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New IMF facility ready to start lending to vulnerable countries

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The International Monetary Fund for Resilience and Sustainability – the lender’s first facility to provide affordable, long-term financing to help countries deal with structural challenges such as climate change and pandemics – is now operational, said its general manager Kristalina Georgieva.

The RST, which has so far received pledges of $37 billion from 13 countries, is now ready to begin lending to low-income and most middle-income countries, she said. said Wednesday.

She expressed her “tremendous gratitude” to Australia, Canada, China, Germany, Japan and Spain, which provided the first round of resource contributions amounting to $20 billion. dollars.

There is “no pause button on the climate crisis”, as the world faces other crises, Ms Georgieva said.

The RST will help countries “maintain long-term economic and financial stability, while catalyzing other public and private financing”, she said.

The IMF’s Executive Board approved the creation of the RST in April to complement the fund’s other lending platforms: the General Resources Account (GRA) and the Poverty Reduction and Growth Trust (PRGT).

The trust offers financing with a 20-year maturity and a 10.5-year grace period. It will support eligible low- and middle-income countries, which represent about three-quarters of IMF membership.

It allows economically stronger IMF members to channel their special drawing rights, or emergency reserves, to help vulnerable countries.

“New contributions are expected to come into effect in early 2023 once countries have completed their national procedures, ensuring that the RST is in a strong position to meet RSF demand. [resilience and sustainability facility] arrangements in the years to come,” Ms. Georgieva said.

“Additional countries are expected to commit over time, and we will continue our fundraising efforts to broaden the pool of contributors and ensure the RST has sufficient resources.”

On the demand side, the confidence has already generated “strong interest” from countries.

“We are already in advanced discussions with a diverse group of countries in their climate policy actions. The IMF is gaining experience with this new instrument throughout this initial phase, and the lessons learned from these cases will benefit the IMF. future to the wider group of eligible countries,” Ms Georgieva said.

“We are also preparing the ground for RST loans to support pandemic preparedness policies, thanks to good cooperation with other international institutions.”

Updated: October 13, 2022, 06:46