International Monetary Fund:

Current Financial Situation

T-NSIAD/AIMD-99-254: Published: Jul 21, 1999. Publicly Released: Jul 21, 1999.

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Benjamin F. Nelson
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contact@gao.gov

 

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Pursuant to a congressional request, GAO discussed issues related to the International Monetary Fund's (IMF) financial situation, focusing on: (1) the Fund's situation regarding quota resources that IMF obtains from its member countries and that is used for most of its financial assistance; (2) the level of resources that the Fund has reported as actually available for lending; and (3) other resources that the Fund potentially has available for conducting its operations, such as resources obtained through borrowing and the Fund's gold holdings.

GAO noted that: (1) for the financial year ended April 30, 1999, IMF had about $287 billion in resources in its General Resources Account (GRA) obtained primarily from members' quota; (2) however, from the GRA IMF could use only about $195 billion, that is, the amount from members that are sufficiently strong economically to permit their currencies to be used for IMF operations; (3) the remaining $92 billion was unusable for lending as it consisted of member currencies in weak positions and gold, which IMF does not consider to be a liquid resource; (4) of the usable amount, about $118 billion had been lent, committed, or reserved leaving about $77 billion available for additional credit to IMF members and to meet members drawing on their reserves held by IMF; (5) in addition to these resources, IMF has several other resources potentially available for lending; (6) IMF's Articles of Agreement permit the Fund to borrow resources for its operations and transactions; (7) IMF has borrowed from member governments on multiple occasions and maintains two standing arrangements with groups of countries for use when quota resources are insufficient; (8) these arrangements, the General Arrangements to Borrow and the New Arrangements to Borrow, are standing credit lines worth a combined total of about $46 billion; (9) IMF drew about $6 billion under these arrangements in July 1998 and December 1998 to finance lending to Russia and Brazil but repaid these obligations in March 1999; (10) as of April 30, 1999, IMF had about 103 million fine ounces of gold holdings with a market value on that date of about $30 billion; (11) according to IMF's Executive Board, the gold provides an underlying strength to IMF's financial condition, can be used to replenish currency holdings if IMF does not have enough liquid resources to pay creditors, and is available for contingencies; (12) however, gold is a non-interest-earning asset and is not deemed by IMF to be a liquid resource; (13) IMF sold gold for a variety of purposes, most recently during 1976-1980 to raise funds to support lending to poorer IMF member countries; (14) during that same period, IMF sold gold to the members that had previously used gold to pay part of their quota; (15) IMF has determined that ownership rights to the Fund's gold clearly reside with IMF; and (16) however, under the Fund's Articles of Agreement, members may have residual rights to the gold in two instances: (a) if the Fund elects to restitute gold to members; or (b) if the Fund is liquidated.

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