Inside the Portfolio of the International Finance Corporation: Does IFC Do Enough in Low-Income Countries?

Between 2001 and 2016, the International Finance Corporation (IFC) committed $127 billion through 3,343 projects across the developing world. During this period, the bulk of IFC’s portfolio has moved lower middle-income countries to upper middle-income countries. Between 2001 and 2004, IFC’s portfolio was dominated by lower-middle income countries. Between 2013 and 2016, Turkey, China, and Brazil received $3.8, $2.9, and $3.0 billion in investments respectively, making them some of the largest recipients of IFC investment. The portfolio shift from lower-middle to upper-middle income countries is in significant part due to recipient countries graduating out of lower-middle income status. Our analysis shows that IFC’s portfolio is not focused where it could make the most difference. Low income countries are where IFC has the scale to make a considerable difference to development outcomes. These are the countries with the greatest need for investment and (implicit) guarantee mechanisms for private investment. And these are the countries receiving the bulk of advisory services support. While an excessive portfolio shift might imperil IFC’s credit rating, the evidence suggests that there is considerable scope for increasing commitments to low income countries without significant impact to IFC’s credit scores.