IMF Unveils New Trust to Help 'Vulnerable' Countries

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas
The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas
TT
20

IMF Unveils New Trust to Help 'Vulnerable' Countries

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas
The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, US, September 4, 2018. REUTERS/Yuri Gripas

The IMF plans to raise at least $45 billion for a new trust to help "low-income and vulnerable middle-income countries" cope with protracted challenges like pandemics and climate change, it announced Wednesday.

The Washington-based crisis lender's Resilience and Sustainability Trust (RST) will come into effect May 1, and is in addition to a $650 billion boost to reserve assets called Special Drawing Rights (SDR) allocated earlier this year.

"As the world is confronting consecutive global shocks, we must not lose sight of the critical actions needed today to ensure longer-term resilience and sustainability," IMF Managing Director Kristalina Georgieva said in a statement announcing the new trust.

She added that the goal of the trust is to redistribute funds from wealthier countries to more vulnerable ones as members look to support global economic recovery from the Covid-19 pandemic.

Around three-quarters of the IMF's 190 members will be eligible to borrow from the new tool, it estimates.

First proposed last year, the RST will offer extended repayment periods, with a 20-year maturity and 10-year grace period, AFP reported.

In order to access the money, member countries will need "a package of high-quality policy measures," have sustainable debt and "adequate capacity to repay," the IMF said.

It added that the trust will require close collaboration with the World Bank and other international financial institutions.

"The RST will amplify the impact of the US$650 billion SDR allocation implemented last year by channeling resources from economically stronger members to countries where the needs are greatest," said Georgieva.

The increase was the biggest ever for SDRs, which are international reserve assets that aid governments in protecting their financial reserves against global currency fluctuations and also help the IMF calculate loans and interest rates.



Oil Edges Down amid Bearish Trump Tariff Outlook

A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo
A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo
TT
20

Oil Edges Down amid Bearish Trump Tariff Outlook

A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo
A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo

Oil prices declined moderately on Thursday as investors weighed the potential impact of US President Donald Trump's tariffs on global economic growth.

Brent crude futures were down 23 cents, or 0.3%, at $69.96 a barrel by 0904 GMT. US West Texas Intermediate crude fell 32 cents, or 0.5%, to $68.06 a barrel.

On Wednesday, Trump threatened Brazil, Latin America's largest economy, with a punitive 50% tariff on exports to the US, after a public spat with his Brazilian counterpart Luiz Inacio Lula da Silva.

He has also announced plans for tariffs on copper, semiconductors and pharmaceuticals and his administration sent tariff letters to the Philippines, Iraq and others, adding to over a dozen letters issued earlier in the week including for powerhouse US suppliers South Korea and Japan.

Trump's history of backpedaling on tariffs has caused the market to become less reactive to such announcements, said Harry Tchilinguirian, group head of research at Onyx Capital Group.

"People are largely in wait and see mode, given the erratic nature of policy making and the flexibility the administration is showing around tariffs," Tchilinguirian said.

Policymakers remain worried about the inflationary pressures from Trump's tariffs, with only "a couple" of officials at the Federal Reserve's June 17-18 meeting saying they felt interest rates could be reduced as soon as this month, minutes of the meeting released on Wednesday showed.

Higher interest rates make borrowing more expensive and reduce demand for oil, Reuters said.

Supporting oil prices however was a weaker US dollar in Thursday's Asia trading session, said OANDA senior analyst Kelvin Wong. A weaker dollar lifts oil prices by making it cheaper for holders of other currencies.

US crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday. Gasoline demand rose 6% to 9.2 million barrels per day last week, the EIA said.

Global daily flights were averaging 107,600 in the first eight days of July, an all-time high, with flights in China reaching a five-month peak and port and freight activities indicating "sustained expansion" in trade activities from last year, JP Morgan said in a client note.

"Year to date, global oil demand growth is averaging 0.97 million barrels per day, in line with our forecast of 1 million barrels per day," the note said.

Additionally, there is doubt the recent increase in production quotas announced by OPEC+ will result in an actual increase in production, as some members are already exceeding their quotas, said Tony Sycamore, an analyst at IG.

"And others, like Russia, are unable to meet their targets due to damaged oil infrastructure," he said.

OPEC+ oil producers are set to approve another big output boost for September, as they complete both the unwinding of voluntary production cuts by eight members, and the United Arab Emirates' move to a larger quota.