International Monetary Fund: Current Financial Situation

Published by the Government Accountability Office on 1999-07-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Joint Economic Committee

For Release on Delivery
Expected at
10:00 am., EDT
July21, 1999              MONETARY FUND
                          Current Financial
                          Statement of Harold J. Johnson, Associate Director
                          National Security and International Affairs Division


                          Gary T. Engel, Associate Director, Accounting and
                          Information Management Division

                             fGAO   Accountability* Integrity * Reliability

GAO/T-NSLAD/AIMD-99-254    /243/ O737/
Mr. Chairman and Members of the Committee:

We are pleased to be here today to discuss issues related to the
International Monetary Fund's (IMF)' financial situation. Our remarks will
be based on our past work for this Committee 2 and our ongoing review
required by the Omnibus Appropriations Act for fiscal year 1999.3 The
information we will present on our ongoing work is preliminary. We expect
to complete our work and report to the congressional committees specified
in the law by the end of September. As requested, today we will discuss

* the Fund's current situation regarding quota resources that the IMF
  obtains from its member countries and that is used for most of its
  financial assistance;
* the level of resources that the Fund has reported as actually available
  for lending; and
* other resources that the Fund potentially has available for conducting
  its operations, such as resources obtained through borrowing and the
  Fund's gold holdings.

As you requested, we will discuss the IMF's financial situation from both a
current and historical perspective, highlighting the share of the IMF's
financial resources that have been contributed by the Group of Ten (G-10)4
countries. Also as requested, we will provide current and historical
perspectives on the IMF's gold holdings.

'The IMF is an organization of 182 member countries that was established to promote international
monetary cooperation and exchange rate stability and to provide short-term lending to member
countries that experience balance-of-payments difficulties.

'International Monetary Fund: Observations on Its Financial Condition (GAOrT-NSIAD-98-220, July 23,

3The Omnibus Appropriations Act for fiscal year 1999 (P.L. 105-277, Oct. 21, 1998) appropriated about
$18 billion for the IMF and required us to report on seven specific matters. We have divided this
mandate into three reports: International Monetary Fund: Approach Used to Establish and Monitor
Conditions for Financial Assistance (GAO/GGD/NSIAD-99-168, June 22, 1999); International Monetary
Fund: Trade Policies of IMF Borrowers (GAO/NSIAD/GGD/99-174, June 22, 1999); and a report on the
IMF's financial operations that will be issued by September 30, 1999. The act requires the latter report
to include the IMF's current financial condition and certain current and historical information on its

4The G-10 comprised 10 industrialized countries: Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Sweden, the United Kingdom, and the United States. Switzerland became the 11th
member in 1984.

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Suimmnary   For the financial year ended April 30, 1999, the IMF had about $287 billion
            in resources in its General Resources Account (GRA) obtained primarily
            from mennbers' quota. However, from the GRA IMF could use only about
            $195 billion, that is, the amount from members that are sufficiently strong
            economically to permit their currencies to be used for IMF operations. The
            remaining $92 billion was unusable for lending as it consisted of member
            currencies in weak positions and gold, which the IMF does not consider to
            be a liquid resource. Of the usable amount, about $118 billion had been
            lent, connmitted, or reserved leaving about $77 billion available for
            additional credit to IMF members and to meet members drawing on their
            reserves held by the IMF.

            In addition to these resources, the IMF has several other resources
            potentially available for lending. The IMF's Articles of Agreement permit
            the Fund to borrow resources for its operations and transactions. The IMF
            has borrowed from member governments on multiple occasions and
            maintains; two standing arrangements with groups of countries for use
            when quota resources are insufficient. These arrangements, the General
            Arrangements to Borrow (GAB) and the New Arrangements to Borrow
            (NAB), are standing credit lines worth a combined total of about
            $46 billion. The IMF drew about $6 billion under these arrangements in
            July 1998 and December 1998 to finance lending to Russia and Brazil but
            repaid these obligations in March 1999.

            As of April 30, 1999, the IMF had about 103 million fine ounces of gold
            holdings with a market value on that date of about $30 billion.5 According
            to IMF's Executive Board, the gold provides an underlying strength to IMF's
            financial condition, can be used to replenish currency holdings if IMF does
            not have enough liquid resources to pay creditors, and is available for
            contingencies. However, gold is a non-interest-earning asset and is not
            deemed by the IMF to be a liquid resource. In the past, the IMF sold gold
            for a variety of purposes, most recently during 1976-80 to raise funds to
            support lending to poorer IMF member countries. In addition, during that
            same period, IMF restituted gold, that is, sold gold, to the members that had
            previously used gold to pay part of their quota. The IMF has determined
            that ownership rights to the Fund's gold clearly reside with the IMF.
            However, under the Fund's Articles of Agreement, members may have
            residual rights to the gold in two instances: if the Fund elects to restitute

            6 As of July 14, 1999, the market value of the Fund's gold holdings had declined to about $26 billion.

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                         gold to members or if the Fund is liquidated. In the first instance, gold
                         could be restituted to countries that were members on August 31, 1975,
                         based on their relative quotas at that time. In the case of liquidation, gold
                         may be restituted to members on the same basis after the Fund's liabilities
                         have been satisfied.

Background               Before discussing the details of IMF's financial situation, it is useful to give
                         some background on members' quotas, currency purchases and
                         repurchases, and gold holdings.

Members' Quotas          Quotas are the membership dues that countries pay when they join IMF
                         and when there is an approved increase in such dues. Quotas comprise the
                         bulk of the Fund's resources for providing financial assistance. Up to
                         25 percent of quotas must normally be paid in reserve assets, which are
                         currencies that are freely usable in the principal foreign exchange markets
                         (U.S. dollars, yen, euros, or the pound sterling) or "special drawing rights"
                         (SDR). 6 The balance may be paid either in a country's domestic currency or
                         with noninterest-bearing promissory notes.7 The portion paid in freely
                         usable currency, or SDRs, is referred to as the member's reserve assets or
                         initial reserve tranche position. This portion can be drawn by the member
                         as needed based upon the representation of a balance of payments need. If
                         withdrawn, these amounts are to be replaced with the country's own
                         currency; however, members are not obligated to replenish their reserve
                         tranche positions by, for example, repurchasing their own currency with
                         freely usable currency.

