Transcript

Transcript of a Press Briefing by Thomas Dawson, Director, IMF External Relations Department

June 13, 2000

MR. DAWSON: I'm Tom Dawson, the Director of External Relations at the Fund.

Here are some housekeeping matters: For the Annual Meeting preparations, for those who are into long-term planning, we are making available press accreditation and hotel accommodation requests on the Internet. Bill Murray is the point of contact in that regard.

We are, I guess, perhaps focusing on a kind of Annual Meeting run-up. I should alert you there will be a number of events, meetings and so on, that the Fund management and staff will be having in anticipation and in the run-up to the Annual Meetings, particularly what I think I would describe as outreach, both with nongovernmental organizations and civil society, but also with media events in the three months prior, running up to the meetings.

For example, at the end of this month--or, actually, this week, Eduardo Aninat will be in Berlin at a conference. Later in the week, Mr. Sugisaki will be in Vienna for a conference. We've got a UN conference the end of June that a number of Fund staff, including Vito Tanzi, will be at.

So we will be trying to keep you aware of these events. We've already had some meetings both with NGOs and press in Europe, and we will be continuing that on, I think, an increasing level in the next two or three months and will try to keep you informed about that so either you individually or your colleagues elsewhere can keep up with that.

We also are announcing today and posting the schedule for the Managing Director's trip to Africa, which I think you all are aware of, but he will be in Nigeria July 2nd, 3rd, Senegal the 4th of July, Cameroon the 5th, Mozambique July 6th, and Johannesburg July 7th and 8th. And this is the third of his three regional listening tours that he embarked on initially, with Latin America in May and in Asia, returning last week.

I think that's all that I have at this point, so as is our custom, I'll be happy to take questions. We now have a clear majority of the attendees being from the External Relations staff. Well done.

QUESTIONER: Have you had time to take on board yet the decision Nigeria of the President to rescind, at least in part, the increase in petroleum prices and to speculate on how that might impact on any understanding it has with the Fund?

MR. DAWSON: Well, we are aware. It would appear that either the rollback--the price increase has been rolled back by half or it is half of what initially had been announced. There was no fuel price precondition in the proposed standby arrangement, so there's no direct effect because of that.

There are, of course, potential budget effects, but the budget itself is one of the issues that's presently underway since the government has proposed a budget -- or it has difficulties because the government had proposed a budget that the Congress has not approved. And we will still be looking at the budget issues, but there is no direct effect because of the rollback of the petroleum price increases because it was not something that was explicitly contained in the Fund program.

QUESTIONER: Was it implicitly contained?

MR. DAWSON: Well, I mean, to the extent that you have a budget and budgets require revenues and so on. But the question is what other offsetting expenditure measures might be taken, and as well as how the rest of the budget puts it together. So it's not something that causes an immediate reaction or requires an immediate reaction on our part because there is a more general discussion going on in terms of the budget, because as I say, the budget that the parliament had passed was one that was not consistent with the government's own request.

QUESTIONER: Could I just follow up to ask you whether you--I mean, many people saw that increase as a test of the government's resolve to take quite major political decisions and take political risks in bringing about the proper pricing regime for the petroleum market. Does it disturb you perhaps that the government has--I don't want to use the phrase "caved in," but decided to go back on something which many people saw as being a real test of their resolve.

MR. DAWSON: I think it's too early for us to be able to respond to that. I would note, however, that indeed there was--you know, it was a partial rollback or a partial increase, depending on how you look at it. And we're going to have to take a look at how that works out within the overall budget and the overall policy stance. So I think it's a little early to respond to that, but I think it's not as stark or black and white an issue as it might sound by yes or no in terms of the budget because there is still a discussion going on, as I say, on the budget.

QUESTIONER: Yes, a follow-up to that. How close are we to finalizing a deal with Nigeria?

MR. DAWSON: As I say, there was--notwithstanding this issue, there was still discussions necessary in terms of trying to resolve the budget issues. I mean, it's an issue of active consideration now, but, you know, it's not something that's any, you know, I would call it, any different than it was when I had the briefing a couple weeks ago.

QUESTIONER: In Argentina, they've got the President in town at the moment. What sort of schedule is there for discussions at the IMF with De La Rua.... Secondly, does the dwindling GDP figures that are being talked about, particularly by De La Rua, affect the program?

