The crisis also threatens many upcoming infrastruc-ture projects that are expected play an importantdevelopment role.• IFC’s new
Infrastructure Crisis Facility
supports viable private sector or public-private partnership projects (PPPs) that facefinancial distress because of the crisis. Debtand equity components will provide short-to medium-term financing and advisoryservices to help governments design orredesign PPPs. Plans include:— Ensuring a minimum level ofcontinued new project activity whererestarting project development planscould otherwise take several years;— Investing up to $300 million or itsequivalent in the facility’s equity fund,with other investors expected toprovide at least $1.2 billion.
Although commercial microfinance as a wholecontinues to perform well, the private capital it hadstarted attracting in recent years is now virtuallyunavailable. To help this critical industry rebuildmarket confidence and maintain its momentum inthe fight against poverty:• IFC and German development bank KfW havecreated a
with initial funding of $500 million.Three of the industry’s leading private fundmanagers (BlueOrchard Finance, responsAbilitySocial Investments AG, and CyranoManagement) will oversee funds, ensuringrapid deployment and cost efficiency.— More than 100 microfinance institutionswill receive needed refinancing.— The initial focus will be on large playerswith extensive reach.— The initiative will support 60 millionlow-income borrowers in the world’spoorest countries.
Enhancing Advisory Services
IFC Advisory Services
are being refocused tohelp clients weather the crisis. Priorities include:• Scaling up specific existing programs inresponse to growing client needs;• Designing new crisis-response programsin risk management and nonperformingloan management;• Raising up to $60 million from donors tosupplement IFC resources for advisorywork at the firm and bank level (such asrisk management and corporate gover-nance) as well as in policy reform (inareas such as insolvency frameworks).
Investing in Leading Local Banks
As losses mount among private banks, local financialsectors will need strengthening. But developingcountries lack the resources to take the sameapproach as the U.S. and several European countries.Even in countries receiving IMF support, local banksoften prefer to receive new private capital in order tostay independent.• The
will provideadditional capital for major banks in developingcountries so that they can keep lending andsupporting economic recovery and job creationthrough the crisis.— The fund will make subordinated loansand equity or equity-linked investmentsin major private banks or state-ownedbanks on a clear path to privatization.— IFC investment totals $1 billion; weattracted another $2 billion from theJapanese government, and otherinvestors may join as well.
IFC is responding to the global economic downturn with a series of large-scale initiatives, helping developing countries weather the stormwith a broad package of targeted investments and advisory services. The initiatives help companies hold their own in challenging times—keeping people at work, products on the shelves, and money in the banks.
The global crisis is steering private capital away fromemerging markets and into lower-risk assets. Vitalcommercial trade finance lines are being cut, creatinga need for new funding in previously well-financedsectors. IFC has two complementary programs tosupport trade finance:• IFC has expanded its
Global Trade FinanceProgram
from $1 billion to $3 billion, guaran-teeing risks that commercial banks will nottake—especially for smaller companies in thepoorest countries—and allowing support foran additional $18 billion in trade. Now activein 68 countries, the program expects to add25 more in the coming year.• A new
Global Trade Liquidity Program
willwork on a larger scale, teaming IFC withStandard Chartered Bank, Standard Bankof South Africa, other major internationalbanks, and development partners to support$50 billion of trade throughout the financialcrisis.
Providing Liquidity SupportRebuilding Financial Infrastructure