IMF to create new trust to help middle, low income countries address macroeconomic risks

Doaa A.Moneim , Thursday 14 Apr 2022

The executive board of International Monetary Fund (IMF) has approved establishing a new Resilience and Sustainability Trust (RST), which aims to help low-income and vulnerable middle-income countries address longer-term structural challenges that pose macroeconomic risks, including climate change and pandemics, the fund announced on Wednesday.

IMF

IMF said the new trust will come into effect as of 1 May.

“The RST will amplify the impact of the $650 billion SDR allocation implemented last year by channeling resources from economically stronger members to countries where the needs are greatest. The aspiration is to build a trust of at least $45 billion in resources,” said the IMF’s Managing Director Kristalina Georgieva.

Georgieva noted that The RST will serve as a third pillar of the IMF’s lending toolkit, besides the General Resources Account and the Poverty Reduction and Growth Trust.

It will also provide policy support and affordable longer maturity financing – with a 20-year maturity and a 10-and-a-half -year grace period – to help build resilience against long-term risks to balance of payments stability, according to Georgieva.

“About three-quarters of the IMF’s country membership will be eligible for RST financing, including low-income members as well as most middle-income countries and all small developing states,” Georgieva added.

It is worth noting that the IMF’s and the World Bank Group’s (WBG) annual meetings – Spring Meetings ­– are set to kick off officially on Monday, which are expected to launch the two institutions updates on the world and regional economic outlook with a key theme of the impacts of the Russian-Ukrainian conflict on the global economy.

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