Transcript

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

October 4, 2012

Webcast of the press briefing

MR. RICE: Good morning, everyone, and welcome to this press briefing on behalf of the IMF. I'm Gerry Rice of the External Relations Department, and as usual, this briefing will be embargoed until 10:30 a.m. Washington time. Welcome to colleagues in the room as well as colleagues online. It's a very busy period we're running into over the next week or so, so if you'll bear with me, I have a couple of announcements up front, and then as usual we'll come to your questions.

Number one, I'd like to just mention that the IMF's annual report is being published today and I see that some friends in the room actually have a copy in front of them. It's an interesting document with lots of details and facts and figures, so just to bring that to your attention that that is now available online of course. Secondly, let me tell you that the Managing Director has a couple of meetings that you may be interested in. Christine Lagarde will be attending the Gulf Corporation Council meeting in Riyadh on October 6, and there will be a joint press conference with the Saudi finance minister at the end of that meeting. That's the Gulf Cooperation Council meeting which is a fairly regular occurrence in terms of the Fund's participation. Secondly, Christine Lagarde will be going on to the meeting of the Euro Group in Luxemburg which is going to be on the 8th and 9th of October, so that's Monday and Tuesday of next week. So that takes us then into one of the big events certainly in terms of the IMF's annual calendar, and that is our Annual Meeting which will be held in Tokyo of course next week. We perhaps can speak here if there's interest about what might be on the agenda and will be discussed in Tokyo by the 188 member countries of the Fund who will be there. But certainly there will be interest of course in our global outlook and the Fund's updated forecast that will be released and I would imagine the whole issue of cooperative action and next steps in the global crisis would be high on the agenda. The schedule of events for Tokyo is easily findable and accessible to you on imf.org on the website. Let me mention a couple of things that could be of interest to you. The launch of the World Economic Outlook and the Fiscal Monitor again relating to our updated Global and Country Forecasts will be on October 9, so that's on Tuesday of next week. And then our Global Financial Stability report which I know many of you look at carefully, that will be launched on Wednesday, October 10. In addition to those things for those of you in Tokyo, I can tell you that there will be regional press briefings for all of our major areas at the Fund and you can be in touch with Media Relations regarding those events. The Managing Director's press conference at the Annual Meetings will be on Thursday, October 11, and the IMFC meeting, that important meeting of the Fund's governing council, if you will, is going to held on October 13 which is next Saturday. Sorry, that's a week on Saturday. And there will be of course an IMFC press conference.

Then in between times there is a multiplicity of interesting events, debates, discussions, seminars, on all the big issues. The vast majority of those are open to the press, to you, to attend to participate and I encourage you to do so and look forward to you doing so. Sorry about the length of that upfront announcement. Let me turn to your questions in the room.

SPEAKER: Good morning, Gerry -- can you give us an overview of the negotiations that are currently taking place in Greece between the Troika and the Greek government? How long will the team from IMF stay in Greece?

MR. RICE: Thank you. As you know, as you mentioned, the IMF mission returned to Athens earlier this week. Those discussions are ongoing, so I won't have a lot for you in terms of the substance of that. But just to respond to what you asked, we have nothing yet in terms of when that mission will end. Broadly, we continue to work with the Greek government to find sustainable, feasible measures to bring fiscal policy back on track and underpin a fully credible program.

SPEAKER: Do you think that time is running out because there is a Euro Group next Monday and after 2 weeks we have the summit? What's going on?

MR. RICE: Obviously I think everyone is moving as fast as they can given the difficult situation facing Greece and the intention to support Greece, so I think you're right that urgency is of the essence, but again I don't have a timeline for you in terms of report of the mission and how that fits with the Euro Group and the European Council and things that you mentioned.

SPEAKER: If there is no solution in the negotiations, can the IMF accept a political solution summit?

MR. RICE: I wouldn't want to get ahead of where we are which is the discussions in Athens are ongoing, and I think we should let them run out and take it one step at a time.

SPEAKER: How does the Greek budget that was released this week play into those discussions right now?

MR. RICE: That will be one of the issues being discussed on the ground, Lesley, with the mission in Athens, so I don't have an [assessment at this stage].–

SPEAKER: Would you say that they're encouraging or that it does add to more difficulties in these discussions?

MR. RICE: I don't have a lot to offer in terms of a detailed assessment. Again, I think that's something the team will be discussing with the Greek authorities in the course of these discussions, and just to refer to what I just said what the basic intentions are in terms of having the measures that can underpin a fully credible program.

SPEAKER: At what stage does the IMF -- clearly you're looking for an agreement on the measures first before you start discussing financing. Has the financing started or not at all?

MR. RICE: Again I don't have a lot of information on the sequencing of the measures and the financing and I think we just need to wait for the discussions in Athens to take place.

