Transcript

Transcript of IMF Press Briefing

December 3, 2020

MS. RICE: Good morning from the International Monetary Fund. I'm Gerry Rice of the Communication Department and this briefing will be embargoed until 10:30 a.m. –- that's Washington time.

It's been some weeks since we've had our press briefing here, so let me just catch you up on a few things that have been happening here at the Fund and then turn to your questions on line. And if you are able to connect with us via Webex that would be lovely and we'd be delighted to see you and to take your questions there.

Let me begin with a couple of recent happenings here at the Fund. Just yesterday you might have seen the op-ed from our Managing Director, Kristalina Georgieva. It was a joint op-ed actually with Rajiv Shah, President of the Rockefeller Foundation –- and it followed up really on what Kristalina Georgieva had been saying at the Paris Peace Forum recently and at the G20 Summit recently about the value, the high impact of a coordinated investment around a green job rich infrastructure push. That was one op-ed yesterday. There was another one just a few days ago again from Kristalina, this time with Minister Sigrid Kaag of the Netherlands, and that was focused on the needs of low-income countries as they strive to address the pandemic. We just published two days ago the December issue of our Finance & Development magazine and that focused on the issue of jobs and economic opportunity. Again, I mention it because I think it's very timely. It's something that's on all of our minds at this point for obvious reasons.

Then maybe just to give you a couple of updates in terms of the Fund's work, a couple of numbers that may be of interest. As of today, the IMF has provided emergency financing to 78 countries totaling over $31 billion. This includes assistance to 49 of the poorest countries, the low-income countries. And that totals about $11 billion dollars. We have and are providing direct debt relief under our Catastrophe Containment and Relief Trust. And so far that has been extended –- that's debt relief –- to 29 of our poorest and most vulnerable eligible member countries. This was first approved, you might recall, back in April, just as the pandemic effects were beginning to hit. And it covered debt service payments to the IMF for a period of six months. Well, that has been extended for another six months, so that will take us up until at least April next year. And the total debt relief for the first two tranches amounts to somewhere around half a billion, about $500 million.

Our total –- the IMF's total lending commitments at this stage are now on the order of $280 billion –- that's 2-8-0 –- with more than 1/3 of that amount –- it's actually over $100 billion approved again just since the pandemic hit, so around mid March or so. And that $280 billion covers 83 countries, of which 50 are the poorest countries, low-income countries.

So quite a few numbers there. You can find all this information very easily. It's very visible, easily findable on IMF.org, our website, along with other items you might find useful –- a recent Q&A on debt, for example, as well as our Covid lending tracker, which shows the policy steps taken by each of the countries that we are seeking to help during this crisis. And it's, again, very easily findable on our Covid-19 lending page on IMF.org.

Finally, in these introductory remarks, let me just run through a few upcoming events just in the coming days. Today Kristalina Georgieva will be joining a Bloomberg Businessweek event and that will feature a one-on-one interview with Businessweek editor Joel Weber. That's at 3:30 p.m. today. You can catch that on various places on Bloomberg, but on IMF.org and our social media channels. Tomorrow morning, 10:30 a.m. –- morning Washington time at least –- we will hold our 6th Annual Richard Good Lecture focused on fiscal issues. And this year I'm pleased to say we have Professor Daron Acemoglu of MIT delivering the lecture, and fittingly, on remaking the post-Covid world. Kristalina Georgieva will open that event before Professor Acemoglu makes the keynote address. Again, you can catch it on IMF.org and other places.

Next Wednesday, the 9th, 11 a.m. Washington time, the Managing Director will be participating in a conference we're hosting here at the Fund on how the pandemic is affecting developing countries. You'll find the agenda for that conference on IMF.org. You can watch it on IMF.org. Kristalina will be on a panel with the head of ActionAid, the Minister for Economy for Senegal, and it will be moderated by CNN.

The day after that –- so this is Thursday, December the 10th, Kristalina Georgieva will be making some remarks again at another conference here at the Fund hosted by our Monetary and Capital Markets Department, and that's on the topic of financial inclusion and cybersecurity.

You can catch that at 7 a.m. Washington time. And then finally on Friday, December 11th around 9:20 a.m. Washington time, the Managing Director, Kristalina Georgieva will give the keynote speech at the Singapore Fintech Festival. As many of you know, that's probably the largest gathering conference focused on fintech issues and she will be speaking at that. You can catch it on IMF.org and via the Singapore Fintech Festival itself.

With that, let me turn to your questions which I see are coming in online. And again, please join us by Webex if you can and we'll try and take your question. As we wait for you on Webex, let me take a few questions that are coming in online. The first one is from Lalita of Press Trust India asking about, well saying the Indian economy is in recession. What's the IMF's assessment of India's economic condition and what steps can India take to come out of this recession?

