Rwanda agrees with IMF on aid under new climate change fund

Rwanda on Friday reached a deal with the IMF on $310 million in aid under the institution's newly-created fund aimed at helping low-income countries tackle the impacts of climate change.

If the International Monetary Fund board approves the financing package, it would make Rwanda the third country and the first African nation to secure a deal through the Resilience and Sustainability Trust (RST) launched earlier this year.

A team from the Washington-based lender, led by Haimanot Teferra, agreed with Kigali on a three-year reform package to accompany the RST financing, which will build on the country's economic progress even as it faces challenges from high inflation and "a highly volatile global environment," the statement said.

"Rwanda remains vulnerable to shocks and the uncertain external outlook," Teferra said. "Sustaining the economy's recovery will require a focus on policies to safeguard debt sustainability, increase fiscal and financial resilience to adverse shocks, as well as reforms to mitigate pandemic scarring and raise productivity growth."

The new funding will help the country "further strengthen its institutions to deliver and monitor its ambitious climate objectives," the official said.

The IMF aims to mobilize $45 billion for the RST with contributions from member governments and provide 20-year loans available to about 140 low- and middle-income nations eligible for the funding.