Transcript

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

March 22, 2012

Webcast of the press briefing

MR. HAWLEY: Good morning. My name is David Hawley. I’m Deputy Director of the External Relations Department and welcome to another of our regular press briefings. As usual this is under embargo. The embargo is 10:30 Washington time, which is 1430 GMT.

Before going to questions, let me make a few announcements. The Managing Director, Christine Lagarde, will deliver a speech on April 3 at the Associated Press Annual Membership Meeting here in Washington. The title of her speech will be “Economic Cooperation in an Interconnected World.” The speech will be carried live on APTN’s video feed and streamed on AP’s Web site.

On April 12 also here in Washington and looking forward to the spring meetings which take place the following week, the Managing Director will speak at Brookings, and her speech will be entitled “Seizing the Moment: Thinking Beyond the Crisis.”

In other management activities, the Deputy Managing Director, Min Zhu, will be visiting Samoa on March 23 to attend a high level conference on Pacific island countries, fostering inclusive growth and building resilience.

On March 23 and 24 the First Deputy Managing Director, David Lipton, will be in Singapore where he will take part in the IMFC’s deputies meeting, which is preparatory to the spring meetings, and he will meet the authorities. From Singapore he travels to Korea on March 26 also for meetings with the authorities.

Deputy Managing Director Naoyuki Shinohara on March 26 and 27 will be in Thailand where he on March 27 will give a speech at the Chulalongkorn University in Bangkok. This will address regional and global outlook and the event is open to the media. His speech text should be released to you. If you’ve got questions, follow up please with Media Relations. From Thailand he goes to Cambodia for the ASEAN Plus Three central bank governors and finance ministers meetings on March 28 to the 30, and then on to Japan on April 2 and 3.

Finally, a couple of housekeeping points on the spring meetings. The analytic chapters of the GFSR, the Global Financial Stability Report, will be released on April 11 at 9 a.m., and the analytic chapters of the World Economic Outlook will be on April 12 also at 9 a.m. These documents as usual were released under embargo. And a reminder, press registration for the spring meeting in April has opened. So if you have an interest in attending, please contact Media Relations for further information.

Let me make a news announcement because it is happening as we speak. A team has been in Egypt headed by Masood Ahmed, the Director of the Middle East and Central Asian Department. They’ve been there for the past three days to lay the groundwork for the return of a technical team that can continue work on Egypt’s economic program which could in turn be supported by the Fund. The mission has productive talks with the authorities and key political parties in parliament.

With those announcements, I’m ready for questions.

SPEAKER: I want to start with clarification if possible. What is your position on the Greek elections and if you think that the electoral process is an obstacle to implementation of the program?

MR. HAWLEY: The electoral process is not an obstacle to the implementation of the program. Elections take place in many countries, drawing the life of a Fund-supported program.

SPEAKER: To follow up on your announcement on Egypt and I did not see much about it. I just saw like a slug line, saying Egypt and IMF failed to agree on a program. Was an agreement expected?

MR. HAWLEY: Thank you. It gives me an opportunity to clarify the purpose of the mission, which as I just said was intended to meet with key stakeholders in the country, and I mentioned these included political and parliamentary leaders. This is to make sure that if and when a program is agreed that there is a clear understanding on both sides about the support needed for implementing policies. So let me repeat. This is not a mission that ended in disagreement because there wasn’t an intention during this mission to reach agreement on a program on either side.

SPEAKER: And my real question was on Ukraine. It was reported that they may seek a delay in repaying the IMF under the program that they have, the timeframe of about ten years was mentioned. Have they approached you for any requests like this?

MR. HAWLEY: I’m afraid I’ve got nothing on that. Media Relations will get back to you on it.

SPEAKER: First to follow up on the logistic announcement that you just said, the analytical chapters of Fiscal Monitor Report intended to be embargoed. And my question is U.S. Treasury Secretary Geithner recently said the United States had no intention to seek additional U.S. resources for the IMF. Do you have some comments on this? And do you have some updates after Madame Lagarde’s recent trip to China and India on strengthening the IMF resources in the firewall?

