Blended Finance is one of the complementary tools that IFC uses to create markets and bring about development impact. IFC uses a disciplined and targeted approach when it comes to blending concessional donor funds with its own commercial funds by applying the following five principles:
- Economic Rationale for Blended Concessional Finance
Contribution that is beyond what is available, otherwise absent from the market, and should not crowd out the private sector.
- Crowding-in and Minimum Concessionality
Contribute to catalyzing market development and mobilization of private sector resources, with concessionality not greater than necessary.
- Commercial Sustainability
Impact achieved by each operation should aim to be sustainable and contribute towards commercial viability.
- Reinforcing Markets
Addresses market failures effectively and efficiently minimizes the risk of market distortion or crowding
out private finance.
- Promoting High Standards
Promote adherence to high standards, including in areas of corporate governance, environmental impact, integrity, transparency, and disclosure.