Proposed Decisions
Decisions Pertaining to FY 2022
Decision 1 provides for the assessment on SDR Department participants for the reimbursement of the General Department for the expenses of conducting the business of the SDR Department in FY 2022.
Decision 2 provides for the income of the Fixed-Income and Endowment Subaccounts for FY 2022, if any, to be retained in the respective subaccounts.
Decision 3 provides for the placement of FY 2022 GRA net income to the Fund’s Special Reserve and the General Reserve. Specifically, the net income amount of the GRA up to the amount of the pension-related (IAS 19) gain in FY 2022 will be placed in the Fund’s Special Reserve, and any additional net income amount will be placed in equal parts to the Fund’s Special Reserve and General Reserve.
Decision 4 provides for the transfer of currencies from the GRA to the Investment Account equivalent to the increase of the special and general reserves following the placement of FY 2022 net income.
Decisions Pertaining to FY 2023–2024
Decision 5 sets the rate of charge on the use of Fund resources for FY 2023–2024 at 100 basis points over the SDR interest rate.
Decisions 1, 2, and 3 each may be adopted by a majority of the votes cast. Decisions 4 and 5 may be adopted by a 70 percent majority of the total voting power.
Decision 1. Assessment under Article XX, Section 4 for FY 2022
Pursuant to Article XVI, Section 2 and Article XX, Section 4 of the Articles of Agreement and Rule T-2 of the Fund's Rules and Regulations, it is decided that:
(i) The General Department shall be reimbursed for the expenses of conducting the business of the SDR Department for the period of May 1, 2021 through April 30, 2022; and
(ii) An assessment shall be levied on all participants in the SDR Department. The special drawing right holdings accounts of participants shall be debited on April 30, 2022 with an amount equal to 0.00127767 percent of their net cumulative allocations of special drawing rights. The total assessment shall be paid into the General Department.
Decision 2. Income of the Fixed-Income and Endowment Subaccounts
The income of the Fixed-Income and Endowment Subaccounts for FY 2022, if any, shall be retained in the Fixed-Income Subaccount and Endowment Subaccount, respectively, and invested according to the Rules and Regulations for the Investment Account.
Decision 3. Placement of FY 2022 Net Income of the General Resources Account to the Special Reserve and General Reserve
Net income of the General Resources Account for FY 2022 equivalent to the pension-related remeasurement gain shall be placed to the Fund’s Special Reserve, and for any net income in FY 2022 that exceeds the amount of the remeasurement gain, an amount equivalent to this excess shall be placed in equal parts to the Fund’s Special Reserve and General Reserve.
Decision 4. Transfer of Currencies to the Investment Account for FY 2022
Pursuant to Article XII, Section 6(f)(ii) of the Articles of Agreement, the Fund shall transfer from the General Resources Account to the Investment Account currencies in an amount equivalent to the difference between the Fund’s general and special reserves as of April 30, 2022 and the cumulative amount of previous transfers of currencies from the General Resources Account to the Investment Account. This transfer of currencies to the Investment Account shall be effected in the context of the Financial Transactions Plan covering the period August, 2022-January 2023. The currencies transferred to the Investment Account pursuant to this decision shall be used for immediate investment in the Fixed-Income Subaccount in accordance with the Rules and Regulations for the Investment Account.
Decision 5. The Rate of Charge on the Use of Fund Resources for FY 2023 and FY 2024
Pursuant to Rule I-6(4)(a), last sentence of the Fund’s Rules and Regulations, the rate of charge for FY 2023 and FY 2024 shall be 100 basis points over the SDR interest rates under Rule T-1 of the Fund’s Rules and Regulations.
Annex I. Decisions in Effect Related to the FY 2022 Income Position1
Decisions in Effect
The Executive Board has taken the following decisions affecting the Fund’s income position for FY 2022:
Rate of Charge
The margin for calculating the basic rate of charge in FY 2022 was set in 2020 at 100 basis points for a period of two years (FY 2021–22).1 This decision was adopted under the exceptional circumstances clause of Rule I-6(4), which allows the margin for calculating the basic rate of charge to be set at a level other than that which is adequate to cover the estimated intermediation expenses of the Fund and to generate an amount of net income for placement to reserves.
Burden Sharing for Deferred Charges2
Income losses resulting from unpaid charges are shared equally between debtor and creditor members under the burden sharing mechanism largely pursuant to decisions taken in 2000 and 2009. Unless amended by the Board, this mechanism will continue for as long as overdue obligations to the Fund persist.3
Special Charges4
For overdue repurchases, the special rate of charge is set to equal the excess, if any, of the SDR interest rate over the basic rate of charge (Paragraph 3 of Decision No. 8165-(85/189), as amended). Pursuant to Rule I-6(4), the basic rate of charge “shall be determined at the beginning of each financial year as the SDR interest rate under Rule T-1 plus a margin expressed in basis points”. Since under the current system for setting the basic rate of charge, that rate is always in excess of the SDR interest rate, members are not subject to special charges on their overdue repurchases.
In FY 2019 the Board reviewed the system of special charges and adopted a decision to amend Section VI of the 1985 decision on special charges, to shift the requirement for regular review from the annual review of the Fund’s income position to the five-yearly Review of the Fund’s Strategy on Overdue Financial Obligations. The next review of the special charges framework is scheduled for 2023 at the earliest.
Suspension of PRGT reimbursement through FY 2026
In July 2021, the Board approved the suspension of reimbursement of the GRA for the costs of administering the PRGT for the fiscal years 2022-2026.5 Temporary suspension is permissible under the Fund’s new income model adopted in 2008 and the three-pillar framework for the self-sustained PRGT adopted in 2012.6
1 Decision No. 16774-(20/51), adopted on April 27, 2020. 2 Decision No. 12189-(00/45), adopted on April 28, 2000, as amended. 3 See Recent Fall in the SDR Interest Rate—Implications and Proposed Amendments to Rule T-1 (10/16/14). 4 The requirement for an annual review of special charges was amended. See Review of the Fund’s Income Position for FY 2019 and FY 2020 (03/19/19). 5 Executive Board Decision No. 17083-(21/71), July 14, 2021. 6 See Executive Board Decision No. 14093-(08/32), adopted April 7, 2008; and Proposal to Distribute Remaining Windfall Gold Sales Profits and Strategy to Make the Poverty Reduction and Growth Trust Sustainable (09/17/12).Annex II. Treatment of Pension-Related Revaluations for Precautionary Balances—New Approach
The Interim Review of the Adequacy of the Fund's Precautionary Balances discussed an alternative approach that would better isolate the volatility in the level of precautionary balances stemming from the pension-related (IAS 19) gains or losses, driven mainly by the periodic remeasurement of the defined benefit obligation and the revaluation of plan assets.1 The new approach:
reflects the role of precautionary balances as a long-term buffer for economic and financial risks;
recognizes that income volatility stemming from the pension-related gains and losses cannot be eliminated for financial reporting under International Financial Reporting Standards;
aims to achieve this by replacing the accounting valuation of the net pension-related assets and liabilities with a more long-term economic measure, and taking a more prudent stance on any economic gains;
would be applied prospectively, commencing in FY 2022;
will entail staff monitoring the economic impact for potential material underfunded positions under the long-term economic basis.
