Ninth Replenishment of IFAD’s Resources
IFAD9 Consultation inter-sessional paper
24-25 October 2011
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Key messages from the 2nd Consultation
• Non-repeatability of the ratio of Members’ contributions
to PoLG under IFAD8
• Strong view that the PoLG should not be reduced
• Further clarification and information required
in a number of areas
2
Further clarification
• Options for strengthening internal resources
• Fuller analysis of ACA/CFS
• Longer-term perspective on IFAD’s financial capacity
• External audit of the assumptions and projections used in
IFAD’s financial model
• Additional resources needed as a result of DSF
• Request for alternate scenarios
• Additional medium-term funding possibilities
3
Options for strengthening internal resources
• Loan prepayment
Could enhance internal contribution by US$15 million
Can only be done on a voluntary case by case basis,
hence eliminated from calculations
• Alignment of lending terms
Hardening some highly concessional terms
Dropping intermediate terms
Could generate resources in the range of US$40-55 million
4
Fuller analysis of ACA/CFS
• Benefits of ACA
• Limitations in its use
• Why CFS is better
5
Benefits of ACA
• Future reflows virtually certain
• IFAD carries high levels of liquidity
• Can safely commit, based on future cash receipts
• Allows enhancement of resources while limiting Member
contributions
• But …
6
Limitations of ACA
• Increasing ACA is a one-time drawdown of resources
• ACA oversimplifies
• Does not give any insight into repeatability
• Does not represent maximum prudent use of resources
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What is CFS and why is it better?
• Other IFIs use cash flow modelling to determine prudent
disbursements
• CFS is one form of cash modelling
• Assumes repeatability is desirable
• Assures repeatability by explicitly considering future IFAD
replenishments
• Assumes maximising PoLG by optimizing cash flow for any
given IFAD replenishment
8
Implementation plan for a CFS approach
• Creation of a Financial Planning and Risk Analysis unit within
the Financial Operations Department
• Unit to be directly supervised by the CFO
• Will include ALM, BUD and Financial Management Office
• ALM will therefore be independent from TRE and will focus on
 Risk budgeting
 Financial forecasting
 Developing quarterly financial projections for management
to report to the EB
9
Longer-term perspective on IFAD’s
financial capacity
• Assumed US$1.6 billion IFAD9 Member contributions
• Assumed US$3.2 billion PoLG
• From IFAD10 onward, contributions and PoLG grow with
inflation
10
IFAD long-term cash flow
IFAD cash flows under an IFAD9 with a US$ 3.2 billion PoLG,
assuming US$1.62 billion in Member contributions
(Millions of United States dollars)
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Snapshots of IFAD9 and beyond
IFAD9
IFAD10
(2013-2015) (2016-2018)
Source of Funds
Investment Income
Loan Reflows
Cancellations/Reduction
Use of future reflows
Total IFAD
188
886
193
921
2 188
140
1 085
243
832
2 299
104
1 339
297
708
2 448
86
1 656
309
565
2 617
Members Contributions
Total Funds
1 615
3 803
1 739
4 038
1 873
4 321
2 017
4 634
PoLG
Admin and HIPC
Total PoLG, Admin and HIPC
3 200
603
3 803
3 446
592
4 038
3 711
610
4 321
3 997
637
4 634
IFAD sources of funds and requirements
(Millions of United States dollars)
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IFAD11
IFAD12
(2019-2021) (2022-2024)
External Audit of IFAD’s financial modelling
• PWC engaged to perform an external audit of the assumptions
and projections used in IFAD’s financial modelling
Assumptions reasonable
Data agrees to published financial information
Model arithmetically and logically valid
Projections reasonable
• Clean audit assurance on all counts
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Additional resources needed as a result
of DSF
Replenishment
Forgone principal due
and compensated
by Member States
(Millions of United States
dollars)
IFAD 9 (2013-2015)
0
IFAD 10 (2016-2018)
3.4
IFAD 11 (2019-2021)
39.7
IFAD 12 (2022-2024)
99.2
Resources required to compensate IFAD for the loan principal
repayments forgone as a result of DSF
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Additional medium-term funding possibilities
• Management will build on lessons learned
• Potential new sources
• New and existing partners
• Validated proposals will be brought before the relevant
governing body
15
Thank you!
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