G20 Leaders Expected to Discuss IMF Gold Sale
From Reuters
Sunday, March 29, 2009
http://www.reuters.com/article/compa...
LONDON -- G20 leaders are expected to discuss using proceeds from planned gold sales by the International Monetary Fund (IMF) to double funding available for poor countries that need help dealing with the global economic crisis, a source familiar with the plan said on Sunday.
The source said there was not unanimous support for the idea, including within the IMF, because the IMF's low-interest lending to poor countries does not generate enough return to fund further lending.
Regardless of any possible gold sales, IMF Managing Director Dominique Strauss-Kahn has already asked the G20 group of the world's 20 biggest economies to provide additional funding to double resources for IMF low-income programmes.
According to a draft G20 communique obtained by the Financial Times, the IMF will be asked to "bring forward, by the spring meetings, proposals to use the proceeds of agreed gold sales to support low-income countries."
The IMF last year approved the sale of 403 tonnes of gold from its stocks of 3,217 tonnes (103.4 million ounces) as part of a plan to put its finances on a sounder footing and create an endowment with the proceeds.
Selling IMF gold requires ratification by the legislatures of member countries, including the U.S. Congress, a process which is expected to take at least several months.
The IMF has therefore emphasised that plans to sell gold are not part of proposals for near-term financing needs associated with the current global financial crisis.
But a recent surge in IMF lending to countries facing balance of payments crises related to the global downturn has led analysts to ask whether the Washington-based institution needs to proceed with the gold sales as part of a broader make-over of its financial structures.
African leaders and anti-poverty groups have long called on the IMF to sell more gold to raise immediate funding for poor countries, which are now being hard hit by falling exports and lower commodity prices.
The IMF has repeatedly said that any gold sales would be made under the umbrella of a central bank gold agreement, to avoid disruption in the market.
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