Financing needs in low- and middle-income countries are at all time high as a result of COVID-19 shocks, soaring debts and elevated interest rates.  At the same time, there is increasing pressure on ODA budgets due to weak economic growth in Europe and conflicting priorities (Ukraine, refugees in donor countries). The EU’s concessional finance toolkit is not fit for purpose to respond to these challenges (budget support does not take debt levels into account, highly concessional lending for balance-of-payment issues is limited to the EU neighbourhood and EIB sovereign lending is not on par with other MDBs). As the EU is about to start the negotiations for the next Multiannual Financial Framework, we suggest three policy innovations going forward […]