2024 Public Sector Perspectives

Dustin Ling Multilateral Development Banks, Public Sector Banking Stephanie von Friedeburg Global Head of DFI Partnerships Santiago Silva Restrepo Public Sector Group, Corporate Banking HowGlobal Development Finance Institutions Can Solve the Local Currency Lending Conundrum G lobal development finance is critical to emerging market countries. But most lending is in foreign currency, creating risks that are hard for borrowers to mitigate. Local currency lending, which is achievable by partnering with global commercial banks for strategic on-lending solutions, offers an efficient andmore effective alternative. The world faces multiple crises. The outlook for economic growth remains tepid, many countries face historically high inflation, and the repercussions of Russia’s invasion of Ukraine continue to ripple through the energy markets. At the same time, the catastrophic impacts of climate change are becoming more evident, with devastating fires in Hawaii, floods in Pakistan, earthquakes in Morocco and record-breaking heatwaves in southern Europe. The need for sustainable development has never been greater. Central banks andministries of finance simply cannot provide the scale of financing needed to address the world’s overlapping crises. Reconstruction costs in Ukraine are likely to be up to $750 billion 1 while the Sustainable Development Goals (SDGs) funding gap is $3.7 trillion, for example. 2 Multilateral development banks (MDBs) and other development financial institutions (DFIs) are at the forefront of addressing these global challenges. They have long occupied a central position in funding and catalyzing investments to facilitate projects in the developing world. Their technical expertise and experience are critical to tackling a wide spectrum of issues, from enhancing government reforms and improving service delivery to advancing infrastructure development and helping to build more sustainable and inclusive economies. Isobelle Lang Public Sector Group, Corporate Banking 1 https://www.reuters.com/world/europe/ukraine-needs-750-bln-recovery-plan-prime-minister-says-2022-07-04/ 2 https://www.unpri.org/sustainable-development-goals/closing-the-funding-gap-the-case-for-esg-incorporation-and-sustainability-outcomes-in- emerging-markets/9430.article Citi Perspectives for the Public Sector 7 Multilateral development banks (MDBs) and other development financial institutions (DFIs) are at the forefront of addressing these global challenges. They have long occupied a central position in funding and catalyzing investments to facilitate projects in the developing world. 6 How Global Development Finance Institutions Can Solve the Local Currency Lending Conundrum