Review Of The Fund S Income Position For Fy 2016 And Fy 2017 2018

The Fund’s total net income for FY 2017, including surcharges, is projected at about SDR 1.7 billion or some SDR 0.7 billion higher than expected in April 2016. This mainly reflects the IAS 19 adjustment (relating to reporting of employee benefits), which is expected to contribute about SDR 0.4 billion to net income, and higher investment income. Lending income is expected to be modestly lower than the April 2016 estimates. The paper recommends that GRA net income of SDR 1.2 billion for FY 2017 (which excludes projected income of the gold endowment), be placed equally to the special and general reserve. After the placement of GRA FY 2017 net income to reserves, precautionary balances are projected to reach SDR 16.4 billion at the end of FY 2017. The paper further proposes to transfer currencies equivalent to the increase in the Fund’s reserves from the GRA to the Investment Account. In April 2016, the margin for the rate of charge was set at 100 basis points for the two years FY 2017 and FY 2018. The margin may be adjusted before the end of the first year of this two-year period (i.e., FY 2017) but only if warranted by fundamental changes in the underlying factors relevant for the establishment of the margin at the start of the two-year period. Staff does not propose a change in the margin. The projections for FY 2018 point to a net income position of SDR 0.7 billion. These projections are subject to considerable uncertainty and are sensitive to a number of assumptions.

This paper updates the projections of the Fund’s income position for FY 2022 and FY 2023–2024 and proposes related decisions for the current financial year. The paper also includes a proposed decision to set the margin for the rate of charge for financial years 2023 and 2024.

IMF Financial Operations 2018 provides a broad introduction to how the IMF fulfills its mission through its financial activities. It covers the financial structure and operations of the IMF and provides background detail on the financial statements. It reviews the IMF's three main activities: lending, surveillance, and technical assistance.

"The Fund’s total net income for FY 2018 is projected at about SDR 0.7 billion, broadly in line with the April 2017 estimate. The projections for total lending income are broadly unchanged. Most sources of lending income are lower, reflecting a lower level of credit outstanding as a result of advance repurchases and delayed disbursements. However, projected commitment fee income is higher following the early cancellation of a large FCL arrangement in November 2017. The paper recommends that GRA net income of SDR 0.7 billion for FY 2018 (excluding projected income of the gold sales profits-funded Endowment Subaccount) be placed to the special and general reserve. After the placement of GRA FY 2018 net income to reserves, precautionary balances are projected to reach SDR 17.4 billion at the end of FY 2018. The paper further proposes to transfer currencies equivalent to the increase in the Fund’s reserves from the GRA to the Investment Account. The paper also revisits options for the allocation of net income between the special and general reserve, and proposes that net income be allocated equally between the special and general reserve. In line with the recent Board discussion of a framework for guiding future payouts from the Endowment Subaccount, the paper presents a detailed proposal, which includes delaying payouts for three years to protect the real value of the Endowment. The paper also recommends that the margin for the rate of charge for the period FY 2019–2020 be kept unchanged at 100 basis points. The margin will again be set under the exceptional circumstances clause, as non-lending income continues to be constrained by the low interest rate environment and lending income will be used to finance a portion of the Fund’s non-lending activities. The projections for FY 2019 and FY 2020 point to a net income position of SDR 0.4 billion and SDR 1 billion, respectively. These projections are subject to considerable uncertainty and are sensitive to a number of assumptions."

The medium-term income projections have been updated from the April 2015 outlook and the February review of the adequacy of precautionary balances. The main changes to the outlook stem from a more gradual rise in the SDR interest rates and lower surcharge income following the lowering of the surcharges threshold. The revised projections still show a positive forecast for net operational income (and surcharges) over the medium term, albeit lower than projected a year ago. Lending income (excluding surcharges) is marginally higher compared with earlier estimates. Surcharge income is estimated to be lower, reflecting the adjustment of the surcharges thresholds following the implementation of quota increases under the 14th General Review. Projected income from the Fixed-Income Subaccount of the Investment Account and interest-free resources are expected to increase more gradually over the medium-term as market indicators now point to a slower rise in interest rates from their current low levels. The expenditure path includes an increase in real terms of about 1⁄2 percent in the net administrative budget for FY 2017 to accommodate rising costs for physical and IT security. Moreover, reflecting further upward pressure over the medium term and uncertainty about the scope for offsetting savings, the traditional baseline assumption of a constant real spending envelope in the outer years is complemented by an alternative scenario with a further moderate spending increase of 11⁄2 percent, phased in over FY 2018–19. In addition, a lower projected U.S. dollar/SDR exchange rate increases the expenses in SDR terms.

This paper reviews the adequacy of the Fund’s precautionary balances, using the framework approved by the Board in 2010. The review takes place on the standard two-year cycle and assesses developments since the last review in 2016.

This paper reviews the Fund’s income position for FY 2019 and FY 2020. The paper updates projections provided in April 2018 and proposes decisions for the current year. The paper includes a comprehensive review of the Fund’s income position as required under Rule I-6(4). No change is proposed in the margin for the rate of charge that was established under this rule in April 2018 for the period FY 2019–20.

This volume documents decisions, interpretations, and resolutions of the Executive Board and Board of Governors of the International Monetary Fund, as well as documents relating to the United Nations and other international organizations.