Transcript

Transcript of IMF Press Briefing

October 27, 2016

MR. RICE: Okay. Well, good morning, everyone. And welcome to this briefing on behalf of the IMF. I'm Gerry Rice of the Communications Department.

As usual, our briefing this morning will be embargoed until 10:30 a.m., and that is Washington, D.C. Time. Also, as usual, I begin with a few announcements then come to questions in the room, and take a few online as well.

So, on the announcements, Managing Director Christine Lagarde will make the Opening Remarks at the Seventeenth Annual Jacques Polak Research Conference here at the Fund. The theme of this year's conference is macroeconomics after the great recession. It will be open to the public and to the media over the two days, beginning November 3^rd and the 4^th.

What's special about this year's conference, which I know is familiar to many of you, but what's special about this year is, it will honor Olivier Blanchard's contributions to economic research and policy. Olivier, as I think most of you know, was our chief economist and director of Research here at the IMF for a number of years. And we are absolutely delighted to be able to honor Olivier in this way.

So, Christine Lagarde will speak; David Lipton, our First Deputy Managing Director, will also in fact chair two panels; and Larry Summers will give the Mundell-Fleming Lecture, which is part of this overall Polak, Jacques Polak Conference. So, Larry will do that on November 3^rd.

And Olivier himself will participate also in a panel with Stanley Fischer of the Fed, also well known to you, a former colleague here at the IMF. Others, Kristin Forbes of MIT; Federico Sturzenegger, President of the Central Bank of Argentina, and other stars of the economic world will all be here for that Jacques Polak Conference on November the 3^rd and 4^th, and you are all welcome to attend.

A few days later on November the 7^th, we are hosting another conference on fiscal policy and gender equality, and Christine Lagarde will participate in that, and it starts at 9:30 at November 7^th, open to the public. Open to the media, so we look forward to seeing you there.

A couple of other things. Our Deputy Managing Director, Tao Zhang, is in Antigua and Barbuda today and tomorrow to speak at a conference on correspondent banking, an issue which the Fund has been following and speaking out on. And this event is organized by the CARICOM, that’s the Cabinet of Heads of Government of the Caribbean Community.

Tao will then travel to Trinidad and Tobago for the IMF's 2016 High-level Caribbean Forum. That’s going to be on November 2^nd, and he will deliver the opening address at that forum.

So, those are the announcements. You can find more information on our website; you can follow us on Facebook and on Twitter. And let me take your questions.

QUESTIONER: Good morning. So, if I'm not mistaken, Gerry, the meeting is coming back to the (inaudible). So how do you evaluate the first stage of the negotiation with the Greek authorities, and what are the difficulties ahead? If there is any common ground regarding the labor market reform?

MR. RICE: Okay. Thank you. As you say there is a mission on the ground in Greece right now to take part in the discussions on the second review of the ESM, that’s the European Stability Mechanism. The Fund is part of these discussions, and at the same time, is continuing discussions on a possible new program from the IMF that could be supported by a financial arrangement, which has been requested by the Greek authorities.

This mission will break at the end of this week and will resume next month. We don’t expect to issue a statement at this time. So that’s the status. We are participating in the ESM discussions, at the same time having discussions on a possible IMF program. As you know there is no IMF program this time, but having discussions toward that.

In terms of where we stand, maybe just step back a little bit. Certainly it's a positive development that the first review of the ESM program has been completed. That’s good. As I mentioned, there's a request from the Greek authorities for a new program with the Fund, and an ongoing explicit request from the European authorities that the Fund remains fully engaged.

What we want to achieve, as I've said here before, is an economic program that helps Greece get back on the path of sustainable growth, and sustainable public finances. And Poul Thomsen, our Europe Director, went into some detail on this in his press briefing during the recent Annual Meetings. And among other things outlined that, you know, we can support a program that’s based on a primary surplus target of 1.5 percent of GDP, accompanied by structural reforms and significant debt relief - the two legs that we've talked about so many times.

And, you know, if Greece and its European partners want to pursue a more ambitious fiscal target, we would need to see the reforms that make it add up. We do not think that the current program is consistent with those more ambitious targets over the medium and long term. So, that’s kind of where we stand. Did you have more?

