Something to think about, Is the IMF about to go bankrupt?

[Tet]

Check out the latest from the IMF scroll down for Key IMF Financial Statistics for Dec 28, 2006
http://www.imf.org/external/np/tre/a...22806.htm#tab1

Credit outstanding has gone from 55.4 billion at the end of 2004 to just 10.1 billion at the end of 2006. It's important to note that banks work inversely from a business. Loans are assets for a bank and a liability for a business. This is a decline of 82% in assets that the IMF was holding just two years ago. At the end of 1998 the IMF had created 60.5 billion in loans, so since the end of 1998 assets have gone down 83.3%.

I know both Bolivia and Ecuador are talking about paying off their IMF debts fairly soon. The largest holder of IMF debt is currently Turkey. Nobody is borrowing from the IMF and why should they, China and Russia are lending at much more favorable terms. Where does this all lead?

The IMF financed itself back in the 1940's with gold, what happens to this asset if the IMF is no longer a lender? As of August 2006 the IMF claimed that they held 103.4 million ounces (3,217 metric tons) of gold at designated depositories. Certainly the IMF has some level of fixed costs that must be met to finance buildings, payroll and their excessive meddling in the economies of the world, what does one consider this level of expense to be and how possibly can 10.1 billion in loans be enough to pay for this expense?

If you're a holder of gold, I think I'd be a bit concerned about some level of IMF sells of gold entering the market, especially at these prices.

[jk]

Re: Something to think about, Is the IMF about to go bankrupt?

tet,
1. where can i find the information on china and russia lending to developing countries? it makes perfect sense that they would- they have the excess reserves and it serves their geopolitical interests to displace the imf, which has been a tool of the u.s.

2. your point re the imf gold reserves is interesting, but i'm not sure that the imf reserves overhang the market any more than cb reserves around the world.

[Tet]

Re: Something to think about, Is the IMF about to go bankrupt?

This is something I've been keeping an eye on for about four years now. I like Henry C K Liu at Asia Times. Thanks for reminding me Liu I just noticed has a new article.
http://www.atimes.com/atimes/others/Henry.html

I try to keep an eye on interfax.ru http://www.interfax.ru/e/C/finances/26.html?menu=2

There's other Russian sources for news, I do try to avoid MOSNEWS.

I think when you've got this in the back of your mind you'll notice these stories even in the Western Press. Bloomberg, Financial Times and the standard places have articles. I think if you search on China loans to Africa right now you'd find a lot of interesting stories, slanted obviously against Chinese loans to Africa.

Buying allies these days is pretty cheap it would seem, especially if you have access to large piles of d0llars. South America seems to be moving pretty quickly out of the US/London sphere of influence. I remember October of 2005 being when China and Russia made the $40 billion investment into South America.

[bart]

Re: Something to think about, Is the IMF about to go bankrupt?

If you're a holder of gold, I think I'd be a bit concerned about some level of IMF sells of gold entering the market, especially at these prices.

Of course, but they had a lot more gold in the '70s than they have now. And the ECB has traded more than they own in a number of 1-2 month periods over the last few years.

Its not a big factor.

[metalman]

Re: Something to think about, Is the IMF about to go bankrupt?

Of course, but they had a lot more gold in the '70s than they have now. And the ECB has traded more than they own in a number of 1-2 month periods over the last few years.

Its not a big factor.

more old itulip stuff...

International Monetary Fund, "the second-largest official holder of gold in the world, with about 10 percent of total official gold stocks of member countries" in its current pamphlet titled The Role of Gold in the IMF:

"Gold provides a fundamental strength to the IMF's balance sheet, giving it operational maneuverability and adding credibility to the level of its precautionary balances."

http://itulip.com/gold.htm

[Tet]

Re: Something to think about, Is the IMF about to go bankrupt?

more old itulip stuff...

International Monetary Fund, "the second-largest official holder of gold in the world, with about 10 percent of total official gold stocks of member countries" in its current pamphlet titled The Role of Gold in the IMF:

"Gold provides a fundamental strength to the IMF's balance sheet, giving it operational maneuverability and adding credibility to the level of its precautionary balances."

http://itulip.com/gold.htm

LOL, I think that's the article that got me to buy the shiny metal in 2001.
The Washington agreement from your link is intersting to consider here.

