IMF obtains 40,000 million for the fund against climate change

In April 2022, the International Monetary Fund (IMF) approved the establishment of the Resilience and Sustainability Trust (RST) to help countries increase resilience to external shocks and ensure sustainable growth.

On Friday, IMF head Kristalina Georgieva said the Resilience and Sustainability Trust had already received $40 billion in commitments, out of the required $45 billion.

Speaking at the Ibrahim Governance Forum, a conference focused on Africa, Georgieva said the trust exists to deal with challenges such as climate change and possible pandemics in the future.

The RST will complement the IMF’s existing lending toolkit by focusing on longer-term structural challenges, including climate change and pandemic preparedness, which involve significant macroeconomic risks and where policy solutions have a strong for-profit nature. world public.

Shield against climate change

The RSF will support measures aimed at the adaptation, mitigation and transition of countries in the face of climate change problems and the possibility of future pandemics. About three-quarters of IMF members will be eligible for the RST’s affordable longer-term financing, including all low-income countries, all small developing and vulnerable states, and lower-middle-income countries.

The RST will channel the Special Drawing Rights (SDR) provided by countries with strong external positions to countries where the needs are greater. This will provide political support and affordable longer-term financing to strengthen the resilience and sustainability of members and thus contribute to the prospective balance of payments stability.

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The loan-based trust works with voluntarily mobilized resources. Access will be based on the strength of country reforms and debt sustainability considerations and will be capped at 150% of the quota. The loans will have a maturity of 20 years and a grace period of 10 1/2 years, and borrowers will pay a modest interest rate above the three-month SDR rate, and the most favourable financing terms will be granted to the poorest countries. (climate change Fund)

The RST will be ready to begin lending operations once a critical mass of resources from a broad base of taxpayers is achieved. As well as establishing sufficiently solid financial systems and processes, which is expected to happen by the end of the year.

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