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Transcript of IMF Press Briefing
October 3, 2024
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IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: Pavis Devahasadin and Angham Al Shami
Phone: +1 202 623-7100Email: MEDIA@IMF.org
October 3, 2024
PRESS OFFICER: Pavis Devahasadin and Angham Al Shami
Phone: +1 202 623-7100Email: MEDIA@IMF.org
SPEAKER: Ms. Julie Kozack, Director of the Communications Department, IMF
MS. KOZACK: Good morning, everyone. It is great to see you all here in person and online. Welcome to this IMF Press Briefing. I am Julie Kozack, Director of the Communications Department. As usual, this briefing is embargoed until 11:00 a.m. Eastern Time in the United States. I will start with some announcements and then take your questions in person on Webex and via the Press Center.
First, Managing Director Kristalina Georgieva is on a one-day visit to Qatar today to attend the annual Gulf Cooperation Council Finance Ministers and Central Bank Governors Meeting. She will also meet country authorities and engage with university students. On October 7th, the Managing Director will be in Hamburg, Germany for the Hamburg Sustainability Conference, and the following day she will participate in the Annual Meeting with Heads of International Organizations in Berlin, organized by Chancellor Olaf Scholz.
Deputy Managing Director Kenji Okamura will be in Mongolia from October 3rd to 4th to meet with the authorities. Then, October 9th and 10th, DMD Okamura will participate in the ASEAN Summit in Vientiane, Lao PDR. During his visit, Mr. Okamura will meet with regional leaders.
And finally, as a reminder, the Annual Meeting's Curtain Raiser Speech, as well as the analytical chapters of our flagship reports, the World Economic Outlook, the Global Financial Stability Report, and the Fiscal Monitor will be released during the week of October 14th. Media advisories will be sent in due course. Our Annual Meetings will take place from Monday, October 21st to Saturday, October 26th. Registration for journalists to attend the Annual Meetings is still opened and we advise you to register before October 7h, especially if you require a visa. You can visit IMF Connect to register, where you will also find the media FAQs.
And with that, I will now open the floor for your questions. For those connecting virtually, please turn on both your camera and microphone when speaking. And so over to you.
QUESTIONER: Thank you very much. Why the IMF has indefinitely postponed its official visit to Russia since 2019. Had it been prompted by objections from western countries? And when, approximately, is the Fund intending to send its mission to Russia? And as a follow up to this question, does the Fund intend to discuss with the US authorities whether the Russia's new Executive Director, Ksenia Yudaeva, would be granted United States visa?
MS. KOZACK: All right, any other questions on Russia? Okay, on the Article IV for Russia, as we have said before, the Article IV Consultations with Russia have been postponed while we are gathering all of the necessary data and analysis to ensure that a rigorous consultation and analysis can take place. And I don't have any further updates at this time.
And then on the question about the Executive Director. As a reminder, Executive Directors are nominated by their member countries and elected onto the IMF's direct -- Executive Board by the member country or by a group of countries that they would represent. This process is currently underway, so it would be premature for me to comment further at this time.
QUESTIONER: In terms of the program of Sri Lanka right now -- oh, hi. Thanks. In terms of the program, the current program, what revisions does the IMF expect the new president administration to make to that program? And is it possible to revisit some of the parameters without breaching some of the debt sustainability framework that some of these bondholder agreements are on? And then also on the bondholder and some of those other agreements, particularly the bondholder, the new one, is there an update on whether or not it meets the comparability of treatment expectations with the OCC deal? And as I mentioned, I am sure there's some other Sri Lanka questions floating around.
MS. KOZACK: Anything else on Sri Lanka? I see nothing in the room online on Sri Lanka.
QUESTIONER: Good morning, Julie. I've got two questions regarding Sri Lanka. That is, number one, is Sri Lanka recently elected its new president, and now the president has also declared the 14th of November as the parliamentary elections. Now Sri Lanka is facing kind of an impasse where you have one faction saying that they will go ahead with the IMF program while another faction contesting the upcoming polls wants to change the IMF program. Given this situation, is there any possibility of sticking with the program or is the review going to change or is the deadline, I mean, the program review going to be pushed back? And at the same time, the new government has also introduced new concessions to the general public. Was the IMF consulted in this regard?
