Ecuador and the IMF
Honduras and the IMF
Philippines and the IMF
Russian Federation and the IMF
Ukraine and the IMF
Heavily Indebted Poor Countries -- A Factsheet
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PRESS BRIEFING BY THOMAS DAWSON, DIRECTOR, EXTERNAL RELATIONS DEPARTMENT AND MASOOD AHMED, DEPUTY DIRECTOR, POLICY DEVELOPMENT AND REVIEW DEPARTMENT
Wednesday, July 26, 2000
MR. DAWSON: Good morning, everybody. Long time no see, although I've heard from a number of you. This is the latest in our series of semi-regular briefings. For the record, we are, of course, on the record, and embargoed until 5 or 10 minutes after we finish. And we will set the time at conclusion.
I am Tom Dawson, Director of External Relations at the Fund. And with me this morning is Masood Ahmed, the Deputy Director of the Policy Development and Review Department, whose particular focus is on debt issues, HIPC, PRGF and so on. And we thought we would include him in this briefing this morning, since this is a topic that is of both recent and enduring interest. And if you have questions in that particular area, Masood would be happy to take them.
I trust that you all have missed me as much as I have missed you the last few weeks. I certainly sensed, a month or so ago, that we sort of had either a lack of news or waning interest. I am trying to make these briefings perhaps a little more topical and interesting by perhaps having some of my colleagues, such as Masood, join me in the future. If you do, though, have a sense that we are not providing you with a structure like this that you want to have more often, just do let us know, and we'll be happy to try to accommodate you.
I don't have any real announcements for this morning. I think I would note, as I think a number of you know, that the Managing Director will be traveling to Europe. It's a combination of official and personal business. The only public events that I am aware of at this point will be that he will be traveling to Prague, Czech Republic, on Sunday, and will be in Prague Sunday night and most of Monday for meetings with the authorities. There will be a couple of public press-covered events and an evening news show on Sunday evening, as well as press conference after a meeting with President Havel on the afternoon of Monday, July 31st. I would note Mr. Fischer is in London today, and some of you may have seen some comments from there, and I think we probably have his statements available if you wish.
I think that is all I have at this point. So I am happy to open up to any questions that you all may have. Don't be shy. Masood will think you're not interested.
Again, please identify yourselves and your affiliations. Thank you.
QUESTIONER : Can you tell us when there will be a joint meeting with the World Bank Board and what the agenda of that meeting might be?
MR. DAWSON: There is a planned joint meeting of the Boards. This is an initiative of the two Boards. I am not aware of a particular agenda. As I say, this is an initiative of the two Boards. And my understanding is that it is Friday. I don't have any details, and I would not, at this point, expect that there will be any announcements.
I know you are all rather industrious. You can call. You have the phone numbers of the Board members. But this is very much a Board initiative for the two institutions to get together. I think it's something that makes a great deal of sense, and they do get together occasionally. I think perhaps it has a little more attention this time, since the Fund Board did have a retreat with management and some staff recently, which is, in some sense, an input to this meeting as well. But as I say, I would not expect this is a particularly news-creating event.
QUESTIONER: Just exactly where might that meeting take place?
MR. DAWSON: I honestly don't know, and it may be in the institutions. I'm really not sure. As I say, we're not expecting that it would be something in which statements and so on come out. So I'm not sure we're in a position to really release where it is taking place.
QUESTIONER: On Ecuador, any sort of update that you can give us?
MR. DAWSON: We did issue on Monday a comfort letter for the debt exchange offer that's going forward, and there are still some outstanding structural issues to be resolved. But I think we are optimistic that they will be, expect that they will be. And in terms of when the next Board action, in terms of review of the standby, would be, I think we're looking at late August, but obviously everything is subject to change.
As I'm sure most of you realize--the Board recess will be starting I guess it's the end of next week. So that makes all timing questions a little uncertain at this point.
QUESTIONER: Can you give us any feedback from the Managing Director's trip to Africa; what sort of issues the African governments brought to the discussions, what their views were of proposed changes to the Fund and the Bank, those kinds of things?
