Press Release: IMF Executive Board Approves Limited Sales of Gold to Finance the Fund’s New Income Model and to Boost Concessional Lending Capacity

IMF News, September 18, 2009

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Canonical URL: Press Release: IMF Executive Board Approves Limited Sales of Gold to Finance the Fund’s New Income Model and to Boost Concessional Lending Capacity

The Executive Board approved gold sales in a volume strictly limited to 403.3 metric tons.
The approved volume is described as "one-eighth of the Fund’s total holdings."
Sales are to be conducted under modalities that safeguard against disruption of the gold market.

The decision is a central element of the new income model for the IMF endorsed by the Executive Board in April 2008.
Central component: 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.
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 chaired by Andrew Crockett.

Managing Director Mr. Dominique Strauss-Kahn: “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.”
He added: “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.”

Sales must be conducted at market prices under the Fund’s Articles of Agreement, including direct sales to official holders.
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.
On-market sales could be conducted in a phased manner over time, following the approach adopted by central banks participating in the Central Bank Gold Agreement.
Participants in the recently renewed Central Bank Gold 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 element of transparency, the Fund will inform markets before any on-market sales commence.
The Fund will report regularly to the public on the progress with the gold sales.

Source: Press Release No. 09/310, IMF, September 18, 2009.