MR. HAWLEY: The Fiscal Monitor does not have analytical chapters. Now, sorry, your next question was on --

SPEAKER: Yes, U.S. Treasury Secretary Geithner mentioned the United States has no intention to seek additional resources for the IMF. Do you have comments on that?

MR. HAWLEY: I have no specific comment on Secretary Geithner’s remarks, but let me remind you what G-20 finance ministers said in Mexico on February 24 and 25. They reaffirmed the importance of increasing the Fund’s resources and suggested an increase in the IMF’s lending capacity of $500 billion to complement an equally credible, high quality, and properly sized European firewall.

You were asking also about an update on China and India. Let me refer you to the press releases. It came up in discussions as the press releases make clear, but there is no specific announcement in that regard.

I’m going to turn if I may to the Media Briefing Center where I have a question about why the enhanced program of inspection agreed with Italy has not yet begun. This is very much at the authorities’ initiative and it is for them to decide on an appropriate timing. In the meantime, however, staff is preparing for the annual Article IV mission, which is likely to take place during the spring.

SPEAKER: It’s a simple question, but it also might be complicated in a sense. Does Greece fulfill the criteria for getting access to such an increased funding from the IMF?

MR. HAWLEY: I’m not sure I understood the question. We just approved a new program.

SPEAKER: That’s good, but in the report there are a lot of points where sustainability is being discussed, and I was wondering if Greece is clear for that. I mean, the program has been agreed to, we move on, or is there still a lingering debate on fulfilling the criteria because of the increased access?

MR. HAWLEY: The program was approved. That means the program is in place. Like any program, it is subject to periodic review and those periodic reviews lead to disbursement of tranches of the loan dependent on performance. That is true of Greece, and it is true of any other program.

SPEAKER: I was wondering if the IMF got assurances from Europe that they would increase the firewall before agreeing on the Greek loan.

MR. HAWLEY: I’ve got nothing for you on that.

SPEAKER: David, in the report I understand that there is a big possibility that the IMF is going to withhold the next installment of aid to Greece due in three months as you know, if the Greek government doesn’t pass new measures -- about $12 billion more -- within the next three months. Is it correct?

MR. HAWLEY: Well, this review like any Fund loan is not fixed at a certain date, but as I just mentioned, dependent upon the authorities -- in this case, the Greek authorities -- meeting certain mileposts agreed under the reform program. For the next review in Greece, a key agreed milepost is defining and legislating where feasible the measures necessary to complete Greece’s fiscal adjustment. We certainly hope that this can be done in three months’ time, but if not, and this is a complex task to undertake, then the review could take longer.

SPEAKER: If they don’t implement, there is a possibility that the IMF is going to withhold the next installment.

MR. HAWLEY: Any program is dependent on reviews.

SPEAKER: May I ask you sort of an unusual question? As you know, the whole news of the day today and for the past week or so is the selection of the new president for the World Bank. Does the management of the IMF take part in that process in any way as consultant? It is a sister institution after all.

MR. HAWLEY: The selection of the president of the World Bank is exclusively a matter for the membership of the World Bank.

SPEAKER: What is exactly the recommendation of the IMF on the firewall, like can you be as specific as possible on how large it should be?

MR. HAWLEY: I’ll refer you to the G-20 statement.

SPEAKER: But that’s the G-20, that’s not the IMF.

MR. HAWLEY: It’s what I’m referring you to.

SPEAKER: I will try once more about Greece, and maybe there is much criticism in the foreign press of the IMF’s first program for Greece. The question is, do you accept the criticism that the first project failed and that the second one is already in jeopardy?

MR. HAWLEY: Certainly we do not accept that the first program failed. A great deal was accomplished in very difficult circumstances by the Greek authorities and people with the support of Greece’s partners.

