Transcript of a Conference Call by a Senior Official of the International Monetary Fund on the IMF's Sale of Gold to the Reserve Bank of India

November 3, 2009

Washington, D.C.
Monday, November 2, 2009

SENIOR IMF OFFICIAL: Good evening, everyone.

Let me say a few words just as background to the announcement this evening. As I’m sure you all know, in mid-September, on September 18, the IMF’s Executive Board approved a limited gold sale to finance the Fund’s New Income Model, and also to help boost the Fund’s concessional lending capacity, and the sale was strictly limited to 403.3 metric tons.

And at the time, we noted that the Board approved two broad modalities for the sale. One was direct off-market sales to official purchasers, if there was interest from official purchasers. And the second was on-market sales which would be conducted in a phased manner consistent with the approach followed by central banks that participate in the Central Bank Gold Agreement.

So, today we are announcing the sale of 200 metric tons of gold to the Reserve Bank of India. That’s just under half the total amount that was approved for sale by the Executive Board.

As is laid out in the Press Release, this sale was phased over a period of two weeks, ending last Friday, October 30, and each sale was conducted based on the prevailing market prices on the day of the sale, with total proceeds equivalent to about $6.7 billion, or about 4.2 billion SDRs.

We are making the announcement tonight, consistent with the approach that we have indicated we would take, of being very transparent with the sales, and reporting regularly on the progress.

I think those are the main points. I’ll stop there. Happy to take any questions.

QUESTIONER: Thank you. I have a question about the market price of gold. Obviously, you are very lucky; what’s your sense on this.

SENIOR IMF OFFICIAL: Obviously, you know the price has recently been fluctuating a bit over $1,000 an ounce, and we’ll only know the average price once settlement is completed--. We’re in the process of finalizing now, but probably (the average price will be) just under $1,045 per ounce.

QUESTIONER: Thank you. When you planned this sale, you planned on $850/oz price. Now it’s more than $1,000. Do you have a feeling that you couldn’t have been more lucky?

SENIOR IMF OFFICIAL: Obviously, it’s a good price relative to the original assumptions. You might recall, as part of the agreement on stepping up our financing to low-income countries, we had already agreed that part of the proceeds from the sale would be used to generate resources for concessional lending. So this certainly helps with that.

Of course, this is only half the sale that we have completed, so we don’t want to get ahead of ourselves. We still have another half to go. I hope we’ll still be lucky.

QUESTIONER: I was wondering how soon after the agreement in September did India come forward to buy the gold? And I was wondering if you’ve got any potential buyers lined up for the remaining 203 tons of gold?

SENIOR IMF OFFICIAL: I don’t recall exactly when India came forward. We’ve been in discussions for a while. Obviously it’s a sale for a large amount, so it’s taken a little while to finalize the details. So we’ve been in discussions for a while leading up to the sale. And, as I mentioned, it took place over a period of two weeks.

I can’t really comment on other potential interests. Obviously, as we indicated back in September, we stand ready to sell the gold directly to central banks or other official holders if there’s interest. But I wouldn’t want to comment beyond that at this point.

QUESTIONER: And I was wondering why the sales—this is just for my knowledge—take place over two weeks?

SENIOR IMF OFFICIAL: Well, given its size, I think both from the Fund’s point of view and also the Reserve Bank of India, this was a really to give some protection against short-term fluctuations in the price. Obviously this is an off-market sale, but we do it based on the price prevailing on the day. The price can fluctuate up and down for various reasons on a day-to-day basis. So we felt it would give some protection against short-term fluctuations to do it on a phased basis over two weeks, rather than just all at the price prevailing on one day.

QUESTIONER: Given the good price you got for this gold, would you consider putting more than previously planned for help for countries, given that there are not many donor countries ready to step forward and help—especially for lower rates?

A second question, just technical—so does India pay you in SDRs for this transaction?

And finally, are you optimistic you won’t need to go to the market to sell all of the gold?

SENIOR IMF OFFICIAL: On the first question—well, the decision to sell is very clearly limited to 403 tons. That’s the decision taken by the Board. And so far the Board has also decided that a certain amount, which was roughly SDR 500 to 600 million of resources linked to the sale would be provided for concessional subsidies for concessional lending. So those are the decisions that have been taken so far.

As I said, we haven’t yet sold all the gold, so we don’t yet know whether, at the end of the day, we will have more than we were originally anticipating, or how much more. So I think it’s probably too early to speculate on that.

In terms of payment, the payments are in currencies, not in SDRs. So the payment will be settled in the major currencies that make up the SDR basket.

The third question was—sorry, I missed the third question.

QUESTIONER: Whether you’re optimistic that you won’t need to sell on the market.

SENIOR IMF OFFICIAL: Well, again, this depends whether there’s further interest from the official sector. If not, we would still proceed as we’ve planned previously. And we have indicated that before we start any on-market sales we would inform the market that we are beginning those sales.

Again, it’s probably too early to tell, but we are certainly proceeding with our original plans, and we’ll see if there’s more off-market demand or we’ll begin the on-market sales.

QUESTIONER: You’d said that you plan to be transparent and provide the public with announcement of the progress. And I’m wondering why the decision was made not to make an announcement during hours when the market’s open for trading. You know, it’s six o’clock now. The market’s kind of closed.

SENIOR IMF OFFICIAL: Well, the markets are always open somewhere … and the market will be opening, I guess, in Asia pretty soon. So I don’t think there’s any particular good time to make these announcements.

As I said, the transactions were only concluded on Friday, and we wanted to get the announcement out as quickly as possible.


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