September 27, 1999. Copyright 1999. Graphic News. All rights reserved.

BANKERS OFFER LIFELINE FOR WORLDÕS POOR


LONDON, September 27, Graphic News: EUROPEÕS central banks joined forces on Sunday to restore confidence in a shattered gold market with a vow to sell no more than 2,000 tonnes of bullion over the next five years and to strictly control the pace of sell-offs.
The strategy Ð announced by governors of 15 central banks attending the annual meetings of the 182-nation International Monetary Fund and the World Bank in Washington Ð instantly propelled spot prices more than $6 higher in early Asian trade.
This is their highest level since July, when British gold sales sent the market into freefall, plummeting more than $5 an ounce to a 20-year low of $256.80.
European Central Bank President Wim Duisenberg said the banks owned 70 percent of the gold in the worldÕs central bank vaults and that sales would be limited to about 400 tonnes each year.
Finance ministers at SundayÕs meeting of the IMFÕs interim committee Ð which is chaired by BritainÕs Chancellor of the Exchequer, Gordon Brown Ð also approved a plan for the IMF to revalue up to 14 million ounces of its gold reserves in transactions with central banks to partly finance Third World debt. The World Bank also will contribute along with the United States and other creditor nations.
After opposition from gold-mining countries and U.S. Congress, the IMF was forced to drop plans to sell some 300 tonnes of gold, a tenth of its reserves, to pay for debt relief and low-interest loans for poor countries. The plan, put forward by the Group of Seven nations after a meeting earlier this year in Cologne, would invest funds from the gold sales to relieve debts of 41 of the worldÕs poorest nations.
Critics, including the gold-producing U.S. western states and others, argued that the plan would force the price of gold lower and therefore hurt countries reliant on gold exports for economic development.
ÒGold will remain an important element in global monetary reserves,Ó the European central banks said in a joint statement.
ÒWe hope to remove the uncertainties overhanging the gold market for far too long a period already,Ó Dutchman Duisenberg added. ÒWe hope we will be successful in this endeavor.Ó
Spot gold rose more than US$6 in early trade in Sydney and Hong Kong, quoting at $275.00/$276.0 an ounce, versus a New York Friday closing price of $268.50/269.0.
/ENDS
Sources: Reuters, Associated Press, BBC World