MR. DAWSON: As far as--the Managing Director will be meeting with the President I believe later today, I believe it's at Blair House, so that is--you know, in terms of your factual question, that is that. And we have, as I think you know, had a mission in Buenos Aires that has just returned, and it would appear that the program is, in fact, on track in terms of the targets. So I'm not sure that the implication is quite, at least at this point, it doesn't look like that there's been an adverse implication for the Fund program, because clearly the first-quarter targets were met and all indications are that the second-quarter targets were met as well.

QUESTIONER: Is there any suggestion that IMF funds for Croatia were misused? Or are you aware in the past through your reviews of Croatia that there were problems with the use of government funds and foreign assistance?

MR. DAWSON: Governance issues have always been a concern of the Fund, and Croatia is no different in that regard. I would note that Croatia has been out of compliance with the Fund for more than three years, and at the time they have been current in terms of all of their payments. So it's not an issue that I think has--you know, that we are aware of in terms of any recent allegations, but the concerns that were described in the paper, the newspaper reports this morning, are serious ones, but we have no evidence of any particular--any direct involvement of the nature that you cite by the Fund, but clearly governance issues of the sort identified in there are serious, you know, are a serious concern to us.

QUESTIONER: Since the last briefing, I myself have become very aware of how national security circles here in Washington are beginning to look at the impact on economies of infectious disease, and particularly of AIDS. And this may sound rather esoteric, but, in fact, some of the impacts forecast are really quite dire. And I just wondered whether--I know that the World Bank is involved in this--is the Fund doing any research to look at the potential impact on agreements on the potential for governments actually to make agreements and to comply with them in the light of quite severe downturns in economic growth, impact on budgets, this kind of thing?

MR. DAWSON: The impact of AIDS, particularly in Sub-Saharan Africa, has been a matter, I think, of global concern and of institutional concern, including by the Fund. In one sense of the word, the World Bank has not only expertise but a lead on that issue. But I do know from my own conversations with members of the--senior members of the Africa Department here that it is an issue that concerns them very, very strongly, one of a number of concerns, including the number of cross-border conflicts, civil wars, and so on.

So, yes, it is a matter of great concern, and we are working with our colleagues not only at the Bank but in other institutions. But it is definitely on the radar scope as something that has serious, both short-, medium-, and long-term, implications for the region.

QUESTIONER: In Mozambique the debt relief program there, there has been some criticisms that the IMF is pushing them to bring down barriers in their sugar industry, and that has been devastating to the country, critics say. Is that part of the negotiations on debt relief in Mozambique?

MR. DAWSON: The issue of sugar tariffs in Mozambique, it's a part of the--there is that issue in the program, and it involves the World Bank as well. I'm not sure I would necessarily say it is part of the debt relief, but that issue of protection in sugar is part of the program. I know there's been some recent coverage on it, and that's an issue we are discussing with the government. That is an issue in the program, the tariff levels, yes.

QUESTIONER: [inaudible follow up question on Mozambique]

MR. DAWSON: We are in discussions with them. That has been the--that is the desire as part of the overall strategy in terms of trying to make the economy more competitive and allocate resources more effectively.

QUESTIONER: Romania got its money last week, I believe. Are they still on track?

MR. DAWSON: They got their money this year--this week. They're still on track. Is that the question?

QUESTIONER: [inaudible follow up question on Romania]

MR. DAWSON: Yeah, I mean, there was a--maybe you don't want to quote another news service or something. I'm trying to figure out the premise of your question. There certainly has been--there's a report of an appeals court decision in Bucharest regarding proposed limits on bonuses and salary increases to workers, and the decision of the court does run contrary to what was part of the program. And it is an important--this is an important issue since a number of the enterprises in Romania have been traditionally running--or have been, in Fund-speak, loss-making.

And so we are quite concerned about controlling arrears. We are not concerned, as some have reported, or desiring to cut wages, but this is a bonus issue. We know the government is going to be taking another look at this issue, and whether there are alternative measures, court appeals or whatever, I think it's a little early for us to say just what route we'll be taking since this just came in overnight.

QUESTIONER: Just to follow up on Romania, it would stand to reason that the Monetary Fund is quite pleased with the actions of the government over the past couple weeks in dealing with this financial distress and the run on these financial institutions. Is that a fair characterization?

MR. DAWSON: The government did respond to the run on the financial institutions, and that was one of the reasons that we did go ahead with the approval and extension of the program.

QUESTIONER: If I can follow up on the Argentina question? Argentina did meet its targets, but has had to implement pretty severe budget cuts and has announced a new round. Is there any consideration to renegotiate any targets or letting those targets slip a little bit in the next quarter in order to let them sort of recharge the economy?