Directors broadly supported the measures proposed by staff to mitigate the volatility of precautionary balances created by the accounting treatment of pension revaluations under IAS 19.
Annex III. Implementation of the New Income Model— Status Update FY 2022
In April 2008, the Executive Board endorsed a New Income Model (NIM) aimed at diversifying the Fund’s sources of income and reducing the institution’s overreliance on income from lending activities to finance its diverse activities. The NIM reflected many of the measures that had been proposed in early 2007 by the Committee of Eminent Persons chaired by Andrew Crockett, and was designed to develop broader and more sustainable income sources in recognition of the public good aspects of many of the Fund’s activities. Adoption of the NIM required an intensive work program for the Fund over many years. The table below summarizes the main elements of the NIM and the status of their implementation.1
| Completed | In progress | Not started |
|---|---|---|
| Main Element | Implementation | Status |
| An amendment to the Articles of Agreement to broaden the Fund’s investment authority. | The amendment to the Articles came into effect in February 2011 following ratification by three-fifths of IMF members representing 85 percent of the total voting power. The amendment aimed at providing the Fund with flexibility to enhance the expected return on its investments and adapt its investment strategy over time. |  |
| Creation of an endowment funded with profits from the sale of 403.3 metric tons of the Fund’s gold holdings. | Gold sales required an 85 percent majority vote of the Executive Board. The gold sales were completed in December 2010 and realized total profits of SDR 6.85 billion.2 Initial sales were conducted through off-market transactions with central banks and official holders followed by on-market sales. | |
| Adoption of new rules and regulations for the Investment Account (IA)—a requirement for the Fund to exercise its expanded investment authority under the amended Articles. | In January 2013, the Executive Board approved new rules and regulations for the IA. | |
| Investment of the endowment | The 3-year phased implementation of the endowment’s investments was completed in 2018. The Executive Board has since reviewed the investment strategy for the endowment in 2018 and in 2022. In 2018, the Board also approved a payout policy framework and a delay in initiating payouts until an adequate cushion of retained investment income was established. Payouts are now expected to commence in FY 2023. |  |
| Adopting a new rule for the margin for the basic rate of charge. Previously, the margin was set to generate sufficient income for the Fund to cover all of its administrative expenses and to meet a specific net income target. | In December 2011, the Fund adopted a new rule for setting the margin on the rate of charge.3 Under the new rule, the margin should be set to cover the Fund’s intermediation (lending) costs and help build-up reserves. However, given the continuous low interest rate environment, investment income has been subdued and the continued reliance by the Fund on lending income to cover a significant portion of its non-lending operating costs, the margin has so far been set under the exceptional circumstances clause. |  |
| Reimbursement of PRG Trust expenses. | In FY 2013, the practice of reimbursing the Fund for the expenses of conducting the business of the PRG Trust was resumed and has subsequently been suspended from FY 2021 to FY 2026. The cumulative impact of the suspension is expected to be SDR 539 million over the six years. The temporary suspension of reimbursement, however, is one of the recognized contingency measures under the PRGT’s three-pillar framework when self-sustained capacity falls short of the target envelope. The proposed suspension would retain these resources in the PRGT Reserve Account, which provides security to lenders. |  |
| Review of the investment strategy for the Fixed-Income subaccount | Following the Amendment to the Articles in 2011, the investment strategy for the Investment Account Fixed-Income Subaccount (FI) was reviewed and an expanded investment strategy was approved by the Board in 2015. The Board reviewed experience with the expanded FI strategy in 2022. At this review, a target margin of 50 basis points above the SDRi was added to the current investment objective to guide expectations for the FI strategy’s risk and return profile. It was noted that a higher margin as envisaged under the NIM could be revisited in the future if yield curves return to levels which were more normal in the past. | |
| Completed | In progress | Not started |
|---|---|---|
| Main Element | Implementation | Status |
| An amendment to the Articles of Agreement to broaden the Fund’s investment authority. | The amendment to the Articles came into effect in February 2011 following ratification by three-fifths of IMF members representing 85 percent of the total voting power. The amendment aimed at providing the Fund with flexibility to enhance the expected return on its investments and adapt its investment strategy over time. | |
| Creation of an endowment funded with profits from the sale of 403.3 metric tons of the Fund’s gold holdings. | Gold sales required an 85 percent majority vote of the Executive Board. The gold sales were completed in December 2010 and realized total profits of SDR 6.85 billion.2 Initial sales were conducted through off-market transactions with central banks and official holders followed by on-market sales. | |
| Adoption of new rules and regulations for the Investment Account (IA)—a requirement for the Fund to exercise its expanded investment authority under the amended Articles. | In January 2013, the Executive Board approved new rules and regulations for the IA. | |
| Investment of the endowment | The 3-year phased implementation of the endowment’s investments was completed in 2018. The Executive Board has since reviewed the investment strategy for the endowment in 2018 and in 2022. In 2018, the Board also approved a payout policy framework and a delay in initiating payouts until an adequate cushion of retained investment income was established. Payouts are now expected to commence in FY 2023. | |
| Adopting a new rule for the margin for the basic rate of charge. Previously, the margin was set to generate sufficient income for the Fund to cover all of its administrative expenses and to meet a specific net income target. | In December 2011, the Fund adopted a new rule for setting the margin on the rate of charge.3 Under the new rule, the margin should be set to cover the Fund’s intermediation (lending) costs and help build-up reserves. However, given the continuous low interest rate environment, investment income has been subdued and the continued reliance by the Fund on lending income to cover a significant portion of its non-lending operating costs, the margin has so far been set under the exceptional circumstances clause. | |
