## _020112

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### Executive summary — major findings and context
- Proposal: distribution of a portion of the Fund’s general reserve attributed to profits from recent Fund gold sales to facilitate members’ contributions towards Poverty Reduction and Growth Trust (PRGT) subsidies.
- Context: Board-endorsed strategy in July 2009 as part of comprehensive reform of the Fund’s Low Income Country (LIC) facilities and concessional financing framework; financing package to ensure PRGT capacity to lend up to SDR 11.3 billion ($17 billion) during 2009–14.
- Financing requirement under 2009 package: additional subsidy resources of SDR 1.5 billion for 2009–14, of which SDR 0.2–0.4 billion from new bilateral contributions and SDR 0.5–0.6 billion (in end-2008 NPV terms) to be generated from resources linked to profits from gold sales.

### Gold sales, proceeds, and reserve treatment
- Limited gold sales: approved September 2009, initiated October 2009, concluded December 2010.
- Overall profits from sales: SDR 6.85 billion; average sales price: US$1,144 per fine ounce.
- Windfall profits above initial assumed price (US$850 per fine ounce): about SDR 2.45 billion.
- Transfers: SDR 6.85 billion transferred in March 2011 from the General Resources Account (GRA) to the Investment Account (IA).
- Special reserve placement: Board placed SDR 4.4 billion of net income attributed to gold profits into the special reserve (not available for future distribution).
- Windfall in general reserve: remaining windfall of SDR 2.45 billion placed in the general reserve pending further Board decisions.
- Precautionary balances: currently exclude all the gold profits earned from the limited gold sales for policy and analytical purposes.

### Board guidance, sequencing, and fundraising progress
- April 2011 Board guidance: use gold sale profits to facilitate PRGT contributions of SDR 0.5–0.6 billion (end-2008 NPV terms); emphasize minimizing leakage via satisfactory assurances from members before distribution.
- September 2011 Board views: consider distributing up to SDR 0.7 billion of gold profits in 2011; many Directors supported initiating distribution only after the lower end of bilateral contribution targets was met; broad agreement that satisfactory assurances should be in place that resources equivalent to at least 90 percent of amounts distributed would be provided as PRGT subsidy contributions.
- New pledges since September 2011: Japan SDR 28.8 million; United Kingdom SDR 19.8 million.
- Total pledges as of end-2011: 25 members pledged a total of SDR 202.8 million—broadly in line with the lower end of the SDR 0.2–0.4 billion target range envisaged in 2009.

### Specific staff proposal and rationale
- Amount proposed for distribution: SDR 700 million from the portion of the general reserve attributable to windfall gold sales profits.
- Assurance threshold: distribution subject to receipt of satisfactory assurances that members will provide new PRGT subsidy contributions equivalent to at least 90 percent of the amount to be distributed (SDR 630 million).
- Rationale: SDR 700 million distribution intended to facilitate contributions of SDR 0.5–0.6 billion (end-2008 NPV terms) envisaged under the 2009 package, accounting for leakage and current bilateral fundraising near the lower end of earlier ranges.
- Timing: uncertain and dependent on pace at which members provide satisfactory assurances of PRGT contributions in the minimum amount contemplated.

### Legal basis, voting, and currency of distribution
- Chosen legal basis: partial distribution from the general reserve pursuant to Article XII, Section 6(d) (staff preference over distributing net income under Article XII, Section 6(a)) given uncertain timing relative to annual net income decisions.
- Article XII, Section 6(d) requirements: distribution may be made at any time, must be made to all members in proportion to quotas on the date of distribution, and requires Executive Board approval by a 70 percent majority of total voting power.
- Currency of distribution: Article XII, Section 6(e) specifies distribution of the general reserve is to be made in SDRs, unless either the Fund or the member decides it be made in the member’s own currency.
- Quota implication example: based on quotas as of January 31, 2012, a distribution of SDR 0.7 billion would imply distribution to each member of an amount equivalent to 0.294 percent of its quota (final proportions based on quotas at time of distribution).

### Funding mechanism and IA principal reduction
- Proposed funding: partial reduction of the principal in the Investment Account (IA) representing GRA reserves invested there.
- Legal authority for IA principal reduction: Article XII, Section 6(f)(vi) requires Executive Board decision with 70 percent majority of total voting power.
- Transfer to GRA: once assurances threshold is reached, IA currencies would be transferred to the GRA pursuant to Article XII, Section 6(f)(ix) for immediate use in operations and transactions, including distributions to members.

