments-Trading
Securities purchased under resale agreements
Securities sold under repurchase agreements, securities lent under
securities lending agreements, and payable for cash collateral received a
Derivative assets
Currency swaps and forward contracts
Interest rate swaps
Other
Total
Derivative liabilities
Currency swaps and forward contracts
Interest rate swaps
Other
Total
Cash held in investment portfolio b
Receivable from investment securities traded and other assets
Payable for investment securities purchased c
Net investment portfolio

June 30, 2022$
81,78337$

June 30, 2021
$ 87,566
338

(201)

(3,333)

941
19
2
962

485
16
501

(55)
(523)
(578)
262
103
(311)
82,057

(417)
(561)
(1)
(979)
2,037
400
(699)
85,831$a. Includes $164 million of cash collateral received from counterparties under derivative agreements ($3,308 million—June 30,2021).
b. This amount is included in Unrestricted cash under Due from banks on the Balance Sheet.
c. This amount includes $260 million of liabilities related to PCRF payable, which is included in Other liabilities – Accounts
payable and miscellaneous liabilities on the Balance Sheet ($178 million—June 30, 2021), and no liabilities related to shortsales ($98 million—June 30, 2021).

The composition of IBRD’s net investment portfolio was as follows:
Table C3: Net investment portfolio composition
In millions of U.S. dollars
June 30, 2022
Net investment portfolio
Liquid asset portfolio
PEBP holdings
PCRF holdings
AMC holdings
LCMD investments
Total

$

$

78,7962,456
766
39
82,057

June 30, 2021$$

82,751
2,476
555
10
39
85,831

As of November 2021, IBRD transferred all contributions received from donors under the Advance Market
Commitment (AMC) program to the GAVI alliance, thereby concluding the program.
IBRD uses derivative instruments to manage the associated currency and interest rate risk in the portfolio. For details
regarding these instruments, see Note F—Derivative Instruments. After considering the effects of these derivatives,
IBRD’s investment portfolio is predominantly denominated in U.S. dollars.
Commercial Credit Risk
For the purpose of risk management, IBRD is party to a variety of financial transactions, certain of which involve
elements of credit risk. Credit risk exposure represents the maximum potential loss due to possible non-performanceby obligors and counterparties under the terms of the contracts. For all securities, IBRD limits trading to a list of
authorized dealers and counterparties. In addition, IBRD may require collateral in connection with resale and swap
agreements. The collateral serves to mitigate IBRD’s exposure to credit risk.
Swap Agreements: Credit risk is mitigated through the application of eligibility criteria and volume limits fortransactions with individual counterparties and through the use of mark-to-market collateral arrangements for swap
transactions. IBRD may require collateral in the form of cash or other approved liquid securities from individual
counterparties in order to mitigate its credit exposure.

100

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

IBRD has entered into master derivative agreements, which contain legally enforceable close-out netting provisions.
These agreements may further reduce the gross credit risk exposure related to the swaps. Credit risk with financial
assets subject to a master derivatives arrangement is further reduced under these agreements to the extent thatpayments and receipts with the counterparty are netted at settlement. The reduction in exposure as a result of these
netting provisions can vary due to the impact of changes in market conditions on existing and new transactions. The
extent of the reduction in exposure may, therefore, change substantially within a short period of time following thebalance sheet date. For more information on netting and offsetting provisions see note F—Derivative Instruments.
The following is a summary of the collateral received by IBRD related to swap transactions:
Table C4: Collateral received
In millions of U.S. dollars
June 30, 2022
Collateral received
Cash
Securities
Total collateral received
Collateral permitted to be repledged
Amount of collateral repledged
Amount of cash collateral invested

$
$
$

164
427
591
591
143

June 30, 2021
$
$
$

3,308
1,083
4,391
4,391
1,492

Securities Lending: IBRD may engage in securities lending and repurchases, against adequate collateral, as well as
secured borrowing and reverse repurchases (resales) of government and agency obligations, corporate securities, ABS
and MBS. These transactions, if any, are conducted under legally enforceable master netting arrangements, whichallow IBRD to reduce its gross credit exposure related to these transactions. For balance sheet presentation purposes,
IBRD presents its securities lending and repurchases, as well as resales, on a gross basis. As of June 30, 2022, andJune 30, 2021, there were no amounts which could potentially be offset as a result of legally enforceable master netting
arrangements.
Securities lending and repurchase agreements expose IBRD to several risks, including counterparty risk, reinvestment
risk, and risk of a collateral gap (increase or decrease in the fair value of collateral pledged). IBRD has procedures inplace to ensure that trading activity and balances under these agreements are below predefined counterparty andmaturity limits, and to actively manage net counterparty exposure, after collateral, through daily mark-to-market.
Whenever the collateral pledged by IBRD related to its borrowings under repurchase agreements and securities lending
agreements declines in value, the transaction is re-priced as appropriate by returning cash or pledging additional
collateral.
Transfers of securities by IBRD to counterparties are not accounted for as sales as the accounting criteria for thetreatment as a sale have not been met. Counterparties are permitted to repledge these securities until the repurchasedate.
As of June 30, 2022, liabilities relating to securities transferred under repurchase or securities lending agreements
amounted to $37 million ($25 million — June 30, 2021) and there were no unsettled trades relating to repurchase or
securities lending agreements. There were no replacement trades entered into in anticipation of maturing trades of asimilar amount (Nil — June 30, 2021). As of June 30, 2022 and June 30, 2021, the remaining contractual maturitiesof these agreements were overnight and continuous. The securities transferred were mainly comprised of government
and agency obligations and equity securities.
In the case of resale agreements, IBRD receives collateral in the form of liquid securities and is permitted to repledge
these securities. While these transactions are legally considered to be true purchases and sales, the securities received
are not recorded on IBRD’s Balance Sheet as the accounting criteria for treatment as a sale have not been met. As ofJune 30, 2022 and June 30, 2021, there were no unsettled trades pertaining to securities purchased under resaleagreements. For resale agreements, IBRD received securities with a fair value of $38 million ($340 million — June30, 2021). As of June 30, 2022, and June 30, 2021, none of these securities had been transfered.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

101

NOTE D—LOANS AND OTHER EXPOSURESIBRD’s loans and other exposures (collectively “exposures”) are generally made to, or guaranteed by, member
countries of IBRD. In addition, IBRD may also make loans to the IFC, an affiliated organization, without any
guarantee. As of June 30, 2022, all IBRD’s loans were reported at amortized cost.
IBRD’s loan portfolio includes loans with multicurrency terms, variable spread terms and fixed spread terms. At June30, 2022, only loans with variable spread terms (including special development policy loans), were available for new
commitments. Effective April 1, 2021, IBRD suspended the offering of loans on fixed spread terms.
As of June 30, 2022, 86% of IBRD’s loans carried variable interest rates. IBRD uses derivative instruments to manage
the currency risk as well as repricing risk between its loans and borrowings. After the effects of these derivatives, theentire loan portfolio carried variable interest rates, with a weighted average interest rate of 1.92% as of June 30, 2022
(0.84%—June 30, 2021). For details regarding derivatives used in the loan portfolio see Note F—Derivative
Instruments.
The majority of IBRD’s loans outstanding are denominated in U.S. dollars (80%) and euro (18%).
IBRD excludes the interest receivable balance from the amortized cost basis and from the related disclosures aspermitted by U.S. GAAP. As of June 30, 2022, accrued interest receivable on loans of $1,029 million is included in
Other Receivables – Accrued income on loans in the Balance Sheet ($668 million — June 30, 2021).
As of June 30, 2022, 0.2% of IBRD’s loans were in nonaccrual status and related to one borrower. The total
accumulated provision for losses on loans was 0.8% of the total loan portfolio. Based on IBRD’s internal credit quality
indicators, the majority of loans outstanding are in the medium-risk or high-risk classes.
A summary of IBRD’s loans outstanding by currency and by interest rate characteristics (fixed or variable) is asfollows:
Table D1: Loans outstanding currency and interest rate structure
In millions of U.S. dollars, except as otherwise noted
June 30, 2022
Euro
Japanese Yen
U.S. dollars
OthersLoans Outstanding
Fixed
Variable Fixed Variable Fixed
Variable Fixed Variable
Fixed
Variable
Multicurrency terms a$
13 $7 $ 11 $
4 $
32 $
402 $
- $
- $
56 $
413 $
2.78
6.25 2.78
6.25
6.77
5.97
5.10
5.98
Weighted average rate (%) b
Average Maturity (years)
2.12- 2.08
1.14
1.54
Variable-spread terms$
Weighted average rate (%) b
Average Maturity (years)
Fixed-spread terms

3 $20,175 $
0.51
0.41
0.62
8.31

- $
-

252 $
0.75
7.10

$12,045 $ 7,804 $1 $874 $ 20,637 $ 23,922 $ 355
8.0
0.52
3.35
2.49
6
8.9
5.96
8.60
9.91
1

Weighted average rate (%) b

2.00

0.53

2.30

Average maturity (years)

10.88

7.07

0.58

Loans Outstanding- $ 139,402 $
2.25
8.63

-

$12,061 $27,986 $ 12 $ 1,130 $ 20,669 $ 163,726 $ 355
8.0
2.00
0.45 2.74
0.59
3.36
2.29
6
Weighted average rate (%) b
8.9
Average Maturity (years)
10.87
7.96 1.94
6.19
8.58
8.80
1
Loans Outstanding
Less accumulated provision for loan losses and deferred loan income
Net loans outstanding

102

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

$ 3,027 $
8.98
7.58
$

Total
469
5.88
0.18

3 $ 162,856 $ 162,859
0.51
2.14
2.14
0.62
8.57
8.57

378 $ 33,038 $ 32,978 $66,016

6.49

2.91

2.02

2.47

8.09

9.43

9.12

9.27

$ 3,405 $ 33,097 $ 196,247 $ 229,344
8.70

2.91

2.13

2.24

7.64

9.42

8.64

8.75
$ 229,344
2,252$ 227,092

Table D1.1
In millions of U.S. dollars, except as otherwise noted

Multicurrency terms a
Weighted average rate (%) b
Average Maturity (years)

June 30, 2021
Euro
Japanese Yen
U.S. dollars
OthersLoans Outstanding
Fixed
Variable Fixed Variable Fixed Variable Fixed Variable
Fixed
Variable$20 $8 $ 19 $
5 $
35 $
402 $
- $
- $
74 $
415 $
2.78
6.38 2.78
6.38
7.13
6.11
4.83
6.12
2.62
- 2.621.30
2.00-

Variable-spread terms$
Weighted average rate (%) b
Average Maturity (years)

6 $ 20,506 $
0.51
0.16
1.12
8.20

- $
-

317 $
0.58
7.96

- $ 130,449 $
0.95
8.73

-

$ 2,651 $
8.42
7.71

Total
489
5.92
0.30

6 $ 153,923 $ 153,929
0.51
0.97
0.97
1.12
8.64
8.64

Fixed-spread terms$ 12,917 $ 8,440 $2 $ 1,105 $ 19,670 $ 23,113 $ 482
Weighted average rate (%) b2.10
0.34 2.30
0.44
3.40
1.26 7.84
Average maturity (years)
11.77
7.58 0.96
6.81
8.59
10.69 9.06

$ 417 $ 33,071 $ 33,075 $ 66,146
3.56
2.96
1.03
1.99
8.44
9.84
9.74
9.79

Loans Outstanding$ 12,943 $ 28,954 $ 21 $ 1,427 $ 19,705 $ 153,964 $ 482
2.10
0.22 2.72
0.49
3.40
1.01 7.84
Weighted average rate (%) b
Average Maturity (years)
11.75
8.02 2.42
7.04
8.58
9.00 9.06
Loans Outstanding
Less accumulated provision for loan losses and deferred loan income
Net loans outstanding$ 3,068 $ 33,151 $ 187,413 $ 220,564
7.76
2.96
0.99
1.29
7.81
9.82
8.82
8.97
$ 220,564
1,765$ 218,799

a. Variable rates for multicurrency loans are based on the weighted average cost of allocated debt.
b. Excludes effects of any waivers of loan interest.

