(Image: Rose Kouwenhoven/IMF)
The IMF's Ceyla Pazarbasioglu and Uma Ramakrishnan laid out in a new blog this week how a proposed IMF Resilience and Sustainability Trust (RST) will help low-income and vulnerable middle-income countries build resilience to balance of payment shocks and ensure a sustainable recovery.
The $50-billion trust fund would also be a place where countries could channel their Special Drawing Rights to more vulnerable nations.
--Key design features: About three quarters of the IMF's membership would be eligible for RST financing. This would include all low-income countries, all developing and vulnerable small states, and all middle-income countries with gross national per-capita income of less than roughly $12,000 per year.
The RST aims to address macro-critical longer-term structural challenges that entail significant macroeconomic risks to member countries’ resilience and sustainability, including climate change, pandemic preparedness, and digitalization. Access to RST financing would be determined case by case, based on the strength of reforms and debt sustainability considerations, and is expected to be capped at 150 percent of IMF quota or SDR 1 billion, whichever is smaller.--Timeline: Pazarbasioglu and Ramakrishnan said they hope for broad support from IMF membership and international partners. The aim is to secure IMF Executive Board approval before the upcoming Spring Meetings and for the trust to become fully operational before the year’s end.