Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department, International Monetary Fund

March 12, 2009

Washington, D.C.
Thursday, March 12, 2009
Webcast of the press briefing

MR. HAWLEY: Good morning, ladies and gentlemen. I am David Hawley. Welcome to this, another of our regular briefings for the press. As usual, this is under embargo until 10:30 Washington time. That's 1430 GMT. Welcome in addition to those in the room to journalists joining via the Media Briefing Center.

Before taking questions let me mention a couple of management activities. The Managing Director, Dominique Strauss-Kahn, and the First Deputy Managing Director, John Lipsky, will be participating in the G-20 Ministerial Summit, Ministerial Meeting, I should say, this weekend in the U.K. Mr. Lipsky will attend the Fourth OPEC International Seminar, which is on the theme “Petroleum: Future Stability and Sustainability,” and this takes place in Vienna next week. He will be giving a speech on March 18. Details on the speech and whether it's available in advance of delivery will come from Media Relations. On March 21 to 23, Deputy Managing Director Murilo Portugal will be in Beijing where he is taking part in a conference, the China Development Forum in Beijing. The topic of his speech will be how to prevent regional financial crisis turning into a global depression. The forum is open to the media. Finally, the Asia and Pacific Department will be holding a conference—a half-day seminar here at headquarters on March 19, and this will discuss Japan's experience with financial crisis in the 1990s and the parallels to the current crisis in the United States. The event will be open to the press, and if you have an interest in attending, please contact Media Relations. Finally, the Spring Meetings are only just around the corner so the online media accreditation for the meetings has just opened on our website. The meetings I'll remind you are taking place on April 25 and 26. With that I'll take questions. Thank you very much.

QUESTION: Obviously yesterday's briefing by Tim Geithner, what is your reaction to his ideas about increasing NAB.

MR. HAWLEY: Thank you. We welcome the proposal from the U.S. Treasury as a very positive step towards assuring the global financial system that the Fund has an appropriate level of financial resources to meet the needs of our members.

QUESTION: But is it in line with your own ideas? The Managing Director suggested and then I understand the Board approved the idea of increasing the resources of the Fund to the same amount, and now the Americans say yes but not that, but a separate program, a separate package, the NAB should be increased by tenfold. First, why do you think did they need to do that? And again how does it square with your own regional proposal?

MR. HAWLEY: There are a number of options under consideration for increasing the financial resources of the Fund with the view to doubling them. One of the ways of doing that is through bilateral borrowing arrangements with the membership and in that context we have some experience provided by the GAB, the General Arrangements to Borrow, and the New Arrangements to Borrow, in which members agree under specified circumstances to make available money to the Fund to increase its resources for lending to members in need.

QUESTION: Did they discuss the idea with you before they proposed it?

MR. HAWLEY: I haven't anything on the context between the Fund and the membership on the modalities of increasing the Fund's financial resources.

QUESTION: You say you didn't have?

MR. HAWLEY: I'm saying I've got nothing for you on the specifics of context.

QUESTION: David, do you have an update on Turkey? Is there a planned date for the visit of the IMF mission?

MR. HAWLEY: The discussions are continuing, and in response to specific concerns raised by Prime Minister Erdogan in order to facilitate—and in order to facilitate progress, the Fund has recently conveyed to the authorities a modified set of policy and reform proposals and we stand ready to resume discussions in Ankara when the authorities are ready for us to do so.

QUESTION: So you have (inaudible) modified set of proposals (inaudible) and now you are ready to resume talks? Is that –

MR. HAWLEY: Let me repeat what I said in response to the concerns raised by the Prime Minister and in order to facilitate progress the Fund recently conveyed to the authorities a modified set of policy and reform proposals.

QUESTION: And you are ready?

MR. HAWLEY: And we stand ready.

QUESTION: I'd like to ask about the European offer to contribute $75 to $100 billion that we reported overnight out of Europe, if you had a reaction to that, and any remarks about progress from increasing contributions from other members? Thank you.

MR. HAWLEY: By coincidence there's a question on the Media Briefing Center on the same subject so I'll take them together. Let me say that we—I cannot comment specifically on what is at this stage a news report only, but that we welcome proposals from the members to increase the Fund's resources so that we can—so that it is demonstrated that the Fund has sufficient resources to meet the needs of its membership.

QUESTION: On this same issue, so far the Fund was asking for $250 billion extra and now so the proposal by the U.S. Treasury yesterday talked about $500 billion. Is that something that you asked for or that you're in a situation you think requires more resources? I mean, how did that come about?

MR. HAWLEY: The Fund has said that in view of the possible demands from the membership we felt it prudent to double the financial resources. That takes us up roughly to the figure of $500 billion.

QUESTION: I just wanted a little bit of numerical clarification. So the U.S. proposal then would take the Fund up to not $500, but $750 billion? Is that right?

