Transcript

Transcript of IMF Press Briefing

May 7, 2020

MR. RICE:  Well, good morning, everyone.  And welcome to this Press Briefing on behalf of the International Monetary Fund.  I am Gerry Rice of the Communications Department. 

And this morning the briefing will be embargoed until 10:00 a.m., that's Washington Time.  The first thing I want to say is I hope everyone is well.  Best wishes to you all out there.  Thank you for tuning in today. 

Thank you for your patience with this virtual briefing, and appreciation from me to the many journalists who have actually submitted their questions in advance, that's very helpful, and we will try and get to those today, as well as any questions that may be coming in, in real time during this briefing.

Let me just quickly run through a few scheduling things, and then we'll get to the questions.  So, today at 10:00 actually, the Managing Director, Kristalina Georgieva, will be participating in a panel relating to reopening the economy while protecting public health.  She will be on that panel with Christine Lagarde, the President of the European Central Bank; and Tom Frieden, formerly of the Center of Disease Control here in the United States. And that will be, session will be moderated by Francine Lacqua, of Bloomberg.  So that's at 10:00 this morning, okay, following this press briefing.

Tomorrow, Kristalina Georgieva will take part in another event hosted by the European University Institute State of the Union Session, and that will be focused on global cooperation, amid COVID-19, and that will be a one-on-one conversation between the Managing Director and Roula Khalaf who is the Editor-in-Chief of the Financial Times. That's tomorrow, that's 11:30 a.m., Washington Time.

And then on May 12^th, Kristalina Georgieva will have a virtual -- all of these things are virtual actually -- Fireside Chat with Gillian Tett of the FT, focused on, well, what can the IMF do in this time of pandemic to help distressed economies; that's May 12^th, 9:40 a.m.

And then on May 18, at noon, the Managing Director will participate in a Ted interview, not a Ted Talk, but a Ted interview, with the theme of building back better, looking at the issue of recovery from the pandemic. 

And then finally, for the Managing Director, 8:30 on May 19, she will be in conversation with former Australian Prime Minister, Kevin Rudd, under the auspices of the Asia Society Policy Institute. So, a series of events there, more information available on IMF.org, and more specifics available by getting in touch with Media Relations here at the IMF, so quite a bit of activity.

Let me also just mention, our Deputy Managing Director, Tao Zhang, will be speaking later today, tonight, at the Boao Forum for Asia, and that's under the title of Asian Development Prospects and Challenges under the Pandemic. So, that's today.

And then last but not least, in terms of the schedule, you may have noticed we've begun to release our analytical chapters from our flagship documents, the World Economic Outlook, the Fiscal Monitor, the Global Financial Stability Report.  Yesterday we released what I think was I think was a very interesting chapter from the fiscal monitor on fiscal policies to aid recovery.  And today, actually, being released, as we speak, is another chapter, looking at the role of state-owned enterprises.

Look, this is the first briefing that I've had since the Spring Meetings several weeks ago. It's been an incredibly busy time for everyone, but here at the IMF, we've been trying to respond to the requests for assistance from our member countries, it's been unprecedented, over 100 countries at this point have requested, or expressed interest in assistance from the IMF.

So, just to recap, for those who may not have followed it in great detail, to meet this demand, we have doubled access to our emergency facilities, the rapid credit facility, the rapid financing instrument, which will enable us to meet up to 100 billion in anticipated demand, $100 billion in expected demand.  And importantly, these facilities allow the Fund to provide emergency assistance without the need to have a full-fledged program, so they do not entail the usual IMF conditionality.

This immediate assistance gets to countries once approved by our Board, in a matter of days, and without the usual IMF conditionality. 

As of yesterday, the IMF's Executive Board has approved financing under these emergency facilities, at record speed for about 50 countries, in fact, for 50 countries, totaling about $18 billion, at this point. So, since roughly the beginning of April, until May 6^th, yesterday, we have approved financing for 50 countries under these emergency facilities. 

It's IMF moving at an unprecedented speed, in an unprecedented way to meet this unprecedented challenge which we are all facing of course.  So, the revamping of our emergency facilities was one step.  You may have also have seen that Kristalina Georgieva, along with David Malpass, President of The World Bank, called for a suspension of debt service payments, for the poorest countries, from official bilateral creditors.

