INTERNATIONAL FINANCE CORPORATIONIFC FY23 BUDGET
Enabling Delivery on the Road to 2030

Approved by IFC's Board of Directors on June 29, 2022
Released in accordance with IFC's Access to Information Policy

CONTENTS
EXECUTIVE SUMMARY ........................................................................................... i
CHAPTER 1: STRATEGIC PRIORITIES AND RESOURCE SHIFTS ............... 1
STRATEGIC PRIORITIES ....................................................................................................... 1
STRATEGIC RESOURCE SHIFTS .......................................................................................... 2

CHAPTER 2: GROSS RESOURCE NEEDS ............................................................ 4
STAFFING AND COMPENSATION ....................................................................................... 4
GLOBAL FOOTPRINT ............................................................................................................. 4
LIBOR TRANSITION ............................................................................................................... 4
MODERNIZATION OF THE ENTERPRISE RESOURCE PLANNING SYSTEM ............... 4
COMPLIANCE ADVISOR OMBUDSMAN (CAO) ................................................................ 5
CORPORATE OVERHEADS AND OTHER EXPENSES ...................................................... 5

CHAPTER 3: EFFICIENCIES ................................................................................... 6
EFFICIENCY SAVINGS........................................................................................................... 6

CHAPTER 4: FY23 BUDGET FRAMEWORK ....................................................... 7
ADMINISTRATIVE BUDGET TRAJECTORY ...................................................................... 7
ADVISORY SERVICES BUDGET TRAJECTORY ................................................................ 7
AGGREGATE ADMINISTRATIVE AND ADVISORY BUDGET TRAJECTORY ............. 7

CHAPTER 5: FY23 BUDGET PROPOSAL DETAILS .......................................... 8
FY23 TOTAL RESOURCES VIEW BY SOURCES OF FUNDS ........................................... 8
ADMINISTRATIVE BUDGET ................................................................................................. 8
COST CATEGORY VIEW OF ADMINISTRATIVE BUDGET ............................................. 8
ADVISORY SERVICES SOURCES OF FUNDS .................................................................... 9
FEE BUDGETS ....................................................................................................................... 10
JEOPARDY BUDGETS .......................................................................................................... 10CARRYOVER MECHANISM ................................................................................................ 10

CHAPTER 6: FY23 CAPITAL BUDGET ............................................................... 11
FACILITIES ............................................................................................................................. 11
INFORMATION TECHNOLOGY .......................................................................................... 12

CHAPTER 7: INCOME DESIGNATIONS............................................................. 13
USE OF IFC’S NET INCOME ................................................................................................ 13

CHAPTER 8: RECOMMENDATIONS .................................................................. 14

FIGURES
Figure 1: FY23 Total Resources ................................................................................................................... 8

TABLES
Table 1: Historical IS Resource Deployment to Deliver Program Volumes by Priority Area ...................... 2
Table 2: FY22-23 Total Resources Trajectory .............................................................................................. 7
Table 3: IFC’s Administrative Expenses and Budget by Cost Category ...................................................... 9
Table 4: Advisory Services Sources of Funds............................................................................................... 9
Table 5: Capital Budget Request ................................................................................................................. 11

ACRONYMS
AIP
AS
BCR
CAO
CCAP
CDB
CLED
CMAW
CO
CODB
COVID-19
CPSD
CSO
DEI
ERP
E&S
FCS
FMTAAS
FNA
HQ
HR
IBRD
IDA
IFC
IS
IT
ITS
LIBOR
LTF
MIC
PPE
QBHR
RFP
SBO
SOFR
SSA
STF
WBG
WFP

-

-

Annual Investment Plan
Advisory Services
Budget Coverage Ratio
Compliance Advisor Ombudsman
Climate Change Action PlanCountry-driven budgeting
Legal Department
Creating Markets Advisory Window
Country Office
Cost of Doing BusinessCorona Virus Disease 2019
Country Private Sector Diagnostics
Department of Special Operations
Diversity, Equity, and Inclusion
Enterprise Resource Planning
Environmental and Social
Fragile and Conflict-Affected Situations
Funding Mechanism for Technical Assistance and Advisory Services
Funding Needs Assessment
Headquarters
Human Resources
International Bank for Reconstruction and Development (also referred to as the Bank and the World Bank)International Development Association
International Finance Corporation
Investment Services
Information Technology
Information and Technology Solutions
London Interbank Offered Rate
Long-Term FinanceMiddle Income Country
Personal Protective Equipment
Quarterly Budget and Human Resources Report
Request for Proposal
Strategy and Business Outlook
Secured Overnight Financing Rate
Shared Service Agreements
Short-Term FinanceWorld Bank Group
Workforce Planning

