Transcript of IMF Press Briefing

November 10, 2016

MR. RICE: Good morning, everyone, and welcome to this briefing on behalf of the International Monetary Fund. I am Gerry Rice of the Communications Department.

And as usual this morning, we are on the record, and this briefing is embargoed until 10:30 a.m.; that’s Washington time. Let me run through a couple of announcements, and then I'll turn to your questions in the room.

The Managing Director of the IMF, Christine Lagarde, will be in Los Angeles next Monday, November 14, to receive the Woman of the Year Award from Glamour magazine. She will also be given a Lifetime Achievement Award, and at that event Madame Lagarde will be making a speech on Women's Economic Empowerment. That’s next Monday.

A few days later, Madame Lagarde will be making the opening remarks at the IMF's statistical forum, to be held here in Washington, and you'll be welcome to attend. Let me also mention that Maury Obstfeld, our chief economist; and Deputy Managing Director Tao Zhang will be also at the same forum chairing some of the events related to that.

Then November 18 to 20, Madame Lagarde will be in Peru to participate in the APEC Leaders' Meeting, and as part of her visit there, as well as the official meetings of APEC, she will speak at the Universidad del Pacifico, and we'll be sharing that speech with you, and other details closer to the time.

David Lipton, our First Deputy Managing Director, will be in Beijing, China, on November 21st, 22nd, for a seminar hosted by the Chinese Academy of Social Sciences and part of the Seminar Series, “The Shifting Global Economic and Political Landscape.”

And then on November 16, Deputy Managing Director Tao Zhang will be in New York for the China Life U.S. Representative Office, Opening Ceremony of the Overseas Business Dialogue, November 16, New York.

Finally, on November 17 and 18, Deputy Managing Director Mitsuhiro Furusawa will be in Guatemala to participate in the 14th Central America Regional Conference. And then about a week later, November 26, 27, Mr. Furusawa will travel to Myanmar to attend the 52nd Annual Southeast Asian Central Bank's Conference.

So, as usual, you can follow us on Facebook and Twitter, And with that, let me turn to your questions. Good morning.

QUESTIONER: I had a question about the election of -- actually I have two questions. So, do you feel that that opens a period of uncertainty for the U.S. economy and the global economy? And do you see the election as a rebuke of the policies that the IMF has been advocating for many years? And so do you think it should push the IMF to rethink its action and its policies? Thank you.

MR. RICE: I'm guessing that there might be a few questions on the U.S. election, its implications. Maybe I'll take a few and come back. So, yeah?

QUESTIONER: Just a follow up on his question. If you are concerned that the new U.S. government will try to make it harder for you to engage financially with certain countries, like Greece, let's say?

MR. RICE: Sir?

QUESTIONER: -- it's a sort of too general type question, but you could give a “guesstimate” of whether it's net positive, net negative for the economic process at this point?

MR. RICE: Yes?

QUESTIONER: Yeah. I'm with Reuters. Do you have concerns about the level of the U.S. commitment to the international institutions going forward given Mr. Trump's America-first policies, and a general sort of rejection of decades of trade liberalization policy?

MR. RICE: Sir?

QUESTIONER: I’m with Bloomberg. The other thing I have to add is to the economic implications. Do you have anything on the financial implications? There was some volatility yesterday, but ultimately there was actually a rally in stocks and other risk assets. So I'm wondering what the financial implications are as you see it.

MR. RICE: Okay. Let me -- let me try and take these, and then we can move on to other things. We issued a statement yesterday. Let me repeat that for you. The IMF looks forward to working with the next U.S. administration, to help the challenges facing the U.S. economy and the global economy.

You know, beyond that, clearly in terms of, you know, specific questions about policy directions, and it's really just -- it's too early to speculate. We need to see how the new U.S. administration defines its policy priorities and related actions once it takes office before we would make any assessment of specific issues.

That said, let me try and respond to a couple of the issues that you’ve raised. On the financials and the markets, there was some volatility yesterday, but markets this morning seem relatively calm from what we can see there. I think there was a question about, does this signify a repudiation of IMF policies or, you know, does it entail a rethink on how we are approaching things. Again, I think it's too early to speculate on any specific policies, but we have been saying now for quite some time, including at the most recent Annual Meetings, that there needs to be, of course, a focus on increased growth. But we've also been emphasizing equally the need for inclusive growth.

