Finance

A unique mandate to eradicate poverty and hunger

IFAD is both a specialised agency of the United Nations and an international financial institution (IFI), established to mobilise resources for agriculture and rural development in developing countries.

IFAD is the only IFI with the specific mandate to eradicate poverty and hunger by investing in poor rural people through financial and technical assistance to agriculture and rural development projects in developing member states.

IFAD's operations are primarily financed by member state contributions, loan repayments, investment income and special contributions from non-member states. Other sources of financing include sovereign borrowing and, more recently being explored, concessional loans and borrowing in international capital markets.

Similar to peer supranational lending institutions, IFAD shares a solid business profile based on transparent governance and management expertise, relevance of its public mandate, strong relationships with stakeholders and preferred creditor treatment.

IFAD plays an active role in various working groups of MDBs and IFIs which aim at harmonizing policies, practices and knowledge sharing.

Corporate finance

IFAD's corporate finance function supports the integrity, transparency in reporting, control and accounting of IFAD's financial resources (2016 assets: US$ 8.2 billion) which ensures the continued confidence in IFAD by its stakeholders. Corporate finance provides operational responsibility and real-time analytics with business intelligence tools (in contributions, disbursements, payments and assets, among others) which supports informed decision-making and alignment with IFAD's goals. IFAD's statutory financial statements are prepared in accordance with leading-practice International Financial Reporting Standards (IFRS) which are audited annually by an independent External Auditor.

Financial management

Proper oversight and management of financial resources are key to IFAD’s ability to reach its objectives and demonstrate to its stakeholders that adequate  governance arrangements are in place. Project Financial Management is a key contributor to IFAD's governance structure through risk based fiduciary assurance (compliance) and the performance of value-added inputs. Financial management also contributes to IFAD’s development effectiveness through supporting improved delivery and achieving higher disbursements.

IFAD adheres to its development commitments as a maturing IFI and reliable development partner, enhancing its business model and strategic operational development also through harmonised FM best practices, development of modernised operational policies with sound FM processes and knowledge management.

Financial products and financing terms

IFAD aims to reduce rural poverty, improve nutrition and increase food production by providing loans and grants for programmes that boost economic growth, reduce inequalities, and improve poor rural people’s living conditions. The Fund is also considering the Debt Sustainability Mechanism in order to help low-income countries to restore or maintain their external debt sustainability.

Risk ratings emerge from country-specific forward-looking debt sustainability analyses based on the joint IMF-World Bank Debt Sustainability Framework (DSF) for low-income countries.

Investment management

Investment management at IFAD refers to the management of IFAD’s liquidity portfolio. This portfolio is predominately invested in investment grade, fixed income securities and is managed actively within the guidelines set forth by the Fund’s Investment Policy and governed by control measures set forth in the Internal Control Framework. Risk and return measures are reported in IFAD’s Investment Portfolio Report.

The investment portfolio is composed of funds received through member contributions and funds raised through borrowing. The Fund’s framework for governing resources borrowed from sovereign entities is known as the sovereign borrowing framework, while governing document for concessional partner loans is known as the concessional partner loans framework.

In addition to the management of the investment portfolio, the Fund also determines the level of funds in the investment portfolio that is available for commitment, known as resources available for commitment.