11 FEB '92 10:18 ODA LONDON FAX: 071 917 0219
ASLIN DEVELOPMENT BANK – ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 1990 and 31 December 1989
P.5
OCR-7
:
CONTINUED
NOTE A - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Functional Currencies and Reporting Currency
The currencies of members are functional currencies. The reporting currency is the United States dollar, and the financial statements are expressed in thousands of current United States dollars.
Valuation of Capital Stock
The capital stock is defined in Article 4. paragraph 1 of the Articles of Agreement Establishing the Bank (the Charter) "in
ད་ ད་
effect on 31 January 1966" (the 1966 dollar) and the value of each share is defined as 10.000 1966 dollars. The capitai stock nad historically been translated into the current United States dollar (the Bank s unit of account) on the basis of its par value in terms of goid. From 1973 until 31 March 1978, the rate arrived at on this basis was $1.20635 per 1966 dollar. Since 1 Apru 1978, at which time the Second Amendment to the Articles of Agreement of the International Monetary Fund (IMF) came into effect, currencies no longer have par values in terms of gold. Pending the Bank s selection of the appropriate successor to the 1966 dollar, the capital stock has been valued for purposes of these financial statements in terms of the Special Drawing Right (SDR) at the value in current United States doliers as computed by the IMF, with each share valued at SDR 10,000
As of 31 December 1990, the value of the SDR in terms of the current United States dollar was $1.42266 ($1.31416 - 1989) giving a value for each share of the Bank's capital equivalent to $14.226.60 ($13.141.60 - 1989). However. the Bank could decide to fix the value of each share at $12.063.50 based on the 31 March 1978 par value of the United States dollar in terms of gold.
Translation of Currencies
Assets and liabilities are translated from their functional currencies to the reporting currency generally at the applicable rates of exchange at the end of a reporting period. Income and expense arxams are translated for each semi-monthly period generally at the applicable rates of exchange at the beginning of each period: such practice approximates the application of average rates in effect during the period. Translation adjustments other than those relating to
Notze land amy takings (:0 HIQUINONE uí valne si viny
credited to "Accumulated translation
or losses on Exchange gains
currency
are charged adjustments"
GT
transactions among functional currencies are included in Income Currency swaps made in connection with borrowings are hedged by forward exchange commitments and. accordingly, do not result in any net exchange gain or loss.
Investments
Investment securities are reported at cost or amortized cost. Gains and losses on sales of Investments are measured by the difference between average cost or amortized cost and the net proceeds of sales
Loans
The Bank's loans have been made to or guaranteed by members or their governments, with the exception of loans to the private sector, and have maturities ranging between 10 and 30 years. The Bank requires its borrowers to absorb exchange risks attributable to fluctuations in the value of the currencies which it has disbursed. The Bank has not suffered any loan losses to date and follows a policy of not taking part in debt rescheduling agreements. It is the policy of the Bank to place in non-accrual status all loans made to or guaranteed by a member if principal, interest, or other charges with respect to any such loan are overdue by one year. Interest and other charges on non-accruing loans are included in income only to the extent that payments have actually been received by the Bank.
Thales in 1 1.4, 1006 ska İnmding rasa al tha Rank uime kaamet on a fixed lending rate system under which loans carried interest rates fixed at the time of loan approval for the entire life of the loans. Effective 1 July 1986, the Bank adopted a pool-based variable lending rate system for those loans approved on or after that date plus certain others at the option of the borrowers.
For loans to the private sector, interest is charged at negotiated rates.
Equity Investments
The Bank's equity investments are made in private enterprises located in developing member countries and include the Bank's investment in 1989 of $34,984,000 in Asian Finance and Investment Corporation Ltd. (AFIC).
Equity Investments are reported at cost, net of allowance for possible lessss. Such allewenga in datammined unmuraiki kaend on management's evaluation of potential losses in the equity investments portfolio.
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