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Intemnational Finance Corporation 19 74AnnualReport

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1971, 1974 INDONESIAP. T. Semen Cibinong-cement

1974 Annual Report

ICInternationalFinanceCorporation

"The purpose of the Corporation is The Directors of the Internationalto further economic development by Finance Corporation have hadencouraging the growth of productive prepared this Annual Report for

~~~~~~~~~~~~private enterprise in member the fiscal year Jiuly I, 1973, tocountries, particularly in the less June 30, 1974, in accordance withdeveloped areas, thus supplementing the By-Laws of the Corporation.the activities of the International Mr. Robert S. McNamara,Bank for Reconstruction and President of the Corporation andDevelopment.... In carrying out Chairman of the Board ofthis purpose, the Corporation shall: Directors, has submitted this

i. in association with private Report, together with the auditedinvestors, assist in financing the financial statements, to the Boardestablishment, improvement and of Governors.expansion of productive privateenterprises which wouldcontribute to the development ofits member countries by makinginvestments, without guarantee ofrepayment by the membergovernment concerned, in caseswhere sufficient private capital isnot available on reasonable terms;

ii. seek to bring together investmentopportunities, domestic andforeign private capital, andexperienced management; and

iii. seek to stimulate, and to helpcreate conditions conducive to,the flow of private capital,domestic and foreign, intoproductive investment in membercountries.

"The Corporation shall be guided inall its decisions by the provisionsof this Article."

Article OneArticles of AgreementInternational Finance Corporation

Contents

t 3 I. The Investment Climate in 1973-74

7 II. IFC's Year

7 Investments

7 Distribution of Investments

% 7 Associated Investors

Ii _-s_ 8 Sales of Investments8 Capital Markets9 Investment Promotion

9 Financial Summary

10 Organization

12 III. IFC-1970-1974

14 IV. The Year's Investments

31 V. Financial Statements

45 VI. Appendices

46 A Voting Power and Subscriptions of Member Countries

47 B Governors and Alternates

49 C Directors and Alternates and Their Voting Power

50 D Officers and Department Directors

1974 YUGOSLAVIAZP Slovenske Zelezarne ZelezarnaJesenice-steel

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I. The Investment Climate in 1973-74

Even though the investment climate year as a whole. However, the latter prices, can be expected to bear heavily 3during the preceding year was char- stages of this expansionary cycle were on the import bill of the non-oil pro-acterized by great uncertainty and accompanied by strong inflationary ducing developing countries in 1974.change, the world's financial markets forces. While the rate of growth in real By the spring of 1974, there werewitnessed booming activity through output in the industrial world was indications of a break in the commod-most of 1973. International investment clearly beginning to recede during the ity boom as the upward movement inand trade had to contend with a world- second half of 1973, the inflationary the prices of certain major food grainswide system of floating exchange rates process continued to gather momen- and raw materials was reversed. Theand extremely volatile conditions in tum. The average rate of price inflation long-term outlook for commodityforeign exchange markets, but the pace in industrial countries was close to 10 prices remains unclear. This is due toof business and investment activity in per cent in national currencies during significant changes in the internationalboth industrial and developing coun- the second half of 1973 and accel- demand/supply balance for certaintries was strong, especially during the erated further in the early months of commodities, the effects of rising costsfirst half of 1973. As the year pro- 1974. on long-term supply and, above all, agressed, however, the financial climate Most developing countries were able new worldwide awareness of the im-became more clouded under the com- to achieve a high level of economic ac- portance of adequate and assuredbined impact of receding economic tivitv in 1973. While there were im- availability of essential primary com-growth in the industrial world, the portant differences in the economic modities. Nevertheless, keeping in viewquickening pace of worldwide inflation situation and performance of individ- the extraordinary price increases thatand the dramatic and wide ranging ual developing countries, the boom in have already occurred, and the sub-effects of the increase in oil prices. primary commodities benefited them stantially reduced rate of economic

The flow of investment funds to the as a group, strengthening thei- external growth during 1974 in the industrialdeveloping countries in 1973 was aided trade and payments position. There countries, which provide the majorbv the relatively liquid state of inter- were several exceptions to this gener- markets for these commodities, somenational money and capital markets ally favorable outcome, and a number downiward adjustment of commodityfor the greater part of that year. How- of countr ies saw their modest gains on prices is likely during 1974. In short,ever, the financial situation began to the export side more than otTset by developments both on the imiport andchange towards the end of 1973. and higher import prices of food grains and export side point to a significant deteri-1974 saw the emerLence of a more manufactured goods. While there was oration in the overall terms of trade ofstringent financial environment which great unevenness in performance, the the developing countries (other thanwas reflected in a growing liquidity termls of trade of the developing coun- the oil produccrs) in 1974.squeeze. a hardening of interest rates. tries as a whole (otlher than the major The financial position and prospectsand increasing difficulties in mobilizing petrolcum exporters) improved by 6-7 of the major oil-exporting countriesinvestment resources. particularly for per cent duling 1973. and their inter- have, of course, improved spectacu-the deve]oping countries. These finan- national reserves rose by approxi- larly following the sharp rise in oilcial developments were, of course, cs- mately S8 billion, prices during the latter part of 1973.sentially a reflection of the more fun- Recent trade developments suggest The effects of these price increases willdamental changes that were in progress that the improvement in the interna- be felt fully in 1974 when the total sur-in the world economy. tional reserves of non-oil producing plus in the current account of the bal-

The economic upswing in the indus- developing countries will prove to have ance of payments of oil-producingtrial countries, which had gathered been short-lived. and that 1974 is countries is expected to show roughlyforce during 1972, reached its peak likely to see a rapid erosion of these a tenfold increase from its level ofduring the first half of 1973. The gross gains. Prices of imported manufactures slightly over $6 billion in 1973. Thenational product of the major indus- by developing countries have been manner in which these potential sur-trial countries probably grew on the rising almost twicc as fast as the pluses arc invested or recycled will un-average at a rate of about 8 per cent in average rate of domestic price inflation doubtedly dominate the course ofreal terms during the first six months of in industrial countries, and this, to- international money and capital mar-1973, and at 6-7 per cent during the gether with the steep increase in oil kets during 1974, and beyond.

4 The difficulties that are being ex- 1972, reflecting mainly the impact of these intermediate commodities seemperienced in the world's financial mar- inflation in industrial countries, the to have stimulated a new investmentkets in adjusting to the new situation spiralling increase in commodity prices cycle in these industries. More funda-are evident from the heightened uncer- and the depreciation of the U.S. dollar mentally, h1owever, this trend reflectstainty which has characterized their during this period. Information so far the fact that several developing coun-functioning during the first half of available for the first half of 1974 sug- tries are now entering a more sophisti-1974. Important shifts in the pattern gests some slowdown in the growth of cated and capital-intensive phase ofof international capital flows are un- world trade. industrialization. The emphasis onavoidable as a result of recent develop- The preliminary data on interna- heavy industry and the recent steepnients, but there is a real danger, tional capital movements show that increase in equipment prices also con-which hopefully can be avoided, that the total flow of resources to devel- tributed to larger individual invest-these shifts will impinge most severely oping countries (excluding most Euro- ments during 1973.on the non oil-producing developing currency credits)"' exceeded $24 Another noteworthy feature was thecountries. The emerging pressures billion in 1973-approximately one- increased investment interest in thehave particularly serious implications fourth higher in dollar terms than in field of mineral exploration and devel-for the financial situation of those the previous two years. According to opment. The international boom indeveloping countries which are heav- OECD estimates, these transfers in- commodities and the worldwide searchily dependent on both oil and food im- cluded some $11 billion in private for secure sources of raw materialsports, and which entered 1974 without capital flows, of which $5.9 billion prompted new investment initiativesthe undeerpinnings of a strong balance represented direct foreign private in- in several countries, including Brazil,of payments and reserve position. vestment (including investment in Guatemala, Peru and the Philippines.

The prospects of efficient interna- petroleum but excluding suppliers' A number of developing countries,tional financial mediation in these cir- credits) in developing countries. Indonesia and the Philippines for ex-cunistances are complicated by, and There are no recent data on direct ample, also moved towards the estab-to some degrce interlinked with, the foreign private investment excluding lishment of facilities for local process-onset of worldwide inflation in con- petroleum, but the indications are that ing of raw materials in association withjunction with declining economic the 1973 level did not differ signifi- foreign partners.growth. The situation calls for close cantly from the average over the past There was a continued tendency oncooperation between different seg- three-four years of around $1.8-$2 bil- the part of certain industries in devel-ments of the international financial lion. The partial information available oped countries, such as textiles, to lookcommunity. It also underlines the need suggests concentration of investment for possibilities of further expansionto evolve, during the transitional pe- llows in certain areas, such as Brazil, and decentralized production throughriod, financial policies and procedures Indonesia, Korea, Malaysia, the Phil- new investment in low-wage develop-which engender confidence in both po- ippines and Tunisia. Foreign private ing countries. This was particularlytential investors and borrowers so that enterprises were also more active in true of Japanese investors in suchthe order-ly functioning of international domestic investment in some of the countries as Indonesia and the Philip-financial markets is preserved and major oil-producing countries. pines, but there were also comparablethere is minimum disruption in the It is possible to identify in general cases involving foreign investment byflow of international capital. terms certain broad tendencies in the U.S. and European enterprises. Simi-

pattern of investment flows during the larly, there appeared to be somewhat

Trade and Investm7lent Flows past year. For example, there appears greater readiness on the part of foreignto have been considerable emphasis on investors to join with local enterprises

The volumiie of world trade in 1973 heavy industry - particularly petro- in export-oriented investments, and,grew by more than 12 per cent, or chemicals, cement, iron and steel, and where the investment was primarilyslightly higher than the rate of growth fertilizers. The widespread shortages directed towards the domestic market,in the previous year. In dollar terms, and soaring international prices for to assume responsibility for marketingthe rate of growth in world trade in a part of the production abroad.1973 was almost twice as large as in 'The Euro-markers ai-e referred to on pp. 5-6. Finally, there were many more re-

ported cases during the past year of especially those with abundant natural During the first quarter of 1974, 5joint ventures and other forms of col- resources, were much sought after in publicized borrowings by developinglaboration between private enterprises Euro-markets. The number of such countries were still quite large-nearlyin different developing countries. In- borrowers rose considerably during $3 billion, or approximately equal todian and Pakistani investors were re- this period, the maturity period of the average amount borrowed in eachported to be active in Indonesia and loans lengthened, and the spread be- of the final two quarters of 1973. How-Malaysia, in East and Central Africa, tween deposit and lending rates nar- ever, the lending terms became grad-and in the Middle East. There were rowed. In all, 40 developing countries ually more stringent and, the numbersimilar reports of joint ventures under- borrowed over $9 billion equivalent of developing countries in the markettaken by enterprises from Korea and in 1973 in the form of publicized'2t decreased. Even in the case of officialHong Kong in other developing coun- loans; on a gross basis this was more borrowers from developing countries,tries in the Far East and Africa. than twice the 1972 level. Loans with there were fewer loans with maturity

While there are important differ- a final maturity of 15 years. and periods going up to 15 years, and theences in the attitudes of individual spreads of 1/2 to 3/4 per cent over interest spread over LIBOR generallycountries towards foreign private in- LIBOR (the London Interbank offer exceeded 1 per cent. The liquidityvestment, there appears to be a well- rate for deposits), were reported in squeeze was much more notice-defined trend on the part of many the case of official borrowers. Simi- able in the case of loans to privategovernments to increase national con- larly, loans with a maturity of 7-10 borrowers from developing countries:trol and participation in key sectors of years at 1 per cent or less above it became harder for such enterprisesthe economy, and to place increasing LIBOR were reported to have been to borrow for more than 5-7 years,emphasis on significant local participa- made to some established private com- spreads of 2 per cent or more abovetion in foreign-owned enterprises. This panies in developing countries. While LIBOR were widely quoted, and theretrend has more recently been particu- there are no comprehensive data cov- is reported to have been a significantlarly noticeable in the field of natural ering both publicized and unpublicized overall reduction in such lending.resource development. loans, total Euro-borrowing by devel- Concurrently. with the diminishing

As in the past, there were several oping countries in 1973 is estimated role of developing countries in thecases during the preceding year in very roughly to have been in the $11- market, there was a massive increasewhich governments in developing $13 billion range. in borrowing by industrial countriescountries decided to participate in, or Towards the end of 1973, and into which caused the developing countries'to take over, foreign-owned invest- 1974, the functioning of Euro-markets, share in total publicized loans to dropments. There appears to be increasing and especially the access of developing from about 40 per cent in 1973 to 21awareness that such policies should be country borrowers to the markets, was per cent during the first quarter ofimplemented in an equitable fashion increasingly affected by some major 1974. These trends became even moreso as not to impair the investment developments: the rising pace of in- pronounced during the second quarterclimate. In general, steps towards in- flation, the dismantling of capital con- of 1974.creased host country participation over trols in the United States, the parallel Euro-market operations have grownthe past year were accompanied by a easing of restrictions on capital im- at an extraordinary rate and have un-commitment to pay adequate compen- ports by European countries, and, doubtedly extended and diversified thesation and to maintain a favorable most importantly, the entry into the possibilities open to public and privateclimate for private investment. markets of European governments enterprises in developing countries to

and public institutions as borrowers. raise capital abroad. Total Euro-lend-Euro-mnarkets in 1973-74 These developments had the overall ing, including both syndicated loans

effect of tightening liquidity and grad- and bond issues, to developing andThe performance of Euro-markets ually inducing shorter loan maturities, developed countries, probably reachedduring 1973-74 reflected the uncer- wider "spreads", and greater selec- $40 billion in 1973. While all of ittainties that dominated the interna- tivity in lending. does not represent a net increase in thetional financial scene. During most of indebtedness of the borrowers, it is1973, developing country borrowers, "i.e.,those annolunced in tde press. difficult to evaluate this growth in

6 lending in the absence of any detailed increase in the flow of funds for invest- in which IFC has customarily obtainedor reliable information about the oper- ment and balance of payments pur- additional finance for the projects itations or country exposure of Euro- poses through Euro-markets, in the has supported has been through themarket institutions. context of a rapidly changing world sale of participations in its own loans.

It is now possible, however, to see financial environment, have inevitably In this way the Corporation has beenmore clearly the main factors that are given rise to some concern about the able to fill a gap in the financing of alikely to influence the future role and financial strength and viability of Euro- project while, at the same time, limit-development of Euro-markets. In the market institutions. In a sense, the ing its own exposure to an amount inpast, the flow of funds into the markets very freedom from controls which has keeping with the extent and use of itswas conditioned largely by changes in spurred the extraordinary growth of own resources.economic conditions and financial con- Euro-markets now begins to constrain The funds raised by the Corporationtrols in key industrial countries. Now, their further development. through the sale of participations inwith the very large resources that are The maintenance of continuing con- its loans and by way of syndicationlikely to accrue to oil-producing coun- fidence in Euro-markets, and their reached the record of $84.5 million intries, there is the prospect of a steady evolution into a more orderly and FY 74 as compared to $58.3 milliongrowth in the inflow of capital into truly international capital mnarket, in FY 73. Much of IFC's syndicationEuro-markets, provided Euro-institu- will require concerted action in certain activity occurred during 1973 whentions can offer, with security and effi- areas. These include the availability of money and capital market conditionsciency, the financial and investment reliable information on the market's were still generally favorable in termsservices that will be required. operations and exposure. Such infor- of lending to developing countries.

