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To: grampa who wrote (40145)	9/8/1999 6:55:00 PM
From: Alex	Respond to of 116796

IMF gold revaluation endorsed by key U.S. lawmaker By Mark Egan WASHINGTON, Sept 8 (Reuters) - A key U.S. lawmaker on Wednesday backed a new International Monetary Fund gold sales plan, thawing a political impasse which had threatened to derail a debt relief initiative for 41 of the world's poorest nations. Republican Jim Leach, chairman of the House of Representatives Banking Committee, welcomed the IMF's new approach to the thorny issue of unlocking the value of its gold which would see the fund revalue some of its gold rather than sell it on the open market. ``The proposal...is preferable to the original plan of selling gold on the open market,' Leach said in a statement referring to the IMF's new approach. But Leach's endorsement was far from emphatic. He tempered his approval by adding, ``Whether it is realistic will have to be reviewed. The committee remains open minded to pragmatic proposals for providing the necessary funds for debt relief for the world's poorest countries,' he said. Sources on Capitol Hill said the endorsement from Leach, an ardent advocate for debt relief but an opponent of open-market gold sales, should allow the plan to gain approval from Congress. The plan will likely be debated in Congress sometime in October. When the IMF announced its plan earlier this year to sell 10 million ounces of its 103 million ounce gold reserve it met with a wall of opposition from Congress. Many argued the plan would damage already weak gold prices and hurt some of the impoverished countries targeted for relief which export gold. The IMF had originally planned to sell the gold to finance its obligations under the Highly Indebted Poor Countries Initiative and also to help fund its Enhanced Structural Adjustment Facility low-interest loan program. The open-market sales plan suffered a further blow when gold hit a 20-year low in July after the Bank of England sold 25 tonnes of gold as part of its plan to cut its reserves by 415 tonnes. That left the IMF scrambling to come up with a new plan, before its annual meeting in late September, which would appease opposition but still allow it to fund debt relief. Under the new plan, countries which owe the IMF money from past loans, such as Mexico, would buy IMF gold the day before loan payments are due and then repay the installment the next day with the same gold. The plan raises cash for the IMF because the fund values the gold on its balance sheet at about $46 an ounce. Since gold is actually worth about $255 an ounce, the transaction would net the IMF profits of about $209 an ounce, or about $2.1 billion. After selling the gold, the fund would return $46 per ounce back to its General Resource Account and then transfer the $2.1 billion in profits to a trust fund. The trust would invest the $2.1 billion and use the proceeds to fund both the HIPC debt relief initiative and ESAF. While the revaluation plan could still receive a chilly reception by some in Congress who may see it as ``too cute,' most observers expect the plan to be approved without the bare-knuckle political brawl often seen in Congress when IMF-related issues are debated. On Tuesday, Rep. Jim Saxton, a New Jersey Republican, denounced the plan as ``murky' and urged Congress to oppose it. The new plan will likely appease the gold industry which had launched a campaign against the open-market gold sales although the World Gold Council has reserved judgment until it sees full details. The debt relief plan, which builds on an earlier framework, was agreed by the G7 this summer in Cologne. The IMF's obligation under the expanded Highly Indebted Poor Countries Initiative debt relief plan is $2.3 billion. The $2.1 billion in profits from the gold revaluation plan would generate profits over time which would allow the IMF to fund both its HIPC obligations and make up the funding shortfall in its ESAF loan program, sources said. The overall HIPC plan agreed to in Cologne calls for debt relief of $23.7 billion. biz.yahoo.com

To: grampa who wrote (40145)	9/8/1999 7:06:00 PM
From: John Hunt	Read Replies (1) \| Respond to of 116796

The IMF Is Revaluing What Gold? Hi grampa, From what I remember from reading the IMF site a few months ago, the IMF does NOT own any gold. Rather the members deposit either gold or currency and the IMF uses those as collateral for raising funds or to loan out directly. The deposit still belongs to the members, so it can also be withdrawn if they have a crisis of their own. If I am correct, and someone please correct me if I am not, then the IMF is revaluing someone else's gold for their own benefit ... a nice trick, if you can get away with it. John