LONDON The International Monetary Fund should sell gold to finance deeper debt relief and diversify its portfolio, Britain said on Monday in response to firm opposition to such a plan from Germany's central bank.
The United States is also opposed to Chancellor of the Exchequer Gordon Brown's plan to sell
IMF gold to help the world's poorest nations, setting the scene for a clash at this month's meeting of Group of Seven finance ministers.
Germany's government has said it remains open to using the Fund's gold reserves for aid but the Bundesbank said on Monday that the unrealised gains of the bullion were important to give extra security to IMF creditors.
But Britain said the IMF was not managing its portfolio wisely.
"Holding over US$40 billion ($57.32 billion) in gold is clearly not an optimal asset allocation for the IMF," a UK Treasury spokesman told Reuters.
"Just as central banks have been diversifying their portfolios through gold sales over the past years, so the Fund should be doing the same."
He noted that the IMF itself has concluded that an overall sale of 13 to 16 million ounces could be accommodated without significant difficulty, particularly if it was spread over a reasonable period.
- REUTERS
