Financial Management
Financial management at the TaiwanICDF aims to safeguard funds and assets, and
pursue stable returns. These objectives are designed to support our operations
and generate sufficient revenues and working capital to sustain the operation of
development projects and administration of our organization, enabling us to pursue
our ultimate mission of facilitating sustainable development at conservative and
reasonable risk.
Fund Utilization
The TaiwanICDF’s fund balances (the Fund) are
derived predominantly from two sources: the founding
fund and donated fund; and accumulated earnings.
The Fund is used to engage in international
cooperation and development operations, such
as long-term lending and investment projects. An
uncommitted portion of the fund is set aside and invested
in a portfolio of financial instruments including bonds,
bank deposits, short-term investments and exchange-
traded funds, so as to increase sources of revenue.
Annual earnings derived from interest and revenues
accrued from long-term investment or lending projects
or other financial instruments are used to fund technical
cooperation projects on a non-reimbursable basis, as well
as operational expenses.
As of December 31, 2012, the total outstanding
amount for investment and lending development projects
comprised 38 percent of total fund balances, while 62
percent was allocated to financial investments. Accounting
for commitments made but still outstanding, investment
and lending development projects comprised 54 percent
of total fund balances, while 46 percent was allocated
to financial investments. During the year, long-term
lending and investments denominated in U.S. dollars
yielded returns of 1.92 percent. Financial investments
yielded 1.66 percent. The overall rate of return for capital
investments, including foreign exchange gains and losses
and other income and expenses, was 1.44 percent.
Management of Long-term Lending and
Investments
As of December 31, 2012, the TaiwanICDF was
committed to 13 lending and investment projects, for
which the balance of investments stood at US$46.58
million and NT$240 million. The organization was also
overseeing 83 lending projects with commitments
amounting to US$490.95 million and
€
56.55 million.
Accumulated loan disbursements stood at US$457.75
million and
€
20.84 million, equivalent to 85.43 percent
of net commitments; total principal repayments stood
at US$336.55 million, equivalent to 58.95 percent of all
funds extended.
At the end of 2012, allowances for bad debts of
NT$124.33 million were made (covering receivables,
long-term loans and collections) in compliance with the
organization’s provisions on long-term loans, receivables,
overdue payments and other asset classes and reflecting
the quality of certain assets. In 2012, the rate of return
on lending and investments fell to 1.92 percent from 2.34
percent in the previous year.
Management of Uncommitted Funds
The financial investment of the uncommitted portion
of the Fund is designed to increase the efficiency
with which funds are used and thereby increase the
TaiwanICDF’s revenues. Investments in non-capital
instruments focus mainly on fixed-income assets,
supplemented by long-term holdings of equities.
The TaiwanICDF’s fixed-income assets include bonds
and fixed deposits. With bonds denominated in foreign
currencies earning higher yields than those denominated
in NT dollars, layout during the past year mainly involved
purchases of foreign currency bonds, which allowed for a
stable increase in income at diversified risk.
In addition, having made a number of short-term
trades involving equity assets in previous years, during
2012 we adjusted our investment strategy for this asset
class toward holdings of long-term, available-for-sale
assets. We also allowed for the replacement of assets
yielding volatile capital gains with those yielding fixed
dividend incomes and expanded other sources of income
under relatively safe conditions for our assets.
In terms of managing foreign exchange, the past
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