Transcript

Transcript of IMF Press Briefing

July 11, 2024

SPEAKER: Julie Kozack, Director of the Communications Department, IMF

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MS. KOZACK: Good morning, everyone, both to those of you here in person and those joining us online.  Welcome to this IMF Press Briefing.  I'm Julie Kozack, Director of the Communications Department.  As usual, this briefing is embargoed until 11:00 a.m. S. Eastern Time.  Let me start with some announcements and then I will take your questions in person on Webex and via the Press Center.  

Last week, the IMF and the World bank launched the Bretton Woods at 80 Initiative.  This is a high-level consultation on the future of the world economy and international cooperation.  This initiative is led by Sri Mulyani Indrawati, Minister of Finance of Indonesia, Patrick Achi, former Prime Minister of Cote d'Ivoire, and Mark Malloch Brown, former Deputy Secretary General of the UN.  And they will be working closely with the IMF's Managing Director, Kristalina Georgieva and the World Bank President, Ajay Banga.  Our Media Relations Team will keep you posted on the various public engagements that will be rolled out as part of this initiative.

On Tuesday of next week, this is Tuesday, July 16th, at 09:00 a.m., we will be releasing the World Economic outlook, or WEO Update, and that will be followed by a press conference.  We will be sharing details with you soon.  And tomorrow, Friday, July 12th, we will release the latest edition of our External Sector Report, which analyzes global external developments impacting the world's largest economies.  

Turning to travel, on July 22nd and 23rd, the Managing Director will jointly visit Paraguay with IADB President Ilan Goldfajn.  There, the Managing Director will meet the authorities, women leaders, and other members of the private sector and civil society.  On July 25th to 26th, she will be in Brazil to attend the G-20 Finance Ministers and Central Bank Governors Meeting, which is taking place in Rio de Janeiro.  

Turning to the First Managing Director, Gita Gopinath.  She will be speaking at the reinventing Bretton Woods Central Bank of Peru Conference on July 19th in Cusco, Peru.  Her fireside chat will be live streamed at 10:00 a.m. D.C. time on IMF channels.  

And finally, allow me to plug our latest addition to our social media toolkit.  The IMF is now on WhatsApp as well, and I invite you to follow us there for the latest news and IMF updates.  And with that, I will now open the floor for your questions.  For those of you connecting virtually, please turn on your camera and microphone when speaking.  Now the floor is yours.  Okay, David.  

QUESTIONER: Hi, good morning, Julie.   I just wanted to ask you about the inflation picture.  Fed Chair Powell this week, and in a couple of testimonies in Congress, sounded a bit more dovish, so that the sort of the balance of risks were looking more balanced.  And I think markets sort of read that, as he might be getting ready to make some kind of a move.  Today, we had CPI inflation data out negative for the first time since 2020 in the Pandemic.  

So, I'm just wondering if you can describe how the IMF is viewing these signals.  Are we at a turning point here?  Is there a risk of waiting too long, which would be bad for developing economies?  Thanks.  

KOZACK: Great.  Thanks, David.  While we're on the U.S., any other questions on the U.S.?  Sorry?  U.S. and U.S.?  

QUESTIONER: Thank you, Julie.   So, the IMF has recently stated that the United States government should urgently approach its debt problem and somehow manage to decrease it.  But if we look at the graph, we see that the U.S. debt has been growing for decades and the United States government has been doing almost nothing to decrease it.  So maybe it has, but we have not seen any decrease.  So, I have question, what are the real repercussions from the IMF standpoint if this trend continues, and why the IMF decided to be vocal right now, if we have seen these decades of growing us debt?  Thank you.  

KOZACK: Thank you, Igor.  And I think we have Maoling.  

QUESTIONER: Thank you.  I also want to ask about us debt because the U.S. Federal Reserve seems to be expected to cut rates later than previously expected.  I wonder, how does that impact U.S. national deficit and debt?  And also going forward, as the Fed is expected to cut rates, would interest still be a big burden for U.S. debt?  Thank you.  

