IMF seeks to sell 403.3 tonnes of gold to boost finances [View All]

[seafan]

IMF seeks to sell 403.3 tonnes of gold to boost finances

08 April 2008 0506 hrs
Channel News Asia---AFP

WASHINGTON : The International Monetary Fund on Monday proposed the sale of 403.3 tonnes of its gold reserves as part of a wide-ranging financial overhaul.

The sale could yield around 11 billion dollars, IMF officials said.

Managing director Dominique Strauss-Kahn said in a statement the IMF would use the funds to help shore up the finances of the international organisation and create a new endowment with more diverse investments.
The move is contingent on a charter amendment that would need legislative action in most member countries.
The sale would include about 12 percent of the IMF's gold reserves, or 13 million ounces of the 103.4 million ounces of reserves.

The reform plan, which requires approval by 85 percent of the institution's 185 member nations, has been under debate for months in the financial institution, whose revenues are shrinking amid a decline in lending.

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The announcement came ahead of the spring meetings of the IMF and its sister institution, the World Bank, in Washington this weekend.

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To proceed with the gold sale, the United States, the biggest stakeholder, needs approval from the US Congress. The creation of an endowment fund for investments, from part of the profits of the gold sale, requires an amendment to the charter.
If approved, the new income model "could generate" an additional 300 million dollars in income within a few years, the IMF said.

Econ gurus, what are the implications of this?