IMF reviews income position, sets margin for lending rate

The Executive Board of the International Monetary Fund (IMF) has completed its annual review of the Fund’s income position for the financial years ending April 30, 2011 (fiscal year 2011) and April 30, 2012 (fiscal year 2012), and set the margin for the lending rate for IMF credit for fiscal year 2012.
In the fiscal year 2011 net operational income is projected at SDR 292 million ($467 million), before taking account of income from surcharges applied to higher access borrowing from the Fund that are estimated at SDR 497 million ($794 million).
This outturn, and that projected for fiscal year 2012 will help build the IMF’s precautionary balances, which are needed to mitigate the institution’s exposure to credit risks, in line with the Executive Board’s assessment in September 2010.
Fiscal year 2011 net income also includes gold profits of about SDR 3.1 billion ($5.0 billion) from the recently concluded limited gold sales programme, which began in fiscal year 2010. The gold sales, a central element of the Fund’s new income model, will fund an endowment and also increase the Fund’s resources for lending to low-income countries under a strategy endorsed by the IMF Executive Board in July 2009.
A work programme is underway for the IMF Executive Board to establish new rules and regulations for this endowment and to consider possible uses for the additional windfall profit from the gold sales.The IMF charges member countries a basic rate of charge on use of IMF credit, which is determined as the SDR interest rate plus a margin expressed in basis points. The Executive Board agreed to maintain the margin for this rate of charge unchanged at 100 basis points.Projections for fiscal year 2012 point to a net operational income position of SDR 482 million ($770 million), before taking account of income from surcharges estimated at SDR 981 million ($1.6 billion). The projections are subject to a high degree of uncertainty and are sensitive to the timing and amounts of disbursements under approved arrangements included in the projections, possible new arrangements, and the performance of the Fund’s investment portfolio, said the Fund.
The Executive Board also adopted a number of other decisions that have a bearing on the Fund’s finances including the transfer of amounts attributable to net operational income and surcharges in fiscal year 2011 to the Fund’s investment account, placement of net income to the Fund’s reserves, and to continue special charges on certain overdue obligations.