Riksbank gives loan to IMF for lending to low-income countries
News The Riksdag (the Swedish parliament) has given its approval to the Riksbank lending around SEK 6.9 billion to the International Monetary Fund (IMF), for onward lending to low-income countries as part of the IMF’s Poverty Reduction and Growth Trust (PRGT). The PRGT is the IMF's lending facility for 70 low-income countries and provides loans at subsidised interest rates.
In the wake of the coronavirus pandemic, many of the poorest countries’ already weak economies have been hit hard. Many of the countries covered by the PRGT have therefore been turning to the IMF for emergency loans since the beginning of April. This means that the funds that were available for lending in the PRGT at the beginning of the year are expected to run out soon. The approval from the Riksdag means that Sweden, through the Riksbank, will be one of around 15 countries topping up the resources in the PRGT. When countries borrow from the PRGT they usually undertake to carry out a number of macroeconomic measures to stabilise the economy. The IMF also carries out an analysis to ensure that the country has adequate capacity to repay the loan and that the borrowed funds are used transparently for the intended purposes.