FILE NO. 1-3431

REGULATION BW

RULE 3

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

100 F Street, N.E.

Washington, D.C. 20549

REPORT OF

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

With respect to one or more proposed issues

of debt securities of the Bank

Filed pursuant to Rule 3 of Regulation BW

Dated: October 4, 2023

The following information is being filed pursuant to Rule 3 of Regulation BW with respect to one or more proposed issues of debt securities of the International Bank for Reconstruction and Development. As authorized by Rule 4 of Regulation BW, certain information is to be provided in the form of an Information Statement, attached as Exhibit A. Certain information specified in Schedule A to Regulation BW is not available at the date of this Report.

Items 1-6. Not yet known. This information will be included in the prospectus for a particular issue.

Item 7.   Exhibit

  Exhibit A: Information Statement dated October 2, 2023.

Information Statement

International Bank for Reconstruction

and Development

 

The International Bank for Reconstruction and Development (IBRD) intends from time to time to issue its notes and bonds with maturities and on terms determined by market conditions at the time of sale. The notes and bonds may be sold to dealers or underwriters, who may resell them, or they may be sold by IBRD directly or through agents.

The specific currency, aggregate principal amount, maturity, interest rate or method for determining such rate, interest payment dates, if any, purchase price to be paid to IBRD, any terms for redemption or other special terms, form and denomination of such notes and bonds, information as to stock exchange listing and the names of the dealers, underwriters or agents in connection with the sale of such notes and bonds being offered at a particular time, as well as any other information that may be required, will be set forth in a prospectus or supplemental information statement.

Except as otherwise indicated, in this Information Statement (1) all amounts are stated in current United States dollars translated as indicated in the Notes to Financial Statements: Note A and (2) all information is given as of June 30, 2023.

AVAILABILITY OF INFORMATION

This Information Statement will be filed with the U.S. Securities and Exchange Commission electronically through the EDGAR system and will be available at the Internet address http://www.sec.gov/edgar.shtml.

Upon request, IBRD will provide additional copies of this Information Statement without charge. Written or telephone requests should be directed to IBRD’s main office at 1818 H Street, N.W., Washington, D.C. 20433, Attention: Capital Markets and Investments Department, tel: (202) 477-2880, or to IBRD’s Tokyo office at Fukoku Seimei Building 14F, 2-2-2 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan, tel: (81)-3-3597-6650.

The Information Statement is also available on IBRD’s Investor Relations website at http://www.worldbank.org/debtsecurities/. Other documents and information on IBRD’s website are not intended to be incorporated by reference in this Information Statement.

 

October 2, 2023

 

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This Management’s Discussion and Analysis (MD&A) discusses the financial results of the International Bank for Reconstruction and Development (IBRD) for the fiscal year ended June 30, 2023 (FY23). IBRD undertakes no obligation to update any forward-looking statements. Certain reclassifications of prior years’ information have been made to conform with the current year’s presentation. For discussion of IBRD’s financial results for the year ended June 30, 2022 as compared to the year ended June 30, 2021, see Section III – Financial Results in IBRD’s MD&A and Financial Statements for the fiscal year ended June 30, 2022.

Box 1: Selected Financial Data

In millions of U.S. dollars, except ratios which are in percentages

 

		As of and for the fiscal years ended June 30
		2023				2022				2021
Lending Highlights (Section IV)
Net commitments a		$	38,572			$	33,072			$	30,523
Gross disbursements			25,504				28,168				23,691
Net disbursements			12,736				14,876				13,590
Income Statement (Section III)
Board of Governors-approved and other transfers		$	(221	)		$	(354	)		$	(411	)
Net income			1,144				3,990				2,039
Balance Sheet (Section III)
Total assets		$	332,641			$	317,542			$	317,301
Net investment portfolio b			79,195				82,057				85,831
Net loans outstanding			241,041				227,092				218,799
Borrowing portfolio c			266,828				256,909				253,656
Total equity			60,382				55,320				48,078
Non-GAAP Measures:
Allocable Income (Section III)
Allocable income		$	1,312			$	806			$	1,248
Allocated as follows:
General Reserve d			921				589				874
International Development Association			291				117				274
Surplus			100				100				100
Usable Equity e f (Section VIII)		$	53,105			$	50,481			$	49,997
Equity-to-Loans ratio g (See Section IX)			22.0	%			22.0	%			22.6	%

 

a.	Amounts include guarantee commitments and guarantee facilities that have been approved by the Executive Directors (referred to as “the Board” in this document), and are net of full terminations and cancellations relating to commitments approved in the same fiscal year.

b.	For the composition of the net investment portfolio, see Notes to the Financial Statements, Note C—Investments—Table C3.

c.	Includes associated derivatives.

d.	The June 30, 2023 amount represents the transfer to the General Reserve from FY23 net income, which was approved by the Board on August 3, 2023.

e.	Excludes amounts associated with unrealized mark-to-market gains/losses on non-trading portfolios, net and related cumulative translation adjustments.

f.	Usable Equity includes the transfer to the General Reserve from FY23 net income, which was approved by the Board on August 3, 2023. See Table 27: Usable Equity.

g.	As defined in Table 28: Equity-to-Loans Ratio.

 

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SECTION I: EXECUTIVE SUMMARY

With its many years of experience and its depth of knowledge in international development, IBRD plays a key role in achieving the World Bank Group’s (WBG¹) goal of helping countries achieve better development outcomes, by providing countries with loans, guarantees, advisory services, analytical support and other products.

IBRD and its affiliated organizations seek to help countries in reducing poverty and inequality, achieve improvements in growth, job creation, governance, the environment, climate adaptation, mitigation and resilience, human capital, infrastructure and debt transparency, among others. To meet its development goals, the WBG supports client countries’ efforts to implement programs to improve growth and development outcomes. Further, new and ongoing challenges continue to influence the global outlook. These include high inflation, the rise in food insecurity, growing inequality, global fragility, pandemic risk, Russia’s invasion of Ukraine and other geopolitical events, rising debt, climate change, and macroeconomic imbalances. In response, IBRD, as part of the WBG efforts, continues to work with partners at global and country levels to support its borrowing countries in addressing the impact of these multiple crises, to enhance resilience, and lay the groundwork for rebuilding better. To further support these efforts, the Board and Management have been working on an Evolution Roadmap for the WBG to better address the scale of development challenges by adapting the WBG’s vision and mission, strengthening its operating model, and enhancing its financial capacity and model. Management is in the process of advancing agreed actions and developing further proposals, including efforts to expand crisis preparedness, response and recovery and increase private finance mobilization, with particular efforts to scale investment in emerging markets. In addition, as a part of increasing IBRD’s financing capacity, in April 2023, the Board approved a reduction in the policy minimum Equity-to-Loans ratio from 20% to 19% and a pilot program for issuing up to $1 billion of Hybrid Capital to capital market investors.

 

1	The other WBG institutions are the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). The World Bank consists of IBRD and IDA.

 

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Summary Financial Results

Net Income

IBRD recorded net income of $1,144 million for the fiscal year ended June 30, 2023, a decrease of $2,846 million, compared with net income of $3,990 million for the fiscal year ended June 30, 2022. The decrease in FY23 was primarily due to unrealized mark-to-market losses on IBRD’s non-trading portfolios in FY23, compared to unrealized mark-to-market gains in FY22, partially offset by higher net loan interest revenue. Given IBRD’s intention to maintain its non-trading portfolio positions to maturity, unrealized mark-to-market gains and losses are not included in IBRD’s allocable income.

Allocable Income

Allocable income is the measure IBRD uses for making net income allocation decisions. For the fiscal year ended June 30, 2023, allocable income was $1,312 million, compared with $806 million for the fiscal year ended June 30, 2022. The increase in allocable income was mainly due to higher net revenue on interest earning assets, primarily reflecting the increase in the average balance of loans outstanding and the impact from the increase in interest rates during the year.

In millions of U.S. dollars

 

Lending Operations

IBRD’s lending operations during the fiscal year ended June 30, 2023 provided $38.6 billion of net commitments, and $25.5 billion of gross loan disbursements. Net disbursements of $12.7 billion were the key driver for the increase in net loans outstanding, from $227.1 billion as of June 30, 2022, to $241.0 billion as of June 30, 2023.

In billions of U.S. dollars

 

 

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Net commitments were $5.5 billion higher compared with FY22 (Table 8). The regions with the largest share of commitments during FY23 were Europe and Central Asia and Latin America and the Caribbean with 26% each.

 

 

 

 

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SECTION II: OVERVIEW

Introduction

IBRD, an international organization owned by its 189 member countries, is one of the five institutions of the WBG. Each institution is legally and financially independent, with separate assets and liabilities. IBRD is not liable for the obligations of the other institutions.

IBRD is a Multilateral Development Bank that combines knowledge services and financing with a global reach. IBRD’s value is derived from its ability to help eligible borrowing members address their development challenges and meet their rising demand for innovative products. IBRD provides loans, guarantees, and other financial products for development-focused projects and programs to creditworthy middle-income and lower-income countries to support sustainable development. By operating across a full range of country clients, IBRD maintains a depth of development knowledge, uses its convening power to promote development and advance the global public goods agenda, and coordinates responses to regional and global challenges.

Member countries use IBRD’s technical advice and analysis and convening power to develop or implement better policies, programs, and reforms that help sustain development over the long term. The products delivered range from development data, to reports on key social economic and social issues at the local, country, regional and global levels. The products also include knowledge-sharing workshops focused on local issues, flagship events and fora to address the most pressing global development challenges.

Financial Business Model

IBRD’s objective is not to maximize profits, but to earn adequate income to ensure that it has the long-term financial capacity necessary to support its development activities. IBRD seeks to generate sufficient revenue to finance its operations as well as to be able to set aside funds in reserves to strengthen its financial position.

