US to block IMF gold sale

<O:P>The movement to sell a portion of IMF gold reserves to finance debt relief for poor nations has hit a roadblock after a key US lawmaker said Congress and the Bush administration will block any such move. </O:P>

    IMF gold reserves are worth $45 billion at current prices

    Jim Saxton, chairman of the Joint Economic Committee of Congress, said on Tuesday the potential profits on IMF gold sales "rightfully belong to the original donor countries and their taxpayers".
      
    "Thus, these IMF gold sales would amount to a hidden appropriation from the donor countries that were the original source of the gold."
      
    Saxton, who said he supported other means for debt relief, said congressional approval would be required for any IMF gold sale.
      
    The movement to sell some part of IMF gold reserves, long backed by activists for debt relief, has gathered momentum recently. 
      
    Debt relief

    In London in February, finance ministers of the Group of Seven industrialised nations asked the IMF to draft a proposal on gold sales for debt relief to be presented at the spring meetings of the Fund and the World Bank in mid-April in Washington. 
      

    "Potential profits on IMF gold sales rightfully belong to the original donor countries and their taxpayers. Thus, these IMF gold sales would amount to a hidden appropriation from the donor countries that were the original source of the gold"

    Jim Saxton, Joint Economic Committee of Congress

    Global finance officials have been searching for a way to cut the estimated $80 billion owed by the poorest nations to multilateral institutions such as the IMF and World Bank.

    Critics of the group say poor countries are unable to escape crushing debt burdens and are unable to invest in education, health and other programmes to curb poverty.

    Selling IMF gold reserves to finance debt relief is strongly favoured by Britain, the G7's current chairman, but the United States has previously expressed reservations about the approach.
      
    Saxton said the US Congress "has an obligation to protect the taxpayers and reject any proposed IMF gold sales". 
      
    Gold reserves

    He added that the Bush administration "has taken the right position in opposing the IMF on this matter, and deserves congressional support. There are better ways of financing debt relief than drilling the taxpayers yet again". 
      

    Rodrigo de Rato says IMF gold
    could be sold on the open market

    The statement from Saxton added that for nearly its entire history, the IMF "failed to have lending safeguards and accounting controls in place. Not surprisingly, some of its loans have gone bad, and the consequences should not be papered over".

    An IMF spokesman declined to comment on Saxton's remarks.
      
    But IMF managing director Rodrigo Rato said last month that some of the IMF's undervalued gold could be sold on the open market as part of a debt relief plan.
      
    IMF figures show the international organisation has 103.4 million ounces of gold.

    The IMF values the gold at a low level of $9 billion, for historical reasons. At current market prices the gold would be worth $45 billion.

    SOURCE: AFP


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