OREANDA-NEWS. May 16, 2016. The Executive Board of the International Monetary Fund (IMF) completed its annual review of the Fund’s income position for the financial year ending April 30, 2016 (FY 2016) and set the margin for the lending rate for IMF credit for FY 2017 and FY 2018, on April 22, 2016.

FY 2016 Income Position

Total FY 2016 net income, including income from surcharges applied to higher-access borrowing from the IMF, is estimated at SDR 1 billion (US\\$1.4 billion). Net income excluding the retained earnings of the gold endowment will be added to the IMF’s precautionary balances, which are projected to reach SDR 15.2 billion (US\\$21.1 billion) at end-FY 2016. Net income for FY 2016 was higher than estimated at the start of the year as revised actuarial assumptions resulted in a positive adjustment under International Accounting Standard 19, which relates to the reporting of employee benefits.

FY 2017-2018 Lending Rate and Income Position

The IMF charges member countries a basic rate on the use of IMF credit, which is determined as the SDR interest rate, plus a margin expressed in basis points. Following a comprehensive review of the underlying factors relevant for the establishment of the margin and taking into account the impact of the inclusion of the renminbi in the SDR basket on Fund income and borrowing costs, the Board decided to maintain the margin at 100 basis points.

Projections for FY 2017 and FY 2018 point to annual net income of SDR 1 billion (US\\$1.4 billion) and SDR 0.7 billion (US\\$1 billion), respectively. The projections are subject to a high degree of uncertainty and are sensitive to the timing and amounts of disbursements under approved arrangements included in the projections, possible new arrangements, and the performance of the Fund’s investment portfolio. The projected net income will enable the IMF to continue to add to its precautionary balances.

The Executive Board also adopted a number of other decisions that have a bearing on the Fund’s finances. These included decisions to transfer income from the Fixed-Income Subaccount of the Fund’s Investment Account (IA) to the GRA, to place the net income of the GRA for FY 2016 in equal parts to the Fund’s special and general reserve, and to transfer currencies from the GRA to the IA of amounts attributable to net operational income and surcharges previously retained from FY 2014 and FY 2015, and also from FY 2016. Decisions were also adopted to reimburse costs to the GRA and to continue special charges on certain overdue obligations.