Transcript

Transcript of IMF Press Briefing

February 10, 2022

MR. RICE: Well, hello, everyone, and welcome to this briefing on behalf of the IMF. I am Gerry Rice of the Communication Department. As usual, we'd be embargoed until 10:30 a.m., that's Washington time. Great to see everyone today. I see colleagues on screen, welcome. I will be coming to you shortly and seeing some questions coming in online, as well. I hope everyone is doing okay, staying safe and well.

Let me make a few announcements and then, get to your questions. The Managing Director, Kristalina Georgieva, will be traveling to Europe next week where she will participate in the EU-Africa Summit that is going to be held in Brussels February 17 to 18. And she will go from Brussels to Munich to participate in the Munich Security Conference which is running over February 18th to 20th. In between time, the G20 Finance Ministers and Central Bank Governor's Meeting takes place in Jakarta, Indonesia, and the Managing Director will be participating also, in that meeting, virtually. Which is taking place again, over 17/18 of February. Our First Deputy Managing Director, Gita Gopinath, will also be participating, virtually, in the Finance and Central Bank Deputies Meeting on 15th and 16th of February. So, IMF participation in the upcoming G20 Meeting under the chair of Indonesia. And as those of you who follow the Fund know, we usually publish what we call a note for the G20, and we will be doing that next week. So, you can look out for that in the earlier part of next week, the G20 note, we call it the G20 Surveillance Note that gives an update on where we see the global economy and other issues in preparation for the G20.

Just a final note on Managing Director activity, on February the 22nd, so, the week after next, she will participate in the ILO's, the International Labor Organization's Global Forum for a Human-Centered Recovery. And she will be talking about decent jobs and inclusive economic growth. I think that's about it on the announcements. And with that, let me turn to your questions. And again, great to see folks online.

Eric, let me begin with you today, if that's okay with you? Eric Martin, Bloomberg.

QUESTIONER: Truly, thank you, Gerry. Of a few different countries that we have interest in this week, I wanted to ask you on Argentina, if you expect any kind of in-person missions as part of this stretch of talks o working out the details? And whether a staff agreement by the end of this month is still the baseline target? On Lebanon, about talks on what the IMF means by talks for a conclusive solution to Lebanon's financial crisis in terms of budget cuts, recovery plan, and reforms. And if I could also ask about Ukraine and whether the next steps in the IMF's relationship with Ukraine, given the tension and conflict in that country right now, and when the IMF mission will review its Ukraine policies.

Thank you.

MR. RICE: Okay, thanks very much, Eric. I will take all of your questions. On Argentina and given that I see colleagues from Argentina on the call, let me take their questions just on Argentina. Eric, I will take all three of your questions, but let me take anything from Liliana or Raphael or anyone else who wants to ask about Argentina. Liliana, do you want to add to Eric's questions?

QUESTIONER: Good morning, Gerry.

MR. RICE: Good morning, Liliana. I am hearing you loud and clear, and seeing you, too.

QUESTIONER: Okay, thank you. The next deadline with the IMF is not a problem. And it is an issue that we have to order with the Fund (phonetic) and we are moving it forward. Frankly, it's not a problem, said the President Alberto Fernández, regarding the upcoming 2.8 billion IMF maturity at the end of March. Does the IMF expect to accept postponement of the March payment if an agreement has not been approved by the Executive Board yet? Thank you.

MR. RICE: Thanks, Liliana. Raphael, do you want to come in?

QUESTIONER: Yes, hi, Gerry, good morning. I just wanted to know if you had any announcements in terms of a possible mission of the IMF staff to Buenos Aires or a new mission of Argentine officials, here, in D.C.? And also, the last statements from the Managing Director seems to like adjust the expectations of the IMF regarding the deal. She spoke about a realistic when she spoke about a very solid agreement. Can you tell us a little bit about what's the reason about -- for this readjustment in the message? Thanks.

