Information about Asia and the Pacific Asia y el Pacífico
Chapter

Poverty Reduction and Growth Facility Administered Accounts

Author(s):
International Monetary Fund
Published Date:
October 2007
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Information about Asia and the Pacific Asia y el Pacífico
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Balance sheets as at April 30, 2007, and 2006

(In thousands of SDRs)

AustriaIndonesiaPortugal
20062007200620072006
Assets
Cash and cash equivalents4,382
Investments (Note 4)25,00025,0002,629
Advance payments to the
PRGF-ESF Trust Subsidy Account721
PRGF-HIPC Trust179
Interest/other receivable42339951
Total assets25,60225,3992,6874,403
Liabilities and resources
Deposits (Note 5)25,00025,0002,6294,382
Interest payable3941931321
Total liabilities25,39425,1932,6424,403
Resources20820645
Total liabilities and resources25,60225,3992,6874,403
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn/s/ Rodrigo de Rato
Director, Finance DepartmentManaging Director

Statements of income and changes in resources for the years ended April 30, 2007, and 2006

(In thousands of SDRs)

AustriaIndonesiaPortugal
20062007200620072006
Balance, beginning of the year206164
Investment income (Note 4)35957706105129
Other expenses(1)(1)
Interest expense on deposits(7)(455)(206)(14)(22)
Operational income2750250091106
Transfers to the
PRGF-ESF Trust Subsidy Account(27)(46)(106)
PRGF-HIPC Trust(500)(458)
Net income/changes in resources24245
Balance, end of the year20820645
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.

Statements of cash flows for the years ended April 30, 2007, and 2006

(In thousands of SDRs)

AustriaIndonesiaPortugal
20062007200620072006
Cash flows from operating activities
Net income24245
Adjustments to reconcile net income to cash generated by operations
Interest income(46)(957)(706)(105)(136)
Interest expense74552061422
(39)(500)(458)(46)(114)
Changes in other assets31(179)1411
Cash used in operations(8)(679)(458)(32)(103)
Interest received4693349954136
Interest paid(38)(254)(41)(22)(33)
Net cash used in operating activities
Cash flow from investment activities
Net disposal/(acquisition) of investments3,601(2,629)4,735
Net cash provided by/(used in) investment activities3,601(2,629)4,735
Cash flow from financing activities
Repayment of deposits(5,000)(1,753)(2,191)
Net cash used by financing activities(5,000)(1,753)(2,191)
Net (decrease)/increase in cash and cash equivalents(1,399)(4,382)2,544
Cash and cash equivalents, beginning of year1,3994,3821,838
Cash and cash equivalents, end of year4,382
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.

Notes to the financial statements for the years ended April 30, 2007, and 2006

1. Nature of operations

At the request of certain member countries, the IMF established the Poverty Reduction and Growth Facility Administered Accounts (“PRGF Administered Accounts” or “Administered Accounts”) for the benefit of the PRGF-ESF Subsidy Account of the PRGF-ESF Trust and PRGF-HIPC Trust Account. The IMF is the Trustee of each of the Administered Accounts. The Administered Accounts comprise deposits made by contributors. The difference between interest earned by the Administered Accounts and the interest payable on deposits is transferred to the PRGF-ESF Subsidy Account of the PRGF-ESF Trust and PRGF-HIPC Trust Account.

The resources of each Administered Account are held separately from the assets of all other accounts of, or administered by, the IMF and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the Administered Accounts are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices, as set out below, are in accordance with and comply with IFRS and have been applied consistently for all periods presented.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The determination of estimates requires the exercise of judgment based on various assumptions and other factors, such as historical experience and current and expected economic conditions. Actual results could differ from those estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Unit of account

The functional and presentation currency of the Administered Accounts is the SDR. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in November 2005 and the new composition of the SDR valuation basket became effective on January 1, 2006.

