IMF sells 200 tons of gold to India

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(Xinhua)
Updated: 2009-11-03 11:35

WASHINGTON: The International Monetary Fund announced on Monday the sale of 200 tons of gold to India's central bank, almost half the total sales volume of 403.3 tons that was approved by the Executive Board in September.

"I strongly welcome this transaction with the Reserve Bank of India," Managing Director Dominique Strauss-Kahn said in a statement. "This transaction is an important step toward achieving the objectives of the IMF's limited gold sales program, which are to help put the Fund's finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries."

The transaction, which is in the process of being settled, involved daily sales that were phased over a two week period during October 19-30, 2009, with each daily sale conducted at a price set on the basis of market prices prevailing that day.

The total sales proceeds are equivalent to US$6.7 billion or SDR 4.2 billion.

Under the IMF's Articles of Agreement, all gold sales must be conducted at prices based on market prices, including direct sales to official holders as in the case of this transaction.

The action, authorized by the Group of 20 (G20) countries at their summit in London in April, mainly aimed at boosting the IMF' s capacity to lend to poor countries.

The IMF, a 186-nation Washington-based lending institution, is the third-largest official holder of gold in the world after the United States and Germany.

In accordance with the guiding principle of avoiding disruption of the gold market, the IMF said its Executive Board adopted modalities for the gold sales consistent with guidelines it had earlier established.

In particular, the Fund is standing ready for an initial period to sell gold directly to central banks and other official holders that may be interested in such sales.

Thereafter, on-market sales of any amounts remaining from the 403.3 tons would be conducted in a phased manner over time, following the approach adopted successfully by central banks participating in the Central Bank Gold Agreement, according to the agency.

Meanwhile, the IMF also promised that it will inform markets before any on-market sales commence, and will report regularly to the public on progress with the gold sales.