Transcript

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

March 13, 2014

Webcast of the press briefing

MR. RICE: Hello. Good morning everyone. Welcome to this briefing on behalf of the International Monetary Fund. I'm Gerry Rice the Director of Communications here at the IMF. As usual our briefing will be embargoed until 10:30 a.m. Washington time.

Let me begin with some information for you about major events upcoming here at the Fund and our management travel. Then we'll move to your questions in the room and to our colleagues online.

Christine Lagarde, the Managing Director, will be visiting China. She'll be in Beijing from March 22nd to March 24th for a round of meetings including with government officials. She will speak during the opening ceremony of the China Development Forum on Sunday March 23rd, and give a second, more elaborate speech on Monday, March 24th at the same event. That's the China Development Forum in Beijing. Both events will be open to the press.

Today starting at noon our first Deputy Managing Director, David Lipton, will be presenting the findings of a staff paper entitled, “Fiscal Policy and Income Inequality” at the Peterson Institute for International Economics here in Washington. That presentation will be available to you on the web live and, of course, it’s open to the press. There will be a Q&A session with David Lipton after that event.

A few other things. Let me announce that the government of Jordan, the IMF, and the Arab Fund for Economic and Social Development will cohost a high-level regional conference in Amman, Jordan, on May 11 and 12 of this year to discuss the challenges and opportunities of the economic transformation process underway in the Arab countries in transition.

Christine Lagarde will participate and we expect well over several hundred participants from across the Arab world and beyond. That conference is entitled “Building Future Jobs, Growth, and Fairness in the Arab World.”

Last announcement then, we're coming upon the Spring Meetings and online press registration is open to you now. With that let me take some questions in the room.

QUESTIONER: We saw the statement yesterday about the meeting with Ukraine’s Prime Minister Yatsenyuk. I was wondering if you could maybe give us a few more details. Also, if you have any more details about when the mission will be returning and what the next steps are. Whether you need more information or anything like that. Thank you.

MR. RICE: As you indicate, Christine Lagarde, the Managing Director, made a statement later yesterday about her meeting with the Prime Minister of Ukraine. I'm sure that everyone has seen that. It emphasized that the IMF is eager to help the people of Ukraine, that we have a fact-finding mission in the field in Kiev as we speak, that we are consulting with the membership, and with other international institutions as to how best to support Ukraine at this stage.

In answer to your question, the fact-finding mission began on March 4^th --we had anticipated it would take about two weeks-- so we are expecting that mission to end very soon, perhaps tomorrow. That would be the two week period. The next steps would be for that fact-finding team to make their presentation, their assessment, to brief IMF management on that, and in due course our Executive Board, of course, and to make an assessment as to what the next step would be.

My understanding is that, and I know Christine Lagarde indicated this as well, the discussions in Kiev had made good progress. There had been a very good exchange of views. You've seen the statements from the Prime Minister, including yesterday, as well. So, again, an assessment to be made by the fact-finding team, and we'll take it from there.

QUESTIONER: I believe Ukrainian officials said they plan to have the IMF money in April. Is that -- I imagine you can't comment, but I'm going to ask, is that a realistic assessment? Thank you.

MR. RICE: We talked about this a couple of weeks ago, as you know. We don't have a timeline for you. First of all, as I just said, the fact-finding mission has to make the assessment, and then management the decision that would go ahead with the financial support and a program. As I also mentioned a few weeks ago, one of the features of the IMF is that we can respond to the membership fairly quickly. But again, everything is contingent on the assessment of the mission, and we will have a sense of that very soon.

QUESTIONER: Will you keep us updated?

MR. RICE: Absolutely. As we always do.

QUESTIONER: Yesterday the U.S. Secretary of the Treasury said that the amount of IMF aid would be 15 billion plus. How concerned are you that a member state is taking like that, the IMF assistance for granted?

MR. RICE: I didn't see that particular statement.

QUESTIONER: I was not a statement. It was during a hearing at the Congress.

MR. RICE: Okay. Again, I haven't seen that particular statement, but what I would say is, again, that our fact-finding team is in the field. They are making an assessment. Including in these discussions would be some assessment of a potential financing need. So, you know, I don't have those numbers today. That's something that the mission would be looking at. I think it'd be premature for me to say today what any potential number might be.

QUESTIONER: But it's not premature for the U.S. Secretary of the Treasury?

MR. RICE: Well, you have to talk to the Treasury colleagues about that. I can only speak for the IMF. Again, the team is making its independent, technical assessment at this stage. We expect them to conclude very soon. A decision would then be made on how to move forward, and included in that would be a consideration of the financing need.

