Frequently Asked Questions on the Poverty Reduction and Growth Trust (PRGT) Review

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The IMF supports Low-Income Countries (LICs) through policy advice, capacity development and concessional financing aimed at macroeconomic stability and growth.
LICs’ demand for IMF financing reached unprecedented levels over the past five years due to successive shocks; PRGT credit outstanding has tripled.
As a result of exceptional lending volumes and sharply higher interest rates, the PRGT faced an acute funding shortfall, with its “self-sustained” lending capacity falling to only SDR 1 billion per year.
The IMF Executive Board approved on October 15, 2024, a comprehensive package of reforms and financing to bolster support to LICs while restoring the self-sustainability of the PRGT.

The PRGT will have a long-term self-sustained annual lending envelope of SDR 2.7 billion (US$3.6 billion), more than twice the envelope available before the Covid-19 pandemic.
Near-term lending volume is expected to be somewhat higher but decline from recent peaks observed in the aftermath of the Covid-19 pandemic.
Annual demand for PRGT financing is expected to decrease from recent historic peaks but remain well above pre-pandemic levels.

Effective January 1, 2025, the access norm for Extended Credit Facility (ECF) and Stand-by Credit Facility (SCF) arrangements will be set at 145 percent of quota; the norm is neither a floor nor a ceiling.
Access limits will remain at 200 percent of quota annually, and 600 percent of quota in total, keeping the higher levels decided as a temporary measure in December 2023.
The space between the norm and the limits provides flexibility to assist countries with higher needs.
Key features of the blending policy remain: countries required to blend will continue with a 1:2 PRGT:GRA financing; other countries retain access to PRGT concessional financing without a blending requirement. The poorest LICs (around half of all PRGT-eligible countries) will benefit from the absence of a cap on such financing.
Access to IMF resources will continue to be determined case-by-case using standard criteria: (i) the size of the balance of payment need; (ii) the strength of the adjustment program; (iii) the capacity to repay; and (iv) IMF credit outstanding and track record of past use.

Effective May 1, 2025, a new interest rate mechanism will apply to new PRGT lending. Outstanding credit under financing approved before that date, and new disbursements under existing arrangements (including potential augmentations), will remain subject to the current zero interest rate.
The new mechanism will:
- Set interest rates at 0 percent for the poorest PRGT-eligible members (around half of all LICs).
- Charge modest, concessional interest rates for other PRGT-eligible countries, tied to the SDRi.
Specific tiering:
- Tier 1 (lowest income): Interest rate on new post-reform PRGT arrangements = 0 percent; PRGT access = Uncapped, non-presumed blenders.
- Tier 2 (higher income) — Tier 2A (meet market access criterion): Interest rate = 70 percent of SDRi; Access = Presumed blenders (1:2 PRGT:GRA) with PRGT access capped per arrangement at the norm; and at the AAL/CAL.
- Tier 2 (higher income) — Tier 2B (do not meet market access criterion): Interest rate = 40 percent of SDRi; Access = Non-presumed blenders with PRGT access capped at the AAL/CAL.
The tiered interest rate structure complements the tiered PRGT access structure under the PRGT/GRA blending policy and will act as an automatic stabilizer to reduce pressure on PRGT resources from subsidization of interest rates.
The new PRGT lending terms remain substantially concessional, below GRA lending terms and well below prevailing and expected market rates.

Safeguards have been strengthened and streamlined, centered around the access norm, to reflect risks associated with higher PRGT credit exposure and elevated macroeconomic vulnerabilities in many LICs.
Countries currently eligible for borrowing under the PRGT will remain eligible after the review. The IMF Executive Board assessed the PRGT eligibility framework as broadly appropriate, with marginal adjustments.
Recognizing elevated uncertainties regarding the economic outlook for LICs, no country was proposed for graduation at this point.

The PRGT’s funding gap will be addressed through changes in lending policies, bilateral contributions, and a framework for the use of IMF internal resources.
The IMF membership agreed on a framework to distribute IMF net income and/or reserves to facilitate generation of SDR 5.9 billion (about US$ 8 billion) in additional subsidy resources over the next five years (in net present value terms).
The distribution framework, approved by consensus of the entire IMF membership, leverages the IMF’s historically strong financial position to boost concessional lending and allow continued support for LICs’ stability, growth, and poverty reduction goals.

The substantially increased volume of PRGT financing available under the reform package is expected to outweigh the impact of modest interest charges compared with a scenario without the reform.
The new interest rate mechanism will apply only to new ECF and SCF arrangements as well as outright disbursements under the RCF approved from May 1, 2025, onwards; accumulated credit outstanding and arrangements approved before that date (as well as any subsequent augmentations) will continue to be subject to the current zero interest rate.