Transcript

Transcript of IMF Press Briefing

November 1, 2018

MR. RICE: Good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice, Director of Communications. As usual, our briefing this morning will be embargoed until 10:30 a.m. That's Washington, DC time.

Let me begin with a few announcements and then I'll turn to questions in the room and take a few on line if we can. So the first order of business is that as of -- you know, within the last half hour or so the Annual Research Conference here at the Fund kicked off and the topic this year is international spillovers and cooperation. It began with remarks from our First Deputy Managing Director David Lipton. He just concluded in another part of the building here. And, as usual, the Conference brings together many researchers, economists, policy makers, from different parts of the globe to discuss research in the area of economics. Sad to say this will be the last Research Conference that will be led by our economic counselor, Maury Obstfeld, whom, as you may know, is retiring from the Fund later this year, to be succeeded by Gita Gopinath, who will join us at the beginning of the New Year.

A couple of other things. On November the 5th IMF Managing Director Christine Lagarde will be in China, in Shanghai actually, for the China International Import Expo that's being held there in Shanghai. She will be speaking at the opening ceremony along with President Xi and other heads of state. Christine Lagarde will then head to Beijing to attend the so-called 1+6 Roundtable discussions. These are the annual discussions held with the heads of the major international organizations, hosted again by the Chinese Premier, and that will be on November 6. There will be a press conference after that discussion. And, finally, then the Managing Director will go from Beijing to Singapore where she will participate in the New Economy Forum being hosted by Bloomberg, and that's on November 7. So November 5, 6, and 7 Christine Lagarde doing some public things there that you will have access to.

Then on November 11, a few days later, the Managing Director will be in Paris for the Peace Forum to commemorate the end of World War I, the 100 year commemoration of that. And as you may know, it's a major event hosted by President Macron -- 60 heads of state attending that event, 10 heads of international institutions, to discuss reviving international cooperation and other issues. Again, there will be many public aspect so that, so we'll get the details to you.

We're launching our regional REO, the Regional Economic Outlook, for Europe in Copenhagen; a joint event with the Danish Central Bank. Poul Thomsen will lead that, along with Governor Per Callesen, and that's November 8. And, again, open to the media, open to you all.

Finally, a little bit ahead -- quite a lot going on actually -- November 19-20 our Sixth Global statistical Forum will be held here at the Fund, I think on an interesting topic, measuring economic welfare in the digital age. That will be here at the Fund. The keynote speaker for this year for this year is Jim Balsillie, who is Chair of the Centre for International Governance, and, as you may know, former Chair and co-CEO of RIM, associated with Blackberry of course. And we'll get you more info on that. That's the November 19-20.

Thanks for your patience. Let me take some questions in the room.

Good morning.

QUESTIONER: Good morning. Thank you, Gerry, for doing this. I would like to ask a couple of questions regarding sanctions. So, as you know, the sanctions on Iran are in effect as of today. So how do you think that will affect the Iranian economy and other countries buying lots of oil from Iran, and what would be the implications for the oil market?

And one more question on sanctions, which will be related to Russia and Ukraine. Today Russia announced some substantial sanctions on over 300 people in 60 countries in Ukraine. Do you think this will have any significant effect on the Ukrainian economy and IMF program?

Thanks.

MR. RICE: Okay, thank you very much. On your last one, I haven't even seen that news myself, so you're giving me some news on Russia and Ukraine, so I won't comment on that, but we'll try and come back to you once we've had a chance to look at it.

On Iran, the re-imposition of U.S. sanctions will reduce economic growth by restricting Iran's oil exports and Iran should implement policies to safeguard macro stability and, in particular, protect the most vulnerable groups. I don't have -- you know, the other part of question, you know, an implication for oil markets or oil prices. We did talk a bit about that in the context of our World Economic Outlook a short time ago, but I don't have anything further today on that.

QUESTIONER: Good morning, Gerry. Just to follow up on the Iran sanctions. Is the IMF concerned at all that sanctions against Iran and the threats by the United States against SWIFT, unless it complies, could destabilize the global financial system in any way? Is there a broader spillover effect here?

