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Principle 1

Anchor Blended Finance use to a Development Rationale

All development finance interventions, including blended finance activities, are based on the mandate of development finance providers’ to support developing countries in achieving social, economic and environmentally sustainable development.

1A - Use development finance in blended finance as a driver to maximise development outcomes and impact.

The development mandate provides the rationale for deploying development finance through blended finance, as an effective and efficient financing approach towards its policy objectives. Consequently, the SDGs are at the core of how and why official development finance is used in blended finance.

1B - Define development objectives and expected results as the basis for deploying development finance.

Development objectives and expected results should be defined before the deployment of blended finance. They should be mutually agreed and embraced by all parties, as a key basis for the deployment of blended finance. The overarching objective for the use of blended finance is the expansion of sustainable, marketbased solutions for development financing needs.

1C - Demonstrate a commitment to high quality.

High quality in the design and execution of projects financed by development finance, including blended finance, are central to the objective of supporting the development of functioning and effective markets. Blended finance should be based on high corporate governance, environmental and social standards, as well as internationally recognised responsible business conduct instruments, providing an opportunity for commercial partners to acquaint themselves with quality standards in unfamiliar markets.

« Private sector financing will be critical to reaching the 2030 goals. DFIs have recently adopted joint guidance for the use of blended concessional finance in our private sector operations. We also welcome the OECD’s efforts to bring donors and other stakeholders together around policy principles for blended finance. These initiatives will help us make the best use of scarce development finance resources, having more development impact and mobilising more than would otherwise be possible, without getting in the way of the private market. »

NANNO KLEITERP, CHAIRMAN, EUROPEAN DEVELOPMENT FINANCE INSTITUTIONS

This guidance is a collaborative effort. We encourage you to send us your questions and comments at: DCD.BlendedFinance@oecd.org