“The first IMF facility to provide affordable long-term financing, the DR (Resilience and Sustainability) Trust Fund aims to help countries build their resilience to structural challenges, such as climate change and pandemics,” said IMF Managing Director Kristalina Georgieva.
The goal is to ensure, she said, that these countries “preserve their longer-term economic and financial stability, while mobilizing other public and private financing.”
The loans granted by the new mechanism have a maturity of 20 years, with a grace period of 10 and a half years. Ms Georgieva recalled that in less than three years, the world has been hit by multiple successive shocks, citing the COVID-19 pandemic, the war between Ukraine and Russia and the cost of living crisis that it has led, as well as climate change “which knows no respite”.
Last April, the IMF’s board of directors approved the creation of the new fund, which becomes the third pillar of the international institution’s arsenal of lending instruments, alongside the general resources account and the trust fund for the reduction poverty and for growth.
It will benefit eligible low-income and middle-income countries, which represent about three-quarters of IMF member countries.
It will, it is said, “amplify the impact of last year’s $650 billion Special Drawing Rights allocation, by directing the resources of more robust member countries to the economic plan to the countries with the greatest needs”.
Germany, Australia, Canada, China, Spain and Japan have allocated the first tranche of resources, amounting to 15.3 billion SDR (20 billion dollars), the IMF says, specifying that this first tranche represents only a little more than half of the total commitments made to date by 13 countries in favor of the fund, ie 29 billion SDRs (37 billion dollars).
New contributions are expected to materialize in early 2023, once national procedures are completed, which will provide the IMF with a solid foundation to respond to requests in the years to come. The IMF CEO reported the “strong interest” shown by countries for financing under the new fund.