IMF Approves $8 Billion Reform Package for Low Income Nations The Executive Board of the International Monetary Fund (IMF) has approved a comprehensive reform and financing plan for the Poverty Reduction and Growth Trust (PRGT) to bolster assistance to low-income countries.
This package, which includes an $8 billion subsidy over the next five years, is designed to provide crucial concessional financing to help these nations navigate unprecedented economic challenges.
In a press statement on Wednesday, IMF Managing Director Kristalina Georgieva emphasized the importance of the reform, stating that it would enable the IMF to better address country-specific needs, acknowledging the growing economic diversity among low-income countries.
The International Monetary Fund (IMF) has increased the annual lending capacity of the Poverty Reduction and Growth Trust (PRGT) to $3.6 billion, more than doubling its pre-pandemic level. This expansion is made possible through the deployment of IMF net income and reserves to generate additional resources, and it is expected to encourage further contributions from both public and private sectors.
This boost comes at a critical time, as low-income countries are grappling with global economic shocks and significant financial needs. The IMF intends to channel these resources into supporting sound economic policies and strengthening institutions in these nations.
A key feature of the reform is the introduction of a new interest rate mechanism, ensuring that the poorest countries continue to receive interest-free loans while maintaining concessional lending terms for others. The reform also includes more flexible access policies, allowing the IMF to better tailor assistance to the specific needs of individual countries.
IMF Managing Director Kristalina Georgieva highlighted the importance of these changes, noting that the global membership has shown a shared commitment to supporting low-income countries during challenging economic times.
The IMF’s list of low-income countries, as of 2024, includes 68 nations such as Afghanistan, Bangladesh, Ghana, Ethiopia, and Zambia. These countries are defined as those with a gross national income (GNI) per capita of $1,145 or less, as per the World Bank’s classification for 2023.
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