B.39/03: Reports from Board committees, panels and groups

The Board:

  1. Recalls decision B.36/16, which requested the Secretariat to develop, under the guidance of the Investment Committee, a framework that specifically addresses the scope and criteria for local currency financing pilot projects, with particular attention to, inter alia, additionality, direct access entity eligibility, implications to the GCF balance sheet and commitment authority, and cost of all-in concessionality for each project/programme utilizing local currency financing;
  2. Takes note of the progress made by the Investment Committee and the Secretariat in developing a framework addressing the scope and criteria for local currency financing, particularly the focus of the Investment Committee on understanding the GCF’s existing GCF/B.39/19 Page 4 foreign exchange exposure and the range of foreign exchange risk mitigation instruments including hedged and unhedged options;
  3. Also takes note of the need to strengthen the risk management capacity and internal treasury function of the GCF in order to implement a Foreign Exchange Management Framework for its financing to developing countries;
  4. Requests the Secretariat to undertake further analysis and report to the Investment Committee on:
    1. The GCF’s existing foreign exchange exposure in its financing to developing countries;
    2. The risks and costs of different foreign exchange risk mitigation instruments and their likely implications on the design of such instruments, taking into account potential impacts on end beneficiaries of GCF financing, including hedged and unhedged options; and
    3. The progress of strengthening GCF’s risk management regarding foreign exchange exposure; and
  5. Also requests the Secretariat, under the guidance of the Investment Committee, to develop a Foreign Exchange Management Framework for its financing to developing countries, cognizant of the work of the Risk Management Committee on foreign exchange risk and the need to ensure impactful investment across different regions, for consideration by the Board at its forty-first meeting.