The Executive Board of the International Monetary Fund (IMF) has endorsed a comprehensive reform and financing package for the Poverty Reduction and Growth Trust (PRGT), aimed at enhancing support for low-income countries.
The package, which includes a $8 billion subsidy over the next five years, was developed to provide much-needed concessional financing to help these nations manage unprecedented economic challenges.
IMF Managing Director, Kristalina Georgieva, highlighted the significance of the reform in a press statement released on Wednesday saying the package for the PRGT would help tailor IMF support to country-specific needs, recognizing the increasing economic heterogeneity of low-income countries.
The new framework enables the deployment of IMF net income and reserves to generate additional resources, with the goal of increasing the PRGT’s annual lending capacity to $3.6 billion — more than double the pre-pandemic level.
- This, in turn, is expected to stimulate further contributions from both public and private sectors.
- According to the IMF, this development comes at a critical time, as low-income countries have been hit hard by global economic shocks and continue to face considerable financing needs.
- The IMF said it aims to channel the increased resources toward supporting these countries in implementing sound economic policies and building resilient institutions.
- The reform also includes a new interest rate mechanism, ensuring that the poorest nations continue to receive interest-free loans while maintaining favorable lending terms for others.
- Access policies have also been designed to offer flexibility, ensuring that IMF assistance is tailored to the unique needs of individual countries.
To ensure that scarce concessional resources are targeted to those most in need, the IMF Managing Director in the statement said a new interest rate mechanism will maintain interest-free lending for the poorest countries while ensuring that lending terms for others have a sufficient degree of concessionality.
“Access policies will allow for flexibility in calibrating Fund support, and safeguards will be strengthened and streamlined.
“Our global membership has demonstrated once again its shared commitment to support our low-income members in challenging economic times,” Georgieva stated.
The World Bank defines low-income economies as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,145 or less in 2023, while lower-middle-income economies, where Nigeria is classified, are those with a GNI per capita between $1,146 and $4,515.
IMF’s list of low-income countries as of 2024 shows that there are 68 of them in total. These include Afghanistan, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Cameroon, Cabo Verde, Central African Republic, Chad, Comoros, Congo, Democratic Republic, Côte d’Ivoire Djibouti, Dominica, Eritrea Ethiopia, Gambia, Ghana, Grenada, Guinea, Guinea-Bissau, Haiti, Honduras, Kenya, Kiribati, Kyrgyz Republic, Lao P.D.R., Lesotho, Liberia, Madagascar, and Malawi.
Others are Maldives, Mali, Marshall Islands, Mauritania, Micronesia, Moldova, Mozambique, Myanmar, Nepal, Nicaragua, Niger, Papua New Guinea, Rwanda, Samoa, São Tomé and Príncipe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, St. Vincent and the Grenadines, Sudan, Tajikistan, Tanzania, Timor Leste, Togo, Tonga, Tuvalu, Uganda, Uzbekistan, Vanuatu, Yemen, Republic of, Zambia and Zimbabwe.
