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US Treasury to support IMF gold sales if linked to cost-cutting, reforms
Mon, Feb 25 2008, 15:04 GMT
http://www.afxnews.com

WASHINGTON (Thomson Financial) - The US Treasury, in a significant policy shift, has decided it will support gold sales from the International Monetary Fund's reserves if they are part of a package of cost-cutting and other reforms of the way the international financial organization operates.

Under Secretary for International Affairs David McCormick will lay out the details in a Washington speech later today. In a pre-address briefing for reporters, he said the Bush administration -- which had until now opposed selling IMF gold reserves -- would support a sale of the scale of roughly 8 pct of the IMF reserves or 12.9 mln ounces as part of a package of reforms which also included significant cost-cutting in IMF operations.

The proceeds would be used to create an endowment from which the income would be used to finance the IMF operations.

McCormick said also that the IMF needs to refocus its mission toward international exchange rate surveillance and global financial stability and away from its traditional lending to emerging market countries.

Those economies are now increasingly able to borrow in the private international financial markets, and the loss of their interest payment revenue is a key source of the IMF's current financial problems.