Expanding local currency lending for capital projects Currency volatility remains another source of fragility in emerging markets. Firms often generate revenues in local currency while carrying debts denominated in hard currency such as dollars or euros. This misalignment exposes them to sudden financing shocks. With public debt in developing markets projected to rise from 70% to 83% by 2030, the strain on sovereign balance sheets is expected to translate into higher-risk premiums for private sector borrowers.42,43 To address this, MDBs are scaling up access to local currency financing alongside foreign currency lending, helping to lower the risk-adjusted cost of capital. While borrowing in hard currency can still be attractive – particularly when revenues are dollar-linked or hedging is affordable – local currency solutions are increasingly important for financial stability. A recent example is the €150 million EFSD+ guarantee agreement, signed in July 2025, by the European Commission, EDFI Management Company and The Currency Exchange Fund (TCX). Known as the EU Market Creation Facility – Pricing Component Plus, the initiative aims to reduce the cost of local currency hedging and is expected to unlock up to €2 billion in local currency financing across EU partner countries.44 By lowering hedging costs and shielding borrowers from exchange rate volatility, such initiatives make it easier to originate loans directly in local currency and to better align cash flows with domestic revenues. Greater transparency on MDB programmes on eligible currencies, tenors and indicative pricing can further strengthen uptake, particularly among SMEs and mid-market firms, which are most vulnerable to currency risk.The World Bank Group, in close collaboration with the Government of Morocco and private investors, supported a €476 million expansion of Tanger Med Port, a strategic logistics hub on the Strait of Gibraltar. The project aimed to modernize operations and double truck capacity, enhancing Morocco’s trade capacity, strengthening export competitiveness and attracting private investment into strategic infrastructure. The financing structure combined €400 million in debt and €76 million in equity from the Tanger Med Port Authority. Key contributions included an IFC loan of up to €150 million, the first sustainability-linked loan in Morocco and among the first in the port sector in emerging markets globally, an IFC- mobilized trust loan of up to €46.9 million under the Managed Co-Lending Portfolio Program, and a €203 million MIGA guaranteed commercial loan from international banks. This integrated approach de-risked the project, catalysed private participation and reinforced collaboration between public and private stakeholders. By aligning public sector leadership, MDB de-risking instruments, and private sector participation, the expansion strengthened Morocco’s role as Europe’s gateway, improved supply chain resilience and embedded long-term sustainability in national trade infrastructure.41CASE STUDY Tanger Med expansion: strengthening Morocco’s position as a global trade hub Resilient Firms and Economies 20

Resilient Firms and Economies 2025