Transcript of IMF Press Briefing

November 30, 2017

MR. RICE: Well, good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communication Department. And as usual, this morning the embargo for this briefing will be 10:30 a.m., and that's Washington time. I will make a few announcements and turn to questions in the room. And I can see that we're already quite busy online as well.

So let me begin with some of the scheduling announcements. The Managing Director, Christine Lagarde, will travel to Africa from December 10 until December 19. Madame Lagarde will visit Benin, Ethiopia, and Djibouti, where she will meet with the authorities, private sector, labor groups, civil society, and so on. In both Benin and Ethiopia, she will hold a press conference and deliver keynote speeches, which we will get to you in good time as usual.

The one other thing I want to mention is that we expect to publish the IMF's latest financial sector stability assessment, and that will be of the People's Republic of China, next week. And we will have the authors of the report, from our Monetary and Capital Markets Department, available to brief you, to brief the press. So we'll also get the embargoed documents to you in advance. So really just to give you a bit of a head's up on that. I know there's a good deal of interest in that particular assessment. And as I say we expect that in the coming days. We will confirm the exact date for you closer to the time.

And, finally, just to bring to your attention the latest edition of our Finance & Development magazine, just published yesterday and available to you online. It's a new, redesigned, revamped Finance & Development focused on the Middle East, where we will actually be having a major conference in Marrakesh toward the end of January. More information coming your way on that as well.

Okay, thank you very much, and let me turn to any questions in the room.

Questioner: Hi. I was wondering if you could update us on the IMF's assessment of the situation in Zimbabwe following the change of regime there? Last week the mission chief had said that the situation was very difficult and, you know, that there were a lot of steps that would take for it to get back to normal. Has there been any contact with the new government there? Any discussion about sort of getting external financing going again?

MR. RICE: Thank you. So let me give you a sense of where we are on Zimbabwe. As you mentioned, our mission chief, Gene Leon, had communicated quite extensively several days ago, but let me try and summarize a bit where we stand. So of course, Zimbabwe faces severe economic challenges on a number of fronts. So restoring growth will require concerted efforts to tackle the fiscal deficit, to complement that with structural reforms, and so on.

What I can say in terms of the IMF and your question, we stand ready to support the authorities in their efforts to design policies that can indeed restore stability and growth. And moreover, in addition to a strong and coherent reform program, we see a concerted international effort will be required to revive and reintegrate the Zimbabwean economy. And I think, as our mission chief had said, an IMF financial arrangement, for example, would only be possible after progress in resolving Zimbabwe's arrears to other international financial institutions and other creditors.

In terms of next steps and engagement, we will have a regular staff visit in early December. So that's going to be in the very near future, in the coming days. And that mission will update our assessment of Zimbabwe's fiscal position,d foreign exchange developments, and inquire about the new administration's economic plans. As you know, the new president is putting in place his cabinet and, as I said, we stand ready to work closely, and that staff visit should help us to make progress in that direction.

Let me turn to Greece.

QUESTIONER: Thank you, Gerry. So if the IMF's mission is on the ground in Athens can you update us on how things are going over there, and if you're optimistic that this review can be concluded in a timely manner?

Thank you.

MR. RICE: Thank you. Yes, I can confirm the IMF mission is currently in Athens joining staff from the European institutions in their third review of the ESM program, that's the European Stability Mechanism program. So it's the third review of that program, just to be clear. We are not conducting a review at this time, since our program is not yet effective, the agreement and principle that was approved in July. So our staff is assessing the current economic situation in Greece and the status of policy implementation.

QUESTIONER: But you will conduct your review, your first review in February, right?

MR. RICE: Well, it depends on what happens with this mission and, you know, they will be reporting out after that and we'll be communicating after that. So really the status of a review for our program would of course require first of all the program become effective and then we would have a review. We're not at that stage. As I said, we are joining with our other partners, assessing the current economic status of the policies that are being implemented right now.

QUESTIONER: Can you explain what you mean, your program will become effective?

MR. RICE: Yes. Because, as you recall, it was approval in principle of the program. And for the program to be made effective, you may recall, we had said would be contingent on the provision of debt relief to ensure that Greece's economic situation is sustainable. So it was approval in principle of a program. And to become fully effective we would need the debt relief. So those discussions are ongoing.

Yes, on Greece.

