Transcript

Transcript of IMF Press Briefing

January 14, 2021

MR. RICE: Well, good morning everyone and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department and as usual this morning, the briefing will be embargoed until 10:30 a.m., that's Washington time. The first thing I want to do this morning is to wish everyone a Happy New Year. This is our first virtual a press briefing of the year, so I hope everyone is managing to stay safe and well in these difficult times that we're all facing.

Let me make a couple informational announcements and then we'll turn to your questions online and I'm happy to see some colleagues with us via Webex. Look forward to speaking with them just in a short time. So, the first thing I want to bring to your attention is we are releasing, this morning the IMF's Work Program for the next six months. So, we do this twice a year. It gives you a sense of where the IMF is headed in terms of our priorities in the Work Program. This particular document, as you'll see, is as you might expect very much focused on the crisis facing our member countries of the pandemic and you'll see how the IMF's priorities are very much adjusted and focused on those issues facing our 190 member countries in the period ahead. So, other things you'll see the focus is the response to the pandemic, the focus on recovery, a focus on jobs, on growth. You'll see an emphasis on low-income countries, our most vulnerable member countries. You'll see an emphasis on a recovery, not just in terms of growth, but in terms of the building more sustainability and resilience into the economy. You'll see a major emphasis on climate issues, in particular. And an emphasis, of course, on ensuring that the Fund remains adequately financed and resourced so that we can, indeed, support our countries and there's an update there on ongoing governments' reforms at the IMF.

So, in all these areas going forward, we will be supporting our members, as we have been over the last period of the work program. I've said here before, the IMF has responded in an unprecedented way both in scope and scale of the support to our member countries, including nearly 103 billion dollars in emergency financing to 83 countries at this point. And again, we plan to maintain this effort in the period ahead.

Let me just finally touch on a few events and announcements that may be of interest to you. Tomorrow at 9:00 am o'clock Washington time, Kristalina Georgieva, the Managing Director of the IMF, will be participating in the Gaidar Forum in a one-on-one conversation on the future of economic growth. And you can watch that on IMF.org. You will find it there. That's tomorrow at 9:00 o'clock. The Gaidar Forum is held virtually in Russia.

On Monday, January 18th, the Managing Director will hold a joint press conference with Magdalena Andersson who is the Finance Minister of Sweden and importantly will be taking up on that day, her new role as Chair of the International Monetary and Finance Committee. Finance Minister Andersson has been selected by the membership to that position and that's her first day in this new role on January 18. And again, this press conference will be live streamed. You will be able to access that and I believe the media advisory has actually gone out on that.

And then on that, let me just mention a week later on January 25th, the Managing Director will participate in the Climate Adaptation Summit, co-hosted by the U.N. and the government of the Netherlands. That summit brings together global leaders, institutions and senior figures from the private sector civil society and so on to discuss the critical issues related to resilience and managing the effects of climate change. That's January 25th. That will be at 8:00 a.m.

Let me mention then one other thing, and I know it's of great importance to, particularly, our media colleagues who follow the IMF and that is, on that week of the 25th, I mentioned the Climate Adaptation Summit on the Monday. On the Tuesday, the 26th, we will be launching an update to our World Economic Outlook. And again, I know many of you follow that with close interest that will have an update on our forecasts and on where the global economy stands. This year, we will follow that with an update on the financial stability report, the global financial stability report and we'll have an update on fiscal issues in particular, the fiscal monitor will also have an update. We normally do not do updates on the financial and fiscal aspects in particular, but because of the crisis, because of the pandemic and the great interest in those issues, we will do updates this year. So, look out on that week of the 25th, you will see three updates on three of the major issues coming from the IMF and we will be providing more details on how you can connect with that well in advance.

With that, let me turn to of your questions and again, very pleased to see media colleagues online. Eric Martin, Bloomberg, Eric, I see you there. Welcome. If you have any questions.

QUESTIONER: Yes, Gerry, can you hear me?

MR. RICE: Yes, Eric. You're a little bit faint for me.

QUESTIONER: Is this any better?

