Press Release No. 10/204

Press Release: IMF Executive Board Reviews Fund's Income Position and Sets Lending Rate for 2011 Financial Year

May 19, 2010

The Executive Board of the International Monetary Fund (IMF) has completed its annual review of the Fund's income position for the financial year ended April 30, 2010 (FY 2010) and set the lending rate for IMF credit for the financial year ending April 30, 2011 (FY 2011).

FY 2010 Income Position

FY 2010 net operational income position is projected at SDR 365 million (US$534 million), compared with SDR 290 million (US$424 million) envisaged at the beginning of the financial year. This improved outlook is primarily attributed to higher than expected earnings on the Fund’s investment portfolio, which is made up largely of fixed-income securities, and lower net administrative expenditures, in SDR terms, reflecting movements in the U.S. dollar/SDR exchange rate.

FY 2010 net income will include gold profits estimated at about SDR 3.5 billion (US$5.1 billion) from part of the limited sale of the Fund’s gold (see Press Release No. 10/44). The gold sales, a central element of the Fund’s new income model, will fund an endowment and also increase the Fund’s resources for lending to low-income countries under a strategy endorsed by the IMF Executive Board in July 2009 (see Press Release No. 09/268). The endowment to provide a sustainable source of income has not yet been established pending approval by the membership of the proposed amendment to the Articles of Agreement to broaden the investment mandate (see Press Release No. 08/101).

FY 2011 Lending Rate and Income Position

The Executive Board agreed to maintain the margin on the rate of charge—the interest rate the IMF charges member countries for non-concessional credit—unchanged at 100 basis points above the SDR interest rate for FY 2011, consistent with key principles for setting the rate of charge.

The projections for FY 2011 indicate a net operational income position of about SDR 202 million (US$295 million), before taking account of income from surcharges applied to higher access borrowing from the Fund that are estimated at SDR 499 million (US$730 million). These projections are subject to a high degree of uncertainty given the difficulty of predicting future demand for Fund financing. Income projections are sensitive to the timing and amounts of disbursements under arrangements included in the assumptions, as well as possible new arrangements and the performance of the Fund’s investment portfolio.

The Executive Board also adopted a number of other decisions that have a bearing on the IMF's finances, including decisions to use FY 2010 investment income to meet expenses of conducting the business of the Fund during FY 2010, to transfer amounts attributable to FY 2010 net operational income to the Fund’s investment portfolio, and to continue special charges on certain overdue obligations.