Canada has agreed a deal with the International Monetary Fund to provide up to $677.5m to support the fund’s lending programme for low-income countries.

The Canadian government’s finance department announced the approval of the new loan resources for the IMF’s Poverty Reduction and Growth Trust last week.

Launched by the fund in November 2015, the campaign has a target of raising $14.9bn in bilateral loan resources. The Poverty Reduction and Growth Trust is designed to provide a greater financial safety net for the fund’s lower income members.

Demand for loans under the programme have risen in recent years, reaching $2bn in 2015 driven by the commodity price crash and adverse global financial conditions.   

An IMF spokesman said: “The continued support from Canada is a critical element towards sustaining the fund’s concessional lending operations over the medium term.”

The agreement, which came into force in January, represents Canada’s fourth loan contribution to the Poverty Reduction and Growth Trust and will see the country become one of seven so far to provide lending under the current campaign.

The IMF also announced it had struck a similar deal with the UK, which will lend up to $2.71bn to the trust.