Transcript

Transcript of a Press Briefing by Caroline Atkinson, Director, External Relations Department, International Monetary Fund

May 26, 2011

Webcast of the press conference

MS. ATKINSON: Good morning, everybody. Welcome to our regular press briefing. I’m Caroline Atkinson, the Director of External Relations at the International Monetary Fund.

I’ll just go through some upcoming events and management travel. First of all our work program was released today. This looks at three main issues that we will be focusing on. The first is strengthening growth while pursuing economic and financial stability. The second is further work on the international monetary system. And the third is developments and help from the IMF to low-income countries.

Next, the Acting Managing Director, John Lipsky, is as I’m sure you know today and tomorrow in Deauville for the G-8 summit. He is participating there also with Masood Ahmed who is the Director of our Middle East Department, and Antoinette Sayeh who is the Director of our African Department.

On June 6-10 the Acting Managing Director will be traveling to the U.K., Japan, and China for the conclusion of the Article IV missions in those countries, including a discussion of the new spillover analysis that the IMF is doing for the five largest economic areas. These are aimed at looking at the interconnected nature, or understanding the interconnected nature of the world, seeing how policies in one country spill over to those in others. There will be press availability also on those trips; on June 6th, 7th, in London; the 8th in Tokyo; and the 9th, 10th in China.

The Chinese mission will also include the FSAP, the Financial Sector Assessment Program, which as you know China has agreed to do for the first time this year and that’s where the conclusions there will be discussed with the staff.

And finally, the Special Advisor, Min Zhu, also today and tomorrow is in Rio de Janeiro in Brazil for a conference that is co-hosted by the Fund and the Brazilian authorities on capital flows in emerging markets. High-level Brazilian officials will be there: Guido Mantega from the Ministry of Finance; and our Chief Economist, Olivier Blanchard, and Nicholas Eyzaguirre who is the Director of our Western Hemisphere Department, are also participating.

So let me turn now to your questions. I also have questions on line, and please identify yourselves and your affiliation before your question.

QUESTIONER: Thanks. I have two or three questions about this l’affaire DSK—as it is called. What are the lessons learned, Caroline, from this whole affair for the IMF?

MS. ATKINSON: I think for the IMF the key point is that we have—and I think we demonstrated this last week—an experienced staff with depth and commitment to carry on our business, our important business, of supporting our member countries and giving advice to help promote the global economy in the interests of all its citizens. That is what the Acting Managing Director, John Lipsky, stressed to staff last week, and that is what staff has been very keen to continue to work on.

QUESTIONER: But the former Managing Director, himself, obviously failed in his leadership position, at least obviously personally failed. Some people would probably say it was also a systemic failure. So my question about lessons learned and whether anybody actually tries to learn those lessons here was more about this sort of thing as the fallout from what happened.

MS. ATKINSON: You raised a good question about lessons learned. And whenever there are difficult times for any institution, including this one, it’s important to think carefully about what things have happened. But I want to make clear that the former Managing Director is obviously subject to a criminal investigation, criminal charges. That is quite separate from the International Monetary Fund.

We as an institution have to think very carefully about how we comport ourselves. We have a strong—we’re not perfect—but we have a strong code of conduct. It was recently reviewed and updated—I think maybe you’re all aware of that—on May 6. We tightened some parts of the code of conduct, although many parts were reaffirmed. We obviously need to make that clear to all of our staff. That process has begun.

We’re subject to rules of conduct that are consistent with best practice in the private and public sector in the U.S. and elsewhere. Now, does that mean as I said that we’re perfect? Absolutely not, we need to think how to work to become better. But I would not buy into your comment that there is a systemic failing. Clearly we’re in the spotlight, and we need to be able to demonstrate openly and transparently what kind of an institution we are, what kind of people work here, and under what guidelines and guidance.

QUESTIONER: Still, within that same process I think one can see room for the question of responsibility. We all remember that when this guy was appointed, first appointed, he was not universally welcome, and there were questions raised. And some members and some groups of members specifically insisted on him being appointed on the regional principle. So have you ever heard any discussions here about the responsibility of those people who opposed his candidacy?