MR. RICE: Okay, let me take those questions on Argentina. And then, I'll turn to Eric's questions, and then, if there is any follow up on Argentina, we can come back to that, too.

So, maybe just a backup for people because there was a lot of activity on Argentina, and with Argentina over the last week. So, about a week ago, January 28th, IMF staff and the Argentine Authorities reached an understanding on key policies as part of the ongoing discussion toward an IMF-supported program. So, the discussions towards the agreement of what we would call a staff-level agreement. Those discussions are ongoing, but we did announce last week, as did the Argentine Authorities, that we had reached an understanding on certain key aspects. So, the where we are is those discussions are continuing, IMF staff working very closely with the Argentine Authorities towards reaching this, again, staff-level agreement.

We issued a press release statement last week that described some of the understandings on key policies, including the fiscal path that would sustainably improve public finances and reduce monetary financing. We also, referenced an understanding on durably reducing energy subsidies and on mobilizing external support to strengthen Argentina's resilience. Indeed, we referred to this as a realistic, pragmatic, credible approach to designing a program with Argentina that will strengthen the country's macroeconomic stability and begin to address deep-seated challenges -- credible approach to designing a program with Argentina that will strengthen the country’s microeconomic stability and begin to address deep-seated challenges; and, again, where we are is, the IMF staff team continues working very closely with the authorities towards the agreement. I do not have a timeline in terms of the agreement which was one of the questions from you. What I would say is, again, we’re working very hard, as are the Argentine authorities, we’re working closely together; and we will be looking to do this as quickly as possible. So, stay tuned for updates in the period ahead.

Just perhaps to add again, for those who don’t follow the Fund so closely, we have reached some understandings. These have been announced and described. Discussions continue. The next step would be a staff-level agreement and we will communicate on that; and then, of course, the next step is that the program proposal would be taken to our Executive Board who makes the final decision on the program going forward, as is always the case.

So, I don’t have timing on a mission as such but, again, the discussions are ongoing fairly intensively; and I don’t have a specific date on the staff-level agreement but I’ve said as quickly as possible, both sides working towards that. And, you know, Lilliana, on your question, I wouldn’t speculate as to other alternatives but, rather, you know, just focus on where we are, which is, I think, progress made regarding the understandings and the discussions continuing.

So, that’s where we are on Argentina. I will be happy to take a follow up on Argentina if you want to come back, if anyone wants to come back; but let me take Eric’s other questions, to be fair to him, because he had asked about the status of where we are on Lebanon.

Eric, what I can tell you is that we’re having discussions with Lebanon. Those discussions, I would characterize them as progressing well, but extensive work still required in the period ahead. There has been an ongoing mission. It’s scheduled to end this week, and we will continue to be closely engaged to help the authorities formulate a reform program that can address Lebanon’s economic and financial challenges.

As the Managing Director has said, recently, we stand ready to re-double our efforts to help Lebanon and its people to overcome the social and economic crisis that the country is facing; and, again, the mission has been working with the authorities in Lebanon. Those discussions will continue in the period ahead.

Eric had also asked about the status of Ukraine. And, again, just to back up for people who don’t follow it as closely, perhaps, as Eric does, that we, the IMF, does have a program in place supporting Ukraine. This is a $5 billion, 18-month standby arrangement. That current program was recently extended through the end of June ’22. We did communicate on that; and we, more recently, indicated that the first review of the program with Ukraine was completed toward the end of last year unlocking about $700 million dollars, disbursed.

So, where do we stand? Like everyone else, we’re monitoring developments very closely in Ukraine. We are hoping for tensions to ease. The Board had approved, in November, the schedule for the remaining two disbursements under the program with Ukraine, with the second review mission expected to take place in the first quarter of this year, the first quarter of 2022, provided sufficient progress has been made to meet the objectives under the program.

So, discussions continue. Once the next review mission is scheduled, Eric, we will announce its start, probably through our Res-Rep, Resident Representative in Kief and Ukraine. We will communicate on that. But, again, like everyone else, we are monitoring developments very closely in Ukraine and hoping that tensions will ease.

