Transcript

Transcript of IMF Briefing

February 25, 2021

MR. RICE: 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, our briefing this morning will be embargoed until 10:30 a.m. That's Washington time.

Nice to see a lot of colleagues online this morning. Good to have you with us, and I'll take questions on WebEx, and I'll take questions online as they come in. I hope everyone is keeping safe and well these days.

Let me just make a couple of announcements and we'll get right to it. Tomorrow of course, February 26, the Managing Director of the IMF, Kristalina Georgieva will, as always, participate in the G20 meeting that is being held. That's the meeting of the finance ministers and the central bank governors, being held tomorrow under the leadership of Italy. Italy is leading the G20 this year, has the presidency. And that meeting will be held virtually.

So ahead of that meeting, as we always do, those of you who watch us know this; we released a G20 note which gives our sense of where the global economy stands right now. And then, in addition, Kristalina Georgieva released a blog yesterday which again, takes note of the status of the global economy, as we see it, and outlined our priorities as we see them running into this G20 meeting.

So she amongst other things, talked about ‑- well, I'll pick up three points. One, of course, the need to step up ‑- continue and step up efforts on the pandemic, on the health crisis is first and foremost on everybody's mind. She in particular called for stronger international collaboration to accelerate vaccine rollout, especially in and for the poorer countries, was one of her big points in that piece.

Secondly, in addition to the health crisis continue and step up efforts on the economic crisis. And major efforts have been made as we all know over the past year on the fiscal, monetary fronts. And clearly, governments need to continue to build on those efforts, continue to provide fiscal support, calibrated, targeted to the stage of the pandemic. Countries are at different stages in terms of their responses and recoveries and, you know, the state of their economies and their policy space. But definitely the message of continuing the policy support in the pandemic as it continues.

And then, the third big message that she emphasized was again, this focus ‑- this need for focus and further support to the poorer countries; in particular the low income countries especially. Given their more limited resources to make that fiscal response that I talked about and a more limited policy space, they are faced with really incredibly difficult choices between maintaining economic stability, tackling the health crisis, and, of course, meeting people's basic needs in this very difficult moment.

I would expect ‑- I mentioned these three issues in particular because I would expect that these would be three of the ‑- certainly three of the major issues that the G20 would be looking at tomorrow. And I would expect that we would hear more on those three issues, certainly.

Let me just touch on a couple of other events coming up. On Tuesday, Kristalina Georgieva will participate in the African fiscal form. I talked about the special emphasis on low income countries; this will be March 2nd and 3rd. We are organizing this in cooperation with the European Commission. It will be live streamed. You will be able to plug-in and watch it. It's going to focus on those fiscal policies that are needed; that are so important to shape the recovery in sub-Saharan Africa and elsewhere.

And the only other thing I'll mention is to look out on Monday you'll see our latest Finance and Development magazine. Quite an interesting addition, I think, focused on digital technology which, again, is very much on everybody's minds including as we conducted this press briefing, doing it digitally. And this Finance and Development looks at that, including issues with digital currencies and, you know, the gap between the digitally connected and those not connected, which is really important. So that's coming out on Monday. Look out for that.

With that, I'm going to turn to your questions. And I am looking at ‑- I'm seeing some questions on Argentina. Let me begin with those. I see Rodrigo Campos has a question about what's your response to the Argentine governments reported plan to delay a deal with the Fund. How does this differ from your time line?

I'm wondering if there are any other questions on Argentina, we'll just take them and then move on. Does anyone want to come in on WebEx on Argentina? Eric, am I seeing you? Yes. Good morning. Are you coming in on Argentina, Eric? I think you might be mute, my friend.

QUESTIONER: Sorry, Gerry. I just wanted to ask about the call from some senators asking for the IMF to produce the review of the 2018 program under the IMF. Does the IMF has a comment on that?

MR. RICE: Yeah. I can give you something on that, Eric.

Anything else on Argentina? I'm seeing Claudia Torrance. I'm seeing Pablo, Rodrigo Campos. Good morning. Come on in. I think you might be mute.

QUESTIONER: Hi, yes. I was wondering on Argentina, if you have confirmation of a visit from Minister Guzman in mid-March. And if we can expect any sort of bilateral meeting during the G20 with Argentina also?

