Transcript

Transcript of IMF Press Briefing

March 9, 2018

MR. RICE: Good morning everyone and welcome to this press briefing on behalf of the International Monetary Fund. I am Gerry Rice with the Communication Department and our briefing this morning is on the record but will be embargoed until 10:30 a.m. and that's Washington time.

Let me begin with a few announcements. Then I'll turn to the questions in the room, and I see we have some questions online coming in as well. With today being International Women's Day, I'd like to mention a couple of things related to that. Number one, we published earlier this week a staff working paper entitled “What is Driving Woman's Financial Inclusion Across Countries”, and that working paper was accompanied by a blog from our Managing Director Christine Lagarde, co-authored with a couple of our staff members. That's available on the IMF website.

Last night Ms. Lagarde also participated in a “Women in the World” event here in Washington D.C. And today the Managing Director will be at the Washington Post for a discussion about issues related to International Women's Day. That's at 6 p.m. today at the Washington Post. I believe it's open and will be webcast.

A couple of other things upcoming. Ms. Lagarde will visit Paraguay next week. And while there, she will meet with the authorities, business, society representatives, women leaders, and youth groups, and she will participate in a seminar at the Central Bank of Paraguay on March 14 and do a press conference that day as well. We can get you more information on that if interested.

The Managing Director will travel from Paraguay to Buenos Aires in Argentina to meet with the Argentine authorities and also representatives of the private sector, academics, and so on. And she will stay in Buenos Aires to participate in the G-20 meeting that is taking place there, hosted by the Argentine government. That's going to be March 19 and 20. That's the G-20 finance ministers meeting. Our First Deputy Managing Director David Lipton will also be there.

In advance of that G-20 meeting we will, as usual, publish our G-20 Surveillance Note, as we call it, which, as you probably know, is our update on the economic outlook that we provide at the request of the G-20. That's going to come your way on March 15 if you want to look out for that.

And, finally, let me mention that our Deputy Managing Director Tao Zhang will travel to India and Bhutan from March 12 until 20. Various activities by Mr. Zhang include a presentation at the National Stock Exchange in Mumbai on “Finance and Fintech.” And he will be meeting with the authorities and other groups in both of those countries as well.

Let me turn to any questions you might have in the room.

QUESTIONER: My name is Yaroslav Dovgopol, I represent Ukraine’s foreign news agency “Ukrinform.” My question is, obviously, about Ukraine. Does the IMF continue a dialogue with the Ukrainian authorities? If so, how could you correct the level of intensity of the conversation and what is the progress in the framework of the EFF program?

MR. RICE: Yes, our discussions are very much ongoing with the Ukrainian authorities. In fact, at the request of the authorities, as you may know, a small staff team from the IMF visited Kyiv to discuss technical aspects of the reform program, which is supported by the Fund. Discussions on various issues, but including the draft legislation on the anti-corruption court.

At the conclusion of the visit we issued a statement indicating that further progress needs to be made on delayed measures that are necessary to achieve the program objectives, including in the energy sector and fiscal policy, as well as the anti-corruption efforts.

What I can tell you is that these discussions are continuing and will continue in the coming weeks. I do not have a date for you in terms of the timing of the next review mission. That hasn't been decided. And, of course, I don't have a Board date either for when the board might consider that review. The mission would take place and come back and make a report to the Board in due course, but I don't have any timing on that right now.

QUESTIONER: Jan Boesche, German public radio. Today might be the day we learn about the tariffs on steel and aluminum, at least there's something going on in the White House. Perhaps you can elaborate again about how the IMF has assessed the situation? What are your fears? Trade war perhaps is in the air. How does IMF see this whole picture?

MR. RICE: Well, as you know, we issued a statement a few days ago, late last week, on this issue. I can refer you to that. And the Managing Director Christine Lagarde has also made several statements in recent days.

Perhaps just to summarize in response to your question: While the U.S. administration has announced its intention to impose import tariffs on steel and aluminum, a formal adoption of such tariffs is still pending, and I think that's important to say, because in that context, it's going to be very important to learn the details of such a measure, including, the scope of the products affected, whether any training partners would be exempt, and whether there might be some flexibility in either the use of tariffs or import quotas.