MR. RICE: Go ahead, Eric. I can do it.

QUESTIONER: All right. Thank you very much and I'm happy to be here. And with that - beginning with Argentina requesting for my colleague, Patrick Gillespie, about Argentina's government having banned exports of corn two weeks ago only to reverse the decision when farmers went on strike this week. Since the IMF is in constant communication with Argentine authorities, did IMF officials speak to Argentina about the export ban? Also, from my colleague, Matthew Hill,on Zambia: Are the measures outlined in Zambia's economic recovery program launched last month enough to ensure progress with the requested program, or do increased fuel subsidies work against progress with the IMF? And finally, a question on Ukraine, the IMF resumed its virtual mission with Ukraine. On Monday, how long will you be working with Ukraine in this current mission? Thanks, Gerry.

MR. RICE: Thanks, Eric, you became much, much clearer just after you began. So, that's great. I caught all those questions. And let me say thank you for acting as a terrific moderator, and putting these questions forward. Not just for me, yourself, but from other colleagues. I do see Matthew Lee and Andrea Shalal, and Takeshi and others on Webex, so they may also be able to join. But let me pickup on what you've asked, Eric.

On Argentina, let me take the opportunity to just update everyone, where we stand, our discussions with Argentine authorities ongoing, of course. And those discussions with the authorities and the IMF team will continue in the period ahead. We did have a short break in the dialogue over the end of the year holiday period. But we expect the pace of the meetings, all virtual, to pick up in the coming weeks again.

The authorities, of course, continue their work on designing their medium‑term economic plan and discussing the specific measures to put them in place and work towards underpinning it with a broad political and social support.

We share the view with the authorities that tackling Argentina's challenges will require a carefully balanced set of policies to foster stability, restore confidence, protect the most vulnerable people in Argentina, and set the basis for sustainable and inclusive growth. And, of course, Argentina, like pretty much every other country, is also faced with the challenge of the pandemic and the health and humanitarian issues that that brings.

On your specific question, Eric, we have not been in contact on this issue. I will take Matthew's question via, you, Eric, on Zambia, again, asking: Are the measures outlined in Zambia's economic recovery program launched last month enough to ensure progress with the requested program, or do increased fuel subsidies work against progress with the IMF?

Again, just a little bit of background, following Zambia's request for a financing arrangement with the Fund, our Director of the Africa Department, Abebe Selassie, and our Mission Chief for Zambia, Alex Segura-Ubiergo, visited Lusaka in December, and they had high‑level discussions with the Zambian authorities on the economic recovery plan and on that request for a Fund‑supported program.

We are now assessing how we could support that program, those reform efforts, through possible Fund financing. On your question, specifically, we take note of that recent policy announcement for a zero rate value‑added tax on fuel.

While intended to protect consumers against possible price increases such measures tend to be regressive and do not benefit the most vulnerable groups. But, again, this is set in the context of my discussions with the authorities and our assessment of how we might be able to move this forward.

Let me pick up on the question on Ukraine. The IMF resumed its virtual mission with Ukraine on Monday. How long will it be working with the country?

And, again, just context, particularly, as we start up again for the New Year, we do have, the IMF does have, a standby arrangement with Ukraine, US $5 billion to support the authorities response to COVID‑19 and to help preserve important economic gains and advance a set of critical reforms that are needed to position Ukraine for recovery and growth.

The first tranche of that new program for about US $2.1 billion has already been disbursed and the remainder is scheduled over four reviews. So, again, coming to your question, the virtual IMF mission began its work, its discussions with the Ukrainian authorities in December.

We had a short break over the holiday period, and we did resume those discussions, those meetings virtually with the Ukrainian authorities just this week on January 11th. So the first review of the standby arrangement is ongoing. That's the basis for those discussions.

Let me come back to colleagues online, if there are any other questions. Takeshi Kawanami from Nikkei, I see you there, nice to see you again, Happy New Year.

QUESTIONER: Can you hear me?

MR. RICE: Yes, I can.

