The practical guide presented by the Senegalese consulting firm aims to give decision-makers an overview of this new funding tool set up by the IMF. 

AfriCatalyst, a global development consulting firm based in Dakar, Senegal, presented on Monday, March 27, its practical guide to inform African policymakers and national stakeholders of the key features, eligibility criteria, and objectives of the Resilience and Sustainability Trust, a financing instrument set up by the International Monetary Fund (IMF).

"The Resilience and Sustainability Trust (RST) is potentially beneficial for African countries with high debt burdens.  With support from the Bill & Melinda Gates Foundation, AfriCatalyst is building policymakers’ capacity to gather evidence. It also provides technical support to facilitate African countries' access to this financing mechanism," said Daouda Sembene (photo), founder and CEO of AfriCatalyst, according to a summary of his presentation at a webinar hosted by the Economic Commission for Africa (ECA).

The guide also explores how IMF support under this facility could contribute to the development and implementation of national macroeconomic policies that integrate climate and pandemic risks and the cost of adaptation into their macro-fiscal frameworks.

The trust - which aims to help developing and lower-middle income countries build resilience to external shocks and achieve sustainable growth- appears like a solution to the challenges to the unconditional release of the new special drawing rights (SDRs) recently issued by rich countries to countries facing liquidity challenges.

While this solution is in line with the ECA's ambition to reduce the cost of access to international financing for African countries and reduce liquidity challenges, the conditions for access are quite complex. The funding secured via the trust comes with a 30-year repayment period but, countries requesting it should carry out sometimes complex and difficult reforms.  

Also, the Fund's initial envelope of $50 billion falls far short of Africa's infrastructure needs alone -the continent needs $130 to $150 billion in infrastructure financing annually, according to the African Development Bank. Africa is also not the only continent that the envelope is destined to. The envelope is destined for other low-income and vulnerable developing countries, as well as all the middle-income countries whose annual per capita national wealth is less than $12,000. Based on the eligibility criteria, one-third of IMF members are eligible for the funding.  

Rwanda is currently the only African country that has received IMF support under the RST trust. It secured $319 million to build its climate resilience.  This will, according to the IMF, enable it to catalyze additional funding, integrate climate risks into fiscal planning, improve the sensitivity of public investment management to climate-related issues, and accredit its Ministry of Environment to the Green Climate Fund. 

Though it is an alternative funding tool, the RSF is far from being an effective solution for the transformation of the global financial architecture. Indeed, many analysts criticize the debt sustainability models that fail to take African countries’ resources -agricultural lands, hydrographic potential, and strategic minerals- into account.  

Even with the current model, in 2021, Sub-Saharan Africa’s debt was around $800 billion (according to the World Bank). At the time, the average maturity of that debt was eight years.