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Annual Report 1977

International Finance Corporation

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1977 Annual Report

IFCInternationalFinanceCorporation

IFC, which was established in 1956, is an affiliate of theWorld Bank. Membership in IFC is open to all countrieswhich are members of the World Bank. IFC now has106 member countries.

The essential function of IFC is to assist the economicdevelopment of its less developed member countries bypromoting the growth of the private sector of their economies.The Corporation helps to mobilize domestic and foreigncapital for this purpose.

Article One of IFC's Articles of Agreement defines theCorporation's purpose:

"The purpose of the Corporation is to further economicdevelopment by encouraging the growth of productive privateenterprise in member countries, particularly in the lessdeveloped areas, thus supplementing the activities of theInternational Bank for Reconstruction and Development..In carrying out this purpose, the Corporation shall:

i. in association with private investors, assist in financingthe establishment, improvement and expansion ofproductive private enterprises which would contribute tothe development of its member countries by makinginvestments, without guarantee of repayment by themember government concerned, in cases where sufficientprivate capital is not available on reasonable terms;

ii. seek to bring together investment opportunities, domesticand foreign private capital, and experienced management;and

iii. seek to stimulate, and to help create conditions conduciveto, the flow of private capital, domestic and foreign, intoproductive investment in member countries."The Corporation shall be guided in all its decisions by the

provisions of this Article."IFC may make investments of its funds in any form in

productive private enterprises in the territories of its members.The existence of a government or other public interest in suchan enterprise does not necessarily preclude IFC from makingan investment therein. The use of IFC's funds are not restrictedto purchases in any particular member country. TheCorporation investment decisions are based only on economicand financial considerations.

lFC undertakes its financing on terms and conditions whichit considers appropriate taking into account the requirementsof the enterprise, the risks being undertaken and the termsand conditions normally obtained by private investors forsimilar financing. IFC seeks to revolve its funds by selling itsinvestments to private investors whenever it can appropriatelydo so on satisfactory terms.

The Directors of the InternationalFinance Corporation have hadprepared this Annual Report forthe fiscal year July 1, 1976, toJune 30, 1977, in accordance withthe By-Laws of the Corporation.Mr. Robert S. McNamara,President of the Corporation andChairfnan of the Board ofDirectors, has submitted thisReport, together with the auditedfinancial statements, to the Boardof Governors.

The Directors

Jacques de GrooteEarl G. DrakeSaid E. El-NaggarErnesto Franco-HolguinEdward R. FriedJulio C. GutierrezHans JanssenR. A. JohnstonYahia KhelifThavil KhutrakutAnthony IJ. A. LooijenEinar MagnussenSusumu MurayamaEduardo PesqueiraArmand RazafindrabeGiorgio RotaWilliam S. RyrieS. R. SenTimothy T. ThahaneJacques Henri Wahl

June 30, 1977

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Contents

2 I. The Investment and Trade Climate in 1976-77

8 II. IFC's Year

8 Investments

8 Distribution of Investments

9 Domestic Capital Markets and Financial Institutions

9 Project Development

10 Participations and Sales of Investments

1 0 Financial Results

11 Organization

14 III. The Year's Investments

25 IV. Financial Statements

39 V. Appendices

40 A Voting Power and Subscriptions of Member Countries

41 B Governors and Alternates

43 C Directors and Alternates and Their Voting Power

44 D Officers and Department Directors

FOOD PRODUCTION AND PROCESSING.A farmer lays irrigation pipes for his sugar canefield. In fiscal year 1977 IFC approved sixinvestments in food production and food processing,two of which were in IFC's smaller and leastdeveloped member countries in Africa. In additionto the projected 5,000 jobs created directly inagric,dlture and in processing facilities, an estimated7,500 independent farmers will benefit from the newmarkets created f or their production by these projects.

I. The Investment and Trade Climate in 1976-77

2 The recovery of the world economy pace of recovery is still modest, al- appears to be stagnating. The elementfrom the recession of 1974-75 has now though improving. GNP growth of of confidence, elusive and difficult tobeen underway for almost two years. about 5 per cent was achieved in 1976 define as it may be, is thus a neces-However, its pace has been uneven in the non-oil developing countries, sary ingredient for a stronger and moreamong countries and has lacked the compared to 3.3 per cent in 1975 and sustained economic recovery, both invigor and sustained momentum that the expectations are for a growth of industrialized and in developing coun-has characterized previous economic approximately 5 per cent in 1977. tries. As has been made clear by therecoveries. For the industrialized coun- However, these aggregates have to be Conference on International Economictries of the OECD, GNP as a whole set against a population growth rate of Cooperation held in the course of theexpanded by an average of 5.3 percent 2.4 per cent, so that the improvement last year, progress in the "South" is notin 1976 and can be expected to rise by in per capita income has been small. likely without progress in the "North".approximately 4.5 per cent in real Further, while the GNP of the middle Both in industrialized and in devel-terms in 1977. The recovery has thus income countries in 1975-76 rose on oping countries, confidence is to a largebeen slower than might have been average by about 6 per cent, that of the degree the result of the interplay be-expected a year ago. poorest countries expanded at half that tween the public and private sectors.

To a large extent, these events re- rate. The expectations for 1977 are In the developing world, most govern-flect the disappointing behavior of cap- for some improvement in the poorest ments undoubtedly have a vital role inital investment. The pace of recovery countries, while a continuation of last influencing the direction and pace ofhas so far depended heavily on the up- year's trends is expected in the middle economic activity. Yet, the private sec-turn in consumer expenditures. While income countries, some of the largest tor accounts for approximately 75 perthere are a few sectoral exceptions, of which are engaged in financial re- cent of the GNP of developing coun-particularly in energy-related fields, the adjustment programs. tries and probably two-thirds to three-lack of dynamism in investment has Commodity exports, which account quarters of that originates in the mod-been perhaps the most important and for 65 per cent of developing countries' ern sectors of those economies. Thealso intriguing feature of the cyclical export earnings, are still the bellwether attitude of the private sector towardsupswing. Certain capital goods indus- of economic trends in those countries. investment is thus of prime impor-tries still appear to be suffering from Although some commodity prices, no- tance. It reflects not only the degree ofovercapacity, so that a recovery of in- tably those of coffee and tea, have success of cooperation between gov-vestment in those sectors is likely to risen sharply since 1975, the recovery ernments and business, but also, in-be delayed. Nevertheless, uncertainty in other raw material prices, especially creasingly, it is affected by views ofabout the future is perhaps the most minerals, has not yet materialized due what is happening beyond the nationalimportant reason for the behavior of to the lack of buoyancy of heavy in- borders, especially in the industrializedbusiness investment. Fears about infla- dustries in the industrialized world. In countries.tion, coupled with memories about the fact, some prices, such as that of cop-rapid sequence of adverse economic per, have declined further, instead of International PrivateCapital Flowsevents of the early 1970s, have tended rising moderately, as had been ex- The area in which there has beento undermine confidence. A major in- pected a year ago. The terms of trade noticeable growth during the recentgredient, therefore, of a continued and of developing countries, which deterio- recession has been in the flow of inter-sustaincd economic recovery is likely rated sharply in 1974-75, have not ma- national private capital from commer-to be the restoration of a sustained terially improved since then. cial banks to developing countries. Thehigh level of confidence for investment As a result of the uncertainties in speed and volume with which the in-decisions, in order to avoid the eco- the industrialized countries, and of ternational banking system, led by anomic disruptions of recent years. their own internal constraints, the in- few major institutions, has responded

The interdependence of the world vestment outlook of many developing to the adjustment needs of major in-economy has been highlighted by the countries also is not yet strong. Do- dustrialized and developing countriesrepercussions of economic behavior in mestic investment is recovering, but at since 1973 is undoubtedly one of thethe industrialized countries upon de- a somewhat hesitant pace while foreign most noteworthy economic events ofveloping countries. For the latter, the investment, except in the energy field, the decade. Since 1973, lending by

commercial banks has been the second sified economies with excellent poten- 12 per cent of the approximately $500 3largest single resource flow to develop- tial for rapid export growth. They billion outstanding in internationaling countries, after official develop- should be in a position to make pro- sources of credits,' while they had usedment assistance, which itself comes ductive use of future capital inflows. approximately $95 billion or 19 perfrom a variety of bilateral and multi- The important question for them is cent of the amount of such credit out-lateral agencies. The bulk of the lend- whether, given reasonable develop- standing, including short-term credit.ing by commercial banks to developing ment prospects and economic manage- The net debtor position of the devel-countries has been concentrated in a ment, the supply of external finance oping countries as a whole was thusfew countries-although more than 50 will continue on a scale sufficient to less than appears at first sight, althoughdeveloping countries have in the last avoid significant and sudden down- of course there are substantial varia-four years obtained Eurocurrency syn- ward readjustments in growth. tions between countries.dicated bank loans-and has largely On the supply side, it is true that There may thus be good reasons toconsisted of general purpose financing funding in the last two years was eased think that lending from commercialto governments. The vast majority of considerably by the relatively liquid banks to developing countries can con-the lenders are private commercial in- position of major international banks. tinue to expand. However, new initia-stitutions, but only a fraction of lend- Among the factors which contributed tives may need to be considered whiching has gone directly to private sector to liquidity was the channeling of a help match sources of funds with de-borrowers for identifiable projects. Of major part of the financial surpluses mands for their productive use.the estimated $32 billion in publicized of some oil-exporting countries to do- There are several ways in which aEurocurrency credits to non-oil devel- mestic and international money mar- beginning could be made. The role ofoping countries in the period 1973-76, kets. Another factor was the slack in international financial institutions inonly about one-tenth was in the form investment which was associated with providing adequate support to coun-of publicized loans to private borrow- the recession and of the strong ten- tries in need of assistance is deemed byers without a government guarantee. dency of corporations to strengthen the banking community to be a key

Despite the rapid growth of Euro- their balance sheets by reducing short- element in maintaining confidence inlending to the developing world, there term debt. These special cyclical cir- continued lending to the developingis now considerable discussion as to cumstances cannot be expected to con- countries. In both project and balancewhether this pace can continue in the tinue indefinitely. On the other hand, of payments financing, commercialfuture, as major institutions feel that several other considerations need to lenders and multilateral and bilateralthey might not be able to sustain the be taken into account in an assessment financial organizations can increas-growth of such lending. A number of of future supply. Lending by inter- ingly complement their activities -

suggestions have been made that some national banks to major developing through co-financing mechanisms-innew initiatives may be needed-as country borrowers has become an es- order to increase the flow of resourceswas suggested in the introduction to tablished activity, which has been prof- for productive investment. Further-the 1976 IFC report-if this type of itable for the lenders. For the future, more, the quality and availability oflending is to continue to expand in there is a likelihood that a significant information about financial flows canmeeting the capital requirements of the portion of the surpluses of a few oil- and should be improved. At present,developing countries, especially mid- exporting countries will continue to lenders sometimes may be proceedingdle-income countries. flow to the Eurocurrency banks. on the basis of information which is

The prevailing consensus about One element of the international fi-Eurolending to developing countries nancial context affecting developingneeds to be put in the proper context. countries is that they themselves, by Estimated from Bank for International Settle-

So far, the discussion has focused on holding a substantial part of their in- ments data on external positions in domestic

the demand side, principally the debt ternational reserves in the international and foreign Cuirrency of banks in the Groupof Ten countries and Switzerland and of the

service implications for a few major money market, are already major sup- foreign branches of U.S. banks in the

borrowers and the exposure of a small pliers of funds to that market. As of Caribbean and the Far East. This estimate

number of large banks. In fact, most September 1976, the non-oil develop- thus excludes internatiesof non-US banks

of the borrowers are large well-diver- ing countries provided an estimated located outside the Group of Tcn region.

4 dated, and which might have changed Moreover, foreign investment has pecially from the Mediterranean andsubstantially in the intervening period. become a subject of some controversy, Latin America. Similar investmentsBetter information would enable lend- both on the side of investors' countries have been made by U.S. firms for manyers to improve their own credit assess- and of host countries. In the host coun- years in southern border areas and inments. With improved information, tries, the terms of investment and Far Eastern export platforms. Nega-the private financial institutions should the appropriateness of the technology tive direct employment efFects uponbe in a position to provide loan matur- transfer have frequently been the sub- home industries have been particularlyities which would be more suited to ject of criticism. Strong demands have difficult to face in the uncertain eco-the repayment possibilities of projects arisen for codes of behavior on the nomic environment of the last two orthan is the case at present. part of the investor. Clearly, for the three years. But it must be recognized

Any international arrangements to future, a sound basis for mutual trust that these problems are the result ofprovide support to commercial lenders needs to bc established, since other- the shift of international comparativeshould not impinge upon their flexibil- wise there is a risk that viable invest- advantacc and. to some extent, there-ity of action which made their activi- ment opportunities may be lost or fore, are an inevitable part of theties such an important element in the postponed at great cost. In the min- international adjustment process.Ilows to selected developing countries erals field, for example, there are indi- The answers to these problems arein the recent difficult years. Nor should cations that exploration in non-fuel neither uniform nor simple. A coop-support be seen as a guarantee against minerals in a substantial number of erativc effort is needed, and ilexibilitycommercial risk. The principal aim resource-rich developing countries is and pragmatism on both sides are es-of suppor-t should be to provide con- at a standstill. Although the effects of sential. On the side of the host coun-fidence in order to maintain a con- the present inactivity may not be visi- tries, a greater awareness is needed oftinuing flow of external capital to ble for some time, the long-term con- the wider and long-term effects of theirdeveloping countries. sequences could be serious, both for own policies. For countries whose gov-

the countries with potential production crnments wish to encourage produc-Cooperation for Inivest)mienit and for the economic exploitation of tive private investment, both domestic

In the growing intcrdependence be- world resources. and foreign, more explicit policies aretween North and South, foreign invest- For the inivesting countries, invest- needed, including not only consistentment is a major link. However, in order ment abroad undoubtedly poses a criteria for the treatment of invest-to put it in proper perspective, foreign number of problems. Externally, the ments, but also the removal or allevia-investmiient should be seen primarily as maintenance of a secure investment tion of price distortions, which tend toa contributor of skills, technology, and climate is a prime objective. Another motivate investment into activities ofaccess to markets. As a contributor of important matter to which investors' limited benefit to national economies.tinancial rcsources, it is today much governments have devoted attcntion The continued economic progress ofless important in relative terms than it are the standards of conduct in inter- many developing countries is criticallywas in the I 950s and 1 960s. In abso- national operations. Internally, foreign dependent upon the availability of for-lutc tcrms, net forcign direct invest- direct investment can create problems eign technology and skills, and alsoment in developing countries expanded of adjustmcnt, especially in employ- increasingly upon access to forcignin the early I 970s. After 1973, how- ment in affected industries or areas. In markets for their exports. If thesc in-ever, if transactions with tax havens reccnt ycars, therc has been a growing puts arc to be available, however, thoseand those of petroleum companies are proportion of foreign investment by who providc them must be equitablyexcluded, net flows-includino domes- smaller firms-espccially from Europe treated and suitably rewarded. A se-tically rCinvCsted carnings-stagnated -which have sought lower wage cost cure environment is necessary in orderat an annual rate of about S4 billion in areas for the more labor-intensive to stimulate investment. On the side ofcurrLent dollars. or a gradual decline in proccsses of production. In the case of the investors and their governments,rcal tcrms. Preliminary indications for Europe, these "transfer investments" the search for nlew approaches to in-1 976, although subject to furtlher veri- have been particularly noticeable in vestment needs to be intensified. Jointficationi, suggest no significant change the case of firms intending to supply venture formulas need to be developedin the trend. the domestic market from abroad, es- between the outside investor and the

host government and local enterprise. IFC-associated investments accounted simply the volume of funds which it 5These formulas have to respond in for an important part of private direct could itself make available. The in-each case to the deep desire of devel- investment commitments to the devel- crease in the number of operationsoping countries to upgrade the oppor- oping world. In addition, $416 million should be paralleled by a wider geo-tunities for their citizens and to derive in investment from domestic sources graphic coverage. The Corporationthe maximum long-term benefit from has been raised. hopes to substantially increase thetheir own resources. No single pattern In the context of the capital in- number of its operations in the smalleror formula can be applied to all coun- crease, the Directors in January 1977 and economically least developedtries and products. Each case must re- reviewed the future activities and di- among its members in Latin America,flect a deeply felt response to the rections of the Corporation. Strong Asia and Africa, particularly the latter.aspiration of less privileged countries emphasis was given to IFC's role as a Innovative ways of doing business willfor a sense of shared purpose and development institution, whose funda- be needed in order to be effective inequality. mental concern was the economic de- the special settings of such countries.