| Reimbursement of PRG Trust expenses. | In FY 2013, the practice of reimbursing the Fund for the expenses of conducting the business of the PRG Trust was resumed and has subsequently been suspended from FY 2021 to FY 2026. The cumulative impact of the suspension is expected to be SDR 539 million over the six years. The temporary suspension of reimbursement, however, is one of the recognized contingency measures under the PRGT’s three-pillar framework when self-sustained capacity falls short of the target envelope. The proposed suspension would retain these resources in the PRGT Reserve Account, which provides security to lenders. | |
| Review of the investment strategy for the Fixed-Income subaccount | Following the Amendment to the Articles in 2011, the investment strategy for the Investment Account Fixed-Income Subaccount (FI) was reviewed and an expanded investment strategy was approved by the Board in 2015. The Board reviewed experience with the expanded FI strategy in 2022. At this review, a target margin of 50 basis points above the SDRi was added to the current investment objective to guide expectations for the FI strategy’s risk and return profile. It was noted that a higher margin as envisaged under the NIM could be revisited in the future if yield curves return to levels which were more normal in the past. | |
Developments
Significant progress has been made in implementing the NIM with almost all elements now in place. As a result, the Fund has gradually increased the diversification in its sources of income and reduced the institution’s overreliance on income from lending activities to finance its diverse activities (see Figure AIII.1). Nonetheless, the contribution of these sources of income as well as the financing requirements for the Fund’s activities have varied with changes in the global economic and market environment and other related developments. Since the global financial crisis, the Fund’s lending income has increased while non-lending income has been highly constrained by very low sustained global interest rates.4 This has been the primary reason that income from investments and interest free resources has covered a much smaller percentage of expenditures (around one tenth) compared to initial expectations.5 Going forward, the prospect for achieving these initial expectations could continue to remain low, unless global interest rates revert back to higher levels considered more normal in the past. This may indicate that a reassessment of these initial expectations may be warranted at a later stage.
Actual and Projected Operational Income and Expenses—FY 2012–321
Citation: Policy Papers 2022, 026; 10.5089/9798400212000.007.A999
Source: Finance Department.1 Operational income and expenses excluding the pension-related (IAS 19) gains and losses.Actual and Projected Operational Income and Expenses—FY 2012–321
Citation: Policy Papers 2022, 026; 10.5089/9798400212000.007.A999
Source: Finance Department.1 Operational income and expenses excluding the pension-related (IAS 19) gains and losses.Actual and Projected Operational Income and Expenses—FY 2012–321
Citation: Policy Papers 2022, 026; 10.5089/9798400212000.007.A999
Source: Finance Department.1 Operational income and expenses excluding the pension-related (IAS 19) gains and losses.Annex IV. Endowment Payout—Practical Considerations
The Board endorsed a set of criteria for determining a constant real payout rule, supplemented by safeguards to help protect the value of the EA in real terms (Box 1).
Reassess adequacy of retained income cushion (“cushion”) based on EA NAV. The target cushion could be sized so the portfolio could absorb one extreme event equivalent to a two-standard deviation market shock. This was equivalent to around 15 percent in 2018. In practice the time required to achieve the required cushion would be uncertain and subject to market conditions. However, the Board could decide to delay payouts for a certain period with the intent of building an adequate income cushion in the EA. The EA cushion represents the difference between the EA’s NAV and its corpus. The corpus is estimated based on principal amounts invested in the EA since inception, adjusted for the GED. These parameters are calculated monthly by the Fund’s custodian.
Review return outlook/projections for EA. The initial value of the payout would need to be aligned with a conservative estimate of the projected long-term EA real returns in US dollar terms. This estimate would ideally be associated with a relatively high level of confidence (or conversely a lower-than-average probability of underperformance).
Current USD amount of initial payout. The constant real payout rule is used to determine future payout amounts after the initial payout is determined. Under this rule, the payout amount for any given year would be calculated as the prior year’s USD payout increased by the deflator (GED). If the payout amount as a percentage of NAV exceeds the maximum limit specified, it will be suspended.
Maximum limit of payout to trigger future suspension of the payout. Based on the level of the EA’s cushion, a maximum limit would be set as a percentage of NAV to trigger suspension of future payouts. An adequate cushion is a prerequisite for commencing payouts and to prevent a start-stop scenario. For example, a 1 percent initial value of the payout and cushion size of 12.2 percent would imply a maximum limit of approximately 1.1 percent. In other words, if in future years the payout amount reaches 1.1 percent of the current EA NAV, a suspension of payouts would be triggered. Following a suspension, staff will need to repeat the reassessment of the EA cushion as described above and calculate a new maximum limit, before proposing to recommence payouts.
Annex V. Assumptions Underlying the Income Projections
Assumptions Underlying the Income Projections
(in billions of SDRs, unless otherwise stated)End-February figure is unannualized.
The projected returns for the Endowment Subaccount are shown in SDR terms.
Assumptions Underlying the Income Projections
(in billions of SDRs, unless otherwise stated)| Actual | ||||
|---|---|---|---|---|
| through Feb. 2022 |
FY 2022 | FY 2023 | FY 2024 | |
| Regular Facilities: | ||||
| 1. Purchases (excl. reserve tranche purchases) | 5.9 | 13.1 | 23.6 | 14.5 |
| 2. Repurchases | 6.1 | 10.9 | 19.3 | 23.3 |
| 3. Average balances subject to charges | 90.1 | 90.4 | 95.9 | 93.6 |
| 4. Average SDR holdings | 23.6 | 23.9 | 25.9 | 26.7 |
| 5. Average remunerated positions | 102.7 | 103.6 | 114.3 | 115.7 |
| 6. Average investment account assets-Fixed-Income subaccount | 18.9 | 18.9 | 21.1 | 23.2 |
| 7. Average investment account assets-Endowment subaccount | 6.5 | 6.5 | 6.7 | 6.8 |
| 8. Average borrowings and issued notes | 4.6 | 4.5 | 2.7 | 0.9 |
| (In percent) | ||||
| Return on investments-Fixed-Income subaccount 1 | -0.29 | -0.32 | 1.14 | 1.70 |
| Return on investments-Endowment subaccount 1, 2 | 2.55 | 3.16 | 2.12 | 2.56 |
| Average interest rates: | ||||
| SDR interest rate and basic rate of remuneration | 0.1 | 0.1 | 0.8 | 1.2 |
| Basic rate of charge | 1.1 | 1.1 | 1.8 | 2.2 |
| Margin on the rate of charge | 1.0 | 1.0 | 1.0 | 1.0 |
End-February figure is unannualized.
