Transcript

Transcript of IMF Press Briefing

July 25, 2019

MR. RICE: Good morning everyone and welcome to this press briefing on behalf of the International Monetary Fund. I’m Gerry Rice of the communication department. And as usual this morning, this briefing will be embargoed until 10:30 a.m., that’s Washington time.

Let me begin with a few announcements, and then I’ll turn to our colleagues in the room here. And also, I know many are watching online today, and quite a few questions there. I’ll turn to the questions online after some exchanges here in the room.

So, I can be very briefly actually on the announcements. Amongst other things, this will be the last press briefing we do before our executive board goes into what we call recess. They take a break for part of the month of August. So, this will be the last press briefing until probably the latter part of August when we’ll resume. On that note, the annual meetings of the IMF and the World Bank coming up in October, but the press registration for that will actually begin Thursday August 1^st. So, that’s a week from today. And we’ll have some information on IMF.org for you on that.

And then the final thing I have to say is that on Monday, so that’s July 29, we will be releasing our Regional Economic Outlook for the Western Hemisphere Department. And that will be led by the director of our Western Hemisphere Department, Alejandro Werner. And I know that that report is something that’s of interest to many of you. So, that’s going to be on Monday morning, 9:30am, the REO, the Regional Economic Outlook for Western Hemisphere. And of course, as I’m sure you’ve all noted, we did release our World Economic Outlook update just a few days ago in Santiago, Chile. So, we had the WEO this week, and we will have the REO update on Monday. Okay. Thank you very much for your patience, and with that, let me turn to your questions in the room.

QUESTIONER: do you have any update in the selection process for the new MD? A timeline when is expecting the IMF to have a new MD?

MR. RICE: Okay. Thank you for that. Let me perhaps just try and give an update on where we stand on the selection process for the managing director position. I think the first thing really to stress for those who don’t follow this process so closely is that the selection of the managing director is a process that’s determined by the IMF’s executive board. Which of course, represents the Fund’s membership. And we’ve had some communication on this issue already. And in our July 16^th press release, the Board indicated that it would be moving the process forward, the selection process for the managing director, expeditiously.

What I can tell you is that the Board is expected to meet very soon to discuss the selection process, and of course, we will then communicate the details of that to you, including the timeline, which you just asked about. So, again, I think the important point here is that this process is the prerogative of the IMF executive board. I say that to distinguish a bit from it being a decision of IMF management, which it is not. It’s a decision of the Board, and it’s the executive board’s process representing the membership.

And, as in the past, we expect this process to be open, transparent, and merit based. And again, for those who may not follow the process so closely, just in very simple terms, member countries or groups of countries propose candidates, nominate candidates, and the member countries through the Board make the decision on the choice of the managing director. We actually have quite a bit of information on this on the website if you’re interested further, you can find that fairly easily. We’ve made it easily findable but willing to help you with that if you need further information.

QUESTIONER: So, the meeting will happen like next week, no? Because afterwards is the summer recess, so we’re expecting like this meeting of the Board like next week, right?

MR. RICE: So, I don’t have a date for you right now for the Board meeting, but as I said, we expect it to happen very soon. And we will communicate once the Board has had that meeting.

Yes, good morning. Welcome.

QUESTIONER: Earlier this week, President Obrador from Mexico asked the IMF to apologize for supporting policies that basically unleashed crime and violence in Mexico in the past two decades. What do you have to say about this, and do you agree, or would you present apologies?

MR. RICE: What I’d say is that we appreciate very much, the strong relationship that we have with Mexico. And this was reaffirmed quite recently when the Managing Director, Christine Lagarde, visited Mexico City, met the President and with other officials in Mexico.

We, recently, two days ago, in the context of the WEO update that I mentioned, we issued a revised growth forecast for Mexico. It was revised down somewhat, driven by the data that has become available since April. We said, however, that despite the somewhat lowered forecast and although the Mexican economy is slowing, we said that it continues to demonstrate resilience in the face of prolonged uncertainty, and that the Mexican authorities’ firm commitment to prudent policies, including to fiscal consolidation, coupled with the economy’s strong frameworks should continue to help Mexico’s economy going forward. So, that was I think the context for the comments that you’re talking about, and again, just to reaffirm that we have a strong and positive relationship with Mexico, and we appreciate that.

