Africa to be first beneficiaries of $45bn Resilience Sustainability Trust Fund – IMF boss says
Director of the International Monetary Fund (IMF), Kristalina Georgina, has said African countries will be the first beneficiaries of the Fund’s $45bn Resilience Sustainability Trust (RST).
Speaking to norvanreports on the sidelines of the ongoing Africa Climate Change Adaptation Summit, Ms Georgina noted the creation of the RST, is to among others, provide funds to member countries to deal with the impacts of climate change.
“The IMF promised to set up the resilience sustainability trust and start with at least $40 billion, we have delivered on this promise and African countries will be among the first countries to be beneficiaries of the RST,” she told norvanreports.
The RST in April 2022 was approved by the Executive Board of the International Monetary Fund (IMF) to help countries build resilience to external shocks and ensure sustainable growth, contributing to their long-term balance of payments stability.
The RST will complement the IMF’s existing lending toolkit by focusing on longer-term structural challenges— including climate change and pandemic preparedness—that entail significant macroeconomic risks and where policy solutions have a strong global public good nature .
It will channel Special Drawing Rights (SDRs) contributed by countries with strong external positions to countries where the needs are the greatest, providing policy support and affordable longer-term financing to strengthen members’ resilience and sustainability and thereby contributing to prospective balance of payments stability.
The RST will be a loan-based trust, with resources mobilized on a voluntary basis. About three quarters of the IMF’s membership will be eligible for longer-term affordable financing from the RST, including all low-income countries, all developing and vulnerable small states, and lower middle-income countries.
Access will be based on the countries’ reforms strength and debt sustainability considerations and capped at the lower of 150 percent of quota or SDR 1 billion.
The loans will have a 20-year maturity and a 10½-year grace period, with borrowers paying an interest rate with a modest margin over the three-month SDR rate, with the most concessional financing terms provided to the poorest countries.
The RST will stand ready to commence lending operations once a critical mass of resources from a broad base of contributors is achieved and once sufficiently robust financial systems and processes are in place, which is anticipated to occur by the end of the year.
Fundraising toward the estimated total resource needs of about SDR 33 billion (equivalent to US$45 billion) will be initiated immediately.
I am a climate change activist and adaptation advocate from Cameroon 🇨🇲. This is a big step in realizing the objectives of the Paris Agreement and the Glasgow convention. My main concern is the follow up or measures put in place to make sure these funds end up doing what they are destined for. The real climate activists are always sidelined at the local level when it comes to the realization of these projects. I just hope stakeholders and policy makers are really duty conscious to carry out these resilience and adaptation projects and also to mitigate the impacts of climate change affected communities.