By Andrea Shalal

WASHINGTON (Reuters] – A new task force suggested Monday that the International Monetary Fund (IMF), should develop a new instrument that allows richer nations to use their IMF reserve funds to aid a wider set of countries in tackling climate change and COVID-19.

IMF officials have sought for months to rally support for a new Resilience and Sustainability Trust (RST) https://www.reuters.com/business/exclusive-imf-exploring-creation-new-trust-provide-sdrs-broader-group-countries-2021-06-13 that its members could use to donate or lend their share of $650 billion in newly issued Special Drawing Rights (SDR) to low- and middle-income countries – as an alternative to the Poverty Reduction and Growth Trust, which can be tapped only by the poorest countries.

This issue will become a major topic at the IMF’s autumn meetings this month. However, some IMF members have been reluctant about backing the trust proposal, saying that it goes beyond their scope.

Monday’s launch of the Task Force on Climate, Development and the International Monetary Fund prompted support for the trust, declaring that the actions of the international lender were crucial to help countries address the growing impact of climate change.

Over $6 Trillion in global damage from extreme weather events occurred over the past 20 decades. This figure will increase to an estimated $298 Billion by 2021. Small island states are likely to lose around 100% of their GDP if one weather event occurs, according the report.

Monday’s meeting was attended by a group of experts to support the Intergovernmental Group of Twenty-Four, (G24), and Vulnerable Group of Twenty (20 (V20) ministers of finance.

According to experts from Peking University and institutions like the African Economic Research Consortium (Boston University Global Development Policy Center), the RST can be a key part of climate and finance in developing and emerging countries.

Although they welcomed the June commitment by the Group of Seven wealthy economies to mobilize $100 billion of resources for countries in crisis, they said that much more funding was needed.

Experts estimated that the emerging market and developing countries needed to increase at least 2% their GDP before the pandemic. The situation has been further complicated by the large debt burdens and high borrowing costs.

According to the group, the new trust is expected to offer short- and longer-term financing options. The trust also should help countries deal with climate shocks, without causing a sharp increase in their debt.

According to them, the IMF could help countries by encouraging them to plan for fiscal buffers in response climate risks. It would also encourage savings that can be used as contingency, disaster or reserve funds.