Transcript

Transcript of a Press Briefing by David Hawley, Deputy Director, External Relations, International Monetary Fund

August 25, 2011

Webcast of the press conference

MR. HAWLEY: Good morning, ladies and gentlemen, and welcome to another of our regular briefings for the media. I am David Hawley from the External Relations Department of the IMF. As usual, our briefing is under embargo until 10:30 Washington, that's 1430 GMT.

Before going to your questions, let me as usual do a couple of housekeeping remarks. Press registration for the Annual Meetings of the IMF and World Bank is open, so if you intend to come, I encourage you to register. Our next press briefing will look forward to the Annual Meetings, and that's scheduled for September 8. And for planning purposes, the bulk of the media events at the Annual Meetings will be during the week beginning September 19, and the IMFC (International Monetary and Financial Committee) is at the end of that week, on September 24.

Managing Director Christine Lagarde and First Deputy Managing Director John Lipsky will attend this weekend's Jackson Hole Symposium hosted by the Federal Reserve Bank of Kansas City. The Managing Director will be on a panel on Saturday approximately midday or early afternoon Washington time with President Trichet of the ECB. She will make remarks to that panel and if possible we'll give you the text of them, but we'll have to confirm any arrangements of release of remarks nearer to the time. With that, over to your questions.

QUESTIONER: The situation in Libya is changing quickly, so I'd like to know: is the IMF providing assistance, or will you provide any assistance, to the (country)?

MR. HAWLEY: Thank you for your question. We at the Fund are monitoring developments in Libya and hope of course that there will be a swift end to the civil conflict. The nature of our engagement going forward will depend on the wishes of any internationally recognized government in the country. So to underline, we're following events. We will await an expression of the wishes from an internationally recognized government.

QUESTIONER: Also following-up on Libya, you talked about an internationally recognized government. Thirty governments have already recognized the rebel TNC. As I understand it, the IMF will need to recognize it officially, separate from what the U.N. or anybody else is doing, also for any kind of lending from other development institutions to happen. Do you know of any sort of movement going on now within the IMF to move that forward? The White House, the Treasury, everybody has said they recognize these guys. What formal procedures need to happen?

MR. HAWLEY: In the case of Libya as in other similar cases, the Fund's process of recognition of a new government is guided by, in other words, we follow, the views of the international community. Events are still unfolding and we're following them. When there is a clear, broad-based international recognition of a new government in Libya, it's at that point that the Fund could or would move toward recognition.

QUESTIONER: May I follow-up on that? So when you talk about the international community, you're talking about your member countries or does it have to go through the U.N.? How does that work?

MR. HAWLEY: Thanks. It's the member countries of our organization, but since there are 187, it is much the same thing as saying the entire international community, but it's following the wishes of the countries who are our members.

QUESTIONER: I have a question on Greece. We know that a mission is in Greece. Could you give us some sort of feeling on how the mission is feeling as it goes into this next process? As you know, there seem to be some delays with regard to the private-sector debt swap. I think only half of the private-sector banks have signed up for it. The Fund said last month that it was a little worried about that process, that it needed to move quickly.

MR. HAWLEY: There are several questions in one there, so stop me if I don't cover what you're asking. Let me bring you up to date on the mission. The fifth review mission is currently in Athens. It's expected to conclude its work around September 5, and assuming agreements are in place, the IMF Executive Board could be in a position to consider approval of the next disbursement toward the end of September. You had a question on PSI (private sector involvement)?

QUESTIONER: I had a question on the private sector. The Fund issued a statement maybe earlier this month expressing concern that the process should not be delayed, saying it needs to move quickly forward. Since only 50 percent of the banks so far have signed up, how is it important is it that this process gets completed and gets done for Greece to be sustainable?

MR. HAWLEY: What can I say? We're discussing with the authorities the current program review and that's what our focus is at the moment. I don't have anything to add to the earlier statement that you mentioned.

QUESTIONER: Would the PSI be part of those discussions?

MR. HAWLEY: The PSI is not contingent -- is not part of the fifth program review.

QUESTIONER: May I change the subject? I wanted to ask about Ukraine. The Fund issued a statement yesterday about a meeting on Tuesday. Incidentally, Tuesday was the earthquake, so if you could mention where the meeting took place out of -- but substantively, the talks resulted in the mission being postponed until late October. My question is: what was the reason for that? What needs to happen before the mission? Can the date be moved forward for the mission?

MR. HAWLEY: I haven't anything to add to what we said on Ukraine. The discussions took place in Washington. Let me underline Mr. Lipton's main expression of our views, which was the importance of strong policies, and reforms being necessary to overcome delays and complete the second review, but I don't have further detail at this stage. But I can tell you that the next mission is now scheduled for October. I don't have a time in October.

QUESTIONER: Is it true though that the mission had originally been scheduled for late August?

MR. HAWLEY: I'd have to get back to you on the original mission scheduling.

I've got a question on Turkey: when will an IMF mission come to Turkey for the next Article IV Consultation? I can say that the mission will start on September 6.

QUESTIONER: I have another follow-up on Greece in trying to understand what's going on. I think that's what I'm trying to get from you. There is discussion that there might be a follow-up program, more money for Greece. Is it the understanding from the Fund that that is going be on the table? Could a new program emerge from these discussions? Then I have another follow-up.

MR. HAWLEY: Let me make clear that what we're talking about in this mission is the current review.

QUESTIONER: Everyone is expecting Greece to come to you to ask for a second program, so I assume it hasn't been done, and we still don't know what the share of the IMF would be. Are you still of the philosophy as are the Europeans to provide a third?

MR. HAWLEY: As you know, it is not set in stone what the share of a Fund-European distribution of financial support is. As you know, in the past it has been approximately two-to-one.

