{
  "title": "IMF Survey: Board Backs Plan to Adopt New Income Model for IMF",
  "publication": "IMF News, April 7, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew040708a",
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  "summary": "Managing Director Dominique Strauss-Kahn applauded an agreement by the Executive Board to propose a new and sustainable income and expenditure framework for the IMF, calling it "a landmark decision that will put the institution on a solid financial footing."",
  "authors": [
    "IMF Survey"
  ],
  "publishDate": "2008-04-07",
  "sections": [
    {
      "heading": "Executive summary",
      "content": "- The Executive Board agreed to revamp the IMF's income model to reduce reliance on lending income and place the institution on a more sustainable financial footing.\n- Managing Director Dominique Strauss-Kahn called the agreement \"a landmark agreement that will put the institution on solid financial footing and modernize the IMF's structure and operations.\"\n- The Board approved the administrative budget for FY2009 (May 1, 2008-April 30, 2009) and considered a medium-term budget for financial years 2009-11 that includes deep spending cuts intended to close a projected income-expenditure gap of $400 million within a few years."
    },
    {
      "heading": "Key elements of the new income model",
      "content": "- Replace the current income model with one based on more robust and diverse sources of revenue in line with the Fund's multiple functions.\n- If approved, the new model could generate an additional $300 million in income within a few years.\n- Create an endowment with the profits from the limited sale of 403.3 metric tons of the IMF's gold holdings; gold sales would be conducted in a transparent manner with strong safeguards to ensure they do not add to official sales and avoid any risk of market disruption.\n- Broaden the IMF's investment authority to enhance the average expected return on the Fund's investments and enable adaptation of the investment strategy over time; investment policies would reflect the public nature of the funds and include safeguards to avoid perceived conflicts of interest.\n- Resume the long-standing practice of reimbursing the IMF's budget for the cost of administering the PRGF-ESF Trust (the trust fund for concessional lending to low-income countries) in the financial year in which the IMF adopts a decision authorizing the gold sales; this cost recovery will not affect the Fund's ability to provide concessional lending to low-income countries."
    },
    {
      "heading": "IMF medium-term budget — objectives and cuts",
      "content": "- Strategic plan focuses on five goals: strengthening multilateral surveillance, sharpening bilateral surveillance, refocusing work on low-income countries, streamlining capacity building, and modernizing the Fund.\n- Budgetary strategy centers on reshaping the institution to deliver more focused and cost-effective outputs and shifting resources from non-core to core business to increase resources for multilateral and regional surveillance.\n- Administrative budget proposal includes expenditure cuts of $100 million in FY2009-11.\n- Including savings of $27 million already allotted in the budget plan for FY2008-10, real net administrative expenditures will decrease about 14 percent to $796 million in FY2011 from $922 million in FY2008."
    },
    {
      "heading": "Implementation, legal, and legislative requirements",
      "content": "- Key elements—particularly a proposed amendment of the IMF's Articles of Agreement to expand the Fund's investment authority—will require legislative action in most member countries.\n- Approval by the U.S. Congress is needed before the U.S. Executive Director can vote in favor of gold sales.\n- Executive Directors were commended for their commitment to seek expeditious approval by their legislatures to enable these components of the new income model to come into effect."
    },
    {
      "heading": "Background and timeline",
      "content": "- The Board decision on April 7 marks the culmination of a two-year effort that began in May 2006 with the appointment of a committee of eminent persons to review the IMF's income base.\n- The committee, headed by Andrew Crockett, concluded in early 2007 that continuing to rely on income from lending was not a sustainable model and recommended adopting a package of income-generating measures, including creating an endowment from limited gold sales.\n- The Board approved the administrative budget for FY2009 (May 1, 2008-April 30, 2009) as part of this package."
