BUILDINGA BETTER FUTURE

2023 ANNUAL REPORT FINANCIALSTable of Contents

56
2
MANAGEMENT’S DISCUSSION
AND ANALYSIS
3 Selected Financial DataCONSOLIDATED FINANCIAL
STATEMENTS AND INTERNALCONTROL REPORTS
57 Management’s Report Regarding
Effectiveness of Internal Control overFinancial Reporting

8 Overview

59 Independent Auditors’ Report on the
Effectiveness of Internal Control overFinancial Reporting

11 Client Services

60 Consolidated Balance Sheets

25 Liquid Assets

6 1 Consolidated Statements of Operations

26 Funding Resources

62 Consolidated Statements ofComprehensive Income

4 Executive Summary

29 Risk Management
42 Critical Accounting Policies
45 Results of Operations
51 Governance and Control
54 Appendix

63 Consolidated Statements of
Changes in Capital64 Consolidated Statements ofCash Flows
66 Consolidated Statement ofCapital Stock and Voting Power68 Notes to Consolidated Financial
Statements
141 Independent Auditors’ Report143
INVESTMENT PORTFOLIO
Cumulative Gross Commitments by
RegionIFC 2023 ANNUAL REPORT FINANCIALS

1MANAGEMENT’SDISCUSSION
AND ANALYSIS

2 IFC 2023 ANNUAL REPORT FINANCIALSThis Management’s Discussion and Analysis (MD&A) discusses the financial results of the International FinanceCorporation (IFC or the Corporation) for the fiscal year ended June 30, 2023 (FY23). The MD&A contains forward
looking statements which may be identified by such terms as “anticipates,” “believes,” “expects,” “intends,” “plans”,“aims” or words of similar meaning. Such statements involve a number of assumptions and estimates that are
based on current expectations, which are subject to risks and uncertainties beyond IFC’s control. Consequently,
actual future results could differ materially from those currently anticipated. IFC undertakes no obligation to
update any forward-looking statements. Certain reclassifications of prior years’ information have been madeto conform with the current year’s presentation.

Table 1: Selected Financial Data
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023(FY23)

2022(FY22)

2021(FY21)

Long-Term Finance (LTF) Commitments(Own Account and Core Mobilization)$ 31,706$ 23,165$ 23,305

Short-Term Finance (STF) Commitments(Own Account and Core Mobilization)a

12,023

10,426

8,498

Disbursements

18,68913,198

11,438Investments Highlights (Section III)

Statement of Operations(464)$ 4,209

681

382

1,066

2023

2022

$110,547$ 99,010

Liquid assets (Section IV)

40,12041,717

Investments (Section III)51,50244,093

Borrowings outstanding, including fair value
adjustments (Section V)

52,44348,269Total capital (Section V)

35,03832,805

Net income (loss) (Section VIII)
Income available for designation (Section II)
AS OF THE YEAR ENDED JUNE 30(US$ in millions)

$

672

$

Balance Sheet
Total assetsba. Starting FY23, short-term finance core mobilization commitments were included in commitments reporting. Previous years’
information were updated to conform with the current year’s presentation.
b. Net of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives.

AS OF THE YEAR ENDED JUNE 30

2023

2022

60.7%

62.0%

Capital Utilization Ratio
Capital Utilization Ratio (CUR)

IFC 2023 ANNUAL REPORT FINANCIALS

3SECTION l.
EXECUTIVE SUMMARY
This executive summary highlights selected information and may not contain all of the information that is
important to readers of this document. For a complete
description of IFC’s FY23’s performance, as well as therisks and critical accounting estimates affecting IFC,
this MD&A should be read in its entirety.
With its many years of experience and its depth ofknowledge in the international development arena, IFC
plays a key role in achieving the World Bank Group’s(WBG1) goal of helping countries achieve better development outcomes. IFC contributes to both the WBG’s
twin goals of ending extreme poverty and promoting shared prosperity, and to the Forward Look 2, by
providing financing and advisory services primarily
to the private sector in developing countries thatare members of IFC. IFC and its affiliated organizations seek to help countries achieve improvements ingrowth, job creation, poverty reduction, governance,
the environment, climate adaptation and resilience,
human capital, infrastructure and debt transparency. To further enhance these efforts, the Board
and Management have been working on an Evolution
Roadmap for the WBG to better address the scale ofdevelopment challenges by adapting the WBG’s visionand mission, strengthening its operating model, andenhancing its financial capacity and model. The roadmap puts strong emphasis on the private sector andon IFC as key partner to support coordinated efforts
around global priorities. Key priorities for IFC in the
Evolution Roadmap include enabling and facilitating mobilization of private capital across developing
and emerging markets, leveraging the expertise fromacross the WBG in support of the global development
agenda, and scaling blended finance. Management isin the process of advancing agreed actions and developing further proposals.
In April 2018, IFC’s Board of Governors approved a capital increase package comprising a three-step capitalraising process: conversion of a portion of retained
earnings into paid-in capital, a Selective Capital
Increase (SCI), and General Capital Increase (GCI) thatwould provide up to $5.5 billion additional paid-in capital. In April 2023, the subscription deadline for SCI and
GCI was extended to April 16, 2025 and April 16, 2024
respectively and the payment deadline for SCI was
extended to April 16, 2025, to be aligned with the GCI
payment deadline. As of June 30, 2023, 120 countries
have subscribed a total of $4.4 billion, and payment of$3.0 billion has been received from 100 countries.
Aligned with the capital increase, IFC continued to
grow its footprint in the poorest countries and fragile areas. New and ongoing challenges continue toinfluence the global outlook, disproportionately affecting the poor and vulnerable, and worsening global
inequality. High inflation, rising interest rates, Russia’s
invasion of Ukraine, large macroeconomic imbalances, and shortages of energy, fertilizer, and foodhave caused a sharp global economic downturn. In
response, IFC has been working with partners at global
and country levels to support its clients in enhancing
resilience and laying the groundwork for rebuilding
better. In June 2022, IFC launched a $1.0 billion African
Trade and Supply Chain Finance Program (ATRI), thefirst of an expected series of platforms, to strengthen
intra-African trade. In October 2022, IFC launched
its Global Food Security Platform, a new $6.0 billion
financing facility, to strengthen the private sector’sability to respond to the global food and security crisisand help support food production. In November 2022,
the Board approved the Africa and Middle East, Central
Asia, and Pakistan (MCAP) Venture Capital Platform,
a $225 million envelope that will help IFC to deepen
the Venture Capital markets and to grow its impact inthe target regions, most importantly by providing IFC
with the agility to meet market needs and more efficiently process investments in Digital Transformationcompanies.

RUSSIA’S INVASION OF
UKRAINE
Russia’s invasion of Ukraine that began in February
2022 has negatively impacted regional and global
financial markets and economic conditions. As ofJune 30, 2023, IFC had investments in Ukraine, theRussian Federation, and Belarus with a total carrying
value3 of $305 million, less than 1% of the total investments portfolio. Recognizing there is a heighteneddegree of uncertainty and judgment in incorporating
the impact, especially the impact from spillovers toother countries, valuations of equity investments, debt
securities and certain loans reported at fair value reflect
management’s best estimates as of June 30, 2023.
In evaluating the appropriateness of IFC’s reserveagainst losses, IFC has considered the impact ofRussia’s invasion of Ukraine largely through its rating
system that classifies its loans according to creditworthiness and risk. A number of the credit risk ratingsof individual loans deteriorated since then, reflecting
general credit considerations and specific considerations related to Russia’s invasion of Ukraine. As thesituation is still evolving, IFC expects further impacts
which are not reflected in the model calculated reserveand cannot be directly attributed to any individualloan. As a result, a $135 million qualitative overlay wasapplied for the estimated losses due to the invasion
and its spillover macroeconomic impact in March 2022,
which remained unchanged as of June 30, 2023.

1. The other institutions of the WBG are the International Bank for Reconstruction and Development (IBRD), the International
Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of
Investment Disputes (ICSID).
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. The
Forward Look rests on four pillars: serving all clients; mobilizing resources for development; leading on global issues; and improving thebusiness model.
3. Please refer to Section III. Client Services Disbursed Investment Portfolio section for the definition of carrying value.

4 IFC 2023 ANNUAL REPORT FINANCIALSIFC’S RESPONSES
IFC has been supporting clients in Ukraine throughloan disbursements, advisory assistance, risk-sharing agreements and trade finance lines — to enable
access to essential fuel and food products and facilitate
exports. IFC’s financing included $81 million in portfolio disbursements and $131 million of trade financeguarantees for imports of critical goods. In addition, in
FY23, IFC committed $65 million to support tech andexport-oriented entrepreneurs in Ukraine, $22 million to support Ukrainian small and medium-sizedenterprises via financial institutions and $69 million tofinance operations of a global grain trader in Ukraine.
IFC also agreed with its development partners fromthe European Union to repurpose grants provided to
the IFC-managed Ukraine Energy Efficiency Fund tofinance housing for internally displaced people andto help restore damaged residential housing. Finally,leveraging its advisory services, IFC launched theDigital Data Corridor initiative to enable information exchange between credit bureaus in Ukraine andcountries receiving refugees to facilitate their accessto finance.
Going forward, IFC’s interventions in Ukraine will
be guided by the Economic Resilience Action (ERA)
program for Ukraine discussed with the IFC Board in
December 2022. IFC will mostly provide liquidity andworking capital support to help preserve businesses
and enable provision of important goods and services.
IFC will also selectively consider investments to support provision of essential infrastructure services. In
parallel, IFC will grow its advisory and upstream program to prepare for the reconstruction phase. IFC has
already signed a Memorandum of Understanding with
the Government of Ukraine to act as a strategic advisor
for attracting private capital in reconstruction.

FINANCIAL PERFORMANCESUMMARY
The financial performance of IFC has been significantly
influenced by the volatile emerging equity markets aswell as changes in interest rates.

NET INCOME AND INCOME AVAILABLE FORDESIGNATIONS

Figure 1: Income Measures(US$ in millions)
Income Available for Designations
Net income (loss)
4,209

4,500
3,600
2,700
1,800
1,066
900

382

0

681

672

(464)

(900)

FY22

FY21

FY23

Income Available for Designations totaled $681 million in FY23, as compared to $382 million in FY22. On
August 3, the Board of Directors approved a designation of $60 million to Funding Mechanism for Technical
Assistance and Advisory Services (FMTAAS). This designation is expected to be noted with approval by the
Board of Governors in fiscal year 2024 (FY24).

INVESTMENT OPERATIONSIn FY23, IFC committed $16.7 billion in long-term
investments for its Own Account and $15.0 billion fromCore Mobilization, totaling $31.7 billion in LTF. Total LTF
commitments represent a 37% increase from FY22 that
supported 325 LTF projects in developing countries. In
addition, IFC extended $12.0 billion in STF in FY23, 15%higher than FY22. Overall, IFC delivered a combined
total of LTF and STF of $43.7 billion in FY23, 30% higher
than FY22. Furthermore, IFC disbursed $18.7 billion for
its own account in FY23 as compared to $13.2 billion
in FY22.

Figure 2: LTF and STF
Commitments (US$ in billions)
LTF commitments

STF commitments

32

24

16

IFC’s net income was $672 million in FY23, as compared to a net loss of $464 million in FY22, primarily
resulting from reversal of previous year mark to market
losses and additional interest income from Treasury
and higher income from loans and debt securities.

8

0

FY19

FY20

FY21

FY22

FY23

IFC 2023 ANNUAL REPORT FINANCIALS

5

Figure 3: Disbursements(US$ in billions)Figure 5: Liquid Assets(US$ in billions)

20

50
40

15

30
10
20
5

10
0

0

FY19

FY20

FY21

FY22

June 19

FY23

June 20

June 21

June 22

June2023
23
June

INVESTMENT PORTFOLIOBORROWINGSThe carrying value 4 of IFC’s outstanding investment
portfolio was $51.5 billion at June 30, 2023, an increaseof $7.4 billion compared to June 30, 2022, primarily
driven by a $7.6 billion increase attributed to new disbursements exceeding repayments, prepayments anddivestments.

Borrowings outstanding (including fair value adjustments) increased by $4.1 billion from $48.3 billion atJune 30, 2022 to $52.4 billion at June 30, 2023, mainly
due to net new issuances of $4.5 billion.

Figure 4: Investments(US$ in billions)

New borrowings under the medium and long-termborrowing program (on a funding authorization basis)
in FY23 was $13.7 billion as compared to $9.1 billion
in FY22.

Figure 6: Borrowings(US$ in billions)

60
50

60

40
30

40

20
10

20

0
June 19

June 20

June 21

June 22

June 230

LIQUID ASSETS

June 19

June 20

June 21

June 22

The Net Asset Value (NAV) of the liquid assets portfolios decreased by $1.6 billion to $40.1 billion at June 30,2023 from June 30, 2022. The market funded liquidity
portfolio declined by $1.9 billion as outflows from net
disbursements to loans exceeded inflows from net
borrowings. The net worth funded liquidity portfolio
increased by $346 million in FY23.

4. Please refer to Section III. Client Services Disbursed Investment Portfolio section for the definition of carrying value.

6 IFC 2023 ANNUAL REPORT FINANCIALS

June 23

ECONOMIC CAPITALFRAMEWORKIFC’s Capital Adequacy, as measured by CUR was 60.7%
as of June 30, 2023, lower than 62.0% level as of June 30,
2022. The reduction (improvement) in CUR was largely
attributed to an increase in Capital Available, withincreases in paid-in capital, undesignated retained
earnings, and accumulated other comprehensive
income. There was also an increase in Capital Required,primarily due to increases in capital to support the
Loan and Treasury portfolios.

Figure 7: Capital
Utilization Ratio
100%

75%

50%

25%

0%

June 19

June 20

June 21

June 22

June 23

IFC 2023 ANNUAL REPORT FINANCIALS

7SECTION II.
OVERVIEW
IFC is the largest global development institution
focused on the private sector in developing countries.
Established in 1956, IFC is owned by 186 member countries, a group that collectively determines its policies.
IFC is a member of the WBG but is a legal entity separate and distinct from IBRD, IDA, MIGA, and ICSID, with
its own Articles of Agreement, share capital, financial
structure, management, and staff. Membership in IFC
is open only to member countries of IBRD. IFC is notliable for the obligations of the other institutions.

FINANCIAL BUSINESS MODEL
IFC helps developing countries achieve sustainablegrowth by financing private sector investment, mobilizing capital in international financial markets, andproviding advisory services to businesses and governments. IFC’s principal investment products are loans,equity investments, debt securities and guarantees.
IFC also plays an active and direct role in mobilizing
additional funding from other investors and lenders
through a variety of means. Such means principally
comprise: parallel loans, loan participations, theManaged Co-lending Portfolio Program (MCPP), thenon-IFC portion of structured finance transactions
and the non-IFC portion of commitments in funds
managed by IFC Asset Management Company andadvisory mobilization (collectively Core Mobilization).
Unlike most other development institutions, IFC does
not accept host government guarantees of its exposures. IFC raises virtually all of the funds for its lending
activities through the issuance of debt obligations in
the international capital markets, while maintaining a small borrowing window with IBRD. Equity
investments are funded from capital (or net worth).

IFC’s capital base and its assets and liabilities, otherthan its equity investments, are primarily denominated in U.S. dollars ($ or US$) or swapped into U.S.
dollars along with borrowings denominated in currencies other than U.S. dollars which are invested insuch currencies. Overall, IFC seeks to minimize foreignexchange and interest rate risks arising from its loans,debt securities and liquid assets by closely matching
the currency and rate basis of its assets in various
currencies with liabilities having the same characteristics. IFC generally manages non-equity investment
related and certain lending related residual currency
and interest rate risks by utilizing currency and interest
rate swaps and other derivative instruments.

BASIS OF PREPARATIONOF IFC’S CONSOLIDATEDFINANCIAL STATEMENTS
The accounting and reporting policies of IFC conformto accounting principles generally accepted in the
United States of America (U.S. GAAP). IFC’s accounting policies are discussed in more detail in Section VII,
Critical Accounting Policies, and in Note A to IFC’s
consolidated financial statements as of and for theyear ended June 30, 2023 (FY23 consolidated financial
statements). Certain reclassifications of prior years’
information have been made to conform with the current year’s presentation.
IFC uses Income Available for Designations (a non-U.S.
GAAP measure) as a basis for designations of retained
earnings. Income Available for Designations comprises
net income excluding unrealized gains and losses oninvestments and borrowings5 and grants to IDA in theyear ended June 30, 2021.

Table 2: Reconciliation of Net Income or Loss to Income Available
for Designations
FOR THE YEAR ENDED JUNE 30(US$ in millions)
Net income (loss)

$

2023

2022

2021

672

$ (464)$ 4,209

Adjustments to reconcile Net income (loss) to Income Available for Designations
Unrealized (gains) losses on investments

(41)

740

(3,285)

Unrealized losses (gains) on borrowings

50

106

(71)

Grants to IDA
Income Available for Designations

–

–

213

$ 681

$ 382

$ 1,066

5. Unrealized gains and losses on investments and borrowings presented in the table includes unrealized gains and losses fromassociated derivatives.

8 IFC 2023 ANNUAL REPORT FINANCIALSTable 3: Summary of Financial Results
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023

2022

2021

$ 2,290$ 1,156$ 1,116(Provision) release of provision for losses on loans, off-balance sheet credit
exposures and other receivables

(22)

(126)

201

Income from equity investments and associated derivatives

191

208

3,201

Income from debt securities, including realized gains and losses on debt
securities and associated derivatives

518

414

340

(7)

(14)

(3)

Income (loss) from liquid asset trading activities

1,464

(413)

327

Charges on borrowings(2,598)

(302)

(326)

Other income

518

419

595

Other expenses

Consolidated statement of operations highlights:
Income from loans and guarantees, including realized gains and losses on loans
and associated derivatives

Provision for losses on available-for-sale debt securities(1,721)(1,653)(1,687)

Foreign currency transaction (losses) gains on non-trading activities

(86)

76

(148)

Income (loss) before net unrealized gains and losses on non-trading
financial instruments accounted for at fair value and grants to IDA

547

(235)

3,616

Net unrealized gains (losses) on non-trading financial instruments accounted
for at fair value

125

(229)

806

Income (loss) before grants to IDA

672

(464)

4,422

–

–

(213)

(464)

$ 4,209

Grants to IDA
Net income (loss)
AS OF THE YEAR ENDED JUNE 30(US$ in millions)

$

672

$

2023

2022

$110,547$ 99,010

40,12041,71751,50244,093

Consolidated balance sheet highlights:
Total assets
Liquid assetsaInvestments
Borrowings outstanding, including fair value adjustments
Total capital

52,44348,269$ 35,038$ 32,805$ 11,589$ 10,840

221

298

of which
Undesignated retained earnings
Designated retained earnings
Accumulated other comprehensive income (loss) (AOCI)
Paid-in capital

632

(82)

22,596

21,749a. Net of securities sold under repurchase agreements, payable for cash collateral received and associated derivatives.

IFC 2023 ANNUAL REPORT FINANCIALS

9

Table 4: Key Financial Ratios
AS OF THE YEAR ENDED JUNE 30(US$ in billions, except ratios)

2023

2022

a

104%

111%

Debt-to-equity ratiob

1.6

1.6

3.7%

4.4%

Capital Availabled

34.8

32.5

Capital Requirede

21.1

20.1

60.7%

62.0%

Overall liquidity ratio

Total reserve against losses on loans to total disbursed portfoliocCapital measures:

Capital Utilization Ratiofa. Overall Liquidity Policy states that IFC would at all times maintain a minimum level of liquidity, plus undrawn borrowing commitmentsfrom the IBRD, such that it would cover at least 45% of the next three years’ estimated net cash requirements. IFC’s overall liquidity as apercentage of the next three years’ estimated net cash needs stood at 104% as of June 30, 2023, above the minimum requirement of theBoard of 45%.
b. Debt to equity (leverage) ratio is defined as outstanding borrowings plus committed guarantees divided by total capital (comprises ofpaid-in capital, retained earnings and Accumulated other comprehensive income (loss)). IFC’s debt-to-equity ratio was 1.6 as of June30, 2023, well within the maximum of 4 required by the policy approved by IFC’s Board of Directors,c. Total reserve against losses on loans to total disbursed loan portfolio is defined as reserve against losses on loans as a percentage of thetotal disbursed loan portfolio.
d. Capital Available: Resources available to absorb potential losses, calculated as: Balance Sheet Capital less Designated Retained
Earnings.
e. Capital Required: Aggregate minimum Economic Capital required to maintain IFC’s AAA rating.
f. CUR is defined as Capital Required divided by Capital Available.

10 IFC 2023 ANNUAL REPORT FINANCIALSSECTION III.
CLIENT SERVICES

IFC supervises its projects to monitor project performance and compliance with contractual obligations
and with IFC’s internal policies and procedures.

INVESTMENT PRODUCTS
BUSINESSOVERVIEW
For all new investments, IFC articulates the expected
impact on sustainable development and, as projects
mature, assesses the quality of the development benefits realized.
IFC’s strategic focus areas are aligned to advance the
WBG’s global priorities.

INVESTMENTSERVICES
IFC’s investments are normally made in its developing member countries. IFC’s Articles of Agreement
mandate that IFC shall invest in productive private
enterprises. The requirement for private ownership
does not disqualify enterprises that are partly ownedby the public sector if such enterprises are organizedunder local commercial and corporate law, operate
free of host government control in a market context
and according to profitability criteria, and/or are in
the process of being completely or partially privatized.
IFC’s investment products and services are designed tomeet the needs of clients in different industries — principally infrastructure, manufacturing, agribusiness,
disruptive technologies and funds, services, and financial markets. Investment services product lines include:loans, equity investments, debt securities, trade andsupply-chain finance, local currency finance, partial
credit guarantees, portfolio risk-sharing facilities,
securitizations, blended finance, venture capital, the
IDA Private Sector Window (IDA-PSW), client risk
management and various mobilization products suchas loan participations, parallel loans and the Managed
Co-lending Portfolio Program (MCPP). Since the startof Coronavirus Disease 2019 (COVID-19) pandemic,
IFC has been providing financing under the COVID-19
Response Facilities.
IFC’s investment project cycle can be divided into thefollowing stages:• Business Development• Early Review• Appraisal• Investment Review• Negotiations• Public Disclosure• Board Review and Approval• Commitment• Disbursement of funds• Project Supervision, and Development
Outcome Tracking• Evaluation• Closing

Loans — IFC finances projects and companies throughloans, typically for five to ten years. IFC also makesloans to intermediary banks, leasing companies, andother financial institutions for on-lending. IFC provides
long-term local-currency solutions and helps companies access local capital markets through loans from
IFC denominated in local currency, derivatives whichallow clients to hedge existing or new foreign currency
denominated liabilities back in to the client’s local currency, and structured finance which enable clients toborrow in local currency from other sources. While
IFC’s loans have traditionally been denominated in the
major currencies, IFC has made it a priority to structure local currency products based on client demandand on IFC’s ability to fund in local-currency and/or
economically hedge loans in these currencies throughthe use of derivatives, principally currency and interest
rate swaps and financial futures.
Loans generally have the following characteristics:• Term — typically amortizing with final maturities

generally for seven to twelve years, although someloans have been made for tenors as short as one year
and as long as 20 years• Currency — primarily in major convertible currencies,
principally U.S. dollar, and to a lesser extent, Euro, butwith a growing local-currency loan portfolio• Interest rate — typically variable (or fixed andswapped into variable)• Pricing — reflects such factors as market conditions
and country and project risks
Equity Investments — Equity investments provide
developmental support and long-term growth capitalthat private enterprises need. IFC invests directly incompanies’ equity, and also through private-equity
funds. IFC generally invests between 5 and 20 percent
of a company’s equity. IFC’s equity investments are
typically in the form of common or preferred stock
which is not mandatorily redeemable by the issuer or
puttable to the issuer by IFC. Equity investments areusually denominated in the currency of the country inwhich the investment is made. IFC also uses put andcall options, profit participation features, conversion
features, warrants and other types of instruments inmanaging its equity investments.
Debt Securities — Investments typically in the form ofbonds and notes issued in bearer or registered form,
securitized debt obligations (e.g., asset-backed securities (ABS), mortgage-backed securities (MBS), andother collateralized debt obligations) and preferredshares that are mandatorily redeemable by the issuer
or puttable to the issuer by IFC.
Trade and Supply Chain Finance — IFC’s Global Trade
Finance Program (GTFP) guarantees trade-related
payment obligations of approved financial institutions.
Separately, the Global Trade Liquidity Program (GTLP)
and Critical Commodities Finance Program (CCFP)
provides liquidity, through risk sharing, for trade in

IFC 2023 ANNUAL REPORT FINANCIALS

11

developing countries. IFC also has a number of otherTrade and Supply Chain Finance related programs,
including Global Trade Supplier Finance (GTSF), Global
Warehouse Finance Program (GWFP), Working Capital
Solutions (WCS) and Global Structured Trade Finance
Program (GTST).
Local Currency Finance — Lending to the private sector in developing countries has traditionally been in theform of loans denominated in non-local currency suchas the U.S. dollar or the Euro. But the volatility in currency markets represents a major risk for companies
with revenues in local currency. IFC provides long-term
local currency solutions and helps companies accesslocal capital markets.
Guarantees and Partial Credit Guarantees — IFC’s
guarantee is available for debt instruments and tradeobligations of clients and covers commercial as well as
noncommercial risks. IFC will provide local currency
guarantees, but when a guarantee is called, the client
will generally be obligated to reimburse IFC in U.S.
dollar terms. A partial credit guarantee represents apromise of full and timely debt service payment up
to a predetermined amount. Typically, the sum that
IFC pays out under the guarantee covers creditors
irrespective of the cause of default. The guarantee
amount may vary over the life of the transaction basedon the borrower’s expected cash flows and creditors’
concerns regarding the stability of cash flows. The
guarantee is structured to reduce the probability ofdefault of the debt instrument and increase the recovery if default occurs.
Portfolio Risk Sharing Facilities — A risk sharing facility allows a client to sell a portion of the risk
associated with a pool of assets. The assets typicallyremain on the client’s balance sheet and the risk transfer comes from a partial guarantee provided by IFC.
Securitizations — IFC invests in domestic or cross-border securitizations and provides credit enhancement
to transactions through funded or unfunded participations, mainly at the mezzanine level.
Blended Finance — In addition to providing commercial financing for IFC’s own account, IFC uses a numberof complementary tools to crowd in private sector
financing that would otherwise not be available toprojects with high development impact. IFC blendsconcessional funds, typically from development partners, alongside IFC’s own commercial funding.
COVID-19 Response Facilities — In March 2020, IFC’s
Board of Directors approved a Fast Track COVID-19
Facility (COVID Facility, or FTCF) in the amount of$8 billion, as part of a WBG crisis response package.

• $2 billion from the Real Sector Crisis Response

Envelope, which supports existing clients in theinfrastructure, manufacturing, agriculture and services industries. IFC offers loans to companies in
need, and if necessary, make equity investments. This
instrument also helps companies in the healthcare
sector that are seeing an increase in demand.
• $2 billion from the existing Global Trade Finance
Program, which allows financial institutions to provide trade financing to companies that import andexport goods.

12 IFC 2023 ANNUAL REPORT FINANCIALS• $2 billion from the Working Capital Solutions

Program, which provides funding to emerging-market banks to extend credit to help businesses shore
up their working capital and thereby maintain viableprivate sector firms.
• $2 billion from the Global Trade Liquidity Program,and the Critical Commodities Finance Program,
both of which offer risk-sharing support to local
banks so they can continue to finance viable companies in emerging markets.

In February 2021, the Board approved an extensionof the COVID Facility dedicated to the Base of the
Pyramid Program (BOP) for $400 million, focused on
supporting financial service providers in this sector. In
March 2022, the Board approved the extension of both
FTCF and BOP until June 2023, as well as an increaseof up to $200 million for the BOP, making the total
available for COVID facilities $8.6 billion.
IDA-PSW — The IDA-PSW is a development financetool to crowd-in more private sector investment
where it is most needed. The $2.5 billion IDA-PSW was
created under the IDA18 for IFC and MIGA to rebalance
the risk-reward profile for private sector projects inthe poorest countries eligible to borrow from IDA andFragile and Conflict-Affected Situations (FCS). The IDAPSW is implemented through four facilities:• Risk Mitigation Facility: Involves both MIGA and

IFC, this facility is designed to provide project-based
guarantees to encourage/mobilize private sector
investment in infrastructure projects and public-private partnerships.
• Local Currency Facility: Administered by IFC, thisfacility is designed to provide local currency denominated loans, investments or hedges to private sector
clients who operate in markets where there are limited currency hedging capabilities. In the absenceof currency hedging instruments and creditworthy
counterparties, IDA would enter into swaps orindemnity agreement with IFC.
• Blended Finance Facility: Administered by IFC,
this facility blends PSW financing support with IFC
investments to support SMEs, agribusiness and otherpioneering investments.
• MIGA Guarantee Facility: Administered by MIGA,
this facility is designed to expand the coverage of
MIGA Political Risk Insurance (PRI) products throughshared first-loss or risk participation similar toreinsurance.
Client Risk Management Services — IFC extends
long-maturity risk management products to clients indeveloping countries. IFC provides derivative products
to its clients to allow them to hedge their interest rate,currency, or commodity-price exposures. IFC intermediates between clients in developing countries andderivatives market makers to provide such clients withaccess to risk management products to bridge thecredit gap between its clients and the market.
Mobilization Products — IFC promotes development
by mobilizing financing for the private sector in its
developing member countries.
Loan Participations (B Loans): Through its B Loan
Program, IFC offers participants the opportunity tolend to IFC-financed projects. These loans are a key partof IFC’s efforts to mobilize additional private sector

financing in developing countries, thereby broadening
the Corporation’s developmental impact. When an IFC
loan includes financing from the market through the B
Loan Program, IFC retains a portion of the loan for its
own account (the A Loan), and sells participations in
the remaining portion to participants (the B Loan). The
borrower signs a single Loan Agreement with IFC, andIFC signs a Participation Agreement with the participant or participants. IFC is the sole contractual lender
for the borrower. While IFC is the lender of record, theparticipants’ involvement is known to the borrower.
The structure allows participants to fully benefit from
IFC’s status as a multilateral development institution.
A Loan Participations: An A Loan Participation (ALP)
is an exposure management tool which IFC uses toreduce its risk exposures to a client, country or sector.
An ALP is created through the partial sale of an A Loan
to commercial banks or other financial institutions
and is governed by a Participation Agreement, much
like the agreement used for B Loans. As in a B Loan,
IFC remains the lender of record for the entire A Loan
and an ALP participant shares all project risks with
IFC and has the same benefits of a traditional B Loan
participant.
Parallel Loans: IFC acts as an arranger — and can also
act as an administrative agent — by using its existing
mobilization platform, deal-structuring expertise andglobal presence to identify investments, perform due
diligence, and negotiate loan documents in cooperation with parallel lenders.
MCPP: MCPP creates diversified portfolios of emerging market private sector loans. MCPP leverages IFC’s
origination capacity and deep market knowledge
to source opportunities for third party investors toco-lend alongside IFC. MCPP gives IFC the ability toprovide larger financing packages than it could from its
own account and increases the pool of financing available for achieving development goals. MCPP builds aloan portfolio for an investor that mirrors the portfolio
IFC is creating for its own account. MCPP investors and
IFC sign upfront administration agreements determining the makeup of the portfolio based on agreed
eligibility. Investors pledge capital upfront and thenas IFC identifies eligible deals, investor exposure isallocated alongside IFC’s own per the terms of theagreement.
Debt Securities Mobilization: IFC helps issuers access
capital markets with advisory services and supports
the issuance of debt securities for entities that seek toaccess global capital markets and reach new investors.
Private Equity Funds Mobilization: Non-IFC portion of
investment in PE funds (including growth equity, venture capital and mezzanine funds) raised due to IFC’s
role and involvement in the fund.
Trade Mobilization: Non-IFC portion of investment in
the specific project under the Global Trade Liquidity
Program, the Critical Commodities Finance Program,the Global Warehouse Finance Program, the Global
Structured Trade Finance Program, and the Global
Supply Chain Finance Program made available to Client
due to IFC’s active and direct involvement in raisingresources.

Distressed Asset Recovery Program: This program focuseson the acquisition and resolution of distressed assets,
the refinancing, and roll-over risk of viable entities,
and the restructuring of small- and medium-sizedenterprises.
Short-Term Finance Core Mobilization: Non-IFC portionof transactions guaranteed under the Global Trade
Finance Program and Global Trade Supplier Finance
Program made available to the clients due to IFC’s
active and direct involvement in guaranteeing thetrade transaction or receivable.
Mobilization by Decision: Mobilization activities not eligible for automatic recognition by the programs above
may receive recognition by decision of the Corporate
Risk Committee.

INVESTMENTPROGRAMCOMMITMENTS
Long-Term Finance (LTF) Commitments comprise Own
Account and Core Mobilization and totaled $31.7 billion
in FY23, an increase of $8.5 billion or 37% from FY22. IFC’s
FY23 LTF Own Account Commitments were $16.7 billion ($12.6 billion in FY22) and Core Mobilization was$15.0 billion ($10.6 billion in FY22). Short-Term Finance(STF) Commitments Own Account were $11.0 billion in
FY23 ($9.7 billion in FY22) and Core Mobilization was$1.0 billion in FY23 ($767 million in FY22). Total program
delivery (LTF and STF) was $43.7 billion in FY23 as compared to $33.6 billion in FY22.
In direct response to the COVID-19 pandemic, IFC committed $4.1 billion in FY23 including $1.0 billion under
its Fast Track COVID-19 Facility in support of IFC’s
existing clients. Outside of the facility, IFC committed
an additional $3.1 billion in financing to support clientsin response to COVID-19. Since the start of the COVID19, IFC committed $8.4 billion under the Fast Track
COVID-19 Facility and additional $17.0 billion outsideof the facility.
Committed portfolio (sum of (i) committed but undisbursed (undisbursed) balance; and (ii) disbursed andoutstanding balance) increased by $6.5 billion from
$63.0 billion at June 30, 2022 to $69.5 billion at June 30,
2023. The committed debt (including loan and loan-like
instruments) portfolio increased by $5.7 billion from$44.0 billion at June 30, 2022 to $49.7 billion at June 30,
2023, mainly due to new commitments outpaced
repayments, prepayments, sales and cancellations.
The committed equity (including equity and equity-like
instruments) portfolio of $14.2 billion at June 30, 2023
increased by $412 million from June 30, 2022 reflecting new investment commitments are in excess ofsales and cancellations in FY23. Committed guarantees
and risk management portfolio increased by $347 million from $5.2 billion at June 30, 2022 to $5.6 billion atJune 30, 2023 due to new commitments in excess ofmaturities and cancellations.

IFC 2023 ANNUAL REPORT FINANCIALS

13

CORE MOBILIZATIONCore Mobilization is financing from entities other than IFC that becomes available to clients due to IFC’s direct
involvement in raising resources. IFC mobilizes such private sector finance from other entities through a numberof means, as outlined in the table below.

Table 5: Long-Term Finance and Short-Term Finance Commitments(Own Account and Core Mobilization)
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023

2022

$ 14,135$ 10,190

1,761

1,622

704

719

Long-Term Finance Own Account Commitments
Loans
Equity investments
Guarantees

77

38$16,677$12,569$ 2,984$ 1,656

1,870

1,754

Managed Co-lending Portfolio Program

457

65

Debt Securities Syndication

181—$ 5,492$ 3,475$$

Client risk management
Total Long-Term Finance Own Account Commitments

Long-Term Finance Core Mobilization
Syndication
Parallel loans
Loan participations

Total Syndication
AMC (see definitions in Table 8)
Asia Fund

13

142

MENA Fund2—

FIG Fund—

59

China-Mexico Fund—47

Total AMC Mobilization

$

15

$

248

Advisory Mobilization(see definitions in Section III — Advisory Services)
Public Private Partnership$ 3,687$ 3,534

25

28$ 3,712$ 3,562$ 2,163$ 2,041

Corporate Finance Service Equity Mobilization
Total Advisory Mobilization
IFC Initiatives
Global Trade Liquidity Program, Critical Commodities Finance Program, Global Warehouse
Finance Program and Global Structured Trade Finance Program
Mobilization by Decision

1,665

—

Debt Security Mobilization

1,030

1,140

Private Equity Funds Mobilization

700—

Debt and Asset Recovery Program

252

130

Total IFC Initiatives$ 5,810 $ 3,311

Total Long-Term Finance Core Mobilization$ 15,029 $ 10,596

Total Long-Term Finance (Own Account and Core Mobilization)$ 31,706 $ 23,165

Short-Term Finance Own Account Commitments$ 11,027 $ 9,659

Short-Term Finance Own AccountShort-Term Finance Core Mobilization

996

a

767

Total Short-Term Finance Commitments (Own Account and Core Mobilization)$ 12,023 $ 10,426

Total Long-Term Finance and Short-Term Finance Commitmentsb (Own Account andCore Mobilization)$ 43,729 $ 33,591

a. Starting FY23, short-term finance core mobilization commitments were included in commitments reporting. Previous years’
information was updated to conform with the current year’s presentation.
b Debt security commitments are included in loans and equity investments based on their predominant characteristics.

14 IFC 2023 ANNUAL REPORT FINANCIALSINVESTMENTDISBURSEMENTS

region and industry sector as of June 30, 2023 andJune 30, 2022 is shown below:

IFC disbursed $18.7 billion for its own account in FY23($13.2 billion in FY22): $13.9 billion of loans ($10.1 billion
in FY22), $1.0 billion of equity investments ($1.5 billion
in FY22), and $3.8 billion of debt securities ($1.6 billion
in FY22).

Figure 8: Disbursed Investment
Portfolio Distribution by
Region (US$ in millions)
Asia and Pacific
17,114
14,942DISBURSED INVESTMENTPORTFOLIO

Latin America and the Caribbean, and Europe

IFC’s total disbursed investment portfolio (a nonU.S. GAAP performance measure) was $52.8 billion
at June 30, 2023 ($45.1 billion — June 30, 2022), comprising the disbursed loan portfolio of $32.9 billion($27.7 billion — June 30, 2022), the disbursed equity
portfolio of $10.4 billion ($10.5 billion — June 30, 2022),
and the disbursed debt security portfolio of $9.5 billion($6.9 billion — June 30, 2022).
IFC’s disbursed investment portfolio is diversified byindustry sector and geographic region. The distributionof the disbursed investment portfolio by geographical

16,035
12,749Africa10,1508,860

Middle East, Central Asia, Türkiye,
Pakistan, and Afghanistan
6,050
5,346

Other
3,464
3,217
FY23

FY22

Table 6: Disbursed Investment Portfolio Distribution byIndustry Sector
FOR THE YEAR ENDED JUNE 30(US$ in millions)
Finance & Insurance

DISBURSED INVESTMENTS

AS A % OF TOTAL

2023

2022

2023

2022

$23,445$18,56444%

41%

Collective Investment Vehicles

4,745

4,494

9%

10%

Electric Power

4,141

4,220

8%

9%

Chemicals

2,527

2,174

5%

5%

Transportation and Warehousing

2,076

1,934

4%

4%

Construction and Real Estate

1,978

1,588

4%

4%

Wholesale and Retail Trade

1,697

1,544

3%

3%

Agriculture and Forestry

1,622

1,660

3%

4%

Industrial & Consumer Products

1,578

1,256

3%

3%

Information

1,236

796

2%

2%

Others

7,768

6,884

15%

15%

Total

$52,813$45,114

100%

100%

The carrying value of IFC’s investment portfolio comprises: (i) the disbursed investment portfolio; (ii) lessreserve against losses on loans and debt securities;(iii) unamortized deferred loan origination fees; (iv)less disbursed amount allocated to a related financial instrument reported separately in other assets
or derivative assets; (v) unrealized gains and losses
on equity investments held by consolidated variableinterest entities; and (vi) unrealized gains and losses
on investments.

The carrying value of IFC’s investment portfolio was$51.5 billion at June 30, 2023 ($44.1 billion — June 30,2022), comprising the loan portfolio of $31.4 billion($26.2 billion — June 30, 2022), the equity portfolio of $10.8 billion ($11.1 billion — June 30, 2022), andthe debt securities portfolio of $9.3 billion ($6.7 billion — June 30, 2022).
.

IFC 2023 ANNUAL REPORT FINANCIALS

15

LOANS
IFC’s disbursed loan portfolio totaled $32.9 billion at June 30, 2023 ($27.7 billion — June 30, 2022),
increased by $5.2 billion or 19%. Loans comprised 62%of the disbursed investment portfolio as of June 30,2023 (62% — June 30, 2022) and 61% of the carrying
amount of the investment portfolio as of June 30, 2023
(59% — June 30, 2022).

The carrying value of IFC’s loan portfolio (comprising
the disbursed loan portfolio, together with adjustments as detailed in Note D to IFC’s FY23 consolidated
financial statements), increased by $5.2 billion (19.8%)
to $31.4 billion at June 30, 2023 from $26.2 billion atJune 30, 2022, analyzed as follows:

Figure 9: Carrying Value of Loan Portfolio(US$ in millions)
13,838114(7,307)(1,389)26,223June 2022(23)

31,414(51)

9Changes Disbursements Repayments Prepayments Write-oﬀs net Foreign
in Reservesof recoveries Exchange
and Fair Value
LossesOthers*June 2023* Mainly represents loan sales, transfers and conversions to equity investments.

The increase in the carrying value of the loan portfolio was primarily driven by disbursements exceeding
repayments and prepayments by $5.1 billion.
The weighted average contractual interest rate on
fixed and variable rate loans at June 30, 2023 was 7.8%,
up from 5.2% at June 30, 2022.
Loans have been traditionally denominated in the
major currencies, but IFC has an extensive portfolioof local currency products. IFC typically offers local
currency products in other currencies where it caneconomically hedge the local currency loan cash flows
back into U.S. dollars using swap markets or where it

16 IFC 2023 ANNUAL REPORT FINANCIALS

can fund itself in local bond markets. The outstanding
local currency denominated loans were $5.9 billion as ofJune 30, 2023, a $1.3 billion increase from June 30, 2022.
The increase was mainly due to higher disbursementsof loans denominated in Chinese renminbi, Brazilianreal, Indonesian rupiah, Colombian peso and South
African rand compared with FY22. IFC has also madeloans in a number of frontier market currencies suchas Vietnamese dong, Tanzanian shilling, Kazakhstan
tenge, Bangladeshi taka, Tunisian dinar, Pakistani rupee
and Sri Lankan rupee.
At June 30, 2023, 70% of IFC’s disbursed loan portfolio
was U.S. dollar-denominated (74% – June 30, 2022).

The currency composition of the disbursed loan portfolio at June 30, 2023 and June 30, 2022 is shown below:

Table 7: Currency Composition of the Disbursed Loan Portfolio
DISBURSED LOANS

FOR THE YEAR ENDED JUNE 30(US$ in millions)

AS A % OF TOTAL

2023

2022

2023

2022

$22,859$20,530

70%

74%

Euro

4,134

2,612

13%

9%

Chinese renminbi

1,429

1,389

4%

5%

Brazilian real

1,081

548

3%

2%

U.S. dollar

Indonesian rupiah

837

537

3%

2%

Colombian peso

523

374

2%

1%

South African rand

406

260

1%

1%

Indian rupee

284

362

1%

1%

265

324

1%

1%

Others

1,068

763

2%

4%

Total

$32,886$27,699

100%

100%

Mexican peso

After the effect of interest rate swaps and currency swaps, IFC’s loans are principally denominated in variable
rate U.S. dollars.

EQUITY INVESTMENTS
IFC’s disbursed equity portfolio totaled $10.4 billion atJune 30, 2023 ($10.5 billion — June 30, 2022), a decreaseof $177 million or 2%. Equity investments accounted for
20% of IFC’s disbursed investment portfolio at June 30,2023 (23% — June 30, 2022), and 21% of the carrying
amount of the investment portfolio at June 30, 2023
(25% — June 30, 2022).

The carrying value of IFC’s equity investment portfolio (comprising the disbursed equity portfolio, together withadjustments as detailed in Note D to IFC’s FY23 consolidated financial statements), declined by $359 million(3.2%) to $10.8 billion at June 30, 2023 ($11.1 billion — June 30, 2022), analyzed as follows:

Figure 10: Carrying Value of Equity Investment Portfolio(US$ in millions)
1,033
11,137(183)

June 2022

Changes in Fair Value

97

10,778Others*June 2023(1,306)

Purchases

Cost of Sales* Mainly represents conversions and transfers from loans and debt securities to equity investments.

The decrease in the carrying value of equity investment portfolio was mainly due to net sales of equity investments and lower valuations.

DEBT SECURITIESIFC’s disbursed debt security portfolio totaled$9.6 billion at June 30, 2023 ($6.9 billion — June 30,2022), an increase of $2.7 billion or 39%. Debt securities accounted for 18% of IFC’s disbursed investment

portfolio at June 30, 2023 (15% — June 30, 2022) and 18%of the carrying amount of the investment portfolio at
June 30, 2023 (15% — June 30, 2022).

IFC 2023 ANNUAL REPORT FINANCIALS

17

The carrying value of IFC’s debt security portfolio (comprising the disbursed debt security portfolio, together
with adjustments as detailed in Note D to IFC’s

FY23 consolidated financial statements), increased
by $2.6 billion (38.3%) to $9.3 billion at June 30, 2023($6.7 billion — June 30, 2022), analyzed as follows:

Figure 11: Carrying Value of Debt Security Portfolio(US$ in millions)
3,818
9,310

15
(1,053)(24)

Redemptions

Prepayments

(68)

6,733
(111)

June 2022

Changes inReserves andFair Value

Purchases

Foreign
Exchange
Gains

Others*June 2023* Mainly represents conversions and transfers from debt securities to equity investments.

The increase in the carrying value of the debt security portfolio was primarily driven by purchases exceeding
redemptions and prepayments by $2.7 billion in FY23.
Additional information on IFC’s investment portfolio as of and for the years ended June 30, 2023 and June 30,
2022, can be found in Notes D, E, F, G, H, P, R and T to IFC’s FY23 consolidated financial statements.

GUARANTEES AND PARTIAL CREDIT GUARANTEESIFC offers partial credit guarantees to clients covering, on a risk-sharing basis, client obligations on bonds and/or loans. IFC’s guarantee is available for debt instruments and trade obligations of clients and covers commercial as well as non-commercial risks. IFC provides local currency guarantees, but when a guarantee is called,
the client is generally obligated to reimburse IFC in U.S. dollars terms. Guarantee fees are consistent with IFC’s
loan pricing policies.
Guarantees of $4.4 billion remained outstanding (i.e., not called) as of June 30, 2023 ($4.2 billion — June 30, 2022).

INVESTMENT PORTFOLIOMANAGEMENTAt the core of IFC’s approach to portfolio management
is the aim to build and proactively manage a portfoliothat produces strong financial results and development impact. IFC achieves this through a combinationof strong presence on the ground and deep sector
expertise, that enables IFC to stay close to its clientsand markets, monitor trends and anticipate impactsof external factors.
Active portfolio management depends on timely andaccurate information to drive business decisions.
Regional investment teams regularly review theregional industry portfolio with Senior Management
and Risk to ensure continued oversight and assess
broad trends as well as performance of select projects.
Additionally, quarterly reviews of IFC’s portfolio results
are presented to the Board, along with an in-depth
analysis at the end of each fiscal year. IFC’s investment
and portfolio teams, largely based in field offices, complement global reviews with asset-by-asset quarterly
assessments for investments.

18 IFC 2023 ANNUAL REPORT FINANCIALSAt the corporate level, IFC combines portfolio analysis with sector and local expertise along with project
knowledge and projections of global macroeconomic
and market trends to inform decisions about programand strategy. IFC also regularly conducts stress tests
to assess the performance of the portfolio against
possible macroeconomic developments, and to identify
and address risks.
At the project level, IFC’s multidisciplinary teams,
including investment and sector specialists with deepindustry expertise, closely monitor investment performance and compliance with investment agreements.
IFC does this through site visits to evaluate project
implementation, and through active engagement withsponsors and government officials, where relevant,to identify potential problems early on and formulate appropriate solutions. IFC also monitors clients’environmental and social (E&S) performance in a riskbased manner and measures financial performanceand development results.
IFC closely assesses its equity portfolio on an ongoingbasis including proactively identifying assets ready fordivestments where IFC’s development role has been
completed. This rebalancing of the equity portfolio isthe result of an analysis that takes into account market
conditions, opportunities, expected returns, and risks,
and is adjusted periodically as required. To improve its
governance structure, IFC has appointed Global Equity
Heads, who focus on strategic business development,
central oversight and management of IFC’s larger andmore complex equity positions throughout the investment lifecycle.
For projects in financial distress, IFC’s Department ofSpecial Operations (CSO) determines the appropriate
remedial actions to optimize the Corporation’s overall
return on a net present value basis while minimizing reputational risk and, where possible, maximizing
developmental impact. It seeks to keep the project
operational to achieve the intended development
impact and negotiates agreements with creditorsand shareholders to share the burden of restructuring. Investors and other partners participating in IFC’soperations are kept regularly informed, and IFC consults or seeks their consent as appropriate.
IFC continues to invest in information-technology
systems to better support the management of its
portfolio, and continuously enhance its governance,
through the Portfolio Management Department,
which works closely together with stakeholders bothin the global industry and regional departments.

MCPP
As of June 30, 2023, eleven global investors havepledged $12.7 billion ($10.0 billion — June 30, 2022) to
MCPP, with certain programs investing across all sectors and others focused on infrastructure or financial
institutions exclusively. Investors have also approved
funding for 263 projects totaling $10.0 billion across
63 countries as of June 30, 2023 (218 projects totaling$7.7 billion across 57 countries — June 30, 2022), of
which $8.3 billion ($6.9 billion — June 30, 2022) has beencommitted. IFC will continue to deploy the remaining
funds raised as IFC identifies projects that meet investors’ investment criteria.

IDA-PSW
The IDA-IFC-MIGA Private Sector Window (PSW) was
created under IDA’s Eighteenth Replenishment of
Resources (IDA18) to mobilize private sector investment in IDA only countries and IDA-eligible Fragile
and Conflict-affected Situations (FCS). Under IDA’s
Twentieth Replenishment of Resources (IDA20),$2.5 billion has been allocated to PSW, bringing the
cumulative total allocation to $5.5 billion.
As of June 30, 2023, a combined total of $3.8 billion($2.9 billion — June 30, 2022) of instruments under the
IDA18 through IDA20 had been approved, of which$2.8 billion ($2.1 billion — June 30, 2022) related to IFC.
Refer to Note B to the FY23 consolidated financial
statements for transaction details.

AMC
IFC Equity Mobilization Department (AMC), invests
third-party capital and IFC capital, enabling outside investors to invest alongside IFC in developing
markets. Investors in funds managed by AMC haveincluded sovereign wealth funds, national pension
funds, multilateral and bilateral development institutions, national development agencies and international
financial institutions (IFIs).
Cumulatively through June 30, 2023, AMC raised total
funds of $10.1 billion ($10.1 billion — June 30, 2022).

