WASHINGTON - September 29 - As G-7 Finance Ministers prepare to meet in Washington on Friday with poor country debt cancellation near the top of their agenda, a report released today by Debt and Development Coalition Ireland demonstrates the feasibility of the sale of IMF gold to fund debt cancellation.

The report, "The IMF, Gold Sales, and Multilateral Debt Cancellation" by Sony Kapoor of the New Economics Foundation in London, finds that responsible and transparent sale of the IMF's gold at a rate of 5 million ounces per year for the next twenty years could raise $30 billion with no significant impact on the world price of gold. It recommends that proceeds from the sale of IMF gold go to fund multilateral impoverished country debt cancellation.

"Given the devastation that the debt is wreaking on peoples' lives, it is imperative that the G-7, and the IMF and the World Bank in their meetings this weekend, take responsible action and cancel the debt," said Jean Somers, Coordinator of Debt and Development Coalition Ireland. "This report offers gold sales as a viable solution to the debt crisis. By taking a close look at the impact the sale of gold by many rich countries over last 10 years, it debunks the argument that IMF gold sales would lower gold prices."

The research is particularly timely because G-7 nations are coming into Friday's talks where much of the discussion is likely to center on how debt cancellation will be financed: this report offers gold sales as a strong and viable option.

"The sale of IMF gold is an approach to financing poor country debt cancellation that should please all G7 nations," said Neil Watkins, a spokesperson for Jubilee USA Network. "The IMF is sitting atop a mountain of outrageously undervalued gold. With thousands of people dying due to HIV/AIDS in Africa and elsewhere, the sale of IMF gold could easily finance the IMF and World Bank's share of desperately needed debt cancellation for impoverished nations."

The report points out that gold only represents 2% of total resources available to the Fund, so a sale would not significantly impact the Fund's operations. The paper also considers the potential impact of gold sales by the IMF on the world price of gold. It documents recent large sales by rich country central banks and suggests that even if the sale were to potentially impact the world price of gold, several options were available to mitigate the effects.

"Selling IMF gold to help alleviate poverty must surely take precedence over the long term portfolio rebalancing needs of rich country central banks which continue to sell large quantities of gold " says Kapoor, the report's author, who will be in Washington this week, while suggesting that IMF gold could be sold under the existing Central Bank Gold Agreement under which rich country central banks plan to sell 80 million ounces of gold over the next five years. "Instead of selling 16 million ounces of gold a year, these central banks could reduce their quota to 11 million ounces and let the IMF sell 5 million ounces with no market impact."

The report also examines the impact of gold sales on HIPC countries; argues for sales rather than a revaluation approach; and considers precedents for the sale of gold.

An executive summary and the full report are available online at www.debtireland.org

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