IMF distributes $1.1 billion in gold sales profits to low income countries

The International Monetary Fund (IMF) made three announcements today through its press office.

1.  The IMF will distribute $1.1 billion in reserves attributed to windfall gold sales profits to its members in order to boost its concessional lending capacity for low-income countries during the global crisis.  Low-income countries may currently borrow at zero or low interest from the Poverty Reduction and Growth Trust (PRGT), the IMF’s concessional lending vehicle. The IMF sold 403.3 metric tons of gold in 2009-10 as part of a plan to ensure the long-term financing of the IMF’s day-to-day operations through the creation of an endowment using anticipated gold sales profits of some $6.8 billion. High world gold prices during the sales period, over and above the US$850 an ounce envisaged when the sales were originally planned, generated “windfall” profits of about US$3.8 billion.

2.  Algeria and Brunei Darussalam have contributed additional financing to the IMF. They are joining a concerted action among important creditors to ensure the Fund has sufficient resources to tackle crises and to promote global economic stability. The financial pledges of US$5 billion from Algeria and US$300 million from Brunei Darussalam are in addition to US$456 billion already pledged by member countries and their institutions to reinforce the IMF’s capacity to fight crises.

3.  Global growth has decelerated and substantial uncertainties and downside risks remain. Key policy steps have been announced, but effective and timely implementation is critical to rebuild confidence. We need to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth. Advanced economies should deliver the necessary structural reforms and implement credible fiscal plans. Emerging market economies should preserve or use policy flexibility as appropriate to facilitate a response to adverse shocks and support growth.   Tharman Shanmugaratnam, Deputy Prime Minister of Singapore, Minister for Finance and Chairman of the IMF Committee