This working paper authored by the OECD takes stock of the use of guarantees in the blended finance market.
It examines the key benefits, along with the main challenges and barriers to more common deployment of this financial instrument in developing contexts, particularly in least developed countries. The paper also investigates the scope and potential role of guarantees in light of COVID-19 and countries' efforts to rebuild following the pandemic.
The paper concludes with a series of recommendations to influence more ubiquitous use of guarantees by development agencies and public institutions, including better uniformity in their structuring and their inclusion as ODA-eligible instruments.