The maturity structure of IBRD’s loans is as follows:
Table D2: Loans maturity structure
In millions of U.S. dollars

Terms/Rate TypeMulticurrency terms
Fixed
Variable
Variable-spread terms
Fixed
Variable
Fixed-spread terms
Fixed
Variable
All Loans
Fixed
Variable
Total loans outstanding

July 1, 2022
through June30, 2023
$

$

26
413

July 1, 2023
through June30, 2027$30-

June 30,2022
July 1, 2027
through June30, 2037$

Thereafter
-

$

-

Total
$

56
413

3
8,509

41,986

89,61822,743

3
162,856

1,445
2,458

7,265
8,116

18,995
16,201

5,333
6,203

33,03832,9781,474
11,38012,854

7,295
50,102
57,397

18,995
105,819
124,814

5,333
28,94634,27933,097
196,247
229,344

$

$

$

$

Table D2.1
In millions of U.S. dollars

Terms/Rate TypeMulticurrency terms
Fixed
Variable
Variable-spread terms
Fixed
Variable
Fixed-spread terms
Fixed
Variable
All Loans
Fixed
Variable
Total loans outstanding

July 1, 2021
through June30, 2022
$

$

29
415

July 1, 2022
through June30, 2026$

45-

June 30, 2021
July 1, 2026
through June30, 2036$

Thereafter
-

$

-

Total
$

74
415

3
9,841

3
37,62883,68722,767

6
153,923

1,562
1,519

7,153
8,591

16,773
15,715

7,583
7,250

33,07133,075

1,594
11,775
13,3697,201
46,21953,42016,773
99,402
116,175

7,583
30,01737,60033,151
187,413220,564

$

$

$

$

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

103

Credit Quality of Sovereign Exposures
Based on an evaluation of IBRD’s exposures, management has determined that IBRD has one portfolio segment –Sovereign Exposures. IBRD’s loans constitute the majority of the Sovereign Exposures portfolio segment.
IBRD’s country risk ratings are an assessment of its borrowers’ ability and willingness to repay IBRD on time and in
full. These ratings are internal credit quality indicators. Individual country risk ratings are derived on the basis of bothquantitative and qualitative analysis. The components considered in the analysis can be grouped broadly into eightcategories: political risk, external debt and liquidity, fiscal policy and public debt burden, balance of payments risks,
economic structure and growth prospects, monetary and exchange rate policy, financial sector risks, and corporate
sector debt and vulnerabilities. The analysis also takes into account Environmental, Social, and Governance (ESG)
factors. For the purpose of analyzing the risk characteristics of IBRD’s exposures, these exposures are grouped into
three classes in accordance with assigned borrower risk ratings, which relate to the likelihood of loss: Low, Mediumand High-risk classes, as well as exposures in nonaccrual status.
IBRD’s borrowers’ country risk ratings are key determinants in the provision for losses. Country risk ratings aregrouped in pools of borrowers with similar credit ratings for the purpose of the calculation of the expected credit
losses. Country risk ratings are determined in review meetings that take place several times a year. All countries arereviewed at least once a year, or more frequently, if circumstances warrant, to determine the appropriate ratings.
An assessment was also performed to determine whether a qualitative adjustment of the loan loss provision was needed
as of June 30, 2022, including consideration of the COVID-19 pandemic and other global events. Management
concluded that a qualitative adjustment beyond the regular application of IBRD’s loan loss provision framework was
not warranted.
The following tables provides an aging analysis of the loan portfolio:
Table D3: Loan portfolio aging structure
In millions of U.S. dollars
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

Up to 45

46-60

61-90

$

$ 1
1
$ 1

$

$

-

June 30, 2022
91-180 Over 180
Total Past Due

38
38
$ 38

$ $ -

$

$

428
428

$

39
39
428
467

$

Current$

23,42896,533
108,916
228,877$ 228,877

Total$

23,42896,533
108,955
228,916428$ 229,344

Table D3.1
In millions of U.S. dollars
Days past due
Risk Class
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual status
Total

104

Up to 45

46-60

61-90

91-180June 30, 2021
Over 180
Total Past Due

$

$ $ -

$ $ -

$

$

$

-

$

-

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

432
$ 432

$

$

432
432

Current

Total

24,22993,530102,373
220,132$ 220,132$ 24,229
93,530102,373
220,132432$ 220,564$

IBRD considers the signature date of a loan agreement as the best indicator of the decision point in the origination
process, rather than the disbursement date. The table below discloses the outstanding balances of IBRD’s loan
portfolio as of June 30, 2022 and June 30, 2021, classified by the year the loan agreement was signed.
Table D4: Loan portfolio vintage disclosure
In millions of U.S. dollars
June 30,2022
Fiscal Year of Origination

2022
2021
2020
2019
2018
Risk
Low
$
250 $ 100 $ 196 $ 1,060 $ 346 $Medium
5,595
8,298
6,678
3,577
4,487
High
6,416
7,878
6,588
7,075
6,663
Loans in accrual status
12,261 16,276 13,462 11,712 11,496
Loans in nonaccrual
statusTotal$ 12,261 $16,276 $13,462 $11,712 $11,496 $CAT DDOs
CAT DDOs
Disbursed and Converted toPrior Years Revolving
Term Loans
21,47665,78873,410160,674

- $
203
462
665

- $
1,907
463
2,370

23,42896,533
108,955
228,916$665 $

2,370 $

428
229,344

Prior
Years

CAT
DDOs
Disbursed
andRevolving

428
161,102$

Loans
outstanding asof June 30,
2022

Table D4.1
In millions of U.S. dollars
June 30,2021
Fiscal Year of Origination

Risk
Low
MediumHigh
Loans in accrual status
Loans in nonaccrual
status
Total

2021

2020

$

$

5,477
4,034
9,511

$ 9,511

2019

2018

2017

109 $
702 $
237
6,040
3,171
4,074
5,701
6,682
6,310
11,85010,555
10,621$ 1,831 $ 21,350 $
4,101
68,674
8,438
70,221
14,370 160,245

726
504
1,230

$ 11,850 $ 10,555 $ 10,621

432$ 14,370 $ 160,677 $

1,230

CAT
DDOs
Loans
Converted outstanding
to Term
as of JuneLoans
30, 2021
$

$

1,267
483
1,750

$ 24,229
93,530102,373
220,1321,750

432$ 220,564

The amount of Catastrophe Deferred Drawdown Option (CAT DDOs) converted to term loans during the fiscal year
ended June 30, 2022 is $671 million ($282 million—June 30, 2021).
Accumulated Provision for Losses on Loans and Other Exposures
Management determines the appropriate level of accumulated provision for losses, which reflects the expected losses
inherent in IBRD’s exposures.
The balance of the accumulated provision as of July 1, 2020, decreased by the $214 million transition adjustment
recorded upon the adoption of ASU No. 2016-13, Financial Instruments—Credit Losses (ASC 326). The transition
adjustment corresponds to the difference between the accumulated provision calculated under the “incurred loss”
model and the current expected credit loss (CECL) model.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

105

Changes to the Accumulated provision for losses on loans and other exposures are summarized below:
Table D5: Accumulated provision
In millions of U.S. dollars
Loans outstanding
Accumulated provision, beginning of the fiscal
year
Provision - charge (release)
Translation adjustment
Accumulated provision, end of the fiscal year
Composed of accumulated provision for losseson:
Loans in accrual status
Loans in nonaccrual status
Total
Loans, end of the fiscal year:
Loans in accrual status
Loans in nonaccrual status
Total loans outstanding

$

1,270
509
(37)
1,742

$

$

June 30,2022
Loan commitments
$

$

326
44
(11)
359

Other a
$

$

Total

51
17
(4)
64

$

$

1,647
570
(52)
2,165

1,528
214
1,742

$

$ 228,916
428$ 229,344

Table D5.1:
In millions of U.S. dollars
Loans outstanding
Accumulated provision, beginning of the fiscal
year
CECL transition adjustment
Adjusted accumulated provision, beginning of
the fiscal year
Provision - charge (release)
Translation adjustment
Accumulated provision, end of the fiscal year
Composed of accumulated provision for losseson:
Loans in accrual status
Loans in nonaccrual status
Total
Loans, end of the fiscal year:
Loans in accrual status
Loans in nonaccrual status
Total loans outstanding

$

$

$
$

1,599
(465)
1,134
123
13
1,270

June 30, 2021
Loan commitments
$

$

298
298
25
3
326

Other a
$

$

99
(47)
52
(2)
1
51

Total
$

$

1,698
(214)
1,484
146
17
1,647

1,054
216
1,270

$ 220,132432$ 220,564

a. Primarily relates to guarantees and does not include recoverable asset relating to Guarantee received under the Exposure
Exchange Agreements (for more details see the Guarantees section).

Balance Sheet
Accumulated Provision for Losses on:
Loans outstanding
Loan commitments and other exposures(excluding exposures to member countries’
derivatives)

106

Reported as follows
Statement of Income

Accumulated provision for loan
lossesProvision for losses on loans and otherexposures

Other liabilities

Provision for losses on loans and otherexposures

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Overdue Amounts
IBRD considers loans to be past due when a borrower fails to make payment on any principal, interest or other charges
due to IBRD on the dates provided in the contractual loan agreement.
At June 30, 2022, there were no principal or interest amounts on loans in accrual status, which were overdue by morethan three months.
Zimbabwe is the only borrowing member with loans or guarantees in nonaccrual status and has been in nonaccrual
status since October 2000.
The following tables provide a summary of selected financial information related to loans in nonaccrual status as ofand for the stated fiscal years:
Table D6: Loans in nonaccrual status
In millions of U.S. dollars
June 30, 2022
$
428
214
430
1,061
428
633

Recorded investment in nonaccrual loans a
Accumulated provision for losses on nonaccrual loans
Average recorded investment in nonaccrual loans for the fiscal year
Overdue amounts of nonaccrual loans:
Principal
Interest and charges

June 30, 2021
$
432
216
433
1,042
432
610

a. A loan loss provision has been recorded against each of the loans in nonaccrual status.

Table D6.1
In millions of U.S. dollars
2022Interest revenue not recognized as a result of loans being in nonaccrual
status

$

27

2021
$

27

2020
$

28

During the fiscal years ended June 30, 2022 and June 30, 2021, no loans were placed into nonaccrual status or restored
to accrual status.
In addition, during the fiscal year ended June 30, 2022, less than $1 million interest revenue was recognized on loans
in nonaccrual status (less than $1 million—June 30, 2021 and less than $1 million—June 30, 2020).
Guarantees
Guarantees of $6,379 million were outstanding at June 30, 2022 ($6,705 million—June 30, 2021). This amountrepresents the maximum potential amount of undiscounted future payments that IBRD could be required to makeunder these guarantees, and is not included in the Balance Sheet. These guarantees have original maturities ranging
between 10 and 21 years, and expire in decreasing amounts through 2042.
At June 30, 2022, liabilities related to IBRD's obligations under guarantees included the obligation to stand ready of$298 million ($347 million—June 30, 2021), and the accumulated provision for guarantee losses of $59 million ($50
million—June 30, 2021).
During the fiscal years ended June 30, 2022 and June 30, 2021, no guarantees provided by IBRD were called.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

107

IBRD participates in Exposure Exchange Agreements (EEA) which are recognized as financial guarantees in thefinancial statements. Information on the location and amounts associated with the EEAs executed with Multilateral
Investment Guarantee Agency (MIGA), African Development Bank (AfDB) and Inter-American Development Bank(IADB) included on the Balance Sheet and in the Statement of Income is presented in the following table:
Table D7: Amounts associated with EEA
In millions of U.S. dollars
June 30, 2022
(Accumulated(Stand readyprovision)
Notional
obligation)
Recoverable
amountAsset
asset
Guarantees provided a,c $ 3,630 $ (170)$(27)
Guarantees received b(3,630)
170
25
$
$
$
(2)

June 30, 2021

Notional
amount$ 3,640(3,640)$-(Stand readyobligation)
Asset
$
(190)
190
$
-

(Accumulated
provision)
Recoverable
asset
$
(20)
17
$
(3)

Location on
Balance Sheet
Other liabilities
Other assets

a. For the fiscal year ended June 30, 2022, Provisions for losses on loans and other exposures line on the Statement of Income
includes $7 million charge relating to Guarantees provided (less than $1 million release of provision —June 30,2021 and $3
million of provision —June 30,2020).
b. For the fiscal year ended June 30, 2022, Non-interest revenue—Other, net, line in the Statement of Income includes $8 million ofgain on recoverable asset relating to Guarantees received (less than $1 million of reduction in recoverable asset —June 30,2021
and $5 million of reduction in recoverable asset —June 30,2020).
c. Notional amount, obligation to stand ready and provision for the guarantees provided are included in guarantees outstanding of$6,379 million, obligations to stand ready of $298 million and accumulated provision for guarantee losses of $59 million,
respectively ($6,705 million, $347 million and $50 million, respectively—June 30,2021).

