Transcript

Transcript of a press briefing by Thomas Dawson, Director IMF External Relations Department, February 2, 2001

February 2, 2001

MR. DAWSON: Good morning, everyone. Welcome to our regular press briefing. I'm Tom Dawson, Director of External Relations at the Fund.

A couple of announcements or notes for you all. On Thursday afternoon, February the 8th, there will be a memorial lecture delivered at Fund Headquarters in honor of former Monetary Affairs and Exchange Relations Director, Manuel Guitián, who passed away some months ago. The Managing Director and Mr. Fischer will offer opening remarks, along with some other friends of Mr. Guitián, and then the lecture itself will be delivered by Nobel Laureate Robert Mundell. It is open to the press. It's scheduled between 5:00 and 7:00 p.m.

Secondly and finally, we're planning a technical briefing on transparency initiatives by the Fund. This is an issue I know of some interest to certain publications here who think that while we may be transparent, we're not always understandable, so we're going to try to be understandably transparent. And it's designed to help you regular Fund watchers explore what the Fund is publishing, kind of what the rules are, and so on. I don't have a precise time for it, but we hope to arrange it in the next week or ten days, and we'll go over the kind of recent Board discussions on various initiatives and codes, what's published, what isn't and so on. It's mostly what's published in the new Fund.

The briefing itself will be posted on the Web, so if you can't pull yourselves away from whatever else you're doing, you can transparently review it. I guess that's it. I will take any questions you may have.

QUESTIONER: How is the Moscow mission going? I'm basically interested in hearing whatever you can tell us about that mission, and specifically, do you have a feeling that the Fund and the Russians are aiming for the same thing here?

MR. DAWSON: We always are heading for the same thing. I know there are people there, but I don't think the mission's actually there, since I met with most of the mission yesterday. So I think it's a little premature to talk about what the mission's doing. There may be people already there, but I saw everybody who's likely to be leading the mission in a meeting with me yesterday.

So, yes, we are talking to them about their program, and this is sort of a continuation. We last met, as I recall--they last met in November. Clearly, the Russian situation continues to be one of pretty strong growth, strong macro position, strong balance of payments position. So any new arrangement would, as indicated before, be a precautionary arrangement. And I think we're basically where we were before, except obviously, the mission is about to head out. But as I say, macro performance has been quite strong, fiscal performance-

QUESTIONER: Is there a list of preconditions that you're looking at, and how advanced are they in fulfilling those?

MR. DAWSON: Well, any arrangement would have performance criteria and measures, but I don't think there's a particular list worth going over at this point. As I said, the overall performance has been pretty good. So what they're looking at is a number of the structural measures, which we've been discussing with the Russian authorities for some time, and I think I don't really have much more than that, but you can try again.

QUESTIONER: In terms of Thailand and South Korea, even though Thailand is in a post-program phase at the moment, and Korea is, as of December, out of theirs, are there any contacts with either the Thai or the South Korean Government at the moment about the direction of reform there? Because there's continuing concern that these countries are already starting the slip on the road.

MR. DAWSON: Well, of course, there is a new government that has been elected in Thailand, and as I indicated previously, we expect to be in contact with them once in office. There is a procedure for post-program monitoring that goes on in each case. In the case of Korea, we did have, I believe last week, the article for discussion.

What, yesterday? That quickly? Well, I actually have the release here. Time flies when you're having fun. We had that discussion, and the conclusions of that are passed back to the authorities. So both countries are subject to the review process, particularly in this kind of post-program context, and because of the new government in Thailand in particular, we'll be in touch with them, and I indicated that at my last press briefing.

QUESTIONER: There were some comments from Colombia this week about how talks have been progressing with the IMF, but we haven't heard anything from your end. How have the talks been progressing? And can you give us some indication about what the new targets you're going to set for them are?

MR. DAWSON: We are now finalizing the discussions in the second review, which will set forth the year 2001 objectives and targets, and basically broad agreement has been reached. And we would expect that the Board could be discussing this in early March.

QUESTIONER: I'll try another attempt at the same thing. The Russians have indicated their desire to talk to the Paris Club about restructuring. Now, that raises the possibility, if they don't pay their debts this year, of landing in arrears to the IMF. So first off, have you heard from them about their intentions about paying those debts now, this year, and are you concerned that you might have a program with them, which as you have just indicated, will probably be a precautionary, and then they'll start having problems with servicing their debt to the Paris Club? So that presumably leaves the possibility of the program being frozen again or whatever.

MR. DAWSON: Any restructuring of Russia's debt service obligations to bilateral creditors is a matter between--in this case, the Russian authorities and the Paris Club.

The IMF staff assessment is that despite the recent decline in oil prices, the Russian balance of payments is still strong, and the short-term outlook favorable. The medium-term outlook does remain sensitive to assumptions on oil prices and to the pace of structural reform. The Fund policy would prevent submission of a new arrangement for approval by the Fund Board if there were arrears or in the absence of a confirmation from the Paris Club that Russia was negotiating in good faith with them.

So I think I answered your question.

