Financial Post G7 Record

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Financial Post, Weekly edition, Thu 08 Jun 95, page 4

Keywords: International finance Gold International Monetary Fund

IMF MAY SELL PART OF GOLD HOARD: Proposal expected to be resolved ahead of Halifax summit, where G-7 leaders will look at overhaul of international financial agencies.

Alan Toulin

A proposal to sell a portion of the gold reserves of the International Monetary Fund has not yet been agreed to by the leaders of the seven major industrial countries, said senior Canadian officials.

But, the issue of IMF gold sales will have to be resolved by the G-7 leaders at the Halifax Summit next week, said the officials who spoke on the condition of anonymity.

Canada favors such gold sales into the world market as a way of freeing up more financial resources for the 15 or 20 absolutely poorest countries in the world.

Canadian officials said the proposed sales - representing perhaps 3% to 5% of the IMF's gold holdings - would not have a major impact on world gold prices.

''It would be such a small amount and it would occur over a period of time so there wouldn't be any major impact on the position of Canadian companies,'' said one official.

A review of the working of international financial agencies such as the IMF, the World Bank and the various specialized development banks is on the agenda for the G-7 leaders in Halifax.

Prime Minister Jean Chretien has been pushing for such a review of institutions which were created 50 years ago at the Bretton Woods conference at the conclusion of the Second World War.

''After all, 50 years have passed and it is time to look at the institutions which have, in fact, changed significantly,'' said one official.

''Partly it's a recognition that as a result of globalization, particularly with respect to the international monetary system, there have been radical changes since the IMF was created,'' the official said.

The G-7 leaders want to strengthen the ability of the IMF to deal with currency crises such as the one that hit the Mexican peso last December.

The leaders want the IMF to develop an early warning system of potential crises and they want a new financing mechanism available to respond quickly to a de-stabilizing run on a currency.

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