The Executive Board of the International Monetary Fund (IMF) has concluded its review of the Poverty Reduction and Growth Trust (PRGT) facilities and financing, which serves as the IMF’s platform for offering concessional loans to low-income member countries.
In a statement issued on October 15, 2024, the Fund’s Managing Director, Ms. Kristalina Georgieva, announced:
“Our membership today has adopted a comprehensive reform and financing package for the Poverty Reduction and Growth Trust (PRGT) to bolster the IMF’s support to low-income countries.”
“The package includes a framework to deploy IMF net income and/or reserves to generate about US$8 billion in additional subsidy resources for the PRGT over the next five years,” she noted.
She said: “Combined with other reform measures and last year’s successful bilateral fundraising, this would increase the PRGT’s long-term annual lending envelope to about US$3.6 billion, more than twice the pre-pandemic level, and help catalyse significant additional flows from public and private sources.”
This agreement, the IMF MD noted, “comes at a critical time as low-income countries have suffered a series of unprecedented shocks and face substantial financing needs.”
“With exceptionally high demand for PRGT financing, the approved package will generate the concessional resources necessary to ensure that the Fund can continue supporting low-income countries to implement sound policies and build strong institutions,” explained Ms Goeigieva.
These reforms, she highlighted, “will help tailor IMF support to country-specific needs, recognising the increasing economic heterogeneity of low-income countries.”
To ensure that scarce concessional resources are targeted to those most in need, she mentioned that, “A new interest rate mechanism will maintain interest-free lending for the poorest countries while ensuring that lending terms for others have a sufficient degree of concessionality.”
Access policies, she added, “Will allow for flexibility in calibrating Fund support, and safeguards will be strengthened and streamlined.”
“Our global membership has demonstrated once again its shared commitment to support our low-income members in challenging economic times,” she said.