IMF pledges new lending support for low-income countries

IMF pledges new lending support for low-income countries

The International Monetary Fund (IMF) has announced that it would revamp its concessional lending programmes to better support low income countries (LIC) during COVID-19 and aid their economic recovery.

In a news release, the Bretton Woods institution Thursday said its executive board, last week, backed reforms that include raising the access limits for concessional financing for low-income countries by 45 per cent; eliminating access limits for the poorest countries with eligible programmes and maintaining zero per cent interest rates on such loans.

The changes are needed, given an eightfold increase in IMF lending to low-income countries to $13.2 billion in 2020 and signs that demand for concessional financing will remain high for several years, IMF said.

“The two-stage funding strategy that was approved by the IMF Board will secure the resources that we need to really get through this pandemic and its immediate aftermath,” said Christian Mumssen, Deputy Director of IMF’s Financial Department.

To boost the lending capacity of its Poverty Reduction and Growth Trust (PRGT), IMF said it would seek an additional $18 billion in coming years from member countries, on top of some $24 billion already raised since the start of the crisis, plus $4 billion in subsidies to support zero-per cent interest rates.