This was endorsed by the G20, and is underway.  The IMF, for its part, with the approval of our Executive Board, has gone ahead with immediate debt service relief from the IMF to 25 countries, under our revamped Catastrophe Containment and Relief Trust, the CCRT, and this allows those countries to channel more resources towards vital health and medical relief efforts, rather than repay debt obligations owed to the IMF.

So under the rubric of debt relief, the IMF is moving with our CCRT.  We are also, I should mention, aiming to triple our concessional financing to the poorest countries under the Poverty Reduction and Growth Trust Facility that we have at the IMF.

And finally, just a couple of weeks ago, the Board approved the establishment of a Short-Term Liquidity Line, to further strengthen the global financial safety net.

So, again, I just wanted to recap what has been an unprecedented phase of action by the IMF to help respond to this unprecedented demand from our membership, and to help you stay updated on this, you'll find a special place on IMF.org, it's very easy to find, just click on IMF.org, it's right there, and you'll find everything that we are doing to help fight this pandemic.

And in particular, you will find what we call our policy tracker where, for 190, or so, countries, all of the policy measures that they are taking to address the COVID-19, you will find a fairly detailed descriptor there, for every country which we think is useful in terms of keeping track, and useful in terms of sharing information.

So, thank you for bearing with me on that.  I thought it might be useful just to step back and give that little update.  So, let's turn to your questions, which we have received many in advance; and some coming in online.

A questioner submitted a number of questions. The theme, the main theme of a number of his questions relate to what I've just said about the IMF and our emergency financing. And Matthew is asking an important question, and it's a question that's being asked by many.

And the gist of it is: What does the IMF say to the recommendation that it should consistently apply transparency and anti-corruption measures to its loans, such as requiring governments to conduct independent audits, publish procurement plans, including the names of beneficial owners, et cetera, et cetera.  So, the question is indeed striking at that issue of how we are implementing and conducting this emergency financing that I just described.

So, I'd say a couple of things to respond to that. Number one, in 2018 we did, our Board did adopt an enhanced framework on governance, and an increased focus on anti-corruption, as a macroeconomic issue. So, that covered our Article IV surveillance, it covered our lending programs, and capacity development.

So there already was a stepped-up approach.  In terms of the emergency financing, which I think Matthew is asking about, this is something to which we've actually a great deal of attention.

Number one, specifically, we are asking member governments who receive emergency financing from the Fund, to commit in their letters of intent, to ensure that this assistance is used for the urgent purposes agreed under the emergency financing.  These letters of intent are important, and they are published by member countries, and they are available for you and anyone to review on the IMF website.

Two, we assess which public financial management anti-corruption, anti-money laundering measures. We want to ask members to put in place without unduly delaying the urgently needed disbursements under the emergency financing.

So, again, specifically, the IMF has asked member countries to commit to enhanced reporting of crisis-related spending, to undertake and to publish independent, ex-post audits of crisis-related spending, to ensure procurement transparency by, for example, publishing procurement contracts, and by preventing conflicts of interests and corruption by publishing the beneficial ownership information of firms awarded procurement contracts.

So these were a number of things that were asked.  There are specific country information and examples on our IMF.org. I would also want that we ensure that our emergency resources are subject to our safeguard assessment policy. And these assessments provide reasonable assurance to the IMF that a central bank's framework of governance, reporting and controls is sufficient to manage resources, including of course IMF disbursements.

Where there are shortcomings, IMF Staff makes time-bound recommendations and closely monitor their implementation. And of course, in all our arrangements with members there are ex-post assessment procedures to be followed.

Look, I wanted to dwell on that topic a little bit, because it's not only you who has asked about it, it has been asked by a number of people, and I wanted t provide that information.

There is a very useful fact sheet on this topic, on IMF.org, again, pretty easy to find, you go there, and it's got more information, more detail than I provided just now.  And it's got country-specific examples.  So, I recommend that to you.

Let me turn to specific country questions.  Quite a number that have been asked; and I see some coming in as we speak. I'll start with Argentina, questioners have asked the following: The Argentine authorities have made their debt restructuring offer to the private creditors.  Do you endorse this offer?  Is it reasonable, and does it make debt sustainable?  Do you share the view of multiple renowned economists that support the authority's offer?

To which I would say, you know, the Argentine authorities are currently in active negotiations with private bond holders to restructure its sovereign debt, and as we have said before, and in line with our long-standing practice, not just in Argentina, but in all countries, our long-standing practice is that these negotiations are a bilateral matter for Argentina and its creditors, and the IMF is not directly involved.