EXECUTIVE SUMMARY
1. This document presents IFC’s FY23 budget proposal for Board approval. It builds on the “IFC
FY23-25 Strategy and Business Outlook (SBO) Update: On the Road to 2030” discussed by the
Board in April 2022.
2. IFC’s FY23-25 program will be delivered in a context of heightened uncertainty. Geopoliticaltensions and conflict are compounding existing vulnerabilities and interrelated risks. While
program volatility will continue over the near term, reflecting underlying economic conditions, IFC
remains firmly committed to its 2030 targets and Capital Package compact with shareholders. On
the heels of record delivery in FY21, IFC is maintaining the trajectory laid out in the FY22-24 SBO
Update, with total financing projected to grow from US$32.3 billion in FY22 (of which US$24.3
billion is long-term financing) to US$40.4 billion in FY25 (of which US$31.3 billion is long-term
financing).
3. IFC will strengthen its strategic emphasis in five areas where challenges have become more acute,continuous engagement is needed most, and new opportunities have accelerated due to thepandemic and the war in Ukraine. These are: (i) continuing support for crisis relief and recovery
efforts; (ii) sustaining a sharp focus on fragility and forced displacement, including in middleincome countries; (iii) accelerating efforts towards climate response and energy transition; (iv)
supporting digital transformation across countries and industries; and (v) promoting healthcare
resilience and vaccine access in the context of diversifying global supply chains.
4. IFC will require additional resources to support operational delivery in these five strategic focus
areas. The additional resources will be used to further strengthen operational capacity in priority
regions and countries, bring in new talent to advance the climate, health, and digitalization
agendas, proactively manage environmental, social, integrity and other business risks, continue
to lead on transparency, strengthen human resources capabilities, complete implementation of
the London Interbank Offered Rate (LIBOR) transition to the Secured Overnight Financing
Rate (SOFR), and ensure adequate funding as IFC’s business activities – travel in particular –return to pre-pandemic levels. Gross spending needs will be offset by efficiencies, resulting in a
net incremental administrative budget of US$78 million and a proposed nominal Administrative
Budget of US$1,255 million.
5. IFC’s FY23 Capital Budget (IT and Facilities) proposal is US$63 million.
6. As IFC’s Advisory activities continue to shift to focus on Upstream work, it is critical to sustain
appropriate funding for Upstream projects and sector-level engagements, including via
designations from IFC’s income. The transfer of net income (loss) to retained earnings and any
designations of retained earnings will be submitted to the Board as resolutions immediately
following approval of the year-end financial statements.

iCHAPTER 1: STRATEGIC PRIORITIES AND RESOURCESHIFTS
1.1.
As detailed in the FY23-25 "IFC Strategy and Business Outlook Update: On the road to 2030”(SBO Update), the global outlook remains volatile and highly uncertain. The prospect of global
recovery, which was tenuous before the war in Ukraine, is at risk. Geopolitical tensions and conflictare compounding existing vulnerabilities and interrelated risks, including economic, health, and social
setbacks from the pandemic, unsustainable debt levels, surging inflation, constrained fiscal capacity,and climate change, causing serious reversals in development.
1.2.
At the same time, the private sector is ever more critical to investing, innovating, and creatingjobs in client countries where public finances are stretched, and development gaps remain large.
Opportunities brought about by climate transition, digitalization, and changing patterns of production
are growing, and private sector solutions are key to supporting green, resilient, and inclusive
development and reversing development setbacks.

STRATEGIC PRIORITIES
1.3.
To respond to acute challenges across the globe while addressing new opportunities anddevelopment needs, IFC will sharpen its strategic emphasis over the FY23-FY25 period in thefollowing five priority areas, with a commensurate and deliberate shift of its human and financial
resources:•

Continuing Relief and Recovery Efforts through: (i) short and medium-term financing forresilience and food security; (ii) addressing gender and inclusion gaps; and (iii) scaling up
private capital mobilization through Upstream project development.