QUESTIONER: Yes. If you can be more specific on the labor market reforms. As I gather, this is one of the most difficult issues of this review. And if you can give us the times about what has been discussed so far.

MR. RICE: Yes. I don’t have details on that because as you understand the mission is on the ground. They are having those discussions, so I don’t want to preempt what they are doing.

QUESTIONER: And one last, if I may. If you are confident that the second review can be completed on time, I mean, before the end of the year.

MR. RICE: I think it's possible. You know, it just depends on progress made under the discussions.

Good morning.

QUESTIONER: If I can stay on Greece. Earlier in the year, Mr. Thomsen said that he would go with a proposal to the Board by the end of this year. I was wondering if you still stand by this timeline, and on a totally surprise issue, I had a question on Egypt. There's been a lot of protest against some of the measures that were advocated for by the IMF. So I was wondering, are you worried about those demonstrations, and do you think it jeopardizes the upcoming Loan Agreement that you expect to finalize with Egypt? Thank you.

MR. RICE: On the first question, on Greece, it's possible that this could be done by the end of year. Again, everything depends on progress made on the discussions. On Egypt, turning to Egypt -- Yes.

QUESTIONER: It's possible that it's done by the end of the year, are you talking about a decision by the IMF on whether or not it will financially participate in the bailout?

MR. RICE: It's possible. It just depends on progress on the discussions. I'm going to turn to Egypt. I'll take the question on Egypt, and I'll come back. I see there are more questions on Greece. Okay. Then I'll come back to that.

On Egypt, for those who don’t follow it, just a very quick reminder that a staff-level agreement for a US$12-billion Extended Fund Facility with the IMF was announced in August, and the discussions have been continuing on the program since then. Progress has been made on a number of objectives and actions under that program in the subsequent period, and we expect the program to come to the Board within the next few weeks.

He was talking about the -- asking about the measures called for under the program, and he was asking about possible protests against some of the measures and so on.

You know, I'd just like to make one thing clear. A lot of the protest seems to be aimed at the issue of food subsidies. And I just want to make clear the IMF program does not call for any cuts in food subsidies. So there's been some reporting and some speculation around that. I want to be clear on that. The IMF program does not call for any cuts in food subsidies. In fact, it provides for increases in the food subsidy budget to help people get through the early months of adjustment. Of course, it's up to the Egyptian government to decide which subsidies will be increased, but I just want to be clear on that particular point. And also just to add that as we've said before, one of the features of this program, and what we're trying to do working in partnership with the Egyptian government, is to make social protection a cornerstone of this program so that budgetary savings that come from some measures will be applied to and used to alleviate the expected effects of reforms on the poor and the vulnerable. And we've been very -- this is not a generality -there are a lot of specifics in the program about how that is going to happen. I can give you some of that detail if you wish. It was outlined before in the staff-level agreement, but I just want to make that point on the social protection and on the food subsidies.

QUESTIONER: (off mic).

MR. RICE: On Egypt? Why don't we just stay on Egypt then, and we'll come back to Greece and whatever. Did you have more?

Good morning.

QUESTIONER: Good morning. Just wondering if you can update us on what it is that Egypt needs to do prior to the program to make it ready for the Board approval? Is there devaluation that needs to happen? Fuel subsidies need to be cut? What are the specific steps that they need to take there?

Also, if you can tell us where things are at in terms of the additional financing that's needed, the $6 billion. There has been a deposit from the Saudis to the Egyptian Central Bank a couple of weeks ago. Where is the rest of it?

Thanks.

MR. RICE: Okay. Maybe just take your questions in order. On the reforms and what needs to be done before the program comes to the Board is really a question of just continuing with what has been agreed and the government's reform plan. So as I mentioned, the parliament has already passed the budget; they recently approved the VAT; the government has a plan on energy subsidies; the central bank is committed to move gradually to a more flexible exchange rate. So these are the key elements of the program which should continue to be implemented in the period ahead. And as I mentioned, we expect the Board to discuss this in the next few weeks.