Again, this is not just the case for Argentina; this is our standard practice in all countries where these issues are germane.  But that said, let me say a couple of other things regarding Argentina. We are hopeful that an agreement with creditor participation can be reached, that restores that sustainability with high probability, and we stand ready to help Argentina, especially in these difficult times. As the Argentine government seeks to respond to the health and economic effects of the Coronavirus and to develop an economic plan that restores sustainable and inclusive growth over the medium term. 

Turning to Ukraine, a questioner, who is asking: last week, you confirmed that the IMF is continuing negotiations with the Ukrainian government on a new IMF lending arrangement.  Could you comment on the development of the talks?

So, just the context, last December, the IMF had reached an agreement with the Ukrainian government on policies to underpin a new three-year arrangement, under our extended fund facility.  The authorities were still working on that implementation of agreed prior actions when the pandemic hit.  So, we’ve been in close contact with the Ukrainian government to discuss the parameters of a new fund arrangement that would help Ukraine effectively manage the economic and health impacts of the pandemic.  So, what I can say is that, again, we’re in discussions with the Ukrainian authorities on a -- on the parameters of a new IMF arrangement.  There’s an ongoing virtual mission discussing policies that could be supported by what would be a standby arrangement, so rather than the extended fund facility, and, given the unprecedented uncertainty surrounding the economic and financial outlook, and the need to focus policy priorities on near term containment and stabilization, negotiations have shifted to this 18-month Stand-by arrangement, which could provide balance of payment support to reinforce the authority’s response, and then when a recovery is in place, the focus could shift back to addressing Ukraine’s longer term structural reform needs to foster stronger and more inclusive growth.  So, that’s where we stand on Ukraine.

There is a question from our colleague, who normally attends these briefings about India, and he is asking: how does the IMF see the steps being taken by India to protect its economy?  To which I would say, we support the government’s response to COVID-19, especially the proactive nationwide lockdown, which has helped to mitigate the spread of the virus and has saved lives. We also support other steps taken by the Indian government, including fiscal stimulus, with support for low income workers and households, monetary easing, and liquidity and regulatory measures for the financial sector and for borrowers.

Given the unprecedented shock, we see the immediate priority being for a coordinated policy response to fight the virus, prevent long-term damage to productive capacity, and provide support and assistance to the most vulnerable citizens. In that context, we believe further stimulus is warranted, especially fiscal, expenditures on health, food, and income support for vulnerable households and support for businesses. A detailed, well-communicated, and credible medium-term fiscal consolidation plan, alongside an increase in fiscal transparency, would help boost market confidence, thereby reducing the cost of borrowing.  That’s on India.

There’s a question on Sri Lanka. What’s the status of IMF rapid credit facility requested by Sri Lanka?  When can we expect it?  And now that the IMF program with Sri Lanka is about to be over, what kind of engagement will you have with Sri Lanka?

So, I can confirm, we have received a request from the Sri Lankan government for emergency financial support, under the rapid financing instrument. We will be working in close coordination with the government to assess all relevant factors related to that request, and I can also say that the Sri Lankan authorities also expressed interest in a range of options for future engagement with the Fund, and, in this context, again, we’re discussing the authority’s intention to replace the extended fund facility arrangement that they had with the rapid financing instrument. So, I think that responds to the questions raised on Sri Lanka.

A number of questions from media colleagues across Africa.  There’s -- I’ll start with South Africa; Could the IMF say whether it’s considering emergency financial assistance for South Africa, and if so, what’s the status of deliberations?  Could you say what the amount is being considered? 

I can confirm, South Africa has requested support, under the IMF’s rapid financing instrument, and, you know, I described that instrument a bit earlier, at the beginning of the briefing. The access for countries under this instrument is up to 100 percent of their quota share.  So, that is something the -- the amount that is, that is something that would be discussed and decided by our Executive Board. And that’s something that will be discussed by our Executive Board, and staff are currently in discussions with the government and planning to present this request, from South Africa, to management and to our Board.  That’s where we stand on South Africa.

I want to turn to Zambia, on which there have been a number of questions. The questions relate to -- does Zambia qualify as a PRGT country?  That’s that poverty reduction and growth trust facility of the IMF’s, which I mentioned at the beginning, which provides concessional resources. So, the question is: does Zambia qualify, technically, to apply for the rapid credit facility, as well?  So, that’s two questions, there, and has it applied?