MR. DAWSON: I mean, the trip was the third of his listening trips. I think much of the discussion focused on the assistance the Fund has been providing, in particularly in the HIPC/PRGF context. I think there was a very strong endorsement on the part of the authorities in these countries for the Fund's approach and the Fund's involvement in Africa, strong support for the universal character, nature and activities of the Fund.
I think, as I say, it was part of the concluding of the three segments of his listening tour, but it was, I think, a very positive experience.
As you know, he met with a group of mostly English-speaking or else Portuguese-speaking African Governors of the Fund, as well, in Maputo. And I think it gave him a sense of the Fund's involvement in Africa and how the authorities welcome it and want the Fund to stay engaged. So I think that's the broad-brush, comment I would make. I would, also, direct you to his own statements in the various stops that he made.
Do you want to follow up?
QUESTIONER: Did they, for example, complain at the slow process of debt forgiveness, such as came up during the G-8 meeting and the comments surrounding that?
MR. DAWSON: I mean, I think everyone would like the process to go more rapidly. And I think perhaps Masood later can talk about that process. I think we all would like to have a faster process, and there are lots of reasons why it has been slower. So I'm not sure I would use the word "complain." But certainly all of us would like to have this process go forward as quickly and smoothly as we can.
QUESTIONER: But I am asking whether they brought the issue up.
MR. DAWSON: The issue of the pace of the programs comes up every time, certainly.
QUESTIONER: A follow-up on Ecuador. Can you give any more details on what structure issues are outstanding?
And do you want a separate question on a separate country now or later?
MR. DAWSON: Oh, you can go ahead.
QUESTIONER: Ukraine, the Board said in its last that it would soon decide how to respond to their misreporting. How soon?
MR. DAWSON: In terms of the Ecuadorian program, it is--among the issues are the liberalization of interest rate caps and how to handle some fiscal issues relating to the expected phase-out of the financial transaction tax, which, if it phases out too early, would create a possible revenue problem. So that's basically the kinds of issues that are going on in Ecuador.
In the case of Ukraine, we don't have--I'm not sure I have that much of an update for you, really.
There is this additional PriceWaterhouse study that is due. It does not involve a period in which there was Fund lending. So there are issues regarding disclosure of information. But it is not an issue of calling into question disbursements that took place previously.
So we are looking at it. We've had conversations with the authorities, and there will be a delegation visiting next week. But in terms of timing, either in terms of Board action or on the misreporting issue, I don't have anything for you at this point. But it's not that there's been any slow-down. It's proceeding as we had expected.
QUESTIONER: But the delegation that's coming is pretty high level. They have a Deputy Prime Minister, they have the Minister of Finance. So do you have a sense of what they want to achieve here?
MR. DAWSON: Well, there will be a continuation of the discussions that were held in Kiev in I think the end of or middle of June. We still have policy issues to resolve, as well as the consideration of the two existing PriceWaterhouse reports. And what I was indicating on the third one is it is not expected to be of the same nature as the first two.
So you're right, it is a high-level group. It will be meeting with management. But it is, basically, a continuation of the discussions that had taken place just about a month ago.
QUESTIONER: Also, on Ukraine you said that at the time there was going to be an internal report on how much staff knew. Has that been completed and will it be published?
MR. DAWSON: The review has been concluded, and it will be discussed internally, including with the Board. But I don't have a timing as to when that will actually take place.
QUESTIONER: Is there any progress to report on the negotiation of the committees of the Fund and Bank Boards on finding a new procedure for the election process of the MD and the President?
MR. DAWSON: No, I don't think we have a progress report. The Bank and the Fund Boards separately have established for themselves such committees. But this is not an issue that has a short time fuse on it, at least as far as we know. I'm speaking for the Fund, at least.
So I think that this is a very important issue, but it's not one that we require a report to the Board of Governors by the IMFC and Development Committee meetings.
QUESTIONER: Do you have any idea of when the Board will meet on Nigeria yet?
MR. DAWSON: No, I don't. I would suggest you keep in touch on that one. I mean, it could come up reasonably soon. But as I think I mentioned earlier, we have scheduling issues regarding the Board recess and so on. But, I'm not aware of anything having been scheduled. But that's not to say that that might not happen on relatively short notice.
QUESTIONER: So it's just a scheduling issue.