QUESTIONER: Actually the IMF is releasing today another study about inequality. Is it something that will be part of the discussion with the Ukraine? I mean, to the fact of, you know, stressing the importance of inequalities? Is it something that is going to be part of the discussions with the country?

MR. RICE: It's an issue, obviously, that affects many countries if not most countries. So it's relevant in many country circumstances. It's an issue that we've been talking about, we've been highlighting for a considerable period of time if you look back at the IMF's statements.

In recent times we've been doing a bit more research on the issue given that it is linked to growth. You may have seen the staff paper that we issued a few weeks ago. There was a staff paper, again, on the same topic some time ago. Basically what those papers have been showing is that inequality is not conducive to sustainable growth, and so we're now looking at some research that is evidence of that.

Then we had a paper, the one a couple of weeks ago, that built on that finding and talked a bit more about redistribution and its effects, and indicating that redistribution policies can obviously be good or can be bad depending on their design. That leads to today where the paper that we will be releasing, and the discussion, will be more about the design of those policies and how they can be as effective and as efficient as possible in helping to reduce inequality.

QUESTIONER: But you didn't really answer my question.

MR. RICE: Well, I'm going to.

QUESTIONER: I'm sorry, can you just answer is it a relevant issue for Ukraine?

MR. RICE: As I said, it's a relevant issue for most countries including Ukraine.

QUESTIONER: Also on Ukraine. In the Senate markup of the U.S. aid bill there was a lot of discussion of the IMF. Basically, the argument was made that unless they pass that bill the IMF is somehow constrained in what it can do. So can you address the idea? What's the relationship between the reforms that are part of the bill and your ability to act on Ukraine?

Also, there's at least one quote from Russians saying that even if the U.S. doesn't pass its part of the IMF reforms there would be some ability of the IMF or the member states to go forward with certain rule changes to try to bring about reforms without the U.S. passing such a bill. Is it possible? What's your thought on that?

MR. RICE: We're already engaging in the sense that we have a team in the field, they're making an assessment. I've also said that I don't have anything to say in terms of specific potential numbers. But in answer to your question and on the quota reform, a couple of things: under the reform Ukraine's quota would increase so that potentially its access to IMF resources would also increase, other things being equal. Of course, I want to add to that the caveat that quotas are just one relevant metric in terms of an overall potential financing package.

There are a number of other considerations, balance of payment support, strength of policies, things like that. It's all on our website. So that's on Ukraine.

More broadly, on why the quota reform is important from the financial side, which is what you're asking about, it puts the Fund's resources and capital base on a much more secure footing. That's important for the entire membership and for any potential crisis situations that may occur. So I think in both those respects the quota reform is very important.

QUESTIONER: Can it be done without the U.S. passing a bill?

MR. RICE: The team is in the field. The team is making an assessment. They will come back and make a recommendation to management, so we need to wait for that recommendation as to whether it would be a program.

What I've just said to you in answer to the previous question is that with the quota reform Ukraine's quota would increase, and its potential access to Fund resources would increase as well.

QUESTIONER: I'm sorry if I wasn't clear. I just meant could this quota reform, could the overall reform that could increase Russia's share from 2.5 to 2.7, could all of these things be done absent the U.S. passing a bill to that effect? I saw at least one quote from a Russian Minister at the G-20 where people were saying that he said that somehow they should go forward after April even if the U.S. doesn't agree. I just wanted to know if that's feasibly possible, not to do with Ukraine, just to do with the overall quota reform proposal?

MR. RICE: I just want to wait for the team to come back, make the fact-finding, and make the assessment. Then we'll be in a better position to answer that.

QUESTIONER: Do you have any idea when this mission's going to end? Also, is the political situation a factor to give or not to give money to a country? I'm not saying this because of the political situation in Greece, but also for Ukraine.

MR. RICE: Let me just say to you and our Greek colleagues in the room that I don't have a great deal that's fresh for you today on Greece, which is unusual. We normally have a little bit of news for you.

The reason I don't have anything much that's fresh is that the team's in the field, discussions continue, and it wouldn't be appropriate to get into the details.

Maybe just as backdrop for colleagues who don't follow this closely: The IMF team along with the ECB, European Central Bank, and the European Commission is currently in Athens discussing the fifth review of the program. Intense discussions are underway. We're hoping that it will conclude as soon as possible.