    },
    {
      "heading": "Direct quotations",
      "content": "- \"We have made difficult, but necessary choices to close the projected income shortfall and put the Fund's finances on a sustainable basis, but in the end, it will make the Fund more focused, efficient, and cost-effective in serving the needs of our members,\" Dominique Strauss-Kahn said.\n- \"Today, the Fund's membership took a fundamental step that will enable the institution to remain an independent, astute, and dynamic international organization that facilitates global cooperation and action to ensure financial stability and prosperity for all,\" Mr. Strauss-Kahn said.\n- \"We agreed to replace an obsolete and unviable income model with a modern and more predictable model in line with other international financial institutions. We also agreed on a medium-term budget proposal with sharp spending cuts of $100 million over the next three years.\"\n\nSource: IMF Survey online, April 7, 2008 — \"IMF Survey: Board Backs Plan to Adopt New Income Model for IMF.\"\n\n---\n\n Content in this bundle\n\n- 013107 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- In The News\n- Read the press release\n- Interview with Finance head\n- IMF gold holdings\n- Overhaul of IMF quotas\n- Refocusing the IMF\n- Where the IMF gets its money\n- IMF financial resources\n- IMF work program\n- resolution\n- IMF's gold holdings\n- Andrew Crockett\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew040708a"
    }
  ],
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    "[Structured JSON version](/en/news/articles/2015/09/28/04/53/sonew040708a/index.json)",
    "[Bundle manifest](/en/news/articles/2015/09/28/04/53/sonew040708a/bundle-manifest.json)",
    "Authors: IMF Survey",
    "Published: April 7, 2008",
    "The Executive Board agreed to revamp the IMF's income model to reduce reliance on lending income and place the institution on a more sustainable financial footing.",
    "Managing Director Dominique Strauss-Kahn called the agreement \"a landmark agreement that will put the institution on solid financial footing and modernize the IMF's structure and operations.\"",
    "The Board approved the administrative budget for FY2009 (May 1, 2008-April 30, 2009) and considered a medium-term budget for financial years 2009-11 that includes deep spending cuts intended to close a projected income-expenditure gap of $400 million within a few years.",
    "Replace the current income model with one based on more robust and diverse sources of revenue in line with the Fund's multiple functions.",
    "If approved, the new model could generate an additional $300 million in income within a few years.",
    "Create an endowment with the profits from the limited sale of 403.3 metric tons of the IMF's gold holdings; gold sales would be conducted in a transparent manner with strong safeguards to ensure they do not add to official sales and avoid any risk of market disruption.",
    "Broaden the IMF's investment authority to enhance the average expected return on the Fund's investments and enable adaptation of the investment strategy over time; investment policies would reflect the public nature of the funds and include safeguards to avoid perceived conflicts of interest.",
    "Resume the long-standing practice of reimbursing the IMF's budget for the cost of administering the PRGF-ESF Trust (the trust fund for concessional lending to low-income countries) in the financial year in which the IMF adopts a decision authorizing the gold sales; this cost recovery will not affect the Fund's ability to provide concessional lending to low-income countries.",
    "Strategic plan focuses on five goals: strengthening multilateral surveillance, sharpening bilateral surveillance, refocusing work on low-income countries, streamlining capacity building, and modernizing the Fund.",
    "Budgetary strategy centers on reshaping the institution to deliver more focused and cost-effective outputs and shifting resources from non-core to core business to increase resources for multilateral and regional surveillance.",
    "Administrative budget proposal includes expenditure cuts of $100 million in FY2009-11.",
    "Including savings of $27 million already allotted in the budget plan for FY2008-10, real net administrative expenditures will decrease about 14 percent to $796 million in FY2011 from $922 million in FY2008.",
    "Key elements—particularly a proposed amendment of the IMF's Articles of Agreement to expand the Fund's investment authority—will require legislative action in most member countries.",
    "Approval by the U.S. Congress is needed before the U.S. Executive Director can vote in favor of gold sales.",
    "Executive Directors were commended for their commitment to seek expeditious approval by their legislatures to enable these components of the new income model to come into effect.",
    "The Board decision on April 7 marks the culmination of a two-year effort that began in May 2006 with the appointment of a committee of eminent persons to review the IMF's income base.",
    "The committee, headed by Andrew Crockett, concluded in early 2007 that continuing to rely on income from lending was not a sustainable model and recommended adopting a package of income-generating measures, including creating an endowment from limited gold sales.",
    "The Board approved the administrative budget for FY2009 (May 1, 2008-April 30, 2009) as part of this package.",
    "\"We have made difficult, but necessary choices to close the projected income shortfall and put the Fund's finances on a sustainable basis, but in the end, it will make the Fund more focused, efficient, and cost-effective in serving the needs of our members,\" Dominique Strauss-Kahn said.",
    "\"Today, the Fund's membership took a fundamental step that will enable the institution to remain an independent, astute, and dynamic international organization that facilitates global cooperation and action to ensure financial stability and prosperity for all,\" Mr. Strauss-Kahn said.",
    "\"We agreed to replace an obsolete and unviable income model with a modern and more predictable model in line with other international financial institutions. We also agreed on a medium-term budget proposal with sharp spending cuts of $100 million over the next three years.\"",
    "[013107 (PDF)](/external/np/oth/2007/013107.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[In The News](https://www.imf.org/en/news/search)",
    "[Read the press release](https://www.imf.org/external/np/sec/pr/2008/pr0874.htm)",
    "[Interview with Finance head](https://www.imf.org/external/pubs/ft/survey/so/2008/INT040708A.htm)",
    "[IMF gold holdings](http://www.imf.org/external/np/exr/facts/gold.htm)",
    "[Overhaul of IMF quotas](http://www.imf.org/external/pubs/ft/survey/so/2008/NEW032808A.htm)",
    "[Refocusing the IMF](http://www.imf.org/external/np/exr/key/quotav.htm)",
    "[Where the IMF gets its money](http://www.imf.org/external/np/exr/facts/finfac.htm)",
    "[IMF financial resources](http://www.imf.org/cgi-shl/create_x.pl?liq=)",
    "[IMF work program](http://www.imf.org/external/np/sec/pr/2007/pr07295.htm)",
    "[resolution](https://www.imf.org/external/pubs/ft/survey/so/2008/NEW032808A.htm)",
    "[IMF's gold holdings](https://www.imf.org/External/NP/EXR/faq/goldfaqs.htm)",
    "[Andrew Crockett](https://www.imf.org/external/pubs/ft/survey/so/2007/INT051B.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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