Can the IMF Use Its Balance Sheet More Effectively to Address Global Challenges?

The IMF was not included in the recent review of multilateral development banks’ capital adequacy frameworks that proposed reforms to allow them to expand their lending to developing countries. The paper considers whether this review contained lessons for the IMF despite its distinct role and financial structure. It begins with a detailed summary of the IMF’s financial structure, including the trusts which provide support to low-income countries (the PRGT) and for climate finance (the RST). Although this financial structure is very different from an MDB’s, the paper argues that the IMF’s gold holdings pay a role that is analogous to an MDB’s callable capital. Drawing upon one of the related recommendations of the review, the paper’s main conclusion is that explicit recognition of the high value of the IMF’s gold holdings could pave the way for the more efficient use of reserves on its main balance sheet to support the severely depleted lending capacity of the PRGT.