Source: FX168 

Original title: Selling gold to provide debt relief for poor countries? IMF’s latest response: There is currently no plan to sell gold, and gold reserves provide fundamental support

FX168 Financial News Agency (North America) The International Monetary Fund (IMF) is under pressure to sell some of its gold to provide debt relief for poorer countries.

As countries struggle to support their economies in the context of the new coronavirus pandemic, more and more debt worries have attracted people’s attention. This topic is one of the main topics discussed at the annual meeting of the International Monetary Fund this week.

The Jubilee Debt Campaign (JDC) is taking this as an opportunity to urge the International Monetary Fund to begin selling part of its gold to provide debt relief for troubled countries around the world. According to a press release issued by JDC on Monday (October 12), the sale of gold can provide much-needed help for less developed countries to fight the new crown pandemic.

The spot gold price has risen from US$1,500/ounce to US$1,900/ounce this year. The IMF’s total gold reserves are 90.5 million ounces, which means that the current value of these gold reserves is approximately US$175 billion. This adds approximately $38 billion in value.

JDC pointed out that if the gold reserves sold by the International Monetary Fund are less than 7% of its total reserves, it will make a profit of 12 billion US dollars, which is enough to cancel the debt of more than 70 poorest countries in the next 15 months.

“The profit from selling less than 7% of the IMF’s gold is enough to offset all the debts of the world’s poorest countries to the IMF and the World Bank in the next 15 months. This will be lower than since the beginning of the new crown crisis. The increase in the value of gold at the International Monetary Fund,” the press release said.

JDC is a British charity organization whose goal is to end poverty caused by unfair debt.

Sarah-Jayne Clifton, head of JDC, said that poorer countries do not have currency tools that developed countries can use to help them deal with the impact of the new crown epidemic.

“The IMF has the tools and resources to help fill this gap. It is now capable of launching a comprehensive debt repayment cancellation plan… which will have a huge impact, helping poorer countries cope with the current economic and health crisis, and supporting them A faster economic recovery in the coming years,” Clifton said in a press release.

However, despite the JDC’s above call, the IMF seems unlikely to be willing to sell any of its gold reserves, especially during this uncertain period.

The Guardian quoted IMF spokesperson Gerry Rice as saying, “The IMF currently has no plans to sell gold. Gold reserves provide fundamental support for the IMF’s balance sheet, enabling the fund to lend to member countries safely and at low cost. This is particularly important at the moment, because in the context of the new crown pandemic, the IMF is providing substantial support to its member states, including the poorest member states.”

Rice also said that the International Monetary Fund has approved more than $10 billion in emergency financing to 47 low-income countries since March.

The World Gold Council (WGC) also stated that gold will continue to play a key role in the investment portfolio of the International Monetary Fund.

“The IMF regards gold as an important part of its balance sheet and stated that it currently has no plans to sell gold,” Shaokai Fan, head of central bank relations at the World Gold Council, told Kitco News in an email on Wednesday.

In addition, the World Gold Association believes that despite the slowdown in gold demand this year, in this crisis, gold plays a vital role for central banks around the world.

Fan said: “We believe that central banks will continue to be net buyers of gold this year, although the purchase volume may not be as large as in previous years.”

The official sector’s gold purchases reached record levels in 2018 and 2019, at 656 tons and 667 tons, respectively. So far, in 2020, the central bank has purchased more than 200 tons of gold.