The International Monetary Fund (IMF) approved the creation of the so-called Resilience and Sustainability Fund to help low- and middle-income countries face long-term adversities such as the effects of climate change or preparation for future pandemics.
The deputy director of Fund for Strategy, Policies and SupervisionUma Ramakrishnan, explained this Monday at a press conference that the agency’s board of directors approved the new fund on April 13 and that it will launch it on May 1.
The objective of the fund is to provide vulnerable countries with low or medium incomes with long-term financing that allows them to improve their economic resilience and helps to balance their payments in a stable way.
This new tool will complement the existing one for loans from the IMF and its main distinguishing feature is that it focuses on long-term structural challenges, unlike the rest of the programmes, which are more focused on immediate liquidity problems.
“Initially, the fund will focus on mitigating the effects of climate change and improving preparedness for pandemicsas both are public interest services, and more targets may be added in the future,” Ramakrishnan said.
According to the Fund, access to this instrument will be voluntary, and three quarters of the member countries are likely to request it.
The money will come from wealthy nations with interests abroad, and the beneficiaries will be those “who need it most.”
In this sense, access will depend on the reforms carried out by potential recipients to strengthen their economy and the viability of their debt, they indicated from the IMF.
They will be loans with a maturity of twenty years and a grace period of ten and a half years, with a “modest” interest rate and lower for the poorest countries.