That’s on Lebanon and Ukraine. Does anyone want to come back on Argentina? Okay. Thank you very much.

QUESTIONER: Gerry?

MR. RICE: Oh, hi, Patricia.

QUESTIONER: How are you? I was wondering if, in terms of what the IMF and Argentina announced, what level of completion of the agreement would you say that those subjects represent? What else they are discussing in order to reach an agreement in the upcoming weeks?

MR. RICE: Thank you, Patricia. I wouldn’t get into the details of the discussion, which we never do. I think we outlined the broad parameters in our statement last week. So, I would refer you to that; and, again just to say that what we’re looking at is a realistic pragmatic approach to designing a credible program that can address Argentina’s microeconomic stability and begin to address the deep-seated challenges that the country is facing. So, I would not really get much more into the details of what is being discussed there; but stay tuned, as I said. Intensive discussions, consultations taking place and everybody working hard, and hoping to do this as quickly as possible.

So, let me move on. I am seeing David there. I am seeing Delphine. David, why don’t you come in?

QUESTIONER: Hi, Gerry. Good morning. I had a question about Sri Lanka. The President there has asked China for restructuring terms for its debt. And they seemed to have ruled out an IMF program at this stage. Just wondering what you can tell us about what sort of engagement the IMF has in this effort, and if you have a view on sort of how big a test is this for China’s participation in the various debt relief framework programs, you know. Given that Sri Lanka’s kind of the poster child for belt and road over-borrowing. Also, just wondering if you can talk about what the IMF is expecting; what Madam Georgieva is expecting from the G-20 Meeting next week on debt restructuring, on debt relief? What kind of progress there is realistic to move this forward? Thanks.

MR. RICE: Okay, David, thanks very much. On Sri Lanka, what I can tell you is that we had a staff team from the IMF in Colombo toward the end of next year, finished up just before the end of the year; and that was related to the Article IV Consultation. Then, that, we expect to be discussed by the Executive Board

in the normal way. Probably later this month towards the end of this month. We also, I can tell you we had a mission that was aiming to strengthen, technical assistance mission, aiming to strengthen the macro fiscal unit at the Ministry of Finance as part of our capacity development activities. And that was conducted virtually and is just concluding almost as we speak.

We have not received a request for financial support from Sri Lanka, from the Government of Sri Lanka. Of course, we stand ready to discuss options if requested and we continue to closely monitor economic and policy developments. On the debt front, I don't have anything in detail to offer you there. As is always the case, we would be looking for all participants to play their part, as appropriate.

On your question about the G20, David, and what to expect specifically with regard to the Common Framework. You may have noted the Managing Director and others speaking just in recent days about some steps that we would like to see taken to strengthen the common framework. And these include a sustained debt service standstill for the duration in of the negotiation. Once a country would indicate its willingness to participate in the common framework, we are advocating that there should be a debt service standstill, once the country indicates its willingness to participate.

And we are also calling for a firm timeline, a specific timeline for the process to be completed with regards to a negotiation around a specific country on its debt restructuring. So, these would be two elements that we think would significantly strengthen the common framework. And hopefully, we might see some progress in those discussions at the G20. Let me leave it there and turn to Delphine.

QUESTIONER: Good morning, Gerry. Good morning, everyone. I would like to ask the question about Tunisia. Could you please give us update of status (phonetic) that Tunisia? Could you confirm there will be a team visit starting on February 14? Could you also tell us what we should expect from this visit? And so where we are in the context of difficulties from political friction in Tunisia?

MR. RICE: Okay, thanks. Delphine, look, you've asked about Tunisia. I know Matthew Lee wants to ask about Tunisia also, and I saw Matthew just a second ago. Matthew, if you're there, do you want to come in? Otherwise, I can -- you sent your question in advance, so I can read it, but do you want to come in Matthew with that? And any other questions you have? I think we just --

QUESTIONER: Okay, not sure if I heard the question on Africa, so maybe when she's done.

