IMF Executive Board Completed the Interim Review of the Resilience and Sustainability Trust and Review of Adequacy of Resources
IMF News, May 17, 2024
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- Published: May 17, 2024
Overview
- The Executive Board of the International Monetary Fund (IMF) completed the interim review of the Resilience and Sustainability Trust (RST) and review of Adequacy of RST Resources on May 8, 2024.
- The interim review takes stock of experience with the RST since it became operational in October 2022.
- A more comprehensive review of the RST is planned for 2026.
Demand and operational experience
- To date, 18 arrangements have been approved—all seeking to help countries tackle challenges stemming from climate change—and most less than a year old.
- Directors noted:
- Successful approval of 18 RSF arrangements so far, committing SDR 6.3 billion.
- An expectation of 30‑35 additional requests in the near term.
- Most arrangements are at early stages; strong demand demonstrated the usefulness of the instrument to the membership.
- Directors observed arrangements have primarily focused on addressing climate change challenges and looked forward to a forthcoming expansion of focus into pandemic preparedness.
RST design fine‑tuning and operational flexibility
- The Executive Board approved fine‑tuning of a few elements of RST design to enhance effectiveness. These include:
- Facilitating early disbursements for reform measures completed ahead of schedule.
- Allowing for continuity of an RSF arrangement when there is a need to switch across qualifying concurrent Upper Credit Tranche (UCT)-quality programs.
- Eliminating the possibility of dual‑purpose reforms.
- Access and disbursement guidance:
- The access norm would remain at 75 percent of quota, with higher access based on exceptionally high‑quality reform packages.
- Proposals to bring forward the disbursement associated with (at most) one Reform Measure (RM) completed ahead of schedule per review were supported by most Directors.
- While many Directors concurred that maximum access levels may be appropriate for exceptionally high‑quality reform packages, a number of other Directors stressed deviations from the norm should remain country specific and supported by detailed justification to minimize evenhandedness concerns.
- Directors encouraged staff to more closely link policy advice developed in RSF arrangements into the Fund's surveillance work.
- Some Directors agreed that potentially tailored solutions could be considered for small developing states that reflect their unique circumstances.
Scope of reforms and collaboration with partners
- Directors concurred that reforms under the RST should be grounded in countries’ existing climate strategies and should address macro‑critical country‑specific challenges through policies in areas of the Fund’s mandate and expertise.
- A number of Directors underscored the need for climate related reforms under RSF to focus on adaptation.
- Several Directors called for expansion of the list of qualifying longer‑term structural challenges eligible for financing under the RST, but many Directors considered that such an expansion would not be feasible for quite some time.
- Directors underscored the importance of continued close collaboration with development partners, including the World Bank and other MDBs, to:
- Formulate and evaluate Reform Measures (RMs) in RSF arrangements.
- Develop complementary reform packages and CD provision.
- Bring together key actors to leverage limited Fund staff resources and expertise on climate and pandemic preparedness, avoid duplication of work, and maximize catalytic funding impact.
- Directors called for collaboration with other partners to develop a coherent framework for assessing the catalytic effects of RSFs on financing.
Resources, financial outlook, and fundraising
- The review assesses the adequacy of the Trust’s resources and finds:
- Increased near‑term fundraising will be needed to meet strong demand.
- The Trust’s reserves remain adequate in the baseline and under a range of risk scenarios.
- The interest rate cap for Group A countries remains appropriate.
- Directors emphasized the need for reinvigorated near‑term fundraising for the Trust to meet strong demand for RSF arrangements and ensure the RST's ability to sustain its lending activities.
- Directors encouraged further progress on a hybrid contribution modality that could pave the way for significant additional financial contributions.
- The comprehensive review in FY2026 will cover:
- How effectively the RST is achieving its intended objectives.
- The appropriate size of the RST given trends in donor contributions and staff workload.
- Access rules and limits.
- Planned reassessment of safeguards including post‑RSF monitoring.
- The potential inclusion of RST financing under the Fund’s Exceptional Access Frameworks.
- Proposals to explore developing a non‑disbursing RSF arrangement and to increase flexibility in requiring a concurrent qualifying UCT‑quality program.
Executive Board assessment and next steps
- Executive Directors welcomed the Interim Review of the RST and Review of Adequacy of Resources and affirmed support for the RST to provide long‑term catalytic financing, subject to appropriate risk mitigation, to assist countries’ reform efforts to reduce risks to prospective balance of payments (BoP) stability.
- Directors looked forward to the comprehensive review of the RST in FY2026 and called for a systematic and expansive evidence base, including feedback from RSF‑implementing authorities and mission chiefs, to support deliberations.
IMF Executive Board Completed the Interim Review of the Resilience and Sustainability Trust and Review of Adequacy of Resources — Press Release No. 24/171