On your second question, what is important for the IMF is the commitment of the government to an agreed set of policy understandings, reforms, and the capacity of the government to control and implement those policies. That's really the way I would like to characterize it. That's true in all the countries that we work with, including Greece and Ukraine. So it's that commitment to the reforms, to the policies, and the capacity to implement.

QUESTIONER: Madame Lagarde said yesterday that the fact-finding mission in Ukraine is making good progress and the IMF is eager to help the Ukraine to restore economic stability. But when we look into the past, the Ukraine does not have a very good track record of implementing the reforms agreed in the previous IMF supported programs. Do you have concerns of this? Do you think this time will be different? Thank you.

MR. RICE: Your question really relates to what I just said, the key is the commitment of the government. That's what the team in the field will be also making its assessment on that basis.

You mentioned the statement from Christine Lagarde yesterday, and you may have seen the statement from Reza Moghadam about a week ago. Reza is our Director for the European Department. He was in Kiev last week, and he issued a statement. Reza had also talked about being positively impressed with the authorities' determination, sense of responsibility, and commitment to economic reform and to transparency. I'm just quoting from Reza's statement there. I'm referring you to that.

So the third thing I'd refer you to is what the Prime Minister himself has been saying, including yesterday in Washington. You know, these are indications of a commitment to reform. But again, that's something that the fact-finding team will be reporting on, and IMF management, and ultimately our Executive Board will be making a decision about.

QUESTIONER: On Greece, I'm just wondering, is it correct that there are three reviews being done at once in Greece at the moment? Because you're so late that you're doing reviews for several, like, all the three reviews? That's what I've been told, and I'm just checking it's correct. If so, is that a record in IMF history to combine three reviews at once?

My second question is we haven't heard anything from the Fund on the results of the bank's stress tests in Greece. Can you tell us whether you're satisfied, and satisfied with the (inaudible) in particular?

MR. RICE: I'm sorry, I'm looking a bit puzzled Sandrine. You know, this is the fifth review of the program and that's what, you know, we're looking to conclude.

On the bank stress test issue, that will be one of the issues being discussed in Athens with the team right now. When we have their report we will be publishing that in the usual way, and I'm sure it will have more detail on that particular issue.

QUESTIONER: When it comes to reviews, it's common in press releases when you complete a review that you say the IMF completed the fourth and fifth review of Portugal or things like that. So that when we conclude the one in Greece you're just going to say we've concluded the fifth review?

MR. RICE: That's what it will be, yeah. QUESTIONER: Is there a disagreement between the two sides about how the Greek government will use the primary surplus?

MR. RICE: The team is discussing these issues as we speak, so I don't have anything further on that. Sorry, I did say I don't have a great deal fresh for you today.

QUESTIONER: If I may follow-up on the recapitalization aid for the banks in Greece.

QUESTIONER: It's not necessarily fresh because it was something new last week. I'm wondering could you please make clear for us the IMF's stance on the Financial Times article on the needs for the recapitalization needs of the banks to be as high as 20 billion or 22 billion? What's the IMF's stance? How big and how quickly can the recapitalization of the banks in Greece take place? If you have anything on that it would be really useful. Thank you.

MR. RICE: I really don't have anything on that because that's, again, at the crux of the discussions that are taking place, so I don't have anything fresh.

QUESTIONER: I have a question on Madagascar. The government today said that the IMF has restored ties with Madagascar for the first time since 2009, and this should enable them to have an engagement with other donors. So I was wondering if you could confirm that and give a little background on why that happened?

MR. RICE: I can confirm that the Fund has recognized the government of Madagascar. The decision is consistent with broad international support and recognition of the newly elected government. Recognition of the government will allow the Fund to resume its work in Madagascar.

So let me go online just a little bit and then I'll come back. Let me take a question on Pakistan. How does the IMF see the current level of the Pakistan currency? Is it the real value of the rupee against the dollar? Is it overvalued, undervalued? On the issue of Pakistan's exchange rate, I can say that we firmly believe that Pakistan is best served by a flexible exchange rate which allows the rupee to find a market-based equilibrium. Recent appreciation pressure seems to reflect improving current account prospects and better capital inflows, both welcome developments.

We would encourage the State Bank of Pakistan to take advantage of this favorable moment to step up its efforts to rebuild reserves while keeping an eye on Pakistan's underlying competitiveness in world markets, which needs to be improved.

I'm going to take one more question online which is related to Argentina. The question is: U.S. Secretary of State John Kerry said the U.S. won't side with Argentina if asked to file an amicus brief. What is your opinion, taking into consideration that the IMF stated some months ago that it was going to support Argentina's position?