QUESTIONER: Good morning. So my question is about Japan. I'm looking forward to read the new economic outlook on the 26th. But, before that, I'd like to ask you about Japan’s economy. So COVID cases in Japan are low, but we also assessed the economic damage to Japan has been so significant and the recovery is so slow. Could you tell me why?

MR. RICE: Yeah, thank you, Takeshi. We do expect gradual recovery in Japan in 2021, with some upside relative to the last projection in the October world economic outlook, which was 2.3 percent, as you know.

This reflects the strong growth in the third quarter and the government's third stimulus package announced in December. So we do expect, again, gradual recovery in 2021. However, that path to recovery will be uneven. We expect weak economic results in the first quarter, as Tokyo and surrounding regions were put under that state of emergency from January 8th.

And this month long state of emergency is expected to have less of an impact on the economy than the previous one, but, nevertheless, some impact. We expect the recovery to pick up in the second quarter, supported by pent up demand and restored business confidence along with support from fiscal and monetary policies.

And, you know, I think you asked why the outlook was so for slower growth. And I think it's attributable just largely to the pandemic, the measures taken, the external environment, which inevitably weakened the domestic economy consumption and investment. But, again, we do expect the gradual recovery in Japan in 2021. So you'll hear more about this, Takeshi, in the context of the WEO update coming in just a couple of weeks now.

I am looking to see if there are other questions. I see Andrea signaling. Happy New Year, Andrea, nice to see you. I think you might be on mute. I'm not hearing you, Andrea, sorry. (Pause) Still not hearing you. There we go, there we go.

QUESTIONER: Can you hear me? Happy New Year, Gerry.

MR. RICE: Loud and clear.

QUESTIONER: Happy New Year to everyone.

MR. RICE: You, too.

QUESTIONER: So I had a couple of quick questions, one is: On the update, the World Bank has revised down its forecast for next year. I know that Gita has said she is fairly upbeat but we have seen the COVID cases go up quite a bit. We have had record deaths here in the U.S.; and, of course, the U.S. economy is a really important driver.

With all of the activities that are going on, the impeachment of the President, and the violence, and the threat of additional violence, are you having to go back and revise your assumptions for the U.S. economy? And does just the overall, sort of, slowdown and rolling out the vaccines and getting, you know, these COVID surges that are happening, does that make you more cautious than you might have been even just a couple of weeks ago? And then I have another couple of quick ones on specific countries.

MR. RICE: Andrea, what I would say is let's ‑‑ I don't want to preempt the WEO and what Gita Gopinath will say in a couple of weeks. But let me make a couple of comments. Clearly, as you indicate, the global economy is a critical juncture. Countries have started to climb back from the depths of the crisis but the resurgence in infections and the new virus variance in many economies, I think, shows just how difficult and uncertain this recovery will be.

Our baseline scenario, you will recall from the October World Economic Outlook assume that the pandemic will be broadly under control globally by the end of 2022. So again, there will be further updating on that in a couple of weeks. The main development since the last WEO, as we all know, has been the significant and very welcome progress on vaccine development.

So now, and I think Gita Gopinath put it this way last week. What we're basically seeing is this race, in many ways, a race between the virus and the vaccine. And diverging recoveries depending on just how quickly countries can gain access to the vaccine. And, of course, dependent also on the strength of their policy response.

So, the big developments have been access to the vaccine. Additional substantial stimulus in some countries, some major countries. I mentioned Japan, also the United States which you asked about and overall, data in the third quarter in 2020 was better than had been expected. But there remains a great deal of uncertainty. I think uncertainty is the word to emphasize and the prospect of a still very difficult period ahead with infection surges and people continuing to suffer.

So, certainly no time to let up on our efforts. The policy response in many ways has been unprecedented, has been strong if you look at the fiscal efforts, you look at the monetary policy efforts pretty much worldwide and they need to continue to be very strong.

That's where I'd say broadly, Andrea, on the U.S., again will be -- you'll get an update on that in a couple of weeks' time. There have been developments in the U.S. What I said about the Q3 data applies to the U.S. It's apprised on the upside as we like to say. It is better than expected.

