Year: 2022
Type: article
Abstract: Executive Directors approved the establishment of a Resilience and Sustainability Trust (RST) to support member countries' longer-term structural reform efforts by channeling SDRs to lowincome and vulnerable middle-income members.They concurred that the envisaged role of the Trust to provide affordable long-term financing to enhance economic resilience and sustainability would contribute to prospective balance of payments stability, consistent with the Fund's purposes.Directors noted that the economic costs of not addressing macro-critical longer-term structural challenges could be very high, and the support from the RST combined with the additional financing it will help catalyze would contribute to alleviating these risks.Most Directors supported RST operations to initially focus on addressing climate change and pandemic preparedness while maintaining flexibility to add additional qualifying challenges in the f uture with sufficiently broad consensus.A number of Directors, however, proposed expanding from the outset the qualifying challenges to a broader set of longer-term challenges.Directors generally considered that the proposed eligibility criteria, and the resulting list of 143 RST-eligible members, strike the right balance between breadth of access and resource constraints.Directors broadly welcomed the longer lending terms and endorsed the tiered interest rate structure that increases concessionality for lower income members.They noted that periodic interest rate reviews should balance the need to ensure the financial sustainability of the Trust and provide appropriate terms for borrowers, with an interest rate cap to be considered if needed to protect the lowest income borrowers from rising interest rates, following consultations with contributors.Directors endorsed the proposed lending modalities under RSF arrangements.They generally supported the requirement for a concurrent IMF instrument with upper-credit tranche-quality conditionality.Directors agreed with the access norm of 75 percent of quota with an access cap at 150 percent of quota or SDR 1 billion, whichever is lower.Many Directors, however, would have pref erred higher access limits for small quota countries, vulnerable states, and other qualifying members with large financing needs to address longer-term challenges.Most Directors agreed that RST access would not count towards triggering existing GRA and PRGT exceptional access policies and high combined access safeguards, although some Directors would have preferred such additional safeguards.Directors also welcomed counting RST credit outstanding toward post-financing assessments triggers, which may be recalibrated as appropriate at the RST review.Directors endorsed the governance structure of the RST, which places the IMF's Executive Board at its center, complemented by consultation with contributors on key issues and requiring the consent by contributors for certain amendments that affect key contributor interests.They emphasized the need for a timely, comprehensive review of the RST, in three years at the latest.They also agreed to an interim review to take stock of the initial experience 1 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.An explanation of any qualifiers used in summing ups can be found here: http://www.IMF.org
Source: MF Policy Paper
Language: English
Subfield: Development
Field: Social Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4293107779