Transcript of a Press Briefing by Thomas Dawson, Director,External Relations Department
March 12, 2001
External Relations Department
International Monetary Fund
Monday, March 12, 2001, 9:30 a.m.
MR. DAWSON: Good morning. I'm Tom Dawson, Director of External Relations at the Fund, and this is another of our regular briefings with our regular ground rules. We'll be embargoed until about 10 or 15 minutes after conclusion. We'll set the time when we conclude.
No real announcements. On Friday, March 16th, we'll open press registration for the Spring Meetings. The forms, registration forms, and information about the Meetings are on the Fund and (World) Bank websites. Registration is all electronic, and so your bureaus and offices elsewhere will have access to whatever information they need to plan for coverage of the Meetings. The deadline for signup is April 16th.
We'll have a tentative public events schedule posted on the web when registration opens. But for the record, press events begin on Thursday, April 26th, with a press conference and release of the latest World Economic Outlook.
Contact our friendly Media Relations people if you have any further questions about accreditation for the Meetings, and I expect to be in a position to review the Meeting's agenda at a later briefing.
Now I'll be happy to take any questions you have, and as always, please be on your -- not only on your good behavior, but identify yourself and your institutional affiliation.
QUESTIONER: Today, what can you tell us about Turkey? And if the program, if the new program is concluded soon, when do you think it will be discussed at the Executive Board?
MR. DAWSON: I think it's way too premature to be able to answer that. As you know, the Minister just returned to Turkey last evening, and he will be having consultations with the government over the coming days. And as and when we have any news to report in that regard, we will let you know. But I think at this point the action is very much in with the Turkish authorities. As you know, the new Minister did meet with the Managing Director last week.
QUESTIONER: I know you have something ready.
QUESTIONER: As you know, Argentina will not meet the targets of the first quarter. I was wondering whether there will be a waiver for not meeting the targets? And, obviously, we changed Finance Ministers since your last briefing, so could you comment on that?
MR. DAWSON: Well, yes, I guess I can, as a matter of fact. I mean, we do expect we'll be having a mission shortly for a three-day staff visit to assess the developments on the program and to establish in-person contact with the new team. The discussions for the third review will take part in the latter part -- the review of the program will take part in the latter part of April.
You're correct. We did take note of the change in the Cabinet with Mr. Lopez Murphy becoming the Minister for the Economy. We're looking forward to working with the new team and the members of the team who have stayed on as well.
And with regard to the program, I think your premise is correct. Preliminary data do indicate a weaker than expected fiscal situation in January and February with a likelihood that deficit targets may be exceeded.
The mission will discuss with the authorities their plans to bring the program back on track and ensure compliance with year-end targets. Observance of the targets is not just, of course, a matter of the Fund program. It's also a matter of the requirements under the fiscal responsibility law, which is Argentine legislation.
QUESTIONER: Does that mean it will be waived?
MR. DAWSON: No. It's definitely premature to discuss that. But I think the premise -- as I said, the premise of the question is right. It's just sort of a time and process that needs to go forward.
QUESTIONER: Tom, do you expect demonstrations at the Spring Meeting? And if that would happen, how are you prepared?
MR. DAWSON: Well, obviously, we always try to manage our expectations, which in this case indicates to prepare, be prepared. On the other hand, I don't think we have the kind of level of indication of interest in our meetings that we had for last spring's Meetings. But, of course, we do have every intention of being prepared, and I think we'll all have a better feeling for that as we get a little bit closer to the meetings.
QUESTIONER: On Indonesia, Tom, what have you got for us on that? Obviously there is some strife there this morning with the rupiah falling to, I think it was a 30-month low this morning, the stock market getting the daylights kicked out of it because of concern about Wahid resigning. Rizal Ramli tends to be playing it down as just another -- I think he called it a blip on the radar screen. But obviously there's a great deal of concern about Indonesia. What's the Fund's reading?
MR. DAWSON: Well, I think you know, we make it as a matter of practice in all countries not to talk about exchange rate movements on a daily basis. The staff of the Fund has been and is continuing useful discussions with the authorities over the program. Issues do remain in these discussions, issues of central bank autonomy, decentralization, IBRA, and the macro framework. I cannot say much beyond that, just that we do expect further discussions to be held and are hopeful for additional progress. But I'd say in terms of the progress, it's not fundamentally a different story than I told you the last time we were here.
QUESTIONER: You said that Argentina exceeded the deficit target...
MR. DAWSON: For the first couple of months it appeared that way and that it would be there likely for the quarter.
