The Diplomat
The Council of Ministers yesterday authorized two contributions of more than 92 million euros in favor of the International Monetary Fund (IMF) trust funds for Resilience and Sustainability and for Growth and Poverty Reduction.
On the one hand, Spain will contribute 30.5 million euros to the new IMF Trust Fund for Resilience and Sustainability, which will begin operating in the last quarter of the year. The resources will be used to provide financial support to vulnerable countries with low and medium per capita income, to promote projects to combat climate change and prepare for future pandemics.
“Spain was one of the first countries to promote the creation of this new trust fund, which will provide long-term financing to vulnerable low and middle-income countries, for example, in Africa and Latin America, which have a traditional IMF financial support program,” said the Executive.
The aim of this fund is to make these countries more resilient to external shocks, strengthen their macroeconomic stability and reduce the risk of balance of payments crises. To this end, the financial support of this fund will initially focus on measures to address climate change and to improve preparedness for future pandemics, although it is expected that other objectives may be incorporated at a later date.
On the other hand, the Council of Ministers authorized a financial contribution of 62 million euros to the IMF’s Poverty Reduction and Growth Facility, through which loans are channeled on concessional terms (i.e., with more favorable financial conditions for the beneficiaries than those of the market) to low-income countries. With these resources, Spain becomes one of the countries that endow this account for the purpose of financing the concessional component of this type of IMF support.
“The international community thus continues to make progress in responding to the situation of vulnerability in which many countries, particularly low-income and emerging countries, find themselves. In addition to the health, economic and social impact of the crisis triggered by COVID-19, there is the Russian invasion of Ukraine, which affects third countries through indirect channels, such as energy and food prices,” the Government stated.
In parallel, the Bank of Spain will make a contribution in Special Drawing Rights (SDRs) to the IMF’s Resilience and Sustainability Trust Fund, bringing Spain’s total contribution to approximately €1,860.5 million. This contribution is in addition to the SDRs already channeled by the Bank of Spain to the IMF’s Poverty Reduction and Growth Trust Fund, also in the amount of 350 million SDRs, in April of this year. In this way, Spain fulfills its commitment to make 20% of the SDRs received in the 2021 general allocation available to the most vulnerable countries.
