Transcript

Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department, International Monetary Fund

June 23, 2011

Webcast of the press conference

MR. HAWLEY: Good morning, ladies and gentlemen, and welcome to another of our regular briefings for the media. My David Hawley and I'm a Senior Adviser in the External Relations Department of the IMF. As usual, this briefing is under embargo and the embargo is 10:30 a.m. Washington time, that's 1430 GMT.

Before taking your questions, let me mention a couple of forthcoming events. The Annual Consultation on Managing Public Debt will be held in Seoul, Korea, this is co-hosted by the Ministry of Strategy and Financing of the Republic of Korea and this take place on June 22nd and 23rd. At this event the Fund is represented by Jan Brockmeijer who is the Deputy Director of the Monetary and Capital Markets Department of the Fund. Then on June 23rd and 24th, the Financial Counselor and Director of the Monetary and Capital Markets Department, José Viñals, will participate in the Annual Meeting of the Bank for International Settlements.

Perhaps in anticipation of questions that may come, I should just run through the timetable on the Managing Director selection process. On June 21, Augustin Carstens met with the Executive Board and his statement to the Board was released later today. That means probably around midday. Christine Lagarde will meet the Executive Board and her statement will also be released later. The Board is as we've announced earlier scheduled to meet early next week for discussion with the aim of completing the selection process by June 30 and at that time the selection will be announced via press release. With those announcements, I'm ready to take questions.

QUESTION: To clarify, I thought previous the Board had said that it was scheduled to meet June 28 and now you're saying early next week. Does that mean maybe it might meet Monday?

MR. HAWLEY: I anticipate that the date you mentioned is the one they will meet on.

QUESTION: Secondly you said -- planning to make an announcement by June 30.

MR. HAWLEY: Completing the selection process by June 30. I mean when they complete the selection process there will be a press statement.

QUESTION: That press statement will be on June 30 or by June 30?

MR. HAWLEY: By June 30. Let me be clear. They will announce it at the time they reach their decision and the decision is expected to be reached by June 30.

QUESTION: So they could announce it on Tuesday or if they decided to hold the meeting on Monday they could announce it then. I'm not trying to trip you up. I'm trying to be clear.

MR. HAWLEY: There will be an orderly sequence of selection process and announcement.

QUESTION: Mr. Thomsen is in Greece. He met with the new Finance Minister. Is there any readout from this meeting?

MR. HAWLEY: Not yet. As you know, they 're meeting today. I haven't got anything fresh from that meeting.

QUESTION: What is the reason of this meeting?

MR. HAWLEY: It's a brief visit to meet the new Finance Minister and to take stock of developments under the government's current economic program.

QUESTION: The Greek ministry has said publicly that there is a $3.5 billion shortfall in their reworked austerity plan. They say they will cover it, but is there any concern among the IMF about changing the austerity plan agreed upon in the last few weeks at such short notice?

MR. HAWLEY: I'm not sure I understand the question.

QUESTION: The troika, the IMF, the E.U. and Greek officials, agreed to an austerity plan as part of the program recently. Now under the new government they are saying they're tweaking or changing the austerity plan. There's a 3.5 billion euro shortfall. They say they're going to cover it. But I'm just wondering if the IMF has any concern at this point that they're changing it at such a late date.

MR. HAWLEY: Thank you. Now I get it. As I just said, Paul Thomsen and his counterparts from the European Commission and the ECB are in Athens to take stock of developments under the current economic program.

QUESTION: Do you see any opening for discussions to change the program?

MR. HAWLEY: We're there to take stock of current policies with the authorities.

QUESTION: So?

MR. HAWLEY: So we're there to take stock.

QUESTION: So you are willing to discuss changes of the program if I understand well?

MR. HAWLEY: We have an agreement on policies with the Greek authorities and we stay in close contact with them including today in Athens. I don't have anything further for you on that at the moment.

QUESTION: To point out, and I understand you're probably not going to say anything further, but taking stock generally means that you're reviewing what they're doing. That's different than being open or closed to changes in the program so that's the only reason why there's some confusion at least on our part.

MR. HAWLEY: Let me repeat what John Lipsky, the Acting Managing Director, said in Luxemburg on June 20, a statement that continues to be true, "We are discussing the existing program and what is needed for it to be on track. We are not negotiating a new program."

