Transcript

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

May 23, 2014

Webcast of the press briefing

MR. RICE: Good morning, everyone. Welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice, Communications Director here at the Fund. As usual, we're on record this morning, and we're under embargo until 10:30 a.m. That's Washington time.

I'll begin with a few announcements then turn to our colleagues in the room and go online. So some travel and events. This coming weekend, Sunday, May the 25th the Managing Director, Christine Lagarde, will give the keynote speech at the opening of the European Central Bank Forum on Monetary Policy in a Changing Financial Landscape. That will be in Sintra, Portugal. We will distribute Madame Lagarde's speech to you.

She then goes on to London, that will be May 27th, where she is giving the keynote address at the Inclusive Capitalism Conference in London. We will also make that available to you.

Finally, Madam Lagarde goes on to Maputo, Mozambique on May the 28th for a conference May 29th and 30th entitled “Africa Rising.” The conference is jointly organized by the government of Mozambique and the IMF. It focuses on highlighting Sub-Saharan Africa's economic achievements, and the challenges facing the region ahead.

We expect that to be a significant conference with well over 300 participants. Most of the finance ministers, Central Bank governors from all over Africa will be attending plus private sector, civil society, Parliamentarians, youth groups, and representatives from other countries. That's Mozambique, May 29th to 30th. We have all sorts of arrangements for live webcasts and making it available to you.

Let me mention one other thing that may be of interest to you. We're heading into a very heavy Article IV season which is usual at this time of year, but let me just remind you some of the major Article IV consultations coming out where we will have, you know, the usual concluding statements by staff which are then subject, of course, to the formal discussion with the Board.

But among those upcoming are Japan, China, the UK, the U.S., and the Euro Zone. So let me tell you that the First Deputy Managing Director, David Lipton, will be in Tokyo next week for that Article IV on Japan. As usual, David will meet with the authorities. At the moment we're scheduling a press conference for Friday, May the 30th. That's in Tokyo.

Mr. Lipton will then be in Beijing for the China Article IV concluding discussion, again, with the authorities. That press conference is tentatively scheduled for June the 5th.

I will be able to give you the information on the other dates for concluding press conferences at our next briefing. I hope that's helpful to you.

Final mention that our Deputy Managing Director, Naoyuki Shinohara is, at the moment, at the Philippines for the World Economic Forum on East Asia. He's speaking on a panel there.

Let's go to the room.

QUESTIONER: Do you think the Board is going to convene on May 30th? Also, do you think that the elections in Europe are a threat to the Greek program?

MR. RICE: I don't have a lot that's fresh for you, Michael. You have the news, in a way. I can confirm the Board will meet on May the 30th to discuss, that's the fifth review, of Greece's program. We expect, you know, the disbursement would be made contingent upon approval by the Board.

What else can I tell you? The approval of the fifth review, again, contingent on Board approval would enable a disbursement of about €3.5 billion. That's combining two disbursements given the delay in reaching agreement on the review.

I can tell you the team is expected next to briefly visit Athens in July. The next mission to conclude, you know, after the summer. As I think I'm indicating, our focus is very much on this review. So, you know, I wouldn't want to speculate on the upcoming elections.

QUESTIONER: Gerry, there was a report by the Financial Times. They were saying that officials from the ECB, IMF and Europe prepare a Plan Z for Greece to get out of the Euro Zone. Can you tell us anything about this, and if anybody in this building participated in these meetings?

MR. RICE: You know, as usual, we don't comment on news stories. More generally, not specific to Greece, but, you know, it's our job at the IMF to draw up various economic scenarios so that we can provide better advice to our member countries. Again, that's our core business. I'm not making that comment specific to Greece.

QUESTIONER: Good morning. Just a follow-up to ask a more precise question, not about the FT story. But has the IMF participated in a scenario plan for a Greek exit?

MR. RICE: There are -- you mean right now?

QUESTIONER: I'm talking about --

MR. RICE: Are you asking about now or in the past?

QUESTIONER: I'm talking about does the IMF have a plan, a scenario plan somewhere in its records, in its safekeeping on the table, you know, in the shelves ready to go just in case there is a potential Greek/Euro exit?

MR. RICE: I'm not aware of any such plan currently. So I don't have that.

QUESTIONER: You don't?

MR. RICE: We do not. To be clear, I’m not aware of any such plan.

QUESTIONER: Now or before because we are talking about 2012?

MR. RICE: What I'm saying right now, I'm not aware of any such plan, and, you know, again, I'm not commenting on the past.

QUESTIONER: Do you have any set plan for any other country of the Euro Zone that you would know of? The idea of an exit of any other country of the Euro Zone of a scenario of a Euro Zone breakup that you have been taking into account in your scenarios? Maybe for Greece? Maybe for other countries?

MR. RICE: No.

QUESTIONER: Actually I have a question on Mali. The IMF has voiced its concern about the fact that the president bought a jet for 40 million. Did you get any convincing explanations from the authorities? Do you have any time table for the resumption of the discussion in the context of the program that was approved back in December?

MR. RICE: Thank you. Maybe just stepping back a bit, for those who may not have followed this as closely. I'll try to answer your question directly.