QUESTIONER: Also, on Sri Lanka. I'm just wondering if you have a date for engagement with the new government? Do you anticipate meeting with leaders of the country? Do you expect them to attend the Annual Meetings this month? Thanks.
MS. KOZACK: So, let me take these as a group. So first, just stepping back to remind on June 12th, 2024, the IMF Executive Board completed the 2024 Article IV Consultation, and the Second Review under the EFF program was Sri Lanka, providing the country with immediate access to about $336 million to support its economic policies and reforms. Program performance is strong, and reform efforts are bearing fruit in terms of reviving economic growth, lowering inflation, boosting reserves and improving revenue mobilization. However, as we have said before, important vulnerabilities and uncertainties do remain, and this means that sustaining reform momentum is critical.
Right now, a high-level team led by our Director of the Asia Pacific Department, Krishna Srinivasan, is currently visiting Colombo to meet with President Dissanayake and his new economic team. The delegation is discussing with the authorities the latest economic developments and their economic reform objective. Dates for the Third Review under the EFF will be announced in due course and this delegation will communicate when their visit concludes. And we will have more information for you at that time.
On the question on the bondholders, what I can say is that on September 18th, Sri Lanka and the international bondholder representatives reached an agreement in principle subject to confirmation of comparability of treatment by Sri Lanka's Official Creditor Committee, and this does represent some significant progress in Sri Lanka's debt restructuring process.
QUESTIONER: New Prime Minister Ishiba cautioned recently about the rate hikes by BOJ. Given the current circumstances, especially Federal Reserve starting easing monetary policy, should the BOJ stick to the gradual normalization policy? What is your view on the point? And the second question, PM Ishiba also intends to support consumers who are struggling -- struggling with higher prices, but considering Japan now facing -- facing with pile of debt, is it appropriate?
MS. KOZACK: So, starting with the monetary policy question, the Bank of Japan is taking important steps toward the normalization of monetary policy and its monetary policy toolkit. These changes will help anchor inflation in Japan and inflation expectations at the 2 percent target. And our advice is that the BOJ should continue to be data driven and to gradually raise the policy rate over its policy horizon if the inflation forecasts bear out that this is the right - is the right way forward. So, in sum, the BOJ should continue to be data driven in its approach.
And then on your second question regarding consumer spending, what we can say is that the Japanese economy does continue to grow. As I already noted, there are broad based price increases which are maintaining headline inflation above the BOJ’s target. Our assessment is that the economy does remain on track to achieving the 2 percent target sustainably over the medium-term.
With regard to fiscal policy, which goes to the question [of] supporting consumer spending, our recommendation is that the focus of fiscal policy be on growth friendly fiscal consolidation to help rebuild fiscal buffers and ensure debt sustainability. And this can be underpinned by both revenue and expenditure measures. And this would contribute to both maintaining market confidence in Japan's debt sustainability, which, of course, is essential for Japan's growth.
QUESTIONER: I'm just wondering if you can articulate a bit the IMF's concerns about the rapidly escalating situation in the Middle East. You know, obviously there's major concerns about increasing loss of life and increasing damage, but as far as the global economy and the regional economy goes, are we possibly in for a spike of inflation if oil prices go up, trade is -- shipments are disrupted, food shipments are disrupted? What is the pressure on the regional economies in that neighborhood? Egypt, Jordan, Lebanon itself, Israel itself and others. Thank you.
MS. KOZACK: Anything else on the Middle East?
QUESTIONER: Yes, just a quick question. Just to know if IMF had an assessment about what has been the growth loss for the world economy, and more specifically maybe MENA, during the last year due to the ongoing conflict in Gaza and Middle East.
QUESTIONER: In recent months, [the] Libya Central Bank has been under crisis due to political interference that has negatively impacted the nation's economy, including energy resources as well as regional economic. Similar situations have also occurred in other countries, including in Nigeria with past administration. So, what is the Fund doing engaging with the government as well as what is your view regarding this crisis? And as I said, how is the Fund addressing this issue?
QUESTIONER: Can I add one more? I just wanted to ask about Fund Staff in the region. If there has been any changes in terms of pulling people out or moving them to other locations, if you could just give us an update on that?
