Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-5186-HU

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO US$66 MILLION

TO THE

NATIONAL BANK OF HUNGARY

WITH THE GUARANTEE OF THE

REPUBLIC OF HUNGARY

FOR A

FINANCIAL SYSTEM MODERNIZATION PROJECT

APRIL 6, 1990

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit - Forint (Ft)

AVERAGE EXCH4NGE RATES(Forints per US$)

1985 1986 1987 1988 1989 1990(Feb.)

US$1.00 Ft 50.1 45.8 47.0 50.4 60.8 63.9

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS

BB - Budapest BankCCB - Commercial and Credit BankDP - Direct PurchaseHCB - Hungarian Credit BankICB - International Competitive BiddingIS - International ShoppingITCB - International Training Center for BankersNBH - National Bank of HungaryNSB - National Savings BankSBS - State Bank Supervision AgencySSS - State Securities Supervisory Board

HUNGARY - FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

HIINGARY.

FINANCIAL SYSTEM NODERNIZATION PROJECT

Loan and Proiect Summary

Borrcwer: National Bank of Hungary (NBH).

Guarantor: Republic of Hungary.

Beneficiaries: NBH; regulatory and supervisory agencies; participatingbanks; bankers training center; national paymentsclearing center; stock exchange; Government.

Ar.ount: US$66 million equivalent.

Terms: Fifteen years, including a five-year grace period, atthe Bank's standard variable interest rate.

Onlending Terms: NBH will onlend US$57.0 million equivalent in Forintsto the participating institutions (including theunallocated part of the Bank loan) and US$4.0 millionequivalent in Forints to the Governmernt, at maturitiesnot exceeding 15 years including fivs years of grace,at an adjustable rate which is established in accordancewith the principles that guide NBH's refinancing rate.These principles aim at achieving a positive rate in realterms and provide for the rate at least to cover NBH'saverage cost of funds and the projected differentialbetween domestic and relevant international inflationrates. Of the remaining US$5.0 million equivalent,US$1.0 million equivalent will be used for trainingpurposes, and US$4.0 million equivalent will be useddirectly by NBH, NBH will bear the foreign exchangerisk.

Financing Plan: IBRD US$ 66.0 millionParticipating Institutions US$ 67.4 millionGovernment US$ 3.4 millionNBH USS 6.6 million

TOTAL US$ 143.4 million

Staff Appraisal Report: Report No. 8200-HU, dated April 6, 1990.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its cor.tents may not otherwise be disclosed without World Bank authorization.

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE EXECUTIVE DIRECTORSON A PROPOSED LOAN

TO THE NATIONAL BANK OF HUNGARYWITH THE GUARANTEE OF THE REPUBLIC OF HUNGARYFOR A FINANCIAL SYSTEM MODERNIZATION PROJECT

1. The following memorandum and recommendation on a proposed loan tothe National Bank of Hungary for US$66 million equivalent, to help finance afinancial system modernization project, is submitted for approval. The proposedloan would have fifteen years maturity with five years grace and carry thte Bank'sstandard variable int2re,st rate.

2. Background. The financial system in Hungary has evolved rapidlysince the establishment Of the uwo-tier banking system in 1987. The systemconsists of a banking system--comprising the central bank, fifteen domesticcommercial banks, se-en specialized financial institutions, and four jointventure banks with foreign participation--, a nascent securities market, fourinsurance companies, and the social security system. As part of overall economicliberalization, the Government has also embarked on a major reform of financialpolicies, institutions and instruments. Management of monetary and credit policyis now by indirect instruments, deposit and lending interest rates areincreasingly market based, banking services for households and enterprises arebeing integrated, and foreign exchange operations are being decentralized. Anew Central Bank Law is expected to be approved in '990, while a new Banking Lawis under preparation to permit its approval in the fourth quarter of 1990. Thenew Banking Law would establish a comprehensive framework for bank operationsin Hungary, and would strengthen the banking supervisory function as well as theprudential regulations for banks. Recent corporate legislation has facilitatedthe development of the incipient securities market, and a new Secarities MarketLaw has been approved in January 1990.

