March 7, 2006
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The Executive Board of the International Monetary Fund (IMF) met on March 6, 2006 for a preliminary discussion of the Fund's income outlook and its reliance on interest income earned from lending.
"The Executive Board welcomed the recent decline in lending as a positive development, noting it reflects the strength of the global economy and the Fund's success in helping member countries resolve balance of payments difficulties and in promoting their pursuit of sound macroeconomic policies. The Board also agreed that the Fund needs to ensure that it has a stable and durable income base in place, even in an environment of continued low credit," IMF Managing Director Rodrigo de Rato stated.
As part of its discussion, the Executive Board agreed on a two-pronged strategy that will first involve immediate steps to address a projected income shortfall for the financial year beginning May 1, 2006 (FY07), and then lead to the development and assessment of a full range of options available to close projected medium-term financing gaps and to place the Fund's income position on a sustainable footing.
Staff are expected to report to the Executive Board in April on specific proposals for immediate actions necessary to address issues related to the income position for FY07. Staff were also urged by the Board to continue work on medium-term options. It is also expected that income and expenditure issues will be considered in the context of the Medium-Term Budget and the Medium-Term Strategic Review now underway.