QUESTIONER: Can I just follow up on that? I read in some investment bank research the other day that the IMF might consider changing its recommendation on Russia, which has been, until recently, that there is no financing gap that needs to be dealt with the restructuring of Paris Club debt. Is there any plan to change that recommendation?

MR. DAWSON: The basic answer to that is no. Our assessment remains that there is no financing gap at this point, although in the medium term, the assessment is sensitive to the considerations that I indicated. Send me the research so I can look at it. I'm curious.

QUESTIONER: On Indonesia, is their latest disbursement officially delayed now, and what exactly are the issues that you have with Indonesia at the moment?

MR. DAWSON: Disbursements aren't officially delayed. They either happen or they don't. So in that sense, delayed is in the sense as compared to an originally-contemplated timetable, but we don't officially delay things.

You know, in terms of the status of both relations and in terms of a possible drawing, we continue to be in close contact with the authorities, and that's no change. Anoop Singh was in Jakarta in early January, and Mr. Fischer had a good meeting with Minister Ramli in Davos last week. We had a technical assistance team in Jakarta in January, and progress is being made, but there are still a number of issues that would need to be resolved.

A team would need to return to Jakarta before this--which is the third--review of the program could be approved, could be taken to the Executive Board, and we cannot give you a sense now of when that would be. When there's enough progress in the open areas, we would send out a mission.

QUESTIONER: But what exactly are the issues? One of the things that was mentioned by the World Bank this past week was decentralization. Are you concerned about the plan that the government has in place for decentralization?

MR. DAWSON: You know, there are a number of issues outstanding. We have talked with the Indonesian authorities and given them our counsel on the importance of preserving the independence of the Central Bank, Bank Indonesia, and we've made a number of recommendations on how its accountability and transparency could be strengthened, which is something they're concerned about, building on the 1999 bank law but without compromising its independence.

We are waiting for agreed safeguards in fiscal decentralization to be implemented, and among the financial issues, we're awaiting a number of actions surrounding IBRA's asset recovery and restructuring program. And in all of this, of course, at least in the latter two issues, of course, we are working closely with the World Bank.

QUESTIONER: I hear that some of the poorer countries of the former Soviet Union might be given access to the HIPC initiative soon. My question is how soon that might happen?

MR. DAWSON: We announced in November in the Work Program, that the Board would be considering a paper analyzing the external debts sustainability of the poorest CIS countries. The paper covers Armenia, Georgia, Kyrgyz Republic, Moldova, and Tajikistan, and was drafted jointly by the Fund and Bank. This is sort of a regular process in terms of evaluating debt sustainability for all countries, but obviously, this is a sensitive one because the debt levels are high in these countries, and we've been working with them.

This paper is not part of the HIPC initiative, and in regard to HIPC, eligibility could only be established after the countries have established a track record of sustained progress towards stabilization and structural institution reforms, and they must have benefited also from concessional rescheduling of bilateral official and private debt, which has not taken place. So the issue of their debts is being discussed, but I think it's premature to discuss it in the HIPC context.

QUESTIONER: Do you have anything to say about the meeting the Managing Director and Mr. Fischer had with Treasury Secretary O'Neill? O'Neill said he came away favorably impressed.

MR. DAWSON: My understanding is that the meeting was quite a good one. It was a chance for them to meet each other, and I have a policy, and certainly in this case as well, of never contradicting the Treasury on an issue like that. I think everyone was happy to have had a chance to get to meet each other early on, and the relationship is going to develop over the next several years with summits, G7 meetings, and so on coming up--well, there's a G7 meeting coming up in just a month or so, this month, as a matter of fact.

QUESTIONER: Just as a follow up to that, was there any discussion, did he give any idea of initial thoughts on reform or the continuing process of reform? And secondly, are there any more meetings scheduled?

MR. DAWSON: I'm not aware of any meetings scheduled, but that's not unusual because there's a certain routine to them in that regard.

In terms of IMF reform, I am aware that a couple of the issues involved in IMF reform came up, but I think I would just say it was very preliminary and that's an issue that obviously will be discussed.

QUESTIONER: The Argentine Minister of Finance is coming to Washington this weekend, and I think he's got a meeting with officials in the IMF on Monday.

MR. DAWSON: Yes.

QUESTIONER: Could you say what is on the agenda?

MR. DAWSON: My understanding of it is that they are coming to Washington to get to meet the new U.S. administration, and that their visit to the Fund is essentially a courtesy call update. But you're right, they will be meeting on Monday.

QUESTIONER: Mr. Duisenberg said yesterday that the ECB was following the IMF advice on its rate policy. Are you advising the ECB on rate policy? Are you advising every central bank on its rate policy?

MR. DAWSON: Are we talking interest rates or exchange rates?

QUESTIONER: I mean interest rates.

MR. DAWSON: Okay. We certainly have a process of consultation with our members, and a separate process of consultation with ECB, and our views are made known to them. I mean, that is part of the surveillance processes, is giving advice, so that's correct. In terms of the characterization of it, I don't have anything to add to what Mr. Duisenberg said.

Okay. That's it? Okay. That's it. Thank you.