MR. RICE: So we're following the development closely. We urged the Iranian authorities to strengthen and effectively implement their AML-CFT framework -- that's anti-money laundering, countering the financing of terrorism framework, AML-CFT -- in line with international standards ahead of the February 20, '19 meeting of the FATF deadline. As you may know, the whole issue of AML-CFT is something to which the IMF pays a great deal of attention. We in particular provide lots of technical assistance to many members in that area, so we're again urging a strengthening of that framework to the Iranian authorities.

QUESTIONER: I just wondered if you could give us any update on how the talks with Pakistan about their program have been going and what -- I guess there's an IMF team that's been there, or maybe is still there, doing kind of the first round of that -- and if you could give us kind of a timeline of what the next steps are looking like and when we might, you know, see it go before the Board for the first time, and things like that.

MR. RICE: Sure. Let me give you what I have on Pakistan. So a few weeks ago, on October 11, during our Annual Meetings in Indonesia, Pakistan's Finance Minister made a formal request for financial assistance from the IMF. So we expect those discussions to begin on November the 7th. So an IMF staff mission will go to Islamabad and initiate discussions with the authorities. And, of course, the objectives of that program to help stabilize the Pakistan economy, put in place the preconditions for sustained inclusive growth, and modalities of that would be announced once we've reached a staff level agreement. And then the usual process, once the staff level agreement is reached, then we'll go forward to our Board for the formal approval of the program. There will be, again as usual -- people who follow us know this -- there will be a press release, there will be a communication at the end of that. Assuming staff level agreement is reached, there would be a communication at that point.

So November the 7th is when the discussions are going to begin and the Board date would be -- the Board discussion would be contingent on agreement being reached and following again.

Does that do it for you? Okay. Anything else in the room?

Good morning.

QUESTIONER: Yes, good morning, Gerry. Regarding Argentina, there is some concern that the greater risks ahead are more political than economic in terms of social unrest and what the opposition see as the future in case Macri doesn't win a second term. Could you comment on that please?

MR. RICE: Yeah, you know, maybe I'll step back for those who haven't been following it just a few days ago. Last Friday actually the Board of the IMF completed the first review of Argentina's 36-month standby arrangement with the Fund and that allowed the disbursement of about $5.7 billion. And in addition, the Board approved an augmentation of the IMF program for Argentina which increased the loan amount to a $56.3 billion. And we think this is going to strengthen a Argentina's economic plan. It will bolster confidence and stabilize the economy amongst other things by reducing the budget deficit to the adoption of a simpler monetary policy framework and a freely floating exchange rate. And importantly, the protection for the most vulnerable groups in Argentina continues to be a central component of the authority's efforts. It's a central component of this augmented arrangement, including by prioritizing social assistance spending and planning for an increase in spending on social assistance programs in the event that social conditions would deteriorate.

The next staff mission to Buenos Aires should be expected soon in the coming weeks. And amongst recent developments, we've seen the budget proposal from the Argentine government approved by the Lower House of the Parliament. That was a very important step. Your question, we don't get into politics. We're focused on the economics, but clearly the name of the game now is implementation. So we have the program agreement. We have the measures agreed. And I think the momentum has begun. There's been good progress so far, but it's early days. So I think the name of the game is implementation. And again, just to answer your question, I think what I would say is that for the IMF, we're confident that steady implementation of the policies that underpin this program together with strong support from the international community will indeed allow Argentina to return to macroeconomic stability and to fulfill its economic potential for the benefit of all Argentines, of course, which is the objective. So again, now it's implementation. There's been good progress and we expect that to continue.

QUESTIONER: Thank you. My first question is this, does the IMF still see a benefit to a buyback of its loan to Greece and, of course, this option being discussed lately with the Greek authorities or the or the ESM?

MR. RICE: Yeah. You know, I don't know the details of discussions. What I would say is that on the whole question of buyback and so on, it's a decision for the Greek authorities to make obviously, and that's in the context of they're a liability management strategy. They certainly have a range of options and that's one of them. But again, I don't have the details. What -- I mean, what I'd also say is that in Greece is in a strong position following the decision by the European Partners on additional debt relief and the buildup of a large cash buffer supported by the final ESM disbursement. So, it can afford to be a patient in a way in terms of coming to the decision, which again is, it's a prerogative.

