In July, the IMF approved reforms to expand the lending powers of the Poverty Reduction and Growth Trust (PRGT), its concessional lending facility, to allow the Fund to “better support” low-income countries (LICs) in their pandemic response. The PRGT access limits have been increased to 145 per cent of a country’s IMF quota annually and 435 per cent for the total size of the loan, up from 100 per cent and 300 per cent, respectively. Additionally, for the poorest LICs eligible for “exceptional access”, hard limits on the size of concessional loans have been removed altogether.

The IMF disbursed $10 billion through the PRGT in 2020, by far the largest amount in the trust’s history, and 2021 is already the second largest year for lending. The large demand on resources, coupled with the plans to increase lending capacity, have led the IMF to call for $4 billion to be granted by rich countries and an additional $17.9 billion worth of SDRs on-lent through a channelling of rich countries’ new SDR allocations to the PRGT (see Observer Autumn 2021).

Reflecting on the PRGT reforms, Tim Jones, of UK-based civil society organisation Jubilee Debt Campaign, stated that, “The IMF is proposing a huge increase in lending and so debt for lower income countries. In the absence of proactive debt restructurings, these loans are primarily used to bail out previous reckless lenders, while austerity is pushed on the borrowing country. The real beneficiaries are banks and hedge funds from rich countries, while citizens are impoverished.” Emphasising the debt concerns, research from Belgium-based network Eurodad published in March had already noted increasing debt vulnerabilities for developing countries as a consequence of the pandemic.