Enhanced IMF Support for Low-Income Nations

COLOMBO (News 1st); The Executive Board of the International Monetary Fund (IMF) has successfully completed the review of the Poverty Reduction and Growth Trust (PRGT) facilities and financing. 

This initiative is pivotal for providing concessional financing to low-income member countries.

Kristalina Georgieva, Managing Director of the IMF, announced the adoption of a comprehensive reform and financing package aimed at enhancing the IMF’s support to low-income countries.

The newly approved package includes a framework to utilize IMF net income and reserves, generating approximately US$8 billion in additional subsidy resources for the PRGT over the next five years. 

This, combined with other reform measures and last year’s successful bilateral fundraising, is expected to increase the PRGT’s long-term annual lending capacity to about US$3.6 billion, more than double the pre-pandemic level.

This boost will help attract significant additional flows from both public and private sources.

Georgieva emphasized the critical timing of this agreement, noting that low-income countries have faced a series of unprecedented shocks and substantial financing needs.

The approved package aims to provide the necessary concessional resources to ensure continued support for these countries in implementing sound policies and building robust institutions.

The reforms are designed to tailor IMF support to the specific needs of low-income countries, acknowledging their increasing economic diversity. 

A new interest rate mechanism will maintain interest-free lending for the poorest countries while ensuring sufficient concessionality for others. 

Additionally, access policies will be flexible to calibrate Fund support, and safeguards will be strengthened and streamlined.