The projected returns for the Endowment Subaccount are shown in SDR terms.
Assumptions Underlying the Income Projections
(in billions of SDRs, unless otherwise stated)| Actual | ||||
|---|---|---|---|---|
| through Feb. 2022 |
FY 2022 | FY 2023 | FY 2024 | |
| Regular Facilities: | ||||
| 1. Purchases (excl. reserve tranche purchases) | 5.9 | 13.1 | 23.6 | 14.5 |
| 2. Repurchases | 6.1 | 10.9 | 19.3 | 23.3 |
| 3. Average balances subject to charges | 90.1 | 90.4 | 95.9 | 93.6 |
| 4. Average SDR holdings | 23.6 | 23.9 | 25.9 | 26.7 |
| 5. Average remunerated positions | 102.7 | 103.6 | 114.3 | 115.7 |
| 6. Average investment account assets-Fixed-Income subaccount | 18.9 | 18.9 | 21.1 | 23.2 |
| 7. Average investment account assets-Endowment subaccount | 6.5 | 6.5 | 6.7 | 6.8 |
| 8. Average borrowings and issued notes | 4.6 | 4.5 | 2.7 | 0.9 |
| (In percent) | ||||
| Return on investments-Fixed-Income subaccount 1 | -0.29 | -0.32 | 1.14 | 1.70 |
| Return on investments-Endowment subaccount 1, 2 | 2.55 | 3.16 | 2.12 | 2.56 |
| Average interest rates: | ||||
| SDR interest rate and basic rate of remuneration | 0.1 | 0.1 | 0.8 | 1.2 |
| Basic rate of charge | 1.1 | 1.1 | 1.8 | 2.2 |
| Margin on the rate of charge | 1.0 | 1.0 | 1.0 | 1.0 |
End-February figure is unannualized.
The projected returns for the Endowment Subaccount are shown in SDR terms.
Annex VI. Consolidated Medium-Term Income and Expenses
Consolidated Income and Expenses, FY 2022–32 Desk Survey Scenario
Includes recent refinements of the investment strategy of the IA-FI which improved the prospects of achieving a 50 basis point margin on average over the SDR interest rate over the medium term.
The projections assume a 1 percent payout from the gold endowment commencing in FY 2023. The illustrative scenarios for FY 2032 show a continued payout of 1 percent in a low investment return environment (Scenario B); and a higher payout of 1.5 percent in a high investment return environment (Scenario A).
Interest free resources reduce the Fund’s costs and therefore provide implicit returns. Since the Fund invests its reserves in the IA to earn a higher return, the interest free resources retained in the GRA are mainly attributable to unremunerated reserve tranche positions not represented by gold holdings and GRA income for the year not transferred to the IA. These resources reduce members’ reserve tranche positions and the Fund’s remuneration expense or increase interest income if reflected in SDR holdings of the GRA, resulting in implicit income for the Fund.
Updated for a five-year suspension of the PRGT reimbursement of expenses for the FY 2022-26 approved by the Board in July 2021.
The Budget Augmentation Framework (11/12/21) proposed an augmentation to be implemented through annual increases in the real net administrative budget averaging 2 percent each year during FY 23 to FY 25 (relative to FY 22), returning to a flat real budget trajectory thereafter.
Reflects a reduction in precautionary balances as a result of the full distribution of the SCA-1 (SDR 1,066 million) in the context of the clearance by Sudan of its overdue financial obligations to the Fund. Precautionary balances are also adjusted for a positive one-off permanent adjustment of SDR 205 million effective May 1, 2021 to reverse the impact of the cumulative IAS 19 gains and losses previously included in the Fund’s precautionary balances under the accounting basis.
Consolidated Income and Expenses, FY 2022–32 Desk Survey Scenario
| Low-lending environment | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Scenario A | Scenario B | ||||||||
| SDRi 3% | SDRi 2% | ||||||||
| P/out=1.5% | P/out=1% | ||||||||
| FY22 | FY23 | FY24 | FY25 | FY26 | FY27 | FY28 | FY32 | FY32 | |
| (in SDR millions) | |||||||||
| A. Operational Income | 2,570 | 3,056 | 3,082 | 2,609 | 2,395 | 2,355 | 2,160 | 1,126 | 891 |
| Lending income | 2,618 | 2,704 | 2,559 | 2,023 | 1,750 | 1,586 | 1,333 | 247 | 247 |
| Margin for the rate of charge | 904 | 959 | 936 | 806 | 677 | 609 | 521 | 200 | 200 |
| Service charge and other income | 199 | 118 | 72 | 17 | 10 | 0 | 0 | 23 | 23 |
| Commitment fees | 283 | 196 | 183 | 2 | 0 | 0 | 0 | 24 | 24 |
| Surcharges | 1,232 | 1,431 | 1,368 | 1,198 | 1,063 | 977 | 812 | 0 | 0 |
| Investment income | (62) | 305 | 457 | 518 | 573 | 600 | 654 | 640 | 449 |
| Fixed-Income Subaccount 1/ | (62) | 240 | 391 | 451 | 505 | 531 | 584 | 525 | 375 |
| Gold endowment pay-out 2/ | 0 | 65 | 66 | 67 | 68 | 69 | 70 | 115 | 74 |
| Interest free resources 3/ 6/ | 6 | 38 | 57 | 59 | 62 | 61 | 64 | 125 | 81 |
| SCA-1 and other | 6 | 38 | 57 | 59 | 62 | 61 | 64 | 125 | 81 |
| Reimbursements | 8 | 9 | 9 | 9 | 10 | 108 | 109 | 114 | 114 |