It also seeks to provide support to IDA and trust funds through income transfers for other developmental purposes.

IBRD’s financial strength rests on the support it receives from its shareholders, and on its array of financial policies and practices. Shareholder support for IBRD is reflected in the capital backing it continues to receive from its members and in the record of its borrowing member countries in meeting their debt service obligations to IBRD. Sound financial and risk management policies and practices have enabled IBRD to maintain adequate capital, diversify its funding sources, hold a portfolio of liquid investments to meet its financial commitments, and limit its risks, including credit and market risks.

IBRD offers its borrowers, in middle income and creditworthy low-income countries, long-term loans with maturities up to 35 years. Borrowers may customize their repayment terms to meet their debt management or project needs, in multiple currencies on variable spread terms. Previously, loans on fixed spread terms were also available to borrowers. Borrowers have generally preferred loans denominated in U.S dollars and euros. IBRD also supports its borrowers by providing access to risk management products such as derivative instruments, including currency and interest rate swaps, catastrophe derivatives, and interest rate caps and collars.

To meet its development goals, IBRD intermediates funds for lending from the international capital markets. IBRD’s loans are financed through its equity and from borrowings raised in the capital markets. IBRD is rated triple-A by the major rating agencies and its bonds are viewed as high-quality securities by investors. IBRD’s funding strategy is aimed at achieving the best long-term value on a sustainable basis for its borrowing members. This strategy has enabled IBRD to borrow at favorable market terms and pass the savings on to its borrowing members. IBRD’s annual funding volumes vary from year to year, and funds raised are used to finance IBRD’s development projects and programs in member countries. Funds not deployed for lending are maintained in IBRD’s investment portfolio to supply liquidity for its operations.

 

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IBRD uses derivatives to manage its exposure to various market risks from the above activities. These are used to align the interest and currency composition of its assets (loan and investment trading portfolios) with that of its liabilities (borrowing portfolio), and to stabilize earnings on the portion of the loan portfolio funded by equity. See Section IX: Risk Management for additional details on how IBRD uses derivatives.

Management believes that these risk management strategies, taken together, effectively manage market risk in IBRD’s operations from an economic perspective. However, these strategies entail the use of derivatives, which introduce volatility in net income through unrealized mark-to-market gains and losses (particularly given the long- term nature of some of IBRD’s assets and liabilities). Accordingly, management makes decisions on income allocation without reference to unrealized mark-to-market gains and losses on risk management instruments in the non-trading portfolios – see Basis of Reporting – Allocable Income.

Financial Performance

IBRD’s primary sources of revenue are from loans and investments, both net of funding costs (see Figure 1). These revenues cover administrative expenses, provisions for losses on loans and other exposures² (LLP), as well as transfers to Reserves, Surplus, and for other development purposes, including transfers to IDA.

In addition, other development activities generate non-interest revenue that is classified as Revenue from externally funded activities. These external funds include trust funds, reimbursable funds and revenues from fee-based services. Non-interest revenue from externally funded activities provides additional capacity to support the development needs of client countries.

Figure 1: Sources and Uses of Revenue

 

 

2	Other exposures include deferred drawdown options (DDO), irrevocable commitments, exposures to member countries’ derivatives and guarantees.

 

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Basis of Reporting

Audited Financial Statements

IBRD’s financial statements conform with accounting principles generally accepted in the United States of America (U.S. GAAP). All financial instruments in the investment and borrowing portfolios and all other derivatives are reported at fair value, with changes in fair value reported in the Statements of Income, except for changes in IBRD’s own credit, which are reflected in Other Comprehensive Income. IBRD’s loans are reported at amortized cost, except for loans with embedded derivatives, if any, which are reported at fair value. Management uses net income as the basis for deriving allocable income, as discussed below.

Allocable Income

IBRD’s Articles of Agreement (the Articles) require that the Governors determine the allocation of income at the end of every fiscal year. Allocable income, which is a non-GAAP financial measure, is an internal management measure that reflects income available for allocation. IBRD defines allocable income as net income after certain adjustments, that are approved by the Board at the end of every fiscal year. These adjustments primarily relate to unrealized mark-to-market gains and losses associated with the non-trading portfolios, as well as the expenses for Board of Governors-approved and other transfers, which primarily relate to the allocation of the prior year’s net income.

See Financial Results Section (Section III) and Table 1, for details of the adjustments to reported net income to calculate allocable income.

The volatility in IBRD’s reported net income is usually driven by the unrealized mark-to-market gains and losses on the derivative instruments in IBRD’s non-trading portfolios: loans, borrowings, and other asset/liability management (ALM). IBRD’s risk management strategy entails the use of derivatives to manage market risk. These derivatives are primarily used to align the interest rate and currency bases of its assets and liabilities. IBRD has elected not to designate any hedging relationships for accounting purposes. Rather, all derivative instruments are reported at fair value on the Balance Sheets, with changes in fair values accounted for through the Statements of Income.

In line with its financial risk management policies, for the non-trading portfolios, unrealized mark-to-market gains and losses from instruments carried at fair value (borrowing portfolio, and derivatives in the loan and other ALM portfolios) are excluded from allocable income.

For the trading portfolio (investment portfolio), allocable income generally includes both realized and unrealized mark-to-market gains and losses. In some cases, the unrealized mark-to-market gains and losses on certain trades are excluded from allocable income when the underlying item is a physical asset held at amortized cost.

 

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SECTION III: FINANCIAL RESULTS

Financial Results and Portfolio Performance

The following is a discussion of the key drivers of IBRD’s financial performance, including a reconciliation between IBRD’s net income and allocable income.

Table 1: Statements of Income

 

a.

Includes unrealized mark-to-market gains on the Investments-Trading portfolio of $28 million in FY23 (unrealized mark-to-market losses of $21 million for FY22) and excludes Post Employment Benefit Plan (PEBP) and Post Retirement Contribution Reserve Fund (PCRF) gains of $74 million in FY23 ($33 million losses for FY22) reported in Net other revenue (Table 3).

b.	Includes changes on recoverable asset relating to Guarantee received under the Exposure Exchange Agreements (EEAs).

c.	Adjusted to exclude amounts reclassified to realized gains (losses).

d.	Adjustment to pension accounting expense to arrive at pension plan contributions. Pension plan and PCRF contributions were $264 million in FY23 and $250 million in FY22.

 

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Table 2: Balance Sheets

 

In millions of U.S. dollars
As of June 30,		2023				2022				Decrease      Increase
Investments and due from banks		$	79,824			$	82,299
Net loans outstanding a			241,041				227,092
Derivative assets, net			271				804
Other assets			11,505				7,347
Total Assets		$	332,641			$	317,542
Borrowings			237,265				235,173
Derivative liabilities, net			26,893				20,041
Other liabilities			8,101				7,008
Equity			60,382				55,320
Total Liabilities and Equity		$	332,641			$	317,542

 

a.	The fair value of IBRD’s loans was $236,521 million as of June 30, 2023 ($225,046 million – June 30, 2022).

The main drivers of the change in the Balance Sheet items are below:

 

•

Increase in net loans outstanding primarily from net loan disbursements;

 

•

Increase in other assets mainly from the increase in the overfunded status of the Staff Retirement Plan (SRP) and Retired Staff Benefits Plan (RSBP) and higher accrued interest receivable on loans consistent with the increase in interest rates; partially offset by:

 

•

Decrease in investments and due from banks primarily due to net loan disbursements, and in line with the decrease in the target liquidity level;

 

•

Increase in derivative liabilities primarily due to mark-to-market losses on borrowing-related derivatives as a result of the increase in interest rates; and

 

•

Increase in equity, mostly from the increase in accumulated other comprehensive income due to the increase in the unrecognized net actuarial gains on benefit plans and increase in paid-in capital during the year.

Net Income

IBRD’s net income was $1,144 million in FY23, compared with net income of $3,990 million in FY22. The decrease was primarily due to unrealized mark-to-market losses on IBRD’s non-trading portfolios in FY23, compared to unrealized mark-to-market gains in FY22 . This was partially offset by higher net loan interest revenue during the year (see Table 1).

 

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Results from Lending activities

Loan Interest Revenue, net

Under IBRD’s pricing policy, the lending rates for all loans are based on the underlying cost of the borrowings funding these loans. After the effect of related derivatives (see Figure 21 and Figure 22), the loan and borrowing portfolios are based on variable interest rates. The portion of the loan portfolio funded by equity is sensitive to changes in interest rates.

 

Figure 2: Loan interest revenue and funding cost		Figure 3: Loan Interest Revenue, net
(including derivatives)		In millions of U.S. dollars
In millions of U.S. dollars

IBRD’s FY23 loan interest revenue, net of funding costs was $3,874 million, an increase of $1,982 million compared with $1,892 million in FY22 (Figure 3). Other ALM derivatives moderate the impact of interest rate changes on the portion of the loan portfolio that is sensitive to interest rate movements, thereby partially stabilizing the net interest revenue earned from these loans (see Figure 3). Other ALM derivatives comprise interest rate swaps, which are used to convert the variable rate cash flows from these loans to fixed rate cash flows. The combined effect of the increase in loan interest revenue, net of $1,982 million and the decrease in interest revenue from Other ALM derivatives, net of $1,433 million from FY22 to FY23, resulted in a total increase in net loan interest revenue of $549 million. The increase was primarily due to the higher average loan balance and partially due to the interest rate reset lag between the Secured Overnight Financing Rate SOFR-based loans and the mixed 6-month LIBOR and SOFR based borrowing portfolio, in a rising interest rate environment.