3. The agenda for deepening and expansion of the financial sectorinvolves actions in two broad areas, namely: (i) policy actions to improveefficiency of mobilization and allocation of financial resources; and (ii)modernization and strengthening of the regulatory framework and institutions ofthe financial system. Policy issues in the first area have been addressed inthe industrial sector adjustment loan (ISAL) approved in June 1988 and will bedeepened under a proposed SAL, including the maintenance of a positive realrefinancing rate by NBH, and steps to reduce subsidies on housing finance topermit the maintenance of positive real deposit rates for households, which willallow the further integration of the household and enterprise banking sectors.Shortcomings in the second area include the weak policies and procedures of thebanks, obsolete banking technology and infrastructure, and indications of weakloan portfolios of the major banks. The officially reported quality of theportfolios of some of these banks is likely to be overstated due to inadequateprudential regulations with respect to interest accrual, loan classificat,on andprovisioning standards, and lending concentration by borrowers and sectors. Apoor accounting and auditing framework, coupled with weaknesses in financialskills and related training capacities, further constrain financial systemdevelopment. The project would help to address these institutional weaknesses.In line with the sequencing of the Government's reform agenda in the financial

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sector, the phasing of the modernization program would progress from the bankingsector to other areas such as the securities market, housing finance, and socialsecurity. The project would support the first phase of the medium-term actionprogram in this area.

4. Country Assistance Strategy. Since lending to Hungary began in1983, the Bank's country assistance strategy has focussed on supporting Hungary'sprogram of reform and structural adjustment to make the economy more efficient,flexible, market-oriented and competitive in convertible currency markets. Inrecent years, this strategy has been implemented mainly through a series ofhybrid loans for industrial restructuring, combining quick-disbursing funds tosupport institutional and policy reform, and investment funds to supportrestructuring at the enterprise and subsector levels. Investment loans in others'zctors have also supported implementation of the reform, as well as improvementin enterprise efficiency. Following the adoption by the Government in 1987 ofa medium-term program of stabilization and adjustment to correct imbalancescreated by economic deterioration, the Bank stepped up its support to the reformthrough the above mentioned ISAL. That loan, combined with an IMF Standby in1988, provided crucial external support to strengthen the Government's increasedreform and adjustment efforts. Regarding the financial sector, the Bank hasworked with the Hungarian authorities to analyze the development constraints andpriorities in a collaborative review of the sector. The preparation of thereview formed the basis for the policy dialogue on the major issues affectingthe development of the banking system and securities markets in the context ofthe policy matrix agreed under the first and second industrial restructuringprojects as well as the ISAL. The roles of the Bank and IFC in Hungary have beencomplementary and, with regard to financial sector reforms, collaborative. Inthe context of the project, the Bank and IFC have worked together closely inproviding advice on the further development of the securities market.

5. The Bank's assistance strategy will continue to support theGovernment in carrying out its adjustment efforts. It will address medium tolong term constraints to sustainable growth, assist in developing institutionalcapacity in line with systemic reforms and help ensure Hungary's continued accessto external financing. This strategy will be implemented through both adjustmentand investment lending operations.

6. Rationale for Bank Involvement. In the context of projectpreparation, the Bank Group has made considerable contributions to thedevelopment of the regulatory framework and supervisory functions of both thebanking system and securities markets. It has been actively involved in thepreparation of the scope of the proposed new Banking Law, including the relatedprudential banking regulations, as well as in preparing the new Securities MarketLaw. The Bank has further developed with the Government the framework for adetailed review of the portfolio condition of the major Hungarian commercialbanks and for a follow up program of financial restructuring. The Bank has alsocarried out a critical analysis of the institutional capacities of the majorbanks, on the basis of which tailor-made action programs were developed for eachbank. Continued Bank involvement would help ensure the timely implementationof the recommendations, which would help to accelerate restructuring at theenterprise level by inducing financial discipline and making available investmentresources based on stringent economic and financial criteria. It would also

benefit onlending of Bank funds by these banks in the eleven ongoing Bankoperations in agriculture, industry, and technology development. The Bank hasalso been working actively with the Government in its review of accounting andauditing practices, and has largely been instrumental in initiating the importantreform program in this area, now under way.

