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Transcript of a Press Briefing
by Thomas Dawson
External Relations Department
International Monetary Fund
Friday, September 28, 2001
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MR. DAWSON: It looks like we may have to start an incentive program to increase attendance at the press briefings.
All right. Good morning, everyone. I'm Tom Dawson, Director of External Relations at the Fund, and this is another of our regular press briefings.
The only announcement I have to make before taking questions is a somewhat unusual one. After a gap of 16 years, the Fund is about to publish the latest volume of the official history of the Fund. On October 9th it will come out. This is a series started in the 1960s. This latest volume covers the 1980s, and historically, these histories compensated for some of the secrecy in which the Fund often did its business. Now, of course, we're much more open and so, too, is our approach to history.
The author, Jim Boughton, has been a Fund staff member for some 20 years, has had access to all of our staff and management and our archives, but this history will include citations of hundreds of internal documents that are now open for outside researchers to see as well.
It's an insider but somewhat personal history of the period, and everything in it is open to verification. It tells a lot about the internal workings of the Fund, not just what decisions were made but how and why we made them. And before the author finalized the text, the manuscript was reviewed by a distinguished panel of outside experts.
One of the main events covered in the book is the Latin American debt crisis, how it happened, how the world community dealt with it, and what the Fund's role was. That part of the book provides interesting background how the Fund came to be leading international crisis manager. That in some sense prepared the way for our role in the financial crises of the last few years.
It also covers our relations with the G-7, G-24, World Bank, and other groups and institutions. Mr. Boughton has made it as much a history of the world economy as of the institution and draws several lessons or conclusions about how to think about the international financial system and the Fund's role in it.
The book is called "Silent Revolution: The International Monetary Fund 1979-1989." It has around 1,100 pages, including a 45-page index, and will retail for $75.
MR. DAWSON: I don't know whether it's available on Amazon. But having noted that, I'd be happy to take any questions. What?
QUESTIONER: What was the print?
MR. DAWSON: What the print was? I don't know. You know, we do have a special kind of availability for books at Annual Meetings, and I think it was either last year or the first year I was here that the best-seller was Edition 9 of International Monetary Law. This one I think will sell a few more copies.
Questions? In the back?
QUESTIONER: On Pakistan, the last tranche of the latest loan was disbursed earlier this week, and it is believed that the Pakistani delegation will be arriving in Washington sometime early next month. Can you update us on negotiations between the IMF and Pakistan for a fresh round of loans?
MR. DAWSON: Well, you've just about exhausted my talking points in your question. But you're right. On the 26th, we concluded the third and last review of the stand-by arrangement, allowing Pakistan to draw about $135 million. The program execution was quite good, and the authorities were praised by the EDs for the implementation of reforms.
We do expect the Pakistani delegation, led by the Finance Minister, to be in Washington in early October. I don't have a precise date for you. And they will be continuing discussions with staff on a possible three-year PRGF arrangement. And this has been something that has been anticipated, and the successful conclusion of the stand-by arrangement makes this even more expected.
The authorities have already published on their website--and I can provide the citing, if you wish, later--a draft Interim PRSP, which is an essential part of a PRGF program. So that is indeed something that is on track. Issues that are continuing to be subject to discussion include tax reform, improvement in tax collection, public enterprise restructuring, privatization, banking reform, and their poverty reduction strategy, much of this in collaboration with the World Bank.
QUESTIONER: There have been numerous reports that Brazil is seeking additional funding from the IMF. Can you give us some indication as to where talks are there?
MR. DAWSON: Well, as I think is reasonably well known, certainly to this group of hearty perennials, that the Brazilians did approach the Fund and do have a new Fund program online to be available as and when they think they need it. In terms of additional funding, I know there were some stories the last couple of days, but the last that I saw was that the Brazilian--some Brazilian authorities were denying that they were requesting additional funding.
MR. DAWSON: I'm not aware of any, and I find it's usually appropriate to take authorities' denials at their face value.
QUESTIONER: In yesterday's release on Mexico, you mentioned that the Executive Board thought it would be desirable for Mexico to seek a line of credit with the possibility of a CCL. I'm just wondering if there are other countries for which the IMF considers a CCL a possibility or lines of credit of that kind desirable at this point.
MR. DAWSON: Well, the simple answer is yes. I should sort of flesh out your statement. The Mexican authorities have made it clear on the record that they are interested in a CCL. So that in that sense is an affirmation on both sides.
There are other countries that we have been and continue to be in discussions with on the CCL. We're not in a position at this point to identify them, I'm sorry to inform you. And, of course, in the context of the new international economic situation, countries' interest in looking at various options with regard to support from the Fund has clearly increased. The CCL is one, but only one of a number of possible avenues that countries may use to try to line up assistance or potential assistance from the Fund.
