The Executive Board of the International Monetary Fund (IMF) has completed the Review of Poverty Reduction and Growth Trust (PRGT) Facilities and Financing for poor countries.
The financing arrangement is the IMF’s vehicle for providing concessional financing to low-income member countries.
This was announced in a statement issued on Monday, 15 October 2024 by Ms. Kristalina Georgieva, IMF Managing Director.
“Our membership today has adopted a comprehensive reform and financing package for the Poverty Reduction and Growth Trust (PRGT) to bolster the IMF’s support to low-income countries.
“The package includes a framework to deploy IMF net income and/or reserves to generate about US$8 billion in additional subsidy resources for the PRGT over the next five years.
“Combined with other reform measures and last year’s successful bilateral fundraising, this would increase the PRGT’s long-term annual lending envelope to about US$3.6 billion, more than twice the pre-pandemic level, and help catalyse significant additional flows from public and private sources,” Madam Georgieva added.
This agreement, she pointed out, “comes at a critical time as low-income countries have suffered a series of unprecedented shocks and face substantial financing needs.”
“With exceptionally high demand for PRGT financing, the approved package will generate the concessional resources necessary to ensure that the Fund can continue supporting low-income countries to implement sound policies and build strong institutions,” Madam Georgieva further explained.
These reforms, she highlighted, “will help tailor IMF support to country-specific needs, recognising the increasing economic heterogeneity of low-income countries.”
To ensure that scarce concessional resources are targeted to those most in need, she mentioned that, “A new interest rate mechanism will maintain interest-free lending for the poorest countries while ensuring that lending terms for others have a sufficient degree of concessionality.”
Access policies, she added, “Will allow for flexibility in calibrating Fund support, and safeguards will be strengthened and streamlined.”
“Our global membership has demonstrated once again its shared commitment to support our low-income members in challenging economic times,” she said.