The International Monetary Fund (IMF) in an effort to build resilience to the balance of payments shocks says it is proposing a $50 billion trust fund to help low and vulnerable middle-income countries. The IMF stated that amid the covid-19 pandemic it is crucial not to overlook the long-term challenge of transforming economies so as to achieve sustainable and inclusive growth. The IMF who made this disclosure via a blog post titled, ‘A New Trust to Help Countries Build Resilience and Sustainability, also Identified Climate change as a long-term challenge that threatens macro-economic stability and growth in many countries through natural disasters and disruptions to industries, job markets, and trade flows, among others.
According to IMF, “A proposed $50bn trust fund could help low-income and vulnerable middle-income countries build resilience to balance of payments shocks and ensure a sustainable recovery.
"The pandemic has taught us that not addressing these long-term challenges in a timely manner can have significant economic consequences, with the potential for the future balance of payments problems.
"Even as countries continue to battle COVID-19, it is crucial not to overlook the longer-term challenge of transforming economies to become more resilient to shocks and achieve sustainable and inclusive growth.
“Climate change is another long-term challenge that threatens macroeconomic stability and growth in many countries through natural disasters and disruptions to industries, job markets, and trade flows, among others.
“These are global public policy challenges, and it is the shared responsibility of individual countries and the international community to take timely actions. The RST’s resources would be mobilised on a voluntary basis from members who wish to channel their SDRs or currencies for the benefit of poorer or vulnerable countries.”
In its conclusion, stated that to be eligible for this funding, a country must be a member of IMF and also a low-income country, developing and vulnerable small states, as well as all middle-income countries with per capita GNI below 10 times the 2020 IDA operational cutoff, or about $12,000.
The IMF added that it would need the support of its member states and approval by the IMF Executive Board for the proposed Fund. “With broad support from the membership and international partners, we hope that the Trust can be approved by the IMF Executive Board before the upcoming Spring Meetings and for it to become fully operational before the year’s end.” - IMF
