Over the last years, and especially since the Financing for Development conference in Addis Ababa in 2015, there has been a substantial growth in international attention on the role of blended concessional finance to promote private sector participation in developing countries. More concessional resources for blending have become available, which has provided DFIs with enhanced possibilities for development impact. This trend has also made the imperative of working closer together and having a clear common understanding of the principles for engagement even more pertinent.
To help ensure the effective and efficient use of concessional resources in private sector projects, and avoid market distortion or crowding out private capital, the MDB Heads at their October 2016 meeting called for efforts to build on and further strengthen the principles for the use of concessional finance in private sector operations agreed by the DFIs in October 2013. This paper summarizes the findings of the Development Finance Institutions working group on investment concessional finance in private sector operations.