Currency Purchases and   When a member needs additional funds other than from its reserve tranche
Repurchases              position, the country purchases the currency it needs from IMF with an
                         equivalent amount of its own currency. The member later repurchases its

                         6The SDR is a unit of account that IMF has used since 1969 to denominate all its transactions. Its value
                         comprises a weighted average of the values of four currencies: the U.S. dollar, Japanese yen, euros, and
                         pound sterling. Because the value of the SDR relative to the U.S. dollar changes daily, the dollar value of
                         amounts converted from SDRs also changes daily.
                          These promissory notes are made payable to IMF, are denominated in the member's domestic currency,
                         and are held by the member's designated central bank or other designated depository. IMF views these
                         notes as fully equivalent to its currency holdings because IMF can cash the notes on demand within 24
                         hours to receive members' domestic currency. IMF members are obligated to maintain the SDR value
                         of their quotas.

                         Page 3                                                                    GAO/T-NSIAD/AIMD-99-254
                own currency using SDRs or other currency on terms established by IMF.
                Because ][MF's financial assistance is in the form of currency purchases by
                member countries, it does not reduce the combined total of IMF's currency
                holdings in terms of SDR equivalents; that is, the funds are not lent out.8
                Instead, the composition of IMF's currency holdings changes as
                "borrowers" replace the currency they purchase with their own currency.
                The relationship of IMF's holding of a member's own currency to the
                member's quota is an important one because it determines whether the
                member is a creditor, debtor, or in a neutral position with IMF. With some
                exceptions, currencies of members who are creditors are considered
                usable by IMF to finance transactions, while currencies of countries in a
                neutral borrowing or a debtor position are considered unusable by IMF.
                Appendix I lists IMF member countries classified as creditor, neutral, or
                borrower as of April 30, 1999.

Gold Holdings   The IMF holds about 103 million fine ounces of gold at designated
                depositories in four member countries. 9 The IMF acquired almost all of its
                gold prior to January 1, 1974, when its Articles of Agreement required that
                in most cases 25 percent of members' quota subscriptions be paid in gold
                and that certain transactions between member countries and the IMF be
                conducted in gold. In 1978, IMF's Articles of Agreement were amended to
                reflect the end of the fixed currency exchange rate system that had
                governed the international financial system up to that time. IMF's Articles
                specify that based on an 85-percent majority vote of the total voting power
                of the Executive Board, the IMF may sell its gold on the open market and it
                may accept gold, at market prices, in discharge of a member's obligations
                to the Fund.

                The IMF -values its gold at SDR 35 per ounce (about $47 per ounce as of
                April 30, 1999), its value at the time of acquisition." Therefore, the IMF's
                gold holdings are valued on its balance sheet at SDR 3.6 billion (about

                8 TheIMF considers its financing to low-income developing countries on concessional
                (below-market-interest-rate) terms to be lending. This lending is financed from a trust account, the
                Enhanced Structural Adjustment Facility (ESAF) Trust that is administered by the IMF outside of its
                General Department

                9These gold holdings represented about 9 percent of the world's official gold holdings in March 1999.

                '┬░An exception is a small amount of gold (21,396 ounces) that Cambodia gave to IMF in December 1992
                in partial settlement of an overdue loan obligation. The IMF values this amount at SDR 5.1 million
                (about $6.8 million currently).

                Page 4                                                                  GAOfr-NSIAD/AIMD-99-254
                              $5 billion). However, the IMF reports in a footnote to its financial
                              statements the market value of its gold holdings as of its financial year-end.
                              On April 30, 1999, the IMF estimated its gold was worth about $30 billion.
                              Were the IMF to sell some of its gold, it is unclear how much money could
                              be raised because the world price fluctuates and might be affected as a
                              result of the sale. In addition, the IMF has stated it does not have legal
                              authority to buy, lease, or swap gold.

Availability of IMF           We will now discuss the resources that are available to the IMF to conduct
Resources                     its operations.

Current Size and Historical   In January 1998, IMF Board of Governors' approved a new quota'2 level of
Growth of IMF's Quota         SDR 212 billion ($288 billion), a 45-percent increase from the prior quota
Resources                     level of about SDR 146 billion. The quota became effective in January 1999
                              when members having 85 percent of the total quotas consented to the quota
                              increase. As of April 30, 1999, about $5 billion in quotas had not been paid
                              to the IMF by 27 members. Specifically, seven member countries' 3 are
                              currently in protracted arrears to the IMF for overdue obligations and are
                              ineligible to consent to or pay their quota increases until they become
                              current on their obligations. In addition, 20 other members"4 have not
                              individually consented to the quota increase and have until July 30, 1999, to
                              do so.

                              Since the IMF was created in 1945, total quotas have grown substantially.
                              This growth in IMF's quotas came from increased membership, eight quota
                              increases since 1959, and several special and ad hoc increases in quotas of

                              "The Board of Governors is the highest decision-making body of the IME

                               A general quota increase involves all member countries. Quotas of individual members or groups of
                              members may be increased at other times.

                              "3The Islamic State of Afghanistan, the Democratic Republic of Congo, Iraq, Liberia, Somalia, Sudan,
                              and the Federal Republic of Yugoslavia (Serbia and Montenegro). The Federal Republic of Yugoslovia
                              has not yet succeeded to the membership of the Socialist Federal Republic, which ceased to be a
                              member in 1992.

                              14The Bahamas, Belgium, Brunei Darussalam, Estonia, Grenada, Guatemala, Haiti, Lao PDR, Lebanon,
                              Luxembourg, the Marshall Islands, Micronesia, Namibia, Nepal, Qatar, St. Vincent and the Grenadines,
                              San Marino, Turkmenistan, United Arab Emirates, and Uruguay.

                              Page 5                                                                 GAOfr-NSIAD/AIMD-99-254
                                                        individual members."5 During this period as reported by the IMF, the
                                                        overall general quota increases ranged from about 34 percent to about
                                                        61 percent. The United States has historically contributed the largest
                                                        amount of quota resources. However, the U.S. share of quotas has fallen,
                                                        from a high of about 39 percent of total quotas in 1945 to the current level
                                                        of 17.5 percent. The decrease in the U.S. share of quotas is primarily due to
                                                        the expansion in IMF membership over the years-152 countries have
                                                        joined the IMF since its founding. However, the absolute size of the U.S.
                                                        quota has increased, from about $2.8 billion in 1945 to the current amount
                                                        of about $50 billion."6 Figure 1 shows the historical growth in IMF quotas in
                                                        both nominal and inflation-adjusted 1998 dollars. Also shown is the
                                                        number of IMF members at the time of each quota review.