1.Gold will remain an important element of global monetary reserves.
2.The above institutions will not enter the market as sellers, with the exception of already decided sales.
3.The gold sales already decided will be achieved through a concerted programme of sales over the next five years. Annual sales will not exceed approximately 400 tonnes and total sales over this period will not exceed 2,000 tonnes.
4.The signatories to this agreement have agreed not to expand their gold leasings and their use of gold futures and options over this period.
5.This agreement will be reviewed after five years.

Note the agreement was for a period of five years, back in 1999. I wonder if it's been renewed.

[Tet]

Re: Something to think about, Is the IMF about to go bankrupt?

tet,
1. where can i find the information on china and russia lending to developing countries? it makes perfect sense that they would- they have the excess reserves and it serves their geopolitical interests to displace the imf, which has been a tool of the u.s.

China aims to spend $200bn of reserves
The new company, tentatively named National Foreign Exchange Investment Company, will be controlled by the State Council, China's cabinet. It will spend funds from the foreign reserves on mergers and acquisitions of overseas businesses, including foreign financial institutions. It will also target overseas energy assets and will likely acquire equities in the domestic markets, or even lend money to help finance domestic research and development projects.

Informed sources say that Lou Jiwei, currently vice minister of finance, will be appointed as board chairman of the National Foreign Exchange Investment Company.
http://www.atimes.com/atimes/China_B.../IB03Cb09.html

China launches mining program in Zambia

Zambian President Levy Mwanawasa was all smiles Sunday as he and Hu launched an economic partnership zone centered around the Chambishi copper mine in Zambia's Copperbelt Province. The partnership is designed to draw $800 million in mining investment from scores of Chinese companies and create 60,000 jobs.
China already has poured hundreds of millions of dollars into Zambia's copper sector, which accounts for 60 percent of the country's exports.

http://news.yahoo.com/s/ap/20070204/...f/africa_china

From other readings I'm pretty sure China accepts Zambian currency for trade, I can't imagine that this copper will be trading in d0llars.

[bart]

Re: Something to think about, Is the IMF about to go bankrupt?

Note the agreement was for a period of five years, back in 1999. I wonder if it's been renewed.

Yes, it was renewed in September 2004 for another 5 years.
Here's one link:
http://www.safehaven.com/article-1365.htm

[jk]

Re: Something to think about, Is the IMF about to go bankrupt?

From other readings I'm pretty sure China accepts Zambian currency for trade, I can't imagine that this copper will be trading in d0llars.

put the two articles you mentioned together: china is using its dollar reserves to buy assets in other countries. i would assume they are using dollars to buy the copper. any info on the balance of payments between zambia and china? i would guess that, especially with increasing copper sales, zambia has a positive balance and receives that balance in dollars.

[Tet]

Re: Something to think about, Is the IMF about to go bankrupt?

put the two articles you mentioned together: china is using its dollar reserves to buy assets in other countries. i would assume they are using dollars to buy the copper. any info on the balance of payments between zambia and china? i would guess that, especially with increasing copper sales, zambia has a positive balance and receives that balance in dollars.

US companies operating in other countries need to be bought out with the d0llars China is using, after this buyout occurs the company is free to choose which currency the trade is conducted in. Zambian copper sales are not being conducted with d0llars to China. Why would Zambia do that when they can use their own currency to purchase Chinese goods?

[jk]

Re: Something to think about, Is the IMF about to go bankrupt?

http://www.tralac.org/scripts/content.php?id=4874

Save export sector from collapse, IMF urges Zambia
Topic:	G - Other Trade Topics - Trade and Development
Author:	Kaswende, Kingsley; http://allafrica.com
Published:	25/05/2006
Region:	Zambia
---------
Zambia has been advised by the International Monetary Fund (IMF) to save the export industry from collapse through structural reforms to keep exports competitive in light of major losses due to the appreciation of the kwacha. The appreciation of the local currency has eroded Zambian exporters' income by a third, with the agricultural sector alone sustaining calculated losses of more that K680 billion this year as a direct result of the strong kwacha. An estimated combined loss in all productive sectors is expected to exceed K2 trillion if the kwacha maintains its current levels of around K3,000 per US dollar. Dr Joseph Kakoza the IMF resident representative emphasized the need to reduce business costs, which he identified as the immediate requirement to saving the export industry. Analysts are arguing that the appreciation of the kwacha has further compromised the export-led strategy that the country embarked on in its development strategy. Exporters have lobbied the government to intervene in the financial market to save their businesses, but the government insists on letting market forces play the game.

