Transcript

Transcript of IMF Press Briefing

February 4, 2021

MR. RICE: Good morning, everyone, and warm 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, our briefing will be embargoed until 10:30 a.m. That's Washington time. We had a very busy week of communication last week at the IMF. Many of you will have seen the various products that we released last week. The update to the World Economic Outlook, to the Global Financial Stability Report, and to the Fiscal Monitor. And I hope that was useful to those of you who followed these things. Yesterday we communicated around some updating, some improvements made to our methodology regarding debt sustainability analysis, and I saw some coverage of that yesterday. And then earlier today, the Director of our Middle East and Central Asia Department, Jihad Azour, launched the Middle East and Central Asia Regional Economic Outlook Update, and update to our outlook on that region. And again, I'm seeing quite a bit of coverage of that report this morning. There will be another regional update coming to you as of Monday, and that will be on the Western Hemisphere Department, including the countries of Latin America, of course, and that will be presented by Alejandro Werner, the director of our department for that area. And Alejandro will present the update on Monday at 8:45 a.m. Washington time, and he will also hold a press conference, so you'll be welcome to join that press conference, ask some questions, provide your questions in advance, if that's helpful to you, or just join the conference and ask Alejandro at the press conference.

So those are just a few things on the communication front here at the Fund as, you know, like everyone else, the pandemic, the crisis continues to be priority number one, top of mind for everyone here as we try to help the membership fight this crisis. So I have reported recently our efforts on that regard, so I'm not going to repeat it this morning.

Let me turn to your questions. Delighted to see some colleagues online here this morning, and hope the technology holds out and WebEx is kind to us, and I can take your questions.

QUESTIONER: Yes, Gerry, good morning. I wanted to ask you on behalf of my Bloomberg colleagues and our bureaus around the world, first on Ukraine, we know that there's an IMF mission still working in Ukraine and wanted to ask when they will complete its review, how the talks are going, and what does Ukraine need to do in order to reach a staff-level agreement? And also on Ethiopia, the government of Ethiopia said this week that it will decide whether to restructure debt with private creditors or to conclude negotiation with official lenders through the G-20 common framework. We're wondering whether Ethiopia can exclude bond holders from a debt restructuring under the rules of the common framework, and when do you expect restructuring negotiations to start for Ethiopia if the IMF will be involved?

MR. RICE: Thank you very much for those questions, Eric. Good to see you. Look, on Ukraine, I don't have much by way of an update for you, you know, following what I said here a couple of weeks ago. The first review of the stand-by arrangement, the IMF support, financing support for Ukraine is ongoing. That review is ongoing right now. The virtual mission, staff mission had begun late last year. It was passed, took a short break over the holiday period, and has resumed, and is ongoing. And, you know, they're discussing the issues broadly that, you know, we've communicated about in regard to the Ukraine program and its covering the economic development policies and reforms that, you know, we would need to discuss to underpin the completion of the review. So that's ongoing. Again, I don't have too much that's new there, Eric.

I can say a bit more on Ethiopia. As we've mentioned before, the pandemic is pushing debt levels to new heights. It's adding to countries' spending needs as they seek to mitigate this health and economic crisis. And, you know, revenues are falling due to lower growth and trade, and together again, raising the debt burden. Like a number of other African countries, Ethiopia is struggling with a high debt burden that, again, has been exacerbated by the crisis.

On the role of the IMF, I just want to remind everybody that, you know, as in all cases, debt restructuring negotiations are a matter for the government involved and its creditors. We, of course, want to be helpful. We try to be helpful, but we are not a direct party to the negotiations. And again, this is true not just for Ethiopia, this is true in all cases.

Now, you know, that said, I would want to emphasize that we are very supportive of the common framework for debt treatments. You may recall the IMF actually helped to develop and promote this common framework which takes countries beyond the debt service suspension initiative. It has been agreed by the G-20. And again, we are very supportive of that framework, and it aims to address these unsustainable sovereign debt situations in low-income countries on a case-by-case basis. And one of its main objectives, is to try and ensure broad participation of creditors, comparability of treatment, and with fair burden sharing. We had talked about the common framework in terms of helping to establish a level playing field. So that's where the situation stands. In terms of the update on the debt sustainability assessment, the DSA, I don't have a date for you right now on that. But that's as much as I have on Ethiopia on the debt front at the moment.