KOZACK: Anyone online want to come in on the U.S.?  Okay, let me take these questions on the U.S., starting with inflation and monetary policy.  And just a reminder, I think many of you were there, but last week we concluded our Staff-level discussions with the U.S. authorities for the 2024 Article IV.  The Managing Director and my colleagues from the Western Hemisphere Department, had a Press Briefing to discuss the situation in the U.S.  Maybe just in terms of the us economy, it is good to remind that the performance of the us economy has been remarkably strong.  Both activity and employment have exceeded expectations, and the disinflation process is underway.  

Regarding inflation in particular and monetary policy, as we stated last week, we do support the Fed's data dependent and cautious approach to monetary policy.  We also do expect that the Fed will be in a position to reduce rates later this year.  And that assessment continues to hold.  In terms of the questions on debt, we have been clear, I think, last week in our discussion around the 2024 Article IV, that action is needed by the United States to reduce its high fiscal deficit and to put debt on a downward trajectory.  

I should say that we have been highlighting these concerns for quite some time.  It has been a recommendation that we've had in past Article IV’s as well.  Why is it important to do this?  What we can say is that in 2021 and 2020 to 22, the U.S. did pass significant fiscal legislation.  And that legislation is expected to have a lasting, positive impact on reshaping the U.S. economy.  At the same time, now the fiscal deficit is too high.  And it is the time now, especially, that the economy is strong, to take action to put debt-to-GDP on a decisive downward path.  And that will require a broad set of fiscal measures.  And we will, of course, have a full detailing of those measures in the Article IV Report that will be published in the coming weeks.

And with respect to the question on interest, the federal government in the U.S. has a line called net interest payments.  Those in FY 2023, net interest payments of the federal government were 2.4 percent of GDP.  In the current FY, they are expected to increase to 3.2 percent of GDP.  And this is largely due to higher interest rates.  Looking even further ahead, we do -- our estimate is that net interest payments are expected to remain elevated even in the medium-term, and that is on the basis of high primary fiscal deficits and the resulting public debt.  And it's for this reason as well that we are calling for action to be taken to reduce the U.S. deficit and debt at this time.  

All right.  Eric?

QUESTIONER: Moving to another topic, I wanted to ask you about Kenya.  We've seen this morning the news that President Ruto has dismissed most of his cabinet.  We've certainly seen the reaction in the streets in Kenya to the tax increases that the Kenyan government was attempting to implement.  Wanted to ask several questions on Kenya about whether the IMF is in talks to extend Kenya's program, which is due to end in April 2025.  Any plans to change the program in light of the tax plan that has been suspended?  And when, if you have a date yet, for the Board to discuss the review of the Kenya program, which I understand was delayed.  

KOZACK: Okay, thank you, Eric.  Any other questions on Kenya?  In the room, and I know I have some questions online on Kenya.  I think, Julian and Rodrigo, I understand you have questions on Kenya.  

QUESTIONER: Thank you so much.  Just to add to what Eric has already floated by way of questions is, has the government of Kenya expressly reached out to the IMF in terms of potentially recalibrating the program, whether by extension of some of the benchmark requirements, in light of the developments which saw the suspension of the now infamous Finance Bill of 2024?  Thank you.  

KOZACK: Rodrigo, did you have a question also on Kenya?  

QUESTIONER: The colleagues have asked for me, I do have a question on Pakistan.  I do not know if you want it now or later?

KOZACK: I'll come back to you on Pakistan. 

KOZACK: And I see a question has come in online on Kenya, which I will read out loud.  The question is from Ramah Nyang of CGTN.  The question is, has there been any effort by the Kenyan government to get in touch with the IMF to restructure some of the targets in the loan program?  Would the Fund also be willing to move some of the loan payments forward as part of the efforts to create some fiscal headroom?  

Okay, so, turning to Kenya, let me start by expressing our deepest sympathy to the people affected by the tragic events in Kenya.  Our hearts go out to those who have lost their lives, lost loved ones or suffered injuries.  

With respect to Kenya's broader situation, I think it's important to say that the situation in Kenya reflects broader challenges facing many of our low-income members.  Many of these countries are experiencing a funding squeeze, including on account of tighter global financial conditions and reduced availability of concessional financing.  So, policymakers in these countries, including in Kenya, face a complex balancing act.  They have pressing spending needs in priority areas such as social programs, health, and education.  They're managing rising public debt and debt service, and they also have the challenge of boosting domestic revenue.  For Kenya specifically, the goal of our IMF supported program is to help establish sound macroeconomic fundamentals, and these are crucial for fostering sustainable and inclusive growth in the country.  Crucial for generating jobs for the Kenyan people, including Kenya's young population.  

