Transcript

Transcript of the 2020 Spring Meetings IMFC Press Conference

April 17, 2020

Kristalina Georgieva, Managing Director, IMF

Lesetja Kganyago, Chairman for the International Monetary and Financial Committee (IMFC)

Gerry Rice, Director, Communications Department, IMF

MR. RICE: Good morning everyone, and welcome to this press conference, on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department.

Our press conference today will be focused on the International Monetary and Financial Committee meeting, which just ended here in Washington.

As you know, that's the meeting of the 189 member countries of the IMF represented on that Committee. The meeting just concluded, has been summarized in the communiqué of the IMFC, which has been sent out to our friends in the media. If you haven't seen that communiqué you can find it now on IMF.org.

So, let's turn to the press conference. We have with us this morning, the Governor of the Reserve Bank of South Africa, Lesetja Kganyago, who is also the Chair of the IMFC, and we have with us the Managing Director of the IMF, Kristalina Georgieva.

I am going to ask both the Chairman and the Managing Director to make some brief opening remarks, and then we'll turn to your questions—I can see them coming in online. And thanks to all of you who have submitted questions in advance. We'll try and get to those in as efficient a way as we can.

So, thanks to you all for joining us today. And Mr. Chairman, over to you to kick off, please.

MR. KGANYAGO: Thank you very much Gerry. Good day everyone.

We are in remarkable and extraordinary times.

This virtual press conference is a first one for me as the chair of the International Monetary and Financial Committee and for the Committee itself. How we are meeting today is emblematic of how these extraordinary times require extraordinary actions.

I want to thank IMF Managing Director Kristalina Georgieva and the IMF staff. The IMFC was able to convene and hold very effective discussions today.

The novel coronavirus pandemic has presented us all with significant and potentially daunting challenges. But you see from the IMFC communique—a very forceful statement of policy actions--that the international community, led by the IMF and its membership, is tackling the issues head on.

We are far from declaring victory on the outcomes or the outlook, yet we are convinced that an aggressive response coordinated through the IMF will lead to more positive economic and humanitarian results than would otherwise be possible.

Beyond the serious human impact of the pandemic, we agreed today that the economic repercussions will be severe, particularly for emerging markets and developing countries, commodity exporters and economies with weak health systems.

A global recession and severe uncertainty have now gripped our societies. Most of us have taken extraordinary measures to support health systems and affected workers and businesses.

It is important that we continue to act quickly, decisively and in coordination. Large, timely, and targeted fiscal and financial measures are essential to help our citizens.

The global financial system has held up well so far, thanks in large part to the extraordinary measures also taken by central banks and supervisory authorities around the world.

The IMF’s policy tracker shows that fiscal measures so far have amounted to about $8 trillion and liquidity injections by central banks amounting to over $6 trillion. However, we all agreed, exchange rate and liquidity pressures remain important challenges.

Let me touch on some of the key outcomes of the IMFC today:

We reviewed and supported the package of financial support that the IMF has quickly put together in the wake of the pandemic. The IMF’s crisis response initiatives—outlined in the IMFC communique—are critical features of efforts to contain the impact of COVID-19.

The Fund has revamped the Fund’s toolkit by doubling access levels to emergency facilities, expanding the use of precautionary lines, establishing a new Short-erm Liquidity Line, and considering other options to help countries meet their financing needs.

The IMFC, including donor countries, agreed on the importance of ensuring that the IMF can support its poorest and most vulnerable members. We are thankful for the pledges already made to replenish the Poverty Reduction and Growth Trust and the Catastrophe Containment and Relief Trust and call for additional contributions.

We welcomed the coordinated approach agreed by the G20 and the Paris Club, supported by the IMF and World Bank, for a time-bound suspension of debt service payments by bilateral official creditors, for the poorest countries that request forbearance. We encourage private creditors to participate on comparable terms, as well.

As the communique states, we are in an unprecedented global crisis. And while the outlook is subject to exceptionally high uncertainty, we reaffirmed today that extraordinary macroeconomic action, and working together, will contribute to a faster recovery.

I come out of these virtual meetings with a real sense that we will overcome these challenges because we will work effectively and constructively together.

Before I take your questions, let me turn the table over to my friend Managing Director Kristalina for some remarks.

MR. RICE: Thank you very much, Mr. Chairman. Let me turn to Kristalina for some opening remarks on her side. Kristalina?

MS. GEORGIEVA: Well, thank you very much, Chairman Kganyago, I want to thank you for your strong leadership of the IMFC at this time of exceptional crisis.

We obtained today very strong endorsement of the concrete package of measures, in support of our members with which we scale up and accelerate the delivery of critical support for the membership. Act fast and act big. This is what we propose, and this is what our IMFC Governors endorsed today.