Waivers of Loan Charges
IBRD provides waivers on eligible loans, which include a portion of interest on loans, a portion of the commitment
charge on undisbursed balances and a portion of the front-end fee charged on all eligible loans. Waivers are approved
annually by the Executive Directors of IBRD. As part of the COVID-19 Strategic Preparedness and Response Program(SPRP), the Executive Directors of IBRD approved the waiver of commitment/standby fees for health-related COVID19 operations payable during the first year of each financing and a reduced front-end fee of 25 bps for CAT DDOs
approved under the Fast-Track COVID-19 Facility. Such waivers/reductions are available for financing approved onor prior to March 31, 2021. The Executive Directors also approved the waiver of commitment fees for COVID-19
vaccine related projects under the Additional Financing to the COVID-19 SPRP for the first 18 months, starting fromthe date of approval of financing for each project. Such waivers being available for financing approved on or prior to
October 1, 2022.
The foregone income resulting from waivers of loan charges is summarized in the following table:
Table D8: Waivers of loan charges
In millions of U.S. dollars
Interest waivers
Commitment charge waivers
Front-end fee waivers
Total

$

$

2022
15
2
3
20

$

$

2021
23
3
5
31

$

$

2020
31
6
37

Concentration Risk
Loan revenue comprises interest, commitment fees, loan origination fees and prepayment premiums, net of waivers.
For the fiscal year ended June 30, 2022, there was no country that contributed more than 10% of the total loan revenue.

108

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Information about IBRD’s loan revenue and associated loans outstanding by geographic region is presented in thefollowing table:
Table D9: Loan revenue and associated outstanding loan balances
In millions of U.S. dollars
RegionLatin America and the Caribbean
Europe and Central Asia
East Asia and PacificMiddle East and North Africa
South Asia
Eastern and Southern Africa
Western and Central Africa
Total

As of and for the fiscal years ended June 30,
2022
2021
Loan Revenue a
Loans Outstanding
Loan Revenue a
Loans Outstanding
$
1,287
$
72,417$
1,191$
68,525463
46,033472
48,012638
48,826620
46,574443
31,675402
30,868257
22,008228
20,309
244
6,667
223
4,665
33
1,718
32
1,611
$
3,365
$
229,344$
3,168$
220,564

a. Does not include interest expenses, net of $871 million from loan related derivatives ($840 million—June 30, 2021). Includes
commitment charges of $126 million ($115 million—June 30, 2021).

NOTE E—BORROWINGSIBRD issues unsubordinated and unsecured fixed and variable rate debt in a variety of currencies. Variable rates areprimarily based on exchange rates or market interest rates.
Borrowings issued by IBRD are reported at fair value. As of June 30, 2022, 98% of the instruments in the portfolio
were classified as Level 2, within the fair value hierarchy. In addition, most of these instruments were denominatedin U.S. dollars and euro (64% and 12%, respectively).
IBRD uses derivative contracts, reported at fair value, to manage the currency risk and the interest rate risk between
its loans and borrowings. For details regarding the derivatives used, see Note F—Derivative Instruments. After theeffect of these derivatives, the entire borrowing portfolio carried variable interest rates, with a weighted average costof 1.04% as of June 30, 2022 (0.12% as of June 30, 2021).
The following table summarizes IBRD’s borrowing portfolio after derivatives:
Table E1: Borrowings and borrowing-related derivatives
In millions of U.S. dollars
Borrowings a
Currency swaps, net
Interest rate swaps, net$$

June 30, 2022
235,173
8,162
13,574
256,909$$

June 30, 2021
260,076(2,913)(3,507)
253,656

a. There were no unsettled borrowings as of June 30, 2022 (Nil - June 30, 2021).

For the fiscal year ended June 30, 2022, Borrowing expenses, net in the Statement of Income of $750 million ($662
million—June 30, 2021 and $3,754 million—June 30, 2020) include $2,317 million of interest revenue, net related toderivatives associated with the Borrowing portfolio ($3,323 million—June 30, 2021 and $1,183 million—June 30,2020).
The following table provides a summary of the interest rate characteristics of IBRD’s borrowings:
Table E2: Interest rate composition of Borrowings
In millions of U.S. dollars, except as otherwise noted
June 30, 2022
Fixed$
222,748
Variable
31,120Borrowings b$
253,868
Fair Value Adjustment(18,695)
Borrowings at fair value$
235,173

WAC a (%)
1.53
3.71
1.80

June 30, 2021
$ 224,850
31,784$ 256,634
3,442$ 260,076

WAC a (%)
1.61
0.59
1.49

a. WAC refers to weighted average borrowings cost as of the reporting date.
b. At amortized cost.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

109

The currency composition of IBRD’s borrowing portfolio before derivatives was as follows:
Table E3: Currency composition of Borrowings (before derivatives)
June 30, 2022
63.6
11.6
24.8
100.0

U.S. Dollar
Euro
OthersJune 30, 2021
60.8
13.3
25.9
100.0

%

%

%

%

The maturity structure of IBRD’s borrowings outstanding was as follows:
Table E4: Maturity structure of Borrowings
In millions of U.S. dollars
Less than 1 year
Between
1-2 years
2-3 years
3-4 years
4-5 years
Thereafter$June 30, 2022
42,289$28,48332,27427,47919,16385,485
235,173$

June 30, 2021
45,240$29,652
28,31934,36728,21094,288260,076

IBRD’s borrowings have original maturities ranging from 29 days to 50 years, with the final maturity in 2069.

NOTE F—DERIVATIVE INSTRUMENTS
IBRD uses derivative instruments in its investment, loan and borrowing portfolios, and for asset/liability management
purposes. It also offers derivative intermediation services to clients and, concurrently, enters into offsetting
transactions with market counterparties.
The following table summarizes IBRD’s use of derivatives in its various financial portfolios:
Portfolio

Derivative instruments used

Purpose / Risk being managed

Risk management purposes:
Investments

Currency swaps, currency forward
contracts, interest rate swaps, options,swaptions and futures contracts, TBA
securities

Loans

Currency swaps and interest rate swaps

Borrowings

Currency swaps and interest rate swaps

Other asset/liability
management derivatives
Other purposes:
Client operations

Currency swaps and interest rate swaps
Currency swaps, currency forward
contracts, and interest rate swaps

Manage currency and interest rate risk in theportfolio
Manage currency risk as well as interest rate risk
between loans and borrowings
Manage currency risk as well as interest rate risk
between loans and borrowings
Manage currency risk and the duration of IBRD’s
equityAssist clients in managing risks

Under client operations, derivative intermediation services are provided to the following:
Borrowing Countries: Currency and interest rate swap transactions are executed between IBRD and its borrowers
under master derivatives agreements.
Non-Affiliated Organizations: IBRD has a master derivative agreement with the International Finance Facility for
Immunisation (IFFIm), under which several transactions have been executed.
Affiliated Organizations: Derivative contracts are executed between IBRD and IDA, under an agreement allowing
IBRD to intermediate derivative contracts on behalf of IDA.
The derivatives in the related tables of Note F are presented on a net basis by instrument. A reconciliation to the
Balance Sheet presentation is shown in table F1.

110

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Offsetting assets and liabilities
IBRD enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting agreements with
substantially all of its derivative counterparties. These legally enforceable master netting agreements give IBRD theright to liquidate securities held as collateral and to offset receivables and payables with the same counterparty, in theevent of default by the counterparty.
The following tables summarize the gross and net derivative positions by instrument type. Instruments that are in a
net asset position are included in the Derivative Assets columns and instruments that are in a net liability position are
included in the Derivative Liabilities columns. The gross columns represent the fair value of the instrument leg thatis in an asset or liability position that are then netted with the other leg of the instrument in the gross offset columns.
The effects of the ISDA master netting agreements are applied on a aggregate basis to the total derivative asset andliability positions and are presented net of any cash collateral received on the Balance Sheet. The net derivative asset
positions in the tables below have been further reduced by any securities received as collateral to disclose IBRD’s net
exposure on its derivative asset positions.
Table F1: Derivative assets and liabilities before and after netting adjustments
In millions of U.S. dollars
June 30, 2022
Location on the Balance SheetInterest rate swaps
Currency swaps a
Other b
Total
Less:
Amounts subject tolegally enforceable
master netting
agreements
Cash collateral received
Net derivative positionon the Balance Sheet
Less:
Securities collateral
received
Net derivative exposure
after collateral

Gross
Amounts
Recognized$
22,62446,314
3$
68,941

Derivative Assets
Gross
Amounts
Net Amounts
OffsetPresented$(16,087) $6,537(41,361)
4,953
(1)
2
$
(57,449)$
11,492Gross
Amounts
Recognized$
51,02879,504$ 130,532

Derivative Liabilities
Gross
Amounts
Net Amounts
OffsetPresented$(31,334) $19,694(68,064)
11,440$(99,398)$
31,134

10,524c
164

11,093d804

20,041366$

438

a. Includes currency forward contracts and structured swaps.
b. These relate to swaptions, exchange traded options and futures contracts.
c. Includes $2 million CVA.
d. Includes $571 million DVA.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

111

Table F1.1
In millions of U.S. dollars
June 30, 2021
Location on the Balance SheetInterest rate swaps
Currency swaps a
Other b
Total
Less:
Amounts subject tolegally enforceable
master netting
agreements
Cash collateral received c
Net derivative positionon the Balance Sheet
Less:
Securities collateral
received c
Net derivative exposure
after collateral

Gross
Amounts
Recognized$
23,893
98,836$ 122,729

Derivative Assets
Gross
Amounts
Net Amounts
OffsetPresented$(13,832) $10,061(90,147)
8,689$(103,979)$
18,750Gross
Amounts
Recognized$
26,57744,1732$
70,752Derivative Liabilities
Gross
Amounts
Net Amounts
OffsetPresented$(18,206) $8,371(39,196)
4,977
(1)
1
$
(57,403)$
13,34912,124d
3,271

12,127e

3,355

1,222

1,012
$

2,343

a. Includes currency forward contracts and structured swaps.
b. These relate to swaptions, exchange traded options and futures contracts.
c. Does not include excess collateral received.
d. Includes $18 million CVA.
e. Includes $21 million DVA.

