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U.K. Says IMF Should Free Funds by Selling Gold (Update1)
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By Kitty Donaldson and Nicholas Larkin

April 2 (Bloomberg) -- Britain wants an agreement from the Group of 20 nations to improve the way the International Monetary Fund uses its cash, including freeing up money for lending by selling gold reserves, International Development Secretary Douglas Alexander said.

“Among the measures we hope we can affect is the commitment to provide more and better funds for the IMF and World Bank including by using profits from the sale of IMF gold reserves,” Alexander said at the Group of 20 nations summit in London today. “There have already been conversations with the South Africans and others in terms of whether the gold market can bear a phased and appropriate sale in a way that makes sense commercially.”

The IMF’s board approved a proposal in April 2008 to sell 403.3 tons of bullion as part of a plan to close the Washington- based lender’s annual deficit. The Obama administration soon will push Congress for legislation that allows the IMF to “mobilize” its stockpile of gold to boost its funds, U.S. Treasury Secretary Timothy Geithner said on March 11.

A decision to sell gold requires the backing of 85 percent of the IMF’s executive board, and the board representative from the U.S. needs the approval of Congress to vote in favor of any sales, according to the organization’s Web site.

“I wouldn’t expect there to be an immediate decision out of today’s decision to sell gold tomorrow on behalf of the IMF,” Alexander said. “On the other hand, there is recognition from all parts of the international financial system that we are risking an unprecedented crisis which risks impoverishing many hundreds of millions more people around the world.”

Gold for immediate delivery traded at $911.77 an ounce in London as of 12:21 p.m. local time. The metal gained the past eight years and is up 3.3 percent in 2009.

To contact the reporter on this story: Kitty Donaldson in London at [e-mail]; Nicholas Larkin in London at [e-mail]