Amsterdam, December 21, 2022 — The Operational Board of the European Fund for Sustainable Development plus (EFSD+) has approved financial guarantees of EUR 325.75 million in support of The Currency Exchange Fund (TCX). Combined with the existing EU Market Creation Facility of EUR 165 million, this brings the European Commission’s financial contribution to TCX to more than EUR 490 million.

The new financial support for TCX is part of EUR 6.05 billion in financial guarantees that EFSD+ has approved to de-risk activities and leverage private investments in low and low-middle income countries. It allows TCX to significantly increase its capital base and implement the Commission’s policy objective to increase the share of local currency funding in development finance. Today, most development finance lending is still extended in USD, offloading the currency risk to individuals, enterprises and governments in low-income countries. This makes debt in local currency unpredictable and therefore unsustainable.

It will also be utilized to make currency risk protection more affordable, especially for financing to reduce energy poverty. Funded by the guarantee, capacity building focused on currency risk management for sovereign debt management will complement these activities.

TCX has teamed up with KfW, FMO and EDFI MC as implementing partners.

Ruurd Brouwer, CEO, TCX: “In today’s volatile market conditions, it is more important than ever to protect borrowers in the poorest countries from currency risk. Especially now significant investments will go into climate finance. We are very pleased to receive such tremendous support from the European Commission and thank EDFI MC, FMO, and KfW for partnering with us. It is great to see TCX at the heart of Team Europe, increasing sustainable financing and economic growth in low-income countries.”

Please refer to the press release of the European Commission for more information.