QUESTIONER: In terms of Myanmar, recent developments in Myanmar. It seems that quite recently, just before the coup, that the IMF had given some $350 million and dedicated it toward it. I'm wondering what are your thoughts? First of all, what are the IMF's thoughts, obviously, on the coup? But also generally, how did the IMF react when there's a change of government in this way right after they've given money? Is there any -- how can you assure that the money goes, you know, for the intended purposes? That it doesn't actually support a now more military government? That's my question for today.

MR. RICE: Thank you very much for that. We are, of course, very concerned about the impact of recent events and what they could have on the people of Myanmar, and we're watching it very closely, of course, like the rest of the world. Just to remind that, of course, Myanmar faced large economic and social costs as a result of the pandemic, and the IMF resources, our support was to help the people of Myanmar to meet these urgent humanitarian needs. That was the whole purpose.

Again, just to set in context, the approval of this supports was back in January by our board and followed all standard procures for this kind of emergency financing. The same as we have done for another 84 countries in this crisis, and standard safeguards in place regarding the resources, including the repayment schedule. And as I think you know, the IMF's record over 75 years on repayment and safeguarding of IMF resources is very clear. In terms of the status of our engagement, we have had no communication at this point with the new regime, and that's about as much as I have at the moment on Myanmar.

QUESTIONER: Turning back to Argentina, our usual, at least in Argentina, we are talking all the time about the IMF. I wonder what is the longest term that the IMF can grant in an Extended Facility program for Argentina? What is the longest term? Because here in Argentina [there is talk] of a 20-year program between the IMF and Argentina.

MR. RICE: You were saying there's a lot of talk about the IMF in Argentina. Let me just give a little bit of context of where we stand. The talks on a possible future program are continuing between the Argentine Government and the IMF staff team. We're working hard with the authorities toward reaching an agreement on a program that could be supported by an Extended Fund Facility.

And, you know, the terms of that, Lilliana, are available on the website. You can look and that will give you the sense of timing on the EFF should that come to completion. We don’t have a precise timeline yet for an eventual agreement on an IMF supported program. Sticking with the time factor, as you probably know, Minister Guzman just last week reiterated the authorities wish to complete these negotiations by May this year and we will continue to do our utmost to meet the Minister's timetable. I would expect a formal staff mission to take place in the coming weeks. That would be virtual, of course, and to continue the work with Argentina towards this program. And again, what we're talking about here is what we call an Extended Fund Facility. And the timeline, the terms and all of that are easily available. We can point you to that, Lilliana, after the briefing.

MR. RICE: Let me take a question online about the U.S. The U.S. Treasury Secretary Janet Yellen spoke with the IMF Managing Director earlier this week. Can you talk about what they discussed?

We actually, we communicated on this meeting. There was a tweet actually from Kristalina Georgieva which did summarize the meeting. There was also a readout from Janet Yellen so I would, Kimmie, I'd point you to those. And this was just the other day. I would summarize it by saying they talked about, of course, fighting the pandemic, how to boost growth, combating income inequality, tackling climate change as top priorities. And they also spoke about the importance of global engagement to support low income countries. That's the way I would summarize that meeting.

QUESTIONER: So I had a question to follow up on Myanmar. I'm just wondering, on what happens [next]? Do you have to wait until whatever government emerges to reach out to the IMF to see if there's going to be even a relationship with the IMF going forward? And, you know, some people that I've spoken with are suggesting that well, this is kind of a pitfall of these rapid disbursing instruments that have been used. The money goes out very quickly all at once with no or very few conditions attached to it. Is there any thought to changing that at this stage and, you know, just wondering what next steps are on this? Is it just waiting till the smoke clears to decide how we engage? Also, the military generals that were appointed, a new central bank chief who was the same guy that ran the central bank when they were in power. Is there some concern that the central bank will lose its independence?

