IMF Wants Middle-Income-Nation Trust to Start With $30 Billion
(Bloomberg) -- The International Monetary Fund wants its new trust for middle-income and fragile island economies to start with about $30 billion and be in place by its annual meetings next October, Managing Director Kristalina Georgieva said.
The fund plans to build the so-called Resilience and Sustainability Trust “up to $50 billion and beyond,” she said in remarks at the Paris Peace Forum on Thursday, adding the aim is to have a design in place by the spring meetings in April, and implementation by the annual gathering in the fall.
The new trust would provide long-term funding at low interest rates to help countries weather both the pandemic and climate crises. Funding for the trust would come from rich nations reallocating some of the reserves that they received through the IMF’s record $650 billion issuance in August.
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 the second vehicle.
“Via this new RST instrument, the IMF can do significantly more to support policies for the once-in-a-lifetime transformation to the new climate economy --one that is low-carbon and, most importantly, climate resilient,” Georgieva said. “And as well as the PRGT and the RST, we would also be willing to provide technical advice to multilateral development banks which might want to explore other viable options for rechanneling.”
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