Transcript

Transcript of a Press Briefing by William Murray, Deputy Spokesman, Communications Department,International Monetary Fund

October 25, 2013

Webcast of the press briefing

MR. MURRAY: Hi, welcome. I’m William Murray of the Communications Department at the International Monetary Fund. This briefing is one of our regular briefings. It’s embargoed until 10:30 a.m. Washington Time. That’s 2:30 p.m. GMT. Let me go through a few points about official travel and a few events for the record and then we will take questions from journalists here in the room and from you online at the moment. Again, let’s go through some of the travel plans.

Managing Director Christine Lagarde will be in Paris to participate in a meeting of leaders of the International Financial Institutions on November 8th. It’s a conference that is being organized by French President Francois Hollande. The idea is to review the state of the global economy and Europe. Our understanding is the event will conclude with a press conference.

On November 10th, the Managing Director will travel to Kuwait for a one-day visit. She will have meetings with the authorities. The visit will include the IMF-Middle East Center for Economics and Finance, a training center funded by the Kuwait government that enables us to provide training to Arab League countries, to raise capacity in monetary and fiscal policy. In addition to the visit to the Center, the Managing Director will be giving a speech at a Central Bank Symposium in Kuwait.

Turning to travel by our deputy managing directors, our First Deputy Managing Director David Lipton will deliver a speech, October 31^st at the American Academy in Berlin entitled “Germany’s Role in an Interconnected World.” The Media Relations Division will be in touch with you regarding embargoed access to text. Deputy Managing Director Naoyuki Shinohara will be traveling to Accra, Ghana, this weekend for meetings with the authorities. He will be a keynote speaker at a conference called Opportunities and Challenges of Financial Integration in West Africa n Monday, October 28th. .

Deputy Managing Director Minouche Shafik will be in New York City on October 29th .to speak to the Council of Foreign Relations on the global outlook and participate in the Economist Buttonwood Conference . On November 8th she’ll be in Boston to participate in Harvard University’s Arab Weekend 2013

Now into some operational issues. We have a number of Regional Economic Outlooks (REOs) that will be launched over the course of the next few weeks. Sub-Saharan Africa is next Thursday, October 31st, in Lagos, Nigeria, and Dakar, Senegal. So it’s a simultaneous launch in Nigeria and Senegal.

Additionally, on October 25th in Kazakhstan, there will be the launch of the regional outlook for the caucus and Central Asian economies. And lastly, on November 12th in Dubai, there will be the MENA -- the Middle East and North Africa – REO launch in Dubai. Again, Media Relations has the full details and you can contact them for additional information.

Lastly, I want to flag -- I have a little prop here today. I want to flag this event which you should mark on your calendars: November 7th and 8th here at IMF Headquarters is the annual Jacques Polak Research Conference. This year it’s honoring Stanley Fischer, former Israeli Central Bank Chief, and former senior official here at the IMF. The keynote speaker at the event will be Paul Krugman. My understanding is Fed Chairman Bernanke, Larry Summers, a host of other prominent economists will be attending this research conference this year. Again, mark your calendar, November 7th and 8th. Press have to pre-register.

Okay. With that, we’ll turn to the floor for some questions. I think we have some -- go ahead.

QUESTIONER: The first question is when the mission is going to Greece and who is going to lead the mission this time? Is Mr. Thomsen going back?

MR. MURRAY: Poul Thomsen will be the mission chief when the mission goes back. Poul will be on the ground sometime in early November. I don’t have precise dates for you, but it will be early November that the mission will return to Athens to work on the fifth review of the program.

QUESTIONER: Do you have dates already?

MR. MURRAY: Right now we’re just saying early November. It’s fairly soon.

QUESTIONER: The next question I have is that the Prime Minister of Greece and also the Finance Minister of Greece, both stated that they reject any new measures, saying that the Greek people cannot bear any new measures. On contrary, the IMF and the rest of the troika, as I understand -- and if I’m wrong, please correct me -- they want more steps and more measures. Keeping this agreement between the Greek government and the troika, can you tell us what is the position of the IMF on this issue?