IFC 2023 ANNUAL REPORT FINANCIALS

19

The Funds managed by AMC and their activities as of and for the year ended June 30, 2023 and 2022 are summarized as follows. As of June 30, 2023, all Funds managed by AMC are in post investment period.

Table 8: Funds Managed by AMC
THROUGH JUNE 30, 2023
FOR THE YEAR ENDED
JUNE 30, 2023

TOTAL FUNDS RAISEDSINCE INCEPTION(US$ in millions)

TOTAL

FROM
FROM
OTHER
IFC INVESTORSCUMULATIVEINVESTMENTCOMMITMENTS a

INVESTMENTINVESTMENTCOMMITMENTS DISBURSEMENTS
MADE BY FUND b
MADE BY FUND

Post Investment Period
IFC Capitalization (Equity) Fund,
LP (Equity Capitalization Fund)

$

1,275

$

775

$ 500

$ 1,214$ –$ –IFC Capitalization (SubordinatedDebt) Fund, LP (Sub-Debt
Capitalization Fund)

1,725

225

1,500

1,614

–

–

IFC African, Latin American and
Caribbean Fund, LP (ALAC Fund)

1,000

200

800

864

–

–

IFC Catalyst Fund, LP, IFC
Catalyst Fund (UK), LP and
IFC Catalyst Fund (Japan), LP(collectively, Catalyst Funds)

418

75

343

363

–

8

IFC Global Infrastructure Fund,
LP (Global Infrastructure Fund)c

1,430

200

1,230

902

–

–

IFC Global Emerging Markets
Fund of Funds, LP and IFC Global
Emerging Markets Fund of Funds(Japan Parallel), LP (collectively,
GEM Funds)

800

150

650

757

–

86

Women Entrepreneurs Debt
Fund, LP (WED Fund)

115

30

85

110

–

–

IFC Middle East and North Africa
Fund, LP (MENA Fund)

162

60

102

86

4

8

China-Mexico Fund, LP (ChinaMexico Fund)

1,200

–

1,200

362

–

10

IFC Financial Institutions GrowthFund, LP (FIG Fund)

505

150

355

344

–

3

IFC Emerging Asia Fund, LP (Asia
Fund)

693

150

543

573

16

97

Post Investment Period Total

9,323

2,015

7,308

7,189

20

212

Africa Capitalization Fund, Ltd.
(Africa Capitalization Fund)

182

–

182

130

–

–

IFC Russian Bank Capitalization
Fund, LP (Russian Bank Cap
Fund)

550

250

300

82

–

–

Liquidated Funds Total

732

250

482

212

–

–

$10,055$2,265$ 7,790$ 7,401

$ 20

$ 212

Liquidated Funds

Grand Total
a. Net of commitment cancellations.

b. Excludes commitment cancellations from prior periods.
c. Includes co-investment fund managed by AMC on behalf of Fund LPs.

20 IFC 2023 ANNUAL REPORT FINANCIALSTHROUGH JUNE 30, 2022
FOR THE YEAR ENDED
JUNE 30, 2022

TOTAL FUNDS RAISEDSINCE INCEPTION(US$ in millions)

TOTAL

FROM
OTHER
FROM
IFC INVESTORSCUMULATIVEINVESTMENTCOMMITMENTS a

INVESTMENTINVESTMENTCOMMITMENTS DISBURSEMENTSb
MADE BY FUND
MADE BY FUND

Investment Period
IFC Financial Institutions GrowthFund, LP (FIG Fund)IFC Emerging Asia Fund, LP (Asia
Fund)

$

505

$

150

$

355

$

347

$ 90

$ 138

693

150

543

559

187

197

1,198

300

898

906

277

335

IFC Capitalization (Equity) Fund,
LP (Equity Capitalization Fund)

1,275

775

500

1,214

–

–

IFC Capitalization (SubordinatedDebt) Fund, LP (Sub-Debt
Capitalization Fund)

1,725

225

1,500

1,614

–

–

IFC African, Latin American and
Caribbean Fund, LP (ALAC Fund)

1,000

200

800

864

–

–

IFC Catalyst Fund, LP, IFC
Catalyst Fund (UK), LP and
IFC Catalyst Fund (Japan), LP(collectively, Catalyst Funds)

418

75

343

363

–

7

IFC Global Infrastructure Fund,
LP (Global Infrastructure Fund)c

1,430

200

1,230

929

–

–

IFC Global Emerging Markets
Fund of Funds, LP and IFC Global
Emerging Markets Fund of Funds(Japan Parallel), LP (collectively,
GEM Funds)

Investment Period Total
Post Investment Period

800

150

650

757

–

117

Women Entrepreneurs Debt
Fund, LP (WED Fund)

115

30

85

110

–

–

IFC Middle East and North Africa
Fund, LP (MENA Fund)

162

60

102

82

4

13

China-Mexico Fund, LP (ChinaMexico Fund)

1,200

–

1,200

362

47

47

Post Investment Period Total

8,125

1,715

6,410

6,295

51

184

Africa Capitalization Fund, Ltd.
(Africa Capitalization Fund)

182

–

182

130

–

–

IFC Russian Bank Capitalization
Fund, LP (Russian Bank Cap
Fund)

550

250

300

82

–

–

Liquidated Funds Total

732

250

482

212

–

–

$10,055$2,265$7,790$ 7,413

$ 328

$ 519

Liquidated Funds

Grand Total
a. Net of commitment cancellations.

b. Excludes commitment cancellations from prior periods.
c. Includes co-investment fund managed by AMC on behalf of Fund LPs.

IFC 2023 ANNUAL REPORT FINANCIALS

21

As of June 30, 2023, AMC managed multiple funds (collectively referred to as the AMC Funds), in its capacity
as General Partner (GP)/Manager of these funds.
However, none of these funds require consolidation
by IFC, because the third party limited partners ofthese funds have a substantive ability to remove IFC
as GP/Manager. All AMC Funds are investment companies and are required to report their investment
assets at fair value through net income. IFC’s ownership interests in these AMC Funds are shown in thefollowing table:IFC’S
OWNERSHIP
INTERESTAMC Funds
IFC Capitalization (Equity) Fund, L.P.

a61%

IFC Capitalization (Subordinated Debt)
Fund, L.P.

13%

IFC African, Latin American and
Caribbean Fund, LP

20%

IFC Catalyst Fundsb

18%

IFC Global Infrastructure Fund, LP

17%

China-Mexico Fund, LP—%

IFC Financial Institutions Growth Fund, LP

30%

IFC Global Emerging Markets Fundof Fundsc

19%

IFC Middle East and North Africa Fund, LP

37%

Women Entrepreneurs Debt Fund, LP

26%

IFC Emerging Asia Fund, LP

22%

a. By virtue of certain rights granted to non-IFC limited partnerinterests, IFC does not control or consolidate this fund.
b. The ownership interest of 18% reflects IFC’s ownership interest
taking into consideration the overall commitments for the
IFC Catalyst Funds, which comprises IFC Catalyst Fund, LP,
IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan),LP (collectively, IFC Catalyst Funds). IFC does not have anownership interest in either the IFC Catalyst Fund (UK), LP or the
IFC Catalyst Fund (Japan), LP.
c. The ownership interest of 19% reflects IFC’s ownership interest
taking into consideration the current committed amounts
for the IFC Global Emerging Markets Fund of Funds, which
comprises IFC Global Emerging Markets Fund of Funds, LP and
IFC Global Emerging Markets Fund of Funds, (Japan Parallel)
LP. IFC does not have an ownership interest in the IFC Global
Emerging Markets Fund of Funds, (Japan Parallel) LP.

22 IFC 2023 ANNUAL REPORT FINANCIALSUPSTREAM AND
ADVISORY SERVICES
Starting January 2023, upstream and advisory organizational units in IFC regional industry departments
have been fully integrated to deliver holistic solutions
to enable new investment opportunities for IFC andothers, enhance the development impact and operational performance of existing IFC investments, andimprove the enabling environment to open new markets for private sector investments.
Providing advice and engaging in early stage project
development activities are critical enablers of the IFC’s
3.0 strategy to create markets and mobilize private
capital. Through IFC’s Upstream and Advisory programs, IFC works with clients — including companies,
financial institutions, industries, and governments— to transform ideas into increased private sector
investment, green growth, inclusive job creation, andbankable projects. IFC helps to establish the necessary
conditions that will attract capital and sustainable
investments and mobilize private capital through its
Public-Private Partnership (PPP) transaction advisory
work. IFC works with its investment clients to improvetheir operations and enhance their development
impact on local supply chains and communities. IFC
supports the creation of bankable investment projects
in challenging markets and nascent sectors throughearly-stage project preparation and development,
de-risking activities before their financial close.
IFC’s Upstream and Advisory work is informed by
the joint IFC and World Bank Country Private Sector
Diagnostics; the WBG’s multi-year Country Partnership
Frameworks; and IFC’s Country Strategies and Sector
Deep Dives.
Through IFC’s Upstream and Advisory Services:• IFC helps companies attract and retain private inves-

tors and partners, enter new markets, and increase
their impact. IFC provides tailored market insights
as well as technical advice on how to improve companies’ operational performance and sustainability.
• IFC helps industries adopt good practices and standards to increase competitiveness, productivity, andsustainability.
• IFC helps governments structure public-private partnerships to improve people’s access to high-quality
infrastructure and basic services. IFC also advises on
improving the business environment through reforms
that promote investment, spur growth, and create
jobs — while providing support for the implementation of these reforms.
• IFC contributes to the costs and efforts necessary to
determine the feasibility of a potential project andbrings its expertise to specific project development
activities, at times using its resources to fund capital
and/or operational expenditures by the project withthe aim of proving a business model in a specificcountry or region.
• IFC works in collaboration with the World Bank toprovide policy advice and develop activities that help
create markets and support future transactions in
multiple industries, especially in IDA eligible countries
and FCS.

• IFC works with global experts to generate ideas andanalyses to address the most urgent challenges inprivate sector development. IFC fosters peer-topeer learning at a global scale through its networks
convening policymakers and influencers, which IFC
effectively leveraged to help support its clients during
the pandemic.

Particularly in the poorest and conflict-affected areasof the world, IFC works with clients to improve theirenvironmental, social, and governance practices,
including those related to gender. IFC helps developing economies realize the economic potential ofclean energy and green building. IFC helps lagging private sectors transform into the digital age. IFC helps
potential investment clients improve their operational
performance and management practices to attract thefinancing they need.

HOW IFC WORKS WITH COMPANIESAgribusiness: IFC helps companies improve productivity and sustainability by focusing on operational
efficiency, food safety and standards, adoption of technology to the agribusiness value chain, good soil andwater management, and professionalizing smallholder
farmer supply chains while applying climate-smart andgender-smart practices.
Health: IFC supports healthcare providers in improving the quality of healthcare outcomes throughdeploying the new IFC IQ-Healthcare assessment tool
and accompanying Advisory Services. IFC also runs acommunity of practice to support Women’s Leadershipin Healthcare, focusing on the unique challenges towomen leaders in the sector.
Education: Through IFC’s new initiative, Vitae, IFC
supports higher education institutions in improving
employability outcomes for their graduates, thereby
minimizing the skills gap for the changing job realitiesof the 21st century.
Manufacturing: IFC works with its clients in the
manufacturing sector to develop and finance theirdecarbonization strategies, as well as improve the productivity of their direct operations and supply chains.
This includes bringing a gender-smart lens to companies’ employment challenges and supporting the
deployment of supply chain finance tied to improved
sustainability performance.
Tourism: IFC helps businesses modernize their tourism
offerings and maximize the potential of their naturaland cultural assets. IFC works with clients to assess
the impact and devise strategies to restore their tourism sectors as quickly as possible.
Infrastructure: IFC supports private and sub-sovereign public sector clients to become attractive
destinations for infrastructure investments and helps
close the infrastructure gaps. IFC works with subnational governments to strengthen institutions andregulations; improve critical infrastructure and environmental sustainability; foster skills and innovation;
expand access to finance; build capacity to manage tax
and royalty payments to improve community welfare

and local content. IFC also works closely with private
sector clients to acquire a social license to operate intough environments by increasing benefits to local
communities; mitigating social risks; and addressing
obstacles to gender equality and inclusion in the workplace, across the supply chain.
Corporate Finance Services: IFC supports clients to
identify and enter new markets and structure entry
strategies. IFC helps companies attract international
investors, bring in new skills, expertise, and capital.
IFC supports the structuring of complex projects andoffers advice on the design and execution of partnerships, joint ventures, and acquisitions.
Green Buildings: IFC offers tools and training to help
companies construct buildings that use energy, water,and materials more efficiently. IFC also helps governments establish related policy frameworks and works
with banks to launch green-finance products.
Small and Medium Enterprises (SMEs): IFC helps
SMEs strengthen their skills and performance,
improving their ability to participate in the supply anddistribution networks of larger firms. IFC advises companies and governments on how to improve working
conditions and boost the competitiveness of the textile
sector’s supply chain.
Gender Equality and Economic Inclusion: IFC works
with companies to enhance the recruitment, retention, and promotion of women and other underserved
groups. IFC also helps companies increase women’s
access to financial services, technology, information,and markets.
Environment, Social & Governance (ESG): IFC provides integrated ESG advice to help companies improveaccess to capital, achieve long-term success, andimplement crisis management and pandemic response,
by adopting corporate governance structures, in linewith the IFC Corporate Governance Methodology, as
well as environmental and social risk management
systems in line with the IFC Performance Standards.
IFC’s guidance addresses holistically the managementof potential or actual changes to the environment,
including pollution, biodiversity impacts, carbon emissions, climate change, natural resource use; potential
or actual changes on surrounding community andworkers, including the incidence of gender-based
violence; and improving governance structures andprocesses, such as board functioning, gender diversity
in corporate leadership, ethical conduct, controls, disclosure, and transparency. IFC builds the capacity ofindustry associations and service providers to influence
ESG practices market wide.
Disruptive Technologies: IFC works across the entrepreneurial and venture capital ecosystem supporting
accelerators, seeds funds and new fund managers infrontier geographies, connects high-impact proventech solutions globally with corporate customers
to de-risk tech adoption, increases capital flow towomen entrepreneurs and promotes adoption of digital training platforms for improving digital skills for
employment.

IFC 2023 ANNUAL REPORT FINANCIALS

23

HOW IFC WORKS WITH FINANCIAL
INTERMEDIARIES AND FUNDS
Financial Institutions: IFC helps clients strengthenrisk management and diversify product offerings to
key priority areas such as SME finance, gender, housing
finance, and renewable energy. Through knowledge
sharing of best SME-banking practices and solutions, IFC helps build financial institutions’ capacity
to expand access to credit; expand their financial andnon-financial services, including to women-led/owned
businesses; supports sustainable supply chains; andcatalyzes investment opportunities in emerging anddeveloping market economies. IFC supports financial
institutions to define and implement their digitization strategy roadmaps and accelerate their digitaltransformation.
Fund Managers: IFC helps develop the private equity
industry in frontier markets and provides non-investment-related advice to fund managers. IFC helps
increase ESG investment into emerging markets byproviding asset managers with ESG data and artificial
intelligence-powered analytics.

HOW IFC WORKS WITH GOVERNMENTS
Public-Private Partnerships: IFC helps governments
design and implement PPPs that are tailored to local
needs, helps solve infrastructure bottlenecks, andachieves national development goals by mobilizing
private technical and managerial expertise and capital.
Financial Sector: IFC works with governments and theprivate sector to promote universal access to finance,build resilient, transparent, and smooth-functioning

financial systems and capital markets. This includes
supporting governments to establish the key building
blocks, both regulations and institutions, to increase
access to finance, such as credit information, use of
moveable assets to secure lending, and debt resolution.
IFC works closely with the World Bank and leverage
its expertise alongside IFC investment resources tojointly develop local capital markets in selected focus
countries.
ESG Landscape Initiative: IFC helps governments,
private companies, and stakeholders, assess, and mitigate risks and cumulative impacts at a multi-projectlevel, across specific geographic areas (landscapes).
Landscape initiatives enable governments to consider
E&S impacts in broader sectoral planning, achievesignificant efficiencies with companies implementing joint assessments and management strategies
and address environmental and social bottlenecks
upstream of investment and project development.
Enabling Investment Climate: IFC helps improvethe business environment through economy-wide andincreasingly more sector-specific reforms that address
regulatory barriers and promote investment, spur
growth through increased competitiveness and accessto markets, and create jobs. This work is increasingly
an entry point for IFC’s upstream agenda. IFC works
closely with the World Bank to leverage their expertisefor private sector development.
Cities Initiative: IFC helps local governments,
municipalities, and provinces prioritize and develop
sustainable, resilient infrastructure services for theircitizens.

As of June 30, 2023, the IFC Advisory Services portfolio totaled $1.4 billion ($1.4 billion — June 30, 2022). FY23
program expenditures were $260 million ($251 million in FY22) with a strong focus on IFC’s strategic priority
areas — IDA eligible countries at 54%, fragile and conflict-affected situations at 28%, and climate change at 27%,(compared to 51%, 21% and 25% respectively in FY22).

Table 9: IFC Advisory Services — Program Expendituresa
by Region
FOR THE YEAR ENDED JUNE 30(US$ in millions)

PROGRAM EXPENDITURE

AS A % OF TOTAL

2023

2022

2023

2022

$ 99

$ 99

38%

39%

East Asia and the Pacific

34

29

13%

12%

World

31

31

12%

13%

AfricaLatin America and the Caribbean

27

26

10%

10%

South Asia

23

20

9%

8%

Europe

21

20

8%

8%

Middle East

13

15

5%

6%

Central Asia and Türkiye

Total Program Expenditures

12

11

5%

4%

$260

$251

100%

100%

a. The program expenditure presented herein is based on the Operational reporting methodology, which includes all project expendituresassociated with an Advisory project. This does not include program expenditure associated with IFC’s Upstream project development
activities.

24 IFC 2023 ANNUAL REPORT FINANCIALSTable 10: IFC Advisory Services — Program Expenditures
by Business Area
FOR THE YEAR ENDED JUNE 30(US$ in millions)

PROGRAM EXPENDITURE

AS A % OF TOTAL

2023

2022

2023

2022

Financial Institutions

$ 70

$ 62

27%

25%

Regional Advisory

55

52

21%

21%

Transaction Advisory

43

35

16%

14%

Manufacturing Agribusiness & Services

37

44

14%

18%

Infrastructure & Natural Resources

17

23

7%

9%

Environment, Social & Governance

14

13

6%

5%

Disruptive Technologies & Funds

5

6

2%

2%

Other Advisory

19

16

7%

6%

$260

$251

100%

100%

Total Program Expenditures

SECTION IV.
LIQUID ASSETSFUNDEDLIQUIDITYPORTFOLIO

All liquid assets are managed according to an investment authority approved by the Board of Directors andLiquid Asset Investment Directive approved by IFC’s
Corporate Risk Committee, a subcommittee of IFC’s
Management Team.

IFC’s primary funding source for liquid assets is market borrowings. Proceeds of borrowings from market
sources not immediately disbursed for loans andloan-like debt securities are managed internally by
IFC against money market benchmarks in the Funded
Liquidity Portfolio. Refer to Section V. Funding
Resources for additional details on borrowings.

IFC funds its liquid assets from two sources, borrowings from the market (the market funded liquidity
portfolio) and capital (the net worth funded portfolio).
Liquid assets are managed in several sub-portfolios
related to these sources.
IFC generally invests its liquid assets in highly rated
fixed and floating rate instruments issued by, or unconditionally guaranteed by, governments, government
agencies and instrumentalities, multilateral organizations, and high quality corporate issuers; these include
asset-backed securities (ABS) and mortgage-backed
securities (MBS), time deposits, and other unconditional obligations of banks and financial institutions.
Diversification across multiple dimensions ensures afavorable risk return profile. IFC manages the individual liquid asset portfolios on an aggregate portfolio
basis against each portfolio’s benchmark within specified risk parameters. In implementing these portfolio
management strategies, IFC utilizes derivative instruments, principally currency and interest rate swaps,
foreign exchange forward contracts, and futures andoptions, and it takes positions in various industry sectors and countries.

NET WORTH
FUNDEDPORTFOLIO
The second funding source of liquid assets is the portion of IFC’s net worth not invested in equity andequity-like investments. These funds comprise the Net
Worth Funded Portfolio which is managed internallyby IFC against a U.S. Treasury benchmark.
IFC’s liquid assets are accounted for as trading portfolios. The NAV of the liquid asset portfolio was$40.1 billion at June 30, 2023, a decrease of $1.6 billion
from $41.7 billion at June 30, 2022. The liquid asset
portfolio as of June 30, 2023 comprised the market
funded liquidity portfolio of $23.2 billion and the net
worth funded portfolio of $16.9 billion ($25.1 billion and$16.6 billion respectively — June 30, 2022). The decrease
was composed of a $1.9 billion decline in the market funded liquidity portfolio, as outflows from net
disbursements to loans exceeded inflows from net
borrowings, and a $346 million increase in the net
worth funded portfolio.

IFC 2023 ANNUAL REPORT FINANCIALS

25

SECTION V.
FUNDING RESOURCESBORROWINGS

IFC’s funding resources (comprising borrowings,
paid-in capital and retained earnings) as of June 30,2023 and June 30, 2022 are as follows:

Figure 12: IFC’s Funding
Resources (US$ in millions)
Borrowings from market sources
53,77349,923Retained earnings
11,810
11,138Discount Note Program and othershort-term borrowings

2,967
2,327
Paid-in capital

The major source of IFC’s borrowings is the international capital markets. Under the Articles ofAgreement, IFC may borrow in the public markets
of a member country only with approvals from thatmember, together with the member in whose currency
the borrowing is denominated.
Substantially all borrowings are carried at fair value
under the Fair Value Option. The change in the fairvalue of these borrowings resulting from changes in
instrument-specific credit risk is reported in othercomprehensive income, while the remaining change
in fair value is reported in “Net unrealized gains andlosses on non-trading financial instruments accounted
for at fair value” in the consolidated statements ofoperations. Changes in the net fair value of IFC’s borrowings from market, IDA, and associated derivatives,
include the impact of changes in IFC’s own credit
spread when measured against reference rates. IFC’s
policy is to generally match the currency, amount, andtiming of cash flows on market borrowings with the
cash flows on the associated derivatives entered into
contemporaneously.

22,596
21,749Borrowings from IDA

262
358
FY23

FY22

The outstanding borrowings (including fair value
adjustments) on IFC’s consolidated balance sheets
were $52.4 billion at June 30, 2023, up from $48.3 billion at June 30, 2022. At June 30, 2023, this comprised
an outstanding balance of $49.4 billion in medium andlong-term borrowings ($46.0 billion — June 30, 2022)
and $3.0 billion in short-term borrowings under the
discount note program ($2.3 billion — June 30, 2022).
The increase in outstanding borrowings was mainly
due to new issuances, net of maturities and repayments, of $4.5 billion shown below:

Figure 13: Borrowings Portfolio(US$ in millions)14,219640
48,269June 2022

New
Issuances(9,689)

(220)

(194)

Maturities &Repayments

FV Unrealized(Gains) /LossesFX (Gains) /LossesMarket borrowings are generally swapped into floating-rate obligations denominated in U.S. dollars.
IFC uses its borrowings as a tool to promote capital markets development in emerging and frontiermarkets and this can result in raising local currency
funds. Borrowings from market sources at June 30,2023 with no associated interest rate or currency swap
amounted to 2% of the total borrowings from market sources (2% — June 30, 2022). As of June 30, 2023,$1.0 billion of such non-U.S. dollar denominated market

26 IFC 2023 ANNUAL REPORT FINANCIALS

52,443(582)

Net issuanceof discountnotes

Unamortizeddiscount /premium

June 2023

borrowings were outstanding ($1.2 billion — June 30,2022). As of June 30, 2023, they were denominatedin Bangladeshi taka, Chinese renminbi, Costa Rican
colon, Georgian lari, Indonesian rupiah, Indian rupee,
Kazakhstan tenge, new Azerbaijanian manat, newRomanian lei, Philippine peso, Sri Lankan rupee, Turkishlira and Ukrainian hryvnia.
During FY23, IFC raised $19.8 billion in medium andlong term market borrowings ($14.1 billion in FY22),

net of derivatives and including discount notes withmaturities greater than three months of $5.9 billion($4.8 billion in FY22). During FY23, IFC repurchased andretired $432 million of outstanding debt ($628 million
in FY22), including debt called and bought back, generating gains on buybacks (from fees and capital gains)of $1 million in FY23 ($4 million in FY22).
IFC diversifies its borrowings by currency, country,
source, and maturity to provide flexibility and cost-effectiveness. In FY23, IFC borrowed in 24 currencies andin final maturities ranging from 3 months to 40 years.
Borrowings outstanding have a weighted averageremaining contractual maturity of 5.4 years at June 30,2023 (5.6 years — June 30, 2022). Actual maturities may
differ from contractual maturities due to the existenceof call features in certain of IFC’s borrowings.
As of June 30, 2023, IFC had gross payables fromborrowing-related currency swaps of $34.3 billion($30.9 billion — June 30, 2022) and from borrowing-related interest rate swaps in the notional principal
payable amount of $22.2 billion ($21.3 billion — June 30,2022). After the effect of these derivative instruments

is taken into consideration, 98% of IFC’s market
borrowings at June 30, 2023 were variable rate U.S. dollar-denominated (98% — June 30, 2022). The weighted
average cost of outstanding market borrowings after
currency and interest rate swap transactions was 5.2%
at June 30, 2023 (1.3% — June 30, 2022). The increase incost of borrowings compared to the prior year was due
to rising interest rates.
IFC has short-term discount note programs in U.S.
dollar and Chinese renminbi to provide an additional
funding and liquidity management tool for IFC in support of certain of IFC’s trade finance and supply chain
initiatives and to expand the availability of short term
local currency finance. The discount note programs
provide for issuances with maturities ranging fromovernight to one year. The weighted average cost of
discount note borrowing was 4.1% in FY23 (0.2% in
FY22). During FY23, IFC issued $11.4 billion of discountnotes ($7.5 billion in FY22) and $3.0 billion were outstanding as of June 30, 2023 under the short-term
discount note programs ($2.3 billion — June 30, 2022).

CAPITAL AND
RETAINED EARNINGS
Table 11: IFC’s Capital
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023

2022

Authorized capital$25,080$25,080

CapitalSubscribed capital

23,93923,611

Less: unpaid portion of subscriptions(1,343)(1,862)Paid-in capital

22,596

21,749632(82)

Accumulated other comprehensive income (loss)

11,810

11,138$35,038$32,805

Retained earnings
Total Capital

At June 30, 2023 and June 30, 2022, retained earnings comprised the following:

Table 12: IFC’s Retained Earnings
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023

2022

$11,589$10,840

Creating Markets Advisory Window

161

207

Funding Mechanism for Technical Assistance and Advisory Services

48

78

Small and Medium Enterprise (SME) Ventures

12

13

Undesignated Retained Earnings
Designated Retained Earnings:

Total Designated Retained Earnings$

Total Retained Earnings$11,810

221

$

298

$11,138

IFC 2023 ANNUAL REPORT FINANCIALS

27

Following the Spring Meetings in April 2018, a financing
package, comprising: (i) a three-step capital raisingprocess: Conversion of a portion of retained earnings into paid-in capital, a GCI and a SCI that would
provide up to $5.5 billion in additional paid-in capital;(ii) a planned suspension of grants to IDA after theconclusion of the IDA 18; and (iii) internal measures
for increased efficiency was endorsed by the Boardof Governors. The authorized capital stock at June 30,2023 is 25,079,991 shares of $1,000 par value each
(unchanged from June 30, 2022).

establishes a threshold that no designations of any kindcan take place if IFC’s CUR is above 88%, and establishes a framework for prioritizing future designations
to Funding Mechanism for Technical Assistance andAdvisory Services (FMTAAS) and for transfers to IDA
based on IFC’s CUR and a cushion for FMTAAS. IFC has
also created the Creating Markets Advisory Window(CMAW) in fiscal year 2018 to focus on market creationin eligible IDA countries and FCS.

The GCI and SCI Resolutions were adopted and became
effective on April 16, 2020. $17 billion of retained earnings were converted into paid-in-capital in April 2020.
In April 2023, the subscription deadline for SCI and
GCI was extended to April 16, 2025 and April 16, 2024,
respectively, and the payment deadline for SCI was
extended to April 16, 2025, to be aligned with the GCI
payment deadline. As of June 30, 2023, 120 countries
have subscribed a total of $4.4 billion (GCI — $3.7 billion
and SCI — $677 million) and payment of $3.0 billion(GCI — $2.4 billion and SCI — $654 million) was received
from 100 countries.

Income available for designations in FY22 (a non-U.S.
GAAP measure) totaled $382 million, calculated as
net income excluding unrealized gains and losses oninvestments and borrowings and grants to IDA. Basedon the Board-approved distribution policy outlined
above, the maximum amount available for designation was $6 million. On August 4, 2022, the Board of
Directors approved the entire designation of $6 millionof IFC’s retained earnings for FMTAAS. This designation
was noted with approval by the Board of Governors on
October 14, 2022.

FY22 Designations

FY23 Designations
DESIGNATIONS OF RETAINED EARNINGS
Amounts available to be designated are determinedbased on a Board of Directors-approved income-based
formula and on a principles-based Board of Directorsapproved financial distribution policy, and are approvedby the Board of Directors.
IFC uses a sliding-scale formula and the methodology
for calculating the incremental rate of designation.
The approach approved by IFC’s Board of Directors

28 IFC 2023 ANNUAL REPORT FINANCIALS

Income available for designations in FY23 (a non-U.S.
GAAP measure) totaled $681 million, calculated as
net income excluding unrealized gains and losses oninvestments and borrowings and grants to IDA. On
August 3, 2023, the Board of Directors approved a designation of $60 million to FMTAAS. This designation
is expected to be noted with approval by the Boardof Governors, and subject to the above conditions,concluded in FY24.

ENTERPRISE RISKMANAGEMENT
IFC provides investments and advisory services tothe private sector in emerging markets and is therefore exposed to a range of potential financial andnon-financial impacts. Active monitoring and soundmanagement of evolving risks remain critical pillars interms of fulfilling IFC’s mission.
IFC’s enterprise risk management framework (ERM)
is designed to enable the prudent management ofpotential financial and reputational impacts that originate from the Corporation’s business activities. In thiscontext, IFC’s risk management efforts are designed
specifically to help align the Corporation’s performance with its strategic direction. In FY23, IFC updated
its ERM framework to reflect IFC’s current risk profileand emerging risks. The framework defines:• Key risk management objectives for managing risks.
• A standard classification of roles and responsibilities

for risk management, to differentiate and thereby
clarify how different parts of the Corporation contribute towards the overall management of risk
through a well-defined risk governance mechanism.
• A risk appetite component to ascertain the level andtype of risk that IFC is able and willing to assume inits exposure and business activities.
• An updated risk taxonomy for categorizing risks
across the organization, to help ensure that risk management efforts are coordinated and aligned acrossthe distinct parts of the organization that share
responsibility for managing different aspects of risk.
• Cross-cutting risk management principles to ensurethat business decisions are based on a thoroughunderstanding of risks and that risks and rewards
are balanced appropriately. Another principle is thatIFC will be selective in undertaking activities that
could cause significant adverse reputational impact.

Figure 14: IFC’s Enterprise Risk
Management Framework
RISK MANAGEMENT PRINCIPLESSECTION VI.
RISK MANAGEMENTRISK MANAGEMENT OBJECTIVES
Development Impact, Financial
Sustainability, Safeguarding Reputation

RISK GOVERNANCERISK APPETITERISK CATEGORIZATIONKEY RISK MANAGEMENT OBJECTIVESIFC has defined three explicit Risk Management
Objective Statements at the corporate level which arederived from IFC’s purpose, business scope, strategic
objectives, and the risks that it faces.

• Development Impact — IFC will maximize develop-

mental impact by focusing on the World Bank Group’s
twin goals of addressing extreme poverty and boosting shared prosperity, while maintaining financial
sustainability and safeguarding its brand.
• Financial Sustainability — IFC will generate andmaintain sufficient financial resources, conduct its
business and manage risk consistent with standards
implied by a triple-A rating.
• Safeguarding Reputation — In determining what
engagements and activities to pursue, IFC willassess whether any potential adverse impact to its
reputation is in balance with the potential development impact.

IFC’s risk culture is central to all aspects of IFC’s risk
management efforts. One of the key objectives of theframework is to embed a strong risk culture in the
Corporation while ascertaining those tools and capabilities are in place to facilitate risk management anddecision-making at different levels of the organization.

IFC 2023 ANNUAL REPORT FINANCIALS29

RISK GOVERNANCE STRUCTURE

Figure 15: IFC’s Risk Governancea
GOVERNING BODIESBoard, Management Team and Independent Oversight Bodiesb
Accountability to stakeholders for organizational oversight

INTERNAL AUDIT
Independent

STAFF

assurance

First line roles:
own risk and responsible for identifying,recording, reportingand managing risks

KEY:

Second line roles:

Third line roles:

Provide oversight

Independent andand challenge ofobjective assurance

risk management

Accountability, reporting

EXTERNAL ASSURANCE PROVIDERS

Governing body roles: integrity, leadership, and transparency

Delegation, Direction, Oversight

Alignment, collaboration

a. Adapted based on the Institute of Internal Auditors three lines model.
b. Oversight Bodies include the Integrity Vice Presidency (INT), the Independent Evaluation Group (IEG), the Compliance Advisor/
Ombudsman (CAO) and the Ethics and Business Conduct (EBC) Department along with the Internal Audit which is listed separately inthe picture above due to its role in providing independent oversight of IFC’s risk management practices.

IFC’s Enterprise Risk Management follows theshared-responsibility principle, and IFC’s risk governance structure is built on the “three lines model” asdefined below:• 1st Line — All staff engaged in the business origina-tion, revenue generating and client facing areas of
IFC and all associated support functions including
Investment, Advisory and Treasury staff which are
not risk, control or compliance monitoring functions.
• 2nd Line — Staff in risk, controllers, legal, compliance and communication functions independent of
the first line provides oversight and challenge overfinancial and operational risk activities.
• 3rd Line — Internal Audit provides independent
oversight.

From an organizational standpoint, three distinctgroups govern the risks that IFC undertakes during
its day-to-day business activities:

30 IFC 2023 ANNUAL REPORT FINANCIALS• Independent Oversight Bodies:• The WBG Internal Audit Vice Presidency

provides independent oversight of IFC’s risk management practices.
• The Integrity Vice Presidency investigates allegations of fraud, corruption, and staff misconduct
in IFC’s operations and in WBG-financed operations impacting IFC.
• The Independent Evaluation Group assesses
the relevance, efficacy and efficiency of IFC’soperational programs and activities (and theircontributions to development effectiveness).
• The Compliance Advisor/Ombudsman serves as
an independent recourse mechanism for stakeholders in projects supported by IFC.
• The Ethics and Business Conduct Department
promotes the development and application of thehighest ethical standards by WBG staff in the performance of their duties and among other areas,
focuses on addressing misconduct by reviewing
concerns, recommending actions, and facilitating
resolutions.

• The Board: IFC’s Articles of Agreement outline thecomposition, roles and responsibilities of IFC’s senior
governance body, its Board of Directors. The Audit
Committee of the Board of Directors plays a key rolein overseeing risk management at IFC.
• Management Team: Under the direction of its
Managing Director (MD), IFC’s Management Team(MT) is responsible for the Corporation’s day-to-day
operations including the management of existing andpotential risks. The MT carries out its responsibilities
through three Management Committees:• The Tier III Project Committee (T3PC), which isa decision-making body to review new projects(investment or advisory) that meet certain risk
criteria including certain economic capital thresholds, nominal investment amounts, credit ratings
and/or complex E&S and/or integrity issues. The
T3PC does not set policy recommendations ordirectives but can approve exceptions to IFC’soperational directives as appropriate, for individual projects (unless otherwise specified in that
directive).
• The Corporate Risk Committee (CRC), which isprimarily responsible for overseeing risks to IFC(including in relation to Shared Services6). The

CRC is supported by the Treasury Sub-Committee,
which reviews and makes recommendations to
CRC regarding certain risks that arise within the
Treasury business; acts, under delegated authority
from CRC, as approval authority for Treasuryrelated initiatives and new Treasury products;
and vets proposals from the Treasury or Risk and
Finance VPUs for changes in policies and procedures that impact the Treasury business.
• The Blended Finance and Donor Funds
Committee (BFC), which is primarily responsible
for the terms, proper allocation and utilization ofdonor funds, IFC’s blended finance facilities, IDA/
PSW funds at Concept and IRM stage and allocation and utilization of grants at or above US$
1 million. The BFC also reviews and approves public
sector/government-facing advisory projects thatmeet certain criteria.
The MT is also supported by the Information andTechnology Steering Group (ITSG), a largely deliberative body which formulates proposals, develops new
ideas, considers refinements, promotes coordination,and makes recommendations regarding IFC’s IT strategy, investment plans and work programs for approvalby the MT.

MT has delegated to the above Committees the authority to make certain decisions and to grant permitted
exceptions to Directives and other instruments. Figure 16 below depicts IFC’s management decision-making
governance structure:

6. IFC has service level agreements (SLAs) with IBRD in place for about 20+ shared services. The scope of these services includes HR
services, information technology services, accounting services, procurement services, global telecom and client services, knowledge andinformation services, liability & insurance programs and other specialized support services. These SLAs provide risk management forcommon risks faced by WBG such as physical safety of staff and information security to ensure cyber resilience. Each SLA has a distinct
governance process of its own with representation by both IFC and IBRD.

IFC 2023 ANNUAL REPORT FINANCIALS

31

Figure 16: IFC Management Decision Making GovernanceManagement TeamThe MT is responsible foroverall IFC administration,
direction and strategy

MANAGEMENT TEAM (MT)
Leading the institution
Management Committees
Decide, escalate to MT or MD as needed
Tier III Project
Committee

Corporate Risk
Committee (CRC)(T3PC)

Institutional risk
& asset-liability
management,
exceptions to
Mobilization
Guidelines, newmobilization
platforms

Complex or highrisk projects

Treasury SubCommittee

Blended Finance& Donor Funds
Committee (BFC)
Blended financefor Investment
Services,
Advisory Services
fundraising/allocation, complex
public sector
Advisory Services

Management
Committees
The MT’s three decisionmaking committees
review, approve andprovide guidance on
significant operational,
strategic, portfolio andenterprise risk matters

Steering Groupdeliberates and recommends to MT

Information
Technology
Steering Group(ITSG)(or CRC as appropriate)

IT matters

Decides within delegated scope,for decisions beyond that scope

Within IFC, (i) all financial risks and operational risks
are consolidated under the Vice President of Risk and
Finance, (ii) non-financial risks are under the Vice
President & General Counsel for Legal and Compliance
Risk, and (iii) Environment, Social and Corporate
Governance (ESG) risks are managed by two departments, the Environment and Social Policy and Risk
department reporting directly to IFC’s Managing
Director and the ESG Sustainability Advice and Solutions
Department reporting to the Vice President, CrossCutting Solutions.

32 IFC 2023 ANNUAL REPORT FINANCIALS

IT Steering GroupA deliberative forumwith limited delegateddecision-making
authority that formulates
proposals, promotes
coordination and makes
recommendations on
IT matters. Delegatedauthority to approve

The Corporate Support Vice Presidency supportsalignment and coordination across all IFC Policies &Procedures. Strategic stakeholder communication for
managing potential and actual reputational impacts
are managed by IFC Corporate Support Vice Presidency.
Figure 17 depicts IFC’s risk responsibilities structure forfinancial, operational, and other non-financial risks.

Figure 17: Risk Responsibility within IFC
IFC MANAGINGDIRECTORa

VICE PRESIDENTRISK ANDFINANCE

VP & GENERALCOUNSELLEGAL &COMPLIANCE RISKSENIOR DIRECTOR
E&S POLICY& RISKVICE PRESIDENTCORPORATESUPPORT

a. The IFC VPUs listed under the IFC Managing Director include only those Vice Presidencies and Directors that have a second line role in
the three lines model adopted by IFC.

ENTERPRISE LEVEL RISK APPETITE• Leverage Policy — IFC’s outstanding debt plus guar-

IFC’s Risk Appetite is the level and type of risk that IFC
is able and willing to assume in its exposure and business activities. In FY21, IFC’s Corporate Risk Committee
approved a Risk Appetite (RA) framework for IFC. The
purpose of the RA framework is to: (i) compare andcontrast IFC’s risk appetite against its risk exposure; (ii)communicate the target level of risks to stakeholders;(iii) provide context for the risk policies and frameworks; (iv) make informed decisions; and (v) report on
risks to the Board and management.

• Overall Liquidity Policy — Minimum liquidity (liquid

antees held must not exceed four times its net worth.

On the financial risks faced by IFC, one of the ways
in which the risk appetite is expressed by key financial policies approved by its Board of Directors as
detailed below:• Capital Adequacy Policy — IFC is required to main-

tain a minimum level of total resources (including
paid-in capital, total loss reserve and retained earnings, net of designations) equal to total potential
losses for all on- and off-balance sheet exposuresestimated at levels consistent with maintaining a
triple-A rating.

assets) must be sufficient at all times to cover at least
45% of IFC’s estimated net cash requirements for the
next three years.
• Matched Funding Policy — Loans are funded withliabilities that have similar characteristics in terms ofinterest rate basis, currency, and maturity, except for
new products, approved by the Board of Directors,
involving asset-liability mismatches.

RISK CATEGORIZATION
As part of the ERM framework update in FY23, IFC
has adopted the following risk taxonomy and risk
categorizations. Figure 18 below reflects the risk categorization approved in FY23 effective July 1, 2023. It
should be noted that some of the risks in the taxonomy
may be related and as such are not mutually exclusive
or totally independent of one another. Operational
Risk Dimensions are further classified into a third level
called Risk Drivers. Examples of Risk Drivers include
misconduct, improper business or market practices etc.

IFC 2023 ANNUAL REPORT FINANCIALS

33

Risk
Dimensions

Risk
Domains

Risk
Dimensions

Risk
Domains

Figure 18: IFC’s Risk Taxonomy
MARKET RISK
(Equity, FX Rates,
Interest Rates,
Commodity Prices)

LIQUIDITY,FUNDING AND
ALM RISKOTHER
FINANCIAL
RISKS

Credit Risk —Investment
Operations

Market Risk —Investment
Operations

Liquidity& Funding
Risk

CapitalRisk

Credit Risk —TreasuryMarket Risk —Treasury

Asset Liability
Management
Risk

Pension
Risk

CREDITRISKSTRATEGIC AND
BUSINESS RISKOPERATIONALRISKClassified into
15 other risk
categories

Strategic
Risk

Environment& Social
Risks
Risk

Corporate
Governance
Risk

Integrity,
ML/TF & Tax
Risk

ClimateRisk

External
Financing
Risk

Risk
Dimensions

Risk
DomainRisks due to IFC’s business

OPERATIONALRISKBusiness
Continuity

Information
and Cyber
Security

DataManagement

Technology

Fraud

PhysicalSecurity and
SafetyStaff HealthandWell-Being

PeopleProcess
Execution

Model

ReportingBusiness
Conduct andOperational
COI

Legal,
Regulatory
andComplianceVendorsOther

34 IFC 2023 ANNUAL REPORT FINANCIALSCREDIT RISKIFC defines credit risk as the risk of loss of principal orloss of an expected financial return due to credit events
such as a default or downgrade in credit ratings or any
other failure to meet a contractual obligation that
results in financial loss. IFC is exposed to credit risk in
its loan portfolio and to investment and counterparty
credit risk in its Treasury portfolio.

INVESTMENT OPERATIONS
Credit risk in investment projects is actively managed
throughout the project life cycle. Investment teams
are responsible for gathering the necessary information from the client and other relevant stakeholders
to verify the financial viability of each project, and for
assigning a credit rating (CR) at defined stages in the
project approval process. The CR, the investment size,
the product type and other project-related risks determine the authority level required for the approval ofeach transaction. All projects are subject to independent credit assessment by a credit officer within the
independent Risk and Finance Vice Presidency and who
participates in the project approval process. Projects
are approved with reference to a number of operational and prudential limits approved by the Corporate
Risk Committee, including limits related to single project or client exposure, single country exposure, andsector concentration; these are detailed below:• IFC’s total exposure to a country, for the purpose of

setting exposure limits, is measured as the amountof economic capital required to support its investment portfolio in that country. Exposure limits areset for each country based on the size of its economy.
Sub-limits apply for certain sector exposures withina country.
• IFC’s total exposure to a single client or clientgroup may not exceed stipulated economic capitaland nominal limits based on the Credit Rating forthe client.
• Individual Investment Limits are applied at the individual project or client level to prevent excessive
concentrations.
• Preferential debt exposure to a country is limited byreference to that country’s total medium and longterm external debt.
• IFC’s total equity and quasi-equity exposure (outstanding exposure net of specific reserve) shall not
exceed IFC’s net worth.
IFC’s investment projects are actively supervised aftercommitment. CRs are reviewed regularly for eachproject, with frequency depending on the level of CR
assigned, and revised if new material information isreceived. An independent risk management team in
the Risk and Finance Vice Presidency regularly assesses
IFC’s portfolio, including stress testing of exposure to
emerging risks. Additionally, the Corporate Portfolio
Management Department, as part of the Industries
Vice Presidency, regularly reports on the performanceof the overall debt and equity portfolio and performs
deep dives on selected top country and sector exposures, along with areas of strategic importance to
IFC. When projects show signs of financial distress,
immediate attention is key for improving potential
outcomes. Seasoned “workout” professionals from
IFC’s Department of Special Operations in the Risk and
Finance Vice Presidency focus on projects, to implement the restructuring, or possible recovery, of IFC’s
exposure.
The credit risk of loans is quantified in terms of theprobability of default, loss given default and exposure
at risk. These risk parameters are used in the processes
to determine risk-based returns, project-based capital
allocation and internal risk management purposes, aswell as for establishing allowances against losses onloans under the new Current Expected Credit Losses
accounting standard, and exposure limits.

Selected indicators of credit risk exposure in IFC’s loan portfolio, together with the five-year trend of non-performing loans (NPLs), are given below:

Table 13: IFC Loan Portfolio Credit Risk Indicators
INDICATORJUNE 30, 2023

JUNE 30, 2022

CHANGE

2.7%

3.9%

Down 1.2%

Principal amount outstanding on NPLs

$1.1 billion$1.3 billion

Down $205 million

Total reserve against losses on loans

NPLs as % of the loan portfolioa$1.2 billion$1.2 billion

No change

Total reserve against losses on loans as % of disbursed
loan portfolio

3.7%

4.4%

Down 0.7%

Total reserve against losses on loans as % of NPLs

107.6%

91.0%

Up 16.6%

Total reserve against losses on outstanding guarantees$15 million$11 million

Up $4 million

a. NPL ratio is calculated on loan portfolio inclusive of debt security portfolio.

IFC 2023 ANNUAL REPORT FINANCIALS

35

Figure 19: NPLs as
Percentage of Disbursed
Loan Portfolio
US$ in millions 0

200

400

600

MARKET RISK

800 1,000 1,200 1,400 1,600 1,800

FY19
FY20
FY21
FY22
FY23
Percentage

0.0$ NPLs

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Percentage of disbursed loan portfolio

Additional details are provided in Section VIII — Resultsof Operations (Provision for Losses on Loans, Offbalance Sheet Credit Exposures and Other Receivables).

TREASURY OPERATIONSIFC manages its exposures to investments and counterparties in its Treasury operations to mitigate
potential losses from the failure by a counterparty
to fulfill its contractual obligations. Counterparty
eligibility criteria are set by Authorizations from theBoard of Directors and by Directives approved by IFC’s
Corporate Risk Committee. Eligible investments andcounterparties are predominantly sovereign governments, government agencies, banks, and financial
institutions with high quality credit ratings issued byleading international credit rating agencies.
Details of applicable financial policies and guidelines
are given below:• Counterparties are selected based on standard eli-gibility criteria, with a tenor limit for deposits andrepurchase agreements.
• Counterparties for derivative instruments are generally restricted to banks and financial institutions withhigh-quality credit ratings from leading international
credit rating agencies; for the sole purpose of funding
local currency loans, eligibility is extended to central
banks and select local banks.
• Exposures to individual counterparties are subject toexposure limits.
• IFC signs collateral agreements with counterparties
that require the posting of collateral when net markto-market exposures exceed certain predeterminedthresholds.
• For exchange-traded instruments, credit risk is limited by restricting transactions to a list of authorizedexchanges, contract types, and dealers.
Treasury operations counterparties remain well diversified by sector and geography. In accordance with its
agreements with counterparties, at June 30, 2023, IFC
held $185 million in cash and $1 million in securities as
collateral for changes in mark-to-market exposureson open trades ($730 million in cash and $2 million
in securities — June 30, 2022). In terms of Treasury’s
credit profile, the liquid assets remain concentrated
in the upper end of the credit spectrum with an average rating of A+, reflecting IFC’s objective of principal
protection and its resulting preference for high-quality
investments.

36 IFC 2023 ANNUAL REPORT FINANCIALS

Market risk is the risk of losses due to movement inmarket prices such as interest rates, credit spreads,
equity, foreign exchange or commodity prices. IFC’s
exposure to market risk is mitigated by its matchedfunding policy, whereby it uses derivative instruments
to convert loans funded from market borrowings, andthe market borrowings themselves, into floating rate
U.S. dollar assets and liabilities with similar duration. Similarly, market risk resulting from derivativetransactions with clients, to facilitate clients’ risk management, is typically mitigated by entering offsetting
positions with highly rated market counterparties.
IFC’s exposure to unhedged market risk arises primarily from its listed and unlisted equity investmentsin emerging markets, its quasi-equity loans, and its
Treasury liquid asset portfolio.

LIBOR TRANSITION
In 2017, the Financial Conduct Authority (FCA), theregulator of LIBOR, announced that it would no longer compel panel banks to submit rates required to
calculate LIBOR after December 31, 2021, with key U.S.
dollar LIBOR settings (O/N, 1M, 3M, 6M &12M) panels
ceasing on June 30, 2023 (the Cut-off Date). Therefore,
market participants, including IFC and its borrowers needed to move to alternative reference rates. In
June 2017, the Alternative Reference Rates Committee(ARRC), announced it had selected Secured Overnight
Financing Rate (SOFR) as its preferred alternative to
USD LIBOR.
In April 2023, the FCA announced its decision to require
the ICE Benchmark Administrator to continue publication of 1-, 3- and 6-month US dollar LIBOR settings
until September 30, 2024 using an unrepresentative"synthetic" methodology (Synthetic USD LIBOR). Thisannouncement has provided additional time for certain transactions that can continue using Synthetic
USD LIBOR, effectively extending the Cut-off Date forsuch projects to September 30, 2024.
IFC has taken necessary steps to facilitate a smoothand orderly transition of its financial instruments
affected by the regulators’ requirement for use ofalternative reference rates. In FY21, IFC adopted theInternational Swaps and Derivatives Association (ISDA)
2020 IBOR Fallbacks Protocol (IBOR Protocol) and has
been hedging the majority of its borrowings to SOFR.
As of June 30, 2023, IFC’s SOFR-based borrowings
on an after-swap basis totaled $55.7 billion ($11.4 billion — June 30, 2022).
In line with global USD lending markets, IFC ceased theorigination of new LIBOR-based financial instruments
on December 31, 2021 (with certain limited exceptions).
In FY22, IFC started offering Term SOFR and Daily NonCumulative Compounded SOFR-based loan products
and related Client Risk Management (CRM) products.
Of the new SOFR-based commitments, approximately
90% are based on Term SOFR.
IFC has made significant progress with the conversionof its existing LIBOR-based portfolios to SOFR withswap conversions substantially completed. IFC aims tocomplete the conversion of its remaining LIBOR-based

assets and liabilities to SOFR in advance of their respective next interest reset dates following the applicable
Cut-off Date (June 30, 2023 or September 30, 2024).

funded from its net worth and market borrowings. IFC
manages the risk of mismatches in foreign exchange
rates, interest rates, and maturity dates between balance sheet assets and liabilities.