MR. DAWSON: I'm not aware of that. My understanding is that the budget cuts and so on that are being contemplated are as a result of the fiscal responsibility law, which is not, itself part of the Fund program. So, to repeat part OF the first answer to the question, the program is on track despite some concerns earlier that it would not be on track; but, secondly, the discussions going on are--it's not clear that they are driven by the Fund--any particular Fund targets. The fiscal responsibility law dictates essentially these sorts of measures, these types of measures, not the specific measures. The government has a choice in terms of how they deal with the budget, but the constraints under which they act are in Argentine legislation. It's not the Fund program.

QUESTIONER: But is there no thought to the fact that they might need to provide some more fiscal stimulus in order to get their country finally out of the recession?

MR. DAWSON: I don't know--I'm not quite sure how I can say is there no thought to it. As I say, the program seems at this point to be on track. They're worrying about what is a difficult budget situation, and I'm not aware of the government having indicated that. Indeed my understanding is they're indicating that they're trying to follow the law.

QUESTIONER: Just in terms of Herr Köhler's meeting with the private sector last week, why were there so few details about this? Was there not....

MR. DAWSON: I believe, actually, we provided more detail. I've attended meetings with Mr. Camdessus with the private sector, and we didn't even put out a press release. So I think we've actually probably provided more details.

If you have a particular question, I'll be happy to answer. But the Banks put out a press release, the Fund put out a short press statement.

QUESTIONER: Short, being...

MR. DAWSON: Which is longer than before. Infinitely longer.

QUESTIONER: I'm satisfied now. Thank you.

MR. DAWSON: Okay. No, but anyhow, I think the banks--the banks' press release, I think, did go into more-- a fair amount of detail, and we were--it was a very--I think it was a very good meeting. I was at the meeting. It was quite a good meeting. There will be a number. The new Managing Director is reaching out not only to the private financial community but to a number of other elements of society to have meetings of this sort, and I think this was a good move. I think the banks had felt in the past that they had not had as much access to the Managing Director as they wished, and so I think it was useful early on in his tenure to have this particular session, and there will be other sessions, particularly, I would note, in other regions of the world, because this was banks--I think there were 19 banks there representing a number of regions. I think you can expect that he will continue meeting with the banking and other communities as he travels.

In Latin America we met the banking community in a number--in, I guess, two other countries that we visited, and similarly in Asia, he met with another--both private sector groups and civil society groups. So it's part of our enhanced outreach, and we'll try to put out more press releases, longer press releases.

QUESTIONER A follow-up on that.

MR. DAWSON: Sure.

QUESTIONER: Is there any talk that the Treasury Department has called for establishing some kind of capital markets committee inside the Bank that would have private sector....

MR. DAWSON: Inside the Fund?

QUESTIONER: Inside the Fund, I'm sorry, that would have some private sector bankers as part of that. Is there talk of doing that, and is there talk of bringing some of these folks into the vision track....

MR. DAWSON: The Managing Director has noted his desire--and he noted it in his speech in Paris to the International Monetary Committee conference, rather--the desire to set up what we are calling a Capital Markets Consultative Group, which would be a number of bankers representing institutions from all over the world, that we would try to have something of a bit more of a structured dialogue than we have had in the past. We are working on the details of that, but certainly the idea would be that it would include banks from a number of regions, and when I say "banks," I mean that in the shorthand sense of the word, also money managers, investment banks and so on.

When we have a better idea of precisely what the nature of that would be, we will certainly be letting you all know, but it is an idea that he did announce back at the end of--back in May, end of May, I guess it was, and we will be pursuing that.

It is consistent with but not identical to what Secretary Summers announced or proposed in his speech, in New York, I guess it was.

QUESTIONER: Are we any closer to the next report from Ukraine on the next audit? And have any decisions been made on what sort of sanctions the Board may ask for Ukraine after the last audit?

MR. DAWSON: Well, we obviously are closer to it than we were previously. I don't have a date for you, but I think it is--I think the expectation is that in the next month or so we would have that second report, and that is a requirement for the Board then to decide what to do, both in terms of responding to the allegations and how to go forward on the program.

QUESTION: So they won't [inaudible]...

MR. DAWSON: We have stated that previously.

QUESTIONER: Could I ask a question about Mexico? Last week, the officials of the international financial agencies heaped quite a lot of praise on President Zedillo for what he has done to improve the economy and lay the groundwork for avoiding a crisis in the selection, but his party's candidate is threatening dire consequences if they are not re-elected for the, you know, 72nd year or something.

