The IMF plans to raise at least $45 billion for a new trust to help “low-income and vulnerable middle-income countries” cope with protracted challenges like pandemics and climate change.
The Washington-based crisis lender’s Resilience and Sustainability Trust (RST) will come into effect May 1 and is in addition to a $650 billion boost to reserve assets called Special Drawing Rights (SDR) allocated earlier this year.
“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,” IMF Managing Director Kristalina Georgieva, in a statement announcing the new trust.
She added that the goal of the trust is to redistribute funds from wealthier countries to more vulnerable ones as members look to support global economic recovery from the Covid-19 pandemic.
Around three-quarters of the IMF’s 190 members will be eligible to borrow from the new tool, it estimates.
First proposed last year, the RST will offer extended repayment periods, with a 20-year maturity and 10-year grace period.
In order to access the money, member countries will need “a package of high-quality policy measures,” have sustainable debt and “adequate capacity to repay,” the IMF said.
It added that the trust will require close collaboration with the World Bank and other international financial institutions.