[stop-imf] IMF Plan to Sell Gold Goes to Congress - news clips

[robert weissman]

IMF Plan to Sell Gold Goes to Congress
By TOM BARKLEY
May 7, 2008
The Wall Street Journal

With global finance ministers giving their final consent to the
International Monetary Fund to change its income model, a broad package
of measures to overhaul the multilateral institution's finances and sell
a chunk of its gold is about to head to the U.S. Congress -- and an
uncertain future.

Given the short time left in the congressional schedule and the
approaching change of administration, action by Congress this year is
looking increasingly unlikely, congressional staffers and outside
experts say.

Still, there is some optimism the package will eventually be approved:
Congressional reaction to the IMF's plan to sell gold -- designed to
shore up its finances -- is likely to be less hostile than in 2005 and
1999, when heated opposition doomed the plans.

Other countries also must approve parts of the overhaul package, but the
U.S. -- with a 17% voting share -- has effective veto power over the
changes and is also the only country that has to give its blessing to
the gold sales.

The gold sales would total 403.3 metric tons, or about an eighth of the
fund's holdings, and are valued around $11.3 billion. The money would be
used to set up an interest-generating account to help close a projected
$400 million budget deficit in coming years.

Write to Tom Barkley at tom.barkley@dowjones.com

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IMF moves toward gold sales

19 hours ago

WASHINGTON (AFP) =97 The International Monetary Fund board of governors
Tuesday approved a new program that calls for the sale of 403.3 tonnes
of IMF gold reserves as part of a wide-ranging financial overhaul.

The plan would create an "endowment" that helps provide a steadier
source of income to the international organization that has drastically
scaled back on lending.

The program announced April 7 also calls for a 13.5 percent cutback in
IMF spending over the next three years.

The governors approved a new investment plan to be activated after gold
sales. The gold sales must be approved by the US Congress to allow the
US representative to the IMF to approve the change.

"The new income and expenditure framework is expected to cover a
400-million-dollar shortfall projected in the medium term," the IMF said
in a statement.

Governors from 176 of the Fund's 185 member countries cast votes, with
all in favor of the plan. Approval required a majority of the votes cast.

"With this decisive endorsement, the Fund's members have once again
demonstrated their support for reforming key components of the
institution's framework, including its financial structure," IMF
managing director Dominique Strauss-Kahn said.

"Together with the resounding vote last week to change the
representational structure of the Fund, this vote further reinforces the
legitimacy of the Fund. I thank the membership for this vote of
confidence in the institution's future."

The new plan calling for the endowment requires an amendment of the
Fund's Articles of Agreement, which will need to be accepted by at least
three-fifths of IMF members.

The sale, amounting to some 12 percent of its gold reserves, could yield
around 11 billion dollars, IMF officials said last month. This would
help finance a reorganization of the institution as it seeks to survive
a downturn in lending to troubled countries, its main income source.

The IMF said the plan calls for gold sales to be "conducted in a
transparent manner with strong safeguards to ensure they do not add to
official sales and avoid any risk of market disruption."

The organization is also in the process of sharply cutting back staff.
Last week it said 591 had requested voluntary buyouts, or about one in
five eligible employees, well above the number expected.

The institution, created over 60 years ago with a mission to foster
global financial stability, is struggling to reinvent itself after many
developing countries began rejecting its financial aid and accompanying
restrictions.

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http://www.guardian.co.uk/business/feedarticle/7502134

IMF overwhelmingly backs expanding investment reach

Recasts with details on broadening IMF investment authority, add
details, background)

WASHINGTON, May 6 (Reuters) - International Monetary Fund member
countries on Tuesday voted overwhelmingly to broaden the fund's
investment reach, including the creation of an endowment with profits
from the proposed sale of 403 tonnes of gold.

The IMF, which played a central role in bailing countries out of
financial crises in Asia and Latin America in the 1990s, has
traditionally relied on lending to member nations to fund its
operations. But with fewer crises, the fund has lost income and faced a
growing income deficit, requiring it to raise more funding from investments=
.

"With this decisive endorsement, the fund's members have once again
demonstrated their support for reforming key components of the
institution's framework, including its financial structure," IMF
Managing Director Dominique Strauss-Kahn said.

The IMF said in a statement that the approval by the board of governors,
its highest decision-making body, of the new investment mandate "will
enable the fund to increase the average expected return and adapt its
investment strategy over time."

The proposed gold sales depends on approval by some countries'
legislatures, including the U.S. Congress.

The U.S. director in the IMF is unable to vote on gold sales until
Congress approves the move.

A make-over of the IMF's financial structure includes cuts in spending
by 13.5 percent over the next three years that will help cover a $400
million shortfall projected in the medium term. It also includes cutting
380 jobs from a work force of around 2,900.

"Once fully implemented, we will have an integrated budget process that
will enable the fund to work more efficiently and cost-effectively by
focusing its resources an work on its areas of expertise," Strauss-Kahn
said. (Reporting by Lesley Wroughton; Editing by Leslie Adler)