Transcript

Transcript of Regular Press Briefing by David Hawley, Senior Advisor, External Relations Department, IMF

October 30, 2008

MR. HAWLEY: Hello, everybody. I'm David Hawley, and welcome to another of our regular press briefings. Welcome to those of you joining us on the online Media Briefing Center. I believe there are about 30 of you online.

Before I take questions, as usual, I'd like to make a couple of housekeeping announcements. On November the 8th and 9th, the Managing Director, Mr. Strauss-Kahn, will be in Sao Paulo, Brazil, where he will participate in the G-20 annual meeting of finance ministers and central bank governors. And on November the 4th to 6th, next week, the First Deputy Managing Director, John Lipsky, will travel to Trujillo in Peru to participate in the 15th APEC ministerial meeting. We'll give you details going forward about possible media availabilities.

Before turning to questions, let me make an EXR announcement. Masood Ahmed, who has led EXR for more than two years since joining us in 2006, moves to the Middle Eastern/Central Asian Department. And his successor, Caroline Atkinson, until now a Deputy Director in the Fund's Western Hemisphere Department, will be the Director. I'm sure you'll join me in wishing Masood well and thanking him for his service for Fund communications over the last nearly two and a half years, and welcome Caroline to her new position. With that, I'll take questions.

QUESTIONER: Could you just explain to me? Yesterday the MD mentioned that he was going to recommend Iceland's package to the Board. Is there still another part of that package that's still got to come before it actually goes to the Board?

MR. HAWLEY: Let me explain what the position is. The mission reached what we call an ad referendum agreement, an agreement that is subject to review by the Management and the Board, a few days ago on a two-year Stand-By Arrangement in the amount of about US$2 billion, and it is tentatively expected to come to the Executive Board next Wednesday. That's November the 5th.

Like many agreements, it has prior actions, steps which are expected to be taken before the Board considers the program. It was such a prior action that I believe the Managing Director was referring to yesterday.

QUESTIONER: It seems that in Ukraine the parliament has followed some of the steps. Is that enough to make that go to the Board as well now and when? And do you have a date for Hungary, please?

MR. HAWLEY: We're moving expeditiously to support Ukraine, and consideration by the Executive Board of the program would follow the legal changes to the bank resolution framework. I don't, however, have as yet a tentative Board date for Ukraine.

The tentative Board date for Hungary, your other question, is next Thursday, November the 6th.

QUESTIONER: Is there any estimate already of how many countries will be interested in the short-term liquidity facility announced yesterday?

MR. HAWLEY: The Managing Director answered that question, I believe, when you put it yesterday with the words "possibly some." I don't have anything further to add to that.

QUESTIONER: I'm kind of interested to look at the Fund's conditions, and there's still a lot of countries complaining about IMF conditions. If you look back at previous crises and how the Fund reacted, conditions of those times and how they are compared to what conditions they are imposing now, is there a vast difference? Could you just lay it out for me, please?

MR. HAWLEY: I think the way to think about conditionality is as an evolutionary process, one which has been underway for some time, where the trajectory of change has been towards making conditionality focused in a more targeted fashion on remedying the problems that have caused the country to turn to the Fund for assistance in the first place. And that's what the Managing Director was referring to yesterday when he spoke about targeted conditionality.

QUESTIONER: Do you have any update on Pakistan, please, the Pakistan talks?

MR. HAWLEY: The stage of talks that took place in Dubai has concluded. Further discussions will take place in the next few days.

QUESTIONER: In Dubai?

MR. HAWLEY: I'm afraid I don't know where the talks will take place in the next few days.

QUESTIONER: Do you maybe know if the country has officially now asked for a Fund program or does the Fund team come back to Washington and then assist?

MR. HAWLEY: We're still discussing whether Fund's assistance is needed and, if so, under what conditions.

QUESTIONER: My question would be about your resources. The Managing Director said yesterday that he would be pleased to get more resources and, in 2009, you would be likely to lend more money. So, do you have any intention to publish guidances for next year about your resources and your fundings?

MR. HAWLEY: Let me split the question up into two parts. The Fund has adequate financial resources to meet the perspective borrowing needs of its membership. However, as the Managing Director and John Lipsky, the First Deputy Managing Director, have said, we may need more resources. The means by which resources could be increased are under consideration, but I don't have further details.

Now, in the second part of your question about the amount of money available to the Fund next year, we publish regularly our available resources and the amount that has been lent. So you can follow that, more or less, in real time.

