Concessional

Concessional refers to terms or conditions that are more generous than those available on the open market. The term is used across finance, taxation, and public policy to describe support or benefits that reduce the net cost to the recipient. Etymologically, it derives from the Latin concessio, meaning a grant or yielding.

In lending, concessional loans carry below-market interest rates, longer repayment periods, and often longer grace periods. They are common in official development assistance and other forms of government or multilateral financing. The borrower’s benefit is measured by the difference between market funding costs and the terms offered, and such loans are described as concessional or non-concessional depending on the degree of subsidy.

In taxation and policy, concessions include tax reliefs, exemptions, deductions, or credits designed to encourage certain activities or support specific groups. Concessional treatment lowers the net cost of an activity for eligible individuals or organizations and can be targeted by income, sector, or purpose.

Concessionality also appears in employee benefits and retirement schemes, where contributions or benefits may be taxed at concessional rates or otherwise aided by favorable terms. In broader policy discussions, concessional terms are weighed against fiscal or financial sustainability, since they involve a cost to funders that must be justified by anticipated social or economic benefits.

Overall, concessional provisions aim to promote development, social objectives, or behavioral change by offering terms more favorable than standard market conditions.