MS. KOZACK: Let me also see if there is anyone online who may have a question on the Middle East.
QUESTIONER: This is specifically on Lebanon. I wanted to know if the 2022 SLA (staff-level Agreement), which has not really moved forward since 2022, will be tweaked in this situation now that society in Lebanon looks very different from two years ago. That is both the size of the program and the reform requirements.
MS. KOZACK: And anyone else online? You wanted to come back on?
QUESTIONER: Yes, just a quick follow up on the question I was asking. Given the crisis, as I mentioned, we are seeing more crises like this around the world. So, what is the spillover, in terms of -- sorry, I got it -- and the significant impact that we have on monetary reform and governance in the economy?
MS. KOZACK: So, let me start with the broader picture for the Middle East, and then we can get to the two country specific questions. First, I just want to start by conveying our heartfelt condolences for the loss of life in these conflicts. And as we have said before, we call for an end to all conflicts, both in the Middle East and elsewhere.
With respect to the economic situation, we are closely monitoring the recent intensification of the conflict in the region with great concern. The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond. With respect to the most recent developments, it is too early to speak to the economic fallout, but we know already that the economies at the center of the conflict, West Bank, Gaza, Lebanon, Israel, are hard hit.
And let me say a few words about each of those economies, starting with the West bank and Gaza. Nearly a year of conflict has had a devastating impact on the economy. In Gaza, the civilian population faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid delivery. Preliminary official estimates indicate an 86 percent decline in GDP in the first half of 2024.
In the West bank, already grim prospects have further deteriorated, and preliminary official data indicate a 25 percent decline in GDP in the first half of 2024.
In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation. The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure.
And in Israel, at the outset of the conflict, GDP contracted by about 20 percent in the fourth quarter of 2023, followed by only a partial recovery in the first half of this year. And we will be, as you know, providing an updated set of projections both in our October World Economic Outlook and in our Regional Economic Outlooks, which will be released during the Annual Meeting.
Looking at the global economy, the main channels of impact have been through so far have been through shipping costs and commodity prices. With respect to the latter, meaning commodity prices, so far, they remain below the highs of the past year. And again, we will be discussing this in our Global Economic Outlook later this year. But I just emphasize once again that we are closely monitoring the situation, and this is a situation of great concern and very high uncertainty.
Let me turn now to -- there was a specific question on Lebanon, and let me get to that one, and then I will turn to Libya. So, with respect to the Staff-Level Agreement, the situation is as follows. There has been up to date, relatively limited progress on some of the actions that had been agreed in that Staff-Level Agreement with the authorities. We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so. But it would necessitate that the actions can be taken, and decisive policy measures can be taken. We are currently supporting Lebanon through capacity development assistance and other areas where possible.
And with respect to the question on Libya.
QUESTIONER: (inaudible) IMF Staff?
MS. KOZACK: I will come back to you on IMF Staff. I do not -- I do not have the details with me now, but we will come back to you on that.
And Libya. So, with respect to Libya, we do welcome the agreement to end the standoff over the leadership at the Central Bank of Libya. This agreement was reached last week with the support of (United Nations Support Mission in Libya) UNSMIL and other international partners, and it paved the way for a resumption of central bank operations and oil production and exports. And just as background, on July 1st, the IMF's Executive Board concluded the 2024 Article IV consultation with Libya.
In terms of the economic situation in 2023, real GDP was estimated to have expanded by 10 percent, and this was largely owing to a rebound from oil production stoppages in 2022. And the key medium-term challenge for Libya is to diversify away from hydrocarbons and promote stronger and more inclusive private sector growth.
QUESTIONER: Can you answer the IMF’s view on the political spillover of the Central Bank?
MS. KOZACK: I do not have anything further to add to what I just mentioned.
I do have a question coming in from the Press Center on Egypt. And the question is, Dr. Mahmoud Mohieldin's term as Executive Director of the IMF for Arab countries and the Maldives has concluded. Has a new Executive Director been nominated? We would like to know more details on this matter. And then additionally, when is the next review for Egypt scheduled? Has Egypt applied for the $1.2 billion loan from the IMF Resilience and Sustainability Trust?
