The International Monetary Fund (IMF) has announced the establishment of the Resilience and Sustainability Trust (RST), a $41 billion mechanism for financing green initiatives in developing nations.
This declaration was delivered by Kristalina Georgieva, Managing Director of the IMF, during the New Global Financial Pact Summit in Paris, which concluded on Friday, June 23. The RST has exceeded its initial funding goal of $35 billion and is now aiming for $60 billion.
“We have created a new instrument: the Resilience and Sustainability Trust,” she stated. It offers long-term affordable finance with a 20-year repayment period and a 10-and-a-half-year grace period for the first time in IMF history.”
“How did we pay for it?” We funded it with the goodwill of nations like France – and we hope the United States will contribute – that have participated in their new SDR allocation and, as promised, have made this available to the IMF to enable us to provide this long-term, affordable loan”.
“We have met the pledged commitment of $100 billion in SDR channeling made in 2021.”
Around $60 billion of this pledge is currently in use by the IMF through the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust. Rich countries pledged to securing $100 billion in so-called Special Drawing Rights, or SDRs, a term for monies made available to all IMF members in sums ranging from $1 billion to $2 billion”, she said.
Many wealthy countries have redistributed a portion of their own Special Drawing Rights (SDRs) to help countries in need of emergency assistance.
In times of need, developing countries can obtain funds from the IMF. It is also vital to emphasize that accessing the RST does not add to poor countries’ debt loads. The RST funds are used to combat climate-related disasters in underdeveloped nations.
Georgieva noted that RST would be critical in hastening the green transition in underdeveloped nations and helping them to address energy transition concerns more effectively. She also added that the IMF has included climate considerations into everything they do over the years because climate is a macro-critical issue.
