A Renewed EU Budget Support Framework to Maximise Leverage and Impact

Bernat Camps-Adrogue, Tay Drummond, Mikaela Gavas, Laura Granito and Jasper Siegfried
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Bernat Camps-Adrogue: Lion’s Head Global Partners
Tay Drummond: Lion’s Head Global Partners
Mikaela Gavas: Center for Global Development
Laura Granito: Center for Global Development
Jasper Siegfried: Lion’s Head Global Partners

No 384, Policy Papers from Center for Global Development

Abstract: Amid mounting pressure on European development budgets, the EU must maximise the effectiveness and impact of its development finance toolkit. Although the European Commission is among the world’s largest providers of budget support, its allocations are not systematically aligned with partner countries’ creditworthiness or debt vulnerabilities. This misalignment undermines efficiency, with grants often concentrated in countries that retain market access rather than those facing constrained fiscal space. The framework is further limited by uneven regional distribution, a bias toward lower-risk environments, and fragmented engagement beyond the EU Neighbourhood. Drawing on a comparative assessment of international best practices and financial modelling of alternative grant–loan configurations, this paper explores how EU budget support can be strengthened to expand financing capacity, enhance development impact, and increase leverage in the run-up to the 2028–2034 Multiannual Financial Framework. It outlines options for optimising the grant–loan mix and estimates the potential gains from a more strategically calibrated financial toolkit.

Pages: 44 pages
Date: 2026-03-09
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Persistent link: https://EconPapers.repec.org/RePEc:cgd:ppaper:384

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