We are currently working with the authorities to ensure that these objectives can be met, and we recognize that there's a careful balance between providing public services and securing adequate financing.  Our program also includes initiatives to improve governance and transparency, and to ensure responsible use of public funds to safeguard social programs and social spending, particularly to protect the most vulnerable members of society.  It's also important that these policies that are under discussion go through a process of broad consultation so they can gain broad public support.  We remain committed to supporting Kenya in its effort to achieve inclusive growth.  At every program of review, we do take the opportunity to assess developments and make adjustments considering the evolving circumstances.  And that’s exactly what we're doing in our active and constructive discussion with the Kenyan authorities, and we're confident that we will be able to find a balanced path forward with Kenya.  

Okay, Kemi, over to you.  

QUESTIONER: So, I was wondering if you could provide updates on Gambia, Angola.  And I have more of a broader question on the global economy.  The NATO Summit is taking place, and we are seeing across the world -- we are seeing more countries -- are spending more of their budgets dealing with crisis, like in Ukraine, and the situation in Kenya as well.  So, what is the Fund's view regarding the convergence between economic policy and defense spending also? 

KOZACK: Okay, very good.  Okay, so let me start with Angola.  So, on Angola on July 3rd, so just a few days ago, our Executive Board concluded the, what we call Post Financing Consultation for Angola.  Angola has remained resilient in the face of significant challenges in 2023, including weaker oil production and weaker oil prices.  Economic growth in Angola is expected to recover in the near-term.  Inflation is expected to remain temporary, elevated in 2024.  But we do expect that inflation will come down after that.  And the non-oil primary fiscal balance is expected to improve over time.  Going forward, our advice to Angola is to continue fiscal consolidation and reforms, growth enhancing reforms supported by technical assistance and capacity development by the IMF and other development partners.  

And Gambia.  So on -- on the Gambia, again, just giving you a sense of where we are, we recently, our Executive Board , completed on July 9th the Fist Review of the Gambia's Extended Credit Facility, and this enabled a disbursement of nearly $11 million U.S. dollars, and it brought total disbursements under the ECF to about $22 billion -- sorry, million -- U.S. dollars.  In the Gambia, economic growth is estimated at 5.3 percent in 2023, and this is supported by good performance in the agricultural sector, in services, in telecommunications, and in construction.  On the inflation side, inflation has come down, but it does remain above the central bank's medium-term objective.  Performance under the program has overall been satisfactory.  Looking ahead, we're encouraging the government to continue implementing reforms that will help address medium- and long-term macroeconomic challenges and catalyze additional financing from other parties for development.  And I will stop there on those two countries.  

And then I think on your broader question about, you know, how is the IMF seeing the -- and our recommendation as well.  So, I think it's useful to step back and think about what is the role of the IMF.  If you think about even the creation of the IMF, the IMF was created in the ashes of World War II as an institution, along with our sister institution, the World Bank, but as an institution to foster global economic cooperation and as an institution to bring countries together even when times were very, very difficult.  We have grown in membership tremendously over the decades.  We now have 190 members, and we take very, very seriously our role as a convener of all of our members to discuss pressing global economic issues and as a venue to foster global cooperation.  

So, what we are doing is looking at the broader global context.  We'll have our WEO Update next week, which will give you a sense of the global landscape.  We are doing analytical work to think about some of the most pressing global issues, including our work around fragmentation, which I think is really the crux of your question -- what are the economic implications of fragmentation -- and we're continuing to do that work.  And obviously, we're also providing a lot of policy advice and financial support to our membership because, when the world is in a difficult moment, that's when the needs of our membership and our members are often the greatest, and we feel an obligation to step in and help and support them as needed.  

Let me maybe go online for a little bit, and then I'll come back to the room.  So, online, let's see.  I have -- Liliana, why don't I start with you?  

QUESTIONER: Thank you, Julie, for taking my question.  Well, it seems that Argentina and the IMF are having a honeymoon, because today the Economy Minister, Toto Caputo, was very enthusiastic due to the conversation with the Staff regarding a new program.  How about the IMF in this matter?  And can we expect a new agreement in October?  And a new program means new loans to Argentina?  Thank you.  