QUESTIONER: You did not answer the question as to has there been a request.

MR. HAWLEY: We haven't had a request for a new program. I've got a question which is about the two-part agreement between Greece and Finland: "Do you support the two-part agreement?" We understand this discussion is continuing among Euro Area member states on the appropriateness and technical feasibility of such arrangements, but at this time we don't have a specific comment on that discussion.

QUESTIONER: I'm going to come back to Libya. Clearly the Fund has been monitoring this and you've been working in coordination possibly with the U.N. Has the Fund done any sort of assessment or have you already started looking at what sort of rebuilding is needed for Libya or what kind of possible engagement is necessary in this kind of post-Qaddafi Libya?

MR. HAWLEY: We would have to access the economic impact of the conflict. Clearly it's had an impact on crude oil exports which have largely dried up, but we haven't got an up-to-date assessment of the impact.

QUESTIONER: Is the Fund at all involved in the frozen assets issue?

MR. HAWLEY: Not that I'm aware of, no.

QUESTIONER: You mentioned crude oil exports. Have you tried to assess the impact of the halting of those exports?

MR. HAWLEY: We simply have an assessment of the drying up of the exports. They have already entirely stopped. But we'll have to wait for the situation to settle a little before we can give you a more informed view of the economic situation in Libya.

QUESTIONER: Do you expect Libya to be discussed at the IMF meetings? Is it on the program?

MR. HAWLEY: The IMFC agenda has yet to be finalized. As you know, the meetings are typically an occasion where issues of current international topicality are discussed so I wouldn't be surprised to see Libya as an object of discussion, but don't think of the meetings as centered around Libya.

QUESTIONER: Who do you expect to represent Libya in those meetings?

MR. HAWLEY: I don't know at this stage.

QUESTIONER: I know I'm jumping around a little bit, but let me come back to Greece. As you know, some emerging market countries have expressed concern about the Fund getting involved in another major bailout for Greece and I was wondering whether that sentiment is going to affect anything that the Fund does on Greece or would that have to be what the Board discusses?

MR. HAWLEY: Let me give two responses to that which are both in general terms. One is that the Fund is very adequately financed at the current time. Second, the decision to support a member country is a function of that member country's needs and financing requirements.

QUESTIONER: I was wondering if there is any plan for Dominique Strauss-Kahn to come and talk to the staff since there has been some talk about that in France?

MR. HAWLEY: Like any former Managing Director of the IMF, Mr. Strauss-Kahn would be welcome to visit the Fund and I understand that he intends to make a personal visit to headquarters.

QUESTIONER: Is it to meet with Ms. Lagarde or the staff?

MR. HAWLEY: It's a personal visit during which I expect he would meet with the staff. I don't have any further details on a visit which is not yet fully fleshed out.

QUESTIONER: I was going to ask -- what time and date can we be here?

MR. HAWLEY: It could be as early as next week, but if there were such a visit, it would be a personal one and essentially a private one so it wouldn't be open to the press or the public.

QUESTIONER: I was wondering if the Fund has any updated comment on how you see the global economic environment right now. You've just come off recess. It's been a few weeks. There's been massive turmoil in the markets. Most of it seemed to be centered around advanced economies. And I was wondering if you have any comment on Japan and the yen.

MR. HAWLEY: I'll start with Japan. We don't comment on specific intervention operations. On the outlook, as you know, our flagship publications, "The World Economic Outlook" (WEO), the "Global Financial Stability Report" (GFSR) and "The Fiscal Monitor" are going to be published about a month from now, on September 20 and September 21. In general our view of the outlook is that activity has weakened and become more uneven and the outlook has deteriorated since the (June 2011) WEO, but I don't have any precision. You'll have to wait for the publication of the WEO, the GFSR and "The Fiscal Monitor."

QUESTIONER: David, is it the Fund's view that the EFSF (European Financial Stability Facility) needs to be worked on a little bit more? Is it satisfied that the Europeans have moved adequately to deal with their debt problems?

MR. HAWLEY: We earlier as you probably know welcomed the decision to increase the effective size of the EFSF, and in the same spirit, we expect that the size of this fund would be adjusted should that need arise.

I'll take a question if I may on the Horn of Africa. As you know, the Managing Director made a statement yesterday expressing the Fund's concern about the human cost of this worst drought in two generations, and I have a question on how we're responding specifically. She mentioned that we're in contact with two countries, so I don't have anything beyond that. Also what we're doing on Somalia and what the situation is on Eritrea. As you know, we don't have an operational relationship with Somalia because there hasn't been a recognized government for many years. I don't have anything specific on a timeline of contacts with Eritrea either.

QUESTIONER: Can you recap? I assume you were talking about Libya at the beginning of the briefing? Can you restate what was said there?

MR. HAWLEY: My main message was that the Fund is monitoring developments in Libya in hopes that there will be a prompt end to this civil conflict. Looking forward, the Fund stands ready to support any member country, but the nature of our future engagement with Libya will depend on the wishes of an internationally recognized government in that country. Unless there are other questions, I'll wrap up. I do have a question which is on euro bonds. He asks, "Does the IMF think euro bonds would be a good near-term solution to the current problems? Has the Fund encouraged their development and what are your thoughts on their structure?" He also asks about the Finnish collateral deal which we dealt with earlier. Let me remind you what we've said on this. There was specific language in the Euro Area Article IV report which said the European stability mechanism could evolve into a European Debt Management Agency if the political will were mustered for limited fiscal integration. That included common bonds backed by enhanced Euro Area fiscal capacity. That's making the point generally that to function well, any common currency area needs some form of fiscal integration and that means that common bonds such as euro bonds is one such option in that effort.

Thank you very much. The briefing is under embargo until 10:30 Washington time and that's 1430 GMT, and the next briefing is September 8. Thank you very much.

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