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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Bobby Yellin who wrote (38727)	8/10/1999 10:34:00 AM
From: Alex	Respond to of 116760

IMF Determined to Sell Gold Stanley Fischer keen to give money to poor dictators. The International Monetary Fund said yesterday it was trying to raise money for debt relief without selling some of its gold reserves but refused to rule out eventual gold sales if no alternative could be found. "We're trying very hard to see if there is a way of doing what the gold sales were designed to do without going into the markets," Stanley Fischer, IMF deputy managing director, said after meeting with African and other central bankers in Pretoria, the South African capital. The IMF wants to sell 10m ounces of its gold reserves, worth about $2.5bn, to help finance the Highly Indebted Poor Countries (HIPC) debt relief initiative. Under an enhanced version of the plan agreed by industrialised nations in Cologne in June, poor countries would have their debt stock reduced by about $50bn. But South Africa and other gold producers, as well as members of the US Congress, have criticised the proposal to sell gold as counter-productive. One of their arguments is that official sales by central banks and the IMF are undermining the price of an export product on which many poor and indebted countries depend. Gold has fallen by more than $30 an ounce since Britain announced in May that it was selling more than half its gold reserves. Mr Fischer said it was essential for the IMF to finance its contribution to the HIPC plan. "We're going to write off significant amounts of debt and we need to find the money to that," he said, adding that the IMF would try to do it "without actually selling the gold". There were two main obstacles, Mr Fischer said. First, a complicated solution might not accord with the IMF's strict articles of agreement - its constitution. Second, even if the IMF accepted the suggested idea of revaluing its gold - now booked at $46.50 an ounce compared with a market price of more than $250 -a method still had to be found to realise the capital gain so that it could be used for debt relief. "We've got to find a way or ways of liberating that capital gain," Mr Fischer said. "Writing them [the reserves] up in the balance sheet doesn't produce income." Mr Fischer insisted that the IMF could not be blamed for gold's recent weakness since its proposed gold sale was announced two years ago. The lobbying of the US Congress, the South African government and other IMF members had prompted the IMF to attempt to find another solution. The Financial Times, August 10, 1999