Use of Gold Sales Profits - Initial Considerations and Options

Policy Papers, March 16, 2011

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Use of Gold Sales Profits - Initial Considerations and Options

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Bibliographic details

• Published: March 16, 2011
• Series: Policy Papers

Background and purpose of the sale

• In December 2010, the Fund concluded the limited gold sale (403 metric tons) approved by the Board in September 2009.
• The main purpose of the sale was to generate profits to fund an endowment that would diversify the Fund’s income sources away from lending income.
• The Board agreed in July 2009, before approving the sale, to a strategy pursuant to which resources linked to the gold sale would contribute to boosting the Fund’s concessional lending capacity.

Key figures and financial outcomes

• Total profits from the gold sale were SDR 6.85 billion.
• The paper focuses primarily on options for use of the windfall profits above a price of US$935 per ounce.
• The US$935 per ounce figure was the average price required to:
  • generate resources for the endowment at the assumed gold price underlying the new income model, and
  • implement the agreed strategy to provide SDR 0.5–0.6 billion in resources linked to gold sales as part of the 2009 concessional financing package.
• The profits significantly exceeded those assumed in April 2008 and in July 2009, reflecting the substantial increase in the market price of gold throughout the period of the gold sales.

Purpose of the paper and scope

• The paper seeks to provide a basis for initial Board consideration of the use of the profits from the gold sale.
• It focuses primarily on the options for use of the windfall profits above US$935 per ounce.
• The emphasis is on balancing:
  • funding an endowment to diversify income away from lending income, and
  • contributing resources to boost the Fund’s concessional lending capacity for low-income developing countries.

Relevant subjects (as listed)

• Concessional aid
• Forward commitment capacity
• Fund financial position
• Gold sales by Fund
• Low-income developing countries
• Poverty Reduction and Growth Trust
• Profits
• Resource mobilization

Source: Use of Gold Sales Profits - Initial Considerations and Options, March 16, 2011

Content in this bundle

• Use of Gold Sale Profits—Initial Considerations and Options; IMF Policy Papers; March 16, 2011
  • Use of Gold Sale Profits—Initial Considerations and Options; IMF Policy Papers; March 16, 2011 (Markdown version)
  • Use of Gold Sale Profits—Initial Considerations and Options; IMF Policy Papers; March 16, 2011 (PDF)