The International Monetary Fund (IMF) could put in place this year a new $50 billion lending plan to help countries around the world build sustainability and resilience against economic shocks, according to officials.
Among those eligible for financing are low-income and vulnerable middle-income countries, said Ceyla Pazarbasioglu and Uma Ramakrishnan, the IMF Strategy, Policy and Review Department’s director and deputy director, in a new blog post.
Officials have stressed that even as countries continue to combat the COVID-19 pandemic, it is crucial that economies also tackle other structural challenges, such as climate change, and ensure sustainable growth.
The lender is working to develop a resilience and sustainability trust (RST) that could enable about three-quarters of IMF members, including developing and vulnerable small states and those with very low per-capita income, secure affordable long-term financing.
“With broad support from the membership and international partners, we hope that the trust can be approved by the IMF executive board before the upcoming spring meetings and for it to become fully operational before the year’s end,” the officials said.
Who can borrow?
Access to the RST would be determined case by case, based on the strength of reforms and debt sustainability considerations. It is also expected to be capped at 150 percent of the IMF quota or SDR 1 billion, whichever is smaller.
The lender said potential borrowers may be asked to present a package of high-quality measures that are consistent with the RST’s purpose.
A potential borrower might also need a concurrent financing or non-financing IMF-supported programme with appropriate macroeconomic policies to mitigate risks for borrowers and creditors, as well as well as sustainable debt and adequate capacity to repay the lender.
The RST would be set up under the IMF’s power to administer contributor resources, which allows for more flexible terms on maturities. The loans would also have much longer maturities than traditional IMF financing.
“Specifically, staff has proposed a 20-year maturity and a 10-year grace period. A tiered interest structure would differentiate financing terms across country groups, with a high degree of concessionality for lower-income members,” the post said
(Reporting by Cleofe Maceda; editing by Seban Scaria )
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