The Executive Board, International Monetary Fund (IMF), yesterday approved the creation of a new Resilience and Sustainability Trust (RST) worth up to $45billion effective May 1.
The Trust aims to help low-income and vulnerable middle-income countries address longer-term structural challenges that pose macroeconomic risks, including climate change and pandemics.
This follows the call by the World Bank Group (WBG), International Monetary Fund (IMF), United Nations World Food Program (WFP), and World Trade Organization (WTO), yesterday calling for urgent action on food security.
Such actions also include policy and financial support to help vulnerable countries mitigate balance of payments pressures and work with all countries to keep trade flows open.
IMF Managing Director, Ms. Kristalina Georgieva, who announced the RST in a statement, stressed the need to focus on critical actions needed to ensure longer-term resilience and sustainability, especially now as the world is confronting consecutive global shocks.
She was quoted as saying: “The RST will amplify the impact of the $650 billion SDR allocation implemented last year by channelling resources from economically stronger members to countries where the needs are greatest.
The aspiration is to build a Trust of at least $45 billion in resources.
“The RST will serve as a third pillar of the IMF’s lending toolkit, in addition to the General Resources Account and the Poverty Reduction and Growth Trust.
“The RST will provide policy support and affordable longer maturity financing – with a 20-year maturity and a 10½ -year grace period – to help build resilience against long-term risks to balance of payments stability.”
The Trust aims to help low-income and vulnerable middle-income countries address longer-term structural challenges that pose macroeconomic risks, including climate change and pandemics.
Georgieva also explained that about three-quarters of the IMF’s country membership will be eligible for RST financing, including low-income members as well as most middle-income countries and all small developing states.
“We have worked extensively with our members and other stakeholders to design the RST, with the goal of balancing the needs of potential contributors and borrowers.
“The reforms supported by the Trust are also intended to catalyze increased financing from the private sector, donors, and other international financial institutions (IFIs),” she added.
She maintained that close collaboration with the World Bank and other IFIs will be critical for the success of the RST.
“Our membership had called on us to enhance our existing lending toolkit to address a growing need for building resilience and sustainability now in order to reduce economic risks in the future. Today, our membership has come together and responded,” she concluded.