7. Project Objectives. The project would support the modernizationand strengthening of the Hungarian financial system, and thereby improve itsability to mobilize and allocate financial resources efficiently. Specifically,the project aims to help: (i) provide a modern legislative, regulatory andsupervisory framework for banking and securities markets; (ii) strengthen theoperations of the domestic banks by improving their management policies,procedures and capabilities as well as their long-term financial viability;(iii) develop the data processing infrastructure for the banking system; (iv)develop the market for issue and trading of securities; and (v) improve thetransparency and reliability of accounting information of enterprises andfinancial institutions.

8. Proiect Description. The modernization of the Htngarian financialsystem is expected to be a medium-term process. The proposed coverage of thisfirst operation in support of the financial system would focus on the priorityareas during the initial period, namely the strengLhening of the banking systemas well as the establishment of necessary condition for the efficientdevelopment of the securities market. The project would cover the needs in theseareas in the coming two years (mid-1990 to mid-1992), and would support: (a)technical assistance for strengthening of the legislative framework, regulationsand supervision of banking; (b) strengthening of the participating banks; (c)development of banking infrastructure; (d) technical assistance and training fordevelopment of the securities market; and (e) modernization of the Hungarianaccounting and auditing framework to international standards. Technicalassistance, which accounts for more than 30 percent of the loan, would supportconsulting services of financial experts, advisors, and training specialists.The balance of the loan would be disburse(. against procurement of informationtechnology systems necessary for the modernization of the financial system.

9. The first component would provide technical assistance to helpfinalize drafting of the new banking law, including important new prudentialregulations for banks regarding capital adequacy requirements, liquidityrequirements, classification of loan portfolios, provisions for doubtful loans,suspension of interest accrual, limits on ownership concentration, auditing andreporting requirements, and powers to restructure ailing banks. The componentalso would help strengthen the capacity of the State Bank Supervision Agency,including its organization, procedures and manuals, information system, andtraining.

10. The second component would support the participating. banks in thedevelopment and implementation of action programs in the areas of institutionaldevelopment, information technology development, and financial strengthening.In the area of institutional development, the programs would include assistanceto develop for each bank: its policy statement, including institutional role andstrategy; organization structure; functional areas such as credit and risk assetmanagement, financial management, and internal audit; internal policies and

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procedures; and human resource requirements and training. Based on suchinstitutional development programs, and on a medium-term automation strategy foreach bank, the project would support the imp_ementation of automated managementinformation systems, including the introduction of systems at the head officesand a few selected branches. As mentioned earlier, despite the apparentlyhealthy financial position of the banks, the reported quality of their portfoliosis likely to be overstated. Strengthening of the banks' financial position underthe project would, therefore, in the first instance involve the carrying out ofdetailed audits, by qualified auditors, of the portfolios of three of the majorbanks (BB, CCB and HCB) in the first half of 1990. To the extent that the auditswould reveal that the solvency of the banks might be threatened as a result ofthe necessary adjustments to their portfolios and financial positions, theGovernment has agreed to take an active role in the development of a strategyand action plan for financial restructuring of the banks, including theirrecapitalization, where necessary, for which burden sharing arrangements wouldbe developed as part of the plan. Each bank would also manage its futurebusiness along agreed financial performance indicators.

11. Detailed programs for institutional strengthening have been developedfor four of the major Hungarian banks (Budapest Bank, Commercial and Credit Bank,Hungarian Credit Bank, and National Savings Bank). In the case of NationalSavings Bank, NSB and the Government have agreed to adopt measures to permit thebank to operate as an autonomous financial institution. These measures includetaking by June 30, 1990 all steps required by NSB and the Government to transformNSB into a joint-stock company, and a guarantee of a minimum intermediationspread of 3.0% on NSB's housing finance operations given the administered natureof the rates on its housing finance assets. In addition to the aboveparticipating banks, a line of credit allocation has been made to allow for theparticipation of other banks based on the following eligibility criteria: (i)preparation of an institutional development program and related implementationarrangements; (ii) satisfactory current and projected financial performance ofthe bank, and future management of the bank taking into account agreed financialperformance indicators; 2nd (iii) annual audits of the bank's financial positionalong international standards, executed by qualified external auditors.Financing of studies by the banks and development projects with costs belowUS$300,000 equivalent would follow simplified eligibility criteria. Six of thesmaller banks have already indicated their intention to participate in theproject alongside the four major banks.