MS. ATKINSON: I think that’s going into rather a different point. I believe that his appointment was by consensus as has been traditional in the IMF. I think that process, the selection of the Managing Director, is a matter for our Executive Board and ultimately for the 187 member countries. It’s a somewhat separate issue from the issue of conduct of staff and management. Of course, the Executive Board is responsible for ensuring and requiring the highest standards from the Managing Director.

QUESTIONER: But basically what you’re saying, though, are no apologies are needed or required?

MS. ATKINSON: No, I’m not saying that. You should have learned, not to try to put words into my mouth. I used the words that I wanted to use.

QUESTIONER: Okay, what about that apology thing, though? And then one last brief one –

MS. ATKINSON: I thought the last one was the last one.

QUESTIONER: The last one is about appointing a new European to that position, which is being discussed. Do you think it will be good, better, or indifferent for the legitimacy of the IMF?

MS. ATKINSON: I think that’s a question at base about the selection process for the Managing Director. And what I can say about that is first of all I want to clarify that that is a matter for our Executive Board and for all 187 member countries. The Executive Board has begun that process. They laid out in quite a lot of detail in a press release that’s available to you the criteria that they would be looking for in a new Managing Director—importantly, obviously, strategic vision, knowledge of the global economic problems, and impartiality and objectivity. And they noted that they would examine the candidates without regard to geographic preference.

The Executive Board has also said that they—the Dean of the Board when announcing the new procedure said that the process should be open, merit-based, and transparent. And that’s certainly what is happening. There is a period of nominations now open. It opened on Monday, and it will be open until June 10. The Executive Board will then consider the nominations, draw up a short list, and with reference to the profile that they have laid out, they will select a candidate by June 30. Thank you.

QUESTIONER: To just go back on the case, I was curious, Caroline, to know if there’s anybody from the Attorney’s office in the Manhattan District that expressed a desire or is actually interviewing some staff at the IMF right now and whether the IMF has retained legal counsel on this?

MS. ATKINSON: On the second part, the IMF retained legal counsel as I think we announced early on, immediately. So we retained our legal counsel to look after the interests of the IMF on Saturday, the 14th of May. And in regards to the legal process, I don’t want to go into the legal investigation. I believe it’s probably at a fairly early stage. I know that we will be behaving as a good citizen in the United States where we live. I’m sure there are various issues that will be discussed amongst the lawyers about availability of staff and so on. I don’t think that those have been addressed yet, and I know that we will be aiming to cooperate fully and behave as a good citizen here whilst, of course, respecting the rights of staff members.

QUESTIONER: Good morning. My question has to do with the ethics policy at the IMF. Mr. Lipsky referred to it in his remarks to the camera last week as well. In light of what’s happened here, will there be any consideration of breaking the provisions of contracts in the future if the Managing Director or other high-ranking executive ever gets indicted and convicted, for example, the $250,000 severance package for this person?

MS. ATKINSON: Perhaps it’s worth drawing a distinction. The Managing Director’s contract is a specific one that is between the Managing Director and the Executive Board, so it’s not part of the same rules of the staff. The Executive Board has the option of putting into that contract and agreeing in that contract with the Managing Director whatever they may choose.

As far as the staff more generally, I’m sure that of all of these I expect there will be a serious review in the Institution. It’s about a whole range of issues, which will go on at the same time as we are, most people, are focused on their normal work. I don’t have anything more for you on that specific issue now.

QUESTIONER: Is there any way that the current provisions of the contract between the Board could be changed if he is convicted?

MS. ATKINSON: Well, I’m not a lawyer. It’s a contract. I think that you’re also jumping ahead. There are, of course, serious criminal charges, but there is no conviction. And I think that it’s quite likely that the trial would take a period of time, and it’s not for any of us to jump ahead to the conclusion of that trial.

QUESTIONER: Just a couple of clarifications. First, I know you said the IMF will cooperate fully. Are you saying that you cannot say whether the New York Prosecutor’s Office has requested information or interviews?

MS. ATKINSON: I don’t know. Yes, I can’t say.

