IMF Executive Board Approves Limited Sales of Gold to Finance the Fund’s New Income Model and to Boost Concessional Lending CapacityPress Release No. 09/310
September 18, 2009
The Executive Board of the International Monetary Fund (IMF) today approved gold sales in a volume strictly limited to 403.3 metric tons, with these sales to be conducted under modalities that safeguard against disruption of the gold market. This decision is a central element of the new income model for the IMF that was endorsed by the Executive Board in April 2008 and will also increase the Fund’s resources for lending to low-income countries under a strategy endorsed by the Board in July 2009 (see Press Releases No. 08/74 and No. 09/268). The new income model builds on the January 2007 recommendations of the Committee of Eminent Persons to Study the Sustainable Long-Term Financing of the IMF that was chaired by Andrew Crockett (see Press Release No. 07/18).
“I am delighted that the Executive Board has given its overwhelming backing to a strictly limited sale of Fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries,” Managing Director Mr. Dominique Strauss-Kahn stated. “These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market. Most importantly, the sales are strictly limited to 403.3 metric tons, which is one-eighth of the Fund’s total holdings, so the IMF will continue to hold a relatively large amount of its assets in gold.”
The new income model is designed to provide the Fund with more diverse income sources that are better aligned with the variety of functions performed by the Fund, with a central component being the funding of an endowment with the profits from these limited gold sales. Resources linked to the gold sales will also be used indirectly to increase the Fund’s capacity to provide concessional loans to low-income countries (see Press Release No. 09/268).
In accordance with the priority of avoiding disruption of the gold market, the Executive Board adopted modalities for the gold sales consistent with guidelines it had earlier established (see Factsheet on Gold in the IMF and Gold Sales—Frequently Asked Questions). First, the Fund would stand ready to sell gold directly to central banks or other official sector holders if there were to be interest from such holders. Such transactions would redistribute official gold holdings without changing total official holdings. Under the Fund’s Articles of Agreement, all gold sales must be conducted at market prices, including direct sales to official holders.
Second, the gold sales could be conducted on-market in a phased manner over time, following the approach adopted successfully by the central banks participating in the Central Bank Gold Agreement. Participants in the recently renewed agreement announced ceilings on sales of 400 tons annually, and 2,000 tons in total during the five years starting on 27 September 2009, and noted that the Fund’s sales can be accommodated under these ceilings. Hence, on-market gold sales by the Fund will not add to the announced volume of official sales.
As one of the elements of transparency, the Fund will inform markets before any on-market sales commence. In addition, the Fund will report regularly to the public on the progress with the gold sales.
Gold Sales—Frequently Asked Questions:
Factsheet: Gold in the IMF:
IMF Survey: Board Backs Plan to Adopt New Income Model for IMF:
Factsheet: IMF Support For Low-Income Countries:
Central Bank Gold Agreement–Joint Statement on Gold:
IMF Statement on the Renewal of the Central Bank Gold Sales Agreement: