U.S. Treasury Secretary Janet Yellen announced on Saturday that the recently passed $1.2 trillion government funding bill includes provisions for the United States to allocate up to $21 billion to the International Monetary Fund’s (IMF) Poverty Reduction and Growth Trust (PRGT).
This funding solidifies the U.S. as the largest supporter of the PRGT, which extends zero-interest loans to assist low-income nations in stabilizing their economies, fostering growth, and enhancing debt sustainability. The approval of the bill, following a Senate vote post-midnight, averts a government shutdown.
The allocation for the IMF fulfills a commitment made by President Joe Biden over two years ago, aligning with other Group of 20 leaders, to contribute $100 billion to aid vulnerable countries grappling with the economic aftermath of the COVID-19 pandemic and confronting macroeconomic challenges.
The PRGT serves as the IMF’s primary mechanism for disbursing zero-interest loans to low-income nations, facilitating their economic programs, and enabling them to access additional financing from various sources, including donors, development institutions, and the private sector.
Since the onset of the pandemic, the IMF has provided over $30 billion in interest-free loans through the PRGT to more than 50 low-income countries. This support has mitigated instability in nations like Haiti, the Democratic Republic of Congo, and Nepal.
The IMF anticipates that the demand for PRGT lending will surge to nearly $40 billion this year, far surpassing historical averages.
Yellen expressed satisfaction with the U.S.’s fulfillment of its commitment to assist low-income countries adversely affected by the pandemic, climate risks, and spillovers from global conflicts.
The allocation comes at a crucial juncture, addressing the urgent need for affordable financing in regions, particularly Africa, grappling with soaring interest rates.
Despite some challenges in Congress regarding the allocation, Yellen affirmed the U.S.’s enduring support for the IMF’s vital role in promoting global economic stability and development.