The IMF is concerned about the quality of recent decisions such as the purchase of the presidential plane, and the issuance of a significant state guarantee to allow a private company to buy supplies.

Under the ECF arrangement that we have with Mali the authorities have committed to execute their budget in line with the priorities highlighted in their strategy, in their growth and poverty reduction strategy, and in accordance with sound public financial management practices.

So we have contacted the authorities, as you say, to ask for more information about this purchase. That's the plane purchase. As well as the state guarantee that I mentioned.

Getting satisfactory information about these transactions and reassurance that the authorities still stand behind the fiscal stability and sound financial management practice objectives of their arrangement with the IMF will take time. I can tell you it will delay the first review of the arrangement initially scheduled for June.

QUESTIONER: Do you have a time table for this review now that you --

MR. RICE: As I said, we expect it to take a bit of time. I don't have a specific time table. I've mentioned the first review which had been initially scheduled for June. We expect to be delayed. We, of course, stand ready to work with the Malian authorities on the diagnosis of weaknesses in public financial management, and on remedial actions to address these weaknesses in order so that we can move ahead with the review of the ECF.

QUESTIONER: Yes. Just a follow-up on that. Can you help me understand the IMF rules or protocol on -- so let's say that you find out there was a, you know, purchase of a plane and state guarantee from the state budget. If Mali takes remedial action is it still disqualified from the further bailout tranches? Do you understand what I'm saying?

Let's say you find something in violation of Fund rules, but they fix it. Can it still go ahead if they fix it?

MR. RICE: You know, as I said, we're working with the Malian government on the diagnosis. On remedial actions we, you know, stand ready to work with them on that to address them, and, you know, that would help us then to complete the review.

QUESTIONER: A number of things, mostly dealing with natural gas. The Ukrainians are still not paying Russia for the gas they get, and the Russians are now threatening to demand prepayment. Is there anything the IMF can do in this situation? By way of due diligence, is there any other items on the Ukrainian agenda in your book that we need to know about? Maybe a change in the situation?

MR. RICE: No major change in the situation. Confirming that, perhaps helpful, that we expect the mission to be in Kiev during the last week of June, first week of July. So in terms of something new that's what I have for you.

Let me come to your question, and you can come back. On the Naftohaz Gazprom, as you know these are bilateral discussions between the two companies. We are not, the IMF is not party to those discussions. However, as I've said here before we encourage both sides to reach a mutually acceptable agreement as soon as possible.

QUESTIONER: But we also know the IMF does not lend into arrears. We have been repeatedly assured that money was specifically provided in the Ukrainian program to clear the arrears. The arrears are not being cleared, and then the problem still goes ahead. What is the logic here?

MR. RICE: So the logic is, again, that Naftohaz is an autonomous entity. Thus, it's not part of the budgetary process. Nevertheless, the program also monitors the deficit of Naftohaz in order to properly take into account fiscal and quasi-fiscal risks.

So, as you say, the Fund supported program that was approved three weeks ago does leave room, it does enable the repayment of arrears in 2014, and for Ukraine, generally, to remain current on its external payments.

Again, we've said that the question of gas price and arrears should be promptly resolved. But again, it's being resolved in the context of bilateral, commercial talks between Naftohaz and Gazprom.

QUESTIONER: Okay. Next subject, also dealing with natural gas and sanctions against Russia. The point of the sanctions is to isolate Russia, in the meantime, the Russians and the Chinese just signed a huge contract amounting to $400 billion over the next 30 years. What is the significance of this contract macro economically in your view, and in the context of these effort to isolate Russia?

MR. RICE: Well, as you just said, this agreement was reached yesterday, so staff are currently examining the implications of that agreement for the Russian economy.

QUESTIONER: So no formal statement about this?

MR. RICE: Well, I think it's too early. It's too early to answer these questions as the details of the agreement are still not known.

QUESTIONER: On Ukraine, do you have any specific concerns about the outcome of the presidential elections that are taking place on Sunday?

MR. RICE: You know, it's our understanding the elections are proceeding on May 25st as planned, and, you know, I think we should wait for the elections. We normally don't comment on potential outcomes.

QUESTIONER: Different country. Venezuela. A former Venezuelan central banker has said that the country is in selective default. Can you remind us or refresh our understanding of IMF/Venezuela relations? Has there been any contact from Caracas with the IMF for technical assistance, program, et cetera?

MR. RICE: We haven't been able to conduct the Article IV, as you probably know, with Venezuela for quite some time. I can get you the specifics on that. It's been quite some time. You know, I don't have anything for you on the specific comment, you know, which I haven't seen.

QUESTIONER: If there's no Article IV does that mean that there's really no other relationship? If there's not Article IV does that mean there's also been no technical assistance or anything else?

MR. RICE: I mean, I'm not saying there's never any other form of discussion or dialogue. We're always open to dialogue with our member countries, but the absence of the Article IV makes it difficult to, you know, move forward in a substantive way.

QUESTIONER: I thought I'd stay in Latin American then. If you can just give us an update on Argentina? I asked two weeks ago if there was any new development.