12. The third component for development of banking system infrastructurewould support: (i) the further development of the recently establishedInternational Training Center for Bankers (ITCB) to meet the technical andmanagement skills needs of the banking system; (ii) the implementation of anational payments clearing center (so-called GIRO center), which would be usedfor inter-bank clearings, for calculation and reporting of inter-bankindebtedness, and for financial reporting to the NBH and regulatory bodies; and(iii) the development of a comprehensive information system for NBH to enableimproved internal operations, and facilitate monetary policy formulation andmanagement.

13. In support of development of the securities market in Hungary, thefourth component involves a technical assistance program--jointly developed by

the Bank and IFC with the authorities--which will focus on: (i) establishmentof the State Securities Supervisory Board; (ii) establishment of a stockexchange; and (iii) review of the remaining constraints to securities matketdevelopment and preparation of a program to address these.

14. Finally, the fifth component would support the Government in theimplementation of a two-year program to modernize accounting and auditingstandards and practices in Hungary. Under the program, accounts of enterprisesand financial institutions would be prepared, presented and audited alonginternational standards from 1991, and a program of professional developmentwould be initiated. The project would support the necessary foreign advisoryand consulting assistance to support the Government in this area.

15. Onlending to the participating institutions and the Government wouldbe based on a refinancing facility in NBH, which would also be responsible foroverall project coordination and for monitoring the use of the loan. Tofacilitate implementation, an on-site advisory unit was established in January1990, for which foreign advisors would be used and supported by the project.Procurement and the selection of consultants will be based on Bank guidelines.The establishment of a revolving fund of US$5.0 million (about four months ofestimated average Bank loan disbursements) and retroactive financing of up toUS$5.0 million (7.6% of the Bank loan) are recommended. A breakdown of costs,and the financing plan are shown in Schedule A. Details on procurement methodsand disbursements are shown in Schedule B. A timetable of key project processingevents and the status of Bank Group operations in Hungary are given in SchedulesC and D, respectively. The Staff Appraisal Report No. 8200-HU, dated April 6,1990, is also attached.

16. Agreed Actions. Signing of subsidiary loan agreements between NBHand the State, the four major participating banks, and the GIRO center, and ofthe agreement with ITCB for carrying out its part of the project, is proposedas a condition of Bank loan effectiveness. At negotiations, the followingsalient agreements were obtained from the Government, NBH, and the participatinginstitutions: (a) presentation of a satisfactory draft Banking Law includingrelated prudential regulations to Parliament by end-1990, for approval; (b)implementation of the two-year reform program (1990-91) for accounting andauditing, including presentation of a satisfactory draft Accounting Law toParliament by September, 19^0, for approval; (c) execution of the specialportfolio audits of the three major banks, and based on the outcome of theaudits, development by the Government of an action program at the latest by end-1990, to maintain, as necessary, the capital adequacy of the banks, includingby possible recapitalization of the banks; (d) measures to permit NSB to operateits housing finance business with a minimum 3.O0 intermediation spread, andcompletion of necessary steps by NSB and the Government by June 30, 1990, toenable conversion of NSB into a joint-stock company; (e) implementation by thebanks of agreed institutional development plans; (f) execution of yearlyfinancial audits of the banks by qualified external auditors along internationalstandards; (g) eligibility criteria for non-appraised banks to participate inthe project, as referred to in para 11, and (h) procurement using Bankguidelines.

17. Benefits. Through the improved operation of the banking system andsecurities market, the project would contribute to a better mobilization offinancial resources and a higher financial savings rate in Hungary, as well asan improved allocation of resources to productive activities along efficiencyand profitability criteria and thus enhance the restructuring of the realeconomy. The stronger legislative, regulatory and supervisory framework as wellas the institutional development and audits of the banks will help instillgreater financial discipline and prudence among the banks and thus protect theirsolvency as well as the interests of depositors. The training of financial staffunder the project would contribute to significant skill building and humanresource development in the financial sector. The improvements in accountingand auditing will significantly ameliorate the transparency and reliability ofHungarian financial data, a necessary condition for having modern enterprise andfinancial sectors.

