WASHINGTON (Reuters) - The U.S. Congress has passed a $1.2 trillion government funding bill that will enable the United States to provide up to $21 billion to an International Monetary Fund (IMF) trust, according to U.S. Treasury Secretary Janet Yellen.
This funding will establish the United States as the primary supporter of the IMF’s Poverty Reduction and Growth Trust (PRGT), which offers zero-interest rate loans to help low-income countries stabilize their economies, enhance growth, and manage debt sustainability.
The bill was approved by Congress with a Senate vote after midnight, preventing a government shutdown.
The IMF spending fulfills a pledge made by President Joe Biden and other leaders from the Group of 20 large economies more than two years ago to provide $100 billion in assistance to low-income and vulnerable countries dealing with the fallout from the COVID-19 pandemic and facing macroeconomic risks.
The PRGT is the primary channel through which the IMF provides zero-interest loans to low-income countries, supporting their economic programs and mobilizing additional financing from donors, development institutions, and the private sector.
Since the start of the pandemic, the IMF has provided approximately $30 billion in interest-free loans through the PRGT to over 50 low-income countries, reducing instability in nations such as Haiti, the Democratic Republic of Congo, and Nepal.
The IMF anticipates that demand for PRGT lending will reach nearly $40 billion this year, more than four times the historical average.
Yellen, in a statement first reported by Reuters, said, "Today’s development represents a significant milestone in the United States fulfilling its commitment to assist low-income countries still grappling with economic challenges stemming from the pandemic, while addressing high debt vulnerabilities, climate risks, and spillovers from Russia’s war against Ukraine."
Kevin Gallagher, director of Boston University's Global Development Policy Center, noted that the long-awaited U.S. f
unding arrived "just in the nick of time," given the high interest rates affecting poorer countries, particularly in Africa, which have compounded their already substantial debt burdens.
He highlighted that Congress had declined to approve Treasury's proposals to allocate some of the funds to the IMF's Resilience and Sustainability Trust, established to provide financing for countries to address climate change and other challenges.
Yellen emphasized that the funding for the IMF underscores Washington's ongoing support for the institution and its unique role in the international monetary system, encompassing policy advice, capacity development, lending, and a focus on good governance, robust economic reforms, and necessary adjustments.
"I eagerly anticipate our continued collaboration with the IMF to meet the needs of low-income countries," Yellen concluded.