IMF approves $8 billion reform package for low-income countries through PRGT expansion

The International Monetary Fund (IMF) Executive Board on Wednesday (October 16) approved a comprehensive reform and financing package to expand the Poverty Reduction and Growth Trust (PRGT), aiming to enhance support for low-income countries facing economic challenges. The package, valued at approximately $8 billion, will bolster concessional financing, doubling the PRGT’s annual lending capacity to $3.6 billion.

IMF Managing Director Kristalina Georgieva stressed the package’s importance, noting, “Our membership today has adopted a comprehensive reform and financing package for the Poverty Reduction and Growth Trust (PRGT) to bolster the IMF’s support to low-income countries.”

The new funding framework allows for deploying IMF net income and reserves to increase subsidy resources for PRGT over the next five years. Paired with recent reform measures and prior bilateral fundraising, this expansion will help address financing shortfalls exacerbated by recent global shocks.

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“This agreement comes at a critical time as low-income countries have suffered a series of unprecedented shocks and face substantial financing needs,” Georgieva said.

“The approved package will generate the concessional resources necessary to ensure that the Fund can continue supporting low-income countries to implement sound policies and build strong institutions.”

To better address diverse economic conditions across low-income countries, the reforms introduce a new interest rate mechanism that preserves interest-free lending for the poorest while adjusting terms for other low-income members.

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Georgieva said, “These reforms will help tailor IMF support to country-specific needs, recognising the increasing economic heterogeneity of low-income countries.”

The expanded PRGT structure is expected to attract further public and private funding, reinforcing the global commitment to low-income economies. Georgieva added, “Our global membership has demonstrated once again its shared commitment to support our low-income members in challenging economic times.”