Transcript

Transcript of IMF Press Briefing

June 10, 2022

P R O C E E D I N G S

MR. RICE: Well, good morning, everyone. Welcome to this briefing on behalf of the International Monetary Fund. I am Gerry Rice of the Communication Department, and as usual, we’ll be embargoed this morning until 10:30 a.m., and that’s Washington time. Good to see everyone. Thank you for joining us today. Let me begin with a few announcements, and then I’ll turn to your question online, and in the room so to speak, I see many of you joining today by Zoom or WebEx. Nice to see you all.

Next week from June 14th until the 18th, the IMF Managing Director Kristalina Georgieva will be visiting Barbados in her first trip to the Caribbean region. The Managing Director will meet with Prime Minister Mia Motley, and other high level officials from the region, not just from Barbados, but from throughout the Caribbean region. A number of events will be taking place. Many of them will be open to you. You will be able to watch these, participate in these, in some cases. I won’t go into all the details, but you can be in touch with Media Relations, and they will give you all the details. That should be, amongst other things, talking to university students, meeting with recipients of our Regional Technical Assistance in the Caribbean, and so on. So that’s next week essentially, okay, Kristalina Georgieva in the Caribbean.

At the end of the month, she will be participating in the G7 Leaders’ Summit, so that’s going to be on June 27, and as you probably know, that G7 Leaders’ Summit is being hosted by Germany. Let me quickly tell you that our other senior members of management here at the IMF, our Deputy Managing Directors are very active also, in terms of their public communication and outreach. You may have seen Gita Gopinath, our First Deputy Managing Director, talking about the global outlook and other issues yesterday in a session with Martin Wolf of the Financial Times.

Our Deputy Managing Director Antoinette Sayeh is actually in Morocco today participating in a high Level round table on informality development and the business cycle in the North Africa Region, and you can watch that at 10:30 today, again live event. Antoinette will then be going onto Botswana to participate in a conference jointly organized with the African Union on the issue of governance and accountability, and after Botswana, Antoinette will be going to Zambia where, amongst other things, she will meet with President Hakainde Hichilema, and members of civil society, members of Parliament, other officials in Zambia, to discuss recent economic developments, and of course, Antoinette will be discussing any updates on the debt restructuring situation in Zambia, which we’ve said before here, we talked about it here, essential to open the path towards an extended credit facility with the Fund. So, she will be discussing those with the Zambian officials.

Let me also mention that our other Deputy Managing Directors are active, Kenji Okamura will be making a speech tomorrow virtually in Poland on monetary policy in the Three Seas Initiative countries, that’s a conference organized by the Central Bank of Poland, and then Kenji will be moving on to Moldova, where he will meet with the President, the Prime Minister, and other high-level officials. He will visit a Ukrainian refugee site there, and a border post, and he will be engaging with civil society, and young people, actually, visiting a school in Moldova.

So finally, our Deputy Managing Director Bo Li, also active making a speech next Tuesday, June 14th at 9:00 here in Washington on regulating, supervising, handling distress in public banks, and again, live, available to you online. If you need any further information on those things, guys, please be in touch with our Media Relations colleagues after this, and they will be happy to give you further detail.

I’m going to take some questions online straightaway. Ukraine continues to be an issue of great interest to everybody, of course, and I’ve got a number of questions have come in online. I’m going to take those, and if you have questions on screen here on Ukraine, I’ll turn to you then, and I’ll take those questions too. The questions I’m seeing online, and including from Yaroslav Dovgopol, excuse me, Yaroslav, from UKRINFORM, are around what is the IMF’s latest assessment of the economic damage caused by the war in Ukraine. There’s a question, “Can you update us on donor contributions to the IMF’s Administered Account for Ukraine?” And there’s a question about “Can the Fund IMF give even more to financially support Ukraine’s budget?” I’m going to quickly turn to the virtual room. If you have a question on Ukraine, I can add it to these, or I can take these, and then come back inside the room. Does anyone want to raise their hand on Ukraine? Yes, I am seeing Shabtai. On Ukraine Shabtai, please come in.

QUESTIONER: My question is not on Ukraine.