QUESTIONER: Yeah. We'll have some more questions if it's possible and I don't know if you have any reader would have for them meeting between Mrs. Lagarde and Mr. Socalados in Bali. But I wanted to clarify one thing if it's possible. Did the Mrs. Lagarde told Mr. Socalados and I quote, that “the size of the fiscal space was primarily an issue between Greece and its European Partners and that this fiscal space must be spent for the benefit of society and growth." This is the announcement by the Ministry of Economy of Greece after the meeting.

MR. RICE: Yeah, I actually don't know, again, the details of the discussion, but I mean broadly the IMF no longer has a financial arrangement or program with Greece as you well know. So clearly, the main interaction now is between Greece and the European Partners though again, IMF continues to be involved in terms of helping with surveillance and so on. So broadly, that's the arrangement and I think that we would certainly agree that resources, fiscal and other should be used for the benefit of society as a whole. That's -- we would certainly subscribe to that. Morning.

QUESTIONER: One more question about Greece, please.

MR. RICE: Sure, sure.

QUESTIONER: A year ago, the Managing Director had accepted an invitation by the Greek president to visit Greece. Until now, no date has been set. Do you have any updates for us?

MR. RICE: I don't. That's true and I think we are eager to find the right time and place to do that. But I don't have anything specific for you today, but I know that the managing director would like to visit one of these days. Good morning.

QUESTIONER: I wanted to ask you about Pakistan.

MR. RICE: Sure.

QUESTIONER: It is, Pakistan's application with IMF.

MR. RICE: Yes. I'm sorry. We talked about -- we talked about Pakistan also, but at the beginning. Your question is about the --

QUESTIONER: Yeah. Is this application is still pending --

QUESTIONER: -- or they have moved out of it.

MR. RICE: Okay. So --

QUESTIONER: I think they have aid from other --

MR. RICE: -- we did talk about this a bit just at the beginning. So maybe you can look up the --

QUESTIONER: Okay, I'll look at the transcript.

MR. RICE: Basically what I said, yes. They've applied for -- they've requested a program and November the 7th discussions will begin. If you look at the transcript, you'll get a bit more information, but that's the essence of it. Does that -- is that okay?

QUESTIONER: Yeah, that's fine.

MR. RICE: Yeah.

QUESTIONER: I have one more question on India.

MR. RICE: Sure.

QUESTIONER: The ongoing dispute between Central Bank and the federal government in India. How do you see what role the Central Bank has in in India? It should be -- is it independent? What's your impression about it?

MR. RICE: So we're monitoring the development on that issue and will continue to do so. Just stepping back, as a general principal, and we've said this before. I've said this before standing here that we support clear lines of responsibility and accountability and international best practice is that there should be no government or industry interference that compromises the independence of the Central Bank and financial supervisor.

QUESTIONER: President Trump in recent weeks had criticized fed here and what's going on in India too. Do you think there's a general trend globally of -- on central banks across the world?

MR. RICE: You know, again, it's something we're watching, but I think the answer I gave you is probably -- is probably the most appropriate for that. Again, international best practice and this is true across the range of countries, is that the independence of the Central Bank and the financial supervisor is of utmost importance. We regard it as such and we have to make that statement in the context of a number of countries. So I think that's probably the best response I can give you.

QUESTIONER: Thank you.

QUESTIONER: Good morning. Do you know when the Board is meeting again on Egypt because yesterday you did a statement on the new payment --

MR. RICE: Yep.

QUESTIONER: -- so maybe you can give details on the Board itself.

MR. RICE: I don't have a Board date for you yet. As soon as soon as we have it -- what Delphine is referring to is that there was staff level agreement on the fourth review of the IMF's support for Egypt's economic program. There was a fairly extensive press release yesterday, just came out yesterday. And what Delphine is asking is when will the board meeting take place and we will get back to you as we, once we have that. Don’t have it right now.

