IMF gold sales boost for poor
George Osborne said he wrote a joint letter with his French counterpart, Pierre Moscovici, urging the rest of the remaining IMF members to back the idea.
The International Monetary Funds powerful policymaking committee is set to announce measures on Saturday to use extra resources to boost efforts to help some of the worlds poorest countries.
Finance ministers and central bank governor members of the IMFC are expected to approve the injection of a $2.7 billion windfall from the sale of gold reserves held by the IMF into a special fund aimed at helping low-income countries.
UK finance minister George Osborne said on Friday he was confident the proposal had won enough support to get the green light from the IMFC.
The cash transfer to the Poverty Reduction and Growth Trust (PRGT) was approved by the IMF Executive Board last month but can only go ahead if members provided assurances that an amount equivalent to at least 90% of the distribution will be made available to the PRGT.
As of last Tuesday, some 133 countries representing 89.46% of the proposed distribution had pledged to use their portion of the distribution to subsidize lending to low-income countries, which may currently borrow at zero or low interest from the PRGT.
Osborne said he had written a joint letter with his French counterpart, Pierre Moscovici, urging the rest of the remaining IMF members to back the idea.
This will make conditions more bearable for low income countries, he told journalists on the fringes of the meeting. Both of us are delighted that this seems to have been agreed at the board of the IMF.
Osborne said support was also growing for a $250 million transition fund to help countries affected by the Arab Spring coming through the Deauville Partnership, the G8-led initiative established last year. It will help these countries develop more open economies and support the private sector, he said.
Contours of the future size and shape of the IMF as well as the relative power of advanced and emerging economies in the Fund could also emerge from the IMFC meeting.
Critical and controversial decisions on the formula on which IMF quotas or shareholdings are allocated are still to be agreed. But the IMFC is expected to look beyond these to the size that IMF resources need to reach in order to help underpin global financial stability
Hopes that implementation of reforms could be announced at the annual meetings have been thwarted by the failure of the US to sign up to them.
For the US Congress not to pass the necessary legislation could be interpreted as undermining American leadership in the international community, a source close to the IMF told Emerging Markets.
Therefore there will be an interest for whoever is in the White House and whichever party is dominating Congress to make this happen.
His comments echo IMFC chairman Tharman Shanmugaratnam, who told Emerging Markets on Thursday he was hopeful Washington would deliver on commitments in coming weeks.