So let me see if there's some other questions on Egypt.
QUESTIONER: Just building on the one about the review, just in addition to that, when you might expect the next Staff visit to Cairo related to that.
MS. KOZACK: Anyone else on Egypt online?
QUESTIONER: Yeah, I just -- I guess, to put a point on it, just whether this Fourth Review has, in fact, been postponed until November.
MS. KOZACK: Any other questions on Egypt? Okay, let me talk about Egypt, then.
So, on the first question regarding the Executive Director, I would just refer you to my earlier response, which is that the Executive Directors are nominated by their countries. There is a voting process of the membership that is ongoing, and it would be premature to comment further while that process is underway.
Then on the other questions on Egypt, just to step back. So, on July 29th, the IMF's Executive Board completed the Third Review of Egypt's EFF, allowing the authorities to draw $820 million. The Egyptian authorities' recent efforts to restore macroeconomic stability have indeed started to yield positive results, inflation is elevated but trending down, and the flexible exchange rate regime remains a cornerstone of the authorities' program.
That said, and as we have just discussed, the regional environment remains difficult and complex. Domestic policy challenges do require decisive implementation of the authorities’ reform program, and this means a need for continued fiscal consolidation, strengthened revenue mobilization, and creating the space needed to finance and expand important social programs. And of course, accelerating reforms that strengthen private sector growth will also be essential. All of this will require staying the course on economic policies that will best serve the people of Egypt.
With respect to the next review mission, the next review mission is planned to take place in the coming months. This has always been the case. It is consistent with the schedule that was presented in the published Staff Report, and those plans have not changed.
QUESTIONER: My question is about Mexico and the new president, Claudia Sheinbaum. How do you see the country's economic prospects? Although she has promised that there will be no tax reform and that she will contain the deficit, her government program also includes numerous plans for expanding social programs. Do you think there is a risk that the public deficit will increase with these plans? Thank you.
MS. KOZACK: Any other questions on Mexico by chance? So, I'm going to give a very short answer to this because we do have an Article IV process underway. So, a team is scheduled to meet with the new authorities shortly, and we will then aim to communicate the findings of the Article IV later this month. And we will also have an updated outlook as part of the World Economic Outlook. So given that the process is ongoing and underway, I will refrain from -- commenting further, and you'll hear more as that process comes to a conclusion.
QUESTIONER: My questions are related to the Caribbean Region specifically.
QUESTIONER: First up, can you give us a review of St. Vincent and the Grenadines and Grenada in light of the hurricane issues that impacted those two territories? Also, the port strike is happening here in the United States at the moment. What impact do you foresee this, having on those small island states within the Caribbean Region, especially St. Kitts and Nevis. And finally, I want to get from you Guyana's position. Guyana has been one of the fastest growing countries within Latin America and the Caribbean Region, including South America to an extent. But outside of its oil and gas revenues, the economy has somewhat stagnated. What is [the] IMF's position on that? And where do you foresee the IMF? Have any discussions been -- has a review been done with Guyana surrounding this? And what [are] the IMF recommendations to curb rising inflation within the country?
MS. KOZACK: So, let me start with St. Vincent -- St. Vincent and the Grenadines and Grenada. So first, I again want to extend our deepest condolences to the people of Grenada and St. Vincent's and the Grenadines for the loss of life, loss of livelihoods, and the physical damage from this terrible hurricane. We are in close contact with the authorities of these countries during this very challenging period. With respect to the two countries, let me start with Grenada. While the full estimate of the damages and losses is yet to be completed, the initial estimates suggest that physical damages alone exceed 16 percent of GDP. And this includes substantial damage to infrastructure and housing and significant damage to agriculture and fisheries. Economic growth, despite all of these challenges in the near term, is expected to remain positive, and that is supported by the hurricane’s limited impact on critical tourism, infrastructure and also the beginnings of the post-disaster reconstruction. And of course, we will have a further update for you as part of our World Economic Outlook, and particularly the Regional Economic Outlook in October, which will be presented here.
