Transcript

Transcript of IMF Press Briefing

May 19, 2022

MR. RICE: Well, good morning, everyone, and welcome to this first 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., Washington time. I should know that by now.

Good to see everybody on screen and online. We’ll try and take as many of your questions as we can. Let me make just a few opening remarks, and then turn to questions from you.

So, you may have seen yesterday, the IMF and six other international institutions published a joint-action plan to address the crisis of food security; and the IMF will be contributing to this plan in various ways: policy advice; capacity development; financial support, to help catalyze and complement financing from other institutions. You may have seen the statement from Kristalina Georgieva yesterday on this international action plan, and you can find more details on IMF.org.

Today, the Managing Director is at the G7 Meeting in Borne, in Germany; and I know that David, I see on screen, has already interacted with Kristalina this morning. I saw some reporting there, David; thank you. Relatedly, Kristalina will also be meeting today with the African Ministers of Finance and Agriculture at the African Development Bank and African Union to discuss the African Union’s commissions initiative; again, to discuss the looming food security crisis in Africa. I see Simon on the call. It may be of interest, particularly to him.

Next week is Davos week, obviously; and the Managing Director will be there with our First Deputy Managing Director, Gita Gopinath, that’s the World Economic Forum’s Annual meeting, and Davos starts on Monday. There’s just a ton of stuff going on there. It’s probably best for me to refer you to media relations to get the details on what Kristalina and Gita are doing in Davos. It’s quite a lot. There’s everything from open public discussion panels on the global economic outlook to digital currencies, to the issue of fragmentation, as it’s called, in the global economy, global debt, and many other issues. Again, if you want more details on exactly what Kristalina and Gita are doing in Davos and how you can get access to those events ‑‑ most of them are fully public ‑‑ please contact media relations afterwards and we’ll get you all that you need.

Finally, our Deputy Managing Director, Bo Li, will be at the Pacific Technical Assistance Center steering a committee meeting in Fiji next week, and he will be giving a keynote speech there; and, again, that will be available to you in real time and on IMF.org. And with that, let me turn to your questions.

Let me begin this morning with Bloomberg. I see Eric there. Hey, Eric, come on in.

QUESTIONER: Yes; thank you. Good morning, Gerry. Good to see you again. I had questions for you first regarding Argentina, and whether the IMF expects to complete its first review of Argentina’s program this month. If so, when? Is the IMF confident Argentina can reach its target for foreign reserve accumulation, or is that target going to be modified at this review? And then on Ukraine, if you can give us an update on the administered account and if any more countries have donated to that; and whether the IMF is advising Ukraine to stick with a fixed exchange rate of their currency hryvnia, the policy which they had switched to when Russia invaded; or whether that continues to be appropriate at this time? Thank you.

MR. RICE: Thanks very much, Eric. Good to see you, as well. Let me take your questions on Ukraine; and before I ask your questions on Argentina, I’ll turn to number of journalists from Argentina who are on the call; and I’ll take their questions as well and fold them in as we normally do.

On the administered account, Eric, which you asked about ‑‑ well, let me just step back a bit. Since the beginning of the war, Russia’s invasion of Ukraine, we have been closely, very closely engaged with the authorities; and by that, I mean almost on a daily basis; and you’ve seen the various conversations between Kristalina Georgieva and President Zelensky ‑‑ there was one just a few days ago which we publicized; and our immediate response at the IMF has been to help Ukraine with their near-term financing needs and, you know, the response by the Ukrainian authorities, I have to say, has been remarkable.

Back in March, we dispersed $1.4 billion in emergency financing to Ukraine and then, as Eric rightly says, we had set up a so-called administered account. Now, this allows donors to channel further support to Ukraine in a secure manner, loans or grants; and, again, using our fiduciary infrastructure. Canada has pledged a billion in its forthcoming budget. I’m not aware of other pledges or commitments at this point. We will keep you posted as to any further additions.

On your question about the exchange rate, Eric, I am not aware of any specific advice that we’ve given related to adjustment at this point.

Turning to your question, Eric, on Argentina. You asked about the timing of the review and the targets, particularly for foreign exchange. I will come to your questions, Eric, but let me see if there ‑‑ I see Patricia has her hand up. Let me take her question and any other question on Argentina right now. Let me just take those and then I see your hands raised, I will come to all of you in due course; but, Patricia, perhaps you could come in.

QUESTIONER: Hi, Gerry.

MR. RICE: Yeah, hi. Go ahead.

QUESTIONER: Good morning.

MR. RICE: Good morning.