Euro-markets are not likely to lack mation is essential, not only to achieve The subsequent and growing liquidityborrowers, from developing and de- the financial coordination envisaged squeeze during 1974 has led to in-veloped countries, able to make pro- above, but also for purposes of day-to- creasing difficulties in syndication andductive use of funds. However, a day credit analysis and risk evaluation the sale of participations.major uncertainty now overhanging by the institutions operating in the Nevertheless, IFC has continued itsEuro-markets concerns the extent to market. Furthermore, in view of the efforts to organize investment financingwhich reliance will be placed on them growing number of institutions in the in ways that meet the constraints offor balance of payments recycling in market, and the diversity in their size existing market conditions as well asaddition to genuine investment financ- and operations, there may now be a the requirements of the borrowers. Ining. For the Euro-markets to perform need for some refinancing or "last a few cases, for example, IFC has beentheir function of financial mediation resort" facilities which might be avail- able to secure additional financing atefficiently, and in an orderly manner, able to Euro-institutions in times of a floating interest rate while providingit will be necessary to devise ways of financial crisis. Finally, the formulation its own financing on a fixed interestachieving some coordination of bor- of some liquidity standards for Euro- rate basis, and on terms which makerowing-both for investment and bal- market institutions, whether through the total financial package match theance of payments purposes-wvith the self-regulation or otherwise, may be borrowers' requirements.inflow of capital into the market. In the expected to strengthen general confi- Although IFC's ability to secureabsence of any ovcrall surveillance and dence in the markets and their pros- finance in support of its own invest-coordination, it could prove extremely pects of sound development. ments is inevitably affected by con-difficult to prevent continuing instabil- ditions in the international moneyitv in the functioning of Eur-o-miiar-kets. The iii pact on IFC market, the Corporation is ready, sub-Developing country borrowers are ject to those conditions, to continue tolikely to be amongst those most ad- In line with its general policies, IFC devise financing patterns which are inversely affected by such instability. acts both as an investor of its own the best interests of the lending institu-

The orderly evolution of Euro- funds and as a catalyst by whiclh other tions, its bor riowers and the developingmarkets is clcarly of great importance funds, local and foreign, may be ob- countries.for the future of world trade and in- tained to support projects in whichvestment. The prospects of a massive IFC itself is investing. One of the ways Jiuly 1974

II. IFC's Year

Investments S Guatemala. Manufacturing enterprises 7Sources of Funds in IFC in Indonesia, Jordan and Spain re-

IFC's investments in FY1974 totaled Assisted Projects ceived a total of $8 million; while $6a record $203.4 million. They ex- FY 1974 million was invested in machinery pro-ceeded the figure for fiscal 1973, itself 3 ' duction in Brazil and $4.2 million ina record, by $56.7 million, and raised $8.4 |7 1 1% chemical production in Israel andthe total of the Corporation's cumula- Finland & Tunisia. Pulp and paper manufacturetive gross commitments since it was Switzerland in Kenya was supported with $2.9established in 1956 to more than ' Japan million, food and food processing in$1,000 million. i World Bank/IDA Nigeria, the Philippines and Senegal

During the year IFC made 32 in- $13.0 L1.7% | with $1.4 million, and tourism investments, in loan and equity, in 19 $40.0 5.1%j Canada Mexico with $1.2 million. Local de-developing countries. Concurrently I velopment finance companies in In-with IFC other investors, local and European donesia, Korea and Senegal receivedforeign, committed $466.9 million to $64.9 8.4% Community $1.1 million, and a capital marketthe same enterprises. Taking into ac- project in Korea $342,615.count $104.4 million to be financed by Eleven of the projects supported bycash generation, the total cost of the IFC during the year, with a total ofprojects to which these commitments $116.2 15.0% United States $36 million, were for the establishmentwere made was $774.7 million. of new enterprises, while another 20

The cumulative gross total of the ] projects, which received a total ofCorporation's investments since 1956 . $166.8 million, were for the expan-is now $1,049.1 million in 225 enter- sion and modernization of existingprises in 54 developing countries, in l concerns.which others had concurrently invested Of the total $203.4 million com-approximately $3,943 million. Of the mitted by IFC during the year, $131.7cumulative total of the Corporation's . $203.4 26.3% IFC million went to eight projects in Latininvestments, $684.4 million, or about America and the Caribbean, $39.365 per cent, has been committed in the million to five projects in Europe,last five years. $18.6 million to ten projects in Asia,

$9.2 million to three projects in thei Middle East, and $4 million to five

Distribution of Investments projects in Africa.Of the cumulative gross total of

During the year IFC for the first time $1,049.1 million of IFC investments,made investments in the Dominican $465 million (44.3 per cent) haveRepublic, Israel and Jordan. Of the been made in Latin America and theCorporation's total investments during Caribbean, $251.5 million (24 perthe year, $84.4 million was committed cent) in Asia, $173.6 million (16.5in support of steel projects in Brazil, $325.8 42.0% Developing per cent) in Europe, $108 millionIran, the Philippines, Turkey and Countries 0.3 per cent) in Africa and $50 mil-Yugoslavia; $52.9 million for textile lion (4.8 per cent) in the Middle East.production in Brazil, Colombia, Indo-nesia, the Philippines and Turkey;$25.4 million for the production of ; Associated Investorscement in Colombia, the DominicanRepublic, Indonesia and Yugoslavia; Other investors in enterprises assistedand $15 million for a nickel mine in by IFC in fiscal 1974 included 57

8 business firms and government agen- Sales of Investments included capital gains of $4 million.cies and 59 financial institutions. Of Contributing significantly to these re-these, 67 were in developing countries, Sales by IFC of its loans, by way of sults were transactions involving sevenwhich provided $221.4 million, 49 participations, and of equity invest- development finance companies withwere in developed countries, which ments from the Corporation's port- which IFC has been associated as acontributed $232.5 million, and folio, again reached record levels in shareholder for several years. With$104.4 million will come from internal fiscal 1974. Sales of loans amounted respect to ten other companies, IFCcash generation. to $84.2 million and of equity invest- helped to broaden local ownership

ments to $7.6 million, a total of $91.8 through sales from its portfolio to localmillion. investors; a similar result was achieved

The figure for sales of loans re- in some of the cases in which the en-flected IFC's expanded cooperation tire IFC holding in another six com-with other financial institutions in pro- panies was sold out.viding for the financial needs of proj- Sales during the year brought cumu-

The individual reports on the projects ects in developing countries-for lative net sales, including the acquisi-supported by IFC during the year instance, the placement with five finan- tion by others of $33.7 million of(pp. 17 to 29) show in detail how the cial institutions of a major portion of a securities covered by standby andCorporation has continued to assist $60 million IFC loan to finance a steel underwriting commitments, to $352.9the private sector in the developing project in Brazil. In spite of growing million.countries, particularly by strengthen- uncertainty in the money markets, aing local ownership and through sup- relatively large portion of the financingporting joint ventures between local arranged by IFC from others was at Capital Marketsand foreign capital. fixed rates of interest.

Of the projects supported by IFC Equity sales from IFC's portfolio The purpose of the Capital Marketsduring the year, 10 in Brazil, also reflected the broadening scope of Department is to support IFC's devel-Colombia, Iran, Israel, Mexico, the IFC's eforts to revole its equity port- oping member countries in their effortsPhilippines, Tunisia, Turkey and folio. Sales proceeds of $11.3 million to strengthen their financial sectors soYugoslavia, were wholly locally- as to mobilize domestic capital forowned. Another 19 were joint ventures investment, achieve a more efficientbetween investors in developing and - - -l allocation of capital to productive en-developed countries. They were lo- Sales by years 100 i terprises and broaden the base of cor-cated in Spain and Yugoslavia in MillionsofU.S.Dollars porate ownership. The DepartmentEurope; Brazil, Colombia, the Do- provides policy advice and technicalminican Republic, and Guatemala in assistance to member governments andLatin America; Indonesia, Korea and 75 helps to establish and support financialthe Philippines in Asia; Kenya, Nigeria institutions and markets. The year'sand Senegal in Africa; and Jordan in activities reflected various aspects ofthe Middle East. Foreign partners in 50 this work.those enterprises came from eight de- In Indonesia, the Department suc-veloped countries, Canada, France, cessfully completed the major phase ofthe Federal Republic of Germany, a program carried out for the country'sJapan, the Netherlands, Switzerland, 25 1 financial authorities; it included athe United Kingdom and the United I comprehensive review of the bankingStates. There were also two joint ven- sector, in particular the state-ownedtures between investors in developing l commercial banks. A joint IFC/Indo-countries themselves, India and Indo- o nesian technical team prepared fornesia in a project in Indonesia, and In- '70 '71 '72 73 '74 each bank's management a program todia and Nigeria in a project in Nigeria. _ _ _ _ _j strengthen financial and operational

procedures, with a particular focus on oped indigenous private entrepreneur- Financial Sunmmary 9accounting, credit and management ial class and local capital resources, or : __

reporting systems. because public sector initiative hasElsewhere in Asia, the Department been predominant, private industrial Cumulative Commitments

undertook, at the request of the Korean investment has not made a significant Commitments by IFC in fiscal yearMinistry of Finance, an analysis of contribution to development. 1974 of $203.4 million brought cumu-possible approaches to the creation of In reinforcing the promotional ac- lative gross commitments by the Cor-a Capital Markets Development Fund tivities of the Corporation's regional poration since it began business inas a means of further strengthening the investment departments, the Office of 1956 to $1,049.1 million, as men-local capital market. In Thailand ad- Investment Promotion has concen- tioned on p. 7. Cumulative net com-vice was given in the development of trated on the earliest stages of project mitments, taking into accountan accounting training program. development-the definition of invest- cancellations, terminations and write-

The Department also provided tech- ment opportunities and the provision offs, increased during the year fromnical assistance in varying forms to of assistance to local and foreign en- $792.2 million to $986.1 million.countries in the Middle East, Latin trepreneurs, as well as to state-ownedAmerica and Europe. A financial sec- corporations, from the conception oftor analysis, as a basis for strengthen- a project to the point at which it can be Portfolioing the domestic financial market, was appraised in detail. At the close of the fiscal year the Cor-completed for the Lebanese author- The usual pattern of operation is poration's investment portfolioities. In Brazil, IFC staff contributed for a preliminary study at headquarters amounted to $768.0 million of whichto discussions on possible legislation to be followed by a mission to a se- $217.7 million was held for the ac-for development of the corporate bond lected country. There the mission talks count of participants in IFC invest-market, and in Colombia on official to the government, and to local and ments and $550.3 million for IFC'spolicy and regulations relating to the foreign banks and entrepreneurs, to account. This latter amount consistedsavings and loan system and the pos- determine more clearly the possibilities of loans aggregating $422.4 millionsible introduction of private mortgage for acceptable projects likely to con- and equity investments of $127.9 mil-insurance companies. In Venezuela, tribute both to the country's economic lion, of which loans of $262.2 millionthe Department assisted in designing development and the growth of the and equity investments of $101.6 mil-the organization and operations of a local private sector. For instance, in lion, for a total of $363.8 million, weresecondary market liquidity mechanism a country where mining is a principal disbursed and outstanding. A year ear-for corporate bonds and debentures, economic activity, there may be oppor- lier the disbursed portfolio held by IFCand, in Ecuador, took part in discus- tunities for establishing ancillary in- amounted to $189.8 million in loanssions on the better utilization of gov- dustries. Parallel with such discussions, and $93.9 million in equity invest-ernment savings in support of private contact is made, in Europe, North ments for a total of $283.7 million.enterprise. America and Japan, with companies

already active in those countries under Disblirsementsreview.

In its first year the activities of the Disbursements during the fiscal yearInvestment Promotion office have primarily been related to for IFC's and participants' accounts

four countries in Africa. A series of amounted to $162.5 million, bringingIn 1973, as announced in last year's missions has been undertaken to cumulative disbursements to $675.2Report, IFC created a new department Cameroon, Malagasy Republic, Zaire million.with special responsibility for promot- and Zambia. Other exploratory mis-ing projects from their conception, sions have visited three countries inparticularly in the Corporation's least South America, Colombia, Ecuadordeveloped member countries. Such and Peru. As a result, a number of As set forth in Note A to the financialcountries include those where, because projects are now under consideration statements, during fiscal year 1974of the absence of a sufficiently devel- for financing by IFC. IFC adopted the policy of directly

10 charging income with a provision for Capital and Reserves cent at the end of fiscal 1973. Theselosses on investments. Net income in returns reflect dividends, interest andprevious years had been reported be- As a consequence of the change in ac- other charges, gains and losses on salesfore such provision and had been al- counting policy referred to above, the of portions of investments, and miscel-located in its entirety to a Reserve cumulative earnings of the Corpora- laneous charges and credits.Against Losses. tion, amounting to $65.3 million at

IFC's total operating income in fis- June 30, 1974, have been transferredcal year 1974 was $26.2 million, con- to surplus and allocated to a Generalsisting of $21.5 million of interest and Reserve. The total Capital and Gen- Organizationcommitment charges on loans and eral Reserve of the Corporationother income and $4.7 million of divi- amounted to $172.5 million and the Executive Vice Presidentdends and profit participations. After Reserve Agaist Losses totaled $20administrative expenses and financial million at the same date. William S. Gaud, Executive Vice Presi-charges on borrowings totaling $20.7 dent of the Corporation, will retire onmillion, income from operations August 31,1974. He will be succeededamounted to $5.5 million. Net income, Return on Investments by Ladislaus von Hoffmann, now Viceincluding gains on sales of investments At June 30, 1974, the average annual President.of $4 million, and after deducting a return on equity investments held by Mr. Gaud became Executive Viceprovision for losses on investments of the Corporation over their present life President of IFC on October 1, 1969.$3.6 million, amounted to $5.9 mil- was 7.93 per cent and the similar re- He had previously served in the U.S.lion. Net income for the previous year, turn on loans was 9.16 per cent. This Agency for International Developmentrestated on the same basis, amounted resulted in an average annual return of for eight years-first as Assistant Ad-to $4.2 million. 8.69 per cent, compared to 8.51 per ministrator for the Near East and South

Asia, then as Deputy Administratorand finally as Administrator.

Mr. von Hoffmann, a German na-tional, was engaged in German indus-try before he joined IFC in 1960. He

Five-year Summary-Fiscal years 1970-74 became Director of the then Depart-Thousands of United States dollars ment of Investments for Africa, Asia

and the Middle East in 1965 and Vice1970 1971 1972 1973 1974 President five years later, in 1970.

Gross commitments by Consequent upon Mr. von Hoff-years........... 111,853 101,435 115,649 146,741 203,404 mann's appointment as Executive Vice

President, Mr. Moeen Qureshi, a Pak-Gross commitments, istan national, will become Vice Presi-

cumulative() ............. 476,518 577,815 693,761 848,082 1,049,082 dent. Mr. Qureshi has been EconomicProject costs by years ....... 492,746 433,508 688,536 480,700 774,734 Adviser to the Corporation since 1970.Total project costs,

cumulative(2) ............. 2,609,189 3,042,697 3,731,233 4,211,933 4,986,667 IFC in EasternAfricaSales .................. 18,888 14,236 39,754 64,985 91,845Operating Income .......... 15,388 14,656 18,302 19,644 26,205 To facilitate the identification and de-Net income(3) .............. 6,896 3,271 6,036 4,167 5,938 velopment of new projects for possi-

ble support by IFC, and to strengthen-the Corporation's relations with the

(t) Includes exchange adjustments to prior years' commitments. bses s comn ty ond ge e2) Total new investment financed by IFC and from other sources in assisted enterprises. in Eastern Africa, I gC has appointed a(3) In accordance with changes in IFC's accounting policy, net income for 1970-73 has been restated, rerntAtive to brsidentinte

to reflect direct charges to income of provision for losses. representative to be resident in the

region, based in Nairobi. Michael IFC's international advisory panel A.G., Frankfurt; Sohei Nakayama, lDixon, a U.S. national, will take up met with the Corporation's officers and Counsellor, The Industrial Bank ofthis post in October. management twice during the year, in Japan, Ltd., Tokyo; Sir Eric Roll,

London in October 1973, and in Paris K.C.M.G., C.B., Deputy Chairman,Stafj in June 1974, to discuss IFC activities S. G. Warburg & Co., Ltd., London;

and policies. Members of the panel and Robert V. Roosa, Brown BrothersAt June 30, 1974, the staff of the arc: J. R. M. van den Brink, Manag- Harriman & Co., New York.Corporation numbered 203, including ing Director, Amsterdam-Rotterdamnationals of 38 countries. The com- Bank, N.V., Amsterdam; Jacques deparative figures at June 30, 1973, were Fouchier, President and Director Gen- Membership186 and 31. eral, Banque de Paris et des Pays-

Bas, S.A., Paris; Dr. Wilfried Guth, Western Samoa became the 99th mem-[S El E Managing Director, Deutsche Bank, ber of the Corporation during the year.

III. IFC-1970-1974

12 From tine to time the IFC Annual -Report has included a review of theCorporation's past activities. At this Fiscal years 1970-1974point it is appropriate to look back Millions of US. Dollarsat IFC's record during the last fiveyears, a period which has seen afurther distinct stage in the evolutionof the Corporation's activities andorganization.

Some illustrative figures are rele- Gross commitments 220 Gross commitments 1,050vant. For instance, as of June 1969, by years cumulativeafter 14 years of operations, IFC hadmade total gross commitments of 190 900$364.7 million to 131 enterprises in 39developing countries to which otherinvestors had committed a total of$1,752 million. Today the compara- 160 750ble figures are, as mentioned on p. 7,total gross commitments by the Cor-poration of $1,049.1 million to 225 l enterprises in 54 countries, in which 130 600others have invested a total of $3,943million. In other words, the numberof companies in which IFC invested 100 450increased by 72 per cent, the cumula- '_ '71 '72 '73 '74 '70 '71 '72 '73 '74tive total of the Corporation's invest-ments about trebled, and the totalamount committed by other investorsmore than doubled. Concurrently, thetotal amount realized by IFC from Other investors 600 Other investors 4,000sales of its own investments, by way of by years cumulativeparticipations and from its portfolio,during the same period nearly trebled 450 3,500from $123.2 million to $352.9 million.