Provision for losses on loans and other exposures

During FY23, IBRD recorded a provision for losses on loans and other exposures expense of $683 million, $121 million higher expense compared to FY22. This increase was primarily driven by the increase in the loss given default (severity) due to the increase in the implied forward interest rates in FY23 compared to FY22. The severity reflects the expected losses from delays in receiving interest payments since IBRD does not charge

 

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interest for overdue interest. As the majority of IBRD’s loans carry a variable interest rate, changes in forward interest rates impact the expected losses that are recorded through the provision for losses on loans and other exposures in the Statements of Income.

 

Figure 4: Change in Net Loans Outstanding		Figure 5: Net Loans Outstanding
In billions of U.S. dollars		In billions of U.S. dollars

As of June 30, 2023, IBRD’s net loans outstanding totaled $241.0 billion, $13.9 billion or 6% higher than June 30, 2022 (see Figure 5). The increase was mainly attributable to $12.7 billion of net loan disbursements in FY23 and currency translation gains of $1.8 billion, primarily due to the 4.4% appreciation of the euro against the U.S. dollar during the year.

Gross disbursements were $25.5 billion, 9.5% lower compared to FY22, primarily due to lower COVID-19 related gross disbursements in FY23.

Results from Investing activities

Net Investment Portfolio

IBRD’s net investment portfolio was $79.2 billion as of June 30, 2023 ($82.1 billion as of June 30, 2022). Of this amount, $75.4 billion related to the liquid asset portfolio ($78.8 billion as of June 30, 2022). See Note C: Investments in the Notes to the Financial Statements. The decrease in the liquid asset portfolio is primarily due to the net loan disbursements during the year and in line with the lower target liquidity level in FY23 (see Section VI).

 

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Net Investment Revenue

During FY23, IBRD’s net investment revenue increased by $191 million, compared to FY22. This was primarily driven by higher interest income due to the increase in average interest rates in FY23.

 

Figure 6: Net Investment Portfolio		Figure 7: Investment Revenue, net
In billions of U.S. dollars		In billions of U.S. dollars

Results from Borrowing activities

As of June 30, 2023, the borrowing portfolio was $266.8 billion, $9.9 billion higher than June 30, 2022 (see Note E: Borrowings in the Notes to the Financial Statements). The increase was primarily due to net new debt issuances during the year. New issuances of medium-and long-term debt of $42.2 billion during the year (Table 23) were highly diversified by investor profile and location, with an average maturity of 6.3 years. The funds raised financed development lending operations and satisfied the liquidity requirements.

Figure 8: Borrowing Portfolio (original maturities)

In billions of U.S. dollars

 

Net Other Revenue

Net other revenue represents certain non-interest sources of revenue, which was higher by $115 million during FY23. The increase was mainly due to the higher investment earnings from the PEBP and PCRF holdings, consistent with prevailing market conditions.

 

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Table 3: Net Other Revenue

In millions of U.S. dollars

 

For the fiscal year ended June 30,		2023				2022				Variance
Loan commitment fees		$	124			$	126			$	(2	)
Guarantee fees			15				14				1
Net Earnings from PEBP and PCRF			74				(33	)			107
Others			5				(4	)			9
Net other revenue (Table 1)		$	218			$	103			$	115

Net Non-Interest Expenses

As shown in Table 4, IBRD’s net non-interest expenses are primarily comprised of administrative expenses, net of revenue from externally funded activities. IBRD and IDA’s administrative budget is a single resource envelope that funds the combined work programs of both entities. The allocation of net administrative expenses between IBRD and IDA is based on an agreed cost and revenue sharing methodology, approved by their Boards, which is primarily driven by the relative level of lending, knowledge services, and other services between these two entities. The administrative expenses shown in Table 4 include costs related to IBRD-executed trust funds and other externally funded activities.

Figure 9: Net Non-Interest Expenses (GAAP basis)

In millions of U.S. dollars

 

The increase in net non-interest expenses on both a GAAP basis and allocable income basis from FY22 to FY23 was primarily driven by higher staff costs and higher travel expenses (Table 4). Travel expenses have been gradually increasing since the easing of the COVID-19-related travel restrictions and office closures and are now approximately 83% of the pre-COVID level for the World Bank.

IBRD’s goal is to have its net administrative expenses covered by its loan spread revenue (Box 2) and certain fee revenue, using an efficiency measure referred to as the Budget Anchor. In FY23, IBRD’s Budget Anchor was 60.3%, an improvement of 5.1 percentage points compared with 65.4% in FY22. The improvement was due to an increase in loan spread revenue, partially offset by an increase in net non-interest expenses during the year (see Table 5 for details of the Budget Anchor components).

 

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Table 4: Net Non-Interest Expenses

In millions of U.S. dollars

 

For the fiscal year ended June 30,		2023				2022				Variance
Administrative expenses
Staff costs		$	1,082			$	1,003			$	79
Travel			142				60				82
Consultant fees and contractual services			505				490				15
Pension and other postretirement benefits a			351				451				(100	)
Communications and technology			91				73				18
Premises and equipment			128				128				—
Other expenses			21				20				1
Total administrative expenses		$	2,320			$	2,225			$	95
Contributions to special programs (See Section V)			17				17				—
Revenue from externally funded activities: (See Section V)
Reimbursable revenue – IBRD executed trust funds			(570	)			(494	)			(76	)
Reimbursable advisory services			(52	)			(47	)			(5	)
Revenue—Trust fund administration			(62	)			(50	)			(12	)
Restricted revenue (primarily externally financed outputs)			(3	)			(4	)			1
Revenue—Asset management services			(16	)			(18	)			2
Other revenue			(175	)			(174	)			(1	)
Total Revenue from externally funded activities		$	(878	)		$	(787	)		$	(91	)
Net non-interest expenses (Table 1)			1,459				1,455				4
Net pension cost, other than service cost b (Table 1)			(205	)			(280	)			75
Net Non-Interest Expenses—GAAP Basis		$	1,254			$	1,175			$	79
Adjustments to arrive at net non-interest expenses—allocable income basis
Pension, Externally Financed Outputs (EFO) and Reserve Advisory and Management Partnership (RAMP) adjustments c			107				70				37
Net non-interest expenses—Allocable incomebasis		$	1,361			$	1,245			$	116

 

a.	Represents the service cost component of net periodic pension cost. See Notes to Financial Statements, Note J: Pension and Other Post-Retirement Benefits.

b.	Amount is included in Other Non-interest expenses in the Statements of Income (see Table 1).

c.	Adjustments are included in the Pension and other adjustments line in Table 1.

 

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Table 5: Budget Anchor Ratio

In millions of U.S. dollars

 

For the fiscal year ended June 30,		2023				2022				Variance
Total Net non-interest expenses (From Table 4)		$	1,254			$	1,175			$	79
Pension adjustment (From Table 7) a			119				79				40
RAMP adjustment a			(1	)			7				(8	)
EFO adjustment a			(11	)			(16	)			5
Net administrative expenses – for Budget Anchor		$	1,361			$	1,245			$	116
Loan spread revenue, net			2,118				1,765				353
Loan commitment fees (From Table 3)			124				126				(2	)
Guarantee fees (From Table 3)			15				14				1
Budget anchor revenue		$	2,257			$	1,905			$	352
Budget Anchor			60.3	%			65.4	%

 

a.	These adjustments are made to arrive at net administrative expenses used for allocable income purposes. For more information see Table 7 in Net Income Allocation section.

Unrealized mark-to-market gains/losses on non-trading portfolios

Unrealized mark-to-market gains and losses associated with the non-trading portfolios are excluded from reported net income to arrive at allocable income. As a result, from a long-term financial sustainability perspective, income allocations are generally based on amounts that have been realized (except for the Investments-Trading portfolio, as previously discussed). For FY23, $167 million of net unrealized mark-to-market losses ($3,356 million net unrealized mark-to-market gains in FY22) were excluded from reported net income to arrive at allocable income (see Table 1).

Table 6: Unrealized Mark-to-Market gains/(losses) on non-trading portfolios ^a

In millions of U.S. dollars

 

For the fiscal year ended June 30,		2023				2022				Variance
Loan related derivatives		$	1,673			$	5,988			$	(4,315	)
Other asset/liability management derivatives, net			(1,642	)			(3,392	)			1,750
Borrowings, including related derivatives			(198	)			747				(945	)
Client operations derivatives			1				8				(7	)
Others, net			(1	)			5				(6	)
Total		$	(167	)		$	3,356			$	(3,523	)

 

a.	Adjusted to exclude amounts reclassified to realized mark-to-market gains (losses).

Loan Portfolio

Loans are reported at amortized cost on the Balance Sheets and therefore the mark-to-market effect on loans is not reflected in reported net income. However, the derivatives used to convert the loans from fixed-rate to variable-rate instruments, for asset / liability management purposes, are reported at fair value. From an economic perspective, IBRD’s loans after the effect of derivatives carry variable interest rates and have a low sensitivity to interest rates. The unrealized mark-to-market gains on loan related derivatives were $1,673 million in FY23, primarily due to the increase in interest rates during the year. The lower unrealized mark-to-market gains in FY23 were primarily due to the less prominent increase in interest rates compared to FY22. See Section IX: Risk Management for additional details on how IBRD uses derivatives in the loan portfolio.

 

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Other ALM Portfolio

IBRD uses derivatives to stabilize its interest revenue from the portion of loans that is sensitive to changes in short—term interest rates. The Other ALM portfolio consists of derivatives which convert variable rate loan cash flows to fixed rate loan cash flows. In FY23, IBRD recorded unrealized mark-to-market losses of $1,642 million on this portfolio primarily due to the increase in interest rates during the year. The lower unrealized mark-to-market losses in FY23 were primarily due to the less prominent increase in interest rates compared to FY22. As of June 30, 2023, the duration of this portfolio was 3.9 years, within the Board established limit of 5 years.