QUESTIONER: So hi, thanks again. Just was -- had a question regarding Venezuela. Now I know that they have not come to the IMF to seek your assistance or anything like that --

MR. RICE: Yes.

QUESTIONER: -- but there has been more noises from the United States about possible sanctions against gold sales which could have some detrimental effects. I'm just wondering if that’s something that the IMF is concerned about if there is an increase in sanctions from the U.S. side, whether that would further destabilize the situation there?

MR. RICE: I just don't have anything on that. You know, we are not in active discussions with the Venezuelans and I don’t have anything on that. Let me take this one more and then I will take a couple online.

QUESTIONER: Okay, thank you. I would like to ask you one general question regarding sanctions. Could you please tell us about the stance of IMF on economic sanctions based on political reasons?

QUESTIONER: You know, they haven’t been used in the last four or five years we see a heavy use of sanctions from the United States and the Europeans on Russia and now on Iran and, you know, other countries as mentioned. So just a general idea how IMF looks at sanctions.

MR. RICE: So what we look at as I mentioned earlier, you know, our job is not in the political realm but what we are -- our job is in the economic realm. So what we do is of course try to help with advice and assessment, analysis in terms of, you know, when sanctions are imposed, what the economic impact might be, the implications might be, what steps might be taken by a particular country in that context.

But, you know, what I'm trying to say is we are a very focused institution and there are other institutions that look at other aspects. We focus on the economics and so it is the implications of sanctions in a particular situation that we would look at.

I'm going to take a couple of questions online and then I'll, you know, see if there's a last question or two in the room. There is a question from Matthew Lee asking about Saudi Arabia. What's the IMF's estimate of the impact of the Khashoggi affair on the country's economy as well as the U.S. call for cessation of hostilities in its war on Yemen. So again my caveat about the, you know, the IMF not doing politics stands.

But on Yemen, I would like to make the point that we are very concerned about the humanitarian situation in Yemen and the economic costs of the conflict and that we are working with donors to try and avert what we see as a very humanitarian situation. We think donor grants would be needed. We think cooperation within the revamped central bank system is essential to facilitate imports and maintain basic public services.

Of course, again, the IMF role given the armed conflict and the humanitarian situation, our role is, the IMF role is limited in Yemen in terms of what we can do right now. But we do stand ready to reengage as soon as the conflict is resolved to help restore macro stability, build institutional capacity and jumpstart growth. And again we urge the international community to be ready to move quickly to help Yemen with reconstruction and other humanitarian needs hopefully in the very near future.

On the other question on the impact of the Khashoggi affair on Saudi Arabia, it's too early to say how that might affect the Saudi economy. It clearly depends on how confidence could be affected and whether business investment and the decisions are affected which we don’t see at the moment. So far the effect appears to be economically relatively modest. That's probably all I have to say on that.

There is one more question on Sri Lanka. What is the IMF's view of the impact of the reportedly counter legal installation of Mr. Rajapaksa as prime minister? What is the IMF's view?

Again the IMF is not in the political realm but clearly we take note of recent developments. We are monitoring the situation closely and we remain in contact with our counterparts at the technical level. I don't have any assessment as yet on potential program implications there in Sri Lanka.

Is there anything else in the room? QUESTIONER: Yes. You said that you don't have a program with Greece and of course I understand it. But, and this is the last time that I'm going to ask about this. But can you clarify whether under the post program moratorium the IMF is asking from Greece to implement the measures from 2019 and in particular the pension cuts or this is an issue that Greece will resolve with its European lenders

MR. RICE: You know, on the pension reform, again as you indicated this is something that has been agreed for some time and we think it is important that Greece moves in a convincing way, using all the tools at its disposals toward more growth friendly social inclusive policies. In that context we do see the implementation of the 2019, the 2020 pre legislative package as moving in this direction by freeing up fiscal space for non-retiree social spending which remains low and helping to reduce the tax burden.

Okay. I'm going to thank you for coming today and leave it there and look forward to seeing you in two weeks' time. Thanks.