These figures reflect both trends inprivate investment in the developingworld and expansion and innovation in 300 3,000IFC's own activities.

The broad trend in private invest-ment in the five years under reviewhas been upward, and, allowing for 150 2,500inflationary pressures on costs, theaverage investment project has be-come larger-with a consequent in- 0 2,000crease in the size of the average IFC '70 '71 '72 '73 '74 '70 '71 '72 '73 '74commitment.

As regards IFC itself, the record forthe period shows an expansion of the

Corporation's efforts to strengthen finance for projects which otherwise was the creation of a Business Rela- 13local ownership in private enterprise either might have had difficulty in ob- tions Unit to contribute to a betterin its developing member countries, taining it, or might not have obtained knowledge of IFC in the financial andand in the support of joint ventures it at all. business community. IFC has longbetween local and foreign investors. Expansion and innovation have also maintained its own representatives in

As IFC has sought to pursue these been characteristic of the Corpora- Europe and in Japan, and, during theobjectives in a growing number of tion's organization during the period. last five years, it has taken additionalcountries it has increasingly provided In 1970, the Office of Economic Ad- steps in the direction of regional rep-finance as a lender. A consequence has viser was established to provide IFC resentation by locating a member of itsbeen a considerable rise in the propor- with better internal resources for its own staff in Indonesia and, more re-tion of IFC's commitments made in role as a development institution. A cently, in Africa.the form of loans, which the Corpora- Capital Markets Department was es- Such a broadening of IFC's base oftion has been able to provide through tablished in 1971 to act for the World operation helps to explain the recentits ability to borrow from the World Bank Group in improving capital and growth of the Corporation's business.Bank. Most recently, a combination of money markets in developing member It shows, no less, that despite currentthe need of large projects for consider- countries. In 1973, an Office of In- difficulties and uncertainties, IFC canable loans, and of the need for IFC to vestment Promotion was set up to continue to support the private sectorlimit its own commitment to any one concentrate upon the promotion of in its developing member countries,project, has led the Corporation to ex- new projects-initially in Africa and not only in the ways envisaged whenpand its cooperation with other finan- in some South American countries- it was estab]ished in 1956, but also incial institutions. In this way IFC has which might become suitable for fi- other ways which have since evolvedbeen able to facilitate the provision of nancing by IFC. A related innovation and which will continue to evolve.

nriD

IV. The Year's Investments

Summary14 Total Project

Loan Equity IFC Cost

BrazilCompanhia Siderurgica da Guanabara (COSIGUA) (steel)

(second commitment) ....................................... $ 60,000,000 S 4,500,000 $ 64,500,000 $123,000,000Fabrica de Tecidos Tatuape S.A. (textiles) ....................... 31,000,000 - 31,000,000 53,000,000Industrias Villares S.A. (machinery) ............................. 6,000,000 - 6,000,000 20,257,000

ColombiaEnka de Colombia, S.A. (textiles) (third commitment) ............. 4,000,000 1,077,729 5,077,729 14,306,000Cementos Boyaca, S.A. (cement) ............................... 1,500,000 - 1,500,000 7,061,000

Dominican RepublicCementos Nacionales, S.A. (cement) ............................ 6,000,000 1,380,000 7,380,000 34,500,000

GuatemalaExploraciones y Explotaciones Mineras Izabal, S.A.

(nickel mining) ............................................. 15,000,000 - 15,000,000 100,000,000

IndonesiaP.T. Semen Cibinong (cement) (third commitment) ............... 5,000,000 1,522,540 6,522,540 29,899,000P.T. Kamaltex (textiles) ....................................... 2,400,000 600,000 3,000,000 7,500,000P.T. Primatexco Indonesia (textiles) (second commitment) ......... 2,000,000 300,578 2,300,578 6,840,000P.T. Monsanto Pan Electronics (manufacturing) .................. 900,000 - 900,000 3,316,000P.T. Private Development Finance Company of

Indonesia (DFC) ............................................ - 483,092 483,092 20,983,000

IranSherkate Sahami Aam Navard va Luleh Ahwaz (steel)

(second commitment) ....................................... 3,500,000 364,444 3,864,444 21,084,000

IsraelMakhteshim Chemical Works, Ltd. (chemicals) ................... 1,750,000 1,750,000 3,500,000 18,400,000

JordanJordan Ceramic Industries Company, Ltd. (manufacturing) ........ 1,600,000 221,522 1,821,522 7,192,000

KenyaPanafrican Paper Mills (E.A.), Limited (pulp and paper)

(second commitment) ....................................... 1,300,000 1,593,993 2,893,993 14,272,000

KoreaKorea Development Finance Corporation (DFC)

(second commitment) ....................................... - 356,207 356,207 2,481,000

Total Project 1 5Loan Equity IFC Cost

Korea (conitinued)

Korea Investment and Finance Corporation (capital markets)(second commitment) ....................................... - 342,615 S 342,615 S 343,000

Malaysia*Malaysia Industrial Development Finance, Berhad (DFC)

(second commitment) ........................................- 632.175 632,175 632,000

MexicoCancun Aristos Hotel (tourism) ................................ 976,000 264,000 1,240,000 4,960,000

NigeriaLafiagi Sugar Estate (food and food processing) .................. - 119,148 119,148 1,121,000

PhilippinesMaria Cristina Chemical Industries, Inc. (steel) ................... 1,550.000 458.027 2,008,027 4,667,000Filipinas Synthetic Fiber Corporation (textiles) ................... 1,500,000 - 1,500,000 7,459,000RFM Corporation (food and food processing) ................... 1,200.000 - 1,200,000 4,003,000

SenegalSociete Financiere Senegalaise pour le Developpement

Industriel et Touristique (DFC) ....... ....................... - 207.000 207,000 5,517,000Bud/Senegal, S.A. (food and food processing)

(second commitment) ....................................... - 124,224 124,224 1,680,000

SpainIndustrias de Tableros y Derivados de la Madera, S.A.

(manufacturing) ................. ........................... 4.386,000 846,812 5,232,812 17,868,000

TunisiaIndustries Chimiques du Fluor, S.A. (chemicals) .................. - 648,000 648,000 13,800,000

TurkeyAksa Akrilik Kimya Sanayii A.S. (textiles) ....................... 10,000,000 - 10,000,000 51,785,000Borusain Gemlik Boru Tesisleri A.S. (steel) ....................... 3,600,000 450,001 4,050,001 10,408,000

YugoslaviaZP Slovenske Zelezarne Zelezarna Jesenice (steel) ................. 10,000,000 - 10,000,000 96,300,000Salonit Anhovo Industrija Gradbenega Materiala (cement) ......... 10,000,000 - 10,000,000 70,100,000

TOTAL ................................................. $185,162,000 $18,242,107 $203,404,107 $774,734,000

'Exercise of rights to subscription to shares subsequently sold.

16

Commitments by Types of Business/1974M Irons of U S Dollars

Iron & Steel 84.4

Textiles & Fibers 52.9

Cement & Other 25 4Construction Materials 2

Mnng 150

General 8.0Manufacturing

Machinery 6 6.0

Chemical &Petrochemical Products W 4.2

Pulp & PaperProducts W 29

Food & Food 1 4Processing

Tourism 1.2

Development Financing 1

Money & Capital 0 .3Markets

20 00 ~~~~~~~~~60 00

The following project reports arearranged in the order of industrialsectors set out in the chart on p. 16,and, within each sector, in the orderof size of the IFC commitment.

All figures in these reports are in U.S.dollars unless otherwise stated.

Steel production facilities to help satisfy Iran 17growing domestic demand and ease the Sherkate Sahami Aam Navard vaneed for imports. Luleh AhwazBrazil Loans totaling $51.9 million were

Companhia Siderurgica da made by the Export-Import Bank A $3.9 million commitment was madeGuanabara (COSIGUA) of the United States; a U.S. in support of a $21.1 million project toIFC made a second investment of commercial bank; an international double the capacity and diversify theIFC made a seond investme of syndicate of banks, composed of output of Sherkate Sahami Aam$64-.5 million in this companyconsisting of a loan of $60 million French, German and U.S. institutions; Navard va Luleh Ahwaz (Ahwazand an equity subscription of $4.5 IFC and suppliers. The major part of Rolling and Pipe Mills), a locally-million. Two European and three U.S. the $44.4 million equity for the project owned Iranian steel company whichbanking institutions participated in was provided by the Company. Other IFC helped to establish in 1968.the IFC loan, investors included Armco Steel The commitment consisted of aOther loan capital investors included ACorporation of the United States, the $3.5 million loan, $284,444 in equitymillion was provided by suppliers in technical partner, and several U.S. and $80,000 for contingencies. Themurope and the United States. equipment suppliers. balance of the financing was composedEurope an the Ungit Stat The project consists of the of $4.1 million in equity, cashAdditional financing included anequity capital subscription of $40.5 construction of a new special steels generation of $4 million, a $6 millioncold rolling mill, adjacent to the loan from the Industrial and Miningmillion by existing COSIGUA share- Company's existing facilities in Development Bank of Iran, and $3.2holders, who are the Brazilian northern Yugoslavia, with an annual million in suppliers' credits.Gerdau Group and August Thyssen capacity of 1 15,000 metric tons. The project will double theHuette AG of Germany. Cash Company's hot rolled steel stripgeneration accounts for the remaining capacity to 280,000 metric tons, pipe$ 10 million. The total cost of the Turkev production to 80,000 metric tons andexpansion project was estimated at Borusan Gemlik Boru Tesisleri pipe galvanizing to 60,000 metric tons.$123 million. A.S. It will also add facilities for producing

The new investment was to helpCOSIGUA double the production IFC invested $4 million, consisting of other specialized steel products.capacity of its existing plant near Rio a $3.6 million loan and $450,000 in Foreign exchange savings over the nextde Janeiro, which was established equity, in a $10.4 million project to 1 5 years are estimated at $44 million.with the help of an earlier IFC establish a 130,000 metric tons a yearinvestment of $9 million made in plant in northern Turkey to expand Philippines1972. In addition, a direct reduction and mprove steel gas and water pipe Maria Cristina Chemicalplant will be built, introducing a new poutn.MaiCrsiahecltechnology to Brazil. The sponsor of the project, Borusan Industries, Inc.

Boru Sanayii A.S., and other private Approximately $2 million, includingTurkish investors provided the balance a $1.55 million loan and $458,027 in

Yugoslavia of the $4.3 million equity, and local equity, was invested in this companyZP Slovenske Zelezarne Zelezarna private banks supplied the remainder to help finance a $4.7 million electricJesenice of the $6.1 million loan financing. arc furnace that will double productive

The project will meet rising domestic capacity by producing some 21,000A $ 10 million loan was made to a demand. It will also contribute to metric tons of ferroalloys a year.$96.3 million project establishing foreign exchange earnings by making Equity totaling $505,000 wasYugoslavia's first special steels available high quality pipe for export. provided by the Company, private

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Philippine investors and Philippine The project, which will increase the Colombia 19financial institutions. The Private labor force by 720, consists of theDevelopment Corporation of the building and operation of a new mill in Enka de Colombia, S.A.Philippines made a $1.6 million loan. a new location designed to meet A third IFC investment in this leadingCash generation of $536.000 rapidly growing domestic demand, , synthetic fiber manufacturer was madecompleted the financing. particularly for durable cotton fabric to help finance an expansion of the

The project, located in a depressed for popularly-priced garments. High Company's facilities near Medellin, thearea on the island of Mindanao, will priority has been assigned by the total cost of which has been estimatedbe supplied by more than 2,000 new Government to the expansion and at $14.2 million. IFC's investmentbackyard charcoal makers who are modernization of the textile industry, consisted of a loan of $4 milion andexpected to earn well over twice the a significant source of employment. an equity subscription of aboutaverage annual family income in the $971,200.region. It also will use other locally- Turkey Other equity financing totaling $5available raw materials and hydro- million was to be subscribed byelectric power, thus permitting A ksa A krilik Kimya Sanayii A .S. existing and new shareholders, and aproduction for world markets atcompettiive costs Proet an .u. l A loan of $10 million helped this loan of $1 .2 million was provided by

net foreign exchange benefits were synthetic fiber manufacturer to finance Corporaci6n Financiera Nacional.estimated at $4 million, partly through a $51.8 million expansion. Cash generation in the amount of $3exports and partly through import Further loan capital of $10.7 million completed the financing.substitution. In addition, ownership of million was provided by Turkiye Is Established in 1964, Enka is thethe Company is being broadened by Bankasi, a major commercial local largest and most diversified syntheticincluding greater employee bank, and $9.9 million came from fiber manufacturer in Colombia. Itsparticipation in the equity. other lenders. Equity capital totaling technical partner is AKZO, N. V., of

$21.2 million will be obtained from an the Netherlands. Local partnersincrease in the share capital and from include four major local textile

Textiles cash generation. manufacturers which are importantTichgeneraCiompany.wasformedin customers of Enka, and two financingThe Company was formed in 1968 institutions-Corporaci6n Financiera

Brazil by four Turkish textile companies as a Nacional and Corporaci6n FinancieraFa'brica de Tecidos Tatuape S.A. means of backward integration to de Caldas-which have also been

Fdbricade Tecios Tatup~ S.A. ensure a regular supply of acr-ylic fiber assisted by IFC.

A loan of $31 million was made to for spinning, knitting and weaving. Duristhe y IFC.support a $53 million expansion of The other shareholders are Turkiye Is During the year IFC also received,Tatuap6 S.A., a company of the Bankasi A.S., Turkiye Sinai Kalkinma Corporation's earlier investment,Brazilian Santista industrial group. Bankasi A.S., a development finance 258,545 shares in the Company of

Participants in the loan with IFC company which IFC has supported, an shate value of ofwere one Canadian bank and two U.S. and about 200 local private investors.banks. Cash generation and financing The additional facilities, adjacent tofor the purchase of equipment the existing plant located near Indonesiaaccounted for the balance of the total Istanbul, will increase annual P. T. Kamaltexcost. production to 25,000 metric tons of

The Company operates two plants acrylic fiber, primarily for domestic A $3 million investment, consisting ofin the greater Sio Paulo area and consumption and in substitution a $2.4 million loan and $600,000 inemploys 2,670 people. of imports. equity, was made in an Indonesian

20 textile project in which both the federation, and three Japanese firms, the principal domestic shareholder.sponsor and the principal equipment Daiwa Spinning Co., Ltd., Nichimen Teijin Co., Ltd., of Japan, a majorsupplier were companies from India. Co., Ltd., and Yamatogawa Dyeing polyester fiber producer and Filipinas

The balance of the $3 million equity Works, Ltd. Together they invested Synthetic Fiber Corporation'sfinancing for this new company, approximately $2 million in the technical partner, is the principalestablished to build a $7.5 million, expansion, while Daiwa and Nichimen foreign shareholder.20,160 spindle spinning mill in Central made loans amounting to $1.3 million. The project will make the enterpriseJava, came from Karamchand Internal cash generation completed a more competitive polyesterPremchand Private, Ltd., of the the financing. producer, add to the Philippines'Sarabhai Group, a leading industrial The project will expand the mill's domestic sources of yarn for the textilehouse in India; the Private Investment annual capacity by 4.1 million meters industry, and generate an estimatedCompany for Asia (PICA), S.A.; P. T. of broadcloth and 680 metric tons of $1.7 million a year in net foreignIndonesian Investment International, cotton yarn, add mercerizing and exchange savings.and Mr. Machdi, an Indonesian sanforizing equipment, and provideindustrialist and businessman. The working capital. It is expected to resultbalance of the $4.5 million loan in net foreign exchange savings of Cem ntfinancing was provided by PICA more than $2 million a year. eand by Asia Pacific CapitalCorporation, Ltd. Yuigoslavia

Lakshmi Machine Works, Ltd., an Philippines Salonit Anhovo IndustrijaIndian company which IFC helped tofinance a decade ago, supplied a Filipinas Synthetic Fiber Gradbenega Materialasubstantial part of the equipment. Corporation A loan of $ 10 million helped thisThe Sarabhai Group is providing A $7.5 million project to double producer of cement and asbestostechnical, management and training filament yarn production to 4,270 cement to finance a $70.1 millionsupport for the mill, which has a rated metric tons a year was assisted by cement expansion project.capacity of 1,600 metric tons of a $1.5 million IFC loan. Other loan capital totaling $49.1polyester-cotton blended yarn a year. The balance of the project financing million was provided as follows: $19.6

consisted of new equity subscriptions million by foreign suppliers' credits,by existing shareholders totaling $12.7 million by local banks, $7.1

Indonesia approximately $1.3 million, cash million by local suppliers' credits and

P.T. Primatexco Indonesia generation of $176,000, suppliers' $9.7 million by customers and othercredits of $559,000 and loans local sources. Cash generation

A second investment, consisting of a amounted to $3.9 million. It was accounted for the remaining $11$2 million loan and $300,578 in provided by the Private Investment million.equity, was made in P. T. Primnatexco Company for Asia (PICA), S.A., and Banks in Australia, Canada,Indonesia, an integrated textile mill by the Private Development Germany and the United Stateswhich IFC helped to establish in 1971 Corporation of the Philippines, a participated in the IFC loan. Most ofand which was completed ahead of development finance company which the local bank financing was providedschedule and below the estimated cost. IFC and the World Bank helped to by Ljubljanska Banka, Ljubljana.

Sponsors of the original project and organize and finance in 1963. The Company is an importantof the new $6.8 million expansion were The Company is 60 per cent regional cement producer in Slovenia,Gabungan Koperasi Batik Indonesia, Philippine owned, with Lepanto and one of the largest Yugoslavan Indonesian batik cooperatives' Consolidated Mining Corporation as manufacturers of asbestos cement

1974 YUGOSLAVIASalonit Anhovo IndustrijaGradbenega Materiala-cement

products. The purpose of the project 21was to construct and operate a newcement plant with a productioncapacity of 850,000 metric tonsannually. Yugoslavia has been a netimporter of cement during the lastten years and is seeking to meet risinglocal demand by an expansion ofdomestic production.

Domiinican Republic

J w Z tt 9 ' t t' | IlilpCementos Nacionales, S.A.

#41 r /A first commitment in the DominicanRepublic, of $7.4 million, was madeto support the building of a $3 34.5mnillion cement plant.

The IFC investment consisted ofa $6 million loan, an equitysubscription of $1.2 million and a

i contingent commitment of $180,000.Other loan capital totaling $16.5

million was provided by the Export-Import Bank of the United States, twoU.S. banks and a local Dominicanbank. The balance of the $10.8 millionequity capital was subscribed byCorporaci6n Dominicana de EmpresasEstatales, a government-owned

-r4,< ; . corporation for investments inindustrial and commercial enterprises;Corporaci6n Financiera Asociada,S.A., a local private development

d banking institution; other local private~~~ ~ investors, and Gulf and Western

Industries, Inc.The new plant, with a production