Questioner: Thank you. If I may follow up on this. So the ESM had -- Mr. Regling recently said that in order to have that debt relief the ESM would consider maybe replacing some of the other creditors' loans with EMS loans because the terms of the EMS loans supposedly are better. And so that would contribute to some form of debt relief. Would that make it easier for your Board to approve to make effective, as you said, your Greek program? Would that be enough for the IMF?

MR. RICE: Well, I think it's something we would need to look at in terms of the detail. But what I would say is it's not a new idea. The Eurogroup has mentioned in their past statements that remaining ESM funds could be used for what is actually, usually called liability management operations. So this could be beneficial since they would reduce Greece's debt costs. So we'd welcome such liability management measures, and we would expect to discuss them in the context of the discussions of debt relief. But, again, we need to wait for the details and for those discussions.

Questioner: Can I follow up on that so I can understand? That would reduce your exposure to Greece, wouldn't it? Would that also be a factor that the Board might consider in actually financing some more? You know, giving some more money to Greece for your program?

MR. RICE: Well, as I aid, you know we need to wait and look at the details. And it's something that would be discussed in the context of the ongoing dialogue on debt relief. And, indeed, then that's something that the Board would take into account, depending on the outcome of those discussions that the Board would take into account once the proposal was put to them for making the program effective.

One more on Greece.

QUESTIONER: Thank you. Negotiations and talks to define the terms of a future government coalition in Germany have not produced results and the debt log still remain. Given the fact that the IMF will be called by February to decide whether to participate in the program or not are you concerned about this delay which may lead to a new election in Germany and therefore postpone further debates on Greek Debt?

Thank you.

MR. RICE: You know, I don't really have any comment on the political situation in Germany, as you might expect. But on the debt relief and the discussions, we believe the agreement on debt relief can be reached. That continues to be the IMF view. And if this were not the case we would not have recommended the approval in principle of a new program, which we did in July.

So I would say on the debt that we've made a great deal of progress since 2015 on the debt relief issue. And clearly while not all the differences have been bridged, we believe there is the scope to do so. And from our part, again, we're committed to work with our partners to arrives at a positive outcome on debt relief and one that credibly alleviate Greece's debt burden so that it can embark on a sustained recovery.

So, we see progress, the discussions continue, and that's the status of where we are on the debt relief.

QUESTIONER: You said you can be reached until February, the following weeks, the following two months?

MR. RICE: You know, I didn't put a date on it, and I wouldn't put a specific date on it, but just to say, again, that we think there is scope to reach agreement and we hope it can be done as soon as possible obviously.

QUESTIONER: Even with new German government?

MR. RICE: Again, regardless of -- there are political developments in many countries at all times, so we've got our eye on the ball in terms of the debt relief discussion and, as I said, we think there's been some progress on that, and we think there's scope for more.

QUESTIONER: Thank you.

MR. RICE: Good morning.


MR. RICE: Yes, good morning.

QUESTIONER: Can you tell us what's the IMF impression about India's economic scene right now? Is it improving, is it going down, and what role is playing in this overall?

MR. RICE: I don't have much fresh for you on the state of India's economy. We did comment in quite some detail, including Madame Lagarde, the Managing Director, commented in quite some detail on India at the time of the Annual Meetings, which was, you know, a month or so ago. And what I can tell you is that we will be updating the forecast for India, including the growth rate, and that will be coming January with the update of our World Economic Outlook. So at this point I don't really have much that's fresh.

QUESTIONER: Bangladesh, which has been facing influx of refugee population from Myanmar. The IMF has been helping in the past to Bangladesh with this financial assistance. In view of the additional burden the refugees are having on the Bangladesh economy is IMF, or has the Bangladesh government approached the IMF for any financial assistance?

MR. RICE: I'm not aware of any such request from the Bangladesh government, but I would say two other numbers. Number one, obviously we are concerned about the refugee situation. And number two, there have been a number of other country cases where the IMF has indeed worked with the governments to create fiscal space to help the meet emergency refugee situations. Again, I'm not aware of any request for such support from the Bangladeshi government at this time, but it has occurred in other country cases.

QUESTIONER: According to U.N., since August there are more than 600,000 Rohingya refugees have arrived in Bangladesh. What is IMF assessing the impact this will have on Bangladesh economy?

MR. RICE: We have not made an assessment yet of the economic impact. That's something that will be done in due course. The situation has been very recent, as you know, so that's something that we will be doing in due course, and we'll get back to you on that.