What I can say is what we've said here before. This relates to the legal case in the New York lower courts. As we've said before, the Fund remains deeply concerned about the broad systemic implications that the lower court decision could have for the debt restructuring process in general. In terms of the amicus brief I have nothing to offer on that.

QUESTIONER: I have a question on Cyprus. Can you tell us what is the status of the mission there? Do you have any comment on the resignation of the Central Bank Governor in Cyprus?

MR. RICE: On the status of Cyprus, the IMF staff team, along with our partners in the EC and the ECB, concluded discussions with the Cypriot government on the third review of the program on February 11th.

I can tell you that our Board is scheduled to discuss this third review on March 28th, later this month. As usual, you know, we'll be publishing our staff report in the days following the meeting. That's probably what I have on status.

On the central bank governor, what I can say is that we look forward to engaging with a new central bank governor as part of the dialogue with the Cypriot authorities on the economic program, as well as the Fund's regular interaction with the authorities of member countries.

QUESTIONER: I have another question on Ukraine. You said that one of the key elements was this report from the authorities, but given the high level of instability in the country, you know that there is this referendum in Crimea this week, don't you think that the support coming from the population is also a key factor? Do you really think that this government, which was not really elected, could get enough support from the population to implement harsh reforms?

MR. RICE: As I said earlier, the commitment of the government to the reform and the capacity to implement the reform are issues that the team will be assessing, taking into account. You know, that will be part of the decision-making process that will follow.

QUESTIONER: If I may follow-up on Greece just one more time? If the negotiations are concluded on Sunday as the Europeans are asking the Greek government to do, when do you expect the Board to discuss the staff review on Greece?

MR. RICE: I don't have a date for you. You know, it's number one, contingent on the review concluding, which we have to wait and see. Then number two, it takes a little bit for the team to put together the staff report and get it to the Board. I mean, there's a normal timeline for this. It's usually somewhere around four weeks. So that's the norm, but around that time which I think you probably know.

QUESTIONER: I wanted to ask about Sudan and Hungary. On Sudan, the Minister of Finance has said that the country is now eligible for debt write-off. That it's met IMF reform requirements, including poverty reduction strategies. I don't know if that's the case, so I'm wondering if it's true? And should I ask Hungary now or…

MR. RICE: I'll need to come back to you on Hungary, actually because I don't have much that's up to date on Hungary, but you can ask your question for the records. We'll come back to you then later.

QUESTIONER: On Hungary, this is kind of a book that came out this week saying that the previous economy minister spoke to Goldman Sachs before making public that it was going to the IMF for a program, and that this resulted in currency trading that some people, rightly or wrongly, are attributing to this sort of speaking in advance to an investment bank. So it just made me want to ask you whether the IMF -- obviously there's Hungarian legal issues that exist or don't-- have any rules on the ministers and governments that it speaks with how they should convey that information? Either if they could trade on it, for example, or if they can convey it to others and then in turn could trade on it?

MR. RICE: I don't have any information at all on the case you're referring to, so I don't have any comment on that. But we do have, of course, confidentiality understandings on information that we would consider confidential in the discussions that we undertake with any authority. But again, I do not have anything specific for you in this case.

QUESTIONER: Like the existence of discussions? In this case it may not be anything that was actually conveyed, but simply the fact that the government intended to approach the IMF?

MR. RICE: I really don't have much more beyond what I said.

QUESTIONER: Okay.

QUESTIONER: You know, I do suppose that because the bank issue is very, very important, and we need to know the IMF position. Can you take the question of the two ladies and answer later today? Because we need to know the IMF position on the banks, on the Greek banks.

MR. RICE: I understand your eagerness and anxiousness to know. But I think we have to respect that the mission is in the field. It's doing its work with the Greek authorities. They're doing their work and the partners are all in there talking about it. It just wouldn't be appropriate to do that. But I do understand you pushing.

QUESTIONER: This is just a very short question to follow-up on Madagascar. So what does that actually mean? Does it mean the IMF will go to Madagascar? Are there any programs on the line? I guess if you could explain a little more in practical terms what does the…

MR. RICE: I don't have that. Is a mission about to take off? I don't know. But the recognition of the government allows us to resume our work, so that process will begin. We'll come back to you, and now that we know you're interested in this case we will keep you posted as to the next steps.

I'm going to leave it there and thank everyone for coming. Thanks to colleagues online as well. See you in a couple of weeks.

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