There was this phrase at the Annual Meetings that growth has been too low for too long for too few. So, we've been doing, I think as you know, those who watch us, we've been doing a lot of work, in fact, over the last number of years on issues such as inequality, for example, and how to make growth more inclusive. So, that’s something to which we are committed and in that respect, if you will, a rethink has already been well underway, as I say, for several years.

In fact, the annual economics conferences that we've been running have often been titled Rethinking Macroeconomic. So we are committed to helping our membership promote more inclusive growth. You know, I think the same applies on the whole issue of globalization, and some of the policies related to that, you know, openness, trade and so on.

Again this was a big discussion point during the Annual Meetings again recently, that for many countries around the world and for many people, especially poor people around the world, those policies have delivered many benefits. A lot of people have been lifted out of poverty over the last generation. But we have added and emphasized that clearly the negative side effects of some of these globalization policies need to be taken into account more. And again, that’s something we've been emphasizing now for some time. So, it's not just the -- it's making globalization work better and work for everyone. Again, that was a big discussion point during the Annual Meetings.

On the other questions, some of your other questions, do we anticipate difficulties to emerge with other countries? Again, no, at this point no, I do not see that. But again, I think we have to wait and let the new administration take office and see what the specific policies might be. There was a question about the U.S. level of commitment to the IMF and, you know, there are just a -- the U.S. was a founding member of the IMF. The U.S. is the leading shareholder in the IMF. We have an excellent relationship with the U.S. authorities, and we would expect that to continue into the future.

On certainty and uncertainty, again, I think it's the early days -- too early to speculate. Clearly, as a general principle, certainty is a good thing. Policy certainty is a good thing. But again, we need to wait and see. Remember we are barely 24 hours away from the election decision.

On the same topic?

QUESTIONER: Yes, please. If I may follow up regarding the trade agreements and the international trade agreements like NAFTA, which is already in a certain place, and also TTIP, and TPP. The Fund has been -- if I'm not mistaken -- promoting those agreements in the process of opening up and reducing barriers to trade. But the current, the president elect seems to be saying that he wants to stop them or change them significantly. So can you, please, comment on that? I mean, have you -- I'd like some clarification on your point. Thank you.

MR. RICE: So, again, and a similar question online that just popped up. It's almost the same as your question.

So, again, I think it's just too early to speculate. I think we need to let the new administration take office. Let the new administration establish its policy priorities and the actions related to that, and then we can make an assessment. Separate from that on trade, we have said that we believe that trade has been an engine of growth for the global economy and holds great potential in the future in terms of growth for the global economy.

So, I'm not referring to specific agreements here. I'm not getting into that level of detail, but as a general principle, the Fund takes that view. We have also said though, and again this was another major part of that discussion during the Annual Meetings, that clearly the more negative side effects of trade need to be taken more into account for those who feel left out or left behind. We need to have more policies that help to mitigate the negative effects and help address the concerns of those who feel left behind. So that's an important part of the narrative on the overall, you know, view that trade helps the engine of growth.

So I'm going to take two more on this topic and then I'm going to move on. That's you and him.

QUESTIONER: I understand, Gerry, that you don't want to get into politics, but we are in a year where there was the Brexit vote, and then you have an anti-trade candidate be elected to the White House. So I'm just wondering, you know, do you feel that the recommendations of the IMF are, you know, making on a daily basis are going to be less influential in the sense that people will maybe doubt more about their relevancy? And don't you think that it should -- do you imply that institutions like the IMF have been a bit blindsided in the past in that they refuse to listen to voices that were raising concerns about people losing to globalization?

MR. RICE: Again, I would not interpret recent political events as a repudiation of the IMF. That's not how I see it. And as I said, I think we have been strongly emphasizing that those who have been feeling left out, left behind by the process known as globalization and policies underlying that, that more attention needs to be paid to those groups of people, and policies need to be more than that. Policies need to be developed to help mitigate the negative effects. Again, we've made very strong statements to that effect. More than that, we've had a whole program of research over the last at least three or four years related to inequality in particular and its relationship to growth, how to make growth more sustainable and more inclusive.

QUESTIONER: To work on the field actually, what about including inequality criteria to your bailout programs?