Borrowing Portfolio

IBRD’s bonds and the related derivatives are reported at fair value. IBRD recorded $198 million of net unrealized mark-to-market losses on IBRD’s bonds and associated derivatives, due to the increase in interest rates for the year ended June 30, 2023. The losses on the bond-related derivatives exceeded the gains on the bonds. The net unrealized mark-to-market gains on IBRD’s bonds exclude changes in IBRD’s own credit, referred to as the Debit Valuation Adjustment (DVA) on Fair Value Option elected liabilities, which is instead recorded in Accumulated Other Comprehensive Income (AOCI). In FY23, the DVA was $13 million of unrealized mark-to-market losses, resulting mainly from the tightening of IBRD’s credit spreads relative to the applicable reference rate during the year. As of June 30, 2023, IBRD’s Balance Sheets included a cumulative DVA of $351 million of mark-to-market gains reflected in AOCI (See Notes to the Financial Statements, Note L –Fair Value Disclosures).

Net Income Allocation

Management recommends allocations of income to the Board, at the end of each fiscal year, to augment reserves and support developmental activities. These allocations are based on allocable income. As illustrated in Table 7, the key differences between allocable income and reported net income relate to unrealized mark-to-market gains and losses on IBRD’s non-trading portfolios, and expenses related to Board of Governors-approved and other transfers.

Table 7: Allocable Income

In millions of U.S. dollars

 

For the fiscal years ended June 30,		2023				2022
Net Income		$	1,144			$	3,990
Adjustments to Reconcile Net Income to Allocable Income:
Board of Governors-approved and other transfers			221				354
Non-functional currency translation adjustments gains, net a			(39	)			(150	)
Unrealized mark-to-market losses (gains) on non-trading portfolios, net b			167				(3,356	)
Pension c			(119	)			(79	)
PEBP and PCRF adjustment			(74	)			33
Other adjustments			12				14
Allocable Income		$	1,312			$	806
Recommended Allocations
General Reserve			921				589
Surplus			100				100
Transfer to IDA			291				117
Total Allocations		$	1,312			$	806

 

a.	Translation adjustments relating to assets and liabilities denominated in non-functional currencies.

b.	Adjusted to exclude amounts reclassified to realized gains (losses).

c.	Represents the difference between the pension cost incurred and pension contributions.

 

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All of the adjustments between reported net income and allocable income are recommended by management and approved by the Board:

Board of Governors-approved and other transfers

Board of Governors-approved and other transfers refer to the allocations recommended by the Board and approved by the Governors, as part of the prior year’s net income allocation process and subsequent decisions on uses of surplus, as well as on payments from restricted retained earnings.

Since these amounts primarily relate to allocations out of IBRD’s FY22 allocable income, Surplus, or restricted retained earnings, they are excluded from FY23 reported net income in calculating FY23 allocable income.

Non-functional currency translation adjustment gains/losses

Translation gains and losses relating to non-functional currencies are reflected in reported net income. Since these are unrealized gains/losses that relate to asset/liability positions still held by IBRD, they are excluded from reported net income to arrive at allocable income.

Unrealized mark-to-market gains/losses on non-trading portfolios

These mainly comprise unrealized mark-to-market gains and losses on the loan, borrowing, and other ALM portfolios as previously discussed.

Unrealized mark-to-market gains/losses on certain positions in the investments-trading portfolio, net

This adjustment applies to trades where the unrealized gains and losses on derivative forward contracts are recorded in the Statements of Income and the underlying physical assets being purchased and sold are recorded at amortized cost during the holding period. In these cases, the unrealized gains and losses on the forward contract at the end of the reporting period (if any) are excluded from net income when calculating allocable income. As of June 30, 2023, there were no active trades requiring adjustment.

Pension, PEBP and PCRF adjustments

The Pension adjustment reflects the difference between the accounting expense and IBRD’s cash contributions to the pension plans, the Post-Employment Benefit Plan (PEBP), and the Post-Retirement Contribution Reserve Fund (PCRF). It also includes investment revenue earned on pension plan, PEBP, and PCRF assets. The PCRF was established by the Board to stabilize contributions to the pension and post-retirement benefits plans. Management bases allocation decisions on IBRD’s cash contributions to the pension plans, PEBP and PCRF, rather than pension accounting expenses. In addition, Management has designated the income from these assets to meet the future needs of the pension plans. As a result, PEBP and PCRF investment revenues are excluded from allocable income.

Other Adjustments

 

•

Under certain arrangements (such as Externally Financed Outputs), IBRD enters into agreements with donors under which it receives grants to finance specified IBRD outputs or services. These funds may be utilized only for the purposes specified in the agreements and are, therefore, considered restricted until IBRD has fulfilled those purposes. Management excludes amounts arising from these arrangements from allocable income because IBRD has no discretion over the use of the related funds. In line with this, in FY23, the income of $11 million was transferred out of restricted retained earnings (Table 7). Consequently, the net balance of these restricted funds decreased by the same amount.

 

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•

Under the Board-approved framework, RAMP fees are dedicated for the purpose of providing technical assistance and asset management services to external clients. Due to the potential timing mismatch between fee revenue (recognized as earned) and program expenditures (recognized when incurred), fees earned in a given fiscal year may be used to provide services in a future fiscal year. To ensure that RAMP revenues are only used for the delivery of RAMP services, and not allocated for other purposes, any difference between fee revenue and expenses from RAMP included in reported net income are excluded to arrive at allocable net income. Allocable income for FY23 was adjusted for the excess of RAMP expenses over the fee revenue from RAMP of $1 million (Table 7).

Income Allocation

Since 1964, IBRD has made transfers to IDA from its net income, upon approval by the Board of Governors. In FY17, the Board approved a formula-based approach for determining IBRD’s transfers to IDA. The approach links transfers to IBRD’s allocable income for the year, ensuring that most allocable income is retained to grow IBRD’s reserves. In addition, as part of the commitment made under the 2018 capital package, the incremental revenue from the 2018 price increase is excluded from the formula used to calculate the amount to be transferred to IDA, and fully retained in IBRD’s reserves.

IBRD’s strong support of IDA is reflected in the $16.5 billion of cumulative income transfers it has made since IDA’s first replenishment.

Annual IDA transfer recommendations are subject to approval by the Governors as part of the net income allocation process in accordance with IBRD’s Articles. In making their decisions, Governors will continue to take the overall financial standing of IBRD into consideration.

Allocable income in FY23 was $1,312 million, and out of this, the Board approved the allocation of $921 million to the General Reserve on August 3, 2023, and the Board recommended to IBRD’s Governors a transfer of $291 million to IDA and $100 million to Surplus.

Figure 10: FY23 Allocable Income and Income Allocation

In millions of U.S. dollars

 

 

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SECTION IV: LENDING ACTIVITIES

IBRD provides financing instruments and knowledge services to middle-income and creditworthy low-income countries, while ensuring that social, environmental, and governance considerations are taken into account. Country teams with an understanding of each country’s circumstances work with clients to tailor the mix of instruments, products, and services.

Engagement with borrowing members is increasingly aligned with IBRD’s strategic priorities, including engagements that support global public goods such as climate, fragility and gender.

Projects and programs supported by IBRD are designed to achieve a positive social impact and undergo a rigorous review and internal approval process, aimed at safeguarding equitable and sustainable economic growth, that includes early screening to identify environmental and social impacts and designing mitigation actions. From July 1, 2023, new financing and guarantees provided by IBRD are being tracked against the objectives of the Paris Agreement and a country’s pathway towards low greenhouse gas emissions and climate-resilient development.

Financing cycles involve identifying and appraising a project and approving and disbursing the funds. In response to emergency situations, such as natural disasters and crises, IBRD is able to accelerate the preparation and approval cycle.

Loan disbursements must meet the requirements set out in loan agreements. During implementation of IBRD- supported operations, IBRD’s staff review progress, monitor compliance with IBRD policies, and help resolve any problems that may arise. The Independent Evaluation Group, an IBRD unit whose Director General reports to the Board, evaluates the extent to which operations have met their development objectives.

All IBRD loans, are made to, or guaranteed by, member countries. IBRD may also make loans to IFC without any guarantee. In most cases, IBRD’s Board approves each loan and guarantee after appraisal of a project by staff. Under the Multiphase Programmatic Approach, the Board may approve an overall program framework, its financing envelope and the first appraised phase, and then authorize Management to appraise and commit financing for later program phases.

For FY24, eligible countries with 2022 per capita Gross National Income (GNI) of more than $1,315 are eligible for new lending from IBRD.

Net Lending Commitments and Gross Disbursements

IBRD provided $38.6 billion of new net loan commitments in FY23, through 136 operations (including blend operations), an increase of $5.5 billion (17%) compared to FY22, mainly driven by the increase in Investment Project Financing commitments (Figure 11).

Table 8: Net Commitments by Region

In millions of U.S. dollars

 

For the fiscal year ended June 30,		2023				% of total				2022				% of total				Variance
Eastern and Southern Africa		$	2,364				6	%		$	2,907				9	%		$	(543	)
Western and Central Africa			564				2				386				1				178
East Asia and Pacific			6,636				17				5,482				17				1,154
Europe and Central Asia			10,162				26				5,974				18				4,188
Latin America and the Caribbean			9,828				26				9,407				28				421
Middle East and North Africa			4,697				12				4,135				13				562
South Asia			4,321				11				4,781				14				(460	)
Total		$	38,572				100	%		$	33,072				100	%		$	5,500

 

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Table 9: Gross Disbursements by Region

In millions of U.S. dollars

 

For the fiscal year ended June 30,		2023				% of total				2022				% of total				Variance
Eastern and Southern Africa		$	1,690				7	%		$	2,441				9	%		$	(751	)
Western and Central Africa			161				1				261				1				(100	)
East Asia and Pacific			4,350				17				5,439				19				(1,089	)
Europe and Central Asia			4,833				19				4,580				16				253
Latin America and the Caribbean			8,216				32				8,911				32				(695	)
Middle East and North Africa			2,964				11				3,407				12				(443	)
South Asia			3,290				13				3,129				11				161
Total		$	25,504				100	%		$	28,168				100	%		$	(2,664	)

Lending Categories

IBRD’s lending is classified in three categories: investment project financing, development policy financing, and program-for-results (Figure 11).

