What Would Revive Demand for the IMF’s Resilience and Sustainability Facility?

It has been almost two and half years since the IMF launched the Resilience and Sustainability Facility (RSF) to help low-income and vulnerable middle-income countries address long-term structural challenges related to climate change and pandemic preparedness. While the RSF saw a strong initial uptake, demand peaked in 2023 and has since tapered off (Figure 1). Between October 2022 and May 2024, the IMF approved 18 RSF arrangements. However, only four additional arrangements have been approved since then (the IMF Board also recently supported Egypt’s request for an RSF arrangement). This trend contradicts the IMF’s Interim Review of the RSF, which stated that demand for the RSF remains “high.” As a result, a significant portion of the resources pledged to the RSF will remain unutilized, even as financial needs continue to grow in many low- and middle-income countries (LMICs). This blog post argues that the IMF needs to implement reforms to the RSF’s architecture to enhance its attractiveness to potential users.

Substantial resources pledged by wealthy countries to the Resilience and Sustainability Trust (RST), which finances the RSF, remain largely unused. To date, these countries have committed to recycling SDR 34.8 billion ($45.56 billion) to the RST, of which the IMF has committed SDR 8.47 billion ($11.09 billion) to borrowing countries (Figure 2). Actual disbursements by the IMF are even lower than these commitments. While last year’s Interim Review called for “$10 billion of…near-term fundraising,” the RST’s current resources are more than sufficient to meet its current financing needs.

Two key features of RSF eligibility and program design are inhibiting its uptake by countries. First, access to an RSF program requires that a country concurrently maintain an upper credit tranche (UCT) IMF program. Second,the RSF imposes relatively low access limits on its funds (see previous CGD blogs, here, here, and here). Specifically, countries must have an ongoing UCT-level program with at least 18 months remaining to ensure macroeconomic stability and the ability to implement long-term reforms. Additionally, RSF financing is capped at 150 percent of quota or SDR 1 billion, whichever is smaller. These constraints particularly disincentivize small developing states (SDS) from accessing the RSF, despite their high vulnerability to climate shocks. These constraints are further elaborated below:

1. The UCT requirement. Currently, the IMF does not have a sufficient pipeline of UCT programs to sustain its desired rate of RSF uptake. While 31 countries have a UCT program and have not accessed the RSF, nearly half of these have programs expiring within 18 months. Several of the remaining countries face short-term challenges—such as elevated debt burdens or ongoing conflicts—that limit their interest in long-term climate or health resilience efforts. This leaves an estimated 16 countries that are currently positioned to agree to new RSF programs.

   While UCT conditionality can be met through various IMF arrangements, including liquidity and credit lines with relatively low qualification thresholds, IMF programs carry a negative stigma, deterring countries from borrowing due to concerns over stringent conditions and potential negative market reaction. Whether justified or not, this perception limits the pool of RSF-eligible countries.

   SDS are particularly disadvantaged by the UCT requirement. Most SDS do not maintain UCT programs, nor do they require one to ensure macroeconomic stability. However, their small population and economic bases make them highly vulnerable to external shocks. In the event of a climate disaster, SDS can access the IMF’s emergency financing instruments, the Rapid Financing Instrument and the Rapid Credit Facility, but neither qualifies them for the RSF. The IMF’s 2024 guidance on engagement with SDS encourages them to consider “the Fund’s wider range of instruments” to unlock RSF financing, including the non-financing Policy Coordination Instrument (PCI), used by Rwanda and Paraguay. While SDS should consider these tools, the IMF should also reevaluate RSF eligibility criteria to ensure that it reaches the countries that need it most (as discussed below).

2. RSF access limits. Estimates suggest that LMICs require trillions of dollars annually to address climate challenges. While the RSF is only a small part of a broader financing effort and aims to catalyze private finance, its access limits prevent countries from borrowing at levels that would meaningfully strengthen their resilience. Among the RSF’s 22 programs, 12 countries have already borrowed their maximum, either 150 percent of quota or SDR 1 billion. Once a country reaches this cap, it is ineligible to pursue a successor program, even when pressing needs remain. Of the three SDS countries with RSF programs, two (Barbados and Seychelles) have already reached their borrowing limits. Cabo Verde, which has received $31.63 million in commitments from the RSF, and could access an additional $15.82 million, still faces an estimated $842 million in climate needs between 2024 and 2030 according to the World Bank’s CCDR.

