IFC recent experience in FRY

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• IFC recent experience in FRY
• Roberto Albisetti Chief of Mission
• IFC Belgrade
• 4 February, 2003 European Movement, Belgrade
• Economic Forum

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International Finance Corporation
We promote sustainable private sector investment
in developing countries, helping to reduce
poverty and improve peoples lives.
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IFC A Member of theWorld Bank Group 
IFC is owned by its 175 member countries, which
collectively determine policies.
Multilateral Investment Guarantee Agency, 1988
International Finance Corporation, 1956
International Bank for Reconstruction and
Development, 1945
International Development Association, 1960
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World Bank Group Institutional Roles

• IBRD lends to governments of middle-income
  developing countries.
• IFC finances a wide range of private sector
  sustainable projects in developing countries.
• IDA provides concessional loans to governments of
  the poorest developing countries.
• MIGA provides guarantees to foreign investors
  against noncommercial risk.

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Defining characteristics

• Participates only in private sector ventures
• Shares same risks as other investors
• Invests in equity
• Has market pricing policies
• Does not accept government guarantees
• Is profit oriented

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Capital Stock Held by our Shareholders175
Member Countries
Five largest 45.8 Other countries 54.2
United States 24.1
Japan 6.0
Other countries 54.2
Germany 5.5
France 5.1
United Kingdom 5.1
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IFCs Operating IncomeFY 19982002

U.S. millions
380
249
241
212
161
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Financial strength
(As of June 30, 2002)
Authorized capital 2.45 billion Total capital
6.3 billion Capital strength IFCs capital
resources currently stand at 49 percent of
risk-weighted assets, well above the 30 percent
minimum for this ratio required by the capital
adequacy policy.
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Investments by Sector
FY02 Total Commitments 3.61 billion
Gross investments, including loan syndications
and financing for IFCs own account. Also
includes guarantees and risk management products,
which are off-balance-sheet.
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IFC Financing
Includes loan guarantees and risk management
products for FY99-02
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IFC in FRY

• FRYs membership of WB and IFC in May 2001
• IFC opened a field office in September 2001
• IFCs investment portfolio in former Yugoslavia
  was among the top country exposures
• One of the largest markets in Southern Europe
• Substantial interest from foreign strategic
  investors
• FRY is then a priority in IFCs strategy to
  support private sector development
• IFC as an early investor aims at increasing
  confidence to attract foreign direct investments

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What IFC has achieved so far

• MicroFinanceBank Yugoslavia, equity investment of
  US 1 million equal to 16.6 of share capital
• Raiffeisen Bank Yugoslavia, equity investment of
  Euro 1 million equal to 10 of share capital
• FreshCo (agribusiness) Loan of Euro 7.7 million,
  signed November 2001, disbursed
• Tigar Rubber Company (tires) Loan of Euro 16
  million and equity investment of Euro 4 million
  (10 of share capital in new JV with Michelin)
  signed March 2002

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IFCs role in FRY

• Invest in modernization Serbia has largely
  under-utilized industrial infrastructure, mostly
  state or socially owned, some traditionally trade
  oriented
• Provide long term capital during isolation
  companies have lost market share, are left cash
  starved, need investments but have no access to
  international financial markets
• Develop the local financial market financial
  intermediation is still very low, interest rates
  are high
• Attract and provide confidence to foreign
  investors in the early phase of transition, the
  privatization process is relatively slow and
  foreign investors are still prudent
• Provide technical assistance skilled workforce
  is available, but modern managerial resources are
  limited

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IFCs strategy in FRY

• Help to fill some of the existing gaps by
  delivering results on the ground immediately,
  mobilizing significant resources
• Provide technical assistance to support capacity
  building (market focus, business plans,
  accounting discipline)
• Invest in commercially viable companies both
  private and partially private/to be privatized
• Support privatization and restructuring process
• Strong client focus, provide flexible solutions
  for modernization investments and working capital
  needs
• Provide comfort to foreign investors through a
  demonstration effect
• Focus on the financial sector (banks), develop
  other financial intermediaries (leasing, funds)
• Promote the growth of local entrepreneurship and
  SMEs

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Actions being taken

• Focus technical assistance on critical segments
  of the real sector and financial sector,
  increased attention on infrastructure
• New project developments under way in
  garment-textiles, agribusiness, mechanical
  industry, pharmaceuticals, distribution, tourism,
  banking, insurance, leasing
• Build a broad pipeline of investment
  opportunities in order to diversify risks
• Intensify cooperation with the Privatization
  Agency to help increase results on the ground
• Mobilize financial resources to local
  intermediaries for on-lending to SMEs

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Project Cycle and Timing
Internal to IFC
As Seen by Client
Initial Discussions
Initial Review Authorization to Appraise
Management Approval
Mandate Letter Appraisal Financing Negotiations
Board Approval
Info. Memo and Syndication Legal Documentation
Disbursement
Supervision/Evaluation
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How to contact us

• Send us a brief outline of your project
  description, sponsors, management, market and
  sales, industrial background, investment
  requirements, anticipated financial plan
• IFC Belgrade Office, Kneginje Zorke 96
• Tel [phone] fax [phone]
• Ralbisetti_at_ifc.org
• www.ifc.org