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

June 18, 2004

Director, External Relations Department
International Monetary Fund
Friday, June 18, 2004
Washington, D.C.

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MR. DAWSON: Good morning ladies and gentlemen. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular briefings. As usual, we are embargoed until approximately 15 minutes after conclusion, and we'll set that point, and that applies to our Web viewers as well.

Before I take questions, I'd like to draw your attention again to the press release issued by Media Relations on June 15th regarding the Managing Director's travel to Tokyo, Japan, on the 21st and 22nd of June; Beijing on the 23rd and 24th; Singapore on the 25th; and Vietnam, Hanoi, on the 26th, to meet with leaders and senior government officials of these countries and hear their perspectives on the work of the Fund. I expect in at least a couple of these stops there will be a press conference, and we will let you know that. I know that we have one planned for Tokyo, and I believe we have one planned for Vietnam as well. And there will be other evidences to the press of our presence in that visit.

We also expect that in each of the countries we will have a press statement at the conclusion of the visit.

It is, obviously, Mr. de Rato's first visit to the region as Managing Director since taking office on June the 7th. With regard to other travel and public engagements planned by management, I don't have the details at the moment for you in terms of specific dates, but we will post on the Web as soon as we do. Anne Krueger, the First Deputy Managing Director, will be traveling next week and on into the following week, including a conference at the central bank in Vienna, Austria, on the 60th anniversary of the IMF; a speech in Berlin; and I believe also a speech in Iceland; and I believe a conference at Oxford. So it's a rather full agenda, and we will have those details for you as well.

I think that's all I have at this point. I'd be happy to take your questions, and as usual, demonstrate your proper behavior by identifying yourself and your organization so your mothers will be proud of you.

QUESTIONER: Two things about Turkey. It seems Turkey's privatization efforts are faltering again. That includes legal hurdles facing the sale of TÜPRAS, and many people believe that Turkey's likely to miss privatization targets again this year. And this one, coupled with exceptionally high oil prices, it's believed that this is bringing a burden of something like $3 billion of financing gap for this year. How is the program going to perform from this point on regarding this?

And, secondly, Turkey and the IMF planned to decide--meet in mid-2004 on the nature of the relationship following the end of the program in February 2005, and we are already in mid-2004. Also, there is a mission still in Turkey, and what's going to happen? Where are we heading for? Will a decision be made during this review?

Thank you.

MR. DAWSON: I think I will approach answering your first question by starting with your second question, because, indeed, there is a joint Article IV and Eight Review mission taking place presently, which is why I don't have, you know, the detailed sort of answers to your first question that you might hope because I expect the mission, as usual, will be making a statement at the end of the visit.

The team that's there now first visited Istanbul and met with representatives of the private sector, financial institutions, academics, as well as some NGOs, and presently is in Ankara.

The Article IV does provide the opportunity to sort of step back from the immediate program-related issues to appraise the program's record and discuss the strategies for sustaining and advancing the recent strong gains.

Clearly, a key task will be to assess Turkey's growth prospects, which is critical because of the implications for the debt dynamics and accommodating the fast-growing labor force.

Included in that, related to part of your first question, is an assessment of the policies needed to sustain the recent and strong fiscal effort that has quite a track record in recent years into the coming years. The mission is expected to wrap up in a few days and is proceeding essentially on schedule. So I would expect that the mission statement will address some of the questions, particularly in the first one. With regard to the future relationship of the Fund, while in one sense of the word it is, of course, a joint decision of the institution and the country, it is, of course, driven primarily by the country's views and terms of the nature of the ongoing relationship. And that question, therefore, is best addressed to the authorities, although I wouldn't be surprised if it's touched on in the concluding statement. And as you know, occasionally they do a briefing as well.

I haven't had a chance to talk to Mr. Moghadam about it, but as I understand it, things are on track.

QUESTIONER: Given that a majority of the bondholders have rejected Argentina's latest offer, does the Fund consider Argentina to be negotiating in good faith with its creditors?

MR. DAWSON: We, of course, have a mission in Argentina at the moment that is conducting the review under the program. The mission has, indeed, even as has been referred to this morning in some of the Argentine press, been meeting with some of the bondholder groups.

The issue of normalizing relations with external creditors to help create a better investment climate is an objective that the Argentine Government and the Fund and the international community all share. That issue of debt and normalizing, regularizing relations is also a component in the program, one of a number of components in the program, and I refer you to the Managing Director's question and answer in Madrid at his press conference on Monday as well as in the Letter of Intent itself that talks about the elements of the program.

The process is an ongoing process. As I said, we consulted with representatives of some of the creditor groups, including the domestic creditor groups, as well as with other groups in civil society, just as we do in any country program--or non-program context, for that matter. I don't think it's appropriate to try to draw a judgment since the review is going on, and certainly my understanding is that discussions are going on among the various parties.

We, of course, are not a party to the discussions between the creditors and the government, but we, of course, are interested in how it is proceeding.

QUESTIONER: The Dominican Republic, I understand, has a mission there, and are they any closer to reaching an agreement?

MR. DAWSON: I don't believe that is actually quite right. I don't think the mission is actually there. It was there, and I think it may be going back. To check, yes, that certainly is my understanding.

