Reply #14: Selling Gold at I.M.F. to Rebuild Its Finances

[UpInArms]

http://www.nytimes.com/2008/02/26/business/worldbusiness/26imf.html?ex=1361682000&en=5d8a3337d325da97&ei=5088&partner=rssnyt&emc=rss

WASHINGTON — For decades, the International Monetary Fund has played a pivotal role in rescuing insolvent countries and stabilizing the world economy. But after years of budget problems, the fund received approval on Monday from the Bush administration to sell gold bullion to stabilize its own shaky finances.

The sale, which Congress also must approve, must be accompanied by cuts in the fund’s budget and changes in its governance to give more influence to emerging countries and perhaps less to Europe, said David H. McCormick, under secretary of the Treasury for international affairs.

“The I.M.F. must reform to remain relevant,” Mr. McCormick said in a speech at the Peterson Institute for International Economics in Washington. “The world economy is constantly changing, and the I.M.F. must now change with it, as it has successfully done in the past.”

Mr. McCormick called for the fund to reduce the number of executive board members to 20, from 24, and to make room within the 20 for developing countries. The emerging economic powers, including China, Brazil, Russia, India and Mexico, have agitated for more such board seats in recent years. The fund took a step in that direction in 2006 but now needs to do more, he said.

<snip>

According to the treaty setting up the I.M.F. after the war, the United States must obtain Congressional approval for a sale of gold.

...more...