Tool Accepts Donations of Special Drawing Rights Aid
The IMF Board of Directors established a new fund to aid developing countries with long-term pandemic and climate challenges. The Resilience and Sustainability Trust (RST) offers low-cost loans to developing countries with emergency currency or Special Drawing Rights (SDRs) that wealthy countries will contribute.
“The new trust provides an important way for wealthy countries to support developing countries struggling with the impacts of crises spurred by the pandemic and climate change,” said Eric LeCompte, Executive Director of religious development group Jubilee USA Network and a United Nations finance expert. “With the growing challenges that developing countries face and new global shocks from the war in Ukraine, we need more tools like this trust.
In August the IMF created $650 billion SDRs. Due to IMF rules, about $230 billion went to developing countries and more than $400 billion went to developed countries. The RST is a process that enables wealthy countries use their SDRs to aid developing countries. Countries can also pledge SDR funding to the Poverty Reduction and Growth Trust, a fund that lends at a zero interest rate but supports only the poorest countries.
“The decision to allow developing middle-income countries to access the new trust recognizes the significant difficulties these countries face,” added LeCompte.
The Fund seeks to mobilize $45 billion for the RST in the coming months. The G20 continue discussions on how to channel SDRs through development banks.
“The new trust is a start, but we will need additional ways to donate Special Drawing Rights to developing countries that struggle to meet development goals and deal with health crises," stated LeCompte.
Read IMF Managing Director's full statement on the creation of the RST here.