MR. DAWSON: No, and I didn't say it was just a scheduling issue. I said I don't have anything yet. But because we are in this particular time crunch right now, with the end of next week being recess, and then you have to wait for 2 weeks afterwards, some things can happen quicker than they might otherwise happen.
QUESTIONER: Could one of those quick things that happen be the Kenya package tomorrow? And can you say anything about that?
MR. DAWSON: Yes. We do expect to have Kenya discussed. But that's obviously not related to Nigeria. Yes, but we do expect that to come up.
QUESTIONER: In terms of the Philippines, the President Estrada has been upsetting some people by saying that we're having a mild relapse of the Asian financial crisis, which is something, yes, something that even his own cabinet colleagues are a little bit shocked at. But there's no doubt that the Philippines is coming under a great deal more pressure again.
Does the IMF, first, have any ongoing negotiations, discussions, whatever with the Philippine government? And, secondly, does it feel the need to have another look at the Philippines given, A, the statements coming out of there and, B, its own assessment?
MR. DAWSON: I mean, we certainly do have an ongoing dialogue with them and have been following the developments. We had been expecting to have a Board meeting. That has now been postponed, so we can a look at what these developments are. But we are clearly in regular touch with the government.I think the premise of your question is a bit overstated about another Asian financial crisis.
QUESTIONER: My understanding is that Russia is not really in a great need of additional monies from the IMF. At the same time, it needs a program of the IMF to talk to the Paris Club.
So my question is, is there a possibility of some sort of a precautionary arrangement for Russia?
MR. DAWSON: I mean, we are continuing. I think it's premature to talk about that. We are talking about how we can support the Russians and the Russian program. Certainly, we have been quite pleased, pleasantly surprised I think it's fair to say, with the strength of the Russian economic performance this year, both in terms of growth, as well as in reserve accumulation. And we will be having, as I'm sure you know, in September, a Article IV discussion on Russia, and we expect that we'll have further discussions on how we can support their program in the fall.
But I think in your case, some of your premises are correct. And, indeed, the performance has been quite solid, so that it's a question of how we can best support the program.
QUESTIONER: On Russia, your audit found that there were no problems. Now, Swiss authorities have found that there might be some problems with the $4.8 billion. Does that show that your audit was incomplete in some way? Are you reassessing what you found in that audit?
MR. DAWSON: We take seriously all reports--journalistic, investigatory or otherwise--about allegations of misuse of Fund resources or related sorts of issues.
Having said that, however, and having tried quite carefully to read the reports, both in the press, as well as in talking with a journalist yesterday who read me excerpts of the prosecutor's letter, which I have not actually seen, but excerpts, I have to say I have some sense of being in "Groundhog Day." I mean, many of these accusations are precisely the ones that the PriceWaterhouse report, I believe, conclusively refuted. Some of them are newer accusations. You have to take a look at them.
Just to take an example, the prosecutor's letter indicates--makes a statement that there was a $4.8 billion transfer from the Fund on I believe it was August 14th. There was no such transfer. We've published quite clearly what the disbursements were at the end of July into the New York Fed account, and on a daily basis the disbursements out of the New York Fed account to the variety of banks--commercial banks--in Europe and Russia. So that we can't track those numbers. Not only can we not track those numbers, we know, in fact, there was no such transaction.
Other transactions that are indicated in this report, we also believe did not happen. One of the banks mentioned in the letter, we believe, does not even exist. If you looked at the story in the New York Times this morning, they contacted one, I believe an Austrian bank, who said they didn't even have a branch in the city that they were talking about.
So we have some difficulty understanding what these are. We will look at all accusations, take them seriously. But thus far, in terms of specifics--names, dates, numbers that have been mentioned--we haven't been able to find anything that is--I mean, those that we can respond to we don't believe are true, and those that we can't respond to we will try to take a look at. But it doesn't, quite frankly, it doesn't seem to hold together.
I would note, in the New York Times article this morning, there was, which I think presented it fairly, one point I would make, when we talk about the $4.8 billion, remember that actually what the PriceWaterhouse audit looked at was a total of about $9.1 billion in that particular account that was handling exchange rate interventions. So that the PriceWaterhouse review was for the entire--for an amount much larger than the Fund amount. And it tracked the daily disbursements, and there were no disbursements that, in any sense, matched the disbursements that supposedly took place in what is in the prosecutor's letter and has been referred to in press reports over the last couple of weeks.