The following table provides information about the credit risk exposures of IBRD’s derivative instruments byportfolio, before the effects of master netting arrangements and collateral:
Table F2: Credit risk exposure of the derivative instrumentsa
In millions of U.S. dollars
Portfolio
Investments
Loans
Client operations
Borrowings
Other asset/liability management derivatives
Total Exposure$$

Interest rate
swaps
19
4,155
402
1,728
233
6,537

June 30, 2022
Currency swaps (including currency
forward contracts)
$
941
1,374
877
1,761
$
4,953

Total
$

$

960
5,529
1,279
3,489
233
11,490

Table F2.1:
In millions of U.S. dollars
June 30, 2021
Interest rate
Currency swaps (including currency
Total
swaps
forward contracts)
Investments
$
16
$
485
$
501
Loans
645
782
1,427
Client operations
1,227
648
1,875
Borrowings
6,529
6,774
13,303
Other asset/liability management derivatives
1,644
1,644
Total Exposure$
10,061$
8,689$ 18,750
a. Excludes exchange traded instruments as they are generally subject to daily margin requirements and are deemed to have nomaterial credit risk.
Portfolio

112

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

The volume of derivative contracts is measured using the U.S. dollar equivalent notional balance. The notional balance
represents the face value, or reference value, on which the calculations of payments on the derivative instruments are
determined. At June 30, 2022, the notional amounts of IBRD’s derivative contracts outstanding were as follows:interest rate contracts $433,539 million ($452,450 million at June 30, 2021), currency swaps $117,856 million($136,467 million at June 30, 2021), long positions of other derivatives $185 million ($186 million at June 30, 2021),
and short positions of other derivatives $143 million ($75 million at June 30, 2021).
IBRD is not required to post collateral under its derivative agreements as long as it maintains a triple-A credit rating.
The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a liability
position as of June 30, 2022 was $20,203 million ($1,078 million—June 30, 2021). IBRD has not posted any collateralwith these counterparties due to its triple-A credit rating.
If the credit-risk related contingent features underlying these agreements were triggered to the extent that IBRD would
be required to post collateral as of June 30, 2022, the amount of collateral that would need to be posted would be$16,141 million ($209 million—June 30, 2021). Subsequent triggers of contingent features would require posting ofadditional collateral, up to a maximum of $20,203 million as of June 30, 2022 ($1,078 million—June 30, 2021). In
contrast, IBRD received collateral totaling $591 million as of June 30, 2022 ($4,391 million—June 30, 2021) in
relation to swap transactions (see Note C—Investments).
The following table provides information on the amount of unrealized mark-to-market gains and losses on the nontrading derivatives and their location in the Statement of Income:Table F3: Unrealized mark-to-market gains (losses) on non-trading derivatives
In millions of U.S. dollars$

Unrealized mark-to-market gains (losses)
2022
2021
2020
(13,844)$ (4,228)$ 3,914$(4,336)(18,180)

Reported as:
Interest rate swaps
Currency swaps (including
currency forward contracts andstructured swaps)
Total

Unrealized mark-to-market(losses) gains on nontrading portfolios, net$(1,702)(5,930)

838
4,752

$

All of the instruments in IBRD's investment portfolio are held for trading purposes. Within the investment portfolio,
IBRD holds highly rated fixed income securities, equity securities as well as derivatives. The trading portfolio isprimarily held to ensure the availability of funds to meet future cash flow requirements, and for liquidity management
purposes.
The following table provides information on the amount of unrealized mark-to-market gains and losses on theInvestment-Trading portfolio and their location in the Statement of Income:Table F4: Unrealized mark-to-market gains (losses) on Investment-Trading portfolio
In millions of U.S. dollars
Unrealized mark-to-market gains (losses)
2022
2021
2020

Reported as:
Type of instrument a
Fixed income (including associatedderivatives)
Equity b
Total

Unrealized mark-to-market (losses)
gains on Investments-Trading
portfolios, net

$
$

(74)
(3)
(77)

$
$

60
171
231

$
$

189
4
193

a. Amounts associated with each type of instrument include gains and losses on both derivative instruments and non-derivative
instruments.
b. Related to PEBP holdings.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

113

NOTE G—RETAINED EARNINGS, ALLOCATIONS AND TRANSFERS
The changes in the components of Retained Earnings are summarized below:
Table G1: Retained Earnings composition
In millions of U.S. dollars
Cumulative Unallocated Restricted
SpecialGeneralPensionFair Value Net Income Retained
Other
Reserve Reserve c, e Reserve c Surplus Adjustments(Loss) a
Earnings c reserves d, e
Total$
293 $ 28,606 $787 $ 126 $ (1,888)
$
843
$ 40
$
$ 28,807
831
6
100
(278)
(584)
(45)
(30)
-

As of June 30, 2019
Net income allocation a
Board of Governorsapproved transfers
funded from Surplus
and other transfers b
Net income for the year
As of June 30, 2020
Cumulative effect ofchange in accounting
principle
As of July 1, 2020
Net income allocation a
Board of Governorsapproved transfers
funded from Surplus
and other transfers b
Net income for the year
As of June 30, 2021
Net income allocation a c
Board of Governorsapproved transfers
funded from Surplus
and other transfers b
Net income for the year
As of June 30, 2022
$

-

-

-

(126)

-

81

-

45

-

293

29,437793

100(2,166)

(42)
298

(5)

15

(42)
28,765

-

-

-

-

-

-

-

203

203

293
-

29,437
950

793
(62)

100
100

(2,166)(1,137)

298
33

(5)
59

218
57

28,968
-

-

-

-

(100)

-

80

-

20

-

293
-

30,387
1,077

731
(38)

100
100

(3,303)
1,218

2,039
2,450
(2,177)

54
(12)

295
(168)

2,039
31,007
-

-

-

-

(100)

-

80

-

20

-

3,990
4,343

$ 42

$ 147

3,990
$ 34,997

293 $

31,464 $693 $ 100 $ (2,085)$

a. Amounts retained as Surplus from the allocation of net income are approved by the Board of Governors.
b. A concurrent transfer is made from Surplus to Unallocated Net Income (Loss) for all transfers reported on the Statement of Income
and authorized to be funded from Surplus.
c. May differ from the sum of individual figures due to rounding.
d. Comprised of non-functional currency translation gains/losses and the unutilized portion of the transfer to the GPG Fund.
e. Includes a one-time transfer of $203 million from Other reserves to the General Reserve, representing the cumulative effect of
adopting ASU 2016-13 on July 1, 2020.

IBRD makes net income allocation decisions on the basis of reported net income, adjusted to exclude unrealized markto-market gains and losses on non-trading portfolios, net, restricted income, Board of Governors-approved and othertransfers, non-functional currency translation adjustments, and after considering the allocation to the pension reserve.
On August 5, 2021, IBRD’s Executive Directors approved the following adjustments and allocations relating to the
net income earned in the fiscal year ended June 30, 2021, to arrive at allocable income for that fiscal year:•$1,218 million increase in the Cumulative Fair Value Adjustments, for the Unrealized mark-to-market gain
on non-trading portfolios (this excludes realized amounts).

•

Add back $411 million related to Board of Governors-approved transfers approved in the fiscal year ended
June 30, 2021, to reported Net Income to arrive at allocable income. These transfers relate to income
earned in prior fiscal years.

•$874 million increase in the General Reserve.

•$38 million decrease in the Pension Reserve.

•$35 million increase in Other reserves, for net non-functional currency translation adjustment.

•$12 million decrease in Restricted Retained Earnings

On August 5, 2021, IBRD’s Executive Directors also approved a one-time transfer of $203 million from Other reservesto the General Reserve, which represents the cumulative effect of adopting ASU 2016-13, Financial Instruments –Credit Losses (Topic 326) on July 1, 2020.
114

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

On August 4, 2021, IBRD’s Board of Governors approved a transfer of $20 million from Surplus to the IBRD Fundfor Innovative Global Public Goods Solutions (GPG Fund). The transfer was made on August 12, 2021, resulting in a
reduction in Surplus and an increase in Other reserves. These funds will be expensed, and Other reserves reduced,
when utilized by the GPG Fund. As of June 30, 2022, no funds have been utilized out of the cumulative transfers of$85 million and therefore, no expense has been recognized in the Statement of Income.
On October 14, 2021, IBRD’s Board of Governors approved a transfer to IDA of $274 million and a transfer of $100
million to Surplus out of the net income earned in the fiscal year ended June 30, 2021. The transfer to IDA was madeon October 25, 2021.
On December 6, 2021, IBRD’s Board of Governors approved a transfer of $80 million from Surplus to the Trust fundfor Gaza and the West Bank. The transfer was made on December 13, 2021.
Board of Governors-approved and other transfers that were expensed during the stated fiscal years are included in thefollowing table:
Table G2: Board of Governors-approved and other transfers expensed
In millions of U.S. dollars
Transfers funded from:
Unallocated Net Income:
IDA
Surplus:
Trust fund for Gaza and West Bank
Total

2022

2021

2020

$

274

$

331

$

259

$

80
354

$

80
411

$

81
340

There were no amounts payable for the transfers approved by the Board of Governors at June 30, 2022, nor at June30, 2021.

NOTE H—TRANSACTIONS WITH AFFILIATED ORGANIZATIONSIBRD transacts with affiliated organizations by providing loans, administrative and derivative intermediation services,and through its pension and other postretirement benefit plans.
In addition, IBRD provides transfers to IDA out of its net income, upon approval by the Board of Governors (see Note
G—Retained Earnings, Allocations and Transfers).
IBRD had the following receivables from (payables to) its affiliated organizations:
Table H1: IBRD’s receivables and payables with affiliated organizations
In millions of U.S. dollars
IDA
$ 174
8

June 30, 2022
IFC
MIGA
$ 37
$ 14
-

Total
IDA
$
225 $ 26888June 30, 2021
IFC
MIGA
$ 36
$ 13
-

Total
Administrative Services, net$
317
Derivative assets, net a8
Pension and Other Postretirement
Benefits
(602)
(640)
(25)
(1,267)
(572)
(645)
(25)
(1,242)
Investments
(260)
(260)
(178)
(178)
Total
$ (420)$ (863)$ (11)$ (1,294) $ (296)$ (787)$ (12)$ (1,095)
a. Presented on a net basis by instrument. For details on derivative transactions relating to swap intermediation services provided
by IBRD to IDA see Note F—Derivative Instruments.

The receivables from (payables to) these affiliated organizations are reported on the Balance Sheet as follows:
Receivables / Payables related to:Reported as:
Administrative services a
Other assets/liabilities
Derivative transactions
Derivative assets/liabilities – net
Investments
Other liabilities
Pension and other postretirement benefits
Other liabilities
a. Includes amounts payable to IDA for its share of investments associated with PCRF. This payable is included in Other
Liabilities - Accounts payable and miscellaneous liabilities on the Balance Sheet.

Loans and Other Exposures
IBRD has a Local Currency Loan Facility Agreement with IFC, which is capped at $300 million. As of June 30, 2022
and June 30, 2021, there were no loans outstanding under this facility.
IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

115

During the fiscal year ended June 30, 2014, IBRD entered into an exposure exchange agreement with MIGA underwhich IBRD and MIGA exchange selected exposures, with each divesting exposure in countries where their lending
capacities are limited, in return for exposure in countries where they have excess lending capacity. Under theagreement, IBRD and MIGA have each exchanged $120 million of notional exposure as follows: MIGA assumes
IBRD's loan principal and interest exposure in exchange for IBRD's assumption of principal and interest exposure of
MIGA under its Non-Honoring of Sovereign Financial Obligation agreement. As of June 30, 2022, assets related to
IBRD’s right to be indemnified under this agreement amounted to $1 million ($1 million—June 30, 2021), whileliabilities related to IBRD’s obligation under this agreement amounted to $1 million ($1 million—June 30, 2021).
These include an accumulated provision for guarantee losses of less than $1 million as of June 30, 2022 (less than $1
million—June 30, 2021).
Administrative Services
Expenses jointly incurred by IBRD and IDA are allocated based on an agreed cost-sharing methodology, and amounts
are settled quarterly. For the fiscal year ended June 30, 2022, IBRD’s administrative expenses are net of the share of
expenses allocated to IDA of $1,644 million ($1,873 million—fiscal year ended June 30, 2021, and $1,824 million—
fiscal year ended June 30, 2020).
Revenue
Revenue jointly earned by IBRD and IDA is allocated based on an agreed revenue-sharing methodology, and amounts
are settled quarterly. For the fiscal year ended June 30, 2022, IBRD’s other revenue is net of revenue allocated to IDA
of $252 million ($261 million—fiscal year ended June 30, 2021, and $316 million—fiscal year ended June 30, 2020),
and is included in Revenue from externally funded activities in the Statement of Income.
This revenue also includes revenue from contracts with clients, who are not affiliated with IBRD as follows:
Table H2: Revenue from contracts with clients
In millions of U.S. dollars
Trust fund fees
Reimbursable advisory services
Asset management services
Of which:
IBRD's share
IDA's share