•

Sustaining a Sharp Focus on Fragility and Forced Displacement by: (i) maintaining strong
Upstream focus on IDA-FCS; (ii) continuing to scale up the use of de-risking instruments,
with an aspiration also to address fragility in MICs; and (iii) deepening collaboration within
the World Bank Group (WBG) on private sector-oriented policy reform, using Country
Private Sector Diagnostics (CPSDs) and IFC Country Strategies. Notably, in FY22, IFC
established a new Regional Vice Presidency that encompasses the Middle East, Central
Asia, Türkiye, Afghanistan, and Pakistan to strengthen strategic focus, management
oversight and staffing for this region, and enhance in-country program delivery.

•

Accelerating Efforts towards Climate Response and Energy Transition by scaling up
climate finance, which is at the heart of IFC's efforts to support a resilient recovery andmeet the 2030 Capital Package aspirations. In line with the WBG's climate targets indicatedin the new Climate Change Action Plan (CCAP), IFC remains committed to achieve an
average of 35 percent per year of climate finance through 2025, to screen all projects forphysical climate risk by FY23 and to advance private sector solutions for climate
adaptation.

•

Supporting Digital Transformation through: (i) strengthening digital infrastructure andplatforms, with a focus on IDA-FCS markets; (ii) increasing investment in digital-enabled
services and digital transformation; (iii) supporting technology entrepreneurship anddisruptive technologies, particularly in climate; (iv) supporting digital skills development;and (v) investing in emerging areas of importance in the digital economy such as artificial
intelligence, machine learning and creative industries in developing countries.

•

Promoting Healthcare Resilience through: (i) increasing developing countries’ access to
key medical products and services (such as personal protective equipment (PPE), vaccines,1other pharmaceuticals, and healthcare services) and (ii) creating healthcare resilience andpandemic preparedness through support for sustainable regional health value chains.
1.4.
Despite the highly uncertain environment, IFC remains firmly committed to its 2030 Capital
Package goals and is maintaining the program trajectory laid out in the previous (FY22-24) SBO
Update, though the program volatility is expected to continue in the medium term.
1.5.
IFC will flexibly use its full toolkit and will continue to be innovative in its way of working,including product development, partnering with others, and internal processes. With a strong capitalbase, well-managed portfolio, and IFC 3.0 tools such as Country Private Sector Diagnostics, County
Strategies, Upstream, and Integrated Country Driven Budgeting, which enables strategic resource
allocation at the country level, IFC is uniquely placed to help clients survive, recover, and pursue
opportunities toward inclusive and sustainable development.

STRATEGIC RESOURCE SHIFTSCOST OF DOING BUSINESS
1.6.
The Cost of Doing Business (CODB) model is a tool that provides a useful directional
indication of the resources needed to deliver increasingly complex Advisory, Upstream, and Investment
programs in line with IFC’s strategic priorities.
1.7.
The Investment Services CODB indicates that additional resources will be required to enable
IFC’s planned growth in strategic focus areas. Table 1 presents the historical deployment and growthin Total Investment Services (IS) Resources in strategic priority areas to deliver SBO commitment
volumes from FY19 through FY21.
Table 1: Historical IS Resource Deployment to Deliver Program Volumes by Priority Area

Priority Areas1
IDA17 OAIDA17 + FCS OA
Industries

Financial Institutions Group
Manufacturing, Agribusiness & Services
Infrastructure
Disruptive Technologies & Funds
Regions
AfricaCentral Asia and Turkey
East Asia and the Pacific
EuropeLatin America & the Caribbean
Middle East, Afghanistan & Pakistan
South Asia
World

Total Commitment Volume(LTF Own Account (OA) + LTF
Core Mobilization)∆
FY21-19
FY19 FY20 FY21

Resource Allocation within Operations

FY19

FY20

FY21

∆
FY21-19

23%
24%

25%
25%

23%
25%

1%

30%
32%

31%
34%

32%
34%

2%
2%

44%
18%
28%
4%

44%
21%
22%
3%

40%
25%
18%
2%

(4%)
7%
(10%)
(2%)

