ANNUAL FINANCIAL REPORT
YEAR ENDED 31 DECEMBER 2021
International Finance Facility for Immunisation
Company, 2 Lambs Passage, London EC1Y 8BB, United
Kingdom. Registered in England and Wales as a
company limited by guarantee with number 5857343
and as a charity with number 1115413.
Annual Financial Report 2
CONTENTS
Management Report 3
Objectives and Public Benefit 4
Structure, Governance and Management 4
Programmes Funded by IFFIm 7
Achievements and Performance 9
Financial Overview 11
Risk Management 13
Recent Developments 18
Future Plans 18
Responsibility Statement 18
Consolidated Financial Statements 19
Consolidated Statement of Comprehensive Income 20
Consolidated Statement of Financial Position 21
Consolidated Statement of Changes in Funds 22
Consolidated Statement of Cash Flows 23
Notes to the Consolidated Financial Statements 24
Independent Auditor’s Report 48
Annual Financial Report 3
MANAGEMENT REPORT
YEAR ENDED 31 DECEMBER 2021
Annual Financial Report 4
OBJECTIVES AND PUBLIC BENEFIT
OBJECTIVES
The International Finance Facility for Immunisation Company (“IFFIm”) was created to accelerate the
availability of predictable, long-term funds for health and immunisation programmes through Gavi, the
Vaccine Alliance (“Gavi”), in over 71 developing countries around the world. IFFIm promotes the effective
use of Gavi resources for charitable purposes, and for the benefit of the public, by providing services and
facilities that assist Gavi in raising funds. Such services and facilities include, but are not limited to, borrowing
money or entering into agreements that are backed by legally binding funding commitments from sovereign
government donors (the “Grantors”).
Every year, in many of the world’s low-income countries, millions of children miss out on vaccinations against
common diseases, making them vulnerable to sickness, disability and death. Millions of children die from
easily preventable diseases such as diphtheria, pneumonia, diarrhoea, meningitis and yellow fever. In 2020,
the COVID-19 pandemic gave rise to unprecedented new challenges with providing vaccines for these
preventable diseases while also introducing the need for a new coronavirus vaccine. In 2021, Gavi continued
to co-lead COVAX, the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator which involves
coordinating the COVAX Facility, a global risk-sharing mechanism for pooled procurement and equitable
distribution of COVID-19 vaccines. COVAX has the world’s largest and most diverse portfolio of COVID-19
vaccines and was created to maximise the chances of successfully developing COVID-19 vaccines and
manufacturing them in the quantities needed to end the pandemic.
IFFIm funding accelerates the availability and increases the predictability of funds for immunisation, vaccine
procurement and health systems strengthening (“HSS”) programmes. Gavi uses funds raised by IFFIm to
reduce the number of worldwide vaccine-preventable deaths and illnesses. Gavi achieves this by funding the
purchase and delivery of vaccines and strengthening health systems in many low-income countries in the
world. Gavi has also leveraged these resources to address the COVID-19 pandemic.
IFFIm raises funds by issuing bonds in the international capital markets under its Global Debt Issuance
Programme and through its involvement in issues of Sukuk certificates. IFFIm then disburses the funds to
Gavi to support various Gavi vaccine procurement, immunisation and HSS programmes. Through its bond
issuances, IFFIm converts long-term government pledges into immediately available cash resources. IFFIm
uses grant payments from the Grantors to pay the principal and interest on its bonds.
PUBLIC BENEFIT
IFFIm is a public benefit entity that provides public benefit through supporting the charitable aims of Gavi.
It does not work directly with the public and has no employees. IFFIm’s directors have considered the Charity
Commission’s general guidance on public benefit and have paid due regard to it when planning IFFIm’s
activities and assessing how IFFIm’s activities further its objectives for the public benefit.
STRUCTURE, GOVERNANCE AND MANAGEMENT
STRUCTURE
IFFIm is a multilateral development institution incorporated as a private company, limited by guarantee, in
and Wales, with the charity registration number 1115413. Gavi is the sole member of IFFIm.
IFFIm has control over IFFIm Sukuk Company III Limited (“IFFImSC III”), a Cayman Islands company with
limited liability, which was incorporated on 5 March 2019 under the Companies Law (2013 Revision) of the
Cayman Islands with company registration number 348825. IFFImSC III was established for the sole purpose
of issuing sukuk certificates in support of IFFIm’s operations. IFFIm’s 2021 consolidated financial statements
include the accounts of IFFImSC III.
In order to achieve its objectives, IFFIm worked with the following organisations during 2021:
• Gavi: Gavi is a Swiss foundation that is accorded international institution status in Switzerland with
certain privileges and immunities like those accorded to international intergovernmental organisations.
It uses funds raised by IFFIm to finance immunisation-related charitable activities in many of the world’s
low-income countries. Gavi’s charitable activities are described further in the Programmes Funded by
IFFIm section of this report. Gavi also provides administrative support to IFFIm.
• The International Bank for Reconstruction and Development (the “World Bank”): The World Bank is a
global development organisation based in the United States. It provides treasury management, risk
management and accounting services to IFFIm on a commercial basis. IFFIm’s relationship and interactions
Annual Financial Report 5
with the World Bank are described further in the Financial Overview and Hedging IFFIm’s Market Risks
sections of this report.
GOVERNANCE AND MANAGEMENT
Board of Trustees
IFFIm’s trustees, who are also directors of IFFIm for the purposes of company law, are responsible for
determining IFFIm’s strategic plans, overseeing the implementation of such plans, and monitoring functions
outsourced to Gavi and the World Bank. Members of the Gavi Secretariat and the World Bank take part in
every board meeting.
IFFIm has no employees. During 2021, there were six meetings of the IFFIm board and four meetings of a
Committee of the board to undertake ad hoc decisions in the ordinary course of business. In accordance with
its Board Charter and Code of Conduct, IFFIm directors are expected to attend all board meetings unless
exceptional circumstances prevail. Directors had an average board meeting attendance of 83% in 2021.
As at 31 December 2021, IFFIm’s directors were as follows:
• Kenneth Lay, Chair: Mr Lay is Senior Managing Director of The Rock Creek Group, an asset management
firm based in Washington D.C. that manages globally diversified portfolios of public and private assets
for institutional investors. Mr Lay also works with international institutions, private foundations and
NGOs in efforts to develop new approaches to increasing the scale and reducing the cost of financing for
global public goods. Before joining Rock Creek at the end of 2010, Mr Lay served as Treasurer of The
World Bank, where he and his colleagues managed more than US$ 100 billion in investments for the
World Bank and other international financial institutions and for more than 40 of the World Bank’s
member countries’ central banks, sovereign wealth and pension funds, using the revenues to fund an
extensive program of capacity-building partnerships and training. Mr Lay was appointed as a director
effective 16 October 2020 and as Chair of the IFFIm board effective 1 January 2021.
• Bertrand de Mazières, Audit Committee Chair: Mr de Mazières is the Director General for Finance at the
European Investment Bank (EIB). He oversees EIB’s Finance Directorate, which is responsible for the bank’s
borrowing and treasury operations and its support functions for equity, lending, borrowing, and funding
operations. Prior to that, he was the Chief Executive of Agence France Trésor, the division of the Ministry
of Economy and Finance of the Republic of France responsible for the country’s debt and treasury
management. Mr de Mazières was appointed as a director effective 18 May 2018 and as Audit Committee
Chair effective 1 April 2020.
• Monique Barbut: Ms Barbut is the President of The World Wildlife Fund (WWF) France. After studying
economics, Ms Barbut had a long career in different positions at the Agence Française de Développement
Group (AFD), the main French public institution for aid in development. As a member of the French
government delegation to the 1992 Rio Earth Summit, she was a key player in the financing negotiations,
and later on an active negotiator in the creation of the Global Environment Facility (GEF) as well as the
French Global Environment Facility (FGEF), to which she was appointed first Chief Executive Officer. From
2003 to 2006 she headed the Technology, Industry and Economics Division of the United Nations
Environment Program (UNEP) before becoming CEO and President of the GEF in June 2006. In 2013, the
United Nations Secretary General appointed her as Executive Secretary of the United Nations Convention
to Combat Desertification (UNCCD). In addition to these functions, she became Under Secretary
General of the United Nations in 2016. She joined the Board of trustees of WWF France in 2014 and
became its President in January 2021. Ms Barbut was appointed as a director effective 1 July 2021.
• Doris Herrera-Pol: Ms Herrera-Pol retired from the World Bank in 2015 where she was the Global Head of
Capital Markets. Her team was responsible for designing the World Bank's funding strategy and
managing its multi-currency funding programme in global money, capital and derivatives markets. From
2002 to 2007, she led the team responsible for the World Bank’s plain-vanilla debt products, including
global bonds and emerging market bond issues. Ms Herrera-Pol was appointed as a director effective 13
November 2015 and she is a member of the audit committee.
• Hassatou Diop N’Sele: Ms N’Sele is the Treasurer of the African Development Bank Group (“AfDB”). Since
June 2015, she has led the expansion of the AfDB capital markets activities across the globe, setting an
effective funding strategy for the institution. She oversees the funding of the Bank’s activities, investing
of the Bank Group’s US$ 20 billion liquidity in multicurrency portfolios and hedging activities of the
Group, and back-office operations. She leads discussions with rating agencies on treasury activities and
provides strategic support to discussions with member countries on capital increases, replenishments of
the African Development Fund (ADF), and the Multilateral Debt Relief Initiative (MDRI). Prior to this
position and from 2008, Ms N’Sele was the Head of funding of the AfDB. She joined the Bank in 1999 as
a Senior Treasury Officer and was previously the finance director of a startup commodities trading
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company in Senegal (Tiger Denreees Senegal), and previously, a Manager in the Financial Institutions
department of Citibank in Senegal. Ms N’Sele was appointed as a director effective 1 July 2021.
• Jessica Pulay: Ms Pulay is the Co-Head of Policy and Markets at the UK Debt Management Office (DMO)
where she has responsibility for the UK government’s debt issuance and cash management, as well as the
policy, research and business operations areas. She is also a member of the managing board of the DMO.
Previously Jessica spent 16 years at the European Bank for Reconstruction and Development (EBRD) in
London where she was Deputy Head of Funding, responsible for the EBRD’s borrowing programme and
their listed equity divestments. Prior to joining the EBRD in 1999, Jessica worked as an executive director
in the debt capital markets departments at Morgan Stanley and Goldman Sachs, and was also a managing
director at Deutsche Bank. Ms Pulay was appointed as a director effective 3 March 2020 and she is a
member of the audit committee.
• Ingrid van Wees: Ms van Wees is Vice President for Finance and Risk Management, Asian Development
Bank. Ms van Wees is responsible for the overall management of the operations of the Office of Risk
Management, the Controller’s Department, and the Treasury Department. Prior to this, she was a senior
official at the German Investment and Development Corporation (DEG), where her portfolio covered
debt, equity and fund investments in Europe, the Middle East, and Asia. She also has treasury experience
in developmental investment banking. Before she moved to DEG in 2004, Ms. van Wees held management
positions in corporate finance and business development with private corporations. Ms van Wees was
appointed as a director effective 1 October 2021.
• Helge Weiner-Trapness: Mr Weiner-Trapness is a founding partner of Quintus Partners, an independent
financial advisory firm that provides strategic and investment advisory and capital raising services to a
diverse client base of corporations, private investment firms, and institutions. Prior to that, he was the
Managing Director and Co-Global Head of the Financial Institutions Group at Barclays Bank in Hong Kong
and previously held senior positions at Asia Pacific Land, JP Morgan Securities, and Goldman Sachs. Mr
Weiner-Trapness was appointed as a director effective 17 December 2018 and he is a member of the audit
committee.
Directors are chosen for their skills and expertise in areas relevant to IFFIm and the IFFIm board maintains a
skills matrix which it uses for succession planning purposes. Board succession planning is managed by the
Board Chair in consultation with the entire board and as such there is no nomination committee. The IFFIm
board is also guided by a diversity statement and seeks to adhere to Gavi’s gender policy requiring that no
more than 60% of the IFFIm board is the same gender. As of 31 December 2021, the gender composition was
60% female and 40% male.
All directors serve on a voluntary basis and are not remunerated. They are, however, reimbursed for expenses
they incur in attending meetings and performing other functions directly related to their duties as directors.
Details of director expenses are disclosed in Note 6 to the financial statements.
A formal induction process is in place that includes briefings with members of the Gavi Secretariat and World
Bank. Induction procedures introduce directors to the specifics of IFFIm’s operations and provide an overview
of entities associated with IFFIm, namely, Gavi and the World Bank. This induction was conducted virtually
in 2021 for Ms Monique Barbut, Ms Hassatou Diop N’Sele and Ms Ingrid van Wees.
IFFIm has a Code of Conduct within its Board Charter. The IFFIm board also has an Independence Statement
which underscores how all directors are required to exercise independent judgement in carrying out their
duties. The IFFIm board must act in line with the principles laid out in the Board Charter and Code of Conduct,
which comprehensively outlines expectations and conduct supported by policies for gifts and entertainment,
diversity, procurement and travel, as well as processes for conflicts of interest.
The directors have a duty to avoid conflicts of interest and while IFFIm does not have a conflicts of interest
policy, its Articles of Association and its Board Charter and Code of Conduct provide for the disclosure and
management of conflicts of interest and a register is maintained and disclosed at each meeting of the IFFIm
board. Gavi’s code of conduct framework also guides the IFFIm board on matters and issues that are not
covered by IFFIm policies.
IFFIm introduced a gifts and hospitality policy in 2018 and while no disclosures of gifts or offers of hospitality
have been made to date, the IFFIm board has established a formal register of gifts and hospitality for use if
and when such disclosure is made.
IFFIm’s Board Chair and directors are invited to attend meetings of the Gavi board. The attendance of IFFIm
directors at the Gavi board meetings is strictly in an observer status with no participation in the decisions of
the Gavi board.
Gavi’s Chief Executive Officer is invited to attend and present reports to meetings of the IFFIm board, as an
observer and with no participation in the decisions of the IFFIm board. At each meeting, the IFFIm board
receives operational reports from the Gavi Secretariat and the World Bank and reviews IFFIm’s strategic
initiatives. Twice a year the IFFIm board receives finance and accounting and monitoring and assurance
Annual Financial Report 7
reports. The IFFIm board also receives regular reports on Grantor and investor financial information and
engagement.
Audit Committee
The IFFIm audit committee is a standing committee of the IFFIm board consisting of four members of the
board and was established to assist the board in fulfilling its responsibilities with respect to the corporate
accounting and financial practices of IFFIm. It oversees the preparation of the annual financial statements,
including accounting policies and judgements, and reviews the performance, independence, and objectivity
of the external auditor. It monitors the effectiveness of IFFIm’s risk management and internal grant
monitoring systems.
During 2021, there were three meetings of the audit committee. Committee member attendance was 100%
at all meetings. The audit committee work plan includes the formal requirement for an executive session
with the external auditor without any representatives from the Gavi Secretariat and the World Bank being
present.
Regarding the reporting of alleged improprieties, misconduct, or wrongdoing, the IFFIm board implemented
an Ethics reporting hotline in 2019 that is connected to Gavi’s. The Ethics Hotline is prominently displayed
on the homepage of IFFIm’s public website. No reports related to IFFIm were received in 2021.
PROGRAMMES FUNDED BY IFFIm
Gavi programmes are funded by IFFIm, subject to the IFFIm board’s approval of a request for funding from
Gavi and when an indicative funding confirmation, signed by any trustee on behalf of the IFFIm board, is
issued to Gavi. The trustees are also directors of IFFIm for the purposes of company law. In the year ended
31 December 2021, IFFIm issued five new indicative funding confirmations, totalling US$ 1,449 million, to
fund Gavi programmes and made grant payments to Gavi, totalling US$ 1,214 million, with respect to
approved funding.
Since its inception, IFFIm has funded several Gavi programmes, which are categorised into Country-Specific
Programmes and Investment Cases. Each of these categories is described below.
COUNTRY-SPECIFIC PROGRAMMES
Governments of eligible developing countries apply for vaccine procurement, immunisation and HSS support
by submitting applications to Gavi. Once it has reviewed and approved the applications, Gavi requests
funding from IFFIm. Since its inception in 2006, IFFIm has provided funding in support of the following Gavi
Country-Specific programmes:
New and Underused Vaccine Support (“NVS”) programmes: Gavi supports developing countries in
introducing vaccines and associated vaccine technology. Gavi’s support is aimed at accelerating the countries’
vaccine uptake and improving their vaccine supply security. NVS programmes funded by IFFIm related
primarily to the following diseases:
• Pneumococcal Disease: This is a bacterial infection and is the leading cause of pneumonia. The bacterium
that causes pneumococcal disease can also cause meningitis, which often leaves survivors with permanent
disabilities, including mental retardation and seizures. Safe and affordable vaccines are the most effective
way to prevent pneumococcal infection. The World Health Organization (“WHO”) recommends that all
countries introduce pneumococcal vaccines into their routine immunisation programmes, and that all
children receive three doses of pneumococcal vaccine. This is particularly important in countries with high
levels of pneumonia and high child mortality rates.
• Hepatitis B: This is a viral infection which is the leading cause of liver cancer. While infections occur mostly
in young children, the deadly consequences of the virus usually occur later in life in the form of liver
disease, including cirrhosis and liver cancer. Transmission of the virus from mother to newborn infant is a
major contribution to disease in regions such as Asia and the Pacific Rim, where infection is widespread.
Most cases could be avoided through vaccination. The vaccine is 98% effective in preventing infection
and the development of chronic disease and liver cancer due to hepatitis B.
• Haemophilus Influenzae Type B (“Hib”): This is a bacterial infection which can cause meningitis,
pneumonia, and septicaemia. It is considered the third biggest cause of vaccine-preventable death in
children under five years of age. Spread through sneezing and coughing, Hib in the pre-vaccine era was
the leading cause of childhood meningitis. Many survivors suffer paralysis, deafness, mental retardation,
and learning disabilities.
• Diphtheria: This is a bacterial infection which can cause myocarditis (inflammation of the heart muscle),
inflammation of nerves, and kidney problems. It is transmitted from person to person through close
Annual Financial Report 8
physical and respiratory contact. The disease can be fatal. Death occurs in 5% to 10% of those infected,
mainly in children under five years of age.
• Tetanus: Also known as lockjaw, tetanus is a bacterial infection. Tetanus affects new-born babies and
their mothers, usually because of unsafe delivery in unhygienic conditions, often without skilled birth
attendants.
• Pertussis: Also known as whooping cough, pertussis is a disease of the respiratory tract caused by bacteria
that live in the mouth, nose, and throat. Many children who contract pertussis have coughing spells that
last four to eight weeks. The disease is most dangerous in infants.
• Yellow Fever: As an acute viral haemorrhagic disease transmitted by mosquitoes, yellow fever causes
devastating epidemics in areas where people who are not vaccinated are exposed to infected mosquitoes.
Up to 50% of people severely affected by yellow fever will die. Yellow fever virus poses the greatest
threat to 900 million people in Africa, Central and South America. Together, deforestation, urbanisation,
climate change and low population immunity have contributed to its re-emergence since the 1980s.
• Measles: This is a highly contagious virus, whose symptoms include a high fever, severe skin rash, and a
cough. Because it is so contagious, measles remains a significant threat to child health even in those areas
where the rates of measles are reduced. By weakening the immune system, measles can also lead to other
health problems such as pneumonia, blindness, diarrhoea, and encephalitis.
• Rotavirus: This virus is the leading cause of severe and fatal diarrhoea in children under five years of age.
Nearly every child in the world will suffer a rotavirus infection by their third birthday. While rotavirus
infects children in every country, more than 95% of rotavirus deaths occur in low-income countries in
Africa and Asia, where access to treatment for severe rotavirus-related diarrhoea is limited or unavailable.
