Advancements in Bank Group Reforms and Financial Products for Development

2. 2

3. 3 To conclude, the reforms introduced since 1996 are continuing to bear fruit. At last year’s presentation, as you may recall, I had reported that the Bank Group is in robust health. I am now pleased to report that the year 2002 has seen exceptionally strong performance by the Bank Group on all parameters, thereby further consolidating the gains made. However, we cannot afford to be, and will not be, complacent. We at the Bank Group would like to take this opportunity to rededicate ourselves to making every effort to facilitate the achievement of the Millennium Development Goals. The solid financial position and strong membership support reinforces the Bank Group’s capacity in providing effective development assistance to its borrowing member countries and in ensuring that it remains the leading development finance institution tackling the development challenge facing Africa. I thank you for your kind attention. To conclude, the reforms introduced since 1996 are continuing to bear fruit. At last year’s presentation, as you may recall, I had reported that the Bank Group is in robust health. I am now pleased to report that the year 2002 has seen exceptionally strong performance by the Bank Group on all parameters, thereby further consolidating the gains made. However, we cannot afford to be, and will not be, complacent. We at the Bank Group would like to take this opportunity to rededicate ourselves to making every effort to facilitate the achievement of the Millennium Development Goals. The solid financial position and strong membership support reinforces the Bank Group’s capacity in providing effective development assistance to its borrowing member countries and in ensuring that it remains the leading development finance institution tackling the development challenge facing Africa. I thank you for your kind attention.

4. 4 Financial Products Classified into Four Main Groups Loan products Risk management products Guarantees Equity participation or quasi-equity Introduced for Flexibility of RMCs

5. 5 Loan Products Selection of currencies US$, €, Yen & ZAR Selection of interest rate bases Floating 6-month LIBOR, EURIBOR, JIBAR Fixed Amortizing swap, computed from market rates Choices of rate fixing dates Each disbursement Bank floating rate reset dates Final disbursement Dates decided by borrower Variable Weighted average cost of funding pool in that currency

6. 6 Loan Pricing Pricing Methodology Lending Rate = Base Rate + Lending Spread Fees

7. 7 Non-sovereign Guaranteed Loan Pricing

8. 8 Lending in Local Currencies Framework recently approved Rationale Revenues denominated primarily in local currency Eliminate foreign currency risk Contribute to reducing financial sector and overall economic risk exposure (FX and maturity risk for borrowers and financial institutions) Issues Loans - limited to financing local expenditures (Article 16 restriction) Ability to raise local currency resources Bond issues Swaps Guarantees Risk Management Asset – liability management Warehousing & cost of carry

9. 9

10. 10 Risk Management Products Available Cap, Floor and Collar Fee: 12.5 basis points on total amount hedged Interest Rate Swap Fee: 12.5 basis points on total amount hedged Currency Swap Fee: 25 basis points on total amount hedged Commodity linked hedge Fee: 37.5 basis points on total amount hedged

11. 11

12. 12

13. 13

14. 14 ADF Currency Choice Borrowers can select disbursement currency Condition: effective for new loans negotiated after 23 June 2005 Currencies available: EUR, USD, JPY & GBP (currencies of SDR basket) Choice: at loan signature Loan remains denominated in Unit of Account (UA) Repayment: in currency disbursed

15. 15