Transcript of a press briefing by Thomas Dawson, Director IMF External Relations Department, January 17, 2001

January 17, 2001

External Relations Department
International Monetary Fund
Wednesday, January 17, 2001
Washington, D.C.

MR. DAWSON: I don't have any particular announcements to make this morning, so I'll just open the floor to any questions, and despite the low level of attendance, IMF staff are not allowed to ask questions. [Laughter.]

QUESTIONER: Could you give us a comment on...IMF's relations...will be with the Bush Administration?

MR. DAWSON: Well, I mean, we've traditionally had very good relations with our largest shareholder, and have every reason to believe that will be the case in the future, and look forward to establishing our contacts and relationship with them as they take office.

QUESTIONER: I think a mission is going to leave to Moscow, if it hasn't left already, and what are the prospects for that mission?

MR. DAWSON: We do expect a mission shortly, but I think it's a little premature to say what the prospects are. As I've said in previous briefings, due to the strong balance-of-payment situation, it is likely that any agreement that was reached would be precautionary in any event. And, you know, our last mission was in the middle of November, and this is sort of the mission that we were expecting. So I don't think I have anything in particular, but the overall balance-of-payment situation for Russia continues quite strong, so the context in which the discussions are taking place that is not one that's necessarily hurried or has large dollar numbers attached to it.

QUESTIONER: You know, the Russians have sort of indicated that they might be defaulting on some debts, that they seem to be playing hardball with the Paris Club. If they do not pay certain debts, what's the IMF's position on whether or not they can continue lending to Russia...?

MR. DAWSON: The Paris Club context is one in which the Fund does provide certain balance-of-payment scenarios and so on, but the Paris Club discussions are between the country in question and its bilateral creditors.

As far as the possibility of their being in arrears to creditors, the Fund does have an established policy about lending into arrears. And if there were arrears, we would look at it in the context of what arrears there were. And to give you a broad view as to what the first-level implication of that is, you can go ahead and have a program with a country that is in arrears, but only if there are constructive negotiations, discussions going on between the creditor and the debtor country. So that would be the context in which it happened, so we would look at it in the context of our lending-into-arrears policy, but we are not at that point yet. And I'm sure if you search the Web you can find all sorts of transparent and understandable commentary on the lending-into-arrears policy. If you find it, please let me know. I helped draft that policy a number of years ago. It is a work of art.

QUESTIONER: Two questions on the HIPC Initiative. How many countries got that relief until the end of 2000, and do you have a summary on the HIPC countries who got a relief until now?

MR. DAWSON: Twenty two, and yes.

And we can provide it to you. We did post it. I think it may have gotten lost in your postings, but there was, I think, a fairly extensive listing of the status of each of them and so on, including some summary statements, including a joint release by the heads of the two institutions as well.

QUESTIONER: Yesterday the World Bank announced that they will be ready to assist financially El Salvador. And I was wondering if at this point the IMF has, you know, considering also to join in assisting the government of El Salvador and if there has been any contacts with government officials at this point?

MR. DAWSON: Yes. We are in contact with the authorities. As I think you know, the new dollarized regime started on January 1st. The staff and the authorities are continuing to discuss a possible standby program, and in the aftermath of the earthquake, we stand ready to help the authorities, including possibly through the use of emergency assistance. But I don't have any specifics on that, but we are well aware of the tragic situation there, and are standing ready to assist the authorities.

QUESTIONER: The incoming Thai Prime Minister has indicated that he believes that some parts of the IMF program should be renegotiated. What exactly has he told the IMF?

MR. DAWSON: I think your second words were the correct one. It's the incoming administration, so they are not in a position, and we have not been in direct contact with them. We look forward to it. I would just, however, caution, there is no existing program with Thailand. They did complete their program last year, so that there are no binding commitments in that regard. There certainly are some measures in the government's current budget that came out of the previous program. But this is not a case, as we all have experienced, as you see in a number of countries, where a program needs to be renegotiated if there's a new government, and the new government saying they want to. There is no existing IMF program in Thailand, but we are looking forward to establishing contact with the new administration when they come in.

QUESTIONER: [Garbling] I was wondering if at this point the IMF has, you know, is considering to reassess their projections for the WEO in (Latin America) for this year?

MR. DAWSON: Very good question. At this point we do not have any plans to produce a new or interim WEO. There will be one, of course, coming out around the time of the spring meetings, shortly before the spring meetings, and you'll have it, of course, on an embargoed basis, and someone will leak it I am sure.

That said, clearly, the current global economic situation is fluid and in line with other forecasters. The Fund has been assessing the impact of these conditions on our forecast. As the Managing Director indicated in his trip to Asia last week, our present assessment is a global growth in 2001 will be about one-half of 1 percent lower than the earlier forecast of 4.2 percent in the fall or October WEO report. But I don't have breakdowns beyond that. Should we change and produce an interim WEO, we would of course let you know. But I don't think we will. I mean, that question came up last month, and that is still our position, but at least I have one number to give you.

QUESTIONER: I was just wondering, with regards to the new (U.S.) administration what you expect -- I mean, does Karin Lissakers expect to stay on until there's a new appointment, or can you give us any sense of how that will go?

MR. DAWSON: I have no information on that at all. I mean, I have certainly read that a number of the Treasury officials are moving on, but whether the Executive Director is moving on, I honestly don't know.

QUESTIONER: Have the authorities from Argentina already signaled their intention to withdrew the 3 billion included in the package?

MR. DAWSON: Let me just check. No, I don't have anything on that, in other words under what's presently available after the approval, no. My latest guidance is that it is available to draw, which implies to me that it hasn't been drawn. But if we have anything more on that, I'll get back to you.

QUESTIONER: Going back to the WEO question, OPEC's expected to cut production, which would presumably raise oil prices.

MR. DAWSON: I think that was announced just a few minutes ago.

QUESTIONER: Okay, so they've cut production. What effect do you expect that to have on world economic growth?

MR. DAWSON: Well, I think one thing that happened and one reason why an interim WEO may not be necessary, is when this question first started getting asked, the oil prices were shooting north of 30, and now they've come. . .down. And if in some sense you average it out, it's not clear that the effect on the previous WEO would be that substantial.

Notwithstanding that, the number I cited to you, the overall effect of varying developments, but it's by no means just oil, is this one-half of 1 percent adjustment. But remember that the prices went well above our forecast and now have come back down quite substantially.

QUESTIONER: Has a date been set for a mission to Indonesia?

MR. DAWSON: No is the simple answer. I know the authorities are reviewing...As you probably know, Anoop Singh was in Jakarta last week or the weekend before last, basically, and had discussions with the authorities, and the authorities are now considering what to do and so on in the wake of those discussions, but we do not have a date for a new mission.

Is that it? Okay. I look forward to seeing you in a couple weeks. The embargo will be lifted at 10:15. Thank you.

[Briefing ends.]


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