Health Systems Strengthening (“HSS”) programmes: The objective of HSS programmes is to achieve and
sustain increased immunisation coverage, through strengthening the capacity of countries’ systems to
provide immunisation and other health services. Countries are encouraged to use HSS funding to target the
bottlenecks or barriers in their health systems.
Immunisation Services Support (“ISS”) programmes: Gavi provides developing countries with flexible reward
payments for strengthening their immunisation systems. These payments are subject to strict performance
requirements and Gavi works with governments and inter-agency coordinating committees to set goals and
monitor progress.
Injection Safety Support (“INS”) programmes: Gavi contributes to the provision of auto-disable syringes,
reconstitution syringes and safety boxes. These syringes and safety boxes facilitate the administering of
vaccines in developing countries.
Vaccine Introduction Grant: Recognising that introduction of a new vaccine can imply additional costs for a
country’s health system, Gavi provides additional support to bridge this resource gap. This support takes the
form of an upfront cash grant and is used by implementing countries to pay for costs such as training, social
mobilisation, programme management surveillance and monitoring. Implementing countries are the eligible
developing countries where Gavi programmes, including those funded by IFFIm, are implemented.
INVESTMENT CASES
From time to time, IFFIm funds tactical investments in disease prevention and control. These investments are
made through Gavi partners such as the United Nations Children’s Fund (“UNICEF”) and the World Health
Organization (“WHO”). Each investment targets a disease that constrains progress towards improved child
and maternal health. Since its inception in 2006, IFFIm has provided funding in support of the following
Investment Cases:
Yellow Fever Stockpiles: Gavi supported the creation and maintenance of yellow fever vaccine stockpiles to
ensure that vaccines are ready for deployment as soon as an outbreak is identified. The stockpiles also help
to secure supply for routine programmes. IFFIm funds were used for both outbreak response and
preventative campaigns.
Polio Eradication: Gavi supported intensified eradication activities that were implemented to interrupt wild
and vaccine-derived poliovirus transmission. These activities included sustaining polio surveillance and
laboratory activities, improving social mobilisation and enhancing technical assistance.
Measles Mortality Reduction: Gavi supported efforts to reduce the level of mortality from measles. The
measles mortality reduction campaign is a partnership among several global health and development
agencies to address this major childhood disease. Measles vaccination campaigns have become a channel for
the delivery of other life-saving interventions, such as bed nets, de-worming medicine and vitamin
supplements.
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Maternal and Neonatal Tetanus: Gavi supported a campaign to eliminate maternal and neonatal tetanus.
Maternal and neonatal tetanus continues to burden the most poorly served populations in many of the
world’s low-income countries. The campaign was implemented to build on existing efforts to improve clean
delivery practices and immunisation services in these populations.
Yellow Fever Continuation: In March 2009, Gavi and IFFIm boards approved funding for an extension and
expansion of Gavi’s original yellow fever investment case described above. The additional funds allowed for
increased and extended yellow fever vaccine coverage and helped offset higher than expected vaccine prices.
Meningitis Eradication: Gavi supported efforts to eliminate meningococcal A meningitis epidemics in 25
African countries that were estimated to be home to approximately 95% of the world’s meningococcal
meningitis burden. Meningococcal meningitis is a bacterial disease that mainly affects children and can result
in death or permanent disability.
Vaccine Research and Development: Gavi provides support to the Coalition for Epidemic Preparedness
Innovations (“CEPI”) for its late-stage vaccine research and development activities. CEPI is a global public-
private partnership whose mission is to accelerate the development of vaccines against emerging infectious
diseases and enable equitable access to these vaccines during outbreaks.
COVAX: COVAX is the vaccines pillar of the Access to COVID-19 Tools (“ACT”) Accelerator, a ground-breaking
global collaboration to accelerate the development, production, and equitable access to COVID-19 tests,
treatments, and vaccines. COVAX is co-led by WHO, Gavi, and CEPI, alongside key delivery partner UNICEF.
Its aim is to accelerate the development and manufacture of COVID-19 vaccines, and to guarantee fair and
equitable access for every country in the world. Gavi’s role in COVAX involves coordinating the COVAX
Facility, a global risk-sharing mechanism for pooled procurement and equitable distribution of COVID-19
vaccines.
ACHIEVEMENTS AND PERFORMANCE
With the help of IFFIm funds, Gavi programmes led to the vaccination of more than 888 million children since
Gavi’s creation in 2000 and prevented more than 15 million deaths in the process. This was achieved by
accelerating the uptake and use of new and underused vaccines, strengthening the capacity of integrated
health systems to deliver immunisation in many low-income countries, increasing the predictability of global
financing and improving the sustainability of national financing for immunisation, and through shaping
vaccine markets to ensure adequate supply of appropriate, quality vaccines at low and sustainable prices for
developing countries.
The Country-Specific Programmes and Investment Cases that are supported by Gavi with the help of IFFIm’s
funding are described in the Programmes Funded by IFFIm section above. In 2021, IFFIm made grant
payments to Gavi totalling US$ 1,214 million, with respect to approved funding, and issued five new
indicative funding confirmations to Gavi totalling US$ 1,449 million. The new indicative funding
confirmations were in support of Gavi core programmes and the Gavi COVAX Advance Market Commitment
(“Gavi COVAX AMC”) programme. The grant payments to Gavi were comprised of US$ 780 million in support
of COVAX and US$ 434 million for previously approved New and Underused Vaccine Support programmes.
From its inception in 2006 to 31 December 2021, IFFIm approved and disbursed the following amounts to
help fund Gavi’s Country-Specific Programmes:
In Millions of US$
Cumulative
Approvals
Cumulative
Disburse-
ments
Outstanding
Balance
Payable
New and underused vaccine support 2,481 (2,424) 57
Health systems strengthening and other 525 (525) -
Total Country-Specific Programme support 3,006 (2,949) 57
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From its inception in 2006 to 31 December 2021, IFFIm approved and disbursed the following amounts to
help fund Gavi’s Investment Cases:
In Millions of US$
Cumulative
Approvals
Cumulative
Disburse-
ments
Outstanding
Balance
Payable
Yellow fever stockpile and eradication 101 (101) -
Polio eradication 191 (191) -
Measles mortality reduction 139 (139) -
Maternal and neonatal tetanus 62 (62) -
Meningitis eradication 68 (68) -
Vaccine research and development 272 (272) -
COVAX 1,119 (780) 339
Total Investment Cases support 1,952 (1,613) 339
Since its inception in 2006, IFFIm has consistently demonstrated its performance as an efficient and flexible
mechanism for Gavi to accelerate access to life-saving vaccines for children in the world’s lowest-income
countries. This continued performance is demonstrated by the following key indicators:
• Maximising value for money: IFFIm aims to deliver maximum value for money to Gavi for every dollar
invested by its Grantors. As a measure of value for money, IFFIm expects that the cumulative total of
IFFIm’s disbursements to Gavi will exceed 90% of total Grantor pledges over IFFIm’s lifetime. As an
indicator of this measure, as of 31 December 2021, IFFIm’s cumulative disbursements to Gavi were
approximately 97.8 % of its total outlays since its inception in 2006.
• Funding cost: IFFIm’s cost of funding compared to that of its Grantors serves as an indicator of IFFIm’s
efficiency. Since its inception, IFFIm has accessed the capital markets at a weighted average cost of
borrowing that is in total lower than that of its Grantors. IFFIm’s weighted average cost of all its bonds
issued since its inception is 6 basis points over USD LIBOR. This is 1 basis points lower than the weighted
average cost of borrowing of its Grantors, which is 7 basis points over USD LIBOR calculated over the same
period. At its inception, IFFIm’s funding cost, on average, was anticipated to be higher than that of its
donors. The cost of funding is subject to macroeconomic factors.
• Flexibility: One of IFFIm’s core values is the financial flexibility that it provides Gavi by allowing it to de-
link its immunisation programmes from when Grantor payments are received and link them to when
funding is needed. This means that Gavi can determine the timing and amount of drawdown from IFFIm
based on its needs, for example, whether to frontload resources over a short period of time or draw down
on smaller amounts over a longer period, without incurring significant costs in either situation. Because
of this flexibility, Gavi was able to drawdown US$ 1,214 million of IFFIm funding in 2021.
• Strategic market access: IFFIm’s funding strategy is premised on the intention to optimise the following
three objectives: (1) funding cost; (2) diversification; and (3) raising the profiles of IFFIm and Gavi and
increasing awareness of Gavi’s immunisation mission. IFFIm continues to achieve this strategy by issuing
bonds in different currencies and regions, attracting new investors, and broadening its geographical
reach. On 21 April 2021, IFFIm issued US$ 750 million 5-year fixed rate Vaccine Bonds, which provided
Gavi with immediate funding to support routine immunisation in lower-income countries. The issuance
also accelerated the availability of critical funding for the Gavi COVAX AMC. On 18 November 2021, IFFIm
increased the bond by US$ 250 million bringing the total of the bond issuance to US$ 1 billion. The bonds
were oversubscribed with the participation of diverse and high-quality investors, demonstrating the
continuing high appeal of IFFIm with global investors to support Gavi’s core programmes and COVID-19
work.
In 2021, IFFIm received new sovereign pledges from the Commonwealth of Australia, the Kingdom of
Norway, and the Kingdom of Sweden, respectively. IFFIm continues to engage with existing and prospective
donors to attract further pledges in support of Gavi’s immunisation mission, including its efforts to respond
to the COVID-19 pandemic through the COVAX Facility. Further details of new sovereign pledges to IFFIm in
2021 are included in the Financial Overview section of this report.
As a large charitable company registered in the United Kingdom, IFFIm has considered its energy use and
the requirement in the United Kingdom to disclose relevant information on energy and carbon reporting.
IFFIm has no physical offices in the United Kingdom. As described above, IFFIm has no employees and
outsources all administrative support to Gavi, which is based in Geneva and Washington, DC, and outsources
its treasury function, together with accounting support, to the World Bank, which is based in Washington,
DC. As such, IFFIm has no directly attributable energy use in the United Kingdom to disclose in this report.
Furthermore, based on the nature of outsourced operations at the World Bank and Gavi, any energy use
attributable to IFFIm, with respect to the relevant supporting activities, would be impractical to obtain.
Annual Financial Report 11
FINANCIAL OVERVIEW
OVERVIEW OF ASSETS AND LIABILITIES
The following table summarises IFFIm’s assets and liabilities as of 31 December 2021 and 2020:
In Millions of US$ 2021 2020 Change
Sovereign pledges
3,437 3,286 151
Derivative financial assets
151 79 72
Funds held in trust
603 478 125
Other assets
12 14 (2)
Total assets
4,203 3,857 346
Bonds payable
1,845 916 929
Derivative financial liabilities
347 486 (139)
Grants payable
396 161 235
Other payables
1 1 -
Total liabilities
2,589 1,564 1,025
Net assets
1,614 2,293 (679)
Total liabilities and net assets
4,203 3,857 346
Sovereign Pledges: IFFIm’s asset base consists primarily of irrevocable and legally binding multi-year
sovereign pledges from the Grantors. As of 31 December 2021, the Grantors were the Republic of France,
the Republic of Italy, the State of the Netherlands, the Kingdom of Norway, the Republic of South Africa,
the Kingdom of Spain, the Kingdom of Sweden, the United Kingdom of Great Britain and Northern Ireland,
the Commonwealth of Australia, and the Federative Republic of Brazil. The amounts pledged by the
Grantors, along with the pledge dates, are listed in Note 4 to the financial statements. From inception to 31
December 2021, cumulative payments received from the Grantors totalled US$ 3.9 billion.
During 2021, IFFIm’s sovereign pledges increased by US$ 151 million due to the following:
• New Sovereign Pledges: In 2021, IFFIm received new sovereign pledges of A$ 86 million from the
Commonwealth of Australia, kr (NOK) 4 billion from the Kingdom of Norway, and kr (SEK) 2.5 billion
from the Kingdom of Sweden, which totalled US$ 720 million. This increase due to new sovereign pledges
was partially offset by fair value losses and payments received from grantors as described below.
• Fair Value Losses: IFFIm recorded US$ 126 million in fair value losses on sovereign pledges during 2021,
primarily comprised of (1) losses due to higher interest rates and (2) losses on pledges denominated in
currencies other than the United States dollar due to the strengthening of the United States dollar in
2021.
• Receipts from Grantors: During 2021, IFFIm received payments from its Grantors totalling US$ 443 million,
which decreased sovereign pledges.
Funds Held in Trust and Investment Strategy: IFFIm’s funds held in trust represent an investment portfolio
denominated in United States dollars and managed by the World Bank. IFFIm has established liquidity and
investment policies based on recommendations made by the World Bank.
The World Bank maintains a single, commingled investment portfolio (the “Pool”) for IFFIm, certain trust
funds and other entities administered by the World Bank, as well as assets held in trust for other World Bank
Group institutions. The Pool’s assets are maintained separate from the funds of the World Bank Group.
The Pool is divided into sub-portfolios to which allocations are made based on specific investment horizons,
risk tolerances and other eligibility requirements set by the World Bank. Under IFFIm’s investment strategy
approved by the trustees, IFFIm’s liquid assets are invested in high-grade fixed-income instruments with
interest rate sensitivity matching that of the liabilities funding IFFIm’s investment portfolio. No ethical
guidelines have been set for the portfolios. IFFIm’s trustees regularly review the portfolios within which
IFFIm’s investments are held.
IFFIm holds sufficient liquidity to satisfy investor expectations and rating agency requirements that a
sufficient balance be available to meet interest and principal payments to debt holders. Consistent with these
purposes, IFFIm maintains a minimum liquidity equivalent to its cumulative contracted debt service payments
for the next 12 months. As of 31 December 2021 and 2020, the calculated minimum liquidity was US$ 99
million and US$ 40 million, respectively, and the value of IFFIm’s funds held in trust was US$ 603 million and
US$ 478 million, respectively.
Annual Financial Report 12
During 2021, funds held in trust increased by US$ 125 million primarily due to (1) bond issuance proceeds of
US$ 993 million and (2) payments received from Grantors of US$ 443 million. These were partially offset by
(1) programme grant disbursements of US$ 1,214 million, (2) bond redemptions of US$ 38 million, (3) net
swap settlement payments of US$ 50 million, and (4) other net cash outlays of US$ 9 million, including
interest received and paid and general and administrative expenses.
IFFIm receives its funding from Grantor contributions and borrowings on worldwide capital markets and
disburses its funds only to Gavi to finance programmes for a defined portfolio of eligible countries or
specified purposes. Therefore, all IFFIm’s funds are treated as restricted funds.
Other assets: IFFIm’s other assets comprise prepayments, amounts due from Gavi, and its cash balances held
at depository bank accounts. Cash balances are moved to the investment portfolio on a regular basis.
Bonds Payable: IFFIm has continued to raise funds on the global capital markets. From inception to 31
December 2021, cumulative proceeds from bond issuances totalled US$ 7.8 billion.
During 2021, IFFIm’s bonds payable increased by US$ 929 million primarily due to the following:
• Bond Issuances and Redemptions: IFFIm received proceeds of US$ 993 million from two new bond
issuances, partially offset by bond redemptions during the year totalling US$ 38 million. This resulted in
a net increase in bonds payable of US$ 955 million. This net increase was partially offset by fair value
gains as described below.
• Fair Value Gains: The fair value of bonds payable is highly sensitive to yield and exchange rate movements,
which are some of the market observable inputs that are used to fair value IFFIm’s bonds. During 2021,
IFFIm recorded fair value gains of US$ 29 million on its bonds.
• Other movements in bonds payable were a net increase of US$ 3 million attributable to accrued interest
payable.
As of 31 December 2021, IFFIm’s bonds payable balance of US$ 1,845 million comprised of bonds payable
falling due within one year of US$ 99 million and bonds payable falling due after more than one year of US$
1,746 million.
Derivative Financial Instruments: IFFIm’s derivative financial instruments represent its net liability position
on interest rate and currency swap contracts. As of 31 December 2021, IFFIm’s net liability balance on its
derivative financial instruments was US$ 196 million (derivative financial liabilities of US$ 347 million less
derivative financial assets of US$ 151 million), which was a decrease of US$ 211 million compared to the prior
year net liability balance on derivative financial instruments of US$ 407 million (derivative financial liabilities
of US$ 486 million less derivative financial assets of US$ 79 million). This US$ 211 million decrease in 2021
was due to net fair value gains of US$ 161 million and net swap settlement payments of US$ 50 million. As
of 31 December 2021, IFFIm’s net liability balance on its derivative financial instruments of US$ 196 million
comprised of net amounts due after more than one year of US$ 194 million and net amounts due within one
year of US$ 2 million. IFFIm’s hedging strategy is described in the Hedging IFFIm’s Market Risks section of
this report and IFFIm’s net liability position is discussed further in Note 10 to the financial statements.
Grants payable: Grants payable represent board approved commitments made by IFFIm to fund Gavi
programmes. Each of these commitments is recognised when an indicative funding confirmation to Gavi is
signed by one of IFFIm’s trustees on behalf of the IFFIm board. During 2021, IFFIm’s grants payable balance
increased by US$ 235 million due to new indicative funding confirmations issued by IFFIm to Gavi totalling
US$ 1,449 million, partially offset by grant payments to Gavi totalling US$ 1,214 million.
Other Payables: IFFIm’s other payables are comprised of amounts payable to service providers and amounts
due to Gavi.
Annual Financial Report 13
OVERVIEW OF INCOME AND EXPENSES
The following table summarises IFFIm’s income and expenses for the years ended 31 December 2021 and
2020:
In Millions of US$ 2021 2020 Change
Contribution revenue
720 1,347 (627)
Net fair value gains
64 45 19
Investment income
1 4 (3)
Other income
1 1 -
Total income
786 1,397 (611)
Programme grants
1,449 210 1,239
Financing costs
10 5 5
Other expenses
5 4 1
Total expenses
1,464 219 1,245
Contribution Revenue: IFFIm receives its funding from Grantor contributions in the form of long-term legally
binding sovereign pledges and converts these pledges into immediately available cash resources by issuing
bonds in the international capital markets. IFFIm then disburses the funds to Gavi to support various Gavi
vaccine procurement, immunisation, and HSS programmes as described in the Programmes Funded by IFFIm
section of this report. Contribution revenue for 2021 was comprised of new sovereign pledges of A$ 86
million from the Commonwealth of Australia, kr (NOK) 4 billion from the Kingdom of Norway, and kr (SEK)
2.5 billion from the Kingdom of Sweden, with initial recorded fair values totalling US$ 720 million.
Net Fair Value Gains: During 2021, IFFIm recorded net fair value gains of US$ 64 million comprised of fair
value gains of US$ 161 million on its swaps and gains of US$ 30 million on its bonds payable, which were
partially offset by fair value losses of US$ 126 million on its sovereign pledges and other foreign exchange
losses of US$ 1 million. The Hedging IFFIm’s Market Risks section below further describes fair value
adjustments on pledges, bonds, and swaps, and summarises their impact on IFFIm’s income.
Investment Income: Investment income was lower by US$ 3 million in 2021 compared to 2020 as IFFIm’s
investment portfolio had a relatively lower weighted average balance in 2021. The lower balance, together
with lower market returns, resulted in a portfolio rate of return of 0.24% during 2021 compared to 0.99%
during 2020.
Other income: Other income for 2021 was comprised of US$ 1 million of administrative support services
donated to IFFIm by Gavi.
Programme Grants: During 2021, four new indicative funding confirmations totalling US$ 1,453 million were
issued by IFFIm to fund Gavi’s COVAX AMC and core programmes. The new indicative funding confirmations
were partially offset by a programme reduction of US$ 4 million related to previously approved funding for
vaccine research and development activities.