So we have difficulty understanding exactly what it's about. And I would also note we have not been contacted by the Swiss investigators or any other authorities in this regard.
QUESTIONER: This is a debt relief question. You were talking a minute ago about recess. I think it came up at the G-7 that the idea is to get from 9 countries to 20 countries before the end of the year. We're looking at about 4 months, if you start in September. Can that realistically be accomplished?
And what about I think it was the British Development Minister, Clare Short, who said that the procedure, the process, needs to be speeded up, and there should be less emphasis on getting all of the paperwork together first.
MR. AHMED: I thought I was going to go through this without having to say anything.
MR. DAWSON: That's an excellent transition. Thank you.
MR. AHMED: Well, as you said, 9 countries have already gone through that process, and we are now working towards getting to 20 countries by the end of the year. Whether or not we get to 20 countries will depend partly on what happens in individual countries because they are putting together programs and also the timing with which they come forth is partly driven by when those programs come together.
But we are reasonably confident that we are on track towards getting to 20 countries. And we are determined to make sure that we look at all of our procedures, processes, that none of those stand in the way of getting to that outcome.
QUESTIONER: I wonder if we've got anywhere on the review of Fund facilities, and specifically the higher interest rates that the G-7 wants to charge the Fund facilities.
MR. DAWSON: The issue of review of Fund facilities and other elements of the reform program review are all under active consideration, but there's nothing to report in terms of conclusion. There certainly are discussions that have been going on, and that will continue. And I don't have a date, if you're looking for sort of a date as to when we may have a conclusion on that specific subject or on other related ones, I don't have any for you at this point, including that issue. The interest rate issue is part of the facilities discussion.
QUESTIONER: But hasn't the Board actually taken up this issue?
MR. DAWSON: They have discussed it, but we do not have a conclusion.
QUESTIONER: Sorry to ask another particular question. But we've heard reports that the Fund is unhappy with the budget that Pakistan passed. Is it unhappy with that? What are the specific problems it has with that budget, and what does that mean for new lending for Pakistan?
MR. DAWSON: We are talking with them, and we're in, as it were, contact at a bit of a distance at this point. If we make enough progress on the policy issues that we have there, a program mission could take place in the relatively near future. I don't have a date for you in that regard.
So I'm not sure I would say, I mean, I think the premise or the verb in your question was "dissatisfied." I don't think that's particularly the case. We're not at a point where our mission is about to go out, but it is something that could happen. So I think "dissatisfied" would not quite characterize the nature of it.
QUESTIONER: On debt relief, since numbers seem to be thrown around that often don't correspond to one another, what are the figures you use, in terms of the nine countries, how much they've saved this year, how much they potentially will save? And if you go to the 40-odd that are eligible, what does that all tally up to in terms of actual debt relief?
MR. DAWSON: I'm actually very glad that Masood is here.
MR. AHMED: Let me give you some basic numbers.
So far, the total commitments on debt relief to the countries that have reached their decision point are $9.3 billion in present-value terms, which corresponds to about $16.5-$16.7 billion in nominal terms. That's essentially the flow of debt service relief over time that they are going to get.
Of that, the countries--that includes both the 9 countries that I just mentioned earlier on that have come forward to their decision point under the enhanced HIPC initiative, which was approved last year, and three countries that got relief under the original HIPC initiative, but which haven't yet come forward for their additional relief.
And if you want more details, then the nine countries that have come forward for enhanced HIPC relief--that is, of that total--amount to $8.6 billion, in present-value terms, again, and that translates into $15.3 billion in nominal debt service over time. So that's the actual figure.
Now, let me also give you two additional numbers because people don't necessarily make that connection directly. Of the $9.3 billion which has been committed so far for all of the countries under HIPC, the share of the IMF is $.8 billion, and the share of the World Bank Group is $2.6 billion--again, all in present-value numbers.