~~~~~ ~~~~capacity of 5 10,000 metric tons ayear using the dry process, will supplyabout 50 per cent of the expected localconsumption of cement; this hasbeen increasing at an average annual

.~~~> ~~~.. ~~~~ rate of 8.6 per cent over the past~~~~~~~~~~ ~ ~ ~ ~ ~ ~ --- 20 years.

22 Indonesia The Company, an important shares of its capital stock.cement manufacturer in the central The project is expected to have a

P. T. Semen Cibinong zone of Colombia, which includes the significant impact on the GuatemalanA $6.5 million investment, of which Bogota area, is currently producing economy-by strengthening the$5 million was in loan and $1 .5 million and selling at full capacity of 360,000 country's balance of paymentsin equity, helped to finance a project metric tons a year. The project is position, by providing employment into double the production capacity, to aimed at expanding annual production a new industry, and by the likely1.2 million metric tons a year, of this to 520,000 metric tons to help meet emergence of ancillary industries andWest Java cement company which rising local demand. related commercial enterprises in aIFC helped to establish in 1971. remote and as yet undeveloped area.

Two other sponsors of the originalproject provided $9.9 million in equityand arranged a loan of $12.1 million Miningfrom commercial banks for the $29.9 Manufacturigmillion expansion. They were Kaiser Guatem alaCement & Gypsum Corporation, E.l Elta Spainthrough its wholly-owned subsidiary, Mineras Izabal, S.A. Industrias de Tableros y DerivadosGypsum Carrier, Inc., and P. T. deIabalS. la IndustiasderTablers ySemen Gresik, a major Indonesian A loan of $15 million helped to de la Madera, S.A.cement producer. Cash generation of complete the financial arrangements A commitment of $5.2 million was$1.4 million from existing operations for a $1 00 million nickel mining and made to a $17.9 million project, incompleted the financing. processing project. The project, in one of the less developed areas in

The project, which is expected to eastern Guatemala, had been under Spain, to manufacture mediumresult in net foreign exchange savings consideration for several years by the density fiberboard.of approximately $6.9 million a year, Guatemalan Government, various The Company's major shareholderalso aims at increasing competition financial institutions and the sponsor, is Industrias del Papel y de la Celulosa,among domestic cement companies. International Nickel Company of S.A., Spain's largest manufacturer of

Canada, Ltd. kraft linerboard. Other shareholdersColomi bia Other financing included a loan of include the Caja de Ahorros y Monte

Cementos Boyaci, SA. $6 million from the Central American de Piedad deZaragoza, Arag6nyRioja,Bank for Economic Integration one of Spain's largest savings banks,

A $7.1 million expansion of this (CABEI), and about $49 million of and Comptoir IndustrieletCommercialcompany was assisted by a loan Canadian, U.K. and U.S. export France-Allemagne, S.A., the Frenchof $1.5 million. credits and a U.K. bank loan. The technical partner, and various

Other loan capital, of $1.5 million, remaining $30 million was provided commercial interests intheTeruel area.was provided by local banks. The by the sponsor in the form of equity. IFC's commitment consisted of aremaining $4.1 million came from the Agreements with the Government $4.4 million loan, $653,812 in equityCompany's own resources. of Guatemala include provision for and a contingency commitment of up

Cementos Boyaca is owned 51 per the Government to acquire gradually, to $193,000. Other loan funds ofcent by several Colombian companies., during the first 1 0 years of production, $6.9 million were provided by thegovernment agencies and individual 30 per cent of the Company's initial Caja de Ahorros y Monte de Piedadinvestors. The balance of the share share capital now held by the sponsor. de Zaragoza, Arag6n y Rioja, and bycapital is controlled by Holderbank The Company will also issue to IFC Spanish and French suppliers.of Switzerland. and to CABEI warrants to purchase Additional equity of $5.9 million was