Financing Costs: IFFIm’s outstanding bonds payable balance was significantly higher in 2021 compared to
2020 due to the two new bond issuances in 2021 totalling US$ 1 billion. As a result, financing costs were
higher in 2021 compared to 2020.
Other Expenses: IFFIm’s other expenses predominantly comprise treasury management fees billed by the
World Bank, legal fees, audit fees, consulting fees, and administrative support services donated to IFFIm by
Gavi. As there were no significant changes in IFFIm’s operations or suppliers, its other expense in 2021
remained at about the same level as 2020. Marginal increases were recorded due to incremental project
based legal fees and amounts accrued for statutory audit fees due to additional statutory financial reporting
requirements.
IFFIm’s policy is to pay its suppliers of the abovementioned services in accordance with those terms and
conditions agreed between IFFIm and its suppliers. Payments for services received are usually processed
within 30 days upon receipt of invoices.
RISK MANAGEMENT
The major risks to which IFFIm is exposed, as identified by the trustees, have been reviewed and systems or
procedures have been established to manage these risks. IFFIm has two main areas of risk: financial risks and
operational risks.
• Managing Financial Risks: IFFIm’s activities expose it to three principal types of financial risk: (1) credit
risk, (2) liquidity risk, and (3) market risk. IFFIm seeks to mitigate each of these risks based on a risk
Annual Financial Report 14
management strategy approved by its board. IFFIm’s mitigation of each type of financial risk is described
below:
(1) Credit Risk: IFFIm’s credit ratings are closely tied to the credit ratings of Grantors. A change in the
outlook for, or a downgrade of, the credit rating of one of the major Grantors may cause one or
more of the credit rating agencies to review its outlook or credit rating for IFFIm and to amend such
outlooks or credit ratings accordingly. A change in the credit rating of IFFIm may affect the market
value of IFFIm’s debt. IFFIm’s credit ratings by Fitch Ratings, Moody’s Investor Service, and Standard
and Poor’s Ratings Service (“S&P”) remained unchanged at AA-, Aa1, and AA, respectively, during
2021. The IFFIm board, working with the World Bank, has put in place measures to manage credit
risk. These measures are described in the Credit Rating and Reserves Policy section below. Note 15 to
the financial statements describes IFFIm’s credit risk and related risk management activities in more
detail.
IFFIm’s ability to make principal and interest payments to investors, and programme payments to
Gavi, depends primarily on receipt by IFFIm of payments from Grantors under the grant agreements.
IFFIm does not have any other significant sources of funds available to meet these obligations. In
connection with this risk, each Grantor has represented and warranted to IFFIm, and to the other
parties to IFFIm’s Finance Framework Agreement, that the grant agreement to which it is a party
constitutes valid and legally binding obligations of that Grantor. IFFIm has experienced occasional
payment delays by some Grantors, which are administrative in nature. These delays have not been
material and have not adversely affected IFFIm’s credit ratings nor IFFIm’s financial condition.
(2) Liquidity Risk: Under its liquidity policy, IFFIm seeks to maintain an adequate level of liquidity to meet
its operational requirements, provide predictability of programme funding and support its credit
rating. Taking these factors into account, IFFIm maintains a minimum liquidity equivalent to its
cumulative contracted debt service payments for the next 12 months.
IFFIm’s bond issuances are managed against the present value of expected future cash flows from
Grantor pledges, in view of the Grant Payment Condition (“GPC”) and other credit factors. The GPC
is described further in Note 18 to the consolidated financial statements. IFFIm only raises bonds
against a percentage of the present value of Grantor pledges. The residual, which is still available to
IFFIm over time, creates a cushion to protect bond holders against adverse credit events such as many
IFFIm-eligible countries falling into protracted arrears to the IMF. The cushion is a percentage of the
present value of Grantor pledges, and is established through the Gearing Ratio Limit (“GRL”) model.
As of 31 December 2021, the GRL model had established that, at a triple-A equivalent confidence
level, 74.1% of the present value of Grantor pledges may be used to support the issuance of IFFIm
bonds. As of 31 December 2021, the fair value of IFFIm’s outstanding bonds, net of bond swaps, cash
and investments, was 34.1% of the present value of its grantor pledges net of pledge swaps.
The World Bank continues to have the right to call for collateral, above a specified threshold amount,
to protect against its exposure on IFFIm’s derivative positions under the terms of the Credit Support
Annex (“CSA”) to the ISDA Agreement between IFFIm and the World Bank. The World Bank has not
exercised this right. To mitigate the risk that the World Bank may call collateral, an agreement is in
place between the World Bank and IFFIm to apply an additional buffer to the gearing ratio limit to
manage the World Bank’s exposure under the derivative transactions between IFFIm and the World
Bank (the “Risk Management Buffer”). The Risk Management Buffer may be adjusted by the World
Bank in its sole discretion. As of 31 December 2021 and 2020, the Risk Management Buffer was 0%
of the present value of expected future cash flows from Grantor pledges. In May 2020, the World
Bank recalculated and reset the Risk Management Buffer to 0% from the previous value of 12%
following the execution of a swap re-couponing transaction in the amount of US$ 200 million, which
reduced the World Bank’s exposure on IFFIm’s derivative positions by the same amount and enabled
the World Bank to intermediate new swaps for IFFIm.
The World Bank, as IFFIm’s Treasury Manager, continues to monitor IFFIm’s funding needs to always
ensure that IFFIm maintains sufficient available resources to be able to meet its financial obligations,
including debt-service payments and obligations under the CSA and ISDA Agreement. Note 16 to the
financial statements describes IFFIm’s liquidity risk and related risk management activities in more
detail.
(3) Market Risk: IFFIm’s market risk is comprised of interest rate and foreign exchange rate risks. IFFIm
mitigated these risks using interest rate and currency swaps. Sovereign pledges were swapped into
United States dollar floating rate assets and, at issuance, IFFIm’s bonds payable were swapped into
United States dollar floating rate liabilities. IFFIm’s activities to hedge market risks are described
further in the Hedging IFFIm’s Market Risks section below. Note 17 to the financial statements
describes IFFIm’s market risk and related risk management activities in more detail.
Annual Financial Report 15
• Managing Programme Risks: Key among IFFIm’s operational risks are programme risks, which include: (1)
the performance risk that IFFIm funds may not be efficiently and effectively applied by implementing
countries to meet Gavi’s programme objectives, and (2) the risk that implementing countries may misuse
funds they receive from IFFIm.
The programme performance risk is mitigated through the Gavi programme monitoring process, which
is a multi-step monitoring and evaluation process that includes an initial project assessment and approval,
as well as annual monitoring reviews.
The programme risk related to misuse of funds is addressed by management controls and audit processes
put in place at Gavi. Gavi has identified cases of misuse of funds in 39 countries since 2009. The estimated
total Gavi funds misused in these countries since 2009 is US$ 44.4 million, which is less than 0.28% of total
funds disbursed by Gavi during that period. This includes cases of misuse estimated at US$ 0.1 million,
which were identified through audit processes that were finalised during 2021. Gavi has a zero-tolerance
policy with respect to misuse of funds and actively works to bring all these identified cases to resolution
and recover the misused funds from the countries. To date, a total of US$ 40.9 million in misused funds
has been scheduled for reimbursement to Gavi and resulted in actual reimbursements of US$ 37.4 million
from the countries, which represents a recovery rate of 91.3%. IFFIm funds have been used in only certain
instances of misuse in 18 countries. It is estimated that approximately US$ 22.1 million of the misuse
identified above relates to funds provided by IFFIm, with a recovery rate of 99.1% against amounts
scheduled for reimbursement to Gavi.
As described in the Structure, Governance and Management section of this report, IFFIm’s Audit
Committee monitors the effectiveness of IFFIm’s risk management and internal grant monitoring systems.
The COVID‐19 pandemic has significantly disrupted economic activity and financial markets globally,
including the economies of IFFIm’s Grantors and implementing countries parts of which were shut down to
slow the spread of the disease. As a result of the disruption caused by the pandemic, IFFIm is exposed to
increased programme and financial risk and disruptions to its business operations, including treasury
management and administrative support functions outsourced to the World Bank and Gavi, respectively. As
described above, IFFIm has appropriate measures in place to mitigate the key programme and financial risks
to which it is exposed and has relied on those measures to effectively mitigate incremental risk due to the
pandemic, including the risk of misuse of COVID-19 vaccines in implementing countries the funding of which
is leveraging IFFIm support through the COVAX Facility. The distribution of COVID-19 vaccines in countries
may be associated with a higher risk of theft and diversion than traditional Gavi-supported vaccines given
they are in low supply with potentially high demand and the existence of secondary markets. They could be
diverted to non-target groups within countries or be used in exploitative transactions. The Gavi Secretariat
is actively working on managing these risks and closely monitor the utilisation of vaccines in implementing
countries through country monitoring and reporting from an early stage. Key IFFIm operational processes
proceeded as planned during 2021 and continue to do so, ensuring that the directors receive timely
information from the World Bank and Gavi to facilitate key decisions and provide necessary guidance on
operational matters on a timely basis. The World Bank and Gavi each invoked business continuity procedures
at the onset of the pandemic in March 2020, including home-based work and other prudent measures to
ensure the health and safety of their employees, which have ensured IFFIm’s operations continue to function.
IFFIm’s trustees have considered the impact of the COVID-19 pandemic on IFFIm’s ability to continue
undertaking its business activities on an ongoing basis and prepare its financial statements on a going
concern basis as discussed further in Note 2 to the financial statements.
Considering the conflict between Russia and Ukraine and its global impact on economic activity and financial
markets, management has assessed the potential impact of the conflict on IFFIm’s financial position,
performance, and its ability to continue meeting its obligations. IFFIm’s sovereign pledges are legally binding
contractual obligations, its investments are maintained under a conservative investment strategy, and its
outstanding bonds are mostly fixed rate instruments, which are less susceptible to market volatility. IFFIm
uses swaps to mitigate against interest rate and foreign exchange rate risks, which are the key market risks
to which IFFIm’s sovereign pledges and bonds payable are exposed. There is potential impact to the fair value
of IFFIm’s sovereign pledges, and associated cash flows, with respect to the GPC, which is a key variable in
the valuation of IFFIm’s sovereign pledges. The calculation of the GPC includes assessments of the risk that
IFFIm-eligible recipient countries may fall into arrears to the IMF, which, among other factors, considers
macroeconomic performance and a geopolitical assessment. As of 31 March 2022, there were no countries
in protracted arrears to the IMF. Management has not quantified the potential impact due to the GPC and
will make this assessment as quarterly reporting is completed. Considering all these factors, management
does not expect that IFFIm’s overall financial position and performance will be significantly impacted by the
adverse effects of the conflict and IFFIm has measures in place to ensure it maintains sufficient liquidity and
capacity to meet its obligations as they fall due and continue undertaking its business activities on an
ongoing basis.
Annual Financial Report 16
CREDIT RATING AND RESERVES POLICY
Based on factors such as the strength of its financial base, its conservative financial policies, and the strong
support of the Grantors, IFFIm’s Global Debt Issuance Programme is rated AA- by Fitch Ratings, Aa1 by
Moody’s Investor Service, and AA by Standard and Poor’s Ratings Service.
IFFIm seeks to maintain an adequate level of liquidity to meet its operational requirements, provide
predictability of programme funding and support its credit rating. Taking these factors into account, IFFIm
maintains a minimum liquidity equivalent to its cumulative contracted debt service payments for the next 12
months. This minimum liquidity level is recalculated and reset on a quarterly basis. As of 31 December 2021
and 2020, the calculated minimum liquidity was US$ 99 million and US$ 40 million, respectively, and the
value of IFFIm’s Liquid Assets was US$ 615 million and US$ 492 million, respectively.
HEDGING MARKET RISKS
The majority of IFFIm sovereign pledges and some of its bonds payable are denominated in currencies other
than the United States dollar. Therefore, IFFIm is exposed to the risk of financial loss or unpredictable cash
flows resulting from fluctuations in foreign exchange rates. Since all IFFIm’s programme expenses are
incurred in United States dollars and predictability of funding is essential to Gavi’s mission, IFFIm has entered
into currency swap contracts with the World Bank and the Toronto-Dominion Bank to mitigate the
aforementioned risks. Under these contracts, IFFIm has effectively swapped foreign currency receipts from
Grantors and payments to bond holders with United States dollar receipts from, and payments to, the World
Bank and the Toronto-Dominion Bank.
In addition to the abovementioned foreign exchange risks, IFFIm is also exposed to potential adverse changes
in the value of its sovereign pledges and bonds payable resulting from fluctuations in interest rates. To
mitigate this risk, IFFIm has entered into interest rate swap contracts with the World Bank. Under these
contracts, IFFIm has effectively swapped sovereign pledges into dollar floating rate receivables from the
World Bank and bonds payable into floating rate payables to the World Bank.
The following table shows IFFIm’s fair value adjustments and interest expense, for the years ended 31
December 2021 and 2020, before and after the impact of IFFIm’s currency and interest rate swaps:
2021 2020
In Millions of US$ Pledges Bonds Pledges Bonds
Interest and fair value adjustments before impact of swaps (126) 23 214 (38)
Impact of currency and interest rate swaps 180 (19) (139) 1
Net interest and fair value adjustments after impact of swaps 54 4 75 (37)
Interest expense on bonds before impact of swaps 8 4
Impact of bond swaps on interest expense (4) 1
Net interest expense on bonds after impact of swaps 4 5
As described in Note 3 to the financial statements, IFFIm has elected not to apply hedge accounting.
Therefore, the fair value gains and losses on currency and interest rate swaps are recognised in full without
any offsetting.
As shown above, IFFIm recorded fair value losses on pledges and fair value gains on pledge swaps in 2021
due to several factors as discussed below. The following table further analyses fair value adjustments on
pledges and pledge swaps:
2021 2020
In Millions of US$ Pledges
Pledge
Swaps Total Pledges
Pledge
Swaps Total
Fair value gains due to GPC Fair
Value Adjustment 71 - 71 33 - 33
Interest rate fair value (losses)
gains (94) 68 (26) (6) (29) (35)
Foreign currency fair value
(losses) gains (103) 112 9 187 (110) 77
Net fair value (losses) gains (126) 180 54 214 (139) 75
Each component of fair value adjustments on pledges and pledge swaps is discussed below:
• Fair value gains due to GPC Fair Value Adjustment: As described in Notes 3 and 18 to the financial
statements, the Grant Payment Condition (the “GPC”) allows the Grantors to reduce their payments to
Annual Financial Report 17
IFFIm in the event that an IFFIm-eligible country falls into protracted arrears on its obligations to the
International Monetary Fund (the “IMF”). Therefore, when calculating the fair values of Grantor pledges,
the expected future cash inflows from Grantors are reduced by an estimated percentage due to the GPC
(the “GPC Fair Value Adjustment”). The GPC Fair Value Adjustment is calculated by the World Bank using
a probabilistic model, which estimates the likelihood and duration that any implementing country might
fall into arrears with the IMF over the life of the Grantor pledges. During 2021, the GPC Fair Value
Adjustment decreased from 8.72% to 7.40%. When Grantor payments are made, they are reduced by the
actual GPC level on the date that they are received. As described in Note 18 to the financial statements,
Sudan, with a country weighting of 0.5%, cleared its arrears to the IMF in May 2021 and, as of 31
December 2021, there were no reference portfolio countries in protracted arrears to the IMF. Therefore,
Grantor payments received in the period from 1 January 2021 to 31 May 2021 were reduced by an actual
GPC level of 0.5%, except for payments received from the Kingdom of Norway, which opted to make
grant payments due to IFFIm in full without applying any GPC reduction. No GPC reduction was applied
to grantor payments received in the period from 1 June 2021 to 31 December 2021. Fair value gains on
pledges of US$ 71 million due to the GPC Fair Value Adjustment were due to the decrease in the GPC Fair
Value Adjustment and the spread between the GPC Fair Value Adjustment and actual GPC reduction
applied.
• Interest rate fair value (losses) gains: As described in Note 18, both pledges and pledge swaps are valued
using the discounted cash flow method. Interest rate fair value losses on pledges of US$ 94 million and
gains on pledge swaps of US$ 68 million in 2021 were primarily due to relatively higher interest rates in
2021.
• Foreign currency fair value (losses) gains: The majority of IFFIm’s pledges are denominated in euros and
British pounds. In addition, IFFIm has smaller foreign currency pledges denominated in Australian dollars,
Norwegian kroner, and Swedish kronor. The United States dollar strengthened against the British pound,
euro, and the other currencies in 2021, which resulted in net fair value losses on pledges of US$ 103
million and gains on pledge swaps of US$ 112 million due to foreign currency movements.
• Net debit valuation adjustment: IFFIm includes a credit valuation adjustment and a debit valuation
adjustment in the valuation of its derivative portfolio to account for counterparty credit risk and its own
credit risk, respectively. A net debit valuation adjustment of US$ 0.2 million was included in the valuation
of pledge swaps in 2021, compared to US$ 0.6 million in 2020, which resulted in a fair value loss of US$
0.4 million in 2021.
As shown above, IFFIm recorded fair value gains on bonds and losses on bond swaps as a result of several
factors as discussed below. The following table further analyses fair value adjustments on bonds and bond
swaps:
2021 2020
In Millions of US$ Bonds
Bond
Swaps Total Bonds
Bond
Swaps Total
Interest (expense) income (8) 4 (4) (4) (1) (5)
Interest rate fair value gains
(losses) 16 (17) (1) (16) 9 (7)
Foreign currency fair value gains
(losses) 15 (6) 9 (18) (7) (25)
Net interest and fair value gains
(losses) 23 (19) 4 (38) 1 (37)
Each significant component of fair value adjustments on bonds and bond swaps is discussed below:
• Interest expense: IFFIm recorded interest expense on bonds of US$ 8 million and net interest expense on
bond swaps of US$ 4 million in 2021.
• Interest rate fair value gains (losses): As described in Note 18 to the financial statements, both bonds and
bond swaps are valued using the discounted cash flow method. Due to higher interest rates in 2021,
higher discount rates were applied to IFFIm’s bonds and bond swaps in 2021, which resulted in fair value
gains on bonds and fair value losses on bond swaps.
• Foreign currency fair value gains (losses): Some of IFFIm’s bonds are denominated in South African rand
and Norwegian krone. The United States dollar strengthened against both currencies during 2021, which
resulted in foreign currency fair value gains of US$ 15 million on bonds and losses of US$ 6 million on
bond swaps.
Annual Financial Report 18
RECENT DEVELOPMENTS
Effective 1 January 2021, following the United Kingdom’s withdrawal from the European Union, IFFIm is
required to prepare consolidated interim and annual financial statements in accordance with IFRS to comply
with reporting obligations as an issuer of securities admitted to trading on a regulated market in the
European Union. Accordingly, IFFIm prepared consolidated interim financial statements (unaudited) for the
six months ended 30 June 2021 in accordance with IFRS, which were published and filed in Luxembourg in
September 2022, and has prepared consolidated annual financial statements for the year ended 31 December
2021 in accordance with IFRS, which will be published and filed in Luxembourg by 30 April 2022.
On 18 November 2021, IFFIm increased by US$ 250 million the 5-year fixed rate Vaccine Bonds of US$ 750
million it issued in April 2021, providing Gavi with additional immediate funding to support routine
immunisation in lower-income countries. The transaction will mature on 21 April 2026, has a re-offer price
of 99.704%, and carries a semi-annual coupon of 1%.
In February 2022, IFFIm issued a reduction of US$ 144 million to previously approved funding for Gavi’s
COVAX AMC programme and issued a new indicative funding confirmation of US$ 275 million to support
Gavi’s new and underused vaccines programmes.
ln April 2022, IFFlm Sukuk Company III Limited made the final payment of US$ 50 million to the holders of
its certificates.
