Transcript

Transcript of a Press Briefing by Caroline Atkinson, Director, External Relations Department, International Monetary Fund

June 9, 2011

Webcast of the press conference

MS. ATKINSON: Good morning, everybody. I'm Caroline Atkinson, the Director of the External Relations Department at the IMF. Welcome to our regular biweekly press briefing. As usual, this is embargoed until 10:30 a.m. Washington time, 1430 GMT.

I'll start with letting you know about a couple of upcoming events. Next week on Monday, Mr. Min Zhu, the Special Adviser in the Managing Director's Office, will be participating in an ILO conference in Geneva and there will be some press events or some publicity around that and we'll be able to tell you about that. Then later in the week on Friday, June 17, we will be releasing our latest update of Global Economy Forecasts, our Global Financial Stability Report and our Fiscal Monitor. We will be doing that in Sao Paulo, Brazil, following on our recent practice of taking these update reports to different key emerging markets and financial centers around the world. The last one in January was in Johannesburg, South Africa. We will be putting the press advisory details on our website. Questioning for the press conference which will be at 9:00 a.m. D.C. time, 10:00 a.m. local time in Sao Paulo, will be available through our Online Media Briefing Center so that you will be able to submit questions that way if you are not actually in Sao Paulo, and the Economic Counselor Olivier Blanchard, our Financial Counselor Jose Viñals and Carlo Cottarelli, the Director of the Fiscal Affairs Department, will all be there.

The following week, Acting Managing Director John Lipsky will be presenting the concluding statement for the Article IV and Spillover Report of the Eurogroup on June 20, in Luxemburg and the U.S. on June 24, and that follows the meetings this week in the U.K., Japan and China that I'm sure you've seen reported. Finally, the release of "Finance and Development," our quarterly magazine, takes place on the website this afternoon. The cover theme is about the cost of aging populations and there are articles on unemployment in the Middle East, the repercussions of the disaster in Japan and on the financial sector.

Perhaps I can say about the Managing Director's selection process, as I'm sure you know, the deadline for receiving nominations is midnight tomorrow, Friday. During next week the Executive Board will be reviewing the nominations and selecting a short list and we will be keeping you updated as that process goes along. The aim as we have said or as the Board has announced is that the selection should be completed by June 30. Maybe I can turn to your questions now. Thank you.

QUESTION: I want to follow-up with the MD selection question. As you mentioned, next week is your shortened candidate list, so that means now there are more than three candidates being nominated? The second question is we noticed that there is a short interview with the Deputy MD Ms Shafik released online yesterday talking about boosting the diversity of the staff of the IMF. Can we take that as a hint that a certain woman will be selected to a certain position in the near future let's say just like the M.D.? Also Ms. Shafik herself can be a candidate. Thank you very much.

MS. ATKINSON: First of all, on the nominations, I don't know which or how many nominations there may have been. The nominations close at midnight tomorrow night. With the short-listing process, if there are more than three candidates, then there is a short-listing during next week. If there are three or fewer candidates, then the Executive Board will move directly to the interview process. So I'm sorry if I misled you on that. On the other question, on the issue of diversity, this is of course an important question and Ms. Shafik is now the member of the management team responsible for personnel policy so that's why she was in that video. I had thought it had been issued earlier actually, but maybe it was just yesterday or maybe you saw it yesterday. It's been on YouTube for a while I think. Finally, to repeat that neither management nor staff have any role in the selection of the Managing Director. The Managing Director will be selected by our 187 member countries or their representatives on the Executive Board. So the 24 members of the Executive Board are the ones that will select the Managing Director.

QUESTION: You said that you are committed to an open process based on merit so I wonder how is this selection process different from the process that happened a few years ago when Dominique Strauss-Kahn was selected? Regarding the investigation, I think in your previous press conference you said that the IMF is going to collaborate with the investigation. I wonder if you could give us some details about how the IMF is collaborating with the investigation.

MS. ATKINSON: On the first, the criteria is slightly different this time. They include a commitment to multilateral cooperation and so on and there is a comment that these criteria will be looked at without geographic preference. The Board laid out very clearly the steps for nomination and short-listing. There has been a change in the nominations this time. Any of the member countries may nominate candidates this time. They can come from the 187 member countries. Whereas in the past it was only the members of the Executive Board, the 24 members of the Executive Board, that could formally nominate a candidate. So it's a broader nomination process.

On your second issue, as I think I probably said before, as good citizens we cooperate voluntarily with all law-enforcement issues in the U.S. and that's always been our practice and will continue to be our practice.