Investment Project Financing (IPF)

IPF provides financing for a wide range of activities aimed at creating the physical and social infrastructure necessary to reduce poverty and create sustainable development. IPF is usually disbursed over the long-term (roughly a 5 to 10-year horizon). FY23 net commitments under this lending category were $17.4 billion, compared with $14.1 billion in FY22.

Development Policy Financing (DPF)

DPF aims to support borrowers in achieving sustainable development through a program of policy and institutional actions. Examples of DPF projects include strengthening public financial management, improving the investment climate, addressing bottlenecks to improve service delivery, and diversifying the economy. DPF supports reforms through non-earmarked general budget financing. DPF provides fast-disbursing financing (roughly 1 to 3 years) to help borrowers address actual or anticipated financing requirements. FY23 net commitments under this lending category were $14.0 billion, compared with $13.2 billion in FY22.

Program-for-Results (PforR)

PforR helps countries improve the design and implementation of their development programs and achieve specific results by strengthening institutions and building capacity. PforR disburses when agreed results are achieved and verified. Results are identified and agreed upon during the loan preparation stage.

 

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FY23 net commitments under this lending category were $7.2 billion compared with $5.8 billion in FY22.

Figure 11: Percentage Share of Lending Categories for Annual Net Commitments

 

Currently Available Lending Products

As of July 1, 2023, 84 member countries were eligible to borrow from IBRD. See Appendix for a list of eligible countries.

IBRD Flexible Loans (IFLs)

IFLs allow borrowers to customize their repayment terms (i.e., grace period, repayment period, and amortization profile) to meet their debt management or project needs. The IFL previously offered two types of loan terms: variable-spread terms and fixed-spread terms. Effective April 1, 2021, IBRD’s offering of loans on fixed spread terms as well as a related conversion feature from the variable spread terms to fixed spread terms was suspended (see section IX: Risk Management). As of June 30, 2023, 73% of IBRD’s loans outstanding carried variable-spread terms and 27% had fixed-spread terms. See Table 12 for details of loan terms for IFL loans.

IFLs include options to manage the currency and/or interest rate risk over the life of the loan. The outstanding balance of loans for which currency or interest rate conversions have been exercised was $41.7 billion as of June 30, 2023 and $41.6 billion as of June 30, 2022. IFLs may be denominated in the currency or currencies chosen by the borrower if IBRD can efficiently intermediate in that currency. Using currency conversions, some borrowing member countries have converted their IBRD loans into domestic currencies to reduce their foreign currency exposure for projects or programs that do not generate foreign currency revenue. These local currency loans may carry fixed or variable-spread terms. The balance of such loans outstanding was $3.4 billion as of June 30, 2023 and $3.7 billion as of June 30, 2022, respectively. Box 2 below shows the components of the spread on IBRD’s IFLs and how these are determined.

Box 2: Components of Loan spread

 

Contractual lending spread		Subject to the Board’s periodic review
Maturity Premium
Market Risk Premium a		Set by Management
Funding Cost Margin

a.	This is only applicable to fixed spread loans which are not currently offered.

The ability to offer long-term financing distinguishes development banks from other sources of funding for member countries. Since IBRD introduced maturity-based pricing in 2010, most countries continue to choose

 

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loans with the longer maturities with a higher maturity premium, highlighting the value of longer maturities to member countries. However, in FY23, due to the ongoing multiple crises, some countries requested more fast-disbursing loans with shorter maturities (See Table 10).

Table 10: Net Commitments by Maturity

In millions of U.S. dollars

 

Maturity		For the fiscal year ended June 30, 2023				For the fiscal year ended June 30, 2022
< 8 years		$	5,838			$	2,992
8-10 years			4,251				5,885
10-12 years			14,898				15,716
12-15 years			4,388				1,922
15-18 years			2,559				3,330
>18 years			6,597				3,227
Guarantee Commitments			41				—
Total Net Commitments		$	38,572			$	33,072

Other Lending Products Currently Available

In addition to IFLs, IBRD offers loans with a deferred drawdown option, Special Development Policy Loans (SDPLs), loan-related derivatives, and loans to IFC (See Box 3).

Box 3: Other Lending Products Currently Available

 

Lending Product		Description
Loans with a Deferred Drawdown Option		The Development Policy Loan Deferred Drawdown Option (DPL DDO) gives borrowers the flexibility to rapidly obtain the financing they require. For example, such funds could be needed owing to a shortfall in resources caused by unfavorable economic events, such as declines in growth or unfavorable shifts in commodity prices or terms of trade. The Catastrophe Risk DDO (CAT DDO) enables borrowers to access immediate funding to respond rapidly in the wake of a natural disaster. Under the DPL DDO, borrowers may defer disbursement for up to three years, renewable for an additional three years. The CAT DDO has a revolving feature and the three-year drawdown period may be renewed up to four times, for a total maximum drawdown period of 15 years (Table 12). As of June 30, 2023, the amount of DDOs disbursed and outstanding was $9.3 billion (compared to $8.8 billion on June 30, 2022), and the undisbursed amount of effective DDOs was $0.1 billion, compared to $0.6 billion a year earlier.
Special Development Policy Loans (SDPLs)		SDPLs support structural and social reforms by creditworthy borrowers that face a possible global financial crisis or are already in a crisis and have extraordinary and urgent external financing needs. There was no amount outstanding as of June 30, 2023 and June 30, 2022. IBRD made no new SDPL commitments in either FY23 or FY22.

 

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Lending Product		Description
Loan-Related Derivatives		IBRD assists its borrowers with access to better risk management tools by offering derivative instruments, including currency and interest rate swaps and interest rate caps and collars, associated with their loans. These instruments may be executed either under a master derivatives agreement, which substantially conforms to industry standards, or under individually negotiated agreements. Under these arrangements, IBRD passes through the market cost of these instruments to its borrowers. The balance of loans outstanding for which borrowers had entered into currency or interest rate derivative transactions under a master derivatives agreement with IBRD was $9 billion as of June 30, 2023 and June 30, 2022.
Loans with IFC		IBRD provides loans to IFC in connection with the release of a member’s National Currency Paid-In Capital (NCPIC) to IBRD. (See Section VIII for explanation of NCPIC). There was no outstanding amount as of June 30, 2023 and June 30, 2022.

Lending Terms Applicable to IBRD Products

Until the end of FY19, loans for all eligible members were subject to the same pricing. However, as part of the 2018 capital package, IBRD implemented a new pricing structure that classifies member countries into four pricing groups, based on income and other factors, and relates the maturity premium to the exemptions, discounts or surcharges applicable to each pricing group (See Table 11 below).

Table 11: Country Pricing Group and Maturity Premium (in basis points)

 

Country pricing group		Description		Maturity Premium a
A		Blends b, small states, countries in fragile and conflict-affected situations (FCS) and recent IDA graduates. These countries are exempt from the maturity premium increase regardless of their income levels.		0-50 c
B		Countries below-GDI which do not qualify for an exemption listed in Group A. Countries above-GDI, but below high-income status and which do not qualify for an		0-70
C		exemption listed in Group A. Countries with high income status and which do not qualify for an exemption listed in		0-90
D		Group A.		5-115

 

a.	Based on the weighted average maturity of the loan, borrower’s income, and other factors, approved by the Board and reviewed annually.

b.	Countries eligible for IDA and IBRD loans.

c.	Member countries in group A are exempt from the maturity premium increase applicable from July 1, 2018.

 

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Table 12: Loan Terms Available During Fiscal Year Ended June 30, 2023

Basis points, unless otherwise noted

 

		IBRD Flexible Loan (IFL) a b Variable-spread Terms		Special Development Policy Loans (SDPL)
Final maturity		35 years		10 years
Maximum weighted average maturity		20 years		7.5 years
Reference market rate		Market-based variable rate index		Market-based variable rate index
Spread
Contractual lending spread		50		min. 200
Maturity premium		0-115 c		—
Market risk premium		—		—
Funding cost margin		Actual average funding cost incurred during the preceding six- month period		—
Charges
Front-end fee		25		100
Late service charge on principal payments received after 30 days of due date d		50		—
Commitment Fee e g		25		25

 

		Development Policy Loan Deferred Drawdown Option		Catastrophe Risk Deferred Drawdown Option
Reference market rate		Market-based variable rate  index		Market-based variable rate index
Contractual lending spread		IFL variable in effect at the time of withdrawal
Front-end fee		25		50 f
Renewal fee		—		25
Stand-by fee		50 e		—

 

a.	There is an implicit floor of zero on the overall interest rate in IBRD’s loans.

b.	Effective April 1, 2021, IBRD suspended offering loans with fixed spread terms.

c.	Based on the weighted average maturity of the loan and on country pricing group.

d.	See Box 7 in Section IX for a discussion of overdue payments.

e.	Certain waivers of commitment / stand-by fees payable during the first year of financing for health-related COVID-19 operations are approved under the Fast Track COVID-19 Facility.

f.	For CAT-DDOs approved under the Fast Track COVID-19 Facility, the Front-End Fee is reduced to 25bps.

g.	For operations approved under the Additional Financing to the COVID-19 Strategic Preparedness and Response Program (SPRP), the commitment fee is waived for a period of up to 18 months starting from the date of approval of the relevant operation.