So, the answers are yes, Zambia qualifies as a PRGT-eligible country, and, yes, also qualifies to apply for a rapid credit facility.  The authorities have requested emergency assistance from their international partners, including the Fund, and I can tell you this comes in addition to an earlier request for Fund support for Zambia’s economic reform program, aimed at restoring macroeconomic stability, as well as debt sustainability, while increasing growth and fighting poverty. So, where we are is -- you know, I’ve given the status of those eligibility and requests.  We continue to have active discussions with the Zambian authorities on their economic responses to COVID-19, as well as their macroeconomic objectives and policies.  So, we are in active discussion with Zambia around those requests.

There’s a question about Zimbabwe: I’d like to know why Zimbabwe did not benefit from the CCRT?  That’s the IMF’s Catastrophe Containment and Relief Trust.  And this is particularly pertinent, since the Zimbabwe government had written to you, asking for assistance. 

So, what I can say is the IMF’s CCRT is designed to provide debt relief only to countries who have debts owing and upcoming repayments to the IMF.  So, that initiative is not applicable to Zimbabwe because it doesn’t owe any debt to the IMF. So, that’s why it’s not eligible for the CCRT. It doesn’t owe the IMF any debt. In fact, Zimbabwe is in good standing with the IMF.  It has, as I’ve said here before, repaid arrears outstanding to the IMF. To become eligible for further financial support from the IMF, Zimbabwe would need to close -- clear its arrears with other financial institutions, as well as reach an understanding with its bilateral creditors over clearance of arrears to them, and beyond the issue of arrears, consideration of any future request would require Zimbabwe to be ready to implement strong macro policies and structural reforms.  So, there are a set of issues there. 

The bottom line is we are in discussions with Zimbabwe. We are engaged in the policy dialogue with Zimbabwe. We do recognize the dire circumstances facing the people of Zimbabwe, and we’re providing technical assistance right now, and our active engagement is ongoing.

There’s a question Egypt. The question is media reported that, on Monday, Egypt will receive $2.7 billion from the IMF. This would be the first disbursement. What’s the size of the whole package?  When can we expect it?

So, useful to perhaps just clarify that’s a set of questions. We have confirmed, the Managing Director has confirmed, actually, that, you know, given Egypt’s economy having been impacted by the COVID-19 outbreak, Egypt has, indeed, requested support from the IMF. And you know, we recognize that the Egyptian authorities have responded quickly and decisively with measures to limit the speed and provide support to affected people and businesses, in Egypt, resulting from the pandemic, including strong actions, timely actions from the Central Bank of Egypt. And, so, again, they have requested financial assistance from the Fund, under the Rapid Financing Instrument, and a Stand by arrangement. The emergency financing would allow the government to strengthen its response to the pandemic and address immediate balance of payments needs, help most affected sectors, and the most vulnerable people.

In terms of the status of the request, what I can tell you is that we expect this to be presented and discussed by our Executive Board on Monday, May 11^th.  So, again, countries are entitled to up to 100 percent of quota, under this Rapid Financing Instrument.  However, as in the previous case I mentioned, the precise amount for Egypt, again, and for any other country, is something that would be decided by our Executive Board. And, again, we are anticipating this decision this upcoming Monday, May 11^th.  That’s where we stand on Egypt. 

I’m going to take one more question, and then I’m going to wrap up, and that’s a question on Lebanon. What’s your assessment of the government’s recovery plan, and what are the main reforms that are needed?

So, our Managing Director, Kristalina Georgieva, had a call on Monday, with Lebanon’s Prime Minister, Hassan, and she said the government’s economic recovery plan is an important step forward to address Lebanon’s economic challenges. That plan identifies some of the key areas for needed reforms to restore external, and public debt sustainability, and improve the standard of living of the Lebanese people. What I can tell you further is that an IMF team will, next week, start discussions with the Lebanese authorities, with the government, on the details of their economic reform plans. So, that’s where we are on Lebanon.

Look, I am going to wrap this up. I, again, want to thank you for all those questions. Really helpful that many of them were provided in advance.  Thank you for your patience with this virtual press conference that we are undertaking. I hope it’s helpful and stay tuned or tune in for the Bloomberg event with Kristalina Georgieva, coming up in just about 15-20 minutes. You can catch that, and I’ll see you in a couple of weeks. Stay well, everybody.  Best wishes.