QUESTION: When the issue of debt restructuring or default has come up, the IMF has taken different positions in different countries at different times based on the circumstances. Now that the line is no restructuring in Greece, how is that evaluated and why are we in a no restructuring scenario versus one in Uruguay where there was a restructuring that was sort of coordinated and supported by the IMF? How do you evaluate it? What the guidelines? What are the standards? Is there any set of parameters in place? Second, this is a somewhat unusual circumstance because you've got a potential Managing Director coming in the door who's been sitting on one side of the table now for a year and a half and is now going to be expected to jump to the other side of the table and be objective in her evaluation and I'm wondering, obviously we don't know who the M.D. is going to be yet, but is there any formal process of recusal in the IMF for someone who comes in the door in the midst of a negotiation and may in fact have a deep conflict of interest?

MS. ATKINSON: Just to take your second question first, I'm not going to presume who the next Managing Director is going to be. I would rather hope that whoever it is comes and takes over the reins as quickly as feasible.

QUESTION: If I could, that doesn't really answer the question. Let's abstract from an individual. Is there any process of recusal within the IMF for staff members who have a conflict of interest in particular negotiations?

QUESTION: There is a slightly different policy which is that staff members should not have a conflict of interest. For example, that's the point of financial disclosure. And if people are leaving to take up a position, then there is a policy of circumscribing what they work on now. That was the case with Murillo Portugal when he was going back to the Brazil and the case of Jaime Caruana when he was going to the BIS. I'm not aware of any other formal recusal policy.

On the issue of Greece and you asked about our policy, our policy is that every one of our programs needs to be financed, so typically we're lending money when countries can't meet all their bills. They propose some measures usually that will make their borrowing needs less, and we provide some financing. Sometimes that financing is enough by itself. Many times, and of course including in Europe, we lend alongside others, and in this case we've been lending alongside the European partners. We then take into account what the gap is likely to be to make sure that our money is financing and is going into a situation that is sustainable and that's our general policy. So the important thing is to make sure that a program is financed in an appropriate way and that's the discussion that's going on now about Greece's financing.

QUESTION Just going back to the MD selection process, I was looking at the fact sheet and it's clear that if there are more than three candidates then a short list will be drawn up and it will be published or announced. But I was wondering if you could give us a better idea of the timeline when we could expect anything, if there are more than three candidates or if there are not.

MS. ATKINSON: If there are fewer than three candidates, the names will be published at that point. That will happen in the early part of next week because I believe the Executive Board will meet to consider the list of candidates or at any rate they will be informed of the candidates. That will then be made public if there are fewer than three. We will be keeping you informed. We don't know how many candidates there may be. If there are more than three candidates then the Executive Board had decided that they would draw up the short list during the course of next week and have the short list by the end of next week. So I would suspect that in practice it might be the beginning of the following week before that's announced. So I think that the most likely timing for an announcement will be in the early part of next week when we know either that there is a short-listing process going on and we would then tell you that, or that there are three or fewer candidates and we would then give you their names and they would be proceeding to interviews.

QUESTION: To follow-up on an earlier question, what is the actual purpose of the recusal process? I am talking about the IMF's own process of recusal why an IMF official would recuse themselves, so I'm asking you as the IMF representative why the IMF would have that process. What's the purpose of it? Second, I have a second question on Greece. I'll wait for you to answer.

MS. ATKINSON: It's a normal process when somebody is leaving to take up another position to see if there could be any material that they're dealing with that could cause a conflict of interest in the future. I'm not sure that we actually use the word recusal, but there is usually a discussion if it's a senior staff member around that.

QUESTION: And that's only for staff members who are leaving to go somewhere else? That only applies in that situation?

MS. ATKINSON: There are other issues where there may be a decision that a staff member would not take a direct negotiating role in something concerning their own country for example.

QUESTION: I'm trying to understand what the purpose of that is. Why would the IMF require that sort of situation? Why is that even necessary?

MS. ATKINSON: I think the purpose is just the same that it is in many organizations that have such a policy. It's to avoid either the perception or an actual conflict of interest.

QUESTION: Thank you. Then on Greece, there have been many criticisms leveled that the IMF has favored Europe in its lending and conditionality practices. This is over a long timeline and the IMF has assessed its own lending practices. Given that Greece is now the highest per quota lender/borrower from the IMF and there is consideration admittedly by the IMF of more lending and some would say conditionality is not as stringent as it has been elsewhere, how would you counter the claims that the IMF is favoring Europe?

MS. ATKINSON: If you look at the programs that we have with European countries, they are strong and I just don't agree with the suggestion that they have a softer basis than other countries. I think these are strong and in many cases difficult programs unfortunately. We don't really like it when any country has to take difficult measures, but mostly when countries come to the IMF they have had some problems and they are in a position where they have to take some difficult measures. That has certainly been the case in the countries in Europe where we've had programs.

SPEAKER: That was on the conditions, but you didn't address the actual amounts borrowed.

MS. ATKINSON: Again I believe that we determine the amounts. We are an international institution representing the interests of the international economy, the global economy and all of our members and our programs are designed to of course support an individual country so that they can restore financial stability, but the goal is to support the global international system.

