Transcript

Transcript of a Press Briefing by Gerry Rice, Acting Director, External Relations Department, International Monetary Fund.

October 20, 2011

Webcast of the press conference

MR. RICE: Well, good morning, everyone. I’m Gerry Rice of the External Relations Department at the IMF. And this is another of our regular press briefings. As usual, this will be embargoed for at least until 10:30 a.m. Washington time.

Before I take your questions this morning, a couple of announcements: On Friday, October 21, the Managing Director of the IMF, Christine Lagarde, will attend the Euro group meeting in Brussels to be followed by the Eurozone leaders’ summit on Sunday, October 23. On November 3 and 4, the Managing Director will attend the G-20 leaders’ summit in Cannes.

Deputy Managing Director Nemat Shafik will represent the Fund at the Gulf Cooperation Council Ministerial Meeting in Abu Dhabi, and that will be on Saturday, October 22.

Deputy Managing Director Min Zhu will attend The Economist Buttonwood Gathering in New York City, and that’s October 26 and 27.

Also on October 27, the IMF and the Icelandic authorities will host a joint conference in Reykjavik on lessons and challenges from Iceland’s recovery. That conference will be opened by the Prime Minister of Iceland, and the IMF will be represented by, again, our Deputy Managing Director, Nemat Shafik. The program for this conference and a live webcast are available on the conference Website, which is accessible from IMF.org.

One final note on an upcoming publication: On October 26, the IMF’s Regional Economic Outlook for the Middle East and Central Asia will be released in Dubai.

And with that, I’m happy to take your questions.

QUESTIONER: Does the IMF feel that the assessment by the Commission about the viability of the Greek debt is too optimistic?

MR. RICE: Well, I wouldn’t comment on any reports that are in the media today. What I would say and I think as you know, the IMF is in the process of completing the fifth review. And when that process is complete, as usual we will be publishing our report and related documents following discussions with the Executive Board. Perhaps just to add, you know, as I think my colleague in the EC did earlier this morning, we continue to work very closely and effectively with our other partners in this program—the Greek government, the EC, the ECB.

QUESTIONER: It’s been announced today that there is a division between—the EU officials are on record saying that there is a split between the IMF and the EU on the issue of debt sustainability. What exactly are those differences and how are you working to narrow them? And if a deeper debt reduction is needed here, does this mean there’s going to be a longer delay in this report? And what about the next tranche?

MR. RICE: I’d just like, again, to echo what I think the spokesman for the EC said earlier this morning about there being no divergences between the EC, IMF, and ECB. On the debt sustainability, of course, that again will be part of our review that will be published as usual as we always do. On the issue of PSI, as you know we’ve said from the beginning this is an issue really for the discussion for the Greek authorities and their creditors. Those discussions are ongoing so I don’t really have anything to add to that at this point beyond saying we support the process inasmuch as it’s important to help restore growth and financial sustainability to Greece and to help to support the objectives of the program that’s underway.

QUESTIONER: Thank you, Gerry. I was surprised that you did not mention in the travel plans the plans for the MD to travel to Russia. Could you please confirm the plans for the trip, and tell us a little bit about it if you can?

MR. RICE: I can confirm for you that immediately after the Cannes summit, the Managing Director, will be traveling to Russia at the invitation of the Russian authorities.

QUESTIONER: What is the purpose of the visit?

MR. RICE: Again, it’s at the request of the Russian authorities to have discussions on the state of the global economy, regional economy, and Russian economy.

QUESTIONER: Will the issue of probably helping the Europeans with their credit crisis be on the agenda?

MR. RICE: I really don’t have much more in terms of what’s on the specific agenda for those discussions, but perhaps closer to the time.

QUESTIONER: Gerry, any idea when Mr. Thomsen is going to write and present his report to the Board, if you can tell us the process? When do you expect that the Board is going to convey and to decide about the next installment for Greece?

MR. RICE: I probably don’t have much that’s fresh for you on that beyond what was said in the joint communiqué last week by the EC, ECB, and the IMF, where—and I’m just referencing it here—that following review by the Euro group and the Executive Board of the IMF, there would be the final report on the fifth review. The decision on the next tranche then would be made, and I’m just again referencing the communiqué that said it will become available most likely in early November. So that’s a reference back to what was said last week.

QUESTIONER: Could it be—because I don’t know how it works—could it be that the part by the ECB and the European Commission could be given first and then the IMF if there is no total agreement, or does it have to be at the same time the whole amount or the tranche?

MR. RICE: I really don’t have information on the exact sequencing and dates, as I said. But after approval by both the Euro group and the IMF, then a decision would be made on the tranche.

SPEAKER: Sir, there is a lot of talk, there are a lot of concerns about the possible second wave of the recession. Here at the IMF, you have one of the strongest systems for analysis, for prognosis. What is the forecast from the IMF?

