Demystifying pre-arranged financing for governments: A stocktake of financial instruments from international financial institutions

The recognition of climate change as an existential threat has triggered the development of a series of new pre-arranged financing (PAF) instruments and related tools and approaches. PAF provides financing that has been approved in advance of a crisis and is released when pre-identified trigger conditions are met. However, many government officials and other stakeholders are currently not yet well equipped to critically evaluate different instruments in this relatively niche, complex and rapidly evolving space. Government officials are often armed with incomplete information and expertise, uncertain which instruments to take up first or how to apply them in combination.

This stocktake intends to inform governments, development partners, and wider civil society about the key features of available sovereign-level instruments and their performance, successes and limitations to date based on clearly defined criteria. The assessment focuses on the main types of internationally supported PAF currently available to governments.