7/09/99 - IMF Planning Gold Reserves Sale
WASHINGTON, Jul 09, 1999 (AP Online via COMTEX) -- The International Monetary Fund said Friday it is going ahead with plans to sell part of its gold reserves to finance debt relief for poor countries. But mounting opposition in Congress casts doubt on whether a sale will take place.
A statement issued after a meeting of the IMF"s 24-member executive board said they hope to decide how the sale will be handled by the time of the IMF"s annual meeting at the end of September.
An IMF spokeswoman said the directors ""reiterated their full commitment to provide appropriate financing"" for the IMF-World Bank"s Highly Indebted Poor Country relief initiative.
""Directors stressed that the gold sales will be handled in a transparent way, without disrupting the gold market, "" the spokeswoman said, speaking on the customary condition of anonymity.
She said the IMF staff will discuss during the summer how the sale will occur.
The United States and other leading industrialized nations agreed last month at a summit in Cologne, Germany, that the IMF should sell up to 10 percent of its $26 billion gold reserves to pay for the debt relief initiative.
But the proposal, which has the backing of the Treasury and IMF Managing Director Michel Camdessus, is running into heavy opposition from gold-producing countries and powerful members of Congress, which must approve any IMF gold sales.
They include House Majority Leader Dick Armey, R-Texas, and Senate Minority Leader Tom Daschle, D-S.D., and several representatives from gold-mining states.
Conservative Republicans, long hostile to the IMF, are demanding that if any gold the IMF rids itself of should go back to the countries that provided it. They say the IMF should borrow money from capital markets, as does its sister institution, the World Bank.
Other opponents of the IMF sale include South Africa, the world"s leading gold producer, and the World Gold Council. The council worries that gold sales by Britain, other nations and the IMF will drive down the metal"s price.
South Africa is sending a mission to Europe to lobby against the sale. Among its arguments is that gold-producing nations who might qualify for debt relief will be hurt by falling gold prices.
The price of gold dipped below $257 an ounce in the past week, its lowest level since May 1979. It closed Friday in New York at $257.70.
Among sales methods the IMF board considered were direct off-market deals with central banks trying to build up gold reserves or a public auction similar to the one the Bank of England carried out this week for the sale of 25 tons.
Copyright 1999 Associated Press, All rights reserved.
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By HARRY DUNPHY
Hmmmmmm, transparency and anonymity. Sure, I'll buy that. |