1967, 1970, 1974 COLOMBIAEnka de Colombia, S.A.-textiles

23

iwz<-

4 0

v ~ ~~' __ __a,_X #

t t % ; % % ^ ts~~R

~~~~~~~~~~~~~~~~~'w ,,A_

24 to be subscribed by the other savings and earnings amounting producer of elevators and escalatorsshareholders. to about $1.5 million a year. and a major supplier of heavy

The plant will introduce a new industrial equipment. It is the maintechnology and a new product which component of a group which includesshould improve the competitive Indonesia Acos Villares S.A., a producer ofposition of the Spanish wood products special steels in which IFC has madeindustry. P. T. Monsanto Pan Electronics three investments.

IFC provided a $900,000 loan for a Two U.S. banks participated in thenew company in Indonesia established IFC loan. Further loan capital

Jordan to produce light emitting diode amounting to $8.3 million was

Jordan Ceramic Industries devices which are used in portable provided by other financial institutionsCompany, Ltd. electronic calculators and computers and suppliers. Equity capital totaling

and have numerous other applications. $4.7 million was obtained through aA first investment in Jordan of $1.8 P. T. Monsanto Pan Electronics is new share issue, and the Company'smillion, consisting of a $1.6 million a $3.3 million joint venture sponsored own cash generation accounted for theloan and $221,522 in equity, was by Monsanto Company, of the United remaining $1.3 million.made in Jordan Ceramic Industries States, through its wholly-owned The project was designed to meetCompany, Ltd., a new company subsidiary, Chemstrand Overseas, continued growth in domestic demandestablished to manufacture 2,000 S.A., and by Mr. Bambang Trisulo, an for machinery and equipment, andmetric tons of sanitary ware and Indonesian businessman. The sponsors the Company's requirements for more4,200 metric tons of wall tiles annually. provided all of the $400,000 equity sophisticated technology.

Jordan Ceramic Industries is one and Chemstrand made a $700,000of the most widely held companies in loan. Cash generation ofJordan, with some 2,500 private approximately $1.3 million completed ChemicalsMiddle Eastern shareholders owning the financing.about three-fourths of the The plant will be located in Jakartaapproximately $2.9 million equity. and will employ about 3,000 workers. IsraelThe balance is held by IFC, the All production is for export, resulting Makhteshim Chemical Works, Ltd.Government of Jordan, and Agrob in estimated annual net foreignAnlagenbau GmbH, the technical exchange earnings exceeding $2 IFC's first investment in Israel waspartner and a wholly-owned million. made with a $3.5 million commitmentsubsidiary of one of the largest for a $18.4 million expansion ofceramic producers in the Federal Makhteshim Chemical Works, Ltd.Republic of Germany. Loans for the AMachinry The commitment consisted of $1.75project totaled $4.3 million and were ac million in loan and $1.75 millionprovided by Jordanian and U.K. banks in equity.and by IFC. A bank controlled by Brazil The balance of the $3.2 millionArab and French interests participated Induistrias Villares S.A. equity financing was supplied byin the IFC loan. Koor Industries, Ltd. and its wholly-

The $7.2 million plant will be A loan of $6 million provided part of owned subsidiary, Koor Chemicals,located near Amman. It will utilize the finance for an expansion project Ltd., Makhteshim's parent companies.locally-available clays and sell its costing some $20.3 million. The Industrial Development Bank ofproducts both domestically and abroad, Industrias Villares S.A., a locally- Israel and Koor Chemicals providedwith resulting foreign exchange owned company, is Brazil's largest the remainder of the $6.3 million loan

1974 ISRAELMakhteshim Chemical Works, Ltd.-chemicals

financing. The $8.9 million balance 25of the project cost was provided by a

gs _ ;i Government grant, cash generation5 _ 1 -and other sources.The project will expand the

*/ t__ . , ** 1 5§ _ ~~~~~~~~~~~Conmpany's pesticide production, which

11 1_ - * 21 -- _ is mainly for export, with an estimated$8 million a year increase in overseas

<- _ _ _sales and consequent net annual foreign*|* i* exchange earnings of about $4 million.&J ' < jelwj | Tunisia

Industrie,y Chimiques du~~~J K~~~~~~~ ~Fliuor S.A.

An equity investment of $648,000assisted a $13.8 million Tunisian

- \ _ pI -oject to build a 22,700 metric tonsa year aluminum fluoride plant basedlargely on domestic raw materials.

The IEFC investment was part of a$3.1 million equity anda $10.7

million loan financing for Industries

Chinmiques du Fluor, S.A., which wasYQi fz < li l911$7 * } §> Fi ~~~~~~sponsored by several Tunisian

companies and by Banque pour lerDeveloppernent Economique de laTunisie. The latter is a developmentfinance company formerly known asSociete Nationale d'lnvestissement inwhich IFC previously made twoinvestments, and which provided bothloan and equity financing for theproject. Additional equity investmentswere made by four Tunisiancompanies and various other localinvestors The Tunisian Government

p ~~~~~~~~~~~~~~~and French banks also made loansfor the project.

In addition to utilizing locally-produced fluorspar and sulphuric acid,the plant is expected to contribute tothe development of southern Tunisia

1970, 1974 KENYAPanafrican Paper Mills (E.A.), Ltd.-pulp and paper

26 and to generate about $5 million in netforeign exchange earnings a year atfull production.

Pulp and Paper

Kenya

Panafrican Paper Mills (E.A.),Limited

A second investment, of $2.9 million,was made in Panafrican Paper Mills(E.A.), Ltd., Kenya, a projectdesigned to produce pulp and paperfrom local wood, in which IFC

- ~~invested $14.7 million in 1970. Thenew investment was made to helpmeet an increase in the project costfrom an original estimate of $35million to a current estimate of $49.3million. The second IFC investmentconsisted of $1.6 million in equity and$1.3 million in loan, but as an earlier$933,000 IFC contingency commit-ment was cancelled, the net increasein the Corporation's commitment

b-t , 0 iZ 1was approximately $2 million.The balance of the additional $6.4

million in equity came from theGovernment of Kenya, the Industrialand Commerciat DevelopmentCorporation, Orient Paper Mills, Ltd.,and Barclays Overseas DevelopmentCorporation, Ltd. New loans totalingabout $3 million were provided by theIndustrial Development Bank of

enya, the East African DevelopmentBank, the Government of Kenya andIFC. Increased suppliers' credits,arranged earlier and amounting toapproximately $4.8 million, completedthe supplementary financing.

Food and CFAF 125 million to CFAF 375 plant whose production would help 27million. In addition to IFC, financing alleviate Nigeria's need for substantialFood Processing was provided by other existing sugar imports.shareholders: the Government of

Philippines Senegal; the House of Bud, S.A., aRFM Corporation European produce marketing TourismRFM_____Corporation____________ company including among itsA loan of $1.2 million was made to shareholders Bud Antle Inc., a largehelp finance this locally-owned U.S. agribusiness company, and Mexicointegrated food company's $4 million Heidemaatschappij, a prominentproject to expand and diversify into Dutch agricultural engineering firm. Cancun Aristos Hotelmeat and vegetable canning Two new shareholders also took part An important expansion of the touristand processing. in the second financing. They were industry was supported by an

Existing shareholders provided SIFIDA Investment Company, S.A., investment of $1.2 million in a$735,000 in equitv, and a loan of a regional development finance 228-room first class hotel which is$1.8 million was made by the institution for Africa, in which IFC is part of a new tourist development onPrivate Development Corporation of a shareholder, and The Netherlands the Yucatan Peninsula.the Philippines. Cash generation Finance Company for Developing The investment consisted of a loancovered the balance of the project cost. Countries. of $976,000 and an equity

The new plant, located at Cabuyao, The additional financing was to subscription of $264,000.30 miles south of Manila, and for enable Bud/Senegal to continue and Other loan funds for the hotel,which two United States food expand its pilot operations which are which is to cost approximately $5companies are providing technical showing promising results. million, were provided by a local bank,assistance, is designed to produce and the balance of the equity capital4,500 tons of processed food a year. Nigeria by local investors and by the sponsors,It is intended to help meet rapidly . . Consorcio Aristos, S.A., a Mexican-expanding domestic demand. In Lafiagi Sugar Estate owned hotel corporation, and Fondoaddition to creating new direct A $119,148 equity investment was Nacional de Fomento al Turismoemployment, it will also provide made in Lafiagi Sugar Estate, a (FONATUR), a fund established byindirect employment through promotional company formed to carry the Mexican Governmient to fostersubstantial procurement of cattle and out preliminary work for a proposed development of the tourist industry.pigs from local, small-scale farmers. sugar growing and processing project The Mexican Government has

at Lafiagi, 210 miles northeast of placed a high priority on theSenegal Lagos. The balance of the $ 1.1 million development of tourism, whichBudISenegal, S.A. share capital was provided by the accounts for over 21 per cent ofBud/Senegal, Mehta Group of India and East foreign exchange earnings. It has givenA second equity investment, of Africa, by the Federal Republic of special support to the Cancun project$124,224, was made in Bud/Senegal, Nigeria and the Kwara State because of its impact on a lessS.A., a pilot company established in Government, and by the Nigerian developed area of the country.Senegal in 1972 to undertake studies Tndustrial Development Bank. The program also includes theand experiments into the possibility The Company is to complete studies construction of an internationalof growing and exporting vegetables. and prepare a feasibility report for a airport, roads and other public

The new financing helped increase 25,000-acre sugarcane plantation facilities, first class hotels andthe Company's share capital from and a 60,000 metric tons a year sugar apartments, and the building of

1971, 1974 INDONESIAP. T. Primatexco Indonesia-textiles

28 E

w | w11, -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

houses to accommodate the more than most of the estimated foreign exchange D6veloppement Industriel et 2925,000 people expected to be living costs of the projects the Company Touristique, a new developmentin the area by 1976. will assist during its first three years finance company for promoting and

of operation. financing the establishment, expansionand modernization of Senegalese

Development Korea industrial and tourism enterprises.IFC invested $207,000 in the

Finance Korea Development Finance Company's equity. Some $1.3 millionCorporation was taken up by the Government of

I nd onesia IFC exercised its preemptive rights Senegal, the Central Bank, BanqueP. T. Private Development Finance as a shareholder in the Korea Nationale pour le D6veloppement duCompany of Indonesia Development Finance Corporation by SBnegal, Unon Senegalaise de

IFC and the International subscribing for up to 28,233 shares investors. Three banks with operationsDevelopment Association (IDA) about $356,207c in Senegal, with Caisse Centrale of

jInedtont help ia establish cribe t. PriThe purpose of the rights issue, France and Fidelity Bank ofDevelopment Finance Company of which was expected to raise about Philadelphia of the United States,Indonesia. IFC subscribed to 25milo,wstsreghnhe subscribed to the remainder of$483,092 of the Company's share $2.5 million, was to strengthen the the equity.capital and IDA provided a $ 10 provide further resources for oeThe World Bank made a loan of

mnillion credit to the Government pts operations. o$3 million.of Indonesia for relending to the The Corporation, the largest privateCompany. development finance company in Capital Markets

The balance of the $6 niillion Korea was established in 1967 andequivalent share capital was taken up K as b establis ed in 16aby leading private Indonesian has been actively supported by the Koreacompanies, the Bank Indonesia, and World Bank and IFC. The bulk of itsa group of eight foreign banks-in business has consisted of medium and Korea Investment and FinanceAustralia, Canada, France, the Federal long-term foreign exchange loans in Co.porationRepublic of Germany, Italy, Japan, the r7a nge of $2000tio $2 mill on. IFC exercised its preemptive rights as

StaeUntes-whichgthe Word Bank anitd support of IFC, sponsored the Korea a shareholder in the Korea InvestmentStats-whch te Wold ank nd Ivestentand Finance Corporation, and Finance Corporation by

IFC helped to organize. A long-term Invefistmoent maktisiuinsubscribing for up to 13,650 shares$5 million Government of Indonesia in Korea. of common stock at a cost ofloan supplemented the Company's $342,615. The additional equity wasinitial resources. needed to strengthen the Corporation's

The new Company provides finance Seniegal borrowing base in view of a rapidlyand a wide range of financial servicesfoandonwiesiang compfianciasesprvimaril Soci~ti Financi6re SMnegalaise increasing volume of. usiness.

for ndoesia copanis, rimaily polur le Developpement Industriel The Corporation, the first short-in the fields of manufacturing et Touristi term finance company in Korea, wasand processing, transport, established in 1971, with the supportcommunications, tourism and The Corporation and the World of IFC, as a combined money marketcomllmercial-scale agriculture. The Bank joined to help finance Societ6 and investment banking typeIFC and IDA financing will help meet Financiere S6negalaise pour le financial intermediary.

30

Commitments by Types of Business/1957-1974M,1 O1s of U S Dollars

Iron & Steel 153.0

Cement & Other 140.8Construction Materials

Textiles & Fibers

Pulp & Paper 119.5Products

Mining 97.

Development 80.7Finance Companies

Motor Vehicles 63.0& Accessories

Fertilizers 57.2

General 51.2Manufacturing

Chemical & 45 7Petrochemical Products

Tourism 41.8

Food & FoodProcessing

Utilities, Printing 23 5& Publishing

Machinery 14.8

MonMey & Capial6.3Markets aWI63

35 70 los 1 ao

V Financial Statements

32 Balance Sheet

34 Statement of Income

35 Statement of Changes in Financial Position

36 Statement of Loan and Equity Investments

41 Statement of Cumulative Gross Commitments

42 Notes to Financial Statements

43 Report of Independent Accountants

Balance SheetInternational Finance Corporation

June 30, 1974 and June 30, 1973

Expressed in United States Dollars-See Notes to Financial Statements, Exhibit F

321974 1973*

Assets

DUE FROM BANKS .................................................... $ 969,780 $ 656,091

INVESTMENTS

Short-term obligations of governments(At cost or amortized cost, which approximates market) ...... $ 1,953,678 1,918,021

Accrued interest ..................... 17,818 8,1431,971,496 1,926,164

LOAN AND EQUITY INVESTMENTS (At cost)-Note A (See Exhibit D)

Investments held for the Corporation ........................ $550,349,468 465,190,930

Less-Undisbursed investments ........................... 186,574,728 181,471,875

Disbursed and outstanding ............................... $363,774,740 283,719,055

Less-Reserve against losses-Note A ..................... 20,000,000 16,400,000343,774,740 267,319,055

ACCRUED INCOME ON LOANS-Note A ................... 6,515,906 5,934,338

RECEIVABLE FROM PURCHASERS OF LOAN AND EQUITYINVESTMENTS SOLD OR AGREED TO BE SOLD ........ $ 96,504,194 71,027,970

Less-Undisbursed investments sold or agreed to be sold .... 94,605,321 68,347,4381,898,873 2,680,532

OTHER ASSETS .......................................................... 391,865 390,935

TOTAL ............................................................. $355,522,660 $278,907,115

*Restated for comparative purposes.

Exhibit A

331974 1973*

Liabilities, Capital and Surplus

LIABILITIES

Accrued charges on borrowings ............................. $ 3,454,537 $ 2,138,190Accounts payable and other liabilities ........................ 1,022,064 688,424

$ 4,476,601 2,826,614

BORROWINGS-Note C

Loans from the International Bank for Reconstructionand Development ....................................... $400,731,665 297,401,710

Less-Undrawn ....................................... 227,229,273 193,008,943Withdrawn and outstanding ............................ $173,502,392 104,392,767