| SDR Department | 8 | 9 | 9 | 9 | 10 | 10 | 10 | 10 | 10 |
| PRG Trust 4/ | 0 | 0 | 0 | 0 | 0 | 98 | 99 | 104 | 104 |
| RST | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| B. Expenses 5/ | 1,073 | 992 | 1,042 | 1,065 | 1,078 | 1,099 | 1,106 | 1,158 | 1,158 |
| Net administrative budget | 830 | 918 | 957 | 980 | 997 | 1,020 | 1,027 | 1,082 | 1,082 |
| Capital budget items expensed | 18 | 15 | 22 | 22 | 22 | 22 | 23 | 24 | 24 |
| Depreciation | 53 | 59 | 63 | 63 | 59 | 57 | 56 | 52 | 52 |
| Net periodic pension cost (IAS 19) | 172 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| C. Net Operational Income (Loss) Before Provisioning (A-B) | 1,497 | 2,064 | 2,040 | 1,544 | 1,317 | 1,256 | 1,054 | (32) | (267) |
| Provision for loan impairment losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| D. Net Operational Income (Loss) | 1,497 | 2,064 | 2,040 | 1,544 | 1,317 | 1,256 | 1,054 | (32) | (267) |
| E. Pension-related remeasurement gain (IAS 19) | 512 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Net Operational Income (Loss) After Pension-Related (IAS 19) Adjustment (D+E) | 2,009 | 2,064 | 2,040 | 1,544 | 1,317 | 1,256 | 1,054 | (32) | (267) |
| Endowment (Gold Profits) Subaccount - Retained Income | 202 | 75 | 105 | 106 | 116 | 133 | 195 | 77 | 112 |
| Net Income (Loss) | 2,211 | 2,139 | 2,145 | 1,650 | 1,433 | 1,389 | 1,249 | 45 | (155) |
| (in US$ millions) | |||||||||
| F. Operational Income | 3,651 | 4,309 | 4,378 | 3,756 | 3,472 | 3,438 | 3,197 | 1,746 | 1,383 |
| Lending income (including Surcharges) | 3,718 | 3,813 | 3,634 | 2,912 | 2,537 | 2,316 | 1,974 | 382 | 382 |
| Investment income | (88) | 430 | 650 | 746 | 832 | 876 | 967 | 992 | 697 |
| Interest free resources | 9 | 53 | 81 | 84 | 89 | 89 | 95 | 194 | 126 |
| Reimbursements | 12 | 13 | 13 | 14 | 14 | 157 | 161 | 178 | 178 |
| G. Expenses | 1,522 | 1,398 | 1,479 | 1,533 | 1,563 | 1,604 | 1,635 | 1,794 | 1,794 |
| Net administrative budget | 1,178 | 1,295 | 1,359 | 1,411 | 1,446 | 1,489 | 1,519 | 1,677 | 1,677 |
| Capital budget items expensed | 25 | 20 | 31 | 32 | 31 | 32 | 33 | 37 | 37 |
| Depreciation | 75 | 83 | 89 | 90 | 86 | 83 | 83 | 80 | 80 |
| Net periodic pension cost | 244 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| H. Net Operational Income (Loss) (F-G) | 2,129 | 2,911 | 2,899 | 2,223 | 1,909 | 1,834 | 1,562 | (48) | (411) |
| Memorandum Items: | |||||||||
| Fund credit (average stock, SDR billions) | 90.4 | 95.9 | 93.6 | 80.6 | 67.7 | 60.9 | 52.1 | 20.0 | 20.0 |
| SDR interest rate (in percent) | 0.1 | 0.8 | 1.2 | 1.3 | 1.4 | 1.4 | 1.5 | 3.0 | 2.0 |
| US$/SDR exchange rate | 1.42 | 1.41 | 1.42 | 1.44 | 1.45 | 1.46 | 1.48 | 1.55 | 1.55 |
| Precautionary balances (end of period, SDR billions) 6/ | 20.9 | 22.9 | 24.9 | 26.5 | 27.8 | 29.0 | 30.1 | 15.0 | 15.0 |
Includes recent refinements of the investment strategy of the IA-FI which improved the prospects of achieving a 50 basis point margin on average over the SDR interest rate over the medium term.
The projections assume a 1 percent payout from the gold endowment commencing in FY 2023. The illustrative scenarios for FY 2032 show a continued payout of 1 percent in a low investment return environment (Scenario B); and a higher payout of 1.5 percent in a high investment return environment (Scenario A).
Interest free resources reduce the Fund’s costs and therefore provide implicit returns. Since the Fund invests its reserves in the IA to earn a higher return, the interest free resources retained in the GRA are mainly attributable to unremunerated reserve tranche positions not represented by gold holdings and GRA income for the year not transferred to the IA. These resources reduce members’ reserve tranche positions and the Fund’s remuneration expense or increase interest income if reflected in SDR holdings of the GRA, resulting in implicit income for the Fund.
Updated for a five-year suspension of the PRGT reimbursement of expenses for the FY 2022-26 approved by the Board in July 2021.
The Budget Augmentation Framework (11/12/21) proposed an augmentation to be implemented through annual increases in the real net administrative budget averaging 2 percent each year during FY 23 to FY 25 (relative to FY 22), returning to a flat real budget trajectory thereafter.
Reflects a reduction in precautionary balances as a result of the full distribution of the SCA-1 (SDR 1,066 million) in the context of the clearance by Sudan of its overdue financial obligations to the Fund. Precautionary balances are also adjusted for a positive one-off permanent adjustment of SDR 205 million effective May 1, 2021 to reverse the impact of the cumulative IAS 19 gains and losses previously included in the Fund’s precautionary balances under the accounting basis.