velopment of its member countries A substantial amount of promotionalthrough assistance to private enter- and technical input will be required be-

The Capital Inlcrease of fEC prise, including the "mixed" sector. fore IFC can actually commit funds:In the immediate years ahead, the In- The capital increase should not only investments in promotional venturesternational Finance Corporation faces permit a considerable expansion in the could be one means to speed up theits greatest challenge since it began number and volume of operations, but preparatory work on projects. It willoperations 21 years ago. The Board of also a wider range of activity. In par- be necessary to work closely with gov-Governors is now voting on a resolu- ticular, there was a clear endorsement ernment bodies and to make invest-tion to offer the first capital increase in of the objective of substantially ex- ments in mixed ownership enterprises.the history of the Corporation to mem- panding activities in the poorer Also, IFC will need to channel a pro-ber countries. A total of $480 million countries. portion of its funds in such countrieswould be allocated for subscription. In the years ahead, IFC ought to be through development banks and otherIt has been clear for some time that in a stronger position to achieve one of financial intermediaries in order tothe original capitalization of approxi- its fundamental objectives, namely to reach the smaller enterprises which aremately $100 million was increasingly mobilize and supplement private cap- characteristic of such environments.inadequate for the Corporation to ital, both domestic and foreign. By At the same time, IFC will continuecarry on effectively its function as a supporting financially viable ventures to place emphasis on the needs of thecatalytic factor to attract other sources which contribute to the economic de- semi-industrialized countries, whichof capital, domestic and private, into velopment of member countries, IFC also have special requirements as theirproductive investment in the private helps to generate confidence among economic evolution continues. Severaland mixed sectors of its developing other investors and lenders. The cata- countries are moving into technolog-country membership. lytic role of IFC will continue to be a ically more sophisticated industries,

Even with these limited resources, vital one. In particular, the Corpora- including capital goods for their ownhowever, IFC has been able to mobil- tion hopes to be able to mobilize from industry and in some cases for export.ize a not insignificant transfer of re- commercial financial institutions an IFC has an important role to play insources and know-how. IFC's opera- increasing flow of participations in its bringing the technology and the usertions in fiscal year 1977 continue the own investments, a function which together, using the experience accumu-past pattern under which for every will help enterprises from developing lated in the last two decades in a vari-dollar committed by IFC, four to five countries to improve their access to ety of industries.dollars were obtained from other international capital markets. The subject of resource develop-sources, both foreign and domestic. It is particularly important, in meas- ment, especially of energy resourcesIn fiscal year 1977, IFC commit- uring the contribution of IFC, to focus and of non-fuel minerals, has receivedments of $206.7 million were matched on the number of operations since IFC considerable public attention as a re-by approximately $546 million in will continue to emphasize its technical sult of the shortages of the early 1970sother external commitments, so that and catalytic contribution rather than and of thc increases in energy prices.

6 In a number of countries there is a cause of a lack of investment. IFC, as flexibility and imagination, IFC-thedanger, because of a lack of explora- part of the World Bank Group, can only international financial institutiontion and slow progress in arriving at play a useful role in the mining and specifically charged with assisting theformulas for investment which will resource development area, especially development of private enterprise insatisfy the aspirations of host coun- if it is in a position to put in larger developing countries-will seek to helptries and at the same time be consistent amounts of equity finance than was the productive sectors of these econo-with the commercial realities of foreign possible in the past. mies face the challenge of this rapidinvestment, that their long-term devel- The 1970s are a period of rapid evolution.opment potential will be held back be- change in the world economy. With July 1977

MINlVIAVG. IF(' he(pc fineo J e c C this g i I( klMillillg (In mtail/tIrgicj a o(essinlg p0Io1e(t iii

Gmitemaohl . E /cc Loc iExi lor 's c'v Lv1loticones Mii eraisLahalci .S.A c ompl/ctcd this vear. In its 21 vears of

o/perSrtios2,. IFC ha.s i// 'es/ved $137 million icc I I 117i)ilg

pro cs Is Ii (li II,c II l/II ( I ),vI in ex-cess of S I . //i, ion.

WIN

11. IFC's Year

8 Investments Distribution of Investments and Turkey, and $500,000 in a Philip-pine petrochemical company and a

IFC continued its efforts in FY1977 IFC continued to emphasize the geo- Korean manufacturer. A total of $21.0to encourage productive private enter- graphic diversity of its investment ac- million was invested in textile com-prise in the developing countries by tivity in FY1977. During the year the panies in Argentina, Indonesia, theitself investing in projects that either Corporation made its first investment Ivory Coast and Madagascar. Miningestablished new businesses or ex- in Madagascar. Of the $206.7 million enterprises in the Philippines and Bra-panded, modernized or diversified actually committed by IFC during the zil received $18.5 million while $15existing businesses. IFC played a ma- year, $82.5 million went to eight proj- million was invested in a Colombianjor role in bringing together foreign ects in Latin America; $62.5 million, natural gas pipeline.investors and companies in the devel- including $35 million being financed Of the cumulative total of IFC'soping countries; in assisting purely by participants, went to six projects in commitments since 1956, $663 mil-domestic enterprises which needed fi- four developing countries in Europe; lion (39 per cent) has been investednance, either equity or loan finance, or $28.5 million to 11 projects in Asia in Latin America and the Caribbean,both; and in technical assistance of and $33.2 million to eight projects in $411 million (24 per cent) in Asia,the type which IFC can provide as a Africa. $392 million (23 per cent) in Europe,result of its international investment The sector distribution was broad, $180 million (10 per cent) in Africa,experience. with 29 per cent of total dollar volume and $65 million (4 per cent) in the

The Board of Directors of the Cor- of commitments in development fi- Middle East.poration approved loan and equity in- nance companies and capital markets The individual reports on the proj-vestments totalling $258.9 million in institutions; 23 per cent in agriculture ects supported by IFC during the year34 enterprises in 20 developing coun- and forestry industries; 21 per cent in other than those involving commit-tries during fiscal year 1977. Commit- heavy industry; 11 per cent in light in- ments related to the exercise of stockments of $206.7 million were made to dustry and manufacturing; 9 per cent rights, overrun costs or rescheduling,33 enterprises during that period. The in mineral resource development, and show that a total of $118 million wascomparable figure of approved invest- 7 per cent in utilities and services. invested in 13 projects which repre-ments for FY1976 was $235.8 million More specifically $40.7 million was sented completely new enterprisesin 33 enterprises. committed for development finance while $86 million was committed to

The total cost of the projects to companies in Greece, Korea and Li- 1 Iprojects representing expansion andwhich IFC made commitments this beria while capital and money market modernization of existing concerns.year came to $1,169 millon. Concur- institutions in Ecuador, Kenya, Korea These figures illustrate a continua-rently with IFC others invested $894 and Thailand were supported with tion of patterns established duringmillion in those same enterprises with $18.2 million. Commitments amount- the past five years with about half ofthe remaining $68 million financed ing to $27.6 million were made in IFC's commitments to newly organizedthrough cash generation. IFC's opera- food production and processing proj- companies, in the formation of whichtions in fiscal 1977 brought the cumu- ects in Argentina, Cameroon, Greece, IFC's financial and technical assist-lative gross total of the Corporation's Malawi, Thailand and Yugoslavia. ance has played an important role.commitments since it was established Pulp and paper projects in Kenya and Half of the companies in whichin 1956 to $1,712 million. These in- Yugoslavia received $17.3 million and IFC invested were owned by spon-vestments were made in 292 enter- a Philippine plywood producer $3.5 sors from the developing countries.prises in 62 developing countries. Fi- million. Twenty million dollars was in- Nine companies were wholly locallynancing from other sources provided vested in a Brazilian foundry; $13.2 owned. Three projects were joint ven-$7,262 million and brought the total million in cement and construction tures between investors from devel-cost of the projects to which the Cor- material projects in Colombia, Cyprus, oping countries-Indian interestsporation made commitments in the Guatemala and Morocco; $11.2 mil- joined Indonesian investors in financ-past 21 years to $8,974 million. lion in iron and steel projects in Brazil ing a textile expansion project in Indo-

nesia; institutions from the Middle Spain and the United States joined of two Asian countries and two coun- 9East joined local interests in sponsor- local Brazilian investors in a large tries in Latin America, but with em-ing a cement project in Morocco; and bauxite mining project in the Amazon phasis on the strengthening of securi-a Mexican company helped sponsor a region. ties markets.pipeline in Colombia. In the Indo- This year IFC made its first invest-nesian and Colombian projects, the Domestic Capital Markets ment intended to contribute directly todeveloping country partners were also and Financial Institutions the financing of small businesses in theresponsible for providing equipment developing countries with a loan ad-and technical services. During the year, IFC's capital markets ministered by a commercial bank in

Eleven projects in Brazil, Camer- activities consisted of a mix of techni- Kenya. The purpose is to provide anoon, Cyprus, Greece, the Ivory Coast, cal assistance services and institution integrated package of technical assist-Korea, Madagascar, Malawi, and Yu- building efforts. In five countries in the ance and financing. In another initia-goslavia were joint ventures between Middle East and Africa, in collabora- tive which also aims at giving particulardomestic investors and investors in de- tion with the appropriate authorities, assistance to small and medium sizedveloped countries. The developed IFC continued or initiated activities enterprises, IFC invested in a leasingcountries represented in these were dealing with the legislative, regulatory company in Korea. In Thailand, IFCBelgium, France, Germany, Italy, Ja- and policy issues involved in increas- assisted in the formation of a mutualpan, the Netherlands, Switzerland, and ing savings and developing the basic fund management company, which isthe United Kingdom. In another joint infrastructure needed to establish and the first enterprise of its kind in thatventure, aluminum companies from strengthen financial markets. Similar country. It is expected to make an im-Canada, the Netherlands, Norway, work was done with the governments portant contribution to strengthening

the local securities market.

* * *

Five-year Summary-Fiscal Years 1973-77 A major objective of IFC's involve-Millions of United States Dollars ment in the financial sector is to pro-

vide support for local development1973 1974 1975 1976 1977 banks and financial institutions, which

themselves assist the private sector inGross investments approved by their countries. IFC supports these

years ..................... 143.8 238.0 232.4 235.8 258.9 institutions through direct investment

Gross commitments by years .... 146.7 203.4 211.7 245.3 206.7 in them, through m rket syndifation

Gross commitments, cumulative(') 848.1 1,049.1 1,262.0 1,505.5 1,711.9 sources of funds, and through repre-Project costs by years (2) . . . . . ...... . 480.7 774.7 1,405.9 1,412.3 1,168.9 sentation on their boards of directors.

Project costs byaThus in FY1977 IFC provided a loanTotal project costs, cumulative(2). 4,211.9 4,986.6 6,392.5 7,804.8 8,973.7 of $40 million to the National Invest-

Sales (3) .................... . 65.4 93.1 52.5 87.9 74.9 ment Bank for Industrial Develop-ment of Greece of which $35 million is

Operating Income ............ 19.6 26.2 34.2 43.3 54.5 being placed with participants, mostly

Net Income .................. 4.2 5.9 5.4 7.7 8.9 North American and European com-mercial banks.

Includes exchange adjustments to prior years' commitments. Project Development12) Total investments financed by IFC and other sources in enterprises to which commitments have

been made.(3) Represents annual participations and portfolio sales and excludes cancellations and exchange during

adjustments, special effort during FY1977 to iden-

10 tifv and assist in the development of IFC's own investment in these proj-projects, especially among the least de- ects, togethcr with its project apprais-veloped of the Corporation's member Sources of Funds in IFC es, aretihrcountris. Thiseffort as focued in Asisted rojectsals, are important factors influencin Icountrics. This effort was focused in SSiS e PJ S the level of participation. This year'sAfrica, and in the smaller countries in FY 1977 total also reflects the continued inter-Asia where the Corporation has been Millions of u.s. Dollars est of international banks in joiningless active in the past. Several projects IFC in financing, without governmentin which IFC made investments this guarantees, private borrowers in de-year, in Cameroon and Kenya, for veloping countries, despite the normalexample, resulted from these special preference in the market fordirectgov-

velopedioncludedfIFCts. Othird prjcmmit- $133.0 11.4% United States ermient obligations or governmentvellopedincluded °drtIFC,s third comnmit- $133.0 11.4% nited States guarantees. Transactions during thement to the cement industry in Colom- fiscal year totaled $67.7 million. Thesebia resulting from a sector analysis and included loans to a leasing company inpromotional effort beginning in 1974. Korea, a ceramic company in Egypt (aWorking in close consultation with FY1976 project), a paper companygovernments, IFC is increasing its ef- in Kenya, three companies in Latinforts to strengthen the environment for America and participations beingprivate investment in several of its 7 27.4% European placed in a development finance com-member countries. Community pany in Greece.

In addition, the Corporation has IFC also continued to expand its ef-selected certain specific investment forts to revolve its equity portfolio.areas, such as food and the food pro- The year's equity sales proceedscessing industry, in which it has sought . amounted to $8.4 million includingto identify viable projects on a world- Other capital gains of $1.2 million. Con-wide basis. To this end it has ap- sistent with TFC's policy to encourageproached companies throughout the and broaden local ownership in thedeveloped world to review possibili- l private sector, eight of the ten trans-ties for IFC to assist in the promotion .& actions undertaken in FY1977 repre-and financing of projects they may be IFC sented sales to domestic investors inattracted to in the developing coun- .~ .. the developing countries where thetries. Several initiatives arising from r projects are located.the Corporation's efforts in this fieldare under active consideration.