Figure 1: Approved IMF Quotas at General Reviews, 1945-1998
                 300    Dollars in Billions                                                                                                              288 288

                                                                                                                                   217   220
                 200                                                                       184
                 150                                                             144               128      135       146       152          179          182

                          104         dollars                108
                                      79           76                                                      73

                  50                             1%                                               45

General Quota Review               1st          2nd       Special   3rd       4th       5thfirs   6th       7th       8th       9        c       tth        1th
 Number of Members      30         49           58        68        69        102       115       128       135       146       152          179          182
       Year of Review   1945       1950         1955      1959 rI     960     1965      1970      1976      1978      1983      1990         1995         1998
                        V~      INominal dollars
                                 1998 dollars

                                                        Note 1: Quota values are expressed in 1998 dollars using the average 1998 dollar/SDR exchange rate
                                                        and an SDR price deflator. This deflator is constructed from the weighted average inflation rate of

                                                        "5This includes seven general reviews and a 1958/59 special review. The first, second, third, and 10th
                                                        general reviews resulted in no increases in quotas.
                                                        '6 Other countries with large quotas include Japan and Germany (about $18 billion each, or 6 percent of
                                                        quotas), and France and the United Kingdom ($14.5 billion each, or 5 percent of quotas).

                                                        Page 6                                                                  GAO/r-NSIAD/AIMD-99-254
                        those countries that comprise the SDR basket of currencies. For nominal dollars, we used the annual
                        average dollar/SDR exchange rate. For the period prior to the creation of the SDR in 1969, we used
                        the inflation rate of the United States because the IMF used the U.S. dollar as its unit of account. This
                        methodology is preliminary and will be further developed in our subsequent report.
                        Note 2: For the 1995 10t General Review, the nominal dollars exceeded 1998 dollars due to a
                        historically high SDR exchange rate.
                        Source: GAO analysis of IMF data.

                        The Fund relies primarily on quota resources to meet credit demands from
                        its members. However, during some periods of great demand for IMF
                        financing, the IMF has borrowed funds from member countries to use for
                        its operations. In December 1978, 62 percent of IMF credit outstanding was
                        funded from resources that IMF had borrowed.

Resources Currently     In July 1998, we testified that about $43 billion of the $201 billion in total
Available for Lending   resources were available at that time for lending. As of April 30, 1999,
                        about $77 billion of the $287 billion of the IMF's total resources were
                        available for lending. Today, using these updated figures, we will explain
                        the step-by-step process that the IMF uses for making its estimate of
                        resources available for lending.

                        As before, the IMF begins with its total amount of resources, about
                        $287 billion as of April 30, 1999. Before considering IMF extended credit,
                        about $195 billion, or 68 percent, is usable as indicated in figure 2.

                        Page 7                                                                    GAO/r-NSIAD/AIMD-99-254
Figure 2: IIMIF Estimated Usable and Unusable Resources, April 30, 1999

Total - $287 billion
I        - Unusable Resources
:~        Usable Resources
Note: The SDR/U.S. dollar exchange rate was SDR 1= $1.35123.
Source: GAO analysis of IMF data.

These usable resources consist of (1) holdings of currencies of members
considered by the Executive Board to have sufficiently strong balance of
payments and reserve positions for their currencies to be used in IMF
operations and (2) IMF's holdings of SDRs. The remaining $92 billion of
resources is considered unusable. These resources cannot be used to
finance IMF transactions because they are

* currencies of members that are using IMF resources and are therefore in
  a weak balance-of- payment or reserve position;
* currencies of members with relatively weak external positions who
  have drawn on their reserve position but have not borrowed;
* gold holdings of the Fund which require an 85-percent vote by the
  Executive Board to be used and are not considered by the IMF as liquid
  assets; or
* other non-liquid assets, such as buildings and facilities.

Page 8                                                         GAO/T-NSIAD/AIMD-99-254
                          The use of IMF credit by a member generally increases the IMF's unusable
                          resources and reduces its usable resources by equivalent amounts. From
                          December 31, 1988, through April 30, 1999, a minimum of 29 members had
                          currency that the IMF identified as sufficiently strong to be used in IMF
                          operations.'7 The maximum number of countries in this situation during
                          this time period was 39.

Usable Resources of the   Figure 3 shows the percentage of usable resources provided by the G-10
G-10 and Other IMF        and other IMF members as of April 30, 1999.

                          17The level of usable currencies fluctuates as certain currencies strengthen over time and become part
                          of the operational budget or as countries experience difficulties and thus are no longer included as part
                          of the operational budget. In that instance, the entire stock of that country's currency becomes

                          Page 9                                                                    GAOTr-NSIAD/AIMD-99-254
Figure 3: G-10 and Other IMF Members' Usable Resources as of April 30, 1999
                                                          United States 26%

                                                          Other Countries 21%

                                                          IMF SDR Holdings 2%
                                                          Belgium 2%
                                                          Canada 4%
                                                          France 7%
                                                          Germany 9%
                                                          Italy 5%
                                                          Japan 9%

                                                          Netherlands 4%
                                                          Sweden 2%
                                                          Switzerland 2%
                                                          United Kingdom 7%
 Total - $195 Billion
 I        I Other G-10 (does not include U.S.)            m.:    IMF SDR Holdings
           S                                              X      Other countries
Source: GAO analysis of IMF data.

As of April 30, 1999, about 77 percent of the resources the IMF deemed
usable were contributions made by the G-10. The United States is the
single largest contributor of usable resources with 26 percent of the total.
In addition, IMF's holdings of SDRs amounted to about $5 billion that
comprised about 2 percent of its usable currencies." s

'8 SDRs can be held by, but not allocated to, the General Resources Account of the IMF The GRA
receives SDRs in partial payment of quotas, from charges on the use of IMF resources, and from

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Available and Uncommitted   As of April 30, 1999, the IMF had $195 billion of usable resources to meet
IMF Resources               requests for funds and requests for use of creditor members' reserve assets.
                            The IMF takes several steps to calculate its available and uncommitted
                            resources, referred to as liquid resources, as indicated in table 1.