On the financing from other sources, as those of you who follow the Fund know, all economic programs supported by the IMF need to be fully financed for at least the first year after Board approval. So in the case of Egypt, as we've said before, this requires financing assurances of about $5-6 billion from bilateral creditors in addition to about $4 billion that would be disbursed by the IMF during the first year. Egypt has made good progress to secure this financing, including contributions from China, Saudi Arabia, and G-7 countries. And, again, the IMF's full commitment over the three-year period would amount to about $12 billion. So, good progress on the additional financing.

Did that cover it in terms of reforms and external financing?

QUESTIONER: In terms of the reforms, what are the steps that need to be taken prior to Board approval as opposed to those that are ongoing through the program?

MR. RICE: You know, I don't have the specific technical granular details, but it's around these issues that I've mentioned, which are already agreed, and we're looking just for continued progress along these lines.

QUESTIONER: My question was kind of along the same lines of what -- you mentioned several different things. Are those preconditions before signing, or is it just the commitment just to do those things? And more particularly about the exchange rate, I think you clarified that as part of the program a move to a flexible exchange rate is something the IMF is calling for, but when you say gradual, what does that mean? Are we talking about a couple of months or a couple of years?

MR. RICE: You know, actually Madam Lagarde talked about that this morning in an interview just a short time ago, and she talked about the exchange rate, you know, the right methodology, the right time, and the right sequencing and all of that. And I think that's about as good an answer as I could give. So I don't have a specific date, but it's the right methodology and the right time. It is one of the objectives of the program. The economy is suffering from foreign currency shortages, and that's been reflected in shortages of some goods. So that's one reason why liberalization of the exchange rate is important.

Are we on Egypt? Let me take the last on Egypt from you.

QUESTIONER: I'm sorry. Actually I think that some of the protests also are aimed at the VAT increase that the IMF has called for, so it's not only food subsidies. And so, if I'm not mistaken, you haven't fully answered my question, which was are you concerned that the IMF could financially engage in a country, I mean with a big loan, in a country where the measures are advocating for raising -- are raising or provoking demonstrations in the streets, so basically that are very unpopular. So are you concerned about that? And do you think that could jeopardize the full program that you wish to have there?

MR. RICE: You know, on the protests, I don't want to get into which protests are about which issues, but this is the government's reform program. We are supporting the government in that, and we will continue to do that. We think the reforms that the government is undertaking are headed in the right direction. And that doesn't mean they're easy to do. They are difficult, and there are going to be disagreements and differences and maybe even protests about that, but we think the reforms are headed in the right direction, should continue, should be implemented, and we're planning to support the government in that.

On your broader question, you know this is in many ways the role of the IMF. The IMF - we don't get asked to come into easy situations. We get requests for help when almost by definition countries are facing difficulty, when there are problems. And, again, that's part of the role that we play - to go into difficult situations and help countries get through them. Again, I think that's something the membership values in the IMF.

Are we going back to Greece? Okay.

QUESTIONER: Clarification first, please. Can the second review be concluded without IMF participation, or are the two interconnected? And how do you expect this to affect the timeline for the discussion on debt sustainability?

MR. RICE: So we are participating in the second review in the sense that we're fully engaged in the discussions. So we are participating in that. And as I said, separately from that, we’re also discussing the possibility of an IMF program.

And your second question was on?

QUESTIONER: How will this affect the timeline for the discussion on the debt sustainability, and do you still expect to have the discussion on the Article IV in December?

MR. RICE: What I can tell you on the Article IV is yes, we do expect the discussion at the Board before the end of the year. And on the debt sustainability, again, yes, that's being prepared now in the context of the Article IV and will be published along with that. So that's kind of the timing on both of those things.

QUESTIONER: And if I could just make --

MR. RICE: Yes, go ahead.

QUESTIONER: -- the one main question, which is there are reports coming from Athens today that the IMF wants more cuts in the pension system. Can you confirm that, and can you tell us is this because -- is this again in the context of the second review, or is it because you think that 3.5 percent primary surplus target is too ambitious - hence you need to see more reforms?

And a related point, a former chief economist of the IMF recently made the argument to pace in the enforcement of further pension reforms in Greece so that not to kill demand. Can you please clarify when do you envision these reforms, further reforms to take place, and is it for the whole deficit of the pension system? Is it within the context of a new Greek program with the IMF?

