US Congress Unlikely to Back Imf Gold Sale in Current Form - Part 1
--Rep. Frank to amend gold-sale bill to give support to miners
--Clinton administration to continue push for IMF gold sale
By Blair Pethel, Bridge News
Washington--Jul 9--The proposed gold sales by the
International Monetary Fund to help fund poor-country debt
relief is unlikely to be approved by the US Congress,
thereby nullifying the IMF's plan to fund its portion of
debt relief, lawmakers and congressional staff told Bridge
News.
Congressional opposition to the sale has become so vocal
that US Treasury officials privately concede they will have
an uphill battle in their lobbying effort to convince
lawmakers to support the proposal, which is part of the
fiscal 2000 US budget proposal.
Because of the opposition, Rep. Barney Frank, D-Mass.,
told Bridge News he planned to introduce an amendment to the
legislation that would allow the sale to proceed, but would
require 10% of the proceeds to be set aside for unemployment
insurance for miners in poor gold-producing countries that
could lose their jobs because of further gold-price
declines.
The IMF is seeking to sell up to 10% of its gold
reserves--about 10 million ounces--invest the proceeds in US
Treasuries or comparable interest-bearing securities, and
use the income generated to fund debt relief for heavily
indebted poor countries--known as HIPC.
The US Treasury Department estimates that income of
around $2.5 billion to $2.8 billion would be generated by
this investment over the next 15 years.
But the IMF and central bank sales are pressuring gold
prices to a 20-year low. The price decline is hurting gold-
producing countries--many of which are HIPC.
Several gold-producing nations have in recent weeks
publicly opposed the IMF proposal, most notably Ghana, one
of the world's largest producers.
Even though Ghana would be helped under the HIPC
initiative approved last month by the Group of 8 leaders at
the Cologne Summit, Ghana has said the IMF should stop its
gold-sale plans. Ghana's Minister of Mines and Energy Fred
Ohene Kena told Bridge News the IMF plan would be
counterproductive, and falling gold prices would paralyze
the economies of gold-producing countries.
"The IMF must find other ways of supporting countries in
distress which rely heavily on gold, especially when its
price is so low," he said.
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