Maximising EU Concessional Finance for Greater Leverage and Impact: An Options Spread

Mikaela Gavas, Samuel Pleeck, Andrew Rogerson, San Bilal and Karim Karaki
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Mikaela Gavas: Managing Director & Senior Policy Fellow, Center for Global Development
Samuel Pleeck: Research Associate, Center for Global Development
Andrew Rogerson: Center for Global Development
San Bilal: Senior Executive & Associate Director, European Centre for Development Policy Management
Karim Karaki: Head of Economic Recovery and Transformation, European Centre for Development Policy Management

No 325, Policy Papers from Center for Global Development

Abstract: Already constrained by the economic aftershocks of COVID-19, the impact of the war in Ukraine, and the food and climate crisis, low-income countries and lower-middle-income countries now face a combination of soaring debt and high interest rates. Confronted with insufficient liquidity to respond to these challenges and unable to access capital markets, they need additional concessional finance, in the form of grants and soft loans. The European Union (EU) already provides concessional finance, but it is not nearly enough to respond to their growing needs. With European budgets under more strain than ever, this paper puts forward the case for finding ways to maximise the overall efficiency and impact of European concessional finance and in doing so, better articulating and combining grants and concessional loans in its support and investment toolbox. To remain relevant and maintain relationships and influence with partner countries–even more in a world characterised by the polycrisis and geopolitical fragmentation–the EU will have to step up its game when it comes to providing more strategic concessional finance. The paper sets out six complementary and non-mutually exclusive options for maximising EU concessional finance with a view to a strategic set of decisions to be made for the next EU Multiannual Financial Framework.

Pages: 25 pages
Date: 2024-03-21
New Economics Papers: this item is included in nep-cfn, nep-cis and nep-eec
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Persistent link: https://EconPapers.repec.org/RePEc:cgd:ppaper:325

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