WASHINGTON, October 13 (Itar-Tass) —— The International Monetary Fund (IMF) will distribute SDR 700 million (about 1.1 billion U.S. dollars) in reserves attributed to windfall gold sales profits to its members in order to boost its concessional lending capacity for low-income countries during the global crisis.
The distribution is a key element of a 2009 plan to boost concessional lending capacity to 17 billion U.S. dollars over the five years to 2014. The decision authorising the distribution was taken by the Executive Board in February 2012, to become effective only after IMF members have provided satisfactory assurances that new amounts equivalent to at least 90 percent of the amount distributed—i.e. SDR 630 million—would be transferred or otherwise provided to the IMF’s concessional lending vehicle, the Poverty Reduction and Growth Trust (PRGT), the IMF said on Saturday, October 13
The 90 percent threshold has been reached with assurances received from the countries listed below, meaning the distribution can now take place. The IMF will continue to seek contributions from remaining members in order to maximise concessional lending capacity. In addition, as agreed on September 28, the Fund is starting a process for seeking assurances on a separate distribution of the remaining gold sales windfall profits of 2.7 billion U.S. dollars, the press release said.
“This is a wonderful achievement that demonstrates our members’ determination to ensure the IMF has the wherewithal to support its low-income members through this crisis,” IMF Managing Director Christine Lagarde stated. “For many countries this process has involved complex legal or legislative steps, and it is a tribute to our membership that we have arrived at the required level in just a few months.”
The IMF sold 403.3 metric tonnes of gold in 2009-2010 as part of a plan to ensure the long-term financing of the IMF’s day-to-day operations through the creation of an endowment using anticipated gold sales profits of some SDR 4.4 billion (6.8 billion U.S. dollars). High world gold prices during the sales period, over and above the 850 U.S. dollars an ounce envisaged when the sales were originally planned, generated “windfall” profits of some SDR 2.45 billion (about 3.8 billion U.S. dollars).
The first SDR 700 million of those windfall profits will be now distributed to the membership in proportion to their IMF quota shares. Meanwhile, on September 28, 2012, the IMF Executive Board approved a second distribution of the remaining SDR 1.75 billion (2.7 billion U.S. dollars) in windfall gold sales profits in a similar strategy to raise resources to make the PRGT concessional lending capacity sustainable. That second distribution is also conditional on receiving satisfactory assurances from members that new amounts equivalent to at least 90 percent of the amount distributed—i.e. SDR 1.575 billion---will be transferred or otherwise provided to the PRGT, the IMF said.