Gold reserves

The IMF said in a statement the sales would be "in a volume strictly limited to 403.3 metric tonnes, with these sales to be conducted under modalities that safeguard against disruption of the gold market."

The Washington-based institution said the decision was a core element of a new income model to make it less dependent on its lending revenue.

The sale amounts to one-eighth of the current holdings of the IMF, which is the third-largest holder of gold after the United States and Germany.

Last year the IMF announced it was going to diversify its income by selling part of its gold reserves to create an endowment. The money will help to fund a major increase in the IMF's lending over the past year to help countries suffering from the global financial downturn.

The G20 at their April summit in London agreed the gold sales should allow the IMF to offer favorable conditions on loans to the poorest countries. The G20 are to meet again next week in Pittsburgh to debate the handling of the financial crisis and a possible curb on bonus payments.

"I am delighted that the executive board has given its overwhelming backing to a strictly limited sale of fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries," Managing Director Dominique Strauss-Kahn said in a statement.

He added that the sales will be conducted in such a way that does not disrupt the sale of the precious metal in commodity markets. The sales will be made directly to central banks or sold on the markets over a longer period of time, the IMF said.

nrt/dpa/AFP/Reuters

Editor: Andreas Illmer