MR. RICE: Well, I think that in many respects that those kind of principles are being adopted in the analytical work that we do and, yes, in the programs also. If you look at, for example, just to be specific for a minute, at the Egypt program that's going to be discussed tomorrow by the Board, you know, the social dimension of that program -- we've talked about this here -- the social protection measures in that program are a cornerstone of the program. They are not an afterthought-- they are not, you know, an add on. They are a cornerstone of the program. And I think there are many other examples, which I'll be happy to give you some of those later -- many other examples that I can point to where that is the case as well. So this is not abstract. This is in the works.

I'm going to take this, and then I'll take yours last, okay? And then I'm going to move on from this general topic.

QUESTIONER: All right. Thanks, Gerry. You seem to be somewhat giving Mr. Trump some leeway here, perhaps hoping that his policies, his actual trade policies, may not be as harsh as what we've heard on the campaign trail -- that they won't live up to his rhetoric, that maybe he won't start a trade war by levying 45 percent tariffs on China, or that he won't drop out of the WTO. Is that a fair assessment?

MR. RICE: I'm simply saying that it's too early to speculate. You know, we need to wait and see what the policies will actually be, and we'll be making an assessment at that time. So it's just too early to speculate, and I won't speculate.

You've got the last word on this topic,.

QUESTIONER: Thank you. It occurred to me that many countries, Russia included, have been saying similar things for a long time, and one of the criticisms was that the IMF is not representative enough, and that the existing Bretton Woods organizations are not representative enough of big (inaudible) of humanity out there. So I think my question is, do you see in this event a signal prompting you to sort of pay more attention to equality, not only within the countries but internationally, including in the IMF? And I know that you've been taking those threats, but those little baby steps have been -- well, what was your description -- too little for too long for too few and all of that.

Thank you.

MR. RICE: It's too little for too long for too few. And that's in reference to economic growth. I would not draw any, you know, direct correlation between recent political events and the issue of representation in the IMF. I would not. However, on your general point about representation in the Fund and in international institutions, I think you know that this is an area where, again, for a number of years we have been working very hard and trying very hard, and not without some success, to ensure that the IMF is indeed representative of its membership, of its 189 member countries. We still have work to do, and we are engaged in that very actively. But I said, not without some success. You recall less than a year ago we did have the approval and agreement on the quota increase, which I think did go a significant way to help ensure this proper accurate representation of the membership in the institution among other things. I think as you know, the BRIC countries are now in the top 10 shareholders of the IMF.

So, again, it's a work in progress, but I think we should note the great efforts that have been made in this area. And, again, some achievement that should be not overlooked.

Yes. We're changing subject?

QUESTIONER: Egypt and Argentina.

MR. RICE: Thank you.

QUESTIONER: On Egypt, there's a Board vote tomorrow, and the Managing Director has recommended approval. I mean, what sort of indication can you give us that that's forthcoming?

And in terms of Argentina, I mean, what would be your description of what the next steps are in terms of their kind of ongoing reintegration into the system and its resumption of normal relations with the IMF?

MR. RICE: On Egypt, as I mentioned, there will be the Board meeting tomorrow, so this going to be the Board's decision on Egypt's request for a $12 billion extended Fund facility. What else can I tell you about that? As he said, Madame Lagarde issued a statement a day or two ago where she said she's recommending approval. I perhaps will mention, because it's been an issue related to the overall program and the approval that in terms of the bilateral financing component, which was around $5-6 billion -- that's in addition to the IMF $12 billion, that Egypt has now secured commitments for this financing, which include contributions from China, the United Arab Emirates, G-7 countries, commercial bank financing, and a prospective Euro bond issue.

And maybe just the last thing I would mention, that clearly the fact that the Board is meeting tomorrow reflects the completion of what we refer to as the prior actions for the program. And you've seen a series of policy actions from the Egyptian authorities in recent days. So we're moving expeditiously to the Board meeting.

We will have more to say tomorrow, including press statements and briefings for you on the Board decision.

On Argentina, I don't have a great deal to add to the fact that yesterday, as you probably saw, there was a Board decision on the issue of statistics related to inflation and data and the lifting of the censure. The IMF lifted the censure that had been placed on Argentina at a previous time. So that news was yesterday. I can tell you there was also an Article IV discussion on Argentina yesterday, and we will be releasing that today. So there's going to be further information, quite a bit more information on Argentina and the state of its economy, including the process of re-integration and all of that today. As you know, with our Article IVs, they are discussed by the Board and then it takes us -- you know, it depends on the discussion and on the documents -- it takes us some time to get the documents ready for public release. We expect to do that today.