MR. RICE: So there's a lot in there, what you've said. I talked about what we saw as a realistic primary surplus target of 1.5 percent, and that would need to be accompanied by reforms and significant debt relief. So, you know, I've said that.

On the pensions, again I won't go into technical detail because these things are being discussed with the Greek authorities, but what I'd say on that is our analysis of the pension system in Greece in well known, and it was covered again in the recent Article IV concluding statement. So you'll find it there. But in summary, we see the system as still unsustainable. And just to mention one figure, it has a deficit of 11 percent of GDP compared to the average of 2.5 percent for the Euro Area and, you know, financed by high tax rates on a narrow basis. So we see it as one of the issues that needs to be addressed.

QUESTIONER: A couple of different questions. Firstly, on Ukraine, there have been several lawmakers who have put forward a draft bill basically severing central bank independence. Wondering what you think about that. If that bill is passed doesn't that abrogate the bailout terms?

And, secondly, the central bank had done a lot of cleaning up of the financial sector, but one bank it has not tackled is PrivatBank. Do you have any concerns that central bank has not addressed PrivatBank?

MR. RICE: So what I would say is the establishment of an independent central bank has been a major achievement under the ongoing program with Ukraine and is a cornerstone of the policies that the IMF can support going forward. It is critical therefore that this achievement - that is the independence of the central bank - be protected. More generally, we have excellent collaboration with the NBU, with the central bank. And under the governor's leadership the NBU has pursued reforms to modernize itself as an institution and has made significant progress in implementing the mandate of reducing inflation and ensuring the stability of the financial system.

On the individual bank that you're referring to, as you know, we normally don't get into specific banks, so I don't have anything for you on that.

QUESTIONER: Then can I just then follow up more generally. How important is it that the central bank continues its overhaul of the financial system to its full extent?

I also have some questions on Nigeria, Venezuela, et cetera. But generally speaking, is there a concern by the IMF that the NBU is comprehensive in its clean up of the financial system?

MR. RICE: You know, as I've said, we think the NBU has been pursuing reforms to modernize itself and to strengthen the implementation of its efforts, including to clean up and strengthen the financial sector. And we look forward to continued implementation in that area.

QUESTIONER: Have you decided on when you're sending mission to Kiev?

MR. RICE: Yes. A mission will visit Kiev in early November. And I can tell you that will be to do two things: to conduct the discussions under the third review under the IMF program but also to conduct the 2016 Article IV Consultation. So, again, they'll assess implementation under the program and discuss policies for the period ahead.

Are we on Ukraine?

QUESTIONER: Yes. Just wondering what the possibility is that Ukraine would be able to get another tranche of funds this year, or what we're talking about is disbursement of funds for next year?

MR. RICE: I think it's possible. Again, depends on progress under these discussions that will take place in early November.

Well, if there's more on Ukraine then -- okay, all right. Go ahead.

QUESTIONER: Yes. I had a question on Russia and another Russian neighbor, but before I go there I wanted to ask you about the MD's visit to Saudi Arabia. You released a statement yesterday, and she was talking about oil in that statement. Have you updated your projections for the price of oil? Because the World Bank, I think last week, rejected a higher level of prices.

MR. RICE: I don't know whether we've updated since we did at the time of the Annual Meetings, which were just a few weeks ago, but I'll come back to you on that. I can also tell you there's a blog that's coming from the IMF on oil and so on, too. So I'll have a bit more detail on that.

QUESTIONER: And then on Russia. The Russian president has been talking publicly about the Russian economy in a positive way. He says we've basically turned the corner. He especially singles out inflation, which is supposed to (inaudible) this year. Do you have any comments on what's happening with inflation in Russia and how significant it is for the economy?

MR. RICE: I don't have anything beyond what we said at the time of the Annual Meetings just a few weeks ago on Russia.

QUESTIONER: And lastly, the neighbor I referred to is Moldova. They announced the IMF Board will consider a program of assistance to them on November 7. Can you confirm that and what program are they talking about? What is the amount of the program and what can we expect?