So, again, I think it's important that we wait for the details. And in that sense, it would be speculative, I think, to comment on the exact impact and what other countries might do. I mentioned that the Managing Director had commented and she said just the other day that in a trade war, no one wins. And in that spirit we encourage the U.S. and its trading partners to work constructively together, to reduce trade barriers, and to resolve trade disagreements without resorting to exceptional measures. I think that's probably where we are right now.

QUESTIONER: Sounds very hopeful.

MR. RICE: As I say, I think we need to wait to learn the details of precisely what it is we're looking at and then we'd be in a position to, beyond the statement we've made, a more detailed assessment.

QUESTIONER: As we get closer to the government resolution in Germany, we are getting more reports that you are ready to get back to the program with Greece, in order to give a boost to country’s access to the market. How do you comment on these reports?

MR. RICE: Maybe, on Greece, I'll just set the context a little bit. The IMF staff had a mission in Athens from February 26 until March 1, until quite recently, jointly with the European institutions. That was to discuss the reforms that are part of the ESM, that's the European Stability Mechanism, and the IMF programs. And there was a statement issued by the institutions after that mission to the point the discussions were constructive and work will continue in the coming weeks to further advance these reforms. So that's where we stand.

In terms of the IMF, as I said here a couple of weeks ago, we continue to be focused on the implementation of the policies and assurances on debt relief that would enable us to go ahead with the program, which we have approved in principle. We've talked before about the two legs that we see as being essential for us to move forward with the program, that's the strong policy implementation on one hand, and understandings on the debt relief. These would be the conditions for effectiveness of the Fund arrangement. We're focused on that. The discussions are continuing and that's where we stand.

QUESTIONER: We are in March and the program expires in August. When do you anticipate that you will make your final decision if you are going to participate in the program?

MR. RICE: I don't have a date for you on that, but I'd say I think the important thing here is not so much the calendar length of the arrangement, but whether, in terms of the IMF's program, it can contribute to achieving the authorities’ objectives in the context of the overall program and during the program period. We believe that it can. So we're working towards that, as I said, and we remain focused on those two legs, the reforms and the debt relief.

I don't have the timing for you, but again, I wouldn't focus overly much on the calendar length, it's whether we can contribute to the effectiveness of the reform program and the authority's objectives.

QUESTIONER: I have another question again on Greece. There have been discussions taking place about the possibility of ESM buying Greece's debt from the Fund. Are we getting closer to this scenario? And will this possible arrangement help Greek debt sustainability in the long run?

MR. RICE: I don't have any details on that at all. Again, we're focused on what we can do to move forward with the IMF arrangement that's been approved in principle. We're very much focused on that.

What I would say in general for any country and including for Greece, we would always be in favor of supporting appropriate measures that can help to reduce a country's debt burden. Again, I'm not commenting on the ESM because I don't have any details on that, but of course we want to help our countries to reduce their debt burdens, particularly when we assess them as being unsustainable.

I'm going to take a few questions online -- I see we have quite a number here -- and then I'll come back to the room if there's anything else.

There's a question on Tunisia from Wassim Ben Larbi of Express FM, asking when will the IMF Board meet to discuss the second review of the program and what is the IMF's view on the recent interest rate rise.

On the review of the program, I can say that we are working with the authorities on finalizing preparations for the second review of the IMF-supported program. I can go a bit beyond that and say that we envisage the Board meeting to take place before the end of this month, before the end of March. And a successful review would bring total disbursements under the program to about US$1 billion and catalyze financing from Tunisia's other external partners.

On the interest rate rise in the central bank's decision, what I would say is that the Central Bank of Tunisia's overriding objective is price stability and increasing the policy rate by 75 basis points to 5.75 percent, which is what they did, at a time when inflation has hit its highest level in 25 years, we think is an appropriate response. Higher policy rates will help anchor inflation expectations and facilitate a gradual return of inflation to sustainable levels. And reducing inflation will protect the purchasing power of Tunisians, especially the most vulnerable segments of society, who are the most exposed to the damaging impact of inflation.