And on St. Vincent and the Grenadines. Again, while a comprehensive and detailed damage assessment is ongoing, initial reports indicate substantial losses and damage in the order of 20 percent to 25 percent of GDP, and it is mainly in the southern Grenadines. The authorities are drawing down their buffers and they are receiving help from the international community to finance post disaster relief and reconstruction efforts. Despite this large physical damage, the growth impact in 2024 at the moment is expected to be relatively moderate, given that the authorities have initiated a very prompt post hurricane reconstruction effort. And again, we will have further updates for you and the latest forecasts as part of our World Economic and Regional updates.
Then I know you had a question on the U.S. While we are on the U.S., any other questions on the U.S.?
QUESTIONER: The Federal Reserve cut its interest rate by 50-basis points last month. Could the Federal Reserve need another 50-basis point cut next month? What is your view on that point?
QUESTIONER: There is currently a labor strike ongoing which affects supply chains. So, what is your view regarding that?
MS. KOZACK: And anyone online on the U.S.?
QUESTIONER: A U.S. Official, Brent Neiman, gave this speech in which he called for greater transparency, including at the IMF, about emergency loans, and I think he was specifically referring to China. And I was wondering, I am sure you have seen the speech, what the IMF's response to that call for greater transparency is.
MS. KOZACK: Let me start with those. So perhaps I'll take the question on the port strike first. On the strike at the port, it's too early to have an assessment of the impact. We are obviously very carefully monitoring these developments, and we certainly hope that the parties can come to an agreement as soon as possible to ensure the smooth operation of of supply chains and to, of course, minimize any spillovers to other regions of the world. And again, as we enter the period where we will be updating our forecasts, we will have more information in the period of the Annual Meetings.
With respect to the question on monetary policy, inflation, as we have discussed here before, has been declining and has declined in response to the Fed's actions. We do see inflation on a path to the 2 percent target in the U.S. And particularly, we see the the Fed's preferred measure, core PCE inflation, to end this year at around 2 percent -- sorry, 2.5 percent, and then back to the target of 2 percent by mid-2025. With respect to the monetary policy actions, the Fed has been acting in an appropriate manner. As the balance of risks have shifted, the Fed has begun an easing process, and we do encourage the Fed to continue its data dependent and meeting-by-meeting approach.
The question regarding the speech by the U.S. Assistant Treasury Secretary, of course, we take note of the U.S. Treasury’s thinking on these matters, which indeed cover very important issues. And we do consider them as an important input into our thinking. As we move forward ourselves on our standard policy reviews at the Fund, we look forward to engaging with our membership on the issues that were raised by both the US authorities and others.
And I think, as you know, we are also in the process of engaging with stakeholders alongside our partners across the street at the World Bank on the Bretton Woods -- it is our 80th anniversary. So, we're engaging with stakeholders on the kind of future of the Bretton Woods Institutions, more generally. And so, all of this input from our membership and from stakeholders is most welcome, and it is important input for us as we think about these issues, the future of our institutions, and how we can continue to best meet the needs of our membership.
I do not have an update for you now on Guyana. So, we will come back to you bilaterally on Guyana. I apologize for not coming back to you.
Let me now go online. I see a number of hands up online.
QUESTIONER: Thank you for taking my question. It will be two questions. When will a mission come to carry out the remaining reviews? We have two. I think they are going to be together, the reviews. And the second question is, there is going to be any final decision concerning the surcharge to the end of the month?
MS. KOZACK: Any other questions on Argentina?
QUESTIONER: I was wondering also in terms of the upcoming reviews - if they are going to be together? And regarding the reserve accumulation target, if the results of this regularization of assets will be taken into account?
MS. KOZACK: And any others on Argentina.
QUESTIONER: How does the IMF view the central bank seeking repos to strengthen the reserves? Can that help avoid a waiver request in that case? Thank you.
QUESTIONER: Following on from the questions and the reviews, and then another follow up here. The government data recently showed that the poverty rate in Argentina near 53 percent. And we just wanted to check and see if those sorts of levels of impact from the austerity measures were already baked into the estimates of the IMF’s review of these policies. Basically, was this sort of impact expected?
MS. KOZACK: And anyone else online on Argentina?
QUESTIONER: So, the question is, is it possible to initiate discussions for a new program once the current provisions have been approved?