QUESTIONER: I was also wondering, in terms of the first video, when can we expect break to conclude, and what are the discussions in terms of inflation and energy subsidies? You may know that inflation’s still quite high here. So, I was wondering if there’s a new goal set already.

MR. RICE: Okay. Anything else on Argentina? Okay; then let me take those questions. So, where we are on Argentina is that after meeting here in Washington during the spring meetings a few weeks ago, the IMF team has been working virtually with Minister Guzman and his technical team towards the first review of the program, which is what Eric was asking about. The teams are assessing the impact of the war in Ukraine on Argentina’s economic outlook, and are working to prioritize policies as needed to ensure meeting the program’s objectives and targets.

I would characterize the discussions, or the status of the discussions on the first review, as good progress being made; and we hope to communicate about the conclusion of the mission soon. So, the teams have been working virtually, and I would characterize it as good progress.

On the questions, both Eric’s and Patricia’s, about targets and objectives in the context of the first review ‑‑ again, as I said, the teams are assessing the impact of the war in Ukraine on Argentina’s economic outlook. Argentina is affected, as are so many countries throughout the world. And, again, as I said to prioritize policies, as needed, to ensure meeting the program’s objectives and targets, those objectives and targets remain unchanged. So, again, you know, looking at prioritizing policies but the program’s objectives and targets remain unchanged. The authorities remain committed to the implementation of the program. It’s their economic program and in this context ensuring that the agreed targets can be met.

Indeed, I think Minister Guzman recently noted that the authorities view the IMF arrangement as an anchor and that the targets remain unchanged. So, I hope that helps to respond.

Let me move on; and I see Matthew Lee there in New York. Matthew do you want to come in?

QUESTIONER: Yeah, sure I do. Thanks a lot. Thanks for taking the questions. I want to ask about Sri Lanka, obviously. Since we last had a briefing, the unrest ‑‑ there’s, at least people have been killed; there’ve been orders to shoot on sight. So, I’m wondering, in that context, I’d like sort of an update on where things stand with the IMF. Also, Egypt is saying that Prime Minister Madbouly has said that they expect to have a new loan in the next few months; and I’m wondering if that’s your understanding as well, what you can say about that? And by contrast, Ghana has said that they intended to go forward without IMF assistance, and if you have any comment on that. So, those are the three. Thanks a lot.

MR. RICE: Hey, thanks, Matthew. Nice to see you out there in New York City. Let me just try and take your three questions fairly quickly. Lots of interest in Sri Lanka, Matthew, to which I can say we are concerned, of course, about the current economic crisis in Sri Lanka and, especially, the hardships being endured by the people of Sri Lanka; and, especially many of those people poor and vulnerable. So, we are clearly monitoring the political and economic developments very closely.

Matthew, an IMF team has been engaging in technical discussions on the authorities’ request for an IMF-supported program so they have asked for the program, as I think you know. We talked about this the last time I was here. And there is, currently, a virtual IMF-staff mission engaged in those technical talks with the Sri Lankan authorities and we expect that to continue, that mission to continue through May 24. So, we remain committed to help Sri Lanka, in line with the IMF’s policies and will engage with stakeholders in support of a timely resolution of the crisis that is being faced there.

On Egypt, Matthew, what I can say is the rapidly changing global environment and the spillovers related to the war in Ukraine are posing sizable, important challenges for countries around the world, as I mentioned in the context of other countries. And this includes Egypt, of course. And in that context, the Egyptian authorities have requested the IMF’s support, to implement their comprehensive economic program. So I can tell you IMF staff are working closely with the Egyptian authorities to prepare for program discussions, with a view to supporting what I believe are our shared goals of economic stability, and sustainable job rich, inclusive medium term growth for Egypt. So, again, the Egyptian authorities have requested an IMF program. We are working closely with the authorities to prepare for the actual program discussions.

You asked about Ghana, Matthew, as well. And I can confirm what you just -- what you said, that the authorities have made no program request, and we do not expect any. That said, we maintain close technical and policy dialogue with the government, and with the Bank of Ghana. We stand ready to help in any way they consider useful, as we have done, as I think you know, during the Pandemic, with the billion-dollar rapid credit facility support, and the $1 billion SDR allocation. Economic activity in Ghana bounced back after 2020, and the government now faces acute stress to finance its budget because of debt vulnerabilities, which have increased. And public debt now exceeding 80 percent of GDP.

So, putting Ghana’s budget back on track in this context, this year, and in the coming years, will be necessary. In order to maintain debt sustainability. That’s where we are on Ghana. Thank you very much, Matthew, and let me turn to -- I see a newcomer in our midst.

QUESTIONER: Thank you very much.

