Transcript

Transcript of the G-24 Press Briefing

October 9, 2014

Speakers:
Chair: Naglaa el-Ehwany, Minister of International Cooperation, Egypt
First Vice Chair: Alain Bifani, Director General of the Ministry of Finance, Lebanon
Second Vice Chair: Marucio Cárdenas, Minister of Finance, Colombia
G-24 Secretariat: Marilou Uy, Director
Randa Elnagar, Communications Officer, IMF Communications Department

Webcast of the press briefing

Ms. Elnagar: Hello, everyone, and welcome to the IMF World Bank Annual Meetings, and to the G-24 Press Briefing. I am Randa Elnagar from the IMF Communications Department. Let me remind you that we have Arabic and Spanish interpretation in the room.

On the podium with me here is the Chair of the G-24, Dr. Naglaa el-Ehwany, Minister of International Cooperation in Egypt; she is on the right. Representing the First Vice Chair on her right is Mr. Alain Bifani, Director-General of the Ministry of Finance in Lebanon. On Mr. Bifani's right is Mr. Andres Velasco, Director of Macroeconomic Policy in the Ministry of Finance in Colombia. In addition, we have Ms. Marilou Uy, Director of the G-24 Secretariat.

First, we are going to start with Ms. El-Ehwany's comments and after that we going to take questions. Thank you.

Ms. El-Ehwany: First, let me welcome all you to this press conference. You have our communiqué, so I can be very brief.

Our meeting focused on two central issues, the Global Economy and Implications for Emerging Markets and Developing Countries and Financing for Development. We also discussed the Role and Reform of both the IMF and the World Bank Group.

First, our Ministers agreed that we continue to face a global economy that is highly uncertain. Growth forecasts have been revised downward since April and downside risks have risen. In the short term, the tapering of monetary policy in major advanced economies poses immediate risks of turmoil in global markets and adverse spillovers for EMDCs. In order to avoid these harmful spillovers and spillbacks, we urged advanced economies to take steps to coordinate and more clearly communicate their policies. It will also be crucial to ensure that emerging and developing countries have access to adequate and more flexible financial safety nets.

Ministers also discussed the considerable long-term risks associated with the potential for an extended period of low or stagnating growth, particularly in advanced economies, which would adversely affect developing country growth prospects. We called on advanced economies to implement deeper structural reforms and more supportive fiscal policies.

While our own economies have been broadly resilient since the crisis and have continued to account for the majority of global growth, it will be critical for us to take actions to support quality and inclusive growth in the long term through increased investment, especially in infrastructure, job creation and improved productivity. We also stressed the absolute imperative of a sharper focus on equality and social inclusion both as outright objectives and as channels for growth.

Achieving our growth and development goals in an inclusive, sustainable way will also require substantial augmentation and revitalization of development finance. We committed to broad actions to strengthen domestic sources of finance, but also called for cooperation from the international community on tax evasion and noncompliance, delivery of aid commitments and strengthened development banking.

With regard to the IMF, our discussion today revolved around the absolute imperative of coming to closure on IMF quota and governance reforms. We are deeply disappointed that the already agreed 2010 package of reforms has not been implemented. This impacts the credibility, legitimacy and effectiveness of the IMF and prevents us from undertaking further necessary reforms and meeting forward-looking commitments.

We believe that all options to sustain voice and governance reforms need to be considered, keeping in mind that the goal of any reforms must be to recognize the growing role of emerging markets and developing countries in the global economy while enhancing the voice of the poor and small, low and middle-income countries.

We also discussed the role and reform of the World Bank Group. We stressed the importance of recognizing the changing global economic realities and the changing development landscape in the governance structure of the Bank, and called for both full implementation of the 2010 governance reforms and also the conclusion of the next Shareholding Review by October 2015, as previously agreed.

Finally, we expressed our deep concern for those countries affected by the Ebola outbreak and underscored the urgent need to contain the outbreak and mitigate the human and economic costs. We call, therefore, for urgent and concerted support by the international community and welcome the stepped-up efforts of the World Bank and the IMF.

With that, we open the floor for questions. Thank you.

Ms. Elnagar: Please identify yourself and your organization.