MR. MURRAY: Thanks for the question. You know, right now there’s been technical discussions for some time now on the fifth review. I’m not going to be explicit in terms of what the outcome of the mission will be. They’re clearly looking at a host of issues and there will be, as usual, communication at the conclusion of the mission in Athens. But the one thing I do have to remind people about is what the Managing Director said during the Annual Meetings. You may recall that she had a press conference here prior to the IMFC meeting and she noted that a mission would be going to Athens, that it would be looking at the budget and what not, but that if new measures were needed, it is not going to be in the form of additional across the board fiscal measures, that is, undifferentiated cuts in wages and pensions. Beyond what the make-up of policies would be going forward, I’m not in a position to get into that.

QUESTIONER: On Greece, the pace things are going, and I know there’s this financial gap, are we going toward having several reviews at once? Because these things are dragging on and we’re not going to have anything for a few months and (inaudible) now?

MR. MURRAY: Let’s get back to it. Let’s take one thing at a time. Clarify, what do you mean several reviews? I don’t quite understand.

QUESTIONER: Well, this is one review, right, that’s going to take -- people were going to -- they left, they came back, and it’s dragging on. So when can we expect any agreement basically? Or are we going to get into the next review time period?

MR. MURRAY: Well, that’s suggesting that the review will not be concluded. There’s no indication that the scenario you’re mapping out is how it’s going to play out. There’s a review underway, we’ve been clear. It’s going to look at the financing gap for the year ahead, because we’re required under our rules to have a fully funded program for 12 months out. And as you know, this review will affect the period beyond July 2014. And we know the program is fully funded to July 2014.

The Europeans have stated that they would be supporting the program beyond 2014. So, you know, those are the things that have to be finalized at some point in time. But to suggest that this is on some sort of slow track or anything like that, I don’t think that’s the right way to look at things right now.

QUESTIONER: About Greece again, it seems that the IMF and Europe are stepping back against their commitment regarding the Greek debt. Greece has done whatever was necessary in order to achieve primary surplus and we’re expecting a final decision in the spring. Now we hear that the discussions will start sometime during the summer. Why is that?

MR. MURRAY: I’m not quite familiar with what you’re driving at. I mean, we know that there’s a primary surplus. The Greek authorities are committed to the 1-1/2 percent primary surplus. Beyond that, that doesn’t ring a bell with me. I’ll have to get back to you on that because I don’t have any guidance.

QUESTIONER: What’s your comment on the recent short-term fiscal deal inked by U.S. lawmakers to end the government shutdown that will fund the government only to middle of January and raise the country’s debt ceiling to early February? Is that an ideal one in IMF’s view?

MR. MURRAY: Well, thanks, that’s a good question. The Managing Director issued a statement when the U.S. Congress took action on the debt ceiling and extended it until February 7th. We welcome that step. But we stress and we still continue to believe this, there needs to be a durable solution to the debt ceiling. Uncertainty is not a healthy condition so you want it for economic activity. And you want to resolve uncertainty as much as possible. We also want a durable solution on the debt ceiling because our main platform is that the U.S. needs to come up with a clear medium term plan for dealing with its fiscal challenges forward. So that’s the critical issues at the moment.

QUESTIONER: I have a question on Tunisia. The first review is still on hold and the political situation over there is deteriorating. So how concerned are you? Do you think that the program over there is at risk?

MR. MURRAY: I’m not going to speculate about the future of the program, but let me give you a fill on where we stand. We had a mission [staff visit] in Tunisia in September. We issued a press release on that. That’s public record. You know, obviously Tunisia’s outlook has been negatively impacted by the ongoing political crisis. The European financial downturn has had an impact, as well. Risks remain important and now tilted to the downside with a delay in the political transition being a factor.

As a result, the growth outlook for the year has been revised to 3 percent. And again, the risk to that forecast is on the downside. The most immediate challenge for Tunisia is to maintain macroeconomic stability while moving ahead with the implementation of their reform agenda, which the agenda is key to restoring investor confidence and fostering a higher rate and more inclusive rate of growth. That’s what I have to say right now.

QUESTIONER: Did you feel that the risks have increased lately given the political instability in the country?

MR. MURRAY: I’m not going to draw conclusions on that. They have political risks that are significant.

QUESTIONER: I wanted to also ask about Ireland. I understand the IMF has sent a mission to Ireland to review the final steps before it’s the first graduate from the program. And I was wondering, IMF I think in the past has been supportive of a precautionary credit line, but now you seem to be kind of in the middle. But maybe it wasn’t as explicit, so I could be wrong. But if you could comment on that a little bit. And then I had a question on Brazil.

