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TOKYO — The Group of Seven (G-7) rich states on Saturday approved the sale of gold by the International Monetary Fund (IMF) from April as part of a broad reform of its budget, and warned that the world economy faced growing threats.

“There was an acceptance among the G-7 that resources should be raised by selling gold,” Italian Economy Minister Tommaso Padoa-Schioppa, also the head of the IMF’s steering committee, said after a meeting of G-7 finance ministers in Tokyo, Japan.

He said the agreement would be finalised in April and would complement spending cuts being drawn up by the IMF under new MD Dominique Strauss-Kahn.

“The current gold price means a flow of income can be ensured,” Padoa-Schioppa said.

The sale will affect gold prices.

Morgan Stanley analyst Stephen Jen said the fund held 103,4m ounces of gold worth about $92bn at current prices. That was up from $23bn just five years ago.

“The IMF is rich if it wants to be,” he wrote in a note to clients.

A surge in oil prices has boosted gold’s appeal as a hedge against inflation. It gained more than 30% last year as safe-haven buying increased due to credit-market turmoil and worries about the dollar’s health as it fell to record lows against the euro.

Gold continued its upward march this year. Cash gold hit a record high of $936,50/oz on February 1, up about 12% since the start of the year, and was quoted at $918,00/oz-$918,70/oz in New York late on Friday.

Padoa-Schioppa said that in the case of the US, approval for gold sales would be required by Congress, meaning “the administration must present a proposal and support it”.

The G-7 ended its meeting on Saturday warning that the global economy faced growing threats from a US housing slump and market turmoil, pledging to take remedial action, but only if needed. The G-7 finance chiefs announced no new concrete measures to shore up their economies and markets in light of the recent subprime loan crisis.

The G-7 — Britain, China, France, Germany, Italy, Japan and the US — warned that “risks have become more skewed to the downside” in the US, the world’s leading economy.

“In all our economies, to varying degrees, growth is expected to slow somewhat in the short term, reflecting global economic and financial developments,” it said.

Strauss-Kahn renewed his call for countries to consider fiscal measures to boost demand in the face of slowing economic growth.

“Some countries where you have fiscal soundness and current account surpluses have room to do something,” he said.

But US Treasury Secretary Henry Paulson said he was confident the US economy would avoid a recession, even though growth was likely to slow in the short term.

G-7 ministers pledged to work together to try to ensure stability of their economies and markets, but ministers said each country would decide its own policies.

“Every country is different and every country has a different economic situation,” said Paulson.

A US housing slump, led by rising mortgage defaults among subprime — high risk — customers, has hit traders’ confidence and wreaked havoc on world markets.

The G-7 ministers warned that global growth may be curbed by further deterioration of the US housing market, tighter credit, high oil and commodity prices and growing inflation pressures.

The ministers urged banks to come clean on their full subprime loan losses and called for greater financial market transparency.

Analysts said the statement had provided little obvious cheer for investors. With Sapa-AFP