Argentina and the IMF
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Transcript of a Press Briefing by Thomas C. Dawson|
Director, External Relations Department
International Monetary Fund
Thursday, February 13, 2003
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MR. DAWSON: Ladies and gentlemen, I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings.
As is standard practice, the briefing is embargoed until approximately 15 minutes after conclusion, and we will set the time there.
I have no prepared remarks to offer today. Would you please identify yourselves and your affiliations, which is the protocol we like to follow. Any questions?
QUESTIONER: Can you just give us a status on the mission to Brazil and Argentina? And specifically on Argentina, there's been a lot of buzz about whether or not the issue of utility rate increases is actually under discussion with the IMF, if you'd address that as well.
MR. DAWSON: As far as Brazil goes, we are certainly very much on track. We've taken note of and had a brief press line on the authorities' announcement of their new fiscal targets. And I think we are looking forward to a good mission. I don't think there's anything of any news to report. Obviously, the broad parameters of the program, the performance, have been quite strong. So I think that augurs well for the mission about to take place.
As far as Argentina goes, there is a mission. I believe the latest date that I have on it is the 17th, but that could wind up being delayed. That was going to be a joint Bank-Fund mission discussing a number of issues relating to the utility pricing issue. It is not a negotiating mission about increases. It is more to deal with frameworks so that everyone has a better sense of what the rules of the game are and how one might go forward. So it's more in the nature of a technical assistance mission as opposed to a negotiating mission. I think that's the best way to describe it.
QUESTIONER: You talked about Brazil being on track. You didn't use the same language for Argentina. There's some discussion apparently from the authorities down there that they really cannot meet, even if scaled down, an IMF program. What is your reaction to that?
MR. DAWSON: I haven't actually seen any indication from the authorities that that is, in fact, the case. The reason I used that particular language with regard to Brazil is we do, in fact, have a negotiating review mission going on, and that's sort of the context in which it's taking place. In Argentina, we are, of course, at an earlier stage since the program was only recently approved.
QUESTIONER: Just to follow up, in other words, you say that from everything the IMF knows at this time, the Argentine program is on track?
MR. DAWSON: It certainly seems to be, but let us also remember it was only recently approved, and at this point, we are engaged in contact with the authorities on a number of issues. As I think everyone knows, Minister Lavagna was here last Friday, I believe.
I don't think it's particularly useful to check in on a weekly or even biweekly basis on status on programs because simply the developments don't happen that quickly. Again, in the context of Brazil, we are at a point where there's a review mission about to take place. But I think they're just at different stages in their different programs.
QUESTIONER: Could you update us on the Fund's mission in Uruguay? And, in the last briefing you said that the Fund was concerned about the Uruguayan debt. Do you think that the Uruguayan Government can make an ordered debt restructure?
MR. DAWSON: That is actually not quite what I said in the last briefing. I indicated that debt was one of the issues being discussed, and indeed it is. The mission is still in Montevideo. It continues at a pretty intensive level. Progress is being made, and it remains our goal to try to work out an agreement that helps them get back to a sustained growth path. I don't think it is appropriate, since the negotiations are going on, discussing details of the program. But as I say, progress is being made, you know, and when I make that statement, that is a statement that's referenced back to my last briefing two weeks ago. So as between then and now, progress has been made.
QUESTIONER: But you actually said that the debt was a significant burden.
MR. DAWSON: That is a fact. But I stressed then and I stress now, that is not the only issue that is in the program under negotiation. That's why I would not highlight it, and I made that point last time. And I'll repeat that point this time.
QUESTIONER: I just wanted to ask because I know that Mr. Aninat was discussing this issue yesterday with the leader of the Uruguayan opposition here in Washington.
MR. DAWSON: I do understand there was a meeting, but I was not part of the meeting. I don't think it would really be appropriate talking about the content of the meeting. But that is true, he did have a meeting with them.
QUESTIONER: For the sake of clarification, what are the dates, beginning and ending, for the missions to Brazil and Turkey? And would you please offer an assessment of the Turkish program at this time?
MR. DAWSON: On Turkey, I don't have an end date, but that is not unusual. The mission is discussing the 2003 budget plans with the authorities, particularly with a view toward achieving the 6.5 percent primary surplus target, which we continue to view as a good and appropriate target and an achievable target. So I think I would leave it at that.
I think we have a pretty good record in terms of the missions in Turkey that when they do wrap up it's made clear. We usually have mission-ending statements, sometimes press briefings, and we'll keep you informed on that.
