{
  "title": "Stepping Up to Meet Low-Income Countries’ Pandemic Recovery Needs",
  "publication": "IMF Blog, July 26, 2021",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs",
  "canonical": "https://www.imf.org/en/blogs/articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs",
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  "summary": "The pandemic caused output growth to stop or reverse, living standards to decline, poverty to increase, and threatened a decade of solid progress in low-income countries.",
  "sections": [
    {
      "heading": "A rapid, unprecedented response",
      "content": "- The pandemic caused output growth to stop or reverse, living standards to decline, poverty to increase, and threatened a decade of solid progress in low-income countries.\n- Financial assistance to 50 low-income countries reached $13 billion in 2020 compared to an average of $2 billion a year pre-pandemic: a more than sixfold increase.\n- The IMF provided $739 million in grant-based debt service relief to 29 of its poorest and most vulnerable members.\n- Three-quarters of the new lending came from the Poverty Reduction and Growth Trust (PRGT) — the IMF’s vehicle for zero-interest loans to low-income countries.\n- Most PRGT assistance was in the form of emergency disbursements with limited conditionality focused on ensuring transparent use of the resources to address pandemic-related needs.\n- IMF assistance was crucial for many low-income countries that entered the pandemic with limited financial means to support lives and livelihoods."
    },
    {
      "heading": "Far-reaching reforms to PRGT",
      "content": "- Increased access to concessional financing for all low-income countries: Limits on normal access to PRGT resources have been raised by 45 percent.\n- Uncapped access to concessional financing for the poorest countries: Access will no longer be subject to maximum levels for poorer countries with strong economic programs that meet the criteria for obtaining above-normal access levels.\n- Retention of zero interest rates for all PRGT facilities: Interest rates on all PRGT loans, reviewed every two years, will be kept at zero until July 2023.\n- Reinforced safeguards to protect low-income countries from over-indebtedness: IMF program design will pay added attention to the debt levels of countries at risk."
    },
    {
      "heading": "Projected demand and funding needs",
      "content": "- Total IMF lending to low-income countries is projected to reach around $48 billion during the pandemic and its immediate aftermath.\n- PRGT credit outstanding could peak at $32 billion in 2025-26 (chart, black line).\n- There are significant uncertainties around the timing and strength of economic recovery, and the possible demand for Fund concessional support (blue shaded area).\n- IMF loans will meet only a fraction of the external financing needs of low-income countries; bilateral donors and multilateral development agencies must also step up through bilateral aid and support for the IMF’s fund-raising efforts.\n- To maintain sustainable levels of debt, much financing will need to come through grants and highly concessional lending."
    },
    {
      "heading": "A two-stage funding strategy",
      "content": "- Stage 1:\n  - Mobilize a further $18 billion in PRGT loan resources.\n  - Mobilize $3.3 billion in new bilateral contributions for subsidy resources to allow continued lending through the PRGT at zero interest rates.\n  - Donors will be offered various, flexible mechanisms for providing subsidy resources.\n  - Use of IMF internal resources of about $0.7 billion will complement donor contributions.\n- Stage 2 (in 2024/25):\n  - By 2024/25—by which time current economic uncertainties are expected to have receded—the IMF will decide on the size of the PRGT and associated funding mechanisms for the long term.\n  - Use of existing and new SDRs is expected to facilitate the funding effort."
    },
    {
      "heading": "Policy implications and appeals to donors",
      "content": "- The IMF has increased access to financing and set a long-term vision for concessional lending while reinforcing safeguards against over-indebtedness.\n- Donor participation is critical: the IMF has opened the door for donors to play their part through subsidy contributions and support for concessional lending.\n- The sums required are large, but the alternative—inaction—would exact a far larger human and economic cost.\n\nSource: Stepping Up to Meet Low-Income Countries’ Pandemic Recovery Needs — IMFBlog, July 26, 2021\n\n---\n\n\n References\n\n- عربي\n- 日本語\n- Português\n\nSource: https://www.imf.org/en/blogs/articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs"
    }
  ],
  "bullets": [
    "[Markdown version](/en/blogs/articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs/index.md)",
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    "Authors: Christian Mumssen, Sen Nolan",
    "Published: July 26, 2021",
    "The pandemic caused output growth to stop or reverse, living standards to decline, poverty to increase, and threatened a decade of solid progress in low-income countries.",
    "Financial assistance to 50 low-income countries reached $13 billion in 2020 compared to an average of $2 billion a year pre-pandemic: a more than sixfold increase.",
    "The IMF provided $739 million in grant-based debt service relief to 29 of its poorest and most vulnerable members.",
    "Three-quarters of the new lending came from the Poverty Reduction and Growth Trust (PRGT) — the IMF’s vehicle for zero-interest loans to low-income countries.",
    "Most PRGT assistance was in the form of emergency disbursements with limited conditionality focused on ensuring transparent use of the resources to address pandemic-related needs.",
    "IMF assistance was crucial for many low-income countries that entered the pandemic with limited financial means to support lives and livelihoods.",
    "Increased access to concessional financing for all low-income countries: Limits on normal access to PRGT resources have been raised by 45 percent.",
    "Uncapped access to concessional financing for the poorest countries: Access will no longer be subject to maximum levels for poorer countries with strong economic programs that meet the criteria for obtaining above-normal access levels.",
    "Retention of zero interest rates for all PRGT facilities: Interest rates on all PRGT loans, reviewed every two years, will be kept at zero until July 2023.",
    "Reinforced safeguards to protect low-income countries from over-indebtedness: IMF program design will pay added attention to the debt levels of countries at risk.",
    "Total IMF lending to low-income countries is projected to reach around $48 billion during the pandemic and its immediate aftermath.",
    "PRGT credit outstanding could peak at $32 billion in 2025-26 (chart, black line).",
    "There are significant uncertainties around the timing and strength of economic recovery, and the possible demand for Fund concessional support (blue shaded area).",
    "IMF loans will meet only a fraction of the external financing needs of low-income countries; bilateral donors and multilateral development agencies must also step up through bilateral aid and support for the IMF’s fund-raising efforts.",
    "To maintain sustainable levels of debt, much financing will need to come through grants and highly concessional lending.",
    "Stage 1:",
    "Stage 2 (in 2024/25):",
    "The IMF has increased access to financing and set a long-term vision for concessional lending while reinforcing safeguards against over-indebtedness.",
    "Donor participation is critical: the IMF has opened the door for donors to play their part through subsidy contributions and support for concessional lending.",
    "The sums required are large, but the alternative—inaction—would exact a far larger human and economic cost.",
    "[عربي](https://www.imf.org/ar/News/Articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs)",
    "[日本語](https://www.imf.org/ja/News/Articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs)",
    "[Português](https://www.imf.org/pt/News/Articles/2021/07/26/blog-stepping-up-to-meet-low-income-countries-pandemic-recovery-needs)"
  ],
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