MR. RICE: So on Moldova, I can confirm that a staff-level agreement, as you probably know, $179 million U.S. dollars, was reached on July 26. That was the staff-level agreement. And the authorities have now completed the set of actions needed for the IMF Board to discuss the program. So your information is correct. The Board meeting is scheduled for November 7.

Questioner: And there is a presidential election in that country coming up and actually the leading candidate is a Socialist. So if he wins, do you see that as an obstacle - a potential obstacle to your plans?

MR. RICE: You know, we’re looking at the economics of the situation as we always do. The timing of the mission, the timing of the Board, is something we’ve worked out with the authorities based on progress under the economic reforms and reflects the completion of implementation of the reform actions.

Questioner: Right, but the reform actions have been completed by the current government, which I understand is more Western oriented. If this new guy comes in - that’s why I’m asking. Do you see a potential barrier there?

MR. RICE: You know, we deal with these situations all the time. Governments change. There are elections, and IMF programs continue through because we’re the independent provider of advice and assistance based on the economics. So that’s the case here, too.

Questioner: Okay, thank you.

MR. RICE: He’s had his hand up for a while, and then I’ll come to you.

Questioner: Just housekeeping, you all don’t make your own forecast. You base your oil forecasts on foreign market prices; unless I’m wrong.

MR. RICE: You are now officially designated as IMF spokesman.

Questioner: Yeah, I don’t know what to say to that. Venezuela and Nigeria, any requests for assistance or financial help from either one of those countries?

MR. RICE: No, nothing. No requests for financial assistance from either of those countries. Nigeria is -- well, they’re different obviously. But with Nigeria we’ve had normal consultations, the Article IV discussions and so on, and we are engaged with the Nigerian authorities; however, no request for financial assistance.

I say that to contrast with Venezuela, where again, you probably know we have had no consultation and active engagement there for quite some time, so it’s a very different situation. We would welcome the authorities’ reengagement with the Fund, including having an Article IV, but that is not the case. So it makes it much more difficult for us to assess the situation in Venezuela relative to Nigeria.

Questioner: Can I just ask one follow-up question? Are you assessing the potential fallout of Venezuela’s economic problems on the order of the South American economy?

MR. RICE: You know, what I’d say is again in the context of us not having had any active engagement there for a long time and not being able then to make any kind of detailed assessment. What we understand is that the economic conditions are deteriorating with higher inflation, declining reserves. And again we would welcome the authorities’ reengagement and being able to do a more detailed assessment in that context.

Questioner: Good morning. Moving on to Mozambique. The government said in a presentation to investors this week that before the Fund can start program talks with the government, first the removal of the country’s debt distress classification must take place. So can you say, or the IMF say, that this is a prerequisite to the program starting?

MR. RICE: Yes. In line with Fund policies, we cannot disburse funds in a situation where we think the debt is not sustainable. We issued a statement related to this situation a bit earlier this week. I can repeat it if you like, but the answer to your question is yes. As with any country, to be able to disburse we need to know that the debt is sustainable.

Questioner: And then also will the Fund only start talks over the new program once the international independent audit has been concluded, or can talks begin while the audit is still underway?

MR. RICE: Well, this has been an issue ongoing for some time. I think again the IMF’s position is well-known on the audit. In fact, it was discussed in Washington when the visit of the president of Mozambique was here. It was discussed, in fact, with Madame Lagarde, where again we issued a statement at the time. We welcomed Mozambique’s willingness to perform the audit, and it was agreed that this audit would be conducted in an independent way by a reputable international auditing company. So my understanding is that work on this has continued, that in fact we expect the terms of reference for this audit to be completed soon. And again, the answer to your question is that we would see this as an important step to our continued support for Mozambique.

Questioner: Gerry, I’ve got another question about Africa, about Zimbabwe. Last week the Fund announced that they had cleared their arrears with the Fund on $109 million, but no program can go forward until they clear the arrears with the World Bank and the African Development Bank. It’s about $1.6 billion, more than that. What do you know about their efforts to clear those arrears? Obviously it’s a lot bigger chunk of money. Where is that going to come from?