QUESTIONER: Okay. Secondly, I asked the IMF a week ago for clarification, especially requesting the Communications Office to check with the appropriate people and files on this issue. Can you confidently assert that there were no other complaints filed against the former Managing Director for any potential breach of ethics other than the Nagy affair?

MS. ATKINSON: I would just refer you to the 2008 report, which is on our Web site and has a lot of information about the quite thorough investigation of that incident. I am not aware of any—actually, there had been no allegation at that point. I’m not aware of any other allegation.

I think that it is important to draw a distinction from the case that is under consideration in New York and how the Institution continues its business. And I think it is important within the Institution, and that is what John Lipsky has been saying, to make sure that people feel able to come forward if they have any problem. We have a Hotline now instituted, which came into effect earlier this year. And, obviously, it’s very important that staff is held to the highest standards and that staff feel able to report and come forward if they have any problem. And I believe that to be the case, but it’s important to reaffirm that.

QUESTIONER: Can I just clarify my understanding of what you’re saying? I just want to understand exactly what you’re saying.

You say that you’re not aware of any. That would mean that you have checked with the appropriate people who are responsible for these complaints, and you have checked with the files to confirm your unawareness of any other complaints?

MS. ATKINSON: I’m not aware of any complaints. The former Managing Director is involved in a legal proceeding, and I don’t think it’s appropriate to get involved in comments on that. What I think is completely appropriate is to discuss what the IMF is like, what we need to think about on this issue going forward, and even more so, how do we best carry on the important business that we have with our member countries. And that’s what I think.

QUESTIONER: Some people from this building I heard had met with Dominique Strauss-Kahn at Riker’s Island. Is it correct? And if some people met with him, who are these people and what did they discuss?

MS. ATKINSON: That’s incorrect. That’s not correct.

QUESTIONER: Isn’t it correct that the legal advisor of the IMF met with Mr. Dominique Strauss-Kahn in New York?

MS. ATKINSON: The legal advisor did not meet with Dominique Strauss-Kahn on Riker’s Island. The legal advisor’s been in the office.

QUESTIONER: So nobody from this building met with him after the incident in New York?

MS. ATKINSON: Nobody has met with him. I mean, obviously there are contacts through lawyers.

QUESTIONER: What is your reading about the situation in Greece in general? So far there’s no consensus. Are you afraid of a political meltdown?

MS. ATKINSON: Clearly, Greece is facing difficult economic issues. We have an IMF mission in the field there now, as I’m sure you know, led by Poul Thomsen who negotiated and has continued to negotiate the program. And they are having discussions with the Greek authorities about how best to move forward with the economic program that the government has designed and that we have supported. And I’m not going to comment on the political surroundings. I’m not a political expert. We are certainly focusing on what can be the next steps for the economic program in Greece.

QUESTIONER: There was a gathering of tens of thousands of people all over Greece yesterday and it seems it was peaceful. I’m just wondering how do you assess this? Is this something that makes you wonder if there is something that isn’t okay? And, of course, they are opposing the measures, and that’s my question.

MS. ATKINSON: Look, one thing that is not okay is if people feel vulnerable or hurt. I think that the aim of our program, of the government’s program, and our support is to put Greece on a path to recovery, a path to growth and a path to stability, with better options and opportunities for its citizens. That is not to say that there aren’t difficult times right now, and we understand that and understand that that is something that the Greek people are working through and the point of it is to get to a better place.

QUESTIONER: Has the secretary received any nominations for the post of Managing Director as of now? And how does this process differ from the process in the past? Has there been more than one candidate by the time the Board would be making considerations? And has it been customary in the past that the Board would interview candidates?

MS. ATKINSON: Okay, on the nominations, that process is confidential—confidential inside the Fund—until the Executive Board considers the candidates.

On the process being different, the process is different but not in the ways that you suggested. So on the differences, this time around there’s a number of people had suggested would be a good idea. Governments from around the world, all 187 countries, may nominate candidates. In the past, it was just the 24 members of the Executive Board.

