June 14, 2018/IMF
On April 25, 2018, the Executive Board of the International Monetary Fund (IMF) completed its annual review of the Fund’s income position for the financial year ending April 30, 2018 (FY 2018) and set the margin for the lending rate for IMF credit for FY 2019 and FY 2020.
FY 2018 Income Position and Allocation
Total FY 2018 net income is estimated at SDR 0.7 billion (US$1 billion), and is broadly in line with the April 2017 estimate. Net income of SDR 0.7 billion, which excludes the retained earnings of the gold endowment, will be added to the IMF’s precautionary balances, which are projected to reach SDR 17.4 billion (US$25 billion) at end-FY 2018.
The annual review of the Fund’s income position discussed the allocation of the Fund’s income to the special and general reserve. The Executive Board adopted a decision to place FY 2018 GRA net income estimated at SDR 0.7 billion equally to the special and general reserve, based on staff’s proposal. Staff will monitor the allocation framework closely and will revisit it again in two years’ time in alignment with the two-year cycles for reviewing the adequacy of precautionary balances and for setting the margin for the rate of charge.
FY 2019–20 Lending Rate and Income Position
The IMF charges member countries a basic rate of charge on the use of IMF credit, which is determined as the SDR interest rate plus a margin expressed in basis points. The margin is set for a period of two financial years, in line with the Board-endorsed principle that the margin should be stable and predictable. In April 2018 the Executive Board agreed to maintain the margin for the rate of charge unchanged at 100 basis points for financial years FY 2019 and FY 2020.
Projections for FY 2019 and FY 2020 point to annual net income of SDR 0.4 billion (US$0.6 billion) and SDR 1 billion (US$1.5 billion), respectively. The projections are subject to a high degree of uncertainty and are sensitive to the timing and amounts of disbursements under approved arrangements included in the projections, possible new arrangements, and the performance of the Fund’s investment portfolio. The projected net income will allow the IMF to continue to accumulate precautionary balances.
The Executive Board also adopted a number of other decisions that have a bearing on the Fund’s finances. These included decisions to transfer income from the Fixed-Income Subaccount of the Fund’s Investment Account (IA) to the General Resources Account (GRA); to transfer currencies from the GRA to the IA of amounts attributable to FY 2018 net operational income including surcharges; to reimburse costs to the GRA; and to continue special charges on certain overdue obligations.