SPEAKER: If I can just follow-up on Greece.

the M.D. mentioned last week that there was still a financing gap on top of the fiscal gap and I just wanted to clarify for the IMF these two gaps need to be filled before you disburse anything.

MR. RICE: As you know, the Fund requires for any program for it to move forward we need two key elements. We need the debt sustainability and we need the financing assurances, and both of those things need to be in place. As to how those requirements will be fulfilled in the context of the current review, we still have to discuss this with the Greek authorities and the European partners and we need to take into account the outcome of the current discussions in Athens.

SPEAKER: I was wondering whether Spain has asked for any financial help from the Fund. Or number two, have any discussions started on a monitoring program or anything to do with Spain?

MR. RICE: Spain has not requested IMF financial support, so I can say that. On the monitoring at the moment that the IMF has engaged in as I think you know is on the banking sector, so I just want to be clear on that and, yes, that has begun. We have a technical expert on the ground in Madrid who's working with the authorities and with our partners on that aspect. Again this is monitoring of the banking assistance. And I can tell you that we expect an IMF mission again on the monitoring of the banking sector that will visit Madrid October 15 to 26, and soon after that mission ends, the report will be given to the Spanish authorities and to the European Commission.

SPEAKER: To follow-up on the Spanish issue, are the Spanish authorities at all engaged with the Fund on any kind of possible role it could have, because it's publicly known that they are considering a full bailout including European money. The question, have the authorities engaged at all on any sort of discussion on the IMF's involvement in a full bailout, meaning more than just the banking sector?

MR. RICE: At the moment our discussion are focused on the banking sector and the technical assistance that we are providing there, and that's about as much as I have. Let me go to colleagues online and then I will come back into the room. There is a question on Argentina which I would like to take. "Argentina's President Cristina Kirchner rejected the IMF's criticism of her government's economic data and dismissed an IMF threat of unspecified sanctions if changes are not made. What is the IMF's answer to that?" What I'd like to say in response to that is that of course the quality, the reliability, the integrity of data is absolutely essential for the IMF to do its work. That is true in the case of all our member countries big and small regardless. It's something that is essential to us and that's why this issue is so important. With regard to the Argentina CPI and GDP data, as you know we continue to follow our established procedures under our framework and it's up to the IMF board to determine what the pace of the application of this procedure would be. So the board will meet again in December as we have announced and they will deliberate again on this issue at that time. Perhaps just add though that as the Managing Director mentioned recently, we stand ready to cooperate with the Argentine authorities with regard to the quality of their CPI and GDP data and working with them to that end.

There is a question on Egypt. The question is, "What can you tell us about the status of the IMF loan for Egypt? What are the vital elements of Egypt's economic reform program that must be in place in order for the country to qualify?" On Egypt and in terms of the status, our discussions with the authorities continue. The authorities are working on their economic program and have indicated that they need some additional time to advance those preparations and be ready to receive the mission. We are ready to send a technical team to Cairo to discuss possible financial support as soon as those preparations are completed, and we look forward to that. We look forward to sending the team at the appropriate moment. In terms of the elements of the program, of course that will be something that will be discussed once the team goes out there, but we have said before that some of the broadly important elements are the objective of macroeconomic stability of course, that the program would be home grown, would have broad political support and importantly will take account of the social dimension and in particular protection of vulnerable groups. Let me take one more question online. The question is from Candida Acosta of the Dominican Republic, "Listin Diario," "With the outlook for global growth being lowered again by the IMF, does the IMF plan for more financial aid to small and open countries with large deficits like the Dominican Republic?" I think it's a broad question. I think we can all look toward to as I mentioned at the beginning the release of the World Economic Outlook next week which will get into the details of the global growth forecast and indeed individual country growth forecasts, and I think the issue of what the IMF might be ready to do I think can be addressed best in that context, so let me leave that there.

SPEAKER: I was going to follow-up on Egypt. Yesterday the Egyptians authorities said that mission is going to be at the end of October. Can you confirm that?

MR. RICE: I wouldn't confirm a specific date, but I can say that we look forward to going out as soon as possible. And as I said, the government is preparing its program.

SPEAKER: Gerry, in Portugal, Spain and Greece there are big protests against the austerity measures. In many cases the protesters turned violent. In Athens there were violent demonstrations today as well. A few days ago "The New York Times" wrote that we should expect big social turmoil due to the tough austerity measures. Are you concerned these incidents? Does it make the government's job in implementing the program much more difficult, because it's not just Greece now, it's the entire Southern Europe. Does the IMF realize that -- it's a big issue for us.

