The International Monetary Fund (IMF) recently announced the creation of the Resilience and Sustainability Trust (RST), a $41 billion tool designed to finance green projects in developing countries.
This announcement was made by IMF Managing Director, Kristalina Georgieva, during the New Global Financial Pact Summit in Paris, which concluded on Friday, June 23. The RST surpassed its initial funding goal of $35 billion and now aims to reach $60 billion.
During her presentation, Georgieva said:
“We have created a new instrument: the Resilience and Sustainability Trust. It lends for the first time in the history of the IMF long-term affordable financing with a 20-year repayment period and a 10-and-a-half-year grace period.
“How did we fund it? We funded it with the goodwill of countries like France – and we look forward to the U.S. contributing – that have taken part in their new SDR allocation and, per the promise made, they have made this available to the IMF to enable us to provide this long-term, affordable lending.
“We have reached the commitment pledged in 2021 –the pledge of $100 billion in SDR channelling. Around $60 billion of this pledge is already working at the IMF in the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust.
“We have seven countries that have benefited, and we have 40 countries expressing interest. And because of that, I want to announce today we are lifting our ambition to increase by 50% the size of the Resilience and Sustainability Trust, so we can respond to needs.”
Rich countries at an earlier meeting committed to secure $100 billion in so-called Special Drawing Rights, or SDRs, a term for funds available to all IMF members in amounts that are tied to the size of their economies.
Many rich countries have reallocated a portion of their own Special Drawing Rights (SDRs) to benefit countries with greater needs for emergency funding.
Developing countries can access the funds through the IMF in emergencies. It is also important to note that accessing the RST does not add to the debt burdens of developing countries. Funds under the RST are used to tackle climate-driven disasters in developing countries.
Georgieva emphasized that RST would play a crucial role in accelerating the green transition in developing countries and enabling them to confront energy transition challenges more effectively.
She also stated that over the years, the IMF has integrated climate considerations into everything they do, because climate is macro-critical.