IMF lending facility for climate, pandemic preparedness is ready

IMF Managing Director Kristalina Georgieva participates in a panel discussion during the group’s Annual Meetings at the headquarters of the International Monetary Fund in Washington, U.S., October 12, 2022. REUTERS/James Lawler Duggan

WASHINGTON  -The International Monetary Fund’s Resilience and Sustainability Trust is now operational, adding an important financing instrument to help countries deal with climate change, pandemics and other longer-term issues, IMF Managing Director Kristalina Georgieva said on Wednesday.

Georgieva said she notified the IMF’s Executive Board that the fund’s first-ever facility to provide long-term funding to help members deal with structural challenges was ready to start lending to low-income and most middle-income countries, after receiving initial pledges of $37 billion.

She said members could start applying for the funds, which will offer 20-year maturities and a 10.5-year grace period, and the board would review applications in coming months.

“I am delighted to announce that the new Resilience and Sustainability Trust (RST) has become operational,” she said in a statement.

The fund, proposed by Georgieva last June, won the backing of the Group of 20 major economies last October, and was approved by the IMF’s board in April.

It allows richer IMF members to channel their Special Drawing Rights, or emergency reserves, to help vulnerable countries on the target issues.

Georgieva said she was pleased the fund had delivered on its promise to make the RST operational around the 2022 IMF/World Bank Annual Meetings.

Australia, Canada, China, Germany, Japan and Spain provided the first round of contributions amounting to about $20 billion, or just over half of the total RST pledges of $37 billion from 13 countries.

Further contributions would become effective in early 2023 once countries completed their domestic procedures, she said.

Additional countries are expected to pledge resources over time, Georgieva said, adding the IMF would continue to broaden the contributor pool and ensure the RST has sufficient resources.

She cited strong interest from countries to tap RST funds, and said the IMF was in “advanced discussions” about their climate policy actions, while laying the groundwork for RST lending to support pandemic preparedness.