MR. RICE: Thank you. Good morning.

QUESTIONER: Good morning. MR. RICE: Welcome.

QUESTIONER: I have a question about the United States. In October the IMF was skeptical about the tax reform plans here regarding the increase of deficit. Now these tax reforms are apparently on the finish line. Are you guys still skeptical about that?

MR. RICE: You know, what I'd say was that the plan, the tax reform plan, is still very much in play; it's still very much undergoing discussion and iteration, so it has not been finalized. And what we have said is that we wouldn't be able to make an assessment or a finalized comment on what we think of that tax plan until we know the final detail. So we're not at that point yet. As you know, it's still being discussed in the U.S. Congress and between the Congress and the Administration. So until we have the details we won't make an assessment. But we look forward to those details.

QUESTIONER: If I may, your skepticism about the debt increase, apparently, that's on the table. Are you still skeptical about that regarding the situation in the United States?

MR. RICE: I won't repeat what I've just said, so we won't make an assessment until we see the final plan. And I think that's reasonable. I think that's what we should do. But what we've said, and I think what we have been saying fairly consistently, is that in our Article IV on the U.S., the economic health check that we do on every country, we laid out what we thought were broad principles that should be followed in terms of a tax reform in the U.S. We said that we thought the tax reform was needed, could be a positive step for the United States, but again we laid out certain principles that we thought should be followed in the development of that tax reform.

And I won't go into detail here. We have gone into detail on that. You can look at the Article IV; it remains the same. But we talked about simplifying the tax code. We talked about closing loopholes. We talked about a tax reform that would stimulate growth, that would stimulate labor market participation; a tax reform that would not exacerbate income polarization. There were a number of principles that we laid out, and I think that's been our position within the broader framework of us saying we thought tax reform was needed in the United States.

Yes, good morning.

QUESTIONER: Hello (. I have a question regarding Venezuela. A couple of weeks ago IMF asked the authorities of Venezuela to give more visibility on the economic indicators, and you asked for some figures. Do you have any feedback on this? Do you have any contact since your statement?

MR. RICE: No, I'm not aware of any further feedback on the issue of provision of accurate data and so on. As you know, we've not had the opportunity to have a dialogue with the Venezuelan authorities for quite some time. The last Article IV that we conducted there was in 2004, actually. So we've not really been in the position to offer an assessment of where the Venezuelan economy stands at the moment. And beyond the statement that we issued a few weeks ago, again on the issue of data, I don't have anything further on that right now.

I'll take one from you, and then I'm going to go online and take a few.

Questioner: Okay, thank you. I've got a question about the World Trade Organization. It’s having ministerial meeting coming up December 10-13, it's the biennial ministerial meeting. I'm just wondering what the IMF's expectations are for this meeting, given the fact that the Trump Administration has been quite critical of the WTO and has taken a much more protectionist trade stance altogether. Would it be enough to sort of just maintain the status quo with the WTO at this meeting, or do you think there's scope for more progress, and where would that come?

MR. RICE: We're always hopeful for progress, and as we've said many times before, we believe free trade and a trade that is rules based is very important for the global economy. We think it has been beneficial for the global economy. So again, we would hope for further progress in that direction. I do not -- I'm not familiar with exactly what's on the agenda for that meeting in December, you mentioned, the WTO, but certainly, we'd be hopeful of progress.

Let me take a few questions online. Then I'll swing back quickly in the room if there's anything left. There's a question on the Caribbean and it says: St. Lucia's prime minister has said of the IMF, "If you care about the Caribbean, you must change the rules of engagement and allow us to help ourselves." He said, "The billions of dollars in Caribbean loans should be reclassified by the IMF.” What is your response? Just by way of context, we recently had a major conference on the Caribbean just less than two weeks ago where a number of these issues were covered. But let me just summarize. We're obviously, acutely aware of the urgent need to assist the Caribbean countries to build resilience, particularly in the context of the recent natural disasters. And we stand ready to do whatever we can to help.