=============================
i guessed that zambia would have a positive trade balance, and that would be consistant with a rising currency.

[Tet]

Re: Something to think about, Is the IMF about to go bankrupt?

http://www.tralac.org/scripts/content.php?id=4874

Save export sector from collapse, IMF urges Zambia
Topic:	G - Other Trade Topics - Trade and Development
Author:	Kaswende, Kingsley; http://allafrica.com
Published:	25/05/2006
Region:	Zambia
---------
Zambia has been advised by the International Monetary Fund (IMF) to save the export industry from collapse through structural reforms to keep exports competitive in light of major losses due to the appreciation of the kwacha. The appreciation of the local currency has eroded Zambian exporters' income by a third, with the agricultural sector alone sustaining calculated losses of more that K680 billion this year as a direct result of the strong kwacha. An estimated combined loss in all productive sectors is expected to exceed K2 trillion if the kwacha maintains its current levels of around K3,000 per US dollar. Dr Joseph Kakoza the IMF resident representative emphasized the need to reduce business costs, which he identified as the immediate requirement to saving the export industry. Analysts are arguing that the appreciation of the kwacha has further compromised the export-led strategy that the country embarked on in its development strategy. Exporters have lobbied the government to intervene in the financial market to save their businesses, but the government insists on letting market forces play the game.

=============================
i guessed that zambia would have a positive trade balance, and that would be consistant with a rising currency.

China pays off Zambia's IMF debt and it's all a mute point. I think Zambia is another one of those Chartalist countries, interesting to see it's pure fiat currency rising in value. The businesses complaining about a strong currency are those that are owned by western interests, because they are the only ones interested in collecting d0llars.

[Tet]

Re: Something to think about, Is the IMF about to go bankrupt?

If you're a holder of gold, I think I'd be a bit concerned about some level of IMF sells of gold entering the market, especially at these prices.

Update from the recent IMF press conference, Feb 15th

QUESTION: [Read aloud by an IMF Media Relations staff member.] A panel including former Federal Chairman Alan Greenspan and ECB President Jean-Claude Trichet recently recommended that the IMF sell 6.6 billion in gold to put its finances on a better footing. Is the IMF considering such a move?

MR. AHMED: Thank you very much. As you say, there was a group of people headed by Andrew Crocket but including a number of other important central bank governors and other eminent personalities who had been asked by the Managing Director of the IMF to look at the Fund's current income model and to identify ways in which over the medium term we could move toward a sustainable financing model that better reflects what the Fund currently does and reflects the interests of the membership. That group reported back and their report which concluded that the current income model is no longer adequate for the Fund came up with a package of measures which in their view would both better reflect what the Fund currently does, and would also provide the income required to meet the operating costs of the Fund on a sustainable basis going forward.

As part of that package, one of the elements they recommended was to look at the possibility of creating an endowment which would be funded by the sale of a limited portion of the gold reserves that the Fund holds, and then the income from this endowment could contribute as one of the elements toward the running costs of the Fund.

That package of measures, including that particular proposal, which in making that proposal the committee indicated very carefully that they felt that if the membership were to go forward with it, it would need to be done in a way that was both tightly ring-fenced, it would be need to be done in a way that did not disrupt the market by being part of the planned sale of gold that central banks are planning under an agreement, and so that package of measures including the potential recommendation of selling gold has been made. It is now going to be discussed. Our own Board is obviously going to have a set of discussions around it, the Managing Director is going to listen to the views of the Board, to the views of the membership, and then based on that, the Managing Director will put forward a set of formal proposals to the Board which will then be the actual proposals which will be considered.

I would just say that the proposals that have been made by the committee are an eminent group of outside people who have made recommendations to the Managing Director as the basis for consultation, but based on that the Managing Director will at some point during the course of the year make proposals to the Executive Board on how he believes the issue of addressing the model of the Fund addressed going forward.

http://www.imf.org/external/np/tr/2007/tr070215.htm
scroll about half way down, interesting comments on Argentina and the Paris Club as well.