34%
30%
30%
6%

34%
30%
31%
5%

32%
31%
31%
5%

(2%)
1%
1%
(1%)

23%
1%
19%
6%
33%
4%
15%
-

23%
5%
18%
6%
32%
4%
10%
-

27%
9%
16%
9%
24%
5%
10%
-

4%
8%
(3%)
3%
(9%)
1%
(5%)
-

27%
5%
15%
9%
20%
7%
11%
6%

28%
5%
15%
8%
20%
8%
11%
6%

30%
5%
16%
8%
18%
8%
11%
4%

3%
1%
(1%)
(2%)
1%
(2%)

1 The total commitment volume percentages for priority areas include LTF OA only. The resources allocation data represents thetotal resources deployed to investment projects with IDA17 and FCS tags.

2

1.8.
The Advisory Services CODB indicates that the Total Resources required to deliver an
Advisory project vary greatly based on the type of engagement.
1.9.
Data on Upstream spending specifically is still insufficient to form firm conclusions about therelated CODB. As the Upstream pipeline matures, and the dataset increases, IFC will work on
developing a comprehensive methodology for Upstream activities that will draw on Investment
Services CODB as it will assess Upstream costs per expected/actual investment volume generated.

INTEGRATED COUNTRY-DRIVEN BUDGETING
1.10. Building upon the first-year experience of integrated Country-Driven Budgeting (CDB) andFunding Needs Assessment (FNA), in FY22Q3, IFC completed comprehensive, bottom-up stocktaking and planning for FY23-25 to ensure that Advisory and Upstream project budgets align with thecountry strategies. This process was anchored in high-level regional and global budget envelopes for
Advisory Services and Upstream activities set by senior management.
1.11. The integrated country-driven budgeting hardwires the links between country strategies andresource allocation. It enables Regional Directors and Country Managers to devise, fund, andoperationalize priority strategic initiatives that deliver against the goals of IFC’s country strategies andbusiness plans and allow for strategic decision making and trade-offs. This approach also entails closemonitoring of spending against budget and enables responsive and proactive reallocation of resources
throughout the year, as country/regional economic conditions shift, or project progress does not justify
continued support.

UPSTREAM RESOURCES
1.12. The strong corporate emphasis on Upstream operations, including front-loading the hiring of
Upstream staff in FY20 and FY21, has led to a growth of IFC's Upstream pipeline. Pipeline growth isexpected to stabilize in the near future as Upstream attains a steady state of operating and new projects
and initiatives replace successful conversions and dropped projects. IFC Management will monitor
Upstream’s financial sustainability through a variety of metrics, including conversion rates, time toconversion, and average age of the Upstream pipeline.
1.13. Upstream staff costs are funded primarily from the Administrative Budget. For Upstream
program funding, IFC will continue to leverage other internal funding sources including CMAW and
FMTAAS and seek external funding from Development Partners, when needed. As the Upstream
delivery model matures, IFC will move more Upstream resources to the regions and will continue tomerge Advisory and Upstream units to help simplify and streamline the management of the AdvisoryUpstream-Investment continuum.

3

CHAPTER 2: GROSS RESOURCE NEEDSSTAFFING AND COMPENSATION
2.1
Staffing expenses are the primary driver of IFC's cost base. The annual Workforce Planning(WFP) exercise ensures alignment between business needs and the workforce, including the number,level and location of staff, and skills mix.
2.2
In Operations, the focus of the FY23 WFP is to strategically reallocate senior industry
resources from Headquarters (HQ) to strengthen business development and client/partner engagement
at a country level. Additional skill sets will be needed to scale up climate finance and ensure alignment
with the Paris Agreement, support the digitalization agenda, and define and implement a roadmap tostrengthen healthcare systems, including by creating local vaccine manufacturing capacity.
2.3
In operational support functions and corporate services, IFC's resource requirements are geared
towards: (i) ensuring IFC continues its leadership on transparency, environmental and social (E&S)
policies and risk management, and integrity and tax due diligence; (ii) enhancing development results
through thorough economic analysis and impact measurement; and (iii) strengthening human resources(HR) capabilities to support organizational growth, talent development at all levels, andimplementation of the diversity, equity and inclusion (DEI) agenda.