QUESTIONER: A more direct response to the comments?

MR. RICE: As I said, I think the comments were made in the context of the release of the WEO update, and the growth forecast and so, I think that's the context for that. Thank you. Good morning.

QUESTIONER: Turning to Argentina, do you think that monetary policy in Argentina is strong enough to face the market turmoil we'll be facing in the next coming weeks due to the election process?

MR. RICE: Let me answer that just in a second. For those that haven't been following Argentina, just a couple of weeks ago, on July 12th, our Board completed the fourth review of Argentina's program support from the IMF and following that meeting, our Acting Managing Director, David Lipton, said that that the Argentine authorities continue to show strong commitment to their economic policy program meeting all the applicable targets under the program and these policy efforts are beginning to bear fruit.

We have talked here before about the improvements in financial markets and in the fiscal and external position. And the economy, be believe, is beginning a gradual recovery from last year's recession. We fully appreciate the magnitude of the challenges facing Argentina, but we believe that progress is being made and that strong implementation of the program is key to the continuation of that progress.

So, turning to your question on the monetary framework that has been adopted by the Argentine government, we issued a statement about monetary policy just a few days ago, just on Monday. And yes, we support the Central Bank of Argentina's policy framework and the technical adjustments made recently to that framework. We think those changes to the monetary policy will keep it -- remain geared toward ensuring a continued path of declining inflation and a smooth functioning of the financial system.

And again, this is very much in the context of our objective to support Argentina in its efforts to strengthen economic outcomes and reduce vulnerabilities. So, we think the recent fine-tuning of the monetary policy framework and the details of that were very much guided by these overarching objectives and so, again, yes, we support the monetary policy framework.

QUESTIONER: One follow-up, but the IMF has reduced the growth perspective for Argentina to half. Could you give us some of the reasons for that?

MR. RICE: The real update that we issued just a couple of days ago, we said that Argentina's economy has contracted in the first quarter of the year, although at a slower pace than in 2018. This contraction, as you know, you follow it, was expected. So, the forecast for 2019 is revised, done slightly compared with where we were at the time of the World Economic Outlook in April, the real in April. And the recovery in 2020 is now projected to be more modest, but again, these projections are very much in line with what we said at the time of that fourth review, which I mentioned was completed just a couple of weeks ago.

I can give you a bit more of that as the staff report said, the revision and the growth forecast reflects the weak growth outturn, especially in domestic demand and imports in the first quarter. And the downward growth revisions to also to regional trading partners, Brazil, in particular. However, the recovery of agricultural production and the gradual rebuilding of salaries’ real purchasing power should help support a return to positive growth beginning in the second quarter. So, maybe I'll leave it there. I hope that's helpful. Thank you.

Are there other questions in the room because if not, I have quite a number online, I think people are increasingly attending this press briefing online. Let me take a number and I'll try and get through these quickly. I'll come back one more time in the room, if you have anything further.

The first question is about the statements, the communication coming from the European Central Bank, just a very short time ago. And IMF's response, do we have any view on that the ECB has just announced, to which I can say that the IMF staff support the ECB's commitment to maintain strong accommodation in its monetary policy for a prolonged period of time and its willingness to consider further accommodative steps, if necessary together with the review of appropriate measures. So, that's on the ECB.

There's a question about Ebola and the World Health Organization has recently declared the Ebola outbreak in the Democratic Republic of Congo, a public health emergency. The World Bank has just issued a statement. What action, if any, is the IMF taking? And I'd like to begin by, of course, expressing our sympathy of the Democratic Republic of Congo for the lives lost as the result of this Ebola epidemic. I can tell you that just as was the case at the time of the last Ebola epidemic, we are monitoring, assessing the situation closely. Our staff are in contact with the authorities in DRC and although the economic impact is not yet clear, we have ample scope within the Fund's lending facilities to provide financial support, if needed. And we stand ready to take action.

