International Monetary Fund member countries on Friday formally endorsed a plan for strictly limited sales of 403.3 tonnes of gold from its stockpile and said any on-market sales would be done in a way that did not disrupt gold markets. The IMF said it could sell the gold, which is one-eighth of its total gold holdings, either directly to central banks or in the gold market.
On-market sales would be conducted in phases over several years, the Fund said, adding it would notify markets before any sales were made. The sales will be conducted within the newly agreed Central Bank Gold Agreement, which limits sales to 400 tonnes annually and 2,000 tonnes in total over five years beginning September 27, 2009.
A senior IMF official said no central bank had expressed interest to buy the gold, and if there was no interest the Fund would proceed with on-market sales. The official told a conference call on-market sales are not expected to begin immediately. All sales would be conducted at market prices on the day, the official added. "We will make another announcement to markets before we initiate on-market sales again," the official added.
The sales are part of plans adopted last year to diversify the Fund's sources of income and to increase low-cost lending to poor countries by up to $17 billion through 2014.
"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.
He said the sales would be done in a responsible and transparent manner. "Most importantly, the sales are strictly limited to 403.3 metric tons, which is one-eighth of the Fund's total holdings, so the IMF will continue to hold a relatively large amount of its assets in gold."