Approaches to EU Blending Mechanisms for Development Finance

Abstract

The European Union is strongly committed to fulfilling the Aid Effectiveness goals of the Paris Declaration and the Accra Agenda for Action, as well as the European Code of Conduct on Division of Labor in Development Policy. Towards this end, the European Commission, with the participation of many EU member states and European development financiers, has launched new financing instruments aimed at translating these commitments into real action. These instruments are grant and loan blending facilities, which link EU budget grants, member state grants and loans by international, regional and European bilateral financial institutions. This study reviews their performance and presents proposals to improve their operations.

Keywords: EU, aid effectiveness, European code of conduct on division of labour in development policy, European Commission, loan, blending, grants, loans