Transcript

Transcript of a Press Briefing by Thomas Dawson, Director, External Relations Department

February 29, 2000

[TRANSCRIPT PREPARED FROM A TAPE RECORDING.]

MR. DAWSON: Good morning, everybody. This is another in our regular series of press briefings. The ground rules are unchanged. My remarks are on the record, but embargoed until 15 minutes after conclusion, and we'll set a specific time when we wrap up.

Again, please identify yourselves and affiliations when I call on you.

I have a couple brief items before we get to questions and answers. You'll see from our website that the IMF Institute is hosting a seminar on March 20th and 21st on implementing inflation targets. We've received a number of press inquiries about the seminar and whether it's open. As the website posting says, the seminar is invitation only, but the Institute, which is dedicated to training officials from member countries, is not opening the event to the press. However, they are releasing the papers that are prepared for the seminar on the Fund website, and I'm told that the papers will be posted in the next three days or so for public consumption, which, of course, is well before the seminar itself.

Secondly, Acting Managing Director Stanley Fischer will be speaking on March 3rd at a conference on Latin American issues at MIT. This event, which is hosted by MIT, is open, and for further details check with Francisco Baker of our press office after the briefing.

I guess that's all I have, and I'll just open the floor to any questions that you all may have. No questions? Okay.

QUESTIONER: Do you have any deadline for the election of the Managing Director, or the Acting Managing Director can continue as Acting Managing Director indefinitely?

MR. DAWSON: There is, in fact, no deadline, and the Acting Managing Director continues in his office until there is a new Managing Director.

I should, since I suspect there may be some other questions on this topic, I might indicate that we expect--more than expect, there will be a Board meeting this afternoon at which we expect the nomination of Mr. Koch-Weser will be presented formally to the Board, and I would expect that as we did after the meeting last week, we will have a posting for you both on the Web and as a press release of information on Mr. Koch-Weser's candidacy, background, and so on.

I believe the Board meeting is at 3 o'clock this afternoon. I don't know when it will conclude, but we will have the material for you as soon as the meeting is concluded.

There's also been reports about the issue of, quote, `straw polls.' I don't have anything for you specifically on that, but I do believe I can confirm what had been reported over the weekend, that there is an understanding among the Directors that if they go the straw-poll route, it would be after nominations had been presented, and there would be sort of a 48-hour-or-so, at least, period before any such straw polling might take place, and that would, therefore, indicate it would be toward the end of this week at the earliest.

But this is a process that the Board determines itself in terms of procedure, and so there are no firm rules and so on. So we can't sort of pull out a rule book and say what is required to happen.

Next question?

QUESTIONER: How does it work? Is it a majority of the Board? A simple majority of...

MR. DAWSON: That is just about the only item that is established formally, which is that if it were to come to a roll-call vote, as it were, it would be a majority vote cast. That has not been the approach taken in the past. The approach taken in the past for the selection of the Managing Director has been a consensus of the Board in the end. And it is fair to say that 13 years ago, a little more than 13 years ago, in the selection of the previous Managing Director, there was also a straw-poll process at that point as well. But, ultimately, the decision was a consensus decision.

QUESTIONER: Sorry. Still on technicalities, is this...If it does come to a vote, is it voting by constituencies or by individual members?

MR. DAWSON: Voting is by Directors, which is constituency. By the Directors, which is the constituency.

QUESTIONER: So the Director would cast his or her vote for all of the countries in his or her group?

MR. DAWSON: That's correct, yes. And each constituency--that is, a constituency as opposed to a single member--has their own rules in terms of how votes are determined. You know, as I say, that is not only a technical question but a theoretical question, because I think, you know, the general approach has always been one of consensus.

QUESTIONER: Tom, one of the Directors characterized that this is a wonderful way to ensure that no work gets done whatsoever. What's the feeling in terms of how the work of the IMF is being affected by the rather remarkable developments that have gone on, especially since Camdessus said at the very start that he didn't want a so-called regrettable process of a political selection to get in the way of the IMF's work and it looks like that's exactly what's happening?