Consolidated Income and Expenses, FY 2022–32 Desk Survey Scenario
| Low-lending environment | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Scenario A | Scenario B | ||||||||
| SDRi 3% | SDRi 2% | ||||||||
| P/out=1.5% | P/out=1% | ||||||||
| FY22 | FY23 | FY24 | FY25 | FY26 | FY27 | FY28 | FY32 | FY32 | |
| (in SDR millions) | |||||||||
| A. Operational Income | 2,570 | 3,056 | 3,082 | 2,609 | 2,395 | 2,355 | 2,160 | 1,126 | 891 |
| Lending income | 2,618 | 2,704 | 2,559 | 2,023 | 1,750 | 1,586 | 1,333 | 247 | 247 |
| Margin for the rate of charge | 904 | 959 | 936 | 806 | 677 | 609 | 521 | 200 | 200 |
| Service charge and other income | 199 | 118 | 72 | 17 | 10 | 0 | 0 | 23 | 23 |
| Commitment fees | 283 | 196 | 183 | 2 | 0 | 0 | 0 | 24 | 24 |
| Surcharges | 1,232 | 1,431 | 1,368 | 1,198 | 1,063 | 977 | 812 | 0 | 0 |
| Investment income | (62) | 305 | 457 | 518 | 573 | 600 | 654 | 640 | 449 |
| Fixed-Income Subaccount 1/ | (62) | 240 | 391 | 451 | 505 | 531 | 584 | 525 | 375 |
| Gold endowment pay-out 2/ | 0 | 65 | 66 | 67 | 68 | 69 | 70 | 115 | 74 |
| Interest free resources 3/ 6/ | 6 | 38 | 57 | 59 | 62 | 61 | 64 | 125 | 81 |
| SCA-1 and other | 6 | 38 | 57 | 59 | 62 | 61 | 64 | 125 | 81 |
| Reimbursements | 8 | 9 | 9 | 9 | 10 | 108 | 109 | 114 | 114 |
| SDR Department | 8 | 9 | 9 | 9 | 10 | 10 | 10 | 10 | 10 |
| PRG Trust 4/ | 0 | 0 | 0 | 0 | 0 | 98 | 99 | 104 | 104 |
| RST | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| B. Expenses 5/ | 1,073 | 992 | 1,042 | 1,065 | 1,078 | 1,099 | 1,106 | 1,158 | 1,158 |
| Net administrative budget | 830 | 918 | 957 | 980 | 997 | 1,020 | 1,027 | 1,082 | 1,082 |
| Capital budget items expensed | 18 | 15 | 22 | 22 | 22 | 22 | 23 | 24 | 24 |
| Depreciation | 53 | 59 | 63 | 63 | 59 | 57 | 56 | 52 | 52 |
| Net periodic pension cost (IAS 19) | 172 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| C. Net Operational Income (Loss) Before Provisioning (A-B) | 1,497 | 2,064 | 2,040 | 1,544 | 1,317 | 1,256 | 1,054 | (32) | (267) |
| Provision for loan impairment losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| D. Net Operational Income (Loss) | 1,497 | 2,064 | 2,040 | 1,544 | 1,317 | 1,256 | 1,054 | (32) | (267) |
| E. Pension-related remeasurement gain (IAS 19) | 512 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Net Operational Income (Loss) After Pension-Related (IAS 19) Adjustment (D+E) | 2,009 | 2,064 | 2,040 | 1,544 | 1,317 | 1,256 | 1,054 | (32) | (267) |
| Endowment (Gold Profits) Subaccount - Retained Income | 202 | 75 | 105 | 106 | 116 | 133 | 195 | 77 | 112 |
| Net Income (Loss) | 2,211 | 2,139 | 2,145 | 1,650 | 1,433 | 1,389 | 1,249 | 45 | (155) |
| (in US$ millions) | |||||||||
| F. Operational Income | 3,651 | 4,309 | 4,378 | 3,756 | 3,472 | 3,438 | 3,197 | 1,746 | 1,383 |
| Lending income (including Surcharges) | 3,718 | 3,813 | 3,634 | 2,912 | 2,537 | 2,316 | 1,974 | 382 | 382 |
| Investment income | (88) | 430 | 650 | 746 | 832 | 876 | 967 | 992 | 697 |
| Interest free resources | 9 | 53 | 81 | 84 | 89 | 89 | 95 | 194 | 126 |
| Reimbursements | 12 | 13 | 13 | 14 | 14 | 157 | 161 | 178 | 178 |
| G. Expenses | 1,522 | 1,398 | 1,479 | 1,533 | 1,563 | 1,604 | 1,635 | 1,794 | 1,794 |
| Net administrative budget | 1,178 | 1,295 | 1,359 | 1,411 | 1,446 | 1,489 | 1,519 | 1,677 | 1,677 |
| Capital budget items expensed | 25 | 20 | 31 | 32 | 31 | 32 | 33 | 37 | 37 |
| Depreciation | 75 | 83 | 89 | 90 | 86 | 83 | 83 | 80 | 80 |
| Net periodic pension cost | 244 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| H. Net Operational Income (Loss) (F-G) | 2,129 | 2,911 | 2,899 | 2,223 | 1,909 | 1,834 | 1,562 | (48) | (411) |
| Memorandum Items: | |||||||||
| Fund credit (average stock, SDR billions) | 90.4 | 95.9 | 93.6 | 80.6 | 67.7 | 60.9 | 52.1 | 20.0 | 20.0 |
| SDR interest rate (in percent) | 0.1 | 0.8 | 1.2 | 1.3 | 1.4 | 1.4 | 1.5 | 3.0 | 2.0 |
| US$/SDR exchange rate | 1.42 | 1.41 | 1.42 | 1.44 | 1.45 | 1.46 | 1.48 | 1.55 | 1.55 |
| Precautionary balances (end of period, SDR billions) 6/ | 20.9 | 22.9 | 24.9 | 26.5 | 27.8 | 29.0 | 30.1 | 15.0 | 15.0 |
Includes recent refinements of the investment strategy of the IA-FI which improved the prospects of achieving a 50 basis point margin on average over the SDR interest rate over the medium term.
The projections assume a 1 percent payout from the gold endowment commencing in FY 2023. The illustrative scenarios for FY 2032 show a continued payout of 1 percent in a low investment return environment (Scenario B); and a higher payout of 1.5 percent in a high investment return environment (Scenario A).
Interest free resources reduce the Fund’s costs and therefore provide implicit returns. Since the Fund invests its reserves in the IA to earn a higher return, the interest free resources retained in the GRA are mainly attributable to unremunerated reserve tranche positions not represented by gold holdings and GRA income for the year not transferred to the IA. These resources reduce members’ reserve tranche positions and the Fund’s remuneration expense or increase interest income if reflected in SDR holdings of the GRA, resulting in implicit income for the Fund.
Updated for a five-year suspension of the PRGT reimbursement of expenses for the FY 2022-26 approved by the Board in July 2021.
The Budget Augmentation Framework (11/12/21) proposed an augmentation to be implemented through annual increases in the real net administrative budget averaging 2 percent each year during FY 23 to FY 25 (relative to FY 22), returning to a flat real budget trajectory thereafter.
Reflects a reduction in precautionary balances as a result of the full distribution of the SCA-1 (SDR 1,066 million) in the context of the clearance by Sudan of its overdue financial obligations to the Fund. Precautionary balances are also adjusted for a positive one-off permanent adjustment of SDR 205 million effective May 1, 2021 to reverse the impact of the cumulative IAS 19 gains and losses previously included in the Fund’s precautionary balances under the accounting basis.