EQUITY INVESTMENTS
LIQUID ASSET PORTFOLIOSThe risk of loss in value of IFC’s emerging markets
equity investments is mitigated primarily by applying
the same limits framework, decision-making process
and portfolio management methods as describedabove for its lending operations. IFC has a multi-year
horizon for its equity investments and accepts shortterm price volatility of these investments, which canbe significant.
US and European equity markets rose strongly during
FY23, despite rapidly rising interest rates, with the
US market gaining 18% (S&P500) and Europe’s largest
stocks gaining 27% (Euro Stoxx 50). However, emerging
market equity returns were subdued at 2% (MSCI EM
total return index) though with substantial gains in
Latin America and Eastern Europe while a significant
decline in Chinese equities. The US dollar strengthened 5% against a basket of EM currencies (JPMorgan
EM currency index). IFC remains focused on strategic
and selective additions on the new business front, andis actively managing its equity book, utilizing rigorous analysis of macroeconomic trends to inform its
management decision-making throughout the project
lifecycle.

LIQUID ASSET PORTFOLIOSMarket risk in IFC’s liquid asset portfolios is managed according to the risk appetite chosen by IFC
Management using derivative and other financial instruments such as over-the-counter foreignexchange forward agreements, interest rate andcurrency swaps, and exchange-traded interest rate
futures. Overall market risk exposure is also subject todaily monitoring, based on Directives approved by the
Corporate Risk Committee, which limit interest rate,credit spread, and foreign exchange risk.
FY23 witnessed continued volatility in interest rate
markets. To manage risks associated with interest rate,
foreign exchange, and credit spread risks, a system oflimits was employed and closely monitored on a daily
basis to ensure ongoing compliance throughout the
fiscal year.

LIQUIDITY, FUNDING
AND ASSET LIABILITYMANAGEMENT (ALM) RISKIFC defines liquidity and funding risk as the risk that,over a specific horizon, IFC will be unable to meet thedemand for additional funds to meet the demand foruses of funds due to either funding or liquidity issues
or both. IFC faces liquidity risk in its core development
finance activities because its investments are predominantly illiquid in nature due to the lack of capital flows,
the infrequency of transactions, and the lack of pricetransparency in many emerging markets. To offset thisrisk, IFC maintains appropriate liquid asset portfolios

Liquidity risk in the liquid asset portfolios is addressedby liquidity coverage ratios (LCR) and strict investment eligibility criteria defined in Directives approvedby the Corporate Risk Committee. LCRs are alignedwith Basel liquidity standards for regulated banks,
include time horizons between 30 days and 3 years, andconsider both normal and stressed cash flow requirements. Examples of eligibility criteria include minimum
issuance sizes required for bond investments, limits
on single bond issue concentration, and limits on
the percentage of total bond issuance held by IFC.
Consequently, a significant portion of the liquid asset
portfolio is invested in highly liquid securities suchas high-quality sovereign, sovereign-guaranteed, andsupranational fixed income instruments. IFC expects
to continue to be able to realize these assets as needed
to meet its cash requirements, even in a liquidity crisis.
On June 30, 2023, IFC’s liquid asset portfolios totaled$40.1 billion ($41.7 billion — June 30, 2022). IFC’s overall
Liquidity Coverage Ratios (LCR) as a percentage ofnext three years’ estimated net cash needs stood at
104%, above the minimum requirement of 45%. During
FY23, IFC raised $19.8 billion in market borrowings,
net of derivatives and including discount notes withmaturities greater than three months of $5.9 billion($14.1 billion in FY22). The outstanding balance under
the Short-term Discount Note Program at June 30,2023 was $3.0 billion ($2.3 billion — June 30, 2022).

FUNDING
IFC’s funding operations ensure that IFC has the funds
required for its lending operations, and that it has sufficient liquidity to safeguard its triple-A rating and fulfill
IFC’s counter-cyclical role. IFC can access a variety
of funding markets, including the U.S. dollar market,
Pounds sterling market and the Australian dollar market as well as private placement and retail markets.
IFC’s discount note program complements IFC’s traditional funding sources by providing swift access tofunded liquidity. IFC’s triple-A rating is critical to the
Corporation’s ability to maintain its low cost of funds.
Regular issuance in a variety of markets serves to sustain investor confidence and maintain a diversified
investor base. In FY23, IFC’s funding costs increased
when compared with FY22 predominantly driven by
the increase in short-term U.S. dollar interest rates.

ASSET-LIABILITY MANAGEMENT
While IFC’s matched-funding policy helps mitigate
currency and interest rate risk, IFC is still exposed toresidual market risks in the market borrowings-funded
portion of the balance sheet. Residual currency riskarises from factors such as changes in the level ofreserve for losses on non-U.S. dollar loans. The aggregate position in each lending currency is monitored
and the risk is managed to within the limits established for each currency and the total exposure for all

IFC 2023 ANNUAL REPORT FINANCIALS

37

currencies. Residual interest rate risk may arise fromdiffering interest rate reset dates on assets and liabilities or from assets that may become mismatched withhedges over time due to write-downs, prepayments,
or rescheduling. The residual interest rate risk is managed by measuring the sensitivity of the present valueof assets and liabilities in each currency to a one basis
point change in interest rates and managing exposures
to within the established limits for each currency andthe total exposure for all currencies.

OTHER FINANCIAL RISKS
IFC includes Capital Risk and Pension risk as the twoother financial risks that it faces. Capital risk is the risk
to IFC’s triple-A rating resulting from a low capital adequacy position, in which available capital falls below
the level of capital required to support IFC’s activities. Pension Risk is the risk that IFC’s defined-benefit
pension plan is underfunded, leading to the need for
additional financial support by IFC.

CAPITAL RISK
From a financial sustainability perspective, the capitalrequired to maintain a triple-A rating is assessed using
an economic capital framework, which is the foundation of financial risk management at IFC. Economic
capital acts as a “common currency of risk” acrossthe organization, providing IFC with an objective,
quantifiable measure of risk that can be applied consistently across business lines, products, regions, andsectors. IFC holds economic capital for credit, market,
and operational risks. The economic capital framework covers IFC’s entire balance sheet — debt, equity,
and Treasury assets- and economic capital is used forlimit-setting, pricing, and risk-adjusted performancemeasurement. The primary measure of capital adequacy is IFC’s Capital Utilization Ratio (CUR), which is
the ratio of Capital Required for the current portfolio to
the Capital Available to support future commitments.
Throughout FY23, IFC’s CUR was well within theestablished threshold of < 88%.

PENSION RISKIFC participates, along with IBRD and MIGA, in pension and post-retirement benefit plans. The Staff
Retirement Plan (SRP), Retired Staff Benefits Plan
(RSBP), and Post-Employment Benefit Plan (PEBP) (collectively called the “Plans”) are defined benefit plans
and cover 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. Pension Risk is defined as therisk that IFC’s defined-benefit pension plan is underfunded, leading to the need for additional financial
support by IFC.
There are two committees that govern the Plans. Froma governance standpoint, both committees are independent of IFC and the Board: (i) The Pension FinanceCommittee (PFC), which is responsible for the financial
management of the Plans and is supported by the

38 IFC 2023 ANNUAL REPORT FINANCIALS

Pension Finance Administrator; and (ii) The Pension
Benefits Administration Committee (PBAC), which is
responsible for the administration of the benefits of
the Plans.
The key policies underpinning the financial management of the Plans, including the determination of WBG
contributions and the investment of Plan assets, arethe 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.
In FY23, the WBG’s rate for contributions to the Plans
was 14.61% of net salaries. More details about WBG’s
pension plan can be found in Section XI: Pension and Other
Post-retirement Benefits of IBRD’s MD&A statement.

OPERATIONAL RISKMANAGEMENT
Consistent with the Basel Framework, IFC defines
operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems,
or from external events, and holds economic capitalagainst such risks. Given IFC’s business model, bothfinancial and non-financial potential impacts are considered in assessment of risks.
IFC’s Operational Risk Management (ORM) program
conforms to a Directive approved by the Corporate
Risk Committee (CRC), which defines the managementof, and roles and responsibilities for, operational risk
management in the Corporation.
IFC identifies, assesses, monitors and reports operational risks across the following key value chains/
business functions, also known as operational risk
areas: Debt, Equity, Treasury, Advisory Services, Third
Party Responsibilities, Business Support Functions,
Corporate Functions, and Shared Services.
During FY23, IFC continued to expand its operationalrisk program by implementing enhanced methodologies to identify, assess, mitigate, and monitor
material operational risks in its key activities. The main
ORM tools that IFC utilizes include Risk and Control
Self-Assessments (RCSA), recording and analysis ofoperational risk events, and monitoring of Key Risk
Indicators (KRIs). IFC’s ORM approach in FY23 focusedon key RCSAs, as well as enhancing risk event reporting, and upgrading its quarterly report to the CRC andthe Audit Committee. Also, during FY23, IFC started
developing risk appetite statements for operationalrisk and started assessing the methodology to conduct focused control assessments. Finally, during
FY23, through various learning and knowledge sharing
events, and training initiatives, there was a noticeable improvement in awareness and understanding ofoperational risks in IFC.
IFC utilizes risk transfer mechanisms, including insurance, at both the project and the institutional levels
for mitigation of low probability/frequency and highimpact operational risks. IFC insures its corporate
assets and operations against catastrophic losses andcyber- related risks where commercially viable.

IFC also continues to focus on its preparedness to react
to significant events that could disrupt its normal operations through the Business Continuity Management
program, which covers critical business processes
across all IFC offices.
On a quarterly basis, IFC’s corporate ORM function
provides a consolidated ORM report to the CRC and asummarized version to the Audit Committee.

CYBERSECURITY RISK MANAGEMENT
IFC’s operations rely on the secure processing, storage
and transmission of confidential and other informationin computer systems and networks. As is the casefor financial institutions generally, cybersecurity risk
continues to be significant for IFC due to the evolving sophistication and complexity of the cyber threat
landscape. These risks are unavoidable and IFC 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, IFC hasdeveloped its cybersecurity risk management program, consisting of cybersecurity policies, procedures,compliance, and awareness programs. IFC deploys amulti-layered approach for cybersecurity risk management to help prevent and detect malicious activity,
both from within the organization and from externalsources. In managing emerging cyber threats suchas malware including ransomware, denial of service
and phishing attacks, IFC strives to adapt its technicaland process-level controls and raise the level of userawareness to mitigate the risk.
IFC 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 and industry benchmarking.

STRATEGIC AND
BUSINESS RISK
These are risks that are specific to IFC given its mission
and strategy and include Strategic Risk, Environment &Social Risk, Climate Risk, Corporate Governance Risk,
Integrity Risk, Anti-Money Laundering/ Combating the
Financing of Terrorism (AML/CFT) Risk and External
Financing Risk.

STRATEGIC RISKIFC defines strategic risk as the risk associated withinitial strategy selection, execution, or modification
over time, resulting in a lack of achievement of overall
objectives.
IFC uses the Anticipated Impact Measurement andMonitoring (AIMM) system as an ex-ante assessment tool to enable IFC staff to measure and monitor
the anticipated development impact of investment
and advisory projects. The AIMM system evaluatesa project’s development impact along two dimensions — project outcomes and market outcomes.

• Project outcomes — These refer to a project’s direct
effects on stakeholders (including employees, customers, suppliers, and the community); the direct,
indirect, and induced effects on the economy andsociety overall; and the effects on the environmentand social sustainability.
• Market outcomes — These refer to a project’s
potential for generating systemic, sector-widechanges that enhance market competitiveness, resilience, integration, inclusiveness, and sustainability.

The AIMM system is now fully integrated into IFC’soperations, allowing development impact considerations to be weighed against a range of strategic
objectives, including volume, financial return, risk, andthematic priorities.

ENVIRONMENT, SOCIAL AND GOVERNANCE(ESG) RISK
Environment and Social (E&S) risk is the risk that IFC
does not effectively engage with and influence clients
to fulfill the requirements of IFC’s E&S PerformanceStandards, potentially causing harm to people or theenvironment. Corporate governance risk is the risk that
IFC’s clients have inefficient or ineffective corporate
governance practices, leading to adverse reputationalor financial impacts on IFC.
Two departments support IFC’s ESG work:• The E&S Policy and Risk Department (CES) serves asa regulatory function of IFC’s E&S risk management
and ensures systems, procedures, and capacity are inplace. CES also acts as custodian of IFC’s Sustainability
Framework, reviews E&S aspects of all projects atorigination and provides oversight, guidance, andsupport on E&S for high-risk projects in all stages ofthe project cycle.
• The ESG Sustainability, Advice and Solutions
Department (CEG) works closely with investment,
advisory, and upstream teams and clients to identify,
evaluate, and manage ESG risks and opportunities,
leveraging IFC’s expertise and experience in emerging
markets regarding the adoption of ESG standards.
Together these departments advise IFC management
on significant ESG risks in its projects, support IFC
clients in strengthening their ESG performance, andenable accountability to stakeholders.
In addition to promoting ESG standards and climate disclosure across emerging markets, IFC builds
internal and external capacity to identify, assess andmitigate ESG risks. IFC continuously strengthens its
ESG approach by improving its internal ESG systems
and procedures; enhancing project-level grievancemechanisms; clarifying the application of IFC’s E&S
requirements for clients, including financial intermediaries; and mainstreaming climate ESG risk, gender,and contextual risk assessment in due diligence andsupervision. IFC supports its clients in mitigating ESG
risks across all regions through rolling out new tools
and knowledge products to support ESG specialists
and clients and updating its approach to due diligenceand supervision program.

IFC 2023 ANNUAL REPORT FINANCIALS

39

ENVIRONMENT AND SOCIAL (E&S) RISK
IFC’s ESG approach is anchored in its Sustainability
Framework which articulates the Corporation’s strategic commitment to sustainable development and iscomprised of:Figure 20: ESRR Distribution
FY16–FY23
FY16
7%
74%
17%
2%

• The Policy on E&S Sustainability, describing IFC’s

commitments, roles, and responsibilities in relation
to environmental and social sustainability.
• The E&S Performance Standards, guiding clients onsustainable business practices, including continually
identifying and managing risks through analyticalwork such as environmental and social assessments;
stakeholder engagement; and client disclosure obligations in relation to project-level activities.
• IFC’s Access to Information Policy, reflects the
Corporation’s commitment to transparency andgood governance and outlines institutional disclosure obligations.
IFC uses E&S Risk Rating (ESRR) system to evaluatea client’s performance in managing E&S risks including avoidance, mitigation and control of risks andadverse impacts. ESRR scale includes: 1) Excellent,
2) Satisfactory, 3) Partly Unsatisfactory, and 4)
Unsatisfactory. The score is calculated at appraisal asa baseline and is then updated after each supervision
activity.
Focused supervision efforts in the last eight fiscal years
have improved the E&S risk profile of IFC’s investment
portfolio by reducing the number of poorly performing
projects, defined as a historical ESRR scale of 3 and4. In FY23, CEG reformed its approach to its supervision program, prioritizing in-person site supervisionof higher-risk projects (in coordination with CES), anddrawing on master framework agreements with E&S
consulting firms. The supervision program is closely
monitored, and helped maintain a substantively
healthy E&S portfolio performance. Figure 20 below
presents the ESRR distribution of IFC’s investment
portfolio from FY16 to FY23.

FY17
6%
76%
16%
2%
FY18
6%
78%
15%
1%
FY19
6%
79%
14%
1%
FY20
4%
82%
13%
1%
FY21
4%
83%
12%
1%
FY22
4%
84%
11%
1%
FY23
3%
86%
10%
1%
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

ESRR distribution scale:Excellent
Satisfactory
Partly Unsatisfactory
Unsatisfactory

CLIENT CORPORATE GOVERNANCE RISKIFC manages corporate governance risk primarily
by conducting a structured evaluation of every new
investment project, covering the following six areas:• Effectiveness of the Board of Directors;• Sufficiency of internal controls, audit, risk management and compliance;• Adequacy of financial and non-financial disclosures,
including ESG/sustainability reporting;• Adequacy of shareholders’ rights;• Adequacy of governance of stakeholder engagement; and40 IFC 2023 ANNUAL REPORT FINANCIALS• Demonstration of the client’s commitment to implement high quality corporate governance policies andpractices.

The findings from these assessments are considered in
the decision on whether to proceed with the project.

CLIMATE RISKClimate risk is the risk that IFC’s clients may directly or
indirectly experience potential adverse impacts fromclimate change such as extreme weather, floods or
droughts, and sea level rise, leading to reputational or
financial risk.
IFC has a dedicated Climate Business Department
integrated with IFC’s Operations that provides
in-house expertise on climate. The Climate Business
Department helps set corporate climate strategy,
engages with stakeholders, supports investment
teams to identify decarbonization and climate investment opportunities, and manages climate risk using
tools such as carbon pricing and has started theassessment of transition and physical climate risk ininvestment projects as part of the Paris Alignment
process for all new projects.
Climate risk is integrated into IFC’s operations throughits commitment under the capital increase and more
recently to align with the goals of the Paris Agreement.
As part of its efforts to align with the Adaptation &Climate Resilience component of the Paris Agreement,
IFC screens its projects for exposure to physical climate
risk and potential impacts on the project’s financial,environmental, and social performance during projectappraisal. IFC has developed tools, methodologies andapproaches to help industry, E&S, and climate specialists to conduct these assessments. Similarly, theMitigation component of Paris Alignment assessments
screens projects for exposure to stranded asset risk
and carbon lock-in risk.
Highlights of climate risk management measures in
FY23 include:• Development of counterparty approach for Paris

Alignment for real and financial sector projects withundefined use of proceeds.
• Testing of Paris Alignment methodology for physicalclimate risk for financial sector projects with defineduse of proceeds.
• Development of sector-specific tools and methodologies for physical climate risk assessment of projects
in multiple sectors that will enable mainstreaming ofclimate risk assessments in these sectors.
• Publication of IFC’s fifth consecutive disclosure
along the guidelines of the Task Force for ClimateRelated Financial Disclosures (TCFD) and conductingof benchmarking exercise at the completion of the
5-year milestone.
• Creation of cross-cutting interdepartmental Climate
Risk Working Group and hiring of consultants to
explore ways to integrate climate into overall risk
management at IFC.
The WBG’s Climate Change Action Plan for FY21 to
FY25, aims to increase support to deliver climate
results, with a focus on reducing the trajectory ofemissions and strengthening adaptation and resiliencein developing countries. As part of this plan, IFC hascommitted to increase its direct climate financing toat least 35 percent of total commitments on averageover the five-year period. IFC is also committed toaligning its financial flows with the objectives of theParis Agreement. Starting July 1, 2023, 85 percent ofBoard approved operations are expected to be alignedwith the Paris Agreement’s goals, and 100 percent ofthese are expected to be aligned starting July 1, 2025.

INTEGRITY, MONEY LAUNDERING AND
TERRORIST FINANCING, AND TAX RISKGroup of interrelated risks that IFC’s Clients may haveare ineffective governance structures and/or controls
to manage exposure to integrity risk, money laundering and terrorist financing (ML/TF) risk and tax risk.
Integrity risks are the risks of engaging with external
institutions or persons whose background or activities,
may have adverse reputational and, often, financial
impact on IFC. ML/TF risks are the associated risks
arising from inadequate controls and processes tomanage money laundering or financing of terrorism
when IFC invests with financial institutions or private equity funds. Tax risk is the risk that IFC’s clientsor projects may be structured so as to evade taxes
or allow the adoption of aggressive tax strategies orpractices.
IFC works with a wide range of clients and partners
in Investment Operations, Upstream and Advisory
Services activities, from multi-national to small
companies, and from government institutions to
non-governmental organizations. Thus, each transaction or service opportunity presents unique integrity
risks, affected by different factors, including the typeof engagement, financial instrument, structure, geography and duration of the engagement. IFC conducts
integrity due diligence on clients and partners tomanage these risks and to mitigate them where it
reasonably can, both before engagement and on an
ongoing basis during the engagement.
ML/TF Risk is the risk that IFC’s financial intermediary clients may have ineffective controls to manage
exposure to money laundering and terrorist financing
risk, subjecting IFC to potential integrity, reputational,
or financial risk. IFC conducts Anti-Money Laundering(AML) / Combating the Financing of Terrorism (CFT)
due diligence on financial institution clients and funds
in addition to its integrity due diligence to determine whether:
1. the client’s AML/CFT procedures and controls
are structured to comply with relevant AML/CFT
standards;
2. the AML/CFT procedures and controls are appropriate for the client’s business and operating
environments;
IFC has been strengthening its AML capacity, throughin-house trainings of its business teams and roll out oftechnical capacity building programs (e.g., to promote
the countering of trade-based money laundering for
financial institutions in developing markets).
Tax risk is the risk that IFC’s clients or projects may
be structured so as to evade taxes or to allow the

IFC 2023 ANNUAL REPORT FINANCIALS

41

adoption of aggressive tax strategies or practices. The
World Bank Group Intermediate Jurisdiction and Tax
Policy, which went into effect on January 23, 2023,
reflects significant changes in the international tax
landscape and the current global focus on tax transparency and responsible tax practices and applies tax
due diligence to investment projects involving intermediate jurisdictions and material cross-border related
party transactions. IFC has been raising awarenessregarding the Policy and the corresponding processes
through targeted trainings for regional and industry
teams.

EXTERNAL FINANCING RISKAs well as using its own resources to invest in and provide advice to clients, IFC raises additional funds frompublic and private sector institutional investors, lenders, and donors through several different mechanisms.
External financing risk is the risk that when entrustedwith oversight of such funds, IFC does not meet its
contractual obligations to the third parties involved.
To mitigate this risk, IFC works within agreed frameworks which establish IFC’s responsibilities andobligations with respect to the third parties. For
example, where financing to clients is mobilized
through B Loans or MCPP, the specialized Syndications
Department follows defined processes to identify
co-financiers, advise on structuring, and monitor
compliance with investment agreements. In somecases, financing from third parties, including donors,
is administered through trust funds. IFC follows predefined procedures for clearing all IFC trust fundproposals and agreements and overseeing IFC’s trust
fund portfolio. Finally, AMC has an independent governance process to make decisions for the benefit ofinvestors in AMC-managed funds and AMC compliancematters are subject to oversight by the Business Risk
and Compliance Department (CBR).

SECTION VII.
CRITICAL ACCOUNTINGPOLICIES
IFC’s accounting policies, as well as estimates madeby Management, are integral to its financial reporting.
Some of these accounting policies require Management
to make highly difficult, complex, and subjective judgments as these relate to matters inherently uncertain
and susceptible to change. Note A to IFC’s FY23 consolidated financial statements contains a summaryof IFC’s significant accounting policies, including a
discussion of recently adopted accounting standards
and accounting and financial reporting developments.
Certain of these policies are considered to be “critical” to the portrayal of IFC’s financial condition andresults of operations, since they require Management
to make difficult, complex or subjective judgments,
some of which may relate to matters that are inherently uncertain.
These policies include:• Determining the fair value of equity investments,

debt securities, loans, liquid assets, borrowings andderivatives;• Determining the level of reserve against losses in theloan portfolio;• Determining the level and nature of impairment for
debt securities carried at fair value with changes infair value being reported in other comprehensive
income (OCI); and• Determining the future pension and post-retirement
benefit costs and obligations using actuarial assumptions based on financial market interest rates, pastexperience, and best estimate of future benefit costchanges and economic conditions.
Many of IFC’s financial instruments are classified inaccordance with the fair value hierarchy established byaccounting standards for fair value measurements anddisclosures which permit the fair value and/or impairment to be estimated based on internally developedmodels or methodologies utilizing significant inputs
that are unobservable.

VALUATION OF FINANCIAL
INSTRUMENTS
IFC reports at fair value all of its derivative instruments,
liquid asset trading securities, equity investments,
investments in debt securities and certain borrowings,
and loans. In addition, various investment agreements
contain embedded or stand-alone derivatives that, foraccounting purposes, are separately accounted for asderivative assets or liabilities. IFC classifies all financial
instruments accounted for at fair value based on thefair value hierarchy established by accounting standards for fair value measurements and disclosures as
described in more detail in Notes A and R to IFC’s FY23
consolidated financial statements.

42 IFC 2023 ANNUAL REPORT FINANCIALSIFC’s regional and industry departments are primarily
responsible for fair valuing IFC’s investment portfolio(equity investments, debt securities, loan investments
and related derivatives). The Investment Valuation Unit
in IFC’s Corporate Risk Management 7 department in
the Risk and Finance Vice Presidency provides oversight over the fair valuation process by monitoring andreviewing the fair values of IFC’s investment portfolio.
IFC’s borrowings are fair valued by the Quantitative
Analysis department in IFC’s Treasury and Syndications
Vice Presidency. Third party independent vendor prices
are used to price the vast majority of IFC’s liquid assets.
The vendor prices are evaluated by IFC’s independent
middle office in Treasury department who maintains
oversight for the pricing of liquid assets. All of IFC’s
financial instruments in its liquid assets portfolios
are managed according to an investment authority
approved by the Board of Directors and investment
guidelines approved by IFC’s Corporate Risk Committee,
a subcommittee of IFC’s Management Team.
The change in fair value of borrowings carried at fairvalue resulting from changes in instrument-specificcredit risk is reported in OCI, while the remainingchange in fair value is reported in Net Income.
Many of IFC’s financial instruments accounted forat fair value are valued based on unadjusted quoted
market prices or using models where the significant
assumptions and inputs are market-observable. The
fair values of financial instruments valued using models where the significant assumptions and inputs are
not market-observable are generally estimated using
complex pricing models of the net present value of
estimated future cash flows. Management makes
numerous assumptions in developing pricing models, including an assessment about the counterparty’s
financial position and prospects, the appropriate discount rates, interest rates, and related volatility andexpected movement in foreign currency exchange
rates. Changes in assumptions could have a significant impact on the amounts reported as assets andliabilities and the related unrealized gains and losses
reported in the income statement and OCI. The fairvalue computations affect both the Investment services and Treasury segments of IFC (see Note S tothe FY23 consolidated financial statements for further
discussion of IFC’s business segments).

RESERVE AGAINST LOSSESON LOANS AND OFFBALANCE SHEET CREDITARRANGEMENTS
In accordance with Accounting Standards Update 201613, Measurement of Credit Losses on Financial Instruments
and related amendments, which is incorporated in ASC
Topic 326, Financial Instruments-Credit Losses (ASC326), IFC recognizes a reserve for credit losses that isdeducted from the amortized cost basis of loans topresent the net amount expected to be collected onloans on the balance sheet. IFC uses a credit loss methodology that reflects an estimate of expected credit
losses over the remaining contractual life of a loan,considering forward-looking information. The process
for determining the reserve against credit losses is discussed in Note A to IFC’s FY23 consolidated financial
statements.
The determination of reserve against credit losses
is based on complex inputs and assumptions, which
require a high degree of judgment. In particular, theforecast of key economic variables relevant to theloan portfolio is one of the critical assumptions to
IFC’s estimation of expected credit losses. Informationand events, with respect to the borrower and/or the
economic and political environment in which it operates, that are considered in determining a loss reserve
include, but are not limited to, the borrower’s financial
difficulties, assessing the risk of breach of contract,
bankruptcy/reorganization, credit rating downgrade
as well as geopolitical conflict, financial/economiccrisis, commodity price decline, adverse local government action and natural disaster. The risks inherent
in the portfolio that are considered in determining
the portfolio reserve are those proven to exist by pastexperience and include: country systemic risk; the riskof correlation or contagion of losses between markets; uninsured and uninsurable risks; nonperformance
under guarantees and support agreements; and opacity of, or misrepresentation in a borrower’s financial
statements.
IFC recognizes a reserve against credit losses on
off-balance sheet credit exposures for guarantees thatare not measured at fair value and other off-balance
sheet arrangements. Methodologies for estimating
the reserve for credit losses on off-balance sheet
credit exposures, including loans committed but not
disbursed, are generally consistent with methodologies for estimating the reserve for credit losses for the
disbursed loan portfolio.
IFC periodically reviews these variables and reassesses
the adequacy of the reserve against credit losses
accordingly. Actual losses may differ from expected
losses owing to unforeseen changes in any of thevariables affecting the creditworthiness or estimates
inherent in the exposure measurements.
IFC’s regional and industry departments are primarily
responsible for individual loss reserve and for credit
risk and facility ratings which are used for portfolio
loss reserve. A critical component of portfolio loss
reserve calculations are the quarterly and annual
reevaluation of current expected credit loss (CECL)
assumptions, which are a collective effort of theInvestment & Credit Risk department, Corporate Risk
Management department, Global Macro and Market
Research unit, and Controllers department. The CECL
Steering Committee is the final approving authority
for these assumptions. The Portfolio Review unit in
IFC’s Controllers department provides oversight overthe individual loss reserve process by monitoring andreviewing the individual loss reserve of IFC’s debt portfolio, and collates inputs and runs the portfolio loss
reserve calculations.

7. Effective July 1, 2023, the Investment Valuation Unit moved to IFC’s Investment and Credit Risk department.

IFC 2023 ANNUAL REPORT FINANCIALS43

IMPAIRMENT OF DEBTSECURITIESPENSION AND OTHER POSTRETIREMENT BENEFITS

For all debt security investments classified as available-for-sale, IFC assesses impairment each quarter. In
accordance with ASC 326, IFC established an impairment model to determine whether all or a portion of
the unrealized loss is a credit loss, and recognizes areserve for credit losses. When impairment is identified, the entire impairment is recognized in net income
if certain conditions are met (as detailed in Note A
to IFC’s FY23 consolidated financial statements).
IFC considers all relevant information including theextent to which fair value has been less than amortized
cost, whether IFC intends to sell the debt security
or whether it is more likely than not that IFC will be
required to sell the debt security, the payment structure of the obligation and the ability of the issuer tomake scheduled interest or principal payments, anychanges to the ratings of a security, and relevant
adverse conditions specifically related to the security,
an industry or geographic sector.

IFC participates, along with IBRD and MIGA, in pension
and post-retirement benefit plans that cover substantially all of their staff members. The underlying
actuarial assumptions used to determine the projected
benefit obligations, accumulated benefit obligations,and the funded status associated with these plans are
based on financial market interest rates, past experience, and management’s best estimate of future
benefit cost changes and economic conditions. All
costs, assets and liabilities associated with the Plans
are allocated between IBRD, IFC and MIGA based upon
their employees’ respective participation in the Plans.
IFC reimburses IBRD for their proportionate shareof any contributions made to these plans by IBRD.
Contributions to the Plans are calculated as a percentage of salary. For further details, please refer to Note V
to the FY23 consolidated financial statements.

44 IFC 2023 ANNUAL REPORT FINANCIALSSECTION VIII.
RESULTS OF OPERATIONSOVERVIEWThe overall market environment has a significant influence on IFC’s financial performance. The main elementsof IFC’s net income and other comprehensive income, and influences on the level and variability of net income
and other comprehensive income from year to year are:Table 14: Main Elements of Net Income andOther Comprehensive Income
ELEMENTSSIGNIFICANT INFLUENCES

Net income:Yield on interest earning assets(principally loans)Market conditions including spread levels and degree of competition.
Nonaccruals and recoveries of interest on loans formerly in nonaccrual status,
and income from participation notes on individual loans are also included inincome from loans.

Liquid asset income

Realized and unrealized gains and losses on the liquid asset portfolios, inparticular the portion of the liquid asset portfolio funded by net worth, which
are driven by external factors such as the interest rate environment andliquidity of certain asset classes within the liquid asset portfolio.

Income from the equity investment
portfolio

Global climate for emerging markets equities, fluctuations in currency
markets and company-specific performance for equity investments. Overall
performance of the equity portfolio.

Provision for losses on loans,guarantees, and available-for-saledebt securities

Risk assessment of borrowers, probability of default, loss given default, andexpected balance at default considering prepayment and disbursement
assumption estimates as well as expected utilization rates.

Other income and expenses

Level of advisory services provided by IFC to its clients, the level of expensefrom the staff retirement and other benefits plans, the approved and actual
administrative expenses, and other budget resources.

Gains and losses on other nontrading financial instruments
accounted for at fair value

Principally, differences between changes in fair values of borrowings,
excluding IFC’s credit spread and associated derivative instruments andunrealized gains or losses associated with the investment portfolio including
puts, warrants, and stock options, which in part are dependent on the global
climate for emerging markets. These securities may be valued using internallydeveloped models or methodologies, utilizing inputs that may be observable
or non-observable.

Other comprehensive income:Unrealized gains and losses on
debt securities accounted for as
available-for-sale

Global climate for emerging markets, fluctuations in currency and commodity
markets and company-specific performance, and consideration of the extent
to which unrealized losses are considered a credit loss. Debt securities may bevalued using internally developed models or methodologies, utilizing inputs
that may be observable or non-observable.

Unrealized gains and losses
attributable to instrument-specificcredit risk on borrowings at fair value
under the Fair Value Option

Fluctuations in IFC’s own credit spread measured against reference rate,
resulting from changes over time in market pricing of credit risk. As credit
spreads widen, unrealized gains are recorded, and when credit spreads
narrow, unrealized losses are recorded.

Unrecognized net actuarial gains andlosses and unrecognized prior service
costs on benefit plans

Returns on pension plan assets and the key assumptions that underlay
projected benefit obligations, including financial market interest rates, staff
expenses, past experience, and management’s best estimate of future benefit
cost changes and economic conditions.

IFC 2023 ANNUAL REPORT FINANCIALS45

IFC’s net income or loss for the past three fiscal years ended June 30, 2023 are presented below:

Figure 21: IFC’s Net Income (Loss) FY21–FY23(US$ in millions)Fiscal year ended June 30,
4,209

2021
2022
2023

(464)
672
-2,000 -1,000

0

1,000

2,000

3,000

4,000

5,000

The following paragraphs detail significant variances between FY23 and FY22 covering the periods included
in IFC FY23 consolidated financial statements. The $1.1 billion increase in net income was principally a result of
the following:

Figure 22: Change in Net Income FY23 vs FY22
(US$ in millions)
56

762

1,136
(25)

483

298

57

(106)

111

(500)
Total Income
from Loans
and Debt
Securities***

Loss
Provision

URG(L)* on
Loans
and Debt
Securities

EquityIncomeURG(L)* on
EquityInvestments

Net
Treasury
Income**Administrative URG(L)* on
Expenses & Borrowings
Pensions

Others***Change in
Net Income

Unrealized gains (losses).

** Total income from loans and debt securities and net treasury income are net of allocated charges on borrowings.
*** Others mainly represents foreign exchange gains/losses, service fees, and net advisory service expenses.

A more detailed analysis of the components of IFC’s
net income follows.

$1.2 billion, primarily attributed to higher interest rates
and portfolio growth.

INCOME FROM LOANS AND GUARANTEES,INCLUDING REALIZED GAINS AND LOSSES ON
LOANS AND ASSOCIATED DERIVATIVESNON-PERFORMING LOANS (NPLS)

Income from loans and guarantees, including realized
gains and losses on loans and associated derivatives
for FY23 amounted to $2.3 billion. This represents asignificant increase of $1.1 billion from FY22’s income of

NPLs decreased by $205 million, from $1.3 billion atJune 30, 2022 to $1.1 billion8 at June 30, 2023. The
decrease is largely due to positive developments of$375 million, partially offset by additions of $177 million.
Included in FY23 additions were four loans individuallyequal to $10 million or more with a total of $142 million.

8. Includes $59 million reported as debt securities and $137 million reported as loans under Fair Value Option on the Balance Sheet as ofJune 30, 2023 ($60 million Debt securities and $197 million Fair Value Option loans — June 30, 2022).

46 IFC 2023 ANNUAL REPORT FINANCIALS

Figure 23: Non-performing Loans(US$ in millions)
177
1,329

June 2022

Increase in NPL
Balance

(375)

(25)

Positive
Developments

Write-oﬀs andlosses on sale
net of recoveries

18

1,124

Others*June 2023* Mainly represents balance changes due to deferrals, restructuring, disbursements, interest capitalization, conversions and foreignexchange gains/losses.

PROVISION FOR LOSSES ON LOANS, OFF-BALANCE SHEET CREDIT EXPOSURES AND
OTHER RECEIVABLES
IFC recorded a net provision for losses on loans, off-balance sheet credit exposures and other receivables of$22 million in FY23 (provision of $126 million in FY22) analyzed as follows:

Table 15: Individual and Portfolio Provision (Release of Provision)
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023

2022

Portfolio provision on disbursed loans

$ 91

$ 41

Individual (release of provision) provision on disbursed loans

(76)

52

Portfolio (release of provision) provision on undisbursed loans

(3)

33

Release of individual provision on undisbursed loans—(1)

Provision on off-balance sheet credit exposures and other receivables

10

1

$ 22

$126

Total

Total portfolio provision in FY23 was mainly due to new commitments and disbursements while individual
portfolio release was driven by positive developments.
Total reserve against losses on loans disbursed and loans committed but not disbursed remained stable at$1.4 billion as of June 30, 2023 analyzed as follows:

Figure 24: Reserve against Losses for Disbursed andUndisbursed Loans (US$ in millions)
88

1,381
(76)

June 2022

Individual
Provision

5

1,379

Others*June 2023(19)

Portfolio
Provision

Write-oﬀs netof recoveries* Mainly represents reserve against capitalized interest and foreign currency transaction adjustments.

At June 30, 2023, reserve against losses on disbursedloans was $1.2 billion or 3.9% of the carrying value of
disbursed loans at amortized cost, largely unchanged
from June 30, 2022 ($1.2 billion or 4.6% — June 30, 2022).

Reserve against losses on undisbursed loans totaled$170 million or 2.5% of loans committed but not disbursed ($172 million or 2.1% — June 30, 2022), a decreaseof $2 million.

IFC 2023 ANNUAL REPORT FINANCIALS

47

Reserve against losses as of June 30, 2023 reflectedcredit risk assessments as of that date. The assessmentof the level of reserve against losses carried a heightened degree of uncertainty and judgment particularly
in light of the impact of Russia’s invasion of Ukraine. As
discussed in the Executive Summary section, a qualitative overlay related to the invasion and its spillover
macroeconomic impact remained at $135 million atJune 30, 2023, unchanged from June 30, 2022.
Individual reserve against losses on disbursed loans atJune 30, 2023 of $366 million ($461 million — June 30,2022) were held against impaired disbursed loans of$1.2 billion ($1.5 billion — June 30, 2022), a coverage ratioof 30.2% (31.5% — June 30, 2022).
Individual reserve against losses on undisbursed loans
at June 30, 2023 of $1 million ($1 million — June 30,2022) were held against undisbursed impaired loansof $46 million ($14 million — June 30, 2022), a coverage
ratio of 2% (7% — June 30, 2022).
In FY23, the top ten largest individual provisions and
top ten largest individual releases of provision accountfor 74% and 76% of the total individual provisions andtotal individual releases of provision respectively.

INCOME FROM EQUITY INVESTMENTS AND
ASSOCIATED DERIVATIVESIFC sells equity investments where IFC’s developmentalrole is complete, where pre-determined sales trigger
levels have been met, and where applicable, lock-ups
have expired. Gains and losses on equity investments
and associated derivatives comprises of both realized
and unrealized gains.
Income from equity investment and associated derivatives (consisting of dividends, and net realized andunrealized gains and losses), decreased by $17 million from $208 million income in FY22 to $191 million
in FY23.
IFC recognized realized net gains on equity investments and associated derivatives of $161 million in
FY23, as compared to net gains of $642 million in FY22,
a decrease of $481 million. Realized gains on equity
investments and associated derivatives were concentrated in a small number of investments. In FY23,
six investments generated individual realized capitalgains of $20 million or more totaling $177 million, andfive investments generated individual realized capital
losses of $20 million or more totaling $129 million. In
comparison, thirteen investments generated individual
realized capital gains of $20 million or more totaling$668 million, and five investment generated individual
realized capital losses of $20 million or more totaling$169 million in FY22. Dividend income in FY23 totaled$162 million, as compared with $180 million in FY22.
Net unrealized losses on equity investments andassociated derivatives were $134 million in FY23
compared to net unrealized losses of $617 million in
FY22. The unrealized losses in FY23 were mainly due
to lower valuations, while FY22 unrealized losses
reflected reclassifying gains from unrealized to realized upon sales.

48 IFC 2023 ANNUAL REPORT FINANCIALSINCOME FROM DEBT SECURITIES ANDREALIZED GAINS AND LOSSES ON DEBTSECURITIES, AND ASSOCIATED DERIVATIVES
Income from debt securities and associated derivatives
increased by $104 million from $414 million in FY22 to$518 million in FY23. The increase was primarily due tohigher interest income which increased by $145 million,
largely driven by higher outstanding balances.

INCOME (LOSS) FROM LIQUID ASSETSTRADING ACTIVITIES
Liquid assets trading activities, gross of funding costs,
generated an income of $1.5 billion in FY23, comprisingincome of $1.4 billion from the market funded liquidity
portfolio, and income of $32 million from the net worth
funded portfolio.
Liquid assets trading activities, net of allocated funding costs, generated an income of $241 million in FY23($521 million loss in FY22), which comprises: (i) incomeof $209 million from the market funded liquidity portfolio ($34 million income in FY22) reflecting mainly
gains from favorable movements in credit and foreignexchange basis spread movements, and (ii) incomeof $32 million from the net worth funded portfolio($555 million loss in FY22 when U.S. Treasury yields
rose rapidly).

CHARGES ON BORROWINGS
IFC’s charges on borrowings increased by $2.3 billion,
from $302 million in FY22 to $2.6 billion in FY23, primarily due to increases in reference rates (both SOFR
and LIBOR) in FY23 compared to FY22.
The weighted average cost of IFC’s outstanding borrowings from market sources, after the effects ofborrowing-related derivatives, and excluding shortterm borrowings from market and other sources, was
5.2% at June 30, 2023, an increase from 1.3% at June 30,
2022. The increase in cost of borrowings was predominantly due to rising interest rates. The size of theborrowings portfolio (excluding short-term borrowings), net of borrowing-related derivatives and before
unamortized discounts and fair value adjustments,
increased by $3.6 billion during FY23 from $53.1 billion
at June 30, 2022, to $56.7 billion at June 30, 2023.

OTHER INCOME
Other income increased by $99 million, from $419 million in FY22 to $518 million in FY23 mainly driven byhigher investment returns on Post-Employment
Benefit Plan assets ($55 million in FY23 comparedto loss of $17 million in FY22) and Post-retirement
Contributions Reserve Fund (PCRF) income ($15 million in FY23 compared to $1 million in FY22).

OTHER EXPENSES
Administrative and pension expenses increased by$25 million, from $1.36 billion in FY22 to $1.39 billion
in FY23. The increase in administrative expenses by$73 million was partially offset by the decrease in pension expenses by $48 million. Administrative expenses
increased due to higher staff costs and travel expenses.

The decrease in pension expenses was driven by anincrease in accretion of unrecognized actuarial gains
as well as an increase in expected return on assets in
Staff Retirement Plan (SRP) and Retired Staff Benefits
Plan (RSBP) based on assumptions established atJune 30, 2022.

FOREIGN CURRENCY TRANSACTION GAINSAND LOSSES ON NON-TRADING ACTIVITIESIn FY23, IFC recorded foreign exchange related gains of$25 million (losses of $64 million in FY22), comprised oflosses of $86 million (gains of $76 million in FY22) thatwere reported in net income, and gains of $111 million(losses of $140 million in FY22) that were reported
in other comprehensive income. For debt securities

accounted for as available-for-sale, foreign currencytransaction gains or losses are recorded in other comprehensive income, while foreign currency transaction
gains and losses on the derivatives economically hedging such debt securities are reported in net income.

NET UNREALIZED GAINS AND LOSSES ON NONTRADING FINANCIAL INSTRUMENTS
IFC accounts for certain financial instruments at fairvalue with unrealized gains and losses on such financial
instruments being reported in net income, namely:(i) market borrowings with associated currency orinterest rate swaps; (ii) unrealized gains and losses oncertain loans, debt securities and associated derivatives; and (iii) borrowings from IDA.

Table 16: Net Unrealized Gains (Losses) on Non-Trading
Financial Instruments
FOR THE YEAR ENDED JUNE 30(US$ in millions)
Unrealized losses on the loan and debt securities portfolio
carried at fair value$

Unrealized gains on associated derivatives

2023

2022

(46)

$ (627)

221

504

Unrealized gains (losses) on loans, debt securities andassociated derivatives

175

(123)

Unrealized gains on borrowings from market and IDA

270

3,822

Unrealized losses on associated derivatives(320)(3,928)

(50)

(106)

125

$ (229)Unrealized losses on borrowings from market, IDA
and associated derivatives
Net unrealized gains (losses) on non-trading financial instruments
accounted for at fair value

IFC reported $175 million of unrealized gains on loans,debt securities, net of associated derivatives in FY23.
Unrealized losses from loans and debt securities was$46 million in FY23 ($627 million in FY22). Included in
FY22 unrealized losses was one investment reclassified
from debt security to equity investment which resulted
in a reversal of unrealized gains on debt security of$197 million. The unrealized gains on associated derivatives of $221 million in FY23 included $69 million gains
on lending related currency and interest rate swaps
due to higher swaps rates in U.S. dollar and Euro, offset
by losses on Brazilian real swaps where interest rates
fell in FY23, and $113 million gains on client risk management swaps mainly on larger Euro and U.S. dollar
interest rate swaps.

$

IFC reported $50 million of unrealized losses onborrowings from market sources and IDA, net of associated derivatives in FY23. This comprised $270 million
unrealized gains mainly related to market borrowings
and IDA in the rising interest rate environment, andunrealized losses of $320 million on borrowing-related derivatives. The net after-swap unrealized losses
in FY23 were driven mainly by losses on Euro, andAustralian dollars portfolios, offset in part by valuation
gains on the Russian ruble portfolio.

IFC 2023 ANNUAL REPORT FINANCIALS

49

OTHER COMPREHENSIVE INCOME
UNREALIZED GAINS AND LOSSES ON DEBT SECURITIES AND BORROWINGS

Table 17: Other Comprehensive Income — Unrealized Gains andLosses on Debt Securities and Borrowings
FOR THE YEAR ENDED JUNE 30(US$ in millions)

2023

2022

Net unrealized gains and losses on debt securities arising during
the period:

$ 275

$ 178

(155)

(432)

Unrealized gains

(58)

(24)

62

(278)

Unrealized gains

474

672

Unrealized losses

(536)

(433)

Unrealized losses
Net unrealized gains (losses) on debt securities$

Net unrealized gains and losses attributable to instrument-specific credit
risk on borrowings at fair value under the Fair Value Option:

Reclassification adjustment for realized gains included in net income
upon derecognition of borrowings

12

1

Net unrealized (losses) gains on borrowings

(50)

240

12

$ (38)

Total unrealized losses on debt securities and borrowings

Net unrealized gains on debt securities totaled$62 million in FY23 (net unrealized losses of $278 million in FY22) which included foreign currency gains of$111 million on debt securities accounted for as available-for-sale. This was partially offset by a reversal
of $49 million unrealized gains for one debt security
sold in FY23, which was reclassified to realized gains
in net income upon sale. In FY22, the unrealized losses
were primarily comprised of foreign currency losses on
debt securities held in Euro ($83 million), Turkish lira($88 million), and Indian rupee ($39 million).
Net unrealized losses on borrowings of $50 million wasrecognized through other comprehensive income in
FY23 (net unrealized gains of $240 million in FY22). Thiswas driven by losses in Russian ruble and Mexican pesobond portfolios due to market price movements andin U.S. dollars due to narrowing in IFC credit spreads,
offset in part by gains on Australian dollar and Euroissuance due to wider IFC credit spreads in thosecurrencies.

UNRECOGNIZED NET ACTUARIAL GAINS AND
LOSSES AND UNRECOGNIZED PRIOR SERVICECOSTS ON BENEFITS PLANS
Unrecognized pension adjustments largely represent
the unrecognized net actuarial gains and losses on
benefit plans. Actuarial gains and losses occur when

50 IFC 2023 ANNUAL REPORT FINANCIALS$

actual results differ from expected results in determining the funded status of the pension plans. Since
the pension plans are long term, changes in asset
returns and discount rates cause volatility in comprehensive income. Given its long-term planning horizon
for pension plans, Management is focused mainly on
ensuring that contributions to pension plans appropriately reflect long term assumptions about asset
returns and discount rates.
During FY23, IFC recorded a gain of $702 million($697 million of unrecognized net actuarial gains and a$5 million reduction of prior service cost). The decreasein the underfunded status of the portion of the pension
plans, net of PEBP assets, was primarily due to theactuarial gains in the projected benefit obligations as aresult of the increase in the real discount rates. As thePlans are managed with a long-term horizon, resultsover shorter time periods may be impacted positively
or negatively by market fluctuations.
For discussion of IFC’s financial results for the year
ended June 30, 2022 as compared to the year ended
June 30, 2021, see Section VIII Results of Operations
in IFC’s Management’s Discussion and Analysis andConsolidated Financial Statements for the year ended
June 30, 2022.

SECTION IX.
GOVERNANCE AND CONTROLSENIOR MANAGEMENT
AND CHANGESThe following is a list of the principal officers of IFC as of June 30, 2023:
President

Ajay Bangad

Managing Director

Makhtar Diop

Regional Vice President, Africa

Sérgio Pimenta

Regional Vice President, Latin America and the Caribbean, and Europe

Alfonso García MoraRegional Vice President, Middle East, Central Asia, Türkiye, Pakistan, and Afghanistan

Hela Cheikh Rouhou

Regional Vice President, Asia and the Pacific

Riccardo Pulitic

Vice President, Cross-Cutting Solutions

Emmanuel Nyirinkindi

Vice President, Corporate Support

Elena Bourganskaia

Vice President, Economics and Private Sector Development

Susan M. Lund

Vice President and General Counsel, Legal and Compliance Risk

Ramit Nagpala

Vice President, Industries

Mohamed Gouledb

Vice President, Risk and FinanceFederico Galiziab

Vice President, Treasury & Mobilizationc

John Gandolfo

a. On July 21, 2022, Christopher Stephens was appointed as World Bank Group Senior Vice President and General Counsel effective
September 16, 2022. Leslie Sturtevant assumed the role as the acting Vice President and General Counsel, Legal and Compliance Risk,
effective September 16, 2022. On October 31, 2022, Ramit Nagpal was appointed as the Vice President and General Counsel, Legal andCompliance Risk effective January 16, 2023.
b. On July 8, 2022, IFC announced the creation of a new Vice President, Industries to oversee all Global Industry Departments, as well as
the Corporate Portfolio and Operations Management Departments. Mohamed Gouled was appointed as the Vice President, Industries
effective July 18, 2022. Tarek S. Himmo assumed the role as the acting Vice President, Risk and Finance, effective July 18, 2022. On
October 31, 2022, Federico Galizia was appointed as the Vice President, Risk and Finance effective December 23, 2022.
c. On July 8, 2022, IFC announced the remapping of AMC to the Treasury & Syndications VPU and renaming it the Treasury & Mobilization
VPU, effective August 1, 2022. Ruth Horowitz was appointed as the Regional Vice President for Asia and the Pacific effective August
1, 2022. On December 6, 2022, Riccardo Puliti was appointed as the Regional Vice President for Asia and the Pacific effective February
1, 2023.
d. Effective June 1, 2023, David Malpass resigned as World Bank Group President. Ajay Banga was appointed as President of the WorldBank Group effective June 2, 2023.

