Treasury’s Yellen says financing bill allows lending of $21 billion to IMF trust fund By Reuters

By Andrea Shalal

WASHINGTON (Reuters) – A $1.2 trillion government funding bill passed by Congress will allow the United States to lend up to $21 billion to an International Monetary Fund (IMF) trust fund to help the world’s poorest countries. world. US Treasury Secretary Janet Yellen said this on Saturday.

Yellen said the financing would make the United States the largest supporter of the IMF’s Poverty Reduction and Growth Trust (PRGT), which provides zero-interest loans to support low-income countries as they work to stabilize their economies, stimulate growth and improve debt. sustainability.

Congress passed the bill with a Senate vote after midnight, avoiding a government shutdown. The IMF spending will fulfill a promise made more than two years ago by President Joe Biden with other leaders of the Group of 20 large economies to provide $100 billion to support low-income and vulnerable countries recovering from the COVID-19 pandemic. 19 and grappling with macroeconomic problems. risks.

The PRGT is the IMF’s main vehicle for providing zero-interest loans to low-income countries to support their economic programs and help mobilize additional financing from donors, development institutions and the private sector.

Since the start of the pandemic, the IMF says it has supported more than 50 low-income countries with about $30 billion in interest-free loans through the PRGT, reducing instability in poor countries from Haiti to the Democratic Republic of Congo and Nepal .

The IMF expects demand for PRGT loans to reach nearly $40 billion this year, more than four times the historical average.

“Today’s development marks a critical milestone for the United States to meet its commitment to provide support to low-income countries that are still suffering from the economic scars of the pandemic, while responding to elevated debt vulnerabilities, climate risks and to the fallout from Russia’s war on Ukraine,” Yellen said in a statement first reported by Reuters.

Kevin Gallagher, director of Boston University’s Global Development Policy Center, said the long-delayed U.S. funding arrived “just in time, given exorbitant interest rates in poorer countries, especially in Africa.” , which have hit low-income countries hard, worsening the situation. already high debt burdens.

He noted that Congress has refused to approve Treasury plans to lend some of the funds to the IMF’s Resilience and Sustainability Trust, established to provide financing to countries working on climate change and other challenges.

Yellen said funding for the IMF reflects Washington’s continued support for the institution and the unique role it plays in the international monetary system through policy advice, capacity building and lending, and a focus on good governance, robust economic reforms and necessary adjustments.

“I look forward to continuing our partnership with the International Monetary Fund to support the needs of low-income countries,” Yellen said.