These funding streams allow financial institutions (often local banks) to on-lend funds to entities for specific purposes. Typically the credit line is extended to the financial institution as a low-interest rate loan by a donor.

Instrument category

International climate finance

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • Depends greatly on the selection of competent and committed financial institutions.
  • A technical assistance component built into the credit line helps lower projects' technical and financial risk.
  • Adequate targeting of customers is needed.
Instrument benefits
  • Provides usually much-needed capital to local financial institutions
  • Allows them to expand into less known sectors, especially if a technical assistance component is added.
Challenges and risks to implementation
  • If there is not adequate monitoring, the funds could be used for alternative purposes.

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