IMF calls for urgent support from members to increase its quota resources
As part of its Global Policy Agenda presented in Marrakesh, the International Monetary Fund (IMF) called for urgent support from members to increase their quota resources and to provide funding for both the Poverty Reduction and Growth Trust (PRGT) , and for the Resilience and Resilience Trust (RST), for the benefit of the poorest members.
PRGT and RST are IMF concessional loans. However, while the PRGT is available to low-income countries that qualify for IMF preferential financing for poverty reduction, the RST is a newer mechanism established in 2021 to help low-income countries and the vulnerable middle-income countries to build resilience to climate change and other external risks.
βTo be able to continue support for our poorest and most vulnerable EMDEs (emerging market and developing economies), we rely on our economically stronger members to fill the remaining PRGT grant funding gap. To date, more than $40 billion in resources have already been pledged to the RST and – pending a successful review of the RST – we encourage members to increase their efforts, including by raising the ambition of economically stronger members beyond the target of redirecting 20 percent of the allocation of SDRs (Special Drawing Rights) for 2021,β the report said.
The IMF said the global economy has shown resilience, but recovery has been slow and uneven. “The medium-term outlook for global growth remains weak in an environment of fragmented trade, high debt levels and possibly higher longer-term interest rates.” Risks to the outlook are more balanced following decisive policy action in early 2023 to limit turmoil in the banking sector. But Russia’s war against Ukraine, the climate crisis and continued inflation in some areas remain concerns for the global economy,” it added.
The multilateral lending agency said the key policy priorities for member countries are preserving macroeconomic stability, rebuilding buffers while boosting prosperity through growth-oriented, green reforms and strengthening international cooperation to strengthen the Global Financial Safety Net (GFSN ) and the debt architecture.
To preserve macroeconomic stability, the IMF said central banks should continue to focus on a lasting restoration of price stability while calibrating policies in a data-driven manner. “Although there is now more differentiation between countries, for many this will require maintaining a tight monetary stance and avoiding premature policy easing.” Effective communication of policy objectives is essential to minimize the marginal costs of disinflation,” he adds.
In a separate joint statement, World Bank President Ajay Banga and IMF Managing Director Kristalina Georgieva said the existential threat posed by climate change, growing income and opportunity disparities, and geopolitical tensions are intensifying. “Rapid digitization and technological transformations create new challenges, but also opportunities, and no country should be left behind,” they added.
They called for decoupling growth from climate risk by developing management capacity and implementing cost-effective strategies for disaster risk reduction and planning, enabling the construction and maintenance of infrastructure resilient to climate shocks and disasters, strengthening regional efforts against environmental challenges that may lead to forced migration, including by conserving biodiversity and promoting sustainable land and water management practices.
Both Banga and Georgieva called on countries to support transformational reforms and modernize global cooperation; strengthening the international monetary system to meet the needs of countries; and to facilitate cross-border trade, payments and investment flows. They also called on countries to strengthen the multilateral trading system to support global economic cooperation and growth by ensuring that it is rules-based, non-discriminatory, fair, open, inclusive, sustainable and transparent with effective dispute settlement mechanisms.