IMF to sell 403 tonnes of gold to boost lending to poor
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WASHINGTON (AFP) - – The International Monetary Fund said its executive board approved Friday the sale of 403 tonnes of gold, worth an estimated 13 billion dollars, to boost its capacity to lend to poor countries.
The IMF said in a statement the sales would be "in a volume strictly limited to 403.3 metric tonnes, with these sales to be conducted under modalities that safeguard against disruption of the gold market."
The IMF said the decision was a central element of a new income model for the institution that had been approved by the executive board in April 2008.
The Group of 20 developed and developing countries decided at their April summit in London that the money raised by the gold sales should allow the IMF to offer favorable conditions on loans to the poorest countries.
"The new income model is designed to provide the fund with more diverse income sources that are better aligned with the variety of functions performed by the fund, with a central component being the funding of an endowment with the profits from these limited gold sales," the 186-nation institution said.
The IMF said that gold sales "will also increase the fund's resources for lending to low-income countries," a strategy that won board backing in July.
The amount of gold is one-eighth of the current holdings of the Washington-based IMF, one of the world's biggest holders of the precious metal.
"I am delighted that the executive board has given its overwhelming backing to a strictly limited sale of fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries," IMF managing director Dominique Strauss-Kahn said in the statement.
"These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market," he said.
The fund is required by its Articles of Agreement to conduct all gold sales at market prices, including direct sales to official holders.
The IMF did not state the value of the gold to be sold but based on the current bullish market price for the metal, it is estimated the sale would fetch 13 billion dollars.
Under the approved plan, the IMF would offer to sell gold directly to central banks "or other official sector holders if there were to be interest from such holders."
The IMF said such transactions would redistribute official gold holdings without changing total official holdings.
If the public sector demand is insufficient, the IMF said it could conduct the gold sales "on-market in a phased manner over time," in line with an approach already followed by central banks.
The IMF would be constrained by the overall ceilings agreed by the central banks, which currently is 400 tonnes annually and 2,000 tonnes in total over the next five years starting on September 27.
The IMF said it "will inform markets before any on-market sales commence" and "report regularly to the public on the progress with the gold sales."
In July, with the world economy struggling to pull out of the worst recession in six decades, the IMF announced it would increase its lending to poor countries to 17 billion dollars by 2014, including 8.0 billion in the coming two years.
That compares with an annual average of one billion dollars in the 2006-2008 period, and three billion dollars in the first half of 2009.
The IMF also had decided to cancel interest payments owed by poor countries through end-2011 and reform lending practices to make loans quickly available, at higher ceilings on amounts and with more flexible conditions.
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oh, better dun buy gold...
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sell gold to help the poor?? laughable!
more like to "stabilise" the gold price.
With their stock of the precious metal reducing, they can only "play the game" for a few more years.
Many European central banks are NOT selling gold and China is encouraging PRCs to buy gold as investment.
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Gold price is very high now. Above $1000 per ounce troy. That's why they need to sell it off.
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Originally posted by dare82:
Gold price is very high now. Above $1000 per ounce troy. That's why they need to sell it off.
Whatsoever, IMF can sell all they want. Best is sell all the gold they have and print more greenbacks at the same time.
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Originally posted by cyberr1981:
Whatsoever, IMF can sell all they want. Best is sell all the gold they have and print more greenbacks at the same time.That is inflate and deflate at the same time.
USD is not tied to the gold price standards anymore.
USD will rise and fall at the same time.