   SDS countries rank among the most vulnerable to climate change—seven of the twenty lowest-scoring countries in the ND-GAIN climate vulnerability index are SDS. Yet, because their IMF quotas are small relative to their needs, they are unable to borrow from the RSF at a scale that meaningfully addresses their climate resilience challenges.

While the UCT requirement and low access limits suppress demand for RSF programs, both are central to the RST’s risk management framework. The UCT requirement serves as a safeguard, ensuring countries meet their obligations to the IMF and, by extension, to the high-income countries that have rechanneled their SDRs for RSF lending. It also prevents “facility shopping,” where countries might use the RSF’s longer-term, lower-cost financing to address short-term balance-of-payments problems rather than to build long-term economic resilience. Similarly, access limits are intended to “manage scarce Trust resources” and ensure that RSF financing plays a catalytic role to leverage additional financing rather than serving a primary source of climate finance.

Given the importance of these protections to the IMF and countries that have on-lent their SDRs, is there a way to stimulate demand for the RSF? We believe so and propose the following reforms to revive RSF uptake:

• Remove the UCT requirement for a successor RSF program and raise cumulative access limits. Once a stable macroeconomic environment has been achieved, countries that completed concurrent UCT and RSF programs should be eligible for subsequent RSF financing without requiring a concurrent UCT program. This would recognize their macroeconomic stability and the ability to implement climate- or health-related reforms in a successor RSF program. Additionally, completion of a UCT program should provide a sufficient safeguard against facility shopping. Costa Rica, Jamaica, and Rwanda have all completed RSF programs and should have the option to access further RSF financing one more time. However, since they have reached the maximum (150 percent of quota), raising these caps would allow them to continue strengthening their resilience against future shocks.

  Another benefit of these changes is that countries returning for a second RSF may choose to leverage its financing for pandemic preparedness. Despite being one of the RSF’s original objectives, pandemic preparedness financing has yet to be utilized, as noted in previous CGD blogs. The strong demand for pandemic financing—evident from the oversubscription to the World Bank’s Pandemic Fund—underscores the pressing health challenges faced by many RSF borrowers. In October 2024, the IMF released a joint IMF-WHO-Pandemic Fund cooperation framework to guide pandemic preparedness reforms. However, this framework has yet to influence RSF reform design. Furthermore, coordination between the World Bank and IMF in this area remains scant. For instance, the IMF’s revised RSF guidance, issued in January 2025, makes only a brief reference to the Pandemic Fund in a footnote stating that “potential synergies should be sought with the Pandemic Fund”. Meanwhile, the RSF is scarcely mentioned in the World Bank’s Pandemic Fund operations.

• Allow SDS to access the RSF without a UCT program and increase their access limits. Originally, the RSF’s access limits were set to manage “scarce” RST resources. However, these resources are not currently scarce compared to commitments, and demand is falling. In these circumstances, the access limits should be relaxed. Moreover, raising borrowing limits for SDS countries would have negligible impact on the solvency of the RST. Collectively, SDS represent just 0.39 percent of the IMF’s quota. The three SDS with RSF programs have accessed 2.4 percent of total RSF commitments, equivalent to just 0.6 percent of the RST’s available resources. This level of support does not recognize these countries’ disproportionate needs. Reforms to raise SDS access have broad support, and last year’s Interim Review reports that both country authorities and mission chiefs advocated for higher minimum access for SDS. Given their unique challenges and urgent financing needs, allowing SDS to access the RSF without a UCT program and increasing their borrowing limits would be a crucial step toward ensuring the RSF reaches those who need it most.

These reforms would require IMF Board approval in the months ahead. The first full review of the RSF would be the opportune time to undertake such reforms. It was planned for this summer but has been postponed. These reforms would require only a majority vote of the Board, thus not giving the United States a veto. But the American view on the IMF’s role in climate and pandemic financing, which is yet unknown, will weigh heavily in any Board discussion. Nonetheless, it is worth beginning a discussion on the future of the RSF now to ensure that any changes are made only after serious consideration of the alternatives.

We wish to thank Benedict Clements and Mark Plant for many helpful suggestions.