Transcript of a press briefing with Gerry Rice, Deputy Director of the IMF’s External Relations Department

August 27, 2010

August 26, 2010
Washington, DC
Webcast of the press briefing Webcast

MR. RICE: Good morning, everyone. Thank you for joining us at the IMF for our regularly scheduled press briefing. Just a reminder at the top that this briefing is embargoed until 10:30 a.m. Washington time; that’s 1430 GMT. If I may, I’d like to begin with a few remarks and some information on Management travel and upcoming events.

In terms of the Managing Director, Dominique Strauss-Kahn will be traveling to Oslo, Norway for a conference on September 13 on the challenges of growth, employment and social cohesion, a conference sponsored by the IMF, the Norwegian government and the International Labor Organization. We anticipate participation of Prime Minister Jens Stoltenberg of Norway, José Luis Zapatero from Spain and George Papandreou from Greece as well as President Ellen Johnson Sirleaf of Liberia. This conference will explore new ways of forging a sustainable, job-rich recovery from the global economic crisis. And for more information on that you can simply go to the home page of, and you will find it there.

The First Deputy Managing Director, John Lipsky, today and tomorrow will be participating in the Kansas City Fed Jackson Hole Economic Symposium, and Mr. Lipsky will have some press availability there.

I’d also like to mention the release next week, Wednesday, September 1, of a package of fiscal papers—three staff position notes addressing some very topical fiscal issues, including debt sustainability in a range of advanced countries and why default in advanced economies is not an easy option. We will provide the papers to you under embargo in advance and arrange for the authors to speak to the press upon request, and Media Relations will be back in touch with the details about that. That’s next Wednesday, September 1.

Finally, on the Annual Meetings, a reminder that online press registration for the Annual Meetings opened last week. You can again visit our web site and look for the Annual Meetings icon—that’s—and the deadline for press registrations is October 7.

The Annual Meetings and related events are scheduled from October 5 until October 10 and will be very different from previous years. The plenary, which is the gathering of the Fund and the Bank shareholders, will be held on Friday morning, followed on Saturday by the meetings of the Fund’s Policy Steering Committee, which is the International Monetary and Financial Committee, the IMFC, and the Bank’s Development Committee. Other events will include seminars, panel discussions, with high profile speakers from academia, the private sector, governments, think tanks, civil society and so on. And again, the schedule of events is now on that Annual Meetings web site and is being updated as we speak.

The best news of all is that there will be new facilities at the Annual Meetings for the press, and Media Relations will inform you about these changes which we think are a big improvement in terms of facilities.

So I think that’s it in terms of introductory remarks. And, as usual, could I ask that you please identify yourselves and your affiliation in the questions?

QUESTIONER: Gerry, I wonder if you can give us any update on how far the Pakistan talks with the IMF are progressing. Has the minister joined those talks and what are they focusing on?

MR. RICE: Yes. As you know, we issued a statement on Pakistan earlier this week on our web site, where the Fund and the Managing Director, Dominique Strauss-Kahn, expressed their sympathies to the government and people of Pakistan for the tragedy that has taken place, and expressed the Fund’s commitment to stand by Pakistan in this time of need.

In terms of the meetings, what I can tell you is that they are ongoing at the technical level and have focused on getting a better sense of the impact of the floods on the economy. Minister [Abdul Hafeez] Shaikh and Governor [Yaseen] Anwar will be joining those meetings today. On the side of the IMF, the team is led by Adnan Mazarei who is the Mission Chief for Pakistan. Now these meetings are expected to continue until later next week, and we will keep you informed on progress of those meetings as the talks continue.

As we said in our statement, these tragic floods will have a major impact on the country’s economy, and the scale of the impact means that the country’s budget and macroeconomic prospects will need to be reviewed, and again we are working with our Pakistani colleagues to assist them in designing measures to overcome these difficulties whilst keeping the Pakistani economy on the path for sustainable growth.

QUESTIONER: If the assessment from the World Bank and the Asian Development Bank has not been completed, how is the Fund actually going to try and figure out what the impact on the economy is?

MR. RICE: Well, we’re going to be working, again, with our Pakistani colleagues as well as with our colleagues in the Asian Development Bank and the World bank, to move together to get that assessment, but I think we don’t want to wait until, you know, all the final details are in before we start doing that work and looking at some of the possible options for how we can assist.