MR. RICE: All right, so let me take these questions on Ukraine. Shabtai, I’ll come to you for your particular question, but let me take these questions on Ukraine. The first one was about an update on the assessment of the damage caused by the war. Of course, it is still ongoing, unfortunately, and very difficult to make an accurate and comprehensive damage assessment at this stage, and I want to indicate at the Fund, we have not been able to conduct such an exercise. Of course, the human cost, the humanitarian impact is of first concern, but we do see preliminary estimates, including from the Kiev School of Economics, suggesting that the damage caused to Ukraine’s physical infrastructure, and this was as of May, late May, already exceeding $105 billion, again, this is an estimate from the Kiev School of Economics, and broader concepts of economic losses, including, for example, output losses, business closures, foregone revenues, and investment, are obviously much higher, so that’s what I can say on our latest assessment. There was a question about IMF’s financial support to Ukraine, and including on this Administered Account, that we’ve talked about before. Just a reminder, the IMF did disburse $1.4 billion to Ukraine in March, actually, that was an immediate disbursement to help budget and balance of payment support. Then in April, and we talked about this a number of times here, the Fund approved the establishment of this special Administered Account through which donors can channel resources to Ukraine in the form of grants and loans, and thus to help Ukraine. Canada had already announced its pledge there of $1 billion, and again, already announced, and I understand an additional loan commitment of $250 million Canadian dollars has been indicated. Moreover, Germany has now announced a grant of euros, a billion euros, that will be channeled to Ukraine via this Administered Account, and what I can tell you is that several other Member Countries are concentrating the possibility of channeling financial support to Ukraine through this vehicle. There was another question about what more can the IMF do, and a specific question about “Is the IMF planning to start discussions on a new program for Ukraine?” The status there is that the Ukrainian authorities have indicated their willingness to have an IMF-supported program to help with their macroeconomic stabilization against the background of the large reconstruction needs that will be required when conditions permit.

So, near-term support from Ukraine’s international partners, we believe should focus on emergency assistance and, ideally, take the form of fast-disbursing grants. A program with the IMF would be something to be discussed more medium term, again, in the context of larger reconstruction needs and when conditions permit. Right now, the focus is on near-term support.

So, with that on Ukraine, I’m going to turn to questions in the room; and I’m seeing Matthew Lee, online. Matthew, in New York, do you want to come in?

QUESTIONER: Actually, Gerry, I had put up my hand but my question is about Sri Lanka. So, I don’t want to step in front of anyone who wants to ask about Ukraine first.

MR. RICE: I think we’ve moved on. I’m happy to comeback on Ukraine if people have a question. Matthew, thank you for your courtesy. Please, go ahead.

QUESTIONER: Okay; sure. I’m sure you’re following closely things in Sri Lanka, and I know that the Prime Minister Ranil spoke to the Managing Director, but he has to expedite the program; and I wanted to know where things stand. That’s my most pressing question for today.

MR. RICE: Okay. Thanks very much, Matthew, for keeping it very succinct. Again, Sri Lanka, very much in the news. Is there another question on Sri Lanka? Give me a waive if you’re on Sri Lanka. I’m seeing Shabtai and Anna. Shabtai, go ahead, then Anna.

QUESTIONER: Thanks. Yeah, I’ll just quickly add to what Matthew’s asking here. The government today is talking about $5 billion in needs. Does the IMF have any assessment of what they will actually need in terms of not only what the status is on the package, but what package are we talking about, and what size of the needs. Thanks.

MR. RICE: Thanks, Supti; Anna, come on in. Unfortunately, we’re not hearing you Anna, at least I’m not, sorry about that. Oh, there you go.

QUESTIONER: I’m so sorry about that. Thank you for this opportunity. It’s a 3-pronged question, wondering whether the Sri Lankan’s government aim to finalize the staff-level agreement within a month is actually feasible; and then how much progress has been made towards agreeing on a reform program and sustainability analysis? If you could share the key sticking points on that. And finally does the Fund plan to send a mission to Sri Lanka?

