New funding facility from IMF to support climate change

The International Monetary Fund (IMF) has created a new instrument, the Resilience and Sustainability Trust (RST) facility, for low- and middle-income member countries, including Caribbean states.

This will provide funding support to undertake structural engagements that address climate change vulnerabilities.

Managing Director, Kristalina Georgieva, who made the announcement on Friday, said the facility was endorsed by the IMF's membership and approved by the board in April, and subsequently shared with finance ministers.

She indicated that the fund is looking to secure a minimum of US$45 billion of which US$40 billion in pledges have, to date, been received from member countries with strong reserve positions.

Georgieva, who advised that the commitments made were from the countries' Special Drawing Rights (SDR) with the IMF, said the institution will commence allocating funds to target beneficiary member countries in October.

The IMF chief further informed that the instrument would span 20 years, with a 10-year-and-a-half moratorium.

“That is to give [them] that fiscal space to take the action that is costly but paramount for the resilience of the countries. We realise that if we are to incentivise our members to undertake structural reforms that would make them more resilient [to climate change], we have to [provide] a longer timeline than our traditional lending [periods],” Georgieva said.

She was speaking at an IMF semi-virtual high-level panel discussion on 'Building Resilience and Sustainability in the Caribbean' in Barbados.

The event was hosted by that country's Prime Minister Mia Mottley, who championed the RST, and moderated by Jamaica's Minister of Finance and the Public Service, Dr Nigel Clarke.

Meanwhile, Georgieva said the IMF is looking to work with other international funding institutions and member countries to bolster the resources that will be provided.

“The ultimate goal is to prevent balance of payment shocks in the future… and that is strictly within the mandate of the IMF,” she added.

Deputy Prime Minister of Canada Chrystia Freeland, who participated virtually, said her country, which contributed US$2.44 billion to the RST, fully supports the instrument.

“It's something that Canada 100 per cent champions, we really believe in it,” she said while lauding Georgieva and Mottley on their leadership in creating the facility.

Mottley noted that the RST is welcome in the Caribbean, particularly as “we have very little choices available to us.

“What is good is that the instruments that the IMF has created not only relate to debt, but they're also policy-based,” she said.

- JIS News

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