The currencies in the basket as of April 30, 2007, and 2006 and their amounts were as follows:

CurrencyAmount
Euro0.4100
Japanese yen18.4000
Pound sterling0.0903
U.S. dollar0.6320

As of April 30, 2007, one SDR was equal to 1.52418 U.S. dollars (1.47106 U.S. dollars as of April 30, 2006).

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other highly liquid short-term investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Investments

Investments consist of fixed-term deposits and their carrying amount approximates the fair value.

Administrative costs

The expenses of conducting the activities of the Administered Accounts are incurred and borne by the General Resources Account of the IMF.

Adoption of new International Financial Reporting Standards

In August 2005, the International Accounting Standards Board (IASB) issued a new standard, IFRS 7 “Financial Instruments: Disclosures,” which requires enhanced quantitative and qualitative risk disclosures for all major categories of financial instruments. IFRS 7 will become effective for financial year 2008, and its implementation is not expected to have an impact on the PRGF Administered Accounts’ financial position or results of operations.

3. Financial risk management

In conducting their operations, the PRGF Administered Accounts are exposed to various types of risks, including interest rate and exchange rate risks.

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. Interest rate risk on the PRGF Administered Accounts’ investments is managed by limiting the investment portfolio to a weighted-average effective duration that does not exceed three years.

Exchange rate risk is the exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on the PRGF Administered Accounts’ financial position and cash flows. Exchange rate risk on the investments is managed by investing in securities denominated in SDRs, or in the constituent currencies, with the same composition of the SDR valuation basket.

4. Investments

Investments consisted of fixed-term deposits with maturities of less than one year as of April 30, 2007, and 2006.

Investment income comprised the following for the financial years ended April 30:

20072006
(In thousands of SDRs)
Interest income1,062888
Realized gains, net51
Unrealized losses, net(69)
Total1,062870

5. Deposits

Austria

The Administered Account Austria was established on December 27, 1988, for the administration of resources deposited in the account by the Austrian National Bank. Two deposits (one of SDR 60.0 million made on December 30, 1988, and one of SDR 50.0 million made on August 10, 1995) were to be repaid in ten equal semiannual installments beginning five and one-half years after the date of each deposit and ending at the end of the tenth year after the date of each deposit. The deposits bore interest at a rate of ½ of 1 percent a year. Both deposits from Austria have been repaid in full and the Account was closed during the financial year ended April 30, 2006.

Indonesia

The Administered Account Indonesia was established on June 30, 1994, for the administration of resources deposited in the account by Bank Indonesia. The deposit, totaling SDR 25 million, is to be repaid in one installment 10 years after the date the deposit was made. The interest payable on the deposit is equivalent to that obtained for the investment of the deposit less 2 percent a year. Upon maturity in June 2004, the deposit was reinvested for another 10 years (according to the amendment of the instrument), and investment income of 2 percent per annum (or any lesser amount if investment returns are below 2 percent) is to be transferred to the PRGF-HIPC Trust.

Portugal

The Administered Account Portugal was established on May 16, 1994, for the administration of resources deposited in the account by the Banco de Portugal (BdP). The BdP has made six annual deposits, each of SDR 2.2 million. Each deposit is to be repaid in five equal annual installments beginning six years after the date of the deposit and will be completed at the end of the tenth year after the date of the deposit. Each deposit bears interest at a rate of ½ of 1 percent a year.

6. Related-party transactions

The difference between the income earned by the Administered Accounts on the amounts invested and the interest payable on the deposits of the Administered Accounts, net of any cost, is contributed to the PRGF-ESF Subsidy Account of the PRGF-ESF Trust and PRGF-HIPC Trust. For the financial years ended April 30, 2007, and 2006, net investment income from the Administered Accounts to the PRGF-ESF Subsidy Account amounted to SDR 0.05 million and SDR 0.1 million, respectively; contributions to the PRGF-HIPC Trust amounted to SDR 0.5 million in each financial year.

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