Transcript

Transcript of IMF Press Briefing

June 10, 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 Communication Department and as usual this morning our briefing will be embargoed until 10:30 a.m. that’s Washington time. I want to wish everyone well today.

Let me begin with a few announcements and then turn to your questions on screen. Good to see a lot of colleagues here today. And take some online as they come in as well.

So I guess all eyes on the G7 Leaders’ Summit coming up this weekend. I can tell you the Managing Director of the IMF, Kristalina Georgieva will be participating virtually in the G7 Leaders’ Summit. And she commented on her expectations of the summit this weekend building on the progress made at the meeting of the Finance Ministers of the G7 last weekend, which Kristalina also participated in.

In addition tomorrow, a little bit of history for those of you who follow the Fund. The Finance Minister of Andorra, Èric Jover Comas, will hold a joint press conference with the IMF Mission Chief for Andorra, Srobona Mitra. And this will be Andorra’s first Article IV consultation since it joined the IMF last year. And of course, it’s a little bit of history as I said because Andorra became the 190^th member country of the IMF. So just a little bit of history tomorrow.

Next week, on Tuesday, that’s June 15. That’s going to be at 12:00 Washington time. There will be a high-level panel here at the IMF on promoting an inclusive recovery again with our Managing Director. Will be joined by a number of other luminaries including building on a fourth coming book coming from the IMF and other coauthors on how to achieve inclusive growth.

That panel will be moderated by Martin Sambel of the FT, Financial Times and you can watch it. It will be livestreamed, it’s open.

The next day at 9:00 on Wednesday, June 16, Kristalina will be part of another high-level policy panel. This one focused on natural disasters and the linkage with climate change. And she’ll be joined there by the Prime Minister of Barbados, the Minister of Economy and Finance of Madagascar. And again, it will be livestreamed. It is open and you can follow that on imf.org.

And then finally next Friday, June 18^th at 10:00 Washington time, the Managing Director will be participating in an event that we are co-sponsoring with the Brookings Institution here in Washington. And that’s on the critical role for an international carbon price floor, an issue of great interest to those of you who follow the climate change challenge that the world is facing. And there will be an IMF paper on that issue that will be the backdrop to the discussion. And again, the Managing Director will be participating. That’s next Friday with the Brookings institution.

So with that thanks very much for your patience. Let me turn to colleagues online. Good morning to you all. We have a couple of new colleagues joining us today. And I want to turn to them. Give them first opportunity. So I see Isabella Schwartz of El Pais is there and Mike McDonald of Bloomberg is with us. Of course, I see Eric there too. We’ll come to you, Eric. But I see Mike joining us. Let me turn to them first. Isabella, come on in if you can. Hi. I’m seeing you. We're not quite hearing you.

QUESTIONER: Hi. I was having trouble inputting myself. Good morning.

MR. RICE: Got you.

QUESTIONER: May I go ahead with my questions?

MR. RICE: Please do.

QUESTIONER: Thank you. My question is regarding El Salvador. I’m wondering -- I mean I know that El Salvador is in talks in the process of negotiating a loan program with the IMF. I believe is a one billion program, if I’m not mistaken. And I would just want to know if there’s any updates on that first? And second, if the recent legislation that will make Bitcoin obligatory tender in the Central American country will be any kind of interference or will have any kind of implications for the loan.

MR. RICE: Thank you, Isabella, for those questions on El Salvador. I understand, Mike McDonald, you might also have a question on El Salvador. Do you want to do it now? Hey, Mike. Not hearing you, Mike.

QUESTIONER: There we go. Yeah, thanks for the question. My question was pretty much what Isabella asked so if you want to go ahead and respond to that, it’s fine.

MR. RICE: Okay. All right. Thanks very much.

QUESTIONER: Thank you.

MR. RICE: I also know, Matthew, that you had an interest in El Salvador. Is it basically the same? Or you want to come in, Matthew? Not hearing you, Matthew. Let’s try and get your sound fixed for the next round. I’m including you on this El Salvador group.

QUESTIONER: Here we go. Yeah, sorry about that. It said you can’t unmute yourself. Anyway, it was very much on the crypto thing. I’ve seen the pushback to the IMF varies things it said about cryptocurrency generally. So the more you can say about what the position is of a country recognizing Bitcoin as legal tender would, I think, be useful there. Thanks.