Considering the conflict between Russia and Ukraine and its global impact on economic activity and financial
markets, management has assessed the potential impact of the conflict on IFFIm’s financial position,
performance, and its ability to continue meeting its obligations. Details of management’s assessment are
included in the
Risk Management
section of this report. Management does not expect that IFFIm’s overall
financial position and performance will be significantly impacted by the adverse effects of the conflict and
IFFIm has measures in place to ensure it maintains sufficient liquidity and capacity to meet its obligations as
they fall due and continue undertaking its business activities on an ongoing basis.
FUTURE PLANS
IFFIm has proven very successful in helping to align Grantor pledges with demand for vaccines and
immunisation related services. The multi-year nature of current sovereign pledges has also helped to
facilitate long-term planning by Grantors, Gavi and implementing countries. IFFIm continues to engage with
Gavi and Grantors to develop potential future roles that deliver significant value to Gavi in achieving its
broader strategic goals for the 2021-2025 strategic period and beyond.
In response to the COVID-19 pandemic, IFFIm is playing an integral role in supporting the Gavi COVAX AMC,
an innovative financing instrument within the COVAX Facility to procure and deliver COVID-19 vaccines for
92 low-income and lower middle-income countries. Co-led by Gavi, CEPI, and the World Health Organization
(“WHO”), alongside key delivery partner UNICEF, the COVAX Facility aims to accelerate the development
and manufacture of COVID-19 vaccines and to guarantee fair and equitable access for every country in the
world. Gavi is raising additional funding for the COVAX AMC to mitigate against future new variants. IFFIm
remains a critical instrument for donors accelerate funding to this AMC to finance this global fight.
RESPONSIBILITY STATEMENT
We confirm, to the best of our knowledge, that:
• the audited consolidated financial statements of IFFIm, presented in this Annual Financial Report for the
year ended 31 December 2021 and prepared in conformity with International Financial Reporting
Standards as issued by the International Accounting Standards Board and as adopted by the European
Union, give a true and fair view of the assets, liabilities, financial position, surplus or deficit of IFFIm; and
• the management report includes a fair review of important activities during the year ended 31 December
2021, their impact on the consolidated annual financial statements, and an overview of the principal risks
and uncertainties faced by IFFIm during the year.
Kenneth Lay Bertrand de Mazières
IFFIm Board Chair Audit Committee Chair
29 April 2022 29 April 2022
Annual Financial Report 19
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
Annual Financial Report 20
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group and Parent Company
In Thousands of US$ Note
Year Ended
31 December
2021
Restricted
Funds
Year Ended
31 December
2020
Restricted
Funds
Continuing operations
Operating income
Contribution revenue 4 719,784 1,347,303
Donated services 4 942 911
Total operating income 720,726 1,348,214
Operating expenses
Programme grants 6 1,449,478 210,365
Treasury manager’s fees 6 2,255 2,104
Governance costs 6 2,371 2,106
Total operating expenses 1,454,104 214,575
Net operating (expenses) income (733,378 ) 1,133,639
Financing and investment income (expenses)
Investment and interest income 5 667 4,479
Net fair value gains (losses) on bonds and bond swaps 7 11,645 (32,278 )
Net fair value gains on pledges and pledge swaps 7 54,030 74,496
Other foreign exchange (losses) gains 7 (1,393 ) 2,707
Interest expense on bonds (7,885 ) (4,141 )
Other financing charges (2,134 ) (559 )
Net financing and investment income 54,930 44,704
(Decrease) increase in funds (678,448 ) 1,178,343
Other comprehensive income - -
Total comprehensive (loss) income for the year (678,448 ) 1,178,343
The accompanying notes are an integral part of these financial statements.
Annual Financial Report 21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group and Parent Company
In Thousands of US$ Note
As o
f
31 December
2021
As of
31 December
2020
As o
f
1 Januar
y
2020
Non-current assets
Sovereign pledges due after more than one year 8 2,882,001 2,880,945 1,745,455
Derivative financial instruments due after more than one
year
10 150,087 79,391 1,915
Total non-current assets 3,032,088 2,960,336 1,747,370
Current assets
Sovereign pledges due within one year 8 554,564 404,840 328,381
Derivative financial instruments due within one year 10 502 - 190
Prepayments 294 32 -
Amounts due from related parties - 11 111
Funds held in trust 9 603,383 478,455 427,925
Cash 11,677 13,906 15
Total current assets 1,170,420 897,244 756,622
Current liabilities
Bonds payable falling due within one year 11 98,486 39,966 331,467
Derivative financial instruments due within one year 10 2,245 5,638 26,171
Grants payable falling due within one year 12 396,065 160,987 200,000
Other payables 960 1,042 1,486
Total current liabilities 497,756 207,633 559,124
Net current assets 672,6 64 689,611 197,498
Total assets less current liabilities 3,704,752 3,649,947 1,944,868
Non-current liabilities
Bonds payable falling due after more than one year 11 1,746,222 876,361 178,334
Derivative financial instruments due after more than one
year
10 344,370 480,9 78 495,205
Grants payable falling due after more than one year 12 - - 157,064
Total non-current liabilities 2,090,592 1,357,339 830,603
Net assets 1,614,160 2,292,608 1,114,265
Restricted funds 1,614,160 2,292,608 1,114,265
The accompanying notes are an integral part of these financial statements.
Annual Financial Report 22
CONSOLIDATED STATEMENT OF CHANGES IN FUNDS
Group and Parent Company
In Thousands of US$ Note
Restricted
Funds
As at 1 January 2020 14 1,114,265
Increase in funds during the year 1,178,343
Other comprehensive income -
As at 31 December 2020 14 2,292,608
As at 1 January 2021 14 2,292,608
Decrease in funds during the year (678,448 )
Other comprehensive income -
As at 31 December 2021 14 1,614,160
The accompanying notes are an integral part of these financial statements.
Annual Financial Report 23
CONSOLIDATED STATEMENT OF CASH FLOWS
Group and Parent Company
In Thousands of US$ Note
Year Ended
31 December
2021
Restricted
Funds
Year Ended
31 December
2020
Restricted
Funds
Cash flows from operating activities
Net change in funds (678,448 ) 1,178,343
Investment and interest income 5 (667 ) (4,479 )
Interest expense on bonds 6, 19 7,885 4,141
Bond issuance costs 19 1,457 (1 )
Fair value losses (gains) on sovereign pledges 7 125,648 (213,574 )
Fair value (gains) losses on bonds 7 (30,541 ) 33,450
Unrealised losses (gains) on cash balances 715 (2,801 )
Initial fair value of pledges 4 (719,7 84 ) (1,347,303 )
Payments received from donors 8 443,356 348,928
Increase in prepayments (262 ) (32 )
Decrease in other payables (71 ) (344 )
Decrease in amounts due under derivative financial instruments (211,199 ) (112,046 )
Increase (decrease) in grants payable 235,0 78 (196,077 )
Net cash used in operating activities (826,833 ) (311,795 )
Cash flows from investing activities
Investment and interest income received 5 667 4,479
Increase in funds held in trust (124,928 ) (50,530 )
Net cash used in investing activities
(124,261 ) (46,051 )
Cash flows from financing activities
Proceeds from bond issuances 19 993,141 698,768
Redemption of bonds 19 (37,608 ) (325,010 )
Interest paid on bonds 19 (5,953 ) (4,822 )
Net cash provided by financing activities 949,580 368,936
Net change in cash, before the effect of exchange rate changes (1,514 ) 11,090
Cash as of the beginning of the year 13,906 15
Effect of exchange rate changes (715 ) 2,801
Cash as of the end of the year 11,677 13,906
The accompanying notes are an integral part of these financial statements.
Annual Financial Report 24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
domiciled in England and Wales and the address of its registered office is 2 Lambs Passage, London EC1Y
capital and for indefinite duration, under the Companies Act 1985. IFFIm is governed by its Memorandum
and Articles of Association dated 26 June 2006. Amended Articles of Association were adopted on 17
December 2018. IFFIm’s company registration number is 5857343 and its charity registration number is
1115413. The Gavi Alliance (“Gavi”) is the sole member of IFFIm.
To achieve its objectives, IFFIm works with Gavi and the International Bank for Reconstruction and
Development (the “World Bank”). Gavi is a Swiss foundation that is accorded international institution status
in Switzerland with certain privileges and immunities like those accorded to international intergovernmental
organisations. It uses funds raised by IFFIm to finance immunisation-related charitable activities in many of
the world’s low-income countries. Gavi also provides administrative support to IFFIm. The World Bank is a
global development organisation based in the United States. It provides treasury management, risk
management and accounting services to IFFIm on a commercial basis.
2. BASIS OF PREPARATION
First-time adoption of International Financial Reporting Standards (“IFRS”): For all reporting periods up to
and including the year ended 31 December 2020, IFFIm prepared its consolidated financial statements in
accordance with Generally Accepted Accounting Practice in the United Kingdom (“UK GAAP”). The
consolidated financial statements for the year ended 31 December 2021 are the first full set of financial
statements IFFIm has prepared in accordance with IFRS to comply with reporting obligations as an issuer of
securities admitted to trading on a regulated market in the European Union, which became effective for
IFFIm on 1 January 2021 following the United Kingdom’s withdrawal from the European Union.
Statement of Compliance: IFFIm has prepared these consolidated financial statements in accordance with
IFRS as adopted by the European Union. In preparing these consolidated financial statements, IFFIm’s
opening statement of financial position was prepared as of 1 January 2020, which is deemed as IFFIm’s date
of transition to IFRS. No adjustments have been made to IFFIm’s financial position, financial performance,
and cash flows in restating its comparative period financial statements from UK GAAP to IFRS. However,
there are some changes to the presentation and category reclassifications of comparative period financial
information in the primary financial statements as follows:
Prior year presentation/classification Current year presentation/classification
Consolidated Statement of Income and Expenditures Consolidated Statement of Comprehensive Income
Contribution revenue categorised as ‘Turnover’ while
donated services categorised as ‘Other operating income’
Contribution revenue and donated services categorised as
‘Operating income’
Financing and investment income (expenses) reported
under sub-headings: ‘Financing expenses on bonds and
bond swaps’, ‘Other financing income (expenses)’, and
‘Investment income’
Sub-headings removed and all items of financing and
investment income (expenses) reported under one heading
‘Financing and investment income (expenses)’
Balance Sheet Consolidated Statement of Financial Position
Headings ‘Fixed assets’ and ‘Liabilities due after more than
one year’
Headings ‘Non-current assets’ and ‘Non-current liabilities’,
respectively
Creditors falling due within one year of US$ 201,995,000 Broken up into: (1) Bonds payable falling due within one
year of US$ 39,966,000, (2) Grants payable falling due
within one year of US$ 160,987,000, and (3) Other payables
of US$ 1,042,000
Creditors falling due after more than one year of US$
876,361,000
Broken up into: (1) Bonds payable falling due after more
than one year of US$ 876,361,000 and (2) Grants payable
falling due after more than one year of US$ 0
Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows
Reconciliation of net change in funds to net cash flows from
operating activities presented separately
Reconciliation of net change in funds to net cash flows
from operating activities presented under ‘Cash flows from
operating activities’
Net change in cash reported as US$ 13,891,000 Broken up into: (1) Net change in cash, before the effect of
exchange rate changes – US$ 11,090,000 and (2) Effect of
exchange rate changes – US$ 2,801,000
These consolidated financial statements have been prepared on a going concern basis. As IFFIm’s credit rating
is AA-, the World Bank has the right to call for collateral, above a specified threshold amount, and protect
Annual Financial Report 25
its derivative exposure to IFFIm. However, following discussions and agreement with the World Bank, the
World Bank has confirmed that it will not call collateral over at least 12 months from the date of approval
of these financial statements, which could cause IFFIm to be unable to meet its required financial obligations.
Furthermore, following Gavi’s confirmation, IFFIm continues to maintain the ability to defer grant payments
to Gavi to the extent that this is required for IFFIm to meet other obligations as they fall due within the next
12 months. In assessing the going concern basis, the trustees have also considered the potential impact of
the COVID-19 pandemic whereby, in addition to assessing any potential impact of the pandemic on the
factors considered above, the trustees considered (1) the continued stability of funding from Grantors due
to its legally binding nature and commitment from the Grantors and (2) measures in place which ensure
IFFIm will maintain the required minimum liquidity levels for at least the next 12 months from the date of
approval of these financial statements as further described in Note 16 below. In their assessment, the trustees
determined that the COVID-19 pandemic does not significantly impact the above key factors that IFFIm’s
going concern basis is primarily reliant upon. The trustees have also considered the impact of the conflict
between Russia and Ukraine as described further in Note 24 to the consolidated financial statements.
Therefore, the trustees concluded that the going concern basis of accounting is appropriate because there
are no material uncertainties related to events or conditions that may cast significant doubt about IFFIm’s
ability to continue as a going concern.
These consolidated financial statements as of and for the year ended 31 December 2021 were approved by
the IFFIm Board on 28 April 2022 for signing on 29 April 2022.
Basis of Measurement: The consolidated financial statements are prepared on the accruals basis of
accounting, under the historical cost convention, with the exception of sovereign pledges, funds held in
trust, derivative financial instruments, and bonds payable, which are included at fair value.
Basis of Consolidation: A subsidiary is an entity controlled by a group. Control exists when the group is
exposed, or has rights, to variable returns from its involvement with an entity and has the ability to affect
those returns through its power over the entity. The financial statements of a subsidiary are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions,
are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that there is no evidence of impairment.
IFFIm has control over IFFIm Sukuk Company III Limited (“IFFImSC III”), a Cayman Islands company with
limited liability. IFFImSC III was incorporated on 5 March 2019 under the Companies Law (2013 Revision) of
the Cayman Islands with company registration number 348825. IFFImSC III was established for the sole
purpose of issuing sukuk certificates in support of IFFIm’s operations and its activities conducted on behalf
of IFFIm and according to IFFIm’s business needs. IFFIm is the primary beneficiary of IFFImSC III, bearing a
significant level of risk incidental to its activities, and retaining residual or ownership risk related to the entity
or its assets. Therefore, these consolidated financial statements include the accounts of IFFImSC III.
IFFImSC III’s balances, income, and expenditure, except for cash of US$ 250 and share capital of US$ 250, are
eliminated upon consolidation in these consolidated financial statements. Therefore, the balances, income
and expenditure reported in these consolidated financial statements also represent IFFIm’s parent company
results and financial position.
IFFIm has considered the requirements of IFRS 8 Operating Segments. IFFIm operates in one segment and
has no geographical segmentation as its business activities are all based in the United Kingdom.
Functional and Presentation Currency: The consolidated financial statements are presented in United States
dollars, which is IFFIm’s functional and reporting currency. All financial information presented in United
States dollars has been rounded to the nearest thousand, unless otherwise indicated.
Use of Estimates and Judgements: The preparation of the consolidated financial statements involves the use
of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the reported amounts of the
revenues and expenses during the year. Actual results could differ from these estimates. Significant estimates
and judgements are used in determining the fair values of IFFIm’s sovereign pledges receivable, bonds
payable, and derivative financial instruments. The natures of these significant estimates and judgements are
described in Note 18 and Note 22.
New Standards and Interpretations Adopted Effective 1 January 2021: The International Accounting
Standards Board (“IASB”) issued several amendments to standards and interpretations, which are effective
for annual reporting periods beginning on or after 1 January 2021. The following are relevant for and were
adopted by IFFIm:
• On 25 August 2020, the IASB issued “Interest Rate Benchmark Reform—Phase 2”, addressing issues that
might affect financial reporting during the reform of an interest rate benchmark, including the effects
of changes to contractual cash flows or hedging relationships arising from the replacement of an interest
Annual Financial Report 26
rate benchmark with an alternative benchmark rate. The objectives of the Phase 2 amendments assist
companies in (1) applying IFRS Standards when changes are made to contractual cash flows or hedging
relationships because of the interest rate benchmark reform; and (2) providing useful information to
users of financial statements. The relevant amendments for IFFIm are the amended disclosure
requirements included in IFRS 7, which IFFIm has adopted and applied for the year ended 31 December
2021. Required disclosures in relation to interest rate benchmark reform are detailed in Note 17.
New Standards and Interpretations Not Yet Effective: The IASB issued several amendments to standards and
interpretations, which are effective for annual reporting periods beginning on or after 1 January 2022. The
following are relevant for IFFIm:
• On 23 January 2020, the IASB issued “Classification of Liabilities as Current or Non-Current (Amendments
to IAS 1)”. The amendments will affect the presentation of liabilities in the statement of financial
position. The amendments clarify that the classification of a liability as current or non-current should be
based on rights in existence at the end of the reporting period to defer settlement of a liability by at
least 12 months. The amendments also clarify that classification of a liability should be unaffected by
the entity’s expectations regarding whether it will exercise its rights to defer payment. The amendments
are effective for annual reporting periods beginning on 1 January 2023. IFFIm does not expect any
significant impact of these amendments on its consolidated financial statements.
• On 12 February 2021, the IASB issued amendments to IAS 1 “Presentation of Financial Statements”,
regarding the disclosure of accounting policies, and amendments to IAS 8 “Accounting policies, changes
in accounting estimates and errors” on the definition of accounting estimates. Both amendments aim
to improve accounting policy disclosure and to help users of the financial statements to distinguish
between changes in accounting estimates and changes in accounting policies. The amendments are
effective for annual periods beginning on or after 1 January 2023. IFFIm does not expect any significant
impact of these amendments on its consolidated financial statements.
• On 15 February 2022, the IASB issued “IFRS Accounting Taxonomy 2021 - Update 1 Disclosure of
Accounting Policies and Definition of Accounting Estimates”. The update reflects the amendments to
IAS 1 and IAS 8 issued in February 2021 and is effective for annual periods beginning on or after 1
January 2023.
IFFIm has not early adopted the above amendments in preparing these financial statements and plans to
adopt them when they become effective.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies of IFFIm are summarised below. As permitted by IAS 8, where International
Financial Reporting Standards are silent or do not give guidance on how to treat transactions specific to
charities such as IFFIm, accounting policies have been based on the general IFRS principles and other relevant
accounting standards, as detailed in the IASB Framework for the Preparation and Presentation of Financial
Statements.
Accordingly, IFFIm referred to the Conceptual Framework for Financial Reporting for guidance on its
accounting policies for revenue recognition and programme grants in accordance with IFRS. Currently, there
is no IFRS framework specifically developed for charities such as IFFIm. Grants to IFFIm are structured in ways
specific to charities and are in the form of multi-year pledges from several sovereign donors and do not fall
within the scope of existing IFRS for revenue recognition such as IAS 20 Accounting for Government Grants
and Disclosure of Government Assistance and IFRS 15 Revenue from Contracts with Customers.
Contribution Revenue: Income received by way of contributions and grants that are for a defined portfolio
of programme implementing countries or specified purposes is recognised as revenue in the restricted net
asset class when there is evidence of entitlement, it can be measured reliably, and receipt is probable.
Contributions and grants are reported as contribution revenue at fair value in the year in which payments
are received or unconditional promises to give or pledges are made.
Donated Services: Donated services are included at the value to IFFIm of the service provided.
Programme Grants: Programmes funded by IFFIm are recognised as expenses in the Statement of
Comprehensive Income when indicative funding confirmations to Gavi have been signed by any trustee on
behalf of the IFFIm board.
Other Operating Expenses: Treasury manager’s fees and governance costs are expensed through the
Statement of Comprehensive Income in the years in which they are incurred.
Interest Income and Expense: Investment and interest income is recognised during the year in which it is
earned. Interest expense is recognised during the year in which it is incurred.