                            Table 1: IMF Available and Uncommitted (Liquid) Resources as of April 30, 1999

                            U.S. dollars in billions
                            Total usable resources (before IMF extends
                            credit)                                                                          $195
                            Less: Resources used (credit extended)                                            (81)
                            Available and usable resources                                                   $114
                            Less: Commitments                                                                 (18)
                            Less: Minimum working balances                                                    (19)
                            Available and uncommitted resources                                               $77
                            Note: SDR conversion rate = $1.35123.
                            Source: GAO analysis and IMF data.

                            First, the IMF reduces its total usable resources of $195 billion by about
                            $81 billion, which is the amount of outstanding credit extended as of
                            April 30, 1999. The IMF then reduces its available and usable resources of
                            $114 billion as of April 30, 1999, by (1) $18 billion of commitments made to
                            countries needing assistance and (2) a minimum working balances reserve
                            of $19 billion, which is the amount IMF officials believe is needed to make
                            payments in specified currencies. IMF's Executive Board set the minimum
                            working balances at 10 percent of the quotas of members in a strong
                            external and reserve position. This leaves about $77 billion available for
                            additional credit to IMF members and to meet members drawing on their
                            reserves held by the IMF Figure 4 shows a breakdown of IMF's liquid
                            resources as of April 30, 1999.

                            Page 11                                                  GAO/T-NSIAD/AIMD-99-254
Figure 4: IMF Liquid Resources as of April 30, 1999

                                                 Expected to be Drawn $18 Billion
                                                 Minimum Working Balances $19 Billion

                                                 Available for Operations $77 Billion
                                                 Resouces Used $81 Billion

 Total - $195 Billion
 02     Resources used
        Expected to be drawn

Note: The SDR/U.S. dollar exchange rate was SDR 1= $1.35123.
Source: GAO analysis of IMF data.

Over the past 20 years the amounts of usable and unusable resources have
varied. Usable resources over the period averaged about 60 percent of
total resources, with a significant portion coming from the G-10. As
figure 5 shows, during this period, the United States was the major
contributor of usable resources, except during 1978 and 1979 when it was
deemed insufficiently strong and was excluded from IMF's operational
budgets. l' )

'9 Following the depreciation of the U.S. dollar in the fall of 1978 the United States mobilized resources
including $5 billion from the Fund to defend the dollar.

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Figure 5: Usable and Unusable Quota Resources, End of Calendar Years 1978-98, and April 30, 1999


      1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1998 1990 1991 1992 1993 1994 1995 1996 1997 1998 Apr.-
      I[ I
                Other countries usable
                Other GlO usable
        _I      United States usable

                                         Source: GAO analysis of IMF data.

IMF Borrowing                            Historically, IMF has borrowed only from official sources to supplement its
                                         resources obtained from members' quotas. This includes member
                                         countries and their central banks, one country that was not a member at
                                         the time the funds were borrowed and its central bank, and the Bank for
                                         International Settlements. 2 0 The Fund has not borrowed from private
                                         capital markets, although IMF's Articles of Agreement permit it to do so.
                                         According to IMF, the preference for borrowing from official rather than
                                         private sources reflects the nature of the Fund as a cooperative,

                                              The Bank for International Settlements is an organization of central banks that is based in Basle,
                                         Switzerland. It is the principal forum for consultation, cooperation, and information exchange among
                                         central bankers.

                                         Page 13                                                                     GAO/T-NSIAD/AIMD-99-254
                    intergovernmental institution whose basic purpose is to facilitate the
                    overall adjustment process by using surpluses to assist countries in deficit

                    The IMF first activated its General Arrangements to Borrow (GAB) 21 credit
                    lines in 1964. In the 1970s during periods of large payment imbalances,
                    borrowed resources financed some 45 to 62 percent of IMF credit between
                    1974 and 1979 and 40 to 50 percent between 1980 and 1985. According to a
                    U.S. Treasury official, some of the borrowings were necessary to satisfy
                    Reserve Tranche drawings by industrial countries, including the United
                    States. Since 1985, the IMF decreased its borrowing substantially and
                    between 1992 and 1997 did no borrowing.

                    The IMF resumed borrowing in July 1998, when it borrowed about
                    $2 billion under the GAB to finance credit assistance to Russia. Also, in
                    December 1998, the IMF borrowed about $4 billion from its recently
                    established credit line, the New Arrangements to Borrow (NAB),2 in
                    connection with a 3-year credit arrangement with Brazil. Both of these
                    amounts were repaid in March 1999, shortly after the IMF received funds
                    from the recent quota increase.

IMF Gold Holdings   IMF policy stresses the importance of gold as a reserve asset for the Fund.
                    In 1995, the IMF's Executive Board reviewed the Fund's position on holding
                    gold as a reserve asset and established several governing principles for
                    managing its gold reserves. These principles state that

                    * gold provides a "fundamental strength" to the IMF;
                    * gold provides operational maneuverability in the IMF's use of its
                      resources and adds credibility to its precautionary balances;
                    * gold should be held to meet unforeseen contingencies;
                    * the IMF has a responsibility to avoid disruption to the functioning of the
                      gold market; and
                    * profits from gold sales should be retained and invested and only the
                      income from such investments should be used for agreed upon

                     The GAB is an arrangement of credit lines that the IMF maintains with G-10 countries for use in

                    22TheNAB is an enlarged version of the GAB with 25 members. Together, GAB and NAB had a
                    combined total about $46 billion as of April 30, 1999.

                    Page 14                                                                GAO/T-NSIAD/AIMD-99-254
                              These governing principles reaffirm a long-held belief by the Fund that gold
                              forms a key part of the organization's reserve structure.

IMF Has Sold and Restituted   From 1976 through 1980, the IMF reduced its gold holdings by one-third but
Gold                          has not disposed of any gold since then. Sales of gold on the open market
                              or restitution of gold to the members who contributed it have been used for
                              a variety of purposes

                              * Sales for replenishments: On several occasions in the late 1950s and in
                                the 1960s, the IMF sold gold to replenish its holdings of usable
                              * Sales to offset operating deficits: To generate income to offset
                                operational deficits, the IMF sold gold to the United States and invested
                                the proceeds in U.S. government securities. A significant buildup of
                                reserves through income from charges to members prompted the IMF to
                                reacquire the gold from the U.S. government in the early 1970s.
                              * Gold auctions: Between April 1976 and May 1980, the IMF disposed of
                                25 million ounces of gold to finance an IMF trust fund, which was
                                created in 1976 to support concessional lending to low-income
                              * Restitution of gold to members: Between 1977 and 1980, the IMF
                                restituted a total of 25 million ounces of gold, in four annual
                                installments, to members in proportion to their quota shares as of
                                August 31, 1975. For the United States, this translated into the
                                acquisition of 5.74 million ounces of gold.

