By Andrea Shalal
MARRAKECH, Morocco (Reuters) – Japan made a “very impressive pledge” to an International Monetary Fund account that provides subsidies to enable zero-interest rate loans to the poorest countries, IMF Managing Director Kristalina Georgieva said on Thursday.
The pledge made Japan the single largest donor – accounting for 20% – of the account that covers the interest payments on loans under the fund’s Poverty Reduction and Growth Trust (PRGT), Georgieva told reporters at the annual meetings of the IMF and World Bank.
Georgieva said a number of new pledges for the subsidy account were received on Wednesday, and further funds were expected when the IMF’s steering committee meets on Saturday.
The IMF has been urging member countries to fill a $1.2 billion gap in the $3 billion subsidy account endorsed by the membership in 2021.
Georgieva said 40 countries had stepped up to contribute, and one-third were emerging market economies.
The IMF is expected to release details on the fundraising effort on Saturday.
The PRGT is the fund’s main vehicle for providing low- or zero-interest loans to low-income countries (LICs) that support economic programmes and help leverage additional financing from donors, development institutions, and the private sector.
Since the beginning of the COVID-19 pandemic, the IMF said it has supported more than 50 low-income countries with some $29 billion in interest-free loans via the PRGT, reducing instability in a wide range of the world’s poorest nations, from Haiti to the Democratic Republic of Congo and Nepal.
The IMF projects demand for PRGT lending will reach nearly $40 billion through next year, more than four times the historical average. It says each $1 of subsidy resources allows the PRGT to provide about $5 in zero-interest loans.
(Reporting by Andrea Shalal; Editing by Robert Birsel)