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Sequoia | 02-05-2005 09:49 PM
G7 Mulls IMF Gold Sales to Help Poor G7 Mulls IMF Gold Sales to Help Poor <TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD bgColor=#cdcdcb><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD height=2></TD></TR></TBODY></TABLE>YEAH _ RIGHT! </TD></TR></TBODY></TABLE><TABLE cellSpacing=0 cellPadding=9 width=100 align=right border=0><TBODY><TR><TD> </TD></TR></TBODY></TABLE> Saturday February 5, 2:55 PM EST <!-- Body -->By Katie Allen LONDON (Reuters) - The International Monetary Fund will look into using its huge gold reserves to help finance debt relief for the world's poorest countries on the urging of the Group of Seven rich nations, ministers said on Saturday. Finance chiefs from the G7 in their communique issued at the end of the two-day meeting said IMF managing director Rodrigo Rato will look at proposals to revalue or sell gold reserves to offer debt relief to alleviate global poverty. "I believe this is the first time there has been a mention of the use of gold in a G7 communique for achieving debt relief," said British finance minister Gordon Brown, who hosted the two-day meeting in London. He said gold sales as well as revaluations would be investigated and Rato would report back in April, when the IMF meets in Washington. "To finance the relief of debts owed to the IMF and to enable the Fund to continue to play a role in the poorest countries, the Managing Director has stated that he will bring forward proposals... covering the Fund's gold and other resources and in an orderly way," the communique said. <TABLE cellSpacing=5 cellPadding=0 align=left border=0><TBODY><TR vAlign=top><TD align=middle><SCRIPT language=javascript> if ((typeof tag336_1) == "function") { tag336_1(); } else { window.name="parentwin"; randomNum = Math.round(Math.random() * 10000000000) + 0; target = "/site=" + moAdData.site + "/area=" + moAdData.area + "/aamsz=336x280"; if (navigator.appName.indexOf("Netscape") > -1 || (navigator.appName.indexOf("Internet Explorer") > -1 && parseInt(navigator.appVersion) >= 4)) { document.write("<scr\"); document.write(\"ipt src=" + site + "/jserver/acc_random=" + randomNum + target + "></scr"); document.write("ipt>"); } else { document.write("<iframe src=" + site + "/hserver/acc_random=" + randomNum + target + "WIDTH=336 HEIGHT=280 frameborder=no border=0 marginwidth=0 marginheight=0 scrolling=no>"); document.write("</iframe> "); } } </SCRIPT><SCRIPT src="http://ae.excite.com/jserver/acc_random=2554048202/site=excite.reuters/area=money.news/aamsz=336x280"></SCRIPT></TD></TR></TBODY></TABLE>Rato said on Friday there are clear ways to sell gold effectively if IMF shareholders decide to proceed. But he stressed he was not providing an opinion. "Certainly we have done it before and we think there are clear ways to do it that will be the most effective from a financial point of view," he said at the London meeting. U.S. OPPOSITION The world's poorest nations owe $12 billion to the IMF, Brown said. Overall, sub-Saharan Africa owes some $70 billion to multilateral lenders and developing countries say repayments are crippling them by diverting funds from education and healthcare. Brown has made debt relief the centerpiece of Britain's 2005 presidency of the Group of Eight, which includes the G7 nations France, Italy, Canada, Germany, Japan and the United States as well as Russia. He first proposed revaluing IMF gold stocks with off-market sales last year. Under a 1971 agreement, most IMF gold is valued at $40 to $50 an ounce, or about one-tenth of current market prices. The fund holds 103.4 million ounces of gold. Brown has said revaluing the gold could free up billions of dollars to ease debt burdens on the world's poor. But U.S. Treasury Under Secretary John Taylor said the United States had other plans for alleviating poverty. Asked about using IMF gold stocks he said: "The United States is not convinced that's the necessary way to do it." The United States has a de facto veto power on IMF gold sales because of its voting weight at the fund. Leading gold producer Canada was cautious in its support. "If a technical answer can be found that does not compromise the IMF's integrity we are prepared to go with it," said Canadian Finance Minister Ralph Goodale after the London talks. But the plan received key backing from the world's largest gold producer, South Africa. Although Finance Minister Trevor Manuel cautioned there must be a rational approach to sales. "Unless we manage this process you might have disruptive sales which will have disastrous consequences for gold producing countries," he told Reuters on the sidelines of the G7 talks. He suggested staggered sales to ensure market stability. "I would rather have an arrangement where we agree to sell, agree to order, agree to a queuing system. I would be happy to have the IMF have some preference in that queue so that we don't impede the debt relief," he said.

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