The International Monetary Fund completed the sale of 403.3 tonnes of gold on December 22, 2010. Given the historically high price of gold, the Fund has realized at least $3.5 billion more than it projected in 2008. In 2009, the Fund agreed to use $900 million of the windfall profits from gold sales to increase the amount of low interest lending to poor countries, and since then the price of gold has continued to climb. Even after creating the endowment for its new income model and subsidizing its low interest lending program, the Fund will conservatively realize an additional $2.5 billion in excess windfall profits.
We strongly urge the IMF to use all excess windfall profits from gold sales to fund debt cancellation and / or non-debt creating assistance for poor countries. Too many poor countries find themselves taking on new debt in the wake of natural disasters or other external shocks such as the global financial crisis.
The IMF does not need these funds for its administrative budget or for increased lending capacity, but the poorest countries now face mounting debt burdens due to the financial crisis through no fault of their own. The two year interest-relief on IMF loans that was partially funded by gold sales may have reduced interest payments for poor countries but did not provide these countries with the non-debt creating assistance that they need. The reduction in interest payments from the subsidy was marginal – an average of less than $1 million per year for countries that qualified. The $2.5 billion in excess windfall from gold sales represents another opportunity to provide debt cancellation and non-debt creating assistance that is so desperately needed by poor countries.