                              According to IMF officials, the proposal for an IMF trust fund to provide
                              balance of payment support to developing countries originated with U.S.
                              officials in late 1974. This proposal coincided with Treasury's desire to
                              diminish gold's role in the international monetary system. As a result,
                              according to the IMF, U.S. Treasury officials proposed the sale of 25 million
                              ounces of the Fund's gold to establish a trust fund to finance balance of
                              payment support to low-income countries. The restitution of an additional
                              25 million ounces of gold to members was viewed as a necessary incentive
                              for industrialized members to approve the sale of 25 million ounces to

                              23The analytical support for these governing principles is contained in a 1995 nonpublic IMF report.
                              Significantly, this study cites the U.S. Gold Commission report of 1982 as partial justification for the
                              Fund's approach to holding gold as a reserve asset. U.S. Treasury officials confirmed that this 1982
                              study remains the basis for U.S. gold policy and is similar in many respects to the Fund's policies on

                              Page 15                                                                    GAO/T-NSIAD/AIMD-99-254
establish the trust fund. The gold sold on the open market netted
$5.7 billion in proceeds, of which $1.1 billion was deposited in the GRA as
capital value (that is, the value at the price of SDR 35 per ounce). The
remaining $4.6 billion was placed in the IMF trust fund for the benefit of
developing countries. From this amount, $1.3 billion was distributed to
developing countries in proportion to their IMF quotas, and the remaining
$3.3 billion was made available for IMF trust fund concessionary lending. 24

Figure 6 shows changes to the IMF's gold holdings since its inception. The
steep rise in gold holdings in the early 1970s was due to the relatively large
fifth general quota increase and the reacquisition of gold previously sold to
the United States. Under this and earlier quota increases, member
countries were generally required to pay up to 25 percent of their quota
increase in. gold.

2 As explained by an IMF official, the Executive Board made a key policy decision in 1980 to retain all
trust fund repayments for future concessional lending programs. As a result, no loan repayments have
been directed to the General Resource Account and no repayments have been forgiven. Subsequent
repayments of trust fund loans have been used in different ways. They were used to establish a subsidy
account for the Supplementary Financing Facility, to finance all Structural Adjustment Facility
operations, and to finance the ESAF reserve account and a small amount of the ESAF subsidy account.

Page 16                                                                GAO/T-NSIAD/AIMD-99-264
                           Figure 6: IMF Gold Holdings Since Inception





                                o    80,000,000




                                                  CO 0       N          d     Co Co 0   N  d  CD CD   00    N       t   C    CD   0     C
                                                                                                                                        N      Co   Co0    N
                                                                                                                                                           C        0    0o
                                                  o)     U       )U0)       O)  O) CO   WO CO CO CD     -       r       O)
                                                                                                                        N    N)       OD 0 OD
                                                                                                                                            'O      CO N       O)   O)   O


                           Source: IMF International Financial Statistics.

Recent Proposals to Sell   Several proposals have been made in recent years to sell some of the IMF's
Some of IMF's Gold         gold. However, the U.S. Congress must approve a U.S. Executive Director
                           vote in favor of the Fund's sale of gold in certain circumstances.   In 1993,
                           the IMF's Board of Governors agreed to, following the approval of the U.S.
                           Congress, the contingent sale of up to 3 million fine ounces of gold to cover
                           ESAF potential loan defaults. The gold would be sold if it were determined
                           that the resources in the ESAF Trust Reserve Account (plus other available
                           means of financing) were insufficient to meet payments to be made from
                           that account to ESAF lenders. The IMF has since deemed it unlikely that

                           25Under U.S. law, the executive branch may not approve IMF dispositions of gold over 25 million
                           ounces benefiting individual IMF member countries or particular segments of the IMF membership
                           unless the Congress by law authorizes the disposition (22 U.S.C. 286c). According to a U.S. Treasury
                           official, because 25 million ounces of gold were sold between 1976 and 1980 for the benefit of a
                           particular segment of IMF membership, any further sale of gold for the benefit of a particular segment
                           of IMF membership requires statutory approval. According to Treasury, congressional approval would
                           not be required if the sale of gold were for restitution or to replenish IMF resources.

                           Page 17                                                                                                    GAO/I-NSIAD/AIMD-99-254
such a gold sale will be needed because sufficient balances exist in the
ESAF Trust Reserve Account.2 6

In late 19936, the IMF proposed that if a financing gap remained in the ESAF
and Heavily Indebted Poor Countries (HIPC) Debt Initiatives after all
efforts had been made to obtain maximum bilateral contributions, the Fund
would sell up to 5 million ounces of gold to make up the funding shortfall.
According to an October 1996 Congressional Research Service report, the
IMF had the requisite votes to adopt this proposal; however, reported
opposition by Germany, Switzerland, and Italy led to an indefinite delay.

More recently, the IMF proposed to sell up to 10 million ounces of gold that
was endorsed by the G-72 7 at Cologne, Germany, in response to growth in
the level of debt relief anticipated for ESAF and HIPC. Figure 7 illustrates
the proposed distribution of the gold sales.

26 Under 22 U.S.C. 286e-1, the Secretary of the Treasury is authorized to instruct the U. S. Executive
Director of the IMF to vote to approve the Fund's pledge to sell, if needed, up to 3,000,000 ounces of the
Fund's gold, to restore the resources of the reserve account of the ESAF Trust to a level that would be
sufficient to meet ESAF obligations.
 The G-7 consists of seven major industrialized countries (Canada, France, Germany, Italy, Japan, the
United Kingdom, and the United States) that consult on general, economic, and financial matters.

Page 18                                                                   GAO/r-NSIAD/AIMD-99-254
Figure 7: Proposed Distribution of Gold Sales

                                                 Sale of 10 Million
                                                  Ounces of Gold
                                                 Proceeds of Sale

    Capital Value of Gold Sale Placed                                         Sale Profits Deposited in
     in General Resources Account                                           Special Disbursement Account
                           l                                                                    I
      Funds Available for General                                               Sales Profits Directed to
        Operations of the Fund                                                  ESAF/HIPC Trust Fund

                                                                              Interest Income Available to
                                                                              Assist Developing Countries
    ESAF - Enhanced Structural Adjustment Facility
    HIPC - Heavily Indebted Poor Countries

                                          Source: IMF and the Treasury.