Classification and measurement of financial instruments: In accordance with IFRS 9 Financial Instruments, the
classification of IFFIm’s financial assets (sovereign pledges and funds held in trust) depends on IFFIm’s
Annual Financial Report 27
business model for managing the financial assets and the contractual terms of the cash flows. Accordingly,
IFFIm’s sovereign pledges and funds held in trust are classified as measured at fair value through profit or
loss as they do not have any contractual cash flows that are solely payments of principal and interest, and
they are not categorised as non-held for trading investments in equity instruments designated at fair value
through other comprehensive income at initial recognition. IFFIm’s financial liabilities (derivative financial
instruments and bonds payable) are, at initial recognition, designated as measured at fair value through
profit or loss as IFFIm manages its financial assets and liabilities on a fair value basis and the measurement
at fair value through profit or loss ensures consistency of measurement bases across its financial assets and
liabilities.
Sovereign Pledges: Sovereign pledges are recognised as contribution revenue and as receivables upon
assignment of donor contributions to IFFIm by Gavi. Sovereign pledges are initially recognised at fair value
through profit or loss then subsequently remeasured at fair value through profit or loss as of each reporting
date. Gains and losses due to changes in fair market values are reported in fair value gains (losses) in the
Statement of Comprehensive Income. Contribution amounts received from sovereign government donors
(the “Grantors”) depend on a Grant Payment Condition (the “GPC”) which allows the Grantors to reduce
such amounts.
Funds Held in Trust: Funds held in trust represent IFFIm’s investments in a portfolio maintained by the World
Bank in its capacity as IFFIm’s treasury manager. IFFIm’s share in the pooled investment portfolio is measured
at fair value through profit or loss on initial recognition, and then subsequently remeasured at fair value
through profit or loss at the reporting date. Gains or losses due to changes in fair market values are reported
in fair value gains (losses) in the Statement of Comprehensive Income.
Cash: Cash consists of cash at depository bank accounts. Cash does not include IFFIm’s pooled investment
portfolio, which is presented separately as funds held in trust in the Statement of Financial Position.
Derivative Financial Instruments: In applying IFRS 9 Financial Instruments, IFFIm has elected not to apply
hedge accounting and has designated, upon initial recognition, its derivative liabilities as measured at fair
value through profit or loss. Derivative financial instruments are initially, and subsequently at each reporting
date, accounted for at fair value through profit or loss. Changes in the fair values of derivatives are reported
in fair value gains (losses) in the Statement of Comprehensive Income. Derivative contracts with positive fair
values are recognised as financial assets while those with negative fair values are recognised as financial
liabilities. Derivative assets and liabilities are not offset in the consolidated statement of financial position
when there is no legally enforceable right or intention to do so.
Bonds Payable: Bonds payable are recognised at fair value through profit or loss at the time of issuance and
subsequently remeasured at fair value through profit or loss at each reporting date. Bonds payable have
been elected to be fair valued as IFFIm manages all its assets and liabilities on a fair value basis. The bond
issuance costs are written off in the year of issue and reported in financing expenses in the Statement of
Comprehensive Income. Gains or losses due to changes in fair market values are reported in fair value gains
(losses) in the Statement of Comprehensive Income.
Grants Payable: Grants payable are initially recognised at board-approved amounts when an indicative
funding confirmation to Gavi has been signed by one of IFFIm’s trustees on behalf of the IFFIm board. They
are subsequently remeasured at amortised cost where settlement is delayed and the effect of the time value
of money is material.
Classification of current and non-current assets and liabilities: Sovereign pledges and derivative financial
assets are classified in the Consolidated Statement of Financial Position as current assets when they are due
to be received or settled within a period of 12 months or less after the reporting date. They are classified as
non-current assets when they are due to be received or settled after more than 12 months after the reporting
date. Bonds payable, grants payable, and derivative financial liabilities are classified in the Consolidated
Statement of Financial Position as current liabilities when they fall due within a period of 12 months or less
after the reporting date. They are classified as non-current liabilities when they fall due after more than 12
months after the reporting date.
Funds: Funds, revenues, gains, and losses are classified based on the existence of Grantor-imposed
restrictions. IFFIm receives its funding from Grantors or by raising funds by borrowing in worldwide capital
markets. Proceeds are used to fund Gavi programmes for a defined portfolio of eligible countries or specified
purposes. Therefore, all funds are treated as restricted funds. Where a Grantor requests funds be made
available to a specific Gavi programme, this further restriction is maintained. There are currently no
unrestricted or designated funds.
Foreign Currency Remeasurement: Foreign currency transactions are translated into the functional currency
using the exchange rates in effect on the dates on which they occur. Foreign currency denominated assets
and liabilities are translated into the functional currency using the exchange rates in effect on the reporting
date. Exchange gains and losses arising on settled transactions and gains and losses on the translation of
Annual Financial Report 28
foreign currency denominated assets and liabilities are included in fair value gains and losses in the
Statement of Comprehensive Income.
4. CONTRIBUTION REVENUE
Contribution Revenue: Grantors have entered into legally binding obligations (“Grantor pledges”) to make
scheduled grant payments to Gavi over periods of up to 20 years. Gavi has assigned the right to receive these
grant payments to IFFIm in consideration for IFFIm’s agreement to assess for approval programmes presented
to IFFIm by Gavi, and to use its reasonable endeavours to raise funds for such programmes if approved. The
details of the grant obligations entered into by the Grantors are as follows:
Grantor Grant Date Payment Period
Grant Amount,
in Thousands
In Thousands
of US$
1
Commonwealth of Australia 28 March 2011 19 years A$ (AUD)
250,000 181,250
Commonwealth of Australia 3 June 2016 5 years A$ (AUD)
37,500 27,188
Commonwealth of Australia 17 August 2021 8 years A$ (AUD)
86,000 62,350
Total A$ (AUD)
373,500 270,788
Federative Republic of Brazil 10 October 2018 20 years US$ (USD)
20,000 20,000
Republic of France 2 October 2006 15 years
€
(EUR)
372,800 421,972
Republic of France 7 December 2007 19 years
€
(EUR)
867,160 981,538
Republic of France 4 May 2017 5 years
2
€
(EUR)
150,000 169,785
Total
€
(EUR)
1,389,960 1,573,295
Republic of Italy 2 October 2006 20 years
€
(EUR)
473,450 535,898
Republic of Italy 14 November 2011 14 years
€
(EUR)
25,500 28,863
Republic of Italy
3
30 November 2020 1 month
€
(EUR)
5,000 5,660
Republic of Italy 1 December 2020 10 years
€
(EUR)
150,000 169,785
Total
€
(EUR)
653,950 740,206
State of the Netherlands
3
4 May 2017 4 years US$ (USD)
66,667 66,667
State of the Netherlands
3
18 December 2009 7 years
€
(EUR)
80,000 90,552
State of the Netherlands 17 December 2020 10 years
€
(EUR)
250,000 282,975
Total
€
(EUR)
330,000 373,527
Kingdom of Norway
3
2 October 2006 5 years US$ (USD)
27,000 27,000
Kingdom of Norway
3
31 August 2010 10 years Nkr (NOK)
1,500,000 169,950
Kingdom of Norway 15 May 2019 5 years Nkr (NOK) 600,000
67,980
Kingdom of Norway 12 June 2020 10 years Nkr (NOK) 2,000,000
226,600
Kingdom of Norway 18 December 2020 10 years Nkr (NOK) 1,000,000
113,300
Kingdom of Norway 14 July 2021 8 years Nkr (NOK)
4,000,000 453,200
Total
9,100,000 1,031,030
Republic of South Africa 13 March 2007 20 years US$ (USD)
20,000 20,000
Kingdom of Spain 2 October 2006 20 years
€
(EUR)
189,500 214,495
Kingdom of Sweden 2 October 2006 15 years Skr (SEK)
276,150 30,487
Kingdom of Sweden 17 August 2021 8.5 years Skr (SEK)
2,250,000 248,400
Kingdom of Sweden 17 August 2021 9 years Skr (SEK)
250,000 27,600
Total
2,776,150 306,487
United Kingdom 2 October 2006 20 years £ (GBP)
1,380,000 1,859,688
United Kingdom 5 August 2010 19 years £ (GBP)
250,000 336,900
United Kingdom 23 December 2020 9 years £ (GBP)
500,000 673,800
Total
2,130,000 2,870,388
Total cumulative grantor pledges since inception
7,513,883
1
United States dollar equivalent amounts of Grantor pledges at the exchange rates as of 31 December 2021.
2
Corresponds to a payment period from 31 March 2022 to 31 March 2026.
3
These grant obligations were fully paid and were not outstanding as of 31 December 2021.
Annual Financial Report 29
Contribution revenue recognised was comprised of:
Group and Parent Company
In Thousands of US$ 2021 2020
Initial fair value of pledge received from the Commonwealth of Australia 55,867 -
Initial fair value of pledges received from the Republic of Italy - 166,342
Initial fair value of pledge received from the State of the Netherlands - 280,361
Initial fair value of pledges received from the Kingdom of Norway 397,910 290,390
Initial fair value of pledges received from the Kingdom of Sweden 266,007 -
Initial fair value of pledge received from the United Kingdom - 610,210
Total contribution revenue 719,784 1,347,303
Donated Services: IFFIm received donated administrative services from Gavi in 2021 and 2020. The services
donated by Gavi were valued by using a comprehensive cost allocation model to calculate a single
administrative support amount. The following donated services were recorded as both income and expense
and valued at an amount equal to the cost incurred by Gavi:
Group and Parent Company
In Thousands of US$ 2021 2020
Administrative support 942 911
Total donated services 942 911
5. INVESTMENT AND INTEREST INCOME
Group and Parent Company
In Thousands of US$ 2021 2020
Income from funds held in trust 667 4,479
Total investment and interest income 667 4,479
6. TOTAL EXPENDITURE
Group and Parent Company
In Thousands of US$ 2021 2020
Expenditure on raising funds
Treasury manager’s fees:
Financial operations management 2,255 2,104
Finance charges:
Bond interest expense 7,885 4,141
Other financing charges 2,134 559
Total finance charges 10,019 4,700
Total expenditure on raising funds 12,274 6,804
Expenditure on charitable activities
Country-specific programmes:
New and underused vaccines 334,400 -
Investment cases:
Vaccine research and development (3,922) 210,365
COVAX 1,119,000 -
Professional services:
Consultancy fees 269 276
Gavi administrative support fee 942 911
Legal fees 660 507
Tax compliance services 16 16
Auditor’s remuneration:
Statutory audit 475 352
Other governance costs:
Trustees’ indemnity insurance premiums 9 9
Trustees’ meeting and travel expenses - 35
Total expenditure on charitable activities 1,451,849 212,471
Administrative and Financial Management Support: Pursuant to the Finance Framework Agreement entered
into among IFFIm, the Grantors, the World Bank, and Gavi, IFFIm has no employees. IFFIm outsources all
administrative support to Gavi, and outsources its treasury function, together with certain accounting and
Annual Financial Report 30
financial reporting support, to the World Bank.
Auditor’s Remuneration: Statutory audit expenses relate to the audit of financial information included in
these financial statements and in the special purpose reporting package prepared by the World Bank in its
capacity as IFFIm’s treasury manager. Other financing charges include fees of US$ 57 thousand and US$ 162
thousand that were due to IFFIm’s auditor in 2021 and 2020, respectively, for services related to IFFIm’s bond
issuances.
Trustees’ Expenses: IFFIm’s trustees are not remunerated. They are, however, reimbursed for expenses they
incur in attending meetings and performing other functions directly related to their duties as trustees. IFFIm
also incurs professional indemnity insurance premium expenses for the trustees. IFFIm had eight and six
trustees as of 31 December 2021 and 2020, respectively.
7. FAIR VALUE GAINS AND LOSSES
Group and Parent Company
In Thousands of US$ 2021 2020
Fair value gains (losses) on bonds and bond swaps
Fair value gains (losses) on bonds 30,541 (33,450)
Net fair value (losses) gains on bond swaps (18,896) 1,172
Net fair value gains (losses) on bonds and bond swaps 11,645 (32,278)
Fair value gains (losses) on pledges and pledge swaps
Fair value (losses) gains on sovereign pledges (125,648) 213,574
Net fair value gains (losses) on pledge swaps 179,678 (139,078)
Net fair value gains on pledges and pledge swaps 54,030 74,496
Other foreign exchange (losses) gains (1,393) 2,707
Net fair value gains on pledges, bonds, and swaps 64,282 44,925
In 2021, fair value gains on sovereign pledges include fair value movements of US$ 71 million (2020: US$ 33
million) attributable to the GPC Fair Value Adjustment.
8. SOVEREIGN PLEDGES
IFFIm’s sovereign pledges represent grants from the Grantors. These legally binding payment obligations are
irrevocable by the Grantors and are paid in instalments according to predetermined fixed payment schedules.
The total amounts paid by the Grantors to IFFIm are impacted by the GPC. See Note 18 for further details.
Sovereign pledges, like contribution revenue, are recognised upon assignment of the Grantor contributions
to IFFIm by Gavi. Fair value adjustments due to changes in interest rates, the GPC, including when Grantors
choose to make grant payments in full without applying any GPC reduction, discounting, and exchange rates
are recognised from inception until year end.
Sovereign pledges were comprised of:
Group and Parent Company
In Thousands of US$
Year Ended
31 December
2021
Year Ended
31 December
2020
Year Ended
31 December
2019
Balance as of the beginning of the year 3,285,785 2,073,836 2,250,485
Initial fair value of pledges 719,784 1,347,303 59,150
Payments received from donors (443,356) (348,928) (331,119)
Fair value (losses) gains (125,648) 213,574 95,320
Balance as of the end of the year 3,436,565 3,285,785 2,073,836
Comprised of:
Sovereign pledges due within one year 554,564 404,840 328,381
Sovereign pledges due after more than one year 2,882,001 2,880,945 1,745,455
Total sovereign pledges 3,436,565 3,285,785 2,073,836
Note 10 provides details on fair value gains from interest rate and currency swaps that were recognised
related to the sovereign pledges due.
Annual Financial Report 31
9. FUNDS HELD IN TRUST
The World Bank maintains a single investment portfolio (the “Pool”) for IFFIm and other trust funds it
administers. The World Bank maintains the Pool’s assets separate and apart from the funds owned by the
World Bank Group. Funds held in trust represent cash, money market instruments, government and agency
obligations, asset-backed securities and corporate securities (together “Liquid Assets”) that are managed by
the World Bank.
The Pool is divided into sub-portfolios to which allocations were made based on fund specific investment
horizons, risk tolerances and other eligibility requirements set by the World Bank. Under an investment
strategy approved by IFFIm’s trustees, IFFIm’s Liquid Assets were invested in high-grade fixed-income
instruments with interest rate sensitivity matching that of the liabilities funding the portfolio.
Group and Parent Company
In Thousands of US$
As o
f
31 December
2021
As of
31 December
2020
As of
1 January
2020
IFFIm’s share in the Pool’s fair value 603,383 478,455 427,925
The Pool’s fair value is based on market quotations. Gains, losses, and investment income are recognised in
the year in which they occurred and are allocated to IFFIm on a daily basis. These net gains totalled US$ 0.7
million and US$ 4 million for the years ended 31 December 2021 and 2020, respectively, and were reported
as investment income in the Consolidated Statement of Comprehensive Income.
10. DERIVATIVE FINANCIAL INSTRUMENTS
IFFIm entered into interest rate and currency swaps that economically hedged certain risks as discussed
below.
For financial reporting purposes, IFFIm elected not to define any qualifying hedge relationships as defined
by IFRS 9. All derivatives were valued at fair value recognising the resulting gains and losses in the
Consolidated Statement of Comprehensive Income during the year in which they occur. IFFIm applies
overnight indexed swap discounting rates to value its interest rate and currency swaps for the major
currencies. IFFIm includes a credit valuation adjustment and a debit valuation adjustment in the valuation of
its derivative portfolio to account for counterparty credit risk and its own credit risk, respectively. These
adjustments are determined by applying counterparty and own probabilities of default, based on the
respective credit default swap spreads, to the market value of the derivative portfolio. The debit valuation
adjustment is calculated based on the threshold amount, above which the World Bank, as a counterparty on
IFFIm’s interest rate and currency swap contracts, has a right to call for collateral.
The World Bank, as IFFIm’s treasury manager, executed a comprehensive swap programme to mitigate
IFFIm’s exposure to movements in foreign currency and interest rates. IFFIm’s swap contracts under the
comprehensive swap programme were executed: (1) using the market exchange and interest rates at the
time the swap contracts were written, (2) considering the different payment profiles in different grant
currencies and, (3) assuming that the reduction amounts due to the GPC will remain at the levels they were
as of the time the swap contracts were written, (4) assuming no Grantor defaults.
At issuance, IFFIm’s fixed rate bond obligations have been swapped simultaneously on a back-to-back basis
into United States dollar 3-month LIBOR, floating-rate liabilities.
As described in Note 16, IFFIm maintains a minimum liquidity equivalent to its cumulative contracted debt
service payments for the next 12 months.
Annual Financial Report 32
The notional amounts and fair values of the interest rate and currency swaps were:
Group and Parent Company
In Thousands of US$
31 December 2021 31 December 2020 1 January 2020
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Currency and interest rate swaps
receivable related to sovereign
pledges 1,445,709 150,589 331,271 79,391 22,113 2,105
Total currency and interest rate
swaps receivable 150,589 79,391 2,105
Currency and interest rate swaps
payable related to sovereign
pledges 1,076,671 (254,632) 2,384,053 (429,821) 1,935,048 (440,802)
Currency and interest rate swaps
payable related to bonds payable 1,633,772 (91,983) 626,907 (56,795) 174,679 (80,574)
Total currency and interest rate
swaps payable (346,615) (486,616) (521,376)
Total fair value of interest rate and
currency swaps (196,026) (407,225) (519,271)
Comprised of:
Net currency and interest rate
swaps payable within one year (1,743) (5,638)
(25,981)
Net currency and interest rate
swaps payable after more than one
year (194,283) (401,587)
(493,290)
The above US$ 196 million net liability on swaps is comprised of an amount of US$ 216 million due to the
World Bank and an amount of US$ 20 million due from the Toronto-Dominion Bank, which are the
counterparties on IFFIm’s currency and interest rate swap contracts. The World Bank has the right to call for
collateral, above a specified threshold amount, to protect against its exposure on IFFIm’s derivative positions
under the terms of a Credit Support Annex (“CSA”) to the ISDA Agreement between IFFIm and the World
Bank. The World Bank has not exercised this right and has confirmed that it will not call collateral over at
least 12 months from the date of approval of these financial statements. Note 16 describes measures in place
to mitigate the risk that the World Bank may call collateral. IFFIm is not required to post any collateral to
the Toronto-Dominion Bank. IFFIm has the right to call for collateral, above a specified threshold amount,
to protect against its exposure on derivative positions under the terms of a Credit Support Annex (“CSA”) to
the ISDA Agreement between IFFIm and the Toronto-Dominion Bank.
As of 31 December 2021, derivative financial instruments included the effects of a swap re-couponing
transaction in the amount of US$ 200 million, which was executed in May 2020 between IFFIm and the World
Bank, as a counterparty on IFFIm’s swap contracts. The transaction, which reduced the World Bank’s
derivative exposure, amended certain swap contracts between IFFIm and the World Bank by modifying their
cash flows such that IFFIm made an additional payment of US$ 200 million to the World Bank in May 2020
and the World Bank will make scheduled repayments to IFFIm in 2023, 2024, and 2025 totalling US$ 200
million with interest. IFFIm evaluated the transaction and determined that it resulted in a hybrid financial
instrument comprised of the amended swap contracts as an embedded derivative and the modified cash
flows corresponding to a separate financial instrument as the host. As permitted by IFRS 9, IFFIm elected to
designate the entire hybrid instrument as a financial liability at fair value through profit or loss. As both
components of the hybrid instrument have closely related economic characteristics and risks, they are not
separated in IFFIm’s financial statements and are reported as part of derivative financial instruments as the
principal cash flows are primarily related to the embedded derivative component.
