The International Monetary Fund (IMF) has approved about $91 billion in financing to 80 countries, including $11.3 billion to 48 low-income countries since the onset of the pandemic in late March and as of September 15, 2020. The fund, which stated this in a recent report, said that out of this amount, it channeled $30 billion in financing to 69 countries through emergency lending facilities.
The Bretton Woods Institution explained that it provides financing to member countries experiencing actual, potential, or prospective balance of payments problems to help them rebuild their international reserves and restore conditions for strong economic growth, while correcting underlying problems.
It also said it provided emergency financing and massively stepped up such financing to help member countries address the immediate impact of the pandemic. According to the report, “unlike development banks, the IMF does not lend for specific projects; instead, IMF financing is meant to help member countries tackle balance of payments problems, stabilise their economies, and restore sustainable economic growth.
IMF financing can also be provided in response to natural disasters or pandemics. Finally, the IMF also provides precautionary financing to help prevent and insure against future crises and continues to enhance the tools available for crisis prevention.
“In broad terms, the IMF has two types of lending—loans provided at non-concessional interest rates and loans provided to low-income countries on concessional terms. Currently, concessional loans do not bear any interest.
The IMF has responded to the pandemic with unprecedented speed and magnitude, making use of its adcurrent $1 trillion lending capacity. “This response has entailed provision of financial assistance to countries with urgent or potential balance of payments needs with the aim to help protect the lives and livelihoods of people, especially the most vulnerable. Between the onset of the pandemic in late March and September 15, 2020, about $91 billion (or SDR 64 billion) has been committed to 80 member countries, of which $30 billion was emergency financing (RCF and RFI).”
It noted that the IMF board had temporarily streamlined the internal processes to allow the fund to respond more quickly to members’ requests for emergency assistance during the pandemic, pointing out that in many cases the IMF made financing available within weeks of a request for emergency financing. “Policy safeguards were introduced in August 2020 to help mitigate financial risks from a member having high levels of combined high access from both the Poverty Reduction and Growth Trust and General Resources Account lending facilities.
“Under the new policy, safeguards apply to any Fund member with combined access to GRA and PRGT resources that exceeds quota-based thresholds set at the same level that triggers the exceptional access framework of the GRA,” the report stated.