Global Environment Facility

The Global Environment Facility (GEF) is an international partnership organization that provides funding to tackle environmental issues globally. GEF offers performance risk guarantees that are similar to a credit guarantee. The performance guarantee is applied to help compensate project partners if the project fails to deliver expected cost savings (i.e., through energy-efficiency improvements). A performance guarantee lowers the risk of project default and encourages local lenders to provide debt funding at attractive rates for the project.

The instrument can be used for projects that deliver global environmental benefits in one or several of GEF’s areas of work, including biodiversity, climate change, international waters, land degradation, and chemicals and waste management.

GEF recipients are developing countries and countries with economies in transition.

• Size of coverage: funding cap for a typical project is set at USD 15 million.
• Tenor of coverage:
  • Private sector beneficiary: maximum maturity of 20 years.
  • Public sector beneficiary: maximum maturity of 40 or 20 years.

https://www.thegef.org/topics/non-grant-instruments ;

https://www.thegef.org/sites/default/files/council-meeting-documents/EN_GEF.C.55.12_NGI.pdf

The Global Environment Facility (GEF) is an international partnership organization that provides funding to tackle environmental issues globally. GEF offers structured financing as an internal credit enhancement mechanism that layers GEF funding, usually at concessional terms or in a junior position, as part of an overall investment package. The ability of the GEF funding to be junior, and therefore riskier, allows other investors to be senior, providing them with more predictable returns. In the event of a partial default, senior investors would be repaid first, with the GEF and other junior partners potentially receiving no repayments.

The instrument can be used for projects that deliver global environmental benefits in one or several of GEF’s areas of work, including biodiversity, climate change, international waters, land degradation, and chemicals and waste management.

GEF recipients are developing countries and countries with economies in transition.

• Size of coverage: funding cap for a typical project is set at USD 15 million.
• Tenor of coverage:
  • Private sector beneficiary: maximum maturity of 20 years.
  • Public sector beneficiary: maximum maturity of 40 or 20 years.
• Costs:
  • Grace period of 10 years for public sector beneficiaries. Principal repaid in equal annual payments after grace period.
  • Flexible concessional interest rate; 25 per centor 0.75 per cent for public sector beneficiaries.
  • Minimum level of concessionality to avoid displacing other finance.
  • First-loss position if justified.
  • Flexible exit date for equity investments.

https://www.thegef.org/topics/non-grant-instruments ;

https://www.thegef.org/sites/default/files/council-meeting-documents/EN_GEF.C.55.12_NGI.pdf