WASHINGTON (AFP) — The International Monetary Fund announced plans Friday to cut up to 15 percent of its staff in a wide-ranging overhaul aimed at shoring up finances at the multilateral economic institution.
In comments posted in an internal IMF magazine, the organization said the plan aimed at budget savings of around 100 million dollars annually and possible job losses of between 300 and 400 staff.
Such cuts could affect around 15 percent of the IMF's total headcount of 2,600.
An IMF official, who requested anonymity, told AFP the job cuts would likely occur over three years starting on May 1, 2008.
The jobs losses, if implemented, would rank among the largest in the IMF's history. Prior job cuts have been small by comparison involving considerably less than 100 employees.
Dominique Strauss-Kahn, a former French finance minister who took over the helm of the IMF in early November, said the fund does not face an immediate financing crisis, but that it cannot continue to rely on income from lending to guarantee its future.
Strauss-Kahn said the overhaul is key to refocusing the IMF's operations and his bid to introduce a new and stronger income model for the 185-country institution.
The IMF managing director said the reforms address "the twin issues of the Fund's relevance and legitimacy, and the Fund's financial soundness."
"These challenges offer us the opportunity to be even more focused, lean and responsive, a Fund for the 21st century," he added.
Without quickly reforming its operations and cutting jobs, the IMF could face a funding shortfall of 400 million dollars by 2010, warned the magazine article, which was posted on the IMF's website.
The Standard & Poor's credit rating agency said in a recent report that the IMF is burning up its cash reserves so fast it risks hindering its ability to help countries in need.
The Washington-based IMF, seen as a lender of last resort to impoverished and developing countries, lost about 110 million dollars in its fiscal year ended April 30, but the S&P cautioned that such losses could double if it does not address its operations.
The IMF has seen its finances deteriorate because of lower levels of lending and advance repayments by some debtor countries. Earlier this year, the IMF itself said that without any changes, its deficit would increase to 224 million dollars in the 2008 fiscal year.
An internal IMF group advising the organization has recommended that the fund sell some of its valuable gold reserves and invest the proceeds in income-generating assets in a bid to improve its financial stance.
The IMF still has some nine billion dollars in reserves of gold and cash to keep it operating. But the organization has been considering the sale of some of its gold to get cash for other investments that could bring in additional income.
The IMF has more than 3,200 tons of gold as part of its financial stockpile, but has resisted offloading any of it.
The overhaul comes as the IMF faces challenges over its survival. Many developing nations are growing rapidly and as a result have less need for IMF aid which is often granted with strict standards.
In an interview with the Wall Street Journal published Friday, the straight-talking Kahn said: "This institution works well, with dedicated people and very high-level staff, but it is a factory to produce paper."
In the IMF magazine, the IMF chief was quoted as saying "the coming months will inevitably be a period of rapid change."
Copyright © 2009 AFP. All rights reserved. More »