18. Risks. The main risk that may affect the strengthening of thefinancial system is the uncertainty of the impact of the Government's ongoingeconomic reform program on the viability of borrowers and hence on the futuresolvency of the banks and the prospects of a securities market. The improvementof prudential regulations and the banks' policies, supported by the project,would help address this risk. Another project implementation risk concerns theuncertainty about the pace at which thorough institutional development can becarried out given the unfamiliarity with modern financial techniques and theshortage of qualified financial personnel in Hungary. To this end, the projectwould support detailed evaluation of the training needs of the participatinginstitutions, and the design and implementation of realistic training programsto meet those needs. A third risk concerns possible delays related toprocurement of data processing systems which may require special export licensesfrom Western export authorities. To avoid such delays, technical specificationsof such systems will be reviewed for comp_iance with export requirements, andadditional safeguards have been built into procurement procedures. Also,possible but unlikely delays in procurement of some items would not delay orotherwise affect the implementation of the other components. Finally, in theevent that procurement of slightly less-advanced technology becomes necessary,the affected component of the project would remain viable. A further risk thatthe new Government to be appointed after the March/April 1990 elections may notfully agree with the objectives and scope of the project, is considered to belimited given the general consensus among the major political parties on thegeneral direction of economic reform and the non-controversial nature of theproject with its institution building focus.

19. Recommendation. I am satisfied that the proposed loan would complywith the Articles of Agreement of the Bank and recommend that the ExecutiveDirectors approve the proposed loan.

Barber B. ConablePresident

AttachmentsWashington, D.C.April 6, 1990

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Schedule AHUNGARY

FINANCTAL SYSTEM MODERNIZATION PROJECT

Estimated Costs and Financing Plan

Estimated Costs:Lo-,al Foreign Total---------(US$ million) ------

Leg./Reg, Frameworkand Supervision of Banks 0.5 1.4 1.9

Strengthening of BanksPre-appraised banks 34.3 26.5 60.8Other banks 11.4 8.4 19.8

Banking InfrastructureTraining Center 0.3 1.9 2.2Payments Clearing Center 9.7 13.3 23.0National Bank of Hungary 5.2 4.1 9.3Advisory Services 0.1 0.4 0.5

Securiti)s Market DevelopmentSupervision and Regulations 0.1 0.4 0.58tock Exchange i.9 1.9 3.9Review 0.0 0.1 0.

Accountino- & Auditing 0,1 0.,8 0.9

Base Cost 63.6 59.2 122.8

Physical Contingencies 5.2 5.1 10.3Price Contingencies 8.6 1.7 10.3

Total 77.4 66.0 143.4

Financing Plan:

IBRD - 66.0O/ 66.0Participating Institutions 67.4 - 67.4Government 3.4 - 3.4NBH 6.66.6

Total 77.4 66.0 143.4

a/ NBH wiLL be seeking grant financing from different sources to cover part ofthe technicaL assistance requirements developed under the *'roject, up to anamount of about USS5 million. In the event such grant financing is obtained,NSH wouLd request the Bank to allocate the equivalent amount of the BankLoan to the financing of deveLopment programs of eiigible banks, to theextent that credit demand has been identified for this purpose.

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Schedule BhUNGRY

FINANCIAL SYSTEM MODERNIZATION PROJECT

Procurement Method and-Disbursements

Procurement Method 1/Items IISOPj/ Othe3' Total

- - - - - (USS million) -----------.--------Equipnent 65.0 18.5 30.0 113.5

(39.0) ( 6.0) C - ) (45.0)

TechnicaL Assistance - 29.9 29.9-~ ~ - ( 21.0) (21.Q)

65-11 18.5 59.9 143.4(39.0) (6.0) (21.0) (66.0)

1/ Figures in parentheses are the amunts financed by the Bank loan.2/ Includes international shopping and direct purchases.3/ Includes services procured under the Bank's consultant guidelines, and goods and services to be procured

locally using local competitive procurement procedures.