QUESTION: Do you assume that you will know the name of the new chairman by June 30? When will the new chairman actually step in? And is there a kind of inauguration ceremony?

MS. ATKINSON: The Board has said that it would like to decide by June 30. I can't remember what day of the week June 30 is. I think it's a Thursday. So if they're deciding on the 30th, maybe they would announce immediately on the 30th, maybe they'd announce on July 1. So that is the current intention. The second question is there has been no date agreed for the starting of the new Managing Director so presumably that would be something that would be worked out between the Board and the successful candidate. There isn't a formal inauguration process as far as I am aware. I'm trying to think of what I remember from before. There would be a first meeting that a Managing Director would have, a first meeting with the Board, the first meeting with staff and that sort of thing, but there isn't a formal I now declare you Managing Director of the IMF process like that. It's not quite that formal.

QUESTION: I'm going to come back the recusal because Mr. Borges said that he had recused himself from commenting and involvement in the Portuguese program because he's Portuguese. I wondered if that was his own decision or if it was an IMF decision in that he would step back from that and that he wouldn't be involved in it.

QUESTION: It was a joint decision. The decision is that he would not be directly responsible for negotiating a program in Portugal. He would be aware of what was going on and he would be participating in discussions, but he would not be the ultimate decider or negotiator. That was the position.

QUESTION: Can you imagine that if whoever the candidate is would have to do the same if it came to an area that they have been previously been involved in? Although if you look at Mr. Strauss-Kahn, he never recused himself from anything in the -- in fact he got more involved in it.

MS. ATKINSON: I think you're talking about something a bit different when you're saying an area as opposed to a specific country. The former Managing Director did not as far as I'm aware participate in the Article IV consultations for France for example so that's more analogous.

QUESTION: Then I have a follow-up on Greece. I need some clarity on the Greece issue. I was wondering if the IMF is open to an entire new program or will it be merged into the previous program. The other one is will the programs run parallel because it includes a pot of private and restructuring? The other one is Mr. Borja also said that he thought -- a few months ago he told us that he thought Greece's debt was sustainable and was wondering that considering the report that came out of Germany yesterday which suggested that the Greece debt is actually unsustainable.

Ms. ATKINSON: The position in Greece is that there is agreement been reached with the Greek and the troika on the policies including some new policies on the fiscal side, not just on the fiscal side but more generally, for this program which has another 2 years. The question now is the financing of that program as you know and there is a discussion about how best the program can be financed given that many people wonder -- there is a question about market access, how much one can assume is available from different parties and that is the discussion that's taking place right now. I think that's the crucial discussion because any program of measures needs also to have the financing to make the program work in the short-term and be sustainable over the long-term. On your other question, I'm not going to comment on documents that may have appeared in the press that we haven't put out.

QUESTION: To stay on Greece, we've seen so many numbers about the Greek financing gap. Can you give us any clarity? Also does the IMF consider that extending maturity for the private sector is equal to restructuring as some rating agencies have said?

MS. ATKINSON: On the first issue, I don't want to add to the confusion by discussing more numbers. I will just repeat that we've reached agreement on these measures which need to be decided still within Greece within the political system, and then the discussion now is about how much money will be available on what terms and we are in those discussions to advise on what would make sense and what would be the implications of different financing options. Your second question?

QUESTION: The implications.

MS. ATKINSON: I think what everybody involved in this has made very clear is that whatever financing options there may be should not be disruptive of financial stability and that's certainly an important consideration.

QUESTION: But would that be disruptive then? Would an extension of maturity for the private sector be disruptive?

MS. ATKINSON: I'm not going to get into the details of what the financing might be because that's what's being discussed right now and whenever we know -- there's plenty of discussion which I'm not sure helps to clarify matters and I think that the discussions that are going on, the aim if them which is important and is clear, is to have a program that is fully financed in an appropriate way.

I've got some questions online. I had some questions online about Greece but I think they've pretty much been covered. I have three online which I'll go through on different countries and then see if you've got more. There's a question on Latvia from Janis Reste of Latvian Television: "Do recent developments in Latvia, the president's decision to start a procedure to dismiss parliament, affect the goals of the program?" As you may know, the Executive Board just completed a view of the program on May 25 and the program is on track. I'm not going to comment on political developments.

Then on Pakistan, there is, "The Pakistani government has agreed to take measures to contain the fiscal deficit to 4 percent as announced in the budget. What measures have they agreed to take?" On that the IMF was discussing with the Pakistan officials in the middle of May. We welcome the intention in their budget of reducing the budget deficit and eliminating or moving to take care of some of the less efficient or more inefficient subsidies. On the details we are looking at those details and are in contact with the Pakistani government.