                                          In contrast to the earlier sale of 25 million ounces of gold, the more recent
                                          proposals to sell gold earmark the interest on the investment of gold sale
                                          profits to help fund the IMF's share of debt relief for poor countries. This
                                          approach is consistent with the IMF's 1995 governing policy on gold that
                                          capital profits from gold sales should be retained and only the income
                                          resulting from the investment of these profits should be used for
                                          agreed-upon purposes.

Provisions in IMF's Articles              The IMF's Articles of Agreement detail how the IMF may sell gold and use
of Agreement Affecting the the proceeds from such sales. The Articles specify that based on an
Sale or Management of Gold 85-percent majority vote of the total voting power of the Executive Board,
                                          the IMF may sell gold on the open market and may accept gold, at market

                                          Page 19                                               GAO/r-NSIAD/AIMD-99-254
prices, in discharge of a member's obligations to the Fund. According to an
IMF official, the IMF is not authorized to engage in any other gold
transactions-including loans, leases, or use of gold as collateral-because
they are not expressly allowed under the IMF's Articles of Agreement.
More specifically, IMF documents state that the Articles of Agreement
permit only the transfer of ownership rights to the gold for a price.
According to IMF officials, because loans, leases, swaps, or the use of gold
as collateral do not require a permanent transfer of ownership rights, they
are not permitted by the Articles of Agreement. Some central banks have
increasingly decided to manage their gold reserves by loaning, leasing, or
swapping their gold to earn a small profit. The World Gold Council
estimates that 70 central banks currently manage their gold reserves in this
manner. Although U.S. law does not preclude the loaning, leasing or
swapping of its gold holdings, the United States has chosen only to
monetize its gold.28

When gold is sold by the IMF, the original capital value of the gold of SDR
35 per fine ounce is deposited in the GRA and becomes immediately
available for the general operations of the Fund. Gold sale profits (that is,
the sale price above the capital value of the gold) are generally deposited in
a separate account called the Special Disbursement Account (SDA), which
provides the primary financial framework for handling such profits. Gold
sale profits in the SDA may be transferred to specialized accounts (such as
the ESAF/IHIPC Reserve Trust Account) or they may be transferred to the
GRA for use in the Fund's general operations.2 9

Specifically, the Articles of Agreement state that based on majority votes by
the Executive Board that assets held in the SDA may be used

* to make transfers to the GRA for immediate use in the Fund's operations
  (70 percent of total voting power);
* for operations and transactions that are not authorized by other
  provisions of the articles but are consistent with the purposes of the
  Fund including balance of payments assistance to developing members
  (85 percent of total voting power);

 s The Secretary of the Treasury is authorized to issue gold certificates to the Federal Reserve which
issues an equivalent credit (at the official price of gold) to a Treasury deposit account. The 1998
Financial Report of the United States Government notes that $11 billion of the U.S. gold reserve has
been monetized in this fashion.

9Gold sale prcofits would be returned to the SDA when the specialized account is closed.

Page 20                                                                  GAO/r-NSIAD/AIMD-99-254
                   * for proportionate distribution of resources authorized for the purpose of
                     providing balance of payments assistance to those developing members
                     that were members on August 31, 1975, based on their respective quotas
                     on that date (85 percent of total voting power); and
                   * to transfer SDA resources to the investment account (85 percent of total
                     voting power). 0

                   The IMF has determined that ownership rights to the Fund's gold clearly
                   reside with the IMF.3 Under the Fund's Articles of Agreement, members
                   may have residual rights to the gold in two instances: if the Fund elects to
                   restitute gold to members or if it elects to liquidate the Fund. In the first
                   instance, gold could be restituted to all countries that were members on
                   August 31, 1975, based on their quotas at that time.32 In the latter case, gold
                   may be restituted to members on the same basis after the Fund's liabilities
                   have been satisfied. If the IMF elected to restitute its current stock of over
                   100 million ounces of gold, the United States would receive almost
                   24 million ounces of gold based on the formula described in the Articles.

                   Mr. Chairman, that concludes our prepared remarks. We would be happy
                   to respond to any questions you or other members of the Committee may

Contacts and       For future contacts regarding this testimony please contact Mr. Harold J.
Ackniowledgments   Johnson at (202) 512-4128 or Gary T. Engel at (202) 512-8815. Individuals
                   making key contributions to this testimony included Phyllis L. Anderson,
                   Thomas Melito, Roger R. Stoltz, Bruce Kutnick, David T. Genser, Charles E.
                   Norfleet, Barbara R. Shields, Michael Tenkate, Norman T. Thorpe, and Kate

                    0 The IMF has never activated the investment account because, according to IMF officials, the Fund
                   has not had the available excess liquidity allowing for the transfer of such resources to the investment

                   "3On May 20, 1947, an IMF Executive Board Decision No. 170-3 stated that "gold and currency
                   subscribed to the Fund are clearly within its unrestricted ownership. They do not belong in any way to
                   the subscriber."

                   32 Art.   V, sect 12 (e).

                   Page 21                                                                  GAO/T-NSIAD/AIMD-99-254
Appendix I

IMF Members' Reserve Tranche Positions

              Each member of the IMF is assigned a quota. Twenty-five percent of the
              member's quota subscription is normally payable in reserve assets
              (originally in gold, and since the second amendment of the Articles of
              Agreement in 1978, in SDRs or currencies of other members considered
              strong by the IMF), and the remainder is payable in the member's own
              currency. These reserve assets are considered to be part of the member's
              international reserves and can be withdrawn by the member upon
              representation of a balance of payments need. If withdrawn, members do
              not have to replenish their reserve asset drawings, but they must replace
              the withdrawn amount with their currency.