Let me add to the points that the Governor made to give you more specificity from the perspective of management of the IMF. First, we are very encouraged by the unanimous support of the membership for the doubling of access to emergency financing which, combined with speed, means that by the end of this month, some 50 countries will have received help, and we have a total request of 102 at this moment.

Second, we are able to step up support for our poorest members, we now have more resources for our Catastrophe Containment and Relief Fund with, now, the U.K., Japan, China, the Netherlands, and in addition as of today, Germany, helping us to boost capacity to over US$600 million.

And in addition to that, we have been able to strengthen our concessional capacity. It is absolutely remarkable. We called on the membership to urgently provide US$17 billion of concessional financing for our Poverty Reduction and Growth Trust, and today in this meeting we got 70 percent of our ask met by commitments of the members.

And I want to thank, wholeheartedly, Japan, the U.K., France, Australia and Canada for making firm commitments totaling $11.7 billion dollars. We also had a strong focus today on what next. A great Canadian, Wayne Gretzky, once said, "Skate to where the puck is going, not where it has been."

And in this skating to where the puck is going, we concentrated on two issues. One, how to make sure that we deploy our $1 trillion lending capacity to help emerging markets and developing economies take action that protects the health of people and the health of the economy, and make sure that we avoid a protracted recession.

And that is where the new Short-term Liquidity Line becomes a very helpful instrument, we are already looking into our tools to make sure that we can increase financing to support members.

And two, how can we prepare for the recovery? What are the policy steps we need to take now for the recovery to be more effective? And in that context, we discussed what are the risks, but also what are the opportunities coming from this crisis? What are the tradeoffs that countries are facing, in terms of maintaining extraordinary stimulus and conventional policy measures for how long?

And then, how to unwind them, dealing with the risks of bankruptcies and unemployment, and ever low-for-longer interest rates, preserving financial stability, supporting economies where structural changes would create new opportunities. New companies will come up, but also there would be a need to support those that would be negatively impacted.

And so, I want to stress an aspect that really touched my heart in many of the comments: we simply cannot take social cohesion for granted. We got a lot of support from the membership to help countries' efforts in calibrating their social policies, to reduce inequality, protect vulnerable people and promote access to opportunities for all.

We are in this crisis together. And I am so encouraged by the strength of unity that this meeting has demonstrated.

And again, thank you, Governor, for leading us in bringing that consensus of the membership. Thank you.

MR. RICE: Thank you very much, Kristalina.

I'm going to turn to your questions now that have been coming in. And, you know, please bear with me. Given the technology constraints, I'm going to put these questions into big buckets, paraphrase them a bit, but try and recognize where they've come from.

So, the first set of questions are around: So, what is the main take away from this IMFC meeting today? And Mansour Kamel of Bloomberg is asking: Would the packages announced help the global economy get out of the current crisis and how? And Soumaya Keynes of The Economist is asking well, under what circumstances would the IMFC go further and consider deploying more resources than are already available now?

So that's kind of the first bucket of questions around the take-aways from the IMFC today.

Managing Director, would you like to begin, and then we'll turn to the Chairman as well.

MS. GEORGIEVA: Well, how it helps: we are providing lifelines to economies that are faced with the sudden standstill. And I can tell you that the speed with which we are delivering emergency financial assistance, and the fact that we have doubled the amounts that countries can access is absolutely essential.

I have gotten calls from a number of leaders of countries that have already received or are about to receive this assistance. And the message is very simple, this is lifeline for our economies. But in addition to that, we are looking into what next, how to provide the right instruments for emerging markets and also for low-income countries. For emerging markets, the new Short-term Liquidity Line is an easy to access instrument for countries with strong policies and it is also lower cost for them. It complements other precautionary instruments we have and the traditional set of tools of the IMF.

For low-income countries, rapidly scaling up concessional financing and the provision of debt relief —they are absolutely critical. And I am very, very grateful that we can do more.

By the way, in addition to those I mentioned, there were a number of countries that indicated they are discussing coming up.

Would we need more? I can tell you that the tone of the meeting was sober and one of commitment to work together, to do what it would take to succeed for our people. And to just quote one of the governors, “Everything has to be on the table.” We simply don't know yet how the crisis would evolve. What we do know is that we have strong financial capacity to act now and that speed of action is of essence in a crisis that has moved so rapidly, and it is so deep. Building a bridge over it, this is what the Fund is doing with the strong endorsement of the membership.

MR. RICE: Thank you. Mr. Chairman, would you like to comment?

MR. KGANYAGO: Yes, I think that for me the big take away was a recognition that different countries are at different levels of development and thus have got different levels of resources. The speed with which the advanced economies were able to respond and deploy resources in their own jurisdiction is not something that can be replicated in emerging and developing countries.