Participations and Sales Financial Resultsof Investments

________________________________Ciunulative Conunitinents

IFn helps companies and institutions Developing Commitments by IFC in fiscal yearin developing countries obtain finance Countries 1977 of $206.7 million brought cumu-from external market sources. This has lative gross commitments by the Cor-been accomplished principally by at- poration since it began business intracting participations in IFC's invest- 1956 to $1,712 mittion, as reportedments. These reached at the end of on page 8.fiscal year 1977 a cumulative total of$451.4 million, of which a large partwere funded in the Euro-currency Portfoliomarket. At the close of the fiscal year the

Corporation's investment portfolio Corporation amounted to $195.7 mil- tive February 15, 1977. He succeeded i1amounted to $ 1, 1 64.8 million, of which lion. During the liscal year the Rescrve Mr. Ladislaus von Hoffmann who re-$300.6 million was held for the ac- Against Losses was credited with turned to private business. Mr. voncount of participants in IFC invest- $5.9 million provided from income Hoffmann joincd the Corporation inments and $864.2 million for IFC's and was charged with $6.2 million, 1960 and sc-ved as Director of Invest-account. This latter amount consisted reprcsenting the major portion of a ments. Africa. Asia and Middle East,of loans aggregating $704.1 million loan which was decemied uncollectible and as Vice President before being ap-and equity investments of $160.1 mil- and written off. The balance of the pointed Executive Vice President inlion, of which $530.5 million in loans Reserve Against Losses at June 30, 1974. On the same day as Mr.and $132.6 million in equity invest- 1977, was $30.4 million. Oureshi's appointmcnt, Mr. Gordonments were disbursed and outstanding. The Board of Governors of IFC is McClurc, previously Director of In-A year earlier the disbursed portfolio now voting on a resolution to increase vestments, Central America, Mexicoheld by IFC for its own account the authorized capital stock of the Cor- and Europe, and Mr. Judhvir Parmar,amounted to $401.1 million in loans poration from $110 million to $650 previously Director of Investments,and $121.7 million in equity invest- million and to provide for an increase Asia, were appointed Vice Presidents.ments. in members' subscriptions totaling Mr. Makarand Dehejia was ap-

$480 million. pointed Director, lFC EngineeringDisbu,rsemnents N Dcpartment, effective March 1, 1977.

New resources were made avaii- On April 1, 1977, Mr. Jose E. Ca-Disbursements during the fiscal year able to IFC in Fcbruarv 1977, when mnacho wa,s named General Counselfor IFC's and participants' accounts the Saudi Arabian Monetary Agency to succe ed M . Rcrds Gen-amounted to $259.9 million, compared agreed to lend S35 million to the Cor- to succed Mr. R. B. J. Richards, Gen-with $199.7 million in FY1976, poration for use in its operations. to ratire atner 2i ears of scrvice withbrinoing cumulative disbursements to Apart from a loan previously provided$1,319 million. hy the Netherlands, the borrowing was the World Bank Group.

th first from sourccs other than the Certain organizational changes wereNet Iiicotiie WorkldBanl<t made soon after the close of the fiscal

vear. These included the reorganiza-IFC's operating income in fiscal year tion of investment operations under1977 was S54.5 million, consisting of Return ont Inivestments five departments and the cs[ablishment$45.9 million of interest and commit- The average annual return on equity of a new dcpartment. the Developtmientment charges on loans and other inl- investments held by IFC over their Department. The principal job of thecome and $8.6 million of dividends present life was 8.24 per cent at the Dcvclopment Department is to developand profit participations. Net income close of FY77. The similar return on and articulate the futurc course for IFCamounted to $8.9 million, including loans was 9.84 per cent, giving an as an effective development institution.gains on sales of investments of $1.2 average overall annual return of 9.35 As part of the new rcorganization, Mr.million, and after deducting a provi- per cent. The overall return a year Kurt B. Eckrich was named Director,sion for losses on investments of $5.9 earlier was 9.1 8 per cent. These re- Department of Investmcnits, Latinmillion. Net income for the previous turns reflect dividends, interest, capital America and Caribbean I, Mr. Douglasyear was $7.7 million, after a provision gains on sales of portions of invest- Gustafson, Director, Department offor losses of $6.4 million. ments and miscellaneous charges and Investments. Europe and Middle East;

Capit(l an(t Reservses credits. Mr. Jose M. Ruisanchez, Director, Dc-partment of Investments. Latin Amer-

The cumulative net earnings of the Oo iation ica and Caribbean 11; Mr. TorsteinCorporation, amounting to $87.3 mil- ' Stephansen, Director, Department oflion at June 30, 1977. have been trans- Investments, Asia; and Mr. Marshallferred to surplus and allocated to a Mr. Mocen A. Oureshi, previously Burkes, Director, Finance and Man-General Reserve. The total paid-in Vicc President of the Corporation, was agement Department, succeeding Mr.capital and General Reserve of the named Exectitive Vice President effec- Eckrich.

] 2 The Department of Investments, Staff dent and Director General, Banque deLatin America and Caribbean I, in- Paris et des Pays-Bas, S.A., Paris; Dr.cludes Colombia, Guyana, Mexico, At June 30, 1977, the staff of the Wilfried Guth, Managing Director,Venezuela and all member countries Corporation numbered 234, including Deutsche Bank, A.G., Frankfurt; So-in Central America and the Caribbean. nationals of 47 countries. hci Nakavama, The Industrial Bank ofThe Department of Investments, Latin Japan, Ltd., Tokyo; Lord Roll ofAmerica and Caribbean TI, includes all Ipsden, Chairman, S. G. Warburg andother member countries in South Co., Ltd., London; and Robert V.America. Roosa, Brown Brothers Harriman and

* * * IFC's international advisory panel Co., New York.met with the Corporation's officers and

In April 1977 IFC established a management inTokyo inOctober 1976Regional Mission in East Asia as an to discuss IFC activities and policies.integral part of its investment opera- Members of the panel are: J. R. M. van Menmibershiptions. The Mission, located in Manila, den Brink, Managing Director, Am-the Philippines, has three staff members sterdam-Rotterdam Bank, N.V., Am- Guinea-Bissau became the 106th mem-headed by Mr. Giovanni Vacchelli. sterdam; Jacques de Fouchier, Presi- ber of the Corporation during the year.

BASIC INDUSTRIES. Completed in 1976/77, theexpansion of ChonjI Paper Manlufacturing Co.,

Ltd., represents one of 24 pulp and paperproducts tnanufacturing enterprises assisted by IFC.

IFC's total investmentt of $145 millioni has beenmatchled by investmnents of $462 million from

foreign and local sources in these same projects.If IFC's investments in basic indastries, particularly

in iron and steel, pulp and paper, and cement areaggregated, approximately 10 per cent of existing

production capacity in the developing world isaccounted for by projects with which IFC

has been associated.

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III. The Year's Investments

Summary14 Total Project

Loan Equity IFC Cost

Investments Approved by Board of Directors and Comimlitted

ArgentinaAlpargatas S.A.I.C. (textiles) .S 7,000,000 $ - S 7,000,000 S 55.000.000Soyex S.A. (food and food processing) .9,000,000 - 9,000.000 33,000,000

BrazilCompanhia Siderurgica da Guanabara (Cosigua) (iron and steel)

(third commitment) .9,968,144 1,000,000 10.968,144 39,500,000FMB S.A. Produtos Metalurgicos (manufacturing) .20,000,000 - 20.000,000 205,400,000Mtineracao Rio do Norte, S.A. (mining) .15,000,000 - 15,000,000 330.000,000

CameroonS.A.F.A. Cameroun, S.A.C. (food and food processing) -- 807,890 807,890 5,634.000

Colombia*Pro-Hoteles, S.A. (tourisnm) (second commitment) .- 26,447 26,447 26,000

Pronmigas, S.A. (Litility) .13,000,000 2,000,000 15,000,000 55.000,000Compania Colombiana de Clinker, S.A. (construction materials) 2,432,432 - 2,432.432 34,432,000

CyprusThe Cyprus Pipes IndLIstries Limited (construction materials) 500,000 170,695 670,695 3.400,000

Ecuador*Ecuatoriana de Desarrollo, S.A. (Compania Financiera) (DFC)

(fourthi comitment) .- 74,641 74,641 75,000

Greece*Hellenic Food Industries, S.A. (food and food processing)

(second comitment) .- 106,564 106,564 107.000National Investnment Bank for Industrial Development, S.A. (DFC)

(second commnitment) .40,000,000 - 40,000.000 40,000,000

GuatemalaCemenitos Novella S.A. (constiLuctioll materials) .3,000,000 - 3,000,000 31,900,000

Indonesia"P.T. Daralon Textile Manufacturing Corporationi (textiles)

(second comitment) .350,000 - 350,000 350,000PT. Katnaltex (textiles) (second commnitment). .1,350,000 150,000 1.500,000 3,100,000

Ivory CoastEts. R. Gonil-eville. S.A. (textiles) .- 884,703 884,703 16,211,000

KenyaKenya Commnc-cial Bank Limited (capital markets.2 ,000,000 - 2.000.000 2.000,000

*Planafrican Paper Mills (E.A.), Ltd. (pulp and paper)(third commlitment). .1,225,000 601,226 1,826,226 1.826,000

Total Project 15Loan Equity IFC Cost

Korea*Gold Star Company, Ltd. (manufacturing) (third commitment) ...... $ - S 174,944 $ 174,944 S 175,000*Korea Development Finanice Corporation (DFC)

(fourth commitment) . . .291,222 291,222 291,000*Korea Securities Finance Corporationl (capital markets)

(second commitment) .............. - 496,894 496.894 497,000Korea Development Leasing Corporation (capital markets) ......... 15,000,000 371.901 15,371,901 15,372,000

Liberia*Liberian Bank for Development and Investment (DFC)

(second commitment) ........................................ - 306,300 306,300 306,000

MadagascarSociete Textile de Majunga S.A. (textiles) ........................ 11,000,000 292,728 11,292,728 38,170,000

MalawiDwangwa Sugar Corporation Limited (food and food processing). . 9,000,000 - 9,000.000 64,893,000

MoroccoAsment de Temara S.A. (construction materials) .................. 4,755,000 2,336,119 7,091,119 61.744,000

Philippines*Philippine Petroleum Corporation (chemical and petrochemical

products) (second commitment) ........ ....................... - 271,037 271,037 271,000Acoje Mining Company, Inc. (mining) ........................... 2.300,000 1.200,000 3.500,000 9,131,000Sarmiento Industries, Inc. (manufacturing) ...................... 3.500.000 - 3,500.000 8,200.000

ThailandThe Mutual Fund Company Limited (capital markets) ............. - 294,118 294.118 294,000United Sugar Terminal Limited (food and food processinlg) ......... 2 500,000 200,000 2,700,000 7882,000

Turkey*Borusan Gemlik Boru Tesisleri. A.S. (iron and steel)

(second commitment) ......................... ,,..,.......... - 226,308 226.308 226,000

YugoslaviaFrikom Ro Industrija Smrznute Hrane

(food and food processing) ................................... 4.000,000 2,0'2,245 6,022,245' 40,622,000Tvornica Kartona I Ambalaze Cazin (pulp and paper) ..... ........ 13,344,739 2,138,580 15,483,319 63,858,000

Total Commitments.. ................................ $190,225,315 $16,444,562 $206,669,877 $ 1,168,893.000

Investments Approved by Board of Directors During YearBut Not Yet Committedt ..................... 51,550,000 678,900 52,228,900 59.315.000

TOTAL APPRONVALS .................................. .241,775,315 S17,123,462 $258,898,777 $1,228,208,000

*These commlitiients represent sLIpplemenital Investmcilts in compa nies in which I FC had madc a pre ioLis comnmitmient and resLllted from the excrcise ofstock rigits, cost overrulns, or reschedutling.

I-Net of approvals from prior years.

16

Commitments by Types of Business 1976/77Millions of U.S. Dollars

Development l0.Finance Companies 40.7

Food and 27.6Food Processing

General 2Manufacturing 3.7

Textiles and Fibers 21.0

Mining 18.5

Money and Capital Markets

Pulp and 17.3Paper Products

Utilities 15.0

Construction Materials 13.2

Iron and Steel 11.2

Chemicals and 3Petrochemical Products

10 20 30 40

The following project reports arearranged by sector in the order ofsize of the IFC commitment. Theydo not include those commitmentsrelated to the exercise of stock rights,overrun costs or rescheduling.

All figures in these reports are givenin U.S. dollars.

.DD-~Dlo 11molf ntfinancial plan. The project is in line with equity and $4 million loan investment; 17Development the Government's objectives of higher one of Yugoslavia's larger integrated

Finance Companies agricultural output and increased factory farms and a major Dutchindustrialization. It will also generate an consumer goods producer are investing

Greece estimated $130 million a year in gross up to $9.6 million in equity. Yugoslavexports, provide an outlet for the bank loans and cash generation complete

The Corporation loaned $40 million to soybean crops of some 4,500 farmers, the financing. The project expands a pilot

the NATIONAL INVESTMENT and create 185 new permanent jobs. program begun in the early 1970s byBANK FOR INDUSTRIAL the Yugoslav sponsor and will giveDEVELOPMENT, S.A., to help finance Frikom an annual capacity of 15,000the institution's planned investment Malawi metric tons of frozen ready meals, bakeryprogram through 1978. IFC retained products and me.getabtput will help meet$5 million of the loan for its own The Corporation joined Malawian and growing domestic demand, especially foraccount and the balance is being placed European investors to develop a institutional feeding programs forwith participants. A group of European $64.9 million sugar enterprise in the factory workers, school children andand United States financial institutions Dwangwa river delta. IFC loaned other groups. It will provide permanentare assisting in underwriting and $9 million to DWANGWA SUGAR employment for 490 workers andarranging the participations. The IFC CORPORATION LIMITED, which is seasonal employment for an additionalloan supports this Greek development establishing a 13,190-acre sugar cane 126 workers. IFC assisted in developingbank's efforts to diversify its sources of estate and a 67,000 metric tons-a-year and implementing this joint venturefunds by borrowing a significant portion sugar mill. Sugar cane will also be between a Dutch company which hadof its foreign exchange requirements in supplied by an irrigated smallholders' not previously invested in Yugoslavia,the international commercial market. project benefiting 326 families. Half of and a Yugoslav enterprise which isThis financing will enable the institution the mill's production will be in raw sugar investing with a foreign partner forto continue to promote economic and half in refined sugar for marketing the first time.development in Greece by providing both domestically and abroad. Thefinance for the establishment of new project will generate net direct foreignproductive enterprises and for the exchange earnings estimated at $7modernization and expansion of million a year and create some 2,900existing ones. full-time and 500 seasonal jobs. The Thailand

project will also contribute to morebalanced regional economic development. IFC committed $2.5 million in loan

Food and A technical partner from the United and $200,000 in equity to UNITEDKingdom joined with two Malawian SUGAR TERMINAL LIMITED for aFood OU rocessing companies as sponsors of the project. $7.9 million project to build and operateThe remainder of the financing was a 720,000 metric tons-a-year bulk

Argentina provided by the German Development transportation, storage and shiploadingCompany (DEG), the European facility on the Chao Phya river just

IFC loaned $9 million to SOYEX S.A. Investment Bank, the Investment and south of Bangkok. The sponsors of thefor a $33 million project to build a Development Bank of Malawi, suppliers' project-providing $2 million in equity600,000 metric tons-a-year soybean credits, and cash generation. -are the major shareholders of one ofprocessing plant. The project is Thailand's largest sugar milling groups.sponsored by a leading Argentine agro- Loans from four Thai financialindustrial group. It will be located near institutions and suppliers' creditsZarate which is about 60 miles north of Yugoslavia complete the financing. The project willBuenos Aires, close to soybean producing permit bulk handling of sugar, reduceareas and transportation facilities. Equity The Corporation joined Yugoslav and wastage and cut port turnaround time forof $13.2 million for the project is being Dutch interests to establish a $40.6 freighters, thus reducing export costsprovided by the group companies and its million frozen foods enterprise, and improving the competitiveness ofshareholders. IFC is assisting in arranging FRIKOM RO INDUSTRIJA Thai sugar in the international market.loans of $10.8 million with international SMRZNUTE HRANE, on the outskirts A collateral benefit will be reducedcommercial banks to complete the of Belgrade. IFC made a $2 million congestion in the port of Bangkok.

