WASHINGTON, Oct 8 (Businesshala) – The International Monetary Fund said on Friday it was still building support among members for a proposed Resilience and Stability Trust that would allow wealthy countries to channel their IMF reserves to countries in need. Will allow, but expect to see new equipment up and running next year.
IMF officials are racing to build support for the new trust, proposed by IMF chief Kristalina Georgieva in June, that would allow aid to countries outside the low-income countries served by the existing Poverty Reduction and Development Trust.
The IMF is encouraging wealthy members to donate or lend their share of $650 billion in newly issued special drawing rights (SDRs) to vulnerable countries, but some countries say the new trust goes beyond the IMF’s purview. Will go
In a blog published on Friday, IMF strategy director Seyla Pazarbasioglu and her deputy Uma Ramakrishnan said they hope to make progress on the Resilience and Sustainability Trust at the IMF and World Bank annual meetings next week.
“Building consensus is never easy; it takes time. Bridging differences requires creative solutions,” he wrote. “We are confident that with the support of the international community, RST is such an innovative solution that can be operational in just one year.”
He said the proposed RST would help build economic resilience and stability, especially in low-income countries and small states, as well as weak middle-income countries, by lending at cheaper rates and longer than the IMF’s traditional lending terms. with maturity.
He said members would agree on objectives of the funding, which could include climate, pandemic preparedness and other “qualified global public policy goals”.
He noted that the trust needs to be able to provide liquidity for creditors who have channeled their SDRs if they face balance of payments, as well as need to have adequate credit risk protection for donors. .
To that end, they said they were proposing a multi-layered credit risk protection framework with policy safeguards, financial buffers, and a diversified creditor and borrower base.
He said RST lending is likely to come in addition to a regular IMF-backed programme, and will benefit from the stronger policy safeguards included in those programmes.
He said details on the size of the trust, eligibility requirements, terms, lending terms and financial structure are still being worked out.
“We continue to engage with our membership and other stakeholders to ensure complete procurement, working closely with other international financial institutions, notably the World Bank, to ensure that the RST is a comprehensive source of international country aid. Part of the strategy.” They said.