QUESTIONER: Do we know by how much, first? And, second, the fact that you are saying that we are not going to renegotiate the targets, does this mean that you're expecting that this difference is going to be recovered or compensated before May when the next disbursement is due?
MR. DAWSON: I think this is exactly what both the Argentines' actions and our discussions will be about, so I can't say how things will be brought back on track. And so it's neither correct nor incorrect to say we're not going to renegotiate the program. The reality is when a program has deviations like this you get together with the authorities and you figure out what you do, what you do with them. And that process has not taken place yet, but will take place over the sort of time frame that I indicated.
QUESTIONER: Did the IMF advise Turkey to abandon the lira peg?
MR. DAWSON: I don't think it's appropriate to talk about the discussions that took place between governments. Clearly, when the peg was abandoned, we indicated our strong support for that action.
QUESTIONER: And, again, there's been a lot of talk in Turkey about expanding the financing. Is that being discussed yet?
MR. DAWSON: No, I think that what is being worked on at the moment is the government is working on its program, and that's a step that is distinct from questions of financing.
QUESTIONER: To follow up on Turkey, would it be fair to say that the Fund has given as much money as it can to Turkey and that all it would be willing to do would be to speed up the disbursements and act in a way to help them get private funds or restructure private debt?
MR. DAWSON: No, it would not be fair to say that, but we don't talk about financing at this point. We have a situation -- you're correct, there was a program. The program is off track at the moment. There was approximately $6 billion remaining under the program. But the conditions under which the program would be back on track, you know, we're not in a position to discuss. That is indeed why the new Minister is working with the government right now trying to work up a program to get it on track, and what nature of financing, external financing, would be appropriate or available will be determined at a later point. And that's, as I say, a little bit down the road.
QUESTIONER: The two usual countries, Russia and Ukraine. The press secretary to the Russian Finance Minister said this morning that they believe they are on their way not only to your one-year program but also to a three-year program, that they are making progress. Do you share that opinion? And what remaining obstacles do you see?
MR. DAWSON: Well, I mean, as I think we did indicate the last time that significant progress was made during the last mission in Moscow, including an agreement, ad referendum on annual and quarterly targets, macro targets for 2001, as well as the supporting fiscal and monetary policies and a number of elements in the structural agenda. Some work does remain to be done, but, clearly, this was a good, a successful mission.
We have been quite clear here. We have been working toward and looking at a one-year precautionary arrangement. That is still where we are. The idea that it could then be followed by a longer-term arrangement of this sort -- I saw that press clipping this morning -- is one that has a certain degree of logic to it, but there is by no means any agreement in that regard. So I think as a statement of one possible path, and a statement perhaps of the intentions of the authorities, I think that's quite reasonable. But we are at the point where we are trying to wrap up the agreement on the precautionary arrangement, and so in that sense of the word it's premature to be working on the three-year one. But in terms of a possible track, that certainly is a possible track.
QUESTIONER: So what are the steps that you see should follow at this point?
MR. DAWSON: Well, at the moment, the work that is going on is largely in the structural area, and then in addition, the authorities will have a statement of economic policies that specifies the program in more detail. So they're filling out those details, and that would be what would be necessary to come to the final staff agreement on a program, a precautionary program that could be presented to the Board.
QUESTIONER: Another country that seems to be expressing optimism. The Ukrainian Vice Premier, who is visiting here, has said that they are looking at least for a sign of encouragement from the IMF, almost like saying that it's not a matter of that tranche that's delayed any longer, but just a sign that the IMF considers their policies correct.
First off, what about the tranche? Are there realistic chances for that tranche to be disbursed? And, second of all, what can he have in mind -- what kind of gesture can the IMF make if it doesn't give the money?
MR. DAWSON: I think that Fund support is not just financial support, so that may be that. That's speculation on my part as to what he may be interested in. If we have something on a meeting, we'll let you know later on.
We did have a mission that recently returned from Ukraine, and they did not conclude the discussions on the fifth review. So, in other words, the discussions did not come to agreement.
While the mission did find that Ukraine had met monetary and fiscal targets for end-December 2000, further progress in a number of areas will be needed before the discussions or before the review can be completed in the areas of tax arrears, transparency of the privatization program, monitoring and payments discipline in the energy sector, financial sector reforms, and the hardy perennial that I mentioned the last time, the export tax on sunflower seeds.
So the delegation that's visiting now will be continuing these discussions, and I think that's really where we are at this point. But from the present state of play, we don't have an expectation of when we could say that discussions are completed, because they're not.
