• Funds will bolster Rwanda’s defenses against climate change
• Rwanda also agrees to 36-month policy coordination instrument

The International Monetary Fund agreed to lend Rwanda about $310 million under a new tool intended to help nations bolster their defenses against climate change.

Rwanda becomes the second nation to get a deal for access to the IMF’s new Resilience and Sustainability Trust, according to mission leader Haimanot Teferra. 

The staff-level deal, which still needs to be approved by the crisis lender’s board, also agreed on reforms under a 36-month so-called Policy Coordination Instrument to support the authorities in their efforts to build on progress in macroeconomic, fiscal and financial reforms started in 2019, the IMF said in an emailed statement.

The pact will help the nation lower its cost of financing projects to mitigate climate change. Rwanda estimates it will cost $11 billion through 2030 to attract new investments to fight hotter weather, changing rainfall patterns and flooding. The World Bank’s Country Climate and Development Report on Sept. 29 recommended that the nation diversify its financing sources, reallocate state spending and lure private investors for green projects.

See related article: UN International Fund for Agricultural Development in Talks With IMF To Join Forces on $45 Billion Resilience Trust

The funds will “trigger private sector and other development partners” to raise the required amount, Finance Minister Uzziel Ndagijimana said at a briefing in Kigali, Rwanda’s capital. Of the $11 billion that’s needed, about $7 billion is likely to be raised through the private sector, development partners and so-called green bonds, he said.

Meanwhile, the nation’s central bank said it’s looking at ways to make it easier to raise climate-related funds.

“What we are now working on is to see as a central bank what policy measures we need to take, what regulatory measures we need to put in place to support these bigger government efforts,” National Bank of Rwanda Governor John Rwangombwa said in an interview on Wednesday. 

The IMF and Barbados agreed to $183 million of loans under the new facility — the first nation to reach such a deal —  to help the hurricane-battered Caribbean-island nation mitigate climate change.

Source: Bloomberg