IFC plays a leadership role among development finance institutions (DFIs) and other multilateral development banks (MBDs) to promote the adoption of the blended finance principles to ensure a strict and disciplined approach to blended concessional finance.

IFC also chairs the DFI Working Group on Blended Concessional Finance, consisting of over 20 DFIs. In 2017 the working group developed a set of guidelines that aim to maximize impact and minimize potential market distortions through the use of concessional resources. This update of principles and guidance for providing blended concessional finance for private sector projects includes guidelines for how to push for commercially viable solutions using minimum concessionality. In addition, it advocates for increased scrutiny of projects proportionate with the underlying risk that concessional resources could lead to market distortion.

The working group has published annual reports since 2017.

DFI Enhanced Blended Concessional Finance Principles for Private Sector Projects

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.