Some IFC-assisted projects completed in 1976/77The date given is that of the original 1FCcommitment to the enterprise.

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A '. Philippines: Plhilagno Edible Oils, lnc-I 9 7 6

B. Korec: Hae Un Dae Development Company. Ltd.-1975C. Brazil: Tecanior SA. Textil Ceitariniense do Nortleste-1976

.*;;..D. \ D mtoia: Alahindra bginie Steel Conmpony, Ltd.-1964F. Morocco: Soc-icte des Cim7ents de Marraketh. S.A.-1976F. Colo'mbia: Cementos Bovaca, S.A.-1974G. Zambhia: Cenittury Pazkages Limiiited-1975

; H. Brazil: Co mtpanlhii Siderurgica chi Guanabara (C osigua)-1973

20 Cameroon contribute to the export of engines and 40 per cent for export to Europeanwill substitute for prospective imports. markets as printed fabric and ready-

An 5(8,)000 IFC equity investment FMB's equity was provided by the made garments. The project representshelped to finance S.A.F.A. sponsors, an Italian automobile a natural but significant progressionCAMEROUN, S.A.C.'s $5.6 million manufacturer and the State of Minas into these exports from the now-project to improve and expand rubber Gerais. A Eurodollar loan by a group established export of quality gray cloth.output and to diversify into palm oil of 36 banks, suppliers' credits and The project will benefit the economy byand palm kernel production at its internal company sources complete the generating an estimated $4 million in netDizangue estate. The balance of the project financing. The IFC commitment foreign exchange savings annually, byproject cost was met by equity and loan is a subordinated loan with an option creating about 1,200 new jobs, and byfinancing provided by Cameroon and to purchase common stock which is utilizing locally-grown cotton as itsFrench investors and financial intended to facilitate future sale of principal raw material. Other financinginstitutions, and bv cash generation. shares to private Brazilian investors. was provided by the Government ofThe new financing introduces into the Madagascar, the German DevelopmentCompany local participation which will Philippines Company (DEG), a Eurodollar loanincrease when, as contemplated, IFC syndicated by Societe Internationalelater sells its holdings to Cameroon C made a $3.5 million loan Financiere pour les Investissementsinvestors. At peak output, the project SARMIENTO INDUSTRtES, INC., et le Developpement en Afrique S Ais expected to yield annually 2,000 a large Philippine plywood producer (SIh ) suppiers' credts andmetric tons of rubber for export and and exporter, for an $8.2 million cas generation.8,600 tons of palm oil and 1,700 tons modernization and expansion project.of palm kernels to meet Cameroon's Philippine financial institutions d A rgentinadomestic needs. The project will have internal Company sources completed theimportant employment benefits and financing. The project will provide for The Corporation is lending $7 millionwill lead to a diversification of the full backward integration of the to Al-PARGATAS S.A.I.C.. a leadingcountry's exports. Company by almost doubling its log publicly-held Argentine manufacturer

harvesting capacity to 300,000 cubic of fabrics and non-formal footwear.meters a vear. It will improve the The Company is constructing a $55

Manufacturing Company's efficiency and lower its million textile mill that will increase itsoperating costs, allowing it to compete capacity by about 10 million linear

Brazil more effectively in international markets. meters of gray cotton and cotton blendIncreased export sales, in the range fabrics a year. An Argentine bank loan,

The introduction of advanced $1 5-$20 million annually, and important suppliers' credits and internal cashtechnology into Brazil was assisted bv employment benefits, primarily through generation are financing the balance ofa $20 million IFC loan for a new the preservation of existing jobs, are the project cost. The new mill will be$205.4 million foundry that incorporates projected. Together with its loan, IFC located in Catamarca, a less-developeda number of modern processes, including received an option to purchase a portion province in the northwest of Argentina,a recently-developed spheroidal casting of the Company's common stock, and is expected to benefit the region'smethod. The foundry is being built economy by creating about 280by FMB S.A. PRODUTOS permanent jobs in the mill. In addition,METALURGICOS at Betim, Minas Textiles the new cotton land being developedGerais, with annual capacity of 57.200 to supply the factory will createmetric tons of iron castings and 8,200 Madagascar 2,000 to 2,500 new jobs in agriculture.tons of aluminum castings, principally A U.S. and a Japanese bank participatedfor the Brazilian automotive industry. The Corporation is making its first in IFC's loan.The foundry project is an integral part investment in Madagascar with anof a large industrial complex including SI I million loan and a $293,000 equity Indonesiaa recently completed automobile plant. commitment for a $38.2 millionThe complex is having a major expansion of SOCIETE TEXTILE Additional support for P.T.developmental impact on employment DE MAJUNGA S.A., a fully-integrated KAMALTEX, an Indonesian textileand on the economy in general of textile mill in northwest Madagascar. venture IFC helped to establish inMinas Gerais, an emerging industrial The project will increase production by 1974, was provided by a $1.35 millionarea of Brazil. The project will 5.7 million meters a year, with over loan and $150,000 equity investment.

The $3.1 million expansion project will in a project to mine and process Ca ital Markets 21add 8,640 spindles and related 3.4 million metric tons of bauxite I

equipment to the existing 20,160-spindle annually in the Amazon region of Brazil Koreaspinning mill and increase output by about 680 miles west of the Atlantic43 per cent to 5.14 million pounds of Ocean. IFC is lending $15 million for thepolyester/cotton yarn per year. The project while Brazilian, United Kingdom I FC's first leasing company investmentexpansion will improve the Company's and United States financial institutions was made with a loan of up to $15economic efficiency, contribute to are providing loans totalling $144.8 million and an equity commitment ofalleviating the domestic yarn shortage, million. The project is being implemented $372_000 in KOREA DEVELOPMENTand create an additional 130 jobs at a by a majority Brazilian-owned company, LEASING CORPORATION. Fivelow capital cost per job. Additional MINERACAO RIO DO NORTE, S.A., million dollars of the loan was for IFC'sequity investments are being made by which is sponsored by a major domestic account with the rest for the account ofthe technical partner from India, an iron ore producer and a leading participants, a group of European, NorthIndonesian development finance Canadian aluminum company. Equity American and Asian banks. The projectcompany which the Corporation also of approximately $100 million is being will diversify and increase the sources ofhelped to establish, the Private provided by the sponsors and by long-term finance, particularly to smallInvestment Company for Asia (PICA), Brazilian. Dutch, Norwegian, Spanish and medium-scale enterprises. TheS.A., and an Indonesian industrialist. and United States companies and proceeds of IFC's loan will be used toA loan from a local bank and cash institutions. Additional project financing purchase equipment required by KDLC'sgeneration complete the financing. will be furnished through suppliers' clients and is expected to cover the

credits and local equipment financing. Company's foreign exchange

Ivory Coast IFC played an active role in developing requirements until mid-I 978.the project, which supports theGovernment's aims of increasing and

The $16.2 million expansion of ETS. R. diversifying exports, moving towardsGlONFREVILLEd S.A., an established, self-sufficiency in basic raw materialsifully-integrated Ivory Coast textile and developing the Amazon region. Themanufacturer, was assisted by an project will generate an estimated Kenva$885,000 IFC equity investment. The $75 million in foreign exchange earningsCompany is increasing its capacity by a year and create more than 1,000 jobs. A new approach to assisting small and50 per cent to 7,500 metric tons a year medium-scale industrial enterprises wasof fabrics and yarn-based on locally- made by IFC through a $2 million linegrown cotton and mostly for export to of credit to be matched with anEuropean markets. The project is equivalent amount from, andexpected to generate net foreign Philippines administered by, the KENYAexchange earnings of around $5 million COMMERCIAL BANK lIIMITED.per annum and to help strengthen the The Corporation invested $2.3 million The program provides relatively smallknow-how and technological basis for in loan and $1 .2 million in equity in private Kenyan firms with an integratedfurther export-oriented development of ACOJE MINING COMPANY. INC., package of IFC's long-term financethis industry at a later stage. Additional to help finance the Philippine-owned together with medium and short-termfinancing for the project included the diversified mining company's $9.1 finance and business advisory servicessale of equity to new investors and to million expansion of ore processing from the local bank. The Commonwealthexisting Ivory Coast and French facilities. Local sources and cash Fund for Technical Cooperation isshareholders, a loan from a consortium generation provided additional financing funding two specialists selected by IFCof Ivory Coast banks, and cash for the project which will increase who are assigned to the Kenyan bankgeneration. chromite ore processing capacity by to help implement the project. The

50 per cent and double copper ore project is expected to expand andprocessing capacity. The project, which improve the effectiveness of assistance

Mining supports the Government's policy of to smaller projects in the manufacturing,developing mineral resources for export, construction, agribusiness and service

Brazil creates employment for over 300 sectors by providing a range of servicesworkers and generates a projected and by making it more readily available

The Corporation is joining Brazilian, $7 million per year in additional through a commercial bank's networkEuropean and North American interests foreign exchange earnings. of branch offices.

22 Thailand an estimated 500 jobs indirectly. It also approximatel1 $19 million in equitv.

will generate approximately $15 million A Moroccan development bank loan of

IFC made its first investment in a mutual a year in foreign exchange benefits, $1 1.1 million, local bank loans offund development and management introduce advanced technology not approximately $2.7 million and Suppliers'institution with a $294,000 equity currently available in the country, and credits complctcd the financilg.commitment to THE MUTUAL FUND develop local natural resources. Production at the plant, which willCOMPANY LIMITED, of Thailand. employ 20)( workers. will help mectIt is a new institution which offers to growing domestic demanid and generatesmaller investors, for the first time in forcign exchange savings estimated atThailand, mutual funds with diversified Utilities S20 million at year.portfolios of equity shares and fixedincome securities. The Company's initial Colombia Gutatemnalafund was marketed in late April through _ ____. _

leading sec.urities companies and twoThai banks and was oversubscribed. IFC IFC made its first investment in a gas A loan of $3 million was made bv IFCplaied a important role in developing transmission project by providing $2 to C EMEN [OS NOVELLA S.A., forthe mutual fund project which aims at million in equity and a $13 million loan a $3 1.9 millionl project to increasechanneling savings from small individual for a $55 million, 240-mile pipeline in cement prodLiction and improve overallinvestors into equity investments, thereby northern Colombia. The pipeline will be efficiency. The project includesinVeStnFSinto secuityinvestmeners,therey aoperated by PROMIGAS. S.A. and will construction of a new 500,000 metricproviding financint for industrial link gas fields located in the Guajira tons-a-year plant at the Company'sprovdimng fiacing ft idustri peninsula with industrial centers which facility at San Miguel while phasing out

need a new source of supply to replace 240,000 tons a year of obsolete clinkerdwindling reserves from older fields. producing facilities. This will raise total

Pulp and Paper Additional financing was furnished by cement capacity to 810,000 tons a yearColombian and Mexican companies and to help meet growing demand in

Yugoslaveia financial institutions. A Mexican Guatemala and permit the CompanyYugoslavia_________________________ company is supplying engineering and to continue production at competitiveI FC invsteinaoinvetreetwen construction services for the project, costs. The Export-Import Bank of the

IFC nvested nm a joint venture between which is expected to result in estimated U.S. and U.S. commercial banks areYuigoslav-German nmterests to estabi-sh net foreign exchange savings of $70 to lending $19.2 million. Internal Companya $63.9 million, 45,000 metric tons-a- $80 million a year. A U.S. financial sources of $9 million and suppliers'

TheaCorporatirboardpan's cmit Yugosavinstitution participated in IFC's loan. credits complete the financing. TheThe Corporation s commitment, project will create employment in aconsisting of $2.1 million in equity and relatively underdeveloped region and$13.3 million in loan. was made to the increased production will substituteTVORNICA KARTONA I for prospective imports.AMBALAZE CAZIN. A large, iConstruct tionf sdiversified Yugoslav forest products a o hiaenterprise provided S 10.8 million in M aterials Co1oij1biaequity; a consortium of companies fromthe Federal Republic of Germany. $5.1 Morocco IFC made a subordinated loan ofmillion: and the German Development $2.4 million to COMPANIACompany (DEG) is to provide $1.3 IFC joined Moroccan and Middle COI.OMBIANA DE CLINKER, S.A.,million. An $1 1.2 million loan from a Eastern institutions in establishing a for a project to establish a $34.4 million,Yugoslav bank, a $2.2 million DEG loan. $61.7 million, 625,000 metric tons-a- 600,000 metric tons-a-year, wet processand S 17.9 million in suppliers credits year cement plant at Temara, near cement plant at Cartegena. The loancomplete the financial plan. The project. Rabat. The Corporation's investment carries an option to buy up to 20 perlocated at Cazin in the Republic of Bosnia was made in ASMENT DE TEMARA cent of the Company's share capital. TheHerzegovina, one of the less-developed S.A. and consists of $2.3 million in project site is close to raw materials andrcgions of Yugoslavia, will produce high- equity and $4.8 million in loan. The deep-water loading facilities. Marketinggrade coated and uncoated paperboard Moroccan sponsor and a group of will he largely export-oriented in thefor the local market and for export. It is Moroccan andi internatiotial institutions early years of operation with expectedexpected to create 236 jobs directly and and individual investors subscribed to gross annual foreign exchange earnings

of $17 million. It will also create cement high pressure pipe in Cyprus to SIDERURGICA DA GUANABARA 23permanent additional employment in an help meet domestic needs. The IFC (COSIGUA), a leading Brazilian non-area which has lagged behind the investment is in a new company, flat steel producer, with a $1 millionprogress of other parts of Colombia. THE CYPRUS PIPES INDUSTRIES equity and $10 million loan investment.Equity for the venture is being provided LIMITED, and consists of $500,000 in The entire loan was placed with fiveby the project sponsors which include loan, and $1 7 1.000 in equity. Other financial institutions in Belgium, Francethree leading Colombian cement financing was provided by the sponsors, and the United States. The investmentcompanies. a Government development a Swiss manufacturer and a local cement is in addition to IFC's original $64.5institution, four local private company. together with the Government million commitment for the project indevelopment finance companies, a of Cyprus, a Cyprus development bank, 1974 and is part of $39.5 million in newdomestic insurance company and an and a British bank. In addition, a stock financing. The remainder of the newaffiliate of the cement companies. Debt offering to the Cypriot general public is financing is being provided by thefinancing includes a loan package planned. The 6,500 metric tons-a-year Brazilian and German sponsors of theprovided by the Export-Import Bank of plant is being built near Limassol on the project, by a stock offering to Brazilianthe U.S. and a New York commercial south coast of Cyprus. The project will shareholders, and by internally-generatedbank; suppliers' credits; and loans from benefit the local economy by providing funds. The project will increase thefive Colombian development finance pipe for irrigation, sewerage and other Company's liquid steel capacity fromcompanies. two local cement companies water distribution programs. 250,000 metric tons a year to 550,000and local banks. tons a year, introduce a significant new