MR. RICE: Okay. Thanks for those questions on El Salvador. Just stepping back. Those of you who don’t follow it. The IMF did make an emergency financing loan to El Salvador last year to help with the pandemic as we did with numerous other countries. And indeed, the El Salvador authorities have now requested an IMF loan to support their economic program. As those of you who do follow the Fund know, the size and the details of any such program are discussed during the engagement with the authorities during what we call our staff missions. So that's what's happening at the moment.

The staff team is in discussion with the El Salvadorian authorities on the possibility of a new program, including on policies to strengthen economic governance. So those discussions are ongoing. I can tell you that the team, the IMF staff team will communicate at the end of this mission which is taking place virtually.

On the question about bitcoin, what I would say is that adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis. So we are following developments closely and will continue our consultations with the authorities.

In that context I can tell you that the IMF team will be meeting with the president of El Salvador today. So I don’t want to get ahead of that meeting with the president with any further comment. But again, the team will be communicating further at the end of this mission. I'm going to leave it there on El Salvador and turn --

QUESTIONER: I just want to ask one follow up.

MR. RICE: Yes, go ahead, Matthew.

QUESTIONER: Not directly about El Salvador but there like in the U.S. legal system, there is a move to get Ripple and XRP to register at securities. Can you give any guidance on, I know the IMF basically every time the word is used, there's some pushback and deep concern.

Can you give any thoughts of what kind of, at least on the legal side, would the registration of tokens and others as securities, would this go some way to addressing the IMF concerns or is there sort of no way out at this point for that industry?

MR. RICE: Yeah. Matthew, I am not going to comment further on the specifics of El Salvador. As I said, there's a meeting today and, you know, I don't want to preempt that.

What we have said in the past in general is that crypto assets, you know, can pose significant risks and that effective regulatory measures are very important when dealing with them. So again, that's a statement we've made in the past. We've put out lots of information on that.

I'm going to leave it there for the time being and leave it to the staff team to communicate a bit further at the end of the mission. And I'll come back to you, Matthew, for further questions you may have in the course of this briefing.

I want to turn now to Lalit Jha. I think Lalit is on the line to talk about India. Hi Lalit.

QUESTIONER: Hi, thank you, nice to see you. I hope to see you in person soon where we can go back to the in person briefing sometime soon. I wanted to ask you about the COVID situation in India right now. How has the second wave of COVID-19 impacted the economy of India and other south Asian countries? You know it is now expanding to other south Asian countries as well.

What is IMF's views on the steps being announced by Prime Minister Modi earlier this week on free vaccinations to all the citizens, free food to 800 million population which is 2 and a half times the size of the U.S. population along with other incentives as well. If you can give your thoughts on it.

MR. RICE: Thank you, Lalit and thank you for the very nice greeting. Back at you on that one. On your last point, what I would say is the IMF welcomes the Indian government's announcement to facilitate access to vaccinations. And to provide additional support to minimize the social cost of the pandemic and to relieve the human, the very human costs of the pandemic. We strongly welcome the government's announcement on that point.

On the Indian economy, the second wave, which you mentioned, and associated containment measures suggests a sharp fall in economic activity. And we will be revising India's growth forecast next month in the update to the World Economic Outlook. That's coming up shortly.

And on your other point, Lalit, India of course is an economy that's important to the global economy due to its large share in global and regional GDP. And therefore, India's growth and economic outlook has broader implications with spillovers working primarily through trade linkages and global supply chains which are particularly strong, of course, with south Asia and that region.

So again, more to come next month when we will be publishing updated forecasts for India in the context of the World Economic Outlook. I'm going to leave it there on India for now and turn back to Matthew. Matthew, if you have --

QUESTIONER: If I can ask a follow up on Matthew's question on crypto and bitcoin, what is IMF's views on there should be global centralized regulatory mechanism for this kind of digital currency. Because it's global in nature, right, people from across the world are trading in those currencies. Where does the IMF stand on that?