IAS 19 ‘Employee Benefits’, requires the actuarial remeasurement of post-employment obligations.
A New Rule for Setting the Margin for the Basic Rate of Charge (11/22/11), was adopted by the Executive Board in December 2011 and was first applied in setting the margin for the rate of charge for FY 2013–14.
In the April 2021 projection, purchases were mainly scheduled to take place in the early part of the year, resulting in higher projected average credit outstanding for FY 2022.
Basic charges from Sudan, which were previously deferred but not burden shared (i.e., charges incurred before the introduction of burden sharing policy), as well as special charges, were received at the time of Sudan’s arrears clearance. Projections from last April did not include the impact of Sudan’s arrears clearance that took place on June 29, 2021.
Commitment fee income is only recognized at the expiration or cancellation of an arrangement in accordance with accounting principles.
The Articles of Agreement provide for the establishment of an Investment Account (IA) to generate income to help meet the Fund’s operating costs (Article XII, Section (6)(f)(iv)). The IA was funded on June 20, 2006 following its establishment by an Executive Board decision in April 2006. The IA was funded through a transfer of currencies of SDR 5.9 billion from the General Resources Account (GRA). The Articles limit the amount that may be transferred to the IA to the equivalent of the Fund’s general and special reserves at the time of the decision to make the transfer, and the June 2006 transfer was equivalent to the Fund’s total reserves at that time.
The modification of the investment strategy of the FI by the Executive Board in January 2022 is not expected to impact the return outlook for the portfolio for the remainder of this year.
Under the Articles, the Executive Board has discretion over the disposition of income in the IA. Investment income can be kept in the IA and reinvested or it may be used for meeting the expenses of conducting the business of the Fund, i.e., transferred to the GRA (Article XII, Section 6 (f)(iv)). Since FY 2007 the FI has earned positive income and staff has proposed that the income of the IA-FI be transferred to the GRA for meeting the expenses of conducting the business of the Fund for the year under review.
As the Fund’s administrative expenditures are largely in US dollars and the EA’s general objective is to contribute to covering such expenditures, the performance of the EA is measured in US dollars as the base currency but translated into SDRs for financial reporting purposes.
In accordance with Article V, Section 12(f) and (g), SDA resources can be used for various purposes, as specified in the Articles of Agreement, including transfers to the GRA for immediate use in operations and transactions, transfers to the IA, or operations and transactions that are not authorized by other provisions of the Articles but are consistent with the purposes of the Fund, in particular to provide balance of payments assistance on special terms to low-income member countries. SDA resources include both assets held within the SDA and assets from the SDA, which have been contributed to the various trusts administered by the Fund as trustee, including the current PRG, PRG-HIPC and CCR Trusts.
See Decision No. 8760-(87/176), adopted December 18, 1987.
The process of estimating SDR Department and PRGT administrative expenses relies primarily on the Fund’s Analytic Costing and Estimation System (ACES) and the estimates include lagged actual data for Q4 costs.
In this regard it should be noted that the direct costs related to SDA assets in the various trusts mostly comprise investment management fees and any operational out-of-pocket expenses. These are borne by the assets as the investment managers deduct such fees/expenses from the investment returns attributed to these assets. Staff has initiated a review of past SDA reimbursements practices to ensure consistency in the treatment of SDA assets in the various trusts. The finalization has been delayed in view of more pressing demands on staff and staff will present it at the next possible opportunity.
Executive Board Decision No. 17083-(21/71), July 14, 2021.
See Executive Board Decision No. 14093-(08/32), adopted April 7, 2008.
See Proposal to Establish a Resilience and Sustainability Trust (03/21/22).
Under IAS 19, the discount rate is determined by reference to market yields at the end of the financial year on high quality corporate bonds. The Fund’s actuary (Willis Towers Watson) derives the Fund’s discount rate from the FTSE Pension Discount Curve which is widely applied.
As discussed in Review of the Fund's Income Position for FY 2021 and FY 2022 (04/12/21) - Annex II, pension-related (IAS 19) gains and losses are volatile year-on-year but have tended to offset over time.
Yields on high quality U.S. corporate bonds have trended higher since January 2022; and based on the current level of the discount rate, a 100 basis point change can increase or decrease the value of the pension liability by 17 to 19 percent. The end-February rate is used for the year end projection.
The grossing-up formulas are for converting participants’ net salaries to pensionable gross salaries used in pension benefit calculations.
In October 2020, Directors broadly supported the approach for addressing cases of impairment, including the use of provisioning, and incorporating Board consultation before any such provision is recorded and reported. The approach was formally endorsed by the Board in April 2021 – see Review of the Fund's Income Position for FY 2021 and FY 2022 (04/12/21).
See Annex III, Review of the Fund’s Income Position for FY 2019 and FY 2020 (03/19/19) for a fuller discussion on the implementation of the new standard in the Fund.
Under Article XII, Section 6(b), the Fund may use the special reserve for any purpose for which it may use the general reserve, except that balances in the special reserve may not be used for distribution to Fund members.
Article XII, Section 6 (f)(iv). The Board could also, by a 70 percent majority of the total voting power, decide to reduce the amount of the investment in the IA (Article XII, Section 6 (f)(vi)).
The annualized volatility of returns is now expected to be 9.8 percent compared to 7.9 percent for the previous asset allocation.
Also see Annex IV. Endowment Payout—Practical Considerations, Review of the Fund's Income Position for FY 2021 and FY 2022 (04/12/21).
This is based on staff estimates of future investment returns, and around 70 percent level of confidence or 30 percent probability of underperformance of the long-term expected return, and a mid-March NAV estimate of US$8.9 billion.
The maximum limit which would suspend future payouts would be approximately 1.1 percent based on the current size of the cushion, slightly lower than prior period estimates. In other words, if in future years the annual payout amount that increases by the GED each year becomes equivalent to 1.1 percent of the underlying NAV, a suspension of payouts would be triggered (NAV-based limit).
See Review of the Adequacy of the Fund’s Precautionary Balances (1/26/16), Review of the Fund’s Income Position for FY 2016 and FY 2017-2018 (4/8/16), and Review of the Fund’s Income Position for FY 2017 and FY 2018 (4/4/17).
See Box 3, in Review of the Fund’s Income Position for FY 2018 and FY 2019–20 (04/05/18).
