JANET GUTTSMAN, Washington | Friday 12.30pm
THE United States backed a hotly contested plan to sell International Monetary Fund gold to pay for debt relief on Thursday, but promised to step up the search for a market-friendly alternative.
A Treasury official, reacting to complaints from lawmakers opposed to the planned IMF gold sales, said Washington is trying to find a way of using IMF gold without damaging prices or upsetting either other IMF member states or the US Congress, which has the power to block the sales.
”We are exploring whether there are alternative ways of mobilising IMF gold reserves that would avoid any impact on the gold market and would be acceptable to the IMF’s membership, would command the support of the Congress and would mobilise adequate financing for the G7 debt initiative for the poorest countries,” the official said.
”At this point, however, the proposal to sell IMF gold is the only viable option that has broad international support.” The United States wants Congress to rubber-stamp a plan to sell some 10-million ounces of IMF gold to fund a programme of debt relief for poor countries with a strong track record on IMF-sponsored economic reforms.
Fear of IMF sales, coupled with Britain’s decision to sell a large part of its own reserves, has depressed the gold market, where prices recently tumbled to 20-year lows. Gold traded at $256,70 per ounce in New York on Thursday.
The sale of IMF gold – to central banks or on a nervous open market – would raise some $2.6 billion at current prices. The IMF would invest the money and use the interest to pay for debt relief and for low-interest loans for poor countries. — Reuters