MR. RICE: I don’t have details for you on the status of the arrears with other institutions. But you are correct to say that the clearance of those arrears with the World Bank, the African Development Bank, the European Investment Bank, and others would be an important consideration for us in terms of moving forward with any support, any possible support for Zimbabwe. The settling of their arrears with the Fund, as you say, does not automatically provide Zimbabwe with access to IMF financing. There are a number of steps that need to be taken. It requires a decision by our Board to lift the remaining remedial measures that had been imposed on Zimbabwe because of the arrears. I can go into the detail of those remedial measures if it’s helpful to you, but there are those remedial measures to be lifted. That’s the decision of the Board, and then there’s also the issue of the clearance of arrears with other institutions. So a number of steps here before we would be considering any kind of financial assistance to Zimbabwe.

Questioner: But in terms of a plan, though, you don’t know of a plan by them to clear those other arrears?

MR. RICE: I do not have a detail on what the status of their plans are with other institutions.

Okay, I’m going to take his question, and then I’m going to go online for a little bit, and then I’ll come back and take a couple of, I’m guessing, Greek questions.

Questioner: I just wanted to follow up on her question. I probably was not listening close enough, but I did not understand whether the completion of the audit was a precondition for reengagement of a bailout. I understand that it’s a critical part of, but it’s unclear to me whether the completion of the audit is necessary.

MR. RICE: The way I would characterize it is, as we’ve said, we think it’s a critical step that would be required for the Fund to move forward, to continue with its support.

I’m going to go online for a little bit, and then I’ll come back and take Greece, and that’s probably going to be it. The first question I’m seeing here is actually on Egypt and social protection plans. I think I’ve probably covered that in my previous comments, so I’m going to probably leave it there and not go into further detail.

There is a question on Argentina, and it’s asking about the Article IV. “When will that go to the Board, and what will likely come out of the meeting? Will the Board give a green light?” Well, I’m not going to preempt the Board, of course, in any decision that it might make. But I can say that the Article IV consultation is expected on November 9. And I can also say the authorities have indicated they plan to consent to publication of the report. So as you know, this is the first Article IV that we’ve done with Argentina in quite some time, so progress is being made there. I should perhaps also mention in this context that on the same day, November 9, the Board will also consider Argentina’s progress on improving the quality of the official CPI data. So those two things will be discussed by the Board on November 9.

I’m taking one more question online on Yemen. So he is asking, “What’s the IMF’s view and monitoring of President Hadi’s action to move the central bank to Aden, including impact on the humanitarian situation?” On that I’d say it’s difficult at this point to provide a full assessment of the implications of moving the headquarters of the central bank from Sana’a to Aden in the absence of a detailed plan. But the Central Bank of Yemen has clearly played a crucial role over the last 16 months in facilitating minimum levels of imports of basic commodities, thus averting an all-out humanitarian crisis while maintaining the stability of the banking and payment system. It’s thus critically important to preserve the capabilities of the central bank. It’s a complex process to move responsibilities between Sana’a and Aden, and it’s going to require considerable technical work and close management. The bottom line is clearly that it’s in the interests of all Yemenis to continue having a central bank that is credible with high operational independence and capacity to facilitate post-conflict stabilization and reconstruction, and the Fund stands ready to help as much as we can.

I’m going to take these last two questions on Greece and call it a day.

Questioner: Thank you, one quick clarification on her first question. Are you discussing the possibility of financial participation with the Greek authorities or with the Europeans?

MR. RICE: So as I described it, we are engaged in the second review of the ESM, in those discussions, and at the same time discussing the possibility of a Fund program that could include financing from the IMF for an IMF program. So we are fully engaged, at the request of the Europeans and the Greeks, fully engaged in the discussions on the second review of the ESM, and at the same, again at the request of the Greek authorities, we are having discussions on a possible Fund program, with financing.

You probably covered her questions.

QUESTIONER: How do you comment on the New York Times recent report about the internal battles inside the IMF before the publication of the IEO for the summer?

MR. RICE: So, she is asking about the IEO Report - that’s our Independent Evaluation Office, which we have here at the Fund that looks back at our work on various country's issues, programs and makes assessment. So there was an IEO Report on the euro zone programs including Greece, not only Greece, but including Greece, in July.