QUESTIONER: Any idea as to when the IMFC might meet in one way or another or some form or another?
MR. DAWSON: We are still looking at having an IMFC meeting later this fall. I think what the Managing Director indicated last week is still valid--and I think Ken Rogoff may have dealt with the issue of an interim WEO, but also in the context of IMFC. We're still expecting late October into November is the likely time, and in that regard, if you didn't note that in the coverage of Ken's meetings with the press yesterday in London, that it is natural that as part of an IMFC process and for other reasons as well that some form of an interim WEO is likely to be produced--for our own use but also for the use of our members in the IMFC context.
I don't have timing with regard to when that would be, but I think it's certainly something that would be expected under the current circumstances. But I don't think you need to be checking with your sources in various offices to get advance copies since it's not ready yet.
QUESTIONER: A question on Turkey. What are the issues that are outstanding for the negotiations next week with Mr. Dervis. And two other follow-ups: Do you expect to actually reach an agreement for the next disbursement? And are you amenable to the Turkish request to not have to repay $5.5 billion next year?
MR. DAWSON: First of all, I don't believe there is such a request. Some of their lending, as I'm sure you are aware, is under the SRF, which does contain in it the ability as part of the agreement--it does not require a change in the agreement--does contain as part of the agreement the ability to postpone payments because SRF is somewhat different from other facilities.
We did recently finish a mission in Turkey. The Minister's visit, at least in part, will be to continue those discussions. We are still shooting for a possible Board date in the middle of October, and I don't really have any additional details. But you are right, if I didn't confirm it already. You are correct, the Minister will be here to talk with staff.
I'm trying just to check. I think that's basically what I have. A follow-up?
QUESTIONER: You don't have any idea of issues that are going to be on the table for Mr. Dervis?
MR. DAWSON: In terms of unresolved issues, I don't. We can get back to you. But it's my impression that things are on track, so I think it's natural that the Minister would be coming.
I think we may have noted recently as well, the reality is that since the Annual Meetings are not going to be held this year, we have a number of cases where authorities are visiting Washington to conduct some of the business that might have been done had the meetings been here. So I think you will see perhaps a slightly larger volume--certainly a larger volume of visits than you would normally have at this point after the time of an Annual Meeting.
QUESTIONER: A couple of things on Russia. First off, of course, what can you tell us about the upcoming trip of the Managing Director to Moscow? And maybe as a part of that, what can Russia do in your opinion at this point to maybe help the global economy since it's growing?
MR. DAWSON: Certainly, the Russian performance has been notable with its strength this year, and I think continuation of these sound policies are a valuable contribution. You are correct--it has been noted in Moscow and I think as well here--that the Managing Director will be visiting Moscow the week after next, the beginning of the week after next. And the reality is that it was just two years ago when we were still engaged in a serious concern over Russia, concern over the course of the program, and performance over the last couple of years, even though there was in a formal sense not a program active for much of that time, has been excellent. And so I think that that is something to be noted and is something for us to be quite grateful. And it is useful that there is this sort of area, geographical area, that had been of some concern previously not being one at this point is helpful. That's one of a number of elements that we have in the global economy now that make us, we believe, somewhat better positioned to deal with the terrible impact of September 11th.
QUESTIONER: But, Tom, do you expect any request to be made in terms of, say, oil production and export, something like that?
MR. DAWSON: I do not think so.
QUESTIONER: I have two questions. First, could you confirm that an IMF mission will tour the euro countries or some euro countries at the beginning of next month to assess the impact of the latest event on the European economy? And do you have a calendar for that?
And the second question is on Pakistan. Were the developments with Pakistan already on schedule, or have they been accelerated by the latest events?
MR. DAWSON: I'll take the latter question first since I think I know the answer to that one. As I've indicated, the performance of Pakistan under the program has been excellent and things are moving as expected. I think as everyone recognizes, more often than not programs at the Fund seem to encounter delays. In the case of Pakistan, their performance has been quite solid, and I think there's no reason to expect delays. But certainly the Board meeting that took place earlier this week took place on the expected timetable, and the Minister's visit, while a little later than it might have been had he been here for the Annual Meetings, still indicates that we are on track and don't expect obstacles.
With regard to the staff visit to Europe, it would not be at all surprising. I'm not particularly aware of one. I do note that we do have coming up in October the euro area discussion in the Board, which will be something which we will be reporting on to you as well.
I should also note that we are, in fact, engaged in a process of reviewing the situation in the vast bulk, if not all, of our member countries, both industrialize as well as developing countries, program countries as well as potential program countries. And that's a process that will involve contact with the authorities. Mission activity at this point is somewhat curtailed to essential travel, but I would suspect over time the travel will start increasing and contacts will increase.
