Concessional financing is offered to the IDB’s most vulnerable member countries. At present Bolivia, Guyana, Honduras and Nicaragua qualify for some form of concessional financing that is provided via blended loans. Haiti benefits exclusively from grants.
Blended loans result from the combination of a Concessional-OC tranche with highly concessional financing terms and a Regular-OC tranche with market-based terms from the Ordinary Capital (OC) that are disbursed pari-passu from a predetermined mix of Concessional-OC and Regular-OC allocation that varies by country based on its debt sustainability.
The introduction of the blended loan approach—after the IDB participated in the largest debt relief initiative for Latin American and Caribbean countries in 2007—allowed it to extend concessional financing for additional years. Blend financing replaced the Fund for Special Operations (FSO) traditional loan as well as the interest subsidies that were provided through the Intermediate Financing Facility (IFF). As a result of the merger of the FSO with the OC, effective January 1st., 2017, Blended loans are entirely financed with OC resources.
For more information about the flexible guarantee instrument for concessional sovereign guaranteed operations, please go to guarantees.