How Much Gold Does the IMF Have?

IMF reserves are estimated to hold 2,814.1 metric tons of gold valued at around $100 billion and needed for its work on behalf of its 190 member nations.

At its founding in 1944, members contributed 25 percent of their initial quota subscription in gold; this gold would later be used to pay loan interest and finance other transactions.

The IMF’s gold holdings

The IMF currently owns approximately 90.5 million ounces (or 2,814.1 tons) of gold stored at designated depositories. It acquired this gold at its founding in 1944 when Member Countries paid 25 percent of their initial quota subscriptions in gold along with increases. Members also traditionally paid interest on IMF loans using gold or used it as payment towards debt settlement obligations owed to the Fund.

Electronic payments and currencies have diminished the role of traditional reserve assets like gold; nevertheless, many central banks continue to view gold as essential for keeping reserves intact.

Barry Eichengreen, professor of economics and political science at University of California Berkeley, and Chima Simpson-Bell, economist in the African Department at the IMF, discuss recent central bank purchases of gold. Reasons include transaction costs, relative returns, economic/financial uncertainties and geopolitical events; discussion also revolves around whether IMF should sell some of its gold holdings to help address such concerns.

The IMF’s gold sales

Since 2009, the IMF has sold off 403.3 metric tons of gold as part of its efforts to build an endowment and boost resources for low-income country lending. Sales profits (or windfall profits) were projected at roughly $8 billion.

These proceeds were divided among member countries based on their IMF quota shares; some also went towards the PRGT; any windfall profits generated were used to provide debt relief assistance for poor nations.

The Fund’s finances do not seem to allow for the use of future gold sales profits to fund specific climate or health needs. Any attempt at altering this restriction would require amending its Articles–an arduous process which can take months or years of discussion, with approval by three-fifths of members with 85 percent voting power–in order to secure all necessary ratifications, making such amendments unlikely.

The IMF’s gold quotas

Gold assets form an essential part of the IMF’s reserve holdings. At its establishment in 1944, members paid 25% of their initial quota in gold; these payments continued after each increase in quota was granted.

In February 2012, the Executive Board authorized a plan to distribute some of the profits from recent gold sales as a way of increasing resources available to lend low-income countries under Poverty Reduction and Growth Trust (PRGT). However, implementation would only occur once members had provided satisfactory assurances that new contributions or transfers to PRGT equaling at least 90% of what would be distributed would occur.

To avoid disrupting the gold market, the Board approved of modalities which allowed for off-market sales directly to central banks and other official sector holders in order to redistribute official holdings without altering total official holdings. These off-market sales took place from October to November 2009 and resulted in the sale of 212 tons.

The IMF’s gold assets

IMF gold can only be sold outright or used to settle future loan repayments; these transactions require an 85 percent majority vote by its Executive Board. Any other form of transaction involving gold would need the approval of both bodies, such as loans, leases or swaps.

A vast majority of the Fund’s gold inventory–90.5 million fine ounces–was acquired prior to 1978’s Second Amendment to its Articles of Agreement and is valued on its balance sheet at its historic cost. Profits generated by these limited sales may only be used towards supporting operations that align with its purposes.

Under one important condition, proceeds from selling this “pre-second amendment” gold must go directly into the Fund’s Special Disbursement Account for use as concessional balance-of-payments assistance for low-income countries. For increased transparency, markets will be informed in advance before any on-market sales commence; and regular reports on its progress with gold sales will be given by the Fund.

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