The PRGT is designed to fund itself over time, using earnings from its investments to provide concessional loans to its borrowers, including interest-free financing to the poorest LICs. In response to the COVID-19 pandemic and subsequent major shocks, the IMF significantly scaled-up its support to low-income member countries. Although the 2021 PRGT fundraising round successfully met its targets for loan and subsidy resources by 2023, the high demand for concessional financing, combined with rising interest rates, have put significant strains on PRGT finances.
As a result, in October 2024, with unanimous support from its membership, the IMF Executive Board approved a comprehensive package of policy reforms and financing measures for the PRGT. The reforms will enable a long-term self-sustained lending capacity of SDR 2.7 billion a year, more than double the pre-pandemic level.
Once IMF members have provided assurances that they will collectively transfer at least 90 percent of the total principal (or the equivalent in new financing) in the Interim Placement Administered Account (IPAA) to the PRGT (SDR 6.2 billion in nominal terms, SDR 5.9 billion in net present value terms), each member’s share of the IPAA principal will become available and transferable from the IPAA according to their instructions.
Additional measures to support the increased lending volume include:
- Generating SDR 2.3 billion through the implementation of a tiered interest rate mechanism. The poorest LICs will continue to benefit from interest-free lending, while higher-income LICs will be charged a positive, yet still concessional, interest rate.
- Securing SDR 0.5 billion from additional bilateral subsidy contributions.
- Raising SDR 0.4 billion by extending the suspension of the reimbursement of PRGT administrative costs to the GRA for five years.
The response so far shows strong support from the membership to ensure a self-sustained annual PRGT lending capacity of SDR 2.7 billion. Since the Executive Board approved the distribution framework, assurances worth 43.7 percent of the total amount to be distributed have been received. Broad participation from the membership is essential for the success of the GRA distribution in support of the PRGT. On April 18, 2025, the Executive Board approved the first annual distribution of net income transferring SDR 1.38 billion from the GRA into the IPAA.