There is also a difference in that the shortlist, there is I think a clearer date set for the operation of the shortlist, the fact that if there are four or more candidates, there would be a shortlist to produce three in the period from June 10 to June 17 and so on. There has in the past been a provision, and I’m pretty sure it’s happened, that different candidates have been interviewed by the Executive Board and they have made a choice between different candidates that they have interviewed, so that has happened in the past and I’m sure it will happen this time as well.

QUESTIONER: Just two simple process questions. I was told by the media department that the vote on the Managing Director’s appointment could be split by each 187 odd countries but the Fact sheet says, however, that it is by the Executive Director’s vote that will carry it. Can you confirm which it is?

MS. ATKINSON: I’m happy to clarify that. We have a system of weighted votes, as you know, so every country, you know, has a quota share and that is what their vote represents. If there should be a vote in the Executive Board, then those Directors cannot split their vote at that time, and that’s laid out in the Articles of Agreement. So, if there were an Executive Director who had a constituency which included countries which had a different view, it would be up to that Executive Director to work out with their own constituency, which way to cast the votes that are carried by that chair.

QUESTIONER: So, just a second follow-up process question. A vast majority of the Executive Director offices have said they’ve been told to refer all questions to them, regardless of the content, to the IMF’s media department. I’m confused, though, because there are a number of questions that I’ve asked the media department to answer that have been then directed to the Board to answer. So, can you just clarify, do the Executive Directors have the ability to speak without the media department’s approval?

MS. ATKINSON: Of course, of course, many of them do.

QUESTIONER: Okay, so they haven’t been directed by anyone in the Fund to talk to the media department?

MS. ATKINSON: They are the Directors, and so they have the ability and freedom to do what they wish. Many of them may choose sometimes not to take your calls. That’s a different issue.

QUESTIONER: I was wondering about your comment that the IMF is looking at a review within the institution of issues that have come out of this case. Is that an official review that has started or is still being considered? And exactly what are you going to be looking at? Clearly you want to avoid the situation happening again, and the guidelines on staff conduct were published at a strange time and one wonders if it had come earlier, if this could have been prevented?

MS. ATKINSON: So first of all, there has not been an official new review started, so I can clarify that. What there has been, and maybe I can just talk about the new code of conduct, much of the code of conduct was already in place. People may not have been fully aware of it. There was a review begun after 2008 and there were some revisions, as was thoroughly discussed externally and internally and so on, and it was approved by our new Deputy Managing Director Minouche Shafik on May 6.

We’ve actually made much more information available on the website last week because of the special circumstances than we normally would. We’ve always had the code of conduct there. But this puts much more detailed information about the staff guidelines and so on there. So we made an effort to make all of that available for all of you last week, whilst also clarifying that the decision to change them was finally approved. And I want to stress “finally” because the work to do that and the difference was in the conflict of interest part of the code, not directly in the harassment part of the code.

Our ethics advisor has been available, and talked to some of you about this. Her experience is in the U.S. government. She has said that she found the IMF, when she first came here; there were not any horrible secrets. She didn’t find any bad stuff. She also believes that the policies are strong and consistent with best practice, as I said, in the private and public sector, including in the U.S.

But, again, as I’ve said, there’s always room for improvement and obviously people are thinking about that. These policies are under review, always, in a way, and certainly the ethics advisor is always thinking about this. That’s why I mentioned the hotline and some other things that have been put in place in the last few months as part of the sort of process of improvement in standards, trying to keep up with best practice, which itself evolves.

QUESTIONER: Have you been getting any overtures that you can confirm from Capitol Hill since the U.S. is one of the largest contributors to the IMF? There are some on Capitol Hill who feel they should look into your ethics program, your compliance, whether it is formidable enough to keep this from happening again?

MS. ATKINSON: Well, what I can say is, as you probably know, there is an Executive Director for the United States on our Board—on our Executive Board. She is responsible, she’s in a confirmed position, and is the sort of official conduit for moves like that with the Treasury Department.

Of course, we also have reached out to and we’re available always for members of the U.S. Congress, as other parliaments, to explain and try to be as open and transparent as possible about what kind of an institution we are and I think that’s an important part of our job.