QUESTIONER: You mentioned in the communiqué the IMF proposals on collective action clauses in sovereign debt. I noticed that in the paper by the International Capital Market Association they also mention Creditor Committees and engagement with creditors in the event of a restructuring which was not mentioned in the IMF paper. Is that something that the G-24 considers important?

Ms. Uy: The G-24 would like to see progress in a much more—as a comprehensive sovereign debt resolution system so that one could have an orderly process of debt resolution in case of default. We are encouraging all options; there are several options on the way forward. Even within the Group, there could be some disagreement on how to actually pursue it, but what we are encouraging is steps toward that. The IMF paper is a step in that direction. There is also some further talk on a multilateral system and that is also an option that could be pursued later.

QUESTIONER: My question goes to Her Excellency, Dr. Naglaa. Have you agreed who is going to be the ED, whether Egypt and Emirates have agreed whether Dr. Shaalan will continue to be in his place or Dr. [?] is stepping in?

Ms. El-Ehwany: We have not yet decided and maybe by tomorrow the picture will be clearer.

QUESTIONER: [THROUGH INTERPRETER] How far has Egypt succeeded in marketing economic success and the positive results that Egypt managed to achieve through the International Monetary Fund, through the signals of the Monetary Fund.

Ms. El-Ehwany: [THROUGH INTERPRETER] Our relation with the International Monetary Fund is an old relation and it is based on cooperation. Egypt has invited a mission from the International Monetary Fund to come to Egypt by the end of this year in order to discuss the Article IV consultation.

We are proud in Egypt that the economic reforms that have been made by the government in the past few months was homegrown. These reforms were homegrown; it means they were inspired by the belief of the government and the political leadership that there should be reform that should be taken because it has been a long time since these reforms should have been taken a long time ago regarding the procedures of subsidy and financial reform, and so on. Therefore, the signal sent by the International Fund and also other international and financial institutions are to the benefit of the national economy, and we will consult with the mission to be sent by the Fund by the end of this year in order to review the situation and the economic landscape in Egypt.

QUESTIONER: My question is for Dr. Bifani. I want to know some of the countries of the G-24 now are facing serious challenges, whether they are military, political tensions, the flow of refugees, and so on and so forth, regarding these countries. So, I want to know how did you discuss this during today’s meeting and what are the steps that you can take in order to support such countries, and if Egypt has a certain role they can play in the G-24

Ms. El-Ehwany: Well, Egypt is a member of the G-24 and we have been chairing this round. All the tensions you have mentioned have been discussed in the last round and in this round also. We are cooperating with all the member countries to solve the problems and tensions. Maybe my colleagues also would have some answers to these issues.

Mr. Bifani: Indeed, as a member of the G-24, we are probably the country that has the biggest number of refugees for the time being. We have effectively 1.5 million refugees for a population of 4 million persons in Lebanon nowadays. The cost is huge; it is a humanitarian cost and it is a human disaster. It is also a stress on the public finance of Lebanon. The economy is strained greatly by the situation. Our losses are in billions of dollars.

For the time being, we also face security issues due to this situation, knowing that at the same time the mobilization of the international community has been very much below expectations and that the support that we were expecting from donor countries has been very much under what Lebanon would have expected. This situation is one of the main reasons why we are here. We are discussing with the institutions the means and the possibilities for us to mobilize more support and to channel it through the Lebanese government properly so we can achieve better results on a humanitarian level and at the same time on the security and stability of the country. Any country in the world that would face such a massive inflow would be at risk at any point in time.

QUESTIONER: You mentioned the quota reforms both at the World Bank and the IMF and I was wondering if you discussed any possibilities for next steps and whether you think a discussion on the 15th Review should begin in January even without U.S. ratification, and also what would you like to see out of the next World Bank reforms that are supposed to be completed in a year.

Ms. Uy: Yes, IMF governance reform was discussed quite extensively in our meetings. We continue to press for the ratification of the 2010 Reforms and it is also in our communiqué that if that would not be the case, we do call on the IMF to find some interim solutions if that ratification does not happen.