              Reserve tranche positions are liquid claims of members on the IMF that
              arise in part from members' reserve asset payments. In addition, reserve
              tranche positions arise from the sale by the IMF of the currencies of
              members considered to be in strong external positions. We reviewed each
              member's reserve tranche position based upon data in IMF's International
              Financial Statistics as of April 30, 1999, and separated IMF members into
              three categories: creditors, neutral, and borrowers

              * Creditors have the highest reserve tranche positions that exceed
                25 percent of their quota. With a reserve tranche position of $23 billion
                and a quota of $50 billion, the United States had the largest reserve
                tranche position. Other G-10 members' reserve tranche positions and
                quotas approximate $42 billion and $102 billion, respectively. During the
                past 20 years, the IMF has considered most of the G-10 members'
                currency to be strong enough for use in IMF's operations. As of April 30,
                 1999, the reserve tranche positions and quotas of members considered
                in a strong position totaled about $81 billion and $189 billion,
                respectively. (see table 1.1)
              * Neutral members are those who may have drawn on all or part of their
                own reserve tranche positions but did not have IMF borrowings
                outstanding. The reserve tranche positions of these members are
                between zero to 25 percent of their quotas. About 60 percent of these
                members actually had zero reserve tranche positions, while those with
                partial reserve tranches balances totaled about $3 billion as of April 30,
                1999. Neutral members had quotas of $31 billion as of April 30, 1999.
                (see table 1.2)
              * Borrowing members are users of IMF credit. Most of these members do
                not have any reserve tranche positions, and all of these members have
                withdrawn at least part of their reserve assets. As of April 30, 1999, the
                reserve tranche positions and quotas of these members totaled $2 billion
                and $61 billion, respectively. (see table 1.3)

              Page 22                                              GAOfr-NSIAD/AIMD-99-254
Appendix I
IMF Members' Reserve Tranche Positions

Table 1.1: Creditor Members' Reserve Tranche Positions and Quotas as of April 30,

In billions of dollars
                                         Reserve                  Reserve Tranche
                                         Tranche                       Position as
Creditor Countriesa                      Position      Quota      Percent of Quota
United States                             $23.05      $50.20                     46
Japan                                       8.26       17.99                     46
Germany                                     7.72       17.58                     44
France                                      5.39       14.51                     37
United Kingdom                              5.30       14.51                     37
Italy                                       3.99        9.53                     42
China                                       3.38        6.33                     53
Canada                                      3.00        8.61                     35
Netherlands                                 2.94        6.98                     42
Switzerland                                 2.10        4.67                     45
Spain                                       1.90        4.12                     46
Belgium                                     1.72        4.19                     41
Australia                                   1.56        4.37                     36
Sweden                                      1.30        3.24                     40
Austria                                     1.09        2.53                     43
Norway                                      1.03        2.26                     46
Denmark                                     0.96        2.22                     43
Malaysia                                    0.82        2.01                     41
Finland                                     0.73        1.71                     43
Colombia                                    0.57        1.05                     55
Chile                                       0.55        1.16                     48
Libya                                       0.53        1.52                     35
Portugal                                    0.53        1.17                     45
Ireland                                     0.48        1.13                     43
Singapore                                   0.44        1.17                     38
New Zealand                                 0.44        1.21                     36
Greece                                      0.34        1.11                     30
United Arab Emirates                        0.26        0.53                     48
Slovenia                                    0.09        0.31                     30
Bahrain                                     0.08        0.18                     45
Oman                                        0.07        0.26                     26
Malta                                       0.05        0.14                     39

Page 23                                                   GAO/T-NSIAD/AIMD-99-254
Appendix I
IMF Members' Reserve Tranche Positions

                                                 Reserve                           Reserve Tranche
                                                 Tranche                                   Position as
Creditor Countriesa                              Position           Quota          Percent of Quota
Botswana                                               0.04            0.09                         44
Total                                               $80.70         $188.57
aGAO defines; creditor countries as those members whose reserve tranche position in the Fund
exceeds 25 percent according to IMF's publicly available International Financial Statistics.

Table 1.2: Neutral Members' Reserve Tranche Positions and Quotas as of April 30,

In billions of dollars
                                                  Reserve                        Reserve Tranche
                                                  Tranche                             Position as
Countries in Neutral Positiona                    Position          Quota        Percent of Quota
Saudi Arabia                                          $1.33          $9.44                        14
Kuwait                                                 0.45           1.87                        24
Poland                                                 0.23           1.85                        13
Hungary                                                0.17           1.40                        12
Egypt                                                  0.16           1.28                        13
Morocco                                                0.10           0.79                        12
Israel                                                 0.09           1.25                         7
Cyprus                                                 0.05           0.19                        25
Brunei Darussalam                                      0.05           0.20                        24
Qatar                                                  0.04           0.26                        14
Paraguay                                               0.03           0.13                        21
Costa Rica                                             0.03           0.22                        12
Lebanon                                                0.03           0.20                        13
Iceland                                                0.03           0.16                        16
Luxembourg                                             0.02           0.18                        12
Fiji                                                   0.02           0.09                       21
Mauritius                                              0.02           0.14                        14
Swaziland                                              0.01           0.07                        13
Bahamas,The                                            0.01           0.13                         7
Suriname                                               0.01           0.12                         7
Afghanistan, I.S. of                                   0.01           0.16                         4
Barbados                                               0.01           0.09                         7
Belize                                                 0.01           0.03                       23
Vanuatu                                                0.00           0.02                        15
San Marino                                             0.00           0.01                       24

Page 24                                                               GAO/r-NSIAD/AIMD-99-254
Appendix I
IMF Members' Reserve Tranche Positions

                                                   Reserve                       Reserve Tranche
                                                   Tranche                            Position as
Countries in Neutral Positiona                     Position         Quota        Percent of Quota
Tonga                                                  0.00           0.01                        25
Maldives                                               0.00           0.01                        19
Bhutan                                                 0.00           0.01                        16
Samoa                                                  0.00           0.02                         6
Solomon Islands                                        0.00           0.01                         5
St.Vincent and Grenadines                              0.00           0.01                         8
South Africa                                           0.00           2.52                         0
Nigeria                                                0.00           2.37                         0
Namibia                                                0.00           0.13                         0
Trinidad and Tobago                                    0.00           0.45                         0
Dominica                                               0.00           0.01                         0
Syrian Arab Republic                                   0.00           0.40                         0
Eritrea                                                0.00           0.02                         0
Turkmenistan                                           0.00           0.06                         0
Czech Republic                                         0.00           1.11                         0
Antigua and Barbuda                                    0.00           0.02                         0
Cape Verde                                             0.00           0.01                         0
Palau                                                  0.00           0.00                         0
St. Lucia                                              0.00           0.02                         0
Marshall Islands                                       0.00           0.00                         0
Micronesia, Federated States of                        0.00           0.00                         0
Angola                                                 0.00           0.39                         0
El Salvador                                            0.00           0.23                         0
Grenada                                                0.00           0.01                         0
Guatemala                                              0.00           0.21                         0
Iran, I.R. of                                          0.00           2.02                         0
Iraq                                                   0.00           0.68                         0
Kiribati                                               0.00           0.01                         0
Myanmar                                                0.00           0.35                         0
Seychelles                                             0.00           0.01                         0
Total                                                 $2.89         $31.42
'GAO defines countries in neutral positions as those members whose reserve tranche position in the
 Fund is 25 percent or less but did not have IMF borrowings outstanding according to IMF's publicly
 available International Financial Statistics.

