As the ongoing UN climate summit kicks off with a new fund to help developing nations cope with costly climate disasters, the International Monetary Fund has said it will help these countries make effective use of the loss and damage fund.
Kristalina Georgieva, managing director of the International Monetary Fund said there were two big questions as regards the new loss and damage fund, saying it has been settled it will be a voluntary contribution from rich countries.
She noted that the second question is how to structure the fund in the next couple of years in terms of where it sits, noting that the World Bank will be a good host but not to make its instruments but to provide the infrastructure and management capacity.
“It is settled that it will be a voluntary contribution but countries of higher levels of income are strongly encouraged to make this contribution. And the second is how to structure it for the next couple of years in terms of where it sits,” she said on the sidelines of COP28.
Responding to the call to reform the financing architecture of Monetary Development Banks and IFIs, the IMF’s managing director said in a constantly changing world, the financial institutions created a long time ago also need to change.
According to her, changing means two things for the IMF. “One, make sure that we have the financial strength, sufficient to meet the needs of our members and agility of how we deploy our instruments.”
“Two, legitimacy, be inclusive to represent the world as it is today.” She stated that the fund has received the support of its members to increase its quarterly resources by 50 percent and that it is close to $320 billion of additional predictable resources.
She noted that the international fund also got an important boost in its concessional financing. “We got $ 55 billion of lending capacity for our zero interest rate.”
“What we have done over the last years is quite remarkable. We have deepened the deployment of our emergency financing. This is the fastest liquidity provision there is in the whole world.”
Speaking on the progress IMF has made, the managing director said it is on the legitimacy of the fund, adding that getting a third chair to represent Sub-Saharan Africa on its board of directors has created more voice for the region that is now a big consumer of IMF support.
“What we want to see is also more representation of economies that have grown in size and our membership made a commitment by mid-2025, to come up with a new mechanism for redistribution of voters,” she said.