QUESTIONER: Just to follow-up on Pakistan, have you had any requests from them for the emergency fund that exists at the IMF or is it more to review the current details, the details of the current loans and change, or waive some criteria?

MR. RICE: I think we’re looking at all options in terms of how we can assist Pakistan in the midst of this tragedy. As you mention, we’re already supporting the Pakistani economy via the standby arrangement, and there is also the possibility of providing financing through an emergency instrument for natural disasters that has been used in the past for countries facing the consequences of this kind of events. And again, these discussions are ongoing, they’re very active, and we’re looking at all the options with the Pakistani delegation.

QUESTIONER: Gerry, one other thing on Pakistan, I’m just trying to figure out how this could work. Could the Pakistani government actually abandon the program? I mean we understand that there are options here. So some of the options are that if they take that facility or the loan from the natural disaster facility, can that loan go hand in hand with a program or do they have to be separate things?

MR. RICE: I think it would be premature to get into the details of the discussions and, you know, what’s going to be negotiated, but I would like to say again that all options are on the table and being discussed. And again, the bottom line is for the Fund to be able to do as much as we can to help Pakistan at this time, by whatever means.

I actually have one other, and I may as well take it now, one other follow-up on Pakistan here [from the Media Briefing Center]: On Pakistan, give the floods, what consideration is the IMF giving to debt forgiveness rather than new loans and what are the IMF’s thoughts on easing conditions?

What I would say on this topic is that, as has been mentioned, we’re working with the World Bank, and ADB (Asian Development Bank). A damage assessment is being prepared which we think will be finalized around October. We already know, however, that the floods have caused serious damage to infrastructure and changed the economic and fiscal outlook, and the IMF is assessing the impact on the budget, growth and inflation and what the appropriate response would be in that context. I think that same message applies to the issue of conditionality in the sense discussions are ongoing and we have to wait and see a little bit what comes out next week.

QUESTIONER: Just one more follow-up on that, the debt relief issue has been brought up by NGOs and a lot of think tanks over the last week, which is why people are focusing on it, but I think the question is whether, or have the Pakistanis requested or brought debt relief to the table yet as one of those options.

MR. RICE: Again, I can’t comment on the discussions ongoing right now. What I might add, if useful, is that most of Pakistan’s debt is to official and multilateral creditors. These are the very same institutions that will be providing financing for rebuilding the Pakistani economy, and we think it would be helpful if bilateral donors could provide grant assistance for the reconstruction.

QUESTIONER: Gerry, on Hungary, I was wondering there. The government has indicated that it is interested in discussions. Can you just give us what the Fund’s view is? Are these discussions happening or not? Can you see them happening down the road? What kind of conditions need to be met before discussion resume?

MR. RICE: Well, as we’ve said before, we continue to engage with the authorities with a view to bridging remaining differences, and we stand ready to resume negotiations with the Hungarian authorities on the Sixth and Seventh Reviews under the standby arrangement.

I have one question here on Iceland which I will take: When is the Third Review of Iceland’s economic program going before the IMF Board? Is it possible that the review is going to be delayed because of the unresolved Icesave issue?

And what I can say in that context is that the staff level agreement has been reached on the review, and the documentation is now being finalized, and the availability of financing confirmed. We continue to foresee that the review will be brought forward for IMF Executive Board consideration sometime in September.

QUESTIONER: Can I just get clarity on that one, Gerry, if you don’t mind? Are you saying that the staff level was reached recently?

MR. RICE: That was reached in July. The staff level review was reached in July, and there was a press release on that which you might remember.

QUESTIONER: If you don’t mind, this is on Greece. I was wondering whether there is some discussion going on in Greece right now that apparently you can physically see the impact of the downturn, of the economic—the impact of what’s going on in the economy right now. There are a lot of shops closing and so on. We were wondering whether there’s a feeling that the austerity package on the Greece economy might be having too much of an impact on growth, where the Fund thinks that that might need to be scaled back to allow for more growth?

MR. RICE: What I would say in response to that is refer to the joint statement that was issued, I think it was about three weeks ago, from the IMF, the European Community and the European Central Bank after the mission to Greece, where they were looking at these issues. So the thrust of that assessment was that we think the program is on track, has made a strong start led by vigorous implementation of the fiscal program, and in fact some important reforms are ahead of schedule, for example, on the pension reform and on the labor market. Of course, important challenges and risks remain, but we believe these are being addressed by the Greek government.

