Press Release No. 13/179

Press Release: IMF Executive Board Reviews Fund’s Income Position; Margin for Lending Rate Remains Unchanged for 2014 Financial Year

May 17, 2013

The Executive Board of the International Monetary Fund (IMF) has completed its annual review of the Fund’s income position for the financial year ending April 30, 2013 (FY2013) and maintained the margin for the lending rate for IMF credit at 100 basis points for FY2014.

FY2013 Income Position

FY2013 net income is projected at about SDR 2 billion (about US$3 billion). This outturn and the one projected for FY2014 (see below) will help build the IMF’s precautionary balances, which are projected to reach SDR 11.5 billion (about US$17.1 billion) at end-FY2013. The Executive Board has set the indicative medium-term target for precautionary balances at SDR 20 billion (about US$29.8 billion) in light of the increase in total Fund credit and commitments (Press Release No. 12/132).

FY2014 Lending Rate and Income Position

The IMF charges member countries a basic rate of charge on use of IMF credit, which is determined as the SDR interest rate plus a margin expressed in basis points. In April 2012, the Executive Board set the margin for the basic rate of charge at 100 basis points for the two financial years FY2013 and FY2014. The margin was adopted under a new rule for setting the margin (see Press Release No. 11/485). Under the new rule a comprehensive review of the Fund’s income position is required before the end of the first year of each two-year period and the margin may be adjusted in the context of such a review, but only if there are fundamental changes in the underlying factors for setting the margin. The Fund has completed this review and concluded that there have not been fundamental changes that would warrant a change in the margin for FY2014. Therefore, the Executive Board agreed to maintain the FY2014 margin on the rate of charge unchanged at 100 basis points above the SDR interest rate.

Projections for FY2014 point to an annual net income of about SDR 1.6-1.8 billion (about US$2.4-2.7 billion). The projections are subject to a high degree of uncertainty and are sensitive to the timing and amounts of disbursements under approved arrangements included in the projections, possible new arrangements, and the performance of the Fund’s investment portfolio. The projected net income will add to needed precautionary balances.

The Executive Board also adopted a number of other decisions that have a bearing on the Fund’s finances, including the transfer of amounts attributable to net operational income and surcharges in FY2013 to the Fund’s investment account and placement of net income to the Fund’s reserves. The Executive Board resumed the long-standing practice of reimbursing the General Resources Account for the cost of administering the Poverty Reduction and Growth Trust (PRGT) in line with the Executive Board’s approval of a long-term financing strategy for the PRGT in September 2012 (see Public Information Notice No. 12/118) and consistent with the elements of the Fund’s new income model endorsed in April 2008 (see Press Release No. 08/74).

Additional Information can be found in the paper: The Consolidated Medium-Term Income and Expenditure Framework.