The International Monetary Fund has proposed a $50billion trust fund focused on climate change for low-income and middle-income nations with gross national per-capita income of less than about $12,000 per year.
In a blog post by Ceyla Pazarbasioglu and Uma Ramakrishnan, the Director and Deputy Director of IMF’s strategy, policy and review department respectively, titled “A New Trust to Help Countries Build Resilience and Sustainability’ published on Thursday, the Fund disclosed that about three quarters of member countries would be eligible for financing from the Resilience and Sustainability Trust (RST).
It said: “A proposed $50bn trust fund could help low-income and vulnerable middle-income countries build resilience to balance of payments shocks and ensure a sustainable recovery.
According to the IMF, the trust would help address longer term challenges to economic stability, including climate change, pandemic preparedness and digitalisation, adding that access would be determined by IMF on a case by case basis depending on countries’ debt sustainability and commitment to making structural changes.
“Even as countries continue to battle COVID-19, it is crucial not to overlook the longer-term challenge of transforming economies to become more resilient to shocks and achieve sustainable and inclusive growth.”
It added: “As we’ve continued to work toward developing the RST, our current thinking on the key design features—which we outline further below—aim to balance the needs of potential contributors and borrowing countries.
“With broad support from the membership and international partners, we hope that the Trust can be approved by the IMF Executive Board before the upcoming Spring Meetings and for it to become fully operational before the year’s end.”
“Like the IMF’s highly concessional and currently zero interest rate Trust for low-income countries, the RST would be established under the IMF’s power to administer contributor resources, which allows for more flexible terms, notably on maturities, than the terms that apply to the IMF’s general resources”, the Fund added.