Transcript

Transcript of a Press Briefing By Thomas Dawson, Chief, External Relations Department, International Monetary Fund

December 12, 2000

MR. DAWSON: Good morning, everyone. I'm Tom Dawson, the Director of External Relations at the Fund. This is one of our regular press briefings, the last, we think, before Christmas, certainly the last regular press briefing before Christmas, and as usual, we are on the record.

As I had indicated during the last couple of briefings, it's a somewhat busy time right now with the effort to complete, in particular, HIPC country cases. We've got several other country cases of some prominence and some end-of-the-year rush going on, but I think by and large we are on track, and at least some of us are able to go to Christmas parties that we were invited to. Anyway, I have no other particular announcements. I'd be happy to take whatever questions.

QUESTIONER: The FT ran a story this morning saying the IMF package for Argentina had been delayed. Is this true?

MR. DAWSON: Well, you know, I read that article, and I don't think that's quite right. I mean, obviously, discussions have been going on a while, but I would not say there is a delay. We certainly think the discussions are entering their final stage. The mission is basically very close to reaching an agreement on a program that could be supported by the Fund. The mission is expected to leave Buenos Aires very shortly.

As is our sort of standard operating procedure, the draft agreement would be reviewed at headquarters and submitted to management for its approval, and we would hope that, if all goes well, an announcement on the outline of the program and the proposed IMF support would be made early next week. Again, as we say, if all goes well.

So I'd say that that particular aspect, that somehow that particular action in the congress delayed something, I don't think that's exactly the case. But it has been a process that has been going on and by some standards is taking a bit longer than expected. But I think very good progress has been made, and we remain confident that we're on track. I spoke with Teresa this morning. She's looking forward to coming back.

QUESTIONER: I'm sorry. Can you just back up? I lost track of what you were saying. You said you're expecting an announcement early next week now?

MR. DAWSON: The program's being finalized, the mission comes back, the program is reviewed by management, and if all goes well, yes, next week we would expect to be able to indicate the nature of the program as well as the nature of the support.

I note, for example, in some articles this morning-Clarin, I will cite, there were some citations on numbers in terms of the size of the program. We would be in a position next week to clarify our role in that, because lots of different numbers had been thrown around and, as I think you know, we have not been in a position to confirm or deny numbers, only to caution about too much reliance on them.

QUESTIONER: Indonesia: What's the progress there at the moment? The technical team or the appraisal team just left over the weekend. Are they on any sort of track towards getting the next tranche at this point, can you say? Or is there a delay in the disbursements or the approach to Indonesia at the moment?

MR. DAWSON: Well, we did indicate that when the mission was there last month--and, you're right, there was a technical mission there subsequently--that we were going over the elements for a program that could be supported by the Fund, but we are not in a position to be announcing anything at this point. So it is in that sense on hold.

QUESTIONER: Since you said the announcement (on Argentina) will be made next week--

MR. DAWSON: If all goes well.

QUESTIONER: If all goes well. We're assuming that we're not going to have the program approved by the Board before next year?

MR. DAWSON: I think people--Daniel Marx was quoted to that extent, and I think the Clarin article this morning-- indicated that as well. Basically, the timing--the way it works, when a mission concludes, they have an agreement in principle, a referendum back to management, management reviews, circulates it to the Board, the Board approves. And our last Board meeting is a week from Thursday. So there is not time for that. But this is not a matter of delay. We have a bit of a vacation problem, and we would hope, again, as I said, if all goes well, which we have every expectation, that we would be making an announcement on the outline of the program and the Fund support next week.

QUESTIONER: But my question was going to be that if you're expecting to have it next year, could Argentina between now and the end of the year withdraw money from the current arrangement, the stand-by, the $2 billion it has already?

MR. DAWSON: No. Any drawings would be decided as part of the new agreement.

QUESTIONER: [inaudible].

MR. DAWSON: When the program would come to the Board, right.

QUESTIONER: The Fund and the Bank indicated months ago that they will include up to 20 countries in the HIPC Initiative through the end of the year. Can you reach that target?

MR. DAWSON: Yes, we believe we are on track. I mean, obviously the goal is up to 20. I think that 20 is, in fact, our goal and we are hopeful we will reach 20. I think the count at the moment is 14 or 15. I think 14 is the number I just received, but I will be subject to correction. But we believe we will be up to 20.

QUESTIONER: When is your expectation now in terms of getting the Board to talk about Argentina, possibly approve the program and allow the first disbursement? And I just want to clarify. The money that's in the existing stand-by will not be drawn by Argentina or cannot be drawn this month?

MR. DAWSON: That's correct. As I said, the drawings would be decided as part of the new agreement.

With regard to your first question, it would be in January, and the Board comes back into session I think approximately the 3rd. Maybe the 5th, but I think it's the 3rd, which is a Wednesday.