MS. KOZACK: And anyone else? Let me try to give you a little bit of an overview of where we are in Argentina.
So, since the conclusion of the Eight Review of the EFF, the Argentine authorities have continued to implement the program. Program implementation has resulted in a sizable reduction in inflation and in the fiscal deficit, and there are signs of a nascent recovery in activity and real wages. But yet there are still a number of challenges. IMF Staff are working with the Argentine authorities closely. Technical discussions are ongoing in the context of the current EFF program, and we’ll provide more information on those discussions when we're in a position to do so.
With respect to the questions on -- there were some questions on reserves and the reserve targets. What I can say is that the team is starting to assess compliance with the end September targets, -- both on the fiscal side and on the reserve side. This technical work is continuing, and it would then therefore be premature for me to comment further on this issue.
And on the question of poverty. We have consistently recognized the very delicate social situation, and this, of course, has been shown in the recently published poverty data. Addressing these high rates of poverty and ensuring that growth is more inclusive remains a priority for the authorities, who are continuing to take steps to protect the most vulnerable. In particular, the authorities have expanded well-targeted social assistance programs that benefit poor women and children.
I would add that continued action to bring down inflation and reforms to encourage employment and investment should lead to a further improvement in real wages and economic activity going forward. And just to say that our Staff remain actively and heavily engaged in this very important area.
Okay, let's go online.
QUESTIONER: I have a couple of questions about Ecuador. First, I would like to know if you can confirm if there is another request from Ecuadorian government for another program? And we heard that maybe the government is asking for an RSF Program. Also, I would like to know if there is a team that is coming to Ecuador this month or maybe in November to the Second Review that you have to do for our program? And the third one is maybe, are you planning to change the perspective of GDP, Ecuadorian GDP? Because, you know, we have now several crises because of lack of rain. We have energy problems now. So maybe, do you think this is going to affect Ecuadorian GDP this year?
MS. KOZACK: Any other questions on Ecuador?
QUESTIONER: I have the same question. We learned that the government of Ecuador requests a new line of financing through the IMF Resilience and Sustainability Trust. We want to know how long the application can take? And my second question is, what does the IMF think about the climate problem that Ecuador has?
MS. KOZACK: Any other questions on Ecuador? Let me take these questions.
So, first, just stepping back on Ecuador. So, in May of 2024, the IMF's Executive Board approved a new 48-month EFF program. Access is about $4 billion, and there was an immediate disbursement of $1 billion. This arrangement is supporting the authorities’ policy plans and actions, and we expect that the First Review of the EFF would take place before the end of this year. Ecuador is eligible to access under the Fund’s Resilience and Sustainability Trust, and the authorities are evaluating this possibility of a potential RSF arrangement.
On the question on the growth forecast and how it may be revised, we will be providing an updated set of forecasts for Ecuador as we will do with all countries at the time of our Annual Meetings in both our World Economic Outlook and our Regional Economic Outlook.
And with respect to climate shocks and the climate situation in Ecuador, like many countries, Ecuador is grappling with climate shocks. It is vulnerable to extreme climate events such as droughts, landslides, floods, storms, El Nino, La Nina. And unfortunately, Ecuador is not alone in having to grapple with these shocks. We have seen many of these extreme events materialize in recent times in Ecuador, and I would simply say that this was covered in some detail in our Staff Report that was published earlier this year, and I would refer you to that report for some additional information.
I do have a question online that I can read. And the question is El Salvador said that their agreement, I assume they mean IMF agreement, is nearly ready. Do you agree with this? And is there a timeline? Is there a set amount of money that we are discussing?
Are there any other questions on El Salvador?
QUESTIONER: Just following an update on the program and the comments about something being near in an agreement? And then specifically on some of the expectations from the IMF. Can you comment on the use of bitcoin as an official currency in El Salvador - if that's going to be a requirement? And any changes and concerns around public sector wages and energy subsidies as well? What sort of hurdles those create to any program? Very interested in the progress and timing of any program.