The Fund has recorded income shortfalls that led to a drawdown of the special reserve in 1972–77, 1985, 2003, 2007–08, 2014, 2020. Following these episodes, the Fund resorted to full allocation of net income to the special reserve.
From FY 1998 to FY 2006, surcharge income was placed to the general reserve, while net operational income (excluding surcharges) continued to be placed to the special reserve. This practice continued through FY 2015, with the exception of periods of income shortfalls (FY2007-08), and the subsequent replenishment of the special reserve (FY2009–10).
Under all four options the special reserve would be replenished in the years after a drawdown due to administrative losses, consistent with the Fund’s past practice.
Since the adoption of amended IAS 19, the pension-related gains and losses have been more volatile as typified by the loss and subsequent gain in FY 2020 and FY 2021, respectively.
Mathematically, the percentage share allocated to the special reserve would be 100 % - level of the special reserve / level of the minimum floor. The level of the special reserve corresponds to its balances at the beginning of the financial year, taking into account the income disposition decisions made by the Board at the end of the previous financial year. Any annual deficit would be charged against the special reserve in full, as per the existing practice.
Under options 2 and 3, the amount of IAS 19 remeasurement gains and losses allocated to the special reserve and the general reserve would vary year on year depending on the ratio of net income allocation between the respective reserves; compared with the equal allocation under option 1. Under all options, the amount of IAS 19 remeasurement gains and losses in the respective reserves and the movements for each year would be disclosed in the annual financial statements.
As noted, IAS 19 projections are excluded from all 4 scenarios.
See Audited Financial Statements for the Financial Years Ended April 30, 2021 and 2020 (07/07/21).
As of April 30, 2021, the balance of the cumulative remeasurement gain in the special reserve is SDR 505 million.
The cumulative amount is derived net of transfers out of the IA. In the past, windfall gold sales profits of SDR 2.45 billion had been transferred to the IA but these were subsequently transferred out during FY13–14, following a distribution of the general reserve to the membership, as part of the strategy for the creation of a self-sustained PRGT.
These totals include special reserves attributed to profits from the 2009–2010 gold sales of SDR 4.4 billion, which are not treated as part of the Fund’s precautionary balances, and corresponding transfers to establish the gold endowment.
A transfer of about SDR 2 billion is estimated for FY 2022.
The balance of the FI corresponds to the investment of the Fund’s reserves except for the gold profits and any currencies retained in the GRA.
The FI has investments equivalent to the Fund’s general and special reserves except for amounts attributed to gold sales profits in the special reserve. In January 2022 the Executive Board modified the investment strategy of the FI that had been in place since 2015. The Board set the objective for the subaccount return at 50 bps over the 3-month SDR interest rate over time, established a maximum average duration of three years for the portfolio, raised the limit for Group 2 assets from 35 to 40 percent and modified the minimum credit rating for eligible assets to at least BBB-(S&P long-term rating scale) for corporate bonds and BBB+ for all other assets.
The payout policy was agreed by the Board at the discussion of the Fund’s income position in April 2018 (see Review of the Fund’s Income Position FY 2018 and FY 2019–2020 (04/05/18).
In line with the EA payout policy endorsed in April 2018, estimated investment income after the payouts now assumed in FY 2023 is to be retained in the endowment for reinvestment and is therefore not included in the Fund’s operational income.
FY 2023–FY 2025 Medium-Term Budget (4/1/22).
Sensitivity of the present value of the defined benefit obligation to changes in the discount rate at April 30, 2021 results in an increase of SDR 1,100 million (decrease of SDR 960 million) for a 50 basis point decrease (increase).
Commitment fees are included in the analysis as a source of income that contributes to reserve accumulation. Under this approach, the analysis in setting the margin is insulated from the unpredictability of commitment fees. See paragraphs 19?20 in A New Rule for Setting the Margin for the Basic Rate of Charge (11/22/11).
For a fuller discussion see Interim Review of the Adequacy of the Fund’s Precautionary Balances (11/12/21).
Consistent with the long-term economic basis for investing and managing the Fund’s plan assets, an amount equivalent to the net liability position as of May 1, 2021 of SDR 205 million was added back to the precautionary balances in FY 2022, as endorsed by the Board of Directors. Going forward, staff will monitor the economic impact for potential material underfunded positions under the long-term economic basis, in keeping with maintaining a more prudent stance on economic gains. See Interim Review of the Adequacy of the Fund’s Precautionary Balances (11/12/21).
See A New Rule for Setting the Margin for the Basic Rate of Charge (11/23/11).
The EMBI spreads do not include advanced economies that currently have outstanding credit from the Fund. However, their share of overall outstanding credit as of end-February 2022 was less than 2 percent. Moreover, based on currently available measures, staff continues to view the EMBI-based measure as the most appropriate metric of long-term market conditions. See Annex II, Review of the Fund’s Income Position for FY 2014 and FY 2015–2016 (04/07/14).
In the past, staff has also adjusted spreads to account for the maturity difference between the SDR interest rate (based on a floating rate composed of three-month instruments) and the EMBI measures (based on medium-term fixed interest rate instruments). As this estimation has been subject to a few conceptual and data limitations, and the resulting adjustments have been marginal (in the magnitude of ten basis points), the assessment of the margin in this review is based solely on credit-risk adjusted EMBI spreads.
See The Fund’s Income Position for FY 2010—Midyear Review (12/08/09), paragraphs 8–10.
See Interim Review of the Adequacy of the Fund’s Precautionary Balances (11/12/21).
In addition to these elements geared to broadening the Fund’s income, the NIM envisioned that in the event the Fund’s precautionary balances are considered to be adequate, the Executive Board could consider making dividend payments to members. The Fund is still accumulating precautionary balances towards the current agreed target of SDR 25 billion. As such, this issue will need to be revisited at a later date.
SDR 4.4 billion of the gold profits was used to fund the endowment. In accordance with two decisions adopted by the Board, the remaining profits of SDR 2.45 billion were distributed to members to help finance concessional lending to low-income countries in October 2012 and October 2013.
Decision No. 15044–(11/119) adopted December 9, 2011.
As context, the average 3-month SDR interest rate has declined dramatically, averaging close to the 5 basis point floor in 2021, compared to around 4 percent in 2007 when the NIM was designed.
When the NIM was conceived the expectation was for investment income to cover most/all of the non-lending expenses.
