September 30, 2022

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The International Monetary Fund approves an increase in credit capacity for poor countries

The International Monetary Fund (IMF) announced on Thursday that it has agreed to drastically increase its ability to lend interest-free money to poor countries, helping them cope with the economic damage caused by the Govt-19 epidemic.

These changes, approved by the Board of Directors of the International Monetary Fund on July 14, help raise the limits on access to credit to allow the company to be more flexible in providing financial assistance to these countries.

It does not aim to “provide more credit to all International Monetary Fund programs,” but to “provide more zero interest funding to countries with strong economic plans to manage epidemics and a full recovery path,” said Deputy Director Sean Nolan. Department of Policy and Strategic Review. This is not writing blank checks, finance officials insisted.

The International Monetary Fund provides this funding mostly through “multi-year loan agreements”, unlike 2020, when most aid was provided through emergency programs, which were provided immediately, subject to economic policies.

The epidemic is engulfing poor countries

The Govt-19 crisis has depleted the resources allocated to these countries, most of which are in sub-Saharan Africa, much faster than expected, and their demand will be higher, the International Monetary Fund said.

He said the funding had dramatically increased funding for poorer countries last year, eight times the average for the previous three years, and demand was “expected to remain high for many years”.

The International Monetary Fund It is also working to increase funding for its Poverty Alleviation and Development Fund (PRGT) to provide zero interest loans, calling for the initial payment of about $ 4 billion, including contributory members.

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The organization is demanding an additional $ 18 billion by 2024-2025, which may come from existing and new exclusive drawing rights (SDRs) and members’ reserves.

The board of directors approved in early July to increase the company’s balance sheet and credit capacity with a new public allocation of $ 650 billion in SDRs.

The proposal must now be approved by the governing body, with the allocation coming into effect by the end of August.