Transcript

Transcript of a Press Briefing by Caroline Atkinson, Director, External Relations, IMF

July 30, 2009

Webcast of the press briefing

MS. ATKINSON: I am Caroline Atkinson, Director of the External Relations Department at the IMF. I'd like to welcome you and the journalists participating online to our biweekly press briefing which is started later than usual today, so our embargo time is also later, at 11:00 a.m. Washington time, or 1500 GMT.

I would like to start with just a few announcements. As you know, we have just released the Euro Area report and had a press briefing here, and all of the documents are available on imf.org. The transcript of the press conference with Marek Belka, the Director of the European Department here, will be also be posted. Tomorrow we have the staff report on the U.S. Article IV Consultation published. We will have a conference call with the Mission Chief, Charles Kramer, and we'll send out a media advisory on that later today. Also tomorrow, we will be publishing the PIN, the Public Information Notice, summarizing the discussion of the Executive Board of the Article IV consultation for France, and we will have a conference call with the Mission Chief Anne-Marie Gulde-Wolf. Later today we will launch what will be a new regular online Public Finance Review, The State of Public Finances cross Country Fiscal Monitor. The numbers in the fiscal monitor will of course be consistent with those in the GFSR and WEO updates, and the idea is just to use this publication to give a little more detail on the fiscal side of things going forward.

Let me also take the opportunity to remind you that yesterday we announced major reforms in our lending facilities and lending ability for low-income countries including an unprecedented increase in the amount that we will make available to the poorest countries, zero interest rates for the next 2-1/2 years on all loans to low-income countries, and a new framework of lending facilities. The reform, just to put it in context, of our low-income financing is part of the ongoing efforts to help the poorest countries deal with the global financial crisis, but it goes a bit beyond that because many of these reforms will be maintained beyond the period of crisis. We've used, if you like, the opportunity to develop a more streamlined and we hope more useful framework for lending to low-income countries just as we have earlier and announced for emerging-markets, or for our more general facilities.

On management travel, the First Managing Deputy Director, Mr. John Lipsky, will attend the Kansas City Federal Reserve's Annual Jackson Hole meeting in Wyoming in late August. Let me remind you that the Executive Board's form recess for the summer will begin on August 10 for 2 weeks. There will be no formal Board decisions scheduled during that period, and we will also suspending our regular press briefings during that time and resume them on Thursday, August 27. Of course, as I said last time, Media Relations and EXR will remain open for business.

Finally, online press registration for the Annual Meetings is open. I have a reminder that you can register on the joint IMF-World Bank website for the meetings and that's linked to the home page of our website.

Let me turn to your questions and ask you and journalists participating through the Online Media Briefing Center to identify yourselves and your affiliation. Thank you.

Question: I wanted to check with you whether the Iceland first review is going to the Board, and what has caused the delay? There have been reports regarding disputes or unfinished business in Iceland regarding Icesave.

MS. ATKINSON: We expect that the review will take place soon. Probably what alerted you to it was that it was put in our online schedule for the Board, which is of course a tentative schedule I believe for next week sometime, maybe for Monday, and it will not be taking place next week we don't expect? There has been good progress and we expect that the report will be issued soon and that there will be a discussion.

Question: So you don't have a fixed date?

MS. ATKINSON: No, we don't have a fixed date.

Question: Do you know what's caused those delays? Is it the new government?

MS. ATKINSON: I think we've been making good progress, and as you know, this is the first review which has taken a while to work through and that's often the case with things that can move more or less rapidly. I don't have anything for you on particular reasons for a delay. My impression is that it was just a very tentative date that was put in the calendar and we're hoping to have it taken out of the calendar pretty soon. It may have raised expectations that were never quite justified for the speed of bringing the review to the Board.

Online Question: Why does the IMF refuse to disclose which countries abstained on the Sri Lanka loan, or please name them,

Ms. Atkinson: It's just a matter of our policy, it's a matter for the Executive Board members to disclose their voting if they wish to do it, and if not, a matter for IMF staff or management and that's just always our practice.

Question: I'm going to come back to Iceland just because there are all these reports and I just want some clarity. The staff has completed the first review and now it's going to the Board, or has the staff not yet finished the first review or discussions with the authorities and that still needs to take place?

MS. ATKINSON: No, the discussions with the authorities have taken place and I can get back to you on whether there's been any announcement.

Question: No, there's been nothing on it.