To which I would say India has indeed been severely affected by the pandemic but is gradually recovering. Fiscal, monetary and financial sector measures announced to date by the Indian authorities provide much needed support to the economy, to businesses, agriculture and vulnerable households. To further support growth, we believe that the Indian authorities should prioritize swift implementation of the existing support programs and may need to consider expanding their scope as warranted. Thanks to Lalita for that question.

There's a question has come in from Edurne Martinez. Edurne is with the Vocenti Group in Spain asking do you think the Spanish government is giving all the resources that families and companies need. Other countries like Germany are much more generous and Spanish people and Spanish companies would like the economic policies to be like those.

To which I would say in general, Edurne, differences in the size of support measures across economies across countries largely reflects differences in fiscal space. And, of course, the legacy from the global financial and European debt crisis. Regarding Spain, we have said the Spanish governments timely provision of income and liquidity support has played a major role in limiting to the legacy of the pandemic, its effects and its economic fallout.

In particular, the short-term work scheme ERTE has been critical to limit the impacts so far on unemployment. And that's in big contrast to those past crises that I mentioned. And also, the public loan guarantee program was rolled out swiftly and has the highest take up rate among large European countries. So, continued support remains critical in the near term.

Again, specifically the extension of the ERTE is welcome as support measures remain critical during this gradual reopening phase. And the recent extension of the maximum repayment period and of the grace period for the state backed loan program will provide some additional liquidity support which we think is important.

Perhaps just to add that funds available under the European recovery and resilience facility provide an opportunity to support the recovery while promoting a structural shift to more productive, greener and digital aspects of the economy. And, of course, efficient coordination, implementation and oversight of those plans will be key in Spain and in all countries.

I'm seeing questions coming in on Argentina. Let me take those and again, please join us on Webex if you can. But on Argentina, I've seen a couple of questions. Ezequiel Burgo from Clarin is asking about the status of discussions with Argentina and the IMF and how close are we to reaching agreement on another program with Argentina.

He's also asking a question about the Argentine foreign secretary recently complained about the U.S. Executive Director at the IMF and said he had not been collaborative enough with Argentina and do we have comment on that. And Martin Kanenguiser from Infobae is coming in essentially with the same kind of question that Ezequiel was asking around what's the outlook on Argentina after the last IMF visit there. Has it changed and what about the agreement?

So again, thank you Martin for that question and to Ezequiel. Let me give you the information I have on where we stand with Argentina. As you both mentioned, we recently had an IMF staff team in Buenos Aires to begin formal discussion with the Argentine authorities regarding a new IMF supported program to underpin their economic plans.

And as the team said at the conclusion of that visit, there has been good progress in defining the initial elements of Argentina's economic program. Talks between the teams are ongoing. They will continue in the weeks to come as the authorities continue to develop and outline their plans.

I think it's fair to say that the authorities and IMF staff share the view that tackling Argentina's challenges will require a carefully balanced set of policies that force their stability, restore confidence, protect the most vulnerable In Argentina and set the basis for sustainable and inclusive growth as Argentina battles its economic challenges, and of course, battles the pandemic as well.

In terms of the status of the discussions then, as I said, they're ongoing. I have characterized it here before and will do so again. I'll characterize our engagement as very fluid and constructive, and as part of these ongoing discussions a small team from the Argentine economy ministry is, indeed, coming to Washington, as you mentioned, for meetings in the coming days. So an IMF staff team has been to Buenos Ares, and we're welcoming an Argentine visit here in Washington.

So those discussions are ongoing, I don't have a precise timeline of any eventual agreement on an IMF supported program. We remain in close contact and as the authorities continue to outline their plans, as I said, and work towards underpinning it with broad political and social support.

What else can I tell you? As is the case with all country and policy matters, Fund staff is keeping our board, our executive board apprised of developments, so that's true in the case of Argentina, but at this stage there's no date for a formal executive board meeting.

On the other question that you asked, Ezequiel, relating to the statement made by the foreign affairs minister. I have nothing to offer on that and really would refer you to the Argentine and U.S. authorities on that one. That's about it for Argentina unless something else comes in in the course of this briefing.

I’m not seeing anyone on WebEx, unless by team tells me otherwise, in which case I'll move to another couple of questions that did come in, and thanks to Matthew Lee in New York who gave us a couple questions in advance of the briefing. Sorry not to see you, Matthew, you've been on WebEx the last couple of times, but let me take a few of your questions.

Matthew had one on Kenya saying the finance ministry says it's discussing a $2.3 billion lending program with the IMF, including an initial disbursement of $725 million in the first half of 2021. What's the status of your talks? What's the IMF's view of the standard gauge railway project from Mombasa to Nairobi which has a budget of Kenya shillings 327 billion which some say indicates that the budget for this project was padded, says Matthew.