Iron and Steel technology to Brazil-the directCvpl-tts Iron and Steel reduction of iron ore into sponge iron,

Cy'p7r1lS . help meet domestic demand for steelBr1azil from domestic sources, and create

The Corporation joined Cypriot and approximately 1,200 new jobs.Swiss investors in establishing a $3.4 The Corporation increased its supportmillion plant to manufacture asbestos- for a major expansion of COMPANHIA

24

Commitments by Types of Business 1957-1977Millions of U.S. Dollars

Iron and Steel 275.8

Textiles and Fibers = 205.3

Development198Finance Companies

Construction Materials 189.2

Pulp andPaper Products14

Mining 136.6

General 106.0Manufacturing > 16

Chemical and 585 .2Petrochemical Products ~

Food and -Food Processing 71.4

Motor Vehicles 6.and Accessories J 677

Fertilizers 60.3

Tourism > 52.4

Non-ferrous metals 38.9

Money and ICapital Markets 332

Utilities _ 31.5

Machinery X 14.8

Other 7.050 100 150 200 250

IV Financial Statements

26 Balance Sheet 25

28 Statement of Income

29 Statement of Changes in Financial Position

30 Statement of Loan and Equity Investments

36 Statement of Cumulative Gross Commitments

37 Notes to Financial Statements

38 Report of Independent Accountants

Balance SheetInternational Finance Corporation

June 30, 1977 and June 30, 1976

Expressed in United States Dollars-See Notes to Fin7ancial Statements, Exhibit F

261977 1976

Assets

DUE FROM BANKS-Note B .............................................. $ 956,304 $ 4,213,547

INVESTMENTS

Short-term obligations of governments(At cost or amortized cost, which approximates market) .................... 2,793,586 14,187,455

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

Investments held for the Corporation ........................ $864,215,532 778,933,748Less-Undisbursed investments .......................... 201,133,445 256,090,611Disbursed and outstanding ............................... 663,082,087 522,843,137Less-Reserve against losses-Note A ...................... 30,400,000 30,700,000

632,682,087 492,143,137

ACCRUED INCOME ON LOANS-Note A ................................. 10,812,667 9,256,267

RECEIVABLE FROM PURCHASERS OF LOAN AND EQUITYINVESTMENTS SOLD OR AGREED TO BE SOLD ........ $ 22,141,470 61,729,391

Less-Undisbursed investments sold or agreed to be sold... . 16,819,235 58,148,5865,322,235 3,580,805

OTHER ASSETS ............. 1,251,853 326.477TOTAL .$653,818,732 $523,707,688

Exhibit A

271977 1976

Liabilities, Capital and Surplus

LIABILITIES AND DEFERRED INCOME

Accrued charges on borrowings ....................... ....... $ 9,997,026 S 6,749,356Accounts payable and other liabilities . ............ 2,145,007 1,459,487Deferred income .............. 1,384,354 1,614,987

$ 13,526,387 9,823,830

BORROWINGS-Note C

Loans from the International Bank for Reconstructionand Development ................ $511,910,302 501,943,192

Less-Undrawn .......... 107,352,115 179,792,928Withdrawn and outstanding ............................ 404,558,187 322,150,264

Loans from others-withdrawn and outstanding .............. 40,000,000 5,000,000444,558,187 327,150,264

CAPITAL AND SURPLUS

Capital stock-Note DAuthorized 110,000 shiares of $1,000 par value each

Subscribed 108,342 shares-1977, 108,324 shares-1976... . $108,342,000 108,324,000Payment on account of pending subscriptions ................ 86,000

General reserve-Note A ................................... 87,306,158 78,409,594

195,734,158 186.733,594TOTAL.. $653,818,732 $523,707,688

Statement of Income Exhibit BInternational Finance Corporation

For the Fiscal Years Ended June 30, 1977 and June 30, 1976

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

281977 1976

Operating IncomeIncome from obligations of governments .................................... $ 285,699 S 271,756

Income from loan and equity investments and standbyand underwriting commitments:

Interest ................................................. $43,965,909 33,997,043Dividends and profit participations ......................... 8,612,276 7,036,429Commitment charges ..................................... 1,579,120 1,592,013Commissions ............................................ 398,029 582,606

54,555,334 43,208,091Other operating income ................................................... (335,084) (186,429)

54,505,949 43,293,418

Operating ExpensesCharges on borrowings ........................................ $27,771,918 $22,096,703Administrative expenses"' .......... ........................... 13,131,898 11,399,504

40,903,816 33,496,207

Income from Operations ..................................................... 13,602,133 9,797,211

Realized Gain on Sales of Loan and Equity Investments .......................... 1,242,432 4,260,415

Provision for Losses-Note A ................................................ (5,948,001) (6,366,906)

Net Income-Transferred to General Reserve-Note A .......................... $ 8,896,564 $ 7,690,720

[The Inter-national Bank for Reconstruction and Developnment is charging the Corporation an annual "Serxice and Support Fee" whichi lor the year eidedJune 30, 1977 was fixed at $1,657,000 (51,485,000-1976).

Statement of Changes in Financial Position Exhibit CI7nternational Finianice Corporationz

For the Fiscal Years Ended June 30, 1977 and June 30, 1976

Expressed in United States Dollars-See Vote.s to Financial Staztemtiersts, Evhibit F

291977 1976

Funds Provided

Net income ............................................................... $ 8,896.564 S 7.690,720Items not requiring current outlay of funds:

Provision for losses on investimients ......................... ......... I .... 5,948,001 6,366,906Chaniges in accrued income and expenses ................................... 1,721,550 1,128,191Other .................................................................. (171,860) (5,351)

Funds provided from operations ........................................ 16,394,255 15,180,466Capital subscriptions ....................................................... 18,000 993,000Borrowings ...................................... ........................ 127,440,813 65,719,008Repayment of Loans ....................................................... 38,644,755 32,675,607Sales and participations .................. 75,642,168 102,446,888Other .................................................................... - 1,665,943

TOTAL FUNDS PROVIDED .......................................... $258,139,991 $218,680,912

Funds Used

Disbursemenits on loan and equity investments ................................ $259,937,771 $199,703,574Repayments on loanis from the International Bank

for Reconstructioni and Development ...................................... 11,806,038 9,634.172Other .................................................................... 1,047,294 _

TOTAL FUNDS USED ............................................... $272,791,103 $209,337,746

Increase (decrease) in Cash and Short-Term Obligations of Governments ........ (.... I$ 14,651,112) S 9,343.166

Statement of Loan and Equity InvestmentsInternational Finatnce Corporation

June 30, 1977

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

30 Investments held for the Corporation(including undisbursed balances)

Total loansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

ArgentinaAlpargatas S.A.I.C ................................... Textiles and fibers S 7,000 $ 3,500 $ - S 3,500Calera Avellaneda, S.A ............................... Cement and construction

material 5,500 2,182 - 2,182Celulosa Argentina, S.A .............................. Pulp and paper products 12,500 5,835 - 5,835Dalmine Siderca, S.A.I.C .............................. Iron and steel 17,000 14,100 - 14,100Soyex S.A ............ ............................. Food and food processing 9,000 9,000 - 9,000

TOTAL 34,617 - 34,617Bolivia

Banco Hipotecario Nacional .......................... Money and capital market 338 - 308 308Banco Industrial, S.A ................................. Development finance 550 - 550 550Plasmar, S.A ........................................ Plastic products 400 156 100 256

TOTAL 156 958 1,114Brazil

Acos Villares, S.A .................................... Iron and steel 9,926 1,891 123 2,014Capital Market Development Fund (FUMCAP) ......... Money and capital market 5,000 5,000 - 5,000Capuava Carbonos Industriais, Ltda .................... Chemicals and petrochemicals 7,262 2,480 1,082 3,562Champion Papel e Celulose, S.A . ..................... Pulp and paper products 4,000 - (Note I) -Ciminas-Cimento Nacional de Minas, S.A .............. Cement and construction

material 32,340 4,128 3,200 7,328Companhia Siderurgica da Guanabara (Cosigua) ......... Iron and steel 84,468 10,619 7,436 18,055Fabrica de Tecidos Tatuape, S.A ....................... Textiles and fibers 31,000 7,233 - 7,233FMB S.A. Produtos Metalurgicos ...................... Iron and aluminum castings 20,000 20,000 - 20,000Industrias Villares, S.A ................................ Machinery 6,000 2,472 - 2,472Mineracao Rio do Norte, S.A .......................... Mining 15,000 15,000 - 15,000Oxiteno Nordeste, S.A ................................ Chemicals and petrochemicals 10,000 10,000 - 10,000Oxiteno, S.A. tndustria e Comercio ..................... Chemicals and petrochemicals 6,040 3,163 1,240 4,403Papel e Ceillose Catarinense, S.A ...................... Pulp and paper products 7,192 - 3,408 3,408Petroquimica Uniao S.A .............................. Chemicals and petrochemicals 8,380 1,491 2,046 3,537Poliolefinas. S.A. Industria e Comercio ................. Chemicals and petrochemicals 8,377 2,257 2,000 4,257Rio Grande-Companhia de Celulose do Sul ............ Pulp and paper products 4,900 3,675 - 3,675Santista Industria Textil do Nordeste, S.A ............... Textiles and fibers 7,450 6,450 1,000 7,450Tecanor S.A. Textil Catarinense do Nordeste ...... ... Textiles and fibers 6,000 6,000 - 6,000Ultrafertil, S.A. Industria e Comercio de Fertilizantes .... Fertilizers 11,250 - 2,945 2,945

TOTAL 101,859 24,480 126,339

CameroonBata Societe Anonyme Camerounaise . ........... Shoes 380 - 127 127S.A.F.A. CameroLn, S.A.C ............................ Food and food processing 808 -- 808 808

TOTAL - 935 935

ChileEmpresa Minera de Mantos Blancos, S.A .......... .... Mining 4.338 - 1,237 1,237Fideos y Alimentos Carozzi, S.A ....................... Food and food processing 1,654 - 154 154Minera Sagasca, S.A .................................. Mining 10,900 1,375(2 l - 1,375

TOTAL 1,375 1,391 2,766

ChinaAsia Cement Corporation .......... .................. Cement and construction

material 4,219 - 1,087 1,087Oriental Chemical Fiber Corporation ................... Textiles and fibers 5,625 1,870 612 2,482

TOTAL 1,870 1,699 3,569

ColombiaCementos Boyaca, S.A ................................ Cement and construction

material 1,500 1,324 - 1,324Cementos del Caribe, S.A ............................. Cement and construction

material 3,600 3,150 - 3,150Compania Colombiasia de Clinker, S.A ................. Cement and constrLction

material 2,432 2,432 - 2,432Compania Colombiana de Tejidos, S.A ................. Textiles and fibers 2,126 - 63 63Corporacion Financiera Colombiana ...... ............ Development finance 2,024 - 1,012 1,012Corporaci6n Financiera de Caldas ....... .............. Development finance 812 - 701 701Corporaci6n Financiera del Norte ....... .............. Development finance 454 - 454 454Corporacion Financiera del Valle ...................... Development finance 431 - 235 235Corporaci6n Financiera Nacional ...................... Development finance 2,042 - 604 604

Exhibit D

Investments held for the Corporation 31(including undisbursed balances)

Total loansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

Colombia (continued)Enka de Colombia, S.A... ............................. Textiles and fibers $ 7,605 $ 2,990 S 2,492 $ 5.482Minera Las Brisas, S.A ............................... Mining 6,000 6,000 - 6,000Pro-Hoteles, S.A ..................................... Tourism 1,046 516 166 682Promigas, S.A ......................................... Utilities 15,000 6,000 2,000 8,000

TOTAL 22,412 7,727 30,139Cyprus

The Cyprus Cement Company Limited ................. Cement and constructionmaterial 2,884 1,511 543 2.054

The Cyprus Pipes Industries Limited ................... Cement and constructionmaterial 671 500 171 671

TOTAL 2,011 714 2,725

Dominican RepublicCementos Nacionales, S.A ............................. Cement and construction

material 7,380 6.000 1,380 7,380

EcuadorEcuatoriana de Desarrollo, S.A. (Compahia Financiera). Development finance 413 - 207 207La Internacional, S.A ................................. Textiles and fibers 3.963 1,062 - 1,062Sociedad Agricola e Industrial San Carlos, S.A .......... Food and food processing 5,000 5,000 - 5,000

TOTAL 6,062 207 6,269Egypt, Arab Republic of

Arab Ceramic Company S.A .......................... Ceramics 5,652 3.225 927 4,152

El SalvadorHoteles de Centro America, Sociedad An6nima ......... Tourism 934 382 233 615

EthiopiaEthiopian Pulp and Paper, S.C ......................... Pulp and paper products 1,909 - 1,209 1,209H.V.A.-Metahara, S.C .............................. Food and food processing 9.045 1,932 1,622 3.554Textile Mills of Dire Dawa ........................... Textiles and fibers 4,815 932 837(3) 1,769

TOTAL 2,864 3,668 6,532

GreeceAluminium de Grece, Societe Anonyme Industrielle

et Commerciale ................................... Non ferrous metal 8,653 638 577 1,215General Cement Company, S.A ........................ Cement and construction

material 3,500 350 - 350Hellenic Food Industries, S.A ......................... Food and food processing 1,238 786 238 1,024National Investment Bank for Industrial

Development, S.A .................................. Development finance 40,719 5,000 102 5,102TOTAL 6,774 917 7,691

GuatemalaCementos NoveJla S.A ............................... Cement and construction

material 3,000 3,000 - 3,000Exploraciones y Explotaciones Mineras Izabal,

Sociedad An6nima ................................. Mining 15,000 15,000 - 15,000TOTAL 18,000 - 18,000

IndiaEscorts Limited ..................................... Engine parts 6,600 6,600 - 6,600Indian Explosives, Ltd ................................ Fertilizers 11,462 90 2,263 2,353Lakshmi Machine Works, Ltd .................... .... Machinery 1,312 - 314 314Mahindra Ugine Steel Company, Ltd ................... Iron and steel 12,797 9,830 830 10,660Zuari Agro Chemicals, Ltd ............................ Fertilizers 18,910 7,898 3.040 10.938

TOTAL 24,418 6,447 30,865Indonesia

P. T. Daralon Textile Manufacturing Corporation ....... Textiles and fibers 6,350 3,725 1,125 4,850P. T. Jakarta International Hotel ...................... Tourism 11,000 3,667 - 3,667P. T. Kabel Indonesia-Kabelindo ..................... Cable manufacturing 3,172 1,012 372 1,384P. T. Kamaltex .................................. ... Textiles and fibers 4,500 3,430 750 4,180P. T. Monsanto Pan Electronics ....................... Electronic products 900 700 - 700P. T. Primatexco Indonesia ........................... Textiles and fibers 4,801 2,167 801 2,968