### Operational safeguards and sequencing
- Distribution contingent on assurances: reduction in IA principal and transfer to GRA only after satisfactory assurances that members will provide at least SDR 630 million as PRGT subsidy contributions.
- Alignment with Board views: sequencing aligns with September 2011 views that distribution should be initiated once lower end of bilateral fund-raising target range has been met; many Directors preferred linking distribution to confirmed pledges.

### Distribution mechanics and attribution for members with overdue repurchase obligations
- Distribution currency options: made in SDRs or, if the Fund or the member so decides, in the member’s own currency.
- For members with overdue repurchase obligations to the GRA: proposed effect is to reduce the amount of those overdue obligations by attributing the corresponding reduction to holdings subject to repurchase (requires change in attribution rules).
- Proposed amendment to Decision No. 6831-(81/65): Paragraph 1(b) amended to read: “(b) For a member with overdue repurchase obligations, the reduction shall be attributed to any obligation to repurchase.”

### Adequate assurances and minimum threshold for PRGT subsidy contributions
- Endorsed strategy requires strong ex-ante assurances from membership linking gold sale resources to PRGT subsidy contributions.
- Staff propose modalities similar to 2007 Liberia fund-raising example (partial distribution of SCA-1).
- Executive Directors broadly supported a minimum contribution threshold equal to 90 percent of the distribution amount.
- Distribution to be effected once satisfactory assurances received that new PRGT subsidy contributions equivalent to SDR 630 million would be made.
- Managing Director to inform Executive Board once assurances are received; timing highly uncertain.

### Modalities for members, Interim Administered Account, and member choices
- Member options for their distributed share:
  - instruct the Fund to transfer their share directly to the General Subsidy Account of the PRGT; or
  - instruct transfer to one of three facility-specific subsidy accounts: the ECF Subsidy Account, the SCF Subsidy Account, and the RCF Subsidy Account; or
  - receive their share directly before making new contributions; or
  - indicate they do not wish to contribute any portion; or
  - specify allocation across more than one of the above purposes.
- Default for non-responding members: receive their share through a deposit to their SDR account by the date of distribution.
- Interim Administered Account for Windfall Gold Sales Profits (the “Administered Account”):
  - Established pursuant to Article V, Section 2(b) to temporarily hold members’ distributions, upon request, pending domestic processes enabling PRGT subsidy contributions.
  - Unit of account: SDR; Account would use SDRs in its operations.
  - Open for three years, or until there are no contributor resources remaining in the account, whichever is earlier.
  - Investment discretion: Managing Director may invest resources following same investment authority and procedures as resources held in the PRG Trust.
  - Attachment to proposed decision contains the Instrument to Establish the Administered Account setting out key operational terms.

### Decision trigger, Managing Director assessment, and Board updates
- Paragraphs 1–4 of the proposed decision (establishing Administered Account, transfer mechanics, distribution amount, and reduction of Investment Account) become effective only when the Managing Director notifies the Executive Board that, in her assessment, satisfactory financing assurances exist regarding availability of at least SDR 630 million for new PRGT subsidy contributions.
- In assessing satisfactory assurances, the Managing Director would consider:
  - (i) amounts members have requested in writing be transferred as PRGT subsidy contributions from their share of the distribution;
  - (ii) the amount of other new contributions members have provided as PRGT subsidy contributions in light of the decision; and
  - (iii) the amount of other PRGT contributions members have given written assurances they will provide in light of the decision.
- Following approval, the Managing Director will send all members letters seeking commitment that distributed resources or broadly equivalent amounts would be contributed for PRGT subsidies; staff to periodically update the Executive Board on progress toward the SDR 630 million minimum.

### Proposed decision — key numeric provisions and operational steps
- Distribution amount: an amount equivalent to SDR 0.7 billion of the general reserve shall be distributed to all members in proportion to their quotas.
- Payment form: in SDRs or, if the Fund or a member so decides, in the member’s own currency; provided that payment to a member with overdue repurchase obligations in the General Resources Account shall be made in the member’s own currency.
- Investment Account reduction: Fund decides to reduce the amount of investment in the Investment Account by an amount equivalent to SDR 0.7 billion and to transfer the proceeds to the General Resources Account for immediate use.
- Attribution amendment: Decision No. 6831-(81/65) amended so reduction for a member with overdue repurchase obligations is attributed to any obligation to repurchase.