And one thing we have seen coming out of this IMFC is an unprecedented global solidarity, where countries with resources pledged those resources to the IMF so that the IMF has got the firepower to deploy to countries that are vulnerable, that do not have the resources. What have been the sources of those vulnerabilities? The sources of those vulnerabilities have been to be able to assist in the countries, to continue the essential containment measures, and more importantly, to support fragile health systems in the developing countries. That for me was a big, big take away.

And so, one has to do with the fact that even doing all of these containments, the focus is on protecting human life. And in our quest to save humanity, we have got to be cognizant of the fact that during this crisis we are affected differently, and it is important that we shield the vulnerable members of our communities, that we are trying to shield affected businesses through targeted fiscal and financial measures.

So, for me, this for me is -- I have presided over many international meetings, and presiding over this one, where we were able as a global community to say that we are in this together, let us deploy the resources to take care of the vulnerable parts of the world, for me was the most crucial point to take away.

MR. RICE: Thank you. Thank you, Mr. Chairman.

We have received quite a number of questions regarding the special drawing right of the IMF, the SDR. And included here are Andrea Shalal from Reuters, Tony Rowley from South China Morning Post, Phil Thornton in London. And, again, I'm going to paraphrase the main themes of their questions, just given the time constraint.

But the themes of the questions are: Can you characterize the discussion on the SDR in the IMFC and where does it stand? Would a new SDR allocation help the IMF's member countries in the crisis at this point, and how? And then the idea that has been put forward of using existing SDRs, and for some of those SDRs to be used in a transfer from the advanced economies to the poorer countries, how could that be done?

Those are the three themes coming through on the SDR.

Managing Director, I'm going to turn to you first and to the Chairman, if he would wish to comment as well.

MS. GEORGIEVA: The meeting discussed what we have and also what might be there in the future. And some of the members did bring the idea of issuing new allocation of SDRs. That is not a topic that at this point we have full consensus, but I want to stress that where we do have full consensus and everybody in the membership is on page, is action now, do what we can right now. And in that sense, one of the ideas that is being now carefully reviewed is: right now, we do have existing SDRs. Some advanced economies have them, but don't really need them, whereas some developing economies, emerging market developing economies could make good use of them, they need them. And how we can make it possible to deploy on a larger scale existing SDRs in support of developing countries.

We are taking message from the IMFC consensus on this topic, and we will work immediately on what more we can do.

For those who may not be familiar with the matter, SDRs of advanced economies have been used to boost the Poverty Reduction and Growth Trust; therefore, there is a precedent and the question is how to build on a larger scale the deployment of this resource for the benefit of developing countries.

MR. RICE: Thank you. Mr. Chairman, would you like to comment?

MR. KGANYAGO: No. I think, it might just suffice to say that, I mean, obviously, the preference would be for permanent resources for the IMF, the SDR would have reflected permanent resources. But we are in a crisis. We must still be engaged in conversation to get permanent resources for the IMF. We are faced with a human catastrophe here that we have to deploy everything that we could deploy immediately in order to address this crisis.

MR. RICE: Thank you very much.

Turning to another theme is some questions from Bloomberg again, South China Morning Post and so on, asking about we see the support being given to the low-income countries, the poorer countries. Is there anything in this package of support for the middle-income countries, including on the issue of debt relief? And on the issue of debt relief, can we say anything about how the IMF sees the role of private creditors and the private sector in supporting debt relief?

MS. GEORGIEVA: Well, let me start by stressing how important the decision taken yesterday by the G20 countries with the strong participation of everyone about more traditional and emerging donors, how important this decision is to go to a standstill of official bilateral creditors to benefit the low-income countries. These are trillions of -- sorry, these are billions -- of dollars that would be at their disposal now. We all endorse, we welcome this achievement. Actually, President David Malpass and myself were on the record to call for it, and we take it as a huge outcome of this week that in a record short time, as the governor said, in the spirit of global solidarity that has been achieved.

Of course, there are other countries that are under the burden of debt that don’t fall in this category, and both the World Bank and the IMF are committed to look into debt sustainability issues on a country-by-country basis. See what more can be done to lift up countries’ capabilities to deal with the crisis and to ease that burden.

Which takes me to the first part of the question, what is in the package for middle-income countries? And there are three things in this package for middle-income countries.

One, the Short-term Liquidity Line, it is a very -- as many governors said -- this is a very useful, very timely new tool in the toolbox of the IMF. It allows quick access to liquidity at the time when many countries are experiencing problems. And that is also a way to get funding without bearing the high cost that a precautionary line would carry for countries and without locking in IMF resources on a larger than necessary scale.

Secondly, in the emergency financing, everybody is eligible, and we do have middle-income countries reaching out to the Fund they are in the pool of those that are the 102 coming to the Fund for immediate assistance.

And thirdly, we are very cautious of the importance to be available for countries that might decide to expand their own buffers on the basis of tapping into IMF precautionary resources.

