Russian Federation and the IMF
United States and the IMF
IMF Surveillance -- A Factsheet
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International Monetary Fund|
By Mr. Horst Köhler
President, European Bank for Reconstruction and Development
and Nominee for the Post of Managing Director, IMF
Friday, March 17, 2000
[TRANSCRIPT PREPARED FROM A TAPE RECORDING.]
Mr. Dawson: I am Tom Dawson, Director of External Relations. Welcome to this press briefing by Mr. Horst Kohler, President of the EBRD and Nominee for the position of Managing Director. Mr. Köhler will make a brief statement, and then will be happy to take some questions. If I can note, in our tradition, this press briefing will be embargoed until 10 minutes after its conclusion and, in addition, would you please identify yourselves and your institution when you ask questions.
Mr. Köhler: Thank you, Tom.
Good afternoon, ladies and gentlemen.
As you know, the European Union has put forward my name for the position of the Managing Director of the International Monetary Fund. I am honored by this expression of confidence. I have come to Washington to introduce myself to the Executive Directors of the IMF. Yesterday, I also met with Stanley Fischer, the Acting Managing Director and I had a talk with the Secretary of the Treasury, Larry Summers.
I sense that there is broad support emerging from shareholders but a decision still has to be made by the Executive Directors. I assume that they will do this next week. I feel it is now important for me to listen carefully before making any specific statements on the role of the Fund, to listen to the IMF shareholders, to its staff, but also to outside experts.
I do, indeed, think, however, that in a globalized world the IMF, with its universal membership, is a cornerstone for promoting growth and stability. I am fascinated by the expertise of the Fund, of its staff and management. I do think that with regard to the future work of the IMF, the focus should be even more on crisis prevention and we should make the best use of the strengths of this institution.
It also remains important to combine financing with adjustment, and to stay engaged in all member countries. That is my statement.
MR. Dawson : Questions?
A Questioner: A question, obviously, on Russia. You have dealt with Mr. Putin, with acting President Putin, when you were at the EBRD. Do you feel you can deal with him now at the IMF? And what is ahead for Russia and the IMF, in your opinion?
Mr. Köhler: Indeed, I met and talked to Mr. Putin in December last year. We had a very frank exchange of views. I recalled that the reform process in Russia is not strong enough and that is the main cause of the difficulties in Russia. Mr. Putin clearly admitted that is right. And he outlined that in his view Russia needs to have a strong State.
I confirmed that is right in terms of bringing more predictability to this state and country. But at the end we will have to wait on concrete deeds and not just listening to words, because this counts. But I would think that we should give Mr. Putin the benefit of the doubt to work together and I do think in the case I am elected Managing Director of the IMF, I am open for a constructive dialogue with Mr. Putin.
A Questioner: The IMF, as you are probably aware, is viewed in some parts of this country as the devil incarnate. In the U.S. Congress and elsewhere, there's been a lot of criticism of the Fund. How would you plan to address that and where--I know you don't want to be specific--but what directions would you see as the priorities?
Mr. Köhler: Well, first, we should know altogether, management and shareholders, about the direction of changes or reforms in the IMF. Secondly, I am fully committed to an open discussion and dialogue also with the U.S. Congress. I think we are meeting in a discussion about reforms. This discussion, I mean, is good. And I have a good feeling that out of all these contributions and comments in this discussion about reforms it is and will be possible to sort out structures and conclusions which will strengthen the IMF for doing a good job in the future.
A Questioner: Could you tell us a little bit more about your conversation yesterday with Mr. Fischer and whether you obtained assurances from him that he will stay on short-term, long-term?
Mr. Köhler: Well, we had, indeed, very good and long discussions. I appreciate very much Stanley Fischer's intellectual brilliance and also his experience in working and guiding the IMF. I clearly told him that I would be interested that he would stay and he at the same time told me that he also would like to stay. And that after some further discussions about future priorities of reforms and concrete issues, we agreed that it is challenging for us to meet the needs of future activities of the Fund.
I and Stanley Fischer am sure will work together very closely for some time.
A Questioner: Mr. Köhler, the process that led to your selection as the next Managing Director has come under heavy criticism. In part because developing countries felt left out, in part because it gave new ammunition to the Fund's critics and in part because it was probably unfair to some people involved, like Mr. Caio Koch-Weser.
As the new leader of the Fund, would you recommend that the process of selection of the Managing Director be reviewed, be discussed, and be changed?
Mr. Köhler: I agree that this process was really not the best I could imagine and I have no hesitation to say this process as it had been experienced should be reviewed and improved.
A Questioner: You talked about your meeting yesterday with Mr. Fischer but could you talk a little bit about your meeting with Secretary Summers, what you discussed.
And before your nomination and as you were being nominated by Europe, there was some concern here in the United States about how the U.S. would view your nomination. They finally came out in support of you. But at first, didn't seem wholeheartedly. Did that come up at all and what other discussions did you have with Secretary Summers?
Mr. Köhler: Well, before I met with Larry here, in Washington, I can tell you that Larry Summers called me in the night, I think from Monday to Tuesday, after President Clinton had telephoned, talked with Chancellor Shroeder. And Larry Summers met in the middle of the night--I had been at this skiing resort in Davos in Switzerland--told me that he would look forward to work with me together. So, this was what happened Monday to Tuesday.
At this talk here, in Washington, we reviewed the work of the IMF and we had an exchange of views about reform priorities. We agreed on most of these items; of course, we couldn't in this talk touch everything in detail. At the end of this talk, Larry Summers congratulated me to this new post and I told him that I am still not formally elected and we should not make any premature statements.
