Press Release No. 24/171

IMF Executive Board Completed the Interim Review of the Resilience and Sustainability Trust and Review of Adequacy of Resources

May 17, 2024

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the interim review of the Resilience and Sustainability Trust (RST) and review of Adequacy of RST Resources on May 8, 2024.

The interim review takes stock of experience with the RST since it became operational in October 2022. Demand for the RST has been high. To date, 18 arrangements have been approved—all seeking to help countries tackle challenges stemming from climate change—and most less than a year old.

Though most arrangements are at early stages, the Executive Board approved fine-tuning of a few elements of RST design to enhance its effectiveness. These include facilitating early disbursements for reform measures completed ahead of schedule and allowing for continuity of an RSF arrangement when there is a need to switch across qualifying concurrent Upper Credit Tranche (UCT)-quality programs.

The review also provides an assessment of the adequacy of the Trust’s resources and finds that increased near-term fundraising will be needed to meet strong demand. The Trust’s reserves remain adequate in the baseline and under a range of risk scenarios.

A more comprehensive review of the RST is planned for 2026.

Executive Board Assessment[1]

Executive Directors welcomed the Interim Review of the Resilience and Sustainability Trust (RST) and Review of Adequacy of Resources, which takes stock of the initial experience with RST implementation, proposes fine‑tuning the RST design, and assesses the resource adequacy and the financial outlook of the RST. They affirmed their support to the RST to provide long‑term catalytic financing, subject to appropriate risk mitigation, to assist countries’ reform efforts to reduce risks to prospective balance of payments (BoP) stability. They concurred that reforms under the RST should be grounded in countries’ existing climate strategies and should address macro‑critical country‑specific challenges through policies in areas of the Fund’s mandate and expertise. A number of Directors underscored the need for climate related reforms under RSF to focus on adaptation.

Directors positively noted the successful approval of 18 RSF arrangements so far, committing SDR 6.3 billion, and the 30‑35 additional requests expected in the near term. They considered that the strong demand for RST financing demonstrated the usefulness of the instrument to the membership. Observing that these arrangements have primarily focused on addressing climate change challenges, they looked forward to a forthcoming expansion of focus into pandemic preparedness and requested additional details on the Fund’s role in this area as compared with the World Bank and World Health Organization. While a number of Directors called for expansion of the list of qualifying longer‑term structural challenges eligible for financing under the RST, many Directors considered that such an expansion would not be feasible for quite some time. Directors encouraged staff to more closely link policy advice developed in RSF arrangements into the Fund's surveillance work. Some Directors agreed that potentially tailored solutions could be considered for small developing states that reflect their unique circumstances.

Directors underscored the importance of continued close collaboration—and progress in developing systematic approaches to collaboration—with development partners, including the World Bank and other MDBs, in formulating and evaluating Reform Measures (RMs) in RSF arrangements, developing complementary reform packages and CD provision, and bringing together key actors. This would leverage the limited Fund staff resources and expertise on climate and pandemic preparedness, avoid duplication of work, and maximize the catalytic funding impact of RSF arrangements. Directors also called for close collaboration with other partners to develop a coherent framework for assessing the catalytic effects of RSFs on financing.

Directors generally supported proposals to enhance the operational flexibility and clarity of the RSF. They concurred that the access norm would remain at 75 percent of quota, with higher access based on exceptionally high‑quality reform packages. While many Directors concurred that maximum access levels may be appropriate for exceptionally high‑quality reform packages, a number of other Directors stressed that deviations from the norm should remain country specific and supported by detailed justification to minimize evenhandedness concerns. Most Directors supported the proposals to bring forward the disbursement associated with (at most) one RM completed ahead of schedule per review. Directors supported the proposal to ensure continuity of the RSF arrangement when there is a need to switch across qualifying concurrent Upper Credit Tranche (UCT)‑quality programs and to eliminate the possibility of dual‑purpose reforms.

Directors agreed that the Trust's reserves are adequate to support its operational needs in the baseline and under a range of risk scenarios, while the interest rate cap for Group A countries remains appropriate. Directors emphasized the need for reinvigorated near‑term fundraising for the Trust to meet the strong demand for RSF arrangements and ensure the RST's ability to sustain its lending activities. They encouraged further progress on a hybrid contribution modality that could pave the way for significant additional financial contributions.

Directors looked forward to the comprehensive review of the RST in FY2026. They called for a systematic and expansive evidence base, including through feedback from RSF‑implementing authorities and mission chiefs, to support their deliberations. Areas to cover would include how effectively the RST is achieving its intended objectives, the appropriate size of the RST given trends in donor contributions and staff workload, access rules and limits. The review would also cover the planned reassessment of safeguards including post‑RSF monitoring, the potential inclusion of RST financing under the Fund’s Exceptional Access Frameworks. Proposals to explore developing a non‑disbursing RSF arrangement and to increase flexibility in requiring a concurrent qualifying UCT‑quality program could also be considered.

[1] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.