IFC – International Finance Corporation

International finance is the examination of analysis of cash flows, institutions and practices, that a reason of the movement from one country to another. The most important prominent distinctions between the international finance and its purely domestic counterpart is the exchange rate risk. And refers to the uncertainty injected into any international financial decision, which results from changes in the price of one country’s currency per unit of another country’s currency.

The level of international trade is a relevant indicator of economic growth worldwide. Or in other word: examples of other distinctions include the environment for direct foreign investment, new risks resulting from changes in the political environment, and differential taxation of assets and income. By providing a resource where currencies from all nations can be bought and sold Foreign exchange markets facilitate this trade.

There in a second motivation for international financial activity and that is the addition to international trade. A lot of firms and companies make long-term investments in productive assets in foreign countries. It has considered a variety of issues, when a firm decides to build a factory in a foreign country. There is a lot of question asked, such as:

– What kinds of tax agreements exist between the home and foreign countries that may influence the after-tax profitability of the new venture?
- Where should the funds needed to build the factory be raised?
And much more questions.

The International Finance Corporation (IFC) is promoting the growth of the private sector in less developed member countries as well as it is a member of the World Bank Group with a principal activity – helping finance individual private enterprise projects. Also it contribute to the economic development of the country or region where the project is located. The International Finance Corporation is the World Bank Group’s investment bank for developing countries. It makes equity investments in companies and lends directly to private them, without having guarantees from governments, and attracts other sources of funds for private-sector projects. Also provides technical assistance and advisory services to businesses and governments.

The IFC’s worldwide committed portfolio as of financial year 2005 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. The IFC generally operates independently as it is legally and financially autonomous with its own Articles of Agreement, share capital, management and staff. The IFC has 2,400 staff; 178 members; and lends in 80 countries, with 40 per cent of its investments in the financial sector.

The IFC typically focuses on small and mid sized businesses, financing projects in all types of industries, including manufacturing, infrastructure, tourism, health, education, and financial services. Established in 1956, the IFC is part of the World Bank group. Although it often acts in concert with the World Bank and shares its president, the IFC is legally and financially autonomous. It is owned by nearly 180 member countries. In other words, International Finance Corporation (IFC) is the lender known ’round the world. IFC promotes economic development worldwide by providing loans and equity financing for private-sector investment.