Building a Genuine Derisking Policy

This paper analyses derisking in development finance and shows that the failure of the slogan "from billions to trillions" does not condemn the approach, but rather reveals a poorly conceived quantitative ambition. The use of public funds is legitimate only if the investment yields a social return greater than its private return, if the private sector would not have invested on its own, and if no other use of public funds is more effective. Implementing derisking requires genuine public-private engineering: detailed risk analysis, specialist expertise, robust project pipelines and the removal of regulatory barriers that hinder risk-sharing instruments. An effective derisking policy must prioritise additionality, risk assessment and risk management, address criticisms regarding its political legitimacy and the risk of subordinating the collective interest to private interests, promote guarantees in particular, and remain complementary to other development finance instruments.