Is the Fund concerned about those types of threats of dire consequences? Do you think that's a wise idea considering the concerns revolving around the Mexican economy and the election year crises?

MR. DAWSON: I can't think of any aspect of that question that I want to answer.

Basically, you know, assuming the performance of the Mexican economy has been quite strong, with growth in the 7 percent plus level, inflation falling to the under 10 percent level, and all signs are that the economy is remaining strong, and we don't really get involved with, you know, the domestic political concerns. But I think the performance of the Mexican economy is something that I think the Fund is quite satisfied with, and certainly having been in Mexico recently, I know that the candidates of all parties are quite satisfied with it as well.

Nobody's going to ask me about Meltzer?

QUESTIONER: [inaudible]

MR. DAWSON: I was prepared for that.

QUESTIONER: Tom, anything further to add on the Meltzer Commission report?

MR. DAWSON: Well, actually, just to note that the U.S. Treasury did, as it called for under the statute, on June 9th submit its detailed response to the Meltzer Commission which we will be taking into account, just as we did the commission report itself and the other various reports that have been conducted on the Fund, both private as well as governmental reports. And they are all an important contribution to our own internal review process, which is well underway.

I might add, there actually was an earlier question about the bankers in terms of whether their meeting in some sense contributed to that dialogue, and it certainly does, and we will be talking not only with the private financial community but with other outside elements in terms of trying to get views on their view of the vision of the Fund for the future.

QUESTIONER: Just as a follow-up, in terms of talking to outside groups, as it were, Flemming Larsen I was talking to in Paris, and he said that one of the hard things about the whole approach in Prague is getting a handle on the NGOs and who to talk to. Is the Fund in preparation for the Annual Meetings trying to identify a list or an accredited list or whatever of NGOs and civil society groups to talk to....

MR. DAWSON: Absolutely. We have had a number of outreach efforts in Europe already. We have, as some of you may know, for a number of years had a regular--a mailing list, basically, something like 900 NGO names on it that we have been communicating with. In anticipation of Prague, we are trying to reach out to NGOs, particularly in Europe but not exclusively, and expect between now and--well, really now and the end of July to have or have had in a couple of cases meetings with British, French, Dutch, Scandinavian, although that will be in August, German NGOs, and press, by the way, also, in a number of cases.

We have a seminar planned at the Joint Institute in Vienna in early July that will focus in particular on Central and Eastern European NGOs, but I think we may invite some Austrian NGOs there as well.

I was in Prague in March and had had some meetings with NGOs there. So to the extent we can identify--and we're working with our colleagues at the World Bank. We're working also with the governments involved, the governments of the countries in which the NGOs are based. We are planning an active effort to talk with them to find out what is of interest to them.

One idea, for example, that we have, building on something we did here in Washington a couple months ago, is to have a seminar for NGOs that are actually interested in discussing what we call financial programming here. One of the controversies among the NGOs in particular PRGF countries in which we work is how do we put together the budget and fiscal monetary models. And for the U.S.-based NGOs, we put on a little seminar for them here a couple months ago, and some of the European NGOs when I was in Paris a couple weeks ago. We mentioned that as a possibility to them, and they are quite interested in that. So we are hoping in early July in Paris to have a similar seminar for them.

Now, of course, there is no way you can reach every NGO that exists because, indeed, a number of the NGOs are what we call sometimes virtual NGOs, on the Web, but we are trying to reach those who have tried to be in contact with us or who we are able to identify. And in that regard, the Internet, while it was certainly helpful for the organizers of the protests this spring, it certainly is helpful for us as well in terms of being able to reach out to NGOs.

So when I said at the outset sort of things were picking up, particularly for External Relations and the PDR Department, that's going to be a major activity. And Flemming--the Paris office is actively involved in that.

Thank you very much. The embargo will be lifted in ten minutes, five after 10:00.

Oh, I might just add, Mr. Phillips from BBC had suggested that we might do some sort of a briefing in anticipation of the African trip. I'll take that under advisement, but what occurs to me as a possibility is that the next regular briefing that I have, which will be before the African trip, in any event, we may try to get Mr. Gondwe and Ernesto Hernandez Cata, or someone from the African Department to perhaps come and take over my briefing so you can have some new questions to ask.

Thanks.

[Whereupon, at 10:00 a.m., the press briefing was concluded.]