Title: The Fund’s Income Position For FY 2020 -- Actual Outcome

THE FUND'S INCOME POSITION FOR FY 2020-

November 20, 2020 ACTUAL OUTCOME

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• The Staff Report prepared by IMF staff and completed on September 9, 2020 for the information of the Executive Board. The paper was prepared following completion of the IMF's FY 2020 external audit.

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THE FUND'S INCOME POSITION FOR FY 2020-ACTUAL

September 9, 2020 OUTCOME

EXECUTIVE SUMMARY

This paper reports on the Fund's income position for FY 2020 following the closing of the Fund's accounts for the financial year and completion of the external audit. Net operational income was about SDR 1.4 billion, slightly higher than estimated in the April supplement, mainly reflecting higher investment income. However, the unrealized pension-related adjustment in FY 2020, stemming mainly from the actuarial remeasurement of staff retirement plan assets and liabilities, was larger than previously estimated and more than offset the Fund's net operational income, contributing to an overall net loss of about SDR 1.4 billion for the year.

The GRA net loss was charged against the special reserve, after which the Fund's precautionary balances amounted to SDR 16 billion at the end of FY 2020. In accordance with decisions taken in April 2020, a transfer of currencies amounting to SDR 319 million was made during the second quarter of FY 2021 from the Investment Account to the GRA.

THE FUND'S INCOME POSITION FOR FY 2020-ACTUAL OUTCOME

Approved By

Andrew Tweedie (FIN)

Prepared by the Finance Department (Maria Manno, Amadou Ndiaye,

Diviesh Nana, Courage Gumbanjera, Yan Sun-Wang, Jessie Yang, and Fiona Delaney under the guidance of Simon Bradbury), in consultation with the Legal Department and the Office of Budget and Planning.

CONTENTS

REVIEW OF THE INCOME POSITION FOR FY 2020____________________________________________________ 3

FIGURE

1. FY 2020 Highlights _____________________________________________________________________________________ 6

TABLES

1. Income and Expenditures for FY 2020_________________________________________________________________ 5
2. Reconciliation of IAS 19 Losses-FY 2020 _____________________________________________________________ 7
3. Reconciliation of Administrative Expenses-FY 2020 _________________________________________________ 7

2INTERNATIONAL MONETARY FUND

THE FUND'S INCOME POSITION FOR FY 2020-ACTUAL OUTCOME

REVIEW OF THE INCOME POSITION FOR FY 2020

1. This paper presents the Fund's net income position for FY 2020. The actual outcome
   reported in this paper follows the closing of the Fund's accounts for the financial year and completion of the FY 2020 external audit conducted by PricewaterhouseCoopers, the Fund's external auditor.1
2. Net operational income of about SDR 1.4 billion, mainly comprising income from lending and investments, remained strong for FY 2020, and was slightly higher than the estimate in the April 2020 Supplement (Line C, Table 1),2 due to higher than anticipated investment income. However, the unrealized pension-relatedadjustment in FY 2020, stemming mainly from the actuarial remeasurement of staff retirement plan assets and liabilities, was larger than previously estimated and more than offset the Fund's net operational income, resulting in a net loss in the GRA of about
   SDR 1,549 million, and an overall net loss of SDR 1,447 million for the year (Table 1). The results are highlighted in Figure 1 and discussed below:

• Lending income. Lending income amounted to SDR 1,884 million, SDR 5 million below the April Supplement estimate. Robust income from lending reflects the ongoing elevated use of Fund credit due partly to the Fund's support to members to help address the COVID-19 pandemic. Income from the margin, commitment fees, and surcharge income were in line with projections in the Supplement; however, service charges were lower following delays in some projected purchases under the Rapid Financing Instrument.
• Income of the Investment Account. Investment income from the Fixed-Income Subaccount amounted to SDR 319 million, higher than the April estimate of SDR 253 million, reflecting the continued decline in bond yields and a sharp recovery in credit spreads in April. The Endowment Subaccount (EA) also reversed earlier projections that had pointed to negative returns due to the significant sell-off in risk assets during the COVID-19 outbreak. These assets recovered strongly in
  April amid central banks' emergency policy responses while bond yields continued to decline.3 These developments bolstered the EA's performance resulting in a gain of SDR 112 million for the financial year.
• IAS 19 losses. The total IAS 19 loss for FY 2020 amounted to SDR 2,971 million, SDR 596 million higher than the SDR 2,375 million estimated in the April Supplement. The total loss comprises the sum of two factors (Table 2):
  (i) The actuarial (or remeasurement) losses, which increased by SDR 676 million due mainly to the change in the discount rate from the 2.97 percent projected in the April Supplement to the final year-end rate of 2.73 percent, which increased the actuarial losses by SDR 519 million.4 Plan asset

1. SeeAudited Financial Statements for the Financial Years Ended April 30, 2020, and 2019.
2. SeeReview of the Fund's Income Position for FY 2020 and FY2021-2022Supplementary Information.
3. The assets of the Endowment Subaccount are invested in a globally diversified portfolio consisting of a 60/40 percent split between global fixed-income and equity instruments.
4. See page 31 ofAudited Financial Statements for the Financial Years Ended April 30, 2020, and 2019.

INTERNATIONAL MONETARY FUND 3