MR. RICE: Well, as you probably know, we released our latest forecast just a few weeks ago. And they are most reliably to be found in the World Economic Outlook, so I’d refer you to those in terms of specific numbers and so on. Overall, what we have been saying over the most recent period of time, is that as everyone knows the global outlook is darkening. It’s becoming a bit more negative and even since the time of our Annual Meetings a few weeks ago. But we will be updating those numbers in our regular REO updates.

QUESTIONER: Following the question, could you just mention the strongest risk?

MR. RICE: Well, I think the number one strongest risk is the restoration of growth. I think what the global economy needs above all is the restoration of growth, and particularly for the advanced economies’ growth that will lead to jobs.

I’m going to take one question online here since several are coming in. The first one is from Greece. And he asks, “Are you optimistic that the upcoming EU summit will lead to solid solutions in the European debt crisis?”

There I would like to point back to the communiqué of several days ago from the G-20 Finance Ministers where they expressed the hope that there would be a comprehensive approach to the European situation in the upcoming EU summit. I think we would echo that hope also, that progress will continue to be made.

There’s a further question: “How do you assess the progress on private sector involvement in the Greek aid package? Do you believe that a bigger PSI will ensure the sustainability of Greek sovereign debt?”

I would just like to repeat what I said on the PSI issue, that it is really a matter for the Greek authorities in discussions with their creditors and those discussions are ongoing. We are obviously supportive of that process, as I said, inasmuch as it can help lead to putting Greece back on the path of economic and financial sustainability.

QUESTIONER: Do you participate on these talks? Do you participate on these talks between the banks and the Greek government?

MR. RICE: We are obviously supportive of that process. The discussions are between the Greek authorities and their creditors.

QUESTIONER: I thought that Mr. Thomsen was in Paris for the talks. Isn’t that correct?

MR. RICE: I don’t have information for you on that. I’m sorry.

QUESTIONER: Do you have some input? Are you participating from a distance or are you advising?

MR. RICE: The way I’d characterize it is there’s a process here. It’s a comprehensive process. The IMF is one of the partners in that process. And of course, we are associated and involved in the discussions, but details I don’t have for you.

QUESTIONER: Any comment on the demonstrations in Greece? As you know, thousands of people are on the streets today and yesterday.

MR. RICE: Well, you know, we’re watching it closely and with concern. We understand that this is a very difficult time for the people of Greece, and times of crisis are always difficult especially if people perceive that changes that need to be made are unfair. And that’s why we have stressed with the Greek government and with our other partners from the beginning the importance of fairness in the program, the importance that the reforms be implemented in a socially acceptable way, including, for example, as you know the emphasis on tax reform and that the burden of adjustment be shared fairly across society. So I think that’s important.

And the last thing I would say is as this goes on we have to keep sight on the goal. The goal is to help Greece as much as possible to exit this crisis, to get back onto the path of growth and jobs and financial sustainability, and to keep our eye on that objective which is what we are trying to do.

QUESTIONER: I was just wondering if you had any comment on the apparent death of Colonel el-Qaddafi? It’s being reported widely that they think they’ve—there’s currently celebrations in Tripoli. I was curious how the IMF is sort of monitoring what’s going on there.

MR. RICE: I don’t have any comment for you on that, sorry, nothing for you on that. Yes, sir?

QUESTIONER: I would like to know if the IMF is considering new prevention tools, financial tools, for countries like Spain and Italy?

MR. RICE: Here I’d like to refer again to the G-20 communiqué of several days ago, which amongst other things asked the IMF to consider new ways to provide on a case-by-case basis short-term liquidity to countries facing external shocks, building on existing instruments and facilities, and to come up with some concrete proposals in that regard by the time of the Cannes summit. I don’t use those remarks in the context of any particular country, Spain or any other country, but I use them to say that there’s going to be a discussion of this issue further at Cannes.

QUESTIONER: I’m coming back to you with Greece because I’m not very happy that you guys are not saying anything about it. There is a really pressing situation going on. There’s a lot of reports in the media today and not a single comment from the IMF on the record whether any of this is true or not. I mean, does the Fund have any comment on the possibility of a division? The sources and the reports are very credible on the divisions. If there are divisions, does that not lead to more market volatility and uncertainty? Does the Fund have any comment on this stuff?

MR. RICE: Well, I can only repeat what I said earlier. We don’t comment on media reports. We continue to work very closely with our partners. And as I mentioned I believe there was a statement from the EC earlier this morning on this topic.

There’s one question on Pakistan and it is asking “Has Pakistan requested a new program from the IMF? Has the IMF provided Pakistan with a letter of comfort meant for multilateral donors?”

I can say that there is no request for a program from Pakistan at the moment. I can also say that an Article IV mission is tentatively scheduled to Pakistan for November. And on the letter of comfort issue, I’m just not aware of that.

QUESTIONER: What is your input on this report? Do you participate? Did Mr. Thomsen write this report--

MR. RICE: We haven’t published any reports.