MR. RICE: Sure. Anything else on Argentina and then we'll ‑- yes, come on in. Good morning.

QUESTIONER: Hi. Good morning. Pablo Rosales here from Buenos Aires.

MR. RICE: Good morning, Pablo.

QUESTIONER: A group of senators sent a letter on Monday, asking for the review of the program even to the previous administration. Will you please elaborate on that and if there will be a formal review, or what kind of review we will ‑- going to see?

MR. RICE: Yes, Pablo, I can give you something on that. I'm seeing more questions online; I'm just going to bucket them in. They're basically echoing, amplifying what you've all asked about; asking about this ex-post evaluation, when should we expect a report; that's Mariano Buttoner from Infobae.

So let me take these questions on Argentina and then we'll move on. On the status; discussions continue. The objective remains as we've discussed it here before. I think the objective we share with the Argentine authorities is to build a program to address the challenges, clearly that Argentina is facing, the economic challenges, the challenges of the pandemic to foster stability, growth, protect the most vulnerable is an important dimension.

And set the basis, the path forward for more inclusive private sector led growth that can be durable over time. As I said, those discussions continue to be very active, constructive, as the Argentine authorities work to lay out their economic plan that could be supported by a Fund program and build the broad support for the policies that would underpin such a program.

So let me ‑- that's the context. Let me turn to your ‑- try and answer your questions. We don't have a precise date yet for the next formal IMF staff mission at this stage. But Minister Guzman and his team have indicated that they would be traveling to Washington in mid-March. So there was a question about that.

I can also say that on this letter from the senators that was asked about, that I can confirm we have received a copy of that letter. It was actually ‑- it was addressed to the director of our Independent Evaluation Office, the IEO. And for those of you who don't follow the Fund, the IEO, this is our Independent Evaluation Office. It's an independent entity within the IMF.

It reports not to management and staff of the IMF. It reports to our board directly because it's independent. And meant to be self-critical and evaluating the policies and operations of the IMF, so it reports directly to the Board in an independent way. And you know, further detailed questions on this can be, indeed referred to Charles Collins, who is the Director of the Independent Evaluation Office, and you can find out more about that on our website. Again, for those of you who don't follow it.

Now, on the specific question. We are indeed, and have been, working on what we call an ex-post evaluation of the 2018 program. So this is the IMF staff's evaluation. So, I'm distinguishing it from the IEO function. So the staff is working on an evaluation that will look at the 2018 program. And this is something that we do for all programs that are undertaken under our exceptional access criteria.

So this is something we do for all programs, it's not just in the case of Argentina. We do it for all exceptional access programs. It's ‑- that's mandated by our Board. So we look at the context, the performance of the program and the whole idea, again, is to draw lessons so that we can incorporate those lessons and do even better in serving our members in the future. So again, it's in this mode of being self-critical and being transparent, which I think is one of the strengths of the IMF.

I don't have ‑- there was a question. I don't have a specific time line on that report but I can tell you that, again, it will be brought to our Board for discussion. And I can tell you that it will be published as all of these ex-post evaluation programs are. Again, that's the transparency part. It will be fully open and published and available to you and to the public.

I think I'm covering all the questions, but if ‑- is there any follow up on Argentina? And then we will ‑- I see Patricia wants to follow up. Patricia, why don't you follow up and then we'll move on?

Patricia, are you there?

QUESTIONER: Hi.

MR. RICE: Hi.

QUESTIONER: Yes. I was wondering if ‑- can we expect any definition on the capital increase of the Fund this weekend and how much that would mean for Argentina also?

MR. RICE: Yeah. I'm not anticipating any discussion of a capital increase. Well, it's actually in the case of the Fund, Patricia, it's actually what we call a quota increase and that's something that, you know, is down the road a ways. I don't see that as being on the agenda for G20 discussion this weekend.

So with that, I'm going to ‑- I should add, Patricia, the Fund is, of course, well-resourced at the moment and we've talked about the trillion dollars that are available to the IMF to support the membership and we've been using those resources quite actively in the past year, as I'm sure you've seen, to help our members through this crisis. But I don't expect the quota discussion to be part of the G20 agenda this weekend.