QUESTIONER: The First Deputy Prime Minister has also said on his trip here in Washington that the perennial sunflower oil seed issue is, quote, `irrelevant,' and that he likened it to figure skating where the IMF demands certain movements in a figure skater's dance. Is it irrelevant or is it a sticking point for future disbursement?
MR. DAWSON: It has been -- as I understand it, it has been an issue for some time. So I think that's not news. Whether he's saying that he's expressing confidence that we can reach an agreement, it may be that. It may be something else.
QUESTIONER: He was saying that the businessmen have found a way of getting around it in practice by exporting it as a raw material at the lower tax rate.
MR. DAWSON: Well, I'd have to look into what that is. If it's...
QUESTIONER: And he also said...
MR. DAWSON: If that's the case...
QUESTIONER: He also said, if you could comment on this, that there's eight issues at the moment that the IMF and Ukraine have to work out, and that if those eight are solved, that he has no doubt that you will seek another 10, and that if those are worked out, he has no doubt that you will seek another five issues.
MR. DAWSON: Did you file a story on that? I didn't...
QUESTIONER: Not yet.
MR. DAWSON: Okay, well, after you file the story, we'll have to take a look at that. I didn't have a list of eight, even, so that's even more ambitious.
QUESTIONER: Could you tell me the progress on funding and about new chief of division which will be created, I think it's international financial markets, and successor to Mr. Mussa?
MR. DAWSON: In that sense of the word, there are two department head vacancies, one of which department didn't exist before, but there's still a vacancy. Both are being advertised publicly, internationally, for candidates. And they are both priorities. I think the financial markets, International Capital Markets Department is, I think, obviously a priority since we want to get this department up and running as soon as possible. But the successor to Mr. Mussa also is a priority, although he will be continuing in his position until, I believe, the end of June.
But, as I said, we will be advertising internationally for both positions.
QUESTIONER: What should be the key features of a new Turkish program? And, secondly, the new Economy Minister's personal qualities, do you think are they an asset for Turkey?
MR. DAWSON: The Minister, as I noted, just returned last night and is working on the new program, and I think it would be highly presumptuous of me to say what the ideal characteristics of the program would be. I think we have a great deal of confidence in him and his team and the authorities to put together a program, and that's sort of where the ball is. We would be happy to be of assistance in whatever way we can.
With regard to his personal qualities, as you said, I should note that he is someone who is certainly well known, not only in the kind of sort of the IMF/World Bank sense of the word, but he's someone of some international stature. And so I think that it makes it easier for him to get started and for everyone to understand each other. So that is certainly a positive.
But we have to admit up front that it obviously is a very difficult situation that he has gone back to try to deal with.
QUESTIONER: Back to Indonesia, one of the things that the markets are focusing on at the moment is whether or not Indonesia would be best served by introducing some form of capital or foreign exchange controls. As a broad concept, the IMF has been wrestling with that particular issue now since the Asian financial crisis. Chile used and exited them. We have seen Malaysia use them and plan to exit them. From the IMF standpoint, are capital controls a legitimate tool for use in situations perhaps as Indonesia is currently facing?
MR. DAWSON: I don't think I want to come close to answering that question. The reality is, yes, we have had a look in our constant, continuing assessment of how programs work, how policies, exchange rate policies work, and I would just lead you to the voluminous literature and speeches that we've put out, including, in particular and appropriately, the Managing Director and the First Deputy Managing Director's speeches from earlier in January of this year.
With regard to the particular situation in Indonesia, I believe I saw reference this morning to the government indicating they have no such plans. So I don't have anything beyond that.
QUESTIONER: You've reminded me of Teresa Ter-Minassian's post, so I would like you to comment whether that will be filled by someone else. But my question was related to Argentina before they gave the bailout, or you call it whatever you want. It was like putting Argentina back to growth. That was the main objective. That didn't happen, I mean, and that's why now there's back the fiscal problem and they're back discussing which measures they should take to cut down this fiscal deficit. And, I mean, I remember our senior official saying that they were willing to overlook the fiscal side in order to put back to growth the country.
And now the focus is back to fiscal deficit, but there's no growth.
MR. DAWSON: Well, I'm not sure that the direction and the order of the causation there. Clearly growth is the objective in the program. The fiscal slippage is significant enough to require under, as I noted, the Argentine fiscal responsibility law, actions to be taken.