MR. RICE: So what I would say is we work closely, Lalit, with the other bodies looking at the whole issue of digital currency. You know, frequent discussions with Bank for International Settlements, et cetera and other colleagues. I don't have, you know, a specific response on your detailed question but maybe just to revert back to what I said earlier and I'm going to leave it there for the time being.

QUESTIONER: Okay. Thank you so much.

MR. RICE: Thank you, Lalit, nice to see you.

Matthew?

QUESTIONER: Yeah, sure. And I know -- I'll keep it brief. I know others have questions so thank -- thanks for calling me and for allowing the follow-up. I wanted to know, just on Tanzania, there seems to be some pressure by the IMF, maybe rightly so, for the disclosure of COVID-19 data and some linkage of a program with disclosures. And I just wanted to note both as to Tanzania, and more generally, what is the level of disclosure that the IMF requires in those circumstances?

And on Cameroon, which I've asked you about a number of times, maybe you have something to say, but recently the U.S. State Department has imposed some visa restrictions given the conflict in the Anglophone zones. I just wanted to know how is the IMF seeing -- there are also issues about COVID-19 aid in the distribution and lack of transparency. What's the IMF's currently thinking on Cameroon?

Thanks a lot, and there will be no follow-ups this time.

MR. RICE: Okay. Thank you very much, Matthew. Two questions on Tanzania and Cameroon. On Tanzania, again, just stepping back, the IMF did support Tanzania last year in the context of the pandemic with support via our Catastrophe and Containment Trust. So that was in the form of debt relief to Tanzania last year.

Tanzania has requested now, access under the Rapid Credit Facility of the IMF. So what I can tell you is fact-finding meetings have recently begun and are ongoing. So we are, of course, assessing the pandemic's impact on Tanzania's economy, especially on the external fiscal accounts, and exchanging views, learning about the government's plan, and policy response.

As my colleague commented earlier this week, in the context of Tanzania, publication of the data and audits concerning the use of COVID-19 funds is a key transparency measure in terms of our engagement with the authorities. And so again, those discussions are taking place. And we are exploring ways for any potential financing to help the country respond further to the public health crisis, and of course, to support other vulnerable sectors. So that's where we are on Tanzania.

I don't have a great deal to say on Cameroon, Matthew, except I can comment on your point, which is related to the issue you raised on Tanzania about the use of the IMF funds in Cameroon. And I can say we are aware of a recent investigation that the Cameroonian authorities launched regarding the use of emergency financing disbursements that were approved last year, again, to help Cameroon address the pandemic.

And again, we have been -- we've been stressing the importance of good governance, proper use around these the funds. So that's something we've been emphasizing repeatedly. We don't want accountability and transparency to take a back seat in this crisis. And we have agreed on specific measures to strengthen governance and reduce vulnerabilities to corruption. These include, just to be specific, the publication of the results of COVID-19 related public procurement and beneficial ownership of companies receiving procurement contracts, the issuance of a report COVID-19 related spending, and an independent audit of the spending. And again, a publication of the results.

So we are engaging with the authorities on these issues and on how best to help them in their continuing efforts to fight the pandemic to save lives, livelihoods in a transparent manner. So that's what I would say on Cameroon.

Let me take one question online that has popped up from Maurice Matta of MTV, and this is on Lebanon. The IMF had previously called for a capital control law, is the question. The draft law has now been sent to parliament. What is the IMF's view on the prospect of this new capital control law, and on the recent decision authorizing the withdrawal of foreign currency deposits? So again, this is on Lebanon.

And what I can say is we are of the view that proposals to implement the capital control law and formalize the deposit withdrawals would need to be part of a broader set of policy measures and reforms in order for it to be viable and sustainable. We don't see the need to implement the capital control law now, especially without the support of appropriate fiscal, monetary and exchange-rate policies. It's also not clear how the contemplated withdrawal of deposit would be financed, given the sharp decline in the availability of foreign currency in the economy over the past two years, and the need to continue financing imports of goods and services.

At the same time, there is also a serious risk that the amount of liras in circulation would increase further from already very high growth rates, thus adding both to inflationary pressures and to the depreciation of the lira which would be highly detrimental to standards of living.

So thanks to Maurice for that question on Lebanon.

Let me turn to Reuters. I see David online there. David, I'm not sure if Andrea is online, but over to you, David.