2022
93
88
30
$ 211
$

$

113
98

2021
82
98
28
$ 208

2020
83
132
30
$ 245

$

$

$

112
96

$

125
120

Each revenue stream represents compensation for services provided and the related revenue is recognized over time.
IBRD’s rights to consideration are deemed unconditional and are classified as receivables. IBRD also has an obligation
to provide certain services for which it has received consideration in advance. Such considerations are presented ascontract liabilities and are subsequently recognized as revenue, when the related performance obligation is satisfied.
The following table shows IBRD’s receivables and contract liabilities related to revenue from contracts with clients:
Table H3: Receivables and contract liabilities related to revenue from contract with clients
In millions of U.S. dollars
Receivables
Contract liabilities

116$

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

June 30, 2022
103
179

$

June 30, 2021
79
196

The amount of fee revenue associated with services provided to affiliated organizations is included in Revenue fromexternally funded activities in the Statement of Income, as follows:
Table H4: Fee revenue from affiliated organizations
In millions of U.S. dollars
Fees charged to IFC
Fees charged to MIGA

$

2022
97
6

$

2021
89
6

2020
83
5

$

Pension and Other Postretirement Benefits
The payable to IDA represents IDA’s net share of prepaid cost for pension and other postretirement benefit plans and
PEBP assets. These will be realized over the life of the plan participants.
The payables to IFC and MIGA represent their respective share of PEBP assets. The PEBP assets are managed by
IBRD and are a part of the investment portfolio.
For Pension and Other Postretirement Benefits-related disclosures see Note J—Pension and Other Postretirement
Benefits.
Derivative Transactions
These relate to currency forward contracts entered into for IDA with IBRD acting as the intermediary with the market.
Investments
These relate to investments that IBRD has made on behalf of IFC, associated with the PCRF, and are included in
Investments-Trading on IBRD’s Balance Sheet. The corresponding payable to IFC is included in the amount payablefor investment securities purchased on IBRD’s Balance Sheet. As a result, there is no impact on IBRD’s investments
net asset value from these transactions.

NOTE I—MANAGEMENT OF EXTERNAL FUNDS AND OTHER SERVICES
Trust Funds
IBRD, alone or jointly with one or more of its affiliated organizations, administers on behalf of donors, including
members, their agencies and other entities, funds restricted for specific uses in accordance with administrationagreements with donors. Specified uses could include co-financing of IBRD lending projects, debt reduction
operations, technical assistance including feasibility studies and project preparation, global and regional programs,
and research and training programs. These funds are held in trust with IBRD and/or IDA, and are held in a separate
investment portfolio which is not commingled with IBRD and/or IDA funds.
Trust fund execution may be carried out in one of two ways: Recipient-executed or IBRD-executed.
Recipient-executed trust funds involve activities carried out by a recipient third-party executing agency. IBRD enters
into agreements with and disburses funds to those recipients, who then exercise spending authority to meet theobjectives and comply with terms stipulated in the agreements.
IBRD-executed trust funds involve IBRD execution of activities as described in relevant administration agreementswith donors, which define the terms and conditions for use of the funds. Spending authority is exercised by IBRD,
under the terms of the administration agreements. The executing agency services provided by IBRD vary and include
for example, activity preparation, analytical and advisory activities and project-related activities, including
procurement of goods and services.
The following table summarizes the expenses pertaining to IBRD-executed trust funds:
Table I1: Expenses pertaining to IBRD-executed trust funds
In millions of U.S. dollars
IBRD-executed trust fund expenses

$

2022
494

$

2021
470

$

2020
470

These amounts are included in Administrative expenses and the corresponding revenue is included in Revenue fromexternally funded activities in the Statement of Income. Administrative expenses primarily relate to staff costs, travel
and consultant fees.
IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

117

The following table summarizes all undisbursed contributions made by third party donors to IBRD-executed trust
funds recognized on the Balance Sheet:
Table I2: Undisbursed contributions by third party donors to IBRD-executed trust funds
In millions of U.S. dollars
IBRD-executed trust funds

$

2022
566

$

2021
552

These amounts are included in Other assets - Miscellaneous and the corresponding liabilities are included in Otherliabilities – Accounts payable and miscellaneous liabilities on the Balance Sheet.
Revenues
IBRD’s revenues for the administration of trust fund operations were as follows:
Table I3: Trust fund administration revenues
In millions of U.S. dollars
Revenues

$

2022
50

$

2021
44

$

2020
42

These amounts are included in Revenue from externally funded activities in the Statement of Income.
Revenue collected from donor contributions for trust fund administation fees, but not yet earned by IBRD totaling $88
million at June 30, 2022 ($95 million—June 30, 2021) is included in Other assets - Miscellaneous and in Otherliabilities – Accounts payable and miscellaneous liabilities, respectively, on the Balance Sheet.
Investment Management Services
IBRD offers treasury and investment management services to affiliated and non-affiliated organizations.
In addition, IBRD offers asset management and technical advisory services to central banks of member countries,
under the Reserves Advisory and Management Partnership, for capacity building and other development purposes,
and receives a fee for these services.
During the fiscal year ended June 30, 2022, IBRD’s fee revenue from investment management activities totaled $18
million ($19 million –June 30, 2021 and $17 million – June 30, 2020) and is included in Revenue from externally
funded activities in the Statement of Income.

NOTE J—PENSION AND OTHER POSTRETIREMENT BENEFITSIBRD, IFC and MIGA participate in the defined benefit Staff Retirement Plan (SRP), a Retired Staff Benefits Plan
(RSBP) and PEBP (collectively “the Plans”) that cover substantially all of their staff members.
The SRP provides pension benefits and includes a cash balance plan. The RSBP provides certain health and life
insurance benefits to eligible retirees. The PEBP provides certain pension benefits administered outside the SRP.
IBRD uses a June 30th measurement date for its pension and other postretirement benefit plans.
All costs, assets and liabilities associated with these Plans are allocated between IBRD, IFC, and MIGA based upon
their employees’ respective participation in the Plans. Costs allocated to IBRD are then shared between IBRD and
IDA based on an agreed cost-sharing methodology. IDA, IFC and MIGA reimburse IBRD for their proportionate
share of any contributions made to these plans by IBRD. Contributions to the Plans are calculated as a percentage ofsalary.

118

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

The following table summarizes the benefit costs associated with the SRP, RSBP, and PEBP for IBRD and IDA:
Table J1: Pension Plan benefit costs
In millions of U.S. dollars

Service cost
Interest cost
Expected return on plan
assetsAmortization of
unrecognized priorservice costs a
Amortization of
unrecognized net
actuarial losses a
Net periodic pension costof which:
IBRD’s share
IDA’s share

$

2022
664
659

SRP
2021
$
642 $
588

2020
547
687

2022
$
178
119

RSBP
2021
$ 170
107

2020
$ 143
118

2022
$ 114
64

(1,289)(967)(1,024)

(223)

(162)

(169)

-

-

-

3

3

3

17

17

17

3

3

3

37 $

311
577 $

90
303

17 $
20

276 $
301

140
163

$
$

$
$

91
44
47

$

12
144

$

$

69
75

$

109
51
58

$
$

PEBP
2021
2020
$ 111 $ 97
56
71

53
234

55
82
$ 225 $ 253

110
124

$ 107 $ 117
118
136

2022
Net periodic pension cost (all three plans combined)
IBRD’s share
IDA’s share

$

171
191

2021
$

2020

452 $ 308
494
357

a. Included in Amounts reclassified into net income in Note K—Accumulated Other Comprehensive Loss.

IDA’s share of benefit costs is included as a payable to/receivable from IDA in Other liabilities – Accounts payable
and miscellaneous liabilities on the Balance Sheet (see Note H—Transactions with Affiliated Organizations).
The components of net periodic pension cost, other than the service cost component, are included in the Non-interest
expenses – Other line item in the Statement of Income. The service cost component is included in the line item Noninterest expenses – Administrative expenses.
The following table provides the amounts of IBRD’s pension service cost:
Table J2: Pension service cost
In millions of U.S. dollars
2022
Service cost
Of which:
IBRD’s share
IDA’s share

$
$

SRP
664
313
351

$
$

RSBP
178
84
94

$
$

PEBP
114
54
60

$
$

Total
956
451
505

In millions of U.S. dollars
2021
Service cost
Of which:
IBRD’s share
IDA’s share

$
$

SRP
642
307
335

$
$

RSBP
170
81
89

$
$

PEBP
111
53
58

$
$

Total
923
441
482

In millions of U.S. dollars
2020
Service cost
Of which:
IBRD’s share
IDA’s share

$
$

SRP
547
254
293

$
$

RSBP
143
66
77

$
$

PEBP
97
45
52

$
$

Total
787
365
422

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

119

The following table summarizes the Projected Benefit Obligations (PBO), fair value of plan assets, and funded status
associated with the SRP, RSBP, and PEBP for IBRD and IDA. The SRP and RSBP assets are held in separate trusts
and the PEBP assets are included in IBRD's investment portfolio. The assets of the PEBP are mostly invested in fixedincome, equity instruments and alternative investments.
Table J3: PBO, funded status and accumulated benefit obligations
In millions of U.S. dollars
SRP

RSBP
2021

2022
Projected Benefit
Obligations
Beginning of year
Service cost
Interest cost
Participant contributions
Benefits paid
Actuarial (gain) loss
End of year
Fair value of plan assets
Beginning of year
Participant contributions
Actual return on assets
Employer contributions
Benefits paid
End of year
Funded Status a
Accumulated Benefit
Obligations$

24,728
664
659
164
(779)
(3,605)
21,831$

24,408
164
(231)
183
(779)
23,745
1,914$

20,643$23,536
642
588
160
(743)
545
24,728$19,266
160
5,507
218
(743)
24,408(320)$

23,127

PEBP

2022
$

4,235
178
119
30
(102)
(794)
3,666

2021
$

2022

3,997
170
107
28
(91)
24
4,235

$

4,145
30
(58)
46
(102)
4,061
395

$

3,195
28
955
58
(91)
4,145
(90)

$

3,666

$

4,235

2021

$

2,339
114
64
5
(40)
(375)
2,107

$

2,167
111
56
4
(35)
36
2,339

$

(2,107)$(2,339)

$

1,923

$

2,087

a. Funded status is included in Other Assets – Assets under retirement benefits plans on the Balance Sheet and Otherliabilities – Liabilities under retirement benefits plans on the Balance Sheet.

As of June 30, 2022, the SRP and RSBP were overfunded by $1,914 million and $395 million, respectively. The
PEBP, after reflecting IBRD and IDA’s share of assets which are included in the IBRD’s investment portfolio ($1,791
million), was underfunded by $316 million.
During the fiscal years ended June 30, 2022 and June 30, 2021, there were no amendments made to the retirement
benefit plans.
The following tables present the amounts included in Accumulated Other Comprehensive Income/Loss relating toPension and Other Postretirement Benefits:
Table J4: Amounts included in Accumulated Other Comprehensive Income at June 30, 2022
In millions of U.S. dollars
Net actuarial loss (gain)
Prior service cost
Net amount recognized in Accumulated Other Comprehensive Income

SRP$ (804)9$ (795)

RSBP
(776)
25
$ (751)

$

PEBP
$ 193
9
$ 202

Total
$ (1,387)43$ (1,344)

Table J4.1: Amounts included in Accumulated Other Comprehensive Loss at June 30, 2021
In millions of U.S. dollars
Net actuarial loss (gain)
Prior service cost
Net amount recognized in Accumulated Other Comprehensive Loss

SRP
$ 1,28112$ 1,293

RSBP
(263)
42
$
(221)
$

PEBP
$ 622
12
$ 634

Total
$ 1,64066$ 1,706

Assumptions
The actuarial assumptions used are based on financial market interest rates, inflation expectations, past experience,and Management’s best estimate of future benefit changes and economic conditions. Changes in these assumptions
will impact future benefit costs and obligations.
The expected long-term rate of return for the SRP assets is a weighted average of the expected long-term (10 years ormore) returns for the various asset classes, weighted by the portfolio allocation. Asset class returns are developed
120