Clearly, we want to get to a situation of growth. But there is a need to deal with the short-term problems as well. And as I indicated, that's a matter not just of the Fund program but of the Argentine program, Argentine law as well.
I guess you're asking about Teresa whether there would be a replacement in that. I'm not quite sure how --frankly, how that is being handled. It's not as if we had a Deputy Director whose responsibility was Argentina and Brazil. When people move on, assignments shift somewhat. So I honestly don't know the answer to that question. We'll get back to you. I'm not sure that a significant personnel decision on that has been made, because I think I would have at least noted it by attendance in meetings.
QUESTIONER: Just to go back to Argentina, you said there was a three-day mission going there shortly. Could you be more...
MR. DAWSON: I don't have the specific date. I was glancing through that.
QUESTIONER: In a week or two?
MR. DAWSON: I don't have that. I'll have to let you know when that is.
QUESTIONER: I was wondering about Peru that there's a loan coming up for Peru, and the government is a caretaker government. There's a close race for the presidency and congress is sort of up for grabs as well. Why is the IMF moving at this particular time for Peru? And also on Ecuador, what are prospects for Ecuador getting access once again to IMF disbursement?
MR. DAWSON: I don't have anything for you on Peru, and I'm sorry. We'll have to get back to you on that. On Ecuador, we do have an ad referendum agreement that was reached with the authorities on a program for the year 2001, and this agreement could form the basis for concluding the second review of the stand-by.
There are issues that need to be resolved, which include congressional approval of the tax reform consistent with the objectives of the program, as well as implementation of measures in the banking sector. Once these issues have been resolved, the Board would be able to consider the second review as well as the authorities' request to extend the stand-by arrangement, probably until this fall.
The present arrangement expires on April 18th, so that any remaining purchases, if the review is completed, would then be phased, rephased under the extension.
And as I say, I don't have anything for you on Peru. We'll have to get back to you.
QUESTIONER: Can you clarify? You said that the new program could be ready in the fall?
MR. DAWSON: No, that's not what I said. I said there's an existing program that ends in April that could be extended until October, and the drawings would be rephased.
QUESTIONER: Two different countries. North Korea and Yugoslavia. Do you expect the delegation from North Korea to attend the Spring Meetings?
MR. DAWSON: No.
QUESTIONER: Have you had any further consultations with the North Koreans about...
MR. DAWSON: There was a visit here in Washington about two weeks ago of a North Korean delegation that was visiting as part of a, I think, GW-sponsored visit. The members of that delegation came and got a briefing on the Fund over in the Visitors Center and so on. But there is no knowledge, and I'm sure I would know if there were any plans for attendance at the meetings this spring.
QUESTIONER: And Yugoslavia, the second country, Yugoslavia. Have you looked at the financial needs of Yugoslavia, the Yugoslav Government? And what do you intend to do to probably help them solve their problems at this point?
MR. DAWSON: We expect to have a mission returning this month that hopefully would be able to reach an agreement. If the March mission is successful, the Board might be able to consider a stand-by request at the end of April or the beginning of May, but I don't have anything more than that.
QUESTIONER: Can I follow up on North Korea? When President Kim Dae Jung had breakfast last week with the Managing Director, did they discuss North Korea and did they agree that some kind of informal study would be made of how the economy of North Korea could be helped?
MR. DAWSON: Yes, the subject did come up, and there was a clear understanding of the need for the Fund and the Bank to be in close contact with -- as well as the Asian Development Bank, I should add -- with the South Korean Government, that we do need to be alert to, you know, developments with regard to North Korea, economic financial developments with regard to North Korea.
There was no particular action plan developed as a result of that meeting, but a clear understanding that we needed to be in touch with each other. And as I indicated, with the exception of that recent visit, there have been no approaches that I'm aware of -- and I would be aware of -- to the Fund on behalf of the North Koreans themselves, who are, of course, not members, and have not indicated a desire to apply for membership either.
QUESTIONER: One follow-up on Yugoslavia. You said there's a possibility of a possible stand-by end of April, early May. Does the IMF...
MR. DAWSON: Board action.
QUESTIONER: Board action, I'm sorry. How does the IMF see right now Yugoslavia's economic policies?
MR. DAWSON: That's kind of why we're discussing the program, to see whether we can reach agreement on a program. As I said, some progress has been made, but whether we can get there with this next visit, I don't know.
QUESTIONER: I was wondering, last week there was a report in congress about money laundering in Argentina, and there were huge sums of money involved. I was wondering how much concern is in the Monetary Fund about this subject, taking account of the impact that it has, money laundering, on the fiscal situation, tax evasion, all of that.