Statement of Loan and Equity Investments (continued)

International Finance Corporation

June 30, 1977

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

32 Investments hetd for the Corporation(including undisbursed balances)

Total ioansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

Indonesia (conitinued)P. T. Private Development Finance Company of Indonesia Development finance $ 483 $ - S 483 $ 483P. T. Semen Cibinong ................................ Cement and construction

material 26,816 11,993 4,500 16,493P. T. Unitex ........................................ Textiles and fibers 3,300 627 800 1,427

TOTAL 27,321 8,831 36,152

IranGorouh Sanaye Kaghas Pars Sherkate Sahami Aam ...... Pulp and paper products 14,193 7,911 1,944 9,855Sherkate Sahami Aam Navard Va Luleh Ahwaz ......... Iron and steel 7,739 640 - 640Sherkate Sahami Carbon Iran, Sahami Khass ........... Chemicals and petrochemicals 3,553 2,033 348 2,381

TOTAL 10,584 2,292 12,876

IsraelMakhteshim Chemical Works Ltd ..................... Chemicals and petrochemicals 10,500 8,554 1,750 10,304

Ivory CoastBanque Ivoirienne de Developpement Industriel, S.A ..... Development finance 204 - 204 204Ets. R. Gonfreville, S.A .............................. Textiles and fibers 885 - 885 885

TOTAL - 1,089 1,089

JamaicaPegasus Hotels of Jamaica, Ltd ........................ Tourism 2,913 1,202 669 1,871

JordanJordan Ceramic Industries Company Ltd ............... Ceramics 1,825 1,350 226 1,576Jordan Fertilizer Industry Company, Ltd ................ Fertilizers 3,084 - 3,084 3,084

TOTAL 1,350 3,310 4,660

KenyaKenya Commercial Bank Limited ...................... Money and capital market 2,000 2,000 - 2,000Kenya Hotel Properties, Ltd ........................... Tourism 5,880 3,602 772 4,374Panafrican Paper Mills (E.A.), Ltd ..................... Pulp and paper products 19,408 8,206 4,504 12,710Rift Valley Textiles Limited ........................... Textiles and fibers 9,070 5,300 2,770 8,070Tourism Promotion Services (Kenya) Ltd ............... Tourism 2,420 1,590 - 1,590

TOTAL 20,698 8,046 28,744

KoreaChonju Paper Manufacturing Co., Ltd ................. Pulp and paper products 5,534 5,000 534 5,534Gold Star Company, Ltd ............................. Electric products 27,853 12,000 1,853 13,853Hae Un Dae Development Company, Ltd ............... Tourism 3,450 2,750 700 3,450Honam Silk Industry Company ....................... Textiles and fibers 1,677 560 277 837Korea Development Finance Corporation .............. Development finance 19,188 8,900 1,087 9,987Korea Development Leasing Corporation ............... Money and capital market 15,372 5,000 372 5,372Korea Investment and Finance Corporation ............. Money and capital market 1,394 - 1,394 1,394Korea Securities Finance Corporation ............... . Money and capital market 6,078 4,687 1,078 5,765Korea Zinc Company, Ltd ............................ Non ferrous metal 19,012 15,000 4,012 19,012Tong Yang Nylon Company, Limited .................. Textiles and fibers 9,000 6,497 2,070 8,567

TOTAL 60,394 13,377 73,771

LebanonBank of the Near East, S.A.L ......................... Money and capital market 1,250 - 1,250 1,250Lebanon Textiles (Libtex) S.A.L ....................... Textiles and fibers 3.900 3,400 - 3,400

TOTAL 3,400 1,250 4,650

LiberiaLiberian Bank for Development and Investment ......... Development finance 555 - 555 555

MadagascarSociete Textile de Majunga S.A .............. ........ Textiles and fibers 11,293 11,000 293 11,293

MalawiDavid Whitehead and Sons (Malawi) Ltd ............... Textiles and fibers 6,000 6,000 - 6,000Dwangwa Sugar Corporation Limited .................. Food and food processing 9,000 9,000 - 9,000

TOTAL 15,000 - 15,000

MalaysiaIndia-Malaysia Textiles, Berhad ....................... Textiles and fibers 1,498 890 248 1,138Malayawata Steel, Berhad ........................... Iron and steel 3,693 409 - 409

TOTAL 1,299 248 1,547

Exhibit D

Investments held for the Corporation 33(including undisbursed balances)

Total loansCOUNTRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

MauritiusDinarobin Inns and Motels Limited .................... Tourism $ 615 S 217 $ - S 217

MexicoCancun Aristos Hotel ................................ Tourism 1,240 927 264 1,191Celanese Mexicana, S.A ......................... .... Textiles and fibers 12,000 7,429 - 7,429Cementos Veracruz, S.A ........................... Cement and construction

material 10,500 5,712 - 5,712Fundidora Monterrey, S.A ............................ Iron and steel 23,741 1,025 1,420 2,445Mexinox, S.A ....................................... Iron and steel 14,773 12,000 2,773 14,773

TOTAL 27,093 4,457 31,550Morocco

Asment de Temara S.A .............................. Cement and constructionmaterial 7,091 4,755 2,336 7,091

Banque Nationale pour le Developpement Economique.. Development finance 1,496 - 852 852Compaflia Industrial del Lukus, S.A ................... Food and food processing 1,389 - 398 398Socite des Ciments de Marrakech, S.A ................. Cement and construction

material 1,336 - 1,336 1,336

TOTAL 4,755 4,922 9,677

NepalSoaltee Hotel Limited ................ T............... Tourism 3,107 2,700 407 3,107

NZicaraguaNicaragua Sugar Estates, Ltd ....................... Food and food processing 6,500 6,500 - 6,500Posada del Sol, S.A .................................. Tourism 900 700 200 900Textiles Fabricato de Nicaragua, S.A ................... Textiles and fibers 2,071 200 - 200

TOTAL 7,400 200 7,600Nigeria

Arewa Textiles, Ltd ................ . ................ Textiles and fibers 1,575 - 442 442Funtua Cottonseed Crushing Company Limited ......... Cottonseed oil 1,580 865 - 865Lafiagi Sugar Estate ............... ................. Food and food processing 112 - 112 112Nigerian Aluminium Extrusions Limited ..... .......... Non ferrous metal 1,328 1,002 326 1,328

TOTAL 1,867 880 2,747

PakistanDawood Hercules Chemicals, Ltd ...................... Fertilizers 3,923 - 2,923 2,923Gharibwal Cement, Ltd ............................... Cement and construction

material 5,668 126 418 544Packages, Ltd ....................................... Pulp and paper products 3,152 279 605 884Pakistan Industrial Credit and Investment

Corporation, Ltd............... . ................ Development finance 520 - 483 483Pakistan Paper Corporation, Ltd .................... Pulp and paper products 7,041 4,761 2,019 6,780

TOTAL 5,166 6,448 11,614Panama

Corporacion de Desarrollo Hotelero, S.A ............ Tourism 1,472 1,100 266 1,366

ParaguayFINAP, S.A ........................................ Lumber products 5,400 4,400 1,000 5,400

PeruCemento Andino, S.A ................................ Cement and construction

material 2,461 - 192( :) 192Compafiia de Cemento Pacasmayo, S.A ................ Cement and construction

material 1,605 - 106 106Southern Peru Copper Corporation .................... Mining 15,000 15,000 - 15,000

TOTAL 15,000 298 15,298

PhilippinesAcoje Mining Company, Inc .......................... Mining 3,500 2,300 1,200 3,500Filipinas Synthetic Fiber Corporation .................. Textiles and fibers 1,500 1,263 - 1,263Manila Electric Company ............................ Utilities 8,000 2,345 - 2,345Maria Cristina Chemical Industries, Inc ................. Iron and steel 1,986 1,368 436 1,804Marinduque Mining and Industrial Corporation ......... Mining 15,000 12,917 - 12,917Mariwasa Manufacturing, Inc ......................... Cement and construction

material 1,193 64 239 303

Statement of Loan and Equity Investments (continued)

Intertiational Finance Corporation

June 30. 1977

Expressed in United States Dollars (in thousands)-See Notes to Finan1cial Statements, Exhibit F

34 Investments held for the Corporation("Icluding undisbursed balances)

Total loansCOUN TRY Original and equityand Obligor Type of business commitments Loans Equity (at cost)

Phillipines (cwvintrwed)Philagro Edible Oils, Inc .............................. Coconut oil and copra 5 2,840 S 2,650 S 190 $ 2,840Philippine Long Distance Telephone Company .......... Utilities 4,500 3,068 - 3,068Philippine Petroleum Corporation ..................... Chemicals and petrochemicals 8.271 4,650 871 5,521P'hilippine Polyamide InduIstrial Corporation ............ Textiles anid fibers 7,000 7,000 - 7,000Private Development Corporation of the Philippines ..... Development finance 19,359 6,348 - 6,348RFM Corporation ................................... Food and food processing 1,200 1,011 - 1,011Sarmiento Industries, Inc ............................. Plywood and wood products 3,500 3,500 - 3,500Victorias Chemical Corporation ....................... Chemicalsandpetrochemicals 2,196 1,322 346 1,668

TOTAL 49,806 3,282 53,088

RwandaSociete d'lnvestissensent Rwandaise du The S.A.R.L.... . Food and food processing 535 535 - 535

SenegalBud Senegal, S.A .................................... Food and food processing 844 - 677 677Societe Financiere Senegalaisc pour le Developpement

de l'fndustrie Tourisme ............................. Development finance 237 - 237 237Societe Industrielle d'Engrais aLt Senegal ................ Fertilizers 3,460 308 810 1,118

TOTAL 308 1,724 2,032

SpainIndustrias de Tabieros y Derivados dc la Madera S.A. . . Construction material 5,250 4,073 864 4.937

SudanCotton Textile Mills. Ltd ............................. Textiles and fibers 9.980 8.715 1,265 9,980Khartoum Spinninig anid Weaving Company Ltd ......... Textiles and fibers 2,212 152 273 425

TOTAL 8,867 1,538 10,405Thailand

Siam Cement Co., Ltd ................................ Cement and constructionmaterial 32.082 10,152 2,043 12,195

The Mutual Fund Companiy Limited ................... Money and capital market 294 - 294 294Unlited Sugar Terminal Limited ....................... Food and food processing 2,700 2,500 200 2,700

TOTAL 12,652 2,537 15,189

TunisiaBanque do D6veloppcrnent Economique de TLnisie ...... Development finance 1,208 - 1,208 . 1,208Compagnie Financi&re ct Touristique, S.A. ............... Tourism 10,248 6,833 2,248 9,081Industries Chimiques du Fluor, S.A .................... Chemicals and petrochemicals 640 - 640 640Societe d'Etudes et dc Devcloppement de Sousse-Nord ... Tourism 3,161 2,530 631 3,161Societe Touristique Ct Hotelicre Rym, S.A ............... Tourism 1,930 1,409 298 1,707

TOTAL 10,772 5,025 15,797

'IurkeyAkdeniz Turistik Tcsislcr A.S ......................... Tourism 603 185 268 453Aksa Akrilik Kimya Sanayii. A.S ....... . ............. Textiles and fibers 10,000 8,000 - 8,000Anadolu Cam Sanayii. A.S ............................ Glass 11,583 5,948 1,583 7,531Asil Celik Sanayi ve Ticaret A.S ....................... Iron and steel 15,112 12,000 3,112 15,112Asian ve Eskihisar Mtittchit Cimento ve SoL Kireci

1-abrikalari, A.' ................................... Cement and constructionmaterial 101600 5,600 - 5,600

Bor-san Gemlik BorLu Tesisleri, A.S .................... Iron and steel 4,263 2,946 663 3,609Doktas DokumCLIluik Ticarct ve Sanayii, A.S ............ Iron artd stee 8,872 7,500 1,314 8,814Kartaltepe Mensucat Fabrikasi, T.A.S .................. Textiles and fibers 1.300 1,114 - 1,114Nasas-Aluminyum Satnavii ve Ticareti A.S ............. Non lerrouIs metal 9,946 5,198 1,371 6,569Sass SLin'i ve Sentetik Elyaf Sanayii, A.S ................ Chemicals and petrochemicals 15,000 7,500 - 7,500Sentetik Iplik Fabrikalari, A.S ......................... Textiles and fibers 4,568 703 555 1,258Turkive Sinai Kalkinma Bankasi, A.S .................. Development finance 63,369 15,000 1,298 16,298Viking Kagit ve ScluIloz, A.S .......................... Pulp and paper products 3.169 1,719 669 2,388

TOTAL 73,413 10,833 84,246

UruguayFabrica UrUgUaya de NCLumaticos, S.A ................. Motor vehicles and accessories 3,800 3,800 - 3,800

VenezuelaSociedad Financier.a PIromotora del Mercado de

Capitales, C.A ................... ................. Money) and capital market 701 - 701 701Sociedad Financicra Valinvenca. S.A ................... Money and capital market 351 - 351 351

TOTAL - 1,052 1,052

Exhibit D

Insestments held for the Corporationi 35lincluding undisbursed balances)

Total loansCOUNTRY Original and equityand Obligor Tyoe of business commitments Loans Equity (at cost)

YugoslaviaBelisce-Bel Tvornica Papira,

Poluceluloze I Kartonaze-Belisce ................... Pulp and paper products $13,259 S 11,369 $ - S 11,369Fap-Famos Belgrade/Daimler-Bcnz, A.G ................ Motor vchicles and accessories 15,956 10,717 2,310 13,027Frikom Ro Industrija Smr7nute Hrane ................. Food and food processing 6,022 4,000 2.022 6,022International Investment Corporation for Yttgoslavia .... Development finance 2.000 - 2,000 2,000Rudarsko Metalurski Kombinat Zenica ................ Iron and stcel 50,000 5,000 - 5,000

o Salonit Anhovo Industrija Gradbenega Materiala ........ Cement and construction___________n_ material 10,000 2,500 - 2,500,|Sava-Semerit ...................................... Motor vehicles and accessories 5,520 3,000 1.179 4.179

itomanavomobilov in Motorjev Maribor,,'KlocknerHumboldt-Deutz, A.G .Motor vehicles and accessories 9,825 5,625 1,540 7,165

Tvornica Kartona I Ambalaze Cazin .Pulp and paper products 15,483 13,345 2,138 15,483ZP Slovenske Zelezarne Zelezarna Jesenice .Iron and steel 10,000 10,000 - 10,000Zavodi Crvena Zastava/Fiat S.p.A .Motor vehicles and accessories 13,000 3,333 7.400 10,733

TOTAL 68,889 18,589 87,478 lri' t'!'