The FY23 consolidated financial statements reflect the organization structure at June 30, 2023.

Figure 25: Governance Structure

BOARD OFGOVERNORS

Audit Committee

BOARD OFDIRECTORS

Committee on
Development Effectiveness

PRESIDENT

Committee on
Governance and Executive
Directors’ Administrative Matters

Budget Committee

Human Resources Committee

IFC 2023 ANNUAL REPORT FINANCIALS

51

BUSINESS CONDUCTThe WBG promotes a positive work environment
in which staff members understand their ethical obligations to the institutions. In support of thiscommitment, the institutions have in place a Code of
Conduct. The WBG has both an Ethics Help Line anda 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.
IFC has procedures in place for receiving, retaining,and handling recommendations and concerns relating
to business 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 othermisconduct that may threaten the operations or governance of the WBG. These rules also offer protection
from retaliation.

GENERAL GOVERNANCE
IFC’s decision-making structure consists of the Boardof Governors, the Board of Directors (Board of Directors
or Board), the President, the Managing Director,
Management and staff. The Board of Governors is
the highest decision-making authority. Governors areappointed by their member governments for a fiveyear term, which is renewable. The Board of Governors
may delegate authority to the Board of Directors to
exercise any of its powers, except those reserved to theBoard of Governors under IFC’s Articles of Agreement.

BOARD OF DIRECTORSIn accordance with IFC’s Articles of Agreement,
Directors are appointed or elected every two years
by their member governments. The Board currently
has 25 Directors who represent all member countries. Directors are neither officers nor staff of IFC.
The President is the only member of the Board frommanagement, 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 the use of IFC’s net income: retained
earnings and designation of retained earnings and onother policies that affect its general operations. The
Board is also responsible for presenting to the Board ofGovernors, at the Annual Meetings, audited accounts,
an administrative budget, and an annual report on
operations and policies and on other matters.
The Board and its committees are in continuous session based in Washington DC, as business requires.
Each committee’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.

52 IFC 2023 ANNUAL REPORT FINANCIALS

The committees are made up of eight members andfunction under their respective stipulated terms ofreference. These committees are as follows:• Audit Committee — assists the Board in overseeing

IFC’s finances, accounting, risk management andinternal controls (see further explanation below).
• Budget Committee — assists the Board in approving
IFC’s budget and in overseeing the preparation andexecution of IFC’s strategy and business outlook. The
committee provides guidance to management on
strategic directions.
• Committee on Development Effectiveness — supports the Board in assessing IFC’s development
effectiveness, providing guidance on strategic directions, and monitoring the quality and results ofoperations.
• Committee on Governance and Executive Directors’
Administrative Matters — assists the Board on issues
related to governance, the Board’s own effectiveness, and the administrative policy applicable to
Directors’ offices.
• Human Resources Committee — strengthens the efficiency and effectiveness of the Board in discharging
its oversight responsibility on IFC’s human resources
strategy, policies and practices, and their alignment
with the business needs of the organization.

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

KEY RESPONSIBILITIESThe Audit Committee is appointed by the Board for the
primary purpose of assisting the Board in overseeing
IFC’s finances, accounting, risk management, internal
controls and institutional integrity, specific responsibilities include:• Oversight of the integrity of IFC’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 account-ing policies and internal controls and the mechanisms
to deter, prevent and penalize fraud and corruption in
IFC operations and corporate procurement.
• Effective management of financial, fiduciary, andcompliance risks in IFC.
• Oversight of the institutional arrangements and processes for risk management across IFC.
In carrying out its role, the Audit Committee discusses
financial issues and policies that affect IFC’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 in corporate governance and its ownrole on an ongoing basis.

EXECUTIVE SESSIONS

EXTERNAL AUDITORS

Under the Audit Committee’s terms of reference, it
may convene in executive session at any time, without
Management’s presence. The Audit Committee meetsseparately in executive session with the external andinternal auditors.

The external auditor is appointed to a five-year term,with a limit of two consecutive terms, and is subject toannual reappointment based on the recommendationof the Audit Committee and approval of a resolution
by the Board.

ACCESS TO RESOURCES AND TO
MANAGEMENTIn May 2022, IFC’s Directors approved Deloitte &Touche LLP as IFC’s external auditor for a second fiveyear term commencing in FY24.

Throughout the year, the Audit Committee receivesa large volume of information to enable it to carryout its duties, and meets both formally and informallythroughout the year to discuss relevant matters. It
has complete access to Management, and reviews anddiscusses 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 otheradvisors as it deems necessary.

AUDITOR INDEPENDENCE
The appointment of the external auditor for IFC isgoverned 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-ap-

proved 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 andmandatory rotation thereafter.
The external auditor may provide non-prohibited,
non-audit related services subject to monetary limits. Broadly, the list of prohibited non-audit services
include those that would put the external auditor in
the roles typically performed by management or in aposition of auditing their own work, such as accounting services, internal audit services, and provision 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 thesame period.
Communication between the external auditor andthe Audit Committee is ongoing and carried out asoften as deemed necessary by either party. The Audit
Committee meets periodically with the external
auditor and individual committee members have independent access to the external auditor. IFC’s external
auditors also follow the communication requirementswith the Audit Committees as set out under generally
accepted auditing standards in the United States.

INTERNAL CONTROLINTERNAL CONTROL OVER FINANCIALREPORTING
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 materially affect IFC’s internal control
over financial reporting. The internal control framework promulgated by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO),“Internal Control — Integrated Framework (2013)”
provides guidance for designing, implementing andconducting internal control and assessing its effectiveness. IFC uses the 2013 COSO framework toassess the effectiveness of the internal control overfinancial reporting. As of June 30, 2023, management
maintained effective internal control over financial
reporting. See “Management’s report regarding effectiveness of Internal Control over Financial Reporting”
for additional information.
IFC’s internal control over financial reporting was
audited by Deloitte & Touche, LLP and their report
expresses an unqualified opinion on the effectivenessof IFC’s internal control over financial reporting as ofJune 30, 2023. See “Independent Auditor’s Report” foradditional information.

DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed toensure that information required to be disclosed isgathered and communicated to Management as
appropriate, to allow timely decisions regarding
required disclosure by IFC. Management conducted
an evaluation of the effectiveness of such controls andprocedures and the President, the Managing Directorand Executive Vice President, the Vice President, Risk
and Finance and the Controller have concluded thatthese controls and procedures were effective as ofJune 30, 2023.

IFC 2023 ANNUAL REPORT FINANCIALS

53

SECTION X.
APPENDIXGLOSSARY OF TERMSAMC Funds: IFC Asset Management Company (AMC),
a division of IFC effective January 31, 2020, invests
third-party capital and IFC capital, enabling outside investors to invest alongside IFC in developing
markets. Investors in funds managed by AMC haveincluded sovereign wealth funds, national pension
funds, multilateral and bilateral development institutions, national development agencies and international
financial institutions (IFIs). These funds collectively arereferred to as the AMC Funds.
Articles: IFC’s Articles of Agreement.
Board: The Board of Directors as established by IFC’s
Articles of Agreement.

Fast Track COVID-19 Facility (COVID Facility, or
FTCF): World Bank Group package to support country and private sector clients with the health andeconomic impacts of COVID-19. IFC Management has
allocated 40 percent of its contribution to projects in
IDA/FCS countries.
IDA18: IDA’s Eighteenth Replenishment of Resources.
IDA19: IDA’s Nineteenth Replenishment of Resources.
IDA20: IDA’s Twentieth Replenishment of Resources
IDA-eligible countries: Countries eligible to borrowfrom IDA on concessional terms.
IFC 3.0: Creating Markets and Mobilizing Private
Capital is long-term strategy that is re-orienting IFC
to a more deliberate and systematic approach to market development, particularly in IDA-eligible countries
and Fragile and Conflict-affected Situations, and to
more proactively marshal new sources of institutional
capital to support private sector solutions in pursuit of
the Twin Goals.

Base of the Pyramid (BOP): Market segment comprised of all people with income below $8 per day inpurchasing power parity or who lack access to basic
goods and services.

Income Available for Designations: Income Available
for Designations (a non-U.S. GAAP measure) is used asa basis for designations of retained earnings. Beginningin FY20, IFC uses “income excluding unrealized gains
and losses on investments and borrowings” as themetric for Income Available for Designations.

Capital Adequacy: A measure of IFC’s ability to withstand unexpected shocks as IFC is required to maintaina minimum level of capital available (Balance Sheet
Capital less Designated Retained Earnings) equal tototal potential losses for all on- and off-balance sheet
exposures estimated at levels consistent with maintaining IFC’s AAA rating.

Paris Agreement: The Paris Agreement is the universal, legally binding global climate change agreement,
adopted at the Paris climate conference in December
2015. It sets out a global framework to avoid dangerous
climate change by limiting global warming and aims tostrengthen countries’ ability to deal with the impactsof climate change and support them in their efforts.

Capital Available: Under IFC’s economic capitalframework, resources available to absorb potential
losses, calculated as: Balance Sheet Capital less
Designated Retained Earnings.

Spring Meetings: The Spring Meetings of theInternational Monetary Fund and the Boards ofGovernors of the World Bank Group is a gathering that features the Development Committee andInternational Monetary and Financial Committee plenary session to discuss work of the institutions.

Capital Required: Aggregate minimum Economic
Capital required to maintain IFC’s AAA rating.
Core Mobilization: Non-IFC financing or risk sharing
arranged on commercial terms due to the active anddirect involvement of IFC for the benefit of a Client. A
Client is a legal entity to which IFC provides Advisory
Services (AS) or Investment Services (IS).
Capital Utilization Ratio (CUR): A ratio to measure
IFC’s capital adequacy expressed as Capital Required
divided by Capital Available.
Credit spread: A credit spread is the difference in yield
between two bonds of similar maturity but different
credit quality.
Economic Capital (EC): Minimum USD amount of
capital required to meet expected and unexpected
losses. For Financial Product(s), calculated as Exposureat Risk (EAR) multiplied by Economic Capital Ratio for
relevant product/sub-product.

54 IFC 2023 ANNUAL REPORT FINANCIALS

Upstream: Upstream activities aim to unlock and/or
create new, additional investment opportunities forwhich IFC is both willing and likely to be a financial
partner. Upstream activities comprise IFC engagements
which aim to (i) Support the creation and realization of
specific projects, for which IFC is a likely finance partner(Transaction Upstream); and/or have a wider market or
sectoral impact to facilitate private sector investment,
for which in turn IFC could be a potential financing
partner (Creating Markets Upstream).
U.S. GAAP: Accounting principles generally acceptedin the United States of America.
UN: United Nations.
World Bank: The World Bank comprises IBRD and IDA.
World Bank Group (WBG): The World Bank Groupconsists of IBRD, IDA, IFC, MIGA, and ICSID.

ABBREVIATIONS AND
ACRONYMS
ABS

Asset-Backed Securities

IDA-PSW

IDA Private Sector Window

AIMM

Anticipated Impact Measurement
and Monitoring

IEG

Independent Evaluation Group

ALM

Asset Liability Management

AML/CFT

Anti-Money Laundering/
Combating the Financingof Terrorism

IFC or the
Corporation International Finance Corporation
IFIs

International Financial Institutions

INT

Integrity Vice Presidency

ISDAInternational Swaps andDerivatives Association

ITSG

Information and Technology
Steering GroupKRIs

Key Risk Indicators

LCR

Liquidity Coverage Ratios

LTF

Long-Term Finance

ARRC

Alternative Reference Rates
Committee

BFC

Blended Finance and Donor Funds
Committee

CAO

Compliance Advisory/Ombudsman

CBR

Business Risk and ComplianceDepartment

CECL

Current Expected Credit Loss

MBS

Mortgage-Backed Securities

Sustainability and Gender Solutions
Department

MD

Managing Director

MD&A

Management’s Discussion andAnalysis

MIGA

Multilateral Investment Guarantee
AgencyCEG
CES

Environmental and Social Policy
and Risk Department

CMAW

Creating Markets Advisory Window

COSO

Committee of Sponsoring
Organizations of the Treadway
Commission

ML/TF

Money Laundering And
Terrorist Financing

MT

IFC’s Management TeamCOVID-19

Coronavirus Disease 2019

NAV

Net Asset ValueCR

Credit Rating

NPLs

Non-performing Loans

CRC

Corporate Risk Committee

ORM

CRM

Client Risk Management

IFC’s Operational Risk
Management

CUR

Capital Utilization Ratio

PBAC

E&S

Environmental and Social

Pension Benefits Administration
Committee

EBC

Ethics and Business Conduct

PCRF

Post-retirement Contributions
Reserve Fund

ERA

Economic Resilience Action

PEBP

Post-Employment Benefit Plan

ERM

Enterprise Risk Management
Framework

PFC

Pension Finance Committee

ESG

Environmental, Social& Governance

PPP

Public-Private Partnership

PRI

Political Risk Insurance

ESRR

E&S Risk Rating

PSW

Private Sector Window

FCA

Financial Conduct Authority

RA

Risk Appetite

FCS

Fragile and Conflict-Affected
Situations

RCSA

Risk and Control Self-Assessments

RSBP

Retired Staff Benefits Plan

FMTAAS

Funding Mechanism for Technical
Assistance and Advisory Services

SCI

Selective Capital Increase

SLAs

Service Level Agreements

GCI

General Capital Increase

SMEs

Small and Medium EnterpriseGP

General Partner

SOFR

Secured Overnight Financing Rate

GTFP

Global Trade Finance Program

SRP

Staff Retirement Plan

IBOR
ProtocolISDA 2020 IBOR Fallbacks Protocol

STF

Short-Term Finance

T3PC

Tier III Project Committee

TCFD

Task Force for Climate-Related
Financial Disclosures

VPU

Vice Presidency Unit

IBRD

International Bank for
Reconstruction and Development

ICSID

International Centre for
Settlement of Investment Disputes

IDA

International Development
Association
IFC 2023 ANNUAL REPORT FINANCIALS

55

CONSOLIDATEDFINANCIALSTATEMENTS
AND INTERNALCONTROLREPORTS

56 IFC 2023 ANNUAL REPORT FINANCIALS

Page 61

Management's Report Regarding Effectiveness ofInternal Control over Financial Reporting
August 4, 2023
The management of the International Finance Corporation (IFC) is responsible for the preparation, integrity, and fairpresentation of its published consolidated financial statements. The consolidated financial statements have been preparedin accordance with accounting principles generally accepted in the United States of America (US GAAP) and include
amounts based on informed judgments and estimates made by management.
The consolidated 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 of the Board of Directors and their
Committees. Management believes that all representations made to the independent auditors during their audit of IFC's
consolidated financial statements and audit of its internal control over financial reporting were valid and appropriate. The
independent auditors’ reports accompany the audited consolidated financial statements.
Management is responsible for establishing and maintaining effective internal control over financial reporting for financial
statement presentations in conformity with US GAAP. Management maintains a comprehensive system of controls
intended to ensure that transactions are executed in accordance with management's authorization, assets are
safeguarded, and financial records are reliable. The system of internal control contains monitoring mechanisms, andactions are taken to correct deficiencies identified. Management believes that internal control over financial reporting
supports the integrity and reliability of the external consolidated financial statements.
There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and thecircumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonableassurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness ofinternal controls may vary over time.
IFC assessed its internal control over financial reporting for financial statement presentation in conformity with US GAAP
as of June 30, 2023. This assessment was based on the criteria for effective internal control over financial reporting
described in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based upon this assessment, management believes that IFC maintained effective internal
control over financial reporting presented in conformity with US GAAP as of June 30, 2023. The independent audit firmthat audited the consolidated financial statements has issued an Independent Auditors’ Report which expresses anopinion on IFC’s internal control over financial reporting.
The Board of Directors has appointed an Audit Committee responsible for monitoring the accounting practices and internal
controls of IFC. The Audit Committee is comprised entirely of Directors who are independent of IFC's management. The
Audit Committee is responsible for recommending to the Board of Directors the selection of independent auditors. It meets
periodically with management, the independent auditors, and the internal auditors to ensure that they are carrying out their
responsibilities. The Audit Committee is responsible for performing an oversight role by reviewing and monitoring thefinancial, accounting and auditing procedures of IFC in addition to reviewing IFC's financial reports. The independent
auditors and the internal auditors have full and free access to the Audit Committee, with or without the presence ofmanagement, to discuss the adequacy of internal control over financial reporting and any other matters which they believe
should be brought to the attention of the Audit Committee.

IFC 2023 ANNUAL REPORT FINANCIALS

57

Page 62

58 IFC 2023 ANNUAL REPORT FINANCIALS

Page 63

INDEPENDENT AUDITOR’S REPORT
President and Board of Directors
International Finance Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of International Finance Corporation and its consolidated entities ("IFC") asof June 30, 2023, based on the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). In our opinion, IFC maintained, in all material respects, effective
internal control over financial reporting as of June 30, 2023, 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 of America (GAAS), theconsolidated financial statements as of and for the year ended June 30, 2023 of IFC, and our report dated August 4, 2023, 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
IFC and to meet our other ethical responsibilities, 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 over financial 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 allmaterial respects and to issue an auditor’s report that includes our opinion on internal control over financial reporting. Reasonableassurance 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:•

Exercise professional judgment and maintain professional skepticism throughout the audit.

•

Obtain an understanding of internal control over financial reporting, assess the risks that a material weakness exists, and test andevaluate 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 with governance, management, and otherpersonnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance withaccounting principles generally accepted in the United States of America. An entity's internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions 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 ofAmerica, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management andthose charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction ofunauthorized acquisition, use, or disposition of the entity'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 detect and correct, misstatements. Also,
projections of any assessment of effectiveness to future periods are subject to the risk that controls may become inadequate becauseof changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

August 4, 2023

IFC 2023 ANNUAL REPORT FINANCIALS59

INTERNATIONAL FINANCE CORPORATION

Page 66

CONSOLIDATED BALANCE SHEETS
as of June 30, 2023 and June 30, 2022

(US$ in millions)

June 30, 2023

June 30, 2022$$

AssetsCash and due from banks – Note C

1,051

702

Time deposits – Note C

10,215

6,579

Trading securities – Notes C and R(includes $6,446 and $5,517 securities pledged to creditors under repurchase agreements at June30, 2023 and June 30, 2022 respectively)
Securities purchased under resale agreements and receivable for cash collateral pledged – Notes
C, R and W

31,02030,891

5,192

8,178

31,414

26,223

10,7789,310

11,137
6,733

51,50244,093

Derivative assets – Notes B, C, Q, R and W

5,722

3,856

Receivables and other assets – Notes B, C, J, T and U

5,845

4,711

Investments – Notes D, E, F, G, R and T
Loans(includes $1,506 and $1,374 loans held at fair value at June 30, 2023 and June 30, 2022
respectively; net of reserve against losses of $1,209 and $1,209 at June 30, 2023 and June30, 2022 respectively)– Notes D, E, R and T
Equity investments– Notes B, D, G, R and T
Debt securities – Notes D, F, R and T(includes available-for-sale securities of $1,394 and $1,919, with associated amortized cost of$1,632 and $2,219, net of reserve against credit losses of $21 and $14 at June 30, 2023 andJune 30, 2022 respectively)
Total investments

Total assets$

110,547$

99,010

$

6,631

$

6,223

Liabilities and capital
Liabilities
Securities sold under repurchase agreements and payable for cash collateral received – Notes C
and W
Borrowings outstanding – Notes B, K and R
From market and other sources at amortized cost

3,327

2,962

From market sources at fair value

48,87344,963243

344

52,44348,269From International Development Association at fair value
Total borrowings
Derivative liabilities – Notes B, C, Q, R and W

11,195

7,900

Payables and other liabilities – Notes B, C, E, L, T, U and V

5,240

3,813

75,50966,20523,93923,611

Total liabilities
CapitalAuthorized capital, shares of $1,000 par value each – Note M(25,079,991 shares at June 30, 2023 and June 30, 2022)
Subscribed capital
Less: unpaid portion of subscriptions
Paid-in capital
Accumulated other comprehensive income (loss) – Note O
Retained earnings – Note O
Total capital
Total liabilities and capital$

The notes to consolidated financial statements are an integral part of these statements.

60 IFC 2023 ANNUAL REPORT FINANCIALS(1,343)(1,862)

22,596

21,749632(82)

11,810

11,13835,03832,805110,547$

99,010INTERNATIONAL FINANCE CORPORATION

Page 67

CONSOLIDATED STATEMENTS OF OPERATIONS
for the three years ended June 30, 2023, June 30, 2022 and June 30, 2021

(US$ in millions)
Income from investments

2023

Income from loans and guarantees, including realized gains and losses on loans
and associated derivatives – Note E
$

2022

2,290

$

2021

1,156

$

1,116

(Provision) release of provision for losses on loans, off-balance sheet credit
exposures and other receivables – Note E

(22)

(126)

201

Income from equity investments and associated derivatives – Note G

191

208

3,201

Income from debt securities, including realized gains and losses on debt
securities and associated derivatives – Note F

518

414

340

(7)

(14)

(3)

Provision for losses on available-for-sale debt securities – Note F

2,970

1,638

4,855

Income (loss) from liquid asset trading activities – Note C

Total income from investments

1,464

(413)

327

Charges on borrowings – Note K(2,598)

(302)

(326)

Income from investments and liquid asset trading activities, after charges onborrowings

1,836

923

4,856

Upstream and Advisory services income – Note U

247

233

237

Service fees

128

142

146

Other – Notes N

143

44

212

518

419

595

(1,430)(1,441)(1,355)

(317)

(287)

(277)

26

75

(55)

(1,721)(1,653)(1,687)

Other income

Total other income
Other expenses
Administrative expenses – Note V
Upstream and Advisory services expenses – Note U
Other, net – Note V
Total other expenses
Foreign currency transaction (losses) gains on non-trading activities

(86)

76

(148)

Income (loss) before net unrealized gains and losses on non-trading
financial instruments accounted for at fair value and grants to IDA

547

(235)

3,616

Net unrealized gains (losses) on non-trading financial instruments accounted forat fair value – Note P

125

(229)

806

Income (loss) before grants to IDA

672

(464)

4,422

Grants to IDA – Note O

—

—

(213)

(464) $

4,209

Net income (loss) – Note S

$

672

$

The notes to consolidated financial statements are an integral part of these statements.
IFC 2023 ANNUAL REPORT FINANCIALS

61

INTERNATIONAL FINANCE CORPORATION

Page 68

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three years ended June 30, 2023, June 30, 2022 and June 30, 2021

(US$ in millions)2023

Net income (loss) – Note S

$

2022
672

$

2021
(464) $

4,209

120

(254)

183

(65)

(38)

(33)

Reclassification adjustment for impairments related to credit loss included in
net income (Release of provision for losses on available-for-sale debt
securities)

7

14

3

Net unrealized gains (losses) on debt securities

62

(278)

153

(62)

239

(270)

12

1

1

(50)

240

(269)

702

1,074

982

714

1,036

866

Other comprehensive income
Unrealized gains and losses on debt securities
Net unrealized gains (losses) on available-for-sale debt securities arisingduring the period
Reclassification adjustment for realized gains included in net income (income
from debt securities and realized gains and losses on debt securities andassociated derivatives)

Unrealized gains and losses on borrowings
Net unrealized (losses) gains arising during the period attributable to
instrument-specific credit risk on borrowings at fair value under the Fair Value
OptionReclassification adjustment for realized gains included in net income uponderecognition of borrowings (charges on borrowings)
Net unrealized (losses) gains on borrowings
Net unrecognized net actuarial gains (losses) and unrecognized priorservice credits (cost) on benefit plans – Note V
Total other comprehensive income
Total comprehensive income

$

1,386

$

The notes to consolidated financial statements are an integral part of these statements.

62 IFC 2023 ANNUAL REPORT FINANCIALS

572

$

5,075

INTERNATIONAL FINANCE CORPORATION

Page 69

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
for the three years ended June 30, 2023, June 30, 2022 and June 30, 2021

Undesignatedretainedearnings(US$ in millions)

At June 30, 2020$
Cumulative effect of adoption of ASU 2016-13, effective
July 1, 2020

7,166

Designatedretainedearnings

Total
retainedearnings

Accumulated
othercomprehensive
income (loss) –Note O$$ 7,599$

433

Paid-in
capital(1,984) $ 19,567

Total
capital$ 25,182

(206)

(206)

(206)

4,209

4,209

4,209

Year ended June 30, 2021
Net income
Other comprehensive income

866

Designation of retained earnings – Note O
Expenditures against designated retained earnings –Note O

(44)

44

—

—

270

(270)

—

—

Payments received for subscribed capital
At June 30, 2021$

866

11,395$207$ 11,602

$

1,193

1,193

(1,118) $ 20,760$ 31,244

Year ended June 30, 2022
Net loss

(464)

(464)

(464)

Other comprehensive income

1,036

Designations of retained earnings – Note O
Expenditures against designated retained earnings –Note O

(161)

161

—

—

70

(70)

—

—

Payments received for subscribed capital
At June 30, 2022

$

1,036

10,840$298$ 11,138

$

989

989

(82) $ 21,749$ 32,805

Year ended June 30, 2023
Net income

672

672

672

Other comprehensive income

714

Designations of retained earnings – Note O
Expenditures against designated retained earnings –Note O

(6)

6

—

—

83

(83)

—

—

Payments received for subscribed capital
At June 30, 2023$

714

11,589$221$ 11,810

$

632

847

847

$22,596$ 35,038

The notes to consolidated financial statements are an integral part of these statements.
IFC 2023 ANNUAL REPORT FINANCIALS

63

INTERNATIONAL FINANCE CORPORATION

Page 70

CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three years ended June 30, 2023, June 30, 2022 and June 30, 2021

(US$ in millions)
Cash flows from investing activities
Loan disbursements
Investments in equity securities
Investments in debt securities
Loan repayments
Debt securities repayments
Proceeds from sales of loans
Proceeds from sales of equity investments
Proceeds from sales of debt securities
Loan origination fees received
Investment in fixed assets
Net cash (used in) provided by investing activities
Cash flows from financing activities
Medium and long-term borrowings
Issuance
Retirement
Change in derivatives associated with borrowings, net
Short-term borrowings, net
Capital subscriptions
Net cash provided by financing activities
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income or loss to net cash provided by (used in) operating activities:
Realized (gains) losses on loans and associated derivatives, net
Realized gains on debt securities and associated derivatives, net
Gains on equity investments and related derivatives, net
Net realized gains on extinguishment of borrowings
Provision (release of provision)
Accretion of net discounts, premiums and loan origination fees
Depreciation expenses
Foreign currency transaction losses(gains) on non-trading activities
Net unrealized (gains) losses on non-trading financial instruments accounted for at fair value
Net discounts paid on retirement of borrowings
Change in accrued income on loans and debt securities (after swaps), net
Change in accrued expenses on borrowings (after swaps), net
Change in liquid asset trading portfolio
Change in derivatives associated with loans and client risk management, net
Change in payables and other liabilities
Change in receivables and other assets
Net cash provided by (used in) operating activities
Change in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
Composition of cash and cash equivalents
Cash and due from banks
Time deposits with maturities under three months
Total cash and cash equivalents

2023

2021

$(13,354) $ (9,719) $ (9,277)(1,034)(1,471)(886)(3,818)(1,622)(1,117)
8,209
8,286
8,282
1,066
898
717
67
11
89
1,405
2,567
2,365
81
185
242
65
72
54
(62)
(50)
(55)
(7,375)(843)
414

19,167(14,393)
(364)
(308)
847
4,949

14,018(15,072)
(160)
640
1,446
872

18,004(17,329)
(593)
(802)
734
14

672

(464)

4,209

(8)
9
(14)
(75)
(112)
(57)
(27)
(25)
(2,981)
(1)
(8)
(3)
29
140
(198)
47
(54)
(63)
56
71
60
86
(76)
148
(125)
229
(806)
(83)
(3)
(8)
(287)
(49)
69
498
119
(86)
6,539
(9,570)(1,114)
349
514
211
306
267
350
(268)
(349)
(313)
7,708
(9,361)(596)
5,282(9,332)
(168)
195
(368)
436
5,477
(9,700)268
3,322
13,022
12,754$ 8,799 $ 3,322 $ 13,022
1,051
7,748
$ 8,799

The notes to consolidated financial statements are an integral part of these statements.

64 IFC 2023 ANNUAL REPORT FINANCIALS

2022

702
2,620
$ 3,322748
12,274$ 13,022

INTERNATIONAL FINANCE CORPORATION

Page 71

CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three years ended June 30, 2023, June 30, 2022 and June 30, 2021

2023

(US$ in millions)
Supplemental disclosure
Change in ending balances resulting from currency exchange rate fluctuations:
Loans outstanding
Debt securities
Loan and debt security-related currency swaps
Borrowings
Borrowing-related currency swaps
Charges on borrowings paid, net
Non-cash items:
Loan and debt security conversion to equity, net

2022

2021

$

114 $ (635) $ 383
15
(454)
106
(115)
972
(483)
187
3,209
(1,957)(173)(3,156)1,940$ 2,183 $ 186 $ 422
$

101

$

54

$

36

The notes to consolidated financial statements are an integral part of these statements.
IFC 2023 ANNUAL REPORT FINANCIALS

65

INTERNATIONAL FINANCE CORPORATION

Page 72

SUPPLEMENTAL INFORMATION: CONSOLIDATED STATEMENT OF
CAPITAL STOCK AND VOTING POWER
as of June 30, 2023

(US$ in thousands)

Capital Stock
Amountpaid

Percentof total

Afghanistan

1,727

Albania

11,099Algeria
AngolaVoting Power

Capital Stock

Number of
votes

Percentof total

Amountpaid

Percentof total

Members

0.01

8,865

0.04

0.05

18,2370.08

Ecuador

20,256

Egypt, Arab Republic of

102,017

65,1500.29

72,2880.30

El Salvador

14,9520.07

22,0900.09

Equatorial Guinea

99

0.00

7,237

0.03

Argentina

323,320

1.43

330,458

Armenia

9,189

0.04

Australia

442,762

Austria

Voting Power
Number of
votes

Percentof total

0.09

27,3940.11

0.45

109,155

0.46

702

0.00

7,840

0.03

328

0.00

7,466

0.03

Eritrea

7,129

0.03

14,2670.06

1.38

Estonia

12,1760.05

19,3140.08

16,3270.07

Eswatini

5,507

0.02

12,6450.05

1.96

449,900

1.88

Ethiopia

2,036

0.01

9,174

0.04

182,5420.81

189,680

0.79

Fiji

3,908

0.02

11,046

0.05

Azerbaijan

20,3600.09

27,4980.11

Finland140,053

0.62

147,191

0.62

Bahamas, The

4,997

0.02

12,135

0.05

France1,079,738

4.78

1,086,876

4.54

Bahrain

13,3130.06

20,451

0.09

Gabon

9,668

0.04

16,806

0.07

Bangladesh

83,4300.37

90,5680.38

Gambia, The

717

0.00

7,855

0.03

Barbados

2,752

0.01

9,890

0.04

Georgia

12,7680.06

19,9060.08

Belarus42,4390.19

49,577

0.21

Germany

1,205,926

5.34

1,213,064

5.07

Belgium

451,559

2.00

458,697

1.92

Ghana

42,2860.19

49,424

0.21

Belize

1,348

0.01

8,486

0.04

Greece63,3740.28

70,512

0.29

Benin

1,986

0.01

9,124

0.04

Grenada

1,576

0.01

8,714

0.04

Bhutan

5,490

0.02

12,6280.05

Guatemala

8,265

0.04

15,4030.06

Bolivia

14,5020.06

21,6400.09

Guinea

2,585

0.01

9,723

0.04

Bosnia and Herzegovina

7,115

0.03

14,2530.06

Guinea-Bissau

137

0.00

7,275

0.03

Botswana

2,094

0.01

9,232

0.04

Guyana12,1190.05

19,2570.08

423,8121.88

430,950

1.80

Haiti

6,267

0.03

13,4050.06

Brunei Darussalam

2,503

0.01

9,641

0.04

Honduras

4,407

0.02

11,5450.05

Bulgaria

56,6660.25

63,8040.27

Hungary

117,492

0.52

124,630

0.52

Burkina Faso

8,849

0.04

15,9870.07

Iceland

2,619

0.01

9,757

0.04

Burundi

1,792

0.01

8,930

0.04

India

918,530

4.07

925,668

3.87

Cabo Verde

114

0.00

7,252

0.03

Indonesia

286,520

1.27

293,658

1.23

Cambodia

3,943

0.02

11,081

0.05

Iran, Islamic Republic of

11,0100.05

18,1480.08

Cameroon

6,748

0.03

13,886

0.06

Iraq

4,946

0.02

12,0840.05

Canada796,137

3.52

803,275

3.36

Ireland22,4930.10

29,631

0.12

907

0.00

8,045

0.03

Israel

26,0000.12

33,1380.14

Chad10,4000.05

17,538

0.07

Italy

725,763

3.21

732,901

3.06

Chile

96,4280.43

103,566

0.43

Jamaica

32,6480.14

39,786

0.17

China

671,360

2.97

678,498

2.84

Japan

1,800,442

7.97

1,807,580

7.56

Colombia

126,293

0.56

133,431

0.56

Jordan

7,175

0.03

14,3130.06

Comoros

107

0.00

7,245

0.03

Kazakhstan

35,3550.16

42,4930.18

19,8330.09

26,971

0.11

Kenya

30,811

0.14

37,949

0.16

999

0.00

8,137

0.03

Kiribati

91

0.00

7,229

0.03

Costa Rica

9,242

0.04

16,3800.07

Korea, Republic of

294,4911.30

301,629

1.26

Cote d'Ivoire

39,1290.17

46,267

0.19

Kosovo14,2310.06

21,3690.09

Croatia

26,2040.12

33,342

0.14

Kuwait134,106

0.59

141,244

0.59

Cyprus20,9360.09

28,074

0.12

Kyrgyz Republic

13,1140.06

20,2520.08

Czechia

90,1920.40

97,3300.41

Lao People's Democratic
Republic

2,344

0.01

9,482

0.04

Denmark

Members

Antigua and Barbuda

BrazilCentral African Republic

Congo, Democratic Republic ofCongo, Republic of

170,267

0.75

177,405

0.74

Latvia19,1830.08

26,321

0.11

Djibouti

160

0.00

7,298

0.03

Lebanon

1,029

0.00

8,167

0.03

Dominica

1,086

0.00

8,224

0.03

Lesotho

1,474

0.01

8,612

0.04

Dominican Republic

9,050

0.04

16,1880.07

Liberia

633

0.00

7,771

0.03

The notes to consolidated financial statements are an integral part of these statements.

66 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

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SUPPLEMENTAL INFORMATION: CONSOLIDATED STATEMENT OF
CAPITAL STOCK AND VOTING POWER
as of June 30, 2023

(US$ in thousands)
Members
Libya

Capital Stock
Amountpaid

Percentof total

Voting Power
Number of
votes

Percentof total

Capital Stock

Voting Power

Members

Amountpaid

Percentof total

Number of
votes

Percentof total

419

0.00

7,557

0.03

Saudi Arabia

519,2982.30

526,436

2.20

Lithuania

22,9120.10

30,0500.13

Senegal17,9860.08

25,1240.11

Luxembourg

23,8350.11

30,9730.13

Serbia17,3060.08

24,444

0.10

Madagascar

6,834

0.03

13,9720.06

Seychelles

206

0.00

7,344

0.03

Malawi13,8920.06

21,0300.09

Sierra Leone

2,730

0.01

9,868

0.04

Malaysia

126,6140.56

133,752

0.56

Singapore

8,789

0.04

15,927

0.07

Maldives

668

0.00

7,806

0.03

Slovak Republic

44,4730.20

51,611

0.22

Mali

5,274

0.02

12,412

0.05

Slovenia

16,1150.07

23,253

0.10

Malta

15,8070.07

22,945

0.10

Solomon Islands

282

0.00

7,420

0.03

Marshall Islands

5,055

0.02

12,1930.05

Somalia

633

0.00

7,771

0.03

Mauritania

1,632

0.01

8,770

0.04

South Africa

132,805

0.59

139,943

0.58

Mauritius

16,6740.07

23,812

0.10

South Sudan

14,3340.06

21,4720.09

Mexico232,794

1.03

239,932

1.00

Spain

384,8971.70

392,035

1.64

Micronesia, Federated States of

5,673

0.03

12,811

0.05

Sri Lanka

57,1160.25

64,254

0.27

Moldova

9,089

0.04

16,2270.07

St. Kitts and Nevis

4,864

0.02

12,002

0.05

Mongolia

1,769

0.01

8,907

0.04

St. Lucia

564

0.00

7,702

0.03

Montenegro

7,891

0.03

15,029

0.06

Sudan

846

0.00

7,984

0.03

Morocco85,9670.38

93,105

0.39

Suriname

4,727

0.02

11,865

0.05

Mozambique

2,455

0.01

9,593

0.04

Sweden234,9181.04

242,056

1.01

Myanmar

5,078

0.02

12,216

0.05

Switzerland

386,653

1.71

393,791

1.65

Namibia

3,080

0.01

10,2180.04

Syrian Arab Republic

1,479

0.01

8,617

0.04

Nepal

6,267

0.03

13,4050.06

Tajikistan

9,241

0.04

16,3790.07

Netherlands

497,5102.20

504,648

2.11

Tanzania

8,923

0.04

16,061

0.07

New Zealand

47,4370.21

54,575

0.23

Thailand

117,536

0.52

124,674

0.52

Nicaragua

6,911

0.03

14,0490.06

Timor-Leste

5,924

0.03

13,062

0.05

Niger

1,121

0.00

8,259

0.03

Togo

6,161

0.03

13,2990.06

Nigeria

270,840

1.20

277,978

1.16

Tonga

1,226

0.01

8,364

0.03

5,932

0.03

13,0700.05

Trinidad and Tobago

31,3520.14

38,4900.16

Norway153,1020.68

160,240

0.67

Tunisia

33,4860.15

40,6240.17

Oman

11,0020.05

18,1400.08

Türkiye

146,0630.65

153,201

0.64

Pakistan

175,2640.78

182,4020.76

Turkmenistan

6,176

0.03

13,314

0.06

Palau

191

0.00

7,329

0.03

Tuvalu

520

0.00

7,658

0.03

Panama

7,678

0.03

14,816

0.06

Uganda

5,604

0.02

12,742

0.05

Papua New Guinea

8,745

0.04

15,883

0.07

Ukraine77,4580.34

84,5960.35

Paraguay

3,324

0.01

10,4620.04

United Arab Emirates

30,7500.14

37,8880.16

Peru79,5370.35

86,6750.36

United Kingdom

1,079,738

4.78

1,086,876

4.54

Philippines

121,8630.54

129,001

0.54

United States

4,341,278

19.21

4,348,416

18.18

Poland74,8930.33

82,031

0.34

Uruguay

27,2120.12

34,3500.14

Portugal

63,4670.28

70,6050.30

Uzbekistan

35,9200.16

43,058

0.18

Qatar

12,5810.06

19,7190.08

Vanuatu

419

0.00

7,557

0.03

Romania

46,1000.20

53,2380.22

Venezuela, Republica
Bolivariana de

210,3470.93

217,485

0.91

Russian Federation

784,2113.47

791,349

3.31

Vietnam

3,401

0.02

10,5390.04

Rwanda

2,333

0.01

9,471

0.04

Yemen, Republic of

5,452

0.02

12,590

0.05

Samoa

1,063

0.00

8,201

0.03

Zambia15,9530.07

23,091

0.10

Sao Tome and Principe

3,347

0.01

10,4850.04

Zimbabwe

24,5130.11

31,651

0.13

North Macedonia* May differ from the sum of individual percentages shown because of rounding

Total June 30, 2023

22,595,632

100.00* 23,923,300

100.00*Total June 30, 2022

21,749,150

100.00* 23,027,156

100.00*The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS67

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSPURPOSEThe International Finance Corporation (IFC), an international organization, was established in 1956 to further economic development in
its member countries by encouraging the growth of private enterprise. IFC is a member of the World Bank Group (WBG), which also
comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), theMultilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). Eachmember is legally and financially independent. Transactions with other World Bank Group members are disclosed in the notes that
follow. IFC’s activities are closely coordinated with and complement the overall development objectives of the other World Bank Groupinstitutions. IFC, together with private investors, assists in financing the establishment, improvement and expansion of private sector
enterprises by making loans, equity investments and investments in debt securities where sufficient private capital is not otherwise
available on reasonable terms. IFC’s share capital is provided by its member countries. It raises most of the funds for its investment
activities through the issuance of notes, bonds and other debt securities in the international capital markets. IFC also plays a catalyticrole in mobilizing additional funding from other investors and lenders through parallel loans, loan participations, partial credit
guarantees, securitizations, loan sales, risk sharing facilities, fund investments and other IFC crisis initiatives. In addition to project
finance and mobilization, IFC offers an array of financial and technical advisory services to private businesses in the developing world
to increase their chances of success. It also advises governments on how to create an environment hospitable to the growth of private
enterprise and foreign investment.

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe consolidated financial statements include the financial statements of IFC and its consolidated entities. The accounting andreporting policies of IFC conform with accounting principles generally accepted in the United States of America (U.S. GAAP). In theopinion of management, the consolidated financial statements reflect all adjustments necessary for the fair presentation of IFC’s
financial position and results of operations in accordance with U.S. GAAP.
Consolidated Financial Statements presentation – Certain amounts in prior years have been changed to conform to the current
year’s presentation.
IFC aligned the presentation of foreign currency gains and losses on borrowings with the foreign currency gains and losses on currency
swaps which economically hedge those borrowings in the second quarter of the year ended June 30, 2021. This resulted in a change inclassification of foreign currency gains and losses on borrowings from “Foreign currency transaction gains (losses) on non-trading
activities,” to “Net unrealized (losses) gains on non-trading financial instruments accounted for at fair value”. As a result of this change
in classification, the impact for the year ended June 30, 2021 includes $108 million decrease in the foreign currency loss on borrowings,
and an equivalent amount of decrease in the unrealized gain on non-trading financial instruments accounted for at fair value. Thechange in presentation had no impact on IFC’s net income and was immaterial for prior periods.
Functional currency – IFC’s functional currency is the United States dollar (U.S. dollars, US$ or $).
Use of estimates – The preparation of the consolidated financial statements 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 theconsolidated financial statements and the reported amounts of income and expense during the reporting periods. Actual results could
differ from these estimates. A significant degree of judgment has been used in the determination of: the reserve against losses on loans
and off-balance sheet credit exposures; impairment of debt securities; estimated fair values of financial instruments accounted for at fairvalue (including equity investments, debt securities, loans, trading securities, borrowings and derivative instruments); projected pension
benefit obligations, fair value of pension and other postretirement benefit plan assets, and net periodic pension income or expense.
There are inherent risks and uncertainties related to IFC’s operations. The possibility exists that changing economic conditions could
have an adverse effect on the financial position of IFC.
IFC uses internal models to determine the fair values of derivative and other financial instruments and the aggregate level of thereserve against credit losses on loans, off-balance sheet credit exposures, and available-for-sale debt securities. IFC undertakes
continuous review and analysis of these models with the objective of refining its estimates, consistent with evolving best practices
appropriate to its operations. Changes in estimates resulting from refinements in the assumptions and methodologies incorporated in
the models are reflected in net income in the period in which the enhanced models are first applied.
Consolidation, non-controlling interests and variable interest entities – IFC consolidates:i.

ii.

entities where IFC holds the majority voting rights, unless noncontrolling shareholders/limited partners have substantive
participating rights or other rights that would overcome the presumption of control by the majority owner;
limited partnerships in which it is the general partner, unless the presumption of control is overcome by certain management
participation or other rights held by noncontrolling shareholders/limited partners; andiii.

variable interest entities (VIEs) for which IFC is deemed to be the VIE's primary beneficiary (together, consolidated entities).

Significant intercompany accounts and transactions are eliminated in consolidation.
The notes to consolidated financial statements are an integral part of these statements.

68 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
An entity is a VIE if:i.

its equity is not sufficient to permit the entity to finance its activities without additional subordinated financial support from otherparties;ii.

its equity investors do not have decision-making rights about the entity's operations; oriii.

its equity investors do not absorb the expected losses or receive the expected returns of the entity proportionally to their voting
rights.