So, in a nutshell, lowering inflation also helps to remove uncertainty, and helps to stimulate investment and jobs. So, again, we think the interest rate rise is an appropriate policy response.

There is a question on Serbia from Matthew Lee, asking us about Serbia’s prime minister who has said the country intends to have talks with the IMF in March and April for a program in June. What’s the status of a program with Serbia?

Serbia’s three-year economic program, supported by the IMF, concluded last month, on February 22. Overall, the program has been a success thanks to the determination and hard work of the Serbian government and people.

The authorities have in fact expressed interest to explore a new program with the IMF, supported by a Policy Coordination Instrument. The Policy Coordination Instrument, the PCI, is a new instrument, designed to provide a policy framework for countries that do not require the IMF’s financial support.

The IMF staff team is now in Serbia to commence discussion on the policies that could underpin a new program. We would expect to continue these discussions in the coming months.

There is a question on the ECB, the European Central Bank, decision from earlier this morning, asking what is the IMF’s view on the ECB’s decisions today?

To which I can say, the ECB has again underlined its commitment to maintaining strong monetary accommodation. Rates will remain low, well past the horizon of net asset purchases, and net purchases can be extended beyond September if necessary.

The decision today to drop an explicit reference to possible future increases in the monthly pace of the ECB’s net asset purchases reflects an improving balance of risks. We are supportive of the ECB decision today.

There is one more set of questions that I’ll take online, and it’s relating to Nigeria and the banking sector. And, again, it’s coming from Matthew Lee at the U.N.

Matthew’s asking about the banking sector: “Did the IMF consider allegations of fraud from the account of the First Bank of Nigeria to the nonpayment of interest by Standard Chartered and others? What about Nigerian bank service to SMEs?”

We, in fact, issued just yesterday the Article IV report on Nigeria. And I would refer people to that since it’s very fresh. It was just yesterday.

But there is a paragraph there that I think helps respond to the question. In the summing up of the Board discussion on Nigeria, directors stressed that rising banking sector risks should be contained. And they in that respect welcomed the central bank’s commitment to help increase capital buffers by stopping dividend payments by weak banks. They called for an asset quality review to identify any potential capital need.

So, there was a reference in that executive board summing up to the financial sector in Nigeria. More broadly, again, I’m just referring to the Board summing up from yesterday, the Board welcomed Nigeria’s exit from recession and the strong recovery in foreign exchange reserves helped by rising oil prices and new foreign exchange measures.

I should just say there are numerous questions on tariffs issue, which I just answered, including from Reuters and AFP and PTI of India. But I think I’ve responded to the question broadly thanks to our colleague in the room.

Is there anything else in the room today? Please.

QUESTIONER: I’ve tried this before. Germany is creeping towards a new government. We have a face for the Minister of Finance, Olaf Scholz, a social democrat. He will become the face here in D.C. for questions about monetary issues and trade surpluses and stuff like that. Before he officially takes his job, any wishes you have? Any tips perhaps he should ponder on when he turns into his new job?

MR. RICE: Nothing specific on that, just that I think I can say that we would wish that our very constructive relationship with Germany will continue. We fully expect that it will. And we would wish that Germany’s continuing constructive role in the Eurozone and beyond would continue. And we expect that it will as well.

QUESTIONER: Somebody said that the reforms are the best insurance against the risk of returning to the markets. On the other hand, the ECB seems to disagree. Will the grated line heal Greece, and what is your opinion on the so-called clean exit?

MR. RICE: I won’t speculate on a period that goes beyond what we we’re focused on, which is the program, and having the conditions met where we can go forward with that because that’s where our focus is.

But that said, we see completion of the reform agenda, including full implementation of the Greek authority’s policy commitments and provision of debt relief by Greece’s European partners as essential ingredients for us going forward with the program that we’ve approved in principle. For laying the foundation for sustainable growth in the post-program period as well.

Thank you very much. We look forward to seeing you in a couple of weeks’ time and maybe see you tonight at the event with Madam Lagarde. Thank you.