QUESTIONER: Do you have anything on what the Fund's reading is for the November 15th summit, please? What is the Fund's role going to be? Surely there's been some sort of instructions to the Fund as to what it needs to do.

MR. HAWLEY: Well, the Managing Director has said in an interview published today that the purpose of the G-20 summit in Washington on November the 15th is going to be a stock-taking of the historic moment we're living through. And so, he would expect, he went on to say, greater decisiveness in dealing with global governance reform and that the Fund will submit a document to the G-20 on the lessons of the crisis. But I don't have details for you at this stage of the content of that document.

QUESTIONER: I wonder if you could run through the process when the Fund needs extra resources. I know there are general agreements to borrow. I'm not entirely sure how they work. Also, beyond that, are there any other alternatives other than simply increasing the quota, which I assume takes quite a long time?

MR. HAWLEY: Let me answer the current borrowing agreements. There are in fact two, the General Arrangements to Borrow (GAB) and the New Arrangements to Borrow (NAB). They are credit lines committed to the Fund by a number of countries in the membership. They can be activated under specified conditions and have been activated in previous crises when the Fund needed to increase the amount of its own resources for lending to membership. You can get full chapter and verse on how to activate it on the web site.

And as I said, other ways of augmenting liquidity are under consideration, but I don't have details.

QUESTIONER: So, one possible option, I guess, if you don't want to increase the quota, can be the New Arrangements to Borrow? I mean how did the second agreement to borrow, I gather that was in the 70s or something or am I getting my facts mixed up?

MR. HAWLEY: Okay. On quotas, they're reviewed, as you probably know, every five years for whether they are adequate to meet the Fund's liquidity or Fund's financial needs. So that's a somewhat more slower moving process.

The GAB and NAB are two agreements. The NAB was the second, and that was updated in the `90s. The GAB is of a rather earlier date, as you note. I don't have a view because I don't have information about whether a third arrangement to borrow is a prospect.

QUESTIONER: Is there any plan to issue IMF bonds as the World Bank did several weeks ago?

MR. HAWLEY: I have no information of such a plan at all.

QUESTIONER: How quickly can the Fund activate those funds? Yesterday the IMF said at the halfway mark when the Fund reaches about $100 billion in lending, it would start reviewing the process. Would that be too late? I mean how quickly can it actually ask members for that money or activate those other resources that you're talking about?

MR. HAWLEY: The NAB and GAB can be activated pretty quickly.

QUESTIONER: As in a day? A week?

MR. HAWLEY: I would have to come back to you with the precise activation details.

QUESTIONER: How much information do we actually get about conditions and how are those published? And has anything been published so far for the countries that the Fund has made agreements with?

MR. HAWLEY: Typically, after a Fund loan, the loan document is released publicly, and that is a description of the policies that the country concerned proposes to undertake in return for the Fund's financial support. So there is a full disclosure of both the program and the terms of the Fund's lending, but that is released only after the Board approves the loan. So, for current countries under consideration, you won't yet have that detail.

QUESTIONER: How would you describe the IMF's role in the G-20 meeting and how much are you involved in the preparation process?

MR. HAWLEY: Well, the Managing Director, at the invitation of the G-20 and the U.S. President, will participate in the meeting and, as I've mentioned, we will submit a document to the group on the lessons of the crisis.

QUESTIONER: I'm going back to the targeted conditions because I don't really understand what it means. Could you maybe explain it?

MR. HAWLEY: Well, let me repeat the words of the Managing Director. Targeted conditionality means that the conditionality has to be directly linked to the needs of the program to make the program a success.

QUESTIONER: Has the Fund sort of reviewed its sense of whether austerity measures might be necessary for some of these countries? I remember that was a criticism in the past, that the Fund demanded too much fiscal restraint. It seems that their philosophy has changed somewhat in that regard for most countries now.

MR. HAWLEY: The Fund does not prescribe austerity. Fund programs are designed to support a member country at a time of crisis, a crisis that will involve economic adjustment, and the purpose of Fund lending substantial amounts of money is to make that adjustment less difficult than it otherwise would be.

At the same time, the Fund attaches conditions to its lending in order to provide support for the authorities of the borrowing country, to provide support for the borrowing country in the policies it is undertaking to address the crisis.

If we have no more questions, I'll bring this briefing to a close. Thank you very much.