A variable interest is a contractual, ownership or other interest whose value changes as the fair value of the VIE's net assets change.
IFC's variable interests in VIEs arise from financial instruments, service contracts, guarantees, leases or other monetary interests in
those entities.
IFC is considered to be the primary beneficiary of a VIE if it has the power to direct the VIE's activities that most significantly impact its
economic performance and the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially besignificant to the VIE.
Fair Value Option – IFC has elected the Fair Value Option under the subsections of ASC Topic 825, Financial Instruments (ASC 825 or
the Fair Value Option) for several of its financial assets and financial liabilities. ASC 825 permits, on an instrument-by-instrument basis,the measurement of eligible financial assets, financial liabilities and firm commitments at fair value that are not otherwise permitted tobe accounted for at fair value under other accounting standards. The election to use the Fair Value Option is available when an entity
first recognizes a financial asset or liability or upon entering into a firm commitment.
IFC has elected the Fair Value Option (FVO) for the following financial assets and financial liabilities:i.

direct equity investments which give IFC significant influence, which in the absence of FVO, would have to be accounted for underequity method and all other financial interests in the investee (e.g., guarantees, loans)ii.

all market borrowings that are economically hedged with financial instruments accounted for at fair value with changes therein
reported in income;iii.

borrowings from IDA;

effective July 1, 2018:iv.

substantially all investments in debt securities; andv.

substantially all hybrid instruments in the loan investment portfolio;

All borrowings for which the FVO has been elected are economically hedged with derivative or other financial instruments accounted forat fair value with changes in fair value reported in earnings as such changes occur. Measuring at fair value those borrowings for which
the FVO has been elected mitigates the earnings volatility that would otherwise occur, due to measuring the borrowings and related
economic hedges differently, without having to apply ASC Topic 815, Derivatives and Hedging (ASC 815)'s complex hedge accounting
requirements.
Measuring at fair value those equity investments that would otherwise require equity method accounting simplifies the accounting andrenders a carrying amount on the consolidated balance sheet based on a measure (fair value) that IFC considers preferable to equity
method accounting. For the investments that otherwise would require equity method accounting for which the FVO is elected, ASC 825
requires the FVO to also be applied to all eligible financial interests in the same entity. IFC has disbursed loans and issued guarantees
to some of those investees; therefore, the FVO is also applied to those loans and issued guarantees.
The FVO has been elected for substantially all investments in debt securities and hybrid loan instruments recognized after June 30,
2018. Among other things, measuring all investments in debt securities and hybrid loan instruments at fair value eliminates therequirement to bifurcate the host and embedded derivative that may have otherwise applied in certain instances, results in moreaccounting consistency across IFC’s investment portfolio and results in a measurement method that is consistent with the manner inwhich the portfolio is managed.
Fair Value Measurements
IFC adopted FASB Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (ASC 820). ASC
820 defines fair value, establishes a framework for measuring fair value and a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels and applies to all items measured at fair value, including items for which
impairment measures are based on fair value.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability (i.e., an exit price) in an orderlytransaction between independent, knowledgeable and willing market participants at the measurement date assuming the transaction
occurs in the entity’s principal (or most advantageous) market. Fair value must be based on assumptions market participants would use(inputs) in determining the price and measured assuming that market participants act in their economic best interest and, therefore,
their fair values are determined based on a transaction to sell or transfer the asset or liability on a standalone basis. Under ASC 820,
fair value measurements are not adjusted for transaction costs.
ASC 820 establishes a fair value hierarchy which gives the highest priority to unadjusted quoted prices in active markets for identicalunrestricted assets and liabilities (Level 1), the next highest priority to observable market-based inputs or unobservable inputs that arecorroborated by market data from independent sources (Level 2) and the lowest priority to unobservable inputs that are notcorroborated by market data (Level 3). Fair value measurements are required to maximize the use of available observable inputs.
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at themeasurement date.
Level 2: Other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly for
substantially the full term of the asset or liability. It includes 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, and financial instruments that are valued using models andother valuation methodologies. These models consider various assumptions and inputs, including time value, yield curves, volatility
factors, prepayment speeds, default rates, loss severity and current market and contractual pricing for the underlying asset, as well asother relevant economic measures. Substantially all of these inputs are observable in the market place, can be derived from observabledata or are supported by observable levels at which market transactions are executed.
Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available,
thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. It consistsof financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs
that are unobservable. It also includes financial instruments whose fair value is estimated based on price information from independentsources that cannot be corroborated by observable market data.
IFC’s policy is to recognize transfers in and transfers out of levels as of the beginning of the reporting period in which they occur.
IFC estimates the fair value of its investments in private equity funds that do not have readily determinable fair value based on thefunds’ net asset values (NAVs) per share as a practical expedient to the extent that a fund reports its investment assets at fair value andhas all the attributes of an investment company, pursuant to ASC Topic 946, Financial Services – Investment Companies (ASC 946). If
the NAV is not as of IFC’s measurement date, IFC adjusts the most recent NAV, as necessary, to estimate a NAV for the investment thatis calculated in a manner consistent with the fair value measurement principles established by ASC 820.
Remeasurement of foreign currency transactions – Monetary assets and liabilities not denominated in U.S. dollars, are expressed in
U.S. dollars at the exchange rates prevailing at end of each reporting period. Income and expenses are recorded based on the rates of
exchange prevailing at the time of the transaction. Transaction gains and losses are credited or charged to income.
Loans – IFC originates loans to facilitate project finance, restructuring, refinancing, corporate finance, and/or other developmental
objectives. Loans are recorded as assets when disbursed. Loans are generally carried at the principal amounts outstanding, adjusted
for net unamortized loan origination costs and fees. It is IFC’s practice to obtain collateral security such as, but not limited to, mortgages
and third-party guarantees.
Certain loans are carried at fair value in accordance with the FVO as discussed above. Unrealized gains and losses on loans accounted
for at fair value under the FVO are reported in Net unrealized gains and losses on non-trading financial instruments accounted for at fairvalue on the consolidated statement of operations.
Certain loans originated by IFC contain income participation, prepayment and conversion features. These features are bifurcated andseparately accounted for in accordance with ASC 815 if IFC has not elected the Fair Value Option for the loan host contracts and thefeatures meet the definition of a derivative and are not considered to be clearly and closely related to their host loan contracts.
Otherwise, these features are accounted for as part of their host loan contracts in accordance with IFC’s accounting policies for loans
as indicated herein.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition on loans – Interest income and commitment fees on loans are recorded as income on an accrual basis. Loan
origination fees and direct loan origination costs are deferred and amortized over the estimated life of the originated loan; such
amortization is determined using the interest method unless the loan is a revolving credit facility in which case amortization isdetermined using the straight-line method. Prepayment fees are recorded as income when received. IFC has elected to present interest
income separately from other changes in the fair value of loans measured at fair value through earnings under the FVO. IFC applies
cost recovery or cash method for recognizing interest income from certain debt securities and beneficial interests accounted for as debt
securities whose cash flows cannot be reliably estimated.
IFC does not recognize income on loans where collectability is in doubt or payments of interest or principal are past due more than 60days unless management anticipates that collection of interest will occur in the near future. Any interest accrued on a loan placed in
nonaccrual status is reversed out of income and is thereafter recognized as income only when the actual payment is received. Interest
not previously recognized but capitalized as part of a debt restructuring is recorded as deferred income, included in the consolidatedbalance sheet in payables and other liabilities, and credited to income only when the related principal is received. Such capitalizedinterest is considered in the computation of the reserve against losses on loans in the consolidated balance sheet.
Accrued interest balances are reported within receivables and other assets on the consolidated balance sheets. IFC elected not tomeasure expected credit losses for accrued interest receivables related to its loans and the available-for-sale securities portfolio as
IFC’s policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by
reversing interest income during the quarter the financial asset is moved from an accrual to a nonaccrual status.
Reserve against losses on loans and off-balance sheet credit arrangements
Effective July 1, 2020, pursuant to Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments andrelated amendments, which is incorporated in ASC Topic 326, Financial Instruments-Credit Losses (ASC 326), IFC adopted ASC 326 to
replace the incurred loss methodology for recognizing credit losses in place at June 30, 2020. In accordance with ASC 326, IFC
recognizes a reserve for credit losses that is deducted from the amortized cost basis of the financial asset to present the net amount
expected to be collected on the financial asset on the balance sheet.
In developing the estimate of expected credit losses in accordance with ASC 326, IFC introduced a credit loss methodology that reflects
an estimate of expected credit losses over the remaining contractual life of a financial asset, considering forward-looking information.
IFC considered the relevant inputs and assumptions required to perform the estimate. These included, but are not limited to, historicaland current loan portfolio data, data relevant to current economic conditions, and data relevant to reasonable and supportable forecastsof economic conditions. Inputs and assumptions are quantitative or qualitative in nature. In particular, the forecast of key economic
variables relevant to the loan portfolio is one of the critical assumptions to IFC’s estimation of expected credit losses. The forecast of
economic variables are credit loss drivers that produce a macro-economic response estimate of loss over the 3-year period that IFC
deems to be reasonable and supportable. For periods beyond the reasonable and supportable forecast period, expected credit losses
are estimated by reverting to historical loss information without adjustment for changes in economic conditions. This reversion isphased in over a one-year period on a straight-line basis. The segmentation process is based on a facility and credit rating, with certain
assumptions segmented by industry. The facility rating applies to an individual investment product and provides information on theamount of loss that IFC is likely to incur on that product if the obligor defaults. IFC’s forecast of expected credit losses is based on theprobability of a loan defaulting associated with each credit risk rating, the expected loss percentage given a default associated witheach facility risk rating, and the expected balance at the estimated date of default. The estimate of the expected balance at the time ofdefault considers a prepayment assumption and, for loans with available credit, a disbursement assumption that estimates expectedutilization rates.
The reserve against losses on loans are established through a review process undertaken on a quarterly basis and has two main
components: (a) a portfolio reserve for expected losses determined from the historical loss rates, adjusted for qualitative factors, andforecasted expected losses on the segments associated with the loan class with similar risk characteristics; and (b) an individual
reserve which is a separate reserve representing the reserve assigned to individually evaluated loans that do not share similar risk
characteristics with other loans. IFC considers its entire loan portfolio to comprise one portfolio segment and defines the one major
category of loans to be the grouping of the loan receivable based on risk characteristics and the method for monitoring and assessing
credit risk. The risks inherent in the portfolio that are considered in determining the portfolio reserve are those proven to exist by pastexperience and include: country systemic risk; the risk of correlation or contagion of losses between markets; uninsured anduninsurable risks; nonperformance under guarantees and support agreements; and opacity of, or misrepresentation in a borrower's
financial statements.
For individual reserve, loans identified as not sharing similar risk characteristics with other assets are individually evaluated for the net
amount expected to be collected and reserve is determined for them outside of the portfolio reserve computation. Information andevents, with respect to the borrower and/or the economic and political environment in which it operates, that are considered indetermining a loss reserve include, but are not limited to, the borrower’s financial difficulties, assessing the risk of breach of contract,
bankruptcy/reorganization, credit rating downgrade as well as geopolitical conflict, financial/economic crisis, commodity price decline,
adverse local government action and natural disaster. Loans modified as troubled debt restructuring, as well as loans placed in
nonaccrual status are individually evaluated for the net amount expected to be collected.
The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Individually evaluated loans are measured based on the present value of expected future cash flows to be received, or for loans that are
dependent on collateral for repayment, the estimated fair value of the collateral, less the cost to sell.
IFC recognizes reserve on loans not carried at fair value in the consolidated balance sheet through the reserve against losses on loans,recording a provision or release of provision for losses on loans in net income, which increases or decreases the reserve against losses
on loans. Loans are written-off along with its reserve against losses when IFC has exhausted all possible means of recovery. The
reductions in the reserve are partially offset by recoveries which are considered in the reserving process, if any, associated withpreviously written-off loans.
In accordance with ASC 326, IFC recognizes a reserve for credit losses on off-balance sheet credit exposures for guarantees that are
not measured at fair value and other off-balance sheet arrangements, primarily loans committed but not disbursed, based on expectedcredit losses over the contractual period in which IFC is exposed to credit risk via a present contractual obligation to extend credit,
unless that obligation is unconditionally cancellable by IFC. Reserve against losses on off-balance sheet credit exposures are included
within Payables and other liabilities on the consolidated balance sheets, with changes recognized through provision for losses on loansin net income. Methodologies for estimating the reserve for credit losses on off-balance sheet credit exposures, including loans
committed but not disbursed, are generally consistent with methodologies for estimating the reserve for credit losses for the disbursed
loan portfolio, as discussed above as applicable, but is subject to an additional parameter reflecting the likelihood that funding will occur.
Equity investments – IFC invests primarily for developmental impact; IFC does not seek to take operational, controlling, or strategic
equity positions within its investees. Equity investments are acquired through direct ownership of equity instruments of investees, as alimited partner in LLPs and LLCs, and/or as an investor in private equity funds.
Pursuant to Accounting Standards Update 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASU
2016-01) and ASC Topic 321, Investments – Equity Securities (ASC 321), effective July 1, 2018, all equity investments are measured atfair value, with unrealized gains and losses reported in net income.
IFC’s investments in certain private equity funds in which IFC is deemed to have a controlling financial interest, are consolidated by IFC,
as the presumption of control by the fund manager or the general partner has been overcome. Certain equity investments, for which
recovery of invested capital is uncertain, are accounted for under the cost recovery method, such that receipts are first applied torecovery of invested capital and then to income from equity investments. The cost recovery method is applied to IFC's investments in its
natural resources unincorporated joint ventures (UJVs). IFC’s share of conditional asset retirement obligations related to investments in
UJVs are recorded when the fair value of the obligations can be reasonably estimated. The obligations are capitalized andsystematically amortized over the estimated economic useful lives.
Unrealized gains and losses on equity investments accounted for at fair value are reported in income from equity investments andassociated derivatives on the consolidated statements of operations. Realized gains on the sale or redemption of equity investments
are measured against the average cost of the investments sold.
Dividends on listed equity investments are recorded on the ex-dividend date, and dividends on unlisted equity investments are recorded
upon receipt of notice of declaration. Realized gains on listed equity investments are recorded on trade date, and realized gains on
unlisted equity investments are recorded upon incurring the obligation to deliver the applicable shares. Losses are recognized whenincurred.
IFC enters into put options, call options and warrant agreements in connection with equity investments; these are accounted for inaccordance with ASC 815 to the extent they meet the definition of a derivative. Put options, call options and warrant agreements that do
not meet the definition of a derivative are measured at fair value with unrealized gains and losses recognized in earnings in accordancewith ASC 321 and included in “Equity investments” on the consolidated balance sheets.
Gains and losses on debt conversions and exchanges of equity interests – Loan and debt security conversions to equity interests
are based on the fair value of the equity interests received. Transfers of equity interests in exchange for equity interests in other entities
and other non-cash transactions are generally accounted for based on the fair value of the asset relinquished unless the fair value ofthe asset received is more clearly evident in which case the accounting is based on the fair value of the asset received. The difference
between the fair value of the asset received and the recorded amount of the asset relinquished is recorded as a gain or loss in the
consolidated statements of operations.
Debt securities – Debt securities in the investment portfolio classified as available-for-sale are carried at fair value on the consolidatedbalance sheets with unrealized gains and losses included in accumulated other comprehensive income until realized.
IFC has elected to present interest income separately from other changes in the fair value of debt securities measured at fair value
through earnings under the FVO. Unrealized gains and losses on debt securities accounted for at fair value under the FVO are reported
in “Net unrealized gains and losses on non-trading financial instruments accounted for at fair value” on the consolidated statements ofoperations.

The notes to consolidated financial statements are an integral part of these statements.

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IFC invests in certain debt securities with conversion features; if the hybrid instrument is not measured at fair value with unrealized
gains and losses reported in net income, these features are accounted for in accordance with ASC 815 to the extent they meet thedefinition of a derivative.
Impairment of debt securities
IFC adopted the guidance under ASC 326 for available-for-sale debt securities by amending the impairment model to determine
whether all or a portion of the unrealized loss on such securities is a credit loss, and recognizing a reserve for credit losses, instead ofrecording a write-down as required by pre-ASC 326 guidance. In determining whether all or a portion of the unrealized loss on suchsecurities is a credit loss, IFC considers all relevant information including the extent to which fair value has been less than amortized
cost, whether IFC intends to sell the debt security or whether it is more likely than not that IFC will be required to sell the debt security,
the payment structure of the obligation and the ability of the issuer to make scheduled interest or principal payments, any changes tothe ratings of a security, and relevant adverse conditions specifically related to the security, an industry or geographic sector.
Debt securities in the investment portfolio classified as available-for-sale are assessed for impairment each quarter. When impairment is
identified, the entire impairment is recognized in net income if (1) IFC intends to sell the security, or (2) it is more likely than not that IFC
will be required to sell the security before recovery. However, if IFC does not intend to sell the security and it is not more likely than notthat IFC will be required to sell the security but the security has a credit loss, the impairment charge is separated into two components:(1) the credit loss component, which is recognized as a reserve for credit losses (through net income), limited to the amount by which
the security’s amortized cost basis exceeds the fair value, and reversal of impairment losses are allowed when the credit of the issuer
improves, and (2) the noncredit related impairment losses, which are recorded in other comprehensive income.
Guarantees – IFC extends financial guarantee facilities to its clients to provide credit enhancement for their debt security issuancesand loan obligations. As part of these financial guarantee facilities, IFC offers partial credit guarantees to clients covering, on a risksharing basis, client obligations on bonds or loans. Under the terms of IFC's guarantees, IFC agrees to assume responsibility for theclient’s financial obligations in the event of default by the client (i.e., failure to pay when payment is due). Guarantees are regarded as
issued when IFC commits to the guarantee. Guarantees are regarded as outstanding when the underlying financial obligation of theclient is incurred, and this date is considered to be the “inception” of the guarantee. Guarantees are regarded as called when IFC’s
obligation under the guarantee has been invoked. There are two liabilities associated with the guarantees: (i) the stand-ready obligation
to perform and (ii) the contingent liability. The fair value of the stand-ready obligation to perform is recognized at the inception of theguarantee. For guarantees that are within scope of ASC 326, the expected credit losses (the contingent liability) associated with thefinancial guarantee is measured and accounted for in addition to and separately from the IFC’s liability recognized for the stand-readyobligation to perform. Guarantee fees are recorded in income as the stand-ready obligation to perform is fulfilled. Commitment fees on
guarantees are recorded as income on an accrual basis. All liabilities associated with guarantees are included in payables and otherliabilities, and the receivables are included in other assets on the consolidated balance sheet.
Designations of retained earnings – IFC establishes funding mechanisms for specific Board-approved purposes through designationsof retained earnings. Designations of retained earnings for grants to IDA are recorded as a transfer from undesignated retained
earnings to designated retained earnings when the designation is noted with approval by the Board of Governors. All other designations
are recorded as a transfer from undesignated retained earnings to designated retained earnings when the designation is approved by
the Board of Directors.
Expenditures resulting from such designations are recorded as expenses in IFC’s consolidated statement of operations in the year inwhich they are incurred and reduces the respective designated retained earnings for such purposes. Expenditures are deemed to havebeen incurred when IFC has ceded control of the funds to the recipient.
Liquid assets portfolios – The liquid assets portfolios mainly consists of: time deposits and securities; related derivative instruments;
securities purchased under resale agreements and receivable for cash collateral pledged, securities sold under repurchase agreements
and payable for cash collateral received; receivables from sales of securities and payables for purchases of securities; and related
accrued income and charges. IFC’s liquid funds are invested in government, agency and government-sponsored agency obligations,time deposits and asset-backed, including mortgage-backed, securities. Government and agency obligations include positions in highquality fixed rate bonds, notes, bills, and other obligations issued or unconditionally guaranteed by governments of countries or otherofficial entities including government agencies and instrumentalities or by multilateral organizations. Asset-backed and mortgagebacked securities include agency and non-agency residential mortgage-backed securities, commercial mortgage-backed securities,
consumer, auto and student loan-backed securities, commercial real estate collateralized debt obligations and collateralized loan
obligations.
Securities and related derivative instruments within IFC’s liquid assets portfolios are classified as trading and, with the exception of cash
equivalent securities which are carried at amortized cost, are carried at fair value with any changes in fair value reported in income fromliquid asset trading activities. Interest on securities and amortization of premiums and accretion of discounts are also reported in income
from liquid asset trading activities. Gains and losses realized on the sale of trading securities are computed on a specific security basis.

The notes to consolidated financial statements are an integral part of these statements.

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Cash and cash equivalents – IFC classifies cash and due from banks as cash and time deposits with original maturities of threemonths or less as cash equivalents in the consolidated statement of cash flows (collectively, cash and cash equivalents) because they
are generally readily convertible to known amounts of cash within three months of acquisition, generally when the original maturities forsuch instruments are three months or less, or six months or less when the time deposit is optionally redeemable within three months.
Repurchase, resale and securities lending agreements – Repurchase agreements are contracts under which a party sells securities
and simultaneously agrees to repurchase the same securities at a specified future date at a fixed price. Resale agreements arecontracts under which a party purchases securities and simultaneously agrees to resell the same securities at a specified future date ata fixed price. Securities lending agreements are similar to repurchase agreements except that the securities loaned are securities that
IFC has received as collateral under unrelated agreements and allowed by contract to rehypothecate. Amounts due under securities
lending agreements are included in securities sold under repurchase agreements and payable for cash collateral received on the
consolidated balance sheet.
It is IFC’s policy to take possession of securities purchased under resale agreements, which are primarily liquid government securities.
The market value of these securities is monitored and, within parameters defined in the agreements, additional collateral is obtained
when their value declines. IFC also monitors its exposure with respect to securities sold under repurchase agreements and, in
accordance with the terms of the agreements, requests the return of excess securities held by the counterparty when their value
increases.
Repurchase, resale and securities lending agreements are accounted for as collateralized financing transactions and recorded at theamount at which the securities were acquired or sold plus accrued interest.
Borrowings – To diversify its access to funding, and reduce its borrowing costs, IFC borrows in a variety of currencies and uses anumber of borrowing structures, including foreign exchange rate-linked, inverse floating rate and zero coupon notes. In managing thecurrency exposure inherent in borrowing in a variety of currencies, generally, IFC either simultaneously converts such borrowings into
variable rate U.S. dollar borrowings through the use of currency and interest rate swap transactions or utilizes liquid asset portfolio or
debt investments denominated in the same currency to economically hedge changes in the fair value of certain borrowings. Undercertain outstanding borrowing agreements, IFC is not permitted to mortgage or allow a lien to be placed on its assets (other thanpurchase money security interests) without extending equivalent security to the holders of such borrowings. Interest on borrowings andamortization of premiums and accretion of discounts are reported in charges on borrowings.
Substantially all borrowings are carried at fair value under the Fair Value Option. All changes in the fair value of these borrowings
resulting from changes in instrument-specific credit risk is reported in “other comprehensive income”, while the remaining change in fairvalue is reported in Net unrealized gains and losses on non-trading financial instruments accounted for at fair value in the consolidated
statement of operations.
Risk management and use of derivative instruments – IFC enters into transactions in various derivative instruments primarily for
financial risk management purposes in connection with its principal business activities, including lending, investing in debt securities
and equity investments, client risk management, borrowing, liquid asset portfolio management and asset and liability management.
There are no derivatives designated as accounting hedges.
All derivative instruments are recorded on the consolidated balance sheet at fair value as derivative assets or derivative liabilities.
Where they are not clearly and closely related to the host contract, certain derivative instruments embedded in loans and debt securities
are bifurcated from the host contract and recorded at fair value as derivative assets or liabilities unless the hybrid instrument isaccounted for at fair value with any changes in fair value reported in income. The fair value at inception of such bifurcated embedded
derivatives is excluded from the carrying amount of the host contracts on the consolidated balance sheet. Changes in fair values ofderivative instruments used in the liquid asset portfolio are recorded in income from liquid asset trading activities. Changes in fair valuesof derivative instruments other than those in the liquid asset portfolio are recorded in net unrealized gains and losses on non-trading
financial instruments accounted for at fair value. The risk management policy for each of IFC’s principal business activities and theaccounting policies particular to them are described below.
Lending activities IFC’s policy is to closely match the currency, interest rate basis, and maturity of its loans and borrowings. Derivative
instruments are used to convert the cash flows from fixed rate U.S. dollar or non-U.S. dollar loans into variable rate U.S. dollars.
Changes in fair value of all derivatives associated with these activities are reported in net income in ”Net unrealized gains and losses on
non-trading financial instruments accounted for at fair value,” in the consolidated statements of operations. Realized gains and losses
associated with these activities are reported in “Income from loans and guarantees, including realized gains and losses on loans andassociated derivatives.

The notes to consolidated financial statements are an integral part of these statements.

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Client risk management activities IFC enters into derivatives transactions with its clients to help them hedge their own currency, interest
rate, or commodity risk, which, in turn, improves the overall quality of IFC’s loan portfolio. To hedge the market risks that arise fromthese transactions with clients, IFC enters into offsetting derivative transactions with matching terms with authorized market
counterparties. Changes in fair value of all derivatives associated with these activities are reported in "Net unrealized gains and losses
on non-trading financial instruments accounted for at fair value", in the consolidated statements of operations. Realized gains andlosses associated with these activities are reported in “Other Income”, in the consolidated statements of operations.
Borrowing activities IFC issues debt securities in various capital markets with the objectives of minimizing its borrowing costs,
diversifying funding sources, and developing member countries’ capital markets, sometimes using complex structures. These structures
include borrowings payable in multiple currencies, or borrowings with principal and/or interest determined by reference to a specified
index such as a stock market index, a reference interest rate, a commodity index, or one or more foreign exchange rates. IFC generally
uses derivative instruments with matching terms, primarily currency and interest rate swaps, to convert certain of such borrowings into
variable rate U.S. dollar obligations, consistent with IFC’s matched funding policy. IFC elects to carry at fair value, under the FVO, allmarket borrowings for which a derivative instrument, liquid asset portfolio investment or debt investment is used to create an economic
hedge. Changes in the fair value of such borrowings and the associated derivatives are reported in "Net unrealized gains and losses on
non-trading financial instruments accounted for at fair value" in the consolidated statements of operations. Realized gains and losses
associated with these activities are reported in “Charges on borrowings”, in the consolidated statements of operations.
Liquid asset portfolio management activities IFC manages the interest rate, currency and other market risks associated with certain of
the time deposits and securities in its liquid asset portfolio by entering into derivative transactions to convert the cash flows from those
instruments into variable rate U.S. dollars or by utilizing market borrowings denominated in the same currency to economically hedgechanges in the fair value of certain liquid asset portfolio investments. The derivative instruments used include short-term, over-thecounter foreign exchange forwards (covered forwards), interest rate and currency swaps, and exchange-traded interest rate futures andoptions. As the entire liquid asset portfolio is classified as trading portfolio, all securities (including derivatives) are carried at fair value
with changes in fair value reported in "Income from liquid asset trading activities" in the consolidated statements of operations.
Asset and liability management In addition to the risk managed in the context of its business activities detailed above, IFC faces
residual market risk in its overall asset and liability management. Residual currency risk is managed by monitoring the aggregate
position in each lending currency and reducing the net excess asset or liability position through sales or purchases of currency. Interest
rate risk arising from mismatches due to write-downs, prepayments and reschedulings, and residual reset date mismatches ismonitored by measuring the sensitivity of the present value of assets and liabilities in each currency to each basis point change ininterest rates.
IFC monitors the credit risk associated with these activities by careful assessment and monitoring of prospective and actual clients andcounterparties. In respect of liquid assets and derivatives transactions, credit risk is managed by establishing exposure limits based on
the credit rating and size of the individual counterparty. In addition, IFC has entered into master agreements with its derivative market
counterparties governing derivative transactions that contain close-out and netting provisions and collateral arrangements. Under these
agreements, if the credit exposure to one of the parties to the agreement, on a mark-to-market basis, exceeds a specified level, thatparty must post collateral to cover the excess, generally in the form of liquid government securities or cash. IFC does not offset the fairvalue amounts of derivatives and obligations to return, or rights to receive, cash collateral associated with these master-netting
agreements. Changes in fair value of all derivatives associated with these activities are reported in ”Net unrealized gains and losses on
non-trading financial instruments accounted for at fair value,” in the consolidated statements of operations. Realized gains and losses
associated with these activities are reported in “Other income”, in the consolidated statements of operations.
Loan participations – IFC mobilizes funds from commercial banks and other financial institutions (Participants) by facilitating loan
participations, without recourse. These loan participations are administered and serviced by IFC on behalf of the Participants. The
disbursed and outstanding balances of loan participations that meet the applicable accounting criteria are accounted for as sales andare not included in IFC’s consolidated balance sheet. All other loan participations are accounted for as secured borrowings; theparticipated loans are included in loans on IFC’s consolidated balance sheets, with the related secured borrowings included in payables
and other liabilities on IFC’s consolidated balance sheets.
Advisory services – Funding received for IFC advisory services from governments and other donors are recognized as contribution
revenue when the conditions on which they depend are substantially met. Advisory services expenses are recognized in the period
incurred. Advisory client fees and administration fees are recognized as income when earned.
Pension and other post-retirement benefits – IBRD sponsors a Staff Retirement Plan and Trust (SRP), a Retired Staff Benefits Plan
(RSBP) and a Post-Employment Benefits Plan (PEBP) that are defined benefit plans and cover substantially all of its staff members aswell as the staff of IFC and of MIGA.
The SRP provides regular pension benefits and includes a cash balance plan. The RSBP provides certain health and life insurance
benefits to eligible retirees. The PEBP provides pension benefits administered outside the SRP. All costs associated with these plans
are allocated between IBRD, IFC, and MIGA based upon their employees’ respective participation in the Plans. In addition, IFC andMIGA reimburse IBRD for their share of any contributions made to these plans by IBRD.
The notes to consolidated financial statements are an integral part of these statements.

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In accordance with ASU 2017-07, the service cost component of the net periodic benefit costs allocated to IFC is included in“Administrative expenses” in the consolidated statement of operations. The remaining components of the net periodic benefit costs
allocated to IFC are included in “Other” in the consolidated statement of operations. IFC includes a receivable from IBRD in receivables
and other assets, representing prepaid pension and other post-retirement benefit costs.
Recently adopted accounting standards
On July 1, 2020, IFC adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments and related amendments, which replaces the incurred loss methodology with an expected loss methodology thatis referred to as the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL
methodology is applicable to financial assets measured at amortized cost, including loan receivables. It also applies to off-balance
sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and othersimilar instruments). In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is torequire credit losses to be presented as a reserve rather than as a write-down on available-for-sale debt securities that management
does not intend to sell or believes that it is more likely than not they will be required to sell.
IFC adopted ASC 326 using the modified retrospective method for financial assets measured at amortized cost and off-balance sheet
credit exposures. Results for reporting periods beginning after July 1, 2020 are presented under ASC 326. On July 1, 2020, IFC
recorded the impact of adopting ASC 326 by means of a cumulative-effect adjustment to the consolidated balance sheet, and asummary of the impact is listed below:(US$ in millions)
Increase (decrease)
Recognizing reserve against credit losses on disbursed loans(net of release of reserve against credit losses on accrued interest of $10 million)
Recognizing reserve against credit losses on guarantees

Cumulative effect of adoption of ASU 2016-13,
effective July 1, 2020
ReserveagainstRetained
Lossesearnings
Total Capital
$
58
$
(58)
$
(58)

Recognizing reserve against credit losses on loans committed but not disbursed
Total

$

8

(8)

(8)

140

(140)

(140)

206

$

(206)

$

(206)

Reserve against credit losses on disbursed loans are reported as a contra asset, reserve against losses, to the loan balance on the
consolidated balance sheets. Reserve against credit losses on guarantees and loans committed but not disbursed are reported within
Payables and other liabilities on the consolidated balance sheets. Retained Earnings is included in the Capital section on the
consolidated balance sheets. IFC adopted ASC 326 for available-for-sale debt securities using the prospective transition approach fordebt securities for which other-than-temporary impairment had been recognized prior to July 1, 2020.
In October 2018, the FASB issued ASU 2018-17, Consolidation: Targeted Improvements to Related Party Guidance for Variable
Interest Entities (ASU 2018-17). ASU 2018-17 amends the guidance for how a decision maker or service provider must determine
whether its fee is a variable interest in a VIE when a related party also has an interest in the VIE. Under the amendment, the decision
maker must consider interests held be its related parties on a proportionate basis when determining if such interests could absorb morethan an insignificant amount of the VIE’s variability. Previous guidance required the decision maker to consider such interests in their
entirety. IFC adopted ASU 2018-17 effective July 1, 2020 with no material impact on IFC’s financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for
Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (ASU 2018-15). ASU 2018-15 amends
ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service
contract. IFC adopted ASU 2018-15 effective July 1, 2020 with no material impact on IFC’s financial statements.
In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13).
ASU 2018-13 amends the fair value disclosure requirements to include: (a) the amount of gain or loss for the period included in othercomprehensive income attributable to fair value changes in Level 3 assets or liabilities, and (b) for Level 3 fair value measurements, therange and weighted average used to develop significant unobservable inputs and the method of calculating the weighted average.
Existing fair value disclosure requirements eliminated by ASU 2018-13 include: (a) the amounts and reasons for transfers between
Level 1 and Level 2 fair value measurements, and (b) the policy for determining when transfers between fair value measurement Levels
occur. ASU 2018-13 modifies existing fair value disclosure requirements by (a) requiring a narrative description of the uncertainty of fairvalue measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at reporting
date, and (b) requiring disclosure of the estimate of the timing of liquidation events for investments measured using the Net Asset Value
practical expedient only if such information has been communicated to the investor or announced publicly by the investee. IFC adopted
ASU 2018-13 effective July 1, 2020 with no material impact on IFC’s financial statements.
The notes to consolidated financial statements are an integral part of these statements.

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In August 2018, the FASB issued ASU 2018-14, Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit
Plans (ASU 2018-04), which amends disclosure requirements related to defined benefit pension and other post-retirement plans forannual periods. The guidance became effective for IFC’s annual financial statements for the fiscal year ending June 30, 2021. The
adoption of this ASU had no material impact on IFC’s financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate
Reform on Financial Reporting. The ASU provides temporary optional expedients and exceptions to the U.S. GAAP guidance on
contract modifications and hedge accounting to ease the financial reporting burden of the expected market transition from LIBOR andother interbank offered rates. To be eligible for the optional expedients, modifications of contractual terms that change (or have thepotential to change) the amount or timing of contractual cash flows must be related to replacement of a reference rate. The
amendments in this ASU are effective upon issuance of ASU for all entities and can be implemented any time before December 31,
2022. IFC adopted the standard effective June 30, 2020 and the adoption did not have a material impact on IFC’s financial statements.
In January 2021, the FASB issued ASU 2021-01 Reference Rate Reform (Topic 848) to amend the scope of the guidance in Topic 848
on facilitation of the effects of reference rate reform, expected market transition from LIBOR and other interbank offered rates on
financial reporting. Specifically, the amendments in ASU 2021-01 clarify that “certain optional expedients and exceptions in Topic 848 forcontract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.” IFC adopted thestandard prospectively effective March 31, 2021, as permitted by the ASU, and the adoption did not have a material impact on thefinancial statements.
In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint
Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic
815. The amendments on the interactions between Topic 321 and Topic 323 clarify that an entity should consider observabletransactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement
alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. These amendments do
not impact IFC because IFC has elected an FVO for direct equity investments which give IFC significant influence, which in the absenceof FVO, would have to be accounted for under equity method. The amendments on the interactions between Topic 323 and Topic 815,
clarify that an entity should not consider whether, upon the settlement of a nonderivative forward contract or exercise of a nonderivative
purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in
Topic 323 or the Fair Value Option in accordance with the financial instruments guidance in Topic 825. IFC adopted ASU 2020-01
effective July 1, 2021 with no material impact on IFC’s consolidated financial statements.
In October 2020 the FASB issued ASU 2020-08 Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees andOther Costs. The amendments in ASU 2020-08 affect the guidance in ASU 2017-08, Receivables—Nonrefundable Fees and Other
Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 had shortened the required
amortization period for investments in callable debt securities purchased for a premium to the earliest call date. IFC had adopted ASU
2017-08 effective July 1, 2019 and ASU 2020-08 effective July 1, 2021 with no material impact on IFC’s consolidated financial
statements.
In November 2021, FASB issued ASU 2021-10 Government Assistance (Topic 832) Disclosures by Business Entities about
Government Assistance. ASU 2021-10 requires business entities to provide certain annual disclosures about transactions with agovernment that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance (forexample, a grant model within IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, or Subtopic
958-605, Not-For-Profit Entities—Revenue Recognition). ASU 2021-10 is effective for financial statements issued for annual periods
beginning after December 15, 2021. Early application of the amendments is permitted. IFC adopted ASU 2021-10 effective June 30,
2023, with no material impact on IFC’s consolidated financial statements.
In December 2022, FASB issued ASU 2022-06 Reference Rate Reform (Topic 848) Deferral of the Sunset Date of Topic 848. The
amendments in this ASU defer the sunset date of ASU 848 Reference Rate Reform from December 31, 2022, to December 31, 2024.
ASU 2022-06 is effective immediately. The ASU was effective upon issuance and the adoption did not have a material impact on IFC’s
financial statements.

The notes to consolidated financial statements are an integral part of these statements.

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Accounting standards and regulations under evaluation
In March 2022, the FASB issued ASU 2022-02 Financial Instruments—Credit Losses (Topic 326), Troubled Debt Restructurings andVintage Disclosures. The amendments in this ASU eliminate the recognition and measurement guidance for troubled debt restructuringsin Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, and require reporting entities to apply the loan
refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan.
The ASU requires enhanced disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower isexperiencing financial difficulty. In addition, for public business entities, the amendments in this ASU require that an entity disclose
current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope ofSubtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The ASU is effective for fiscal years beginning
after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. IFC’s adoption of ASU
2022-02, effective July 1, 2023, is not expected to have a material impact on IFC’s consolidated financial statements.
In June 2022, FASB issued ASU 2022-03 Fair Value Measurement (Topic 820) Fair Value Measurement of Equity Securities Subject toContractual Sale Restrictions. The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is notconsidered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments
also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendmentsin this Update also require certain disclosures for equity securities subject to contractual sale restrictions. The ASU is effective for fiscal
years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. This ASU
should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on
the date of adoption. IFC is planning to early adopt ASU 2022-03 effective July 1, 2023. It is not expected to have a material impact on
IFC’s consolidated financial statements.

The notes to consolidated financial statements are an integral part of these statements.

78 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE B – RELATED PARTY TRANSACTIONSIFC transacts with related parties including by receiving loans, participating in shared service arrangements, as well as through cost
sharing of IBRD’s sponsored pension and other post-retirement plans.
IFC's receivables from (payables to) its related parties are presented in the following table:
June 30, 2023
(US$ in millions)
Services and Support Receivables (Payables)
PSW – Local Currency Facility a
PSW – Blended Finance Facility
Borrowings
Pension and Other Post-retirement Benefits
Post-retirement Contribution Reserve Fund b

June 30, 2022

IBRD
IDA
MIGA
$ (35) $
— $
4
—
50
—
—
(93)
—
—
(243)
—
704
—
—
385
—
—
$ 1,054$ (286) $

4

Total
(31)
50
(93)
(243)
704
385

IBRD
IDA
MIGA
$ (37) $
— $
4
—
11
—
—
(54)
—
—
(344)
—
640
—
—
260
—
—

$ 772

$ 863

$

$ (387) $

4

$

Total
(33)
11
(54)
(344)
640
260

$ 480

_________a Includes other payable of $4 million related to unsettled Local Currency Facility trades that is included in other liabilities on the consolidated balance sheet as of June 30,
2023.
b Receivable from IBRD for IFC's share of investments associated with Post-Retirement Contribution Reserve Fund (PCRF), which is a fund established to stabilize
contributions made to the pension plans.

Services and Support Payments
IFC obtains certain administrative and overhead services from IBRD in those areas where common services can be efficiently provided
by IBRD. This includes shared costs of the Boards of Governors and Directors, and other services such as IT support services andhuman resource shared services. IFC makes payments for these services to IBRD based on negotiated fees and chargebacks, andallocated charges. Expenses allocated to IFC for the year ended June 30, 2023, were $168 million ($156 million – year ended June 30,2022; $144 million – year ended June 30, 2021). Other chargebacks include $28 million for the year ended June 30, 2023 ($26 million –year ended June 30, 2022; $22 million – year ended June 30, 2021). These expenses are included in Administrative expenses on the
consolidated statements of operations. The associated payables are included in the Payables and other liabilities on the consolidatedbalance sheets.
Fee Income from MIGA
Transactions with MIGA include marketing fees received for referral and due diligence services on jointly-developed guarantee projects.
Fee income received from MIGA for the year ended June 30, 2023 were $4 million ($4 million – year ended June 30, 2022; $5 million –year ended June 30, 2021) included in Other Income on the consolidated statements of operations. The associated receivables areincluded in Receivables and other assets on the consolidated balance sheets.
IDA Private Sector Window (IDA-PSW)
The Private Sector Window (PSW) was created under IDA18, to mobilize private sector investment in IDA-only countries and IDAeligible FCS. The PSW continued under IDA’s Twentieth Replenishment of Resources (IDA20), which commenced on July 1, 2022 withan initial allocation of $2.5 billion. Under the fee arrangement for the PSW, IDA receives fee income for transactions executed under thiswindow and reimburses IFC for the related costs incurred in administering these transactions.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS79

INTERNATIONAL FINANCE CORPORATION

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE B – RELATED PARTY TRANSACTIONS (continued)
IDA-PSW Transactions(US$ in millions)
Facility
Local currency

June 30, 2023
Balance Sheet
Description
Location
Currency swaps with IDA to support Derivative
local currency denominated loans
assets/liabilities(US$ in millions)

USD Notional

June 30, 2022

Net Asset/(Liability)
position USD Notional

233

54

108

June 30, 2023

Facility

Description
Liability for IDA-PSW synthetic
Blended Finance equity investments
IDA guarantees to support IFC's
Guarantee Programs in IDA-PSW
Blended Finance eligible countries

Balance Sheet
Location
Payables andother liabilities
Not Applicable

Commitments
150

Net Asset/(Liability)
position
11

June 30, 2022

Carrying
Value

Commitments

(93)

1,308

126

Carrying
Value
(54)

655

Borrowings
In September 2014, IFC issued an amortizing, non-interest-bearing promissory note, maturing September 15, 2039, to IDA (the Note) in
exchange for $1.2 billion. The Note requires payments totaling $1.3 billion, resulting in an effective interest rate of 1.84%. With IFC’sconsent, IDA may redeem the Note after September 2, 2019, upon an adverse change in its financial condition or outlook. The amountdue to IDA upon such redemption is equal to the present value of the unpaid amounts discounted at the effective interest rate. IDA may
transfer the Note; however, its redemption right is not transferrable. IFC has elected the Fair Value Option for the Note. Please refer toNote K Borrowings from IDA for further details on the Note.
IFC has a Local Currency Loan Facility Agreement with IBRD, which is capped at $300 million. As of June 30, 2023 and June 30, 2022,
IFC had no borrowings outstanding under this facility.
Pension and Other Post-retirement Benefits
The receivable from IBRD represents IFC’s net share of prepaid costs for pension and other post-retirement benefit plans and PostEmployment Benefits Plan (PEBP) assets included in Receivables and other assets on the consolidated balance sheets. These will be
realized over the lives of the plan participants.

The notes to consolidated financial statements are an integral part of these statements.

80 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 87

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE B – RELATED PARTY TRANSACTIONS (continued)
IFC managed AMC funds
Asset Management Company (AMC), a division of IFC, invests third-party capital and IFC capital, enabling outside investors to invest
alongside IFC in developing markets. As of June 30, 2023, AMC managed multiple funds (collectively referred to as the AMC Funds), in
its capacity as General Partner (GP) / Manager of these funds, none of which require consolidation by IFC. A management fee ischarged for the management services provided to the AMC funds. IFC’s ownership interests in these AMC Funds are shown in thefollowing table:
AMC Funds
IFC Capitalization (Equity) Fund, L.P. a

IFC’s ownership interest
61%

IFC Capitalization (Subordinated Debt) Fund, L.P.

13%

IFC African, Latin American and Caribbean Fund, LP

20%

IFC Catalyst Funds b

18%

IFC Global Infrastructure Fund, LP

17%

China-Mexico Fund, LP—%

IFC Financial Institutions Growth Fund, LP

30%

IFC Global Emerging Markets Fund of Funds c

19%

IFC Middle East and North Africa Fund, LP

37%

Women Entrepreneurs Debt Fund, LP

26%

IFC Emerging Asia Fund, LP

22%_________
a By virtue of certain rights granted to non-IFC limited partner interests, IFC does not control or consolidate this fund.
b The ownership interest of 18% reflects IFC’s ownership interest taking into consideration the overall commitments for the IFC Catalyst Funds, which comprises IFC Catalyst
Fund, LP, IFC Catalyst Fund (UK), LP and IFC Catalyst Fund (Japan), LP (collectively, IFC Catalyst Funds). IFC does not have an ownership interest in either the IFC
Catalyst Fund (UK), LP or the IFC Catalyst Fund (Japan), LP.
c The ownership interest of 19% reflects IFC’s ownership interest taking into consideration the current committed amounts for the IFC Global Emerging Markets Fund ofFunds, which comprises IFC Global Emerging Markets Fund of Funds, LP and IFC Global Emerging Markets Fund of Funds, (Japan Parallel) LP. IFC does not have anownership interest in the IFC Global Emerging Markets Fund of Funds, (Japan Parallel) LP.

As of June 30, 2023, IFC invested $505 million ($531 million – June 30, 2022) as a limited partner in funds managed by AMC. These
investments were included in Equity investments on the consolidated balance sheets $23 million of management fee income wasrecognized in the year ended June 30, 2023 ($29 million – year ended June 30, 2022; $38 million – year ended June 30, 2021), whichis included in other income on the consolidated statements of operations.

The notes to consolidated financial statements are an integral part of these statements.

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INTERNATIONAL FINANCE CORPORATION

Page 88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE C – LIQUID ASSET PORTFOLIO
Composition of liquid asset portfolio
The composition of IFC’s net liquid asset portfolio included in the consolidated balance sheet is as follows:(US$ in millions)
AssetsJune 30, 2023

June 30, 2022

Cash and due from banks a$$Time depositsb

43
10,21538
6,579

Trading securities

31,020

Securities purchased under resale agreements and receivable for cash collateral pledged

5,192

8,178

433

1,463

Receivables from sales of securities

791

940

Accrued interest income on time deposits and securities

243

102

Accrued income on derivative instruments

248

42

48,18548,233

6,631

6,223

241

77

1,002

172

191

44

8,065

6,516

Derivative assets

30,891

Receivables and other assets:

Total assets
Liabilities
Securities sold under repurchase agreements and payable for cash collateral received
Derivative liabilities
Payables and other liabilities:
Payables for purchase of securities
Accrued charges on derivative instruments
Total liabilities$

Total net liquid asset portfolio

40,120$41,717_________
a Represents cash and due from banks from the liquid asset portfolio and does not include cash and due from banks from other cash accounts of $1.0 billion and $664 million
as of June 30, 2023 and June 30, 2022 respectively.
b Includes time deposits with maturities greater than three months of $2.5 billion and $4.0 billion, as of June 30, 2023 and June 30, 2022 respectively.

The liquid asset portfolio is denominated primarily in U.S. dollars; investments in other currencies, net of the effect of associatedderivative instruments that convert non-U.S. dollar securities into U.S. dollar securities, represent 2.1% of the portfolio at June 30, 2023
(1.0% – June 30, 2022).
Income (Loss) from liquid asset trading activities
Income (Loss) from liquid asset trading activities for the years ended June 30, 2023, June 30, 2022 and June 30, 2021 comprises:(US$ in millions)2023

Interest income, net$

Net gains (losses) on asset-backed and mortgage-backed securities
Net gains (losses) on other trading securities
Net gains (losses) on trading activities (realized and unrealized)
Total income (loss) from liquid asset trading activities$

For the year ended June 30,
2022
2021

1,364

$

331

$

323

21

(61)

36

79

(683)

(32)

100

(744)

4

(413) $

327

1,464

$

The annualized rate of return on the liquid asset trading portfolio, calculated as total income from the liquid asset trading activities
divided by fair value average daily balance of total trading securities, during the year ended June 30, 2023, was 4.5% ((1.2)% – year
ended June 30, 2022; 0.9% – year ended June 30, 2021). After the effect of associated derivative instruments, the liquid asset portfolio
generally reprices within one year.

The notes to consolidated financial statements are an integral part of these statements.

82 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 89

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE C – LIQUID ASSET PORTFOLIO (continued)
Trading securities comprises
Year ended June 30, 2023
(US$ in millions)
Government, agency and government-sponsored agency
obligations

At June 30, 2023
Weighted averagecontractual maturity
Fair value(years)Fair value average dailybalance$21,822$

21,766

1.9

Asset-backed securities

6,446

5,232

22.1

Corporate securities

3,941

4,022

1.1

31,0205.2

Total trading securities$

32,209$Year ended June 30, 2022

(US$ in millions)
Government, agency and government-sponsored agency
obligations

At June 30, 2022

Fair value average dailybalance

23,0601.7

Asset-backed securities

5,049

3,825

17.9

Corporate securities

4,207

4,006

1.1

30,891

3.6

Total trading securities$$

23,948Fair value

33,204$Weighted averagecontractual maturity(years)$

The expected maturity of the asset-backed securities may be significantly shorter than the contractual maturity, as reported above, due
to prepayment features.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS83

INTERNATIONAL FINANCE CORPORATION

Page 90NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE D – INVESTMENTS
The carrying value of investments at June 30, 2023 and June 30, 2022 comprises:(US$ in millions)

June 30, 2023

June 30, 2022

$

$

Loans
Loans at amortized costLess: Reserve against losses on loans

31,117

26,058(1,209)(1,209)29,90824,849

1,506

1,374

31,414

26,223

10,778

11,137

10,778

11,137(amortized cost $1,632 at June 30, 2023, $2,219 at June 30, 2022)

1,394

1,919

Less: Reserve against losses on available-for sale debt securities

(21)

(14)

1,373

1,905

7,937

4,828

9,310

6,733

Loans at amortized cost less reserve against losses
Loans accounted for at fair value under the Fair Value Option(amortized cost $1,642 at June 30, 2023, $1,519 at June 30, 2022)
Total loans
Equity investments
Equity investments accounted for at fair value a b(cost $10,331 at June 30, 2023, $10,507 at June 30, 2022)
Total equity investments
Debt securities
Debt securities accounted for at fair value as available-for-sale

Debt securities, available-for-sale less reserve against losses
Debt securities accounted for at fair value under the Fair Value Option(amortized cost $8,145 at June 30, 2023, $4,981 at June 30, 2022)
Total debt securities
Total carrying value of investments$

51,502$44,093_________a Equity investments at fair value as of June 30, 2023 are comprised of investments in common or preferred shares of $5.5 billion ($5.8 billion – June 30, 2022), equity
interests in private equity funds of $5.2 billion ($5.3 billion – June 30, 2022), and equity-related options and other financial instruments of $36 million ($11 million – June 30,2022).
b Includes $2 million and $1 million for June 30, 2023 and June 30, 2022 of equity investments primarily accounted for under the cost recovery method. As the recovery ofinvested capital is uncertain, the fair value measurement is not applicable to these investments.

The notes to consolidated financial statements are an integral part of these statements.

84 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 91

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE D – INVESTMENTS (continued)
The distribution of the investment portfolio by geographical regiona and by industry sector and a reconciliation of total disbursed portfolio
to carrying amount of investments is as follows:(US$ in millions)

June 30, 2023

Sector/Region

Loans

AfricaManufacturing, agribusiness and services$
Financial markets
Infrastructure and natural resources
Disruptive technologies and funds
Total Africa
Asia and Pacific
Manufacturing, agribusiness and services
Financial markets
Infrastructure and natural resources
Disruptive technologies and funds
Total Asia and Pacific
Latin America and the Caribbean, and Europe
Manufacturing, agribusiness and services
Financial markets
Infrastructure and natural resources
Disruptive technologies and funds

2,153
2,771
2,067
5
6,996

June 30, 2022

Equityinvestments

Debt
securities

$

$

687
336
501
833
2,357

102
466
217
12
797

Total
$

Loans

2,942
3,573
2,785
850
10,150

$

1,595
2,313
1,893
4
5,805

Equityinvestments

Debt
securities

$

$

680
386
554
709
2,329

10
475
212
29
726

Total
$

2,285
3,174
2,659
742
8,860

3,176
4,673
1,773
5
9,627

1,141
687
202
1,558
3,588

886
2,170
813
30
3,899

5,203
7,530
2,788
1,593
17,114

3,449
3,526
1,573
6
8,554

1,058
861
334
1,291
3,544

764
1,474
593
13
2,844

5,271
5,861
2,500
1,310
14,942

3,856
4,568
1,906
5

311
495
499
834

244
2,907
364
46

4,411
7,970
2,769
885

2,751
4,023
1,748
—

312
579
531
754

198
1,784
69
—

3,261
6,386
2,348
754

Total Latin America and the Caribbean,
and Europe

10,335

2,139

3,561

16,035

8,522

2,176

2,051

12,749Middle East, Central Asia, Türkiye,
Pakistan, and Afghanistan
Manufacturing, agribusiness and services
Financial markets
Infrastructure and natural resources
Disruptive technologies and funds

1,306
1,191
1,430
—

330
546
202
194

96
695
60
—

1,732
2,432
1,692
194

927
714
1,446
—

444
608
292
164

75
612
62
2

1,446
1,934
1,800
166

3,927

1,272

851

6,050

3,087

1,508

751

5,346

467
1,534
—
—
2,001
$ 32,886

25
386
21
583
1,015
10,371

—
440
—
8
448
9,556

492
2,360
21
591
3,464
$ 52,813

723
1,008
—
—
1,731
$ 27,699

19
461
50
461
991
10,548

—
495
—
—
495
6,867

742
1,964
50
461
3,217
$ 45,114

Total Middle East, Central Asia, Türkiye,
Pakistan, and Afghanistan
Other
Manufacturing, agribusiness and services
Financial markets
Infrastructure and natural resources
Disruptive technologies and funds
Total Other
Total disbursed investment portfolio
Reserve against losses on loans and debt
securities

$

$

$

$

(1,209)—(21)(1,230)(1,209)—(14)(1,223)

(127)

—

—

(127)

(122)

—

—

(122)

—
—

(36)
—

—
—

(36)
—

—
—

(37)
—

—
—

(37)
—

Unrealized losses on equity investments heldby consolidated VIEs

—

(4)

—

(4)

—

(4)

—

(4)

Unrealized gains on investments accounted
for at fair value as available-for-sale

—

—

(17)

(17)

—

—

33

33

Unamortized deferred loan origination fees,
net and other
Disbursed amount allocated to a related
financial instrument reported separately inother assets or derivative assets
Adjustments to disbursed investment portfolio

Unrealized (losses) gains on investments
accounted for under the Fair Value Option
Carrying value of investments(136)$ 31,414 $

447
10,778

$

(208)
103
9,310 $ 51,502(145)$ 26,223 $

630
11,137

$

(153)
332
6,733 $ 44,093

a - Geographical regions used herein the FY23 consolidated financial statements are based on regional classifications as of June 30, 2023.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS85

INTERNATIONAL FINANCE CORPORATION

Page 92

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES
Loans
Income from loans and guarantees, including realized gains and losses on loans and associated derivatives for the years ended June30, 2023, June 30, 2022 and June 30, 2021 comprise the following:
For the year ended June 30,(US$ in millions)Interest income
Commitment fees
Other financial fees
Realized gains (losses) on loans, guarantees and associated derivatives a
Income from loans and guarantees, including realized gains and losses onloans and associated derivatives

$

2023
2,131
56
95
8

$

2,290

2022
$

2021
999 $
50
116
(9)

$

1,156

988
40
74
14

$

1,116

___________a Includes realized gains and losses on loans under the Fair Value Option, $8 million realized gains for the year ended June 30, 2023; $0 and $2 million realized losses forthe years ended June 30, 2022 and June 30, 2021, respectively.

The currency composition and weighted average contractual rate of the disbursed loan portfolio are summarized below:(US$ in millions, except for rates)
U.S. dollar
Euro
Chinese renminbi
Brazilian realIndonesian rupiah
Colombian pesoSouth African rand
Indian rupee
Mexican peso
Thai baht
Other currencies
OECD currencies
Non-OECD currencies$

Total disbursed loan portfolio$

June 30, 2023
Weighted
averagecontractual
Amountrate (%)
22,859
7.8
4,134
5.4
1,429
4.6
1,081
14.9
837
7.3
523
9.2
406
11.1
284
9.2
265
13.5
156
2.3
81
831

13.2
11.5

32,886

7.8$

June 30, 2022
Weighted
averagecontractual
Amountrate (%)
20,530
4.8
2,612
3.0
1,389
4.8
548
13.4
537
7.4
374
7.6
260
9.2
362
8.4
324
9.3
57
2.1

$

80
626

17.4
11.2

27,6995.2

After the effect of interest rate swaps and currency swaps, IFC’s loans are principally denominated in variable rate U.S. dollars.
As of June 30, 2023, loans in all currencies repayable during the years ending June 30, 2024 through June 30, 2028 and thereafter, areas follows:(US$ in millions)Fixed rate loans
Variable rate loans
Total disbursed loan portfolio

2024
$
1,472
4,586

2025
$
1,908
4,836

2026
$
1,580
3,924

2027
$
737
3,430

2028
$
665
2,919

Thereafter
$
1,571
5,258

Total
$
7,933
24,953

$

$

$

$

$

$

$

6,058

6,744

5,504

4,167

3,584

The notes to consolidated financial statements are an integral part of these statements.

