(Bloomberg) -- The International Monetary Fund will discuss plans for a trust to encourage nations to move their economies toward a more climate-friendly, low-carbon future at its annual meetings this week, the institution’s chief said.
Managing Director Kristalina Georgieva told reporters on Wednesday that the Resilience and Sustainability Trust would be funded by rich nations reallocating some of the reserves that they received through the IMF’s record $650 billion issuance in August. She expects the fund to meet its goal of getting countries to commit to $100 billion of onlending, she said.
The assets, known as special drawing rights, already can be re-channeled to low-income countries through the fund’s Poverty Reduction and Growth Trust, which gives interest-free loans. To broaden the group of nations that can benefit from redirected SDRs, the IMF has been working on a trust for low- and vulnerable middle-income countries.
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Georgieva previously said she hopes that trust will be finalized by year-end.
The new facility, known as the RST, would support policy choices “that would underpin the transformation of the economy, and avoid future balance-of-payments crises,” Georgieva said on Wednesday.
Finance ministers and central bankers from the world’s biggest economies support the establishment of the new trust, the Group of 20 said in a statement Wednesday.
“The new RST should preserve the reserve-asset characteristics of the SDRs channeled through the trust,” they said.
IMF members were debating details about the RST in recent days. The decisions at stake include whether to provide loans only to nations that agree to traditional, conditional IMF loans, according to people familiar with the process, who asked not to be identified without permission to speak publicly.
The IMF was also considering making the repayment time frame for loans through the RST longer than its traditional 10-year maximum, given the length of time needed for investments to counter climate change, the people said.
When asked for comment, the IMF referred to Georgieva’s comments Wednesday, where she said the fund’s staff briefed the board on issues around eligibility, which criteria would apply, and how the program would work.
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