MR. MURRAY: I don’t think we’ve been -- the characterization of what -- this will be driven by the authorities, it always is. So in terms of how they want to structure their relationships with financial support going forward, it’s up to them. So we don’t really have a -- ultimately that’s the authorities to evaluate that situation and determine whether they need a financial backstop.

QUESTIONER: (inaudible) in place?

MR. MURRAY: I’m not going to get into that at this juncture. But the thing is, this is really ultimately for the Irish authorities to determine. Now, you know, this always happens. I mean when you reach, you know, turning points in relationship with the IMF, authorities are always going to think about what the next relationship will be. There’s no rule of thumb, it’s all done on a case by case basis. You know, Ireland is in a strong position in terms of its bond yields and cash buffers. But, there’s uncertainties in Europe in the global economy. So these are all sorts of factors that the authorities themselves have to weigh. But I can’t draw those conclusions for that at this juncture.

QUESTIONER: So, yes, (inaudible) again on Ireland. So is the finance minister indeed coming to meet the managing director next week in Washington? And is the IMF preparing, just in case, a follow-up program? You know, are you working on a (inaudible)?

MR. MURRAY: I prefer that the Irish confirm who they’re meeting with when they come to Washington, but my understanding is that the finance minister will be meeting with David Lipton next week.

QUESTIONER: Brazil’s delegation was in Washington this week to discuss with the IMF about the disagreement over how to measure gross debt. And I was wondering if you have any more follow-up on that? Have you come to any agreement or middle ground on that issue?

MR. MURRAY: I don’t have any additional guidance for you. I mean, one thing is I can confirm, yes, the Brazilian authorities are here today. I’m not expecting to give any readout on that meeting. And until the discussion has come to a point where I can, we’ll give you a readout. We’re not going to hide what we think, but we don’t have a readout at the moment.

ONLINE QUESTIONER: Mission is concluding its work in Ukraine. Are there any results and comments on the situation? Another from Tass. Has there been any forward movement on Ukraine at the Annual Meetings or since then?

MR. MURRAY: With the mission on the ground, again, there will be communication on the mission outcomes which should help answer a lot of these questions. But let me just remind you of a few things. Since the April mission, the Fund’s staff have conducted periodical discussions with the Ukrainian authorities at the technical level on policies that can form part of a comprehensive fund supported program. But there have been no in-depth discussions of such a comprehensive program at the policy level since then. In the meantime, the 2013 Article IV Consultation, which is the mission that is now in Kiev, is underway. And this visit provides opportunities to hold more in depth discussion regarding challenges facing Ukraine.

QUESTIONER: I have a question on the last Fiscal Monitor. The IMF was suggesting that 1 of 10 persons’ tax on wealth could be appropriate to help shorten the fiscal deficit around the globe. This proposition has drawn some criticism. And is it the official position of the IMF?

MR. MURRAY: No. That’s a staff analysis suggestion that if you did X, Y would happen. It’s analytical work; it’s not a policy statement from the Fund.

QUESTIONER: So you don’t think it would be appropriate for –

MR. MURRAY: No, no, it’s not that, it’s analytical work that said if you dial in taxes, a certain level of taxation, this is what you can do with it. It was a piece of analytical work. It wasn’t a policy statement from the Fund that -- I’ve seen the commentary that applies. It’s a policy statement from the Fund, which is not --

QUESTIONER: So the IMF is not calling for such a --

MR. MURRAY: It’s analytical work. It’s purely analytical work. [A short box in the recent Fiscal Monitor reviews discussions and experiences of a one-off capital levy and draws attention to its very considerable downside. It emphatically does not recommend it. See also below for further clarification ].

QUESTIONER: One issue that came up during the Annual meetings was widespread dissatisfaction with the dollar as a reserve currency given all the drama in the U.S. But, you know, there’s a lot of alternatives, but none of them seem to be really feasible. But one area that people have suggested is relying more on special drawing rates at the IMF. And I was wondering if you’ve gotten any expression of interest in that regard or more people are talking and trying to see that as an alternative to reserves. –-

MR. MURRAY: This is an issue. I mean there’s a lot of thought going in all over the world about how to organize the International monetary system. This notion has come up from time to time. I’m not aware of it being an active issue at the moment. Yes, it’s there, it’s alive and well, but I’m not aware of any drive at this moment in time. We just had our policy meetings here in Washington, of course, and I don’t recall this coming up as a driving issue, you know, replacing the dollar with the SDR or any other currencies.