MR. RICE: Okay. Thanks, Anna. Let me take one more on Sri Lanka from Paneetha Ameresekere from Ceylon Today saying the Prime Minister called upon the IMF to hold a conference to help unite Sri Lanka’s landing partners including China, India, Japan. What’s your view and along the lines of Anna and others, the question about when the timing of when a program might be coming forward. So, let me try and take that clutch of questions on Sri Lanka. Clearly, a great deal of interest there; and clearly Sri Lanka facing very difficult economic conditions and severe balance of payments problems. We are deeply concerned about the impact of the ongoing crisis and, particularly, again the humanitarian concern, the impact on people; and, particularly, the poor and the vulnerable groups. So, we are monitoring that situation very closely.

Trying to respond to your specific questions. We are planning, the IMF is planning an in-person mission to Colombo in the coming weeks to engage on policy discussions on the program, building on the technical discussions that we already held with the authorities in Sri Lanka. That was back in May. We’ve talked about that, and there was a press release, actually, at that time. The timing of a staff-level agreement would depend, in part, on the strengths of the policies that the authorities would propose and would commit to; and, again, I emphasized staff-level agreement just for those of you who don’t follow the IMF so closely. That’s different from the approval that we must have from our Board which follows the staff-level agreement. We have the staff-level agreement, and then it goes forward to our Board, and it’s our executive directors who make the final decision.

And because Sri Lanka’s debt is assessed as unsustainable, which, again, we’ve said here before, our Board approval for any program would require adequate assurances that debt sustainability would be restored, which was the point Anna was touching on as well.

You may have noted in the media that Kristalina Georgieva, our Managing Director, had a phone call meeting on Tuesday with the Prime Minister and they discussed next steps for the IMF’s engagement with Sri Lanka; and the Managing Director reaffirmed our commitment to support Sri Lanka at this very difficult time.

Again, very concerned about the situation. The high global food and energy prices, and their impact on the Sri Lankan people, and, you know, we are engaging as much as we can, as actively as we can, to see how we can help; but, again, too early for us to discuss magnitude of potential financing or a specific date for either the staff-level agreement or when this might go to the Board.

And, again, just returning maybe to Anna’s question which is important on the debt, and a reminder that when the IMF determines a country’s debt is not sustainable, the country then needs to take steps to restore debt sustainability before we can move forward with a financing program. So, again, I touched on that point and just wanted to come back to it since Anna had asked about it.

Let me move on then from Sri Lanka. I’m seeing Liliana, Argentina. Hi, Liliana.

QUESTIONER: Hi, Gerry, nice to see you.

MR. RICE: Nice to see you, Liliana; and we’re hearing you loud and clear.

QUESTIONER: Okay; thank you. Yesterday, the IMF press release state the approval for the first quarterly that also, it states a modification of the inter-year quarterly pass of the primary fiscal deficits and reserves accumulation that’s been proposed. When will these changes be known? Thank you.

MR. RICE: Thank you, Liliana. Let me take any other questions from colleagues in Argentina or working or Argentina. Are there other questions? Raise your hand, please. I am seeing Juan and I’m seeing Anna. Please come in, Juan.

QUESTIONER: Okay. Hi, Gerry. Do you hear me?

MR. RICE: Loud and clear.

QUESTIONER: Okay. Nice to meet you, Gerry. Well, I would like to add the following question. The IMF mentioned that the Argentinian government has committed to additional policies. Could you give us more details about that?

MR. RICE: Sure. Anna, let me take you then I’ll swing by, see Patricia, as well. Anna then Patricia.?

QUESTIONER: Thanks again, Gerry. Just a slight rephrase on Liliana’s question. I would just like to know when and how the Fund’s going to determine the changes to those inter-year targets. Would that be something that would come up in the upcoming review? Thank you.

MR. RICE: Okay, thanks, Anna. Patricia, and then I’ll take these questions.

QUESTIONER: Hi, Gerry. I was wondering in terms of inflation, what’s going to be the new range also; and Minister Guzman said, recently, that the reduction of subsidies would be slower and that the IMF agreed on that. So, could you confirm that there’s going to be a change there too?

MR. RICE: Okay. Thank you all for these questions, and always great to see colleagues from Argentina. So, for those of you who don’t follow Argentina, yesterday, we announced, as Liliana mentioned, that there was this staff-level agreement with the Argentine authorities reached on updated microeconomic framework and associated policies necessary to complete the first review under Argentina’s 30-month program, financing arrangement, with the IMF.