Discontinued Lending Products

IBRD’s loan portfolio includes lending products whose terms are no longer available for new commitments. These products include currency pool loans and fixed-rate single-currency loans. As of June 30, 2023, loans outstanding of $457 million (0.2% of the portfolio) carried terms no longer offered, with final maturity in May 2026.

 

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Waivers

Loan terms offered prior to September 28, 2007 included a partial waiver of interest and commitment charges on eligible loans. For these loans, waivers were approved on an annual basis by the Board through fiscal year 2023. In view of the small residual balance in these loans, the Board has now in addition approved the same waiver rates on all future payments for all eligible loans. The foregone income in FY23 due to such approved waivers was $16 million (FY22: $20 million).

Figure 12 illustrates a breakdown of IBRD’s loans outstanding and undisbursed balances by loan terms, as well as loans outstanding by currency composition. The interest and currency profile of loans outstanding after the use of derivatives for risk management purposes is discussed under Market Risk in Section IX.

 

Table 13: Loans outstanding by interest rate structure, excluding derivatives

In millions of U.S. dollars, except for ratios

 

						June 30, 2023																		June 30, 2022
Product terms		Total				% of Total		Of which reference rate is		Total				% of Total				Product terms		Total				% of Total				Of which reference rate is		Total				% of Total
Fixed Spread Loans		$	65,340			27 %		Fixed		$	32,678				14	%		Fixed Spread Loans		$	66,075				29	%		Fixed		$	33,097				14	%
								Variable			32,662				13													Variable			32,978				15
Variable Spread Loans			178,556			73		Fixed			7,770				3			Variable Spread Loans			163,269				71			Fixed			7,150				3
								Variable			170,786				70													Variable			156,119				68
Total		$	243,896			100%				$	243,896				100	%				$	229,344				100	%				$	229,344				100	%

Figure 12: Loan Portfolio

Figure 12a: Undisbursed Balances by Loan Terms

In millions of U.S. dollars, except for ratios

 

 

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Figure 12b: Loans Outstanding by Currency

 

 

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SECTION V: OTHER DEVELOPMENT ACTIVITIES

IBRD continues to deliver value to its client countries through its knowledge services, convening power, and capacity to implement solutions that address global issues where coordinated action is critical.

IBRD also assists clients with designing financial products and structuring transactions to help mobilize resources for development projects and mitigate the financial effects of market volatility and disasters.

Other financial products and services provided to borrowing member countries, and to affiliated and non-affiliated organizations, include financial guarantees, grants, externally-funded activities, and advisory services and analytics.

Guarantees

IBRD’s exposure on its guarantees was $6.5 billion as of June 30, 2023 compared to $6.3 billion as of June 30, 2022 (see Table 14). Exposure is measured by discounting each guaranteed amount from its next call date.

IBRD offers project-based and policy-based guarantees for priority projects and programs in member countries. Project-based guarantees are provided to mobilize private financing for projects; they are also used to mitigate projects’ payment- and performance-related risks. Policy-based guarantees are provided to mobilize private financing for sovereigns or sub- sovereigns. IBRD’s guarantees are partial and are intended to provide only the coverage necessary to obtain the required private financing, considering country, market and, if appropriate, project circumstances. All guarantees require a sovereign counter-guarantee and indemnity, comparable to the requirement of a sovereign guarantee for IBRD lending to sub-sovereign and non-sovereign borrowers (see Box 4). The Corporate Risk Guarantee Committee reviews the choice of instrument for all proposed new guarantee operations.

Box 4: Types of Guarantees Provided by IBRD

 

Guarantee		Description
Project-based guarantees		Two types of project-based guarantees are offered: 1.  Loan guarantees: these cover loan-related debt service defaults caused by the government’s failure to meet specific payment and/or performance obligations arising from contract, law or regulation, in relation to a project. Loan guarantees include coverage for debt service defaults on: (i) commercial debt, normally for a private sector project where the cause of debt service default is specifically covered by IBRD’s guarantee; and, (ii) a specific portion of commercial debt irrespective of the cause of such default, normally for a public-sector project.   2.  Payment guarantees: These cover payment default on non-loan related government payment obligations to private entities and foreign public entities arising from contract, law or regulation.
Policy-based guarantees		These cover debt service default, irrespective of the cause of such default, on a specific portion of commercial debt owed by national or sub national government and associated with the supported government’s program of policy and institutional actions.
Guarantees for enclave operations		IBRD extends guarantees for projects in IDA-only member countries that (i) are expected to generate large economic benefits with significant developmental impact in the member country; and (ii) cannot be fully financed out of the country’s own resources, IDA resources, or other concessional financing. Those projects are known as enclave operations. The provision of IBRD support to enclave operations is subject to credit enhancement features that adequately mitigate IBRD’s credit risk.

 

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Table 14: Guarantees Exposure

In million U.S. dollars

 

As of June 30,		2023				2022
Guarantees (project, policy and enclave)		$	2,840			$	2,703
Exposure Exchange Agreements			3,619				3,630
Total		$	6,459			$	6,333

Table 15: Pricing for IBRD Project-Based and Policy-Based Guarantees

 

		Basis Points
Charges for the fiscal year ended June 30,		2023		2022
Front-end fee		25		25
Processing fee a b		Up to 50		Up to 50
Initiation fee c b		15		15
Standby fee		25		25
Guarantee fee d		50 - 165		50 - 165

 

a.	Determined on a case by case basis. In exceptional cases, projects can be charged over 50 bps of the guarantee amount.

b.	Not applicable for public projects.

c.	The initiation fee is 15 basis points of the guaranteed amount or $100,000, whichever is greater.

d.	Based on the weighted average maturity of the guarantee and country pricing group.

In addition, IBRD has entered into the following arrangements, which are treated as financial guarantees under U.S. GAAP:

 

•

Exposure Exchange Agreements (EEA): IBRD has an exposure exchange agreement outstanding with MIGA under which IBRD and MIGA exchanged selected exposures through reciprocal guarantees, with each divesting itself of exposure in countries where their lending capacities are limited, in return for exposure in countries where they had excess lending capacity.

IBRD also has a Multilateral Development Bank (MDB) EEA with the African Development Bank (AfDB) and the Inter-American Development Bank (IADB). Under this EEA, each MDB exchanged credit risk exposure of a reference portfolio supported by underlying loans to borrowing member countries. For each MDB, EEAs through diversification benefits, help reduce credit risk at the portfolio level; improve the risk- weighted capital ratios especially by addressing exposure concentration concerns; and create lending headroom for individual borrowing countries where MDBs may be constrained. The EEA involved the receipt of a guarantee and the provision of a guarantee against nonpayment in the reference portfolio by each MDB to the other. The guarantee received and the guarantee provided are two separate transactions: (a) a receipt of an asset for the right to be indemnified and receive risk coverage (recoverable asset) and (b) the provision of a financial guarantee, respectively (see Notes to the Financial Statements, Note D: Loans and Other Exposures).

 

•

Other guarantee arrangements: As of June 30, 2023, IBRD had received guarantees totaling $3,325 million ($2,116 million as of June 30, 2022). These guarantees serve as a credit enhancement which increase IBRD’s lending capacity in certain countries (see Notes to the Financial Statements, Note D: Loans and Other Exposures).

 

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Table 16: Exposure Exchange Agreements

In millions of U.S. dollars

 

As of June 30,		2023								2022
		Guarantee Received				Guarantee Provided				Guarantee Received				Guarantee Provided
Exposure Exchange Agreement
MIGA		$	10			$	10			$	21			$	21
IADB			2,021				2,021				2,021				2,021
AfDB			1,588				1,588				1,588				1,588
Total notional		$	3,619			$	3,619			$	3,630			$	3,630

Grant Making Facilities

Grant Making Facilities (GMFs) are contributions to specific trust funds and are complementary to IBRD’s work. IBRD deployed $17 million under this program in FY23 ($17 million in FY22). These amounts are reflected in contributions to special programs in IBRD’s Statements of Income, after IDA’s share is determined in accordance with the cost sharing ratio.

Externally-Funded Activities

Mobilization of external funds from third-party partners includes trust funds. Additional external funds include reimbursable funds and revenues from fee-based services to member countries, which are related to RAS, EFOs, and other financial products and services, including RAMP.

Trust Funds

Trust Funds provide development solutions that serve member recipients and donors. Trust funded partnerships often serve as a platform for IBRD and the partners to access WBG’s diverse technical and financial resources, and achieve development goals whose complexity, scale, and scope exceed any individual partner’s capabilities. IBRD’s roles and responsibilities in managing trust funds depend on the type of fund, outlined as follows:

 

•

IBRD-Executed Trust Funds (BETFs): IBRD, alone or jointly with one or more of its affiliated organizations, manages the funds and implements the activities financed. These trust funds support IBRD’s work program. IBRD disbursed $570 million in FY23 ($494 million in FY22) of trust fund program funds, which was included in Non-interest expenses, Administrative in IBRD’s Statements of Income.

 

•

Recipient-Executed Trust Funds (RETFs): Funds are provided to a third party, normally in the form of project grant financing, and are supervised by IBRD.

 

•

Financial Intermediary Funds (FIFs): IBRD, as trustee, administrator, or treasury manager, offers specific administrative or financial services with a limited operational role. Arrangements include the administration of debt service trust funds, fiscal agency funds and other more specialized limited fund management roles.