On Brazil, the mission is there right now doing the second review of the program and Article IV consultations. The mission will be working for two and a half weeks.
QUESTIONER: In its last World Economic Outlook, the IMF assumed that there will be an average oil price of $24 per barrel. It's been much higher for weeks now. How far does an imminent war against Iraq change the scenario of world economics?
MR. DAWSON: Well, we will be in a little more than a month discussing on our own the World Economic Outlook, and then it will be a subject for discussion at the middle of April for the Spring Meetings. So I don't think it's appropriate for me to pre-empt that.
I believe the last WEO indicated and Ken Rogoff is talking about certain rules of thumb about the impact of higher oil prices if they are sustained on global growth prospects. And I think I would direct you back to that, and I don't have the number quite in my mind, but we can get it for you. But there are certain rules of thumb that—I believe it was triggered to what a sustained increase of $5 a barrel would have in terms of growth prospects over the longer term. But it does indeed need to be sustained. And I do not expect—we are not in a situation where we will be putting out a revised WEO or anything like that. We are reasonably close to having the actual WEO Board discussion and then release of the WEO and WEO press conference.
QUESTIONER: Minister Lavagna in Argentina has said that his government entered into some technical agreements with the IMF separate from the letter of intent, and that one of the issues covered by one of the agreements is utility prices. I'm wondering: What other issues are covered by these agreements, and why were these issues treated in this way and not in the letter of intent?
MR. DAWSON: We do not discuss what is or is not or when there is or is not a so-called side letter. That is usually the term of art for when there is a non-public aspect of an agreement.
On the other hand, I would direct you to the discussion of the issue of side letters and our policy on side letters and when they are appropriate and when they take place. And that was the subject of a fairly extensive series of Board meetings that culminated with a PIN, I believe around September 27th, I think, approximately. It was a discussion of IMF transparency policy. And if you go in there, you can see the circumstances under which the Board and the authorities have these so-called side letters.
But I'm not in a position to talk about the position of Argentina or of any other country that may or may not have had a side letter. Just so you want to know, because I learned a little bit about our website yesterday. If you just go on to the website, go into the transparency discussion, or actually you can search "side letter," then find the September document. There is both a PIN, but there is also the underlying Board document which goes into a reasonable amount of more detail about what a side letter is. It's a longstanding practice in the Fund. There have been them, although they are not very common.
QUESTIONER: Why the IMF didn't show yet the Argentinean last report? And the second question will be: What do you expect for the mission that will take place next week in Argentina also with the World Bank?
MR. DAWSON: As I indicated at the very beginning, as far as the latter part of the question first, it's a mission to go down to talk about issues that involve the issues of utility pricing. It is not, however, a negotiating mission, as I understand it.
Staff reports are only published when it is agreed to with the authorities. I'll just leave it at that. We do not automatically publish staff reports. They have to be agreed.
I just see back there, next to Francisco, Sergio Serrichio, having just arrived to hear his successor ask a question. And I understand he's returning to Argentina next week. I'm authorized to say several soccer—sorry, football teams in Washington will be missing Sergio's participation, including, I understand, that he was—and this may not be suitable to be reported back to Buenos Aires—apparently a member of the Washington Consensus, but which, I will quickly add, was a soccer/football team. Sergio, you will be missed. Now we can go back to business. Or are we finished with business?
QUESTIONER: There was a report this morning suggesting that there is a joint World Bank-IMF study of the voting power balances between various regions and nations around the world. My understanding was that the management had submitted to the Boards a report and there was some discussion on this among the Board.
MR. DAWSON: Yeah, let me describe what I think the process is. The process is that the Development Committee last September asked that the staffs of the two institutions take a look at issues regarding voting and representation in the institutions, and that was a report that will be, as far as I know, presented to the Development Committee at the meeting at the middle of April.
The paper has not been discussed at the Fund Board. I honestly don't know whether it's been discussed at the Bank Board or not. I don't think it has, but that will be an issue that will be discussed in the meetings in the middle of April.
The format of it is typically for reports to the Development Committee—they are jointly prepared by the staff of the Fund and the Bank, reviewed by the two Boards, and then submitted to the Committee. It's my understanding that we're in the process of preparing it. So the story that you referred to this morning, while it was readable and interesting, I think this is a work in progress. The report has not been submitted for final approval by management.
Thank you very much. We'll adjourn and embargoed until 10 minutes after 10:00. And the expectation is that the next press briefing would be on Tuesday, March the 4th.
Thank you very much.
IMF EXTERNAL RELATIONS DEPARTMENT