### Instrument to Establish the Interim Administered Account — principal terms
- Purpose: interim vehicle for holding and administering contributions representing all or a portion of members’ shares of the partial distribution of the general reserve (Decision No. 15092), pending each contributing member’s instructions.
- Unit of account: SDR. Resources provided to the Account shall be in SDRs or currencies as paid to the contributing member by the Fund in the distribution.
- Upon instruction, Fund shall transfer all or part of a member’s attributable resources (including pro rata investment returns) to one or more PRGT Subsidy Accounts or as otherwise specified by the member.
- Investments permitted at Managing Director’s discretion in:
  - (i) marketable obligations issued by international financial organizations, denominated in SDRs or in a member’s currency;
  - (ii) marketable obligations issued by a member or a national official financial institution of a member, denominated in SDRs or in that member’s currency;
  - (iii) deposits with a commercial bank, a national official financial institution of a member, or an international financial institution denominated in SDRs or in a member’s currency.
- Separation and accounting:
  - Assets kept separate from other Fund accounts; not used to meet liabilities of other accounts.
  - Separate financial records and financial statements expressed in SDRs, prepared in accordance with International Financial Reporting Standards.
  - External audit by the external audit firm selected under Section 20 of the Fund’s By-Laws; audit relates to the Fund’s financial year.
  - Reporting: Fund to report on the Account’s assets, property, operations, and include the audit report in the Annual Report of the Executive Board to the Board of Governors.
- Costs and termination:
  - No charge for Fund services; all investment costs (including currency exchange, securities purchase, external asset managers, custodian banks) borne by and deducted from the Account.
  - Termination: (a) three years from the effective date of the decision adopting the Instrument, or (b) as promptly as practicable after receipt of instructions from every contributing member regarding distribution of its resources, whichever is earlier. On termination under (a), each participant with remaining resources shall be paid in full.
- Amendment and dispute resolution:
  - Instrument may be amended by Fund decision with concurrence of each contributing member with resources remaining.
  - Questions between a contributing member and the Fund shall be settled by mutual agreement.

### Member communication templates (sample uses)
- Sample Communication No. 1: Request transfer to one or more PRGT Subsidy Accounts of all [a portion] of member’s share in the distribution.
- Sample Communication No. 2: Request transfer to the Interim Administered Account of all [a portion] of member’s share.
- Sample Communication No. 3: Member does NOT wish transfer to PRGT or Administered Account; request transfer to member’s SDR Account (or designated currency account) and optional pledge to provide equivalent amount to PRGT subsidy accounts.

### Background, financing needs, and PRGT resource package
- Staff estimate: SDR 2.5 billion in end-2008 NPV terms needed to fully subsidize PRGT lending of up to SDR 11.3 billion from 2009 through 2014.
- New PRGT commitments totaled SDR 4.9 billion in 2009-11, leaving lending capacity about SDR 2.1 billion per year for 2012–14, assuming 2009 financing package is completed.
- Objective for self-sustained subsidization: commence in 2015 at an annual capacity of about SDR 0.7 billion.

### Financing package agreed in 2009 and resource gap (end-2008 NPV terms)
- Subsidy requirements: SDR 2.5
- Minus: available resources: SDR 1.0
- Remaining needs: SDR 1.5
- Possible sources (in billions of SDRs):
  - Transfer from PRGF-ESF Reserve Account: 0.62
  - New bilateral contributions: 0.20-0.40
  - Delaying PRGF-ESF reimbursement (for 3 years): 0.15-0.20
  - Gold sales resources 1/: 0.50-0.60
    - 1/ After assumed leakage of 10 percent of the distribution of gold sales.

### PRGT Trust Instrument amendments and administrative cost transfers
- PRGT Trust Instrument amended to allow transfer of resources from the Reserve Account to the PRGT General Subsidy Account.
- Transfer of up to SDR 0.62 billion to take place when subsidy resources are needed, currently projected around end-2012.
- Estimated administrative costs already transferred from the Reserve Account to the PRGT General Subsidy Account:
  - SDR 38.4 million in FY 2010
  - SDR 46.4 million in FY 2011
- Final transfer for FY 2012 expected in April or May 2012 and could be of similar magnitude to previous years.

### Bilateral subsidy commitments and new loan pledges — key figures
- Bilateral subsidy commitments: 25 members pledged a total of SDR 202.8 million (includes Japan SDR 28.8 million; United Kingdom SDR 19.8 million).
- New loan resource pledges to the PRGT: fourteen members pledged SDR 9.8 billion in new loan resources (compared to target of SDR 10.8 billion under 2009 package).
- Table highlights (selected entries preserved exactly as in source):
  - Effective Total: 9,461 (label in source: Effective9,461)
  - Canada: 500
  - China: 800
  - Denmark: 200
  - France: 1,328
  - Italy: 800
  - Japan: 1,800
  - Korea: 500
  - Netherlands: 500
  - Norway: 300
  - Saudi Arabia: 500
  - Spain: 405
  - Switzerland: 500
  - U.K.: 1,328
  - Pledged (Belgium): 350
  - Total: 9,811
  - 1/ Germany (KfW) made a pledge of SDR 1.53 billion. As mutually acceptable lending terms could not be agreed, it is excluded from the total.

### Appendix — possible distribution of SDR 700 million by quota (selected examples)
- Total Quotas: 237,993.4; Percent total: 100.00; Possible Distribution total: 700.00
- Selected country entries (Member Quota; Percent of Total Quota; Possible Distribution, in millions of SDRs):
  - Afghanistan, Islamic Republic of — 16; 1.9; 0.07; 0.48
  - Albania — 60.0; 0.03; 0.18
  - Algeria — 1,254.7; 0.53; 3.69
  - Argentina — 2,117.1; 0.89; 6.23
  - Australia — 3,236.4; 1.36; 9.52
  - Austria — 2,113.9; 0.89; 6.22
  - Belgium — 4,605.2; 1.94; 13.55
  - Brazil — 4,250.5; 1.79; 12.50
  - Canada — 6,369.2; 2.68; 18.73
  - China — 9,525.9; 4.00; 28.02
  - France — 10,738.5; 4.51; 31.58
  - Germany — 14,565.5; 6.12; 42.84
  - India — 5,821.5; 2.45; 17.12
  - Japan — 15,628.5; 6.57; 45.97
  - Netherlands — 5,162.4; 2.17; 15.18
  - Norway — 1,883.7; 0.79; 5.54
  - Saudi Arabia — 6,985.5; 2.94; 20.55
  - Spain — 4,023.4; 1.69; 11.83
  - Sweden — 2,395.5; 1.01; 7.05
  - Switzerland — 3,458.5; 1.45; 10.17
  - United Kingdom — 10,738.5; 4.51; 31.58
  - United States — 42,122.4; 17.70; 123.89
- Notes:
  - 2/ The exact amount of the distribution will depend on the quota shares as of the time of the distribution.
  - 3/ Owing to member's overdue repurchase obligations to the Fund, proposed distribution would be made in the member's own currency and the use of the member's currency would be attributed to Fund holdings of the member's currency subject to repurchase.
  - 4/ This figure may differ from the sum of the percentages shown for individual countries because of rounding.

*Source: _020112 (IMF internal PDF content provided).*

### Executive Summary ......................................................................................................

### Executive Summary

### Major findings and context
- Proposal: distribution of a portion of the Fund’s general reserve attributed to profits from recent Fund gold sales to facilitate members’ contributions towards Poverty Reduction and Growth Trust (PRGT) subsidies.
- Context: strategy endorsed by the Board in July 2009 as part of comprehensive reform of the Fund’s Low Income Country (LIC) facilities and concessional financing framework, including a financing package to ensure PRGT capacity to lend up to SDR 11.3 billion ($17 billion) during 2009–14.
- Financing requirement for PRGT under the 2009 package: additional subsidy resources of SDR 1.5 billion for 2009–14, of which SDR 0.2–0.4 billion from new bilateral contributions and SDR 0.5–0.6 billion (in end-2008 NPV terms) to be generated from resources linked to profits from gold sales.

### Gold sales, proceeds, and reserve treatment
- Limited gold sales: approved September 2009, initiated October 2009, concluded December 2010.
- Overall profits from sales: SDR 6.85 billion, reflecting an average sales price of US$1,144 per fine ounce.
- Windfall profits above initial assumed price (US$850 per fine ounce): about SDR 2.45 billion.
- Transfers: total gold sale profits (SDR 6.85 billion) transferred in March 2011 from the General Resources Account (GRA) to the Investment Account (IA).
- Special reserve placement: Board placed SDR 4.4 billion of net income attributed to gold profits into the special reserve; these amounts are not available for future distribution.
- Windfall in general reserve: remaining windfall of SDR 2.45 billion placed in the general reserve pending further Board decisions.
- Precautionary balances: for policy and analytical purposes, the Fund’s precautionary balances currently exclude all the gold profits earned from the limited gold sales.

### Board guidance and sequencing
- April 2011: Board affirmed strategy to use gold sale profits to facilitate PRGT contributions of SDR 0.5–0.6 billion (end-2008 NPV terms) and emphasized minimizing leakage by seeking satisfactory assurances from members before distribution.
- September 2011: Directors agreed a Board decision to consider distributing up to SDR 0.7 billion of gold profits in 2011; many supported initiating the process only after the lower end of bilateral contribution targets was met; Directors broadly agreed satisfactory assurances should be in place that resources equivalent to at least 90 percent of amounts distributed would be provided as PRGT subsidy contributions.

### Progress on bilateral subsidy pledges
- New pledges since September 2011: Japan SDR 28.8 million; United Kingdom SDR 19.8 million.
- Total pledges as of end-2011: 25 members pledged a total of SDR 202.8 million—broadly in line with the lower end of the SDR 0.2–0.4 billion target range envisaged in 2009.

### Specific staff proposal
- Amount proposed for distribution: SDR 700 million from the portion of the general reserve attributable to windfall gold sales profits.
- Assurance threshold: distribution to be subject to receipt of satisfactory assurances that members will provide new PRGT subsidy contributions equivalent to at least 90 percent of the amount to be distributed (SDR 630 million).
- Rationale: SDR 700 million distribution is intended to facilitate contributions of SDR 0.5–0.6 billion (end-2008 NPV terms) envisaged under the 2009 package, taking into account leakage and current bilateral fundraising being near the lower end of earlier ranges.
- Timing: timeframe for effecting the distribution is uncertain and depends on the pace at which members provide satisfactory assurances of PRGT contributions in the minimum amount contemplated.

### Legal and operational modality
- Chosen legal basis: partial distribution from the general reserve pursuant to Article XII, Section 6(d) (staff preference over distributing net income under Article XII, Section 6(a)) given uncertain timing of distribution relative to annual net income decisions.
- Article XII, Section 6(d) requirements: distribution may be made at any time, must be made to all members in proportion to quotas on the date of distribution, and requires Executive Board approval by a 70 percent majority of total voting power.
- Currency of distribution: Article XII, Section 6(e) specifies distribution of the general reserve is to be made in SDRs, unless either the Fund or the member decides it be made in the member’s own currency.
- Quota implication example: based on quotas as of January 31, 2012, a distribution of SDR 0.7 billion would imply distribution to each member of an amount equivalent to 0.294 percent of its quota (final proportions would be based on quotas at time of distribution).

### Funding mechanism
- Proposed funding: partial reduction of the principal in the Investment Account (IA) representing GRA reserves invested there.
- Legal authority for IA principal reduction: Article XII, Section 6(f)(vi) requires Executive Board decision with 70 percent majority of total voting power.
- Transfer to GRA: once assurances threshold is reached, IA currencies would be transferred to the GRA pursuant to Article XII, Section 6(f)(ix) for immediate use in operations and transactions, including distributions to members.

### Operational safeguards and sequencing
- Distribution only after assurances: reduction in IA principal and transfer to GRA would occur only after satisfactory assurances that members will provide at least SDR 630 million as PRGT subsidy contributions.
- Board expectation: sequencing aligns with Board views in September 2011 that distribution should be initiated once lower end of bilateral fund-raising target range has been met; many Directors preferred linking distribution to confirmed pledges.

### Next steps and contents of paper
- Section II: discusses key legal, financial and operational aspects of the distribution, including modalities to facilitate members’ ability to transfer distributed amounts as PRGT subsidy contributions.
- Section III: sets forth the text of the proposed decision.
- Annex: recalls key elements of the LIC financing package and provides additional information on progress to date with fundraising.

*Source: Executive Summary (IMF internal PDF content provided).*

### 13.      As required under Article XII, Section 6(e), the partial distribution of the general reserve

### _020112 - 13.      As required under Article XII, Section 6(e), the partial distribution of the general reserve

### Distribution mechanics and attribution for members with overdue repurchase obligations
- The partial distribution of the general reserve would be made in SDRs or, if the Fund or the member so decides, in balances of the member’s own currency.
- For members with overdue repurchase obligations to the GRA, the distribution is proposed to have the effect of reducing the amount of those overdue obligations.
- Pursuant to Article XII, Section 6(e), the Fund would decide that the distribution be made in the member’s own currency and that the corresponding reduction in Fund holdings of the member’s currency be attributed to holdings that are subject to repurchase.
- Implementing this requires a change in the Fund’s general attribution rules, which currently give all members with outstanding purchases the option to attribute the use of their currencies by the Fund to enlarging their reserve tranche positions (in lieu of reducing repurchase obligations).
- Proposed amendment to Decision No. 6831-(81/65): Paragraph 1(b) amended to read: “(b) For a member with overdue repurchase obligations, the reduction shall be attributed to any obligation to repurchase.”

### Adequate assurances and minimum threshold for PRGT subsidy contributions
- The endorsed strategy links use of resources from gold sale profits to facilitate PRGT subsidy contributions and requires strong ex-ante assurances from the membership.
- Staff propose modalities similar to the 2007 Liberia fund-raising example (partial distribution of SCA-1).
- Executive Directors broadly supported a minimum contribution threshold equal to 90 percent of the distribution amount.
- Consequently, distribution would be effected once satisfactory assurances have been received that new PRGT subsidy contributions equivalent to SDR 630 million would be made.
- The Managing Director would inform the Executive Board once these assurances are received; the timing of the distribution is highly uncertain.

### Modalities for the distribution and options for members
- Members may instruct the Fund to transfer their share in the distribution directly to:
  - the General Subsidy Account of the PRGT, or
  - one of three facility-specific subsidy accounts: the ECF Subsidy Account, the SCF Subsidy Account, and the RCF Subsidy Account, as a contribution from the member.
- A new administered account, the Interim Administered Account for Windfall Gold Sales Profits (the “Administered Account”), is proposed pursuant to Article V, Section 2(b) to facilitate subsidy contributions in the context of the partial distribution.
  - Purpose: temporarily hold members’ distributions, upon their request, pending domestic processes needed to enable members to make PRGT subsidy contributions.
  - The Administered Account would use SDRs in its operations and remain open for three years, or until there are no contributor resources remaining in the account, whichever is earlier.
  - Resources in the Administered Account could be invested, at the discretion of the Managing Director, following the same investment authority and procedures as resources held in the PRG Trust.
  - The Attachment to the proposed decision contains the Instrument to Establish the Administered Account setting out key operational terms.
- Members could choose to:
  - have their share paid directly to them before making new contributions;
  - indicate they do not wish to contribute any portion of their share towards PRGT subsidies;
  - specify that their share be allocated towards more than one of the above purposes.
- Members that do not respond by the date of distribution will by default receive their share through a deposit to their SDR account.

### Decision trigger and Managing Director assessment
- Paragraphs 1–4 of the proposed decision (establishing the Administered Account, transfer mechanics, distribution amount, and reduction of Investment Account) become effective only when the Managing Director notifies the Executive Board that, in her assessment, satisfactory financing assurances exist regarding availability of at least SDR 630 million for new PRGT subsidy contributions.
- In assessing satisfactory assurances, the Managing Director would consider:
  - (i) amounts members have requested in writing be transferred as PRGT subsidy contributions from their share of the distribution;
  - (ii) the amount of other new contributions members have provided as PRGT subsidy contributions in light of the decision; and
  - (iii) the amount of other PRGT contributions members have given written assurances they will provide in light of the decision.
- Following approval of the decision, the Managing Director will send all members letters seeking their commitment that distributed resources or broadly equivalent amounts would be contributed for PRGT subsidies; staff will periodically update the Executive Board on progress toward the SDR 630 million minimum.

### Proposed decision key numeric provisions and operational steps
- Distribution amount: an amount equivalent to SDR 0.7 billion of the general reserve shall be distributed to all members in proportion to their quotas.
- Payment form: in SDRs or, if the Fund or a member so decides, in the member’s own currency; provided that payment to a member with overdue repurchase obligations in the General Resources Account shall be made in the member’s own currency.
- Investment Account reduction: the Fund decides to reduce the amount of investment in the Investment Account by an amount equivalent to SDR 0.7 billion and to transfer the proceeds to the General Resources Account for immediate use.
- Attribution amendment: Decision No. 6831-(81/65) amended so reduction for a member with overdue repurchase obligations is attributed to any obligation to repurchase.

### Instrument to Establish the Interim Administered Account — principal terms
- Purpose: serve as an interim vehicle for holding and administering contributions representing all or a portion of members’ shares of the partial distribution of the general reserve (Decision No. 15092), pending each contributing member’s instructions on disposition.
- Unit of account: SDR. Resources provided to the Account shall be in SDRs or currencies as paid to the contributing member by the Fund in the distribution.
- Upon instruction, the Fund shall transfer all or part of a member’s attributable resources (including pro rata investment returns) to one or more PRGT Subsidy Accounts or as otherwise specified by the member.
- Investments: resources not immediately needed may be invested at the Managing Director’s discretion in:
  - (i) marketable obligations issued by international financial organizations, denominated in SDRs or in a member’s currency;
  - (ii) marketable obligations issued by a member or a national official financial institution of a member, denominated in SDRs or in that member’s currency;
  - (iii) deposits with a commercial bank, a national official financial institution of a member, or an international financial institution denominated in SDRs or in a member’s currency.
- Separation and accounting:
  - Assets of the Account kept separate from other Fund accounts; not used to meet liabilities of other accounts.
  - Separate financial records and financial statements expressed in SDRs, prepared in accordance with International Financial Reporting Standards.
  - External audit by the external audit firm selected under Section 20 of the Fund’s By-Laws; audit relates to the Fund’s financial year.
  - Reporting: Fund to report on the Account’s assets, property, operations, and include the audit report in the Annual Report of the Executive Board to the Board of Governors.
- Costs and termination:
  - No charge for Fund services; all investment costs (including currency exchange, securities purchase, external asset managers, custodian banks) borne by and deducted from the Account.
  - Termination: (a) three years from the effective date of the decision adopting the Instrument, or (b) as promptly as practicable after receipt of instructions from every contributing member regarding distribution of its resources, whichever is earlier. On termination under (a), each participant with remaining resources shall be paid in full.
- Amendment and dispute resolution:
  - Instrument may be amended by Fund decision with concurrence of each contributing member with resources remaining.
  - Questions between a contributing member and the Fund shall be settled by mutual agreement.

### Member communication templates
- Sample Communication No. 1: Request transfer to one or more PRGT Subsidy Accounts of all [a portion] of member’s share in the distribution.
- Sample Communication No. 2: Request transfer to the Interim Administered Account of all [a portion] of member’s share.
- Sample Communication No. 3: Member does NOT wish transfer to PRGT or Administered Account; request transfer to member’s SDR Account (or designated currency account) and optional pledge to provide equivalent amount to PRGT subsidy accounts.

*Source: _020112 - 13.      As required under Article XII, Section 6(e), the partial distribution of the general reserve*

### 1.      In the discussions leading up to the reform of the Fund’s concessional financing

### _020112 - 1.      In the discussions leading up to the reform of the Fund’s concessional financing

### Background and Financing Needs
- Staff estimated that SDR 2.5 billion in end-2008 NPV terms would be needed to fully subsidize PRGT lending of up to SDR 11.3 billion from 2009 through 2014.
- New PRGT commitments totaled SDR 4.9 billion in the period 2009-11, leaving a lending capacity of about SDR 2.1 billion per year for 2012–14, assuming the agreed 2009 financing package is completed.
- This level of capacity remains necessary to provide scope for PRGT commitments to rise significantly and to allow self-sustained subsidization of the PRGT to commence in 2015 at an annual capacity of about SDR 0.7 billion.

### Financing Package Agreed in 2009 and Resource Gap
- Subsidy requirements: SDR 2.5
- Minus: available resources: SDR 1.0
- Remaining needs: SDR 1.5
- Possible sources (Table 1; in billions of SDRs; end-2008 NPV terms):
  - Transfer from PRGF-ESF Reserve Account: 0.62
  - New bilateral contributions: 0.20-0.40
  - Delaying PRGF-ESF reimbursement (for 3 years): 0.15-0.20
  - Gold sales resources 1/: 0.50-0.60
    - 1/ After assumed leakage of 10 percent of the distribution of gold sales.

### PRGT Trust Instrument Amendments and Administrative Cost Transfers
- The PRGT Trust Instrument was amended to allow transfer of resources from the Reserve Account to the PRGT General Subsidy Account.
- The transfer of up to SDR 0.62 billion will take place when these subsidy resources are needed, currently projected to be around end-2012.
- Estimated costs of administering the PRGT already transferred from the Reserve Account to the PRGT General Subsidy Account:
  - SDR 38.4 million in FY 2010
  - SDR 46.4 million in FY 2011
- A final transfer for FY 2012 is expected to take place in April or May 2012 and could be of a similar magnitude to previous years.

### Bilateral Subsidy Commitments to the PRGT (Table 2)
- Total commitments now exceed the minimum threshold of SDR 0.2 billion sought under the 2009 financing reform package.
- Since the 2011 Annual Meetings, pledges have been received:
  - Japan: SDR 28.8 million
  - United Kingdom: SDR 19.8 million
- As a result of these new pledges, 25 members have now pledged to contribute a total of SDR 202.8 million.
- Table 2 (Contributions pledged — Amount; SDR equivalent):
  - 1 Algeria: SDR 2.3
  - 2 Argentina: SDR 3.9
  - 3 Australia: A$3017.6
  - 4 Austria: SDR 3.9
  - 5 Botswana: SDR 0.2 1/
  - 6 Canada: CAN$40 and SDR 2.8
  - 7 China: SDR 17.5 1/
  - 8 Denmark: DKK 303.6
  - 9 Italy: SDR 22.1
  - 10 Japan: SDR 28.8
  - 11 Korea: SDR 8.8
  - 12 Kuwait: US$3.9 2.6
  - 13 Malta: SDR 0.2
  - 14 Morocco: SDR 1.1 1/
  - 15 Netherlands: SDR 9.5
  - 16 Peru: SDR 1.2 1/
  - 17 Philippines: SDR 1.9
  - 18 Qatar: SDR 0.6
  - 19 South Africa: SDR 3.4
  - 20 Spain: SDR 9.0
  - 21 Sweden: SEK 504.7 2/
  - 22 Switzerland: SFr 1611.0 2/
  - 23 Trinidad and Tobago: SDR 0.6
  - 24 United Kingdom: SDR 19.8
  - 25 Uruguay: SDR 0.6 1/
  - Total: 202.8
  - 2/ Calculated using the exchange rates as of December 31, 2011.
  - 1/ Reflecting net investment income (in end-2008 NPV terms) to be generated from investment agreements.

### New Loan Resource Pledges to the PRGT (Table 3)
- Fourteen members have pledged SDR 9.8 billion in new loan resources for the PRGT, compared to the target of SDR 10.8 billion under the 2009 financing package.
- Table 3 (New Commitments of Loan Resources to the PRGT; In millions of SDRs; as of end-December, 2011):
  - Effective Total: 9,461 (label in source: Effective9,461)
  - Canada: 500 (3/5/2010; USD; Loan; GLA)
  - China: 800 (9/3/2010; SDR; NPA; ECF)
  - Denmark: 200 (1/28/2010; USD; Loan; GLA)
  - France: 1,328 (9/3/2010; SDR; Loan; ECF)
  - Italy: 800 (4/18/2011; SDR; Loan; ECF)
  - Japan: 1,800 (9/3/2010; SDR; NPA; GLA)
  - Korea: 500 (1/7/2011; SDR; Loan; GLA)
  - Netherlands: 500 (7/27/2010; EUR; Loan; GLA)
  - Norway: 300 (6/25/2010; USD; Loan; SCF, RCF)
  - Saudi Arabia: 500 (5/13/2011; SDR; Loan; GLA)
  - Spain: 405 (12/17/2009; SDR; Loan; GLA)
  - Switzerland: 500 (4/21/2011; EUR; Loan; GLA)
  - U.K.: 1,328 (9/3/2010; SDR; NPA; GLA)
  - Pledged (Belgium): 350
  - Total: 9,811
  - 1/ Germany (KfW) made a pledge of SDR 1.53 billion. As mutually acceptable lending terms could not be agreed, it is excluded from the total.

### Appendix: Possible Distribution of Gold Sale Windfall of SDR 700 million to Fund Members
- Appendix Table lists Member Quota (1/ Quota as per January 31, 2012), Percent of Total Quota, and Possible Distribution 2/ (In millions of SDRs). Selected entries (exact figures preserved):
  - Afghanistan, Islamic Republic of — MemberQuota: 16; Percent of Total Quota: 1.9; Possible Distribution: 0.07; 0.48
  - Albania — 60.0; 0.03; 0.18
  - Algeria — 1,254.7; 0.53; 3.69
  - Angola — 286.3; 0.12; 0.84
  - Antigua and Barbuda — 13.5; 0.01; 0.04
  - Argentina — 2,117.1; 0.89; 6.23
  - Australia — 3,236.4; 1.36; 9.52
  - Austria — 2,113.9; 0.89; 6.22
  - Belgium — 4,605.2; 1.94; 13.55
  - Brazil — 4,250.5; 1.79; 12.50
  - Canada — 6,369.2; 2.68; 18.73
  - China — 9,525.9; 4.00; 28.02
  - France — 10,738.5; 4.51; 31.58
  - Germany — 14,565.5; 6.12; 42.84
  - India — 5,821.5; 2.45; 17.12
  - Japan — 15,628.5; 6.57; 45.97
  - Netherlands — 5,162.4; 2.17; 15.18
  - Norway — 1,883.7; 0.79; 5.54
  - Saudi Arabia — 6,985.5; 2.94; 20.55
  - Spain — 4,023.4; 1.69; 11.83
  - Sweden — 2,395.5; 1.01; 7.05
  - Switzerland — 3,458.5; 1.45; 10.17
  - United Kingdom — 10,738.5; 4.51; 31.58
  - United States — 42,122.4; 17.70; 123.89
  - Total Quotas: 237,993.4; Percent total: 100.00; Possible Distribution total: 700.00
  - Notes from appendix:
    - 2/ The exact amount of the distribution will depend on the quota shares as of the time of the distribution.
    - 3/ Owing to member's overdue repurchase obligations to the Fund, proposed distribution would be made in the member's own currency and the use of the member's currency would be attributed to Fund holdings of the member's currency subject to repurchase.
    - 4/ This figure may differ from the sum of the percentages shown for individual countries because of rounding.

*Italic: Source — _020112 - 1.      In the discussions leading up to the reform of the Fund’s concessional financing*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_020112.pdf_