MR. DAWSON: Well, no, I think, in fact, the work is going forward and the Board is continuing its normal workload, and these meetings, for example, are held additionally to what the normal workload is. And I think you can tell from the material being put out both on the Web in terms of--and press releases in terms of the Board's activity, that the activity is proceeding.

That is not to say, however, that we wouldn't like to have a Managing Director. I think certainly, you know, there is, I think, a general view that it's a process that people would rather have in sooner rather than later, but at the same time, you know, the tradition of the Board working to try to get a consensus is a strong one as well.

And I would note, as I'm sure you've seen, I believe we have put out, there have been cases in the past of interims previously, at least one of which, I believe, was longer than the interim in this case has been. Actually, all three of them are longer at this point, rather.

QUESTIONER: Is there any plan at this point for the Board to interview the candidates to find out what exactly they--where they stand on anything?

MR. DAWSON: I am not aware of plans to interview, but I think I would take some exception to "find out where"--to quote the last part of your question, "where they stand on anything." I think all three of the candidates that are identified are people who are reasonably well known to the community as well as to Board members.

QUESTIONER: Is there a deadline when nominations can close? Could there still be--could candidates be withdrawn and others replace them?

MR. DAWSON: There is neither a deadline for nominations nor for voting. There are no deadlines. Except for the deadline for all of you to go to the next press event.

QUESTIONER: I was wondering if there's anything in the IMF rules about the obligations of Executive Board members who represent multiple countries in terms of a decision like this. Do they need to consult with every member and register, have every member register their views, or is this an informal process?

MR. DAWSON: It is my understanding that each constituency from the multi-country constituencies have their own established rules for how the constituency's vote is cast. You know, it's not established in the Articles, but certainly it is established--to my understanding and my memory, established in each constituency. But ultimately each constituency casts a single vote.

QUESTIONER: Do these rules vary from--not rules, understandings vary from constituency to constituency?

MR. DAWSON: They may because they're understandings within the constituency. I'm quite sure that they do.

QUESTIONER: You've got institutional experience here. Do they have to sort of reach a consensus within the constituency first?

MR. DAWSON: Each constituency has their own rules. Some may be consensus, some may be votes. Some may be simply delegated to whoever holds the chair. I mean, it's up to each constituency.

QUESTIONER: In terms of today, are you anticipating any other nominations apart from the one that you already mentioned that you know of at this point?

MR. DAWSON: No, I'm not. I'm always prepared, but I'm not anticipating any, no.

QUESTIONER: Thanks.

QUESTIONER: I'm a bit puzzled about one thing. You said that there might be a straw poll and it would occur 48 hours after the nominations. But if there's no close on the nominations, is that just a judgment of the Chair on when the straw poll will take place?

MR. DAWSON: It would be a consensus--I mean, it would be a consensus of the Board that that would be the next step. But it's not a consequence of the closing of nominations since, as I said, there is no closing. I mean, you could conceivably have had a straw poll after only two nominees.

QUESTIONER: Will you release the results of the straw poll? And who will chair today's meeting?

MR. DAWSON: I have no idea whether the results would be released. I would not necessarily anticipate that. But if there is another Board session, I would--you know, besides the one today, which we've already indicated to you, I would certainly expect that we would have something to say at that point.

QUESTIONER: The Chairperson?

MR. DAWSON: The Board meetings for this purpose are chaired by Abbas Mirakhor, the Dean of the Board.

QUESTIONER: [Off microphone.]

MR. DAWSON: No, no, no, no, no. These are meetings of the Executive Board itself under the chairmanship of the Dean of the Executive Board, which is another one of the hallowed traditions of the Fund.

