IMF Executive Board Adopts New Trust to Help Members Tackle Pandemics and Climate Change
On Wednesday, the Executive Board of the International Monetary Fund approved the creation of a new facility to help low-income and most middle-income countries meet long-term challenges such as climate change and pandemics. . IMF Managing Director Kristalina Georgieva announced the approval of the new Resilience and Sustainability Trust in a post-board statement, aiming to raise at least $45 billion for it to take effect on May 1. It backs the IMF’s $650 billion in special drawing rights last year by allowing wealthier members to manage emergency reserves so vulnerable countries can address long-term challenges that threaten their economic stability. .
The IMF’s first facility set up expressly to help countries manage balance-of-payments risks posed by longer-term challenges, the document says. “Today, even as IMF member countries face the immediate challenges of rising inflation, limited fiscal space, and pandemic recovery – intensified by the risks associated with the war in Ukraine – they are also asking the Fund to help them address longer-term challenges such as climate change and pandemic preparedness,” the newspaper said.
“This landmark decision embodies the spirit of multilateralism,” she said in a statement to Reuters. Together, we are showing that we can achieve meaningful results for everyone. IMF officials have been working on the details of the new facility in recent months after winning backing from a group of the top 20 in October. An IMF staff document prepared for the board and seen by Reuters said nearly three-quarters of the IMF’s 190 members would be eligible to borrow from the RST.
Currently, the IMF offers low-cost, zero-interest financing to help countries deal with short-term challenges, such as capital flight, inflation or high commodity prices, as well as challenges medium-term budget and finance. But until now it lacked a mechanism to help countries manage the risk of balancing payments posed by longer-term threats, and its Poverty Reduction and Growth Trust Fund n was only open to low-income countries.
Many of these states have been particularly hard hit by the pandemic and its economic impact. To be eligible for funding under the new RST, countries still need to develop “credible policies and reforms,” have sustainable debt, and sufficient capacity to repay the Must participate in a lending program. Policy coordination agreements with Serbia, Rwanda and other countries.
The RST, first offered by Georgieva last June, will fill these gaps, providing a wider range of countries with affordable financing over extended repayment periods, with a 20-year maturity and a 10-year grace period. and half. The IMF said it would start disbursing loans under the program by October. Funding will be available to low-income and most middle-income countries, including all small developing countries, according to the IMF.
Summary of news:
- IMF Executive Board Adopts New Trust to Help Members Tackle Pandemics and Climate Change
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