Loan from the State of the Netherlands ...................... 5,000,000 5,000,000178,502,392 109,392,767

CAPITAL AND SURPLUS

Capital stockAuthorized 110,000 shares of $1,000 par value each

Subscribed 107,220 shares-1974, 107,211 shares-1973 .... $107,220,000 107,211,000Payment on account of pending subscriptions ............... - . 91,000

General reserve-Note A ................................... 65,323,667 59,385,734

172,543,667 166,687,734

TOTAL ............................................................. $355,522,660 $278,907,115

'Restated for comparative purposes

Statement of Income Exhibit BInternational Finance Corporation

For the Fiscal Years Ended June 30, 1974 and June 30, 1973

Expressed in United States Dollars-See Notes to Financial Statements, Exhibit F

341974 1973*

Operating Income

Income from obligations of governments .$ 140,868 $ 77,427

Income from loan and equity investments and standby

and underwriting commitments:

Interest .................................................. $19,439,734 14,788,287Commitment charges ............... 1,367,153 1,426,269

Dividends and profit participations ......................... 4,712,545 3,205,849

Commissions ............................................. 493,615 81,116

26,013,047 19,501,521Other operating income .................................................... 52,015 65,022

$26,205,930 $19,643,970

Operating Expenses

Administrative expenses() ..................................... $ 9,176,417 $ 7,538,860

Charges on borrowings ....................................... 11,481,649 7,743,358

20,658,066 15,282,218

Income from Operations .$ 5,547,864 $ 4,361,752

Realized Gain on Sales of Loan and Equity Investments .3,990,069 1,877,963

Provision for Losses-Note A .(3,600,000) (2,072,468)

Net Income-Transferred to General Reserve-Note A ................................ $ 5,937,933 $ 4,167,247

0)The International Bank for Reconstruction and Development is charging the Corporation an annual "Service and Support Fee" which for the yearer.ded June 30, 1974 had been fixed at $1,534,000 ($1,460,000-1973).

*Restated for comparative purposes.

Statement of Changes in Financial Position Exhibit CInternational Finance Corporation

For the Fiscal Years Ended June 30, 1974 and June 30, 1973Expressed in United States Dollars-See Notes to Financial Statements, Exhibit F

1974 1973* 35

Funds Provided

Net income ................................................................. $ 5,937,933 $ 4,167,247Items not requiring current outlay of funds:

Provision for losses on investments ...................... 3,600,000 2,072,468Changes in accrued income and expenses .. 946,960 ( 141,924)Other .. 270,458 ( 48,771)

Funds provided from operations .......................................... $ 10,755,351 $ 6,049,020Capital subscriptions ............................ 9,000 54,000Loans from the International Bank for

Reconstruction and Development ........................ 75,779,670 29,291,057Repayments of loans .............................. 16,898,828 21,235,484Sales and participations ............................. 66,049,352 35,146,628Other .................................................................. 111,698 17,413

TOTAL FUNDS PROVIDED ........................................... $169,603,899 $91,793,602

Funds Used

Disbursements on loan and equity investments ................................. $162,524,038 $88,138,226Repayments on loans from the International Bank

for Reconstruction and Development ........................................ 6,635,000 3,150,000Other .................................................................. 95,515 38,606

TOTAL FUNDS USED ................................................ $169,254,553 $91,326,832

Increase in Cash and Short-Term Obligations of Governments ........................ $ 349,346 $ 466,770

*Restated for comparative purposes.

Statement of Loan and Equity InvestmentsInternational Finance Corporation

June 30, 1974

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit F

36 Investments held for theCorporation

Fin whical ye(including undisbursed balances)

in which Total toansCOUNTRY commitments and equity

and Obligor Type of business were made Loans Equity (at cost)

AfghanistanI Industrial Development Bank of Afghanistan. Development financing 1973 $ - S 322 $ 322 1

Argentina2 Fabrica Argentina de Engranajes, S.A.I.C.... Automotive 23 transmissions 1961 150 - 150 3

4 Celulosa Argentina, S.A .................... Pulp and paper 1965,1972 5,985 - 5,985 45 Dalmine Siderca, S.A ...................... Steel products 1969 400 - 400 56 Editorial Codex Sociedad Anonima .......... Printing and publishing 1969 1,005 - 1,005 6q Calera Avellaneda, S.A ..................... Cement 1971 5,500 - 5,500 7

8 TOTAL 13,040 - 13,040 8

Bolivia9 Plasmar, S.A .............................. Plastic products 1973 259 100 359 9

Brazil10 Champion Celulose, S.A .................... Pulp and paper 1959 (Note 1) 1011 Acos Villares S.A ......................... Steel 1966,1968,1972 3,366 163 3,529 1112 Papel e Celulose Catarinense S.A ........... Pulp and paper 1966,1969 719 3,133 3,852 1213 Ultrafertil S.A.-Industria e Comercio de 1314 Fertilizantes ............................ Fertilizers 1967,1972 3,169 2,945 6,114 1415 Petroquimica Uniao S.A ................... Petrochemicals 1969 3,279 2,046 5,325 1516 Poliolefinas S.A. Industria e Comercio ...... Petrochemicals 1970 4,193 2,000 6,193 1617 Oxiteno S.A. Industria e Comercio .......... Petrochemicals 1971 4,600 1,420 6,020 1718 Industria de Celulose Borregaard S.A ........ Pulp 1971 4,900 - 4,900 1819 CIMINAS-Cimento Nacional de Minas S.A. Cement 1972 4,384 3,200 7,584 1920 Companhia Siderurgica da Guanabara 2021 (Cosigua) .............................. Steel 1973,1974 12,000 6,500 18,500 2122 Capital Market Development Fund 2223 (FUMCAP) ............................ Capital market development 1973 5,000 - 5,000 2324 Empresas de Desenvolvimento de Recursos 2425 Minerais (Codemin) S.A .................. Nickel mining and refining 1973 13,000 3,800 16,800 2526 Industrias Villares, S.A ..................... Elevators and industrial 2627 equipment 1974 3,000 - 3,000 2728 Fabrica de Tecidos Tatuape S.A . ..... Textiles 1974 7,750 - 7,750 28

29 TOTAL 69,360 25,207 94,567 29

Chile30 Empresa Minera de Mantos Blancos, S.A..... Copper mining 1958,1959,1966 - 1,237 1,237 3031 Fideos y Alimentos Carozzi, S.A ............ Food products 1959,1965 - 154 154 3132 Minera Sagasca, S.A ....................... Copper mining 1970 7,803 450 8,253 32

33 TOTAL 7,803 1,841 9,644 33

China34 Asia Cement Corporation ........... ...... Cement 1970 1,800 1,219 3,019 3435 Oriental Chemical Fiber Corporation ........ Synthetic fibers 1970,1971 3,481 612 4,093 35

36 TOTAL 5,281 1,831 7,112 36

Colombia37 Industrias Alimenticias Noel, S.A ............ Food products 1960,1965 54 59 113 3738 Corporacion Financiera Colombiana ........ Development financing 1962 - 1,012 1,012 3839 Corporacion Financiera Nacional ........... Development financing 1962,1963 - 603 603 3940 Compafiia Colombiana de Tejidos, S.A ....... Textiles 1963,1967,1968,1969 - 63 63 4041 Corporaci6n Financiera de Caldas ........... Development financing 1964,1970 - 701 701 4142 Industria Ganadera Colombiana, S.A ........ Livestock 1966 - 580 580 4243 Enka de Colombia, S.A .................... Synthetic fibers 1967,1970,1974 4,050 2,636 6,686 4344 Corporacion Financiera del Norte ........... Development financing 1969,1973 - 454 454 4445 Corporacion Financiera del Valle ........... Development financing 1969 - 431 431 4546 Pro-Hoteles, S.A .......................... Tourism 1970 700 140 840 4647 Corporaci6n Colombiana de Ahorro y 4748 Vivienda ............................... Capital market development 1973 - 314 314 4849 Cementos Boyaca, S.A ..................... Cement 1974 1,500 - 1,500 49

50 TOTAL 6,304 6,993 13,297 50

Cyprus51 Cyprus Cement Company, Ltd .............. Cement 1973 1,742 544 2,286 51

Exhibit D

Investments held for the 37Corporation

Fiscal years (including undisbursed balances)in which Total loans

COUNTRY commitments and equityand Obligor Type of business were made Loans Equity (at cost)

Dominican Republic52 Cementos Nacionales, S.A .Cement 1974 $ 6,000 $1,380 $ 7,380 52

Ecuador53 La Internacional, S.A .Textiles 1966,1972 1,631 172 1,803 5354 Ecuatoriana de Desarrollo, S.A. 5455 (Compahila Financiera) .Development financing 1969,1973 - 307 307 5556 TOTAL 1,631 479 2,110 56

El Salvador57 Hoteles de Centro Am&ica Sociedad An6nima Tourism 1969 546 233 779 57

Ethiopia58 Cotton Company of Ethiopia, S.C .Textiles 1965,1970,1973 1,669 837 2,506 5859 Ethiopian Pulp and Paper, S.C .Pulp and paper 1966 - 1,209 1,209 5960 H.V.A.-Metahara, S.C .Sugar 1968 3,588 1,622 5,210 6061 TOTAL 5,257 3,668 8,925 61

Greece62 "Titan" Cement Company, S.A .Cement 1965,1966 150 - 150 6263 National Investment Bank for Industrial 6364 Development, S.A .Development financing 1966 - 139 139 6465 General Cement Company, S.A .Cement 1966 1,400 - 1,400 6566 Aluminium de Grece, Societe Anonyme 6667 Industriele et Commercialle .Aluminum production 1970,1972 1,296 2,883 4,179 6768 TOTAL 2,846 3,022 5,868 68

Guatemala69 Exploraciones y Explotaciones Mineras 6970 Izabal, S.A.. Nickel mining and refining 1974 15,000 - 15,000 70

Honduras71 Empresa de Curtidos Centro Americana, S.A. Leather tanning 1964,1966 - 67 67 71

India72 Precision Bearings India, Ltd .Bearings 1963,1966 104 - 104 7273 Mahindra Ugine Steel Company, Ltd . Steel products 1964 990 830 1,820 7374 Lakshmi Machine Works, Ltd .Textile machinery 1964 214 314 528 7475 Jayshree Chemicals, Ltd .Chemicals 1967 84 - 84 7576 Indian Explosives, Ltd .Fertilizers 1967 2,430 2,263 4,693 7677 Zuari Agro Chemicals, Ltd .Fertilizers 1969,1970 10,742 3,640 14,382 7778 TOTAL 14,564 7,047 21,611 78

Indonesia79 P. T. Primatexco Indonesia .Textiles 1971,1974 3,328 801 4,129 7980 P. T. Unitex .Textiles 1971 750 800 1,550 8081 P. T. Semen Cibinong .Cement 1971,1973,1974 13,230 3,768 16,998 8182 P. T. Kabel Indonesia-Kabelindo .Cable manufacturing 1971 1,687 372 2,059 8283 P. T Daralon Textile Manufacturting 8384 Corporation .Textiles 1972 3,375 1,125 4,500 8485 P. T. Jakarta International Hotel .Tourism 1973 4,000 - 4,000 8586 P. T. Private Development Finance 8687 Company of Indonesia .Development financing 1974 - 483 483 8788 P. T. Monsanto Pan Electronics .Electronic products 1974 900 - 900 8889 P. T. Kamaltex .Textiles 1974 2,400 600 3,000 8990 TOTAL 29,670 7,949 37,619 90

Iran91 Sherkate Sahami Aam Navard Va Luleh 9192 Ahwaz .Steel 1969,1974 5,100 1,001 6,101 9293 Kaghaz Pars Sherkat Sahami Aam .Pulp and paper 1972 10,215 1,944 12,159 9394 Sherkate Sahami Carbon Iran, Sahami 9495 Khass .Carbon black 1973 2,279 431 2,710 9596 Sherkate Karkhanejate Sanati Iran National, 9697 Sherkate Sahami Khas .Automobiles 1973 7,000 - 7,000 9798 TOTAL 24,594 3,376 27,970 98

Statement of Loan and Equity Investments (continued)

International Finance Corporation

June 30, 1974

Expressed in United States Dollars (in thousands)-See Notes to Financial Statemnents, Exhibit F

38 Investments held for theCorporation

Fiscal years (including undisbursed balances)in which Total loans

COUNTRY commitments and equityand Obligor Type of business were made Loans Equity (at cost)

Israel99 Makhteshim Chemical Works, Ltd .Chemicals 1974 $ 1,750 $1,750 $3,500 99

Ivory Coast100 Banque Ivorienne de Developpement 100

101 Industriel, S.A .Development financing 1965 - 204 204 101

Jamaica102 Pegasus Hotels of Jamaica, Ltd .Tourism 1969 1,308 669 1,977 102

Jordan103 Jordan Ceramic Industries Company, Ltd.... Ceramics 1974 1,350 222 1,572 103

Kenya104 Kenya Hotel Properties, Ltd .Tourism 1967,1968,1973 4,061 742 4,803 104

105 Panafrican Paper Mills (E.A.), Ltd .Pulp and paper 1970,1974 7,706 3,903 11,609 105

106 Tourism Promotion Services (Kenya), Ltd Tourism 1972 1,629 - 1,629 106

107 TOTAL 13,396 4,645 18,041 107

Korea108 Korea Development Finance Corporation Development financing 1968,1974 - 1,058 1,058 108

109 Honam Silk Industry Company .Textiles 1969 1,400 277 1,677 109110 Korea Investment and Finance Corporation. . Capital'market development 1971,1974 - 996 996 110

IIl TOTAL 1,400 2,331 3,731 111

Lebanon112 Lebanese Ceramic Industries Co., S.A.L. Ceramic tiles 1971 678 - 678 112

Liberia113 Liberia Bank for Industrial Development 113

114 and Investment .Development financing 1966 - 248 248 114

Malaysia115 Malayawata Steel, Berhad .Steel 1968,1969 827 1,016 1,843 115

116 India-Malaysia Textilcs, Berhad .Textiles 1970 1,070 248 1,318 116

117 TOTAL 1,897 1,264 3,161 117

Mauritania118 Socite Miniere de Mauritanie .Copper mining 1968 8,217 724 8,941 118

Mauritius119 Dinarobin Inns and Motels, Ltd .Tourism 1971 452 - 452 119

Mexico120 Fundidora Monterrey, S.A .Steel 1962,1965,1966,1968 1,182 1,420 2,602 120121 Industria del Hierro, S.A .Construction equipment 1964,1966 - 360 360 121

122 Minera del Norte, S.A .Iron ore mining 1970 750 - 750 122123 Celanese Mexicana, S.A .Textiles 1971 7,857 - 7,857 123

124 Promotora de Papel Peri6dico, 124

125 S.A. de C.V .Pulp and paper 1972 - 25 25 125

126 Cementos Veracruz, S.A .Cement 1973 6,000 - 6,000 126

127 Cancun Aristos Hotel .Tourism 1974 976 264 1,240 127

128 TOTAL 16,765 2,069 18,834 128

Morocco129 Banque Nationale pour le Developpement 129

130 Economique .Development financing 1963 - 985 985 130

131 Compafnia Industrial del Lukus, S.A .Food processing 1966 290 398 688 131

132 TOTAL 290 1,383 1,673 132

Nicaragua133 Textiles Fabricato de Nicaragua, S.A .Textiles 1968 440 - 440 133

Nigeria134 Nigerian IndtIstrial Development Bank, 134J35 Ltd .Development financing 1964 - 1,399 1,399 135

136 Arewa Textiles, Ltd .Textiles 1964,1967,1970 19 442 461 136

137 Funtua Cottonseed Crushing Company, 137

138 Ltd .Cottonseed oil and byproducts 1973 1,064 - 1,064 138139 Nigerian Aluminium Extrusions, Ltd Aluminum 1973 1,002 326 1,328 139

140 Lafiagi Sugar Estate .Sugar 1974 - 119 119 140

141 TOTAL 2,085 2,286 4,371 141

Exhibit D

Investments held for the 39Corporation

Fiscal years (including undisbursed balances)in which Total loans

COUNTRY commitments and equityand Obligor Type of business were made Loans Equity (at cost)

Pakistan142 Gharibwal Cement, Ltd .Cement 1962,1965 $ 2,669 $ 417 $ 3,086 142143 Pakistan Industrial Credit and Investment 143144 Corporation, Ltd .Development financing 1963,1969 - 450 450 144145 Crescent Jute Products, Ltd .Textiles 1965 718 - 718 145146 Packages, Ltd .Paper products 1965 837 605 1,442 146147 Pakistan Paper Corporation, Ltd .Paper 1967 2,873 2,019 4,892 147148 Dawood Hercules Chemicals, Ltd .Fertilizers 1969 - 2,923 2,923 148149 TOTAL 7,097 6,414 13,511 149

Panama150 Corporaci6n de Desarrollo Hotelero, S.A. Tourism 1971 1.206 266 1,472 150

Peru151 Fertilizantes Sint6ticos, S.A .Fertilizers 1960,1962 55 - 55 151152 Cemento Andino, S.A .Cement 1962,1968 - 132 132 152153 Compahia de Cemento Pacasmayo, S.A . Cement 1964,1967 - 170 170 153154 TOTAL 55 302 357 154

Philippines155 Private Development Corporation of the 155156 Philippines .Development financing 1963,1973 6,523 - 6,523 156157 Manila Electric Company .Electric power 1967 3,912 - 3,912 157158 Meralco Securities Corporation .Electric power 1967 - 3,639 3,639 158159 Philippine Long Distance Telephone 159160 Company .Utilities 1970 4,296 - 4,296 160161 Mariwasa Manufacturing, Inc .Construction materials 1970,1972 256 255 511 161162 Philippine Petroleum Corporation .Petroleum refinery 1971 6,200 1,800 8,000 162163 Marinduque Mining and Industrial 163164 Corporation .Nickel mining and refining 1972 15,000 - 15,000 164165 Victorias Chemical Corporation .Chemicals 1973 1,850 346 2,196 165166 Filipinas Synthetic Fiber Corporation . Syntheticfibers 1974 1,500 - 1,500 166167 Maria Cristina Chemical Industries, Inc . Ferroalloys production 1974 1,550 458 2,008 167168 RFM Corporation .Food products 1974 1,200 - 1,200 168169 TOTAL 42,287 6,498 48,785 169

Senegal170 Societd Industrielle d'Engrais au Senegal.. . Fertilizer 1967 1,226 810 2,036 170171 Bud Senegal, S.A .Agribusiness 1972,1974 - 175 175 171172 Soci&t6 Financiere Sen6galaise pour le 172173 D6veloppement Industriel et Touristique.. . Development financing 1974 - 207 207 173174 TOTAL 1,226 1,192 2,418 174

Spain175 Banco del Desarrollo Econ6mico 175176 Espahiol, S.A .Development financing 1963,1965 (Note 1) 176177 Industrias de Tableros y Derivados de la 177178 Madera, S.A .Construction materials 1974 4,386 847 5,233 178179 TOTAL 4,386 847 5,233 179

Sudan180 Khartoum Spinning and Weaving 180181 Company, Ltd .Textiles 1964,1972 260 273 533 181