QUESTIONER: In view of the delays and the problems that we're running into, is any thought being given, is there much discussion going on within the Board as to whether this whole system should be changed and maybe it should be done a different way the next time around?

MR. DAWSON: No, I think the process is very much an ongoing one, so I'm not sure that there has been reflection in that sense of the word.

But I would also note, as I think I've talked to a number of you about this before, this is a process, you know, that is--I mean, if you think about it, we have put out a number of press releases. We have statements of candidates, et cetera, et cetera. This is a process that has certainly changed compared to, say, 13 years ago, and even though 13 years ago it was a process that I think was followed actively in the press and people understood what was going on.

So certainly the process has become a significantly more open process than it has been before. Just look at the newspapers this morning. But in terms of reflections on the process, I think that may have to wait until the process is further along.

QUESTIONER: Can you say what are the main ways in which it's changed compared to 13 years ago?

MR. DAWSON: Transparency. There's transparency. You have governments publicly announcing their positions on issues. You have the Board giving regular updates of what the process is. You have in the context of that, for example, from Mr. Morais' statement, you know, a listing of the criteria that at least a certain group of Directors follows in the appointment process. I think in the context of the European--you know, European Union's decisions, I mean, that has been a process that they have been open about as well.

I mean, I think it is a process that has, you know, tremendously more transparency than it did, than the process did 13 years ago, although I would note that even 13 years ago, if you were around or you were following it at that time, that it was a process where you knew where individual countries and so on stood on the issue in a reasonably timely fashion. But as I say, it is a process that is not the secretive process that somehow is still current in some people's description.

QUESTIONER: I'd like to ask you...

MR. DAWSON: Paulo Sotero?

QUESTIONER: Paulo Sotero from Estado de Sao Paulo. Is there--I assume that a formal vote will happen when, only when a candidate has 100 percent. Right?
[Laughter.]

QUESTIONER: So, but on the formal process, is there in the way you do this any time you can force a vote at the Board? Because I read it somewhere and I found it strange. Is there--in this straw-poll thing, is there a moment where if a guy gets 65 percent you have to vote to the Board or could you explain that?

MR. DAWSON: I think the Board is--the Board can determine itself how it wishes to proceed, and the Board is certainly, I think, strongly on the view that they are trying to reach a consensus. And, again, I would note back 13 years ago that was a highly contentious, hotly fought over battle at that point, and ultimately it was a consensus vote at the end. So, therefore, I think I would--I think you can expect that the Directors will try to go in that same--along those same lines.

QUESTIONER: I still want you to clarify. You said going back to this consensus, but you said if there was--if it was brought to a vote, you need a majority. Can you clarify...

MR. DAWSON: That is specified...

QUESTIONER: What kind of majority is it?

MR. DAWSON: That is specified in the Articles. That is specified in the Articles that the Director is selected by a majority vote. But if it's a consensus, it's obviously a majority.

QUESTIONER: But what kind of majority is that? Is that...

MR. DAWSON: Fifty percent.

QUESTIONER: Just 50 percent?

MR. DAWSON: No, it's not a weighted majority. I mean, it's weighted voting but it's not a supermajority.

QUESTIONER: Tom, in terms of getting to countries...

[Inaudible comment about Ecuador.]

QUESTIONER: Ecuador, how are things progressing down there? We've obviously got a so-called high-level delegation down there consisting of Ted Truman and guys from State. According to the Treasury Department, their main focus is to actually discuss progress towards getting a multilateral relief package up and running for them based on some fairly sensible, hopefully, policies. So what's the take on how things are developing?

MR. DAWSON: I don't think I have anything to do about--anything to say about a U.S. Government delegation. I think that question is best directed elsewhere.

We have been involved in discussions with the authorities as they are working on their dollarization proposal, and we have indicated that we are willing to work with them and in developing their program more generally. So I'm not sure that I have anything, you know, of a real update in that regard, but we are--I mean, we have indicated to the authorities, and the authorities understand fully, that we, you know, would like to work with them, and I'm not aware of any difficulties. Obviously it's a relatively new government, and that has, as I believe, I think they did make some adjustments to the dollarization proposal, so I think that's basically going forward now. And we're trying to see how we can support them.

