Development
Finances for some of the initiatives are tight due to significantly higher demand for credit and interest
Estao Content 7 Apr 2023 18:22 Updated 10 hours ago
The International Monetary Fund (IMF) has reviewed a number of initiatives to support lowincome countries amid strong demand for credit and higher interest rates. Measures include the Poverty Reduction and Growth Fund (PRGT), the organization’s primary vehicle for lending to underdeveloped countries.
The IMF advocates that the PRGT pursue a multistrategy and richcountry efforts to mobilize collective contributions to fill the gaps and build a sustainable base for short and longterm supply to lowincome countries. This fund currently faces a deficit of approximately $1.6 billion in committed grants and approximately $4.7 billion in loans to complete the first phase of the 2021 funding effort.
“The finances of the PRGT are under pressure due to a significantly stronger demand for credit and significantly higher interest rates than previously expected,” the fund said in a press release.
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Since the pandemic, the IMF has supported more than 50 lowincome countries with more than about $24 billion in interestfree loans.
The organisation’s executive director, Kristalina Georgieva, warned on Thursday 6th of the debt burden of emerging and lowincome countries and the risk of a wave of restructuring. He also called on the fund’s wealthiest members to help address the funding shortfalls in the PRGT.
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“I would like to make a double appeal on their behalf: help them deal with the burden of debt, which has been made much more difficult by the shocks of recent years; and second, to help ensure the IMF’s ability to support them for years to come,” she said at an event at the Meridian House in Washington DC this Thursday.
In addition to the PRGT, the IMF’s Executive Board also reviewed the resource adequacy of the Resilience and Sustainability Fund (RST), which provides lowincome and small countries with longterm financing for the risks of climate change and pandemics, and disaster containment, in a decision taken Thursday and Relief Fund (CCRT), which supports underdeveloped nations affected by natural or public health disasters.
In the case of the RST, the IMF states that since its operationalization on October 12, 2022, five agreements have been approved so far and the pipeline of possible applications is growing “rapidly”. The commitments represent 76% of the loan’s target funding, leaving a gap of approximately $8.8 billion from the original funding target. CCRT, on the other hand, was almost out of cash during the pandemic.
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