Then from Argentina, Liliana Franco of "Ambito" says, "The IMF has completed the technical assistance to Argentina about a national index of prices. Do the Argentine authorities request the IMF to keep secret the conclusions of the work?" This is a technical assistance report so what we do with all technical assistance reports, they are worked for the government and they are like the property of the government and it's up to the government to decide what they do with those reports.

QUESTION: I wanted to ask another question about the Managing Director selection. If there are more than three candidates, will we find out who the other candidates are?

MS. ATKINSON: No. The process is to preserve some confidentiality and privacy, the Executive Board laid out procedures where they would announce the three or up to three that they would then interview and consider, so the short list would be announced.

QUESTION: I have four very short questions. When will the fourth mission review on Greece be published, the full mission report? Are financial disclosure forms filed by the Managing Director public? If not, why not? Is there a formal published recusal policy within the IMF for top officials? And is it midnight Eastern Standard Time or midnight after we hit the time zone out in the Pacific Ocean?

MS. ATKINSON: I'll start with the last one first. That's easy. It's midnight here.

That's why I think it will be early next week if there are just the three or early next week we'll tell you what's going on at any rate. On the publication of the full report, that was a report that the troika did internally. I need to check on this, but I don't believe that that had a formal status of an IMF staff report. There would be an IMF staff report obviously for any review of the program and then that would be published as they have been in the past. So I believe that's the situation.

QUESTION: It was May 31 under the original agreement a year and a half ago was when the fourth mission review was due.

MS. ATKINSON: Yes, but the dates that are in program are always subject to what happens to developments. It's not that there is a date for publication. It's that there is typically a date before which a review cannot take place and then they're often later and so on. So if I'm understanding you correctly, I don't think that that has a particular significance. The next step is for there to be agreement on the financing assurances and then there would be a Board meeting at which a staff report would be discussed which would recommend. That's the process. Then that staff report after the Board meeting would be made public. On the financial disclosure, I don't know. I'd have to get back to you on that. I don't know what's made public and what is not.

QUESTION: Could you get back to all of us?

MS. ATKINSON: Sure. Much material is published as you know like the M.D.'s contract and that kind of thing, but I'm not sure about that. Then we have as you know a Code of Conduct and a lot of rules that back that up as standards which are now available in a lot of detail on our website. The Managing Director in the past has been required to uphold those same standards. All of that, the specific things relating to the Managing Director, will be included in the Managing Director's contract and past practice has been to make that public. So that's where we stand on that one.

QUESTION: In the past both the former M.D. and the Acting M.D. have said that restructuring of the Greek debt is not an option. Does that mean that you can categorically say that the IMF has not recommended at all any sort of debt extension beyond its own lending resources whether it's public or private debt?

MS. ATKINSON: I'll just say what I've said before which is that there is now a discussion about financing. The program does not contemplate debt restructuring and I think everybody agrees that any kind of involuntary debt restructuring or credit event would be undesirable. I'm not going to get into details about what the IMF is discussing now. Just to refer back, there has been no change in what the Acting Managing Director said before which is that the program does not contemplate restructuring.

QUESTION: As you and I have both pointed out I believe two news conferences ago, you said that we agreed that terms were very important, so I'm just trying to understand to clarify exactly what the IMF's position is. You very clearly said involuntary restructuring is clearly not an option. It would be disruptive. We have also in two previous conferences said that restructuring could mean voluntary debt extension. I'm trying to get you to clarify what exactly the IMF means when it says that restructuring is not an option and this is an opportunity for you to say, no, we have not discussed any sort of or considered voluntary debt extension as restructuring or we do consider it debt restructuring.

MS. ATKINSON: I'm going to take the opportunity to repeat what I and others have said which is that the program does not contemplate debt restructuring, that what is important is that there should be financing in a sufficient amount and on appropriate terms to secure the financing to meet the gap that will remain after Greece has taken these difficult measures that it has agreed to do. Leslie?

QUESTION: I'm also going to come back because there's something that's been bothering since June 7 when Bob Traw said it. He said at a banking conference, "Stretching out payment terms for instance in loans from Euro Area partners in the IMF is a reasonable thing to think about." Is he talking about trying to extend the payments, it's not a delay in payments or rephasing?

MS. ATKINSON: I don't know all of the context of what he said. I think what's easier is if I just continue to reaffirm for you that what would be important is that there is agreement among those that are involving in financing Greece on financing arrangements that are sufficient to make the program sustainable.

QUESTION: When the announcement is made around June 30, will it be you announcing it to the press or John Lipsky or will there be a press release? Do you have any idea about that?

MS. ATKINSON: That's a very good question. I imagine that it would be a press release, but I'm kind of making this up. It's the Board's decision so there would be some way of announcing the Board's decision and we will get back to you on that to make sure that it's done in a way that is helpful to all of you. Thank you all very much.

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