Now, the objectives that we are hoping to see is to recognize the increased importance of developing countries in the governance of the IMF, and that is the end objective of which interim solutions are directed toward, and the 15th Review, if it happens, would also be directed toward those objectives.

As far as World Bank governance reform, the promise is to have a review in October 2015 for the next steps, and that was agreed. What we hope is a roadmap by that time and due ambition in the pursuit of governance reform, in voice and governance reform in the World Bank, and also to recognize the role, the increasing role of emerging countries, emerging and developing countries, and to protect the share of the poorest.

QUESTIONER: Do you have any specific proposals for the World Bank?

Ms. Uy: Not at this point simply because the discussions are still ongoing.

QUESTIONER: [THROUGH INTERPRETER] You spoke, Your Excellency, about the issue of uncertainty over the global environment and the situation in the Middle East. What kind of steps are suggested by the G-24 to face such challenges? The second point is, how does the G-24 look at the prospects of the international alliance against ISIL and how it might bear going ahead for the six months?

Mr. Bifani: [THROUGH INTERPRETATION] - Of course, the situation in the region is very much and what is going on nowadays is just a natural sequel to the recent developments over the last couple of years. The response is not through only war. It is also a response through economics and through steps to be taken by the Leaders of the region.

The Arab society has come to know how dangerous terrorism is from the perspective of economics. As to the economic impact, there is an impact that has been created by the inflow of refugees. Also, another impact is that now a whole generation is not schooling. Also, there is an impact on how to manage the revenues of the natural resources against the backdrop of losses. Also, there are sometimes sectarian rifts, sometimes other types of rifts that are emerging.

There is a part of this generation that is not training in schools. It is rather training in extremism and this has an economic impact. I do not have a quantification of the same, but it is catastrophic and it requires that there has to be an education strive that is based on a thorough understanding and a practical one, indeed, of the underlying issues and why the phenomenon has increased in volume over the last couple of years.

QUESTIONER: I am going to touch base on the same answer that his Excellency, Mr. Bifani, just stated.

I see a certain role for the World Bank in terms of the displaced people and individuals, and I insist these people are not called migrants because they are not migrating; they are refugees. Some people are trying to avoid such terminology because they want to basically avoid responsibility. I am not referring here to international organizations; I am more referring to countries.

However, I speak here as a Lebanese because we are suffering. Of course, Mr. Bifani is here wearing the Ministry of Finance hat. He has to give official numbers. We are well aware that the number exceeds 1.5 million. The registered number is 1.48, I think, so it has basically touched 2 million plus, almost half of the population.

Why am I involving the World Bank here? Simply because usually the countries, they stand in line when negotiating with the World Bank due to the technical assistance and the financial assistance that institutions such as the World Bank and the Monetary Fund provide.

Therefore, I do believe that such institutions as the World Bank need to take a further role in terms of pushing other donor countries and organizations in terms of helping countries like Lebanon to cater for such displaced people. What is happening in Lebanon and other countries, but namely in Lebanon, is disasters and the—

Ms. Elnagar: What is the question, sir?

QUESTIONER: The question is, what is the World Bank currently doing to push donor countries and other organizations further to take an active role in terms of the displaced people?

Ms. Elnagar: This is the G-24, sir. We have representatives of the country, but if Mr. Bifani wants to take the question?

Mr. Bifani - Very briefly, because actually the World Bank is one of the organizations that did the most in our specific case. We have seen the President of the World Bank mobilizing and coming to Lebanon and going to see the refugees and the host communities, establishing a Trust Fund for the situation in Lebanon and providing the first commitments. So, effectively we would really wish that many others would follow the path of the World Bank in this specific case.

One of the very interesting things that took place is that the World Bank took the lead in calling for countries and called for a couple of meetings, is urging donors all the time to support the country and to support, if you want, the host community in addition to the refugees, because one very important issue is, yes, the support for the refugees is critical, but at the same time you have host communities that are totally distressed and need as much support as the refugees. But in this specific regard, I think the Bank has done a lot of things, and we were just reassured by the President that he will continue to do so and push forward.

Ms. Elnagar: Thank you very much, everyone, and we hope you enjoy the Annual Meetings. Thank you.