QUESTIONER: But, at hand, have you actually gotten such requests in this case? Just to close out the question, though, do you have any active requests from legislators on Capitol Hill right now to either come up here before upcoming hearings or to submit testimony?

MS. ATKINSON: I’m not aware of that, of an active request, but what I want to stress is that we keep the lines of communication open.

QUESTIONER: First, on the current situation, as you know, a group of executive directors representing Russia, India, Brazil, China, South Africa, have made a statement on the selection process, so, my question is, can you comment on that statement? I presume you know the contents. And my second question, since you did not want to speculate on this current selection process in this regional context that I suggested in my earlier question, let’s separate it, let’s divorce it from the current circumstances, and just speak generally. We all know that the position of the Managing Director has always been held by a European, throughout the history of the IMF, so my question to you is, if this tradition is maintained, will it be good, bad, or indifferent for the wellbeing and legitimacy of the Fund?

MS. ATKINSON: Your second question was so long I’ve forgotten the first one. I’m sorry. What was that? Oh, it was about the BRIC statement, yes. Again, I cannot comment on that statement. I think it speaks for itself.

On your second point, it is not for me—as a staff member, to speculate about what our Executive Board does when they choose the leader of the institution. What I can say is that I think it is very important to have a clear and transparent process. In my personal experience, since I began at the IMF originally longer ago than I care to remember, I think there has been an important move forward on legitimacy.

This institution is very important to have good governance, to have legitimacy. As you know, there have been important shifts in the quota and voting shares. One is pretty much in effect—the 2008 reform. The 2010 reform, which is very significant, needs to be voted in a number of member countries and the Executive Board’s goal is to have that in place by 2012. All of these are important elements of legitimacy, which I do believe is important for the institution.

QUESTIONER: I was wondering, has the IMF told Greece and the EU that it’s not prepared to put money on the table for the next tranche until the Europeans are committed to fully funding their part of the deal? As you see, there have been reports on it and just to make clear that that has been the IMF’s message?

MS. ATKINSON: The IMF’s first message in Greece is that we are there to help. We’re there to help Greece to overcome its economic problems. Now, in any IMF program, we typically get called in when there is a gap between what the country is spending and what they’re raising in revenue, what they’re using in overseas money, and what they’re getting in.

So, when we are there, trying to help to meet this financing gap, we will typically support a mix of adjustment, which is the country itself taking steps to curb spending, improve revenues, stimulate growth if there are, as in Greece, important measures that are needed to promote strong growth. And then on the other side, we provide financing. Now, sometimes the financing that we provide, it’s not appropriate or possible for the IMF itself to provide all of the financing. We act as a catalyst for other financing. That has been the case in Greece, with the European partners, with Greece’s European partners, who put in a lot of financing.

Our Executive Board does not ever let us lend when we don’t have an assurance—nothing’s ever sure, but when we haven’t assured ourselves that there will be no gap, because it’s important that we at the IMF put our money in when we have worked with a country to take steps to close the gap and when we are seeing that other financing is available. That is how we maintain the safety of our member’s money, which is when we lend money. It’s not me lending money, it’s every country around the world that is lending money to Greece, and so we look for—our technical term is “financing assurances”.

QUESTIONER: --ask for financing assurances—

MS. ATKINSON: We have to ask for financing assurances in every program that is an integral part of every program.

QUESTIONER: And do you have that assurance from Europe?

MS. ATKINSON: There’s a mission in the field now, so I can’t comment. Obviously, one part of the discussion for the mission is the adjustment part, and the other part of the discussion is the financing part, including our own financing.

QUESTIONER: What assurances you are asking from Greece? This is one question. The other question, do you consider this program after a year successful?

MS. ATKINSON: So let me go to the first. The assurances that we are seeking are both in the area of policy—and I don’t want to go into that too much. The mission is there, but I think you’re all aware the government has put forward a new medium-term fiscal plan. There are discussions about growth-supporting measures; there were discussions about how to leverage state assets, those sorts of thing. That’s all part of the program discussions. And then there were also discussions about what financing is available, including our own.

