IMF Executive Board Reviews Fund's Income Position for Fiscal Years 2021 and 2022

May 28, 2021

  • Net operational income, mainly comprising income from lending and investments, anticipated to remain strong for FY 2021 reflecting the ongoing elevated use of Fund credit resulting from the unprecedented support to the membership in the wake of the pandemic. This trend is expected to continue in FY 2022.
  • A projected unrealized pension-related accounting gain is expected to increase overall Fund income in FY 2021 reversing a large portion of the corresponding loss experienced last year

Washington, DC: On April 27, 2021 the Executive Board of the International Monetary Fund (IMF) completed its annual review of the Fund’s income position for the financial year (FY) ending April 30, 2021.

FY 2021 Income Position

Net operational income, of about SDR 1 billion (US$1.4 billion), mainly comprising income from lending and investments, is anticipated to remain strong for FY 2021, even though lower than the April 2020 estimate. Robust expected income from lending reflects the ongoing elevated use of Fund credit. The actuarial remeasurement of staff retirement plan assets and liabilities is projected to make a substantial but unrealized contribution of about SDR 2.5 billion (US$3.5 billion) to the net income for the year. [1] The net income will increase the Fund’s precautionary balances, which are projected to rise to SDR 19.5 billion (US$28 billion) at end‑FY 2021 from SDR 16.0 billion at end-FY 2020.

The Executive Board also adopted several other decisions that have a bearing on the Fund’s finances. These included decisions to transfer income from the Fixed-Income Subaccount of the Fund’s Investment Account (IA) to the General Resources Account (GRA); to place a portion of FY 2021 General Resources Account net income equivalent to the GRA’s net loss in FY 2020 to the Fund’s Special Reserve, and to place any additional net income in equal parts to the Fund’s Special Reserve and the General Reserve; to transfer currencies equivalent to the increase in the Fund’s reserves from the GRA, after taking into account the transfer of income from the Fixed-Income Subaccount for use in meeting FY 2021 administrative expenses, to the Investment Account.

The Executive Board also took decisions to reimburse costs to the GRA for the expenses of conducting the business of the SDR department; to suspend the reimbursement to the GRA for Poverty Reduction and Growth Trust administrative expenses for FY 2021; and to retain the income of the Endowment Subaccount for FY 2021.

Projections of the Fund’s income remain subject to larger than normal uncertainties one year into the COVID-19 pandemic. Changes in key assumptions such as the discount rate used to measure the Fund’s retirement plan obligations and asset returns can have a large impact on the actual outcome. The FY 2021 annual financial statements will update for the impact of changes in key assumptions made at the time of the April projections.

FY 2022 Income Position and Lending Rate

As noted above, operational income for FY 2022 is expected to remain strong, with projections pointing to annual net income of SDR 2.2 billion (US$3.2 billion). However, these projections are subject to a high degree of uncertainty related to the scale of new lending associated with the COVID-19 economic fallout and the path of any recovery; as well as the timing and amounts of disbursements under approved arrangements included in the projections. One year into the COVID-19 pandemic, uncertainties surrounding the prospects for recovery remain and are likely to impact actuarial assumptions such as the discount rate, and the performance of the Fund’s investment and retirement plan asset portfolios. Positive projected net income should allow the Fund to continue to accumulate precautionary balances.

The Fund charges member countries a basic rate of charge on the use of Fund credit, which is determined as the SDR interest rate plus a margin expressed in basis points. In April 2020 the Executive Board set the margin for this rate of charge at 100 basis points for financial years FY 2021 and FY 2022. In the context of this year’s comprehensive review of the Fund’s income position at the midpoint of this two-year period, the Executive Board concluded that the margin should remain unchanged.

[1] IAS 19 ‘Employee Benefits’, requires the actuarial remeasurement of post‑employment obligations.

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