QUESTIONER: Are you concerned about the (inaudible) stability?

MR. MURRAY: We’re concerned about global stability in general, but I’m not going to make pronouncement on the dollar today.

QUESTIONER: I have a question on Cyprus. It is well known that the President of Cyprus wants to fire the Governor of Central Bank, and I wanted to know your position on this. And also if you can tell us when the mission is going to Nicosia.

MR. MURRAY: Let me get to the review mission first. There will be an IMF team jointly with our European partners, the European Commission and the ECB. They’ll start discussions with the Cypriot authorities in Nicosia on October 29th. And that will be the second review of the economic program. These missions typically take, you know, most missions typically take two weeks. So two weeks from the 29th we would expect some form of communication on outcomes from that mission to help you out there, so mark your calendars.

In terms of the situation you described in Cyprus we’ve said this before and I’m going to repeat it. We believe that full cooperation between the Executive Branch and the central bank is key to ensure financial stability in Cyprus. That’s all I’ve got to say.

QUESTIONER: I would like to know whether IMF agrees with the Europeans. The Europeans say now that they will start discussing about the sustainability of the Greek debt sometime in the future, maybe during the summer, and not after it verifies the primary surplus, something that will happen as far as we know?

MR. MURRAY: Thanks, now I understand. I wasn’t quite sure. I’m not aware of anything – I don’t have anything on Greek debt at this time. Right now the focal point of our ongoing analysis in Greece is on the fiscal side, things of that nature, the budget. Greece has got to get a budget together and that’s kind of where we’re working. But in terms of debt and then the funding of the –- the financing gap over the next 12 months, those are the key issues. I would discourage you from pursuing the debt thing at this stage. It doesn’t ring a bell with me.

One thing I want to clarify, the question about the Fiscal Monitor. If I wasn’t clear, my colleagues want me to make this clear: we are not recommending the wealth tax. Like I said, it’s analytical work. It’s just if you did this, this is what you would get from it. But it’s not a formal policy of the Fund to recommend a wealth tax. There’s also a box on the Fiscal Monitor you can go look at that gets into this discussion. But it’s not a policy recommendation.

QUESTIONER: We do have a comment on U.S. Supreme Court’s recent decision of declining to hear appeal by Argentina over its battle with restructuring of debt -- that refused to take part in the debt restructurings standing from its default one (inaudible) ago. Thank you.

MR. MURRAY: I know this is a recurring question. I don’t have anything on Argentina (inaudible) issue. We’ve stated our views and we’re not going to comment on any U.S. court cases, whatever country is involved.

QUESTIONER: If I can comment on Argentina. Could you give us some updates on the role between the IMF and Argentina over this issue?

MR. MURRAY: Sure. I can comment a little bit on that. Just to remind people, there’s no fresh developments, but the Managing Director is required to report to the executive board on the status of discussions with the Argentinean authorities over data issues by November 13th. I expect those to be on schedule with that report. I expect that report to be submitted at least, you know, by November 13th. In terms of what the report is going to contain, what the executive board is going to do, I can’t get into that at this stage. Stay tuned. Again, we will have obviously public communication regarding this issue at the appropriate time. But again, deadline is November 13th, report from managing director to the board. The board reviews the report. I’m not, you know, in terms of does it review it on the 13th or not, I don’t know. If it reviews it, it decides what it wants to do. The current status is Argentina.

QUESTIONER: Is Argentina facing sanctions from the IMF?

MR. MURRAY: That already occurs. It’s up to the Board to decide what it wants to do next. I’m going to wrap up here fairly soon, but go ahead.

QUESTIONER: A very quick question on Egypt. There’s been some interesting comments from the Central Bank Governor Ramez, which you may be aware, where he was concerned about the way that Egypt was invited to the Annual meetings, so therefore, they did not come. I was wondering if you could offer any clarification on that?

MR. MURRAY: I can’t clarify that. I haven’t seen – I mean I’m vaguely familiar with what you’re talking about. I really can’t clarify it. Egypt is a member of good standing; they’re invited to the Annual Meetings. We have ongoing, active discussions with the Egyptian authorities. We stand ready to help Egypt and the Egyptian people and that’s where it stands. I don’t see any change in our relationship. Again, thank you for joining us. 10:30 a.m. Washington time, 2:30 p.m. GMT embargo. We’ll see you in two weeks. Thanks.