QUESTIONER: Hi. Thanks, Gerry.

I just wanted to know, circling back to Tanzania very quickly, the finance minister just as we were sort of convening for this press conference, he had said that Tanzania was in talks with the IMF for a loan of about $571 million. I was wondering if you can confirm that, that amount, is what’s under discussion here?

MR. RICE: No, David, I cannot confirm that amount. As I said, the authorities in Tanzania have requested the support of the IMF, under the Rapid Credit Facility. We are still very much in the discussion phase, as I said. So, I would not be able to confirm that number for you.

QUESTIONER: Okay. And one other question on the G7 Summit that’s coming up. The United States has pledged that it’s going to make available 500 million vaccine doses, but, I mean, all you have to do is look at the world population, and say, well, that’s, maybe, nowhere near enough. I’m wondering sort of what the IMF is expecting or wants to see from the G7 leaders here to really take some action to really increase the level of vaccine access, you know, in their statement.

MR. RICE: Yeah, thanks, David. Actually, Kristalina Georgieva talked about this, yesterday, in a public event. So, you might want to take a look at what she said, if you want to pick up a quote. But, you know, I can tell you that, as I said, we’re hoping that the G7 Leaders’ Meeting will build on the progress made last weekend, at the G7 Finance Ministers’ Meeting, where they did discuss and communicate about the priority, the urgent priority, as you say, of, you know, responding to the pandemic and, in particular, supporting emerging and developing countries, in terms of their access to vaccinations. We have expressed, very clearly, our concern that we’re facing this two-track pandemic, that’s causing a two-track economic recovery, with negative consequences for everybody, and that the gap in access to vaccines between rich countries and poor countries is, you know, at the heart of this problem, in many ways.

We have been, over the last several weeks, David, I think you know, the IMF staff have put forward a very concrete proposal for a coordinated strategy to essentially end the pandemic, in 2022. We’ve put a very -- the very specific measures that we think are required, in terms of vaccination, 40 percent of the population in every country to be vaccinated by the end of ’21, 60 percent of the population in every country to be vaccinated by the middle of 2022. We have put a financing number behind that, a price tag if you like, of $50 billion. We have broken down how we think that can be provided. The bulk of that, the vast majority of that, should come in grant form for the most vulnerable countries. We’ve talked about the massive economic potential, the economic return on the $50 billion, somewhere in the region of nine trillion, by 2025, and that does not include what is most important, of course, the inestimable benefits for people’s health and their lives.

So, just to answer your question, David, in terms of expectation, we would hope the G7 leaders will be giving this issue great attention, this issue of vaccination equity, and, in particular, support to the most vulnerable countries because, as we’ve said many times, until we defeat this pandemic everywhere, we do not defeat it anywhere.

Let me turn to colleagues from Argentina. Liliana, I see you. I think Rafael is there. If you’ve got anything on Argentina?

QUESTIONER: Yeah, good morning. Do you hear me? How are you? Good morning.

MR. RICE: Good to see you, Liliana, and we can hear you loud and clear.

QUESTIONER: Oh, thank you very much. Well, we don’t have any news about Argentina and the IMF. This means no news, good news because we didn’t have any notice about a coming mission to Argentina, or how are going the negotiations? Can you enlighten us about this? Thank you.

MR. RICE: Sure. Thanks, Liliana. Let me go to Rafael. And I see Martin has a question online, but, Rafael, you first.

QUESTIONER: Yes, thanks, Gerry. Two questions on Argentina. The first one is, next week, the President of the Lower Chamber of the Argentine Congress Sergio Massa is going to be (inaudible). I wanted to confirm with you if there’s any planned meeting with any of the staff of the IMF. And the other one is if the IMF has received a request from the Paris Club or any of the governments that are part of the current Paris Club of an assessment letter about the state of the negotiations between the Argentine government and the IMF? There has been said that this might be a request for the Argentine and the Paris Club to move forward with their own negotiation. Thanks.

MR. RICE: Thanks, Rafael, nice to see you. Let me take Martin’s question of Infobae, which is online, Martin Kanenguiser, and he’s asking essentially the same kinds of questions. Are you in conversations with the Argentine government to prepare any formal communication to the Paris Club, regarding the negotiation for a new agreement with the IMF, given that the Club asked for this condition to postpone the Argentine debt?