QUESTION: If I can follow-up on that. Actually it created a lot of confusion on the markets by saying we're not negotiating any program. Can you give us a timeline of what's going on? Do you have any pencil date for the decision at least on this tranche? And what are you expecting exactly from the European side or the E.U. side?

MR. HAWLEY: I've got no Board date yet for the Greek program. You will have to ask the Europeans for their position. It's not for me to speak for them.

QUESTION: That's not my question. My question was what are you expecting from the Europeans before you move on on the financing? Does it have to be extremely formal and approved by heads of state, by the ECO -- group?

MR. HAWLEY: Let me tell you what it takes for the Fund's Executive Board to approve a program review. This is true of Greece and it's true of any program. The Board has to be satisfied that the program is on track and that it is adequately financed. That is a general condition and it applies in this case.

QUESTION: So are you satisfied that the Greek program is on track?

MR. HAWLEY: We're taking stock with the authorities today.

QUESTION: I have another question.

MR. HAWLEY: Please.

QUESTION: The austerity plan that the troika has formed for Greece, the first one at least, has not worked. Why in your opinion it failed and there is need for a new program?

MR. HAWLEY: I don't accept the premise of the question that the program has failed. Like any program, it is subject to review and if necessary course correction.

QUESTION: So that is not a new program? It's a corrected one?

MR. HAWLEY: As we have said on many occasions and I'm repeating today, we have not received a request for a new arrangement from Greece.

QUESTION: Two questions on other topics, one on Ireland. Is there a problem in the IMF's eyes that the European partners don't want to lower the rates on the Irish loan? Then the other question is on Egypt. Are you still giving a loan to Egypt? Is it still going to the Board? Because they seem to be saying they don't have external financing needs for their budget.

MR. HAWLEY: Let me take the Egypt question first. We're in close touch with the Egyptian authorities and they have informed us that they are revising their draft budget. We will review this revision together with the authorities including considering its implications for their request for a Fund arrangement.

QUESTION: Ireland?

MR. HAWLEY: Ireland. Sorry. What was your question again on Ireland?

QUESTION: The fact that the European partners don't want to lower the borrowing rates that are a problem or dangerous for Ireland?

MR. HAWLEY: Our program and its implementation and its review isnot dependent on the interest rate applied to the financing from the European partners.

QUESTION: Will Greece be able to pay back its loans? And how long do you think it's going to take?

MR. HAWLEY: Let me simply say that we repeat, the program has to be fully financed and -- let me repeat that answer. We assume that the program will be adequately financed.

QUESTION: Excuse my being late. You might have talked about this before I came in, the post of the new Managing Director. Have you already mentioned this?

MR. HAWLEY: Yes, but ask your question by all means.

QUESTION: Is there any mention of what impressions have been so far, most notably Mr. Carstens who has already left?

MR. HAWLEY: No. As you know, Mr. Carstens met the Board. He issued a statement. That sequence is being repeated today with Madame Lagarde.

QUESTION: So there are no quotes at all on what might have gone on in those meetings, what impressions there might have been?

MR. HAWLEY: No. No, I don't.

QUESTION: In general, there's some debate among the economist community about the transfer of responsibility for the Greek debt crisis from private to public hands. Obviously that debate is ongoing and the IMF has been clear that it's an issue in this particular case that Europe needs to resolve amongst itself. But are there not in general economic concerns for a country or an economic bloc for that transfer of burden or are there no long-term economic considerations?

MR. HAWLEY: I'm sorry to be obtuse.

QUESTION: No. I probably didn't ask that very well.

MR. HAWLEY: This question is about private-sector involvement?

QUESTION: Not specifically, no. I'm talking about the transfer of debt from private creditors to the public sector, taxpayers ultimately paying for a debt bill that's due, one that was originally predominantly a privately held issue. I'm wondering if the IMF has any particularly economic concerns? Are there any concerns of that transfer? Are there any long-term economic considerations? I know it's a rather board question and you may need to get back to me on that.

MR. HAWLEY: That is such a broad question that it really is outside the scope of a briefing like this one. I can set you up with the Research Department to handle a question like that.

QUESTION: I appreciate it.