One other question I have, we haven't at all talked about the Managing Director withdrawing from the commencement speech of Smith College. I just wanted to see if that means she'll never do any other commencements in the future? If you feel like, is it that the IMF is still misunderstood why not engage with the people who are doing the protests?

MR. RICE: Let me take Argentina. You did ask about it two weeks ago, and I think I’m able to update you a little bit today on that.

Stepping back for those who've not been watching it so closely. December 2013 our Executive Board adopted a decision calling on Argentina to implement an initial set of specified actions including public release of a new national inflation consumer price index data set and revised GDP estimates by end of March 2014.

Then the Board also said further action to be implemented by end of September 2014, and then by end February 2015. So it was kind of a set of steps that the Board decided on.

So the first of these reports was submitted to the Board last week. So that's in line with the calendar that I just mentioned. I can tell you that the Board meeting on that report is now scheduled for June 6th to discuss the matter. Other meetings would then follow in line with the calendar that I outlined.

Just in case you have a follow-up, I, obviously, wouldn't be able to comment on the Board's decision, but we will communicate that in the usual way after the meeting. Okay on Argentina?

QUESTIONER: Yes.

MR. RICE: So on Smith, as you know, the Managing Director decided to decline the invitation last week to make the commencement address. She did that with the rationale in mind, very much in her mind, that given the likelihood of some protests and possible disruption of the day that it was in the best interest of the graduating students not to have the day disrupted.

It's a very special day for the graduates. We felt the celebratory nature of the event should be respected and upheld.

Will the Managing Director do commencement addresses in the future? She's done, as you probably know, commencement addresses in the past. I don't have anything specific in mind, and the commencement season is now passing, but I would expect that the Managing Director would, indeed, do other commencement addresses in the future.

Is the IMF misunderstood? You know, I think in some places we're more misunderstood then in others. I think in this particular case it's been interesting to see that, you know, the IMF itself has not said very much. But there were some criticisms from the Smith students who were protesting that the IMF's policies were detrimental to some of our member countries, and particularly the poor.

I think it's been interesting to see the debate in public about that with many commentators actually participating in the debate, and noting that the IMF over the last number of years has evolved and changed significantly. Particularly, in regard to taking increased account in our programs of the social dimension, and to protecting the poor and the vulnerable, to giving attention to issues such as inequality, and to speaking out, in fact, on issues that do affect some of the most vulnerable groups in many parts of the world. For example, women.

The Managing Director, as you may have seen, gave a fairly detailed speech on that topic on Monday of this week which we posted.

It's been interesting to see the commentators are taking note of some recent analysis which shows that actually under IMF programs, contrary to some of the misunderstanding in some quarters, under IMF program expenditures on health and education have actually increased not gone down. You know, I think it's all part of what is a healthy debate.

Let me go online for a minute, because I've got a couple of questions here. He asked about the serious flooding in the Balkans which we're all, of course, very concerned about that. He's asking about the impact on the countries of the Balkans, and Serbia, and Bosnia.

Serbia's, again, been significantly affected. We have great concern, also, about the human casualties and the wide-spread damage, but we do not yet know the full extent of that. As an EU pre-accession country Serbia will be eligible for aid from the EU's disaster Fund.

In the meantime, the IMF engaged with Serbia through our policy advice, as well as in our discussion with other international, financial organizations through our resident representative. On Bosnia, actually, we have a staff team on the ground right now.

Probably have time, perhaps, for one more question, and I'm sorry that's probably going to be it today.

QUESTIONER: I was a bit surprised about your lack of comment on this huge gas deal because everybody else was commenting on it. So basically maybe my question is, is it a welcome development? Step in the right direction? Whatever characterization you want to use. Is there anything you can say about the deal?

MR. RICE: I don't want to characterize it, you know.

QUESTIONER: Obviously in terms of the IMF approach, in terms of the economic and financial stability in the world?

MR. RICE: Yeah. Well, you know, this would be the same for any major deal that was announced, you know, yesterday. We want to take time to look at the details, which we don't have, and then make a deliberate and balanced assessment. Again, that would be true for any such deal, and it will be true in this case.

QUESTIONER: You said that you didn't participate in these meetings from the Z Plan, correct?

MR. RICE: I said it was --

QUESTIONER: Or any plan?

MR. RICE: I said I wasn't going to comment on that story. That's what I said.

QUESTIONER: You said you had alternative scenarios or plans for the countries with programs?

MR. RICE: No. I said that, you know, part of our job with any country, I wasn't talking about Greece, I think I was clear, is to draw up various scenarios. We look at risks, that's part of our job, and so, you know, that's what we do in general. I was not commenting on Greece. Thank you.

QUESTIONER: Actually, can you just tell us, not to comment on the FT, but can you just tell us did the IMF participate in the Plan Z meeting?

MR. RICE: You know, I'm not going to comment on that story, as I've said.

MR. TORDJMAN: I'm not asking you to comment on the story. I'm asking you a question.

MR. RICE: Well, you know, by implication I'm commenting on the story because, you know, you're asking about the story that was in the Financial Times. I'm not going to get into it.

So with that I want to thank you for coming and see you in a couple of weeks.

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