Daily Times

The International Monetary Fund Managing Director Kristalina Georgieva has said that the Fund is exploring creation of a new trust that could allow its members to lend IMF reserves to more countries, including middle-income nations vulnerable to climate change.

Leaders of the Group of Seven rich economies had given the IMF a ‘green light’ to keep working on the plan, and China – the world’s second largest economy – had also expressed interest, along with middle-income countries that stand to benefit from such a fund, Georgieva said in an interview after the end of the G7 leaders summit in Cornwall, England.

The IMF would continue working on the “Resilience and Sustainability Trust” – which could help countries combat climate change or improve their health care systems – ahead of the July meeting of finance officials from the Group of 20 major economies, which includes China.

“Now we have the indication that we have a green light to go ahead, and we will reach out to others,” Georgieva said. “China has expressed interest to participate, and I would expect there could be other emerging market economies with sound fundamentals and strong reserve positions that may also do the same.”

G7 leaders on Sunday said they welcomed an expansion of the global lender’s emergency reserves, or Special Drawing Rights (SDRs), by $650 billion and backed a global target of providing $100bn to the most vulnerable countries. However, they said other countries should also participate.

The IMF’s Poverty Reduction and Growth Trust already allows members to share their IMF reserves, but small island states and other middle-income countries that have been hit hard by the coronavirus pandemic and significant economic downturns are not eligible for funding through that IMF vehicle.

Georgieva welcomed the G7’s commitment to donate one billion Covid-19 vaccine doses as a key step towards ending the pandemic and said discussions would continue within the G20.