In addition to providing commercial financing, IFC uses complementary tools to crowd in private sector financing that would otherwise not be available to projects with high development impact. One such approach is to blend concessional funds—typically from development partners—alongside IFC’s own commercial funding.
Blended finance uses relatively small amounts of concessional donor funds to mitigate specific investment risks and help rebalance risk-reward profiles of pioneering, high-impact investments so that they have the potential to become commercially viable over time.
IFC uses a disciplined and targeted approach to blended finance governance, including by following five key blended finance principles agreed to by development finance institutions. This strategic use of blended finance allows IFC to use the smallest amount of concessional funding possible to fill financing gaps in areas of strategic importance.
From fiscal year 2010 to 2019, IFC has deployed $1.2 billion of concessional donor funds to support 212 high-impact projects