Loan to IMF for lending to low-income countries
Date
05/04/2016
The Riksdag (the Swedish parliament) has given its approval to the Riksbank being able to lend SEK 5.8 billion to the International Monetary Fund (IMF), which will in turn provide loans to low-income countries in the scope of the IMF’s Poverty Reduction and Growth Trust (PRGT).
The PRGT is the IMF's lending facility for 69 low-income countries and provides loans at subsidised interest rates. Its funding is divided into two parts – loan resources and subsidy resources. Some of the IMF's member states contribute loan resources and receive interest on them. When the IMF in its turn lends money to low-income countries, the interest rate they pay is zero or very low. This means that further resources are needed to finance the difference between the interest rate paid to contributing countries and the low interest rate paid by low-income countries, these are known as subsidy resources.
Sweden has always been very positive to the IMF's work with low-income countries and has contributed generously to the subsidy resources in the PRGT, but has never before contributed loan resources. Many of the financially-strong member states in the IMF already contribute loan resources to the PRGT, but the IMF now sees an increased need and has therefore asked Sweden to contribute. The Riksbank, as fiscal agent to the IMF in Sweden, will begin negotiations on an agreement with the IMF in line with the mandate from the Riksdag during the spring.