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

using a forward-looking building block approach and are not strictly based on historical returns. Equity returns are
generally developed as the sum of expected inflation, expected real earnings growth and expected long-term dividend
yield. Bond returns are generally developed as the sum of expected inflation, real bond yield, duration-adjusted change
in yields and risk premium/spread (as appropriate). Other asset class returns are derived from their relationship toequity and bond markets. The expected long-term rate of return for the RSBP is computed using procedures similar
to those used for the SRP. The discount rate used in determining the benefit obligation is selected by reference to theyear-end yield of AA corporate bonds.
Actuarial gains and losses occur when actual results are different from expected results. Amortization of these
unrecognized gains and losses will be included in income if, at the beginning of the fiscal year, they exceed 10 percentof the greater of the projected benefit obligation or the market-related value of plan assets. If required, theunrecognized gains and losses are amortized over the expected average remaining service lives of the employee group.
The following tables present the weighted-average assumptions used in determining the projected benefit obligations
and the net periodic pension costs:
Table J5: Weighted average assumptions used to determine projected benefit obligations
In percent, except years
SRP
2022
2021
4.40
2.70
5.30
4.80

Discount rate
Rate of compensation increase
Health care growth rates-at end of fiscal year
Ultimate health care growth rate
Year in which ultimate rate is reachedInterest crediting rate

5.40

RSBP
2022
2021
4.50
2.80

5.80
4.40
2031
n.a

4.90

PEBP
2022
2021
4.50
2.80
5.30
4.80

5.40
3.90
2031
n.a

5.40

4.90

2022
2.80

PEBP
2021
2.60

2020
3.50

4.80

4.60

4.90

4.90

4.60

4.90

Table J6: Weighted average assumptions used to determine net periodic pension cost
In percent, except years

Discount rate
Expected return on plan assets
Rate of compensation increase
Health care growth rates-at end of fiscal year
Ultimate health care growth rate
Year in which ultimate rate is reachedInterest crediting rate

2022
2.70
5.40
4.80

4.90

SRP
2021
2.60
5.10
4.60

4.60

2020
3.40
5.40
4.90

4.90

2022
2.80
5.40

5.40
3.90
2031
n.a

RSBP
2021
2.70
5.10

5.40
3.70
2031
n.a

2020
3.50
5.50

6.20
3.90
2030
n.a

The medical cost trend rate can significantly affect the reported postretirement benefit income or costs and benefit
obligations for the RSBP. For the fiscal year ended June 30, 2022, the actuarial gains were primarily due to an increasein the discount rates. For the fiscal year ended June 30, 2021, the actuarial losses were primarily the result of a decreasein the real discount rates, whereas the nominal discount rates increased due to an increase in expected inflation.
Investment Strategy
The investment policies establish the framework for investment of the plan assets based on long-term investment
objectives and the trade-offs inherent in seeking adequate investment returns within acceptable risk parameters. A key
component of the investment policy is to establish a Strategic Asset Allocation (SAA) representing the policy portfolio(i.e., policy mix of assets) around which the SRP and RSBP (the Plans) are invested. The SAA is derived using a mixof quantitative analysis that incorporates expected returns and volatilities by asset class as well as correlations acrossthe asset classes, and qualitative considerations such as the liquidity needs of the Plans. The SAA for the Plans isreviewed in detail and reset about every three to five years, with more frequent reviews and changes if and as needed
based on market conditions.
The key long-term objective is to generate asset performance that is reasonable in relation to the growth rate of theunderlying liabilities and the assumed sponsor contribution rates, without taking undue risks. Given the relatively long
investment horizons of the SRP and RSBP, and the relatively modest liquidity needs over the short-term to pay benefits
and meet other cash requirements, the focus of the investment strategy is on generating sustainable long-term
investment returns through a globally diversified set of strategies including fixed income, public and private equity,and real assets. In the first half of the fiscal year 2021, following the onset of the global pandemic, the Pension FinanceCommittee (PFC) re-assessed the assumptions underlying the SAA and reaffirmed the appropriateness of the LongIBRD FINANCIAL STATEMENTS: JUNE 30, 2022

121

Term Real Return Objective within the current risk tolerance parameters. The review of the SAA was completed andapproved in April 2021 with an effective date of June 1, 2021. The new SAAs slightly reduced the Fixed Income andCash policy allocation from 23 percent to 20 percent and increased the policy allocation to Credit Strategy and Market
Neutral Hedge Funds by one and two percent, respectively. More recently, in April 2022 the PFC approved a revision
to the SAA band around the target allocation for private equity from +/-3 percent to +/-5 percent with the effective
date of May 1, 2022. The changes do not materially alter the risk profile of the portfolio but are expected to slightly
increase the efficiency of the allocation.
The following table presents the policy asset allocation and the actual asset allocations by asset category for the SRP
and RSBP:
Table J7: Policy and actual asset allocations
Asset class
Fixed income and CashCredit Strategy
Public equity
Private equity
Market neutral hedge funds
Real assets a
Other b
Total

Policy allocation
2022 (%)
20
6
31
20
10
13
100

SRP
Actual Allocation (%)
2022
2021
17
20
7
7
23
25
27
26
10
9
15
12
1
1
100
100

Policy allocation
2022 (%)
20
6
31
20
10
13
100

RSBP
Actual Allocation (%)
2022
2021
17
21
7
6
22
23
27
28
10
8
16
13
1
1
100
100

a. Includes public and private real estate, infrastructure, and timber.
b. Includes authorized investments that are outside the policy allocations primarily in hedge funds.

Significant Concentrations of Risk in Plan Assets
The assets of the SRP and RSBP are diversified across a variety of asset classes. Investments in these asset classes arefurther diversified across funds, managers, strategies, geographies and sectors, to limit the impact of any individual
investment. In spite of such level of diversification, equity market risk remains the primary source of the overall return
volatility of the Plans. As of June 30, 2022, the largest exposure to a single counterparty was 7% and 6% of the plan
assets in SRP and RSBP, respectively (8% and 6%, respectively—June 30, 2021).
Risk Management Practices
Managing investment risk is an integral part of managing the assets of the Plans. Asset diversification is central to theoverall investment strategy and risk management approach for the Plans. Absolute risk indicators such as the overall
return volatility and drawdown of the Plans are the primary measures used to define the risk tolerance level andestablish the overall level of investment risk. In addition, the level of active risk (defined as the annualized standard
deviation of portfolio returns relative to those of the policy portfolio) is closely monitored and managed on an ongoingbasis.
Market risk is regularly monitored at the absolute level, as well as at the relative levels with respect to the investment
policy, manager benchmarks, and liabilities of the Plans. Stress tests are performed periodically using relevant market
scenarios to assess the impact of extreme market events.
Monitoring of performance (at both manager and asset class levels) against benchmarks, and compliance withinvestment guidelines, are carried out on a regular basis, which provides helpful information for assessing the impact
on the portfolios caused by market risk factors. Risk management for different asset classes is tailored to their specificcharacteristics and is an integral part of the external managers’ due diligence and monitoring processes.
Credit risk is monitored on a regular basis and assessed for possible credit event impacts. The liquidity position of thePlans is analyzed at regular intervals and periodically tested using various stress scenarios to ensure that the Plans
have sufficient liquidity to meet all cash flow requirements. In addition, the long-term cash flow needs of the Plans
are considered during the SAA exercise and are one of the main drivers in determining maximum allocation to theilliquid investment vehicles. The Plans mitigate operational risk by maintaining a system of internal controls alongwith other checks and balances at various levels.

122

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Fair Value Measurements and Disclosures
All plan assets are measured at fair value on a recurring basis. The following table presents the fair value hierarchy ofmajor categories of plan assets:
Table J8: Plan assets fair value hierarchy
In millions of U.S. dollars
June 30, 2022
SRP
Level 2
Level 3

Level 1
Debt securities
Short-term Investments$
20
Securities purchased under resaleagreements
139
Government and agency
securities
2,779
Corporate and convertible bonds
ABS
MBS
Total debt securities
2,938
Equity securities
StocksMutual funds
Real estate investment trusts(REITs)Total equity securities
Other funds at NAV a
Commingled funds
Private equity funds
Private credit
Real estate funds (including
infrastructure and timber)Hedge funds
Total other funds
Derivative assets/liabilities
Other assets/liabilities, net b
Total assets

$

-

$

-

Total
$

20

Level 1RSBP
Level 2
Level 3

$

$

3

-

$

-

Total
$

3

-

-

139

37

-

-

37

451
537
205
299
1,492

-

3,230
537
205
299
4,430

513
553

95
98
38
53
284

-

608
98
38
53
837

1,835
11

-

-

1,835
11

317
2

-

-

317
2

194
2,040

-

-

194
2,040

30
349

-

-

30
349

-

-

-

3,180
6,327
1,782

-

-

-

471
1,084
289

8
$ 4,9865$ 1,497

-

3,280
2,625
17,19413
68$ 23,745

1
903

1
285

-

598
418
2,860
2
13
$ 4,061

$

$

$

$

a. Investments measured at fair value using NAV as a practical expedient have not been included under the fair value hierarchy.
b. Includes receivables and payables carried at amounts that approximate fair value.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

123

Table J8.1
In millions of U.S. dollars
June 30, 2021
SRP
Level 2
Level 3

Level 1
Debt securities
Short-term Investments$
Securities purchased under resaleagreements
Government and agency securities
Corporate and convertible bonds
ABS
MBS
Total debt securities
Equity securities
StocksMutual funds
Real estate investment trusts(REITs)Total equity securities
Other funds at NAV a
Commingled funds
Private equity funds
Private credit
Real estate funds (including
infrastructure and timber)Hedge funds
Total other funds
Derivative assets/liabilities
Other assets/liabilities, net b
Total assets

$

20

$

8

$

- $

Total
28

Level 1$

7

RSBP
Level 2 Level 3
$

3

$

-

Total
$

10

231
3,220
3,471

173
605
164
272
1,222

-

231
3,393
605
164
272
4,693

39
631
677

36
108
31
47
225

-

39
667
108
31
47
902

2,761
2

-

-

2,761
2

426
-

-

-

426
-

222
2,985

-

-

222
2,985

33
459

-

-

33
459

-

-

-

3,571
6,366
1,604

-

-

-

534
1,163
258

2
6,458

2
1,224

2,700
2,247
16,4884238- $ 24,408$ 1,136

225

-

488
324
2,767
17
4,145

$

$

$

$

$

a. Investments measured at fair value using NAV as a practical expedient have not been included under the fair value hierarchy.
b. Includes receivables and payables carried at amounts that approximate fair value.

Valuation Methods and Assumptions
The following are general descriptions of asset categories, as well as the valuation methodologies and inputs used todetermine the fair value of each major category of Plan assets. It is important to note that the investment amounts inthe asset categories shown in the table above may be different from the asset category allocation shown in theInvestment Strategy section of the note. Asset classes in the table above are grouped by the characteristics of theinvestments held. The asset class break-down in the Investment Strategy section is based on Management’s view ofthe economic exposures after considering the impact of derivatives and certain trading strategies.
Debt securities
Debt securities include discount notes, securities purchased under resale agreements, U.S. treasuries and agencies,
debt obligations of foreign governments, sub-sovereigns and debt obligations in corporations of domestic and foreignissuers. Debt securities also includes investments in ABS such as collateralized mortgage obligations and MBS. These
securities are valued by independent pricing vendors at quoted market prices for the same or similar securities, whereavailable. If quoted market prices are not available, fair values are based on discounted cash flow models using marketbased parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves. Some debt
securities are valued using techniques which require significant unobservable inputs. The selection of these inputs
may involve some judgment. Management believes its estimates of fair value are reasonable given its processes for
obtaining securities prices from multiple independent third-party vendors, ensuring that valuation models are reviewed
and validated, and applying its approach consistently from period to period. Unless quoted prices are available, money
market instruments and securities purchased under resale agreements are reported at face value which approximatesfair value.
Equity securities
Equity securities (including REITs) represent investments in companies in various industries and countries.
Investments in public equity listed on securities exchanges are valued at the last reported sale price on the last business
day of the fiscal year.

