A spreading financial crisis is turning what would have been a huge loss into a profit for the International Monetary Fund. The Washington-based global lender, which has approved financial rescue packages for Hungary, Ukraine, Iceland and Latvia since early November, said on Friday it now expects to post a profit of about $11 million in fiscal year 2009, instead of its previous projection for a shortfall of $294 million.
"The improved income outlook reflects new lending activity that is estimated to generate additional fund income of about $247 million, assuming all disbursements under the recently approved arrangements are made as scheduled," the IMF said following a review of its income.
The IMF slowly sank into the red over the last several years as the world economy grew at a rapid pace and emerging market economies, which have traditionally been the IMF's biggest borrowers, blossomed. The IMF relies on lending to countries to fund its operations but with fewer crises over the years, it had lost income and faced a growing deficit.
In efforts to put its finances on sounder footing, the IMF in May offered buyouts to 380 employees and proposed to sell a portion of its gold stocks and invest the profits in government and corporate bonds. The proposed sale of gold depends on approval by some member countries' legislatures, including the US Congress. The financial make-over included cuts in spending by 13.5 percent over three years to cover a shortfall of some $400 million over the medium term.
In a statement on Friday, the IMF said the change in its near-term income outlook would not affect its plans for a new sustainable income structure, including plans to broaden its investment authority and create an endowment funded by limited gold sales.