IBRD uses a cost recovery framework for trust funds, which aims to recover the costs of performing agreed roles in administering trust funds, and is guided by principles of transparency, fairness, simplification, standardization, predictability and consistent treatment across all trust fund donors.

Management continues to implement measures to improve planning, support sustainability and enhance alignment of external funds with mission priorities through greater use of umbrella trust fund programs, increased cost recovery, and new budgetary measures to manage External Funds usage.

 

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During FY23, IBRD’s share of revenue and fees from trust fund administration was $62 million ($50 million in FY22) (see Notes to Financial Statements, Note I: Management of External Funds and Other Services).

Reimbursable Advisory Services (RAS)

While most of IBRD’s advisory and analytical work is financed by its own budget or donor contributions (e.g., Trust Funds), clients may also pay for services. IBRD offers technical assistance and other advisory services to its member countries, in connection with, and independent of, lending operations. Available services include, for example, assigning qualified professionals to survey developmental opportunities in member countries; analyzing member countries fiscal, economic, and developmental environments; helping members devise coordinated development programs; and improving their asset and liability management techniques. In FY23, IBRD earned revenue of $52 million ($47 million in FY22) from RAS.

Externally Financed Outputs (EFOs)

IBRD offers donors the ability to contribute to specific projects and programs. EFO contributions are recorded as restricted revenue when received because they are for contractually specified purposes. In FY23, IBRD had $3 million of restricted revenue, compared with $4 million in FY22, which are included in Net non-interest expenses – GAAP basis in Table 4.

Restrictions are released once the funds are used for the purposes specified by donors. In FY23, there was a release of $14 million ($20 million in FY22).

Other Financial Products and Services

Managing Financial Risks for Clients

IBRD helps member countries build resilience by facilitating access to risk management solutions to mitigate the financial effects of currency, interest rate, and commodity price volatility, disasters, and extreme weather events.

Box 5 below lists some financial solutions and disaster risk financing instruments IBRD offers:

Box 5: Financing Instruments

 

Hedging Transactions		Disaster Risk Financing
Interest Rate		Catastrophe Derivatives and Bonds
Currency		Insurance & Reinsurance
Commodity Price		Regional Pooling Facilities

IBRD also intermediates the following risk management transactions for clients:

 

•

Affiliated Organization: To assist IDA with its asset/liability management IBRD executed currency forward contracts on its behalf. There were no open trades as of June 30, 2023.

 

•

Unaffiliated Organization: To assist the International Finance Facility for Immunization (IFFIm) with its asset/liability management strategy, IBRD executes currency and interest rate swaps on its behalf. In addition, IBRD, as Treasury Manager, is a counterparty to IFFIm and enters into offsetting swaps with market counterparties. During FY23, IBRD did not execute any swaps under this agreement.

(See Risk Management, Section IX, for a detailed discussion of IBRD’s risk mitigation of these derivative transactions).

 

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Asset Management

The Reserves Advisory and Management Partnership (RAMP) provides services that build clients’ capacity to support the sound management of their official sector assets. Clients include central banks, sovereign wealth funds, national pension funds, and supranational organizations. RAMP helps clients upgrade their asset management capabilities, including portfolio and risk management, operational infrastructure, and human resources capacity. Under most of these arrangements, IBRD is responsible for managing a portion of the institution’s assets and, in return, receives a fee based on the average value of the portfolio managed (see Table 17). The fees earned are used to provide training and capacity-building services. In addition to RAMP, IBRD invests and manages investments on behalf of IDA, MIGA, and trust funds; those investments are not included in IBRD’s assets.

Table 17: RAMP – Assets and Revenues

In millions of U.S. dollars

 

As of June 30,		2023				2022
Assets managed under RAMP		$	24,010			$	23,884
Revenue from RAMP		$	14			$	15

As noted in the discussion of Trust Fund Activities above, IBRD, alone or jointly with one or more of its affiliated organizations, administers on donors’ behalf funds restricted for specific uses. This administration is governed by agreements with donors, who include members, their agencies and other entities. These funds are held in trust and are not included on IBRD’s Balance Sheets, except for $588 million of undisbursed third-party contributions made to IBRD-executed trust funds, which are recognized on the Balance Sheets. The funds held in trust by IBRD as administrator and trustee totaled $42.0 billion in FY23, of which $94 million ($108 million in FY22) relates to IBRD’s own contributions to these trust funds (Table 18).

Table 18: Funds Held in Trust by IBRD

In millions of U.S dollars

 

As of June 30,		2023				2022
IBRD-executed		$	257			$	249
Jointly executed with affiliated organizations			1,027				1,004
Recipient-executed			3,142				2,965
Financial intermediary funds			28,060				22,399
Execution not yet assigned a			9,554				7,114
Total fiduciary assets		$	42,040			$	33,731

 

a.	These represent assets held in trust for which the determination as to the type of execution is yet to be finalized.

 

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SECTION VI: INVESTMENT ACTIVITIES

IBRD’s investment portfolio consists mainly of the liquid asset portfolio. As of June 30, 2023, the net investment portfolio totaled $79.2 billion with $75.4 billion representing the liquid asset portfolio. This compares with $82.1 billion a year earlier, of which $78.8 billion represented the liquid asset portfolio (see Note C: Investments in the Notes to the Financial Statements). The decreased level of liquidity reflects the lower debt service requirements and higher loan disbursements during the year.

Liquid Asset Portfolio

Funds raised through IBRD’s borrowing activities that have not yet been deployed for lending are held in the liquid asset portfolio to provide liquidity for IBRD’s operations. The portfolio is managed with the goal of ensuring sufficient cash flows to meet all IBRD’s financial commitments. While it seeks a reasonable return on this portfolio, IBRD restricts its liquid assets to high-quality investments, consistent with its investment objective of prioritizing principal protection over yield. Liquid assets are managed conservatively and are primarily held against disruptions in IBRD’s access to capital markets.

IBRD’s liquid assets are held mainly in highly rated, fixed-income instruments (see Box 8: Eligibility Criteria for IBRD’s Investments) and include the following:

 

•

Government and agency obligations

 

•

Time deposits and other unconditional obligations of banks and financial institutions

 

•

Asset-backed securities (including agency mortgage-backed securities)

 

•

Currency, interest rate and other risk management derivatives

 

•

Exchange-traded options and futures

Figure 13: Liquid Asset Portfolio by Asset Class

In millions of U.S. dollars, except for ratios

 

IBRD keeps liquidity volumes above a Prudential Minimum which is defined as 80% of the twelve-month Target Liquidity Level. The twelve- month Target Liquidity Level is calculated before the end of each fiscal year based on Management’s estimates of projected net loan disbursements approved at the time of projection and debt-service for the upcoming fiscal year. This twelve-month estimate becomes the target for the upcoming fiscal year and the Prudential Minimum is 80% of this target (see Section IX for details of how IBRD manages liquidity risk).

 

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The liquid asset portfolio is composed largely of assets denominated in, or swapped into, U.S. dollars, with net exposure to short-term interest rates after derivatives. The portfolio has an average duration of less than three months, and the debt funding these liquid assets has a similar currency and duration profile. This is a direct result of IBRD’s exchange-rate and interest-rate-risk-management policies (see Section IX), combined with appropriate investment guidelines (see Box 8).

The maturity profile of IBRD’s liquid asset portfolio reflects a high degree of liquidity. As of June 30, 2023, $68.5 billion (approximately 91% of total volume) was due to mature within six months, of which $22.4 billion was expected to mature within one month.

The liquid asset portfolio is held in three sub-portfolios: Stable, Operational, and Discretionary, each may have different risk profiles and performance guidelines (see Table 19).

 

•

Stable portfolio is mainly an investment portfolio holding all or a portion of the Prudential Minimum level of liquidity, set at the start of each fiscal year.

 

•

Operational portfolio is used to meet IBRD’s day-to-day cash flow requirements.

 

•

Discretionary portfolio gives IBRD the flexibility to execute its borrowing program and can be used to tap attractive market opportunities. Additional portions of the Prudential Minimum may also be held in this portfolio.

Table 19: Liquid Asset Portfolio Composition

 

In millions of U.S. dollars, except ratios which are in percentages
As of June 30,		2023				%				2022				%
Liquid asset portfolio
Stable		$	48,205				64	%		$	49,296				63	%
Operational			14,404				19				13,345				17
Discretionary			12,804				17				16,155				20
Total		$	75,413				100	%		$	78,796				100	%

Table 20: Liquid Asset Portfolio - Average Balances and Returns

 

In millions of U.S. dollars, except rates which are in percentages
		Average Balances								Financial Returns %
		2023				2022				2023				2022
Liquid asset portfolio
Stable		$	47,734			$	55,925				4.11	%			0.31	%
Operational			13,049				13,736				4.04				0.24
Discretionary			15,668				9,398				4.36				0.61
Total		$	76,451			$	79,059				4.16	%			0.32	%

During FY23, IBRD’s total return on the liquid asset portfolio was 4.16%, an increase compared to last year and consistent with the rising interest rate environment. In addition to monitoring gross investment returns relative to their benchmarks, IBRD also monitors overall earnings from the investment portfolio, net of funding costs. In FY23, IBRD had $188 million of revenue, net of funding costs on the investment portfolio as discussed in Section III.

 

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Other Investments

In addition to the liquid asset portfolio, the investment portfolio also includes holdings related to the PEBP, PCRF, and the Local Currency Market Development program (LCMD). Table 21 below summarizes the net carrying value of other investments:

Table 21: Net Carrying Value of Other Investments

 

In millions of U.S. dollars As of June 30,		2023				2022
PEBP		$	2,684			$	2,456
PCRF			1,098				766
LCMD			—				39
Total		$	3,782			$	3,261

 

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SECTION VII: BORROWING ACTIVITIES

IBRD has been issuing bonds in the international capital markets since 1947. The proceeds of these bonds support IBRD’s lending operations which are aimed at promoting sustainable development for IBRD’s borrowing member countries.

