October 18, Colombo (LNW): The Executive Board of the International Monetary Fund (IMF) has completed a review of the Poverty Reduction and Growth Trust (PRGT) facilities and financing, a key initiative aimed at providing concessional financial support to low-income member countries.
IMF Managing Director Kristalina Georgieva announced the adoption of a comprehensive reform and financing package, which will enhance the IMF’s ability to assist low-income nations. This newly approved package includes a framework to utilize IMF net income and reserves, generating approximately US$8 billion in additional subsidy resources for the PRGT over the next five years.
Combined with previous reforms and last year’s bilateral fundraising efforts, this initiative is set to more than double the IMF’s long-term annual lending capacity for low-income countries to US$3.6 billion, significantly exceeding pre-pandemic levels. This boost is expected to attract substantial additional flows from both public and private sources, strengthening the IMF’s capacity to support countries in need.
Georgieva emphasized the importance of this agreement in light of the unprecedented economic challenges facing low-income countries, as well as their substantial financing needs. The reform package aims to ensure that these countries continue to receive concessional resources, enabling them to implement sound economic policies and build resilient institutions.
The reforms include a new interest rate mechanism to maintain interest-free lending for the poorest nations while ensuring concessional terms for other low-income countries. The changes also offer flexibility in access policies, allowing the IMF to better tailor its support, while strengthening and streamlining safeguards to protect against potential risks.