MR. RICE: Of course the IMF is concerned about the difficult challenges that these countries are facing. It's a crisis of a large magnitude obviously and involves difficult, painful economic measures. So we have the fullest respect for the efforts that are being made by these governments and by the people of these countries and I think what is important are two things broadly. Number one, I think the economic reforms that are required to get growth and get employment and jobs back need to be undertaken, but I think they need to be undertaken in a way that is fair and balanced and that take account of the social dimension, and in particular protect the most vulnerable groups involved in the process. From the IMF's standpoint, that's one of the things that we consider to be most important in terms of the programs that we're helping to support. Sandrine?

SPEAKER: I'm going to go back on Greece. At the Peterson last week the M.D. confirmed that the debt sustainability corresponds to 120 percent of GDP by 2020, is that a number that can change or is that something that the IMF is set on?

MR. RICE: At the moment that's the target for debt sustainability, and as the Managing Director said at Peterson I think as you say, that that remains the target for the time being.

SPEAKER: Gerry, the ECB met today and kept its interest rate on hold. The Fund has been saying that there is room to lower that rate. What is your comment on the decision today?

MR. RICE: I think first of all I'd like to as the Managing Director and others have done in recent days, indicate that we think the role of the European Central Bank has been playing has been very supportive and the recent announcements have been positive including today's announcement which we support because as we've previously said, we believe monetary conditions in the Euro Area should remain very accommodative.

SPEAKER: As we're heading into the meetings next week, what is the sense from Christine Lagarde on what she wants to have come out of these meetings? I know she'll have a news conference, but as we're heading into them and as a lot of us are looking at what's the possibility of what could come out of these, what is your sense?

MR. RICE: We think these are very important meetings coming at a critical time for the global economy and bringing the economic financial world to one place, to Tokyo, to discuss these issues is a great opportunity. In terms of issues and outcomes I think broadly in terms of outcome I would echo what the Managing Director said in her speech at Peterson last week which was the curtain raiser for the meetings, which was the call to action, the call to implementation. We've seen in recent weeks and months a number of decisions being announced, we've seen a number of initiatives, and I think what's important now is that they be implemented. So I think a sense of action coming out of the Annual Meetings will be important. Just to disaggregate that a little bit, obviously the Euro Zone will be a major area of discussion. I think the situation in the United States, the fiscal cliff, the debt ceiling, will be a big issue, the overarching issue of growth and jobs. I think the issues we've been discussing here this morning, the Arab countries in transition, will be a focal point of discussions. So will the low-income countries and their financing needs. And Asia of course given that these meetings are being held there and the role of emerging markets. I think lastly a point of discussion will be the IMF's role and the IMF's changing role, and we've seen a series of new approaches, new instruments coming from the IMF in recent months. I think the role of the IMF in all of that will be a topic for discussion as well.

SPEAKER: Gerry, there is as political conflict these days in Greece. Regarding the Fantiani list or Lagarde list [which] shows that big Greek depositors in Switzerland [being] investigated for tax evasion. The IMF has many times insisted that we if are not controlling tax evasion the country will not be able to recover. Do you believe that the IMF is proven right after this development, meaning that tax evasion is the biggest issue in Greece because it's not controlled?

MR. RICE: Just broadly on the issue of tax, we are on record as saying that we think in the process of adjustment it's very important that the burden be shared in a fair and equitable way and obviously tax administration is a key part of that. Let me go back online because there is a question about Hungary. The question is "Do you have a date set for the beginning of the official talks between the IMF and Hungary? On what points did the IMF ask Hungary to clarify its position?" We do not have a date for any visit to Budapest, though obviously we continue to be in touch with the Hungarian authorities and with our European partners. On the clarification of position, I think the direction of the policies remains as was broadly described in our press release at the end of July.

I will add that we are not advocating a tighter fiscal stance than the government's current 2013 budget target, so there is no more austerity in our proposals, if you will. We are focusing on a balanced and sustainable package of measures. There are a couple of questions, and let me take them both. "In the U.N. general debate Sudan's foreign minister said the country's debt should be forgiven in response. Do Sudan's and South Sudan's agreements last week in Addis have any impact on IMF analysis or programs in either country? Can you comment on those agreements?" My comment would be that the Fund welcomes the agreement on oil related and other issues between the two countries and we look forward to its implementation and to the resolution of other pending bilateral issues, and the Fund stands ready to continue supporting both countries going forward. There is another question on Rwanda, "Does the cutting of aid based on alleged support of rebels in DRC have any impact on IMF analysis or of programs in the country?" I can say an IMF mission is in Rwanda to conduct a fifth review under the Policy Support Instrument and the discussions for the 2012 Article IV consultation. To answer Matthew directly, delays in aid disbursements is one of the issues the mission is looking into. We expect the mission to complete its work early next week and we'll issue a press release at that time. I think we've come to the end of our time for questions in the room. Let me thank you for being here and for your questions both here at the IMF and online, and look forward to seeing those of you who are on the way to Tokyo and working with you there. Travel well.

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