124

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

Commingled funds
Commingled funds are typically collective investment vehicles, such as trusts that are reported at NAV as provided
by the investment manager or sponsor of the fund based on the valuation of underlying investments.
Private equity funds
Private equity funds include investments primarily in leveraged buyouts, growth capital, distressed investments andventure capital funds across North America, Europe and Asia in a variety of sectors. Many of these funds are in theinvestment phase of their life cycle. Private Equity investments do not have a readily determinable fair market value
and are reported at NAV provided by the fund managers, taking into consideration the latest audited financial
statements of the funds.
Private credit funds
Private credit funds include investments primarily in direct lending and opportunistic credit funds. Direct lending
funds provide private financing to performing medium-size companies primarily owned by private equity sponsors.
Opportunistic credit strategies (including distressed debt and multi-strategy funds) have flexible mandates to invest
across both public and private markets globally. Private credit investments do not have a readily determinable fairmarket value and are reported at NAV provided by the fund managers, taking into consideration the latest audited
financial statements of the funds.
Real estate funds (including infrastructure)
Real estate funds include investments in core real estate, non-core real estate investments (such as debt, value add,
and opportunistic equity investments) and infrastructure. Real estate investments do not have a readily determinable
fair market value and are reported at NAV provided by the fund managers, taking into consideration the latest audited
financial statements of the funds.
Hedge funds
Hedge fund investments include those seeking to maximize absolute returns using a broad range of strategies toenhance returns and provide additional diversification. Hedge Funds include investments in equity, event driven, fixedincome, multi strategy and macro relative value strategies. These investments do not have a readily determinable fairmarket value and are reported at NAV provided by external managers or fund administrators (based on the valuationsof underlying investments) monthly, taking into consideration the latest audited financial statements of the funds.
Investments in hedge funds and commingled funds can typically be redeemed at NAV within the near term while
investments in private equity and most real estate are inherently long term and illiquid in nature with a quarter lag inreporting by the fund managers. Since the reporting of those asset classes is done with a lag, management estimatesare based on the latest available information considering underlying market fundamentals and significant events
through the balance sheet date.
Investment in derivatives
Investment in derivatives such as equity or bond futures, TBA securities, swaps, options and currency forwards areused to achieve a variety of objectives that include hedging interest rates and currency risks, gaining desired market
exposure of a security, an index or currency exposure and rebalancing the portfolio. Over-the-counter derivatives arereported using valuations based on discounted cash flow methods incorporating observable market inputs.
Estimated Future Benefit Payments
The following table shows the benefit payments expected to be paid in each of the next five years and subsequent five
years. The expected benefit payments are based on the same assumptions used to measure the benefit obligation:
Table J9: Expected benefit payments
In millions of U.S. dollars
July 1, 2022 - June 30, 2023
July 1, 2023 - June 30, 2024
July 1, 2024 - June 30, 2025
July 1, 2025 - June 30, 2026
July 1, 2026 - June 30, 2027
July 1, 2027 - June 30, 2032

$

SRP
1,052
1,065
1,093
1,128
1,168
6,480

$

RSBP
92
101
109
117
126
762

$

PEBP
71
72
75
80
85
518

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

125

Expected Contributions
IBRD’s contribution to the SRP and RSBP varies from year to year, as determined by the PFC, which bases its
judgment on the results of annual actuarial valuations of the assets and liabilities of the SRP and RSBP. The best
estimate of the amount of contributions expected to be paid to the SRP and RSBP by IBRD and IDA during the fiscal
year beginning July 1, 2022 is $139 million and $37 million, respectively.

NOTE K—ACCUMULATED OTHER COMPREHENSIVE INCOME
Comprehensive income consists of net income and other gains and losses affecting equity that, under U.S. GAAP, areexcluded from net income. Other comprehensive income (loss) comprises currency translation adjustments on assets
and liabilities denominated in euro; DVA on fair value elected liabilities; the cumulative effects of a change inaccounting principle related to the implementation of U.S. GAAP requirements; and pension-related items. These
items are presented in the Statement of Comprehensive Income.
The following tables present the changes in Accumulated Other Comprehensive Income (Loss):
Table K1: AOCI/AOCL changes
In millions of U.S. dollars

Cumulative Translation Adjustments on
functional currency
DVA on Fair Value option electedliabilities
Unrecognized Net Actuarial (Losses)
Gains on Benefit Plans
Unrecognized Prior Service (Costs)
Credits on Benefit Plans
Total AOCI

Balance,
beginning of
the fiscal year

Changesin AOCI

2022
Amounts
reclassified
into net
income$359$ (1,149)$(218)(1,640)Net Changes
during theperiodBalance, end of
the fiscal year-

$ (1,149)

564

18

582

364

2,974

53a

3,027

1,387

$ 2,389a$23$ 2,483

Balance,
beginning of
the fiscal year

Changesin AOCL

2021
Amounts
reclassified
into net
income

$

$

$

(66)
$ (1,565)

23
94

$

$

(790)

(43)
918

Table K1.1:
In millions of U.S. dollars

Cumulative Translation Adjustments on
functional currency
DVA on Fair Value option electedliabilities
Unrecognized Net Actuarial (Losses)
Gains on Benefit Plans
Unrecognized Prior Service (Costs)
Credits on Benefit Plans
Total AOCL

126

(106)

465

-

Net Changes
during theperiod$465

Balance, end of
the fiscal year
$

359

1,214

(1,377)(55)(1,432)(218)(6,745)

4,727

378a

5,105

(1,640)(89)$ (5,726)$ 3,815

23a
346

23
$ 4,161(66)$ (1,565)

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022$

Table K1.2:
In millions of U.S. dollars

Cumulative Translation Adjustments
on functional currency
DVA on Fair Value option electedliabilities
Unrecognized Net Actuarial (Losses)
Gains on Benefit Plans
Unrecognized Prior Service (Costs)
Credits on Benefit Plans
Total AOCL

Balance,
beginning of
the fiscal year

Changesin AOCL

$

$

(18)

(88)

2020
Amounts
reclassified
into net
income$-Net Changes
during theperiod$(88)

Balance, end of
the fiscal year
$

(106)

705

538

(29)

509

1,214

(3,678)(3,239)172a(3,067)(6,745)(112)$ (3,103)$ (2,789)

23a
166

23
$ (2,623)(89)$ (5,726)$

a. See Note J—Pension and Other Post Retirement Benefits.

NOTE L—FAIR VALUE DISCLOSURES
Valuation Methods and Assumptions
As of June 30, 2022 and June 30, 2021, IBRD had no assets or liabilities measured at fair value on a non-recurring
basis.
Due from Banks
The carrying amount of unrestricted and restricted currencies is considered a reasonable estimate of the fair value ofthese positions.
Loans and Loan commitments
There were no loans carried at fair value as of June 30, 2022 and June 30, 2021. IBRD’s loans and loan commitments
would be classified as Level 3 within the fair value hierarchy.
Summarized below are the techniques applied in determining the fair values of IBRD’s financial instruments.
Investment securities
Investment securities are classified based on management’s intention on the date of purchase, their nature, and IBRD’s
policies governing the level and use of such investments. As of June 30, 2022, all of the financial instruments in
IBRD’s investment portfolio were classified as trading. These securities are carried and reported at fair value, or atface value or NAV, which approximates fair value. Where available, quoted market prices are used to determine thefair value of trading securities. Examples include most government and agency securities, mutual funds, exchangetraded equity securities and ABS securities.
For instruments for which market quotations are not available, fair values are determined using model-based valuation
techniques, whether internally-generated or vendor-supplied, that include the standard discounted cash flow method
using observable market inputs such as yield curves, credit spreads, and conditional prepayment rates. Where
applicable, unobservable inputs such as conditional prepayment rates, probability of default and loss severity are used.
Unless quoted prices are available, time deposits are reported at face value, which approximates fair value, as they areshort term in nature.
Securities purchased under resale agreements, Securities sold under repurchase agreements, and Securities lent under
securities lending agreements
These securities are of a short-term nature and reported at face value, which approximates fair value.
Discount notes and vanilla bonds
Discount notes and vanilla bonds issued by IBRD are valued using the standard discounted cash flow method which
relies on observable market inputs such as yield curves, foreign exchange rates, basis spreads and funding spreads.
Where available, quoted market prices are used to determine the fair value of short-term notes.
Structured bonds
Structured bonds issued by IBRD have coupon or repayment terms linked to the level or the performance of interest
rates, foreign exchange rates, equity indices, catastrophic events or commodities. The fair value of the structured bonds
IBRD FINANCIAL STATEMENTS: JUNE 30, 2022127

is generally derived using the discounted cash flow method based on estimated future pay-offs determined byapplicable models and computation of embedded optionality such as caps, floors and calls. A wide range of industry
standard models such as one factor Hull-White, LIBOR Market Model and Black-Scholes are used depending on thespecific structure. These models incorporate observable market inputs, such as yield curves, foreign exchange rates,
basis spreads, funding spreads, interest rate volatilities, equity index volatilities and equity indices. Where applicable,
the models also incorporate significant unobservable inputs such as correlations and long-dated interest rate
volatilities. Generally, the movements in correlations are considered to be independent of movements in long-dated
interest rate volatilities.
Derivative instruments
Derivative contracts include currency forward contracts, TBA securities, swaptions, exchange traded options andfutures contracts, currency swaps and interest rate swaps. Currency swaps and interest rate swaps are either plain
vanilla or structured. Currency forward contracts and plain vanilla currency and interest rate swaps are valued using
the standard discounted cash flow methods using observable market inputs such as yield curves, foreign exchange
rates, basis spreads and funding spreads. For structured currency and interest rate swaps, which primarily consist of
callable swaps linked to interest rates, foreign exchange rates, and equity indices, valuation models and inputs similar
to the ones applicable to structured bonds valuation are used. Where applicable, the models also incorporate significant
unobservable inputs such as correlations and long-dated interest rate volatilities.
Valuation adjustments on fair value option elected liabilities
The DVA on fair value option elected liabilities is measured by revaluing each liability to determine the changes infair value of that liability arising from changes in IBRD’s funding spread applicable to the relevant reference rate.
The table below presents IBRD’s estimates of fair value of its financial assets and liabilities along with their respective
carrying amounts:
Table L1: Fair value and carrying amount of financial assets and liabilities
In millions of U.S. dollars

AssetsDue from banks
Investments-Trading (including
Securities purchased under resaleagreements)
Net loans outstanding
Derivative assets, net
Miscellaneous assets
Liabilities
Borrowings
Securities sold/lent under repurchaseagreements/securities lending
agreements and payable for cash
collateral received
Derivative liabilities, net

June 30, 2022
Carrying Value
Fair Value

June 30, 2021
Carrying Value
Fair Value

$

$

479

$

479

2,347

$

2,347

81,820227,092804
55

81,820225,046804
55

87,904
218,799
3,355
50

87,904
223,687
3,355
50

235,173

235,173

260,076

260,07637
20,04137
20,041

62
1,222

62
1,222

As of June 30, 2022, IBRD’s signed loan commitments were $57 billion ($59.8 billion—June 30, 2021) and had a fairvalue of $0.6 billion ($2.6 billion—June 30, 2021).

128

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

The following tables present IBRD’s fair value hierarchy for assets and liabilities measured at fair value on a recurring
basis. The fair value of alternative investments and certain equity investments measured using NAV per share as apractical expedient are included in the table below but excluded from the fair value hierarchy.
Table L2: Fair value hierarchy of IBRD’s assets and liabilities
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
June 30, 2022
Level 2
Level 3
Total

Level 1
Assets:Investments-Trading
Government and agency obligations
Time deposits
ABS
Alternative investments a
Equity securities
Total Investments-Trading
Securities purchased under resale agreements
Derivative Assets
Currency swaps b
Interest rate swaps
Other c

$

$
$
$

$
Less:
Amounts subject to legally enforceable master netting
agreements e
Cash collateral received
Derivative Assets, net
Miscellaneous assets
Liabilities:
Borrowings
Securities sold under repurchase agreements andsecurities lent under securities lending agreements d
Derivative Liabilities
Currency swaps b
Interest rate swaps
Other c14,1401,502
295
15,937
37

$

2
2

$

$

$

24,587
37,952
1,603
64,142
-

$

4,870
6,500
11,370

$

$
$

$

-

$

83
37
120

$

$

$

$
$

-

$

55

$

-

$

-

$

231,241

$

3,932

$

$

38,72739,454
1,603
1,704
295
81,783
37
4,953
6,537
2
11,492

10,524164804
55235,173

-

37

-

37

-

10,97819,49230,470

462
202
664

$

11,44019,694
31,134$

11,09320,041$

Less:
Amounts subject to legally enforceable master netting
agreements f
Derivative Liabilities, net$

a. Investments at NAV related to PEBP holdings, not included in the fair value hierarchy.
b. Includes currency forward contracts and structured swaps.
c. These relate to swaptions, exchange traded options and futures contracts and TBA securities.
d. Excludes $164 million relating to payable for cash collateral received.
e. Includes $2 million CVA.
f. Includes $571 million DVA.