But the talk in substance was very friendly. I know Larry Summers from one year of cooperation in 1993. He knows that my working style is open, speaking candidly, but at the end our experience is that it is the best way to find the best solution.
So, I am really also looking forward to work together with Larry Summers in more concrete terms.
A Questioner: You had said you wanted to focus more on crisis prevention and would like to see the IMF focus more on crisis prevention. Can you say how you think the IMF is preventing crises today?
Mr. Köhler: Well, there is a bunch of items which come in, in this thing. And the most important axis for crisis prevention activities is the surveillance activity of the Board. And, surveillance activity in two ways.
First, the macroeconomic stability surveillance, giving advice to countries. But secondly, also, structural issues which are underpinning the macroeconomic stability and sustained growth. For instance, the work which is done or is in the process in the financial stability forum which is very important for bringing this discussion, very important discussion about international financial architecture to very concrete conclusions.
So, here I would think is the main priority for the IMF to enhance activities for crisis prevention.
A Questioner: Mr. Köhler, will you be in office at the event of the Spring Meeting? That means will you have moved at that time from London to Washington?
Mr. Köhler: Well, I must say that the time between when I first talked to Chancellor Shroeder and today is less than two weeks. I have not yet even had a chance to organize my work in EBRD. And this is for me an important thing because going here, to Washington, after election is, of course, fascinating for me and challenging but I would also go to Washington with a bit of a sadness because EBRD is a quite good and efficient institution. And I don't want to give staff of EBRD London the impression that this is a down-grading of this institution.
So, I am very interested to organize an orderly transition and what is in this context the most important thing I am urging shareholders of the EBRD to decide very rapidly on my possible successor.
A Questioner: Would you support the cancellation of debts owed to the IMF by developing countries as was advocated last week in the Meltzer Commission?
Mr. Köhler: Well, as you know, I don't want to go in details today. But I can say a point of principle in this context. I do think that debt reduction, debt relief is and can be and should be an element of a global strategy to secure global growth and also to fight poverty. But debt relief or debt reduction without growth, macroeconomic stability and structural reforms makes no sense. So, it has to be combined, and I have a bit of a concern that this discussion about debt relief and debt reduction is not strongly enough combined, with reforms, with macroeconomic stability.
A Questioner: If I could go back to your remarks on surveillance as an important part of the IMF's crisis prevention work. There is a discussion going on about how the IMF should use the information that it gathers during its process of surveilling its member economies. Some say that this is privileged information that should be communicated directly from the Fund to the governments, themselves. Others say that perhaps the market should be used to bring influence to bear on the governments via the IMF making this information more public.
Could you tell me what your thinking is on how much information the IMF should provide to the public and to the private market?
Mr. Köhler: Well, information which enables markets and the public better to judge a country, its economy, and its problems. There is an area of information which has to be confidentially treated because, for instance, in the context of private involvement these people want to keep their information. But, in principle, more disclosure of information, also more disclosure of IMF policy and IMF activities and approaches in my view is the right direction to cope with the situation at the beginning of this Century.
A Questioner: Just looking at almost the continuum of international economics and trade during the past few months, there has been a shift toward recognizing that developing nations perhaps are feeling a big neglected and not a little bit lectured to during the past few years.
How are you going to approach the issue of developing countries in terms of their role in the global economy? We have G-33, we have the various selection of other groups. But in terms of their place in organizations like the IMF and the World Bank, how do you see developing nations playing a role going forward? How will you be consulting with them and involving them as you go forward in your new role?
Mr. Köhler: We are so often and even maybe too often talking about globalization. But if we are serious with the contents of globalization, we should understand and must understand that the developing countries and the developing world is part of this globalized world. We are really one world. And one approach, therefore, is for me or has been for me that I not only met with the full group of the Executive Directors of IMF yesterday, but I had also a specific meeting with the, as it is called here at the IMF, Group of 11. These are the Executive Directors for the constituencies of the developing countries.
And when you have followed at least my announcement and comments in the process for the selection of the Managing Director, you will have seen the statement that I also would like and would like to rely on the support for my candidacy by the developing countries.
And this is not in the sense that I am advertising for my person, but because I do think that we have to give more attention to the developing countries in order to find out strategies which are sustainable.
Mr. Dawson: Two more questions.
A Questioner: Mr. Köhler, if you do take office before the Spring Meetings you may find thousands of people trying to prevent you from getting to your desk. There are going to be probably very large protests during the Spring Meetings. How do you intend to approach public skepticism about the IMF's intentions and its abilities?
Mr. Köhler: Well, I am really not prepared to answer a question about what I am going to do when the demonstrations happen. But I can give you an answer to the principle. My intention is to have really more open dialogue with the public and with NGOs. I do think it is our obligation to explain IMF policy and activities better maybe than we have done in the past. And also to have a dialogue.
On the other hand, I also would like to make a point. I hope that we are not embarking on a process where dialogue with the NGOs is weakening the democratic institutions in our societies and countries. So, it has to be in my view a process of openness, more public disclosure, more attention to these concerns and contributions to the discussion but also awareness that we institutions that we have elected responsibility and this should not be weakened.
A Questioner: I would like to know what would you do to prevent the misuse of IMF funds and if you know that the IMF is ready to release more money to the Russian Government?
Mr. Köhler: Well, I do think that we have to be even more careful with collecting information and make our assessments. I never would say it is possible to avoid any problem because that is, in life it is more complicated. But what happened, I do think, it reveals the need to be even more careful and if something happens, also, to draw conclusions and to organize our own work so that it will not be repeated.
Mr. Dawson: Thank you very much. The embargo will be lifted at 10 minutes after 2.
IMF EXTERNAL RELATIONS DEPARTMENT