Page 264 - DMGT401Business Environment

Unit 12: International Monetary Fund

Notes
As is laid out in the Press Release, this sale was phased over a period of two weeks, ending
last Friday, October 30, and each sale was conducted based on the prevailing market prices
on the day of the sale, with total proceeds equivalent to about $6.7 billion, or about 4.2
billion SDRs.
We are making the announcement tonight, consistent with the approach that we have
indicated we would take, of being very transparent with the sales, and reporting regularly
on the progress.
I think those are the main points. I'll stop there. Happy to take any questions.
QUESTIONER: Thank you. I have a question about the market price of gold. Obviously,
you are very lucky; what's your sense on this.
SENIOR IMF OFFICIAL: Obviously, you know the price has recently been fluctuating a bit
over $1,000 an ounce, and we'll only know the average price once settlement is completed.
We're in the process of finalizing now, but probably (the average price will be) just under
$1,045 per ounce.
QUESTIONER: Thank you. When you planned this sale, you planned on $850/oz price.
Now it's more than $1,000. Do you have a feeling that you couldn't have been more lucky?

SENIOR IMF OFFICIAL: Obviously, it's a good price relative to the original assumptions.
You might recall, as part of the agreement on stepping up our financing to low-income
countries, we had already agreed that part of the proceeds from the sale would be used to
generate resources for concessional lending. So this certainly helps with that.
Of course, this is only half the sale that we have completed, so we don't want to get ahead
of ourselves. We still have another half to go. I hope we'll still be lucky.
QUESTIONER: I was wondering how soon after the agreement in September did India
come forward to buy the gold? And I was wondering if you've got any potential buyers
lined up for the remaining 203 tons of gold?
SENIOR IMF OFFICIAL: I don't recall exactly when India came forward. We've been in
discussions for a while. Obviously it's a sale for a large amount, so it's taken a little while
to finalize the details. So we've been in discussions for a while leading up to the sale. And,
as I mentioned, it took place over a period of two weeks.
I can't really comment on other potential interests. Obviously, as we indicated back in
September, we stand ready to sell the gold directly to central banks or other official
holders if there's interest. But I wouldn't want to comment beyond that at this point.
QUESTIONER: And I was wondering why the sales-this is just for my knowledge-take
place over two weeks?
SENIOR IMF OFFICIAL: Well, given its size, I think both from the Fund's point of view
and also the Reserve Bank of India, this was a really to give some protection against short-
term fluctuations in the price. Obviously this is an off-market sale, but we do it based on
the price prevailing on the day. The price can fluctuate up and down for various reasons on
a day-to-day basis. So we felt it would give some protection against short-term fluctuations
to do it on a phased basis over two weeks, rather than just all at the price prevailing on one
day.
QUESTIONER: Given the good price you got for this gold, would you consider putting
more than previously planned for help for countries, given that there are not many donor
countries ready to step forward and help-especially for lower rates?
Contd...

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