MR. RICE: Shabtai Gold. Hello Shabtai, of Devex. Happy to take your questions Shabtai, welcome to the press briefing.

QUESTIONER: Thank you very much. I just wanted to dig in a little bit more into what you said at the top, about the food crisis -- and just to get an idea of what the IMF is, broadly, globally thinking, in terms of the combination of the food and debt crisis, meaning that just countries have less fiscal space. I know that there’s been a lot of warnings about that. The treasury announced, sort of, a big program yesterday with some of the development banks. The IMF is going to be giving technical advice, but I was wondering if you see a more urgent need to step in, with financial assistance, and what that might look like?

MR. RICE: Thanks, Shabtai. As you’ve indicated, and as I said at the top of the meeting, many countries now face significant challenges with food security. It’s one of the Global consequences of the war in Ukraine. And clearly rising food, as well as energy prices are adding to inflationary pressures across the world. And, together with the disruptions in food supplies, it threatens food security.

Again, the international action plan on this topic was announced yesterday. And we made a statement on that. So I don’t want to repeat that. But just maybe a bit more, since you asked about the specifics of what the IMF can do, you know, I’d put it in the buckets of policy advice, capacity development assistance, and financial support. So, with a bit more detail, we’re investing in a monetary capacity to allow for timely identify -- identification of countries facing the most pronounced financing pressures, especially in fragile and conflict affected states. We are working with country authorities on macroeconomic frameworks, and policy priorities. A critical focus is to assist countries in strengthening their social safety nets, to protect vulnerable households from the imminent threat of hunger, and to identify ways to safeguard food security without resorting to export restrictions.

For example, the IMF financing support for Moldova, which was announced last week, the augmentation of our support for Moldova, and our support for Mozambique are just a couple of examples, includes a focus on strengthening social safety nets for vulnerable households. We have the new RST, the Resilience and Sustainability Trust, Shabtai. It is coming online, which we hope will provide affordable, longer-term financing for countries facing structural challenges in this area. So this is -- this is new for the IMF. The RST is looking at the longer term, and most of our financing, as you know, is focused on the short term.

And finally, you know, we’re intensifying efforts with the World Bank, and others, to support debt restructurings where needed. And are calling for improvement in the G20 Common Framework for debt treatment. I won’t go into more detail on that now, we’ve talked about it before, but we’ve been quite vocal on the need for a substantial strengthening of the common framework for debt treatment.

Thank you for that, Shabtai. Let me turn to Mao Ling. I see you there, Mao Ling. Come on in please. Nice to see you.

QUESTIONER: Thank you, Gerry, very much, for taking my question. And thank you for doing this. I want to ask about the IMF’s recent decision to lift the weighting of RMB in favor of the SDR basket. I see that the IMF said it’s based on trade, and financial market development, and there are 5 indicators. RMB did better than -- on some of them, than others. I wonder whether you could elaborate a little bit on the reasons behind the SDR weighting change. And, also, can you please comment on, or share some thoughts on the RMB’s internationalization process? Thank you.

MR. RICE: Yeah, thanks Mao Ling. So we periodically review the weights of the 5 currencies underlying the SDR, the so-called basket, to see how their use in international trade and finance has evolved. So, again, this is something we do routinely, periodically. And the weights are determined based on a formula that includes exports and financial variables. So applying the formula, the IMF’s Executive Board, as you indicate, raised the shares of some countries. The U.S. dollar rose from, I mean, the numbers which publicly announced, the U.S. Dollar rose from 41.73 to 43.38 percent. And the Chinese Renminbi, which went from 10.92 to 12.28 percent. So, not huge differences in the weighting. But, as I say, we do this on a periodic basis, and we do it in a, in a transparent way. Some of the weights of the other currencies, of course, went down slightly. The British Pound, Japanese Yen, dropped somewhat.

So, again, the adjusted SDR weights, to answer your question, Mao Ling, reflect a number of factors, including currencies’ use in trade, their importance as a reserve currency, held by central banks all around the World. Their presence in foreign exchange turnover, and the role they play in international banking and debt issuance. We have quite a lot of information about this, Mao Ling, on IMF.org if you’d like more detail, or happy to follow up with you at a later date. But I hope that responds to your question on the SDR valuation review that we published the other day.

On Renminbi internationalization, which you also asked about, well, the international use of the Renminbi varies. For example, while China’s average share in global trade, in the 5 years 2017 to 21, relevant for the SDR review, was 12 percent. Its share in global foreign exchange market turnover in 2019 was only 2.2 percent. And this reflects, among other things, the fact that China’s capital account remains fairly closed.