KOZACK: Thank you, Liliana.  Patricia, I see you have your hands up.  I assume it is also on Argentina? 

QUESTIONER: Yes.   I was also wondering if there is going to be any kind of bilateral meeting during Georgieva’s visit to the G-20 with Caputo, in terms of what Lilliana was asking before.  And what's the IMF's take on the increasing dollar gap in Argentina, and if there are any concerns in terms of what the reserve accumulation goal is.  

KOZACK: Thank you.  Any other -- Eric, and then Roman.  Please go ahead on Argentina.  And then David.  Okay, Eric, you have one on Argentina?  

QUESTIONER: Thank you, Julie.  I wanted to ask, recently President Milei criticized Rodrigo Valdés in a radio interview, and I'm curious if you can provide any perspective from the IMF side about his comments and whether Mr. Valdés will continue to lead the IMF Staff negotiating with Argentina on a new program.  

KOZACK: Okay, Roman.  

QUESTIONER: In the same context, Minister Caputo assured today in Buenos Aires that he began negotiation for a new program.  So, I would like to know if a formal meeting is planned in Washington and who will be the IMF negotiator in these circumstances.  

KOZACK: Okay, let me -- let me start by making a few broader remarks and then I'll get to some of the detailed questions.  So, since approval of the Eighth Review on July 13th, the Eighth Review of the program, we have had some quite positive developments in Argentina.  Congress approved the critical fiscal and structural measures that aim to improve the quality and durability of fiscal consolidation and support the recovery and investment going forward.  Particularly noteworthy was the reform of the personal income tax, which brings more higher-income formal sector workers into the tax net, thereby supporting revenues in Argentina and also improving the burden sharing of the fiscal consolidation.  The approved structural legislation will also help create a more market-based economy and address many of Argentina's bottlenecks to growth.  

More generally, the approval of this critical legislation also demonstrates the administration's willingness and ability to find political compromise in implementing reforms.  And this is also consistent with more recent efforts to build consensus with a broad set of stakeholders on key public policy principles and objectives.  And this -- and all of this is happening as the program continues to be implemented.  Preliminary data suggests that fiscal and reserve targets continue to be met.  High-frequency data point to further reductions in inflation and some stabilization of economic activity and demand.  All of this said, and as we have said many times before, continued efforts are needed to continue to strengthen stability, secure the economic recovery, and we are, our team, actively engaged with the authorities to this end.  

Now, regarding some of the more specific questions on our future engagement with Argentina.  Currently, we remain within the framework of the EFF Arrangement, and as we have already mentioned, our engagement remains frequent and constructive.  Staff will engage in discussions on a potential new arrangement, as we would with any IMF member once the authorities formally request one.  And at this stage, there is no specific timetable for such discussions.  We will, of course, share additional information as it becomes available.  

There was a specific question on market turbulence and volatility.  I mean, to that, what I can say is, you know, it is inevitable that countries that are going through these types of stabilization programs will have periods of volatility, and that is just inevitable.  But the key here is for policymakers, in looking at this volatility, to remain agile with policies and to evolve to continue to address the underlying macroeconomic imbalances that -- that exist.  And this is precisely what the Argentine authorities are doing.

And with respect to the G-20, we do not yet have any -- the formal schedule finalized.  Once we know more and have more information about the Managing Director's schedule at the G-20, we will certainly be communicating that.  

And finally, I think it is just important to note that the Managing Director has full confidence in Rodrigo Valdés and her entire Senior Leadership Team.  And as stated previously, our engagement with the Argentine authorities remains active and constructive. 

I have a few other questions online, which I'm going to go to.  Rodrigo, do you want to come in?  I know you had a question on Pakistan.

QUESTIONER: Yes, thank you.  Pakistan said it had fulfilled all the prerequisites for a program.  Can you confirm that is the case, and if so, when will it materialize?

KOZACK: Any other questions?  Eric, on Pakistan?  

QUESTIONER: Thank you, Julie.  If you could give us some insight into the IMF's thoughts about Pakistan's recently approved budget and any prior actions remaining before reaching a Staff-Level Agreement, or if you can detail or explain for us what the prior actions that are required in Pakistan's case have been.  You know, budget, electricity, and gas prices, anything else that the IMF needs to see from Pakistan?  Thank you.  