Concerning the second program, it’s ambitious. There are risks. But provided all the necessary pieces are place, we believe it is workable.

SPEAKER: One question to follow on my colleague’s question for World Bank chief selection. In your perspective, what is status quo of the Bretton Woods system after Second World War? Is it with --

MR. HAWLEY: Can you repeat the question?

SPEAKER: What is the status quo of the Bretton Woods system formed after Second World War because IMF and World Bank are very important pillars of the system, and now the system is evolving? Do you think it is evolving fast enough to give greater say to emerging economies?

MR. HAWLEY: That is really a question for the membership to say what kind of institutions they need. I think in general one would say that they often express a desire for the Fund -- I can speak only for the Fund -- to undertake new tasks and to change its organization and governance. Those requests, which the Fund endeavors to meet, reflect the importance that the membership attached to the institution and the importance of the Bretton Woods Institution’s in the global system.

I have a question on Egypt, “What is the IMF’s response to criticism that it is negotiating with an unelected military government in a way that the parliament opposes?” Well, in response to the question, I note that the purpose of the mission that has just wrapped up in Cairo is to consult broadly with stakeholders in Egypt to ensure that should there be a program, that it enjoys broad political and social support.

Here is an online question, “Has Hungary got any closer to starting negotiations on IMF financing? Are there any sticking points preventing negotiations from beginning?” There are no new developments since Minister Fellegi’s last visit to the Fund in January. And you will recall that a request was made from Hungary for precautionary financial support on November 21 last year. Before the Fund can determine whether and when to start negotiations for such a standby, it will need to see tangible steps that show the authorities’ strong commitment to engage on all policy issues that are relevant to macroeconomic stability. And in this context, support of the European authorities and institutions would be critical for the successful discussions of a new program.

I have a question online, “Italy is discussing reforms in the labor market. Do you consider it important to reduce the restrictions on dismissals? Should this include the public sector?” In general terms, the structural reforms are key to address the weaknesses in the Italian economy and to enhance potential growth. We haven’t assessed the specific proposal, which has just been presented, but we welcome efforts to improve labor market efficiencies and reduce the gap between regular and non-regular workers.

SPEAKER: May I ask if you’ll take another question for the future? In Russia there is a debate after the elections, recent presidential elections, as to the cost of the programs offered by the president-elect and his reelection publications. And I was wondering if the IMF did any work on trying to assess the programs, the costs, and the potential costs and benefits to the economy. So I understand you cannot talk about it now, maybe you cannot talk about it later, but please take the question.

MR. HAWLEY: I’ll come back to you. And I have another question about Myanmar. Lesley asks whether we’ve got any comment on the move to begin a managed float of the currency. Let me recall where we are with Myanmar. The Article IV was held at the beginning of this year and is going to the Board. The authorities have agreed to publication, I believe for the first time, of the Article IV, and that will take place in the weeks ahead. At that point we can address exchange rate policy issues.

SPEAKER: Two questions: First of all, are there any plans for a trip by the MD to Greece, Portugal, and maybe Ireland? And secondly, people at the Fund note that there has been a lot, too much, emphasis actually on fiscal consolidation on the first program. Is that the case? I assume it is, but why did this happen?

MR. HAWLEY: I am not aware of current travel plans that call for the Managing Director to visit these program countries. I didn’t quite understand your second question.

SPEAKER: That people are saying that there was too much emphasis on fiscal measures in the first program, and that might be one of the reasons that Greece is entering its fifth year of recession. Do you have a response to that?

MR. HAWLEY: I disagree with that characterization. I have an online question, “Is the IMF confident that Portugal will not need a second expanded loan program?” Portugal as you know is currently implementing a program. The next review is in the Board shortly. It is, as is always the case, premature to speculate about success of programs.

If there are no more questions, I’ll wrap up. The embargo is 10:30, 1430 GMT. Thank you very much.