Earlier this month, Fund staff did, in fact, met with President Mejia as well as President-elect Fernandez and their teams, as well as business, political, and social leaders, you know, talked about the need for cooperation during this political transition period in terms of also trying to finalize and formulate measures to keep the program on track.

You know, the meeting--we found the reception to this message and meeting quite encouraging, including an expressed determination to proceed with the Fund program. And we've been recently in touch, management has been in touch with President Mejia and President-elect Fernandez and assured them that we stand ready to work with them and remain hopeful that the transition will proceed smoothly.

So I think that's it, and in terms of when there would be a mission, I'm sure we would let you know when it actually was fielded.

QUESTIONER: Tom, when does the Fund see a meeting with the Iraqi interim government?

MR. DAWSON: We have ongoing meetings with the provisional government, or the CPA and the provisional authorities, and expect that we would be having a meeting with the new authorities. We don't yet have scheduled a meeting with the new Finance Minister who would be, you know, we would expect, the primary interlocutor at the senior level. And we do anticipate that there will be a meeting schedule sometime in the July-August period--to anticipate your next question--outside of Iraq. Where precisely, I don't know and I'm not sure whether we would be in a position to let you know on that. So that is that.

We, of course, continue in regular contact with various levels of the Iraqi transitional and provisional government in terms of all sorts of technical assistance, training programs, and so on that are taking place in the region as well as, I think, here in Washington.

QUESTIONER: I have a follow-up question on Iraq and a question on Europe.

The follow-up question on Iraq: Does the announcement made yesterday by Kofi Annan mean anything for the IMF in terms of programs for returning to Iraq?

MR. DAWSON: I'm not sure which announcement you are referring to.

QUESTIONER: He told the press that it's impossible for the United Nations to go back to Iraq now because the situation is too dangerous.

MR. DAWSON: Well, we certainly have made clear previously and I would reiterate today that we are able to work with the authorities outside of the country. This is not unprecedented. There have been other countries in which we've had these unfortunate internal conditions. So we are able to do a great deal of work with the authorities, both in terms of looking at how their program may and will develop as well as providing them with assistance. So in terms of our ability to work with our interlocutors, we have established and have in many countries had the ability to work outside of the country.

QUESTIONER: A question on Europe. Yesterday, the Spanish Prime Minister, Mr. Zapatero, asked for a new relation between Europe and the IMF. Do you share the need for a new relation? And do you have a reaction to Mr. Zapatero?

MR. DAWSON: We are an institution that is constantly learning and renewing, so I think that strengthening relationships with all of our members, including in Europe, I think is quite important. And I'm actually aware that we have--in terms of our relationship with Spain, we have, for example, a mission in the field right now, an FSAP mission that I believe is there. And I also understand, I believe, that a senior official from the European Department will be shortly visiting to meet with the authorities of the new government.

And, of course, the Managing Director was there on Monday for this conference that we co-hosted with the Bank of Spain, attended also by Mr. Carstens, Mr. Rajan, and yours truly.

QUESTIONER: Tom, the Board discussed Sudan, I think it was two days ago. What was the outcome of that with regard to their arrears and the staff-monitored program?

MR. DAWSON: I believe I will have to take that--well, let me just check.

No, I don't have--I did not attend that meeting. We'll have to get back to you.

QUESTIONER: This week, the Brazilian monetary authority has decided to keep the interest rate at 16 percent once more. Is it cause of any concern that the trend of fall of interest rates in Brazil now seems to be over?

MR. DAWSON: I learned when I was at Merrill Lynch not to try to engage in forecasting like that, either with my own money or without my own money. I think our view on the Brazilian program has been quite clear in terms of the very, very strong performance under the program, that our view is clearly we see the economic recovery continuing. We continue to see growth around the 3.5-percent range.

I was expecting your question to conclude by, "And what's going to happen at today's review of the Brazilian program?" So I would also--even though you didn't ask that question, I would suggest that you might wish to check toward the end of the day. I suspect we'll be putting out a statement on the review of the program, which continues, as I've indicated previously, on track. The authorities have indicated their intention to exist from the Fund program when the current arrangement expires. And I think as we see it, it's a pretty strong record that continues, and I think you'll see a report on the Board discussion this afternoon.

QUESTIONER: Just to follow up on that, it's very usual that we listen that the fundaments in Brazil are very strong, that the program is going very well. So, I mean, like, why cannot the interest fall? That's what everybody's waiting for in Brazil, because everybody says everything is strong.

MR. DAWSON: I've made it a habit not to answer "everybody says" questions.

QUESTIONER: In the Argentine press today, there was a story saying that the IMF mission has asked Argentina I think to set a 3.8-percent primary surplus. I just want to know if you could confirm that. I know that part of the program does call for Argentina to increase its primary surplus over time, but that figure is specifically 3.8 percent even after that.

MR. DAWSON: I would steer you away from taking, you know, reports of particular numbers like that that don't sound very credible. The negotiations--the review mission just started on Monday. It's continuing. And I think, you know, there are any number of reports that come out, and I think it may be too many reporters chasing too little news. It's sort of a Gresham's law of journalism.

Anything else?

[No response.]

MR. DAWSON: Okay. Thank you very much. We'll lift the embargo at 10 o'clock.


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