KOZACK: Okay, let me start with Pakistan.  Okay.  So, with respect to Pakistan and where we are.  Since the end of the recent mission, so we had a mission to Pakistan May 13th through 23rd.  Our Staff visited Islamabad at that time.  We've been continuing to discuss policy goals and actions which could form the basis of a medium-term homegrown reform program for Pakistan that could be supported under an EFF arrangement with the IMF.  The authorities' program, reform program, under discussion has a few aims.  It aims to cement economic credibility through the continued implementation of sound policies and to move Pakistan from economic stabilization to strong, inclusive, and resilient growth.  And that is ultimately what is needed, of course, to improve the living standards in the lives of the people of Pakistan.  And that is the goal of these program discussions.  Consistent policy efforts under the recently completed 2023 Stand-By Arrangement brought Pakistan a return to stability.  And the goal is to, of course, as I said, maintain and broaden and extend that stability to lay the basis for sustainable growth.  

With respect to the specific questions, you know, the discussions with the team, between the team and the authorities are ongoing.  I'm not going to get into the details of those discussions.  And of course, we'll communicate when we have more information for you on Pakistan.  

Let me turn now to Ahmed online.  

QUESTIONER: Thank you for taking my question.  I have a question about Egypt.  Let me know, why was the discussion of the results of the Third Review of the Egyptian Economic Reform Program postponed from the July 10 to July 29?  And I have a second part of my question.  What is the validity of the news regarding the IMF reviewing the reduction its loan fees for major programs, including Egypt? 

KOZACK: Okay.  Let us go to David for Egypt.  

QUESTIONER: Thank you.  Yeah, I also just had a question following on Achmed about the delay in the review consideration.  Can you talk about what can -- there are some reports that there are additional conditions that still need to be met before that funding can be released.  What are those conditions?  And also, just wondering if you can comment -- I mean, there has been stepped up -- recently stepped up a tax by the Houthi group on Red Sea shipping, which cuts into Egypt's canal revenues.  What is the impact of that on the program? 

KOZACK: Okay, so I am going to Ahmed. I am going to start with Egypt, and then I think your second question was about surcharges, if I understood correctly.  So, I will come back to that one to see if there is any other questions on that.  

Starting with Egypt. Let me give you a little bit of a stepping back.  As you know, last month, IMF Staff and the Egyptian authorities agreed on comprehensive policies and reforms for the Third Review of the EFF.  Consideration of the Third Review is scheduled for July 29th, and approval by our Executive Board would provide Egypt with access to about $820 million U.S. dollars.  Recent efforts by the Egyptian authorities to restore macroeconomic stability have helped improve economic conditions in Egypt.  

Following these reform efforts, inflation has fallen for four consecutive months, from 35.6 percent in February to under 28 percent in June.  The foreign exchange demand backlog has been eliminated, and there are signs that the three and a half-year contraction in private sector activity is finally reversing.  So, we do see some fruits from the reform efforts of the authorities.  And this is really important because, of course, as I've been highlighting, this is what's important for the lives of the people, the Egyptian people. 

All of this said, and David, this goes to your point, the regional environment does remain difficult.  So, the drop in volume in shipping in the Suez Canal, based on our latest information, has resulted for Egypt in receipts -- through the Suez Canal -- receipts have fallen, or revenues have fallen by more than half compared to a year ago.  So that is an additional pressure on the Egyptian economy, and it deprives Egypt of a very important source of foreign exchange and also fiscal revenue.  

These downside risks and some of the domestic structural challenges do require, of course, that Egypt stays the course on economic policies that will ultimately best serve the people of Egypt.  And I can say that, you know, Staff is actively engaged with the Egyptian authorities.  And maybe just to mention that the postponement of the Board meeting I want to highlight is not unusual in these kinds of circumstances, and it is related to the need to finalize some details.  I am not going to get into those details, but we're quite confident on the path forward for Egypt.  

And, Ahmed, I'm now going to turn to your second question, which was on IMF surcharges.  But first, I want to just ask: are there any other questions on that topic?  Eric, and then Kemi.  

