By Andrea Shalal
WASHINGTON (Reuters) – The International Monetary Fund said on Friday it was continuing to build support from its members for a resilience and sustainability trust project that would allow richer countries to channel their IMF reserves to countries in need, but hope to see the new instrument expand and run next year.
IMF officials rushed to step up support for the new trust, proposed by IMF Director Kristalina Georgieva in June, which would help countries outside of low-income countries served by the Poverty Reduction Trust and growth.
The IMF is encouraging richer members to donate or lend their share of the newly issued $ 650 billion in Special Drawing Rights (SDRs) to vulnerable countries, but some countries say the new trust would go beyond the IMF’s framework.
In a blog posted Friday, IMF Strategy Director Ceyla Pazarbasioglu and her deputy Uma Ramakrishnan said they hoped to make progress on the Resilience and Sustainability Trust at the annual IMF and World Bank meetings this week. next.
“Building consensus is never easy; That takes time. Creative solutions are needed to bridge the differences, ”they wrote. “We are convinced that with the support of the international community, the RST is one of those innovative solutions that could become operational in a little over a year.
They said the proposed RST would help build economic resilience and sustainability, especially in low-income countries and small states, as well as vulnerable middle-income countries, by lending at lower rates and with maturities longer than traditional IMF lending terms.
They said members would agree on funding targets, which could include climate, pandemic preparedness and other “laudable global public policy goals.”
They noted that the trust needed to be able to provide liquidity to creditors who channeled their SDRs if they themselves faced a balance of payments need, as well as adequate protection against credit risk for them. donors.
To that end, they said they are offering a tiered credit risk protection framework with political guarantees, financial buffers, and a diverse base of creditors and borrowers.
They said the RST loans would likely come in addition to a regular IMF-supported program and benefit from the strong political guarantees included in those programs.
They said details were still being worked out on the size of the trust, eligibility conditions, conditionality, loan terms and financial architecture.
“We continue to engage with our members and other stakeholders to ensure full membership, while working closely with other international financial institutions, especially the World Bank, to ensure that the RST is part of a broader strategy of international aid to countries, ”they said.
(Reporting by Andrea Shalal; Editing by Paul Simao)