Press Release No. 07/82

Press Release: IMF Executive Board Reviews Fund's Income Position and Leaves Rate of Charge Unchanged for FY 2008

April 30, 2007

On April 25, 2007 the Executive Board of the International Monetary Fund (IMF) completed its annual review of the IMF's income position for the financial year ending April 30, 2007 (FY 2007) and agreed to maintain the rate of charge on the use of IMF credit for the financial year ending April 30, 2008 (FY 2008) at its current level.¹ The review took place against the backdrop of ongoing work to ensure the sustainability of the Fund's finances, building on the report of the Committee of Eminent Persons.

The FY 2007 income shortfall is now projected at about SDR 108 million (US$165 million) compared with an estimated SDR 70 million (US$107 million) at the mid-year review (see Press Release No. 07/2). The income shortfall largely reflects a larger-than-expected decline in IMF credit outstanding, owing to advance repayments by some members during FY 2007. In addition, returns from the Investment Account established in June 2006 (see Press Release No. 06/90) were lower than projected, mainly reflecting the relatively flat yield curve between three-month and two-year maturities. The income shortfall will be offset against the Fund's reserves (retained earnings) which amount to some SDR 6 billion (US$9 billion).

For FY 2008, the Executive Board agreed to leave the margin for the rate of charge on the use of IMF credit unchanged at its current level of 108 basis points above the SDR interest rate. The Board also decided to maintain the suspension of contributions by IMF debtor and creditor countries to the special contingent account. Debtor country contributions would otherwise have increased sharply as a result of the overall low credit levels. On this basis, and under a central scenario for credit outstanding of no sizeable new arrangements, the income shortfall for FY 2008 is estimated at about SDR 146 million ($224 million).

The Executive Board also adopted a number of other decisions that have a bearing on the IMF's finances in FY 2008, including burden sharing for deferred charges and the continuation of special charges for overdue obligations.

¹ See Review of the Fund's Income Position for FY 2007 and FY 2008.