AFD - 2018 Registration document

FINANCIAL INFORMATION

Recent changes and future prospects

connectivity, social protection) which are also an area for discussions between France and Asia. In Asia, the activity remains mainly in the form of sovereign loans, but AFD will continue its efforts to develop its non-sovereign activity in Asia. The partnership with the Asian Development Bank (BAsD) will be strengthened: co-financing targets were recently raised to $2.5bn over the next 3 years, which means that over one third of the projects supported by AFD in Asia will be co-financed with the BAsD. In the Middle East, AFD’s 2019 financing will aim to continue to support national sector policies, through public policy loans, project loans and subsidies. This financing will target the management of naturally constrained capital, reduce territorial and social inequalities and support governance. In a context of considerable exposure to climate disruptions, AFD’s financing will help strengthen the countries’ adaptation and mitigation capabilities. Through the SAWA Initiative for the Middle East created in 2017 in response to the Syrian crisis, AFD will contribute to the resilience of host and refugee populations in Jordan and Lebanon and to reconstruction in Iraq (stabilisation-reconstruction-development continuum). This financing will aim to strengthen access to basic services, training and employability of young people, economic recovery and social cohesion in a context of considerable pressure on resources and services. In 2019, the SAWA Initiative will benefit from the increase in subsidy resources allocated to crisis and fragility contexts and will enter into the partnership outlook of increasing delegations to trusted third parties. Across the Eastern regions, AFD will continue to look for European Union fund delegations, particularly through mixing facilities, to supplement its offering of European subsidy loans for technical assistance. P AFD’s activity target in the Three Oceans amounts to €1.6bn for 2019. AFD’s operations in the region will be deployed for the first time in a triple overseas, foreign and regional framework to better meet the economic imperatives, environmental requirements and social challenges of these territories. In the French Overseas Departments and Collectivities, AFD has posted a financing approvals target of €1.26bn for 2019 including the activity carried out on behalf of Bpifrance expected to decrease by €220M compared to 2018. Excluding the BPI activity, AFD’s activity target is €958M, up 7%, driven by the activity carried out on behalf of public players. With regard to the private sector, a continued momentum in own loans to companies and banks is expected, with a stable target of €130M, in line with the needs expressed by the local players. In the States neighbouring the overseas territories, the financing forecasts amount to €357M in a continuation of the momentum observed up to now. The priority countries for French aid (Haiti, Madagascar and the Comoros) will be the first beneficiaries of a subsidy logic. A particularly sustained effort, assessed at €53M,

will be made in the Comoros, in line with the strategy of mitigating vulnerabilities which are a prerequisite for the economic development of areas threatened by fragilities detrimental to their growth. P Since September 2018, the Latin America department has refocused on the subcontinent itself (with Cuba). The Caribbean activity has joined the new Three Oceans region. With a commitment authorisations target of €1.6bn, of which around half in the form of sovereign loans and the other half non-sovereign loans, in 2019 the activity in Latin America will continue on a growth trajectory for commitments in line with its target of €2bn by 2020, including 70% with climate co-benefits. After 2018 which was marked by an exceptional electoral cycle on the continent (notably in Mexico, Colombia and Brazil), a return to normal is hoped for despite new geopolitical uncertainties that weigh on the region. Thus, in Mexico, in addition to the continued significant public policy dialogue on energy issues, the installation of the new government could open up new cooperation areas in subjects such as the fight against inequality, notably gender inequality. In Colombia, the regulations on Major Risk limits could nonetheless require the Group to slow its commitment pace. The activity in Argentina should continue and be consolidated on the same basis as 2018, with a sovereign activity of €100M and an equivalent amount in non-sovereign activities with public banks and local authorities. Lastly, AFD’s activity in Latin America intends to be even more partnership-based as around 40% of the volumes for 2019 should be co-financings, mainly with the IDB, and also the CAF, the World Bank, the Green Fund and the BCIE. 5.1.3 Borrowings On 7 February 2019, AFD’s Board of Directors authorised AFD to borrow a nominal maximum amount of €7.9bn for its operations on its own behalf in 2019, in the form of bank loans or bonds. This ceiling includes a maximum loan of €0.39bn from the French Treasury. 5.1.4 Information about trends There has been no significant deterioration in the outlook for the issuer and its subsidiaries (considered as a whole) since the last audited financial statements of 31 December 2018. 5.1.5 Significant change in the issuer’s financial position There has been no significant change in the outlook for the issuer and its subsidiaries (considered as a whole) since the last audited financial statements of 31 December 2018.

5

91

REGISTRATION DOCUMENT 2018