So what happened to selling IMF's gold to help poor?

Has China claimed it already, or was it never there in the first place?

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IMF Plans to Issue Bonds to Raise Funds for Lending Programs

By Timothy R. Homan
Bloomberg News
Saturday, April 25, 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=ay2PHRcxHy.g&refer=home

WASHINGTON -- The International Monetary Fund is considering a new investment vehicle that some emerging economies are promoting as a way to raise money for the lender to help it combat the global economic crisis.

China and Brazil are among a handful of countries that have expressed interest in purchasing IMF-backed bonds which would give member states a different way to contribute to the Washington-based fund. The IMF has never issued bonds.

The IMF is seeking more cash to finance loans and aid to member countries during worst economic slump in the fund's 64-year history. As the institution taps some of its 185 members for additional cash injections, emerging economies say they want more decision-making power at the fund, setting up a possible clash with the rich nations that run it.

"I'm sure that this vehicle will be used," IMF Managing Director Dominique Strauss-Kahn told reporters today in Washington during meetings of the IMF and World Bank, referring to the bonds. "Now we're discussing with different creditors the way to implement it and the amount that we put in it."

Bonds would offer "flexibility," he said, and their interest rate would be pegged to the value of the IMF's basket of currencies, known as Special Drawing Rights or SDRs.

Still, Brazilian Finance Minister Guido Mantega yesterday dismissed the substance of the IMF's capital-raising bond sale proposal as "insufficient" and "premature."

Brazil would want higher yields than those attached to U.S. Treasuries to buy the new IMF securities, Mantega said after meeting with his counterparts from Russia, India, and China at the IMF's headquarters. He said any contribution by the four largest developing nations would be "provisional," pending reforms that increase their say in IMF decisions.

Contributions should be directed mainly to help emerging markets weather the global credit crisis, Mantega said, rather than simply "strengthen the current structure of the fund."

Less than a month after the Group of 20 advanced and emerging economies pledged to boost funding for the IMF, some officials say member states aren't making adequate contributions. Canadian Finance Minister Jim Flaherty today said some G-20 nations aren't doing their "share" to provide new emergency assistance funding for the IMF.

The IMF said it has received $324.5 billion in commitments from G-20 members since mid-March. Leaders of the G-20 agreed to triple the fund's lending capacity to $750 billion when they met in London on April 2.

The IMF's policy steering committee today agreed to a $250 billion increase in the fund's resources through "immediate financing" from members, according to the group's communique released in Washington.

U.S. Treasury Secretary Timothy Geithner said that governments "should act quickly" to boost the fund's resources. The Obama administration is seeking approval from Congress to contribute up to $100 billion.

Geithner said in a statement that he also supports a push to "realign" power at the fund in a way that benefits emerging markets. He also proposed a reduction in the size of the IMF's executive board next year to 22 from 24 to "better reflect the realities of the global economy."

That number should fall to 20 by 2012, he said. Such a shift must come while maintaining representation for emerging market and developing countries, he said, risking a quarrel with European counterparts who might lose representation as a result.

Strauss-Kahn also told reporters there is broad agreement among IMF members that fiscal stimulus measures in individual countries were necessary, while saying policy makers should devise an "exit strategy" from their emergency moves for when the crisis passes. He also said "everybody agrees" that cleansing banks' balance sheets is essential to spur a recovery.

European officials this weekend questioned IMF estimates that toxic assets plaguing financial institutions would force their banks to write down $750 billion through next year amid global losses forecast to total $4.1 trillion.

"With regards to Europe, because of the methodology, in our view we do not have an entirely convincing analysis," European Central Bank President Jean-Claude Trichet told reporters in Washington late yesterday after a meeting of Group of Seven finance chiefs. French Finance Minister Christine Lagarde said "many among us expressed our greatest reserve on the methodology adopted by the IMF."

Bank of France Governor Christian Noyer said it was "implicitly" suggested to the IMF to "forget this type of exercise." At the same time, everyone agrees on the advice the fund gave for the financial system to be "operational" and correctly capitalized again, he said.

The IMF said April 21 that its calculations showed banks in the 16-nation euro-area would need to write down more than the U.S.' $550 billion by the end of 2010. On April 22 the IMF said in a forecast that the global recession will be deeper and the recovery slower than previously thought as financial markets take longer to stabilize.

The global economy will shrink 1.3 percent this year compared with a January prediction of 0.5 percent growth, the IMF said.

Police arrested seven people in Washington for rioting and assault in the vicinity of the IMF and World Bank meetings, police spokesman Quintin Peterson said.

Six people were arrested for destruction of property, including attacks on bank branches of PNC Financial Services Group Inc. and Wachovia Corp., Peterson said. Another person was arrested for assaulting a police officer, he said.

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