We issued a statement yesterday about this, but what I can tell you is just echoing the statement in a way, all quantitative program targets in the first quarter of 2022 were met. Initial progress is also being made on the structural agenda in line with program commitments. IMF staff and the Argentine authorities have agreed that the annual objectives established at the time of the approval of the arrangement will remain unchanged, okay? This is critical to enhance stability, and support the ongoing economic recovery.

And, as some have mentioned, achieving these annual objectives will require the implementation of some additional policy measures in this regard. The authorities have committed to reprioritize some public spending, and to continue to implement the enhanced monetary policy framework. So that, again, they can adhere to the end year fiscal and reserve accumulation goals.

Let me just mention, again, as I did in the case of Sri Lanka, this is a staff level agreement, and subject to the approval of our Board, which will come a bit later. On the question of these intra-quarterly paths that, that Liliana and others talked about, again, the annual program objectives for the, for the fiscal deficit, for monetary financing, reserve accumulation, they all remain unchanged, okay? This is a very important anchor for the economic outlook, and for the ongoing economic recovery.

Having said that, given the immediate impact of the war in Ukraine, the shock that has come from that, and seasonal spending and import patterns, the intra-year, quarterly paths of the program to achieve these objectives will be revised. In practical terms, the quarterly target path is being adjusted again, to reflect the impact of, of the shock, and the authorities’ policy commitments to deliver on the annual objectives.

Let me just clarify, again, for those who don’t follow the IMF, this happens regularly in IMF programs. It’s actually why we have these quarterly reviews of the program, so that they can take account of developments, and issues as they, as they might emerge. As they might emerge. The overall program targets and objectives remain unchanged, but the intra-quarterly review steps, the paths, they will evolve. Details on that, some of you asked, we will have more details on the updated intra year quarterly targets, with the publication of the staff report. And that will come out after the board discusses the first review.

So, when we go forward now, to the board, as I mentioned, there will be a detailed, what we call staff report. And that will be published -- that will be made available to you with these sorts of details. I would say the same on Anna’s questions about inflation. As with other countries, our projections and forecasts have been revised. In the context of the review. And, given changes in the global conjuncture, including the war in Ukraine, events that have taken place since the approval of the arrangement with Argentina, and we will be able to give you more detailed information on the publication of the report.

Let me move on, and Andrea, I see your hand there. Andrea Shalal, Reuters. If you do wish to speak, please raise your, raise your hand. Andrea?

QUESTIONER: Hi Gerry, thanks for doing this, good to see you. Gerry, we have a pretty significant downgrade in the global economic forecast this week, from both the World Bank and the OECD. I realize we’re still a few weeks out from July, when you’ll put out the next update. But can you give us a trend line of how significant it is? And if you could just, potentially, say something about -- on Ukraine. I wanted to follow up on the -- if you could, perhaps, say how -- what your target is, or what the target is for that account? Like, how much money do you think will come into that right now? We’re at, just over 2, right? 2.25. How big could that fund grow to become? What is your indication? You said several other countries are interested. Thanks.

MR. RICE: Yeah. I don’t have a -- just on your last question, Andrea, I don’t have a scale answer to your question. We would like it to be as large as possible. The needs are great, as I indicated in my answer. And you know it. Everybody knows it. The needs are huge. And so, we would like to mobilize as much as possible. And this is a really effective way, this administered account, this vehicle is a really effective way to get those resources to Ukraine. And we are anticipating there will be further commitments, but I don’t have a number for you.

Turning to your other question, Andrea, as you, as you know, cause I know you follow it closely, we did revise down our growth forecast back in April. At the time of our, of our WEO update -- we went from 4.4 percent for the world in 2022 to 3.6 percent. And since then, clearly, a number of developments have taken place that could lead us to revise down further when that comes with the World Economic Outlook update in July which you mentioned. You may have seen Pierre Olivier Gourinchas has been public in the last few days, talking about the outlook indicating, just as I did, that we could be looking at a further revision. Gita Gopinath said the same thing yesterday in her interview.

You know, again, so much has happened, and happening very quickly. Since we, we last, we last came with our forecast, that, you know, we’ve got the war continuing, we’ve got commodity prices continuing to be very volatile. Energy prices, in particular. Very high food prices. The Chinese lock—- slowdown, I should say, looks to be more severe than had been expected. We have inflation continuing to rise, particularly in a number of advanced economies, leading to the tightening of monetary policies.