There's been additional stimulus. We're seeing reports of possible further stimulus so all of this will be taken into account and we'll be updating you with a bit more granularity in a couple of weeks. You said you had a couple of other things, Andrea. Do you want to do those now?

QUESTIONER: Sure, sure. I mean, I do want to follow up with you, Gerry. I was asking specifically about the violence. If we saw this kind of an incident in any other country in the world you would be standing there probably expressing concern and, you know. I just, also the IMF is located in Washington and there is a threat of additional violence this coming week when the inauguration is scheduled to take place. So, I would ask you to just address it head on if you wouldn’t mind.

But secondly, I also wanted to ask about Chad. Yesterday, David Malpass told me during this conference that the IMF and the World Bank are working together to address Chad's very, very difficult debt problems. And, you know, I'm wondering if you can say anything about those efforts and whether you think that there may be some kind of a restructuring of debt for Chad specifically.

And then also, since we're asking questions on specific countries, what is the current status of the discussions with Lebanon? Thanks.

MR. RICE: You asked me for, I didn't quite pick up your very direct question the first time around. Andrea, apologies for that. On the issue of the events last week and the riots in Washington, like others, we were shocked and saddened by the violence and the loss of life. So, definitely want to make that clear.

And, you know, what I would say is these events underscore the importance of peaceful and civil discourse and the need to nurture and protect strong and independent institutions. So, that would be my statement on that.

On Chad, I don't have anything specifically to offer. We can get back to you with something if we have it, Andrea, after the meeting. Of course, we're very active with the World Bank on the whole issue of debt and particularly for as it applies to the low-income countries and particularly in Africa.

So, we've taken a number of steps, as you know, on the debt relief front and in terms of additional concessional resources. And we're certainly calling for speedy action and support in cases of urgent need on the debt front. But I don’t have anything specific on Chad and we'll get to you after the briefing if we can, okay?

On Lebanon, don't have a great deal to say but can tell you, of course, we think it's important a new government is formed promptly. And with a mandate to implement reforms to address the deepening crisis which is at the root of the worsening social conditions and increasing poverty. And again, Lebanon like every other country is dealing with the pandemic as well.

So, you know, Kristalina Georgieva has said we are ready to redouble our efforts working with others to support Lebanon and the people of Lebanon and help them overcome this crisis. So, I don’t really have much further in terms of detail to add on that.

Let me take one question online which is coming from Lalit Jha from PTI on India. Let me take that question and then I will turn to Matthew Lee who I see on screen for a couple of questions. Lalit is asking about the protests in India and the farmers. So, the Indian government recently enacted three farm laws and the farmers are on the road protesting against it. They're seeking repeal of the law, what's the IMF's view on farm bills? Will they help the agricultural sector and boost the economy? That's the question from Lalit.

To which I would say, we believe the farm bills do have the potential to represent a significant step forward for agricultural reforms in India. The measures will enable farmers to directly contract with sellers, allow farmers to retain a greater share of the surplus by reducing the role of middle men, enhance efficiency and support rural growth. So again, we believe they can represent a significant step forward. However, it is crucial that the social safety net adequately protects those who might be adversely impacted during the transition to this new system. This may require further strengthening of the social safety net and insuring that the job market can accommodate those that may be impacted by the reforms. And of course, the growth benefits of these reforms will depend, critically, on the effectiveness and the timing of their implementation, so need to pay attention to those issues as well with the reform.

Matthew, Happy New Year. Not quite hearing you, Matthew. Still mute for me.

QUESTIONER: Here we go.

MR. RICE: Now I can hear you. Hello.

QUESTIONER: Sorry, it's a little confusing on the interface, but thanks a lot, and Happy New Year to you as well.

I wanted to ask about two programs or possible programs that seem to be kind of in play. One is in Kenya. It's reported, at least, that $1.5 billion program is getting near. There seems to be a lot of issues with the Paris Club. This sort of re-raising of taxes, at least as I understand it. And maybe -- it's reported, and I'd like you to confirm or deny the IMF asking for great public debt disclosure. Can you say, what are the issues from the IMF's point of view at to Kenya?