So let me move on from Argentina. Thank you very much to colleagues there. I'm wondering who wants to come in? Matthew why don't ‑- yeah. Matthew, why don't I come to you because ‑- give you a shot. You're up early today.

QUESTIONER: I appreciate it.

I wanted to know, in Sudan there's been recently a big devaluation or move by the Central Bank on the currency; it's raising a lot of prices, or saying it's tied into trying to move toward an IMF program. So I just wanted your comments on it; what the IMF is thinking that Sudan should do and what your response is to the ‑- to people that complain about the price rises.

And also, Cambodia. There's been some kind of state media coverage that have glowing reviews by the IMF of things there, and others say that that there's problems with land protests and some environmental issues and I'm just wondering what's the balance in terms of is it really true that the ‑- that the IMF is extremely pleased with the Hun Sen government or there are other issues that you're looking at?

I have a Zambia question too, but I'll wait and see if others either ask it or there's time. Thanks a lot.

MR. RICE: All right, Matthew. Nice to see you up there in New York. On Sudan, you're quite right, there's been some important developments in just the other day, again, just by way of context. I'll come to your question. Sudan took a critical step toward what we hope will be debt relief when it concluded review talks with the IMF on what we call a staff monitored program. And you know, the managing director actually commented on that and applauded Sudan for taking strong policy actions, especially unifying its exchange rate which talked about, Matthew. As key to boosting donor support, social spending and investment so that was the backdrop.

On your question, currency reform is vital to raise fiscal revenue and remove economic distortions that stand in the way of economic stability, increased social spending, and enhance competitiveness and growth in Sudan. So the unification of the exchange rate which you asked about will also provide incentives for financial transactions to take place in the financial sector. It will unlock increased donor support, very important, including the launch of the Sudan Family Support program and other donor supported programs.

So the unification increases the value of the support provided to the Sudanese people by exchanging donor funds at the market rate. And prior to unification, as you may know, a very large share of these foreign currency transactions were being carried out at the parallel rate so while the unification reform could lead to a temporary uptick in inflation, the World Bank and donor support to Sudan Family Support program which I mentioned, we believe will help to mitigate the impact of this adjustment and facilitate the implementation of the reform. So thank you for that question on Sudan. It's an important development.

On your question about Cambodia, Matthew, we, the Fund, provides you know, a wide range of technical assistance to Cambodia. You know, that goes from statistics to budget analysis. We continue to provide technical assistance through the National Bank of Cambodia on topics such as supervision, monitoring real estate and so on. And this has been going on for a number of years and will continue through this year at least.

And on ‑- a bit more just on banks that you asked about that. The authorities responded early to ease lending conditions and to facilitate loan restructuring in line with the IMF advice, I should say. And of course, as you know, the economy has been ‑- the Cambodian economy and people have been hit very hard by the crisis and we stand ready to support with technical assistance and macroeconomic analysis. I know you didn't ask about Zambia, Matthew, but just ‑-

MR. RICE: Do you want ‑- go ahead.

QUESTIONER: Sure, I can actually, because there's a lot of ‑- my understanding is ‑- or it is also reported that there are talks, that the IMF is in talks with the government. There's obviously an election coming up and so some people are ‑- I just wanted to get your take on whether it's even possible or feasible that some kind of program would be announced before the election or if really it's just a sort of electoral spending nailing it down after the election.

What's your current status with Zambia? That's the question.

MR. RICE: Yeah, thanks.

QUESTIONER: Thanks.

MR. RICE: Thanks, Matthew, for the question. I know you follow Zambia; I know Eric and others follow Zambia. I don't ‑- I was going to just try and preempt you and not waste your time because I don't really have that much to add on Zambia from what I've said before except to say that, you know, you're right that there's an ongoing mission. The dates of that have been ‑- it's been running since February 11 we expect it to run through March 3, coming up next week so I can confirm that.

I can confirm that we will communicate after that mission; a staff ‑- an IMF staff mission, we will do a press statement at the conclusion of that. And since that mission is in process I really don't have much else to say. That's where we are on Zambia.

I'm going to take a question ‑- thank you, Matthew.