Allocation of Bank Loan:

Loan Categorv Amount X Financing(US mi-lion)

(1) Government Agencies 4.0 100X of foreign expenditures(State Bank Supervision Agency, & 100 of local eypendituresState Securities Supervisory Board, (ex-factory cost), for goods;Ministry of Finance) 80X of local expenditures for

services of consultants(2) NBH 4.0 domiciled within the territory

of the Guarantor and 100% of(3) Participating Banks foreign expenditures for

(a) Budapest Bank 4.6 services of other consultants;(b) Cofmercial & Credit Bank 6.6 and 100% of foreign(c) Hungarian Credit Bank 6.7 expenditures for training.(d) National Savings Bank 8.6

(4) Other Part. Financial Institutions(Eligible Banks, GIRO) 22.5

(5) ITCB i] 100% of foreign expenditures.

(6) UnaRlocated 8.0

Total 66.0

Estimated Disbursements:

IBRD Fiscal Year1991 1992 1993 1994 1995.C.----------- (USS million) ..............

Annual 14.5 22.8 16.2 8.5 4.0Cumulative 14.5 37.3 53.5 62.0 66.0

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Schedule C

FINANCIAL SYSTEM MODERNIZATION PROJECT

Timetable of Key Project Processing Events

(a) Time taken to prepare: 20 months

(b) Prepared by: Participating institutions with Bankassistance

(c) First Bank Mission: July 1988

(d) Appraisal Mission Departure: September 1989

(e) Negotiations: March 19-23, 1990

(f) Planned Date of Effectiveness: July 1990

(g) List of Relevant PCRs and PPARs: None

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SCHEDULE DPage 1 of 2

THE STATUS OF BANK GROUP OPERATIONS IN HUNGARY

A. STATEMENT OF BANK LOANS s(As of December 31, 1989)

USS MillionLoan Fiscal (Less Cancellations)No. Year Borrower Project Loan Undisbursed

Four loans and six B-loans fully disbursed 665.9

2317 1983 ROH f Industrial Energy Conservation 109.0 8.12510 1985 OKGT I Integrated Livestock 80.0 33.92511 1985 NBH f Fine Chemicals 73.0 8.12557 1985 NBH Transport (Rail/Road) 75.0 7.82697 1986 NBH Power 64.0 41.12700 1986 NBH Industrial Restructuring I 100.0 25.82709 1986 NBH Industrial Energy Conserv. II 25.0 9.32738 1987 NBH Crop Production 100.0 32.82834 1987 NBH Industrial Restructuring II 150.0 76.82847 1987 NBH Telecommunications 70.0 42.62936 1988 NBH Agroprocessing Modernization 70.0 65.02966 1988 NBH Technology Development 50.0 42.53020 1989 NBH Industrial Restructuring III 140.0 129.53032 1989 NBH Transport II 95.0 83.43055 1989 NBH Energy Development-Conservation 10.0 8.03056 1989 OKGT Energy Development-Oil and Gas 100.0 93.0

Total 1,976.9Of which: Repaid 126.9

Total now held by the Bank 1.850.0

Total undisbursed 707.7

a/ The status of these projects is described in a separate report on allBank/IDA financed projects in execution, which is updated twice yearly andcirculated to the Executive Directors on April 30 and October 31.

_/ Republic of Hungary.

c/ National Oil and Gas Trust.

V/ National Bank of Hungary.

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SCHEDULE DPage 2 of 2

B. STATEMENT OF IFC INVESTMENTS(As of December 31, 1989)

Gross CommitmentsFiscal Type of US$ MillionYear Obligor Business Loan Eguity Total

1987 Agroform Hungarian-Japanese FermentationIndustry, Limited Lysine Mfr. 8.6 2.7 11.3

1987 UNIC Bank Banking 3.2 3.21988/1989 Salgotarjan Glass Wool Glass Wool 3.5 1.5 5.01989 Dunamont Manufacturing 28.3 3.7 32 01990 First Hungary Fund Capital Markets 7.5 7.51990 Tetrapak Hungary Ltd. Pulp and Paper 6.8 2.9 9.71990 Dexter Molt. Manufacturing 3.0 0.9 3.9

Total Gross Commitments 50. 22.4 72.6

Less: Cancellations, terminations,repayments and salesz 13.1 - 13.1

Total Commitments now held by IFC 37.1 22.4 59.5

Total Undisbursed 18.2 3.1 21.3