February 24, 2024

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Rwanda secures $319m under IMF’s new climate funding program

Image: Al Drago/Bloomberg

The International Monetary Fund approved $319 million for Rwanda under a new financing arrangement aimed at helping countries deal with prolonged risks such as climate change.

The Resilience and Sustainability Facility was created this year for low-income and vulnerable middle-income nations to address the challenges with longer-term, low-cost financing, the Washington-based lender said in a statement on Monday. Rwanda is the first African country to secure access to the funding.

“The RSF will support Rwanda’s ambitious agenda to build resilience to climate change and help to catalyse further financing,” according to the statement. “The program will include facilitating green public investment, creating further fiscal space, mitigating financial risks, and strengthening public debt dynamics and prospective balance-of-payments stability.”

The announcement comes after nations at the COP27 summit in Egypt last month agreed to establish a fund to compensate for loss and damage related to changing weather patterns, a win for developing countries that have been hit hard by climate change even though they contribute little to global warming.

Several developing countries have suffered unprecedented weather events this year, including deadly floods in Pakistan, Nigeria and South Africa, and a prolonged drought that’s left millions in need of food aid across the eastern and Horn of Africa region. Rwanda is highly dependent on natural resources that are under increasing pressure from unsustainable use, soil erosion and deforestation, according the United Nations Environment Programme.

The IMF also approved a new 36-month Policy Coordination Instrument for Rwanda, whose performance will determine disbursements from the climate-linked facility, according to the IMF.

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