I'm going to take a question from Lalit Ja of PTI. Lalit is usually with us. And he's asking what's the IMF stand on cryptocurrency? What's the view of the IMF on a government controlled digital currency like the digital Rupee.

Well, you know, clearly digital currencies continue to develop. That includes crypto assets, so-called stable coins, and Central Bank digital currencies. As digital currencies will be transformative and is essential that we reap the gains and contain the risks both the gains and the risks, public and private digital currencies can reduce the cost of doing business, improve productivity, financial inclusion, and market integration.

On the other hand, they can undermine bank funding, data privacy and cyber security. So forward-looking supervision and regulation can help to contain these risks. Macro financial implications need to be managed, including to currency substitution, financial stability and capital account restrictions. Where we are, where the IMF is, we're very engaged on this issue in analysis, in surveillance, incapacity development. And actively collaborating with other international bodies, the BIS, for example, very engaged on this issue. That's the Bank for International Settlements, including, again, back to our work on enhancing cross-border payments.

On the question of the ‑- Lalit's question about the digital Rupee, certainly Central Bank digital currencies, CBDCs, Central Bank digital currencies, can strengthen the resilience and efficiency of the payment system -- comes through at lower costs, faster settlements, greater competition, and again, increased financial inclusion.

So, policymakers, in our view, should strive for a balanced approach to digital money. Again, to harness the benefits, and address the risks, such as, as I mentioned, operational cyber-risks. There are legal challenges as well. So, we're informing this policy debate with our analysis, and again, collaborating with other international organizations on legal aspects, regulatory issues, on the use of digital currencies. And I know the Reserve Bank of India, the RBI, is currently reviewing central bank digital currency models. And we look forward to their findings, Lalit. So, I hope that helps you with that.

I'm taking a question on Ukraine, online. And then I'll come back on WebEx. The question is from UNIAN. The IMF mission completed its work in Ukraine without reaching a staff level agreement. What difficulties in the anticorruption, fiscal, and energy spheres must the Ukrainian side necessarily solve in order to progress in the negotiations, and reach staff level agreement?

I can confirm, we just recently had a mission to Ukraine, where we discussed a wide range of policy issues including those mentioned. And including emphasizing the strengthening of the governance of the National Bank. The Bank supervision and resolution, the fiscal deficit, the fiscal risks, and strengthening judicial integrity. The discussions were, I would say, productive, but some issues remain outstanding. And once we have more details on these issues, and on certain policy proposals, we look forward to working with the authorities, and continuing our discussions. So, I'll probably leave it there. I don’t have anything in terms of the timeline.

Let me come back or let me say let me come back in the room. Or at least, let me come back on WebEx. And, Andrea, I see you waving.

QUESTIONER: Hey, Gerry. Thanks, so much --

MR. RICE: Nice.

QUESTIONER: Thanks for taking my question.

MR. RICE: Nice to see you, Andrea.

QUESTIONER: And good to see you.

Just this morning, Janet Yellen threw her support behind an SDR allocation, and that has been a long-sought goal of Kristalina, the IMF Managing Director. Can you tell me whether you have had any communication on that? What is your reaction to the Janet Yellen letter? And do you have any indication of what size of allocation the Treasury will now support? And then I guess, just to close out that line of questioning, do you anticipate -- so she is asking in her letter for the G20 to work with countries on a set of shared parameters for greater transparency and accountability in how SDRs are exchanged and used. What can you say about that process? And whether you've already done any work to create such -- or to help create such parameters?

MR. RICE: Thank you, Andrea. Let me just set the context a little bit for those who don’t follow it so closely, then I'll come to your questions.

So, last year, the Managing Director did, as you said, raise the possibility of making a general allocation of SDRs. It was discussed by the IMF membership. It was discussed at the G20 last year, in the context of the response to this crisis of our lifetimes, this COVID-19 pandemic. At the time, there was insufficient consensus in the membership to take it forward. It continues to be under discussion. You may have noticed that it was discussed and mentioned at the most recent G7 Finance Ministers Meeting just last week. And I would expect it to be discussed again by the G20 tomorrow. I would expect that to be on the agenda.