QUESTIONER: The Ukrainians have postponed the visit from their Prime Minister. Most people believe that that has something to do with the relationship between Kiev and the IMF. So I guess the question is: What do you expect for the Prime Minister to bring to the table of the negotiations in order to restart the program for them?

MR. DAWSON: I think--I would not draw that linkage between the visit, the postponement of the visit, over the postponement of the visit and the Fund. I mean, we obviously--we've had a mission that was in Kiev from the 15th to the 22nd of February. It had--it made good progress, but the discussions were not completed at that point. And as I think everyone knows, we have issues regarding misreporting data from 1997, 1998 that are still being looked into.

So I would not relate the postponement of the visit to any Fund activity or concerns that I'm aware of.

QUESTIONER: I'm sorry, if I could follow up on that. About the misreporting question, do you have anything new on that subject?

MR. DAWSON: As we've indicated from the beginning, we take the reports and the allegations very seriously. During the mission and in consultation with the mission, the authorities authorized PricewaterhouseCoopers to conduct two more comprehensive audits that include the authorization to have third parties disclose their dealings with the National Bank of Ukraine and the government.

The first audit would be--cover the period July 31, '97, through January 31, '98, and the results of that audit are expected by the end of March, March 31st.

The second audit, which will cover January 1, '97, through September 30, '98, will also examine the adequacy of current internal management controls to ensure that these comply with best practices and international standards.

The authorities have agreed that the findings of both audits will be published.

QUESTIONER: Going to another country, in your file do you have anything on the Indian budget?

MR. DAWSON: I know it--I know it came out, and at least from what I understand, it's been getting, you know, favorable attention. But I don't have anything specific for you on that. I also know what I read in the Wall Street Journal, but I wouldn't want to quote that.

QUESTIONER: A follow-up on Ukraine.

MR. DAWSON: Sure.

QUESTIONER: Will any action be taken on the loans before the end of the audit? Or are you waiting for a particular time?

MR. DAWSON: We certainly are expecting the first audit would have to be concluded prior to any Board action, yes.

QUESTIONER: Do you have any comment on the Meltzer report, the initial reports that are coming out on what they're recommending to--on the recommendations they are putting forward to radically restructure both the IMF and the World Bank?

MR. DAWSON: I'm sorry. Who?

QUESTIONER: The Meltzer Commission report.

MR. DAWSON: Oh, the Meltzer. Meltzer. I mean, there is a draft report of at least, at that point in time, the majority of the commission that was obtained by Reuters, perhaps by some others as well, and we've worked with the commission, met with them a number of times, made our views known to them. I think the actual report is supposed to be published by March 9th. It's my understanding as well--there were some stories, I think, on the wires yesterday--that there are likely to be some dissenting views as well.

We will be looking at their recommendations. As I think everybody knows, we have a number of analyses that have been proposed or undertaken on the Fund. I would cite, of course, Secretary Summers' speech. We have the Council on Foreign Relations report of last fall. We have, I guess, a couple of different studies that Barry Eichengreen has been involved in, including one out of an institute in Geneva, as I recall. And we have recently the U.K. Treasury Select Committee Report on the Fund.

So we are getting lots of advice and suggestions, and we'll be taking a look at all of them seriously and sincerely, and as will our members, and see what to draw out of all of that. But I do think it's a little premature to comment on the report that is, in fact, in draft. But we are interested in it, and we'll be taking it, as I say, quite seriously, as I'm sure both the administration and the Congress to whom the report is technically directed.

Is that all? Golly. All right. Thank you very much, and the embargo will be lifted at 20 minutes of ten. Thank you.

[Whereupon, the press briefing was concluded.]