IMF to raise $8bn to reduce poverty in low-income countries

The International Monetary Fund (IMF) has announced a plan to raise $8 billion to reduce poverty in low-income countries.

In a statement by the IMF press centre on Friday, the decision followed the fund’s executive board review of poverty reduction and growth trust (PRGT) facilities and financing.

According to the statement, the PRGT is the IMF’s vehicle for providing concessional financing to low-income member countries.

Commenting on the development, Kristalina Georgieva, IMF managing director, said the IMF approved a comprehensive reform and financing plan aimed at strengthening its support for low-income countries.

“Our membership today has adopted a comprehensive reform and financing package for the PRGT to bolster the IMF’s support to low-income countries,” Georgieva said.

“The package includes a framework to deploy IMF net income and/or reserves to generate about eight billion dollars in additional subsidy resources for the PRGT over the next five years.

“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 3.6 billion dollars.

“This is more than twice the pre-pandemic level, and helps catalyse significant additional flows from public and private sources.”

Georgieva said the agreement comes at a crucial time, as low-income countries face significant financing needs following a series of unprecedented shocks.

The IMF boss said the approved package would generate the concessional resources to ensure continued support for low-income countries as they implement sound policies and build strong institutions.

She said the reforms will also tailor IMF support to the specific needs of individual countries, acknowledging the growing economic diversity among low-income nations.

“To ensure that scarce concessional resources are targeted to those most in need, a new interest rate mechanism will maintain interest-free lending for the poorest countries,” she said.

“This will be done while ensuring that lending terms for others have a sufficient degree of concessionality.

“Access policies will allow for flexibility in calibrating fund support, and safeguards will be strengthened and streamlined.”

Georgieva said the organisation’s global membership has demonstrated its collective commitment to assisting low-income countries during difficult economic periods.