The crisis lender’s Resilience and Sustainability Trust (RST), based in Washington came into effect on May 1. It is in addition to a $650bn boost to reserve assets called Special Drawing Rights (SDR) allocated in 2022.
“As the world is confronting consecutive global shocks, we must not lose sight of the critical actions needed today to ensure longer-term resilience and sustainability,” IMF Managing Director Kristalina Georgieva said in a statement announcing the new trust.
Furthermore, she said the trust’s goal is to redistribute funds from richer countries to more vulnerable ones.
Luckily, about three quarters of the 190 IMF members will be able to borrow from the new tool.
As it’s first proposal came in 2021, the RST will offer extended repayment periods. This is within a 20-year maturity and 10-year grace period.
The IMF said to qualify for the money member countries need a package of high-quality policy measures, have sustainable debt and adequate capacity to pay.
It further added that the trust will require close collaboration with the world bank and other international financial institutions.
“The RST will amplify the impact of the US$650 billion SR allocation implemented last year by chaneling resources from economically stronger members to countries where the needs are greatest” said Georgieva.
The increase was the biggest ever for SDRs. These are international reserve assets that aid governments in protecting their financial reserves against global currency fluctuations.
They also help the IMF calculate loans and interest rates.
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