GLOBAL FOOTPRINT
2.4
In FY22, IFC maintained 106 offices in 100 countries. IFC and IBRD co-locate in Country
Offices where feasible and when business needs are supported. Currently, 83 IFC offices are colocated with IBRD, including all offices opened in Africa in the past two years.
2.5Country Office facilities costs are expected to increase in FY23 due to higher operating costs
from new or expanded leases, particularly in Africa and South Asia. These increases will be partially
offset through lease renegotiations and capacity optimization whereby IFC reduces or limits its
footprint expansion in high-cost locations and applies lessons learned from agile workspace pilots in
London and Bangkok.
2.6
IFC will also continue to offset its facilities costs through rental of surplus space that it owns
in HQ and Country Offices to third parties.

LIBOR TRANSITION
2.7
The publication of LIBOR will cease after June 30, 2023 (extended from the original deadlineof December 31, 2021) and IFC is transitioning to SOFR. Several important milestones have been met
since the LIBOR Transition project was launched in FY21 including: (i) development of the SOFR
loan product; (ii) a related necessary upgrade of the Summit system, the trading system used forderivatives and publicly traded securities; (iii) putting in place remediation plans to convert all IFC
LIBOR referencing loans into new SOFR; and (iv) the first in the market Social SOFR Floating Rate
Note issuance.

MODERNIZATION OF THE ENTERPRISE RESOURCE PLANNING SYSTEM
2.8
In FY21, preparatory work was undertaken to examine options for a transition from SAP to a
new WBG Enterprise Resource Planning (ERP) system (Project Aria). The WBG Management has
4determined that a two-phase implementation approach (FY22 through FY30) will allow time to build
the required staff capacity, allow for better monitoring, and enable course corrections, as needed. A
Board technical briefing was held in February 2021.
2.9
As of February 2022, the ERP procurement strategy has been developed and endorsed by the
VP Sponsors and the WBG Procurement Committee. The technical evaluation team has been put inplace, and the evaluation framework and the Request for Proposal (RFP) package are being developed
and are expected to be launched in July 2022, as per the Phase 1 schedule.

COMPLIANCE ADVISOR OMBUDSMAN (CAO)
2.10 As per the new CAO Policy, the CAO is accountable to and reports directly to the Board andthe Board will provide CAO such budgetary resources sufficient to carry out its activities.
2.11

The CAO Director General submitted to the Board for approval, its budget request for FY23.

CORPORATE OVERHEADS AND OTHER EXPENSES
2.12 Increased costs are expected from Shared Service Agreements (SSA) with IBRD and higher
variable costs as normal business activities resume.

5

CHAPTER 3: EFFICIENCIESEFFICIENCY SAVINGS
3.1
The FY23-25 budget trajectory includes efficiency savings in line with the Capital Package
commitments.

BUDGET COVERAGE RATIO (BCR)
3.2
As part of the Capital Package compact with shareholders, in addition to achieving efficiency
savings, IFC committed to maintain a debt income to administrative budget ratio of at least 1.1, whichtranslates into a Budget Coverage Ratio (BCR) of no higher than 91 percent.
3.3
While it is difficult to predict with certainty given the volatility of the key drivers, IFC expects
the BCR to get to its target level by FY25.

6

CHAPTER 4: FY23 BUDGET FRAMEWORKADMINISTRATIVE BUDGET TRAJECTORY
4.1
To maintain the pace of IFC 3.0 implementation with sustained fiscal discipline, IFC is
proposing a 1.3 percent real budget increase (6.6 percent in nominal terms) for FY23. In real terms, theFY23 Administrative Budget ask has been moderated from the indicative trajectory of 2 percent
included in the FY22 Budget Paper as the underlying assumptions have changed.

ADVISORY SERVICES BUDGET TRAJECTORY
4.2
The construction of the Advisory Services budget trajectory is grounded in: (i) country andsector strategies; (ii) resulting regional and industry workforce plans to enable implementation of thesestrategies through Advisory and Upstream engagements; and (iii) the Advisory and Upstream fundingneeds assessment conducted at the regional and global levels as part of the integrated country-driven
budgeting exercise.
4.3
After the resource needs are assessed, IFC determines the appropriate budget level for eachsource of funds based on financial sustainability and operational and financial principles, aligningsources and uses of funds. These principles include funding availability and eligibility, leverage
acceptance, and appetite from Development Partners.