And on your question, I'd, you know, just like to make clear that, as is always the case, the IMF staff complied fully with the IEO's Independent Officers' requests for information and data. But I would like to say, for those who don’t follow it so closely, this was actually a massive project, a massive evaluation over the course of probably 18 months or so, 13 papers published. You may have read some of them. You know, as I say, a massive project, tens of thousands of documents.

So, to answer your question, you know, inevitably, in any organization, in any bureaucracy, there's always some back and forth on the questions and the requests for data. But at the end of the day, and this is what's important, everything was handed over to the IEO that was requested, okay? Full compliance.

I want to just be absolutely clear about that, because one of the distinguishing features of the IMF is this self-criticism, self-evaluation, that is undertaken, including by this Independent Evaluation Office. It's extremely important to us. There is no one more critical of the IMF than it is of itself, this mechanism. And the culture of self-evaluation is very strong within the IMF. So, I think we are second to none in terms of institutions that look at themselves in a hard-hitting way; because it's important to learn and to improve, and that was certainly the case with this IEO Report in July. So, full compliance there.

QUESTIONER: Thank you, Gerry. And one final question from me. The deficit of the pension system that you mentioned, that 11 percent, to go back to my original question. When do you envision that -- envision that to be dealt with in the context of a new IMF program with Greece within three years of however, this program -- however long this program lasts?

MR. RICE: You know, clearly it's something that - it's an issue that we think needs to be dealt with, because it relates to the overall sustainability of the Greek economy. So, I won't get into which program, where and when, but we've been pretty consistent over a long period of time and in saying the pension system is unsustainable and, you know, needs to be addressed. So that will be an important point in our discussions.

Are we on Greece?

QUESTIONER: We are.

MR. RICE: Then you have the last word.

QUESTIONER: Please forgive. I appreciate your patience, and forgive my ignorance here. Two questions. One on the -- can you help me to understand? I know I should know this by now, but what is the exact nature of the relationship of the IMF within the ESM bailout? Is it purely a technical advisory role? Or do you have any role in editing it, or is just a sort of, we are here to check your numbers sort of role?

And secondly, on the IEO, I understand what you are saying about in the end there was full compliance, but there clearly was, as the report says, some, say, difficulties. However, you want to describe them, in getting some of the documents that are required for Madame Lagarde to (inaudible), and as was reported in July by the IEO. But the IEO, there's no compulsion of the Board to follow the IEO's recommendations, if I'm correct. Am I wrong in that? So the IEO can make its criticisms, make its recommendations, but there is no -- unlike an investigator, Inspector General, at an agency here, the Board, the IMF can just dismiss those.

MR. RICE: So on your first question, and I will deal with briefly. Full engagement with our European partners on the ESM, so that means full engagement in our discussion on all the issues. Again, at the request of our European partners and the Greek authorities, we are partners in that process. So, I don’t know a better way to describe it.

On the IEO, as I said, you know, this was a -- this particular report was a particularly massive and complex project, going over a long period of time, a number of countries, not just one. And as I said, literally tens of thousands of documents and emails. Inevitably in that process, as I said, and I think it's understandable, you know, there's always a back and forth about exactly which documents people are looking for at which time and in which place, and sometimes it takes some time to find those documents and, you know, hand them over.

So, that’s just part of -- that’s part of the process, that difficulty, if you will, is part of the process. I don’t think it's all that -- I don't think it's all that surprising. At the end of the day, as I said, everything was handed over, full compliance. And I think that that’s really important to be clear about.

Then, you were asking about, well, there's no compulsion. The IEO -- you're right -- reports to the Board. So there's no compulsion. What actually happens is that, you know, again this learning culture in the Fund, we respect and take what the IEO does very seriously. What happens actually is the management responds to the IEO, and Madame Lagarde did in this case, and it's published, her response. And what management undertakes to do, and in fact it's called the Management Implementation Plan - it's published. You can look at it.

Management undertakes to follow up on the recommendations of the IEO and describes explicitly in that Management Implementation Plan, how it's going to do it, by when, and all of that. And again, these things are published. They are a part of the process, and I think it's very healthy.

I'm going to leave it there. Thank you all very much. And we'll see you in a couple of weeks' time.