So I hope that helps with your questions, Mao Ling. Let me take a question online from Maurice Matta, of MTV in Lebanon, and then I’ll take a question online from Delphine of AFP. But, on Lebanon, Maurice is asking what will be the status of the IMF’s staff level agreement with Lebanon, following elections? And, if no government is formed for a long time, how do you assess the Government’s reform program?

As we all know, Maurice, Lebanon, indeed, is facing an unprecedented crisis, which has led to dramatic economic contraction, and a large increase in poverty, unemployment and emigration, and hardship for the Lebanese people. It’s a manifestation of many years of deep, and persistent vulnerabilities, generated by unsustainable economic policies.

So, as you indicated, Maurice, on April 7, last month, the Lebanese authorities, and the IMF’s staff team reached agreement, the staff level agreement on comprehensive economic policies, that could be supported by a program financing from the IMF, an extended fund arrangement, that would be subject, as all our programs are, to prior actions that the Lebanese authorities have committed to undertake.

And then, again, as is the case with all our programs, our Executive Board would meet to discuss, and consider the programs. At this stage it’s a staff level agreement. Decisive policies and critical reforms are needed. And, you know, as I’ve implied, we remain fully engaged with the authorities, and committed to our efforts to help Lebanon, and its people, to overcome this crisis that the country is facing.

What else can I say on Lebanon? Financing support on highly concessional terms, from Lebanon’s international partners will be essential to support the authorities’ efforts, and ensure that the program is adequately financed, and can meet its objectives. And, again, strong reforms and policies are needed to address the crisis.

On the political issue that you raised, or at least on the formation of the government question that you asked, it’s important that the Government would secure broad political support, to embark on this set of comprehensive reforms that are needed to restore macroeconomic stability, debt sustainability and financial sector solvency. And, of course, with an objective of returning to high, and more inclusive growth over the medium term.

I want to take a question from Delphine, online, and then I’ll come back in the room. I see David has his hand up, and I see Simon as well. Delphine is asking about Tunisia. You signaled some

progress with the Tunisian authorities. What happened since then? That's since the end of March. And could you give us a sense of timing? When can we expect an agreement? Delphine, don't have a great deal more to add to what I've said previously. We're monitoring the evolving political and economic situation in Tunisia.

We are, have been in technical discussions with the authorities, in fact, since the beginning of the year, and that will continue both at the technical level and to ensure capacity development. So while these discussions are ongoing in Tunisia, given the dire economic situation, decisive actions and implementation of reforms should not wait the conclusion of these discussions or an IMF program.

A homegrown reform program as presented by the current government has the benefits of stronger ownership and greater credibility and thus, of a greater chance of success than in the past.

Let me leave it there at Delphine on Tunisia and come back in the room for a final round. David, I want to come to you and thank you for joining us from fields far away.

QUESTIONER: Hi, thank you, Gerry. Can you hear me okay? A bit of noise here in the G7 Press Center.

MR. RICE: Yeah, David you're loud and clear.

QUESTIONER: Okay, great. So at these meetings, obviously, stagflation is a huge topic. Inflation generally is a huge topic. Madam Georgieva had expressed hopes that there would be a lot of discussions here about developing countries because she's quite concerned. And obviously, we're seeing a lot of them struggling right now, especially with what we're seeing in Sri Lanka.

So, what is it that the G7 finance leaders can do here, can say here to, have an impact on developing countries. You more or less think of them as sort of dealing with sort of big, advanced country issues. And then secondly, I've got a question on El Salvador if certainly there's been kind of a route in the cryptocurrency markets.

They have bet big on crypto, putting some of that assets into Bitcoin. What do you think the effects are of that? I mean, would they still need to kind of come out of Bitcoin for them to engage Fund again? Is that a prerequisite for them for the IMF to talk with them? Where are those discussions? What was the last communication you guys had about a program with El Salvador?

MR. RICE: Okay, David, thanks. You're breaking up there just a bit at the end, but I think we got you on G7 and on El Salvador. On the G7 agenda, David, well, you know, you're right there. I do think that these G7 discussions can add I think they're important and I think they can add a great deal of momentum on a number of fronts, including on issues that have direct impact for emerging markets and developing countries, which is what you were asking about.

I mean, if you think about it, food security is already been made an issue for the G7. The announcement yesterday of the joint action plan, action on in inflation, which is a worldwide phenomenon of great import for the emerging markets, developing countries, as well as for the advanced economies, whatever the G7 might say on the issue of debt, which we all know is of great concern to emerging markets and developing economies.