On Argentina? Egypt?

QUESTIONER: Actually, I had another country in mind. I had a question about India. I was wondering if you could comment on the decision from the authorities to withdraw 500 and 1000 notes from circulation. Are you concerned by this decision and its possible consequences? I mean, what's your assessment of it?

MR. RICE: We support the measures to fight corruption and illicit financial flows in India. Of course, given the large role of cash in everyday transactions in India's economy, the currency transition will have to be managed prudently to minimize possible disruptions.

QUESTIONER: If I can just follow up really quickly. Do you think that this decision would have required more preparation than what was the case?

MR. RICE: No, I'm just saying that when countries make these kind of moves, which is not, you know, exceptional -- countries do this quite often -- that the transition needs to be managed very well.

QUESTIONER: On Egypt, just wondering if you can give us a breakdown of how much each of those countries, groups of countries that you mentioned, how much of the financing they're providing? Also, you know, can you confirm that the first installment of about $2.75 billion will be issued next week, assuming approval by the Board. And what sort of schedule can we look forward to going forward for disbursement of funds, you know, every three months, six months?

Also, what does the Fund think about the Egyptian pound has been floated for about a week now? What's the view on sort of how that week has gone? And do you think that the currency will now start to stabilize?


MR. RICE: Yes. On the breakdown of financing and the schedule of disbursements, all of that will be in the documentation we'll release tomorrow after the Board meeting. And pending approval of the program by the Board, which is an important point, but pending that approval we actually expect that first disbursement of, yes, $2.75 billion would take place on the same day. So that will be done expeditiously and that will --

QUESTIONER: So on the first day of the -- from the day of the approval?

MR. RICE: On the same day.


MR. RICE: So the Board meeting is tomorrow. And it will immediately count toward Egypt's gross international reserves.

I think on the exchange rate and the liberalization process, yes, you know, we continue to monitor it, how it's going of course, but we think it's gone reasonably well at this point.

Good morning.

QUESTIONER: Thank you, good morning. Can you give us please, Gerry, more details about what was agreed during the last Eurogroup about the medium-term measures for the Greek debt relief agreement? Is it aligned with your expectations or your terms about participation in the Greek program? Thank you.

MR. RICE: We are working with the Greek authorities and the European partners on a program that adds up and that the IMF can support. We have talked about that before here many times, the need for strong policies, the need for debt relief to ensure debt sustainability.

The sooner there is agreement on both, the sooner we can bring a program to our Board. We do not have a hard deadline for this, but we hope the agreement can be reached very quickly.

I think, as I said the last time here regarding policies, we think the current policy package is broadly consistent with a primary surplus target of around 1.5 percent of GDP, and that no more measures are needed if debt relief is calibrated on the basis of that target, on the basis of the 1.5 percent of GDP.

So, we can support a program based on a long-term primary surplus target of 1.5 percent, and thus, we’re not asking for more austerity, more measures, you know, provided the program is based on that target of 1.5 percent.

On the Eurogroup and the debt, the Eurogroup chairman had mentioned there would be some new ideas presented at the next Eurogroup meeting on December 5. We would, of course, welcome new ideas for debt relief measures and are open to discuss them at any time.

As I said here many times before, for us to go to the Board, we need that complete package. We need the policies and the debt relief to ensure the program adds up.

Does that do it for you?

QUESTIONER: Yes. If I may follow up, do you think these new measures might be enough for you to participate in the program? Given that they will be medium-term. Do you see any extra urgency or even possibility of having this agreement by the end of the year? Thank you.

MR. RICE: So, again, we are running as fast as we can. We would like this to be done as quickly as possible. We’re moving urgently and rapidly. I don’t have, as I said, a hard deadline on it, but we want to move as quickly as we can.

On the debt relief, again, the measures and the discussion that may take place on December 5 at the Eurogroup, according to the chair, again, we would welcome that discussion.

What we have said many times is that the debt relief does not need to be implemented up front and can be conditional to Greece delivering on an agreed reform program, but, you know, again, we need to be able to explain to our Board that there is broad agreement on the type and the scope of debt relief that would be provided.