MR. HAWLEY: I'm being asked by Lesley Wroughton of Reuters if I've got any update on the cyber incident at the Fund. Lesley asks whether there is any update on cyber attacks. How far has the IMF's investigation gone and who is responsible? We're still investigating this breach. We have identified files that have been copied and we're assessing the importance of those files. However, we have no evidence that information held in our emails, our financial systems or the Fund's Document Management System have been compromised and that is where things stand at the moment.

QUESTION: You said you have identified the files copied and you've said there's no evidence that certain protocols have been compromised. Can you say what kind of files have been copied?

MR. HAWLEY: We're assessing that issue precisely as we speak so that I've got nothing further on that.

QUESTION: Are there any clues on where the hack attack was originated? Do you have any suspicions that this is personal or state-sanctioned?

MR. HAWLEY: The source is a matter of investigation. I have a question from [the Online Media Briefing Center] who asks about Pakistan and the progress of talks with Pakistan and the response to the budget that was announced last Friday. We welcome the intention to reduce the budget deficit and ill-targeted subsidies, but a number of elements have to be clarified before we can give a full view, a full assessment of this budget and we're in contact with the authorities in that regard.

QUESTION: Could you tell us more about the M.D. selection? I understand that two candidates are in D.C. this week to give interviews. Could you tell us more about the details or even the future announcement plans?

MR. HAWLEY: I'll repeat the remarks I made at the top of the briefing. On June 21, Agustin Carstens met with the Executive Board and released a statement. And later today, Christine Lagarde will meet the Board and her statement will be released. The Board is scheduled to meet early next week for a discussion with the aim of completing the selection process by June 30. And at the point that the selection process is completed we'll issue a press release.

[A journalist on the Online Media Briefing Center] has asked whether there is a start date agreed yet for the next Managing Director. At this stage the answer is no start date has been agreed for the start of the next Managing Director. She has asked also for clarification on Egypt, whether the IMF has to return to Cairo to renegotiate a program or whether the Egyptian authorities no longer want a program. At the moment it's too early to say whether a mission needs to go back to Cairo. As I said, the authorities have informed us of their proposal to revise their budget and we're considering this new budget proposal and its implications for their request a Fund arrangement. Ian?

QUESTION: You said their request for a Fund arrangement. Does that mean –

MR. HAWLEY: They have a request for –

QUESTION: It's still standing?

MR. HAWLEY: They have a request. We announced a staff-level agreement a few days ago and the authorities have now informed us of their intention to revise the budget. We are considering the implications for their request for a Fund program. But as I say, we have yet to learn all the details of the revised proposal so I haven't anything further to offer at this stage.

QUESTION: So they haven't officially withdrawn it then from the IMF? You would let us know if there's –

MR. HAWLEY: The authorities would let you know if there was a change of their intention. Please?

QUESTION: May I follow-up on two things? One, would the IMF let us know if there had been a compromise of any -- a cyber compromise of any major security issues, first of all? Secondly, the IEO report published earlier this week said that IMF staff often feel that their analysis is supposed to align with a certain message. I'm wondering if that is in fact true with the Greek program. Was there a monolithic agreement that the Greek program when it was initiated was a good and healthy thing and that there were no real concerns about its viability? Or were there actually a multitude of voices that raised concern within the IMF about the legitimacy of the program?

MR. HAWLEY: To take the questions in reverse order, the answer to your second is, no, there wasn't a monolithic approach to the Greek program and there isn't a monolithic approach to any program. Programs are designed to address the particular circumstances of the country which is seeking the support of a program. On your first question, that's hypothetical in the sense that we're investigating what the nature of the breach was and we don't fully know it yet, so I can't tell you what we will find and what will disclose at that point.

QUESTION: Just one more question on the past of Managing Director. Is there any chance that the decision process might be over before June 30, and if that is the case, could things be speeded up?

MR. HAWLEY: The Board at the outset, and it's the Executive Board who is responsible for this process and not the staff or management of the Fund, have said that they aim to complete the process by June 30. That remains the case. Clearly by saying by that opens the possibility it may be before. By the Board hasn't offered any other guidance than that it is their intention to conclude this process by June 30.

If there are no more questions, I'll wrap this up. It's under embargo until 10:30.

###