Page 25                                                               GAO/T-NSIADIAIMD-99-254
Appendix I
IMF Members' Reserve Tranche Positions

Table 1.3: Borrower Members' Reserve Tranche Positions and Quotas as of April 30,

In billions of dollars

                                         Reserve                 Reserve Tranche
                                         Tranche                      Position as
Borrower Countriesa                      Position     Quota      Percent of Quota
India                                      $0.66      $5.62                      12
Venezuela                                   0.43       3.59                      12
Korea                                       0.28       2.21                      13
Indonesia                                   0.20       2.81                       7
Turkey                                      0.15       1.30                      12
Philippines                                 0.12       1.19                      10
Algeria                                     0.11       1.70                       7
Sri Lanka                                   0.06       0.56                      12
Ghana                                       0.06       0.50                      11
Bulgaria                                    0.04       0.87                       5
Tunisia                                     0.03       0.39                       7
Ecuador                                     0.02       0.41                       6
Uruguay                                     0.02       0.30                       7
Kenya                                       0.02       0.37                       5
Panama                                      0.02       0.28                       6
Tanzania                                    0.01       0.27                       5
Bolivia                                     0.01       0.23                       5
Mali                                        0.01       0.13                       9
Honduras                                    0.01       0.17                       7
Niger                                       0.01       0.09                      13
Burkina Faso                                0.01       0.08                      12
Ethiopia                                    0.01       0.18                       5
Armenia                                     0.01       0.12                       7
Burundi                                     0.01       0.10                       8
Nepal                                       0.01       0.10                       8
Lesotho                                     0.00       0.05                      10
Albania                                     0.00       0.07                       7
Malawi                                      0.00       0.09                       3
Benin                                       0.00       0.08                       4
Gambia, The                                 0.00       0.04                       5
Senegal                                     0.00       0.22                       1

Page 26                                                  GAO/T-NSIAD/AIMD-99-254
Appendix I
IMF Members' Reserve Tranche Positions

                                         Reserve              Reserve Tranche
                                         Tranche                   Position as
Borrower Countriesa                      Position   Quota     Percent of Quota
Djibouti                                     0.00    0.02                     7
Russian Federation                           0.00    8.03                     0
Comoros                                      0.00    0.01                     6
Congo, Republic of                           0.00    0.11                     1
Cameroon                                     0.00    0.25                     0
Chad                                         0.00    0.08                     1
Togo                                         0.00    0.10                     0
Zimbabwe                                     0.00    0.48                     0
Mexico                                       0.00    3.49                     0
Cote d'lvoire                                0.00    0.44                     0
Bangladesh                                   0.00    0.72                     0
Croatia                                      0.00    0.49                     0
Central African Republic                     0.00    0.08                     0
Guinea                                       0.00    0.14                     0
Pakistan                                     0.00    1.40                     0
St. Kitts and Nevis                          0.00    0.01                     1
Gabon                                        0.00    0.21                     0
Papua New Guinea                             0.00    0.18                     0
Haiti                                        0.00    0.08                     0
Liberia                                      0.00    0.10                     0
Madagascar                                   0.00    0.17                     0
Sierra Leone                                 0.00    0.14                     0
Thailand                                     0.00    1.46                     0
Belarus                                      0.00    0.52                     0
Zambia                                       0.00    0.66                     0
Lithuania                                    0.00    0.19                     0
Yemen, Republic of                           0.00    0.33                     0
Sudan                                        0.00    0.23                     0
Georgia                                      0.00    0.20                     0
Azerbaijan                                   0.00    0.22                     0
Ukraine                                      0.00    1.85                     0
Mozambique                                   0.00    0.15                     0
Estonia                                      0.00    0.06                     0
Vietnam                                      0.00    0.44                     0
Kazakhstan                                   0.00    0.49                     0
Latvia                                       0.00    0.17                     0

Page 27                                                GAOfT-NSIAD/AIMD-99-254
           Appendix I
           IMF Members' Reserve Tranche Positions

                                                           Reserve                           Reserve Tranche
                                                           Tranche                                Position as
           Borrower Countriesa                             Position          Quota           Percent of Quota
           Moldova                                             0.00            0.17                             0
           Uzbekistan                                          0.00            0.37                             0
           Kyrgyz Republic                                     0.00            0.12                             0
           Mongolia                                            0.00            0.07                             0
           Dominican Republic                                  0.00            0.30                             0
           Jordan                                              0.00            0.23                             0
           Tajikistan                                          0.00            0.12                             0
           Guinea-Bissau                                       0.00            0.02                             0
           Argentina                                           0.00            2.86                             0
           Bosnia & Herzegovina                                0.00            0.23                             0
           Brazil                                              0.00            4.10                             0
           Cambodia                                            0.00            0.12                             0
           Congo, Dem. Rep.                                    0.00            0.39                             0
           Equatorial Guinea                                   0.00            0.04                             0
           Guyana                                              0.00            0.12                             0
           Jamaica                                             0.00            0.37                             0
           Lao P.D.R.                                          0.00            0.05                             0
           Macedonia,fmr.Yug.Rep.                              0.00            0.09                             0
           Mauritania                                          0.00            0.09                             0
           Nicaragua                                           0.00            0.18                             0
           Peru                                                0.00            0.86                             0
           Romania                                             0.00            1.39                             0
           Rwanda                                              0.00            0.11                             0
           Sao Tome and Principe                               0.00            0.01                             0
           Slovak Republic                                     0.00            0.48                             0
           Somalia                                             0.00            0.06                             0
           Uganda                                              0.00            0.24                             0
           Total                                              $2.36          $61.04
           aGAO defines borrower countries as those members whose reserve tranche position in the Fund is 25
           percent or less and had IMF borrowings outstanding according to IMF's publicly available International
           Financial Statistics.

(711372)   Page 28                                                                GAO/T-NSIAD/AIMD-99-254