International Monetary Fund Managing Director Rodrigo Rato said the Group of Seven leading industrialized nations were „open-minded” about allowing the fund to sell part of its gold reserves.
An advisory panel said last month the fund should sell 400 metric tons of gold, valued at about $6.6 billion, and invest the proceeds in interest-bearing assets. De Rato said he discussed a new income model for the IMF, which has seen its loan portfolio shrink, while attending the meeting of G-7 finance ministers and central bankers in Essen, Germany, yesterday. „There is an open-minded attitude toward the report,” de Rato said. „Limited gold sales would be only part of a new income model and if it is done it should be fitted into existing gold-sale agreements by central banks.” IMF Managing Director Rodrigo Rato is seeking to reduce the fund's financial dependence on loans to crisis-stricken nations. The IMF forecasts a loss of $102 million this financial year after countries including Brazil and Argentina repaid loans early. The IMF is the world's third-largest holder of gold, after the US and Germany, with reserves of 103 million ounces, worth about $65 billion.
Gold closed at $666.85 an ounce on February 9, up 18% in the past 12 months. Proponents of gold sales must overcome opposition from the US, the world's third-largest producer of gold, which has veto power over the decision. In November, Treasury spokeswoman Brookly McLaughlin, said gold sales aren't „the appropriate option at this time for dealing with funding issues at the IMF.” Treasury Secretary Henry Paulson sounded a more conciliatory note on Friday, saying: „We are still in listening and studying mode.” The IMF sponsored commission, which included former Federal Reserve Chairman Alan Greenspan and European Central Bank President Jean-Claude Trichet, said the fund should conduct the sales without roiling the gold market. Several IMF executive board directors, representing 33 member nations, have welcomed the report. „Board members appeared broadly supportive of gold sales in our informal discussion, provided it could be done in a way that would not disturb the market,” Laurean Rutayisire, the executive director for 24 African states, said last week.
Thomas Moser, the Swiss executive director, said the report had been relatively conservative both in the amount of gold proposed for sale and in the attention to avoiding damage to the gold market. De Rato, who appointed the eight-member advisory panel, has started discussing the recommendations with the fund's executive board. Formal proposals will be submitted in coming months, the IMF said. „We will, in a very open-minded way, make these proposals a part of our deliberations, including possible gold sales,” German Finance Minister, Peer Steinbrueck, said yesterday. The IMF last sold gold between 1976 and 1980, when it unloaded 50 million ounces following an international agreement to reduce the role of the metal in the global monetary system. The panel also recommended investing some of the money contributed by member nations, known as „quotas,” broadening existing investments, and charging members for advisory services. Founded at the end of World War II to promote global economic stability, the IMF keeps a watch on the currency, trade and economic policies of its 185 members and makes nonbinding recommendations for improvement. (Bloomberg)