So, I think there's a range of important economic issues that the G7 will be discussing. And as I say, I think can add significant momentum in a number of areas that are very important for emerging markets and developing economy. So, I don't think it's just an advanced economy discussion as you were yourself were suggesting also, David.

On El Salvador, where are we on El Salvador? IMF staff and the El Salvador authorities continue to have regular discussions on the critical issues that were emphasized by our Executive Board on January this year. So it does include the pace and composition of fiscal consolidation while supporting growth and supporting vulnerable segments of the population and minimizing the risks arising from adopting Bitcoin as a legal tender, which is what you were asking about David. We have made our views clear on that particular issue.

So it's part of the discussions that are ongoing including the authorities advancement in the compilation of statistics regarding Bitcoin use and other information related to El Salvador's adoption of Bitcoin as a legal tender. So we're providing a technical assistance on this issue, the compilation of Bitcoin use. Discussions around anti-money laundering, fiscal transparency, accountability in the use of public funds, strengthening the anti-corruption framework in line with international standards, and a range of other issues. That's where we are on El Salvador, David.

I'm going to come to Simon and then Eric, I'm going to conclude with you. Simon?

QUESTIONER: Yes. Thank you.

MR. RICE: It's good to see you, Simon.

QUESTIONER: Yeah. Good. See you too. Thank you for taking my question and thank you for doing this. This time on the table, with today, news Africa and Washington. As you said at the top Kristalina is going to have some engagement with finance ministers and agricultural ministers of Africa.

I was wondering if you could give us a preview of what they will discuss whether there should be any major announcement when it comes to food security. Specifically for Africa. And I was also wondering if you could tell us what the IMF is doing in terms of financial assistance for countries affected by severe drought in the Horn of Africa. Thank you.

MR. RICE: Thank you, Simon. Yeah, let's we -- we'll wait for that discussion today. We are, I'm hoping that we'll release some information on that later today, Simon. I don't have anything specific on what Kristalina would announce today, but as you know, the IMF has been and remains deeply committed and highly active in our engagement with Sub-Saharan Africa.

I think you know some of the numbers, Simon. The emergency financing during the pandemic more than 13 times, our average annual lending to Sub-Saharan Africa and mostly done through emergency financing, which had this lower bar on conditionality and so on.

We have also assisted, supported via the allocation of SDRs that did help Sub-Saharan African countries. We are hoping and working towards that SDR allocation being able to help those countries even more. And again, that leads us to the resilience sustainability trust and progress on that. We did provide direct debt relief to Sub-Saharan African countries, a large number through our catastrophe containment and relief trust. And, of course, we continue our engagement with capacity development and training and so on.

Again, I think we've heard the G20 and others make a global ambition of channeling more of their SDR holdings to Sub-Saharan Africa. And we are certainly very supportive of that and working towards that. And as I mentioned in response to a previous question, Simon, we are vigorously pursuing a strengthening of the G20's common framework for debt treatments, which I think would be of tremendous assistance to Sub-Saharan African countries. And particularly we are calling for more progress on those countries that have already applied for a debt treatment under the common framework, Chad, Ethiopia, Zambia, and working towards progress on that.

I don't have anything specific on your question about drought in the Horn, Simon. That's something, of course, of grave concern and it would be part of our efforts in this broader response to the food security crisis that so many countries are facing.

With that, let me take the last question from Eric. Eric, you go first and last today.

QUESTIONER: Yeah. Thank you, Gerry. Thank you so much. Just on Argentina, I just wanted to follow up for clarity. So you're currently -- if I understand, right, you're currently engaged in the first review which had been announced that would be moved up to mid-May, but I just wanted to see if there's a timeline for that completion, if you expect that to actually be completed this month.

And then when you mention that the objectives for the program, objectives and targets will not be changed, does that include even the foreign reserve accumulation? Because given levels of what we know Argentina is accumulated thus far, they're far behind that target. And so that would be extremely difficult to meet.

MR. RICE: Eric, I appreciate your questions. I really don't have much more to add beyond what I said that the program's objectives and targets remain unchanged. And we are working very closely with the authorities to prioritize policies. So, I really don't have much to add on that. And likewise, the technical team, the teams on both sides have been working intensively working virtually at this point. And I -- it might be a good point to end on.

I characterize the discussions, Eric, as good progress being made. And that I do hope that we'll be able to communicate to you on the conclusion of the mission very soon. But I do not have a timeline for you right now.

So, with that, I am going to leave it there. Thank you all for your questions. Great to see you. David, good luck in Germany and look forward to seeing you all soon. Until then stay safe and well, thanks a lot. Bye-bye.

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