QUESTIONER: On the same topic, the impression all along has been that their budget is a key part of the program in Argentina, and a very highly placed IMF spokesman said as much just yesterday, apparently. But now you're saying that the senate changes to the budget are not causing a delay in approving?

MR. DAWSON: I did not say that at all. I mean the process does need--and the budget is indeed still--an important part of the program. It's a critical part of the program. But the headline today saying a delay in the program, I don't believe we would be in a different scenario as to when the Board meeting was happening whether that particular vote had happened or not. That's the context in which there's not a delay in the program.

QUESTIONER: So what is causing the delay?

MR. DAWSON: It still hasn't gone all the way through. It has to now go through another iteration. So it takes a while for the budget process to get completed down there, but I wouldn't really characterize it as a delay. Amendments would have been expected. Amendments would have had to have been resolved. I would call a delay in a program which is when something goes off on one track that has to then start all over again. It's nothing like that. It's just simply the legislative process going on. Some countries have delays in the legislative process. Some have it in the judicial--

QUESTIONER: Right, but you were saying it's taking a little bit longer than expected. In other words, you anticipate--

MR. DAWSON: Overall, over the post-Thanksgiving period, it is--

QUESTIONER: Right. You had anticipated having Board approval--

MR. DAWSON: But it's still going steadily in the right direction.

QUESTIONER: Right. But you had anticipated having Board approval before the end of the year--

MR. DAWSON: We were hoping--

QUESTIONER: --and it seems like the process is taking a little bit longer. So what I'm asking is: What is it that's taking longer if it's not the budget that's causing it?

MR. DAWSON: This headline that I'm referring to--and I don't really mean to pick on our friends from the FT--that was a particular headline this morning. We were already on a track that was leading us to what I just indicated in terms of outlining next week where we are and a Board action in early January.

We've been on that track for a week or ten days. It's nothing that just happened in today's headline. You notice that the mission is still down there.

QUESTIONER: Regarding Turkey and your latest agreement with the Turkish Government, are you now encouraging foreign banks to return to Turkey?

MR. DAWSON: Well, as you know, I would first of all draw your attention to the statements that we have put out, the Managing Director has put out. Obviously you're aware of the meeting that was held under the invitation of Deutsche Bank with the central bank of Turkey yesterday in Frankfurt, and there will be another meeting tomorrow in New York. And I think Deutsche Bank put out a statement indicating broad support from the international banking community for Turkey. I think a number of bankers quoted on the fringes of that meeting were similarly quoted, and we remain in close contact with the authorities on the program. You know, we are examining the agreement that was reached by staff. Michael Deppler returned last night, and we are looking forward to that program being approved--approved by management and then formally approved, and I think we are on track. I think everyone knows we have already scheduled a December 21st Board meeting on Turkey, and we're still on track for that. So I think the banks have indicated an understanding and, at least from what I have read, a pretty strong degree of support and understanding of the situation the authorities find themselves in.

QUESTIONER: And your position?

MR. DAWSON: I'm not quite sure what you mean by our position. We've announced that we've reached an agreement with the Turkish authorities for a program. The private sector is obviously interested and involved, and that's the reason we had the meeting, the Turkish authorities and the Deutsche Bank had this meeting yesterday. We presented the program to the bankers present along with the central bank Governor, and as I said, the response was broadly positive.

QUESTIONER: Back to the HIPC program. Is the IMF having any kind of discussion with the authorities in Chad right now?

MR. DAWSON: The precise question was are we having discussions with Chad now, and I don't believe so. That is not one of the countries that we anticipate to be one of the 20, if that's sort of either an assumption of or a consequence of your question. But if you want to get a little more detailed?

QUESTIONER: Have you expressed any kind of discontent with the authorities in Chad about what Chad's been doing with the money, the oil money?

MR. DAWSON: We don't go into the content of our discussions with authorities in that sort of detail. But, obviously, both we and the Bank have been working together to try to design measures to improve transparency, governance, and so on. And those are important issues to be dealt with prior to presentation of the HIPC decision point document to the Board. And at this point, as I think is obvious, the government has not complied with all of these measures, and so we're just at that point, in that sense in a holding pattern. I can't predict at this point when that would be resolved.

QUESTIONER: Two questions on Turkey. The first one is: Fischer was at the meeting in Frankfurt yesterday. Is he going to the one in New York? And if he isn't, who else is going from the Fund?

And the second question was has the mission returned from Turkey yet?

MR. DAWSON: I'm sure there are still people who went over who are there. The leaders of the mission have come back, or, I mean, one of them, Warren Coats, is off in Yugoslavia, I believe, now. And Michael Deppler returned last night. I believe Stefan Ingves returned last night. Stan Fischer is returning today, although, to go back to the first part of your question, Stan Fischer will not be at the meeting tomorrow. He has a previous engagement. However, we will have a Fisher there. I believe Matthew Fisher will be there. But I believe at this point both Mr. Boorman and Mr. Deppler will be going to the meeting tomorrow in New York as well, so there will be senior IMF representation.