There is a question about Jamaica. And the question on Jamaica is, given that the 1.6 billion precautionary standby arrangement with the IMF comes to an end, please explain the functions of the IMF office that unlike elsewhere, is to remain in Jamaica for two years after the expiration of the program.

On that one, I'd like to refer to a letter that was actually published by our mission chief in Jamaica, Uma Ramakrishnan and that was published in the Gleanar newspaper in Jamaica just yesterday. So, I urge you to take a look at that. I would also add that since 2013, we have had consecutive IMF-supported programs. Jamaica has established an exemplary track record of economic reform achieved through commitment and implementation of the Economic Reform Program. Now in that context then, IMF and the Jamaica Government consider it useful to have that office open, remaining open in Jamaica with the ResRep to continue the support in the post-program period, and as we transition from program to the Article IV annual process with Jamaica, and to continue to support Jamaica with capacity building. And what I can say is, you know, the question said that this as suggested that this was unlike elsewhere. In fact, this is not an unusual arrangement, so it's not unique to Jamaica by any means.

I'm going to take a quick question on Sri Lanka, coming from Ceylon Today, asking about the Central Bank has been pressing the government to implement a flexible inflation target regime, and at the same time the President has called for greater consultation before implementing such a regime. What's the IMF's advice on that flexible inflation targeting regime?

I can say that we believe the planned reform of the Monetary Law Act is a key milestone in Sri Lanka's roadmap to that flexible inflation targeting regime, and that by establishing price stability at the Central Bank's -- as the Central Bank's primary monetary policy objective, and phasing the Central Bank financing of the fiscal deficit, the transition to flexible inflation targeting will strengthen macroeconomic fundamentals in Sri Lanka, which are essential to improve the resilience of the economy and  foster stronger and more inclusive growth.

I'm turning to a question on Lebanon: And what is the IMF's comment or response to Prime Minister Hariri having said: I know the IMF has some reservations, but if we want to adopt everything the IMF does or proposes, then we leave the Lebanese pound to float, that it goes up and down as it wants. What's the IMF's comment on that? I would refer you to the recent concluding statement of our staff mission to Lebanon which said, amongst other things, rebalancing the economy in the current framework of an exchange rate peg requires strong implementation of a large and credible fiscal adjustment and ambitious structural reforms.

There's a question online on Ukraine, asking about the Ukrainian authorities expect the IMF to soften its stance on natural gas prices for Ukrainian households. They also said that Ukraine could receive 2 billion in loans from the IMF this year under a new assistance program. Any update on that? On Ukraine, we have approved, in the recent past, a standby arrangement and it's in the order of about $3.9 billion, and there was a disbursement made actually under that following the Board approval.

So, to update that we had an IMF Mission visiting Kiev earlier this summer, toward the end of May, to discuss recent developments and economic policies including with the new government. We issued a statement after that in which we noted, and this is kind of where we are that the team stands ready to return to Kiev, to the Ukraine to continue discussions after the Parliamentary Elections and as soon as the new government is able to clarify its policy intentions.

The last one I'll take online is actually on Comoros: Any updates on IMF to support Comoros in the wake of the cyclone? And on that I can say that, again, just some weeks ago our Board approved a 12.3 million financial support program to Comoros to help with the aftermath of the cyclone, and we hope that these funds will help the authorities and the people of Comoros to overcome these difficulties. We issued a press release on that, so there's a bit more. And of course this kind of support to Comoros for natural disasters is part of a broader program support that the IMF offers to our member countries. For example, in recent times we offered support to Mozambique, also in the wake of the natural disasters.

That's it online. Is there anything further in the room? If not, let me thank you for coming today, all of you, and for your patience, as I responded to the online questions. And as I said, we look forward to seeing you later in the summer. We are going to take a short break and come back later in the summer. And wish you all the best if you're taking some holidays and look forward to seeing you all soon. Thanks very much.