With regard to private sector debt, unanimously, the IMFC members joined this call for private creditors in the context of low-income countries debt standstill to join with the same reflection on terms. And of course, we are very mindful that in this crisis, we do need everybody to chip in so we can prevent a risk of unnecessary insolvencies either at the level of private sector or when we talk about the capacity of governments to stay strong. Again, the spirit of solidarity, bringing everybody together. The IMF got encouragement from the IMFC to step more actively in this area of private sector engagement, and what we want to see is to give comfort to private lenders to reverse the outflow from emerging markets by projecting that picture of strength in action that emerging markets are taking. So, there is an additional role for the Fund in our surveillance function to provide that sense of certainty to private investors so we can see a reversal of that highly undesirable, US$100 billion outflow form emerging markets.

MR. RICE: Thank you, Kristalina.

Mr. Chairman, would you like to comment?

Mr. KGANYAGO: Nothing from me. I think she has dealt with the facilities quite comprehensively.

MR. RICE: Okay. Thank you, sir.

So, I’m going to take the last bucket of questions, and I will come to you first, Mr. Chairman.

The questions are really around Africa. From Heather Scott, AFP; Eric Martin at Bloomberg.

And Eric has a specific question about South Africa, Mr. Chairman, so I am going to give that one to you. It’s a simple question, at least, not sure about the answer. But the question is, how far is South Africa from approaching the IMF for help?

So, there’s that question. And then there’s another question. Again, Bloomberg, AFP asking: Has enough been done -- it’s a more general question on Africa -- has enough been done so far to help African countries through the steps that have been taken? The UN Economic Commission for Africa said that the continent needs immediately emergency stimulus of US100 billion. Do we have a reaction to that?

And it’s linked to a question from Heather Scott about the fragility of low-income countries and the risk of instability, including protests. And she notes where there have already been some protests, and she mentions South Africa again.

So, Mr. Chairman, over to you and then I’ll turn to Kristalina to close us out more broadly on Africa.

Mr. Chairman?

MR. KGANYAGO: Thank you very much, Gerry.

Firstly, South Africa is a member of the IMF, which is why I am in this chair in the first place. South Africa is a shareholder in the World Bank. We did take a big facility with the World Bank before to build electricity generation capacity. We have utilized IMF facilities before. One facility which was the contingency financing facility and that was in our transition to democracy, when we were faced with a drought and we needed to import grain and we approached the IMF for that facility, and we utilized it. And that is a position we utilized before.

Borrowing decisions are decisions that get taken by the National Treasury. How far they are in engaging the IMF, it is a question best directed to the Minister of Finance. With respect to the continent and the resources that are required, there is no doubt that the continent requires resources. We must actually be seen ourselves as one global system, one global financial safety net. The World Bank had made announcements about what they are doing from the World Bank side, including participating in this debt initiative, jointly with the IMF and the president of the World Bank and the MD have been at one on this one. And the other multilateral development institutions are also coming to the party.

Do we really know whether it is enough? We do not know whether it is enough. What is important is that we deploy these resources, and if we think as we are going on, we think that they are not enough, most of the governors did indicate that we should continue to mobilize –- actually to capture it in the closing -- the Managing Director has been mandated in accordance with the global policy action plan that was actually tabled in the IMFC to continue on her journey to mobilize resources. She has done remarkably well, that we were able to raise, by the end of this meeting, 70 percent of what we thought we would actually need. Once again, well done Kristalina.

MR. RICE: Thank you very much, Mr. Chairman.

Kristalina?

MR. GEORGIEVA: Well, the short answer to this question is stay tuned for tomorrows Mobilizing with Africa meeting that together with David Malpass and with the strong support of the African Union President, President Ramaphosa, the South African President, the African Union Commission and the United Nations, we are going to discuss exactly that.

We have done quite a lot. Africa is actually a high priority at both the IMF and the World Bank in terms of deploying our capacity, especially for us the emerging financing capacity. Africa is a continent that was on the move just before this COVID-19 crisis hit. Many countries were growing six percent and more.

But Africa also has security problems and complex issues. I'm thinking of the Horn of African, of the Sahel. Now, is the time to make sure that we don’t lose the momentum of this Africa on the move and that we are mindful of the risks for the part of Africa that had problems even before COVID-19 and mobilize very strongly with Africa.

Save lives, save jobs, save hope, protect the future.

MR. RICE: Thank you very much, Kristalina. Look, that brings to an end this press conference on the IMFC. Thanks very much for joining us today online. We really appreciate your focus on these issues.

I want to say thanks to the Chairman, Lesetja Kganyago for joining us today from South Africa. And thanks to the Managing Director, Kristalina Georgieva.

And as she just mentioned, we will be seeing you again tomorrow in the context of this meeting on mobilization with Africa. And with that, thank you very much and please stay safe, everybody.