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IMF to Use Windfall Gold Profit for Loans to Poor Members

Sept. 28 (Bloomberg) -- The International Monetary Fund said today it agreed to distribute $2.7 billion in windfall profits from gold sales to subsidize loans to poor countries.

The IMF’s 188 members will receive a payment in proportion to their weight within the institution, the IMF said in an e-mailed statement today. As a pre-condition, countries must give assurances that they’ll make at least 90 percent of the $2.7 billion available to a trust fund that lends to low-income countries at zero percent interest rates.

“The strategy endorsed today by the executive board ensures the IMF is better positioned to help our low-income members absorb future shocks and underpin their efforts to achieve stronger and sustainable economic growth,” IMF Managing Director Christine Lagarde said in the statement.

The gold sales took place in 2009-2010 as part of the fund’s plan to shore up its finances. It brought in about $3.8 billion more than expected because of higher than anticipated gold prices.

The IMF already agreed to use about $1.1 billion of windfall profit through the same process, and member countries are close to giving assurances they will distribute 90 percent from that round to poor countries, according to the statement.

To contact the reporters on this story: Sandrine Rastello in Washington at srastello@bloomberg.net;

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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