Blending loans and grants for development : An effective mix for the EU ?

Abstract

As an ‘innovative financing’ mechanism, blending can catalyse public and private investment and bring other benefits to leverage EU development cooperation efforts. Financing leveraged through grant aid does not guarantee increased or innovative development impact, e.g. ‘additionality’, and holds several further risks. The potential impact of EU blending can be diluted by targeting too many policy objectives and adopting inadequate mechanisms – close coordination and proper monitoring and evaluation are critical.