Policy Papers

This paper provides an update of the resource adequacy of the Fund's Trust funds. Poverty Reduction and Growth Trust (PRGT) finances remain broadly in line with expectations at the completion of the 2024 PRGT Facilities and Financing Review, which included policy reforms and financing measures to ensure adequate and durable financial support to low-income countries (LICs) and restore the PRGT self-sustainability. Following the review, good progress has been made in securing assurances from members under the comprehensive framework to distribute GRA resources to facilitate the generation of additional PRGT subsidy resources. On the Resilience and Sustainability Trust (RST), the agreed process of voluntary bilateral contributions has progressed well. Based on updated projections, there are sufficient resources to meet demand through the RST Comprehensive Review, at which time staff will take stock of experience and assess medium-term resource needs. The RST's reserves remain adequate and the interest rate cap for Group A countries remains appropriate, though risks have increased. The Catastrophe Containment and Relief Trust (CCRT) remains underfunded and its next comprehensive review provides an opportunity to address its financing challenges. The Heavily Indebted Poor Countries (HIPC) initiative is nearly complete, although Sudan's progress towards the Completion Point is delayed. Staff assesses that risks to the finances of the PRGT and RST are appropriately mitigated at this time. Accordingly, and pending the outcome of the CCRT Review, staff does not propose any adjustments or policy changes to the Fund's Trust funds in this annual update.