AGGREGATE ADMINISTRATIVE AND ADVISORY BUDGET TRAJECTORY
4.4
The Total Resources, or “All Funds”, trajectory shows a nominal growth of 4.3 percent in FY23
(see Table 2).
Table 2: FY22-23 Total Resources Trajectory
US$, millions
Administrative Budget
Advisory Services (AS) Non-Administrative Budget
Aggregate Administrative and Advisory Services Budget
Earmarked Service Fees and Others
IFC Total Resources% Growth Aggregate Administrative and AS Budget% Growth Total Resources

7

FY22
1,177
430
1,606
196
1,803

FY23E
1,255
430
1,684
196
1,880
4.8%
4.3%

CHAPTER 5: FY23 BUDGET PROPOSAL DETAILSFY23 TOTAL RESOURCES VIEW BY SOURCES OF FUNDS
5.1
IFC’s projected Total Resources budget for FY23 is US$1,880 million, as shown in Figure 1.
This view reflects the gross needs as described earlier in this document partially offset by efficiencies.
Figure 1: FY23 Total Resources
IFC Contributions toAdvisory Services (otherthan admin. budget),$145 (8%)

US$, millions

Advisory Services:
Development Partners/Client
Contributions, $285 (15%)

Total Administrative
Budget, $1,255 (67%)

Expenses offset by fee
income, $166 (9%)

Jeopardy Expenses,$30 (1%)ADMINISTRATIVE BUDGET
5.2
IFC Management proposes an FY23 Administrative Budget of US$1,255 million, which
represents a 1.3 percent real increase (6.6 percent in nominal terms) over the FY22 Administrative
Budget.
5.3
The incremental FY23 Budget ask is based on an assessment of gross spending needs as detailedin Chapter 2. The total gross needs are expected to be offset by efficiency savings, resulting in a netincremental budget need of US$78 million.

COST CATEGORY VIEW OF ADMINISTRATIVE BUDGET
5.4
IFC’s Administrative Budget can also be viewed by Cost Category as shown in Table 3. Thisview provides the actual expenses for FY20 and FY21 with FY22 projected spend and FY23 estimates.
Salaries and benefits remain the main driver of the total expenses.

8

Table 3: IFC’s Administrative Expenses and Budget by Cost Category
US$, millions

FY20A

FY21A

FY22E

FY23E

Fixed Expenses
Salaries and Benefits
Communications & IT
Depreciation
Equipment & Building
Variable Expenses
ST Consultants & Temporaries
ET Consultants & Temporaries
Travel, Representation and Hospitality
Contractual Services
Services and Support Fees
Other Expenses
Total Expenses
Total Non-Operational Revenue
Net Expenses

841.1
710.0
23.5
62.0
45.6
244.0
15.1
4.4
21.9
46.8
139.2
16.6
1,085.1(21.6)
1,063.5

888.0
763.7
20.4
59.9
45.6
215.3
12.6
7.6
4.1
34.2
141.5
15.2
1,103.3(21.8)
1,081.5

940.6
797.5
19.6
73.8
49.7
242.2
15.9
10.1
10.1
39.6
153.7
12.8
1,182.8(22.4)
1,160.4

996.2
849.1
28.3
64.2
54.5
278.4
14.9
14.0
26.8
53.0
150.9
18.7
1,274.6(20.0)
1,254.6

ADVISORY SERVICES SOURCES OF FUNDS
5.5
Advisory Services sources of funds are used to support both Advisory and Upstream activities.
These activities draw on IFC’s internal funding sources, Development Partners, and Client
Contributions. The combination of funding sources creates a robust and diversified funding model withenough flexibility to enable the successful implementation of IFC 3.0 (see Table 4).
Table 4: Advisory Services Sources of Funds
FY22B

FY23E

US$, millions

US$

%

US$

%

External Funding
Development Partners
Client Contributions
IFC Internal Funding
AS Admin Budget
CMAW
FMTAAS
Other IFC Sources
Total Advisory Services Budget

