By Lesley Wroughton
Reuters
Thursday, February 10, 2005
http://www.reuters.com/financeNewsArticle.jhtml? [1]
type=bondsNews&storyID=7597536
WASHINGTON -- A dozen U.S. lawmakers have told U.S. Treasury
Secretary John Snow to oppose proposals for the sale of some of the
International Monetary Fund's gold stockpile to pay for debt relief
for the world's poor nations.
In a letter obtained by Reuters to Snow, 12 senators from mainly
U.S. mining states said sales of the IMF's 103 million ounces of
gold reserves, the world's third-largest, would hurt gold producers
and cause job losses, including in impoverished countries like Peru
and Tanzania.
The U.S. Treasury is likely to march in lockstep with the senators'
arguments.
"We do not believe it is necessary to sell IMF gold to achieve debt
relief for the poorest countries. We will review the IMF report on
proposals to fund debt relief when it is released," Treasury
spokesman Rob Nichols said.
The letter is signed by senators from the U.S. gold-rich states of
Nevada, Colorado, Montana, South Dakota, Idaho, Utah, Alaska, New
Mexico, California, and Washington.
"We believe that careful consideration must be given to any proposal
that could have such adverse effects on this important commodity
market, and the businesses and communities in the U.S. and around
the world that are affected by it," the senators wrote in the Jan.
31 letter.
The U.S. executive board member to the IMF is barred from voting to
sell IMF gold reserves unless the U.S. Congress has approved the
move first.
Finance chiefs of the rich Group of Seven nations asked IMF Managing
Director Rodrigo Rato last weekend in London to report back by April
on proposals for using IMF gold reserves to write off debts of the
fund's poorest borrowers.
The move sent the yellow metal down to October 2004 lows on Monday,
the first trading day since the G7 meeting, as the market tried to
guess the outcome. Gold ended European trade at $417.15 on Thursday.
In the letter, which preceded the G7 London meeting, the senators
noted it was the second time in five years that "serious proposals
have surfaced that would effectively raid a core reserve asset of
the IMF."
In 1999, a proposal to sell some IMF gold stocks was opposed by
Congress for debt relief, but lawmakers authorized a less disruptive
revaluation of a portion of the reserves.
The lawmakers said the threat of gold sales in 1999 pushed gold
prices to 20-year lows, caused unemployment, while several mines had
to close in western U.S. mining states.
The senators said they did not oppose debt relief and urged the U.S.
Treasury and IMF to develop "more viable and less disruptive
alternatives to IMF gold reserve sales."
"We doubt that IMF gold sales -- which were soundly rejected as a
policy matter just five years ago -- will make any more sense
today," they added.
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