The International Monetary Fund intends to operationalize its new Resilience and Sustainability Trust by October, and officials say they expect donors to announce significant contributions this week during the institution’s yearly Spring Meetings.
Sign up for Devex Invested
The must-read weekly newsletter that keeps you up to date with news about business, finance, and the SDGs.
Why it matters: The RST fund aims to have $45 billion, mostly from rechanneled Special Drawing Rights from wealthy IMF members, and would support long-term financing goals in low- and middle-income countries by deploying low-interest loans.
When the money would be lent out to nations is still up in the air and would depend on how deals are structured. Initial support from the program would go toward climate change and pandemic preparedness.
Donations critical: IMF’s ability to get the project off the ground is dependent on donors putting up the resources to make the fund work. “We can only make the RST operational once we have a critical mass of resources,” said Craig Beaumont, deputy director in IMF’s finance department, during a briefing with reporters. “We do need to reach a pretty substantial initial amount,” he added, but he declined to state an exact figure.
The trust has enjoyed support at the executive board, Beaumont said, adding that he expects donors to start making announcements this week. On the borrowing side, he said demand is expected to be “front-loaded.”
Working with banks: RST is IMF’s first foray into long-term financing of this type, and the institution has been working with the World Bank and regional development banks on plans for the trust. Its initial goal is to support reforms and not project financing, said Uma Ramakrishnan, a deputy director of strategy at IMF, during the briefing.
“The idea is to complement what they are doing,” she said of the banks. This collaboration would include the process of developing conditionalities for the lending to support the reforms.
About the author
Shabtai Gold
Shabtai Gold is a Senior Reporter based in Washington. He covers multilateral development banks, with a focus on the World Bank, along with trends in development finance. Prior to Devex, he worked for the German Press Agency, dpa, for more than a decade, with stints in Africa, Europe, and the Middle East, before relocating to Washington to cover politics and business.