MR. HAWLEY: I don't have specific comment on these accounting issues at this stage. We need to see what comes out of the discussions with the membership and among the membership.

QUESTION: I would like—if you could articulate a moment, your Managing Director, Mr. Strauss-Kahn, has repeated twice, three times that the growth for 2009 is going to be negative. Your last official estimate was 0.5. I'm not asking you for new data since I know they are on the verge of coming out in April, but if you could at least comment and articulate why this further revision below zero?

MR. HAWLEY: You're referring to the Managing Director's most recent remark that for the first time since the Second World War the global economy could shrink. The reason for that view is the deteriorating global situation. And you're right, specific forecasts will come out in the context of the WEO, which will be released at the time of the Spring Meetings.

QUESTION: I had a quick question about Ukraine. When will another mission be sent to Ukraine, and what is the schedule for the release of the second tranche of the loan that you've agreed with the country?

MR. HAWLEY: We're getting close to having the measures in place that would allow a mission to return to Kiev. This is of course a welcome development. Discussions have been productive and good progress has been made. We'll make an announcement when we have a specific date for the return of the mission.

QUESTION: On this issue of the new emergency credit line that you are negotiating, I wonder if there has been any progress there. Have you had any interest from countries in getting that line? I wonder if the fear is for a country to ask for it alone. That you say let's say Brazil is getting that line and that will be a bad signal to the markets perhaps. I don't know if that's part of your thinking and perhaps you're going to announce maybe a group of countries. Can you tell us a little bit about that?

MR. HAWLEY: The aim as always is to have facilities that are attractive to the membership and meet their needs. We're working towards strengthening our tool kit of facilities, in particular to provide flexible instruments for crisis prevention and resolution. I don't have of course a comment on any specific country case in this context.

QUESTION: David, thanks. First I want to put on the record my request for comments on the situation in Russia and why they have inflation from the recession unlike anybody else. But secondly, Ukraine mission tranche—well, the mission and the tranche are probably related. Right? Two other countries at least in the region, Belarus and Latvia, whatever updates you can provide for those countries. And also since you're in that region, are there any other members from that region that you are talking to about some anti-crisis help?

MR. HAWLEY: I don't have any fresh update on either Belarus or Latvia, but since you are discussing the region, I should mention where we are on Romania. An IMF mission is in Bucharest from March 11 through 25. Initial discussions on the challenges facing Romania in the current global environment were held in Washington last week and were fruitful and we're in close dialogue with the authorities and the European Union to evaluate potential responses including possible technical and financial support from the IMF.

QUESTION: Is it true as The Financial Times reported that they are in line for about $25 billion that they're requesting?

MR. HAWLEY: I've got nothing on the size of potential access.

QUESTION: They're requesting that amount?

MR. HAWLEY: I've got nothing on that.

QUESTION: David, I assume you will want to comment on the nature of that modified set of policy proposals. Secondly, do you have an idea about when Turkey might invite the IMF mission?

MR. HAWLEY: I've got nothing further from what I said a couple minutes ago.

QUESTION: On Argentina, at the last briefing you said that you anticipated an Article IV review and I know there are updates for a mission visit or any progress on that?

MR. HAWLEY: I've got nothing to add from what we said last time. If there are no more questions. Someone has just come in. Do you have a question?

QUESTION: I do, actually.

MR. HAWLEY: Go ahead. Please identify yourself.

QUESTION: I wanted to know what you can say about the conditions—the IMF may be considering on the loan to Sri Lanka, a nearly $2 billion loan and there's some discussion of whether they could use it to support the rupee. I also wanted to know whether there's any consideration by the IMF how funds are using given the current military conflict in the country.

MR. HAWLEY: Thank you. Discussions are still ongoing with Sri Lanka and are expected to continue over the next few weeks. They're focused on achieving the government's—in order words, Sri Lanka's policy goals which include rebuilding reserves, reducing the budget deficit and bringing about balance of payment sustainability.

QUESTION: I guess maybe this is kind of a naïve question, but in countries that are involved in—at the U.N. where I usually report from they had a Security Council meeting about the conflict and humanitarian effects of it. What sort of follow through or restrictions are placed such that it isn't—since money is fungible is not used for—or of support to military action?

MR. HAWLEY: I'm sorry. I haven't understood the question.

QUESTION: Since the country is involved currently in a military offensive in the northern part of the country that's given rise to at least one briefing at the U.N. Security Council, what provisions are in place to make sure that such a loan doesn't indirectly simply support military action?

MR. HAWLEY: Let me say—let me repeat what I just said. Our discussion are still ongoing with the Sri Lankan authorities on a possible program, so let us wait for the outcome of those discussions. Thank you very much—and because you were a late arrival, it's 10:30. Thanks a lot.


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