MR. RICE: Okay, I'm coming to your question on Africa. Matthew had also asked about Tunisia, so I'll fold in the response to him in answering Delphine's question. I can confirm, Delphine, that there would be an IMF mission February 14th to 22nd. And I can confirm the status of that mission would be virtual and where we are on Tunisia is the Tunisian authorities in the latter part of last year sent a letter to the IMF requesting a new fund supported program. So, over the past several months, IMF staff and the Tunisian authorities have held technical discussions, focusing on the immediate economic challenges, the country's priorities and the reforms to be implemented in order to overcome the crisis in the country.

And so, those discussions have been ongoing and with a view to again, a new financing program. So, that leads us to the mission that I mentioned that is about to happen beginning next week. And we will be communicating at the end of that mission in the usual way as to the main elements of the discussions.

And I'm just looking at Matthew's question. Yeah. He was asking about actually something very specific related to the judges association in Tunisia. I really don't have anything on that. It's related to the Supreme Judicial Council. I don't have anything on that, Matthew. But he was asking more general really about the status on the request for the program. Matthew, I see you now. Do you want to --

QUESTIONER: No, no. It's been quite a ride, but thanks a lot. And I'm also glad that Sri Lanka was asked about.

MR. RICE: Yes.

QUESTIONER: I just was going to ask about this Supreme Judicial Council in Tunisia, but I do have just a couple of other questions and I've also my colleague, Simon, I know he has a question. But I wanted to ask about Ghana, what the status is. They've been, there's been sort of contradictory statements about whether they're seeking a program or not.

And also, if you can say a little bit more about, about El Salvador and Bitcoin. I know that you put out a big statement since our last briefing. The Government has pushed back and said, it's their sovereign right to do what they want. And also, here in the Southern District of New York courthouse, there's been a big, the largest seizure ever by the U.S. Treasury $3.6 billion from the Bit finance hack. And I wonder whether the IMF sees that as a good, as a sign that Bitcoin can be kind of regulated and sort of civilized by regulators? Or do you see it as another sign that countries shouldn't make it a legitimate tender. Thanks a lot.

MR. RICE: Okay, Matthew, thanks. So, I talked Tunisia already. On Ghana, what I can tell you is that, of course, we've been maintaining a close policy technical assistance dialogue with the Ghanaian authorities. We are, of course, as always monitoring the economic recovery there in Ghana. We highlighted in our Article IV consultation last year that a deeper, more equitable fiscal effort is needed in our view. And the proposed 2022 budget, we think announced a 20 percent spending cut to go into that that direction.

On your specific question, Matthew, the Ghanaian authorities have not requested a financial program with the IMF, but again, as I said, in the context of another country, we stand ready to support Ghana in any way deemed useful by the authorities. But again, just to be clear and answer your question, the Ghanaian authorities have not requested a financial program with the IMF as of today.

You had asked about El Salvador and Bitcoin regulation, and so on, I've spoken, Matthew, as you know, quite a bit about our view on Bitcoin and El Salvador's decision to use it as legal tender. I don't propose to go into all of that again, you know, we support authorities' efforts to boost financial inclusion and raise growth. But again, as I've said before, the risks arising from using bitcoin as legal tender need to be addressed and that includes, of course, an adequate and appropriate regulatory framework.

So I will leave it there. Maybe just for your information, Matthew, the Article IV report was discussed at our executive board on January 24th. So just want to note that that is ongoing.

QUESTIONER: Thank you.

MR. RICE: I think those were your questions because we had talked about Tanzania a bit earlier. Let me turn to Delphine. Delphine, did I cover your question on --

MS. DELPHINE: Yes, you did. Thank you.

MR. RICE: Okay. Then let me turn to Africa and take the question on Africa, please.