QUESTIONER: Thank you, Julie.  Yes.  We reported on Monday that the IMF Board met with Staff to review options for changes to the surcharge policy.  This has been a longstanding request and priority for a number of members, principally Argentina, but we've also seen surcharges paid by Egypt and by Ukraine increasingly.  If you could tell us how that discussion went and whatever next steps there are planned on the topic of surcharges and potential surcharge review?  

KOZACK: Okay, anyone else on surcharges?  

QUESTIONER: Mine sort of relates to that.  

KOZACK: Okay, go ahead.  

QUESTIONER: Yeah.  Regarding my question earlier on, we are seeing more of, as David mentioned, we are seeing more and more of these crises across the world and part of that is the surcharge that you're talking about.  So, to go back to the question I asked earlier on regarding defense spending cutting into the overall budgets of country, how concerned are you regarding that?  

KOZACK: Okay, so on surcharges.  A comprehensive review of IMF surcharges is currently underway.  That is part of our Executive Board 's work program for this fiscal year.  The review aims to do a few things.  It will take stock of experience with the implementation of the surcharge policy since the last review, which was in 2016.  The review may present options for possible changes to the current policy, taking into account, you know, the implications for our borrowing members and also for the IMF's credit risk management framework. Work is underway on that comprehensive review of surcharges.  Engagement with our Executive Board has started.  Engagement between Staff and the Executive Board has started.  As part of that review, the Staff does engage informally with the board from time to time, and that's because a broad consensus among the IMF's membership is needed to make any changes to the surcharge policy.  That policy requires, according to the Articles of Agreement, a 70 percent majority of voting power in the Executive Board for any changes to that policy.  So, building consensus is crucial.  

And, Kemi, I think on your question the way I would -- so first, I think it is fair to say that we have recognized for quite some time now that we are in what our Managing Director calls a shock-prone world.  So, you’ve mentioned many crises.  We would call them shocks, crises, conflicts.  Weve seen climate shocks.  Weve seen conflict and war.  We obviously had the Pandemic, which was an enormous global shock, a cost-of-living crisis following Russia’s invasion of Ukraine, food insecurity crises, droughts and floods, which have affected food production and really ultimately affected very seriously, you know, the lives of people who live, particularly in our poorest and most vulnerable member countries.  

It is a source of grave concern for us at the IMF and our efforts with all of the policy changes that we have been making over the last few years and policy initiatives that we have taken.  Starting with the provision of emergency financing during the Pandemic, the SDR allocation changes, to the access levels for lending, our fundraising efforts to ensure that we can continue to provide sufficient concessional financing for our low-income members.  All of these -- our quota reform, quota decision -- all of these are aimed at providing the best support that we can to our membership at a time of tremendous shocks and also at a time where their needs are evolving in response to these shocks.  

And what I can say is that at the IMF, we are absolutely committed to continuing on that effort to make sure that our policies and our instruments are fit for purpose and addressing the evolving needs of our membership.  

Let me go online to Zulfick, and then Igor, you will have the last word.  

QUESTIONER:  My question on Sri Lanka is that Sri Lanka's Foreign Minister said on Tuesday that the country's debt restructuring process will be done and dusted by end of July.  Now, has the IMF given the green light for the ISBB restructuring?  And at the same time, Sri Lanka's public sector is protesting, demanding for increased salaries, and the government says that they cannot accommodate that request, and if they have to do so, they will have to raise taxes.  Now, what is the IMF's position on such a move, given that the IMF program stresses on protecting the poor and the vulnerable.  

KOZACK: Anyone else on Sri Lanka?  Rodrigo, I see your hand up.  Is it on Sri Lanka?  

QUESTIONER: Yes, Julie, thank you.  

KOZACK: Okay, great.  

QUESTIONER: Sorry.  There was an announcement of a deal with bondholders recently, and it's -- it relies on an agreement with the IMF and the OCC.  Could you tell us if it does -- what they agreed on thus fit within the DSA for Sri Lanka?  

KOZACK: Okay, so let me step back a bit on Sri Lanka and just give you a little bit the lay of the land.  Our Executive Board completed, on June 12th, so just a few days ago, of the 2024 Article IV Consultation and the Second Review of the program, and that provided Sri Lanka with access to about $336 million U.S. dollars.  