Borrowing Portfolio

IBRD borrows at attractive rates underpinned by its strong financial profile and shareholder support that together are the basis for its triple-A credit rating. As a result of its financial strength and triple-A credit rating, IBRD is recognized as a premier borrower and its bonds and notes are viewed as a high credit quality investment in the global capital markets.

IBRD uses the proceeds to finance development activities in creditworthy middle-income and low-income countries eligible to borrow from IBRD at market-based rates. Funding raised in any given year is used for IBRD’s operations, including loan disbursements, replacement of maturing debt, and prefunding for lending activities. IBRD determines its funding requirements based on a three-year rolling horizon and funds about one-third of the projected amount in the current fiscal year.

As discussed in Section II, IBRD uses currency and interest rate derivatives in connection with its borrowings for asset and liability management purposes. New medium- and long-term funding is swapped into variable-rate U.S. dollar instruments, with conversion to other currencies carried out subsequently, as needed. This is in accordance with loan funding requirements, so that IBRD can minimize interest rate and currency risk. IBRD also uses derivatives to manage the re-pricing risks between loans and borrowings. Further discussion on how IBRD manages this risk is included in the Risk Management Section, Section IX.

In FY23, IBRD raised a total of $42.2 billion of medium- and long-term debt (Table 23). IBRD issues short-term debt (maturing in one year or less), and medium- and long-term debt (with a maturity greater than one year). From time to time, IBRD exercises the call option in its callable bond issues; it may also repurchase its debt to meet other operational or strategic needs such as providing liquidity to its investors (Table 23).

As of June 30, 2023, the borrowing portfolio totaled $266.8 billion, $9.9 billion higher than June 30, 2022 (see Note E: Borrowings in the Notes to the Financial Statements). The increase was primarily due to net medium-and long- term debt issuances during the year (Table 23).

Figure 14: Effect of Derivatives on Currency Composition of the Borrowing Portfolio – June 30, 2023

 

 

*	Denotes percentage less than 0.5%.

 

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As of June 30, 2023, IBRD’s total borrowing portfolio, after the effects of derivatives, carried variable rates, with a weighted average cost of 5.1% (1.0% as of June 30, 2022). The increase in the weighted average cost from the prior year reflects the increase in the short-term market interest rates during the year. This also resulted in an increase in IBRD’s weighted average loan rates, which are also based on IBRD’s funding cost. IBRD’s lending spread was therefore not impacted by the increase in short-term interest rates (Figure 2).

Short-Term Borrowings

Table 22 summarizes IBRD’s short-term borrowings, which mainly include discount notes, securities lent or sold under securities lending and repurchase agreements, and other short-term borrowings.

Discount Notes

IBRD’s short-term borrowings consist mainly of discount notes issued in U.S. dollars. These borrowings have a weighted average maturity of approximately 135 days.

Securities Lent or Sold under Repurchase Agreements

These short-term borrowings are secured mainly by highly-rated collateral in the form of securities, including government-issued debt, and have an average maturity of less than 30 days.

Other Short-Term Borrowings

Other short-term borrowings are mostly money market instruments that have maturities of one year or less.

Table 22: Short-Term Borrowings

 

In millions of U.S. dollars, except rates which are in percentages
As of June 30,		2023				2022
Discount notes a
Average daily balance during the fiscal year		$	13,389			$	10,276
Weighted-average rate during the fiscal year			3.58	%			0.29	%
Securities lent or sold under repurchase agreements b
Average monthly balance during the fiscal year		$	578			$	145
Weighted-average rate during the fiscal year			2.37	%			0.02	%
Other short-term borrowings a
Average daily balance during the fiscal year		$	120			$	199
Weighted-average rate during the fiscal year			3.03	%			0.28	%

a.	At amortized cost which approximates fair value.

b.	Excludes securities related to PEBP.

Medium- and Long-Term Borrowings

In FY23, medium- and long-term debt raised directly by IBRD in the capital markets amounted to $42.2 billion with an average maturity to first call of 6.3 years (Table 23). The increase in medium-and long-term debt issuances in FY23 is primarily due to higher debt servicing and refinancing requirements.

 

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Table 23: Funding Operations Indicators

 

In millions of U.S. dollars, except maturities which are in years
For the fiscal year ended June 30,		2023				2022
Issuances a
Medium- and long-term funding raised		$	42,186			$	40,820
Average maturity to first call date			6.3				7.6
Average maturity to contractual final maturity			6.9				8.8
Maturities
Medium- and long-term funding matured		$	28,506			$	35,057
Average maturity of debt matured			5.4				5.7
Called/Repurchased
Medium- and long-term funding called/repurchased		$	3,428			$	2,797

 

a.	Expected life of IBRD’s bonds are generally between first call date and the contractual final maturity.

Table 24: Maturity Profile of Medium and Long-Term Debt

 

In millions of U.S. dollars
		As of June 30, 2023
		Less than 1 year				1 to 2 years				2 to 3 years				3 to 4 years				4 to 5 years				Due After 5 years				Total
Medium and Long-Term Debt		$	28,959			$	31,917			$	29,004			$	27,040			$	25,850			$	84,458			$	227,228

 

As shown below, 65% of IBRD’s medium-and long-term borrowings issued during the year are in U.S. dollars:

Figure 15: Medium- and Long-Term Borrowings Raised by Currency during the year, Excluding Derivatives

 

 

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SECTION VIII: CAPITAL ACTIVITIES

Capital Structure

Principal Shareholders and Voting Power

As of June 30, 2023, IBRD had 189 member countries, with the top six accounting for 41% of the total voting power (Figure 16). The percentage of votes held by members rated AA and above by at least two major rating agencies was 37% (Figure 17).

The United States is IBRD’s largest shareholder, with 16% of total voting power. Accordingly, it also has the largest share of IBRD’s uncalled capital, $49,206 million, or 17% of total uncalled capital.

Subscribed Capital

Total subscribed capital is comprised of paid-in capital and uncalled subscribed capital. See Statement of Subscriptions to Capital Stock and Voting Power in IBRD’s Financial Statements for balances by country.

 

Figure 16: Voting Power of Top Six Members as of June 30, 2023				Figure 17: Percentage of Votes held by Member Countries, as of June 30, 2023

Table 25: Breakdown of IBRD Subscribed Capital

 

In millions of U.S. dollars, except ratios which are in percentages
As of June 30,		%				2023				2022				Variance
Subscribed capital
Uncalled Subscribed capital			93	%		$	296,021			$	286,636			$	9,385
Paid-in capital			7	%			21,819				20,499				1,320
Total subscribed capital			100	%		$	317,840			$	307,135			$	10,705

Uncalled Subscribed Capital

As of June 30, 2023, the total uncalled portion of subscriptions was $296,021 million. The amount may be called only when required to meet IBRD’s obligations for funds borrowed or loans guaranteed and is, thus, not available for use by IBRD in making loans. Of this amount, $41,749 million was restricted pursuant to resolutions of the Governors (though such conditions are not required by IBRD’s Articles). While these resolutions are not legally binding on future Governors, they do record an understanding among members that this amount will not be called for use by IBRD in its lending activities or for administrative purposes.

No call has ever been made on IBRD’s capital. Any such calls are required to be uniform, but the obligations of IBRD’s members to make payment on such calls are independent of one another. If the amount received on a call

 

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is insufficient to meet the obligations of IBRD for which the call is made, IBRD has the right to make further calls until the amounts received are sufficient to meet such obligations. On any such call or calls, however, no member is required to pay more than the unpaid balance of its capital subscription.

Under the Bretton Woods Agreements Act and other U.S. legislation, the Secretary of the U.S. Treasury is permitted to pay approximately $7,663 million of the uncalled portion of the subscription of the United States, if called for use by IBRD, without need for further congressional action.

The balance of the uncalled portion of the U.S. subscription, $41,543 million, has been authorized but not appropriated by the U.S. Congress. Further action by the U.S. Congress is required to enable the Secretary of the Treasury to pay any portion of this balance. The General Counsel of the U.S. Treasury has rendered an opinion that the entire uncalled portion of the U.S. subscription is an obligation backed by the full faith and credit of the U.S., notwithstanding that congressional appropriations have not been obtained with respect to certain portions of the subscription.

Capital Increases

In October 2018, the Governors approved a new GCI and SCI as part of a capital package that includes institutional and financial reforms designed to ensure long-term financial sustainability. The capital increases will result in additional subscribed capital of up to $60.1 billion, with $7.5 billion of paid-in capital and $52.6 billion of callable capital. In May 2023, the Board approved the extension of the subscription period for GCI and SCI from October 1, 2023 to October 1, 2025.

Paid-In Capital

Paid-in capital has two components:

 

•

The U.S. dollar portion, which is freely available for use by IBRD.

 

•

National Currency Paid-In Capital (NCPIC) portion, usage of which is subject to certain restrictions under IBRD’s Articles and is subject to Maintenance-Of-Value (MOV) requirements. For additional details see the Notes to the Financial Statements, Note A: Summary of Significant Accounting and Related Policies.

Usable Paid-in Capital

Usable paid-in capital represents the portion of paid-in capital that is available to support IBRD’s risk bearing capacity and includes all U.S. dollar paid-in capital, as well as NCPIC for which use restrictions have been lifted (referred to as released NCPIC). The adjustments made to paid-in capital to arrive at usable paid-in capital are provided in Table 26.

The $1,317 million increase in usable paid-in capital between FY22 and FY23 was primarily due to the receipt of $968 million for GCI and $352 million for SCI during FY23.

 

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