Resilience and Sustainability Facility (RSF)

April 18, 2022

What is the Resilience and Sustainability Facility?

The Resilience and Sustainability Facility (RSF) complements the existing IMF lending toolkit by helping low-income and vulnerable middle-income countries address longer-term challenges, including those related to climate change and pandemic preparedness. The RSF was created under the Resilience and Sustainability Trust (RST) to provide policy support and affordable longer-term financing to strengthen members’ resilience and sustainability, and contribute to prospective balance of payments stability. 


What challenges does the RSF address?

The RSF complements the IMF’s existing toolkit by:

Supporting policy reforms that reduce macroeconomic risks arising from longer-term structural challenges, such as climate change and pandemic preparedness;

Increasing policy space and financial buffers to mitigate prospective balance of payments risks.


What are the focus areas of the RSF?

RST loans would initially support measures addressing climate change and enhancing pandemic preparedness given their global public goods nature; other challenges could be added over time.

Climate change

As noted in the 2021 IMF Strategy to Help Members Address Climate Change Related Policy Challenges and the World Bank’s 2019 Action Plan on Climate Change Adaptation and Resilience—there are significant economic and social costs as the frequency and magnitude of disasters rise, particularly affecting lower-income and smaller countries. Global warming is also driving other trends that are less visible and disruptive in the short term but carry large longer-term economic risks. The RSF will support measures aimed at adaptation, mitigation, and transition.

Pandemic preparedness

The health, economic and social impacts can be exorbitant, as demonstrated by the COVID-19 pandemic in which costs have recently been estimated by the IMF to rise to US$13.8 trillion through 2024. Investing in pandemic preparedness and response now is projected to have immense returns by reducing the risk of events whose costs can dwarf current government budgets.

What countries are eligible for the RSF?

Low-income and vulnerable-middle income countries, including small states – about three quarters of the IMF’s membership – are eligible for RSF financing. This includes all PRGT-eligible low-income countries, all small states (population under 1.5 million) with per capita GNI below 25 times the 2021 IDA operational cutoff, and all middle-income countries with per capita GNI below 10 times the 2021 IDA operational cutoff.


What are the requirements of the RSF? 

Eligible countries requesting access to the RSF need: 

1. High-quality policy reforms

A package of high-quality policy reforms should help the member make significant progress toward reducing critical risks related to the long-term structural challenge of climate change or pandemic preparedness.

2. A concurrent IMF-supported program

The IMF-supported program can be financing or non-financing and must be under one of the following arrangements: SBA, EFF, PLL, FCL, SCF, ECF, PCI or PSI. Emergency financing facilities (RFI, RCF), SMP, or SLL do not qualify.

3. Sustainable debt and adequate capacity to repay

As with all Fund lending, debt needs to be assessed as sustainable, informed by the Debt Sustainability Framework for Low-Income Countries or the Sovereign Risk and Debt Sustainability Framework for Market Access Countries.

What does RSF conditionality look like?

The RSF has streamlined conditionality. Conditionality is linked to reform progress, with each measure connected to one RSF disbursement. Where a measure includes multiple actions, all must be implemented to unlock the associated disbursement.

What are the terms of RSF loans?

Maturity, repayment, and interest rates:

RSF arrangements have a 20-year maturity and a 10 ½ -year grace period during which no principal is repaid. Borrowers pay an affordable interest rate with a modest margin over the three-month SDR rate. A tiered interest structure differentiates financing terms across country groups, with low-income members benefiting from more concessional terms.

Duration:

The minimum duration of an RSF arrangement is 18 months. The arrangement expires when all amounts available have been disbursed, and it automatically ends upon the termination, cancellation, or expiry of the concurrent IMF-supported program.

Access:

The overall cumulative access cap for eligible members under the RSF is set at the lower of 150 percent of quota or SDR 1 billion, whichever is smaller. The starting point of access determination is an access norm of 75 percent of quota. 

Does the IMF work with other organizations on the RSF?

Given the complex nature of longer-term challenges, such as climate change and pandemic preparedness, the IMF works closely with partner organizations on RSF arrangements. For example, the IMF and World Bank staff have developed broad principles for collaboration on climate change-related RSF arrangements. Similar collaboration frameworks are under development for RSF arrangements related to pandemic preparedness.