So, let me just take these questions. Thank you, all. On Paris Club, look, I can only refer you to the Paris Club for an update to the Paris Club and to the Argentine authorities on that. Rafael, on your question on the President of the Chamber coming to Washington, will he meet with the IMF? I’m not aware of any planned meeting, at this stage, but we will keep you apprised of developments. And Liliana, you had more general questions. I’m not sure I have news for you, Liliana, but the status is, I think, you know, Kristalina Georgieva met with President Alberto Fernandez a few weeks ago we talked about that, the last time I was here. They committed to continuing our work together on an IMF-supported program that can help Argentina, and the people of Argentina, address the deep social and economic challenges the country is facing; aggravated by the COVID-19, of course.

Where we are is continuing to work closely toward that Fund-supported program. I don’t have an update on timing, Liliana, for you. Again, close dialogue, work continues, but no timing for you on when we might be nearing the conclusion of discussions on a new program. I also, I don’t have any timing for you on plans for an Article IV mission at this time. So, that's about all I have on Argentina for you.

Thank you, for the questions.

I am going to just turn back to see if anyone has a further question online? If you do, please, raise your hand. Eric, I don't know if you have something? I said I would turn to you.

QUESTIONER: Yes, Gerry, thank you, so much. I wanted to ask you about Ukraine. And the question I have for you regards just the anti-corruption law and the High Council of Justice and Head of the National Anti-Graft Bureau complying with -- do they comply with the IMF's terms? Because the Parliament approved them in the first reading, and I am wondering if these talks with the IMF over them are continuing before the second reading? Or what's the status of IMF talks about the anti-corruption law is? And where IMF-Ukraine talks are focused now? Is another mission needed to reach a staff-level agreement?

MR. RICE: Yeah, thanks, very much, Eric. I really just have a sort of status report on where we are in Ukraine. As you know, we are looking at the first review under the standby arrangement from the IMF that had been approved by our Executive Board. That was a $5 billion standby arrangement.

So, we remain, I should say, closely engaged with the Ukrainian Authorities on progress towards concluding that first review. That means discussions around implementing the policies and reforms in that program. We have talked about those before. I don’t have the details on the specific issues you raised, Eric.

But I can tell you that the objectives -- under the objectives for that program, the strengthening of the governance of the National Bank is there, is included. Improvements to the legislative and regulatory framework for bank supervision and resolution are included. Policies to reduce the medium-term fiscal deficit. But also, and touching on what you asked about, legislation restoring and strengthening the anti-corruption framework, and the judiciary are also part of the discussion.

So, we have been having those discussions, they are ongoing. We remain engaged. Some progress has been made but more is needed before completion of that first review. That's where we are on Ukraine, Eric.

QUESTIONER: Okay, thank you.

MR. RICE: Thank you. Is there another question onscreen? If you would like, please, go ahead.

QUESTIONER: Hi. I wanted to follow up on Argentina, Raphael's question. Even though the Paris Club is conducting the negotiations, has there been any requests to the IMF to advance to -- and say how the negotiations are going? And also, regarding the evaluation of the program, of the standby program, the independent evaluation, is there any news on whether -- on when that is going to be published?

MR. RICE: Thank you, for those questions. I really don’t have much to add in terms of the status of the ongoing discussions between IMF staff and the Argentine Authorities so, yeah, I am going to leave it as described.

On the evaluation, which is something that the IMF does in the context of any exceptional-access program that we have with a member country. And the previous program with Argentina did fall under that category. So, you are quite right that there will be this evaluation, EPE, we call it, will be forthcoming. I don’t have a date for it but I can tell you that we publish these evaluation reports. We believe in the importance of the objectivity and the transparency of these evaluation reports; Ex-Post Evaluation, EPE, is what we call them. And when this one is completed, we will be publishing it and it will be made available to you in its entirety. So, and that's where we are on that one.

You know, I think I am going to leave it there for today. I want to thank you all for your questions. And I look forward to seeing you all again in a couple of weeks' time. And until then, please, everybody, stay safe and stay well. Bye-bye.