IFC Board approves initiatives for financial crisis response

In response to the global financial crisis, International Financial Corperation (IFC) Board on Tuesday approved a package of crisis response initiatives to support the private sector in emerging markets hit by the global financial crisis.

On December 9, IFC, a member of World Bank Group had also approved a Sovereign Funds Initiative which will enable it to raise and manage commercial capital from sovereign funds for equity investments in some of the poorest developing countries. The initiatives will support the private sector, which is critical to employment, recovery, and growth.

The crisis response facilities consist of a doubling of the IFC Global Trade Finance Program to $3 billion, a new $3 billion Bank Recapitalization Fund, and an Infrastructure Crisis Facility which is expected to mobilize at least $1.5 billion. These will be supported by advisory services addressing the needs of clients affected by the crisis. The goal of the Sovereign Funds Initiative is to connect long-term commercial capital from state-owned investors with the substantial investment needs of private companies in developing countries.

“We are pleased that the Board approved and endorsed these important initiatives,” said Lars Thunell, IFC’s Executive Vice President and CEO. “With the support of donors and partners, these IFC facilities will provide critical assistance to many businesses and entrepreneurs and reduce the impact of the crisis on the poor. In addition, our new Sovereign Funds Initiative should mobilize new sources of commercial capital for long-term investment in frontier regions and countries.”

According to the IFC release, the four crisis response facilities are expected to deploy about $30 billion over the next three years. IFC will fund the facilities and has invited other donors, including governments and international financial institutions to contribute financing and expertise. The Japanese government has announced that it will become a founding partner and invest $2 billion in the Bank Recapitalization Fund.