I think it's important to say that the people of Sri Lanka have shown remarkable resilience in the face of enormous challenges in the country.  The reform efforts are bearing fruit with positive and increasing real GDP growth starting in the third quarter of 2023.  Other positive developments include a rapid decline in inflation, robust accumulation of international reserves, and improved domestic revenue mobilization.  Sustaining the reform momentum in Sri Lanka, though, does remain critical because there are important vulnerabilities and uncertainties that still exist.  

With respect to the question on debt, we, of course, have taken note of the new developments with respect to the discussions on debt, and we're still, our team has -- is in the process of assessing the agreed terms of the debt restructuring and whether they're consistent with the parameters of our program.  So once that assessment is complete, we'll be able to communicate our views on that.  But, of course, it's a very important step for Sri Lanka.  

And then on the other question on salaries and the program protecting the poor.  As I said at the beginning, we do understand, and it's very important to recognize how difficult the situation in Sri Lanka has been over the past few years.  They've been very challenging for the people of Sri Lanka, and the country does continue to face some very complex policy tradeoffs, and this is particularly the case when it comes to debt and the fiscal position.  Both of those situations do remain in challenging territory.  So, restoring fiscal and debt sustainability is critical for the Sri Lankan economy to emerge from the crisis and to avoid returning to a situation like it faced in 2022.  And of course, they're also essential to lay the foundation for robust and sustainable growth and job creation.  

The government does need to, of course, have the resources in order to pay its bills.  And that means ensuring that taxes are paid by those who can most afford to pay them, and that is a key priority in Sri Lanka.  Efforts in this direction include improving tax administration and limiting the size of tax exemptions that have been granted in the past.  And finally, let me emphasize that the program includes measures to protect the poor and the vulnerable.  It has a strong focus on anti-corruption and good governance to mitigate the impact of the reforms on vulnerable segments of society and also to ensure that the hard-won gains from the reform efforts ultimately benefit all of the people of Sri Lanka.  

And Igor, the last word is for you.  

QUESTIONER: I appreciate it.  Also, about debt, but this time about Ukrainian debt.  According to the IMF credit movement, Ukraine has become the second-largest debtor of the Fund, with $10,487,000,000 SDR.  So, $13.84 billion U.S. dollars or something like that.  So, is there any clear understanding from the IMF standpoint that the country is able to repay its debt?  And the second part, do you know which part of this money has gone to civilian needs, like public worker salaries and pensions, et cetera, and which part to defense articles?  Thank you.  

KOZACK: Any other questions on Ukraine?  This is going to be the last set of questions.  So again, stepping back and just to remind that on June 28th, our Executive Board completed the Fourth Review of Ukraine's EFF.  And this enabled a disbursement of about $2.2 billion U.S. dollars.  Bringing total disbursements under the program to $7.6 billion U.S. dollars.  The authorities’ performance under the program remains very strong despite the challenging security situation and the recent devastating attacks on electricity and civilian infrastructure.  

We are seeing signs of an economic slowdown due to the impact of the power outages and worsening sentiment on account of the evolution of the war.  Growth is projected to slow to 2.5 to 3.5 percent this year, and inflation is expected to edge up.  Risks do remain exceptionally high, particularly due to uncertainties around the war.  And we are, of course, encouraging and working very closely with the authorities to continue to deliver the robust macroeconomic policies and reforms that they have been doing so far.  

With respect to the specific questions, our assessment is that Ukraine has sufficient capacity to repay the IMF.  This is supported by both their policy commitments under the program to restore external viability.  And in addition, Ukraine does benefit from added assurances provided by a significant group of creditors and donors with respect to the amounts currently outstanding to the IMF and with respect to how our resources are used.  Under our articles of agreement, IMF resources are provided to help members solve their balance of payments problems.  So, in the case of Ukraine, IMF resources are therefore going to support Ukraine's balance of payments needs to close its balance of payments gap, and they're not directed toward any specific budgetary line item.  

And with that, I'm going to bring this Press Briefing to a close.  A reminder that the Briefing, as always, is embargoed until 11:00 a.m.  The transcript will be available on imf.org.  And last but not least, for your planning purposes, our Executive Board will be in recess from August 5th through 16th, and we will notify you in due course on the date of our next Press Briefing.  And in case of any clarifications or additional questions, please do reach out to my colleagues at media@imf.org.  Thank you all very much, and I wish you a very wonderful rest of the summer.  

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