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

International Finance Corporation We promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives.

International Bank for Reconstruction and Development, 1945 International Finance Corporation, 1956 International Development Association, 1960 Multilateral Investment Guarantee Agency, 1988 IFC: A Member of the World Bank Group IFC is owned by its 175 member countries, which collectively determine policies.

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

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

6 Capital Stock Held by our Shareholders 175 Member Countries Capital Stock Held by our Shareholders 175 Member Countries Five largest: 45.8% Other countries: 54.2% United States 24.1% Japan 6.0% Germany 5.5% France 5.1% United Kingdom 5.1% Other countries 54.2%

7 IFC’s Operating Income FY 1998– U.S. $millions

8 Authorized capital: $2.45 billion Total capital: $6.3 billion Capital strength: IFC’s capital resources currently stand at 49 percent of risk-weighted assets, well above the 30 percent minimum for this ratio required by the capital adequacy policy. (As of June 30, 2002) Financial strength

9 Investments by Sector FY02 Total Commitments: $3.61 billion Gross investments, including loan syndications and financing for IFC’s own account. Also includes guarantees and risk management products, which are off- balance-sheet. SectorCommitment s $ millions Financial1,236 Transportation & Warehousing621 Information310 Construction & Real Estate289 Nonmetallic Mineral Product Manufacturing 227 Food & Beverages190 Wholesale & Retail Trade129 Oil, Gas, Mining, & Chemicals117 Industrial & Consumer Products112 SectorCommitments $ millions Agriculture & Forestry75 Pulp & Paper73 Health Care & Education60 Primary Metals46 Textiles, Apparel, & Leather 43 Accommodation & Tourism Services 39 Professional, Scientific, & Technical Services 25 Plastics & Rubber18

10 Includes loan guarantees and risk management products for FY99-02 IFC Financing

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

12 What IFC has achieved so far MicroFinanceBank Yugoslavia, equity investment of US$ 1 million equal to 16.6% of share capital Raiffeisen Bank Yugoslavia, equity investment of Euro 1 million equal to 10% of share capital Fresh&Co (agribusiness) Loan of Euro 7.7 million, signed November 2001, disbursed Tigar Rubber Company (tires) Loan of Euro 16 million and equity investment of Euro 4 million (10% of share capital in new JV with Michelin) signed March 2002

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

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

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

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

17 How to contact us Send us a brief outline of your project: description, sponsors, management, market and sales, industrial background, investment requirements, anticipated financial plan IFC Belgrade Office, Kneginje Zorke 96 Tel: (011) ; fax: (011)