. Under the self-sustained PRGT, the income earned on the balances in the account will be used to subsidize PRGT lending. The necessary amendments to the PRGTInstrument to authorize the use of RA resources for subsidy purposes are discussed in Section V of this paper.
5. The LIC financing package, approved in July 2009 as part of the LIC reforms, has been critical in supporting higher PRGT lending during the global financial crisis . 4 This package included subsidy resources provided for by the first distribution of SDR 0.7 billion of the Fund’s general reserves
through around mid-2017. As reported in the first section of this paper, good progress has been made in the Board-endorsed effort to raise SDR 11 billion in new loan resources. This marks the first mobilization round since the PRGTinstrument was modified to accord priority to drawings under the SLAs. 2
2. An amendment to the PRGT drawing mechanism is proposed to help facilitate the new loan mobilization effort . Under the PRGT financing framework, Trust lenders may choose to earmark their loan commitments to specific Trust lending facilities (under the SLA) or make
New commitments under PRGT-supported programs amounted to SDR 0.15 billion in 2013, while disbursements on existing arrangements amounted to about SDR 0.8 billion. However, this lower demand is expected to be temporary. New commitments are projected to rebound to about SDR 1.5 billion in 2014, similar to the level observed in 2012. These projections are subject to considerable uncertainty regarding progress on ongoing program negotiations.
A Board-endorsed effort to raise SDR 11 billion in new Poverty Reduction and Growth Trust (PRGT) loan resources needed to sustain the Fund’s concessional lending operations is well underway. Staff is now engaging with 16 interested loan providers bilaterally with a view to having firm pledges in line with the target by the 2016 Annual Meetings and a critical mass of new loan agreements in place by end-2016. To date, committed new loan resources amount to half of the SDR 11 billion fundraising target.
same period through end-2016.
Prgt Lending Interest Rates
4. The PRGT interest rate structure and the mechanism for its setting were adopted in 2009 with the following objectives : (i) making the PRGT financing more concessional, especially in the context of low global interest rates; (ii) preserving the Trust’s scarce concessional resources; (iii) tailoring financing terms to the needs and capacity of PRGT-eligible members; and (iv) limiting fluctuations in concessionality of PRGTinstruments and subsidy costs. A mechanism where the PRGT interest rates are