And on Costa Rica, if there's no program, there's no plan B. That's, like, a big headline over there. But what is the status of the talks that began January 11, and what's the IMF's thinking about the sale of assets and other issues? Where does it stand with Costa Rica? Thanks a lot.

MR. RICE: Thank you, Matthew. On Kenya, and on the status and plausibility of an IMF program, we are in discussions with the Kenyan authorities on the possibility of a program to support the next phase of their response to the crisis. We had a mission there towards the end of last year, and reached agreement in many areas, so that technical work is continuing. And we hope that will lead to something being presented to our board for consideration in early 2021.

Clearly, Kenya continues to face an unprecedented external shock that will severely challenge the economy's underlying health and the policy path forward. We have actually -- we are recommending a pause in fiscal adjustment this fiscal year to accommodate increased health spending and support for the economy during this shock. And we're also recommending continued supportive monetary policy response, as has been the case in Kenya.

And then as we move beyond the crisis, it will be critical that the authorities resume the pursuit of fiscal sustainability, fiscal adjustment. Especially now that the shock has increased the debt vulnerabilities, as you mentioned, Matthew. So we would be talking in those terms about a reduction of the fiscal deficit through a well-balanced policy mix. That's on Kenya.

On Costa Rica, again, status update. What can I say? The government did request an IMF program last year, again, to help fight the pandemic, put the economy on a growth path, protect the most vulnerable, and so on. I can tell you, Matthew, that an IMF staff team has begun virtual discussions this week, January the 11th, on policy priorities and economic plans that could underpin a potential IMF supported program.

And the staff team will be meeting with government officials, parliamentarians, civil society, the private sector, and academics. And again, discussions began this week, and we'll update you as those discussions progress.

Thank you for your questions, Matthew. I'm seeing Rafael Mathus on the line. I'm seeing Liliana Franco there also.

QUESTIONER: Yes. Hi, Gerry.

MR. RICE: Happy New Year.

QUESTIONER: Happy New Year, Gerry. It's good to see you.

MR. RICE: Likewise.

QUESTIONER: So, Gerry, the thing I want to ask you, the Argentine government in the last couple of weeks seems to have adopted a bit more of a hardline on economic policy. I was wondering if there's any concern among the IMF staff that it could jeopardize a deal, or even lead to a default with the IMF?

MR. RICE: I don't really have much to add, Rafael, beyond what I said in response to the question from Eric at the beginning which is that discussions continue. We share the view, broadly with the authorities, on the need for a carefully balanced set of policies with the goal of stability, confidence, protecting the most vulnerable is important.

And of course, like I said, Argentina's battling the pandemic like every other country in the world. So I don't have much to say beyond those discussions are ongoing, and we'll update you as we can.

Liliana, were you trying to come in?

QUESTIONER: Can you hear me?

MR. RICE: Yes. Nice to see you.

QUESTIONER: Happy New Year, Gerry. Nice to see you.

MR. RICE: Likewise.

QUESTIONER: Talking about Argentina, Argentina will have to face important maturities towards the end of the year with the IMF. By any chance, there's a possibility that these maturities would be extended because we are dealing with a new agreement? I know IMF often does this, but maybe this can be considered.

MR. RICE: Yes. Thank you, Liliana. As I said, the discussions are continuing on the path forward for Argentina and the government's plans for that. I'm not aware of any discussions on the particular issue that you raised.

QUESTIONER: Okay. Thank you.

MR. RICE: Thank you, Liliana. I am not seeing any further questions. I am pleased that this virtual briefing seems to have worked very well. Certainly, from my perspective, it's been great to be able to engage again directly with colleagues in the media.

So we will do this again soon. Let me remind you all again of that week of January 25 with very important updates coming from the IMF on the global economy. We will be connecting with you around that time, if not before.

So with that, let me wish you all, again, a Happy New Year. Thank you for joining us today. We appreciate it and I hope everyone can stay safe and well. See you soon.