So, we need that to go forward. Again, I think I mentioned last time around, we will have the publication of the Greek Article IV, we expect in December, and there will be the DSA, the debt sustainability analysis, provided at that time.

I was just about to wrap, so you get the last word again.

QUESTIONER: Thank you. I want to ask about Ukraine. First off, the head of the Ukrainian Central Bank recently said it is possible that the next tranche of the Fund will not be forthcoming. I wanted to have your response to that.

Then I have a question on the income declarations, a little scandal that’s going on there.

MR. RICE: So, is that your question? Roll it in, and I’ll wrap it up.

QUESTIONER: Okay, yes. She asked about the tranche, and then recently, one of the biggest stories in the Ukraine was this new system of electronic filings for income. Apparently, the officials who were behind the recent upheavals all of a sudden became very rich, and the population was very unsure about that.

In that regard, maybe three questions. One, is the Fund worried about the money that it provides as part of their anti-crisis program, that the money can actually leak down to uses that were not intended.

Two other things specifically, the Ukrainians now say that the IMF is promising them help in tracking down the money, the new declared monies of the officials, of the new officials, and maybe even help with appointing the right kind, finding and selecting and appointing the right kind of officials for their country.

Is the Fund ready to provide that help with the people, selection, and with tracking down the money?

MR. RICE: Thank you. Two kind of buckets of questions, one on the status of the program and the review, and I think your second one is broader, around the whole issue of governance and corruption.

Let me take the first one. Again, his question is relating to the IMF program with Ukraine. That is the four year, $17.5 billion Extended Fund facility. There is a staff mission in Kiev right now discussing the third review of that program, and also the Article IV consultation is taking place.

So, the mission is in the field right now. They will assess progress on implementation of the program and with this Article IV consultation. They will also be looking beyond that to the medium-term challenges facing Ukraine, including the need to accelerate the structural transformation of the economy to achieve stronger growth.

So, the mission is in the field. I can’t give much more information on the discussions because they are obviously ongoing as we speak, but I can tell you that they will communicate their findings in due course.

QUESTIONER: If I may interject for a second. The specific question was very simple. Is the expectation here still that the third review will be completed this year?

MR. RICE: I think we have to wait for this mission. That is kind of where I was coming from. I think we have to wait for the discussions of the third review, and then we will be in a better position to give a sense of timing.

Turning to your second important set of issues, what I would say is to remind that the Fund-supported program has had a major focus on corruption and governance from the very beginning. I think you know there was even a special report and study attached to the documentation.

It has led to the establishment of new institutions to tackle corruption, such as the National Anti-Corruption Bureau, the appointment of anti-corruption prosecutors, and more recently, you mentioned this, the e-declaration of assets by high-level officials.

I think where we are, is, we think that this is progress, but Ukraine will need to take further decisive steps to fight corruption, including by making these new institutions fully operational and bringing cases to court.

At the same time, we have tried to promote policies to establish a level playing field and reduce the scope for corruption, including the streamlining of business licenses, improving transparency in public procurement, bringing energy prices to cost recovery levels, cleaning up the banking system, strengthening tax administration, and putting in place an effective framework to prevent money laundering.

So, this is a comprehensive program in this area that is underway, is being implemented. There has been progress, but more needs to be done.

I just want to respond to your question about the IMF funds, because this is something that applies not only in Ukraine but in all our programs. We have very strict procedures/processes around IMF resources and financing. We call them “safeguards.” We have very strict safeguards around IMF funds. I think there is a very clear track record of the effectiveness of those safeguards around IMF financing, if you look at the history of the IMF.

QUESTIONER: Again, the specific question was -- I don’t think it’s in the normal purview of the IMF to provide the kind of assistance that the Ukrainians are now talking about, in terms of selecting personnel and in terms of tracking down the money, or can the IMF be of help to them in that regard?

MR. RICE: Well, you know, I don’t have the details about individuals or personnel, but in terms of the overall processes, and as I mentioned, building effective frameworks to prevent leakage, prevent money laundering, prevent general corruption, this is something where we actually spend a great deal of time with our membership on this particular aspect.

There are many, many programs of technical assistance all around the world where the IMF tries to support our countries, member countries, in this effort, because it is a priority for us.

I’m going to leave it there today. Thank you very much for coming, and see you in a couple of weeks.

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