I would just say on the Greek program that I think the government—the Greek people have made some extraordinary efforts over the past year. Clearly financial markets are not where we predicted that they would be, but it’s also not unusual that things don’t turn out quite how you predict. And that’s actually why we tend to lend money and have quarterly reviews so that we can make adjustments as we go along in concert with the government and with other financing partners if they’re there.

I want to turn to a couple of questions online, yeah, and then I’ll come back to you. Okay?

So, another one is about Greece, so I’ll read that one out:

“Is a restructuring of Greek debt—Greek sovereign debt inevitable? Is the current plan more concerned regarding the help of certain European banks than Greece?”

No, certainly not. As I said, it will be important to see how best to help Greece, how best to help Greece attack its problems, which involve both the need for financing and a need for some adjustments so that the gap is not so big—the financing gap is not so big, and important measures to promote growth.

I have another question online but it’s on Portugal, so if yours is on Greece in the back, I’ll take that one.

QUESTIONER: Yeah. Will Greece get the fifth installment? And will it be determined by political or objective criteria?

MS. ATKINSON: The lending is always on the basis of economic criteria. So, we search for a consensus around policies, economic policies. Yours is on Greece? Okay.

QUESTIONER: I think I don’t understand. So, forgive my obtuseness if I’m not. What I understood you to say, that the IMF will never lend, one, if there is no gap in financing, or two, in this particular case, if there isn’t financing there is a gap in the financing?

MS. ATKINSON: Yes, on the first thing, I should just clarify that we do, as you know, have some contingent lending programs which are in case there might be a gap, but that’s correct.

QUESTIONER: Another on Greece. As I understand you said that Greece needs a new program, new measures?

MS. ATKINSON: No, I didn’t say that. What I said was that Greece is discussing measures with our team and the way that we work is that we have broad program goals, agreed with the government, a broad idea of financing agreed with the government for the length of the program. And then as time goes on, we make those requirements more concrete or make adjustments as necessary. That’s what I said.

QUESTIONER: So what went wrong? This is the main question.

MS. ATKINSON: I think what’s important is to focus on what needs to happen now. How can we think about ensuring a successful outcome for Greece? That’s what’s important now for Greece and for its economic partners and so on.

QUESTIONER: I am sure that you know that there are many voices inside and outside of Europe that claim if Greece does not apply the fiscal program successfully; there is a possibility for Greece to get out of the Eurozone. Does this option reflect the IMF’s stance?

MS. ATKINSON: Again, absolutely not. I would just point that I think there’s a broad view has been expressed about the absolute importance of Greece being a part of the Eurozone. Maybe we’ve been reading different things.

I have a question online about Portugal, which is: “Next week an IMF mission will return to Portugal. What kind of a mission is it?”

There will indeed be an IMF mission in Portugal next week, a technical assistance mission, and this will be looking at, I believe, the public finances and giving some technical assistance on public financial management. It’s separate from the review mission or a negotiating mission which will take place later on. As you know, those are on a quarterly basis, and the Executive Board only last week approved the beginning of the Portugal program.

QUESTIONER: Mr. Lipsky met with Mr. Mitsotsakis, he’s a member of the parliament of the opposition party. Can you give us, first of all, a read out of this meeting? Because according to the New Democracy Party, Mr. Lipsky is not satisfied with the way Greek government handled the problem.

MS. ATKINSON: Yes, I can just let you know that that is not Mr. Lipsky’s view. I’m not going to comment on any meetings. Of course he quite appropriately meets with many people in our member countries, but this is certainly not his view. Thank you.

QUESTIONER: One qualification on that statement. I understand that you cannot comment on the substance of the statement of the Executive Directors, but can you tell us procedurally if it has any consequences, a statement like this. Is it then discussed, distributed among the Directors? What happens after it is introduced?

MS. ATKINSON: Well, it was a public statement, so it’s not a statement to the Board. Of course the Executive Directors from those countries, as those representing every other country, will have an important—not just an opportunity, a responsibility, to discuss and consider with their colleagues who would be the best person to lead the institution when they make the selection for June 30.

Okay. Thank you all very much.

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