MS. KOZACK: And anyone online on El Salvador? On El Salvador, IMF Staff have an ongoing engagement with the Salvadorian authorities, and the objective is to reach agreement on a new IMF supported program that would help with the macroeconomic stabilization and adjustment and also growth enhancing reforms. Ongoing discussions are focused on policies to strengthen reforms that can be used to boost productivity and economic governance. Addressing risks arising from bitcoin is a key element of these discussions. And of course, the goal is for the Fund to be in a position to support a credible and well sequenced policy package that is designed by the authorities.
With respect to the details on bitcoin what we have recommended is a narrowing of the scope of the bitcoin law, strengthening the regulatory framework and oversight of the bitcoin ecosystem, and limiting the public sector exposure to bitcoin.
And with respect to the other areas, what I can say is that the recently presented 2025 budget represents a step in strengthening public finances. The draft budget includes measures to contain the wage bill and spending on goods and services, yet and it will need to be accompanied by strong implementation going forward.
QUESTIONER: A question on Senegal. The current government recently did an audit of the previous government's financial data, and they said they noticed differences in both fiscal deficit and debt. I am just wondering what kind of impact that would have on a current IMF program and whether it would delay the next disbursement.
MS. KOZACK: Any other questions on Senegal? Okay, with respect to the question, we welcome the general audit of public finances in Senegal and the government's commitment to strong governance and fiscal transparency. The authorities have shared the audit findings with our Staff and the team will collaborate closely with the authorities in the coming weeks to evaluate the macroeconomic impact and outline the next steps.
QUESTIONER: I have a question on Ethiopia. The bondholders rejected their proposal that includes a haircut for the second time. I wonder if in any of the scenarios of the DSA, there is a no haircut on the private bond? And on Kenya, we reported recently that there was a push from Western countries to ask Kenya to ask for a governance diagnostic. Has Kenya asked for it? If you already started, can you update us on where it is right now?
MS. KOZACK: So, first, any other questions on Ethiopia or Kenya?
QUESTIONER: Just on the Kenya, if you can just explain, if you don't mind, in a paragraph or so, how this governance diagnostics works and if there are other countries that have requested it and are having it ongoing, just to sort of understand better the request of the donors.
MS. KOZACK: So, let me start with Ethiopia. The IMF Board approved the ECF arrangement on July 29th, 2024. The arrangement supports the authorities’ reforms. And these reforms are aimed at addressing macroeconomic imbalances, they are aimed at restoring debt sustainability, and they are aimed at laying the foundation for high private sector led growth. The IMF financing is about $3.4 billion, and it is our largest program under our Poverty Reduction and Growth Facility to date. About $1 billion was disbursed immediately after the board approved the program.
I would also like to add that the program aims to fill an external financing gap, which is estimated at $10.7 billion through 2027-2028. And there is [a] broadly equal burden sharing in filling this gap between the IMF, Ethiopia's development partners, and debt treatment under the Common Framework.
The Official Creditor Committee provided financing assurances ahead of Board approval regarding the debt restructuring needed to restore debt sustainability. And there was a mission to Ethiopia that took place just recently. This resulted in a Staff-Level Agreement on policies for the First Review under the program, and consideration by our Executive Board is scheduled for October 18th.
Now, turning to Kenya. There were questions on the governance diagnostics but let me just reiterate that the IMF did have a Staff team visit Kenya from September 11th through 16th on a fact-finding mission. There are details of that fact-finding mission in the Press Release, and discussions are ongoing between the IMF in Kenya on the way forward.
With respect to the governance diagnostics, we have encouraged the authorities in the past, and we continue to encourage them to request a governance diagnostics. And while governance reforms themselves, of course, can take time, promoting good governance remains an essential part of the IMF's engagement with the Kenyan authorities.
I think with your specific question about what is entailed in governance diagnostics, I won't go into the details here. What I can say, though, is that this is a form of diagnostic assistance that we do provide to countries, and we have provided it to a number of other countries. We will make sure that you get that list, and we can also provide some detailed information on how those diagnostics are conducted. They are basically meant to assess areas where governance can be improved and strengthened, and then that can lay the basis for action on the part of the authorities. But we will provide more information for you on that one.
QUESTIONER: Thank you for taking my question again. Recently, the Managing Director met with the presidents of Malawi and Sierra Leon at the IMF-HQ. Could you provide information on that meeting and if any new requests were made by the two Head of states? And, if you can give us any update regarding the upcoming fall meetings or would there be another briefing before that?