86 IFC 2023 ANNUAL REPORT FINANCIALS

6,829

32,886

INTERNATIONAL FINANCE CORPORATION

Page 93

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
As of June 30, 2022, loans in all currencies repayable during the years ending June 30, 2023 through June 30, 2027 and thereafter, areas follows:(US$ in millions)Fixed rate loans
Variable rate loans
Total disbursed loan portfolio

$

2023
1,247
4,246

$

2024
927
3,491

$

2025
1,599
4,034

$

2026
899
2,623

$

2027
531
1,861

$

5,493

$

4,418

$

5,633

$

3,522

$

2,392

Thereafter
$
1,666
4,575

$

Total
6,869
20,830$$27,6996,241

At June 30, 2023, 24% of the disbursed loan portfolio are fixed rate loans (25% – June 30, 2022), while the remainder are at variable
rates. At June 30, 2023, the disbursed loan portfolio includes $74 million of loans serving as collateral under secured borrowing
arrangements ($80 million – June 30, 2022).
IFC’s disbursed variable rate loans generally reprice within one year.
Reserve against losses on loans and provision for losses on loans
Reserve against losses on loans as of June 30, 2023 reflects credit risk assessments as of that date. The assessment of the level ofreserve against losses carried a heightened degree of judgment particularly in light of Russia's invasion of Ukraine. The impact of theinvasion has been largely incorporated through IFC's rating system that classifies its loans according to creditworthiness and risk,
however, as the situation is still evolving, IFC expects further impacts from the factors that have not yet been reflected in the model
calculated reserve and cannot be directly attributed to any individual borrowers. As such, a qualitative overlay of $135 million, including$1 million on off-balance sheet guarantee exposures, was applied for estimated losses due to the invasion and its spillover
macroeconomic impact in March 2022, which remained unchanged as of June 30, 2023 and June 30, 2022. The previous qualitative
overlay of $40 million related to COVID-19 was released in the year ended June 30, 2022 as IFC considered the impacts of COVID-19
were properly captured individually through its rating system.
Changes in the reserve against losses on loans disbursed and loans committed but not disbursed for the years ended June 30, 2023,
June 30, 2022 and June 30, 2021 as well as the related loans at amortized cost evaluated for impairment individually and on a poolbasis (portfolio reserve) respectively, are summarized below:
For the year ended June 30, 2023
Loans Disbursed
Individual Portfolio
Total
reserve
reserve
reserve(US$ in millions)
Beginning balance(Release of provision) provision for losses
Write-offs
Recoveries of previously written-off loans
Foreign currency transaction adjustments
Other adjustments a$

Ending balance$

Total disbursed loans at June 30, 2023

$

461 $
(76)
(37)
18
(1)
1

748 $
91
—
—
6
(2)

1,209 $
15
(37)
18
5
(1)

1 $
—
—
—
—
—

171 $
(3)
—
—
1
—

172
(3)
—
—
1
—

366 $

843 $

1,209 $

1 $

169 $

170

46 $

6,795 $

6,842

1,212 $ 30,032 $ 31,244

Loans committed but not disbursed at June 30, 2023
Unamortized deferred loan origination fees, net and other
Loans at amortized cost

Loans Committed but not
Disbursed
Individual Portfolio
Total
reserve
reserve
reserve$(127)$ 31,117___________a Other adjustments comprise reserve against interest capitalized.

The notes to consolidated financial statements are an integral part of these statements.

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INTERNATIONAL FINANCE CORPORATION

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)(US$ in millions)

For the year ended June 30, 2022
Loans Committed but not
Loans Disbursed
Disbursed
Individual Portfolio
Total
Individual Portfolio
Total
reserve
reserve
reserve
reserve
reserve
reserve

Beginning balance

$

598 $

726 $

1,324 $

2 $

141 $

143

52

41

93

(1)

33

32

(200)

—

(200)

—

—

—

3

—

3

—

—

—

Foreign currency transaction adjustments

(8)

(17)

(25)

—

(3)

(3)

Other adjustments a

16

(2)

14

—

—

—

461 $

748 $

1,209 $

1 $

171 $

172

14 $

8,158 $

8,172

Provision (release of provision) for losses
Write-offs
Recoveries of previously written-off loans

Ending balance$

Total disbursed loans at Jun 30, 2022$

1,464 $ 24,716 $ 26,180

Loans committed but not disbursed at June 30, 2022$

Unamortized deferred loan origination fees, net and other

$

(122)

Loans at amortized cost

$ 26,058___________a Other adjustments comprise reserve against interest capitalized.

(US$ in millions)
Beginning balance
Cumulative effect of adopting ASC 326(Release of provision) provision for losses on loans, net
Write-offs
Foreign currency transaction adjustments
Other adjustmentsa
Ending balance

For the year ended June 30, 2021
Loans Committed but not
Loans Disbursed
Disbursed
Individual Portfolio
Total
Individual Portfolio
Total
reserve
reserve
reserve
reserve
reserve
reserve$804 $844 $ 1,648 $
— $
— $
—
—
68
68
3
137
140
(2)
(193)
(195)
(1)
3
2
(225)
(5)
(230)
—
—
—
9
9
18
—
1
1
12
3
15
—
—
—
$

Total disbursed loans at Jun 30, 2021

$

598 $

726 $

1,324 $

141 $

143

46 $

8,466 $

8,512

2,242 $ 23,510 $ 25,752

Loans committed but not disbursed at June 30, 2021$

Unamortized deferred loan origination fees, net and other$

Loans at amortized cost

$ 25,638(114)___________a Other adjustments comprise reserve against interest capitalized.

The notes to consolidated financial statements are an integral part of these statements.

88 IFC 2023 ANNUAL REPORT FINANCIALS

2 $INTERNATIONAL FINANCE CORPORATION

Page 95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
Reserve for losses and provision for losses on off-balance sheet guarantee exposures and other receivables
Changes in the reserve against losses (liability) on off-balance sheet guarantee exposures for the years ended June 30, 2023, June 30,
2022 and June 30, 2021 are summarized below :For the year ended June 30,
2023
IssuedOutstanding(US$ in millions)
Guarantees a Guarantees a
Beginning balance$
11 $7
Cumulative effect of adopting ASC 326
—
—

2022
Outstanding
IssuedGuarantees a Guarantees a
$
11 $
6
—
—

2021
Outstanding
IssuedGuarantees a Guarantees a
$
29 $
—
—
8

Provision (Release of provision) for
losses on off-balance sheet credit
exposure
Guarantee claims paid
Foreign currency transaction
adjustments

4
—

7
—

—
—

1
—

—
(18)

(3)
—

—

(1)

—

—

—

—

Other adjustments

—

—

—

—

1

Ending balance

$

15

$

13

$

11

$

7

$

11

$

6

___________a Guarantees are considered issued when IFC commits to the guarantee obligation. Guarantees are considered outstanding when the underlying financial obligation of theclient is incurred.

Changes in the reserve against losses on accrued interest and other receivables for the years ended June 30, 2021, are summarized
below a:For the year ended
June 30, 2021
$
15
(10)
(5)
$
—

(US$ in millions)
Beginning balance
Cumulative effect of adopting ASC 326
Release of provision for losses on other receivables
Ending balance_________
a The outstanding balance of other receivables is $21 million at June 30, 2021.

There are no changes to the reserve against losses on accrued interest and other receivables for the years ended June 30, 2023 andJune 30, 2022.
Accrued interest
The accrued interest balances are $524 million and $292 million, as of June 30, 2023 and June 30, 2022 respectively, and are reported
within receivables and other assets on the consolidated balance sheets.
Accrued interest is written off by reversing interest income during the quarter the financial asset is moved from an accrual to anonaccrual status. The amount of accrued interest receivables written off by reversing interest income is $5 million and $4 million for theyears ended June 30, 2023 and June 30, 2022, respectively.
Accrued interest receivable is excluded from the amortized cost basis for disclosure purposes.
Nonaccruing loans
Loans at nonaccrual status without a reserve against losses at June 30, 2023 and June 30, 2022 are considered insignificant. Loans on
which the accrual of interest has been discontinued amounted to $1.1 billion at June 30, 2023 ($1.3 billion – June 30, 2022). Theinterest income on such loans for the years ended June 30, 2023, June 30, 2022 and June 30, 2021 are summarized as follows:(US$ in millions)2023

Interest income not recognized on nonaccruing loans
Interest income recognized on loans in nonaccrual status related to current andprior years, on cash basis$

For the year ended June 30,
2022
2021
139

$

78

92

$

65

188
50

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS89

INTERNATIONAL FINANCE CORPORATION

Page 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
The amortized cost in nonaccruing loans at June 30, 2023 and June 30, 2022 is summarized by geographic region and industry sector
as follows:
June 30, 2023

(US$ in millions)

Manufacturing,agribusinessand services

Africa$Asia and Pacific
Latin America and the Caribbean, and Europe
Middle East, Central Asia, Türkiye, Pakistan,and Afghanistan
Total disbursed loans

b

$

196

Infrastructureand natural
resources

Financialmarkets
$

—

$

161

Total nonaccruing loans
at amortizedcost aDisruptive
technologies
and funds
$

5

$

362

118
159

7
12

19
151

—
1

144
323

91

74

130

—

295

564

$

93

$

461

$

6

$

1,124

June 30, 2022

(US$ in millions)

Manufacturing,agribusinessand services

Africa$Asia and Pacific
Latin America and the Caribbean, and Europe
Middle East, Central Asia, Türkiye, Pakistan,and Afghanistan
Total disbursed loans

b

$

221

Infrastructureand natural
resources

Financialmarkets
$

—

$

80

Disruptive
technologies
and funds$

4

Total nonaccruing loans
at amortizedcost a
$

305

143
217

10
12

44
202

—
—

197
431

102

74

220

—

396

683

$

96

$

546

$

4

$

1,329

_________a Includes all components of amortized cost except unamortized fees which are considered insignificant.
b Includes $59 million reported as debt securities and $137 million reported as loans under Fair Value Option on the Balance Sheet as of June 30, 2023 ($60 million Debt
securities and $197 million Fair Value Option loans – June 30, 2022).

The notes to consolidated financial statements are an integral part of these statements.

90 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
Past due loans
IFC considers a loan past due when payments are more than 30 days past the contractual due date. An age analysis, based oncontractual terms, of IFC’s loans at amortized cost by geographic region and industry sector follows:
June 30, 2023

(US$ in millions)31-60 days
past due61-90 days
past due$$Greaterthan 90days pastdue

Total pastdue

Current

Total loans

AfricaManufacturing, agribusiness and services

—

10

$

90

$

100

$

1,918

$

2,018

Financial markets

—

1

—

1

2,736

2,737

Infrastructure and natural resources

—

—

109

109

1,710

1,819

Disruptive technologies and funds

—

—

4

4

—

4

Total Africa

—

11

203

214

6,364

6,578

Manufacturing, agribusiness and services

—

—

18

18

3,088

3,106

Financial markets

—

—

5

5

4,553

4,558

Infrastructure and natural resources

—

—

6

6

1,706

1,712

—

—

29

29

9,347

9,376

Asia and PacificTotal Asia and Pacific
Latin America and the Caribbean, and Europe
Manufacturing, agribusiness and services

25

—

94

119

3,736

3,855

Financial markets

—

—

6

6

3,987

3,993

Infrastructure and natural resources

—

—

26

26

1,749

1,775

25

—

126

151

9,472

9,623

Manufacturing, agribusiness and services

—

—

12

12

1,286

1,298

Financial markets

—

23

33

56

1,019

1,075

Infrastructure and natural resources
Total Middle East, Central Asia, Türkiye,
Pakistan, and Afghanistan

—

—

—

—

1,305

1,305

—

23

45

68

3,610

3,678

Total Latin America and the Caribbean, andEuropeMiddle East, Central Asia, Türkiye,
Pakistan, and Afghanistan

Other
Manufacturing, agribusiness and services

—

—

—

—

455

455

Financial markets

—

—

—

—

1,534

1,534

Total Other—

Total disbursed loans
Unamortized deferred loan origination fees,
net and other

$

25

—
$

34

—
$

403

—
$

462

1,989
$

30,782

1,989$

31,244(127)

Loans at amortized cost$

31,117_________At June 30, 2023, loans 90 days or greater past due still accruing were insignificant.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS91

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Page 98

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)(US$ in millions)31-60 days
past due61-90 days
past due$$June 30, 2022
Greaterthan 90days past
Total pastdue
due

Current

Total loans

AfricaManufacturing, agribusiness and services
Financial markets

—
—

18

$

—

69

$

—

87

$

1,358

$

1,445

—

2,284

2,284

Infrastructure and natural resources

—

—

5

5

1,664

1,669

Disruptive technologies and funds

—

—

4

4

—

4

Total Africa

—

18

78

96

5,306

5,402

Manufacturing, agribusiness and services

2

—

31

33

3,335

3,368

Financial markets

—

—

10

10

3,468

3,478

Infrastructure and natural resources

—

—

17

17

1,471

1,488

2

—

58

60

8,274

8,334

Asia and PacificTotal Asia and Pacific
Latin America and the Caribbean, and Europe
Manufacturing, agribusiness and services

5

—

98

103

2,648

2,751

Financial markets

—

—

—

—

3,505

3,505

—

—

13

13

1,588

1,601

5

—

111

116

7,741

7,857

Infrastructure and natural resources
Total Latin America and the Caribbean, andEuropeMiddle East, Central Asia, Türkiye, Pakistan,and Afghanistan
Manufacturing, agribusiness and services

—

—

18

18

901

919

Financial markets

—

—

33

33

642

675

Infrastructure and natural resources
Total Middle East, Central Asia, Türkiye,
Pakistan, and Afghanistan

—

—

52

52

1,257

1,309

—

—

103

103

2,800

2,903

Manufacturing, agribusiness and services

—

—

—

—

707

707

Financial markets

—

—

—

—

977

977

Other

Infrastructure and natural resources

—

—

—

—

—

—

Total Other

—

—

—

—

1,684

1,684

25,805$ 26,180

Total disbursed loans

$

7

$

18

$

350

$

375

Unamortized deferred loan origination fees, net
and other
Loans at amortized cost_________At June 30, 2022, loans 90 days or greater past due still accruing were insignificant.

The notes to consolidated financial statements are an integral part of these statements.

92 IFC 2023 ANNUAL REPORT FINANCIALS

$

(122)
$ 26,058

INTERNATIONAL FINANCE CORPORATION

Page 99

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
Loan Credit Quality Indicators
IFC utilizes a rating system to classify loans according to credit worthiness and risk. A description of each credit rating andcategorization in terms of the attributes of the borrower, the business environment in which the borrower operates or the loan itself
under the rating system follows:
CreditRisk
RatingCR-1

Indicative
External
RatingAAA, AA+,
AA, AA-

CR-2

A+, A, A-

CR-3

BBB+

CR-4

BBB

CR-5

BBB-

CR-6

BB+

CR-7

BB

CR-8

BB-

CR-9

B+

CR-10

B

CR-11

B-

CR-12

Category

Description
obligor rated CR-1 is the highest rating assigned by IFC. The obligor's ability to meet its
Very Strong An
financial obligations is very strong.
An obligor rated CR-2 is slightly more susceptible to the negative effects of changes inStrongcircumstances and economic conditions than obligors rated CR-1. The obligor's ability to meet its
financial obligations remains strong.
An obligor rated CR-3 exhibits an adequate financial profile, even though at a weaker level than
"CR-1" and "CR-2”.
Adequate

Moderate

An obligor rated CR-4 exhibits an adequate financial profile. However, adverse economic
conditions or changing circumstances are more likely to lead to a deterioration of the obligor’s
ability to meet its financial obligations.
An obligor rated CR-5, as the lowest of the investment grade ratings, exhibits an adequate
financial profile. However, adverse economic conditions and/or changing circumstances are more
likely to lead to a weaker financial profile and a deterioration of the obligor’s ability to meet its
financial obligations.
An obligor rated CR-6, as the first non-investment grade rating, is less vulnerable to default thanother non-investment obligors.
An obligor rated CR-7 can face major uncertainties. Exposure to negative business, financial, or
economic conditions could lead to the obligor's insufficient financial profile and a deterioration of
the obligor’s ability to meet its financial obligations.
An obligor rated CR-8 faces major ongoing uncertainties. Exposure to negative business,financial, or economic conditions could lead to the obligor's insufficient financial profile and adeterioration of the obligor’s ability to meet its financial obligations.

Weak

An obligor rated CR-9 is less vulnerable to default than obligors rated 'CR-10’ or ‘CR-11'.
Significantly negative business, financial, or economic conditions will likely weaken the obligor's
financial profile and ability to meet its financial obligations.
An obligor rated CR-10 is more vulnerable to default than obligors rated 'CR-9’ but the obligor still
has the capacity to meet its financial obligations. Negative business, financial, or economic
conditions will likely weaken the obligor's financial profile and ability to meet its financial
obligations.
An obligor rated CR-11 is more vulnerable to default than obligors rated 'CR-9’ or ‘CR-10’. The
obligor still has the capacity to meet its obligations but slightly negative business, financial, or
economic conditions are more likely to weaken the obligor's financial profile and ability to meet its
financial obligations than a company rated CR-10.

CCC+

Very Weak/
SpecialAttention

An obligor rated CR-12 faces significant challenges. While such obligors will likely have somepositive characteristics, these may be outweighed by large uncertainties or major exposures toadverse conditions. The obligor is dependent upon favorable business, financial, and economic
conditions to meet its financial obligations.

CR-13

CCC

An obligor rated CR-13 is currently vulnerable to default, and is dependent upon significantly
Very Weak/ favorable business, financial, and economic conditions to meet its financial obligations. In the
Substandard event of negative business, financial, or economic conditions, the obligor is not likely to meet its
financial obligations and rescheduling and/or restructuring is likely to be required.

CR-14

CCC-

Extremely
Weak/
Doubtful

An obligor rated CR-14 is highly vulnerable to default. It is highly likely that a rescheduling and/or
restructuring are required without which a default under IFC’s accounting definition would ensue.
In some cases, even though default has not occurred yet, cash flow may be insufficient to service
debt in full.

CR-15

Worse
than CCCand D

Imminent
Default/Default

An obligor rated CR-15 is currently extremely vulnerable to nonpayment and there are indications
that the next payment will not be made before meeting IFC’s accounting definition of default.

D

An obligor rated D is in payment default according to IFC’s definition of default.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS93

INTERNATIONAL FINANCE CORPORATION

Page 100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
The following tables present the loans disbursed by credit quality indicator based on risk rating and origination year at June 30, 2023
and June 30, 2022. The origination year is based on the commitment date that represents the date that the decision was made toextend credit and IFC entered into a legally binding agreement with the borrower. All subsequent loan disbursements, as well as loan
modifications, extensions, and renewals for an associated loan commitment are reported based on the original commitment date:June 30, 2023
(US$ in millions)

Origination year

FY23
FY22
FY21
FY20
FY19
Prior
Total
Revolving loans
Revolving contracts
converted to Term
contracts
Total disbursed loans

Loans at Amortized cost basis by Risk class
Very
Weak/
SpecialAttention

Very Weak/
Substandard

Extremely
Weak/
Doubtful

Imminent
Default/
Default

Very
StrongStrongAdequate

Moderate

Weak

$ —
—
—
69
—
40

$ 590
470
66
—
127
222

$ 1,525
1,186
1,456
1,129
295
885

$ 2,475
2,255
2,608
1,196
832
1,454

$ 1,559
1,471
1,409
586
782
2,241

$

72
143
145
257
182
427

$

20
—
21
59
18
166

$

4
62
—
91
52
189

$

—
—
10
6
52
643

$ 6,245
5,587
5,715
3,393
2,340
6,267

$ 109

$ 1,475$ 6,476$ 10,820$ 8,048$ 1,226

$

284

$

398

$

711

$ 29,547

—

—

—

1,569

86

—

25

—

—

1,680

—

—

7

10

—

—

—

—

—

17

$ 109

$ 1,475$ 6,483$ 12,399$ 8,134$ 1,226711$ 31,244

$

309

$

398

$

Unamortized deferredloan origination fees,
net and other

Total
Contracts(127)

Loans at amortized cost

$ 31,117
June 30, 2022

(US$ in millions)

Origination year

FY22
FY21
FY20
FY19
FY18
Prior
Total
Revolving loans
Revolving contracts
converted to Term
contracts
Total disbursed loans
Unamortized deferred loan
origination fees, net and
other

Very
StrongStrongAdequate

$ —
—
74
—
—
50

$

$

$ 124

88
199
150
140
34
359

Loans at Amortized cost basis by Risk class
Very
Weak/
SpecialVery Weak/
Moderate
Weak
Attention Substandard

Extremely
Weak/
Doubtful

Imminent
Default/
Default

Total
Contracts

939
1,473
1,069
483
627
664

$ 1,020
2,619
1,500
968
1,133
928

$ 439
1,761
1,109
1,319
1,013
2,053

$

31
174
111
144
279
397

$

—
—
61
29
—
265

$

—
2
85
61
34
204

$

4
6
6
44
58
670

$ 2,521
6,234
4,165
3,188
3,178
5,590

$ 970

$ 5,255$ 8,168$ 7,694$ 1,136

$

355

$

386

$

788

$ 24,876

—

—

7

1,123

160

—

—

—

—

1,290

—

—

—

14

—

—

—

—

—

14

$ 124

$ 970

$ 5,262$ 9,305$ 7,854$ 1,136788$ 26,180

$

355

$

386

$

(122)

Loans at amortized cost

$ 26,058

The notes to consolidated financial statements are an integral part of these statements.

94 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 101NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
Following is a summary of IFC’s loans at amortized cost by credit quality indicator, geographic region, and industry sector, effective
June 30, 2023 and June 30, 2022 respectively:
June 30, 2023

(US$ in millions)

Very
Weak/
SpecialAttention

Very Weak/
Substandard

Extremely
Weak/
Doubtful

Imminent
Default/
Default

$

$

$

$

Very
StrongStrongAdequate

Moderate

Weak

$

$

$

394
3,284

$ 1,992
3,250$ 3,303
2,019

517

2,515

4,255

1,497

356

Total

Geographic Region
AfricaAsia and Pacific
Latin America and the
Caribbean, and Europe
Middle East, Central Asia,
Türkiye, Pakistan, andAfghanistan

—
69
—

25
460

313
192

205
6

137
18

209
78

$ 6,578
9,376
9,623

98

215

170

—

—

179

1,537

1,315

365

—

28

254

3,678

40

473

111

1,365

—

—

—

—

—

1,989

Total geographic region $ 109
Unamortized deferred loan
origination fees, net andother$ 1,475$ 6,483$ 12,399$ 8,134$ 1,226711$31,244

Other

$

309

$

398

$

(127)
$31,117

Loans at amortized cost

June 30, 2023

Very
StrongStrongAdequate

Moderate

Weak

Very
Weak/
SpecialAttention

$ 109

$ 770

$ 2,992$ 4,147$ 1,685

$

—

638

2,626

6,676

3,686

155

28

—

67

865

1,576

2,763

732

—

—

—

—

—

—

Total industry sector $ 109$1,475$ 6,483$ 12,399$ 8,134$ 1,226(US$ in millions)

Very Weak/
Substandard

Extremely
Weak/
Doubtful

Imminent
Default/
Default

$

$

$

Total

Industry Sector
Manufacturing,agribusiness andservices
Financial markets
Infrastructure andnatural resources
Disruptive technologies
and funds

339

$

223

322

$10,732

36

52

13,897

58

217

333

6,611

—

—

4

4

711

$31,244

309

$

145

398

$

Unamortized deferred loan
origination fees, net and
other

(127)

Loans at amortized cost

$31,117

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS95

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Page 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
June 30, 2022

(US$ in millions)Geographic Region
AfricaAsia and Pacific
Latin America and the
Caribbean, andEuropeMiddle East, Central
Asia, Türkiye,
Pakistan, andAfghanistan

Very Weak/
Substandard

Extremely
Weak/
Doubtful

Imminent
Default/
Default

$

$

$

$

Very
StrongStrongAdequate

Moderate

Weak

$

$

$

119
3,068

$ 1,671
2,434$2,884
2,004

471

1,622

3,057

1,732

529

74

—
75
—

Other
Total geographic
regionUnamortized deferredloan origination fees,
net and other

Very
Weak/
SpecialAttention

$

52
382

208
140

211
34

73
118

Total

184
79

$ 5,402
8,334

128

244

7,857

—

—

175

851

1,234

259

36

67

281

2,903

49

65

278

1,292

—

—

—

—

—

1,684

124

$ 970

$ 5,262$ 9,305$7,854$ 1,136

788$26,180

$

355

$

386

$

(122)

Loans at amortized
cost$26,058

June 30, 2022

(US$ in millions)

Very
StrongIndustry Sector
Manufacturing,agribusiness andservices$
Financial markets
Infrastructure andnatural resources
Disruptive technologies
and funds
Total industry sector
Unamortized deferredloan origination fees,
net and other
Loans at amortized
cost

$

Very
Weak/
SpecialAttention

Very Weak/
Substandard

Extremely
Weak/
Doubtful

Imminent
Default/
Default

$

$

$

$

StrongAdequate

Moderate

Weak

124
—

$ 775
0

$ 2,5142,092$ 2,998
5,596$ 1,865
2,869

—

195

656

711

3,120

638

224

—

—

—

—

—

—

—

124

$ 970

$ 5,262$ 9,305$ 7,854$ 1,136

283
215

$

116
15

355

$

94
116

Total

421
16

$ 9,190
10,919

176

347

6,067

—

4

4

788

$26,180

386

$

(122)
$26,058

The notes to consolidated financial statements are an integral part of these statements.

96 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 103

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
Loans are modified through changes in interest rates, repayment schedules, and maturity date, in addition to reductions of loan
principal and waiver of accrued interest. The following table presents information related to loan modifications, including past due
amounts capitalized and written off, during the years ended June 30, 2023, June 30, 2022 and June 30, 2021 that are considered
Troubled Debt Restructurings (TDRs):
For the year ended June 30,
2023(US$ in millions)
Loans modified as TDRs

Number of
TDRs
20

2022
Number of
TDRs

Amount
$

568

31

2021
Amount$Number of
TDRs

792

46

Amount$741

Loan at amortized cost modifications considered TDRs during the years ended June 30, 2023, June 30, 2022 and June 30, 2021 issummarized by geographic region and industry sector as follows:
For the year ended June 30, 2023
Infrastructure
Total Loan
Financialand naturalmodifications
marketsresourcesconsidered TDRs a

Manufacturing,agribusinessand services(US$ in millions)Geographic Region
Africa

$

151

$

—

$

—

$

151

Asia and PacificMiddle East, Central Asia, Türkiye, Pakistan, andAfghanistan

70

9

14

93

—

—

160

160

Latin America and the Caribbean, and Europe

—

5

159

164

Total geographic region

$

221

$

14

$

333

$

568

For the year ended June 30, 2022
Manufacturing,agribusinessand services(US$ in millions)Geographic Region
AfricaAsia and PacificMiddle East, Central Asia, Türkiye, Pakistan, andAfghanistan
Latin America and the Caribbean, and Europe
Total geographic region

$

112
106

$

—
—

—
98
$

316

Infrastructureand natural
resources

Financialmarkets
$

53
24

46
21
$

67

Total Loan
modifications
considered TDRs a
$

240
92
$

409

165
130
286
211

$

792

For the year ended June 30, 2021
Manufacturing,agribusinessand services(US$ in millions)Geographic Region
AfricaAsia and PacificMiddle East, Central Asia, Türkiye, Pakistan, andAfghanistan
Latin America and the Caribbean, and Europe
Total geographic region

$

152
158

$

69
36
$

415

Infrastructureand natural
resources

Financialmarkets
—
31

$

—
7
$

38

227
—

Loan modifications
considered TDRs a
$

61
—
$

288

379
189
130
43

$

741

___________a Includes all components of amortized cost except unamortized fees which are considered insignificant.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS97

INTERNATIONAL FINANCE CORPORATION

Page 104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE E – LOANS AND GUARANTEES (continued)
Following is a summary of loans that defaulted during the years ended June 30, 2023, June 30, 2022 and June 30, 2021 that had been
modified in a troubled debt restructuring within 12 months prior to the date of default:
For the year ended June 30,(US$ in millions, except for number of loans)

2023

Loan amount

$

2022
137

Number of Loans

$

12

2021
43 $

70

7

4

Collateral-Dependent Loans
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to beprovided substantially through the operation or sale of the collateral. The following tables summarize the amortized cost of collateraldependent loansa by collateral type, geographic region and industry sector as of June 30, 2023 and June 30, 2022 respectively:
June 30, 2023
Property, Landand
Equipment(US$ in millions)

OthersJune 30,2022
Property, Landand
Equipment

Total

Others

Total

Geographic Region
Africa$Asia and Pacific
Latin America and the Caribbean, and Europe
Total

$

2 $

— $

2

—
3

—
6

—
9

5 $

6 $

11

$

$

June 30, 2023
Property, Landand
Equipment(US$ in millions)

Others

2

— $

2

14
44

—
—

14
44

60 $

— $

60

June 30,2022
Property, Landand
Equipment

Total

Others

Total

Industry Sector
3 $

— $

3

8

— $

8

Financial markets

Manufacturing, agribusiness and services

$

—

6

6

—

—

—

Infrastructure and natural resources

2

—

2

52

—

52

5 $

6 $

11

60 $

— $

60

$

Total

$

$

___________a Includes all components of amortized cost except unamortized fees which are considered insignificant.

Guarantees
IFC extends financial guarantee facilities to its clients to provide full or partial credit enhancement for their debt securities and tradeobligations. Under the terms of IFC’s guarantees, IFC agrees to assume responsibility for the client’s financial obligations in the event ofdefault by the client, where default is defined as failure to pay when payment is due. Guarantees entered into by IFC generally havematurities consistent with those of the loan portfolio. Guarantees signed as of June 30, 2023 totaled $5.1 billion ($4.9 billion – June 30,2022). Guarantees of $4.4 billion that were outstanding (i.e., not called) at June 30, 2023 ($4.2 billion – June 30, 2022), were notincluded in loans on IFC’s consolidated balance sheet. The outstanding amount represents the maximum amount of undiscounted
future payments that IFC could be required to make under these guarantees.

The notes to consolidated financial statements are an integral part of these statements.

98 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE F – DEBT SECURITIESIncome from debt securities, including realized gains on debt securities and associated derivatives for the years ended June 30, 2023,
June 30, 2022 and June 30, 2021 comprise the following:
For the year ended
June 30,
June 30,
June 30,
2023
2022
2021
$
442 $
297 $
282
1
5
1
75
112
57

(US$ in millions)Interest income
Dividends
Realized gains on debt securities and associated derivatives a
Total income from debt securities, including realized gains on debt securities
and associated derivatives

$

518

$

414

$

340

_________a Includes realized gains on debt securities under the Fair Value Option. $4 million, $74 million, and $24 million gains for the years ended June 30, 2023, June 30, 2022, andJune 30, 2021, respectively.

Debt securities accounted for as available-for-sale at June 30, 2023 and June 30, 2022 comprise:(US$ in millions)
Corporate debt securities
Preferred shares
Asset-backed securities
Total

Amortized
cost
$
1,304
28
300

Unrealized
gains a$16
12June 30, 2023
Unrealized Reserve forlosses acredit losses
Fair value$(194) $
(13) $
1,113
(1)
(8)
20
(62)
—
240

$

$

$

1,632

19

(257) $

(21) $

1,373_________a Includes net foreign exchange losses of $221 million as of June 30, 2023.

(US$ in millions)
Corporate debt securities
Preferred shares
Asset-backed securities
Total

Amortized
cost
$
1,722
31
466

Unrealized
gains a$654
13June 30, 2022
Unrealized
Reserve forlosses acredit losses
Fair value$(293) $
(11) $
1,424
(1)
(3)
81
(79)
—
400

$

$

$

2,219

73

(373) $

(14) $

1,905_________a Includes net foreign exchange losses of $332 million as of June 30, 2022.

Due to non-credit related factors, reserve for credit losses were not recorded for the following available-for-sale debt securities in an
unrealized loss position:
June 30, 2023
(US$ in millions)
Corporate debt securities

Unrealized Losses a

Amortized Costs$

Preferred shares
Asset-backed securities
Total

$

857

$

Fair value(194) $

663

9

(1)

8

225

(62)

163

(257) $

834

IFC 2023 ANNUAL REPORT FINANCIALS

99

1,091

$

_________a Includes net foreign exchange losses of $217 million as of June 30, 2023.

The notes to consolidated financial statements are an integral part of these statements.

INTERNATIONAL FINANCE CORPORATION

Page 106NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE F – DEBT SECURITIES (continued)
June 30, 2022
(US$ in millions)
Corporate debt securities

Unrealized Losses a

Amortized Costs
$

1,470

Preferred shares
Asset-backed securities
Total

$

$

Fair value(293) $

1,177

3

(1)

2

466

(79)

387

(373) $

1,566

1,939

$

_________a Includes net foreign exchange losses of $323 million as of June 30, 2022.

The following table shows the unrealized losses and fair value of debt securities at June 30, 2023 and June 30, 2022 by length of timethat individual securities had been in a continuous loss position where the fair value of securities declined below their cost basis:
June 30, 2023
Less than 12 months
12 months or greater
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized(US$ in millions)value
lossesvalue
lossesvalue
losses
$
— $
— $
663 $
(194) $
663 $(194)
Corporate debt securities
Preferred shares

7

—

1

(1)

8

(1)

Asset-backed securities

—

—

163

(62)

163

(62)

(257) $

834

Total

(US$ in millions)
Corporate debt securities
Preferred shares
Asset-backed securities
Total

$

$

$

7

$

—

$

Less than 12 months
Fair
Unrealized
value
losses400 $(46) $
2
(1)
350
(7)
752

$

(54) $

827$

June 30, 2022
12 months or greater
Fair
Unrealized
value
losses
777 $(247) $
—
—
37
(72)
814

$

(319) $

$

(257)

Total
Fair
Unrealized
value
losses1,177 $
(293)
2
(1)
387
(79)
1,566

$

(373)

Corporate debt securities comprise investments in bonds and notes. Fair value associated with corporate debt securities is primarily
attributable to movements in the credit default swap spread curve applicable to the issuer, and also impacted by movements in the riskfree rates and foreign exchange rates. Based upon IFC's assessment of expected credit losses, a reserve for credit losses is made forsecurities where the issuer is not expected to make all contractual principal and interest payments.
Preferred shares comprise investments in preferred equity investments that are redeemable at the option of IFC or mandatorily
redeemable by the issuer. Unrealized losses associated with preferred shares are primarily driven by changes in discount rates
associated with changes in credit spreads or interest rates, minor changes in exchange rates and comparable market valuations in theapplicable sector. Based upon IFC's assessment of expected credit losses, a reserve for credit losses is made for securities where IFC
does not expect to recover the cost basis of these securities.
Asset-backed securities comprise investments in bonds and notes that are collateralized by self-liquidating financial assets that allows
IFC to receive payments that depend primarily on cash flow from those assets.

The notes to consolidated financial statements are an integral part of these statements.

100 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 107

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE F – DEBT SECURITIES (continued)
The tables below present a roll-forward by major security type for the years ended June 30, 2023 and June 30, 2022 of the reserve for
credit losses on debt securities held at the period end:
(US$ in millions)

Beginning balance

For the year ended
June 30, 2022
Corporate
Debt
Preferred
Securities
shares
Total

June 30, 2023
Corporate
Debt
Securities

Preferredshares

$

$

11

3

Total
$

14

$

—

$

3

$

June 30, 2021

3

Corporate
Debt
Securities

Preferredshares

$

$

—

Total

—

$

—

Provision for losses

2

5

7

11

3

14

—

3

3

Write-offs

—

—

—

—

(3)

(3)

—

—

—

Ending balance

$

13

$

8

$

21

$

11

$

3

$

14

$

—

$

3

$

3

As of June 30, 2023, debt securities with contractual maturities that are accounted for as available-for-sale have contractual maturities
during the years ending June 30, 2024 through June 30, 2028 and thereafter, as follows:(US$ in millions)
Corporate debt securities$

Asset-backed securities
Total disbursed portfolio of debt
securities with contractual
maturities

2024
288

$

2025
395

144
$

432

2026
$

58
$

453

63

$

2027
255

21
$

84

$

2028
133

Thereafter
$
11

—

—

15
$

270

$

133

$

11

$

Total
1,145
238

$

1,383

As of June 30, 2022, debt securities with contractual maturities that are accounted for as available-for-sale have contractual maturities
during the years ending June 30, 2023 through June 30, 2027 and thereafter, as follows:(US$ in millions)
Corporate debt securities
Asset-backed securities
Total disbursed portfolio of debt
securities with contractual
maturities

2023
$
370

2024
$
270

2025
$
399

110

155

58

$

480

$

425

$

457

2026
$

$

64

2027
$
251

Thereafter
$
141

Total
$
1,495

22

15

—

360

86

$

266

$

141

$

1,855

The expected maturity of asset-backed securities may differ from the contractual maturity, as reported above, due to prepayment
features. In addition, IFC has $28 million of redeemable preferred shares and other debt securities with undefined maturities ($31
million – June 30, 2022).
The currency composition and weighted average contractual rate of debt securities with contractual maturities that are accounted for as
available-for-sale are summarized below:(US$ in millions, except for ratios)
U.S. dollar

June 30, 2023
Weighted
averagecontractual
Amountrate (%)
457

7.8

Euro

417

Indian rupee

275

Colombian pesoSouth African rand
Türkish lira
C.F.A. Francs BCEAO
Chilean peso
Total disbursed portfolio of debt securities with contractual
maturities$$

June 30, 2022
Weighted
averagecontractual
Amountrate (%)
$

572

4.7

5.9

400

3.1

8.0

584

7.7

187

14.5

195

8.6

22

11.3

28

11.3

21

14.7

64

15.0

4
—

6.0
—

5

6.0

7

7.6

1,383

8.3

1,855

6.2

$

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS101

INTERNATIONAL FINANCE CORPORATION

Page 108

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE F – DEBT SECURITIES (continued)
After the effect of interest rate swaps and currency swaps, IFC’s debt securities that are accounted for as available-for-sale are primarily
denominated in variable rate U.S. dollars.
Nonaccruing debt securities
Debt securities on which the accrual of interest has been discontinued amounted to $59 million at June 30, 2023 ($60 million – June 30,2022). The interest income on such debt securities for the year ended June 30, 2023, June 30, 2022 and June 30, 2021 is summarized
as follows:
For the year ended(US$ in millions)Interest income not recognized on nonaccruing debt securities
Interest income recognized on debt securities in nonaccrual status related to current
and prior years, on a cash basis

June 30, 2023 June 30, 2022 June 30, 2021
$
1 $
3 $
12
—

1

3

NOTE G – EQUITY INVESTMENTS AND ASSOCIATED DERIVATIVES
Income from equity investments and associated derivatives for the years ended June 30, 2023, June 30, 2022 and June 30, 2021
comprises the following:
For the year ended(US$ in millions)

June 30, 2023

Unrealized (losses) gains on equity investments and associated derivativesa$Realized gains on equity investments and associated derivatives, net
Gains (losses) on equity investments and associated derivatives, netb

Dividends
Custody, fees and otherTotal income (loss) from equity investments and associated derivatives$

June 30, 2022

June 30, 2021

(134) $

(617) $

2,550

161

642

431

27

25

2,981

162

180

218

2

3

2

191

$

208

$

3,201

_________a Including unrealized gains and losses related to equity securities still held at June 30, 2023 – net gains of $115 million for the year ended June 30, 2023 (net losses of $42
million - June 30, 2022 and net gains of $2.7 billion - June 30, 2021).
b Includes gains of $119 million for the year ended June 30, 2023 (gains of $234 million – June 30, 2022 and $1.9 billion – June 30, 2021) from equity investments for which
IFC has elected a Fair Value Option.

Equity investments include several private equity funds that invest primarily in emerging markets across a range of sectors and that are
accounted for at fair value under the Fair Value Option. The fair values of these funds have been determined using the net asset valueof IFC’s ownership interest in partners’ capital as a practical expedient and totaled $5.2 billion as of June 30, 2023 ($5.3 billion – June30, 2022). These investments cannot be redeemed. Distributions will be received from these funds as the underlying assets are
liquidated or distributed, the timing of which is uncertain. As of June 30, 2023, the maximum unfunded commitments subject to capitalcalls for these funds are $1.6 billion ($1.9 billion – June 30, 2022). As of June 30, 2023, IFC invested $505 million ($531 million – June30, 2022) as a limited partner in funds managed by AMC. Amounts previously distributed by the AMC Funds may be callable throughthe life of the respective fund. The sale of IFC’s limited partner interests in these funds needs prior consent from the other limited
partners.

The notes to consolidated financial statements are an integral part of these statements.

102 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 109

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE H – INVESTMENT TRANSACTIONS COMMITTED BUT NOT DISBURSED OR UTILIZED
Loan, equity and debt security commitments signed but not yet disbursed, and guarantee and client risk management facilities signed
but not yet utilized are summarized below:(US$ in millions)
Investment transactions committed but not disbursed:
Loans, equity investments and debt securities
Investment transactions committed but not utilized:
Guarantees
Client risk management facilities
Total investment transactions committed but not disbursed or utilized

June 30, 2023

June 30, 2022$$

11,09012,643747
202$

12,039724
177$

13,544The disbursements of investment transactions committed but not disbursed or utilized are generally subject to fulfillment of conditions of
disbursement.

NOTE I – LOAN PARTICIPATIONS
Loan participations signed as commitments for which disbursement has not yet been made and loan participations disbursed andoutstanding which are serviced by IFC for participants are as follows:(US$ in millions)
Loan participations signed as commitments but not disbursed
Loan participations disbursed and outstanding which are serviced by IFC

June 30, 2023
$
785
7,784

June 30, 2022
$
1,314
7,297

(US$ in millions)

June 30, 2023

June 30, 2022

Accrued income on derivative instruments$$

NOTE J – RECEIVABLES AND OTHER ASSETS
Receivables and other assets are summarized below:

1,131

535

Receivables from sales of securities

791

940

Pension and other post-retirement benefits receivable from IBRD

704

640

Accrued interest income on loans

524

292

Post-retirement contribution reserve fund

385

260

Assets under retirement benefit plans

246

106

Accrued interest income on time deposits and securities

243

102

1,346

1,287

(819)

(766)

527

521

1,294

1,315

Fixed assets
Less: Accumulated depreciation
Fixed assets, net
Deferred charges and other assets
Total receivables and other assets

$

5,845

$

4,711

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS103

INTERNATIONAL FINANCE CORPORATION

Page 110NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE K – BORROWINGS
Market borrowings and associated derivatives
IFC's borrowings outstanding from market sources and currency and interest rate swaps, net of unamortized issue premiums anddiscounts, are summarized below:
June 30, 2023
Currency swaps payable(receivable)

Market borrowings
Principal
amount(US$ in millions, except for ratios)

U.S. dollar$

Australian dollar
Pounds sterling
Mexican peso
New Zealand dollar
Canadian dollar
Swedish kronor
Euro
Brazilian realHong Kong dollar
Indian rupee
Chinese renminbi
South African rand
Norwegian kroner
Japanese yen
New Turkish lira
Hungarian forint
New Romanian lei
Colombian peso
Uzbekistan sum
Georgian lari
Indonesian rupiah
Chilean peso
Russian ruble
Philippine peso
Peso uruguayo
Kazakhstan tenge
Korean won
Peruvian soles nuevo
New Azerbaijanian manat
Dominican peso
Jamaican dollar
Czech koruna
Bangladeshi taka
New Serbian dinar
Sri Lanka rupee
Ukraine hrivnya
Costa Rican colon
Principal at face value$

Short-term borrowings from market andother sources

21,6392.4

10,434
5,703
5,221
2,549
2,073
1,496
1,196
1,064
855
675
658
618
488
347
308
298
271
243
191
143
133
119
117
60
60
58
44
43
35
23
15
11
7
4
3
3
1

3.0
1.5
7.8
2.4
1.9
1.4
1.8
3.1
3.0
6.5
2.5
6.1
2.0
4.6
10.9
6.6
5.7
4.5
12.9
8.5
8.0
3.2
5.3
6.3
6.4
10.1
2.7
1.5
6.0
7.0
7.5
4.4
7.1
0.7
8.0
13.6
8.4

57,206

Notional
amount$$Weighted
average rate(%)

33,864

5.2(10,434)(5,703)(5,221)(2,549)(2,073)(1,496)(1,196)(1,064)
(855)
(231)
(611)
(618)
(488)
(347)
(304)
(298)
(56)
(243)
(191)
(67)
—
(119)
(117)
—
(60)
(49)
(44)
(43)
(17)
(23)
(15)
(11)
—
(4)
—
—
—

3.7
1.5
7.9
2.5
1.9
1.4
1.8
2.6
3.0
6.4
2.5
5.5
2.0
3.1
13.6
6.6
5.4
4.1
12.9
7.5
—
3.2
5.8
—
6.4
10.4
2.7
1.5
6.0
7.0
7.5
4.4
—
0.7
—
—
—

(683)

Notional
amount$$21,935(21,754)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
181

60,173(3,433)56,740(4,540)$52,200The notes to consolidated financial statements are an integral part of these statements.

104 IFC 2023 ANNUAL REPORT FINANCIALS

Net currency obligation

Weighted
average rate
(%)

2,967

Unamortized discounts, net
Total market borrowings
Fair value adjustments
Carrying amount of market
borrowings

Weighted
average rate(%)

Interest rate swaps notional
principal payable(receivable)

5.1
2.4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

Notional
amount$$Weighted
average rate(%)

55,684

5.2

—
—
—
—
—
—
—
—
—
444
47
—
—
—
4
—
215
—
—
76
133
—
—
60
—
9
—
—
18
—
—
—
7
—
3
3
1

—
—
—
—
—
—
—
—
—
6.6
2.8
—
—
—
10.5
—
5.8
—
—
9.5
8.0
—
—
6.3
—
8.4
—
—
6.0
—
—
—
7.1
—
8.0
13.6
8.4

56,704

5.2

INTERNATIONAL FINANCE CORPORATION

Page 111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE K – BORROWINGS (continued)
June 30, 2022
Currency swaps payable(receivable)

Market borrowings
Weighted
average rate(%)

Principal
amount(US$ in millions, except for ratios)$

U.S. dollar

21,264

1.6

Notional
amount$30,497

Interest rate swaps notional
principal payable(receivable)

Weighted
average rate
(%)

1.3

Notional
amount$Net currency obligation

Weighted
average rate(%)

20,978(20,828)

1.1
1.6

Weighted
average rate(%)

Notional
amount

$51,911

1.2

Australian dollar

8,726

2.7

(8,726)

2.7

—

—

—

—

Pounds sterling

4,310

1.0

(4,310)

1.0

—

—

—

—

Mexican peso

4,243

7.6

(4,243)

7.6

—

—

—

—

New Zealand dollar

1,999

1.7

(1,999)

1.7

—

—

—

—

Canadian dollar

1,742

1.5

(1,742)

1.5

—

—

—

—

Swedish kronor

1,280

0.7

(1,280)

0.7

—

—

—

—

Brazilian real

1,211

3.3

(1,211)

3.3

—

—

—

—

Euro

1,121

1.8

(1,121)

1.8

—

—

—

—

Japanese yen

1,059

2.4

(1,059)

1.9

—

—

—

—

Indian rupee

954

6.3

(151)

6.3

—

—

803

6.3

Chinese renminbi

817

2.6

(817)

2.6

—

—

—

—

South African rand

699

6.1

(699)

7.0

—

—

—

—
(3.1)

Turkish lira

572

11.1

(566)

11.3

—

—

6

Russian ruble

514

5.5

(514)

5.4

—

—

—

—

Kazakhstan tenge

254

8.2

(243)

8.2

—

—

11

8.3

Norwegian kroner

226

0.9

(226)

0.9

—

—

—

—

Colombian peso

176

4.3

(176)

4.3

—

—

—

—
2.4

New Romanian lei

172

2.8

(93)

3.1

—

—

79

Hong Kong dollar

166

1.5

(166)

1.5

—

—

—

—

Georgian lari

143

8.4

(75)

7.5

—

—

68

9.5
8.0

Indonesian rupiah

133

8.0

—

—

—

—

133

Hungarian forints

131

2.7

(131)

2.7

—

—

—

—

Uzbekistan sum

112

10.5

(112)

10.5

—

—

—

—

Chilean peso

92

2.4

(92)

2.4

—

—

—

—

Uruguayan peso

76

6.2

(76)

6.2

—

—

—

—
6.3

Philippine peso

66

6.3

—

—

—

—

66

Peruvian soles nuevo

41

1.5

(41)

1.5

—

—

—

—

Ukrainian hryvnia

41

13.5

(35)

13.4

—

—

6

13.6

New Azerbaijanian manat

35

6.0

(35)

6.0

—

—

—

—

New Ghanaian cedi

23

13.4

(23)

13.4

—

—

—

—
6.7

Bangladeshi taka

17

6.7

—

—

—

—

17

Czech koruna

11

4.4

(11)

4.4

—

—

—

—

Costa Rican colon

6

7.2

(2)

5.5

—

—

4

8.1

6.7
9.4

(5)
(5)

6.3
9.4

—
—

—
—

1
—

8.6
—

Dominican peso

6

Nigerian naira

5

New Serbian dinar

4

0.7

(4)

0.7

—

—

—

—

3

8.0

—

—

—

—

3

8.0

53,108

1.3

Sri Lankan rupee
Principal at face value$

Short-term borrowings from market andother sources

52,450

$

508

$

150

$

2,327
54,777

Unamortized discounts, net(2,527)

Total market borrowings

52,250Fair value adjustments
Carrying amount of market
borrowings(4,325)$47,925The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS105

INTERNATIONAL FINANCE CORPORATION

Page 112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE K – BORROWINGS (continued)
The net currency obligations not fully hedged by borrowings related swaps have generally been invested and/or on-lent to clients insuch currencies. The weighted average remaining maturity of IFC’s borrowings from market sources was 5.4 years at June 30, 2023
(5.6 years – June 30, 2022).
Charges on borrowings for the year ended June 30, 2023 include $6 million of interest expense on secured borrowings ($4 million –year ended June 30, 2022 and $7 million – year ended June 30, 2021) and is net of $1 million of gains on buybacks of market
borrowings ($4 million – year ended June 30, 2022; $3 million – year ended June 30, 2021).
The net nominal amount receivable from currency swaps of $683 million and the net notional amount payable from interest rate swaps
of $181 million at June 30, 2023 (payable of $508 million from currency swaps and payable of $150 million from interest rate swaps –June 30, 2022), shown in the above table, are represented by currency and interest rate swap assets at fair value of $2.8 billion andcurrency and interest rate swap liabilities at fair value of $10.0 billion ($128 million and $7.3 billion – June 30, 2022), included inderivative assets and derivative liabilities, respectively, on the consolidated balance sheet.
Short-term market borrowings
IFC’s short-term Discount Note Program has maturities ranging from overnight to one year. The amount outstanding under the programat June 30, 2023 is $3.0 billion ($2.3 billion – June 30, 2022). Charges on borrowings for the year ended June 30, 2023, include $109
million in respect of this program ($5 million – June 30, 2022 and $5 million – June 30, 2021).
Borrowings from IDA
Borrowings outstanding from IDA are summarized below:
June 30, 2023
Interest rate swap notional
principal
payable (receivable)

IDA Borrowings
Principal
amount(US$ in millions, except for ratios)
U.S. dollar$

262

Total IDA borrowings outstanding
Fair value adjustments

$

262
(19)

Carrying amount of IDA borrowings$

243

Weighted
averagecost (%)
1.8

Net currency obligation

Weighted
averagecost (%)

Notional
amount
$

262
(262)

$

—

5.5
(-1.8)

Notional
amountWeighted
averagecost (%)

$

262

5.5

$

262

5.5

June 30, 2022
Interest rate swap notional
principal
payable (receivable)

IDA Borrowings
Weighted
averagecost (%)

Principal
amount(US$ in millions, except for ratios)
U.S. dollar$

358

Total IDA borrowings outstanding$

358

Fair value adjustments

1.8

Net currency obligation

Weighted
averagecost (%)

Notional
amount
$

358
(358)

$

—

1.8
(1.8)

Notional
amountWeighted
averagecost (%)

$

358

1.8

$

358

1.8

(14)

Carrying amount of IDA borrowings$

344

The weighted average remaining maturity of borrowings from IDA was 3.39 years at June 30, 2023 (3.3 years – June 30, 2022).
Charges on borrowings for the year ended June 30, 2023, includes $6 million ($8 million – year ended June 30, 2022; $10 million – year
ended June 30, 2021) in respect of borrowings from IDA.