Annual Financial Report 33
11. BONDS PAYABLE
IFFIm issues bonds on worldwide capital markets to meet IFFIm’s primary objective of funding Gavi’s
immunisation, vaccine procurement, and HSS programmes. IFFIm’s outstanding bonds payable were:
Group and Parent Company
In Thousands of US$
Issue Date
Maturity Date
Coupon
Interest Rate
Nominal
Amount
In Thousands
Fair Value
as o
f
31 December
2021
Fair Value
as o
f
31 December
2020
Fair Value
as of
1 January
2020
24 June 2009 24 June 2024 0.50% R (ZAR) 800,000 43,857 47,051 42,608
28 June 2010 29 June 2020 0.50% R (ZAR)
430,000
- - 29,733
28 June 2012 29 June 2027 0.50% R (ZAR) 520,000 23,108 25,097 21,803
16 November
2017
16 November
2020 Libor+13bps US$ (USD)
300,000
- - 301,488
9 April 2019 9 April 2022 Libor+4bps US$ (USD) 50,000 50,037 50,061 50,118
18 July
2019
15 March
2025 0.00% kr (NOK) 480,000
1
53,080 69,412 64,051
7 July 2020 5 April 2030 0.00% kr (NOK) 1,800,000
2
189,075 223,328 -
6 November
2020
6 November
2023 0.38% US$ (USD) 500,000 496,403 501,378 -
21 April 2021 21 April 2026 1.00% US$ (USD) 750,000 741,861 - -
26 November
2021 21 April 2026 1.00% US$ (USD) 250,000 247,287 - -
Total bonds payable 1,844,708 916,327 509,801
Comprised of:
Bonds payable falling due within one year 98,486 39,966 331,467
Bonds payable falling due after more than one year 1,746,222 876,361 178,334
1
This is an amortising bond. The kr (NOK) 480 million nominal amount shown in the table above is as of 31
December 2021. The nominal amount as of 31 December 2020 and 1 January 2020 was an amount of kr
(NOK) 600 million.
2
This is an amortising bond. The kr (NOK) 1.8 billion nominal amount shown in the table above is as of 31
December 2021. The nominal amount as of 31 December 2020 was an amount of kr (NOK) 2 billion.
Total bonds payable by the parent company included a nominal amount due to IFFImSC III of US$ 50 million
as of 31 December 2021, 2020, and 2019.
12. GRANTS PAYABLE
The table below shows changes in grants payable during the period:
Group and Parent Company
In Thousands of US$
Year Ended
31 December
2021
Year Ended
31 December
2020
Year Ended
31 December
2019
Grants payable as of the beginning of the year 160,987 357,064 457,064
Grant approvals during the year 1,449,478 210,365 215,700
Grant payments during the year (1,214,400) (406,442) (315,700)
Grants payable as of the end of the year 396,065 160,987 357,064
Comprised of:
Grants payable within one year 396,065 160,987 200,000
Grants payable after more than one year - - 157,064
Annual Financial Report 34
13. CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
The table below shows the carrying amount of each category of IFFIm’s financial assets and liabilities:
Group and Parent Company
In Thousands of US$
As o
f
31 December
2021
As of
31 December
2020
As o
f
1 January
2020
Financial assets:
Mandatorily measured at fair value through profit or loss:
Sovereign pledges 3,436,565 3,285,785 2,073,836
Funds held in trust 603,383 478,455 427,925
Derivative assets 150,589 79,391 2,105
Cash 11,677 13,906 15
Financial liabilities:
Designated as at fair value through profit or loss upon initial recognition:
Bonds payable (1,844,708) (916,327) (509,801)
Derivative liabilities (346,615) (486,616) (521,376)
Measured at amortised cost:
Grants payable (396,065) (160,987) (357,064)
The table below shows the net fair value gains or losses on each category of IFFIm’s financial assets and
liabilities:
Group and Parent Company
In Thousands of US$
Year Ended
31 December
2021
Year Ended
31 December
2020
Net gains (losses) on financial assets mandatorily measured at fair value through profit
or loss:
Fair value (losses) gains on sovereign pledges (125,648) 213,574
Income from funds held in trust 667 4,479
Fair value (losses) gains on derivative assets
1
(61,296) 12,130
Other foreign exchange (losses) gains (1,393) 2,707
Net gains (losses) on financial liabilities designated as at fair value through profit or loss
upon initial recognition:
Fair value gains (losses) on bonds 30,541 (33,450)
Fair value gains (losses) on derivative liabilities
1
222,078
(150,036)
1
Fair value gains (losses) on derivative assets and liabilities are derived by prorating the net gains (losses) on derivative
financial instruments in proportion to the averages of derivative assets and liabilities during the year.
There were no gains or losses on grants payable.
Annual Financial Report 35
14. MOVEMENT OF FUNDS
Group and Parent Company
In Thousands of US$
As of 31
December 2020
Incoming
Resources
Resources
Expended
As of 31
December 2021
Sovereign pledges assigned from Gavi 5,066,656 719,784 (1,429) 5,785,011
Investment and interest income 147,479 667 - 148,146
Other gains (losses) and other income
(expenses) 587,286 64,282 (12,274) 639,294
Donated services:
Administrative support - 942 (942) -
Programme funding to Gavi:
Country-specific programmes (2,491,058) - (334,400) (2,825,458)
Yellow fever stockpile investment case (57,140) - - (57,140)
Polio eradication investment case (191,280) - - (191,280)
Measles mortality reduction investment
case (139,000) - - (139,000)
Maternal and neonatal tetanus investment
case (61,620) - - (61,620)
Pentavalent payment guarantee (181,050) - - (181,050)
Yellow fever continuation investment case (43,881) - - (43,881)
Meningitis eradication investment case (67,719) - - (67,719)
Vaccine research and development (276,065) 3,922 - (272,143)
COVAX - - (1,119,000) (1,119,000)
Total restricted funds 2,292,608 789,597 (1,468,045) 1,614,160
Group and Parent Company
In Thousands of US$
As of 31
December 2019
Incoming
Resources
Resources
Expended
As of 31
December 2020
Sovereign pledges assigned from Gavi 3,720,548 1,347,303 (1,195) 5,066,656
Investment and interest income 143,000 4,479 - 147,479
Other gains (losses) and other income
(expenses) 549,165 44,925 (6,804) 587,286
Donated services:
Administrative support - 911 (911) -
Programme funding to Gavi:
Country-specific programmes (2,491,058) - - (2,491,058)
Yellow fever stockpile investment case (57,140) - - (57,140)
Polio eradication investment case (191,280) - - (191,280)
Measles mortality reduction investment
case (139,000) - - (139,000)
Maternal and neonatal tetanus investment
case (61,620) - - (61,620)
Pentavalent payment guarantee (181,050) - - (181,050)
Yellow fever continuation investment case (43,881) - - (43,881)
Meningitis eradication investment case (67,719) - - (67,719)
Vaccine research and development (65,700) - (210,365) (276,065)
Total restricted funds 1,114,265 1,397,618 (219,275) 2,292,608
In 2021, IFFIm received new sovereign pledges from the Commonwealth of Australia, the Kingdom of
Norway, and the Kingdom of Sweden in amounts totalling A$ 86 million, kr (NOK) 4 billion, and kr (SEK) 2.5
billion, respectively, with initial recorded fair values totalling US$ 720 million. The new pledges were made
to IFFIm to support programme funding to Gavi encompassing its core programmes and the COVAX Advance
Market Commitment, Gavi’s innovative financial mechanism through which the world’s low-income
countries get access to COVID-19 vaccines. In 2021, IFFIm issued indicative funding confirmations totalling
US$ 1,449 million.
Annual Financial Report 36
15. CREDIT RISK
Credit risk is the risk that IFFIm may suffer financial loss should the Grantors, market counterparties or
implementing countries fail to fulfil their contractual obligations. Implementing countries are the eligible
developing countries where Gavi programmes, including those funded by IFFIm, are implemented. The
carrying amounts of financial assets represent IFFIm’s maximum credit exposures. These maximum exposures
were:
Group and Parent Company
In Thousands of US$
As o
f
31 December
2021
As of
31 December
2020
As o
f
1 January
2020
Sovereign pledges 3,436,565 3,285,785 2,073,836
Cash and investments 615,060 492,361 427,940
Total credit exposure 4,051,625 3,778,146 2,501,776
IFFIm’s derivative assets are excluded from its credit exposure as they would be netted against its derivative
liabilities. As of 31 December 2021, 2020, and 2019, IFFIm had a net liability balance on its interest rate and
currency swap contracts of US$ 196 million, US$ 407 million, and US$ 519 million, respectively. The World
Bank and the Toronto-Dominion Bank, whose credit ratings are AAA and AA-, respectively, serve as
counterparties for IFFIm’s swaps.
Credit Risk Related to Sovereign Pledges: IFFIm was exposed to Grantor credit risk on pledges from its
Grantors. This exposure is detailed by Grantor in Note 4 above. The Grantors were rated between BB- and
AAA as of 31 December 2021.
The Grantors’ credit ratings, as determined by Standard and Poor’s Ratings Service (“S&P”), were:
Grantor
As o
f
31 December
2021
As of
31 December
2020
As o
f
1 January
2020
Commonwealth of Australia AAA AAA AAA
Federative Republic of Brazil BB- BB- BB-
Republic of France AA AA AA
Republic of Italy BBB BBB BBB
State of the Netherlands AAA AAA AAA
Kingdom of Norway AAA AAA AAA
Republic of South Africa BB- BB- BB+
Kingdom of Spain A A A
Kingdom of Sweden AAA AAA AAA
United Kingdom AA AA AA
IFFIm was also indirectly exposed to implementing country credit risk embodied in the GPC. IFFIm took this
risk into account when determining the fair value of sovereign pledges. See Note 18 for details.
Credit Risk Related to Cash and Investments: To manage credit risk related to investments, the World Bank
invests in highly rated Liquid Assets. The World Bank was limited to investments with the following minimum
credit ratings at the time of purchase:
• Investments in money market instruments were limited to instruments issued or guaranteed by financial
institutions whose senior debt securities were rated at least A- by the major rating agencies.
• Investments in government and agency obligations were limited to obligations issued or unconditionally
guaranteed by government agencies rated at least AA- by the major rating agencies if denominated in a
currency other than the issuers’ home currencies. Obligations denominated in issuers’ home currencies
required no rating. Obligations issued by an agency or instrumentality of a government, a multilateral
organisation or any other official entity required a minimum credit rating of AA-.
• Investments in asset-backed securities and corporate securities were limited to securities with a minimum
rating of AAA.
In order to achieve greater diversification of portfolio risks and generate value, the World Bank has made
investments in the short-term domestic debt of new sovereign markets offering potential to generate excess
yields over LIBOR, mainly from currency basis arbitrage. Investments in these sovereign markets are subject
to specific approvals from the financial governing committees of the World Bank and prudent credit limits.
Annual Financial Report 37
IFFIm’s investments in money market instruments, government and agency obligations, asset-backed
securities and corporate securities had the following credit ratings:
Group and Parent Company
In Thousands of US$
As o
f
31 December
2021
As of
31 December
2020
As o
f
1 January
2020
Instruments and securities rated AAA 88,527 226,333 166,060
Instruments and securities rated AA+ 105 7,044 3,975
Instruments and securities rated AA 136,943 37,391 73,685
Instruments and securities rated AA- 157,711 6,841 38,895
Instruments and securities rated A+ 122,880 197,359 128,922
Instruments and securities rated A 97,144 3,299 8,666
Instruments and securities rated A- - 188 7,722
Instruments and securities rated BBB 13 - -
Instruments and securities with no rating 60 - -
Total funds held in trust 603,383 478,455 427,925
Cash, receivables, and payables included in IFFIm’s funds held in trust are reported in the AAA category as
they are held by the World Bank, which is an AAA credit-rated institution.
IFFIm’s credit ratings by Fitch Ratings, Moody’s Investor Service, and Standard and Poor’s Ratings Service
(“S&P”) remained unchanged at AA-, Aa1, and AA, respectively, during 2021. The IFFIm board, working with
the World Bank, has put in place measures to manage credit risk.
16. LIQUIDITY RISK
Liquidity risk is the risk that IFFIm may be unable to meet its obligations, when they fall due, because of a
sudden, and potentially protracted, increase in cash outflows. Under its liquidity policy, IFFIm seeks to
maintain an adequate level of liquidity to meet its operational requirements, provide predictability of
programme funding and support its credit rating. Taking these factors into account, IFFIm maintains a
minimum liquidity equivalent to its cumulative contracted debt service payments for the next 12 months.
This minimum liquidity level is recalculated and reset on a quarterly basis. As of 31 December 2021, the
calculated minimum liquidity was US$ 99 million and the value of IFFIm’s Liquid Assets was US$ 615 million.
As of 31 December 2020, the calculated minimum liquidity was US$ 40 million and the value of IFFIm’s Liquid
Assets was US$ 492 million. As of 31 December 2019, the calculated minimum liquidity was US$ 338 million
and the value of IFFIm’s Liquid Assets was US$ 428 million.
Based on factors such as the strength of its financial base, its conservative financial policies, and the strong
support of the Grantors, IFFIm’s Global Debt Issuance Programme is rated AA by S&P, AA- by Fitch Ratings,
and Aa1 by Moody’s Investor Service.
To help maintain IFFIm’s credit ratings and ensure the lowest possible cost of funds, bond issuances are
managed against the present value of expected future cash flows from Grantor pledges, in view of the GPC
and other credit factors. To provide comfort to the rating agencies and bond holders that IFFIm will always
be able to service its bonds, IFFIm only raises bonds against a percentage of the present value of Grantor
pledges. The residual, which is still available to IFFIm over time, creates a cushion to protect bond holders
against adverse credit events such as many IFFIm-eligible countries falling into protracted arrears to the IMF.
The cushion is a percentage of the present value of Grantor pledges and is established through the Gearing
Ratio Limit (“GRL”) model. The present value of Grantor pledges used in the GRL model is not reduced by
the GPC Fair Value Adjustment, which is described in Note 18.
To mitigate the risk that the World Bank may call collateral, an agreement is in place between the World
Bank and IFFIm to apply an additional buffer to the GRL to manage the World Bank’s exposure under the
derivative transactions between IFFIm and the World Bank (the “Risk Management Buffer”). The Risk
Management Buffer may be adjusted by the World Bank in its sole discretion. As of 31 December 2021 and
2020, the Risk Management Buffer was 0% of the present value of expected future cash flows from Grantor
pledges. The World Bank recalculated and reset the Risk Management Buffer to 0% from the previous value
of 12% following the execution of a swap re-couponing transaction in May 2020 in the amount of US$ 200
million, which reduced the World Bank’s exposure on IFFIm’s derivative positions by the same amount and
enabled the World Bank to intermediate new swaps for IFFIm.
Annual Financial Report 38
The following were the contractual undiscounted maturities of IFFIm’s financial liabilities, including
estimated interest payments:
Group and Parent Company
As of 31 December 2021,
in Thousands of US$
Total Cash
Outflows
Due in Less
than One
Year Due in 2023 Due in 2024
Due from
2025
through
2030
Bonds payable (1,934,496) (98,582) (548,532) (89,808) (1,197,574)
Grants payable to Gavi (396,064) (396,064) - - -
Derivative financial liabilities (451,573) (65,798) (64,651) (111,925) (209,199)
Total undiscounted maturities
(2,782,133) (560,444) (613,183) (201,733) (1,406,773)
Group and Parent Company
As of 31 December 2020,
in Thousands of US$
Total Cash
Outflows
Due in Less
than One
Year Due in 2022 Due in 2023
Due from
2024
through
2030
Bonds payable (953,058) (40,005) (89,948) (539,888) (283,217)
Grants payable to Gavi (160,987) (160,987) - - -
Derivative financial liabilities (539,994) (69,837) (72,665) (67,780) (329,712)
Total undiscounted maturities
(1,654,039) (270,829) (162,613) (607,668) (612,929)
Group and Parent Company
As of 1 January 2020,
in Thousands of US$
Total Cash
Outflows
Due in Less
than One
Year Due in 2021 Due in 2022
Due from
2023
through
2030
Bonds payable (553,066) (337,517) (14,850) (64,456) (136,243)
Grants payable to Gavi (357,064) (200,000) (157,064) - -
Derivative financial liabilities (483,517) (64,026) (50,520) (49,421) (319,550)
Total undiscounted maturities
(1,393,647) (601,543) (222,434) (113,877) (455,793)
As of 31 December 2021, 2020, and 2019, the contractual undiscounted maturities of IFFIm’s derivative
financial liabilities totalling US$ 452 million, US$ 540 million, and US$ 484 million, respectively, were
approximately US$ 105 million higher, US$ 53 million higher, and US$ 37 million lower than their fair values
as of 31 December 2021, 2020, and 2019, respectively, as shown in Note 10.
As of 31 December 2021, 2020, and 2019, the contractual undiscounted maturities of IFFIm’s bonds payable
totalling US$ 1,934 million, US$ 953 million, and US$ 553 million, respectively, were approximately US$ 89
million, US$ 37 million, and US$ 43 million higher than their fair values as of 31 December 2021, 2020, and
2019, respectively, as shown in Note 11.
Annual Financial Report 39
The trustees expect that IFFIm will receive cash inflows over the lives of its derivative financial assets. The
following are the expected undiscounted inflows from derivative financial assets and the expected
undiscounted cash outflows from derivative financial liabilities:
Group and Parent Company
As of 31 December 2021,
in Thousands of US$
Total Cash
Inflows
(Outflows)
Due in Less
than One
Year Due in 2023 Due in 2024
Due from
2025
through
2030
Derivative financial assets
305,793
16,274 20,320 15,228 253,971
Derivative financial liabilities
(451,573)
(65,798) (64,651) (111,925) (209,199)
Net cash outflows
(145,780) (49,524) (44,331) (96,697) 44,772
Group and Parent Company
As of 31 December 2020,
in Thousands of US$
Total Cash
Inflows
(Outflows)
Due in Less
than One
Year Due in 2022 Due in 2023
Due from
2024
through
2030
Derivative financial assets
193,557
6,925 7,272 14,809 164,551
Derivative financial liabilities
(539,994)
(69,837) (72,665) (67,780) (329,712)
Net cash outflows
(346,437) (62,912) (65,393) (52,971) (165,161)
Group and Parent Company
As of 1 January 2020,
in Thousands of US$
Total Cash
Inflows
(Outflows)
Due in Less
than One
Year Due in 2021 Due in 2022
Due from
2023
through
2030
Derivative financial assets
30,549
6,721 5,636 5,943 12,249
Derivative financial liabilities
(483,517)
(64,026) (50,520) (49,421) (319,550)
Net cash outflows
(452,968) (57,305) (44,884) (43,478) (307,301)
17. MARKET RISK
Market risk is the risk that IFFIm’s net assets or deficit for the year, or its ability to meet its objectives, may
be adversely affected by changes in foreign exchange rates and interest rates. IFFIm’s market risk objectives
are: (1) understanding the components of IFFIm’s market risk, (2) controlling IFFIm’s market risk through the
use of currency and interest swaps, and (3) facilitating predictable funding of Gavi programmes within a
controlled and transparent risk management framework.
IFFIm’s market risk is comprised of foreign exchange rate risk and interest rate risk. Each of these is described
further below.