MS. KOZACK: So, on Sierra Leone and Malawi, indeed, the Managing Director did recently meet with the presidents of both nations. On Sierra Leone, the Managing Director met with President Bio to discuss the IMF’s support for the country’s economic stabilization efforts. She congratulated him on Sierra Leone’s reaching a Staff-Level Agreement on a new 36-month ECF arrangement. And they discussed of course the policy actions and the policies within that arrangement.
On Malawi, the Managing Director also met with the president and discussed the country’s macroeconomic policies and reforms that are envisaged under that country’s under Malawi's ECF arrangement. They also discussed strategies to boost growth in the country and also including progress on Malawi's debt restructuring strategy. The Managing Director reaffirmed the IMF's commitment to supporting Malawi in its economic stabilization efforts.
And with respect to the period ahead, we will be entering a relatively busy period in the run-up to the Annual Meetings. There will be a number of press engagements and press conferences during the week of the Annual Meetings, as I'm sure you're familiar with. So, for that reason, we will not have another Press Briefing in this form until after the Annual Meetings, and my team will come back to you with the specific details. But there should be ample opportunities, we hope, for you to have your questions answered in the many press events we'll have during the Annual Meetings.
QUESTIONER: So, a couple of questions for Ukraine. Thank you so much for taking it. So, the first one is when the Board's decision on Ukraine's next tranche is going to take place. Do you have any timeline? And the second one, it is overall as we are coming to Annual Meetings, what is the IMF's assessment of Ukraine's external financial needs for 2025? Do you have any numbers that you could share so far? Thank you.
MS. KOZACK: Any other questions on Ukraine? So, on Ukraine, on September 10th, IMF Staff and the Ukrainian authorities reached a Staff-Level Agreement on the Fifth Review. Under the EFF arrangement, subject to approval by our Executive Board, Ukraine would have access to $1.1 billion. Board consideration of the Fifth Review is expected before the Annual Meetings.
With respect to the financing gap, what I can say is at the time of the Fourth Review, Ukraine's financing gap for 2025 was projected at nearly $26 billion. And our Staff and our team is in the process of updating these projections as part of the Fifth Review which is currently underway.
QUESTIONER: Thanks for taking my few questions. I want to start with the issue of the CBI, Citizenship by Investment programs. There is a Rico case that is expected sometime early next year or sometime next year, which can have implications for small countries, especially those that depend heavily on those. And this is a two-part question. One, what suggestions, what recommendations would the IMF give to those countries that can see some level of economic impact coming out of this case, not only those in the Caribbean, but those across the Pacific and so forth, that depend heavily on these programs? The second part of the question has to do more with St. Kitts and Nevis. They specifically depend heavily on this program. What's the IMF's position now that there could be a potential fallout from this Rico case on its economy, knowing that it is dependent on the CBI program?
And finally, Jamaica. Just recently it was announced that the Minister of Finance will be joining the IMF, and there's been some level of speculation and criticism being leveled at both the IMF surrounding his selection to be the Deputy Director. What's the IMF's response to that?
MS. KOZACK: So, let me say that on St. Kitts, I don't have an update for you at the moment, but I would encourage you to attend particularly the briefing of the Western Hemisphere Department at the Annual Meetings which will cover the entire region, including the Caribbean, in detail.
On your question on the court cases related to the CBI, Citizenship by Investment programs, we are not going to comment on ongoing litigation.
And finally, on the question on Jamaica, all I can say is that we are delighted to have Nigel Clarke join us at the IMF as one of our Deputy Managing Directors. He has worked closely with IMF Staff in the past on Jamaica's programs, and we are very much looking forward to welcoming him and working with him.
And with that, I am going to bring this to a close. Thank you all for coming. It is very nice to see everyone. The briefing, as usual, is embargoed until 11:00 a.m. Eastern Time. The transcript will be made available on imf.org. In place of clarifications or additional questions, please reach out to my colleagues in Media Affairs. Thank you all very much and wishing everyone a wonderful day, and we hope to see you all at our Annual Meetings.
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