MR. RICE: Just on your last point, of course, the independence of central banks is one of the fundamental principles that the IMF believes in and supports so, you know, just to make that very clear. On your other points, clearly the situation is unfolding. In terms of recognition of the government as in other cases, we are guided by the international community, guided by the membership in terms of recognition of the government. So again, the situation is unfolding there but that's what guides us in terms of our relationship with countries.

You know, what I'd say on how the resources that we approved back in January how they are used, clearly again, as I said, these resources were for a clear purpose, the crisis, the pandemic, the helping with the humanitarian needs there. And, of course, it would be in the interest of the government and certainly the people of Myanmar that those funds are indeed used accordingly. Under the arrangement that was agreed with the previous former government, there was indeed safeguards regarding how the funds would be used as is the case with all of our emergency financing. I've talked about it here before. That included audit and, you know, transparency of how the resources are used. And again, this is true for all of the emergency financing. So while there are few conditions, as you rightly say, there are safeguard provisions and it would be our expectation that, you know, regardless of the future that these commitments would be maintained. Because those resources need to go to support the people and especially vulnerable groups.

So you asked finally where we’re thinking of changing. You know, again, we've been using these emergency financing instruments in 85 countries so far. I think they have been a huge help and assistance in the crisis especially to the poorest countries, to low income countries. And I think one of the reasons that they've been so effective and we've been able to get the support so quickly is the, you know, the conditions are relatively few. However, and again I stress, the safeguards and the governance of those resources is something that we give high priority to and each one of those has a set of safeguards. Whether it's audit or publishing of procurement contracts, you know, there's a whole series of governance related provisions that we have attached to these loans. These are very important and we're confident that the resources will be well used and for the purpose that they were intended in these emergency financing loans.

QUESTIONER: I have a follow up question on Argentina. Minister Guzman has said that they want to close the deal before May when there's like a big payment to the Paris Club. Is that a feasible date given the complexity of the agreement that's being negotiated?

MR. RICE: You know, as I said in response to [the previous question on Argentina], indeed you're right the Minister has said that. And while the discussions are ongoing and I mentioned that we expected a staff mission in the coming weeks. We will continue to do our utmost to meet the Minister's timetable. We will be trying very hard working with the authorities to try and meet that timetable that the Minister has indicated.

QUESTIONER: A follow up. If you could tell us, why is this mission being virtual and (inaudible) last year by the pandemic. And are there plans for further meetings here in Washington?

MR. RICE: On your first question, these are purely health related protocols. We all know what we've been dealing with here, what the world has been dealing with, you know, the second wave, the mutating virus. Argentina has been hit very hard as have virtually all countries have been hit hard. So it's purely a matter of everyone's safety on the Argentine side and on our side. It's just purely a health related protocol. Your second question was on --

QUESTIONER: Any plans in D.C. there's talk among insiders that the Minister might come to D.C. this month.

MR. RICE: We understand the authorities may visit Washington over the coming weeks. Although I don't have any precise timing on that and wouldn’t want to speculate on any dates. But indeed, we understand that that is the intention.

MR. RICE: I'm looking at my screen here. Let me take a question from our colleague on India. The Modi's government on Monday proposed a nearly half trillion dollar budget for the 12 months beginning on April 1st. What is your comment on budget?

To which I'd say we welcome the Indian government budget's focus on growth, on fiscal policy which we think can and should play an important role in facilitating a strong and inclusive economic recovery. The budget rightly focuses on health, education, public infrastructure and if fully implemented can help increase India's growth potential. We also welcome the measures to improve the fiscal transparency by including food subsidies in the budget. Of course, a medium term fiscal consolidation strategy will be important to ensure credibility and we also agreed with the need to further strengthen the financial sector and look forward to the details of proposed measures in that area.

I am not seeing any other questions on Webex at the moment. So with that, I'm going to bring this briefing to a close. I want to thank you all for joining me today on Webex, great to see you there and for the questions that had come in online. I'll see you again in a couple of weeks. I hope everyone stays safe and well in these difficult times and see you soon.