So I think it's perfectly to be expected that Fund staff will be increasingly in contact with member countries to assess the impact of the terrorist attack on their particular situations in order to be able to prepare an analysis and a response, in the context of the interim WEO but for other program purposes as well.
QUESTIONER: I would like to refer to Pakistan again. You just mentioned that the program has been going on excellent so far. Well, I still have a lot of doubts, and I really would like to know, given the current strategic importance of Pakistan, can you tell me what the precise conditions of the stand-by arrangement are? And, second, are there new political conditions?
MR. DAWSON: Well, the Fund does not engage in political conditions, first of all.
Second of all, in terms of the conditions under the recently concluded stand-by, they are published on the Web and I suggest you take a look at them. And the performance of Pakistan was quite solid in that regard, and including their performance in dealing with the problems of poverty in the country.
So I think it was quite a good performance and one that merits continued support and would have merited it without regard to the events of September 11th.
QUESTIONER: Tom, a follow-up. But isn't it true, though, that one condition had not been fulfilled and was waived?
MR. DAWSON: That would not surprise me, but conditions are quite often waived, and it's a balanced assessment. But their performance overall I think was outstanding, and I think that was unanimously reflected on by the Board.
Conditions have to be looked at as a package, and quite often failure to meet conditions has explanations, either external or in some cases internal political issues, and the Fund is actually quite flexible and always has been in that regard. But the overall assessment is as I indicated.
QUESTIONER: I know you have to approach the "R" word with a lot of caution, but what is exactly a recession--
MR. DAWSON: I was talking about Russia without any reservation.
QUESTIONER: What is exactly a recession in IMF terms? I mean, Anne Krueger gave the impression last week that it was less than 2.5 percent worldwide growth. Mr. Rogoff gave the other impression that it would be negative growth altogether. So what is it exactly?
MR. DAWSON: Oh, no, I don't think Mr. Rogoff--
MR. DAWSON: Mr. Rogoff did not give that impression at all with regard to worldwide.
I think one of the points we were attempting to make was the distinction between recession in the national sense of the world, which is the two quarters of negative growth, as opposed to in a global sense of the word where it is a higher level. And the first question asked of Ms. Krueger on Monday in the press briefing had indicated that indeed many private forecasters use 2.5 percent. Within the Fund, that's a number people recognize, 2 percent is a number as well. And I think those are useful benchmarks to compare it to, but we don't have the standardized definition for global recession of the sort that we have in the U.S. National Bureau of Economic Research sort of assessment.
I think the point we were seeking to make and I think has been made is that, for a variety of reasons, the benchmark for what would constitute a global recession is a different benchmark than would exist on the national basis. And when we have the results of the interim WEO, we will be coming out with new numbers.
QUESTIONER: A follow-up on that question. We're at now 2.6 percent worldwide in the actual WEO for 2000. I mean, what would be the number with which the IMF would say there's a worldwide recession?
MR. DAWSON: I mean, again, we don't--that is a term of art that people may use. We will see where we come out, and then we will see how that is assessed. I mean, the reality is that the performance for 2001, because of the nature of how the accounts are put together, there's a substantial amount of momentum for the year as a whole. So we are reasonably hopeful for this year, but we will just have to see where the number comes out. And we will give you a number, and you can attach the word to it.
QUESTIONER: A lot of us were also left puzzled as to the IMF's view on whether there's a U.S. recession or not. Can you clarify--
MR. DAWSON: It's too early to tell. Clearly the events of September 11th were unambiguously negative. There had been a significant slowdown reflected in our estimates for the U.S. economy even before September 11th. The new GDP numbers are out this morning which had a very small upward revision for the second quarter. But we will have to see how the third quarter, which is ending Sunday night, comes out and how the fourth quarter does.
Clearly, the downside risks have increased, and I think that is our consistent line, and we will have to see how it all develops. It is a matter of the response, the economic responses, the confidence response to events. But, simply put, it is too early to tell.
You will be seeing, of course, lots of estimates going forward, and we will see who is right in that derby. But we aren't particularly paid simply to do forecasting. We are paid to advise our members, and we will come up with our views on that and our estimates. But in the U.S. context, it's just too early to tell. But, clearly, the risks are--since September 11th--are further on the downside.
That's it? Okay. Thank you very much. I appreciate your patience for, I think for some of you, three briefings this week, and you deserve some sort of award for continuing to turn out.
Likely we will not have a briefing next week, but we'll be in touch. Thank you.
[Whereupon, the press briefing was concluded.]