International Monetary Fund chief Kristalina Georgieva speaks during the G20 Finance Ministers Meeting in Nusa Dua on the Indonesian resort island of Bali on July 15, 2022. (PHOTO / POOL / AFP)
WASHINGTON – The head of the International Monetary Fund Kristalina Georgieva on Friday urged member countries to plug the growing financing gap facing a fund that provides interest-free loans to the poorest countries, citing growing demand for financing.
The IMF chief called on member countries to step up pledges for the fund's Poverty Reduction and Growth Trust (PRGT), citing estimates that showed demand for PRGT funding reaching nearly $40 billion in the period from 2020 to 2024, which is more than four times the historical average.
Georgieva said pledges for the PRGT, seen as critical to help countries weather the COVID-19 pandemic, had reached only 75 percent of the $16.0 billion target, and less than half the $3.1 billion needed in subsidy resources
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Writing in a blog, Georgieva said pledges for the PRGT, seen as critical to help countries weather the COVID-19 pandemic, had reached only 75 percent of the $16.0 billion target, and less than half the $3.1 billion needed in subsidy resources.
"A failure to secure these resources would jeopardize the IMF’s ability to provide much needed support to low-income countries as they seek to stabilize their economies in an increasingly shock-prone world," Georgieva wrote.
"Additional pledges are … urgently needed to meet the agreed fundraising target by the time of this October’s annual meetings in Morocco."
She said the issue would be addressed on April 12 during a special session of IMF donors and recipients of concessional financing, citing an IMF estimate that low-income countries' financing needs would reach about $440 billion through 2026.
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The PRGT provides interest-free loans that support economic programs in developing countries, which in turn helps stimulate additional financing from donors, Georgieva wrote in the blog.
She said the IMF had supported more than 50 low-income countries with some $24 billion in interest-free loans via the PRGT since the beginning of the COVID pandemic, helping them grapple with economic shocks, inflation and rising debt vulnerabilities.