G20–OECD Report Charts Roadmap to Reduce Investment Risk in Development Finance
SDG 17: Partnerships for the Goals | SDG 8: Decent Work & Economic Growth
Institutions: Ministry of Finance (Department of Economic Affairs) | NITI Aayog
The G20–OECD Report on Blended Finance Derisking Measures explains how governments and development banks can use targeted financial tools to attract private investors into projects that deliver public benefits—such as clean energy, healthcare, and infrastructure—without taking on unsustainable risk.
Blended finance combines public and private capital. Public funds take on a share of the risk so that private investors feel more confident investing in low-income or emerging markets. The report identifies several proven ways to do this:
First-loss guarantees—where public partners absorb initial losses if a project underperforms.
Political-risk and credit insurance—to cover losses from instability or non-payment.
Subordinated loans and equity—so that public investors are repaid only after private ones, reducing their risk exposure.
Currency-hedging facilities—to protect investors from exchange-rate fluctuations.
Beyond the financial tools themselves, the report calls for stronger policy and regulatory alignment: clear rules, predictable contracts, transparent reporting, and cooperation between public agencies, banks, and private firms. It also stresses “additionality”—public money should unlock investment that would not otherwise occur, rather than replacing private capital.
The goal is to help countries—especially lower-middle-income and frontier economies—build national derisking toolkits with standard templates and transparent metrics.
For India’s climate, infrastructure, and social-sector needs, blended finance offers a way to stretch limited public budgets. Instruments like partial guarantees or currency-risk funds could encourage institutional investors to back projects in renewable energy, affordable housing, and rural connectivity. The report’s framework could guide both central and state governments in designing scalable models that draw in long-term private finance.
Follow the full report here:
G20–OECD Report on Blended Finance Derisking Measures