The notes to consolidated financial statements are an integral part of these statements.

106 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 113

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE K – BORROWINGS (continued)
Maturity of borrowings
As of June 30, 2023, the principal amounts repayable on borrowings outstanding in all currencies during the years ending June 30,
2024, through June 30, 2028, and thereafter are summarized below:(US$ in millions)

2024

Borrowings from market sources$
Short-term borrowings from market
and other sources
Borrowings from IDA
Total borrowings, gross
Unamortized discounts, net
Fair value adjustments

$

9,042

2025
$

2,967
77
12,086

2026

9,706

$

—
61
$

9,767

2027

12,543$—
34$

12,577

2028

7,016

$

—
12
$

7,028

Thereafter

5,248

$

—
11
$

5,259

Total

13,652$—67$

13,719Carrying amount of borrowings

57,207
2,967
262

$

60,436(3,433)(4,560)$52,443As of June 30, 2022, the principal amounts repayable on borrowings outstanding in all currencies during the years ending June 30,
2023, through June 30, 2027, and thereafter are summarized below:(US$ in millions)

2023

Borrowings from market sources$
Short-term borrowings from market
and other sources
Borrowings from IDA
Total borrowings, gross
Unamortized discounts, net
Fair value adjustments

$

9,226

2024
$

2,327
96
11,649

2025

7,627

$

—
77
$

7,704

2026

9,025

$

—
61
$

9,086

2027

6,621

$

—
34
$

6,655

Thereafter

5,198

$

—
12
$

5,210

Total

14,753$—78$

14,831

Carrying amount of borrowings

52,450
2,327
358

$

55,135(2,527)(4,339)$48,269After the effect of interest rate and currency swaps, IFC’s borrowings generally reprice within one year.

NOTE L – PAYABLES AND OTHER LIABILITIESPayables and other liabilities are summarized below:(US$ in millions)
Accounts payable, accrued expenses and other liabilities
Accrued charges on derivative instruments
Payables for unsettled security trades
Accrued charges on borrowings
Liabilities under post employment benefit plan
Liabilities under retirement benefit plans
Deferred income
Secured borrowings and short sold securities
Total payables and other liabilities

June 30, 2023
$
1,378
1,089
1,002
785
710
112
91
73

June 30, 2022
$
1,318
303
172
598
739
500
103
80

$

$

5,240

3,813

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS107

INTERNATIONAL FINANCE CORPORATION

Page 114

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE M – CAPITAL TRANSACTIONS
Following the Spring Meetings in April 2018, a financing package was endorsed by the Board of Governors that included a three-step
capital raising process: conversion of a portion of retained earnings into paid-in capital, a Selective Capital Increase (SCI) and General
Capital Increase (GCI) that would provide up to $5.5 billion in additional paid-in capital. The SCI and GCI Resolutions were adopted andbecame effective on April 16, 2020. In April 2023, the subscription deadline for SCI and GCI was extended to April 16, 2025 and April
16, 2024, respectively, and the payment deadline for SCI was extended to April 16, 2025, to be aligned with the GCI payment deadline.
The authorized capital stock was increased by the creation of 16,999,998 additional shares each having a par value of $1,000 afterconverting a portion of the retained earnings into paid-in capital. The authorized capital stock was increased by 919,998 and 4,579,995
shares of capital stock each having a par value of $1,000 as per the SCI and GCI respectively. The authorized capital stock as on June30, 2023 consists of 25,079,991 shares of $1,000 par value each (25,079,991 shares – June 30, 2022).
During the year ended June 30, 2023, 42 countries subscribed a total of $328 million (GCI of $228 million and SCI of $100 million) andpayment of $847 million has been received from 82 countries. Subsequent to June 30, 2023, subscription of $11 million was received
from three countries and total payment of $9 million was received from three countries. For the year ended June 30, 2022 and June 30,
2021, $803 million and $2.4 billion was subscribed and $987 million and $1.2 billion payment was received, respectively.
Under IFC’s Articles of Agreement, in the event a member withdraws from IFC, IFC and the member may negotiate on the repurchaseof the member’s capital stock on such terms as may be appropriate under the circumstances. Such agreement may provide, among
other things, for a final settlement of all obligations of the member to IFC. If such an agreement is not made within six months after themember withdraws or such other time as IFC and the member may agree, the repurchase price of the member’s capital stock shall be
the value thereof shown by the books of IFC on the day when the member withdraws. The repurchase of capital stock is subject tocertain conditions including payments in installments, at such times and in such available currency or currencies as IFC reasonably
determines, taking into account the financial position of IFC. IFC’s Articles of Agreement also provide for the withdrawing member torepay losses on loans and equity investments in excess of reserve provided on the date of withdrawal.

NOTE N – OTHER INCOME
Other income for the years ended June 30, 2023, June 30, 2022 and June 30, 2021 comprise the following:(US$ in millions)

June 30, 2023

Investment (losses) gains on PEBP assets$

55

For the year ended
June 30, 2022 June 30, 2021$

(17) $

130

Fees collected from clients

16

13

14

Post-retirement Contributions Reserve Fund (PCRF) income

15

1

—

Other reimbursable arrangements

9

14

24

Others48

33

44

Total Other Income

$

143

$

The notes to consolidated financial statements are an integral part of these statements.

108 IFC 2023 ANNUAL REPORT FINANCIALS

44

$

212

INTERNATIONAL FINANCE CORPORATION

Page 115

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE O – RETAINED EARNINGS DESIGNATIONS AND RELATED EXPENDITURES AND ACCUMULATED OTHERCOMPREHENSIVE INCOME (LOSS)
Designated retained earnings
The components of designated retained earnings and related expenditures are summarized below:(US$ in millions)

Grants to
IDA

Funding
Mechanism
forTechnical
AssistanceandAdvisory
Services

At June 30, 2020

$

$

213

69

Creating
Markets
Advisory
Window$135

PerformanceBased Grants
Initiative

Small andMediumEnterprise
Ventures

Total
DesignatedRetained
Earnings

$

$

$

1

15

433

Year ended June 30, 2021
Designations of retained earnings
Expenditures against designated retained
earnings
At June 30, 2021
Year ended June 30, 2022

$

—

—

44

—

—

44

(213)

(27)

(28)

(1)

(1)

(270)

—

$

42

$

151

$

—

$

14

$

207

Designations of retained earnings

—

72

89

—

—

161

Expenditures against designated retained
earnings

—

(36)

(33)

—

(1)

(70)

At June 30, 2022
Year ended June 30, 2023$

Designations of retained earnings
Expenditures against designated retained
earnings
At June 30, 2023

$

—

$

78

$

207

$

—

$

13

$

298

—

6

—

—

—

6

—

(36)

(46)

—

(1)

(83)

—

$

48

$

161

$

—

$

12

$

221

On August 4, 2022, the Board of Directors approved the entire designation of $6 million of IFC’s retained earnings for Funding
Mechanism for Technical Assistance and Advisory Services (FMTAAS). This designation was approved by the Board of Governors on
October 14, 2022.
Accumulated other comprehensive income (loss)
The components of accumulated other comprehensive income (loss) at June 30, 2023 and June 30, 2022 are summarized as follows:(US$ in millions)

June 30, 2023

Net unrealized losses on available-for-sale debt securities$

June 30, 2022

(238) $(300)

Net unrealized gains on borrowings at fair value under the Fair Value Option due to changes in
instrument-specific credit risk

340

390

Unrecognized net actuarial gains (losses) and unrecognized prior service costs on benefit plans

530

(172)

Total accumulated other comprehensive income (loss)

$

632

$

(82)

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS109

INTERNATIONAL FINANCE CORPORATION

Page 116NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE P – NET UNREALIZED GAINS AND LOSSES ON NON-TRADING FINANCIAL INSTRUMENTS ACCOUNTED
FOR AT FAIR VALUE
Net unrealized gains and losses on non-trading financial instruments accounted for at fair value for the years ended June 30, 2023,
June 30, 2022 and June 30, 2021 comprise:(US$ in millions)
Unrealized gains and losses on loans, debt securities and associated derivatives:
Unrealized gains (losses) on loans under the Fair Value Option
Unrealized gains on derivatives associated with loans
Unrealized (losses) gains on debt securities under the Fair Value Option

For the year ended
June 30,
June 30,
June 30,
2023
2022
2021
$

Unrealized gains on derivatives associated with debt securities
Total net unrealized gains (losses) on loans, debt securities and associatedderivatives
Unrealized gains and losses on borrowings from market, IDA and associatedderivatives:
Unrealized gains on market borrowings accounted for at fair value
Unrealized losses on derivatives associated with market borrowings
Unrealized gains on borrowings from IDA accounted for at fair value
Total net unrealized (losses) gains on borrowings from market, IDA andassociated derivatives
Net unrealized gains and losses on non-trading financial instruments accounted for atfair value

$

9
172

(95) $
389

108
233

(55)
49

(532)
115

325
69

175

(123)

735

265
(320)
5

3,795
(3,928)27

2,016(1,957)
12

(50)

(106)

71

(229) $

806

125

$

$

Market borrowings economically hedged with financial instruments, including derivatives, are accounted for at fair value under the Fair
Value Option. Differences arise between the movement in the fair value of market borrowings and the fair value of the associatedderivatives primarily due to movements in IFC's own credit risk spread, foreign currency exchange risk premiums and accrued interest
balances. The magnitude and direction (gain or loss) can be volatile from period to period but they do not alter the timing of cash flows
on market borrowings. Changes in the fair value of borrowings resulting from changes in IFC’s own credit risk spread are recorded
through other comprehensive income whereas changes in fair value due to other factors, and all fair value changes on hedging
derivatives, are accounted for through net income (loss).

The notes to consolidated financial statements are an integral part of these statements.

110 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE Q – DERIVATIVESIFC enters into transactions in various derivative instruments for financial risk management purposes in connection with its principal
business activities, including lending, investing in debt securities, equity investments, client risk management, borrowing, liquid asset
management and asset and liability management. None of these derivative instruments are designated as accounting hedges under
ASC Topic 815.
The fair value of derivative instrument assets and liabilities by risk type at June 30, 2023 and June 30, 2022 is summarized as follows:(US$ in millions)

June 30, 2023

June 30, 2022

Derivative assets
Interest rate$$

Foreign exchangeInterest rate and currency

843

552

225

900

4,465

2,282

Equity124

77

Credit and other65

45

Total derivative assets
Derivative liabilities
Interest rate

$

5,722

$

3,856

$

2,245

$

1,684

Foreign exchangeInterest rate and currency

217

76

8,706

6,105

Equity104Credit and other17

31

Total derivative liabilities$

11,195$

7,900

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS111

INTERNATIONAL FINANCE CORPORATION

Page 118

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE Q – DERIVATIVES (continued)
The effect of derivative instrument contracts on the consolidated statement of operations for the years ended June 30, 2023, June 30,
2022 and June 30, 2021 is summarized as follows:(US$ in millions)
Derivative risk
category
Interest rate

Foreign exchangeInterest rate andcurrency

EquityOther derivative
contracts

Consolidated Statement of Operations location
Income (loss) from loans and guarantees, including realized gains andlosses on loans and associated derivatives$
Income (loss) from debt securities, including realized gains and losses on
debt securities and associated derivatives
Income (loss) from liquid asset trading activities
Charges on borrowings
Other income
Net unrealized losses on non-trading financial instruments accounted forat fair value(Loss) income from liquid asset trading activities

For the year ended
June 30,
June 30,
June 30,
2023
2022
2021
54

(25) $

(23)

20
56
(407)
18

(13)
73
243
17

(12)
(71)
292
13

(248)
(62)

(1,263)
2,223

(396)
(987)

(12)

8

(16)

7

(3)

3

(9)

(217)

(168)

(109)
(209)
(372)

(64)
575
781

(70)
107
842

(285)
3

(2,180)
2

1,468
4

108
43

(2,144)(43)(1,265)
(30)

(1)

(13)

9

33

(3)

(6)

(1,372) $(2,046) $(306)

Foreign currency transaction (losses) gains on non-trading activities
Net unrealized gains (losses) on non-trading financial instruments
accounted for at fair value
Loss from loans and guarantees, including realized gains and losses onloans and associated derivatives
Loss from debt securities, including realized gains and losses on debt
securities and associated derivatives(Loss) income from liquid asset trading activities
Charges on borrowings
Foreign currency transaction (losses) gains on non-trading activities
Other income
Net unrealized gains (losses) on non-trading financial instruments
accounted for at fair value
Gains (losses) from equity investments and associated derivatives
Net unrealized (losses) gains on non-trading financial instruments
accounted for at fair value
Net unrealized gains (losses) on non-trading financial instruments
accounted for at fair value
Total

$

$

The income related to each derivative risk category includes realized and unrealized gains and losses.
At June 30, 2023, the outstanding volume, measured by U.S. dollar equivalent notional, of interest rate contracts was $74.5 billion($49.2 billion – June 30, 2022), foreign exchange contracts was $20.7 billion ($17.2 billion – June 30, 2022) and interest rate andcurrency contracts was $53.6 billion ($47.0 billion – June 30, 2022).
At June 30, 2023, there were 129 equity contracts related to IFC’s loan and equity investment portfolio and 27 other derivative
contracts, mainly credit indexed, recognized as derivatives assets or liabilities under ASC Topic 815 (139 equity risk and 25 othercontracts – June 30, 2022).

The notes to consolidated financial statements are an integral part of these statements.

112 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 119NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS
ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability (i.e., an exit price) in an orderlytransaction between independent, knowledgeable and willing market participants at the measurement date assuming the transaction
occurs in the entity’s principal (or most advantageous) market. IFC categorizes its financial instruments into three levels based on theestablished fair value hierarchy. For more information regarding the fair value hierarchy and how IFC measures fair value, see Note A –Summary of Significant Accounting Policies. Readers are cautioned in using these data for purposes of evaluating the financial
condition of IFC and the fair values of the individual financial instruments do not represent the fair value of IFC taken as a whole.
Recognizing there is a heightened degree of uncertainty and judgment in incorporating the impact of Russia's invasion of Ukraine, IFC
utilized, where available, comparator, sector and country information, in addition to discounted cash flow models, in valuing its equity
investment portfolio at June 30, 2023. Debt securities and loans accounted for at fair value that do not have available market prices
were primarily valued using discounted cash flow approaches and reflected spreads at June 30, 2023.
For the following instruments, the significant unobservable inputs and its relationship to the fair valuation movement are listed below:
Instrument

Significant Unobservable Input

IFC Local Currency Borrowings

Increase in Unobservable Input Results In

IFC Yield Curve

Decrease in Fair Value

Interest Rate Swaps

Yield Curve Points

Decrease in Fair Value

Currency Swaps

Yield Curve and Exchange Rates

Decrease in Fair Value

Discount Rates, Credit Default Spreads

Decrease in Fair Value

Valuation Multiple, Recovery Rates

Increase in Fair Value

Debt Securities and Loans

Equity Securities and Equity Related
Derivatives

Cost of equity, discounts for lack ofmarketability, weighted average cost of capital
Growth rates, return on assets, perpetual
growth rates, EV/EBITDA, price to book value
and other valuation multiples and volatilities

Decrease in Fair Value
Increase in Fair Value

The methodologies used and key assumptions made to estimate fair values as of June 30, 2023 and June 30, 2022, are summarized
below.
Liquid assets – The primary pricing source for the liquid assets is valuations obtained from external pricing services (vendor prices).
The most liquid securities in the liquid asset portfolio are U.S. Treasuries. U.S. Treasuries and U.S. Government agency bonds areclassified as Level 1. The remaining liquid assets valued using vendor prices are classified as Level 2 or Level 3 based on the results of
IFC’s evaluation of the vendor’s pricing methodologies and individual security facts and circumstances. Most vendor prices use someform of matrix pricing methodology to derive the inputs for projecting cash flows or to derive prices. When vendor prices are notavailable, liquid assets are valued internally by IFC using executable or indicative dealer quotes sourced from the market and these areclassified as Level 2 or Level 3 depending on the degree that the inputs are observable in the market.
The critical factors in valuing liquid assets in both Level 2 and Level 3 are the estimation of cash flows and yield. Other significant inputs
for valuing corporate securities, quasi-government securities and sovereign or sovereign-guaranteed securities include reported trades,
broker/dealer quotes, benchmark securities, option adjusted spread curve, volatilities, and other reference data. In addition to these
inputs, valuation models for securitized or collateralized securities use collateral performance inputs, such as weighted average coupon
rate, weighted average maturity, conditional prepayment rate, constant default rate, vintage, and credit enhancements.
Liquid assets classified as Level 3 as of June 30, 2023 ($0) and as of June 30, 2022 ($179 million) were fair valued based on nonquantitative unobservable valuation inputs. The valuation techniques for these liquid assets are presented in the table below.

(US$ in millions)
Government obligations
Corporate debt securities
Total

June 30, 2022
Fair value
$
172
7
$
179

Valuation technique
Dealer indicative price
Dealer indicative price

Loans and debt securities – Loans and debt securities in IFC’s investment portfolio that do not have available market prices areprimarily valued using discounted cash flow approaches. The majority of loans measured at fair value are classified as Level 3. Certain
loans contain embedded conversion and/or income participation features. If not bifurcated as standalone derivatives, these features are
considered in determining the loans’ fair value based on the quoted market prices or other calculated values of the equity investments
into which the loans are convertible and the discounted cash flows of the income participation features. The significant unobservable
inputs used in the fair value measurement of loans and debt securities are discount rates, credit default swap spreads, and expected
The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
recovery rates. The valuation techniques and significant unobservable inputs for loans and debt securities classified as Level 3 as ofJune 30, 2023 and as of June 30, 2022 are presented below.
June 30, 2023
(US$ in millions)
Debt securities – preferred shares

Valuation techniqueFair value
Significant inputs
Discounted cash flows $15 Discount rate

Weighted
average
Range (%)(%)
10.6 - 16.0
12.0

44 Valuation multiples a121
28

Market comparables
Recent transactions
Other techniques
Total preferred shares

208

Other debt securities

Discounted cash flows

5,886

Recent transactions
Other techniques

1,825
411

Total other debt securities

Credit default swap
spreads
Expected recovery rates

0.4 - 20.2
0.0 - 75.0

3.3
44.7

8,122

Total

$

8,330

_________a Includes valuation techniques with multiple significant inputs, therefore the range and weighted average are not provided.

June 30, 2022
(US$ in millions)
Debt securities – preferred shares

Valuation techniqueFair value
Significant inputs
Discounted cash flows $23 Discount rate
Market comparables
37 Valuation multiples a
Recent transactions
56
Other techniques
68

Total preferred shares

Weighted
average
Range (%)(%)
7.4 - 17.3
10.6

184

Other debt securities

Discounted cash flows

4,672

Recent transactions
Other techniques

1,018
500

Total other debt securities

Credit default swap
spreads
Expected recovery rates

0.6 - 13.4
0.0 - 75.0

4.4
42.6

6,190

Total

$

6,374

________a Includes valuation techniques with multiple significant inputs, therefore the range and weighted average are not provided.

Borrowings – Fair values derived by determining the present value of estimated future cash flows using appropriate discount rates andoption specific models where appropriate are classified as Level 2. Fair values derived from market source pricing are also classified as
Level 2. The significant inputs used in valuing borrowings classified as Level 2 are presented below:
ClassesSignificant Inputs

Structured bonds

Foreign exchange rate and inter-bank yield curves, IFC’s credit curve and swaption volatility matrix,
foreign exchange rate volatility, equity spot price, volatility and dividend yield.

Unstructured bonds

Inter-bank yield curve and IFC’s credit curve.

As of June 30, 2023, IFC had bond issuances with a total fair value of $228 million classified as level 3 in Azerbaijani manat, Jamaican
dollars, Uruguayan peso and Uzbekistan sum where the significant unobservable inputs were yield curve data ($232 million – June 30,2022). As of June 30, 2023, the weighted average effective interest rate on medium and long-term borrowings carried at amortized cost
The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
was 7.3% (7.2% – June 30, 2022) and the effective interest rate on short-term borrowings carried at amortized cost was 4.1% (0.2% –June 30, 2022).
Derivative instruments – The various classes of derivative instruments include interest rate contracts, foreign exchange contracts,
interest rate and currency contracts, equity contracts and other derivative contracts. Certain over the counter derivatives in the liquid
asset portfolio priced in-house are classified as Level 2, while certain over the counter derivatives priced using external manager prices
are classified as Level 3. Fair values for derivative instruments are derived by determining the present value of estimated future cash
flows using appropriate discount rates and option specific models where appropriate.
The significant inputs used in valuing the various classes of derivative instruments classified as Level 2 and significant unobservable
inputs for derivative instruments classified as Level 3 as of June 30, 2023 and June 30, 2022 are presented below:
Level 2 derivatives
Interest rateSignificant Inputs
Inter-bank yield curves, foreign exchange basis curve and yield curves specified to index floating
rates.
Foreign exchange rate, inter-bank yield curves and foreign exchange basis curve.
Foreign exchange rate, inter-bank yield curves, foreign exchange basis curve and yield curves
specified to index floating rates.

Foreign exchangeInterest rate and currency(US$ in millions)

June 30, 2023

Level 3 derivatives

Type

Equity related derivatives

Fair value

Fixed strike price options $Variable strike priceoptions

Interest rate and currency swap assets
Interest rate and currency swap
liabilities

Range (%)
28.1 - 44.3

44.3

113 Contractual strike price a
Yield curve points,
74
exchange rates
Yield curve points,(10) exchange rates

Vanilla swaps
Vanilla swaps

Total

Significant inputs
1 Volatilities

Weighted
average
(%)

$

178

_________a Includes valuation techniques with multiple significant inputs, therefore the range and weighted average are not provided.

(US$ in millions)

June 30, 2022

Level 3 derivatives

Type

Equity related derivatives

Fair value

Significant inputs

Fixed strike price options $2 Volatilities

Variable strike priceoptions

71 Contractual strike price aInterest rate and currency swap assets

Vanilla swaps

35

Yield curve points,
exchange rates

Interest rate and currency swap
liabilities

Vanilla swaps(34)

Yield curve points,
exchange rates

Total

$

Range (%)

Weighted
average(%)

28.1 - 53.0

53.0

74

_________a Includes valuation techniques with multiple significant inputs, therefore the range and weighted average are not provided.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
Equity investments – Equity investments valued using quoted prices in active markets are classified as Level 1. Equity investments
classified as Level 2 are valued using quoted prices in inactive markets. Equity investments classified as Level 3 are primarily valued
using discounted cash flow and market comparable approaches. The significant unobservable inputs include cost of equity, weighted
average cost of capital, asset growth rate, return on assets, perpetual growth rate, price to book and market multiples. The valuation
techniques and significant unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy
for equity investments that were measured at fair value through net income as of June 30, 2023 and June 30, 2022 are presented
below.
(US$ in millions)

June 30, 2023

SectorBanking and other financial
Institutions

Valuation technique
Discounted cash flows

Total banking and other financial
institutions
Funds

Fair value
Significant inputs$
517 Cost of equity (%)
Asset growth rate (%)
Return on assets (%)

Market comparables

400

Listed price (adjusted)
Recent transactions
Other techniques
Associated options b

199
380
180
31

Recent transactions
Other techniques

1,707
106
53
159

Discounted cash flows

896

Market comparables

746

Total funds
OthersPerpetual growth rate (%)
Price to book value
EV/SalesDiscount for lack ofmarketability (%)

Weighted average cost ofcapital (%)
Cost of equity (%)
EV/SalesEV/EBITDA
Price to book value

Weighted
average
Range(%)
11.0 - 26.0
13.7(1.5) - 56.6
8.6
0.3 - 8.7
2.0
2.5 - 13.0
0.3 - 1.5
1.5 - 15.4

5.2
1.3
9.6

*

35.0

7.2 - 29.8
9.7 - 25.5
0.7 - 20.3
4.2 - 22.0
0.6 - 2.4

11.5
14.9
4.2
14.0
1.8

Other valuation multiples a
Recent transactions
Other techniques
Associated options b
Total others
Total

$

521
81
91
2,335
4,201

_________* No range is provided as all of the projects that use this valuation technique are with the same institution and have the same discount percentage.
a Includes price/earnings ratio and price/sales ratio, the range and weighted average are not provided due to the immaterial amounts.
b Fair values for associated options are derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models
where appropriate.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)(US$ in millions)

June 30, 2022

SectorBanking and other financial
Institutions

Valuation technique
Discounted cash flows$

Market comparables

174

Listed price (adjusted)
Recent transactions
Other techniques

215
487
155

Associated options b

7

Total banking and other financial
institutions
Funds

Significant inputs
Cost of equity (%)
Asset growth rate (%)
Return on assets (%)
Perpetual growth rate (%)

3.0 - 13.0

5.2

Price to book value
EV/Sales0.3 - 1.7
1.7- 16.5

1.5
10.0

Discount for lack ofmarketability (%)

*

35.0

Weighted average cost ofcapital (%)
Cost of equity (%)
EV/SalesEV/EBITDA

4.5 - 27.7
8.3 - 22.5
1.6 - 48.7
3.6 - 18.0

10.2
12.8
12.2
13.1

Price to book value

0.6 - 1.9

1.5

1,573
Recent transactions

30

Other techniques

13

Total funds
OthersFair value535

43
Discounted cash flows

1,254

Market comparables

304

Other valuation multiples
Recent transactions
Other techniques
Associated options b

a

739
63
88

Total others
Total

Weighted
averageRange(%)
9.2 - 25.4
11.7
(26.0) - 36.2
5.4(4.1) - 6.6
1.8

2,448
$

4,064

_________* No range is provided as all of the projects that use this valuation technique are with the same institution and have the same discount percentage.
a Includes price/earnings ratio and price/sales ratio, the range and weighted average are not provided due to the immaterial amounts.
b Fair values for associated options are derived by determining the present value of estimated future cash flows using appropriate discount rates and option specific models
where appropriate.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
Fair value of assets and liabilities
Estimated fair values of IFC’s financial assets and liabilities and off-balance sheet financial instruments at June 30, 2023 and June 30,
2022 are summarized below:
June 30, 2023
Carrying
Fair
value
value

(US$ in millions)
Financial assets
Cash and due from banks, time deposits, trading securities andsecurities purchased under resale agreements and receivablefor cash collateral pledged
Investments:
Loans at amortized cost, net of reserve against losses
Loans accounted for at fair value under the Fair Value Option$

47,478$29,9081,506

47,478June 30, 2022
Carrying
Fair
value
value

$

46,35030,3691,506

24,8491,374

31,875
10,776
1,373

26,223
11,137
1,905$

46,35024,8201,374

Total loans
Equity investments accounted for at fair value
Debt securities accounted for at fair value as available-for-sale31,414
10,778
1,373

Debt securities accounted for at fair value under the Fair Value
Option

7,937

7,937

4,828

4,828

9,310

9,310

6,733

6,733

Total investments
Derivative assets:
Borrowings-related
Liquid asset portfolio-related and other
Investment-related
Client risk management-related

51,502

51,96144,09344,063

2,795
433
1,977
517

2,795
433
1,977
517

128
1,464
1,927
337

128
1,464
1,927
337

Total derivative assets
Other investment-related financial assets
Financial liabilities
Securities sold under repurchase agreements and payable forcash collateral received
Market, IBRD, IDA and other borrowings outstanding
Derivative liabilities:
Borrowings-related
Liquid asset portfolio-related and other
Investment-related
Client risk management-related

5,722
—

5,722
3

3,856
—

3,856
4

Total debt securities

Total derivative liabilities

$

6,631
52,443a$

6,631
52,433$

6,223
48,26926,194
11,136
1,905

a

$

6,223
48,277

10,032
241523
399

10,032
241
523
399

7,336
77
214
273

7,336
77
214
273

11,195

11,195

7,900

7,900

_________a For $2 million as of June 30, 2023 ($1 million – June 30, 2022) of equity investments primarily accounted for under the cost recovery method, no fair value measurement isprovided since the recovery of invested capital is uncertain.

The fair value of loan commitments amounted to $39 million at June 30, 2023 ($40 million – June 30, 2022). Fair values of loan
commitments are based on present value of loan commitment fees.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
Fair value hierarchy
As required by ASC 820, financial assets and financial liabilities are classified in their entirety based on the lowest level input that issignificant to the fair value measurement. The following tables provide information as of June 30, 2023 and June 30, 2022, about IFC’s
financial assets and financial liabilities measured at fair value on a recurring basis:
June 30, 2023
Level
1
Level
2
Level 3
Total
(US$ in millions)$— $2,467 $
— $2,467Time deposits with maturities greater than three months a
Trading securities:
Asset-backed securities
—
5,232
—
5,232
—
4,022
—
4,022
Corporate debt securities b
Government obligations
17,042
4,724—
21,766
Total trading securities
17,042
13,978—31,020
Loans
—
—
1,488
1,488
18
Loans measured at net asset value c
Total Loans (outstanding principal balance $1,642)
—
—
1,488
1,506
Equity investments:
Banking and other financial institutions
662
17
1,707
2,386
Funds
—
16
159
175
Others
681
1
2,335
3,017
5,198
Equity investments measured at net asset value c
Total equity investments
1,343
34
4,201
10,776
Debt securities:
Corporate debt securities
—
1,839
5,911
7,750
Preferred shares
—
—
208
208
Asset-backed securities
—
55
723
778
Debt securities measured at net asset value c
574
—
1,894
6,842
9,310
Total debt securities
Derivative assets:
Interest rate
—
—
843
843
Foreign exchange
—
—
225
225
Interest rate and currency
74
—
4,391
4,465
Equity and other
124
—
—
124
Credit and Other derivative contracts
—
—
65
65
—
5,524
5,722
Total derivative assets
198
Total assets at fair value$
18,385 $23,897 $
12,729 $60,801
Borrowings: d
Structured bonds$— $4,073 $
— $4,073—
44,815228
45,043
Unstructured bonds
Total borrowings (outstanding principal balance $57,108)—
48,888228
49,116
Derivative liabilities:
Interest rate
—
—
2,245
2,245
Foreign exchange
—
—
217
217
Interest rate and currency
—
10
8,706
8,696
Equity and other
—
10
10
—
17
Credit and Other derivative contracts——
17
11,175
Total derivative liabilities—
20
11,195
Total liabilities at fair value$— $60,063 $248 $60,311_________a Time deposits with maturities greater than three months are carried at cost, which approximates fair value and are considered to be level 2.
b Includes securities priced at par plus accrued interest, which approximates fair value.
c In accordance with ASC 820, investments that are measured at fair value using net asset value per share have not been classified in the fair value hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in consolidated balance sheet.
d Includes discount notes (not under the short-term Discount Note Program), with original maturities greater than one year, with principal due at maturity of $5.8 billion, with afair value of $1.8 billion as of June 30, 2023.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)(US$ in millions)Time Deposits with maturities greater than three months a
Trading securities:
Asset-backed securities
Corporate debt securities b
Government obligations
Total trading securities
Loans
Loans measured at net asset value c
Total Loans (outstanding principal balance $1,519)
Equity investments:
Banking and other financial institutions
Funds
OthersEquity investments measured at net asset value c
Total equity investments
Debt securities:
Corporate debt securities
Preferred shares
Asset-backed securities
Debt securities measured at net asset value c
Total debt securities
Derivative assets:
Interest rate
Foreign exchangeInterest rate and currency
Equity and otherCredit and Other derivative contracts
Total derivative assets
Total assets at fair value
Borrowings: d
Structured bonds
Unstructured bonds
Total borrowings (outstanding principal balance $52,174)
Derivative liabilities:
Interest rate
Foreign exchangeInterest rate and currency
Equity and otherCredit and Other derivative contracts
Total derivative liabilities
Total liabilities at fair value

Level 1
$

$
$

$

—

$

June 30, 2022
Level 2
Level 3
3,959 $
—

$

Total
3,959

—
—
15,60015,600
—

3,825
3,999
7,288
15,112
54

—
7
172
179
1,303

—

54

1,303

774
—
866

65
19
38

1,573
43
2,448

1,640

122

4,064

—
—
—

1,079
—
52

4,070
184
817

—

1,131

5,071

5,149
184
869
531
6,733

—
—
—
—
—
—
17,240

552
900
2,247
—
45
3,744
24,122

—
—
35
77
—
112
10,729

552
900
2,282
77
45
3,856
57,949

—
—
—
—
—
—
—
—
—
—

$
$

$

4,740
40,33545,075
1,684
76
6,071
—
31
7,862
52,937

$
$

$

—
232
232
—
—
34
4
—
38
270

3,825
4,006
23,06030,891
1,357
17
1,374
2,412
62
3,352
5,310
11,136

$
$

$

4,740
40,56745,307
1,684
76
6,105
4
31
7,900
53,207_________a Time deposits with maturities greater than three months are carried at cost, which approximates fair value and are considered to be level 2.
b Includes securities priced at par plus accrued interest, which approximates fair value.
c In accordance with ASC 820, investments that are measured at fair value using net asset value per share have not been classified in the fair value hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in consolidated balance sheet.
d Includes discount notes (not under the short-term Discount Note Program), with original maturities greater than one year, with principal due at maturity of $4.9 billion, with afair value of $1.5 billion as of June 30, 2022.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
The following tables present the changes in the carrying value of IFC’s Level 3 financial assets and financial liabilities for the years
ended June 30, 2023, June 30, 2022, and June 30, 2021:
For the year ended June 30, 2023

Net gains (losses) (realized
and unrealized) included in(US$ in millions)Purchases,
issuances,sales,
Transfers
Balance as
Other
into
of July 1,
comprehensive settlements
and others Level 3 a
2022
Net income
incomeTrading securities:
Asset-backed securities$— $Corporate debt securities
7
Government and agency obligations
172
Total trading securities
179
Loans
1,303
Equity investments:
Banking and other financial
institutions
1,573
Funds
43
Others2,448
Total equity investments
4,064
Debt securities:
Corporate debt securities
4,070
Preferred shares
184
Asset-backed securities
817
Total debt securities
5,071
Derivative assets:
Interest rate and currency
35
Equity and other77
Total derivative assets
112
Total assets at fair value$ 10,729 $Borrowings:
Unstructured bonds$ (232) $Total borrowings(232)
Derivative liabilities:
Interest rate and currency(34)
Equity and other(4)
Total derivative liabilities(38)
Total liabilities at fair value$ (270) $Transfers
out ofLevel 3 b

Net
unrealized
gains
Net
(losses)unrealized included in
gains
other
(losses)
comprehen
included insive
net income
income(loss)(loss)
related torelated toassets /assets /Balance asliabilities
liabilities
of June 30,
held atheld at2023
year end
year end

1 $
—
(1)
—
30

— $
—
—
—
—

55 $
—
97
152
101

— $
—
—
—
54

(56) $
— $
(7)
—
(268)
—
(331)
—
—
1,488

28
12
(23)
17

—
—
—
—

68
104
(137)
35

55
—
47
102

(17)
—
—
(17)

1,707
159
2,335
4,201

12
5
(145)
(128)

—
—
—
—

(106)
49
4
(53)

105
(54)
5
56

2,218
29
(103)
2,144

574
—
—
574

(950)
—
—
(950)

5,911
208
723
6,842

88
(17)
13
84

3
(4)
8
7

65
58
123
96 $

—
—
—
7

12
(21)
74
—
—
124
12
(21)
198
742 $ (1,319) $ 12,729 $

— $
—
—
—
17

—
—
—
—
—

(7)
53
46
40 $

—
55
—
(6)
—
49
56 $ 2,481 $(12) $(12)1 $1(121) $
(121)

(4) $
(4)

140 $
140

(228) $
(228)(12) $
(12)

1
1

15
(6)
9
(3) $

—
—
—
1 $

(2)
—
(2)
(123) $

(4)
—
(4)
(8) $

15
—
15
155 $

(10)
(10)
(20)
(248) $

(2)
(6)
(8)
(20) $———
1_________a Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2023.
b Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities that were part of July 1, 2022
beginning balance as of June 30, 2023.

The notes to consolidated financial statements are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
For the year ended June 30, 2022

Net gains (losses) (realized
and unrealized) included in

Purchases,
issuances,
Other
sales,
Balance asof July 01, Net income comprehensive settlements(loss)
incomeand others
2021(US$ in millions)

Trading securities:
Asset-backed securities
Corporate debt securities
Government and agency
obligations
Total trading securities
Loans
Equity investments:
Banking and other financial
institutions
Funds
OthersTotal equity investments
Debt securities:
Corporate debt securities
Preferred shares
Asset-backed securities
Total debt securities
Derivative assets:
Interest rate and currency
Equity and otherTotal derivative assets
Total assets at fair value
Borrowings:
Unstructured bonds
Total borrowings
Derivative liabilities:
Interest rate and currency
Equity and otherTotal derivative liabilities
Total liabilities at fair value

$

— $
—

— $
(4)

Transfers
intoLevel 3 aTransfers
out ofLevel 3 b

Net
unrealized
gains
Net
(losses)unrealized included in
gains
other
(losses)
comprehen
included insive
net income
income(loss)(loss)
related torelated toassets /assets /Balance asliabilities
liabilities
of June 30,
held atheld at2022
year end
year end

— $
—

30 $
120

— $
—

(30) $
(109)

— $
7

— $
(1)

—
—

271
271
1,313

9
5
(122)

—
—
—

126
276
171

—
—
—

(234)
(373)
(59)

172
179
1,303

(10)
(11) $
(122)

—
—
—

1,663
16
2,989
4,668

62
(4)
36
94

—
—
—
—

(152)
31
(233)
(354)

—
—
—
—

—
—
(344)
(344)

1,573
43
2,448
4,064

(65)
(6)
(16)
(87)

—
—
—
—

3,985
483
892
5,360

(425)
(99)
(72)
(596)

(153)
(19)
(35)
(207)

318
(181)
32
169

884
—
—
884

(539)
—
—
(539)

4,070
184
817
5,071

(335)
17
(68)
(386)

(165)
8
(44)
(201)

26
133
159
$ 11,771 $

12
(57)
(45)
(664) $———
(207) $

9
1
10
272 $

10
(22)
35
—
—
77
10
(22)
112
894 $ (1,337) $ 10,729 $

27
(57)
(30)
(636) $

—
—
—
(201)

(90) $
(90)

3 $
3

— $
—

(214) $
(214)(44) $
(44)

113 $
113

(232) $
(232)

3 $
3

—
—

(10)
(5)
(15)
(105) $

4
1
5
8 $

—
—
—
— $

(17)
—
(17)
(231) $

(21)
—
(21)
(65) $

10
—
10
123 $

(34)
(4)
(38)
(270) $

(23)
1
(22)
(19) $

—
—
—
—

$

$

_________a Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2022.
b Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities that were part of July 1, 2021
beginning balance as of June 30, 2022.

The notes to consolidated financial statements are an integral part of these statements.

122 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 129NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
For the year ended June 30, 2021

Net gains (losses) (realized
and unrealized) included in

Purchases,
issuances,
Other
sales,
Balance asof July 01, Net income comprehensive settlements(loss)
incomeand others
2020(US$ in millions)

Trading securities:
Asset-backed securities
Corporate debt securities
Government and agency
obligations
Total trading securities
Loans
Equity investments:
Banking and other financial
institutions
Funds
OthersTotal equity investments
Debt securities:
Corporate debt securities
Preferred shares
Asset-backed securities
Total debt securities
Derivative assets:
Interest rate and currency
Equity and otherTotal derivative assets
Total assets at fair value
Borrowings:
Unstructured bonds
Total borrowings
Derivative liabilities:
Interest rate and currency
Equity and otherTotal derivative liabilities
Total liabilities at fair value

$

20 $
—

2 $
(2)

Transfers
intoLevel 3 aTransfers
out ofLevel 3 b

Net
unrealized
gains
Net
(losses)unrealized included in
gains
other
(losses)
comprehen
included insive
net income
income(loss)(loss)
related torelated toassets /assets /Balance asliabilities
liabilities
of June 30,
held atheld at2021
year end
year end

— $
—

87 $
282

— $
—

(109) $
(280)

— $
—

— $
—

—
—

—
20
942

—
—
121

—
—
—

261
630
250

113
113
—

(103)
(492)
—

271
271
1,313

(1)
(1) $
121

—
—
—

1,765
115
2,620
4,500

215
(9)
483
689

—
—
—
—

(285)
(90)
(71)
(446)

6
—
99
105

(38)
—
(142)
(180)

1,663
16
2,989
4,668

273
(9)
431
695

—
—
—
—

3,648
390
930
4,968

135
179
36
350

107
(8)
(17)
82

157
(78)
(57)
22

1,175
—
—
1,175

(1,237)——(1,237)

3,985
483
892
5,360

175
217
33
425

51
8
(27)
32

41
(17)
153
(20)
194
(37)
$ 10,624 $ 1,123 $

—
—
—
82 $

4
—
(2)
26
10
—
—
—
133
(20)
4
—
(2)
159
(10)
460 $ 1,393 $ (1,911) $ 11,771 $ 1,230 $

—
—
—
32

$

$

(152) $
(152)

1 $
1

— $
—

(84) $
(84)

— $
—

145 $
145

(90) $
(90)

1 $
1

—
—

(38)
(4)
(42)
(194) $

5
(1)
4
5 $

—
—
—
— $

(5)
—
(5)
(89) $

—
—
—
— $

28
—
28
173 $

(10)
(5)
(15)
(105) $

(7)
(1)
(8)
(7) $

—
—
—
—

_________a Transfers into Level 3 are due to lack of observable market data resulting from a decrease in market activity for these securities as of June 30, 2021.
b Transfers out of Level 3 are due to availability of observable market data resulting from an increase in market activity for these securities that were part of July 1, 2020
beginning balance as of June 30, 2021.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS

123

INTERNATIONAL FINANCE CORPORATION

Page 130

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
The following tables present gross purchases, sales, issuances and settlements related to the changes in the carrying value of IFC’s
Level 3 financial assets and financial liabilities for the years ended June 30, 2023, June 30, 2022, and June 30, 2021.
For the year ended June 30, 2023
(US$ in millions)
Trading securities:
Asset-backed securities
Government and agency obligations

Purchases
$

67
97

Sales
$

Settlements
and others

Issuances
—
—

$

—
—

$

Net

(12) $—

55
97

Total trading securities
Loans
Equity investments:
Banking and other financial institutions
Funds
Others

164
—

—
(37)

—
297

(12)
(159)

152
101

116
146
203

(61)
(1)
(416)

—
—
—

13
(41)
76

68
104
(137)

Total equity investments
Debt securities:
Corporate debt securities
Preferred shares
Asset-backed securities

465

(478)

—

48

35

3,141
112
148

(2)
(78)
—

—
—
—

(921)
(5)
(251)

2,218
29
(103)

3,401

(80)

—

(1,177)

2,144

—
—

—
—

53
—

2
(6)

55
(6)

—

—

53

(4)

49

(1,304) $

2,481
(121)

Total debt securities
Derivative assets:
Interest rate and currency
Equity and otherTotal derivative assets
Total assets at fair value
Borrowings:
Unstructured bonds

$

4,030

$

(595) $

350

$

—

$

—

(121) $

—

$

$

$

Total borrowings
Derivative liabilities:
Interest rate and currency

—

—

(121)

—

(121)

—

—

(4)

2

(2)

Total derivative liabilities

—

—

(4)

2

(2)

(125) $

2

Total liabilities at fair value

$

—

$

—

$

The notes to consolidated financial statements are an integral part of these statements.

124 IFC 2023 ANNUAL REPORT FINANCIALS

$

(123)

INTERNATIONAL FINANCE CORPORATION

Page 131

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
For the year ended June 30, 2022
(US$ in millions)
Trading securities:
Asset-backed securities
Corporate debt securities
Government and agency obligations

Purchases
$

44
240
220

Sales
$

Settlements
and others

Issuances

— $
(120)
—

—
—
—

$

Net

(14) $
—
(94)

30
120
126

Total trading securities
Loans
Equity investments:
Banking and other financial institutions
Funds
Others

504
—

(120)
—

—
296

(108)
(125)

276
171

112
119
367

(259)
(7)
(434)

—
—
—

(5)
(81)
(166)

(152)
31
(233)

Total equity investments
Debt securities:
Corporate debt securities
Preferred shares
Asset-backed securities

598

(700)

—

(252)

(354)

1,143
—
168

—
(124)
—

—
—
—

(825)
(57)
(136)

318
(181)
32

1,311

(124)

—

(1,018)

169

—
—

—
—

6
—

3
1

9
1

—

—

6

4

10

(1,499) $

272
(214)
(214)

Total debt securities
Derivative assets:
Interest rate and currency
Equity and otherTotal derivative assets
Total assets at fair value
Borrowings:
Unstructured bonds
Total borrowings
Derivative liabilities:
Interest rate and currency

$

2,413

$

(944) $

302

$

—
—

$

—
—

(214) $
(214)——

Total derivative liabilities
Total liabilities at fair value

$

$

$

$

—

—

(20)

3

(17)

—

—

(20)

3

(17)

(234) $

3

—

$

—

$

$

(231)

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS

125

INTERNATIONAL FINANCE CORPORATION

Page 132

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE R – FAIR VALUE MEASUREMENTS (continued)
For the year ended June 30, 2021
(US$ in millions)
Trading securities:
Asset-backed securities
Corporate debt securities
Government and agency obligations

Purchases
$

109
282
261

Sales
$

Settlements
and others

Issuances(17) $
—
—

—
—
—

$

Net

(5) $
—
—

87
282
261

Total trading securities
Loans
Equity investments:
Banking and other financial institutions
Funds
Others

652
—

(17)
(14)

—
373

(5)
(109)

630
250

71
92
174

(368)
(1)
(252)

—
—
—

12
(181)
7

(285)
(90)
(71)

Total equity investments
Debt securities:
Corporate debt securities
Preferred shares
Asset-backed securities

337

(621)

—

(162)

(446)

965
18
89

(132)
(77)
—

—
—
—

(676)
(19)
(146)

157
(78)
(57)

Total debt securities
Derivative assets:
Interest rate and currency

1,072

(209)

—

(841)

22

—

—

5

(1)

4

—

—

5

(1)

4

378

(1,118) $460(84) $
(84)

—
—

(84)
(84)

Total derivative assets
Total assets at fair value
Borrowings:
Unstructured bonds
Total borrowings
Derivative liabilities:
Interest rate and currency

$

2,061

$

(861) $

$

—
—

$

—
—

Total derivative liabilities
Total liabilities at fair value

$

$

$

$

—

—

(4)

(1)

(5)

—

—

(4)

(1)

(5)

(88) $

(1) $

(89)

—

$

—

$

Gains and losses (realized and unrealized) from trading securities, loans, equity investments and debt securities included in net income
for the period are reported on the consolidated statements of operations in income from liquid asset trading activities, Income from
Loans and guarantees, including realized gains and losses on loans and associated derivatives, income from equity investments andassociated derivatives, income from debt securities and realized gains and losses on debt securities and associated derivatives and net
unrealized gains and losses on non-trading financial instruments accounted for at fair value.

The notes to consolidated financial statements are an integral part of these statements.

