Washington, DC, October 21, 2024 – The International Monetary Fund (IMF) has announced a series of reforms aimed at strengthening its ability to assist low-income countries (LICs) in addressing their balance of payment needs.
Key elements of the reforms include:
Increased lending capacity: The IMF will double its annual lending envelope for LICs to SDR 2.7 billion.
Resource mobilization: The Fund will generate additional resources for the Poverty Reduction and Growth Trust (PRGT) through a new framework.
Tailored support: The IMF will customize its support to meet the specific needs of LICs, recognizing their economic diversity.
Tiered interest rates: A new tiered interest rate mechanism will ensure interest-free lending for the poorest countries while maintaining a degree of concessionality for others.
The reforms come in response to a significant funding shortfall in the PRGT, which has been exacerbated by increased lending during the COVID-19 pandemic and subsequent shocks. The IMF's Executive Board has welcomed the reforms, emphasizing their importance in supporting LICs and restoring the PRGT's self-sustainability.
The Fund will rely on a combination of internal resources and bilateral contributions to finance the PRGT. The reforms represent a significant step forward in the IMF's commitment to supporting LICs and ensuring their long-term financial stability.