Foreign Exchange Rate Risk: IFFIm was exposed to foreign exchange risks from currency mismatches as well
as timing differences between receipt of Grantor payments, payment of bond obligations, disbursements to
Gavi and issuance of IFFIm bonds. To mitigate these risks, some Grantor pledges were swapped into United
States dollar floating rate assets and, at issuance, some IFFIm bonds payable were swapped into United States
dollar floating rate liabilities.
Annual Financial Report 40
The carrying amounts of IFFIm's foreign currency assets and liabilities, including derivatives, were:
Group and Parent Company
As of 31 December 2021,
In Thousands of US$
Foreign
Currency
Assets
Foreign
Currency
Liabilities
Net
Exposure
Australian dollar 142,881 (85,692) 57,189
British pound 1,246,811 (1,301,533) (54,722)
Euro 1,091,475 (997,673) 93,802
Japanese yen 1 - 1
Norwegian krone 719,817 (337,356) 382,461
New Zealand dollar 1 - 1
Swedish krona 244,252 - 244,252
South African rand 67,515 (66,966) 549
Group and Parent Company
As of 31 December 2020,
In Thousands of US$
Foreign
Currency
Assets
Foreign
Currency
Liabilities
Net
Exposure
Australian dollar 105,777 (106,255) (478)
British pound 1,442,245 (1,544,916) (102,671)
Canadian dollar - (1) (1)
Euro 1,333,339 (963,888) 369,451
Japanese yen 2 - 2
Norwegian krone 399,998 (405,421) (5,423)
New Zealand dollar 1 - 1
Swedish krona 2,114 (2,166) (52)
South African rand 73,069 (72,148) 921
Group and Parent Company
As of 1 January 2020,
In Thousands of US$
Foreign
Currency
Assets
Foreign
Currency
Liabilities
Net
Exposure
Australian dollar 106,260 (101,446) 4,814
Euro 106,183 (11,304) 94,879
British pound 934,360 (977,136) (42,776)
Japanese yen 2 - 2
Norwegian krone 75,574 (80,562) (4,988)
New Zealand dollar 1 - 1
Swedish krona 3,667 (3,797) (130)
South African rand 95,099 (94,143) 956
The following exchange rates applied during the year:
In US$
Average Rate
for the
Year Ended
31 December
2021
Spot Rate
as o
f
31 December
2021
Average Rate
for the
Year Ended
31 December
2020
Spot Rate
as o
f
31 December
2020
Average Rate
for the
Year Ended
31 December
2019
Spot Rate
as of
31 December
2019
Australian dollar 0.7513 0.7250 0.6907 0.7741
0.6953 0.7014
Brazilian real 0.1857 0.1795 0.1960 0.1925
0.2535 0.2488
British pound 1.3757 1.3476 1.2839 1.3649
1.2767 1.3210
Euro 1.1831 1.1319 1.1415 1.2275
1.1196 1.1228
Japanese yen 0.0091 0.0087 0.0094 0.0097
0.0092 0.0092
New Zealand dollar 0.7072 0.6832 0.6507 0.7240
0.6590 0.6740
Norwegian krone 0.1164 0.1133 0.1066 0.1174
0.1136 0.1138
South African rand 0.0677 0.0627 0.0611 0.0681
0.0692 0.0712
Swedish krona 0.1166 0.1104 0.1090 0.1224
0.1057 0.1075
Annual Financial Report 41
Sensitivity to Foreign Exchange Rates: Strengthening and weakening of the United States dollar, against the
above currencies, as of 31 December 2021, 2020, and 2019 would have increased (decreased) IFFIm’s net
assets and surpluses for those years by the amounts shown below. This analysis is based on foreign currency
exchange rate variances that IFFIm considered to be reasonably possible at the end of the year. The analysis
assumes that all other variables, in particular interest rates, remain unchanged:
Increase (Decrease) in
Surplus for the Year Ended
and Net Assets as o
f
31 December 2021
1
Increase (Decrease) in
Surplus for the Year Ended
and Net Assets as o
f
31 December 2020
1
Increase (Decrease) in
Surplus for the Year Ended
and Net Assets as of
31 December 2019
1
Group and Parent Company
In Thousands of US$
10%
Strengthening
of US$
10%
Weakening
of US$
10%
Strengthening
of US$
10%
Weakening
of US$
10%
Strengthening
of US$
10%
Weakening
of US$
Australian dollar
(4,673) 5,712 580 (709) 42 (51)
British pound
5,871 (7,176) 9,614 (11,750) 4,253 (5,198)
Euro
(7,902) 9,658 (33,343) 40,752 (8,409) 10,278
Norwegian krone
(34,776) 42,504 508 (621) 477 (583)
South African rand
(50) 61 (84) 102 (87) 106
Swedish krona
(22,204) 27,138 10 (12) 16 (20)
1
Excludes impact to funds held in trust balances.
Interest Rate Risk: IFFIm was exposed to interest rate risk from differences in the interest rate bases of the
bonds payable and funds held in trust. IFFIm used interest rate swaps to mitigate this exposure. The interest
rate profiles of IFFIm’s interest-bearing financial instruments, including derivatives, with the exception of
funds held in trust, were:
Group and Parent Company
In Thousands of US$
Carrying
Amount
as of
31 December
2021
Carrying
Amount
as of
31 December
2020
Carrying
Amount
as of
1 January
2020
Fixed rate instruments
Financial assets 115,302 78,686 95,099
Financial liabilities (4,279,808) (3,601,360) (2,102,161)
Net fixed rate instruments (4,164,506) (3,522,674) (2,007,062)
Variable rate instruments
Financial assets 2,380,989 2,384,124 1,504,579
Financial liabilities (257,415) (185,630) (527,406)
Net variable rate instruments 2,123,574 2,198,494 977,173
Sensitivity to Interest Rates: Changes of 25 basis points in interest rates as of 31 December 2021, 2020, and
2019 would have increased (decreased) IFFIm’s net assets and surpluses for those years by the amounts shown
below. This analysis assumes that all other variables, in particular foreign currency rates, remain unchanged:
Group and Parent Company
In Thousands of US$
Increase
(Decrease) in
Surplus for the
Year Ended and
Net Assets as o
f
31 December
2021
Increase
(Decrease) in
Surplus for the
Year Ended and
Net Assets as o
f
31 December
2020
Increase
(Decrease) in
Surplus for the
Year Ended and
Net Assets as of
31 December
2019
25 basis point increase (8,509) 1,500 9,951
25 basis point decrease 8,405 (1,785) (9,836)
Interest rate benchmark reform: Specific interest rate benchmarks, including LIBOR, are due to be
discontinued and replaced with alternative benchmark rates which meet new regulatory and market
requirements.
• Exposure to LIBOR: As of 31 December 2021, one of IFFIm’s outstanding bonds, maturing on 9 April 2022,
and its legacy swap contracts reference the United States dollar 3-month LIBOR. The last LIBOR fixing of
the bond took place in January 2022. Therefore, as of the date of this report, IFFIm’s outstanding bonds
have no exposure to LIBOR. Details of IFFIm’s outstanding bonds are included in Note 11 above.
Annual Financial Report 42
In line with IFFIm’s investment management policy and monthly liquidity management needs, IFFIm’s
investments are allocated between operational cash and stable cash (Libor) strategies in the Pool, the
single investment portfolio the World Bank maintains for IFFIm and other trust funds it administers.
Considering the market transition to the Secured Overnight Financing Rate (“SOFR”), a SOFR-
benchmarked investment strategy was established within the Pool at the end of 2021. As new IFFIm
funding becomes linked to SOFR, it is expected that IFFIm’s investment allocations to stable cash will be
directed into the SOFR strategy going forward.
Besides the United States dollar 3-month LIBOR, which is due to be discontinued after 30 June 2023, no
other interest rate benchmarks are currently referenced in IFFIm’s financial instruments.
• LIBOR transition strategy: Only those IFFIm financial positions that have LIBOR fixings after 30 June 2023
need to be transitioned away from LIBOR.
With respect to IFFIm’s legacy swap contracts, the IFFIm board resolved, at its meeting on 3 March 2021,
for IFFIm to adhere to the ISDA 2020 IBOR Fallbacks Protocol (“the Protocol”) as published by the
International Swaps and Derivatives Association, Inc. (“ISDA”) on 23 October 2020. The Protocol, which
came into effect on 25 January 2021, was created to enable parties to Protocol Covered Documents to
amend the terms of each such Protocol Covered Document to incorporate new terms and fallbacks as
provided by the Protocol and the IBOR Fallbacks Supplement. The master agreements and credit support
annexes, governing IFFIm’s legacy swaps with all IFFIm’s swap counterparts, are the relevant Protocol
Covered Documents for IFFIm. On 24 March 2021, an Adherence Letter submitted by IFFIm to the ISDA,
confirming IFFIm’s adherence to the Protocol, was accepted by the ISDA. All IFFIm’s swap counterparties
adhered to the Protocol too. Adherence to the Protocol will allow IFFIm’s legacy swaps to be transitioned
automatically to the SOFR upon the discontinuation of the United States 3-month LIBOR on 30 June 2023.
This is consistent with market practice around the management of LIBOR transition risk. Starting in 2022,
IFFIm plans to hedge any new donor pledges and bond issuances against SOFR whenever possible to avoid
adding to its exposure to LIBOR.
With respect to IFFIm’s investments in the Pool, as the market moved away from LIBOR for new swap
transactions since the beginning of 2022, no new swaps could be executed with counterparties using
LIBOR reference rates unless a transaction was executed to hedge LIBOR liabilities. Therefore, IFFIm’s
Libor strategy within the Pool is being gradually rolled off, with no new swap transactions in 2022 and
with maturity proceeds reinvested only into eligible money market and fixed income instruments, with
the goal of ultimately transferring all maturity proceeds into the SOFR strategy by 30 June 2023.
• Given the pace of the LIBOR transition, the execution of new transactions using SOFR is already a common
market practice and is not expected to be a challenge for IFFIm. IFFIm has considered risks to which it may
be exposed arising from the transition from LIBOR to SOFR:
Interest rate basis risk: All IFFIm’s LIBOR exposure will be transitioned to SOFR after June 2023 through
the ISDA Fallbacks Protocol that IFFIm and its swap counterparties have agreed to. IFFIm’s new
transactions starting in the year 2022 have been and will continue to be executed based on SOFR. This is
the most practical strategy to minimise basis risk from IFFIm’s perspective and is consistent with the LIBOR
transition strategy adopted by the World Bank.
Operational risk: The trade management system that the World Bank uses, in its capacity as IFFIm’s
Treasury Manager, to support trade capture, payments, and settlements has been upgraded to fully
support SOFR transactions and has not encountered any issues.
As of 31 December 2021, IFFIm’s financial positions that need to be transitioned from LIBOR to SOFR are as
follows:
Group and Parent Company
In Thousands of US$
Notional
Amount
Fair
Value
Transition
Progress
Currency and interest rate swaps maturing after 30 June 2023 3,481,181 190,259
To transition via
ISDA Protocol
Annual Financial Report 43
18. FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values of IFFIm’s financial assets and liabilities are equal to their carrying amounts shown in IFFIm’s
statement of financial position.
Fair Value Hierarchy: The table below analyses IFFIm’s financial instruments carried at fair value, by valuation
method. The different levels have been defined as follows:
• Level 1: Financial instruments that were valued using unadjusted prices quoted in active markets for
identical assets and liabilities.
• Level 2: Financial instruments that were valued using inputs, other than quoted prices included with Level
1, which were observable for the asset or liability, either directly or indirectly.
• Level 3: Financial instruments whose valuation incorporated inputs for the asset or liability that were not
based on observable market data.
Group and Parent Company
As of 31 December 2021, in Thousands of US$ Level 1 Level 2 Level 3 Total
Financial assets
Sovereign pledges - - 3,436,565 3,436,565
Funds held in trust - 603,383 - 603,383
Derivative financial instruments - 150,589 - 150,589
Total financial assets - 753,972 3,436,565 4,190,537
Financial liabilities
Bonds payable - 1,844,708 - 1,844,708
Derivative financial instruments - 346,615 - 346,615
Total financial liabilities - 2,191,323 - 2,191,323
Group and Parent Company
As of 31 December 2020, in Thousands of US$ Level 1 Level 2 Level 3 Total
Financial assets
Sovereign pledges - - 3,285,785 3,285,785
Funds held in trust - 478,455 - 478,455
Derivative financial instruments - 79,391 - 79,391
Total financial assets - 557,846 3,285,785 3,843,631
Financial liabilities
Bonds payable - 916,328 - 916,328
Derivative financial instruments - 486,616 - 486,616
Total financial liabilities - 1,402,944 - 1,402,944
As of 1 January 2020, in Thousands of US$ Level 1 Level 2 Level 3 Total
Financial assets
Sovereign pledges - - 2,073,836 2,073,836
Funds held in trust - 427,925 - 427,925
Derivative financial instruments - 2,105 - 2,105
Total financial assets - 430,030 2,073,836 2,503,866
Financial liabilities
Bonds payable - 509,801 - 509,801
Derivative financial instruments - 521,376 - 521,376
Total financial liabilities - 1,031,177 - 1,031,177
Annual Financial Report 44
The changes in the aggregate fair value of IFFIm’s Level 3 financial assets and liabilities were:
Group and Parent Company
In Thousands of US$ 2021 2020 2019
Balance as of the beginning of the year 3,285,785 2,073,836 2,250,485
Initial fair value of pledges 719,784 1,347,303 59,150
Donor payments (443,356) (348,928) (331,119)
Fair value (losses) gains (125,648) 213,574 95,320
Balance as of the end of the year 3,436,565 3,285,785 2,073,836
Total fair value losses on sovereign pledges of US$ 126 million for the year ended 31 December 2021 are
recognised in Net fair value gains on pledges and pledge swaps in the Consolidated Statement of
Comprehensive Income and are comprised of realised gains of US$ 156 million and unrealised losses of US$
282 million.
For its financial assets and liabilities, IFFIm determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation at the end of each reporting period. There were no transfers
between levels in the current or prior year.
The bases for techniques that IFFIm applied in determining the fair values of financial assets and liabilities
are summarised below.
Funds Held in Trust: The World Bank, as treasury manager, maintains IFFIm’s investments on a pooled
accounting basis and the pooled investments are reported at fair value. IFFIm’s share in pooled cash and
investments represents IFFIm’s allocated share of the Pool’s fair value at the end of the year. The fair value
is based on market quotations where available. If quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments. The corresponding proportionate interest income
and investment gains or losses are recognised by IFFIm in the year in which they occur.
Sovereign Pledges Receivable: Fair values are estimated using a discounted cash flow method. Each cash flow
is reduced by an estimated reduction amount due to the GPC (the “GPC Fair Value Adjustment”), except
when a Grantor irrevocably commits to make grant payments in full without applying any reduction due to
the GPC, and the reduced cash flows are discounted to present value using observable Grantor-specific
interest rates.
The GPC allows the Grantors to reduce their payments if an IFFIm-eligible country falls into protracted arrears
on its obligations to the International Monetary Fund (the “IMF”). Each implementing country has been
ascribed a weight in a reference portfolio that will remain static for the life of IFFIm. Grantors reduce the
amounts they pay IFFIm by the aggregate percentage weights of countries that are in protracted arrears to
the IMF. When countries clear their arrears to the IMF, future amounts payable by Grantors to IFFIm are
increased by the respective weights of those clearing countries. The reference portfolio comprises 70
predetermined IFFIm-eligible countries. Each implementing country has been given a weighting of either
0.5%, 1%, 3% or 5%, totalling of 100%, as shown in the table below. The amount of each Grantor payment
is determined 25 business days prior to the due date of such payment.
The reference portfolio as of 31 December 2021 was as follows:
Country
Country
Weighting Total Share
South Sudan, Sudan 0.5% 1%
Afghanistan, Angola, Armenia, Azerbaijan, Benin, Bhutan, Bolivia, Burkina, Faso,
Burundi, Cambodia, Cameroon, Central African Republic, Chad, Comoros, Congo,
Cote d’Ivoire, Djibouti, Eritrea, The Gambia, Georgia, Ghana, Guinea, Guinea-
Bissau, Guyana, Haiti, Honduras, Kenya, Kiribati, Kyrgyzstan, Lao PDR, Lesotho,
Liberia, Madagascar, Malawi, Mali, Mauritania, Moldova, Mongolia, Mozambique,
Myanmar, Nepal, Nicaragua, Niger, Papua New Guinea, Rwanda, Sao Tome &
Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Sri Lanka, Tajikistan,
Tanzania, Timor-Leste, Togo, Uganda, Ukraine, Uzbekistan, Yemen Republic,
Zambia, Zimbabwe
1% 61%
Vietnam 3% 3%
Bangladesh, Democratic Republic of Congo, Ethiopia, India, Indonesia, Nigeria,
Pakistan
5% 35%
The GPC Fair Value Adjustment is calculated using a probabilistic model, which estimates the likelihood and
duration that any implementing country might fall into arrears with the IMF over the life of the Grantor
pledges. This probabilistic model assumes that the performance of the implementing countries since 1981 is
Annual Financial Report 45
a reasonable proxy for their future performance.
The initial GPC Fair Value Adjustment used in October 2006 was 17.6%, and it was 7.40%, 8.72%, and 8.6%
as of 31 December 2021, 2020, and 2019, respectively. 1% decreases in the GPC Fair Value Adjustment as of
31 December 2021, 2020, and 2019 would have resulted in increases in the fair values of sovereign pledges
of US$ 34 million, US$ 33 million, and US$ 23 million, respectively. 1% increases in the GPC Fair Value
Adjustment would have had equal but opposite effects on the fair values of sovereign pledges.
As of 31 December 2021, no reference portfolio country was in protracted arrears to the IMF. Sudan’s arrears
to the IMF were cleared in May 2021.
For the above sovereign pledges as of 31 December 2021, market-based discount rates ranging from 0.0%
to 5.6% were applied, as appropriate, depending on the Grantor, payment schedule and currency of the
grant payments. 1% decreases in the discount rates applied as of 31 December 2021, 2020, and 2019 would
have resulted in increases in the fair values of sovereign pledges of US$ 126 million, US$ 131 million, and US$
71 million, respectively. 1% increases in the discount rates applied as of 31 December 2021, 2020, and 2019
would have resulted in decreases in the fair values of sovereign pledges of US$ 119 million, US$ 124 million,
and US$ 68 million, respectively.
Bonds Payable: The fair values of IFFIm’s bonds payable are determined using a discounted cash flow method,
which relies on market observable inputs such as yield curves, foreign exchange rates, basis spreads and
funding spreads.
As of 31 December 2021, 2020, and 2019, the cumulative change in the fair value of bonds payable that was
attributable to IFFIm’s own credit spreads was an increase of US$ 17.3 million, US$ 12.5 million, and US$ 1.9
million, respectively. During the years ended 31 December 2021, 2020, and 2019, the change in the fair value
of bonds payable that was attributable to IFFIm’s own credit spreads was an increase of US$ 4.8 million, US$
10.6 million, and US$ 0.9 million, respectively. Changes in the fair value of bonds payable due to IFFIm’s own
credit spreads are measured by revaluing each outstanding bond liability to determine the movement in its
fair value arising from changes in IFFIm’s cost of funding relative to the relevant reference rate.
Derivative Financial Instruments: The fair values of derivatives are estimated using a discounted cash flow
method representing the estimated cost of replacing these contracts on that date. All model inputs are based
on readily observable market parameters such as yield curves, foreign exchange rates, and basis spreads.