A last point I want to make is the question that you raised at the end, how much are they actually receiving? How much is being disbursed? The IMF has disbursed to seven of these nine countries, $300 million, in present-value terms. And bear in mind that the reason it's seven of the nine is because, under the original initiative, they only got their relief at the end of the process. Since the initiative was enhanced last year, they now begin to get the relief as soon as they come to their decision point, so we're able to move forward more quickly.
If you want even more details, I can give you sets of tables afterwards. But I suspect we'll rapidly run out of general interest in it.
QUESTIONER: I went to the briefing at the World Bank that was like right before the G-7 Summit, and they were talking about 7 more countries in the next few weeks, and now it's 20. I mean, do you have a list somewhere?
MR. AHMED: Twenty is the total by the end of the year.
QUESTIONER: Twenty is the total?
MR. AHMED: We've already done nine, and I wasn't at that briefing, but I suspect the seven they were talking about was a set of countries from which we've already got some preliminary documentation being reviewed by the Board, so they're going to be quicker than the others. But we're all working together towards this objective of getting to close to 20 countries by the end of the year.
QUESTIONER: So there's a list somewhere that has the others, to add up the whole total? I mean, we were only told about seven. Are re the others pretty definitive?
MR. AHMED: There is a list on the IMF website, which has the list of countries that are expected to reach their decision points in this year. And if I recall looking at it last, it does, in fact, have 11 more countries over and above those 9. But I will check after this meeting to make sure that is the case.
QUESTIONER: My understanding is that none of the transition economies are even considered as possible candidates for HIPC or anything. Is it something that's prevented by an institutional arrangement or whatever? Is it possible for any of those countries to eventually join the initiative?
MR. AHMED: When the initiative was set up, we looked at all of the countries that met a certain set of criteria, and the basic criteria were that they all had to have debt levels that were above the thresholds of sustainability, and they all had to have income levels that made them IDA-only countries. And at that time, that did not include any countries from transition economies.
If at any time a country does meet those criteria, obviously we'd need to consider that. But at the moment, the list of countries is the one that we're working from.
MR. DAWSON: I think the debt is a big issue there, too, because they didn't come into existence with debts because you kindly took them over. It was very generous of you.
QUESTIONER: Do you have any plan to make public the Cooper's report regarding quota sharing? And if you can't do that, do you have a plan to issue summary of that report? And what is the status of that discussion regarding that report?
MR. DAWSON: For those who may not have the full background, this is a group of outside experts, headed by Professor Richard Cooper of Harvard, which was taking a look at the quota review formulas. They did prepare a report. The report has been made available to the Executive Board. A variety of analyses have been prepared on the report, and that report will be discussed by the Executive Board at some point in the future. I don't have a date on that one.
I am not aware, at this point, of plans to publish the report. The report itself is a highly-technical document and provides raw material for other analyses to take place. I'll look into that aspect of the question. But in terms of action on it, there should be a discussion of it in the Executive Board, but I don't believe it has been scheduled at this point.
QUESTIONER: A question on debt relief. In Honduras's case, the World Bank provided its debt relief write-off. The IMF said it wouldn't provide any debt relief until 80 percent of the creditors came on board. Why is that?
MR. AHMED: For the IMF to provide debt relief, we look to have satisfactory assurances to have the bulk of the other creditors on board, to ensure that what we're doing is part of an overall package.
At the time that the Honduras decision point was reached, the Inter-American Development Bank, which is a major creditor for Honduras, was not in a position to commit to the debt relief initiative because they didn't have their funding fully sorted out. And on that basis, we didn't feel that we were able to go forward with interim relief because we didn't have all of the major creditors on board.
MR. DAWSON: That is it? It will be released from embargo at 9:45. I expect our next briefing we may have a brief window of opportunity the week of August, around the 17th or 18th. We'll try to do one then, and then it'll have to be right after Labor Day. But as I say, if you don't believe we are providing you with information, you need briefings, do feel free to be in touch. But obviously there was some pent-up demand for questions. Thank you.
Oh, yes, I should actually note, for those who may not have noticed, on August 7th, the Managing Director will be doing a Newsmaker Lunch at the National Press Club. So you should look forward to that. Thank you.
IMF EXTERNAL RELATIONS DEPARTMENT