2025 Public Sector Perspectives

Citi’s global program for MDB local currency lending To reduce the risks that result from the current landscape of foreign currency- driven development finance, as well as efficiently deploy excess liquidity from its local franchises, Citi has developed and launched an MDB Lending Solution. It underwrites local currency- denominated facilities at scale, creating an opportunity for Citi’s MDB partners to expand their local currency operations in emerging markets. Leveraging the local balance sheets of a global commercial bank like Citi offers the MDBs an attractive alternative for strategic on-lending solutions. While meeting client demand for local currency funding, the Local Currency Lending Solution also helps to develop local economies and contribute to Citi’s trillion-dollar sustainable finance goal. At the same time, it helps Citi to reduce balances resulting from excess client deposits in local branches that are otherwise constrained by capital limits and other local requirements. For example, Citi can reduce risk weighted assets (RWA) across its EM franchises with high sovereign exposure. Given Citi’s physical presence in 95 countries, this presents a significant opportunity to more efficiently manage excess local currency liquidity. Critical benefits for: • MDB/DFIs: — A core component of MDB reform is the introduction of newMDB/DFI products and services to increase private capital mobilization. Key to this is tackling projects’ FX risk. — By leveraging Citi’s global footprint to make local currency available, Citi aims to enhance the private sector’s ability to contribute to development. • Development: — Having a source for local currency beyond bonds, swaps and derivatives will help MDBs meet project needs, manage FX risk and potentially lower breakage costs. — Formalizing a programmatic local currency lending approach has allowed Citi to better meet development finance demands from global and regional MDBs/DFIs which have demonstrated interest in local currency facilities to on-lend to local corporates and financial institutions. While meeting client demand for local currency funding, the Local Currency Lending Solution also helps to develop local economies and contribute to Citi’s trillion-dollar sustainable finance goal . Key program attributes To facilitate the process of matching MDB client demand with Citi’s offering for the purpose of funding specific projects back-to-back or on- lending to local corporate or financial institutions, Citi has formalized two key processes under the Local Currency Lending Program. 1. A currency card to provide indicative capacity and tenors across Citi’s 30+ available currencies. 2. The development of a Local Currency Facility Agreement which contains key commercial local currency borrowing terms that underpin all lending transactions, with MDB- specific terms and conditions included up front with the goal of prioritizing privileges and immunities on all local lending arrangements. Notable features and benefits of the Agreement: • Flexible and customizable loan format, representations and other special borrowing procedures or conditions. • Based on LMA guidelines with bespoke MDB terms and conditions honored. • Affords a streamlined legal process by offering a globally consistent template that will incorporate any local terms or provisions on a country-by-country basis. • Access to Citi counsel with experience of working on lending agreements for MDB clients. • Potential to execute as a Multi- Currency Framework Agreement. Citi Perspectives for the Public Sector 43