So, you know, we’re seeing this confluence of crises, which the Managing Director talked about the combination of all these things going in the same direction of downside risks materializing. And so, again, I think we can reasonably, you can reasonably expect that there will be a downward revision of the growth forecast for 2022, compared to what we were forecasting only a month and a half ago.

That’s about what I have for you, Andrea, on, on, on the outlook. I think Magaly was looking to come in on this as well? Magaly, do you want to come in? Is it on this global outlook? Or do you want to ask about something else?

QUESTIONER: Hello?

MR. RICE: Yes.

QUESTIONER: Can you hear me?

MR. RICE: Hi. Hello. Go ahead Magaly.

QUESTIONER: My question, I -- thank you. My question wasn’t about the global economy, my question was more about Lebanon. I don’t know if I can ask it now, or—-

MR. RICE: Okay. Of course. Of course you can. Yes. Please do. Nice to, nice to see you.

QUESTIONER: Nice to see you too. We heard that there might be a resident representative appointed in Lebanon. We would please like to confirm this information. And, if it’s true, to, to see when he can come?

MR. RICE: Hey, Magaly, thanks for that question and, yes, is the answer to your question. We can confirm that we have appointed a Resident Representative in Lebanon, as is usually the case in countries with active program negotiations or with programs, again, those of you who follow the IMF you know this.

Let me just give you, maybe, a bit more information, Magaly on, and others who are interested in Lebanon, we continue to work with the authorities on the implementation of their comprehensive economic reform program. Complete and timely implementation of the first steps is key to initiate the process of addressing the deep-seated problems which Lebanon and the Lebanese people obviously face. And that have resulted in a deep crisis that, that Lebanon faces. And the large increases in poverty, which are of great concern.

A bit more information, there is a plan for our staff team -- I know you asked about the Res Rep, and, and, and, and I answered that. But there’s a plan for our staff team to visit Beirut before the end of this month, to discuss the status of the authorities’ implementation of the agreed, of the agreed policies.

I’ve got a couple of questions online, but I want to see if there’s -- if there’s more in the room? Heather. Heather. Hello. Heather, you’ve got a two hander.

QUESTIONER: I was -- Two or 3, yeah. Good to see you Gerry.

MR. RICE: Likewise. Good to see you, Heather, always.

QUESTIONER: Yeah, a couple of things. Real quick on Argentina, do we have timing on the Board meeting? On Tunisia, similar question, when do you expect the negotiation? We understand things are going well. When you expect those negotiations to begin and sort of timing on when you think there can be an agreement, especially with this referendum coming up in July. I'm not sure if you're trying to get it done ahead of that, or after, or trying to stay away. And on the global outlook, the World Bank also warned that the US could see a return to stagflation which is very worrisome. OECD sort of downplayed that a little bit. I just wonder if you could speak a little bit about what the IMF is thinking as far as a stagflation risks. Thanks.

MR. RICE: Hey, sure Heather. I can deal with your Argentina question very quickly; Heather, I may have actually mentioned it. I hope I did, but if not, we've got the staff level agreement as of yesterday and the process will follow and we will have the IMF Executive Board discuss that. I don't have a precise date for you. It can normally run anywhere between three, four, six weeks. That wouldn't be unusual, but I don't have a Board date. And when we do have one, we'll announce it and we'll let you know. And you will have that full staff report that we talked about.

On your question on Tunisia, again, just backing up a bit. The IMF has received a request from the Tunisian authorities for an IMF supported program. We want to be a strong partner for Tunisia. We welcome the fact that the Tunisian authorities have published their proposed economic reform program. So, we are now in technical discussions with the authorities.

I would characterize those discussions, Heather, as advancing, and we hope that they will lead to a staff mission to start program discussions soon. I know that's not as specific as you'd like me to be on timing on either of those questions, Heather, but that's about as much as I have.