126 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 133

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE S – SEGMENT REPORTING
For management purposes, IFC’s business comprises three segments: investment services, treasury services, and upstream andadvisory services. The investment services segment consists primarily of lending and investing in debt and equity securities. The
investment services segment also includes AMC, which is not separately disclosed due to its immaterial impact. Operationally, thetreasury services segment consists of the borrowing, liquid asset management, asset and liability management and client risk
management activities. Upstream and advisory services includes providing advisory services to government and private sector clientsto create markets and mobilize private capital, and engages in early stage project development activities to develop bankable
investment projects. Consistent with internal reporting, net income or expense from asset and liability management and client risk
management activities in support of investment services is allocated from the treasury segment to the investment services segment.
The performance of investment services, treasury services and upstream and advisory services is assessed by senior management on
the basis of net income for each segment, return on assets, and return on capital employed. Upstream and advisory services areprimarily assessed based on the level and adequacy of its funding sources (See Note U). IFC’s management reporting system andpolicies are used to determine revenues and expenses attributable to each segment. Consistent with internal reporting, administrative
expenses are allocated to each segment based largely upon personnel costs and segment headcounts. Transactions between
segments are immaterial and, thus, are not a factor in reconciling to the consolidated data.
The assets of the investment, treasury, and upstream and advisory services segments are detailed in Notes D, C, and U, respectively.
An analysis of IFC’s major components of income and expense by business segment for the years ended June 30, 2023, June 30, 2022
and June 30, 2021, is provided below:

Investment
services(US$ in millions)
Income from loans and guarantees, including realized gains andlosses on loans and associated derivatives
Provision for losses on loans, off-balance sheet credit exposuresand other receivables$

Income from equity investments and associated derivatives
Income from debt securities, including realized gains and losses
on debt securities and associated derivatives

2,290

For the year ended June 30, 2023
Upstream andTreasuryAdvisory
services
services
$

—

$

—

Total
$

2,290

(22)

—

—

(22)

191

—

—

191

518

—

—

518

Provision for losses on available-for-sale debt securities

(7)

—

—

(7)

Income from liquid asset trading activities

—

1,464

—

1,464

(1,375)(1,223)—(2,598)

—

—

247

247

Charges on borrowings
Upstream and Advisory services income
Service fees and other income

271

—

—

271

(1,201)

(53)

(176)

(1,430)

Upstream and Advisory services expenses

—

—

(317)

(317)

Other, net
Foreign currency transaction (losses) gains on non-trading
activities

15

3

8

26

(86)

—

—

(86)

594

191

(238)

547

175

(50)

—

125

(238) $

672

Administrative expenses

Income (loss) before net unrealized gains and losses on nontrading financial instruments accounted for at fair value
and grants to IDA
Net unrealized gains (losses) on non-trading financial instruments
accounted for at fair value
Net income (loss)

$

769

$

141

$

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS127

INTERNATIONAL FINANCE CORPORATION

Page 134

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE S – SEGMENT REPORTING (continued)(US$ in millions)
Income from loans and guarantees, including realized gains andlosses on loans and associated derivatives
Provision for losses on loans, off-balance sheet credit exposuresand other receivables

Investment
services$

1,156

For the year ended June 30, 2022
Upstream andTreasuryAdvisory
services
services
$

—

$

—

Total
$

1,156

(126)

—

—

(126)

Income from equity investments and associated derivatives
Income from debt securities, including realized gains and losses
on debt securities and associated derivatives

208

—

—

208

414

—

—

414

Provision for losses on available-for-sale debt securities

(14)

—

—

(14)

Loss from liquid asset trading activities

—

(413)

—

(413)

(194)

(108)

—

(302)

Upstream and Advisory services income

—

—

233

233

Service fees and other income

186

—

—

186

(1,187)

(50)

(204)

(1,441)

—
55
76

—
4
—

(287)
16
—

(287)
75
76

574

(567)

(242)

(235)

(123)

(106)

—

(229)

(673) $

(242) $

(464)

Charges on borrowingsaAdministrative expenses

Upstream and Advisory services expenses
Other, net
Foreign currency transaction gains on non-trading activities
Income (loss) before net unrealized gains and losses on nontrading financial instruments accounted for at fair value
and grants to IDA
Net unrealized losses on non-trading financial instruments
accounted for at fair value
Net income (loss)

$

451

$

__________
a. Starting January 2023, upstream and advisory organizational units in IFC regional industry departments have been fully integrated to deliver holistic solutions to enable newinvestment opportunities for IFC and others, enhance the development impact and operational performance of existing IFC investments, and improve the enabling
environment to open new markets for private sector investments. As a result, upstream administrative expenses of $70 million previously reported in the Investment
Services segment were reclassed to Upstream and Advisory services segment.

The notes to consolidated financial statements are an integral part of these statements.

128 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONALINTERNATIONALFINANCE
FINANCECORPORATIONCORPORATION

Page
Page135135

NOTES
NOTES TOTO CONSOLIDATEDCONSOLIDATED FINANCIAL
FINANCIAL STATEMENTS
STATEMENTSNOTENOTESS––SEGMENT
SEGMENTREPORTINGREPORTING(continued)(continued)

Investment
Investment
services
services(US$(US$ininmillions)millions)
IncomeIncomefrom
fromloansloansandandguarantees,
guarantees,including
includingrealized
realizedgains
gainsand
andlosseslossesononloansloansassociatedassociatedderivatives
derivatives$$
Release
Releaseof
ofprovision
provisionfor
forlosses
lossesononloans,loans,off-balance
off-balancesheet
sheetcredit
creditexposures
exposuresand
andotherotherreceivables
receivables
IncomeIncomefrom
fromequity
equityinvestments
investmentsand
andassociatedassociatedderivatives
derivatives
IncomeIncomefrom
fromdebt
debtsecurities,
securities,including
includingrealized
realizedgains
gainsand
andlosses
lossesonondebtdebtsecurities
securitiesandandassociatedassociatedderivatives
derivatives
Provision
Provisionfor
forlosses
lossesononavailable-for-saleavailable-for-saledebt
debtsecurities
securities

For
Forthetheyearyearended
endedJune
June30,30,2021
2021
Upstream
Upstreamand
andTreasury
TreasuryAdvisory
Advisory
services
services
services
services

1,116
1,116 $$

—
— $$

—
— $$

Total
Total
1,116
1,116

201
201

—
—

—
—

201
201

3,201
3,201

—
—

—
—

3,201
3,201

340
340

—
—

—
—

340
340

(3)
(3)

—
—

—
—

(3)
(3)

IncomeIncomefrom
fromliquid
liquidasset
assettrading
tradingactivities
activities
Charges
Chargeson
onborrowings
borrowings

—
—
(223)
(223)

327
327
(103)
(103)

—
—
—
—

327
327
(326)
(326)

Upstream
Upstreamand
andAdvisory
Advisoryservices
servicesincome
income

—
—

—
—

237
237

237
237

Service
Servicefees
feesandandotherotherincome
incomeAdministrative
Administrativeexpenses
expensesaa
Upstream
Upstreamand
andAdvisory
Advisoryservices
servicesexpenses
expenses
Other,
Other,net
net
Foreign
Foreigncurrency
currencytransaction
transactionlosses
lossesononnon-trading
non-tradingactivities
activities
IncomeIncome(loss)(loss)before
beforenet
netunrealized
unrealizedgains
gainsand
andlosses
lossesononnonnontrading
tradingfinancial
financialinstruments
instrumentsaccounted
accountedfor
forat
atfairfairvaluevalue
Net
Netunrealized
unrealizedgains
gainsononnon-trading
non-tradingfinancial
financialinstruments
instruments
accounted
accountedfor
forat
atfairfairvalue
value
IncomeIncome(loss)(loss)before
beforegrants
grantsto
toIDA
IDA
GrantsGrantsto
toIDA
IDA
Net
Netincomeincome(loss)(loss)

$$

358
358

—
—

—
—

358
358

(1,108)(1,108)

(43)
(43)

(204)
(204)

(1,355)(1,355)

—
—
(40)
(40)
(148)
(148)

—
—
(3)
(3)
—
—

(277)
(277)
(12)
(12)
—
—

(277)
(277)
(55)
(55)
(148)
(148)

3,694
3,694

178
178

(256)
(256)

3,616
3,616

735
735
4,429
4,429

71
71
249
249

—
—
(256)
(256)

806
806
4,422
4,422

(213)
(213)

—
—

—
—

(213)
(213)

4,216
4,216 $$

249
249 $$(256)(256) $$

4,209
4,209

____________________
a.a.Starting
StartingJanuary
January2023,
2023,upstream
upstreamand
andadvisoryadvisoryorganizationalorganizationalunits
unitsininIFC
IFCregional
regionalindustry
industrydepartments
departmentshave
havebeen
beenfully
fullyintegrated
integratedtotodeliverdeliverholistic
holisticsolutions
solutionstotoenableenablenew
newinvestment
investment opportunities
opportunities forfor IFC
IFC andand others,
others, enhanceenhance thethe development
development impact
impact andand operational
operational performance
performance ofof existing
existing IFC
IFC investments,
investments, andand improve
improve thethe enabling
enabling
environment
environmenttotoopen
opennew
newmarkets
marketsfor
forprivate
privatesector
sectorinvestments.
investments.As
Asaaresult,result,upstream
upstreamadministrative
administrativeexpenses
expensesofof$77$77million
millionreported
reportedininthe
theInvestment
InvestmentServices
Servicessegment
segment
werewerereclassed
reclassedtotoUpstream
Upstreamand
andAdvisory
Advisoryservices
servicessegment.
segment.

The
Thenotesnotestotoconsolidated
consolidatedfinancial
financialstatements
statementsare
arean
anintegral
integralpartpartofofthese
thesestatements.
statements.

IFC 2023 ANNUAL REPORT FINANCIALS

129

INTERNATIONALINTERNATIONALFINANCE
FINANCECORPORATIONCORPORATION

Page
Page136136

NOTES
NOTESTOTOCONSOLIDATEDCONSOLIDATEDFINANCIAL
FINANCIALSTATEMENTS
STATEMENTSNOTE
NOTETT– –VARIABLE
VARIABLEINTEREST
INTERESTENTITIESENTITIES
Significant
Significantvariablevariableinterests
interests
IFC
IFChashasidentified
identifiedinvestments
investmentsinin227
227VIEs
VIEswhichwhicharearenotnotconsolidated
consolidatedbybyIFC
IFCbutbutininwhich
whichit itisisdeemed
deemedtotohold
holdsignificant
significantvariablevariableinterests
interestsatatJune
June30,30,20232023(225(225investments
investments– –June
June30,30,2022).
2022).
The
Themajority
majorityofofthese
theseVIEs
VIEsdodonot
notinvolve
involvesecuritizations
securitizationsororother
othertypes
typesofofstructured
structuredfinancing.
financing.IFC
IFCisisusuallyusuallythe
theminority
minorityinvestor
investorinin
these
theseVIEs.
VIEs.These
TheseVIEs
VIEsarearemainly:
mainly:(a)(a)investment
investmentfunds,
funds,where
wherethethegeneralgeneralpartner
partnerororfund
fundmanager
managerdoes
doesnot
nothavehavesubstantive
substantiveequity
equityatatrisk,
risk,which
whichIFC
IFCdoesdoesnot
notconsolidate
consolidatebecause
becauseit itdoes
doesnot
nothavehavethethepower
powertotodirect
directthe
theactivities
activitiesofofthe
theVIEs
VIEsthat
thatmost
mostsignificantly
significantly
impactimpacttheir
theireconomic
economicperformance
performanceandand(b)(b)entities
entitieswhose
whosetotal
totalequity
equityinvestment
investmentisisconsidered
consideredinsufficientinsufficienttotopermit
permitsuch
suchentity
entitytoto
financefinanceitsitsactivities
activitieswithout
withoutadditional
additionalsubordinatedsubordinatedfinancial
financialsupport
supportororwhose
whoseactivities
activitiesare
aresosonarrowly
narrowlydefined
definedbybycontracts
contractsthat
thatequity
equityinvestors
investorsare
areconsidered
consideredtotolack
lackdecision
decisionmaking
makingability,
ability,which
whichIFC
IFCdoesdoesnot
notconsolidate
consolidatebecause
becauseit itdoes
doesnot
nothavehavethethepower
powertotocontrol
controlthetheactivities
activitiesthat
thatmost
mostsignificantly
significantlyimpact
impacttheir
theireconomic
economicperformance.
performance.IFC’s
IFC’sinvolvement
involvementwith
withthese
theseVIEs
VIEsincludes
includesinvestments
investmentsininequityequityinterests
interestsandandseniorseniorororsubordinatedsubordinatedinterests,
interests,guarantees
guaranteesand
andriskriskmanagement
managementarrangements.
arrangements.
IFC’s
IFC’smaximum
maximumexposure
exposuretotoloss
lossasasa aresult
resultofofitsitsinvestments
investmentsininthese
theseVIEs
VIEswaswas$5.3$5.3billion
billionatatJune
June30,30,20232023($5.2($5.2billion
billion– –June
June30,30,2022).
2022).IFC’s
IFC’smaximum
maximumexposure
exposuretotoloss
lossisisbased
basedononthe
theunlikely
unlikelyevent
eventthat
thatallallofofthe
theassets
assetsininthe
theVIEs
VIEsbecome
becomeworthless
worthlessand
andincorporates
incorporatesnot
notonly
onlypotential
potentiallosses
lossesassociatedassociatedwith
withassets
assetsrecorded
recordedononIFC’s
IFC’sconsolidated
consolidatedbalancebalancesheet
sheet(maximum(maximumfunded
fundedexposure)
exposure)butbutalsoalsopotential
potentiallosses
lossesassociatedassociatedwith
withundisbursed
undisbursedcommitments
commitments(maximum(maximumunfunded
unfundedexposure).
exposure).The
Themaximum
maximumfunded
fundedexposure
exposurerepresents
representsthe
thebalancebalancesheet
sheetcarrying
carryingvalue
valueofofIFC’s
IFC’sinvestment
investmentininthe
theVIE
VIEandandreflects
reflectsthe
theinitial
initialamountamountofofcashcashinvested
investedinin
the
theVIE,
VIE,adjusted
adjustedfor
forprincipal
principalpayments
paymentsreceived,
received,increases
increasesorordeclines
declinesininfair
fairvalue
valueandandanyanyimpairment
impairmentininvalue
valuerecognizedrecognizedininearnings.
earnings.The
Themaximum
maximumexposure
exposureofofunfunded
unfundedpositions
positionsrepresents
representsthe
theremaining
remainingcommittedcommittedbut
butundisbursed
undisbursedamount.
amount.
The
Thecarrying
carryingvalues
valuesandandthethemaximum
maximumexposure
exposureofofIFC’s
IFC’sinvestment
investmentininthese
theseVIEs
VIEsatatJune
June30,30,20232023andandJuneJune30,30,20222022areareasasfollows:
follows:
Nonconsolidated
NonconsolidatedVIEs
VIEs
(US$
(US$ininmillions)millions)
Assets:Assets:Investments
Investments
Loans
Loansa a
EquityEquityInvestments
Investments
Debt
DebtSecurities
Securities
Derivative
DerivativeAssets
Assetsb b
Liabilities:
Liabilities:
Derivative
DerivativeLiabilities
Liabilitiesb b
Other
OtherOff-Balance
Off-BalanceSheet
SheetArrangements:
Arrangements:
Guarantees
Guarantees

June
June30,30,2023
2023
June
June30,30,20222022
Carrying
CarryingValue
Value Maximum
MaximumExposure
Exposure Carrying
CarryingValue
Value Maximum
MaximumExposure
Exposure$$

1,355
1,355 $ $
1,399
1,399
1,333
1,333
——

1,527
1,527 $ $
2,426
2,426
1,408
1,408
——

1,650
1,650 $ $
1,409
1,409
969
969
55

1,939
1,939
2,116
2,116
1,043
1,043
55

$$

(89)
(89) $ $(89)(89) $ $(27)(27) $ $

(27)
(27)

Not
NotApplicable
Applicable $ $

8686

Not
NotApplicable
Applicable $ $5555__________________
a aTheThepresented
presentedcarrying
carryingvalue
valueofofthe
theloansloansdoes
doesnot
notinclude
includethetheassociatedassociatedloan
loanloss
lossreserve
reserveofof$63$63million
millionand
and$78$78million
millionasasofofJune
June30,30,20232023andandJuneJune30,30,2022,2022,
respectively.
respectively.
b bRepresents
Represents
ClientClientRisk
Risk
Management
Management
arrangements.
arrangements.

IFC
IFCtransacted
transactedwith
witha aVIE,
VIE,ofofwhich
whichIFC
IFCisisthe
theprimaryprimarybeneficiary,
beneficiary,totoconstructconstructananoffice
officebuildingbuildingatat2100
2100KKStreet
Streetononland
landowned
ownedbybyIFC
IFC
adjacent
adjacenttotoitsitscurrent
currentoffice
officepremise.
premise.IFC
IFCcommenced
commencedoccupying
occupyingthe
thebuildingbuildingininMarch
March2019.
2019.The
Thebuildingbuildingand
andland,land,totaling
totaling$112$112
millionmillionare
areincluded
includedinin“Receivables“Receivablesand
andotherotherassets”
assets”ononIFC's
IFC'sconsolidated
consolidatedbalancebalancesheet.
sheet.

The
Thenotesnotestotoconsolidated
consolidatedfinancial
financialstatements
statementsare
areananintegral
integralpartpartofofthese
thesestatements.
statements.

130 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 137

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE U – UPSTREAM AND ADVISORY
IFC continues to address increasingly complex development challenges and is enhancing its creating markets strategy by undertaking
both Upstream and Advisory activities. Specifically, IFC provides advisory services to government and private sector clients to create
markets and mobilize private capital, and engages in early stage project development activities to develop bankable investment
projects. IFC also works in collaboration with the World Bank to provide policy advice and develop activities that help create markets
and support future transactions in multiple industries, especially in IDA eligible countries and FCS. IFC funds this business line by a
combination of cash received from IFC shareholders’ development agencies and other development partners, IFC’s operations via
retained earnings and operating budget allocations, as well as fees received from the recipients of the services.
As of June 30, 2023, other assets included undisbursed donor funds of $574 million ($606 million – June 30, 2022) and IFC’s advisory
services funding of $327 million ($331 million – June 30, 2022). Included in other liabilities as of June 30, 2023 is $574 million ($606
million – June 30, 2022) of refundable undisbursed donor funds.
Upstream and advisory services expenses in FY23 amounted to $317 million ($287 million and $277 million in FY22 and FY21
respectively), including $234 million in FY23 sourced from government and other development partners ($217 million and $220 million
in FY22 and FY21 respectively). The funds received from government and other development partners were also recognized asadvisory services income in IFC’s consolidated statements of operations.

NOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITSIBRD, IFC and MIGA participate in the defined benefit Staff Retirement Plan (SRP), a Retired Staff Benefits Plan (RSBP) and a PostEmployment Benefits Plan (PEBP) (collectively “the Pension Plans”) that cover substantially all WBG employees, retirees and theirbeneficiaries.
The SRP provides pension benefits and includes a cash balance plan. The RSBP provides certain health and life insurance benefits toeligible retirees. The PEBP provides certain pension benefits administered outside the SRP.
IFC uses a June 30th measurement date for its pension and other post-retirement benefit plans.
All costs, assets, and liabilities associated with the Plans are allocated among IBRD, IFC, and MIGA based upon their employees’
respective participation in the Pension Plans. Costs allocated to IBRD are substantially shared with IDA based on an agreed costsharing methodology. IDA, IFC, and MIGA reimburse IBRD for their proportionate share of any contributions made to the plans by
IBRD. Contributions to the Pension Plans are calculated as a percentage of salary.
The following table summarizes the benefit costs associated with the SRP, RSBP, and PEBP allocated to IFC for the years ended June30, 2023, June 30, 2022 and June 30, 2021. For the years ended June 30, 2023, June 30, 2022 and June 30, 2021, the service cost of$255 million ($339 million and $300 million) are included in “Administrative expenses” respectively. The components of net periodic
pension cost, other than the service cost component, are included in “Other, net” in the consolidated statement of operations.

(US$ in millions)
Pension Plan Benefit costs
Service cost
Other components:
Interest cost
Expected return on plan assets
Amortization of unrecognizedprior service cost
Amortization of unrecognized
net actuarial (gains) losses

2023$

Sub total
Net periodic pension cost

SRP
2022

$

179

$

For the year ended June 30,
RSBP
2023
2022
2021

2021

239

$

211

$

42

$

55

$

48

PEBP
2022

2023
$

34

$

45

2021
$

41

236
(290)

167
(270)

146
(203)

37
(56)

28
(52)

24
(37)

33
—

23
—

21
—

1

1

1

3

3

3

1

1

1

—

—

76

(6)

—

3

—

22

20

(53)

(102)

20

(22)

(21)

(7)

34

46

42

126

$

137

$

231

$

20

$

34

$

41

$

68

$

91

$

83

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 IFC for the years ended June 30, 2023 and June 30, 2022. Since the assets for the PEBP are not held inan irrevocable trust separate from the assets of IBRD, they do not qualify for off-balance sheet accounting and are therefore included in
IBRD's investment portfolio. IFC has recognized a receivable (prepaid asset) from IBRD and a payable (liability) to IBRD equal to theamount required to support the Plan. The assets of the PEBP are mostly invested in fixed income, equity instruments and other fundinvestments.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS131

INTERNATIONAL FINANCE CORPORATION

Page 138

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
SRP(US$ in millions)
Projected benefit obligations
Beginning of year
Service cost
Interest cost
Net entity transfers
Participant contributions
Benefits paid
Actuarial (gain) loss

2023
$

RSBP
2022

2023

PEBP
2022

2023

2022

5,426 $
179
236
7
58
(171)
(458)

6,239 $
239
167
(29)
55
(199)
(1,046)

842 $
42
37
1
5
(16)
(146)

990 $
55
28
(2)
4
(15)
(218)

739 $
34
33
—
3
(13)
(86)

849
45
23
—
2
(13)
(167)

End of year
Fair value of plan assets
Beginning of year
Net entity transfers
Participant contributions
Actual return on assets
Employer contributions
Benefits paid

5,277

5,426

765

842

710

739

4,926
7
58
298
47
(171)

5,084
(29)
55
(48)
63
(199)

948
1
5
60
13
(16)

959
(2)
4
(14)
16
(15)

—
—
—
—
—
—

—
—
—
—
—
—

End of year
Funded status a

5,165
(112)

4,926
(500)

1,011
246

948
106

—
(710)

—
(739)

Accumulated benefit obligations

$

4,867

$

4,981

$

765

$

842

$

647

$

655

_________a Negative funded status is included in “Payables and other liabilities” and positive funded status is included in “Receivables and other assets” on the Balance Sheet.

As of June 30, 2023, the RSBP was overfunded by $246 million. The SRP was underfunded by $112 million and the PEBP, afterreflecting IFC’s share of assets which are included in the Pension and Other Post-retirement Benefits receivable from IBRD ($704
million), was underfunded by $6 million.
During the fiscal years ended June 30, 2023 and June 30, 2022, there were no amendments made to the retirement benefit plans.
The following tables present the amounts included in Accumulated Other Comprehensive Income (Loss) relating to Pension and Other
Post-retirement Benefits:
Amounts included in Accumulated other comprehensive income at June 30, 2023:(US$ in millions)
Net actuarial gain
Prior service cost$

SRP(202) $
2

RSBP(306) $
2

Net amount recognized in accumulated other comprehensive income$(200) $

(304) $

PEBP
(30) $
4

Total
(538)
8

(26) $(530)

Amounts included in Accumulated other comprehensive loss at June 30, 2022:(US$ in millions)
Net actuarial loss (gain)
Prior service cost

$

SRP
264
3

$

RSBP
(161) $
5

Net amount recognized in accumulated other comprehensive loss

$

267

$

(156) $

PEBP

Total
56
5

$

159
13

61

$

172

Assumptions
The actuarial assumptions used are based on financial market interest rates, inflation expectations, past experience, andManagement’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 or more) returns
for the various asset classes, weighted by the portfolio allocation. Asset class returns are developed using a forward-looking building
The notes to consolidated financial statements are an integral part of these statements.

132 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 139

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
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 arederived from their relationship to equity 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 tothe year end yield of AA corporate bonds.
Actuarial gains and losses occur when actual results are different from expected results. Amortization of these unrecognized gains andlosses will be included in income if, at the beginning of the fiscal year, they exceed 10 percent of the greater of the projected benefit
obligation or the market-related value of plan assets. If required, the unrecognized 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 for the years
ended June 30, 2023 and June 30, 2022 and the net periodic pension costs for the years ended June 30, 2023, June 30, 2022 andJune 30, 2021:
Weighted average assumptions used to determine projected benefit obligations
SRP(In percent, except years)
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

2023
4.90
5.10

5.20

2023
4.90

RSBP
2022
4.50

5.40

5.40
4.20
2031
n.a

RSBP
2022
2.80
5.40

2021
2.70
5.10

2022
4.40
5.30

2023
4.90
5.10

PEBP
2022
4.50
5.30

5.80
4.40
2031
n.a

5.20

5.40

2023
4.50

PEBP
2022
2.80

2021
2.60

5.30

4.80

4.60

5.40

4.90

4.60

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 endof fiscal year
Ultimate health care growth rate
Year in which ultimate rate isreachedInterest crediting rate

2023
4.40
5.90
5.30

5.40

SRP
2022
2.70
5.40
4.80

4.90

2021
2.60
5.10
4.60

4.60

2023
4.50
5.90
5.80
4.40

5.40
3.90

5.40
3.70

2031
n.a

2031
n.a

2031
n.a

The medical cost trend rate can significantly affect the reported post-retirement benefit income or costs and benefit obligations for the
RSBP. For the year ended June 30, 2023 and June 30, 2022, the actuarial gains were primarily due to an increase in the discount rates.
Investment Strategy
The investment policies establish the framework for investment of the Plan assets based on long-term investment objectives and thetrade-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 mix of quantitative analysis that incorporates expected returns andvolatilities by asset class as well as correlations across the asset classes, and qualitative considerations such as the liquidity needs of
the Plans. The SAA for the Plans is reviewed in detail and reset about every three to five years, with more frequent reviews andchanges if and as needed based on market conditions.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS

133

INTERNATIONAL FINANCE CORPORATION

Page 140

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
The key long-term objective is to generate asset performance that is reasonable in relation to the growth rate of the underlying 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 theinvestment 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 April 2022, the Pension Finance Committee (PFC) approved a revision to the
SAA band around the target allocation for private equity from +/-3 percent to +/-5 percent to accommodate the illiquid nature of thisasset class and the limited ability to rebalance the allocation on a short-term basis, 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 at June 30, 2023 and the actual asset allocations at June 30, 2023 and June 30,
2022 by asset category for the SRP and RSBP.
SRP
PolicyAllocation
2023 (%)
Asset class
Public equity
Fixed income & cash
Private equity
Real assets a
Market neutral hedge funds
Credit strategy
Other bTotal

RSBP
PolicyAllocation
2023 (%)% of Plan Assets
2023

2022

% of Plan Assets
2023

2022

31
20
20
13
10
6
—

22
16
28
14
11
8
1

23
17
27
15
10
7
1

31
20
20
13
10
6
—

22
16
27
15
11
8
1

22
17
27
16
10
7
1

100

100

100

100

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 are further
diversified across funds, managers, strategies, geographies and sectors, to limit the impact of any individual investment. In spite of suchlevel of diversification, equity market risk remains the primary source of the overall return volatility of the Plans. As of June 30, 2023, thelargest exposure to a single counterparty was 9% and 11% of the Plan assets in SRP and RSBP, respectively (7% and 6%, respectively– June 30, 2022).
Risk management practices
Managing investment risk is an integral part of managing the assets of the Plans. Asset diversification is central to the overall
investment strategy and risk management approach for the Plans. Absolute risk indicators such as the overall return volatility anddrawdown of the Plans are the primary measures used to define the risk tolerance level and establish 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 ongoing basis.
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 with investment 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 specific characteristics and is an integral part of the externalmanagers’ due diligence and monitoring processes.

The notes to consolidated financial statements are an integral part of these statements.

134 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 141

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
Credit risk is monitored on a regular basis and assessed for possible credit event impacts. The liquidity position of the Plans 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 the illiquid investment vehicles. The Plans mitigate operational risk by
maintaining a system of internal controls along with other checks and balances at various levels.
Fair value measurements and disclosures
All plan assets are measured at fair value on a recurring basis. The following tables present the fair value hierarchy of major categoriesof plan assets as of June 30, 2023 and June 30, 2022:
June 30, 2023
(US$ in millions)

SRP
Level 2

Level 1

Total

RSBP
Level 2

Level 1

Total

Debt securities
Discount notes and time deposits$

Securities purchased under resale agreements

1

$

5

$

6

$

1

$

2

$

3

6

—

6

3

—

3

Government and agency securities

502

71

573

118

19

137

Corporate and convertible bonds

—

65

65

—

14

14

Asset-backed securities

—

39

39

—

9

9

Mortgage-backed securities

—

63

63

—

13

13

Total debt securities

509

243

752

122

57

179

US common stocks

52

—

52

16

—

16

Non-US common stocks

330

—

330

60

—

60

Real estate investment trusts

28

—

28

5

—

5

Total equity securities

410

—

410

81

—

81

Commingled funds

—

—

741

—

—

131

Private equity funds

—

—

1,440

—

—

275

Private credit

—

—

432

—

—

80

Hedge funds

—

—

618

—

—

112

Real estate funds (including infrastructure and timber)

—

—

700

—

—

146

Total other funds

—

—

3,931

—

—

744

(2)

(1)

(3)

—

—

—

—

—

75

—

—

7

Equity securities

Other funds at NAV a

Derivative assets/ liabilitiesb

Other assets/ liabilities , net
Total Assets

$

917

$

242

$

5,165

$

203

$

57

$

1,011

_________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.

The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS

135

INTERNATIONAL FINANCE CORPORATION

Page 142

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
June 30, 2022
(US$ in millions)

SRP
Level 2

Level 1

Total

RSBP
Level 2

Level 1

Total

Debt securities
Discount notes and time deposits

$

4

$

—

$

4

$

1

$

—

$

1

Securities purchased under resale agreements

29

—

29

8

—

8

Government and agency securities

576

94

670

120

22

142

Corporate and convertible bonds

—

111

111

—

23

23

Asset-backed securities

—

43

43

—

9

9

Mortgage-backed securities

—

62

62

—

12

12

Total debt securities

609

310

919

129

66

195

US common stocks

46

—

46

13

—

13

Non-US common stocks

Equity securities
335

—

335

61

—

61

Mutual funds

2

—

2

—

—

—

Real estate investment trusts

40

—

40

7

—

7

Total equity securities

423

—

423

81

—

81

Commingled funds

—

—

660

—

—

110

Private equity funds

—

—

1,313

—

—

253

Private credit

—

—

369

—

—

67

Hedge funds

—

—

545

—

—

98

Real estate funds (including infrastructure and timber)

—

—

680

—

—

140

Total other funds

—

—

3,567

—

—

668

Other funds at NAV a

Derivative assets/ liabilities

2

1

3

—

1

1

Other assets/ liabilities b, net

—

—

14

—

—

3

Total Assets

$

1,034

$

311

$

4,926

$

210

$

67

$

948

_________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 to determine the fairvalue of each major category of Plan assets. Investment amounts in the asset categories shown in the table above may be different
from the asset category allocation shown in the Investment Strategy section of the note. Asset classes in the table above are groupedby the characteristics of the investments held. The asset class break-down in the Investment Strategy section is based on
Management’s view of the 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 offoreign governments, sub-sovereigns and debt obligations in corporations of domestic and foreign issuers. Debt securities also include
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, where available. If quoted market prices are not available, fair values are
based on discounted cash flow models using market-based parameters such as yield curves, interest rates, volatilities, foreignexchange 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 approximates fair value.
The notes to consolidated financial statements are an integral part of these statements.

136 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 143

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE V – PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
Equity securities
Equity securities (including Real Estate Investment Trusts) represent investments in entities 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.
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 and venture capitalfunds across North America, Europe and Asia in a variety of sectors. Many of these funds are in the investment 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 fundmanagers, 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 fair 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 to enhance returns andprovide additional diversification. Hedge Funds include investments in equity, event driven, fixed income, multi strategy and macro
relative value strategies. These investments do not have a readily determinable fair market value and are reported at NAV provided byexternal managers or fund administrators (based on the valuations of underlying investments) monthly, taking into consideration thelatest 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 in reporting by the fund managers. Since thereporting of those asset classes is done with a lag, management estimates are 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 are used to achieve avariety 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 are reported using valuations based on discounted cash
flow methods incorporating observable market inputs.
Estimated future benefits 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:(US$ in millions)
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, 2028
July 1, 2028 – June 30, 2033

SRP
$

207
216
229
241
259
1,555

RSBP
$

15
16
18
20
22
144

PEBP
$

24
25
27
29
32
196

Expected contributions
IFC’s contribution to the SRP and RSBP varies from year to year, as determined by the PFC, which bases its judgment on the results ofannual 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 IFC during the fiscal year beginning July 1, 2023 is $50 million and $13 million, respectively.
The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS137

INTERNATIONAL FINANCE CORPORATION

Page 144

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE W – OFFSETTING OF DERIVATIVES, RESALE, REPURCHASE AND SECURITIES LENDING AGREEMENTS
AND COLLATERALIFC does not present derivative assets and liabilities or amounts due or owed under resale, repurchase and securities lendingtransactions related to contracts entered into with the same counterparty under a legally enforceable netting agreement on a net basis
on its consolidated balance sheet. The following table provides the gross and net positions of IFC’s derivative contracts, resale,
repurchase and securities lending agreements considering amounts and collateral held or pledged in accordance with enforceablecounterparty credit support and netting agreements described below. The gross and net positions include derivative assets of $258
million and derivative liabilities of $455 million as of June 30, 2023, related to derivative contracts that are not subject to counterparty
credit support or netting agreements. Collateral amounts are included only to the extent of the related net derivative fair values or net
resale, repurchase and securities lending agreements amounts.
(US$ in millions)

AssetsGross amount ofassets presented
in the consolidatedbalance sheet

Derivative assets$

Resale agreements

June 30, 2023
Gross amounts not offset in the
consolidated balance sheet
Financial
instruments
a

6,853

$

—

Total assets

$

6,853

$

6,483

Total liabilities$

18,766$$

Resale agreements

4,390

$

a

8,189

$

$

Repurchase and securities lending agreements
Total liabilities

8,203

6,746

13,694

1,210

Net amount
$
1,650

$

7

5,159

$

1,657

Collateral
received$

Net amount

680

c

$

—
$

680

763
—

$

763

June 30, 2022
Gross amounts not offset in the
consolidated balance sheet
Cash
CollateralpledgedFinancial
instruments
b

$

5,491
$

$

—

11,9502,947$

Gross amount ofliabilities presented
in the consolidatedbalance sheet

Derivative liabilities

1,210
—

169

3,799

(US$ in millions)

Liabilities$

Financial
instruments

3,799

Total assets$

June 30, 2022
Gross amounts not offset in the
consolidated balance sheet

Gross amount ofassets presented
in the consolidatedbalance sheet

Derivative assets

c

—

6,476

(US$ in millions)

Assets5,474

Net amount

169

June 30, 2023
Gross amounts not offset in the
consolidated balance sheet
Cash
Financial
Collateral
instruments
pledged
$5,474 $
5,159

Gross amount ofliabilities presented
in the consolidatedbalance sheet$
12,283 b

Repurchase and securities lending agreements$—(US$ in millions)

Liabilities
Derivative liabilities

5,474

Collateral
received

2,947

$

5,491
$

8,438

Net amount

4,324

$

—
$

4,324

932
—

$

932

_________a Includes accrued income of $1.1 billion and $534 million as of June 30, 2023 and June 30, 2022 respectively.
b Includes accrued charges of $1.1 billion and $303 million as of June 30, 2023 and June 30, 2022 respectively.
c Includes cash collateral of $168 million and $678 million as of June 30, 2023 and June 30, 2022 respectively. The remaining amounts of collateral received consist of offbalance-sheet US Treasury securities reported in the above table at fair value.

The notes to consolidated financial statements are an integral part of these statements.

138 IFC 2023 ANNUAL REPORT FINANCIALSINTERNATIONAL FINANCE CORPORATION

Page 145

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE W – OFFSETTING OF DERIVATIVES, RESALE, REPURCHASE AND SECURITIES LENDING AGREEMENTS
AND COLLATERAL (continued)
IFC’s derivative contracts with market counterparties are entered into under standardized master agreements published by theInternational Swaps and Derivatives Association (ISDA) Agreements. ISDA Agreements provide for a single lump sum settlement
amount upon the early termination of transactions following a default or termination event whereby amounts payable by the nondefaulting party to the other party may be applied to reduce any amounts that the other party owes the non-defaulting party. This setoff
effectively reduces any amount payable by the non-defaulting party to the defaulting party.
IFC’s ISDA Agreements are appended by a Credit Support Annex (CSA) that provides for the receipt, and in some cases, posting, ofcollateral in the form of cash, U.S. Treasury securities or U.K. gilts to reduce mark-to-market exposure among derivative market
counterparties. IFC recognizes cash collateral received and a corresponding liability on its balance sheet for the obligation to return it.
Securities received as collateral are not recognized on IFC’s balance sheet. As of June 30, 2023, $5.2 billion of cash collateral wasposted under CSAs ($4.4 billion June 30, 2022). IFC recognizes a receivable on its balance sheet for its rights to cash collateral posted.
In accordance with the CSAs, IFC may rehypothecate securities received as collateral, subject to the obligation to return such collateraland any related distributions received. In the event of a counterparty default, IFC may exercise certain rights and remedies, including
the right to set off any amounts payable by the counterparty against any collateral held by IFC and the right to liquidate any collateral
held. As of June 30, 2023, IFC had $185 million ($730 million – June 30, 2022) of outstanding obligations to return cash collateral under
CSAs. The estimated fair value of all securities received and held as collateral under CSAs as of June 30, 2023, all of which may be
rehypothecated was $1 million ($2 million – June 30, 2022). As of June 30, 2023, $0 of such collateral was rehypothecated under
securities lending agreements ($0 – June 30, 2022).
Collateral posted by IFC in connection with repurchase agreements approximates the amounts classified as Securities sold under
repurchase agreements. At June 30, 2023 and June 30, 2022, no trading securities were pledged in connection with borrowings under ashort-term discount note program, the carrying amount of which was $3.0 billion at June 30, 2023 ($2.3 billion – June 30, 2022).
Under certain CSA’s IFC is not required to pledge collateral unless its credit rating is downgraded from its current AAA/Aaa. The
aggregate fair value of derivatives containing such a credit risk-linked contingent feature in a net liability position was $93 million atJune 30, 2023 ($85 million – June 30, 2022). At June 30, 2023, IFC had no collateral posted under these agreements. If IFC’s credit
rating were to be downgraded from its current AAA/Aaa to AA+/Aa1 or below, then collateral in the amount of $78 million would be
required to be posted against net liability positions with counterparties at June 30, 2023 ($70 million – June 30, 2022).
IFC’s resale, repurchase and securities lending transactions are entered into with counterparties under industry standard master netting
agreements which generally provide the right to offset amounts owed one another with respect to multiple transactions under such
master netting agreement and liquidate the purchased or borrowed securities in the event of counterparty default. The estimated fairvalue of all securities received and held as collateral under these master netting agreements as of June 30, 2023 was $0, ($3.8 billion –June 30, 2022).
The following table presents an analysis of IFC’s repurchase agreements by (1) class of collateral pledged and (2) their remaining
contractual maturity as of June 30, 2023 and June 30, 2022:
Remaining Contractual Maturity of the Agreements – June 30, 2023
Overnight and
Up to 30
Greater thanContinuousdays
30-90 days
90 days
Total(US$ in millions)
Repurchase agreements
U.S. Treasury securities
Total Repurchase agreements

a

$

—

$

1,479

$

3,530

$

1,474

$

6,483

$

—

$

1,479

$

3,530

$

1,474

$

6,483

_________a Includes accrued interest.

Remaining Contractual Maturity of the Agreements – June 30, 2022
Overnight and
Up to 30
Greater thanContinuousdays
30-90 days
90 days
Total(US$ in millions)
Repurchase agreements
U.S. Treasury securities
Total Repurchase agreements

a

$

38

$

1,503

$

2,814

$

1,144

$

5,499

$

38

$

1,503

$

2,814

$

1,144

$

5,499

_________a Includes accrued interest.

As of both June 30, 2023 and June 30, 2022, IFC has no repurchase-to-maturity transactions nor securities lending transactions
outstanding.
The notes to consolidated financial statements are an integral part of these statements.

IFC 2023 ANNUAL REPORT FINANCIALS

139

INTERNATIONAL FINANCE CORPORATION

Page 146

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE X – CONTINGENCIESIn the normal course of its business, IFC is from time to time named as a defendant or co-defendant in legal actions on different
grounds in various jurisdictions. Although there can be no assurances, based on the information currently available, IFC’s Management
does not believe the outcome of any of the various existing legal actions will have a material adverse effect on IFC’s financial position,
results of operations or cash flows.

The notes to consolidated financial statements are an integral part of these statements.

140 IFC 2023 ANNUAL REPORT FINANCIALS

Page 64

INDEPENDENT AUDITOR’S REPORT
President and Board of Directors
International Finance Corporation
OpinionWe have audited the consolidated financial statements of International Finance Corporation and its consolidated entities ("IFC"), which
comprise the consolidated balance sheets as of June 30, 2023 and 2022, and the related consolidated statements of operations,comprehensive income, changes in capital and cash flows, for each of the three years in the period ended June 30, 2023, and therelated notes to the consolidated financial statements (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of IFC
as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June30, 2023, 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 of America (GAAS), IFC's internal
control over financial reporting as of June 30, 2023, 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 4, 2023, expressed anunmodified opinion on IFC’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 Consolidated Financial Statements section of our report. We are required to be independent of IFC
and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about IFC’s ability to continue as a going concern for one year after the datethat the consolidated financial statements are issued.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial 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 and therefore is not a guarantee that an audit conducted in accordance withGAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in theaggregate, they would influence the judgment made by a reasonable user based on the consolidated 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 consolidated financial statements, whether due to fraud or error, anddesign and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements.

IFC 2023 ANNUAL REPORT FINANCIALS

141

Page 65•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made bymanagement, as well as evaluate the overall presentation of the consolidated financial statements.

•

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about
IFC’s ability to continue as a going concern for a reasonable period of time.

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 Supplemental Information
Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidated
statement of capital stock and voting power as of June 30, 2023 ("supplemental information") listed in the table of contents is presented
for the purpose of additional analysis and is not a required part of the consolidated financial statements. This supplemental informationis the responsibility of IFC’s management and was derived from and relates directly to the underlying accounting and other records
used to prepare the consolidated financial statements. Such information has been subjected to the auditing procedures applied in our
audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated
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 consolidated financial statements as a whole.
Other Information Included in Management’s Discussion and Analysis and Consolidated Financial Statements
Management is responsible for the other information included in Management’s Discussion and Analysis and Consolidated Financial
Statements. The other information comprises the information included in Management’s Discussion and Analysis and Consolidated
Financial Statements but does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the
consolidated 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 consolidated financial statements, our responsibility is to read the other information and consider
whether a material inconsistency exists between the other information and the consolidated financial statements, or the otherinformation 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 4, 2023

142 IFC 2023 ANNUAL REPORT FINANCIALSINVESTMENT PORTFOLIO

IFC 2023 ANNUAL REPORT FINANCIALS

143

STATEMENT OF CUMULATIVEGROSS COMMITMENTS(at June 30, 2023)
Cumulative Commitments 1 (US$ thousands)

Investment Portfolio
REGIONIFC

LOAN &GUARANTEEPARTICIPATIONS

TOTAL

15

303,557

5,557

309,114

Angola12

1,044,553

01,044,553

Benin

15

340,1330340,133

Botswana

885,452085,452Burkina Faso

30

1,237,037

0

1,237,037

Burundi11

58,648058,648NUMBER OF
ENTERPRISES

Algeria

COUNTRY

AfricaCabo Verde

8

26,848026,848

Cameroon47

1,075,643

471,500

1,547,143

Central African Republic

1

9,880

0

9,880

Chad

12

170,314

13,900184,214

Comoros

1

14,8880

14,888Congo, Democratic Republic of

38

741,463

143,800

885,263

Congo, Republic of

12

164,432

25,000189,432

Cote D’Ivoire

83

1,444,342

175,275

1,619,617

Djibouti

2

9,290

0

9,290

144

5,244,486

1,133,389

6,377,875

Eritrea

1

949

0

949

Eswatini

947,779047,779Ethiopia

26

965,780

46,336

1,012,117

Gabon

7

342,668

110,000

452,668

Gambia, The

10

47,270047,270Ghana

943,479,961

913,750

4,393,711

Guinea23

678,013

191,000

869,013

Guinea-Bissau

5

9,156

0

9,156

Kenya

146

4,725,905

273,936

4,999,841

Lesotho

2

454

0

454

Liberia

14

265,5790265,579

Madagascar

30

485,71321,000506,713

Malawi23

287,705

9,500

297,205Mali

38

369,065

40,000409,065

Mauritania

18519,530

79,503599,033

Mauritius

24

391,65996391,755

Morocco57

1,567,546

526,934

2,094,480

Mozambique35

615,009

136,913751,923

Namibia

10

198,3910

198,391

Niger

7

72,183072,183

Nigeria146

20,503,689

1,022,205

21,525,895

Rwanda25

282,111

10,000292,111

Egypt, Arab Republic of

1. Includes long-term and short-term investment commitments.

144 IFC 2023 ANNUAL REPORT FINANCIALSREGION

IFC

LOAN &GUARANTEEPARTICIPATIONS

TOTAL

2

2,051

0

2,051

Senegal56

920,833

134,554

1,055,387

Seychelles

849,443

12,00061,443

Sierra Leone

13

221,172

25,000246,172

Somalia

2

975

0

975

South Africa

127

6,609,919

150,025

6,759,944

South Sudan

2

8,750

0

8,750

NUMBER OF
ENTERPRISES

Sao Tome and Principe

COUNTRY

Sudan

6

27,2686,489

33,757

Tanzania

72

1,141,697

15,541

1,157,237

Togo

19

422,2150422,215

Tunisia

37

622,690427,228

1,049,917

Uganda59

676,194

86,788762,982

Zambia51

546,883

20,286567,169

Zimbabwe

51

284,262

99,000383,262

Regional Investments: Africa

177

5,211,928

92,722

5,304,650

Kazakhstan

39

1,830,079

302,933

2,133,012

Kyrgyz Republic

19

174,8260

174,826

Central Asia and Türkiye

Tajikistan

22

174,0680

174,068

Türkiye229

21,235,885

4,118,382

25,354,267

Turkmenistan

1

35,000035,000

Uzbekistan

31

690,678

22,900713,578

Regional Investments:
Central Asia and Türkiye

255,000055,000

Cambodia

21

813,991

660,727

1,474,719

China

349

13,955,298

2,735,933

16,691,232

Fiji

11

57,4932,500

59,993

Indonesia

157

6,283,979

3,111,831

9,395,811

Kiribati

1

1,798

0

1,798

Korea, Republic of

52

1,108,449

195,700

1,304,149

Lao People’s Democratic
Republic

16

132,202

10,000142,202

Malaysia

15

220,889

5,389

226,278

Mongolia

21

1,348,356

971,625

2,319,981

Myanmar32

874,352

20,000894,352

Papua New Guinea

12404,744

25,000429,744

Philippines

East Asia and the Pacific124

4,129,604

718,470

4,848,073

Samoa

8

22,097

0

22,097

Solomon Islands

3

55,000055,000102

3,918,877

1,763,419

5,682,297

Timor-Leste

2

3,000

0

3,000

Tonga

1

6,787

0

6,787

Vanuatu

4

18,1040

18,104

Vietnam89

12,605,762

756,706

13,362,468

Regional Investments:
East Asia and the Pacific78

2,465,216

02,465,216

ThailandIFC 2023 ANNUAL REPORT FINANCIALS

145

REGION

IFC

LOAN &GUARANTEEPARTICIPATIONS

TOTAL

23

559,391

78,613

638,004

Armenia

23

781,969

0781,969

Azerbaijan

27

619,479

212,930

832,409

Belarus21

809,388

18,000827,388

Bosnia and Herzegovina

33

358,576

10,578369,154

Bulgaria

32

1,065,341

183,647

1,248,988

Croatia23

1,016,066

228,199

1,244,265

Georgia33

1,205,896

49,825

1,255,721

Kosovo10

86,150086,150

Moldova

18

285,237

45,000330,237

NUMBER OF
ENTERPRISES

Albania

COUNTRY

EuropeMontenegro

7100,2030100,203

North Macedonia

17

304,463

25,000329,463

Poland61

1,451,430

135,317

1,586,747

Romania

67

4,736,620

570,527

5,307,147

Russian Federation

194

8,797,461

2,523,372

11,320,833

Serbia45

1,968,647

369,723

2,338,371

Ukraine67

3,390,912

953,751

4,344,662

Regional Investments: Europe

67

3,776,807

330,294

4,107,101

1

30,000030,000Argentina

213

8,372,840

6,131,343

14,504,182

Barbados

7

29,025

029,025

Belize4

33,066

11,00044,066

Latin America and the Caribbean
Antigua and Barbuda

Bolivia

33

601,039

155,500

756,539

Brazil348

25,856,665

9,861,403

35,718,068

Chile

80

3,427,925

1,553,155

4,981,079

Colombia

162

6,115,222

1,545,598

7,660,819

Costa Rica

38

1,916,795

104,7092,021,504

Dominica

1

700

0

700

Dominican Republic

39

963,822

241,850

1,205,672

Ecuador29

1,876,505

179,740

2,056,245

El Salvador

22

2,193,099

256,000

2,449,099

Grenada

2

8,000

0

8,000

Guatemala33

3,041,634

230,000

3,271,634

Guyana8

76,417

076,417Haiti

17

146,735

26,000172,735

Honduras

29

2,264,690

142,901

2,407,591

Jamaica

25

557,846

194,244752,090

Mexico259

9,673,169

2,985,750

12,658,919

Nicaragua

28

1,645,375

206,036

1,851,411

Panama37

2,916,237

153,300

3,069,537

Paraguay

19

1,859,139

28,0001,887,139

Peru

85

3,049,370

1,062,099

4,111,469

St. Lucia

580,42235,000115,422

Suriname

1

4,066

0

4,066

Trinidad and Tobago

19433,654

235,000

668,654

Uruguay21

408,842

120,000

528,842146 IFC 2023 ANNUAL REPORT FINANCIALSREGION

IFC

LOAN &GUARANTEEPARTICIPATIONS

TOTAL

39

897,230

703,791

1,601,021

102

2,848,074

350,000

3,198,074

10

249,2540249,254

Bahrain2

340,2710340,271

Iran, Islamic Republic of

11

63,343

8,199

71,542Iraq

18

1,159,116

432,270

1,591,386

Jordan72

2,425,048

707,490

3,132,539

Lebanon43

6,323,413

230,430

6,553,843

NUMBER OF
ENTERPRISES

Venezuela, Republica
Bolivariana deRegional Investments: Latin
America and the Caribbean

COUNTRY

Middle East
Afghanistan

Oman

7

319,853

57,000376,853

Pakistan158

9,615,398

719,199

10,334,597

Saudi Arabia

13726,2770726,277

Syrian Arab Republic

424,732

024,732

United Arab Emirates

21488,252

30,000518,252

West Bank and Gaza

29

516,295

10,000526,295

Yemen, Republic of

17

281,004

96,105377,109

Regional Investments:
Middle East

34

1,527,330

3,000

1,530,330

Bangladesh

77

7,808,009

194,620

8,002,629

Bhutan6

54,517054,517

India

579

21,409,888

1,743,640

23,153,528

Maldives

10

293,250

8,500

301,750Nepal

31524,856

50,250575,106

Sri Lanka

53

2,024,643

128,616

2,153,259

Regional Investments:
South Asia

8

183,443

0183,443

Australia

2

975

0

975

Cyprus8

32,181645

32,827

Czechia

18

455,176

245,588

700,764

Estonia

11

137,806

11,855

149,661South Asia

Worldwide

Finland

4

1,233

1,915

3,148

Greece15995,955

40,131

1,036,086

Hungary

34

691,655

70,335

761,990

Israel1

10,5000

10,500

Italy

1

960

0

960

Latvia7

80,96735,000115,967

Lithuania

11

95,041

9,309

104,350

Portugal

7

51,811

11,00062,811

Slovak Republic

7

115,5440

115,544

Slovenia

13

292,535

47,383339,918Spain

5

19,043

1,685

20,728217

27,932,594

526,234

28,458,828

8298,194

1,400

299,594

7,358

337,406,900

59,509,734

396,916,634

Regional Investments:
Worldwide
Other

2

2. Of this amount, $9.8 million ($8.4m for IFC and $1.4m for participant’s account) represents investments made at a time when theauthorities on Taiwan represented China in the International Finance Corporation. The balance represents investments in Taiwan,
China and Hong Kong SAR, China.

IFC 2023 ANNUAL REPORT FINANCIALS

147

International Finance Corporation
2121 Pennsylvania Avenue, NW
Washington, DC 20433 USA
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