285.0
240.0
45.0
218.8
74.3
80.0
50.0
14.5
503.8

57%
48%
9%
43%
15%
16%
10%
3%
100%

285.0
240.0
45.0
209.5
65.0
80.0
50.0
14.5
494.5

58%
49%
9%
43%
13%
16%
10%
3%
100%

5.6
External Funding. Development Partner and Client support for Upstream work, Advisory
Services, and Blended Finance will be critical for implementing IFC 3.0 and ramping up delivery in key
focus areas such as IDA, FCS, Climate, and Gender.
5.7
IFC continues to manage and enhance existing Development Partner relationships, with atransition to a more disciplined and strategic approach to partner outreach. To promote long-term
financial sustainability, IFC is also continuing to diversify its sources of donor funding by attracting
foundations, philanthropic partners, and other non-traditional partners as the philanthropic and impact
investment ecosystems diversify.
5.8

Client Contributions are primarily used as a tool to strengthen client ownership and commitment9

to implementation and to ensure that any subsidy embedded in pricing is justified by the public benefit
involved. It is expected that Upstream will also draw on Client Contributions going forward, further
diversifying and strengthening its funding model.
5.9
IFC’s Internal Funding. IFC’s direct contributions ensure a sustainable funding model for
initiatives beyond those provided by IFC clients and pay for seed activities in strategic priority areas
where Development Partner interest has not yet materialized.

FEE BUDGETS
5.10 IFC has a long-established practice of using fees to cover direct out-of-pocket expenses
incurred for investment related project expenses such as travel, consultants, and outside legal counsel.
Similarly, clients pay IFC other types of fees, such as service and mobilization fees, that are used tocover IFC’s operational costs.
5.11 IFC ensures that fee budgets do not exceed the fee collections by placing control mechanisms
to mitigate the risks of the fluctuating fee incomes and to ensure that spending against fee budgets
remains well below the generated revenue. By using fees to cover variable costs, IFC can expand or
contract its activities without changing its permanent cost base and more flexibly redirect resources
toward corporate priorities and strategic objectives.
5.12 Budget Allocation to cover Outside Counsel Fees and Expenses (Legal Pooled Fees). IFC
maintains a centralized and dedicated fee pool to cover certain outside counsel fees and expenses. These
fees are used to pay outside legal counsel charges and related out of pocket expenses arising in relation
to certain IFC transactions and corporate matters when other internal and external funding sources are
not available.

JEOPARDY BUDGETS
5.13 IFC considers projects to be jeopardy cases when: i) the prospects for IFC recovering its
investment are in serious doubt due to expected future loan defaults, country/industry considerations,or other material adverse changes to the project, sponsor, or macro-economic circumstances; or ii) when
IFC is threatened with litigation or sued, or where there are serious reputational risks for IFC. The
Board has traditionally recognized jeopardy expenses as being tracked separately from theAdministrative Budget due to the volatility and unpredictability of the jeopardy cases. The cases often
generate significant out-of-pocket expenses and can span many years.
5.14 To manage the jeopardy related expenses, IFC increased its total allocation in FY21 that canbe drawn by the Department of Special Operations (CSO) and the Legal Department (CLED).

CARRYOVER MECHANISM
5.15 IFC’s existing Carryover mechanism is based on the prior year spending against theadministrative budget and allows IFC to carry forward the uncommitted funds as of June 30 of one
fiscal year, up to a limit of 5 percent of the approved budget for that fiscal year, to be used in thesubsequent fiscal year. The carryover does not accumulate year‐on‐year or add to the baseadministrative budget.

10CHAPTER 6: FY23 CAPITAL BUDGET
6.1 The proposed Capital Budget request for FY23 reflects IFC Management’s prioritization ofbusiness demands for Facilities and IT investment and the resulting impact on the Administrative
Budget through depreciation.
6.2
IFC's Capital Budget funds IFC HQ and Country Office (CO) Facilities and Information
Technology (IT) required to support IFC's business model. The proposed FY23 Capital Budget is
US$63 million (see Table 5).
Table 5: Capital Budget Request
US$, millions

FY22B

FY23E

Headquarters Facilities
Country Office Facilities
Information Technology
Total

2.7
5.5
37.7
45.9

10.6
7.2
45.0
62.8

6.3
To better manage its capital investments, for large capital projects, IFC phases the funding
across several Annual Investment Plan (AIP) cycles based on the timing of anticipated spend.

