2022-05-26-IMF-Review_of_The_Fund_39_s_Income_Position_for_FY_2022_and_FY_2023–2024_51页_1mb

IMF Policy Paper: Review of the Fund's Income Position for FY 2022 and FY 2023-2024

Core Content

This document provides an overview of the International Monetary Fund (IMF) income position for the financial years FY 2022 and FY 2023–2024. It outlines the projected net operational income, the impact of pension-related accounting gains, and the decisions made by the Executive Board regarding the allocation of income and the management of the Endowment Subaccount (EA) payout.

Main Projections

• FY 2022 Net Operational Income: SDR 1.5 billion (US$2.1 billion), with an additional SDR 0.5 billion (US$0.7 billion) from pension-related accounting gains.
• Total Net Income for FY 2022: SDR 2.2 billion (US$3.1 billion), which includes SDR 0.2 billion (US$0.3 billion) from investment income in the Endowment Subaccount.
• Precautionary Balances: Projected to reach SDR 20.9 billion (US$29.1 billion) at the end of FY 2022.
• FY 2023–2024 Net Income: SDR 2.1 billion (US$3.0 billion) for both years, excluding pension-related gains or losses.
• Indicative Medium-Term Target for Precautionary Balances: SDR 25 billion, expected to be reached in early FY 2025.

Key Uncertainties

• The projections are subject to greater than normal uncertainties due to:
  • The ongoing war in Ukraine.
  • Lingering effects of the pandemic.
  • Inflationary pressures.
  • The timing and scale of new lending and program disruptions.
• Changes in key assumptions, such as discount rates and asset returns, significantly affect the actual outcomes.

Decisions by the Executive Board

• Lending Margin: Maintained at 100 basis points for FY 2023 and FY 2024.
• Pension-Related Remeasurement Gain: Placed in the special reserve.
• Endowment Subaccount (EA) Payout: Delayed by one year due to the negative impact of inflation and geopolitical events on the EA cushion.
• Transfer of Currencies: Equivalent to the increase in the Fund's reserves from the General Resources Account (GRA) to the Investment Account.
• Retained Investment Income: The EA's investment income for FY 2022 is retained in the EA rather than transferred to the GRA for administrative expenses.
• Suspension of PRGT Reimbursements: Approved for FY 2022–2026 under the Fund's new income model and three-pillar framework.

Income and Expense Breakdown

Key Assumptions and Risks

• Discount Rate: Increased to 3.30% by end-February 2022, affecting the remeasurement of the Fund's retirement plan obligations.
• Asset Returns: Expected to be lower due to inflationary pressures and market volatility.
• Pension-Related Adjustments: Net periodic pension cost after funding is SDR 172 million, and the remeasurement gain is SDR 512 million.
• Market Volatility: The EA cushion is expected to remain vulnerable to significant fluctuations and elevated downside risks.
• Economic Uncertainties: The war in Ukraine and the uneven recovery from the pandemic are major factors affecting the Fund's financial outlook.

Main Viewpoints

• The Fund's net operational income for FY 2022 is projected to be SDR 1.5 billion, with additional gains from pension-related accounting.
• The EA payout is being delayed due to the negative impact of inflation and the war in Ukraine.
• The margin for the rate of charge remains unchanged at 100 basis points for FY 2023 and FY 2024.
• The Fund is expected to continue accumulating precautionary balances, despite the uncertainties.
• The new income model and three-pillar framework have been used to justify the temporary suspension of PRGT reimbursement.

Key Information

• The Fund's income projections are based on the ongoing use of credit and market conditions.
• The pension-related (IAS 19) remeasurement gain is a significant contributor to the Fund's net income.
• The EA is a key source of investment income, but its performance is highly sensitive to market changes.
• The Fund's operational income is expected to remain strong but with high uncertainty.
• The document includes detailed financial tables and a glossary for reference.