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

129

Table L2.1
In millions of U.S. dollars
Fair Value Measurements on a Recurring Basis
June 30, 2021
Level 2
Level 3
Total

Level 1
Assets:Investments – Trading
Government and agency obligations
Time deposits
ABS
Alternative investments a
Equity securities
Total Investments – Trading
Securities purchased under resale agreements
Derivative Assets
Currency swaps b
Interest rate swaps
Other c$$$21,325839
414
22,578
63

$

-

$

$

$
Less:
Amounts subject to legally enforceable master netting
agreements e
Cash collateral received
Derivative Asset, net
Miscellaneous assets
Liabilities:
Borrowings
Securities sold under repurchase agreements andsecurities lent under securities lending agreements d
Derivative Liabilities
Currency swaps b
Interest rate swaps
Other c$$27,30534,621
1,710
63,636
275

$

8,314
9,820
18,134

$

$
$

$

-

$

375
241
616

$

$

$

$
$

-

$

50

$

-

$

-

$

255,482

$

4,594

$

$

48,63035,460
1,710
1,352
414
87,566338
8,689
10,061
18,75012,124
3,271
3,355
50

260,076

-

25

-

25

1
1

4,756
8,309
13,065

221
62
283

$

4,977
8,371
1
13,349$12,127
1,222

$

Less:
Amounts subject to legally enforceable master netting
agreements f
Derivative Liabilities, net$

a. Investments at NAV related to PEBP holdings, not included in the fair value hierarchy.
b. Includes currency forward contracts and structured swaps.
c. These relate to swaptions, exchange traded options and futures contracts and TBA securities.
d. Excludes $3,308 million relating to payable for cash collateral received.
e. Includes $18 million CVA.
f. Includes $21 million DVA

IBRD’s Level 3 borrowings primarily relate to structured bonds. The fair value of these bonds is estimated using
discounted cash flow valuation models that incorporate model parameters, observable market inputs, and unobservable
inputs. The significant unobservable inputs used in the fair value measurement of structured bonds and swaps arecorrelations and long-dated market interest rate volatilities. Generally, the movements in correlations are considered
to be independent of the movements in long-dated interest rate volatilities.
Correlation is the statistical measurement of the relationship between two variables. For contracts where the holder
benefits from the convergence of the underlying index prices (e.g., interest rates and foreign exchange rates), an
increase in correlation generally results in an increase in the fair value of the instrument. The magnitude and directionof the fair value adjustment will depend on whether the holder is short or long the option.
Interest rate volatility is the extent to which the level of interest rates changes over time. For purchased options, anincrease in volatility will generally result in an increase in the fair value. In general, the volatility used to price theoption depends on the maturity of the underlying instrument and the option strike price. In the fiscal years ended June30, 2022, and June 30, 2021, the interest rate volatilities for certain currencies were extrapolated for certain tenors
and, thus, are considered an unobservable input.
In certain instances, particularly for instruments with coupon or repayment terms linked to catastrophic events,
management relies on instrument valuations supplied by external pricing vendors.

130

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

The following table provides a summary of the valuation technique applied in determining fair values of these Level
3 instruments and quantitative information regarding the significant unobservable inputs used. Level 3 instruments
represent 2% of IBRD’s borrowings.
Table L3: Level 3 Borrowings and derivatives valuation technique and quantitative information regarding thesignificant unobservable inputs
In millions of U.S. dollars
Fair
Value atJune 30,
2022

Fair
Value atJune 30,
2021

Valuation
Technique

Borrowings$3,932$4,594

Discounted
Cash Flow

Derivative
assets/(liabilities)$(544)$333

Discounted
Cash Flow

Portfolio

Unobservable
input
Correlations
Interest rate
volatilities
Correlations
Interest rate
volatilities

Range(average),
June 30,2022-18% to99% (12%)61% to77% (68%)-18% to99% (12%)61% to77% (68%)

Range(average),
June 30,2021-14% to92% (13%)52% to54% (53%)-14% to92% (13%)52% to54% (53%)

The table below provides the details of inter-level transfers between Level 2 and Level 3 that are due to changes inobservable inputs.
Table L4: Borrowings and derivatives inter-level transfers
In millions of U.S. dollars
2022

2021

Level 2
Borrowings
Transfer into (out of)Transfer (out of) into$$

Level 3

(195)
(195)

$
$

Level 2

195
195

$
$

Level 3

63
63

$
$

(63)
(63)

Derivative assets, net
Transfer into (out of)Transfer (out of) into

$

24
(28)
(4)

$

(24)
28
4

$

9
9

$

(9)
(9)

Derivative liabilities, net
Transfer (into) out ofTransfer out of (into)

$

$

(11)
(11)
(2)

$

$

(9)
(9)
(5)

$

Total Derivative Transfers, net

9
9
5

11
11
2

$

$

$

The following tables provide a summary of changes in the fair value of IBRD’s Level 3 borrowings and derivatives:
Table L5: Borrowings Level 3 changes
In millions of U.S. dollars
Beginning of the fiscal year
IssuancesSettlements
Total realized/unrealized mark-to-market (gains) losses in:
Net income
Other comprehensive income
Transfers to/(from) Level 3, net
End of the fiscal year

$

$

2022
4,594
355
(371)
(711)
(130)
195
3,932

$

$

2021
5,347
409
(1,695)
512
84
(63)
4,594

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

131

Table L6: Derivatives Level 3 changes
In millions of U.S. dollars

Beginning of the fiscal year
IssuancesSettlements
Total realized/unrealized mark-to-market(gains) losses in:
Net income
Other comprehensive income
Transfers to/(from) Level 3, net
End of the fiscal year2022
Derivatives, Assets/(Liabilities)
Interest
Currency
Rate
Swaps
Swaps
Total
$
154
$
179
$
333
(15)
(15)
(1)
(73)
(74)

$

(435)
(92)
(5)
(379)

(256)
(165)

$

$

2021
Derivatives, Assets/(Liabilities)

(691)
(92)
(5)
(544)

Currency
Swaps$ (153)
2(23)

Interest Rate
Swaps
$
(22)
1
(2)

318
8
2
154

198
4
179

$

$

$

$

Total
(175)
3
(25)

516
12
2
333

Information on the unrealized gains or losses included in the Statement of Income and Statement of Comprehensive
Income relating to IBRD’s Level 3 borrowings and derivatives that are still held at the reporting dates, is presented in
the following table:
Table L7: Unrealized gains or losses relating to IBRD’s Level 3 borrowings and derivatives
In millions of U.S. dollars
2022
Reported as follows:
Borrowings
Net income (loss) a
Other comprehensive income (loss) b
Derivatives
Net income (loss) a
Other comprehensive income (loss) c

2021

2020

$
$

220
130

$
$

(449)
(92)

$
$

(35)
129

$
$

(214)
(97)

$
$

446
25

$
$

91
(41)

a. Amounts are included in Unrealized mark-to-market gains (losses) on non-trading portfolios, net on the Statement of
Income.
b. Amounts are included in Currency translation adjustment on functional currency and Net Change in DVA on fair value
option elected liabilities, on the Statement of Comprehensive Income.
c. Amounts are included in Currency translation adjustment on functional currency, on the Statement of Comprehensive
Income.

Table L8: Borrowings fair value and contractual principal balance
In millions of U.S. dollars
June 30, 2022
June 30, 2021$$

Fair Value
235,173
260,076

Principal Amount Due Upon Maturity$
256,753$
260,277$$

Difference(21,580)(201)

The following table provides information on the changes in fair value due to the change in IBRD’s own credit risk forfinancial liabilities measured under the fair value option, included in the Statement of Comprehensive Income:Table L9: Changes in fair value due to IBRD’s own credit risk
In millions of U.S. dollars
Unrealized mark-to-market gains/(losses) due to DVA on fair value option elected liabilities
DVA on Fair Value Option Elected Liabilities
Amounts reclassified to net income upon derecognition of a liability
Net change in DVA on Fair Value Option Elected Liabilities

132

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

2022
564
18
$
582
$

2021
(1,377)(55)$(1,432)$

The following table provides information on the cumulative changes in fair value due to the change in IBRD’s own
credit risk for financial liabilities measured under the fair value option, as well as where those amounts are included
on the Balance Sheet:
Table L10: Cumulative changes in fair value due to the change in IBRD’s own credit risk
In millions of U.S. dollars
DVA on fair value option elected liabilities- (loss) gain
Reported as:
Accumulated other comprehensive loss

June 30, 2022

June 30, 2021

$

$

364

(218)

Table L11: Unrealized mark-to-market gains or losses on Investments-Trading, and non-trading portfolios, net
In millions of U.S. dollars

$

1,106

2022
Unrealized gains(losses) excluding
realized amounts a$(1,183)

$

6
12
18

5,988
(3,392)
747
8
5
3,356

Realized
gains (losses)
Investments-Trading
Non-trading portfolios, net
Loan related derivatives—Note F
Other asset/liability management derivatives, net
Borrowings, including related derivatives—Notes E and F
Client operations derivatives
Others, net
Total non-trading portfolios, net$

Unrealized
gains (losses)
$

(77)

$

5,994
(3,392)
759b
8
5
3,374

In millions of U.S. dollars

$

(672)

2021
Unrealized gains(losses) excluding
realized amounts a
$
903

$

14
14

2,415
(1,351)
140
14
1,218

Realized
gains (losses)
Investments-Trading
Non-trading portfolios, net
Loan related derivatives—Note F
Other asset/liability management derivatives, net
Borrowings, including related derivatives—Notes E and F
Client operations derivatives
Total non-trading portfolios, net$

Unrealized
gains (losses)
$

231

$

2,415
(1,351)
154b
14
1,232

In millions of U.S. dollars

$

517

2020
Unrealized gains(losses) excluding
realized amounts a
$
(324)

$

(14)
146
63
195

(1,957)
1,204
(362)
(22)
(1,137)

Realized
gains (losses)
Investments-Trading
Non-trading portfolios, net
Loan related derivatives—Note F
Other asset/liability management derivatives, net
Borrowings, including related derivatives—Notes E and F
Client operations derivatives
Total non-trading portfolios, net$

Unrealized
gains (losses)
$

193

$

(1,971)
1,204(216)b41(942)

a. Adjusted to exclude amounts reclassified to realized gains (losses).
b. Includes $20,790 million of unrealized mark-to-market losses related to derivatives associated with borrowings (unrealized
mark-to-market losses of $7,209 million—June 30, 2021, and unrealized mark-to-market gains of $5,478 million—June 30,2020).

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022

133

NOTE M—CONTINGENCIESDue to the ongoing COVID-19 pandemic, IBRD faces additional credit, market and operational risks. The length andseverity of the pandemic and the related developments, as well as the impact on the financial results and position of
IBRD in future periods cannot be reasonably estimated at this point in time and continues to evolve. IBRD continues
to monitor the developments and to manage the risks associated with its various portfolios within existing financial
policies and limits.
From time to time, IBRD may be named as a defendant or co-defendant in legal actions on different grounds in various
jurisdictions. The outcome of any existing legal action, in which IBRD has been named as a defendant or co-defendant,
as of and for the fiscal year ended June 30, 2022, is not expected to have a material adverse effect on IBRD's financial
position, results of operations or cash flows.

134

IBRD FINANCIAL STATEMENTS: JUNE 30, 2022