FACILITIES
6.4
Headquarters (HQ) Facilities. IFC has embarked on a comprehensive HQ modernization
project which is anchored by three main objectives: (i) to optimize utilization of the existing officespace to create a more intuitive, convenient, and collaborative environment; (ii) to ensure staff andvisitor safety and support employee wellbeing; and (iii) to enable flexibility to address evolving staff
expectations of the workplace experience – all while being environmentally responsible and using
resources efficiently. As part of the project, IFC has launched a broad master planning exercise, which
will facilitate the convergence of the two adjoining HQ buildings to a shared standard and aesthetic
and will guide the management of the HQ office space going forward.
6.5
The proposed capital budget for HQ facilities will for the most part fund refurbishment andconstruction that materialize out of the HQ modernization project; building infrastructure cyclicalreplacement and upgrades; as well as improvements to the audio-visual and video conferencing
capabilities in IFC’s HQ buildings.
6.6Country Office (CO) Facilities. The CO facilities capital budget proposal reflects plans to
optimize the global office footprint, enhance sustainability, and implement office reconfiguration andretrofit initiatives. The scope of work planned will focus on upgrades and replacement of building
equipment and furniture; sustainability initiatives; office expansion, relocation and footprint
optimization driven by strategic needs; and improvements to AV/VC capabilities.
6.7
IFC will continue to support, in coordination with IBRD, the upgrade of security equipment
for Country Offices in FCS and medium- and high‐risk countries (as defined by WBG Corporate
Security) through the allocation of capital funds to purchase new or replace outdated security
equipment. In addition, Country Office fit‐outs and purchase/construction projects in these countries willcontinue to benefit from direct security needs assessments by WBG Corporate Security Specialists toensure that all appropriate security measures are included in the overall project capital requirements
and funding.

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INFORMATION TECHNOLOGY
6.8

The FY23 Capital Budget will fund two main categories of IT investment:•

Steady State and Enhancements. These programs ensure the reliability of existing systems
and infrastructure by addressing cyclical end-of-life replenishment needs as well as
implementing bug fixes and minor enhancements to existing systems required forcontinuous and effective support of business operations.

•

Systems Development. These programs focus on developing new or enhanced IT solutions
to support IFC’s lines of business. They include the introduction of technology to improve
operational effectiveness and efficiency and to accommodate IFC’s growth throughautomation of existing business processes and the introduction of new IT capabilities.

12CHAPTER 7: INCOME DESIGNATIONSUSE OF IFC’S NET INCOME
7.1
Amounts available to be designated are approved by the Board of Directors and are determinedbased on a Board-approved income-based formula and on a principles-based financial distribution
policy, also approved by the Board.

METHODOLOGY FOR INCOME DESIGNATION
7.2
Since FY21, as part of the Budget Paper, the Board approves a range (including maximum) ofpotential designations for CMAW and FMTAAS, based on a sliding scale formula and a waterfall
prioritization. After the close of the fiscal year, the formula will be applied to income available fordesignations to determine the actual designations. The transfer of net income (loss) to retained earnings
and any designations of retained earnings will be submitted to the Board as resolutions following
approval of the year-end financial statements.
7.3
Based on current projections, the amount available in CMAW reserves is sufficient to fundup to three years of projected spend. Therefore, IFC proposes not to make additional designations to
CMAW from FY22 Net Income. IFC will continue to make designations to CMAW in future years asallowed through IFC’s Net Income. Depending on final FY22 income amounts available fordesignation under the sliding-scale formula, IFC will propose to make designations to FMTAAS.

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CHAPTER 8: RECOMMENDATIONS
8.1

IFC Management recommends that the Board resolve to approve the following:
A. Administrative Budget Authority•
An Administrative Budget for FY23 of US$1,254.6 million.
B. Capital Budget Authority•
A Capital Budget for FY23 of US$62.8 million.

8.2

IFC Management recommends the following with respect to net income available fordesignations:A. From net income, IFC proposes to designate allocations to FMTAAS.
B. The designation of net income to be disclosed in the Management's Discussion andAnalysis for FY22.

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