Washington, DC – The International Monetary Fund’s (IMF) Executive Board has approved significant reforms to enhance the Fund’s concessional lending facilities for low-income countries (LICs).
These changes, outlined in the “2024 Review of the Poverty Reduction and Growth Trust (PRGT) Facilities and Financing—Reform Proposals,” aim to ensure long-term financial support amid rising demand and funding challenges.
Since the COVID-19 pandemic, annual lending commitments to LICs have surged from an average of SDR 1.2 billion to SDR 5.5 billion.
However, the PRGT now faces a projected funding shortfall, which could drop its lending capacity to just SDR 1 billion annually by 2027 without intervention.
The reforms set a long-term annual lending envelope of SDR 2.7 billion, more than double pre-pandemic levels, and introduce a tiered interest rate mechanism.
This system will offer interest-free loans to the poorest LICs while applying a modest rate to better-off countries.
The changes are designed to balance financial sustainability with the need for continued support to LICs as they recover from recent economic shocks.
The IMF anticipates generating approximately SDR 5.9 billion in subsidy resources through a new financial framework and contributions from member states.
Directors emphasized the need for strong program design and policy support to ensure effective implementation and impact of these reforms.
The next review of PRGT facilities is scheduled for 2029.
