By Zayamu Hassan
The International Monetary Fund (IMF), has applauded the creation of the Resilience and Sustainability Trust (RST) by the IMF Board.
The Trust which will come into effect from May 1, is aimed at assisting low-income and vulnerable middle-income countries address longer-term structural challenges that pose macroeconomic risks, including climate change and pandemics.
In a statement, IMF Managing Director, Ms. Kristalina Georgieva said: “As the world is confronting consecutive global shocks, we must not lose sight of the critical actions needed today to ensure longer-term resilience and sustainability—and we can only succeed by working together.
“The RST will amplify the impact of the US$650 billion SDR allocation implemented last year by channeling resources from economically stronger members to countries where the needs are greatest. The aspiration is to build a Trust of at least US$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.
“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. “
She noted that the IMF had worked extensively with its 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, she said, are also intended to catalyze increased financing from the private sector, donors, and other international financial institutions (IFIs). 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 stressed.