Thailand182 Industrial Finance Corporation ofThailand Development financing 1964,1971 - 384 384 182183 Siam Cement Co., Ltd.. Cement and steel 1969 3,627 2,043 5,670 183184 TOTAL 3,627 2,427 6,054 184

Tunisia185 NPK-Engrais, S.A.T .Fertilizers 1963 - 1,149 1,149 185186 Banque de Developpement Economique 186187 de Tuisie .Development financing 1966,1970 - 1,208 1,208 187188 Compagnie Financi&re et Touristique, S.A.... Tourism financing 1969 6,843 2,248 9,091 188189 Soci&td Touristique et Hoteliere Rym, S.A.... Tourism 1973 1,632 297 1,929 189190 Societe d'Etudes et de D1veloppement de 190191 Sousse-Nord .Tourism 1973 - 38 38 191192 Industries Chimiques du Fluor, S.A .Chenmicals 1974 - 648 648 192193 TOTAL 8,475 5,588 14,063 193

Statement of Loan and Equity Investments (continued) Exhibit DInternational Finance Corporation

June 30, 1974

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit F

40 Investments held for theCorporation

Fiscal years (including undisbursed balances)in which Total loans

COUNTRY commitments and equityand Obligor Type of business were made Loans Equity (at cost)

Turkey194 Turkiye Sinai Kalkinma Bankasi A.S .Development financing 1964,1967,1969,1972, $ 5,000 $ 1,734 $ 6,734 194195 1973 195196 Sentetik Iplik Fabrikalari A.S .Textiles 1966,1969,1971,1972 1,622 560 2,182 196197 Viking Kagit ve Seluloz A.S .Pulp and paper 1970,1971 1,875 669 2,544 197198 Anadolu Cam Sanayii A.S .Glass 1970 6,710 1,583 8,293 198199 Nasas-Aluminyum Sanayii ve Ticareti A.S Aluminum products 1971 6,562 1,372 7,934 199200 Akdeniz Turistik Tesisler A.S .Tourism 1973 335 268 603 200201 Borusan Gemlik Boru Tesisleri A.S .Steel pipe 1974 3,600 450 4,050 201202 AKSA Akrilik Kimya Sanayii A.S .Textiles 1974 10,000 - 10,000 202

203 TOTAL 35,704 6,636 42,340 203

Uganda204 Tourism Promotion Services (Uganda), Ltd.. . Tourism 1972 726 - 726 204

Venezuela205 Protinal, C.A .Animal feed 1969,1973 326 - 326 205

Yugoslavia206 International Investment Corporation for 206207 Yugoslavia .Development financing 1970 - 2,000 2,000 207208 Zavodi Crvena Zastava/Fiat S.p.A .Automobiles 1970,1972 5,000 7,400 12,400 208209 Tovarna Avtomobilov in Motorjev 209210 Maribor/Klockner Humboldt-Deutz, A.G. Commercial vehicles 1971 7,500 1,413 8,913 210211 Fap-Famos Belgrade/Daimler-Benz, A.G Commercial vehicles 1972 12,473 2,120 14,593 211212 Sava-Semperit .Tires 1972 4,000 1,196 5,196 212213 Belisce-Bel Tvornica Papira, Poluceluloze 213214 1 Kartonaze-Belisce .Pulp and paper 1973 10,794 - 10,794 214215 ZP Slovenske Zelezarne Zelezarna Jesenice.. . Steel 1974 10,000 - 10,000 215216 Salonit Anhovo Industrija Gradbenega 216217 Materiala .Cement 1974 2,500 - 2,500 217

218 TOTAL 52,267 14,129 66,396 218

Zaire219 Societe Financiere de Developpement .Development financing 1970 - 756 756 219

Zambia220 Zambia Bata Shoe Company, Ltd. Shoes 1972,1973 872 228 1,100 220

Regional Investments221 Africa 221222 SIFIDA Investment Company, S.A .Development financing 1971 - 500 500 222

Latin America223 ADELA Investment Company, S.A .Development financing 1970 10,000 - 10,000 223

224 TOTAL 10,000 500 10,500 224

225 INVESTMENTS HELD FOR THE CORPORATION $422,439 $127,910 $550,349 225

226 Undisbursed balances 160,220 26,355 186,575 226

227 Disbursed balances $262,219 $101,555 $363,774 227

228 INVESTMENTS HELD BY THE CORPORATION 228229 FOR PURCHASERS AND PARTICIPANTS 229

230 Total $213,348 $ 4,314 $217,662 230

231 Undisbursed balances 92,250 2,355 94,605 231

232 Disbursed balances $121,098 $ 1,959 $123,057 232

233 TOTAL INVESTMENTS HELD FOR THE CORPORATION 233234 AND FOR PURCHASERS AND PARTICIPANTS 234

235 Total $635,787 $132,224 $768,011 235236 Undisbursed balances 252,470 28,710 281,180 236

237 Disbursed balances $383,317 $103,514 $486,831 237

Note (1): Equity investment in this company was acquired or has been recorded at no cost.General: The operational investments are represented by loans and equity, as stated. In addition, in certain investments, the Corporation has the right to acquire shares and/orparticipate in the profits of the enterprise.

Statement of Cumulative Gross Commitments Exhibit EInternational Finance Corporation

June 30, 1974

Expressed in United States Dollars (in thousands)-See Notes to Financial Statements, Exhibit F

Cumulative Gross Cumulative Gross 41Commitments Commitments

Number of (including exchange Number of (including exchangeCOUNTRY Investments adjustments) COUNTRY Investments adjustments)

Afghanistan ...................... I $ 322 Liberia .......................... 1 250Argentina ........................ 8 39,210 Malaysia .......................... 4 8,691Australia ........................ 2 975 Mauritania ....................... 1 20,006Bolivia .......................... 1 400 Mauritius ........................ 1 615Brazil ........................... 19 237,599 Mexico .......................... 12 54,318Chile ........................... 5 21,191 Morocco ......................... 2 2,884China ........................... 2 9,844 Nicaragua ....................... 1 2,071Colombia ........................ 20 26,576 Nigeria .......................... 5 6,002Costa Rica ....................... 1 590 Pakistan ......................... 9 28,009Cyprus .......................... I 2,884 Panama ......................... I 1,472Dominican Republic .............. 1 7,380 Peru ............................ 6 8,980Ecuador ......................... 2 4,270 Philippines ....................... 12 69,164El Salvador ...................... 2 1,074 Senegal .......................... 3 3,842Ethiopia ......................... 3 15,768 Spain ............................ 4 18,743Finland .......................... 4 3,148 Sri Lanka ........................ 1 3,250Greece .......................... 5 14,998 Sudan ........................... 1 2,212Guatemala ....................... 2 15,200 Tanzania ........................ 1 4,657Honduras ........................ 2 452 Thailand ......................... 3 22,766India ........................... I 1 42,303 Tunisia .......................... 6 17,572Indonesia ........................ 9 58,408 Turkey .......................... 8 54,451Iran ........................... 7 42,535 Uganda .......................... 2 4,618Israel ........................... 1 3,500 Venezuela ........................ 6 31,069Italy ........................... 1 960 Yugoslavia ....................... 8 78,389Ivory Coast ...................... 1 204 Zaire ............................ 1 756Jamaica ......................... 2 3,137 Zambia .......................... 1 2,278Jordan .......................... I 1,822Kenya ........................... 3 25,906 Regional:Korea ........................... 4 8,731 Africa ......................... 1 500Lebanon ......................... 2 2,130 Latin America .................. 1 10,000

TOTAL .22.................. 225 $1,049,082

SummaryJune 30

1974 1973 Increase

Investments held for the Corporation .............................................. $ 550,349 $465,191 $ 85,158Principal repayments to the Corporation ....................... 82,911 66,012 16,899Loan and equity investments sold or agreed to be sold ................. 352,877 261,032 91,845Cancellations ................................................................... 58,950 51,892 7,058Investments written off .............................. 3,955 3,955Revaluation of disbursed non-US dollar loans ................... 40 - 40

Total Commitments ....................................................... $1,049,082 $848,082 $201,000

Revaluation of undisbursed non-US dollar commitments madein prior years and other adjustments .2,404

Commitments-1974 .$203,404

Notes to Financial Statements Exhibit FInternational Finance Corporation

June 30, 1974 and June 30, 1973

42 Note A-Significant Accounting PoliciesBasis of Financial Statement Presentation and Changes in Accounting Revenue Recognition-Dividends, profit participations and commis-Policies-The accompanying balance sheet reflects the following sions are recorded as income when received. Interest, commitmentchanges: (1) The undisbursed balances of loan and equity investments and other charges on loans are recorded as income on an accrualare deducted from investments held for the Corporation and from basis except that the Corporation does not currently accrue interestinvestments sold or agreed to be sold. In prior years undisbursed which is considered uncollectible.investments were reflected as liabilities. (2) The undrawn portions of Staff Retirement Plan-The International Bank for Reconstructionloans from the International Bank for Reconstruction and Develop- and Development has a contributory retirement plan for its staffment are deducted from related borrowings. In prior years undrawn which also covers the staff of the Corporation. All contributions toborrowings were reflected as an asset. Consistent with the changes in the retirement Plan and all other assets and income of the Plan arebalance sheet presentation, a statement of changes in financial po- held by the Bank separately from its other assets and can be used onlysition (Exhibit C) has been substituted for the statement of changes for the benefit of the participants in the Plan and their beneficiaries.in resources available for commitment presented in prior years. The Bank and the Corporation contribute that part of the cost andThe Corporation has changed its policy relating to a provision for expenses of the Plan not provided by the contributions of participants.losses on investments as described below under the caption "Reserve The contribution of the Corporation during the fiscal year whichAgainst Losses". The financial statements for the year ended June 30, approximated its share of the actuarial cost of the Plan amounted to1973 have been restated to give retroactive effect to these changes. $714,738 ($422,172-1973).Translation of Currencies-Equity investments disbursed in currencies During 1973, amendments were made to the Plan to allow pensionersother than United States dollars are expressed in United States dol- to elect to receive their pensions in the currency of their country oflars at the exchange rates which applied at the time of disbursement. residence rather than in United States dollars and also to provide forOther assets and liabilities not denominated in United States dollars additional annual cost-of-living increases in pensions. Of the aboveareexpressedin terms of United States dollars at approximate market contributions, the Corporation paid $118,877 into the Plan duringrates prevailing at the fiscal year-end. Exchange gains and losses are the current fiscal year to cover increased liabilities arising fromcredited or charged to income as they occur. these amendments.

Reserve Against Losses-The past practice of the Corporation has Note B-Amounts Due Within One Yearbeen to allocate all net income to a Reserve Against Losses. For thefiscal year ended June 30, 1974 the Corporation, pursuant to action Asset balances due the Corporation within one year are summarizedof the Directors, adopted the policy of directly charging income with as follows: As at June 30a provision for losses on investments with a corresponding credit to ($ thousands)the Reserve Against Losses. The annual charge is based on the 1974 1973Corporation's historical loss experience, the amount of investmentsin respect of which a significant and relatively permanent decline in Due from banks $ 970 $ 656value is recognized and the amount of investments in respect of which Short-term obligations of governments 1,971 1,926losses cannot yet be identified. Principal instalments on loans 23,111 17,837

Accrued income on loans 6,447 5,436Net income remaining after the above charge to income has been Receivable from purchasers of loan andtransferred to Surplus and allocated to a General Reserve. Losses on equity investments sold 335 572investments when written off are charged directly to the Reserve Other 108 178Against Losses. Financial statements for the fiscal year ended June Total $329 942 $2660530, 1974 reflect this change in policy, and financial statements for the T 3fiscal year ended June 30, 1973 have been appropriately restated, re- Note C-Borrowingssulting in direct charges to income for provision for losses of$3,600,000 in 1974 and $2,072,468 in 1973. As a further consequence The Corporation's long-term borrowings comprise the following:of this change, the amount in the General Reserve as at July 1, 1972 (1) Loans totaling $401 million ($297 million-1973) from the Inter-was $55,218,487 reflecting the cumulative earnings for fiscal years national Bank for Reconstruction and Development. A commitmentprior to July 1, 1972. The changes in the Reserve Against Losses, charge is payable on the undrawn balances of the loans at the rate ofas restated, are summarized as follows: 3h4 of 1% per annum. The loans are repayable in semi-annual instal-

Fiscal Year Ended June 30 ments summarized below:1974 1973 Principal Amount Interest Rate Maturity

Balance beginning of period as tr millions) Per Annum Datespreviously reported $ - $72,518,487 1974 1973

Adjustment to reflect changes inaccounting policy - (55,218,487) $191 $197 7% 1974 to 1989

Balance beginning of period as restated 16,400,000 17,300,000 $210 $100 7¼% 1975 to 1994The principal amounts repayable during the fiscal years ending

Provision charged to income 3,600,000 2,072,468 June 30, 1975 and 1976 are $8.4 and $9.6 million respectively.Investments written off - (2,972,468)Balance end of period $20,000,000 $16,400,000 The proceeds of these loans may only be used by the Corporation in

Investment Transactions-Investments are recorded at the date an (2) A loan of $5 million from the State of the Netherlands repayableinvestment commitment is made and are reflected as assets when in equal semi-annual principal instalments commencing on June 1,disbursed. Gains or losses on sales of investments are measured 1979, and having a final maturity date of December 1, 2000 with anagainst the average cost of the investments sold. Gains on invest- interest rate equal to the rate of cash dividend, if any, paid by thements are credited directly to income when realized and losses are Corporation on its capital stock. IFC may use the proceeds of thisprovided for as described in the preceding paragraph. loan in any operation authorized by its Articles of Agreement.

Report of Financial StatementsIndependent Accountants Covered by the

Foregoing Report

431801 K Street, N.W. Balance Sheet

Washington, D.C. 20006 Statement of IncomeJuly 25, 1974 Statement of Changes in Financial Position

International Finance Corporation Statement of Loan and Equity Investments1818 H Street, N.W. Statement of Cumulative Gross CommitmentsWashington, D.C. Notes to Financial Statements

We have examined the accompanying financial statements(Exhibits A through F) of International Finance Corporation forthe years ended June 30, 1974 and 1973. Our examinations weremade in accordance with generally accepted auditing standardsand accordingly included such tests of the accounting records andsuch other auditing procedures as we considered necessary in thecircumstances.

As described in Note A to the financial statements, the Corpo-ration has adopted a new policy relating to the Reserve AgainstLosses. It has also revised the presentation of its financialstatements.

In our opinion, the financial statements examined by us presentfairly, in terms of United States currency, the financial position ofInternational Finance Corporation at June 30, 1974 and 1973, theresults of its operations and changes in financial position for theyears then ended, in conformity with generally accepted account-ing principles applied on a consistent basis after restatementfor the changes, with which we concur, referred to in the pre-ceding paragraph.

PRICE WATERHOUSE & CO.

VI. Appendices

46 A Voting Power and Subscriptions of Member Countries

47 B Governors and Alternates

49 C Directors and Alternates and Their Voting Power

50 D Officers and Department Directors

Voting Power and Subscriptions Appendix Aof Member Countries

As of June 30, 1974

46 Voting Power Total Subscription Voting Power Total Subscription

Number Percent Amount Percent Number Percent Amount Percentof of (in Thousands of of of (in Thousands of

Member Votes Total of Dollars) Total Member Votes Total of Dollars) Total

Afghanistan .361 .27 $ I1I .10 Malawi ................. 333 .25 $ 83 .08

Argentina .1,912 1.45 1,662 1.55 Malaysia ............... 527 .40 277 .26

Australia .2,465 1.87 2,215 2.07 Mauritania ............. 305 .23 55 .05

Austria .804 .61 554 .52 Mauritius ............... 345 .26 95 .09

Belgium .2,742 2.08 2,492 2.32 Mexico ................. 970 .74 720 .67

