1. This note provides an update on the status of contributions to the PRGF-HIPC Trust, which was reviewed by the Executive Board on March 28, 2001.

2. The total cost to the Fund of participation in the HIPC Initiative and the continuation of the PRGF is estimated at US$3.8 billion in end-2000 net present value (NPV) terms¹, with the HIPC Initiative accounting for about two-thirds of the total. These financing requirements are to be met through contributions by the Fund amounting to US$2.3 billion in NPV terms and bilateral contributions amounting to US$1.5 billion in NPV terms.

3. The bulk of the IMF's total contribution of US$2.3 billion comes from the investment income on the net proceeds generated from off-market transactions in gold of 12.9 million troy ounces equivalent to US$1.7 billion in NPV terms. The off-market gold transactions were completed in April 2000, generating net proceeds of SDR 2.226 billion. These resources have been placed in the Special Disbursement Account (SDA) and invested for the benefit of the HIPC Initiative. Immediately after the off-market transactions in gold, the IMF's Executive Board authorized the transfer of nine-fourteenths of the investment income from the net gold proceeds to be used for this purpose. Subsequently, on November 30, 2000, the IMF's Executive Board took a decision to authorize the transfer of the remaining five-fourteenths of the investment income.

4. The IMF also contributes about US$0.6 billion in NPV terms by foregoing compensation for the cost of administering PRGF operations for the financial years 1998 through 2004 and transferring the equivalent amount from the PRGF Trust Reserve Account to the PRGF-HIPC Trust, and by transferring to the PRGF-HIPC Trust part of the interest surcharge on certain outstanding purchases under the Supplemental Reserve Facility.

5. Bilateral pledges from member countries come from a wide spectrum of the IMF's membership, demonstrating the broad support for the HIPC and PRGF initiatives. Altogether, 94 member countries have pledged their support: 27 industrial countries; 58 developing countries; and 9 countries in transition. As of mid-April 2001, effective bilateral contributions amounted to US$1.4 billion in NPV terms, or 92 percent of total pledged contributions.