QUESTIONER: Yes, thank you. Thank you, Gerry, for doing this and thank you for taking my question. I don’t know, I guess you mentioned at the top that the IMF Managing Director will be attending the EU-Africa Summit and I was wondering if she'll make any big announcement there and if yes, which one.

And specifically, I wanted you to give us an update on the state of the economy, the Ethiopian economy. We know with the hiring crisis it seems more like before. If you can give us an update on the state of the Ethiopian economy and also an update on the state of the Angolan economy. They're having a big election this year. Thank you.

MR. RICE: Thank you, Simon, it's nice to see you too. I don't have anything for you in terms of a specific announcement next week. Stay tuned when the Managing Director will be at the EU-Africa Summit as I announced. So, you know, just stay tuned on that. We do plan to issue her statement there.

On Ethiopia, we are of course monitoring that situation, we're concerned about the situation and as I say, monitoring it very closely. With heightened uncertainty on the ground and its impact on the economy, it's difficult to move to program discussions right now. But we stand ready to engage on program discussions when the time is right.

On the Ethiopian economy, again, the uncertainty related to the conflict makes it difficult to refresh our macroeconomic projections. But we will be attempting to do that in the period ahead. I think that's about all I want to say on Ethiopia.

QUESTIONER: On Angola, do you have anything on this yet?

MR. RICE: Thank you, Simon. On Angola, let me come back to you after this briefing. I'll come back to you bilaterally on that, okay? Great. I see one more question, please come in.

QUESTIONER: Hi, thanks a lot, Gerry. Shabtai Gold with Devex. I wanted to ask quickly about the issue about sovereign defaults and whether you have any updates on concerns about countries heading towards defaults. And particularly in African in light of the recent trend of coups and Mali failing to meet a debt payment. Are you beginning to see movement towards more sovereign defaults and are you in talks with countries about any steps to prevent this from happening?

MR. RICE: Thank you for the question. We have spoken quite a bit on this issue and in fact there was a pretty good informative blog that we issued just towards the end of last year from the Managing Director and our Director for Policy Review Department. We have indicated and said this again quite recently that the number of countries looking at debt distress or the risk of debt distress has increased significantly.

We estimate now that about 60 percent of low income countries are at high risk or already in debt distress just by way of comparison. You know, a few years ago, some years ago that number was below 30 percent so now we're saying that it's about 60 percent. So it gives a sense of the magnitude of the challenges and we see those as mounting.

We are aware of the difficulties that many of the countries are facing, particularly as the continue to grapple with the pandemic. The debt suspension service, Debt Service Suspension Initiative, the DSSI, has ended as of last year. That was a G20 initiative. And the common framework which had been put in place again, under the auspices of the G20 and with the IMF and the World Bank has been functioning but needs to be strengthened. And I refer to that the ways in which we think it could be strengthened in the period ahead. I referred to that earlier.

So it could be indeed that we will see an accelerated demand for support for debt restructuring in the period ahead. And it's critical again, as I said, in the context of another question, it's critical that all participants, creditors and debtors play their part as fully as possible.

Just to be specific, we've seen some progress on some specific cases. Chad, Zambia, Ethiopia for debt treatments under the common framework. But we want to see we're calling for further action to strengthen that common framework so as to be better equipped with potential need for debt restructurings in the period ahead.

Let me take a final question. I see a hand raised there. Please, come in.

QUESTIONER: Thank you, Gerry. Just a quick follow up on El Salvador. Is it fair to say that if they continue to use bitcoin as legal tender that closes the door to a possibility of a deal with the IMF.

MR. RICE: What I would say is that the authorities have not yet outlined the technical and operational details around all of this, including the regulatory framework that was referenced earlier. So it's something that needs to be discussed further in the period ahead. Again, we've given a very clear view on what we deem to be the IMF's position on the use of bitcoin as legal tender. So I'm just going to leave it there for right now.

With that, thanks to you all for coming along today. Great to see you and we'll be in touch in the usual way in the period ahead and look forward to seeing you again in a few weeks' time. Thanks everybody. Bye.