The Managing Director, Kristalina Georgieva, in her blog the other day, yesterday actually, said that and I'm just looking at the way she put it, that she said that it is an option under consideration. It would help address the global long-term need for reserves. She said it could add a substantial direct liquidity boost to countries without adding to debt burdens. And she said it could also expand the capacity of bilateral donors to provide new resources for concessional support, including for health spending. And she emphasized this issue, again, of an SDR allocation, a possible SDR allocation being very helpful, important, for the emerging markets, low-income countries, the poorer countries in particular in this time of need. So, all that by way of context.

On your questions, Andrea, I did see the letter to the G20 from Secretary Yellen, just before I came downstairs today. So, I would not want to parse that letter. I will leave that for the Secretary, herself. And for U.S. Treasury. I would -- I would characterize it as very helpful, a very helpful letter from the Secretary. Because I think it raises a very important issue for the G20, that again, I expect will be discussed further tomorrow.

I don’t really have much to say beyond that, Andrea. You know, you were asking about specific parameters mentioned in the letter. Again, I am not going to try to parse that here. There will you know, be more discussion and I'm sure communication tomorrow, out of the G20, so I wouldn’t -- I wouldn’t want to preempt that in any -- in any way.

But that's -- you know, and that would be just my spot reaction to that letter as a very helpful letter, on a very helpful issue. You know, Kristalina Georgieva has stressed that even though there was not the sufficient consensus last year for a new allocation of SDRs, existing SDRs have been used, advanced economies are transferring some of their existing SDRs to the poorer countries. And the poorer countries have been able to benefit from that to a substantial degree. So, we have been making, trying to make use of that. And of course, that recycling of SDRs is something that also could take place under a new allocation. It could take place potentially on a significantly larger scale.

So, the bottom line from our standpoint is that an SDR allocation, you might recall, served the world very well at the time of the global financial crisis, back in 2009. And our view is that it could serve the world well, again now, in this crisis.

QUESTIONER: So, to just follow-up, real quick. Can you--do you have an exact number for how -- what the volume is of existing SDRs that have been as you say, recycled? Or it -- I believe it was 22 billion?

MR. RICE: Yeah, I think it's -- I think it's around 16 billion, and Andrea, I think the larger number is the total resources available in our Poverty Reduction and Growth Trust, through which the SDRs are cycled, are recycled.

QUESTIONER: Okay.

MR. RICE: So, I think that potentially, that larger number is what the poorer countries could receive over time, under existing arrangements. I think and perhaps I could confirm this with you after the briefing. I think it's closer to around 16 billion actually used, so far. Which again, is significant.

QUESTIONER: And then, just finally, the U.S., last year under Steven Mnuchin, said that the -- they would be looking to donate some. Have you had any additional discussions now, under the new administration, about a U.S. donation into the PRGT, the Poverty Reduction Growth Trust? Or the CCRT?

MR. RICE: Yeah, I think -- yeah, I think that those discussions are continuing. You know, the new administration has just recently come in. So, I am sure those discussions, if not already ongoing, will be surfacing soon. But I am not aware, Andrea, just to be clear, I am not aware of any specific discussion between IMF and Treasury on that issue, right now.

Okay, is there anything else on WebEx, or online that I can take? If not, I am going to bring, Eric , you get the last question.

Eric, I think you might be mute. Not hearing you, Eric, no.

QUESTIONER: Okay.

MR. RICE: There you go.

QUESTIONER: Okay, how is that?

MR. RICE: There you go.

QUESTIONER: All right, okay, sorry. I just wanted to ask you on Mozambique. I believe it was about a year ago that you know that Mozambique was in -- was in discussions with the IMF about a program, and I was just wondering if you -- if those discussions are ongoing? Or you could briefly provide any -- if you could, provide any information about the status of the relationship with Mozambique?

MR. RICE: You know, I don’t have anything further on Mozambique, from you know, what I said the last time here, Eric. But again, very happy to follow-up with you, after this briefing, and try and help you out, okay?

Thank you, sir. And thanks, to all of you joining us today on WebEx. And thanks to all who came in online. Great to see you all. And I will see you in a couple of weeks. And stay safe and stay well.

Thanks, very much. Bye-bye.