MR. DAWSON: I think your question is in the Argentine context. I'm certainly aware of the report as well as the publicity generated by it, but I have to tell you I'm not aware of the Fund impact there, you know, of the Fund involvement in that. We'll look into that and get back to you.
The issue of money laundering generally has been one that has been of great interest to our members, of great concern to our members. But I don't have anything particular on the Argentine story. Again, if I have anything on that, we'll let you all know.
QUESTIONER: Just on Indonesia, do you have any plans to send a team at all to Indonesia at any time soon?
MR. DAWSON: Don't have any, no. There were some stories last week, but they were not accurate, and there's nothing planned at this moment.
QUESTIONER: Ivory Coast. Can you confirm the fact that a joint IMF-World Bank mission will go there before the end of the month? And can you confirm the fact as well that the IMF is working on the basis of a program by the end of the year?
MR. DAWSON: I don't have anything on a joint Bank-Fund mission. I do have the possibility of a technical mission from the Fund headed by the res rep who's there that could take place late this month or in early April. And I think that's basically what I have. As I'm sure you know the Prime Minister was in Washington last week. But in terms of next steps, what I have as a next step is a technical mission at the end of the month or the beginning of April.
QUESTIONER: After the decision to float the Turkish lira, from this point on would you support the introduction of upper and lower caps for foreign exchange?
MR. DAWSON: The Turks have an exchange rate policy at the moment of which we are supportive. I don't think we should be talking about possible changes.
QUESTIONER: This is a follow-up (on Argentina). You said that the slippage on the fiscal is significant enough to demand actions to be taken. I was wondering, are you talking about still full implementation of the conditions that were imposed before the program, or are you talking about new measures that need to be taken to take care of the fiscal situation now?
MR. DAWSON: Yes. I mean, that's precisely what the authorities need to look at to see how to get things back on track. And so at this point I can't talk about whether it would be measures, whether -- or what kinds of -- obviously some kinds of measures are necessary.
QUESTIONER: But you're not talking about measures that have -- the compromises that were taken under the agreement before the agreement was accomplished last year? You're talking about new measures...
MR. DAWSON: We're talking about trying to get the program back on track, and what kinds of measures those are the authorities know best. And that's what they're taking a look at to see how to work on it. There's no particular dispute about the objectives. It's just a matter of how they can get back on track based on the first two months, which as I said, appear to be off track. I think I wouldn't quite dramatize it the way you did in introducing that question. I'm just noting that the first two months appear to be off track. It's a quarterly target, so now they need to work to try to see when and how they can get it back on track.
QUESTIONER: Ivory Coast follow-up. You said there's a technical mission led by the res rep that may happen soon.
MR. DAWSON: The end of the month or the beginning of April.
QUESTIONER: Is that looking ahead to a new program or what would the goal of that mission be? Ivory Coast also never got through the Enhanced HIPC.
MR. DAWSON: That is correct. It would be an attempt to get the dialogue and work on a possible resumption of a relationship, and the likely next step in that relationship would not be a resumption of the program. It would be a staff-monitored program. That is the sort of pacing that takes place after there's been a disruption of this sort, and a staff-monitored program would go on for six months or so to assess performance and ability to implement. And then you would then go on to talk about use of Fund resources. But that's an approach that's been taken in a number of other African countries in somewhat comparable situations.
QUESTIONER: What about Mr. Ouattara's concerns? He's said that any money given to Ivory Coast would be pretty much lost.
MR. DAWSON: Well, if you listened to what I just said, I said this program would not involve money. So that would be a staff-monitored program that would go on, as I say, for around six months or so.
I'm really impressed with the number of individual questions and so on. I have to head off, unfortunately, to a meeting. The last question.
QUESTIONER: Okay. A few days ago, you produced this report on debt burden for Central Asian nations from the Caucasus. Have you heard back from any of those governments how satisfied are they with the solutions that you offer in that report?
MR. DAWSON: Well, I would say that this paper was not designed to offer solutions. It was much more analytic to describe a situation for five of the countries in terms of taking a look at debt sustainability and debt levels. And so I think it's much more of an analytic piece, among other things, trying to determine in part how they got to this sort of situation, less prescriptive in terms of what may go forward. That clearly would be the next step.
But then to get back to your question. No, we have not heard back, but we would hope to hear back from not only them but other donors and others involved as to what they think the next steps might be.
Thank you very much. We'll lift the embargo at 10:15.
[The press briefing ends.]