Of course, we are concerned about the growth issue. Of course, we are concerned about the impact of the measures on the Greek people. We feel that this is why it was so important that the government, from the outset of this program, the authorities have placed a strong emphasis on the social fairness of the program and on protecting the most vulnerable groups in the measures that are being undertaken. It was also important that, again from the beginning, the government has placed a large emphasis on structural reform which is based exactly on the issues of growth and competitiveness.

And of course we continue to monitor these closely, but, as we said in that statement and at the end of the last mission, we think the program is off to a strong start.

I have a follow-up on Greece [online]. May I just take that? And the question is: Does the IMF consider the option of non-Greek banks entering into the equity capital of Greek banks in order to boost their capital adequacy?

What I would say again is to refer to the findings of the last mission and the joint statement from the three institutions. I would add that, under the program, substantial steps are being taken to strengthen the financial sector and the banking sector, and the options on how best to do that going forward really they are the prerogative of the Greek government.

QUESTIONER: I have a question on the Executive Board. Members of this Board don’t seem to agree on what should be the composition of the seats, and the African member states are threatened to lose one if an agreement doesn’t occur before the end of October. What’s the position of the Management on this issue? Do you support a new deal on the Board?

MR. RICE: It may be helpful for others to step back a little bit and just explain that the proposed Board of Governors resolution for carrying out the 2010 Election of Executive Directors, which you mentioned, has not secured the 85 percent majority needed to pass, and the Fund’s articles provide for the next election to be held by November 1, 2010. Management and staff briefed the Executive Board on this issue earlier this month, and where we are now is that the membership is now considering how it will proceed with the election, including whether to maintain the Board at its current size.

QUESTIONER: Gerry, considering there’s an October 31 deadline for the mandate of the current Board to run out, is the Fund confident that some sort of resolution can be reached before that, in time to vote and not to paralyze the Fund, if I might say, without a Board? The day-to-day operations of the Fund will be affected. So what kind of meetings do you know are going on to make sure that there is some sort of resolution?

MR. RICE: Well, I would just repeat again, that the membership is actively considering how it will proceed on this issue and with the election. I think it’s too soon to speculate as to what the impact of this might be in terms of distribution of chairs at the Board. And what I can clearly say and reassure you is that the operations of the Fund, including approval of loans, continue as normal, and it’s our full expectation that this will be the case into the future.

I have one other follow-up here which I think we may have answered actually, but let me say it: What is the current state of play on the issue of the Executive Board size and composition after the U.S. abstention? By when will it be clear if the Board size has to revert to 20?

And I think we have answered that question. We’re in August today. We are expecting that we will have clarity on this well in time for the new Board to take up its position on November 1.

QUESTIONER: What’s your view on the global economy now? I mean are you still as upbeat as you were in July with the forecast? We’ve had quite a few worrying figures, notably in the U.S. Is the idea of a double dip still like in a downside, but not main, scenario or have you changed your views on it?

And just to go back to Hungary, so I take from what you say that the government hasn’t asked for any date for the next meeting for the reviews. You don’t have a date for any of that?

MR. RICE: On Hungary, that’s correct. Turning to the global recovery, as you all know, we will have our next update in about four weeks, of the World Economic Outlook. So I think we’d want to wait for that before we make any new projections on the outlook.

As you know, you mentioned the previous WEO update, and basically there the core analysis was that the recovery is proceeding but with downside risks elevated. In terms of the U.S., as you mentioned, recent data point to a more subdued recovery than had been expected by most analysts. Qualitatively, we had expected a subdued recovery for some time, with balance sheet weaknesses continuing to exert restraint on private spending. And broadly speaking, the recent data are in line with this qualitative picture.

QUESTIONER: Gerry, I’m sorry. I just need to be absolutely clear. So the Hungarian government has not asked for an IMF mission to come to resume talks.

MR. RICE: That’s right. Okay. I don’t have any further questions online, and I think we don’t have any questions in the room. So I would like to thank you for coming here today and look forward to seeing you at our next briefing in two weeks’ time. And again, the embargo today is 10:30 a.m. Washington time.

Thanks, everybody.


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