I believe the outline for tomorrow's participation then would be Boorman, Deppler, and Fisher. There may be someone else. I'm just not aware.

QUESTIONER: Can I just follow up on that? Are they expected to make a statement at the meeting or to just observe?

MR. DAWSON: While some of the participants in tomorrow's meeting were at the meeting in Frankfurt, not all of them were, so this is a presentation to North American banks. So I think you can expect that the presentation would be somewhat parallel to the one on Monday.

QUESTIONER: A couple of times we've asked about the Fund's revision to its forecast for next year, the World Economic Outlook. I mean, in recent weeks there's been more and more concern, at least in the private forecasts, about a possible hard landing for the U.S. and what that might mean for the rest of the world. And I was wondering, did we ever get a revision on that forecast? Is it still 4.2 percent?

MR. DAWSON: I guess I am remiss in--I'm not sure whether it was your question before, but let me go back to Mike Mussa, who is the keeper of these things, and see where we are on that. I know in past years sometimes this has been done more than twice a year. We've had recently some inquiries because some of our staff have been traveling in regions and talking about WEO-type numbers where some of the regional forecasts that they use on the trips are slightly off what were used in the final report. So I think we owe you something on that, and even though we're not planning a briefing, let me look into whether Mike feels in a position to put out new numbers of any sort.

QUESTIONER: In regard of developments in Argentina and Turkey, how have discussion on private sector involvement come along?

MR. DAWSON: Well, typically--and I would cite the Turkish example as a case, even though there's differences in the nature of the programs and so on and the situation facing the country. You will note that our discussions with the private sector, the involvement of the government with the private sector, at least with Fund participation, has taken place in the Turkish context after the agreement. So I think that there is a sequencing again in that engagement of the authorities, because it is the authorities not the Fund that does this, but the Fund is in a position to provide information and once an agreement is in place, the outlines of it are clear.

Now, of course, the Secretary of Finance is quite well known and well traveled, and so to some extent the question should be directed to him. But if you're talking about the Fund's interest and involvement in that, we're following a sequencing that is the way that we normally go about it. And so I'm sure we'll be hearing from Daniel and others in the near future. The Clarin article this morning certainly seemed to think it knew what the breakdown was.

QUESTIONER: I was wondering, going back to this briefing a month ago, what happened with the pension reform (in Argentina), because it's obviously not going to be done by next week in which you expect to have your announcement.

MR. DAWSON: No, but the pension reform is still an integral part of the program, and we're in agreement with the bill being considered now by congress and are watching developments in that area, and it would not in any event be a requirement in terms of reaching an agreement, in terms of presenting something to the Board and indicating the nature of our support. But progress on pension reform is, as I said, an integral part of the program.

QUESTIONER: You said that it's not a requirement?

MR. DAWSON: It is an integral part of the program, but it's not required that it be resolved by the time we do the presentation, if we do a presentation next week. There is agreement on what the measures are; therefore, it's not a precondition for discussing the program and sketching out the size of it. But it is an important part of the program going forward. So it's not something that has to be accomplished by next week.

QUESTIONER: What's going on with Vietnam? There was some word from a Resident Representative that there may be an agreement there and it sounded kind of imminent.

MR. DAWSON: One moment, please. I'm not actually sure that I have anything from the res rep, so we'll get back to you. I saw something recently, but it's not here. I know there are--basically the answer is I know there are reports on it.

QUESTIONER: In terms of Turkey, I think there are still some questions out there in terms of what exactly it is that you want to see from them in terms of changes in their banking system. Do you want to see more seizures of banks that are having problems? Do you want to see a faster effort to sell off the ones that are being held by the government? What exactly does the IMF want to see there?

MR. DAWSON: I think the government has sketched pretty clearly what it is that it has wanted to do and needs to do, and I think has indicated pretty strongly its commitment, particularly with the seizure of the banks, I guess it was last week, and there are ten banks already seized that need to be worked out.

So, I think the elements of it are pretty well known and the government has made clear its commitment in that area.  So I don't know the basis for which there would be any uncertainty as to what the nature of the actions that they need to take, and I think there's a pretty strong agreement with them, with the authorities, the BRSA and the SDIF, in terms of what needs to be done.

QUESTIONER: Do we have an idea about when stability could be restored after the turbulence in the Turkish markets?

MR. DAWSON: I think that's sort of a hard question to answer, and Mr. Hawley has always told me to cut it off before you get the last question because it's the last question that's always a problem. So, but, no, we are confident the authorities are doing what's necessary. If you look at what's happened in the last few days, the interbank market rates have come down. The reserves have started building up again. So, the short-term signs are quite positive, and there's a lot of work remaining to be done, but predicting the future is not exactly our business in that regard.

Thank you very much.

[Whereupon, the press briefing was concluded.]