MS. ATKINSON: As for the date, it was scheduled because my impression is that we don't have a completed staff report yet or a completed staff agreement so there's no way that we could suddenly in the Board next week, and there has been good progress in the discussions. I think that if the staff is close to an agreement, if they aren't already there or if we haven't announced it, then we haven't announced it, and we do expect that there will be progress to announce soon.

Question: Can I just come back on the announcement on low-income countries you gave yesterday? On the new facilities, it was mentioned that there some conditions had been eased or less stringent. Do you have examples? Do you think overall conditions have eased on the three or it's just on a particular one? And on the new instruments do you have already countries that have expressed in them?

MS. ATKINSON: We changed our conditionality, it was announced back in May, and that applied to all of our members, but there were some changes that were particularly important for low-income countries. One of those was a shift on structural conditionality, which might apply to laws that should be passed and so on. In the past some structural conditions have been included as performance criteria, then if the timing slips or something similar (almost a technicality) a country would have to apply for a waiver, something which countries don't particularly like to do. Since May we have had a very deliberate focus on streamlining conditionality to focus really on the main issues at hand, on making sure that we're paying attention to social conditionality and to protecting the poor, and getting rid of structural performance criteria. Where we see very important structural policies as needed, those are framed as benchmarks, which are still important and still are discussed in the Board. Conditionality is now more focused and streamlined and with a view to dealing with the heart of the problem and also making sure that there is proper ownership of programs.

Turning to the facilities, the new low-income facilities, they will not actually come into effect until we have all of the money lined up, the switch from the current range of facilities to the new ones. We expect that to be soon. So the next couple of low-income country programs that will come to the Board will be under the old rubric. We do expect that there will be interest because we've heard from countries already that they may be interested. I don't want to speculate. As you know, the major mainstay facility will be the Extended Credit Facility, which is rather similar to the old Poverty Reduction and Growth Facility (PRGF). But then we have reformed what used to be called the Exogenous Shocks Facility to be a rapid-access facility so that countries can quickly get access to rather smaller amounts of money on very concessional terms without having to show that there was a specific exogenous shock. Then we have a new facility , which is more like our standard standby arrangement, the Short-Term Credit Facility. Countries that don't need to engage in such deep medium-term reforms but do have a temporary balance of payments shortfall can borrow from the IMF on concessional terms.

Question: And for that new facility, do you have countries interested in this one?

MS. ATKINSON: I think we have countries interested potentially in all of them and we will see which ones come forward first. Of course, as you're aware, we've had a very big increase in low-income lending especially from sub-Saharan Africa, a very big increase in our lending commitments to these countries in recent months. We believe this new package of facilities will better suit the needs of low-income countries.

Question: I want to ask you do have any update for us in Pakistan, please? The Pakistanis said that they were asking for $4 billion additional and I believe it's going to the Board soon.

MS. ATKINSON: It is going to the Board, yes. We do expect it to go to the Board next Friday, August 7, and the amount and so on will be finally determined at that time by the Executive Board.

Question: You can't confirm that the government has asked for $4 billion additionally or don't you have that?

MS. ATKINSON: I can confirm that augmentation is under consideration, but it will be decided when it goes to the Board next Friday, and I'm sure we will have an announcement then.

Question: Do you have any update on Jamaica, please?

MS. ATKINSON: Yes. There is a staff visit in Jamaica now, continuing discussions on a possible Fund-supported program, a standby. It's a short visit just this week, but I think discussions are going pretty well and we'll see whether they go back or what the next step is.

I just want to back to the question on Africa if I may. You may have seen this number before, but one point on conditionality that's quite interesting I think is that about 80 percent of the programs with African countries that we've recently agreed and that are in place allow for some loosening of the fiscal targets in response to the crisis. So I think that is sort of indicative of the kind of change that we have been bringing in response to the crisis and to needs.

Question: So then, in these new facilities it will not be loosening further? It's just supplying what you've been agreeing on in the past month, right?

MS. ATKINSON: Right. We have an agreement for the financing in place, to support a big increase in our lending. That big increase had already begun, but now we have the financing in place so that we can continue it. We're in a position to lend $8 billion over the next 2 years and $18 billion through 2014, so that's a very large increase in our ability to lend concessional money. The second part of it is that we've made our facilities a bit simpler and more appropriate, and we've particularly put in place this Standby Credit Facility that didn't exist before on concessional terms.

This is embargoed again until 11:00 a.m. our time, 1500 GMT. Thank you.