At that Caribbean forum -- that Caribbean conference that I mentioned, Madame Lagarde actually proposed convening an event with all the major public and private stakeholders to explore options for building resilience in the region, including risk mitigation, debt management and use of catastrophe bonds. So the call by Prime Chastanet, I think, reiterates a plea made by Caribbean leaders at the time of the Annual Meetings to adjust eligibility criteria for concessional lending to take greater account of the Caribbean's very high vulnerability to natural disasters and climate change. And while the Fund cannot currently reclassify countries to make them eligible for concessional Fund borrowing, a review of the Fund's low-income facilities is currently underway and that will examine how well these facilities are addressing the needs of vulnerable small states and will propose changes if needed. So I just wanted to give an update on that situation in the Caribbean.

There is a question on Tunisia. When is the second review mission visiting Tunisia, and what will the discussions focus on? What I can say on Tunisia is that an advanced team is already in Tunis from the IMF, and policy discussions will start next week. That IMF mission was as progressed toward the objectives set for the second review of the current program that is underway. The mission will also conduct an Article IV consultation.

I would just like to say one other thing on Tunisia is that further to some press reports in recent days, I'd like to take this opportunity to clarify the IMF has never recommended reducing food subsidiaries in Tunisia under the current program. I just wanted to clarify that. Efforts to reduce the budget deficit and avoid high public debt from an increasing further should focus, we believe, on limiting the growth of the public wage bill; reducing energy subsidiaries; and implementing tax reforms that distribute the burden of adjustment more equally among the population. We believe public investment and social spending should be protected. So I just wanted to take, since we had a question on Tunisia -- I just wanted to clarify that.

There's a question on the situation in Yemen and the IMF's position on the humanitarian situation there. And, of course, we are very concerned about that humanitarian situation and the economic costs of the conflict that is underway there, and we are working with donors to try and help with that. We believe donor grants will be needed urgently to finance basic imports and support the payment of public sector wages and social assistance. We stand ready to engage as soon as the conflict is resolved to help restore macro stability and help to jumpstart growth as well. So we think the international community needs to be ready to move quickly to help Yemen meet its reconstruction needs and support the resumption of reforms.

There's one other question on Zambia and the status of the IMF relation with Zambia. So let me take that.

Where we are on Zambia is that discussions on a new arrangement were put on hold in August of this year after the authorities unveiled large borrowing plans that we believe threatened that sustainability. So during the Annual Meetings and during a follow-up set of meetings actually led by our Africa Department Director Abebe Selassie, who made a recent visit to Zambia, the authorities expressed their will for a speedy re-engagement with the Fund. Where we stand is that while progress has been made on several elements of a prospective program, the discussions will need to progress and provide greater clarity, including on fiscal policy commitments and credible borrowing plans consistent with debt sustainability.

So we're just essentially waiting for further data and details on the government's external borrowing plans, and then we would field a staff visit to update the macro framework and discuss the way forward.

QUESTIONER: Thank you. Can you update us on the status of the two papers prepared on program design and currency union members and cooperating with original financial arrangements and that whatever has been discussed at the Board level. Can you remind us where we are?

MR. RICE: Yeah, on both of those papers, I think we're looking at Board dates for discussion in the near future, and I'll get back to you once we have those Board dates.

MR. RICE: I don't have a date, but I will come back to you on that. Okay, last question.

QUESTIONER: We have seen Bitcoin reachmore than $10,000. How does the IMF view this development,and is IMF also seriously considering lodging its own cryptocurrencies?

MR. RICE: Yeah, what I would like to say on that is, of course, we don't comment on prices of specific assets or commodities or currencies. But we said before that cryptocurrencies and their underlying technologies can have potential benefits, including the promotion of financial inclusion and more efficient payment and settlement processes. On the other hand, we have also alerted for, cautioned, that cryptocurrencies can also pose considerable risks as potential vehicles for such things as money laundering, terrorist financing, tax evasion and so on. So there's a need for a balanced assessment of cryptocurrencies.

In our view, cryptocurrencies, including ICOs; including the initial claim offerings, should be subject to appropriate regulation and supervision. A key challenge for country authorities will be to contain risks without stifling the innovation associated with cryptocurrencies. And we also believe that greater international discussion and, indeed, cooperation would be helpful, and as you may have noted, we, the IMF, have been trying to play a role in that regard. And again, I might refer you to Madame Lagarde's speech on this issue, fairly detailed, at maybe six weeks ago at the Bank of England, which is available on our website. It laid out the IMF's position, I think, quite clearly.

Look, with that, I want to thank you for coming today. And look forward to seeing you in a couple of weeks' time. Thanks very much.

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