As of 31 December 2021, 2020, and 2019, the cumulative change in the fair value of derivative financial
instruments that was attributable to changes in credit risk was a net decrease of US$ 0.2 million, US$ 0.6
million, and US$ 0.8 million, respectively. During the years ended 31 December 2021, 2020, and 2019, the
change in the fair value of derivative financial instruments that was attributable to changes in credit risk was
a net increase of US$ 0.4 million, US$ 0.2 million, and US$ 0.9 million, respectively. The methodology used to
determine changes in the fair value of derivative financial instruments due to changes in credit risk is
described in Note 10 to the financial statements.
Changes in the fair values of bonds payable and derivative financial instruments that are attributable to
changes in credit risk are recognised in profit or loss rather than in other comprehensive income, which
would create an accounting mismatch in profit or loss. There is an economic relationship between IFFIm
bonds payable, its sovereign pledges, and the related derivatives. IFFIm raises funds by issuing bonds in the
international capital markets under its Global Debt Issuance Programme and through its involvement in
issues of Sukuk certificates. IFFIm’s borrowings are backed by its sovereign pledges, which are legally binding
funding commitments from its Grantors. IFFIm then disburses the funds to Gavi to support various Gavi
programmes. Through its bond issuances, IFFIm converts long-term government pledges into immediately
available cash resources. IFFIm uses grant payments from the Grantors to pay the principal and interest on
its bonds. Presenting any gains or losses on bonds payable and the related derivatives in other comprehensive
income would create an accounting mismatch given that gains or losses on sovereign pledges are presented
in profit or loss. Therefore, all gains or losses attributable to changes in the credit risk of IFFIm bonds payable
and derivative liabilities are presented in profit or loss, which complies with the requirements of IFRS 9
Financial Instruments.
With respect to cash and grants payable, their carrying amounts, reported in the consolidated financial
statements, are reasonable approximations of their fair values due to their short-term nature.
Annual Financial Report 46
19. NOTES TO THE STATEMENT OF CASH FLOWS
The following table analyses changes in the outstanding bonds payable:
In Thousands of US$ 2021 2020 2019
Bonds payable as of the beginning of the year (916,327) (509,801)
(886,338)
Proceeds from bond issuances (993,141) (698,768)
(115,080)
Redemption of bonds 37,608 325,010
500,000
Fair value gains (losses) on bonds 30,541 (33,450)
(10,924)
Interest expense on bonds (7,885) (4,141)
(20,943)
Interest paid on bonds 5,953 4,822
23,484
Bond issuance costs (1,457) 1
-
Movement in bonds payable during the year (928,381) (406,526)
376,537
Bonds payable as of the end of the year (1,844,708) (916,327)
(509,801)
20. RELATED PARTY TRANSACTIONS
IFFIm’s related parties are:
• Gavi: Gavi is a Swiss foundation that is accorded international institution status in Switzerland with
certain privileges and immunities like those accorded to international intergovernmental organisations.
Gavi is IFFIm’s sole member.
• IFFImSC III: IFFImSC III is a Cayman Islands company with limited liability, which was incorporated on 5
March 2019 under the Companies Law (2013 Revision) of the Cayman Islands with company registration
number 348825. IFFImSC III was established for the sole purpose of issuing sukuk certificates in support
of IFFIm’s operations. These consolidated financial statements include the accounts of IFFImSC III.
Balances due to or from related parties are non-interest bearing and do not have specific terms of repayment.
IFFIm’s related party balances were:
Group and Parent Company
In Thousands of US$
As of
31 December
2021
As o
f
31 December
2020
As of
1 January
2020
Programme grants payable to Gavi 396,065 160,987 357,064
Amounts due to (from) Gavi 284 (11) (111)
IFFIm recorded programme grants to Gavi of US$ 1,449 million, US$ 210 million, and US$ 216 million during
the years ended 31 December 2021, 2020, and 2019, respectively. IFFIm recorded in-kind contributions from
Gavi of US$ 911 thousand, US$ 942 thousand, and US$ 888 thousand during the years ended 31 December
2021, 2020, and 2019, respectively.
21. COMMITMENTS AND CONTINGENCIES
The trustees are not aware of any commitments or contingencies as of 31 December 2021, 2020, or 2019.
22. ACCOUNTING ESTIMATES AND JUDGEMENTS
IFFIm manages its sovereign pledges, funds held in trust, derivative financial instruments, and bonds payable
on a fair value basis. Therefore, these assets and liabilities are measured at fair value on the statement of
financial position. When available, IFFIm generally uses quoted market prices to determine fair value. If
quoted market prices are not available, fair value is determined using internally developed valuation models,
which are often based on the discounted cash flow method and use market parameters such as interest rates
and currency rates.
IFFIm applied the following key accounting estimate in the valuation of its sovereign pledges:
As described in Note 3, certain contribution amounts received from Grantors depend on a Grant Payment
Condition (“GPC”), which allows the Grantors to reduce their payments if an IFFIm-eligible country falls into
protracted arrears on its obligations to the IMF. Therefore, the fair values of IFFIm’s sovereign pledges are
estimated using a discounted cash flow method, which includes the application of an estimated reduction
amount due to the GPC (“GPC Fair Value Adjustment”). The GPC Fair Value Adjustment is calculated using a
probabilistic model, which estimates the likelihood and duration that any implementing country might fall
into arrears with the IMF over the life of the Grantor pledges. See Note 18 for more details on the GPC Fair
Value Adjustment and other estimates applied in determining the fair values of IFFIm’s financial assets and
Annual Financial Report 47
liabilities.
IFFIm made the following critical judgement in the valuation of its derivative portfolio:
As described in Note 10, IFFIm includes a credit valuation adjustment and a debit valuation adjustment in
the valuation of its derivative portfolio to account for counterparty credit risk and its own credit risk,
respectively. The debit valuation adjustment is typically applied to the uncollateralised portion of a derivative
portfolio. However, IFFIm has not posted any collateral as the World Bank has not exercised its right to call
collateral and protect its derivative exposure to IFFIm, as described in Notes 3 and 10 above. After due
consideration, consistent with market practice, IFFIm calculated the debit valuation adjustment based solely
on the uncollateralised portion of its derivative portfolio.
23. CURRENT TAX
IFFIm is a registered United Kingdom charity and, as such, is exempt from United Kingdom taxation of income
and gains falling within s478-489 Corporation Tax Act 2010 and s256 Taxation of Chargeable Gains Act 1992
on its charitable activities. No tax charges arose during the years ended 31 December 2021 or 2020. IFFImSC
III is a Cayman Islands company with limited liability, incorporated under the Companies Law (2013 Revision)
of the Cayman Islands. There are no taxes on income or gains in the Cayman Islands.
24. SUBSEQUENT EVENTS
In February 2022, IFFIm issued a reduction of US$ 144 million to previously approved funding for Gavi’s
COVAX AMC programme and issued a new indicative funding confirmation of US$ 275 million to support
Gavi’s new and underused vaccines programmes.
ln April 2022, IFFlm Sukuk Company III Limited made the final payment of US$ 50 million to the holders of
its certificates.
Considering the conflict between Russia and Ukraine and its global impact on economic activity and financial
markets, management has assessed the potential impact of the conflict on IFFIm’s financial position,
performance, and its ability to continue meeting its obligations. IFFIm’s sovereign pledges are legally binding
contractual obligations, its investments are maintained under a conservative investment strategy, and its
outstanding bonds are mostly fixed rate instruments, which are less susceptible to market volatility. IFFIm
uses swaps to mitigate against interest rate and foreign exchange rate risks, which are the key market risks
to which IFFIm’s sovereign pledges and bonds payable are exposed. There is potential impact to the fair value
of IFFIm’s sovereign pledges, and associated cash flows, with respect to the Grant Payment Condition (“GPC”)
which is a key variable in the valuation of IFFIm’s sovereign pledges. The calculation of the GPC includes
assessments of the risk that IFFIm-eligible recipient countries may fall into arrears to the IMF, which, among
other factors, considers macroeconomic performance and a geopolitical assessment. As of 31 March 2022,
there were no countries in protracted arrears to the IMF. Management has not quantified the potential
impact due to the GPC and will make this assessment as quarterly reporting is completed. Considering all
these factors, management does not expect that IFFIm’s overall financial position and performance will be
significantly impacted by the adverse effects of the conflict and IFFIm has measures in place to ensure it
maintains sufficient liquidity and capacity to meet its obligations as they fall due and continue undertaking
its business activities on an ongoing basis.
Annual Financial Report 48
INDEPENDENT AUDITOR’S REPORT
YEAR ENDED 31 DECEMBER 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE
INTERNATIONAL FINANCE FACILITY FOR IMMUNUSATION COMPANY
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of the International Finance Facility for Immunisation Company (the
‘parent charitable company’ or ‘IFFIm’) and its subsidiaries (the ‘group’):
• give a true and fair view of the state of the group’s and IFFIm’s affairs as at 31 December 2021 and of the
group’s and IFFIm’s total comprehensive loss for the year then ended; and
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
We have audited the financial statements which comprise:
• the consolidated and parent charitable company statement of comprehensive income;
• the consolidated and parent charitable company statements of financial position;
• the consolidated and parent charity company statement of changes in funds;
• the consolidated and parent charity company cash flows; and
• the related notes 1 to 24.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as
adopted by the European Union.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent charitable company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the Financial
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the group and IFFIm for the year are disclosed in note 6 to the financial statements. We confirm
that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the group or the
parent charitable company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was:
• the valuation of sovereign pledges
Materiality The materiality that we used for the group financial statements was $36.5m which
was determined on the basis of 1% of forecasted sovereign pledges held at fair
value.
Scoping As described in note 6 to the consolidated financial statements, IFFIm outsources
all administrative support to the Vaccine Alliance (‘Gavi’) and outsources its
treasury function, together with certain accounting and financial reporting support,
to the International Bank for Reconstruction and Development (the ‘World Bank’)
which is audited by the Deloitte member firm in the US (‘Deloitte US’). As such we
instructed Deloitte US to perform certain procedures on our behalf. As part of this
work Deloitte US performed procedures over the Key Audit Matter set out below in
this report. The work was performed under the direction and supervision of the UK
audit engagement team.
Significant changes in
our approach
For the year ended 31 December 2021 the group implemented IFRS for the first
time and we adapted our approach accordingly.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the trustees’ assessment of the group’s and parent charitable company’s ability to continue
to adopt the going concern basis of accounting included:
• Assessing the reasonableness and testing the numerical accuracy of the cash flow forecasts prepared by
management;
• Challenging and reviewing IFFIm’s stress testing exercise by independently recalculating the results of
the stress test exercise using the worst case scenario assumptions used by IFFIm;
• Assessing the impact of macro-economic uncertainties to the IFFIm-eligible countries by independently
verifying the list of countries with protracted arrears with the International Monetary Fund (‘IMF’) and
published news;
• Obtaining and assessing the confirmation letter that IFFIm has received from the World Bank to not call
collateral for at least 12 months from the date of the approval of the financial statements; and
• Obtaining and assessing the confirmation letter that IFFIm has received from Gavi to be able to defer
grant payments to the extent that this impacts IFFIm’s ability to pay other liabilities that fall due within
the next 12 months from the date of approval of the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's and parent charitable
company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the
relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
5.1. Valuation of sovereign pledges
Key audit matter
description
IFFIm’s asset base consists primarily of sovereign pledges from sovereign
government donors (‘the pledges’). The pledges are used to raise finance to make
payments to support various vaccine procurement and immunisation programmes
of Gavi.
The pledges are recognised as contribution revenue and as receivables upon
assignment of donor contributions to IFFIm by Gavi. They are recognised at fair
value at inception and are subsequently remeasured at fair value.
The fair value of the contribution receivables is determined by calculating the
expected future cashflows, applying a High-Level Financing Condition (‘HLFC’)
haircut and discount factor. The HLFC is also referred to as Grant Payment
Condition (‘GPC’).
Determination of the HLFC fair value adjustment is calculated by World Bank
management using a probabilistic model, which estimates the likelihood and
duration that a country implementing an immunisation programme might fall into
arrears with IMF over the life of the grantor pledges.
As detailed in the summary of critical accounting judgements and estimates in note
22 and the fair value disclosures in note 18 to the consolidated financial
statements, the estimation of the GPC fair value adjustment requires significant
management judgement in particular the likelihood that any implementing country
might fall into arrears with the IMF over the life of the pledges. Therefore, we have
determined that there was a risk of error in or manipulation of this balance.
As at 31 December 2021, the fair value of the sovereign pledges amounted to
US$3.4b (2020: US$3.3b). The fair value movement attributable to the GPC fair
value adjustment in 2021 amounted to $71.0m (2020: $33.0m).
How the scope of our
audit responded to the
key audit matter
To scope our audit and respond to the key audit matter, we have:
• Evaluated the design and implementation, and tested the operating
effectiveness of relevant controls over the historical default experiences
used within the fair value calculations;
• Tested the appropriateness of using the World Bank’s historical default
experience as a proxy for expected defaults to the IMF by analysing the full
population of historical defaults from 1984 to present and testing the
correlation between sovereign defaults to the World Bank and IMF;
• Determined if the World Bank's credit experience is an appropriate proxy
for the IMF, including whether the IMF benefits from the same preferred
creditor status (‘PCS’) as the World Bank, which is an inherent factor in the
World Bank's default experience;
• Tested the inputs to the GPC fair value calculation, e.g., country credit risk
rating, probability of default and loss given default by assessing the
sovereign credit rating process at the World Bank and testing the historical
arrears analysis;
• Recalculated the GPC fair value adjustment percentage;
• Tested the donor discount rate by independently obtaining sovereign yields
for each donor country from Bloomberg as of 31 December 2021 and
recalculating the discount rates and present value of cash flows from the
contribution receivables; and
• Engaged a valuation specialist to perform an independent review of the
calculation of the fair value of sovereign pledges and challenged the
methodology used by management for the fair valuation.
Key observations From the work performed, we concluded that the valuation of sovereign pledges is
appropriate as at 31 December 2021.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Group financial statements Parent company financial statements
Materiality
US$36.5m US$34.7m
Basis for
determining
materiality
We set our materiality based on 1% of forecasted sovereign pledges held at fair value. We
reassessed the materiality at 31 December 2021 and continued to use the same
materiality based on the forecasted figures. The parent charity company materiality was
also determined as 1% of forecasted sovereign pledges but capped at 95% of group
materiality.
Rationale for the
benchmark
applied
IFFIm’s main purpose is to raise funds to support Gavi for its health and immunisation
programmes. These are financed by sovereign pledges and represents the capital of the
bondholders as IFFIm converts these pledges into immediately available cash resources by
issuing bonds in the international capital markets. Therefore, we identified this to be an
appropriate benchmark for materiality.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent charitable company financial
statements
Performance
materiality
70% of group materiality 70% of parent charitable company
materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
- our risk assessment, including our assessment of the group’s overall control
environment; and
- our past experience of the audit, which has indicated a low number of
corrected and uncorrected misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of
US$1.8m, as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
Forecast sovereign
pledges US$3,648m
Group materiality
US$36.5m
Component and parent
materiality range
US$12.8m to US$34.7m
Audit Committee
reporting threshold
US$1.80m
Forecast sovereign
pledges
Group materiality
7. An overview of the scope of our audit
7.1. Identification and scoping of components
We determined that there were two components for the purposes of our audit. The first component related
to the treasury operations of the parent charitable company which are managed in the United States of
America. The parent charitable company accounts for 99.99% of the asset balance and 99.99% of the liabilities
of the group. It includes all treasury related balances managed by the World Bank and this component was
subject to a full scope audit at a component materiality which was lower than the materiality of the financial
statements as a whole. The second component related to one other legal entity, which is a subsidiary
incorporated in the Cayman Islands.
7.2. Working with other auditors
As described in the summary of audit scope section of the auditor’s report, the parent charitable company is
reliant upon treasury management, risk management and accounting services provided by the World Bank. As
such, we instructed Deloitte US to perform certain procedures on our behalf. As part of this work, Deloitte US
performed procedures over the Key Audit Matter set out above in this report and we directed the work
performed by Deloitte US. In discharging this responsibility, we set materiality and the scope of the audit work
and actively engaged in determining the nature, timing and extent of audit procedures. We also held regular
virtual meetings with the Deloitte US team to oversee the component audit. As a result of the travel
restrictions in place due to the COVID-19 pandemic, we reviewed the component audit file remotely and held
regular calls with the component team to discuss the results of their work and resolve any queries.
8. Other information
The other information comprises the information included in the annual report of the trustees, other than the
financial statements and our auditor’s report thereon. The trustees are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of trustees
As explained more fully in the trustees’ responsibilities statement, the trustees are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the trustees determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the trustees are responsible for assessing the group’s and the parent
charitable company’s ability to continue as a going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the trustees either intend to liquidate the
group or the parent charitable company or to cease operations, or have no realistic alternative but to do so.
The directors are responsible for preparing the group financial statements in compliance with the
requirements set out in the European Single Electronic Format Regulatory Technical Standard (‘ESEF RTS’).
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Our responsibility is to assess whether the group financial statements have been prepared, in all material
respects, with the requirements laid down in the ESEF RTS.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the
design of the group’s remuneration policies, key drivers for trustees’ remuneration and trustee
expenses;
• results of our enquiries of management and the audit committee about their own identification and
assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the group’s documentation of their policies
and procedures relating to:
o identifying, evaluating and complying with laws and regulations and whether they were aware of
any instances of non-compliance;
o detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud;
o the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations;
• the matters discussed among the audit engagement team including significant component audit
teams and relevant internal specialists, including valuations, charity and information technology
specialists regarding how and where fraud might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for fraud in the following area: valuation of
sovereign pledges. In common with all audits under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing
on provisions of those laws and regulations that had a direct effect on the determination of material amounts
and disclosures in the financial statements. The key laws and regulations we considered in this context
included the Luxembourg legal regulatory requirements relating to the preparation and presentation of the
financial statements and Luxembourg Transparency Law.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the
financial statements but compliance with which may be fundamental to the group’s ability to operate or to
avoid a material penalty. These included charity law in the UK.
11.2. Audit response to risks identified
As a result of performing the above, we identified valuation of sovereign pledges as a key audit matter related
to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail
and also describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on the
financial statements;
• enquiring of management, the audit committee and external legal counsel concerning actual and
potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and
reviewing correspondence with HMRC and the Charity Commission; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness
of journal entries and other adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members including internal specialists and significant component audit teams, and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by law (Directive 83/349/EEC)
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the management report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the management report has been prepared in accordance with applicable legal requirements.
13. Opinion on other matters prescribed by the European Single Electronic Format
Regulatory Technical Standard
We have checked the compliance of the group financial statements as at 31 December 2021 with relevant
statutory requirements set out in the ESEF RTS that are applicable to the group financial statements.
For the group it relates to:
• group financial statements prepared in a valid xHTML format;
• the XBRL markup of the group financial statements using the core taxonomy and the common rules on
markups specified in the ESEF Regulation.
In our opinion, the group financial statements of the International Finance Facility for Immunisation Company
as at 31 December 2021, identified as 549300ILK2NRULX3HX87-2021-12-31-EN, have been prepared, in all
material respects, in compliance with the requirements laid down in the ESEF RTS.
14. Other matters which we are required to address
14.1. Auditor tenure
Following the recommendation of the audit committee, we were appointed by the Board of Trustees on 4
June 2018 to audit the financial statements for the year ending 31 December 2018 and subsequent financial
periods. The period of total uninterrupted engagement including previous renewals and reappointments of
the firm is 4 years, covering the years ending 31 December 2018 to 31 December 2021.
14.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in
accordance with ISAs (UK).
15. Use of our report
This report is made solely to the company’s members, as a body, in accordance our engagement letter
dated 21 April 2022 and solely for the purpose of compliance with the Luxembourg Transparency Act 2008.
Our audit work has been undertaken so that we might state to the company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Simon Stephens, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom