## THE FUND’S INCOME POSITION FOR FY 2015—ACTUAL OUTCOME

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### Executive summary and overall outcome
- Overall FY 2015 net income: SDR 1.6 billion.
- This outcome was SDR 133 million more than estimated in April.
- GRA net income for FY 2015: SDR 1.5 billion; placed to the Fund’s reserves.
- Precautionary balances (end of period): SDR 14.2 billion.

### Income components
- Lending income (including surcharges): SDR 2.77 billion, in line with the April estimate.
  - Margin for the rate of charge: amounts shown in Table 1 (Margin 743/742 in April/Actual).
  - Service charges, commitment fees, and surcharges: broadly in line with projections.
- Investment Account income:
  - Fixed-Income Subaccount investment income: SDR 84 million (actual) versus SDR 82 million (April estimate).
  - Endowment Subaccount (gold profits) investment income: SDR 181 million (actual) versus SDR 174 million (April estimate).
  - Note: The endowment funding is being phased over three years in equal tranches and began in 2014; endowment assets invested in a conservative, globally diversified portfolio consisting of fixed income assets and a limited portion of equities (including real estate investment trusts) per strategic asset allocation benchmark.

### Expenses and budget reconciliation
- Total expenses: SDR 765 million (about SDR 11 million higher than projected in April).
- Net administrative expenditures: SDR 706 million (about SDR 17 million higher than the earlier estimate).
  - Main driver: appreciation of the US$/SDR exchange rate (SDR 23 million).
  - Offset by: lower spending under the net administrative budget (SDR 6 million).
- Capital budget items expensed and depreciation: slightly lower than earlier projections.
- Net operational income (A-B): SDR 688 million (April projection SDR 701 million).
- April memorandum items and reconciliation: see Table 2 (administrative expenses per audited financial statements and reconciliation to budget outturn).

### IAS 19 timing difference (pension and employee benefits)
- Total IAS 19 timing adjustment (timing difference): actual outcome SDR -694 compared with April projection SDR -847.
- Components:
  - Accrual vs. funding (timing difference): actual SDR -149 (April projection SDR -156).
    - IAS 19 expense for FY 2015: SDR 265 million.
    - Actual funding in FY 2015: SDR 116 million.
  - Actuarial losses (recognized in year under amended IAS 19): actual SDR -545 (April projection SDR -691).
    - FY 2015 actuarial losses decreased by about SDR 146 million from the April estimate.
    - Reduction largely due to lower net present value of plan obligations from updated demographic and financial assumptions including salary scale, health care costs, and pension increases.
- Under amended IAS 19, actuarial gains and losses are fully reflected in income in the year they arise rather than deferred.

### Precautionary balances and reserve treatment
- Precautionary balances (end of period): SDR 14.2 billion (higher than April projection SDR 14.0 billion).
  - Increase mainly attributable to the IAS 19 timing difference being lower than the loss estimated in April.
- Investment Account transfers and retention:
  - Investment income from the Fixed-Income Subaccount of SDR 84 million transferred from the Investment Account to the GRA in August 2015 and used to meet FY 2015 administrative expenses.
  - Income from the Endowment Subaccount of SDR 181 million retained in the Investment Account.
  - Currencies of SDR 2.7 billion available for transfer to the IA (comprising net income retained in the GRA in FY 2014 of SDR 1.2 billion and SDR 1.5 billion in FY 2015) will continue to be retained in the GRA pending the Executive Board’s review of the investment strategy for the Fixed-Income Subaccount. The option to retain the currencies in the GRA does not require a Board decision.

### Board decisions, actions, and operational notes
- No further Board decisions required at this time; necessary decisions were taken in April 2015 during the review of the Fund’s income position for FY 2015 and FY 2016.
- GRA net income placement: FY 2015 GRA net income (SDR 1.5 billion) has been placed in the Fund’s general reserves.
- Staff may revert to the Board with a proposal to transfer all or part of the SDR 2.7 billion to the IA for investment following the completion of the investment strategy review.

### Key statistics and memorandum items (as presented)
- Net income position: April Projections SDR 1,492; Actual Outcome SDR 1,625.
- A. Operational income: April Projections SDR 1,455; Actual Outcome SDR 1,453.
- Lending income: April Projections SDR 1,310; Actual Outcome SDR 1,307.
- Fixed-Income Subaccount: April Projections SDR 82; Actual Outcome SDR 84.
- Endowment Subaccount (gold profits) investment income: April Projections SDR 174; Actual Outcome SDR 181.
- B. Expenses: April Projections SDR 754; Actual Outcome SDR 765.
- Net operational income (A-B): April Projections SDR 701; Actual Outcome SDR 688.
- Surcharges: April Projections SDR 1,464; Actual Outcome SDR 1,463.
- IAS 19 timing adjustment: April Projections SDR -847; Actual Outcome SDR -694.
- Outstanding Fund credit (average balances, SDR billions): April Projections 74.3; Actual Outcome 74.2.
- SDR interest rate (average, in percent): April Projections 0.1; Actual Outcome 0.1.
- US$/SDR exchange rate (average): April Projections 1.48; Actual Outcome 1.47.
- Precautionary balances (end of period, SDR billions): April Projections 14.0; Actual Outcome 14.2.

*Prepared by the Finance Department; report completed on September 9, 2015.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2015/_090915.pdf_