International bureaucracies are infamous for bloated budgets, and the International Monetary Fund certainly is a good example. Its headquarters are plush, its staff enormous, its pay extravagant, and salaries are tax free. Nice work if you can get it, as the old saying goes.
Unfortunately for the IMF, nations today generally are avoiding the organization, meaning the bureaucracy isn’t collecting as much “income” from its loan portfolio. So the IMF created a committee to review its financial future. Not surprisingly, this IMF-approved committee did not decide to shrink the IMF staff. Instead, it came up with a novel scheme to seize a portion of the national gold reserves held by the IMF. If a private bank decided to seize depositors’ funds to maintain the country club memberships of management, there would be appropriate outrage.
Hopefully, this proposal to loot the gold reserves will be met with similar scorn. A column in the Wall Street Journal reviews the issue:
And the IMF seeks a new wellspring of funding to support the expansive lifestyle to which it has become accustomed. A Committee of Eminent Persons was assembled to find the money. …The Committee emerged with a proposal to use 13 million ounces, or an eighth of the gold stockpile [stored at the IMF], to establish an IMF endowment, an independent income stream for the Fund in perpetuity.
But this isn’t really the IMF’s gold. The bullion belongs to the U.S., Germany, Brazil, Ghana and other nations. More than one-quarter of it belongs to developing countries. If the IMF is allowed to open the door to this vault, fears of new missions and unrestrained spending will be confirmed. The gold and the gain it can bring should be returned to national treasuries.
India’s poor could do more with the $1.5 billion that is rightfully theirs than the IMF. …A staff of 500 instead of 3,000 and a budget of $400 million instead of $1 billion would be easily sustained by the investment income on the Fund’s $10 billion of existing reserves.