Use of Gold in the IMF

The IMF's Articles of Agreement strictly limit the use of the gold following the Second Amendment in 1978. But in some circumstances, the IMF may sell gold or accept gold as payment from member countries.

In September 2009, the IMF's Executive Board approved the total sale of 403.3 metric tons of gold as a key step in implementing the new income model to help put the IMF's finances on a sound long-term footing. The IMF sold this gold in two phases?the first phase was set aside exclusively for off-market sales to official holders.

A total of 212 metric tons was sold during this first phase, comprising sales to theReserve Bank of India, the Bank of Mauritius, and the Central Bank of Sri Lanka. An additional amount was later sold to the Bangladesh Bank. In February 2010, the on-market phase of its gold sales program began. So as to avoid disruption to the gold market, these sales were phased over time. In December 2010, the IMF concluded the gold sales program with total sales of 403.3 metric tons of gold. Total proceeds amounted to about $15 billion (SDR 9.5 billion).

Proceeds equivalent to the book value of the gold sold, about $4.2 billion (SDR 2.7 billion), were retained in the IMF's General Resources Account. Profits from the gold sales were invested in an income-generating fund to supplement IMF income. In February 2012, the Executive Board approved the distribution to all IMF member countries of about $1.1 billion (SDR 700 million) in reserves attributed to a portion of the windfall profits from recent IMF gold sales, with the expectation that member countries would return equivalent amounts to support concessional lending to low-income countries. The distribution will be effected only when members provide satisfactory assurances that they would make new Poverty Reduction and Growth Trust subsidy contributions equivalent to at least 90 percent of the amount distributed?i.e. about $1 billion (SDR 630 million).

The selling of gold by the IMF is rare as it requires an Executive Board decision with an 85 percent majority of the total voting power. Prior to the recent sale of gold, the last time gold was sold by the institution was through off-market transactions completed in April 2001, with 12.9 million ounces traded. This transaction was approved by the membership as a means to finance the IMF's participation in the Heavily Indebted Poor Countries Initiative and the continuation of the Poverty Reduction and Growth Facility.

Borrowing Arrangements