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IMF swings to profit amid global crisis

WASHINGTON, Jun 23 – The International Monetary Fund said Monday it ended its latest fiscal year with a profit of 126 million dollars, as the global economic crisis spurred higher lending.

The Fund said its finances improved markedly after an initial projection of a shortfall of about 292 million dollars for the 2009 fiscal year ended April 30.

The improvement "stemmed primarily from higher than expected income on the Fund\’s investment portfolio, which is made up largely of fixed-income securities, and an increase in lending income reflecting greater demand from members for Fund financing in light of global economic conditions."

The profit for the fiscal year compared with a loss of 89 million dollars a year earlier as the IMF, the lender of last resort to countries in crisis, saw its finances strained as nations emerged from turmoil.

A year ago, the IMF had been hurt by decisions by Argentina and Brazil and other big borrowers to repay their IMF loans ahead of schedule. Now, with the global crisis having deepened, the IMF is vastly expanding its lending.

For the 2010 fiscal year that began May 1, the IMF\’s "baseline scenario" calls for a profit of 446 million dollars.

But based on possible new loans under discussion, this could grow to as much as 1.1 billion dollars.

"These projections are subject to a higher than usual degree of uncertainty given the difficulty of predicting future demand for Fund financing and the evolution of the financial crisis," an IMF statement said.

The statement said the improvement "does not alter the need for timely implementation of a sustainable income model agreed by the executive board in April 2008 to reduce the Fund\’s reliance on temporary lending income."

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Part of that would be based on an endowment created with the profits from a limited sale of IMF gold reserves, which have not yet been formally approved.

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