QUESTIONER: Why did it get reported? They didn’t call it Commission report, European Commission Report. So you have no input on this.

MR. RICE: As you know, there’s often some confusion in the media about different documents, different reports. I can only say, and I think you understand, I can only tell you about the IMF reports, what the IMF has published. We haven’t published any report at this point, but we will when the review is completed.

QUESTIONER: Gerry, are there two reports coming out? Is there one from the EU and then one from the IMF? Is it a joint sustainability report or are they two separate reports?

MR. RICE: Well, the norm is that the EC has its report, which goes forward to their authorities, and the IMF has its report. That’s no different from anything in the past. That’s business as usual.

QUESTIONER: I wanted to come back to the MD’s travel to Russia. Normally during such visits, high level officials, not the MD but the Deputy MD, from the IMF would meet with the leaders of the country. Are such meetings scheduled for this visit? Will the MD be speaking publicly? And while we’re on the subject, will she only travel to Russia or will she visit somewhere else in the region?

MR. RICE: I don’t have details for you, and there will be details forthcoming in a timely way. But I think we can imagine, as you say, that the Managing Director would be meeting with the high level authorities in Russia. And in terms of other travel to the region, I am not aware of other travel to the region, but there may be some other travel as part of the same trip. But again, we’ll come back to you with the details on this.

QUESTIONER: Okay, and then on a separate subject, the Occupy Wall Street movement, do you view this as helpful or do you view this as disruptive? Do you see parallels with what happens elsewhere in the world?

MR. RICE: I think what I would say is that the frustration that’s being voiced by people over the state of the global financial system is understandable. This crisis has hit ordinary people very hard, and their trust in the financial system and stability overall has suffered. And I would also say that’s why the Fund has been working with others to help reform the global financial architecture so that all people, not just a few, can benefit from it.

I have a number of questions online, and there is one on Turkey which I want to take. “What do you think about the Turkish Central Bank’s decision today and generally the monetary policy stance of the Turkish Central Bank?” And there’s a second question from Turkey: “What do you think about the Turkish government’s new fiscal program for 2012 to ’14? Do you think that GDP, CPI, CAD targets for 2012 are credible?”

I think what I can say on Turkey is on the central bank’s decision today. We support the move by the central bank to raise a key interest rate as a way to preserve the credibility of the authorities’ inflation targets. And on the fiscal side, we welcome the tightening of the target in the new medium-term program and the planned improvement in the medium term as a step in the right direction though we believe there is also room for more ambitious efforts.

QUESTIONER: You’re not going to be surprised that I’m going back to Greece. The French President and the German Chancellor a few, maybe ten, days ago left us with the impression that by the end of the month, there will be a major decision on the effort to get something comprehensive and final. It seems that there’s nothing there yet. There’s even some talk that there might be another postponement of the summit on Sunday, possibly not, but I’m just saying. Is Sunday the major point time-wise? Should we say the G-20 is the major turning point? Ms. Lagarde will be participating in both so the IMF probably has a position on that.

MR. RICE: I think you understand it’s hard to speculate on what might come from these meetings. I would say that both are very important so I wouldn’t want to try and trade off one against the other. I think they’re both very important meetings. And again, we had an official statement from the G-20 Finance Ministers several days ago where they indicated and expressed very strongly their hope for progress on a comprehensive approach towards the European situation. So I think we just have to stay tuned for this weekend and the Cannes meeting that will follow.

QUESTIONER: I’m asking about it just because the markets I assume are waiting for something. So the more time it takes the worse for everybody, for Greece and for the world economy I guess and the European economy and the world economy. That’s why I’m asking. I guess at some point there has to be some final decision. That’s why I’m asking.

MR. RICE: Well, again, I agree with you. And I say these are two very important meetings.

QUESTIONER: So you wait for the decision by the Europeans and from G-20 and then you are going to decide for the next installment, correct?

MR. RICE: Well, I’m going to go back to what I said. We have our process at the IMF for the review. You’re very familiar with it. I don’t have a date for the Board, but I can refer you back to the communiqué from last week—that’s the communiqué from the EC/ECB/IMF—where contingent on approval of the review by the Executive Board in our case that there was an indication of a tranche release in early November.

QUESTIONER: In September the IMF said it was ready to send a mission to Libya. Depending on security, have you got a date for that yet or are you still waiting for developments? As you know, during the Fund’s meeting, the IMF and the World Bank were tossed with helping with the reconstruction. So I just wondered if there are any developments on that?

MR. RICE: What I can tell you on Libya is that a mission actually visited Libya during October 6 to 13 together with the World Bank to conduct a fact finding on macroeconomic developments, public financial management issues, and public expenditure policies. I can also say that in the coming weeks, follow-up missions are planned to undertake a needs assessment on public financial management issues as well as continuing work on the preparation of a macroeconomic framework. But I don’t have a date attached to that for you.

Okay, that concludes the briefing and thank you for coming, and we will see you in two weeks’ time.