Bolivia ................. 328 .25 78 .07 Morocco .638 .48 388 .36

Brazil .1,413 1.07 1,163 1.08 Nepal .................. 305 .23 55 .05

Burma .416 .32 166 .15 Netherlands ............. 3,296 2.50 3,046 2.84

Canada .3,850 2.92 3,600 3.36 New Zealand ........... 1,173 .89 923 .86

Chile .638 .48 388 .36 Nicaragua .............. 259 .20 9 .01

China .4,404 3.34 4,154 3.87 Nigeria ................. 619 .47 369 .34

Colombia ............. 638 .48 388 .36 Norway .804 .61 554 .52

Costa Rica .272 .21 22 .02 Oman .................. 286 .22 36 .03

Cyprus .333 .25 83 .08 Pakistan ................ 1,358 1.03 1,108 1.03

Denmark .1,003 .76 753 .70 Panama ................ 252 .19 2 *

Dominican Republic 272 .21 22 .02 Paraguay ............... 266 .20 16 .01

Ecuador .285 .22 35 .03 Peru ................... 444 .34 194 .18

Egypt,ArabRepublicof 840 .64 590 .55 Philippines .............. 416 .32 166 .15

El Salvador .261 .20 11 .01 Portugal ................ 693 .53 443 .41

Ethiopia .283 .21 33 .03 Saudi Arabia ............ 361 .27 111 .10

Finland .671 .51 421 .39 Senegal ................. 434 .33 184 .17

France .6,065 4.60 5,815 5.42 Sierra Leone ............ 333 .25 83 .08

Gabon .305 .23 55 .05 Singapore .............. 427 .32 177 .17

Germany, Federal Somalia .333 .25 83 .08

Republic of .3,905 2.96 3,655 3.41 South Africa ............ 1,358 1.03 1,108 1.03

Ghana .416 .32 166 .15 Spain .................. 1,358 1.03 1,108 1.03

Greece .527 .40 277 .26 Sri Lanka .............. 416 .32 166 .15

Guatemala .272 .21 22 .02 Sudan .................. 361 .27 111 .10

Guyana .339 .26 89 .08 Swaziland .............. 285 .22 35 .03

Haiti .272 .21 22 .02 Sweden ................. 1,358 1.03 1,108 1.03

Honduras .261 .20 11 .01 Syrian Arab Republic .... 322 .24 72 .07

Iceland .261 .20 11 .01 Tanzania ............... 434 .33 184 .17

India .4,681 3.55 4,431 4.13 Thailand ............... 389 .29 139 .13

Indonesia .1,468 1.11 1,218 1.14 Togo ................... 333 .25 83 .08

Iran .622 .47 372 .35 Trinidad and Tobago .... 398 .30 148 .14

Iraq .317 .24 67 .06 Tunisia ................. 383 .29 133 .12

Ireland .582 .44 332 .31 Turkey ................. 726 .55 476 .44

Israel .300 .23 50 .05 Uganda ................ 434 .33 184 .17

Italy .2,244 1.70 1,994 1:86 United Kingdom ........ 14,650 11.10 14,400 13.43

Ivory Coast .361 .27 111 .10 United States ........... 35,418 26.84 35,168 32.80

Jamaica .398 .30 148 .14 Uruguay ............... 405 .31 155 .14

Japan .3,019 2.29 2,769 2.58 Venezuela .............. 366 .28 116 .11

Jordan .283 .21 33 .03 Viet-Nam ............... 416 .32 166 .15

Kenya .434 .33 184 .17 Western Samoa ......... 259 .20 9 .01

Korea .389 .29 139 .13 Yemen Arab Republic ... 297 .23 47 .04

Kuwait .619 .47 369 .34 Yugoslavia ............. 841 .64 591 .55

Lebanon .300 .23 50 .05 Zaire ................... 582 .44 332 .31

Lesotho .268 .20 18 .02 Zambia ................ 545 .41 295 .28Liberia.......... 333 .25 83 .08Libyan Arab Republic 305 .23 55 .05 TOTALS ........... 131,970 100.OOt $107,220 100.OOt

Luxembourg .361 .27 111 .10 -Less than .005 percent.

Malagasy Republic 361 .27 III .10 tMay differ from the sum of the individual percentages shown because of rounding.

Governors and Alternates Appendix B

As of June 30, 1974

47Member Governor Alternate

Afghanistan ....... Fazal Haque Khaliqyar ............... Mahammed Sarwar HaidarArgentina ....... Jose Ber Gelbard .................... Alfredo G6mez-MoralesAustralia ....... F. D. Crean ......................... Sir John PhillipsAustria ....... Hannes Androsch .................... Walter NeudorferBelgium ....... Willy De Clercq ..................... Robert VandeputteBolivia ....... Victor Castillo SuArez(1) .............. Jaime RodrigoBrazil ....... Mario Henrique Simonsen ............ Paulo H. Pereira LiraBurma .. ..... U Lwin .......................... U Chit MoungCanada .............. .. John N. Turner ...................... Paul Gerin-LajoieChile .Eduardo Cano Quijada ............... Jose Luis Zabala PonceChina .Kwoh-Ting Li .......... ....... Chun-Heng TuColombia .................. Luis Fernando Echavarria ............ Jorge Mejia PalacioCosta Rica .................. Porfirio Morera Batres ............... Claudio Alpizar V.Cyprus .................. Andreas C. Patsalides ................ A. C. AfxentiouDenmark .................. Ove Guldberg ....................... Wilhelm UlrichsenDominican Republic ......... Di6genes H. Fernandez ............... Luis M. Guerrero GomezEcuador .................. Jaime Moncayo Garcia ............... Guillermo Maldonado LinceEgypt, Arab Republic of ..... Abdel Aziz Hegazy ................... Sherif LotfyEl Salvador ................. Vicente Amado Gavidia Hidalgo ...... Atilio VieytezEthiopia .................. Negash Desta ....................... Teferra Wolde-SemaitFinland .................. J6hannes Virolainen .................. Osmo KallialaFrance .................. Minister of Finance .................. Andre de LattreGabon .................. Augustin Boumah .................... Edouard-Alexis M'Bouy-BoutzitGermany, Federal Republic of. Hans Apel(l) .. .. .... Egon Bahr(')Ghana ........ . K. Acheampong ................... K. D. FordworGreece ....... Adamantios Androutsopoulos ......... Triantafyllos EleftheriouGuatemala ....... Eduardo Palomo E.(') ................ Jorge Lamport RodilGuyana ....... F. E. Hope .......................... Harold WilkinsonHaiti ....... Emmanuel Bros ..................... Antonio AndreHonduras ....... Manuel Acosta Bonilla ............... Abraham Bennaton RamosIceland .. ..... Ludvik Josepsson .................... Halld6r E. SigurdssonIndia ....... Y. B. Chavan ....................... M. G. KaulIndonesia ....... Rachmat Saleh ...................... Julianto MoeliodihardjoIran ....... Hushang Ansary(") ................... Jahangir AmuzegarIraq ....... Amin Abdul Karim Kalamchi ......... Sa'adi IbrahimIreland ....... Richie Ryan ......................... C. H. MurrayIsrael ....... Moshe Sanbar ....................... Avraham AgmonTtaly ....... Guido Carli. .,,,,,,,,.,,,.. Paolo BaffiIvory Coast ....... Henri Konan Bedi .Abdoulaye KoneJamaica ....... David H. Coore .G. Arthur BrownJapan ....... Masayoshi Ohira(') .Tadashi SasakiJordan ....... Khalil Salim .Hashim DabbasKenya ....... Mwai Kibaki .Philip NdegwaKorea ....... Duck Woo Nam .Sung Whan KimKuwait ....... Abdul Rahman Salim Al-Ateeqy . Abdlatif Y. Al-HamadLebanon ....... Khalil Salem .Farid SolhLesotho ....... E. R. Sekhonyana .T. ThahaneLiberia ....... Stephen Tolbert .D. Franklin NealLibyan Arab Republic ........ Mohammad Zarrough Ragab .......... Nuri A. Baryun

(continued)

Governors and Alternates (continued) Appendix B

As of June 30, 1974

48Member Governor Alternate

Luxembourg ............. Raymond Vouel(l) ................... Albert DondelingerMalagasy Republic .......... Raymond Randriamandranto .......... Celine Rabekoriana RabevazahaMalawi ...... ....... D. T. Matenje ....................... L. P. AnthonyMalaysia ......... .... Mohamed Rahmat ................... Chong Hon NyanMauritania ............. Sidi Ould Cheikh Abdallahi ........... Mamadou CissokoMauritius ........ ..... Kher Jagatsingh ..................... Ramaswamy PyndiahMexico ............. Jose L6pez Portillo ................... Gustavo Romero KolbeckMorocco ....... ...... Abdelkader Benslimane ............... Mustapha FarisNepal ............. Bhekh B. Thapa ...................... B. B. PradhanNetherlands ............. W. F. Duisenberg .................... J. P. PronkNew Zealand ............. H. G. Lang(') ....................... N. V. Lough(M)Nicaragua ............. Guillermo Sevilla-Sacasa .............. Juan Jose Martinez L.Nigeria ............. Shehu Shagari ....................... A. A. AyidaNorway ....... ...... Per Kleppe ....................... Christian BrinchOman ............. Mahmoud M. Murad ................ John S. TownsendPakistan ........ Mubashir Hasan .A. G. N. KaziPanama ........ Nicolas Ardito Barletta .Miguel A. SanchizParaguay ........ Cesar Romeo Acosta .Augusto Colman V.Peru ........ Amilcar Vargas Gavilano(l) .Luis Barua CastanedaPhilippines ........ Cesar E. A. Virata .Alejandro Melchor Jr.Portugal ........ Vasco Vieira de Almeida .Jose da Silva LopesSaudi Arabia ........ Ahmed Zaki Saad .(vacant)Senegal ........ Ousmane Seck .Famara Ibrahima Sagna(')Sierra Leone ........ C. A. Kamara-Taylor .B. Strasser-KingSingapore ........ Hon Sui Sen .Howe Yoon ChongSomalia ........ Mohamoud Yusuf Weirah .Omar Ahmed OmarSouth Africa ........ T. W. de Jongh .G. P. C. de KockSpain ........ Nemesio Fernandez Cuesta .Luis Coronel de PalmaSri Lanka ........ N. M. Perera .C. A. CooreySudan ......... Ibrahim Moneim Mansour .Mohamed Abdel Magid AhmedSwaziland ........ James Nxumalo . V. E. SikhondzeSweden ........ G. E. Strang .Kjell-Olof FeldtSyrian Arab Republic ........ Nourallah Nourallah ................. Abdul Hadi NehlawiTanzania ................. W. K. Chagula .................... F. A. ByabatoThailand ................. Sommai Hoontrakool(') .............. Chalong PungtrakulTogo ................. Henri Dogo .................... Damien Eklu NateyTrinidad and Tobago ........ G. M. Chambers .................... F. B. RampersadTunisia ................. Mansour Moalla .................... Moncef Bel Hadj AmorTurkey ................. Deniz Baykal .................... Ahmet Tufan GilUganda ................. E. B. Wakhweya .................... Jino GeriaUnited Kingdom ............ Gordon Richardson ................. . D. W. G. Wass0)United States ............... William E. Simon .................... William J. CaseyUruguay ................. Alejandro Vegh Villegas(l) ............ Moises Cohen BerroVenezuela ................. Gumersindo Rodriguez ................ Hector HurtadoViet-Nam ........... ,,.,Le-Quang-Uyen .Nguyen Van DongWestern Samoa .......... Vacant .VacantYemen Arab Republic ....... Ahmed Abdo Said ............. Abdul Karim El-EryaniYugoslavia ................. Momcilo Cemovid ............. Gavra PopovicZaire ................. Baruti wa Ndwali ............. Mbeka MakossoZambia ................. A. B. Chikwanda ............. L. J. Mwananshiku(') Appointment effective after June 30, 1974.

Directors and Alternates and Their Voting Power Appendix C

As of June 30, 1974

Director Alternate Casting votes of Total Votes 49

APPOINTEDCharles 0. Sethness .............. Hal F. Reynolds .................... United States ...................................... 35,418Anthony K. Rawlinson ........... R. A. Browning .................... United Kingdom ................................... 14,650Jacques-Henri Wahl .............. Jean-Claude H. Faure ............... France ............................................ 6,065Hans Janssen ................. Claus Knetschke .................... Germany, Federal Republic of ........................ 3,905Taro Hori ................. Hiroyuki Yasuda ................... Japan ............................................. 3,019

ELECTEDClaude M. Isbister ............... D. R. Clarke .................... Canada, Guyana, Ireland, Jamaica ................... 5,169

(Canada) (Jamaica)S. R. Sen ................. M. Matiul Islam .................... India, Sri Lanka ................................... 5,097

(India) (Bangladesh)Bulcha Demeksa ........... Ismael El Misbah Mekki ............. Ethiopia, Kenya, Lesotho, Liberia, Malawi, Nigeria,

(Ethiopia) (Sudan) Sierra Leone, Sudan, Swaziland, Tanzania, Trinidadand Tobago, Uganda, Zambia ........... 5,060

S. A. McLeod ......... Edmund M. W. Visbord ............. Australia, New Zealand, South Africa ................. 4,996(New Zealand) (Australia)

M. M. Ahmad ......... Mohamed Abdul Rahman ........... Egypt (Arab Republic of), Iraq, Jordan, Kuwait,(Pakistan) Alsharekh (Kuwait) Lebanon, Oman, Pakistan, Saudi Arabia, Syrian Arab

Republic, Yemen Arab Republic .4,983Alfred Rinnooy Kan Branko Mijovi6 ..................... Cyprus, Israel, Netherlands, Yugoslavia. 4,770

(Netherlands) (Yugoslavia)Jacques de Groote ............. Vural Giicsavas .Austria, Belgium, Luxembourg, Turkey ............... 4,633

(Belgium) (Turkey)Choi Siew Hong ........... Byong Hyun Shin ............. Burma, Indonesia, Korea, Malaysia, Nepal,

(Malaysia) (Korea) Singapore, Thailand, Viet-Nam .4,337Giorgio Rota .................... German Calvillo .................... I taly, Portugal, Spain ................................ 4,295

(Italy) (Spain)Poul H. Kryger .................. Annikki Saarela .................... Denmark, Finland, Iceland, Norway, Sweden .......... 4,097

(Denmark) (Finland)Roberto Guarnieri ............. Carlos Santistevan ............. Costa Rica, El Salvador, Guatemala, Haiti, Honduras,

(Venezuela) (Peru) Mexico, Nicaragua, Panama, Peru, Venezuela .3,629Roberto Gavalda ................ Luis Barrios Tassano ................ Argentina, Bolivia, Chile, Paraguay, Uruguay .......... 3,549

(Argentina) (Uruguay)Mohamed Nassim Kochman ...... Andrianampy Ramaholi-Mihaso ...... Gabon, Ivory Coast, Malagasy Republic, Mauritania,

(Mauritania) (Malagasy Republic) Mauritius, Senegal, Somalia, Togo, Zaire .3,359Yahia Khelif ........ Kwaku Gyasi-Twum ............... Afghanistan, Ghana, Greece, Iran, Libyan Arab

(Algeria) (Ghana) Republic, Morocco, Tunisia .3,252Virgilio Barco ......... Placido L. Mapa, Jr ............... Brazil, Colombia, Dominican Republic, Ecuador,

(Colombia) (Philippines) Philippines .3,024

In addition to the Directors and Alternates shown in the foregoing list, the following also served after June 30, 1973:

Director End of period of service: Alternate Director End of period of service:

Fritz Stedtfeld ................. August 22, 1973 M. A. Cranswick .................. July 31, 1973(Germany) (Australia)

Andre van Campenhout ................ October 31, 1973 A. M. A. Muhith ............ October 15, 1973(Belgium) (Bangladesh)

Hans E. Kastoft ........... March 31, 1974 Masanari Sumi .......... November 16, 1973(Denmark) (Japan)

Jorge L. Tersoglio ............. April 5, 1974 Juan Moro ....... November 20, 1973(Argentina) (Spain)

Luis Ugueto ....... June 15, 1974 Wolfgang H. Artopoeus ................. February 28, 1974(Venezuela) (Germany)

Note: China (4,404 votes) and Western Samoa (259 votes) are not represented by a Director.

Officers and Department Directors Appendix DAs of June 30, 1974

50 President ............. ............................... * Robert S. McNamaraExecutive Vice President ............................................ William S. Gaud('Vice President ............................................ Ladislaus von Hoffmann(2)General Counsel ............................................ R. B. J. RichardsDirector, Finance and Management Department ....................... David B. DillardSecretary ............................................ *P. N. Damry

Director, Programming and Budgeting Department ..................... *John H. AdlerDirector of Personnel ............................................ *R. A. ClarkeOffice of Portfolio Supervision ....................................... Douglas J. A. DuPreDirector, Capital Markets Department ................................ David GillDirector of Investments, Africa and Middle East ....................... Cherif HassanDirector, Engineering Department ................................... H Geoffrey HiltonDirector of Marketing ............................................ Ajit HutheesingSpecial Representative in Europe ..................................... Rolf Th. LundbergBusiness Relations ............................................ Norman MacdonaldDirector, Office of Investment Promotion ............................. Sergio MarkmannSpecial Representative in the Far East ................................ Naokado NishiharaDirector of Investments, Asia ..... .................................. Judhvir ParmarDirector of Investments, Central America, Australasia,

Mexico and Europe ............................................ Neil J. PatersonEconomic Adviser ............................................ Moeen A. Qureshi(3 )Director of Investments, South America .............................. Rafael TalaveraDirector of Administrative Services ................................... *James E. Twining

*These officers and department heads hold the same positions in the International Bank for Reconstruction and Del elopment.

"')Until August 31, 1974.(')To be Executive Vice President from September 1, 1974.M To be Vice President from September 1, 1974.

IFC gratefully acknowvledges thecooperation of companies associatedwith the Corporation in its investmentsin providing the photographs whichillustrate this Report.

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