MONEYWEB: Well, across to Washington DC now, and a warm welcome to Masood Ahmed. Good to have you on the programme. He's the chief spokesman of the International Monetary Fund. Masood, by way of background, how much gold does the IMF actually have?

MASOOD AHMED: Hello, Alec. Well, the IMF has about 100m ounces of gold, which makes it the third-largest official holder of gold.

MONEYWEB: Third-largest? Who's in front of you?

MASOOD AHMED: Well there are other countries that are ahead of us. But I think that the main thing for us is that, although we hold a large amount of gold, we are now in the process of considering selling a small part of that, about one-eighth, which is a little over 12m ounces, which we would then place in an endowment. And then the income from that endowment would be used to finance the operating costs of the IMF.

MONEYWEB: Largely because your members are a bit concerned about continuing to finance them?

MASOOD AHMED: Well, the reason for it is really quite simple. The IMF has traditionally been financed through the loans that it makes to countries when they have a crisis. Now the good news is that in the world today not many countries have a financial crisis, so they're not borrowing money from the IMF, which we think is great, because the objective of the IMF is in fact to help countries not to have a crisis. So, in fact, if you look at an organisation whose purpose is to help countries avoid a crisis, it's a bit odd that historically the way it did its financing was that the IMF did well when its members had crises - and we want to change that. So a year ago there was a committee of a number of eminent people, including Tito Mboweni, who looked at the way the IMF should be financed. And they said, well, given what the IMF does, which is really a public good, looking at risks in the world, it should be financed through a variety of sources, not just from the money it lends to its members in practice. And one of the key recommendations they made was to say that the IMF should make a limited and a very carefully orchestrated sale of a small amount of gold that we have, and then use the proceeds to generate income from an endowment. That was the recommendation that was made, and that decision is being considered. The executive board of the IMF hasn't yet agreed to that decision, so we don't have a firm decision yet on it, but that is certainly under active consideration.

MONEYWEB: I'm sure that Tito Mboweni, being a South African, would have asked you to be very responsible in your sales.

MASOOD AHMED: Absolutely. And in fact one of the things that the committee recommended is that, if we do go ahead with this sale, we need to do it in a way that avoids disruptions of the market. And how would we do that? Well, first of all, as I've said, we want to limit the amount to about 12% of what we've got. Secondly, we would phase any sales in a way that they did not add to the volume of announced sales of official sources. As you know, gold sales are coordinated by central bank gold agreements, and ours would be coordinated through that. And also you might imagine, given that we would still be holding a substantial part of the reserves that we've got, as an institution we've got a strong interest in making sure than anything we do does not disrupt the gold market. And also it's the responsible thing to do for our membership.

MONEYWEB: Masood, lets just understand this absolutely clearly. The sales of the IMF gold will then be managed within the central bank pool. Does that mean that the central bank pool will increase the amount that it sells in a year?

MASOOD AHMED: Well, as I say, at this stage we haven't got to the point where we've got even a decision to sell. Just to be clear for your listeners, we're talking about something which is under consideration but hasn't been decided. If we do go forward with it, the presumption is that we would work through the pool. The pool has an announced volume of sales and, to the extent that they could accommodate ours within that announced volume, then that's what we would aim, and we would phase it over time to make sure that it did not result in an increase in the aggregate volume that has been announced. So the idea is that basically we would work within an existing framework, and just phase this amount of sales over time. As you know, the agreed limit that the central bank pools have is to limit their sales to no more than 500 metric tonnes annually, and of course within that framework our own sales would be phased in over a period of time.

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