The International Monetary Fund (IMF) hopes to mobilize about $45 billion in a new fund to help a wider range of countries, including some middle-income economies, deal with climate change and other long-term challenges.
The information is contained in a document prepared by the entity’s technical staff and seen by Reuters.
The IMF’s executive board is expected to approve plans for the new Resilience and Sustainability Fund (RST) later on Wednesday, which were drawn up by the IMF team after the Group of 20 of major economies supported the creation of the instrument in October.
Nearly three-quarters of the IMF’s 190 members would be eligible for loans under the new fund, the first global creditor line of credit created expressly to help countries manage risks caused by long-term challenges, the IMF said in the document.
“Today, even as IMF member countries face the immediate challenges of rising inflation, limited fiscal space and the recovery from the pandemic – compounded by the risks associated with the war in Ukraine – they are also asking the Fund to help respond to challenges long-term, such as climate change and pandemic preparedness,” the document showed.
The RST, first proposed by IMF Managing Director Kristalina Georgieva in June, would fill the instrument gap with a focus on longer-term investment and provide countries with affordable financing over long payment periods.
The IMF said it plans to start lending under the program by October.
The entity would be available to vulnerable low-income and middle-income countries, including small states, many of which have been particularly hard hit by the pandemic and its economic impact.
To qualify for loans under the new RST, countries would still need to develop “credible policies and reform measures”, have sustainable debt and adequate capacity to repay the IMF, and be part of a concurrent or non-IMF-funded financing program. , said the document.
Wealthier IMF members could contribute to the fund by donating unused Special Drawing Rights (SDRs) from a $650 billion allocation approved last August.
Source: CNN Brasil
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