The Managing Director of the International Monetary Fund (IMF) on Wednesday called on the international community to support the world’s poorest countries by helping to close a funding gap facing the Poverty Reduction and Growth Trust, the Fund’s main instrument to support low-income countries with interest-free loans.
Speaking at the start of a session on concessional finance, Kristalina Georgieva said that low-income countries had been impacted severely by multiple economic shocks in recent years and their per-capita income is expected to rise at the slowest pace since 1990, hindering their aspirations to catch up with richer economies.
“This puts them in danger of further divergence unless we act,” she said.
Since the start of the pandemic, the IMF has provided $24 billion in support through the PRGT, alleviating people’s suffering and preventing instability from spreading beyond borders. But higher international interest rates have raised the cost of borrowing and increased the funding shortfall.
“We have to work together to close this gap and I have no doubt that we will be successful,” Georgieva said, adding that every dollar committed in PRGT subsidies translates into $5 of interest-free lending