The International Monetary Fund (IMF) says it has approved distribution of additional profits from gold sales as part of a strategy to support low-interest lending to Caribbean and other poor countries.
The Washington-based financial institution said that the 2009-10 gold sales generated US$10.5 billion in profit, well above the amount envisaged for an endowment to reduce the IMFs reliance on lending income to cover its operational expenses.
It said an earlier distribution of US$1.1 billion of this excess profit, or windfall, is helping generate subsidy resources for concessional lending to Caribbean and other low-income countries during the current economic and financial crisis.
The IMF said it has now taken a similar decision to distribute the remaining US$2.7 billion as part of a strategy to generate additional financial resources for the Poverty Reduction and Growth Trust (PRGT), the IMFs concessional lending vehicle.
An IMF report released in September warned that the sharp drop in PRGT financing capacity after 2014 needed to be addressed for the IMF to maintain its capacity to help low-income countries in the future and support their efforts to promote strong and sustainable growth.
The report also noted IMF support helped some Caribbean and other low-income countries navigate the crisis and promote longer-term poverty reduction and growth, but said that these countries remain exposed to global risks and volatility.
The IMF said reforms agreed to in 2009 doubled poor countries access to concessional financing and reduced interest rates to zero, supported by a concessional financing package for 2009-14.
The IMF has long-recognized the desirability of a self-sustained vehicle for concessional lending to low-income countries, said Robert Powell of the IMFs Finance Department.
Among other things, it introduces greater certainty that the IMF will be able to meet the borrowing needs of its low-income member countries in the longer-term. He said.
The IMF said because the windfall profits from the gold sales are part of the IMFs general resources available for the benefit of the entire membership, they cannot be placed directly in the PRGT, which is available only to low-income countries.