In response to Matthew I'd like to say, a virtual staff mission to Kenya, to Nairobi was held in November and discussed with the authorities and extended credit facility, extended Fund facility program to support the next phase of Kenya's response to COVID-19. The program would provide resources to protect vulnerable groups and would reduce debt vulnerabilities over time through a multi-year fiscal consolidation centered on raising tax revenues. It would also advance the structural reform and governance agenda, and address weaknesses in some state-owned enterprises that had been exacerbated by the COVID shock. And finally, it would strengthen the monetary policy framework and support financial stability. So that was the purpose of the discussions.

I can tell you the mission, the IMF staff team, the mission reached agreement in many areas. Discussions on remaining areas will continue in the coming period with a view to reaching agreement on a program that could be presented to our board, we think, in early 2021. So just responding to Matthew's question on that. I don't have an idea this time, specific idea, on the size or the phasing of that potential borrowing arrangement, but clearly that will come into view as we head to the board, we think, in early 2021.

And on the railway project, Matthew, I would refer you to our October 2018 staff report for Kenya's Article IV consultation which covered this standard gauge railway project in some detail. And I don't have anything further to that level of detail that we provided right now.

I'm seeing some questions come in and I'll turn to them but let me take one more from Matthew since he did come in in advance. His other question was on Mozambique and Matthew's asking what's the impact on the IMF's approach of the decision by the EU on €100 million in direct support to the state budget of Mozambique with monitoring and transparency clauses? Does the IMF include similar clauses in Mozambique and elsewhere?

I'd like to say a couple of things on that. It's an important question. Number one, we welcome the E.U.'s generous support to Mozambique to help with their COVID response. That support covers an important part of the government's financing needs, especially in the health sector on social safety nets, more broadly.

We share the E.U.'s views on the importance of monitoring and transparency in the use of public funds. So more broadly, and again, thanks to Matthew for asking this question, in the wake of the COVID-19 pandemic, and we've talked about this before here: the IMF maintains its commitment to address governance and corruption vulnerabilities in our member countries. IMF emergency financing is provided in upfront, outright disbursements without traditional IMF conditionality. We have talked about this before a number of times here.

However, while there is less scope for attaching traditional conditions, the IMF is working on measures to promote transparency and accountability to mitigate any opportunity for corruption, and obviously to ensure resources are used for their intended purposes.

So, just a few examples: We do ask authorities to commit in their Letters of Intent to us regarding the financing; to enhanced reporting; to independent audits of emergency spending; to publication of procurement arrangements.

And, again, to ensure that these resources are used for their intended purposes which is to help the people in these countries to fight the pandemic, it's really to ensure that resources can get to doctors and nurses and hospitals in this pandemic.

Now, turning back to Mozambique, the $309 million assistance that we approved in April, again, included these types of measures on reporting and audit of the COVID‑19 response spending, again, publishing procurement, monthly updates, et cetera.

More broadly, the Fund has long supported the Mozambiquan authorities' efforts to address transparency, governance, and corruption issues including through capacity development support in this area.

And we support the government's reform priorities identified in their diagnostic report on transparency, governance, and corruption that was published in the summer of 2019 and prepared with IMF support. We have talked about that diagnostic report before here. So I won't go into the detail of that, but just to say, we strongly support that.

A question has come in from David Lawder of Reuters asking: I'd like to know whether the managing director has spoken yet with the U.S. Treasury nominee, Janet Yellen? And, if so, what sort of changes do you expect from the U.S., the new U.S. Administration toward the IMF, and, in particular, resources for the poor?

I am not aware of any conversation yet between Kristalina Georgieva and Janet Yellen. I do know that the managing director has sent a letter to the Treasury Secretary nominee, to Janet Yellen. And, of course, she also made a public statement the other day to the effect that ‑‑ well, I may as well just quote it.

She, Kristalina Georgieva said, on Janet Yellen, "It will be great to have a strong tried and tested exceptionally talented woman at Treasury." So she's on the record with that. And in terms of expected changes from the new U.S. Administration, I think its early days to talk about those issues. It would be premature to talk about that. I think we have to wait for the new U.S. Administration to come in.

Maybe just to mention, not on the U.S. Administration ‑‑ but, of course, at the G20 Summit recently ‑‑ and, again, not the U.S. Administration, in particular, but G20 leaders did indicate that the G20 would support all necessary resources for the IMF. And I say that because David has asked about resources needed for the poorest countries and I think that was an important indication from the recent G20 Summit.

I am not seeing any further questions online or on Webex. And I'm sorry not to have seen any of you today on Webex. Maybe we can catch up next time around. So I'm going to leave the briefing there.

I want to thank you all for joining us today. I want to thank you for your questions. And please take a look at IMF.org. As I mentioned at the top of the briefing, there is a lot going on. And please stay safe, stay well in these days, and look forward to seeing you soon. Thank you.