The Guidelines on EU Blending Operations Tools and Methods Series, Guidelines n°5. outline the project cycle for EU blending initiatives. Blending refers to the strategic use of a limited EU contribution to mobilise additional financing from partner financial institutions and the private sector, thereby enhancing the development impact of investment projects.
Through blending, EU funding is combined with non-grant resources—such as loans, equity, and guarantees from financial institutions, as well as commercial loans and investments—to generate a leveraged development effect. Within the framework of development cooperation, blending projects aim to contribute meaningfully to sustainable development outcomes.
The four sector reference documents complement the Guidelines on EU blending operations,
The Guidelines provide a comprehensive overview of EU blending operations. They explain the concept and rationale behind blending and offer practical guidance on implementing blending operations throughout the project cycle, supported by numerous examples. The document clearly articulates the specific objectives of the instrument, which include:
The Guidelines can be applied throughout the intervention cycle, starting from the pre-programming phase, whenever the blending instrument is considered appropriate to the specific context. Blending is particularly well suited to projects that offer high potential for development impact but generate a below-market expected rate of return, making them unattractive to public lenders and/or commercial financiers.
In other cases, the actual or perceived risks associated with certain projects may be too significant to attract financing at the required scale. For example, this may include firms adopting innovative energy or resource-efficient technologies, or farmers introducing sustainable agricultural practices—activities that may be deemed too risky due to unproven regulatory frameworks or emerging technologies.
All partners involved in a blending operation have distinct roles and responsibilities throughout the EU blending project cycle, which consists of seven stages. These responsibilities are shared among key stakeholders and clearly illustrated in the Guidelines.
The main stakeholders in blending operations include:
The Guidelines facilitate a comprehensive understanding of the advantages of blending, both from conceptual and operational perspectives. They enable an assessment of the specific benefits for the European Union, including:
The Guidelines offer detailed guidance for each stage of the blending cycle, as well as on cross-cutting issues such as risk analysis, visibility, climate change, and private sector engagement. However, all these elements must be assessed within the specific context of each intervention and require thorough, context-sensitive analysis.
The Guidelines include a range of instruments and tools designed to support both the development and implementation of the blending cycle, while promoting harmonisation across different blending operations. Operational managers will find within the Guidelines key resources such as the Project Application Form and Guidance Note, the Assessment Framework, a sample Delegation Agreement, and various management templates. A list of relevant reference documents is also provided to further support implementation.
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Tips and tricks.
Stage / Theme | Some tips and tricks | Why it matters |
Pre-Programming | Align blending with sector and national priorities early on. | Ensures strategic fit and ownership by partner countries. |
Pre-Programming | Conduct preliminary financial and risk analysis with FIs. | Helps assess viability and relevance of blending at an early stage. |
Programming | Involve EU Delegations, thematic units, and FIs from the start. | Promotes coherence and efficient project formulation. |
Programming | Define clear development objectives and blending rationale. | Facilitates justification of the EU contribution. |
Identification | Use the blending Assessment Framework to guide early project screening. | Ensures alignment with blending eligibility and criteria. |
Identification | Consider potential for financial, non-financial, and policy leverage. | Maximises the impact and value addition of EU support. |
Formulation | Use standardised templates (e.g. Project Application Form, Delegation Agreement). | Promotes harmonisation, reduces errors, and speeds up approval. |
Formulation | Integrate cross-cutting issues: gender, environment, climate, and private sector inclusion. | Enhances sustainability and policy coherence. |
Financing Decision | Engage decision-makers with well-prepared documentation including financial modelling. | Increases likelihood of timely approval and financing commitment. |
Financing Decision | Use visibility guidance to plan communication from the outset. | Ensures EU contribution is properly acknowledged. |
Implementation | Maintain close coordination with FIs and partner country institutions. | Facilitates disbursement and adaptive management. |
Implementation | Apply risk mitigation tools and regularly update risk assessments. | Protects against implementation delays and reputational risk. |
Monitoring and Evaluation | Establish M&E frameworks jointly with FIs using common indicators. | Enhances comparability and tracking of development results. |
Monitoring and Evaluation | Collect lessons learned and feed them into future programming cycles. | Supports learning and continuous improvement of blending practices. |
Private Sector Support | Use blending strategically to de-risk private investment (e.g. first loss, guarantees). | Encourages private sector participation in high-impact, high-risk sectors. |
Private Sector Support | Tailor blending instruments to the maturity and nature of the market (e.g. SMEs vs. large infrastructure). | Increases the effectiveness and absorption capacity of funds. |
Climate/Environment | Integrate climate risk screening and resilience building in early design. | Aligns projects with EU Green Deal and SDG targets. |
Climate/Environment | Use blending to support green finance instruments (e.g. green bonds, energy efficiency credit lines). | Drives innovation and market development for climate action. |
Introduction to blending in Latin America and the Caribbean
Blended finance and financial instruments
INTPA Academy on Blending
Blending in the Water and Sanitation Sector
Fundamentals of blending and budgetary guarantees
General Introduction to EFSD+
For further information, any revision or comment, please contact INTPA-ICM-GUIDE@ec.europa.eu
Published by INTPA.D.4 - Quality and results, evaluation, knowledge management. Last update May 2025