On your question about stagflation and my response to Andrea, I gave sort of the status of our growth forecast at the moment. And stay tuned for Pierre Olivier coming forward with a bit more next month, in July. In terms of the descriptor that we we'd use, which I think is what you are asking about. I mean, number one, on the US, the US economy continues to grow strongly. So, that's kind of the status of the economy there. Of course, the US economy is also facing some severe headwinds, including on inflation. But the growth in the US economy continues to be strong.

On the issue of stagflation more broadly, what we have said is, again, that we see the global economy headed into a growth slowdown is probably the word that I would use at the moment. Some countries may indeed be looking at recession. A number of countries may be looking at recession, but in terms of the overall global economy right now, I would characterize it as growth slowdown, you know, rather than another descriptor. But again, we will have much more to say about this when we do the World Economic Outlook next month. Running a bit out of time here, but I'm going to take one other question online with the hand raised. I'm actually finding it hard to see the name, but there is one hand raised there. Nume asking about Africa, Nigeria. Do you want to come in Nume?

QUESTIONER: Yes. Hi, and thank you for taking my question. So, my question is on Nigeria and I'm just wondering if IMF has been monitoring the elections happening. I mean, the upcoming elections that's about to happen. And what advice would IMF give to the aspirants who have emerged flag bearers of the various political parties. Then also as well as the Nigerians debt right now, and it seems to be rising continuously. Is this a concern for IMF and adding the debt to what it would advise the incoming aspirants what they should do when, if they win the elections? Thank you.

MR. RICE: Hey, thanks, Nume. Nice to have you with us. I mean, those of you who follow us closely, you know that we don't do politics. We don't comment on elections. So, I don't really have anything to say about that in Nigeria or elsewhere, Nume.

We are, of course, clearly watching the monitoring developments in Nigeria on the economic front and continue to engage closely with the Nigerian authorities on the economic policy front, including on the issues that you mentioned debt and Nigeria affected like so many other countries by those shocks in the global economy that I talked about earlier. So, I don't really have much more specific for you on Nigeria at this point.

I know that Anna has a question on Zambia, so we're on Africa, Anna, if you can make it quick, I'm going to take your question and there’s been a question waiting online. I'm going to take that and then we are probably going to close out here, Anna. Thank you.

QUESTIONER: I appreciate you coming back to me. Thanks Gerry. So, it's just to do with Zambia and its official creditors committee. I'd just like to know why it's taken so long to constitute and to meet and with IMF is doing anything to expedite that process. Thank you so much.

MR. RICE: Well, Anna, I think as I said here, maybe the last time I was here or -- we were very pleased during the recent Spring Meetings to hear from People's Bank of China, Governor Yi Gang, that China is ready to join the G20 Official Creditor Committee for Zambia and to work expeditiously on a debt treatment.

We are strongly encouraging Zambia's official bilateral creditors to work as quickly as possible to form this creditor committee and provide the financing assurances that we need to move forward here in terms of consideration of an IMF supported program. Once we have those assurances, this will allow the IMF program to be presented to our Executive Board for approval in a timely manner. So, as quickly as possible is the answer to your question, Anna.

We want to move as quickly as possible. Again, I don't have a date on that, but we understand the Creditor Committee Secretariat is working with creditors to identify a suitable date. And again, to do that as quickly as possible.

Last question, online, Lalit Jha, PTI says, Kristalina Georgieva earlier has implored India to reconsider its ban on wheat exports, saying the country should play a key role in international food security and global stability. Can you elaborate a bit more on this issue? We are very concerned by the use of food and fertilizer export restrictions, which can exacerbate global price increases and market volatility.

So, this goes beyond India. Our monitoring indicates that some 30 countries, in fact, have curtailed exports of commodity goods, including food and fuel, and that since the war in Ukraine began. So, we are very concerned about this and Lalit is right. Kristalina Georgieva has been very vocal on this. Gita Gopinath spoke about it again, yesterday.

On India, we welcome India's decision recently to relax its originally announced ban and allow some wheat exports to proceed, including the already contracted shipments and exports to countries with food security needs. And we hope to see further relaxation of bans and again, not just by India, but also by all countries who have imposed them. And that might be the appropriate note on which to end this briefing.

Thanks to you all for joining today. Look forward to seeing you again soon. Quite a bit of communication upcoming from the IMF. We’ll keep you posted and in the meantime, please stay safe and well, thanks everyone. Bye-bye.