U.S. Treasury Secretary Janet Yellen announced on Saturday that the recently approved $1.2 trillion government funding bill includes provisions for the United States to provide up to $21 billion to the International Monetary Fund’s (IMF) Poverty Reduction and Growth Trust (PRGT).
This funding confirms the U.S. as the largest supporter of the PRGT, which offers interest-free loans to help low-income countries stabilize their economies, promote growth, and manage debt effectively.
The bill’s passage, following a Senate vote late at night, prevents a government shutdown.
The allocation for the IMF fulfills a commitment made by President Joe Biden more than two years ago, in line with other Group of 20 leaders, to contribute $100 billion to aid vulnerable countries grappling with the economic impact of the COVID-19 pandemic and facing macroeconomic challenges.
The PRGT is the IMF’s primary mechanism for providing interest-free loans to low-income nations, supporting their economic initiatives, and enabling them to access additional financing from various sources such as donors, development institutions, and the private sector.
IMF anticipates increased demand for assistance (Via Jimmy Anderson/Getty Images)
Since the pandemic began, the IMF has disbursed over $30 billion in interest-free loans through the PRGT to more than 50 low-income countries. This assistance has helped stabilize countries like Haiti, the Democratic Republic of Congo, and Nepal.
The IMF expects demand for PRGT loans to rise to nearly $40 billion this year, well above historical averages.
Yellen expressed satisfaction with the U.S.’s fulfillment of its commitment to assist low-income countries affected by the pandemic, climate risks, and global conflicts.
The allocation addresses the pressing need for affordable financing, especially in regions like Africa where interest rates are high.
Despite some congressional challenges regarding the allocation, Yellen affirmed the U.S.’s unwavering support for the IMF’s critical role in promoting global economic stability and development.
