Press Release: IMF Distributes US$1.1 Billion of Gold Sales Profits in Strategy to Boost Low-Cost Crisis Lending to Low-Income Countries
October 13, 2012Press Release No. 12/389
October 13, 2012
The International Monetary Fund (IMF) will distribute SDR 700 million (about US$1.1 billion) 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 US$17 billion over the five years to 2014. The decision authorizing 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 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 maximize 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 US$2.7 billion (see Press Release No. 12/368).
“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.”
Because gold sales profits are part of the IMF’s general resources available for the benefit of the entire membership, they cannot be placed directly in the PRGT, which is available only to low-income member countries. Accordingly, using these resources for PRGT financing required a distribution of the resources to all IMF member countries in proportion to their quota shares, on the expectation that members would direct the Fund to transfer these resources (or would provide broadly equivalent amounts) to the PRGT as subsidy contributions. The resources raised through the operation will count towards the 2009 package’s target of raising an additional SDR 1.5 billion (US$2.3 billion) in PRGT subsidies. The balance is being raised from other sources, including additional bilateral contributions which the IMF continues to seek from member countries.
The IMF sold 403.3 metric tons of gold in 2009-10 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 (US$6.8 billion). High world gold prices during the sales period, over and above the US$850 an ounce envisaged when the sales were originally planned, generated “windfall” profits of some SDR 2.45 billion (about US$3.8 billion). 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 (US$2.7 billion) in windfall gold sales profits in a similar strategy to raise resources to make the PRGT concessional lending capacity sustainable (see Press Release No. 12/368). 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.
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