ZaireSociete Financiere de D eveloppemen .Development finance 756 - 756 756

ZambiaCentury Packages Limited. Plastic wrappings 985 775 210 985Development Bank of Zambia. Development finance 545 - 545 545Zambia Bata Shoe Company Limited .Shoes 2,278 366 228 594

TOTAL 1,141 983 2,124

Regional InvestmentsAfrica

SIFIDA Investment Company, S.A .Deselopment finance 680 - 680 680Latin America

ADELA Investment Company, S.A. Deelopment finance 10,000 7,300 - 7,300

TOTAL 7,300 680 7,980

INVESTMENTS HELD FOR THE CORPORATION $ 704,081 5160,134 $ 864,215Undisbursed balances 173,566 27,567 201,133

Disbursed balances S 530,515 $132,567 S 663,082

INVESTMENTS HELD BY THE CORPORATIONFOR PURCHASERS AND PARTICIPANTS

Total 5 297,907 5 2,655 $ 300.562Undisbursed balances 15,329 1,490 16,819

Disbursed balances S 282,578 5 1,165 $ 283.743

TOTAL INVESTMENTS HELD FOR THE CORPORATIONAND FOR PURCHASERS AND PARTICIPANTS

Total $1,001,988 S162,789 $1,164,777

Undisbursed balances 188,895 29,057 217,952

Disbursed balances $ 813,093 $133,732 $ 946,825

Note (I): Equity investment in this company was acquired at no cost.Note (2): During fiscal year 1977 this investment was reduced by $6,248,000 whichi was written off.Note (3): IFC's equity investment has been the subject of acquisition procedures by the Gosernment; the matter of pay,ment is pending.General: The operational investments are represented by loans and equity, as stated. In addition, in certain investments, the Corporation has the right toacquire shares and/or participate in the profits of the enterprise.

Statement of Cumulative Gross Commitments Exhibit EInternational Finance Corporation

June 30, 1977

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

Cumulative Gross Cumulative GrossCommitments Commitments

Number of (including exchange Number of (including exclhangeCOUNTRY Enterprises adjustments) COUNTRY Enterprises adjustments)

Afghanistan ...................... S I 322 Malawi .......................... 2 $ 15,000Argentina ...... . . . 10 69,210 Malaysia ........................ 4 8,691Australia .2 975 Mauritania 1.. . ........... 20,007

36 Bolivia .3 1,288 Mauritius ........................ 1 615

Brazil .25 322.284 Mexico .......................... 13 69,091Cameroon .2 1,188 Morocco ........................ 4 11,311Chile .5 21,191 Nepal ........................... I 3,107China ... . . . . 2 9,844 Nicaragua ........... ........ 3 9,471Colombia ........................ 24 53,658 Nigeria .......................... 5 5,996Costa Rica ....................... 1 589 Pakistan ......................... 9 30,224Cyprus .......................... 2 3,554 Panama ......................... 1 1,473Dominican Republic .............. 1 7,380 Paraguay ........................ 1 5,400Ecuador ......................... 3 9,376 Peru ............................ 7 23,980Egypt, Arab Republic of ........... 1 5,652 Philippines ....................... 16 86,252El Salvador ...................... 2 1,074 Rwanda . .............. 1 535Ethiopia ......................... 3 15,768 Senegal ........................... 3 4,541Finland ..... . ..... 4 3,148 Spain ........................... 4 18,761GCreece .... . . . . . 6 56,236 Sri Lanka ........................ 1 3,250Guatemala ....................... 3 18,200 Sudan ........................... 2 12,192Honduras ........................ 2 453 Tanzania ........................ 1 4,657India ........................... 12 58,403 Thailand ......................... 5 35,760Indonesia ........................ 9 61,322 Tunisia .......................... 6 20,687Iran ........................... 7 42,536 Turkey ........................... 13 158,386Israel ........................... 1 10,500 Uganda ......................... 2 4,618Italy ........................... 1 960 Uruguay ......................... 1 3,800Ivory Coast ...................... 2 1,089 Venezuela ........................ 8 32,121Jamaica ......................... 2 3,137 Yugoslavia ....................... 11 151,065Jordan .......................... 2 4,910 Zaire ............................ 1 756Kenya ........................... 5 38,777 Zambia .......................... 3 3,808Korea ........................... I1 113,557 Regional:Lebanon ......................... 4 7,280 Africa ......................... 1 680Liberia .......................... 1 556 Latin America .................. I 10,000Madagascar ...................... 1 11,293 TOTAL ................. 292 $1,711,945

SummaryJune 30

1977 1976 Increase

Investments held for the Corporation ............................................ $ 864,215 $ 778,934 S 85,281Principal repayments to the Corporation ...................... 180,729 142,084 38,645Investments sold or agreed to be sold ........ ........... .. ...................... 515,576 479,346 36,230Syndicate sales pending ............................. 39,000 - 39,000Cancellations .................................................................. 101,001 98,152 2,849Investments written off ............................. 12,446 6,198 6,248Revaluation of disbursed non-US dollar loans ................... (1,022) 751 (1,773)

Total Commitments ................................................... $1,711,945 $1,505,465 $206,480

Revaluation of undisbursed non-US dollar commitments madein prior years .190

Commitments-Fiscal Year 1977 .$206,670

Notes to Financial Statements Exhibit FIniternalional Finance Corporation

June 30, 1977 and June 30, 1976

Note A-Significant Accounting Policies Note B-Amounts Due Within One YearTranslation of Currencies-Equity investments disbursed in currencies Asset balances due the Corporation within one year are summarizedother than United States dollars are expressed in United States dol- as follows:lars at the exchange rates which applied at the time of disbursement.Other assets and liabilities not denominated in United States dollars As at June 30are expressed in terms of United States dollars at approximate market (S thousands)rates prevailing at the fiscal year-end. Exchange gains and losses are 1977 1976credited or charged to income as they occur. Due from banks $ 956 $ 4,214 37

Short-term obligations of governments 2,794 14,187Reserve Against Losses-The Corporation charges income directly Principal instalments on loans 52,322 40,136with a provision for losses on investments with a corresponding Accrued income on loans 10,813 9,256credit to the Reserve Against Losses. The annual charge is based on Receivable from purchasers of loan andthe Corporation's historical loss experience, the amount of invest- equity investments sold 1,333 2,185ments in respect of which a significant and relatively permanent Other 1,054 195decline in value is recognized and the amount of investments in re- Total $69,272 $70,173spect of which losses cannot yet be identified.

Net income remaining after the above charge to income is trans- The amounts shown as due from Banks and short-term obligationsferred to Surplus and allocated to a General Reserve. Losses on of governments at June 30,1977 include $523,433 ($1,691,150-1976)investments when written off are charged directly to the Reserve which is temporarily restricted as to use or as to conversion intoAgainst Losses. Changes in the Reserve Against Losses are sum- other currencies.marized as follows: Note C-Borrowings

Fiscal Year Ended June 30 The Corporation's borrowings comprise the following:

1977 1976 (1) Loans from the International Bank for Reconstruction andBalance beginning of period $30,700,000 $24,500,000 Development totaling $512 million ($502 million-1976). A com-Provision charged to income 5,948,001 6,366,906 mitment charge is payable on the undrawn balances of the loans atInvestments written off (6,248,001) (166,906) the rate of 3/4 of 1 %, per annum. The loans are repayable in semi-Balance end of period $30,400,000 s30,700,000 annual instalments summarized below:

Principal Amount Interest Rate MaturityInvestment Transactions-Investments are recorded at the date in- (5 millions) Per Annum Datesvestment commitments are signed and are reflected as assets when 1977 1976disbursed. As of June 30, 1977 investments approved by the Board of $Directors but not signed as investment commitments totalled $52.7 $168 $176 7.002% 1977 to 1989million ($0.5 million-1976) of which $40.0 million (nil-1976) are $20 $20 8.50% 1978 to 1996to be placed with participants and $12.7 million ($0.5 million- $120 $120 8.506o 1978 to 19961976) are to be held by the Corporation. The market value of $ 20 - 8.20%7 1980 to 1992equity investments in the Corporation's portfolio is estimated to The principal amounts repayable during the fiscal years endingexceed the cost of such investments. Gains or losses on sales of in- June 30, 1978 and 1979 are $14.7 and $18.3 million, respectively.vestments are measured against the average cost of the investmentssold. Gains on investments are credited directly to income when The proceeds of these loans may only be used by the Corporation inrealized and losses are provided for as described in the preceding Its lendig operations.paragraph. (2) Loans from others totaling $40 million ($5 million-1976). A loanRevenue Recognition-Dividends, profit participations and com- of $5 million from the State of the Netherlands presently provides formissions are recorded as income when received, Interest, commit- an interest rate equal to the rate of cash dividend, if any, paid by thement and other charges on loans are recorded as income on an Corporation on its capital stock.accrual basis except that the Corporation does not currently accrue Principal Amount Interest Rate Maturityinterest where collectibility is in doubt. ($ millions) Per Annum Dates

Staff Retirement Plan-The International Bank for Reconstruction 1977 1976and Development has a contributory retirement plan for its staff $ 5 $ 5 - 1979 to 2000which also covers the staff of the Corporation. All contributions to $ 35 $ - 7.875%,-, 1985the Plan and all other assets and income of the Plan are held by the The Corporation may use the proceeds of these loans in any opera-Bank separately from the other assets of the Bank and the Corpora- tion authorized by its Articles of Agreement.tion and can be used only for the benefit of the participants in thePlan and their beneficiaries. The total cost of the Plan includes Note D-Capital Stockamortization of unfunded liabilities. The Bank and the Corporation's On May 4, 1976 the Directors of the Corporation submitted to thepolicy is to fund pension costs accrued. The cost of the Plan to the Board of Governors a draft resolution which would increase theCorporation for the fiscal year ended June 30, 1977 was $1,263,881 Corporation's authorized capital stock by $540 million. Of this($1,142,541-1976) which included amortization of unfunded liabil- amount, $480 million is to be offered for subscription to membersities over periods from 15 to 40 years. of the Corporation. The resolution shall become effective upon

approval by Governors exercising not less than three-fourths of thetotal voting power. The voting period for the adoption of this reso-lution expires September 30, 1977, unless extended by the Directors.

Report of Financial StatementsIndependent Accountants Covered by the

Foregoing Report

381801 K Street, N.W. Balance Sheet

Washington, D.C. 20006 Statement of IncomeJuly 29, 1977 Statement of Changes in Financial Position

Statement of Loan and Equity InvestmentsTo Statement of Cumulative Gross CommaitmentsInternational Finance Corporation Notes to Financial StatementsWashington, D.C.

In our opinion, the accompanying financial statements present fairly,in terms of United States currency, the financial position of Inter-national Finance Corporation at June 30, 1977 and 1976, the resultsof its operations and the changes in financial position for the yearsthen ended, in conformity with generally accepted accounting prin-ciples consistently applied. Our examinations of these statementswere made 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.

PRICE WATERHOUSE & CO.

V. Appendices

40 A Voting Power and Subscriptions of Member Countries 39

41 B Governors and Alternates

43 C Directors and Alternates and Their Voting Power

44 D Officers and Department Directors

Voting Power and Subscriptions Appendix Aof Member Countries

As of June 30, 1977

Voting Power Total Subscription Voting Power Total Subscription

No. Percent Amount Percent No. 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 .27 111 .10 Malawi ................. 333 .25 83 .08Argentina . ........ 1,912 1.42 1,662 1.53 Malaysia ............... 527 .39 277 .26Australia . ........ 2,465 1.83 2,215 2.04 Mauritania ............. 305 .23 55 .05

40 Austria . ........ 804 .60 554 .51 Mauritius ............... 345 .26 95 .09

Bangladesh . ....... 963 .71 713 .66 Mexico ................. 970 .72 720 .66Belgium . ......... 2,742 2.03 2,492 2.30 Morocco ............... 638 .47 388 .36Bolivia . ......... 328 .24 78 .07 Nepal .................. 305 .23 55 .05Brazil . ................. 1,413 1.05 1,163 1.07 Netherlands ............. 3,296 2.44 3,046 2.81Burma . ......... 416 .31 166 .15 NewZealand ............ 1,173 .87 923 .85Cameroon . ....... 361 .27 111 .10 Nicaragua .............. 259 .19 9 .01Canada . ......... 3,850 2.86 3,600 3.32 Nigeria ................. 619 .46 369 .34Chile . .................. 638 .47 388 .36 Norway ................ 804 .60 554 .51China . .......... 4,404 3.27 4,154 3.83 Oman .................. 286 .21 36 .03Colombia . ....... 638 .47 388 .36 Pakistan ................ 1,358 1.01 1,108 1.02Costa Rica . ....... 272 .20 22 .02 Panama ................ 252 .19 2 *

Cyprus . ......... 333 .25 83 .08 Papua New Guinea ...... 364 .27 114 .11Denmark . ........ 1,003 .74 753 .70 Paraguay ............... 266 .20 16 .01Dominican Republic ..... 272 .20 22 .02 Peru ................... 444 .33 194 .18Ecuador . ........ 285 .21 35 .03 Philippines .............. 416 .31 166 .15Egypt, Arab Republic of. 840 .62 590 .54 Portugal .693 .51 443 .41El Salvador . .261 .19 11 .01 Rwanda .350 .26 100 .09Ethiopia . .283 .21 33 .03 Saudi Arabia .361 .27 Ill .10Finland . .671 .50 421 .39 Senegal .434 .32 184 .17France . .6,065 4.50 5,815 5.37 Sierra Leone .333 .25 83 .08Gabon . .305 .23 55 .05 Singapore .427 .32 177 .16Germany, Federal Somalia .333 .25 83 .08

Republic of . . 3,905 2.90 3,655 3.37 South Africa .1,358 1.01 1,108 1.02Ghana . .416 .31 166 .15 Spain .1,358 1.01 1,108 1.02Greece . .527 .39 277 .26 Sri Lanka .416 .31 166 .15Grenada . .261 .19 11 .01 Sudan .361 .27 111 .10Guatemala . .272 .20 22 .02 Swaziland .285 .21 35 .03Guinea-Bissau . . 268 .20 18 .02 Sweden .1,358 1.01 1,108 1.02Guyana . .339 .25 89 .08 Syrian Arab Republic 322 .24 72 .07Haiti . .272 .20 22 .02 Tanzania .434 .32 184 .17Honduras . .261 .19 11 .01 Thailand .389 .29 139 .13Iceland . .261 .19 11 .01 Togo ...... .. 333 .25 83 .08India . .4,681 3.47 4,431 4.09 Trinidad and Tobago 398 .30 148 .14Indonesia . .1,468 1.09 1,218 1.12 Tunisia .383 .28 133 .12Iran . .622 .46 372 .34 Turkey .726 .54 476 .44Iraq . .317 .24 67 .06 Uganda .434 .32 184 .17Ireland . .582 .43 332 .31 United Kingdom .14,650 10.86 14,400 13.29Israel . .300 .22 50 .05 United States .35,418 26.27 35,168 32.46Italy.. 2,244 1.66 1,994 1.84 Upper Volta .305 .23 55 .05Ivory Coast . .361 .27 111 .10 Uruguay .405 .30 155 .14Jamaica . .398 .30 148 .14 Venezuela .366 .27 116 .11Japan . .3,019 2.24 2,769 2.56 Viet Nam .416 .31 166 .15Jordan . .283 .21 33 .03 Western Samoa .259 .19 9 .01Kenya . .434 .32 184 .17 Yemen Arab Republic 297 .22 47 .04Korea . .389 .29 139 .13 Yugoslavia .841 .62 591 .55Kuwait . .619 .46 369 .34 Zaire .582 .43 332 .31Lebanon . .300 .22 50 .05 Zambia .545 .40 295 .27Lesotho . .268 .20 18 .02 134,842 100.00t 108,342 100.00tLiberia . .333 .25 83 .08Libya . .305 .23 55 .05 *Less than .005 percent.Luxembotirg . .361 .27 111 .10 fMay differ from the sum of the individual percentages shown because of rounding.

Madagascar . .361 .27 111 .10 106Countries

Governors and Alternates Appendix B

As of June 30, 1977

Member Governor Alternate

Afghanistan ....... Said Abdul Illah ..................... Zir GulArgentina ... .... Jose A. Martinez de Hoz ........ ...... Adolfo C. DizAustralia ....... Phillip Lynch ........................ J. C. Ingram 41Austria ....... Hannes Androsch .................... Walter NeudorferBangladesh ....... M. N. Huda .............. .......... S. A. Khair(l'Belgium ....... Gaston Geens ....................... Cecil de StryckerBolivia .. ..... Carlos Calv o ......................... Manuel Mercado MonteroBrazil ....... Mario Henrique Simonsen ............. Paulo H. Pereira LiraBurma ....... U Than Sein ......................... U Myo MyintCameroon ....... Youssouffa Daouda ................... Amadou BelloCanada .. ..... Donald S. Macdonald ........ ........ Michel DupuyChile ....... Sergio de Castro Spikula .............. Sergio Undurraga SaavedraChina ....... Walter H. Fei ........................ Chun-Heng TuColombia ....... Abd6n Espinosa Valderrama .......... German Botero de los RiosCosta Rica ....... Porfirio Morera Batres ................ Bernal JimenezCyprus ....... Andreas C. Patsalides ................. A. C. AfxentiouDenmark ....... K. B. Andersen ...................... Wilhelm UlrichsenDominican Republic ......... Fernando Petiche Vidal ............... Luis M. Guerrero G6mezEcuador ................. Santiago Sevilla Larrea ............... Alfonso Arcos V.Egypt ................. A. M. Kaissouni ................... Hamed El-SayehEl Salvador ................. Roberto Ortiz Avalos"l) ............... Roberto Chico DuarteEthiopia ................. Teferra Wolde-Semait .......... ...... Kebede TemesgenFinland ................. Esko Rekola ................... Osmo KallialaFrance ................. Bernard Clappier ................... Marcel TheronGabon ................. Michel Anchouey ................... J. Felix MamalepotGermany, Federal Republic of.Hans Apel .......... ........ .. Marie SchleiGhana .............. Anthony Kwesi Appiah"d ............ K. Anane-BinfohGreece .............. Panayiotis Papaligouras ............... Evangelos DevletoglouGrenada .............. Eric M. Gairy .................... Jose Maria ChavesGuatemala ........ ...... Ramiro Ponce Monroy ............... Jorge Lamport RodilGuinea-Bissau .............. Victor Freire Monteiro ............... Jose Lima BarberGuyana .............. F. E. Hope .................... Harold E. WilkinsonHaiti . Emmanuel Bros .............. Antonio AndreHonduras .............. Porfirio Zavala Sandoval .............. (vacant)Iceland ....... ....... Olafur Johannesson .................. Matthias A. MathiesenIndia .............. H. M. Patel ......................... Manmohan SinghIndonesia .............. Rachmat Saleh ...................... Julianto MeoliodihardjoIran ..... ......... Hushang Ansary ..................... Jahangir AmuzegarIraq ..... ......... Fawzi El-Kaissi ...................... (vacant)Ireland .............. George Colley() ..................... M. N. MurphyIsrael .............. Arnon Gafny ........................ Amiram SivanItaly .............. Paolo Baffi .......................... Ferdinando VentrigliaIvory Coast .............. Henri Konan Bedie ................... Kouame N'Dri KpatchiboJamaica . .............. David H. Coore ...................... Richard FletcherJapan ....... ....... Hideo Boh .......................... Teiichiro MorinagaJordan .............. Hanna Odeh ......................... Hashim A. DabbasKenya .............. Mwai Kibaki ........................ Leonard 0. KibingeKorea, Republic of .......... Yong Hwan Kim... .................. Sung Whan KimKuwait. .............. Abdul Rahman Salim Al-Ateeqy ....... Abdlatif Y. Al-HamadLebanon .............. Khattar Chibli('I ..................... Farid SolhLesotho ........ ,.R. Sekhonyana .A. M. MonyakeLiberia ........ James T. Phillips, Jr .D. Franklin NealLibya ........ Mohammad Zarrough Ragab .Omar M. MehanniLuxembourg ....... Jacques F. Poos . Raymond Kirsch

(continued)

Governors and Alternates (continued) Appendix B

As of June 30, 1977

Member Governor Alternate

Madagascar ............... Rakotovao Razakaboana .............. Rajaona AndriamananjaraMalawi ................. D. T. Matenje ....................... Alfred A. Upindi

42 Malaysia ................. Razaleigh Hamzah ........... ........ Abdullah bin AyubMauritania ................. lbrahima A. Ba ...................... (vacant)Mauritius ................. Rabindrah Ghurburrun ............... Bramduth GhoorahMexico ................. Julio Rodolfo Moctezuma ............. David IbarraMorocco ................. Abdelkader Benslimane ........ ....... Mustapha FarisNepal .............. ... Bhekh B. Thapa ..................... Narakant AdhikaryNetherlands ................. W. F. Duisenberg .................... J. P. PronkNew Zealand ................ N. V. Lough ......................... C. H. TerryNicaragua ................. Guillermo Sevilla-Sacasa ........ ...... Juan Jose Martinez L.Nigeria ................. J. J. Oluleye ......................... Musa BelloNorway ................. Per Kleppe .......................... Hallvard BakkeOman ............... .. Qais A. Zawawi ...................... Sherif LotfyPakistan ................. Abdul Hafeez Pirzada ......... ....... A. G. N. KaziPanama ................. Nicolas Ardito Barletta ............... Miguel A. SanchizPapua New Guinea .......... Julius Chan ......................... M. MorautaParaguay ................. Cesar Romeo Acosta ................. Augusto Colman V.Peru ......... ........ Alcibiades Saenz Barsallo"') ...... ..... Manuel Augusto Blacker MillerPhilippines ................. Cesar E. A. Virata ................... Placido Mapa, Jr.Portugal ................. Henrique Carlos Medina Carreira ...... Antonio Carlos Palmeiro RibeiroRwanda ................. Denis Ntirugirimbabazi ......... ...... J. D. MunyarukikoSaudi Arabia ............... Ahmed Zaki Saad .................... (vacant)Senegal ................. Ousmane Seck ....................... Famara Ibrahima SagnaSierra Leone ......... ...... A. B. Kamara ....................... B. M. Strasser-KingSingapore ................. Hon Sui Sen ......................... Howe Yoon ChongSomalia ................. Abdurahman Nur Herzi ............... Mohamud Jama AhmedSouth Africa ................ T. W. de Jongh ...................... G. P. C. de KockSpain ................. Jose Llad6 y Fernandez-Urrutia ........ Jose Maria L6pez de Letona y Nuniez del PinoSri Lanka ................. Ronnie de Mel(, ..................... Lal JayawardenaSudan .............. ... Nasr Eldin Mustafa .......... ........ Abdel Rahman Abdel-WahabSwaziland ................. James Nxumalo ..................... V. E. SikhondzeSweden ................. Gosta Bohman ....................... Ola UllstenSyrian Arab Republic ........ Sadek Ayoubi ...................... Abdul Hadi NehlawiTanzania ................ .E. M. Mtei ................ ....... E. A. MulokoziThailand ................. Suphat Sutatum ...................... Amnuay ViravanTogo ................. Koudjolou Dogo ..................... Akuete Eklu-NateyTrinidad and Tobago ........ E. E. Williams ................... ... F. BarsottiTunisia ................. Mustapha Zaanouni ........... ...... Rachid SfarTurkey ................. Cihat Bilgehanti ...................... Kaya ErdemUganda ................. Moses Ali ........................... Jino GeriaUnited Kingdom .... ....... Gordon Richardson ........ _ ....... Sir Douglas WassUnited States ............... W. Michael Blumenthal ........ ....... Richard N. CooperUpper Volta ................ Patrice Ouattara ..................... Pierre TahitaUruguay ................. Valentin Arismendi ................... Juan Jose AnichiniVenezuela ................. Lorenzo Azpurua Marturet ............ H&tor HurtadoViet Nam ................. Tran Duong ......................... Mai Huu IchWestern Samoa ............. Vaovasamanaia R. P. Phillips .......... Iulai TomaYemen Arab Republic ....... Mohamed Salem Basendwah .......... Ali Ali-BaharYugoslavia ................. Momcilo Cemovic .................... Miodrag StojiljkovicZaire ................. Bofossa w'Amb'ea Nkoso ............. Asal B. ldzumbuirZambia ................. John M. Mwanakatwe ................ Francis M. Walusiku11} Appointment effective after June 30, 1977.

Directors and Alternates and Their Voting Power Appendix C

As of June 30, 1977

Director Alternate Casting votes of Total Votes

APPOINTEDEdward R. Fried ................ Hal F. Reynolds ................ United States . ................................ 35,418William S. Ryrie ................. Ronald F. R. Deare ................ United Kingdom ......... I . ........................ 14,650 43Jacques Henri Wahl .............. Ren6-Paul Rigaud ................ France ............................................ 6,065Hans Janssen ................. Hans-Dieter Hanfland ............... Germany (Federal Republic of) ...................... 3,905Susumu Murayama .............. Fumiya Iwasaki ................ Japan ............................................ 3,019

ELECTEDS. R. Sen ................. Md. Matiul Islam(') ................ Bangladesh, India, Sri Lanka ........................ 6,060

(India) (Bangladesh)Earl G. Drake ................. Edward M. Agostini ................ Canada, Guyana, Grenada, Ireland, Jamaica .......... 5,430

(Canada) (Guyana)Timothy T. Thahane ............. A. H. Madinga .......... Ethiopia, Kenya, Lesotho, Liberia, Malawi,

(Lesotho) (Malawi) Nigeria, Sierra Leone, Sudan, Swaziland, Tanzania,Trinidad and Tobago, Uganda, Zambia............ . 5,060

Anthony IJ. A. Looijen ........... Gavra D. Popovi6 ........... cyprus, Israel, Netherlands, Yugoslavia ............... 4,770(Netherlands) (Yugoslavia)

Said E. El-Naggar ............ Saleh A. Al-Hegelan ............... Egypt (Arab Republic of), Iraq, Jordan, Kuwait,(Arab Republic of Egypt) (Saudi Arabia) Lebanon, Pakistan, Saudi Arabia, Syrian Arab

Republic, Yemen Arab Republic .4,697Jacques de Groote ............... Tung Bilget ................. Austria, Belgium, Luxembourg, Turkey ............... 4,633

(Belgium) (Turkey)Armand Razafindrab6 ............ Stanislas Y. Kpognon(2) ............. Cameroon, Gabon, Ivory Coast, Madagascar,

(Madagascar) (Benin) Mauritania, Mauritius, Rwanda, Senegal, Somalia,Togo, Upper Volta, Zaire .4,375

Thavil Khutrakul ........... Bharat B. Pradhan ............. Burma, Indonesia, Korea, Malaysia, Nepal,(Thailand) (Nepal) Singapore, Thailand, Viet Nam .4,337

Giorgio Rota ............. German Calvillo .................. Italy, Portugal, Spain ....... ...................... 4,295(Italy) (Spain)

R. A. Johnston ......... Gerald S. Aburn ........... Australia, New Zealand, Papua New Guinea,(Australia) (New Zealand) Western Samoa .4,261

Einar Magnussen ............. Valgeir Arsaelsson .................. Denmark, Finland, Iceland, Norway, Sweden .......... 4,097(Norway) (Iceland)

Eduardo Pesqueira ............. Eduardo A. McCullough ............ Costa Rica, El Salvador, Guatemala, Haiti, Honduras,(Mexico) (Panama) Mexico, Nicaragua, Panama, Peru, Venezuela .3,629

Julio C. Gutierrez ................ Eduardo R. Conesa ................. Argentina, Bolivia, Chile, Paraguay, Uruguay .......... 3,549(Paraguay) (Argentina)

Yahia Khelif ........ Kwaku Gyasi-Twum ............... Afghanistan, Ghana, Greece, Iran, Libya,(Algeria) (Ghana) Morocco, Oman, Tunisia .3,538

Ernesto Franco-Holguin .......... Ram6n Martinez Aponte ............ Brazil, Colombia, Dominican Republic, Ecuador,(Colombia) (Dominican Republic) Philippines .3,024

In addition to the Directors and Alternates shown in the foregoing list, the following also served after October 31, 1976:

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

Charles A. Cooper .............. November 5, 1976 Bruce M. Cheek .............. April 30, 1977(United States) (Australia)

Taro Hori ..... November 22, 1976 Claus Knetschke ........... April 30, 1977(Japan) (Germany)

W. A. E. Green .......... March 31, 1977 Jon Aase ..... April 30, 1977(New Zealand) (Norway)

Masanao Matsunaga ....... ....... May 31, 1977 Toshihiro Kiribuchi .............. June 20, 1977(Japan) (Japan)

Note: China (4,404 votes), Guinea-Bissau (268 votes) and South Africa (1,358 votes) are not represented by a Director.To be succeeded by M. Syeduzzaman (Bangladesh) effective July 20, 1977.

(2) Resigned with effect from July 1, 1977; successor not yet appointed.

Officers and Department Directors Appendix D

44President ....................................... *Robert S. McNamaraExecutive Vice President ....................................... Moeen A. QureshiVice President ....................................... Gordon F. McClureVice President ....................................... Judhvir ParmarGeneral Counsel ....................................... Jose E. CamachoDirector, Finance and Management Department ......... ............... Marshall BurkesSecretary ....................................... *P. N. Damry

Director, Personnel Department ....................................... *R. A. ClarkeDirector, Engineering Department ..................................... Makarand V. DehejiaRegional Mission in Eastern Africa .................................... G. Michael DixonDirector, Department of Investments, Latin America and Caribbean I ...... Kurt B. EckrichDirector, Programming and Budgeting Department ...................... *K. Georg GabrielDirector, Capital Markets Department ................................. David GillDirector, Department of Investments, Europe and Middle East ............ Douglas GustafsonSenior Adviser, Portfolio ............................................. Fawzi HabibSpecial Representative in Middle East ....... .......................... Cherif HassanSenior Adviser, Technical ................... Geoffrey HiltonDirector, Department of Investments, Africa ............................ Gunter H. KreuterDirector, Marketing ........................... ................ Rolf Tb LundbergSpecial Representative in Far East ..................................... Naokado NishiharaSenior Adviser, Part I Countries and Special Projects ..................... Neil J. PatersonDirector, Department of Investments, Latin America and Caribbean 11.... Jose M. RuisanchezDirector, Department of Investments, Asia .............................. Torstein StephansenSpecial Representative in Europe ...................................... J. W. StroblDirector, Administrative Services Department ........................... *James E. TwiningRegional Mission in East Asia ........................................ Giovanni VacchelliDirector, Development Department .................................... (vacant)

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

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

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