Thomas C. Dawson
Thomas C. Dawson

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Argentina and the IMF

Iraq and the IMF

Turkey and the IMF

Special Drawing Rights (SDRs) -- A Factsheet

Proposals for a Sovereign Debt Restructuring Mechanism (SDRM) -- A Factsheet

IMF Surveillance -- A Factsheet

What does it mean?
Arrears

Article IV Consultation

World Bank

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Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, April 3, 2003
Washington, D.C.

View this press briefing using Media Player.

MR. DAWSON: Good Afternoon. I'm Tom Dawson, Director of External Relations at the Fund, and this is another of our regular briefings.

Today's briefing will be my last before the Spring Meetings of the IMF and World Bank Group. I'll briefly review the agenda for the International Monetary and Financial Committee, which is a policy-guiding body of the IMF that will be meeting on Saturday, April 12.

I would also recommend that journalists, and the general public, visit the IMF's website for the schedule of events leading up to the IMFC meeting, including a press conference on April 9 by our Research Department on the latest World Economic Outlook. And a press conference on April 10 by Managing Director Köhler. There will also be a press conference following the IMFC Meeting on Saturday by the Managing Director and Gordon Brown, the Chancellor of the Exchequer in the UK and the Chairman of the IMFC.

Now the agenda for the meetings: [inaudible]...We will also be talking about crisis prevention resolution issues, low-income-country issues, and a number of other items, including some discussion as well of voice and representation of developing countries in the institutions, although that is a formal agenda item at the Development Committee, will also be the subject of some discussion here.

I think that's all I have to do in terms of starting, and I'd be happy to take any questions. Once again, please exercise the proper decorum by identifying yourself and your organization, and I do see just modestly that having press briefings in the afternoon produces a better attendance than in the morning.

QUESTION: Do you have any idea about when the Board could meet to decide on Turkey's case? And since you still haven't received the Turkish letter of intent, is there a problem about that?

MR. DAWSON: I think maybe I should start sort of in the reverse order there. We do expect it to be signed this week and the prior actions completed shortly. A Board meeting we would expect would be held in mid-April. I don't have a precise date for you, but in broad terms, things are on track.

QUESTION: The Board approved yesterday the stand-by with Bolivia. This happened after last--apparently the conditions for this stand-by were relaxed after the disturbances in February that left 33 people dead and more than 200 injured. The President of Bolivia himself went on TV, and he blamed the IMF for what happened. He said that the agreement could have been signed back in November or December if it were not for the IMF's, he said, intransigence on new taxes and price increases.

Do you have anything to say about that?

MR. DAWSON: Well, as you say, the Fund Board did approve the program yesterday. We do not believe that the tragic events from the riots in February, in fact, were related to the Fund conditions.

As part of the discussions toward a PRGF arrangement, we had reached an agreement with the authorities on a fiscal target. There were differences about the best way to approach the target, and the authorities chose to increase the payroll tax, a step the Fund had, in fact, advised against.

The widespread social protests afterwards may have reflected in part opposition to the tax increase, but perhaps more fundamentally, problems stemming from years of sluggish growth and high unemployment. And we hope that these issues as well as issues involving corruption, tax evasion, improving governance all will be able to be addressed going forward, including under a possible new PRGF program, which is our intent.

I should also note, as I'm sure you know, that indeed the fiscal deficit target was, in fact, reduced--in other words, less of a deficit-- between the time of the disturbances and the time of the final agreement. So in that sense of the word, yes, there was a relaxing of the program. But I think the measures--the earlier measures, in fact--that the authorities had themselves adopted, and indeed I think that was commented on at the time in the press. I remember hearing Enrique Garcia, for example, discussing that issue.

QUESTION: Regarding the upcoming meeting, are you--do you plan to have some additional security measures, especially, you know, because of the present time, the war with Iraq? And, also, we have hearing about some of these protesters, that they plan to have the same kind of protests as last year's against globalization, things like that, but also against the war with Iraq. So certainly it seems like this is going to be a tough time.

MR. DAWSON: Well, certainly--well, first of all, security arrangements are the responsibility of the host authorities, and so I believe that's best directed toward them. The Fund certainly will be taking the appropriate precautions both for the meetings themselves as well as for the visitors and staff.

There are indeed, as I understand it, demonstrations planned for that weekend, but it is not my understanding that the demonstrations are, in fact, focused on the Fund. There are demonstrations dealing with the situation in the Middle East, and I understand there are some Latin American demonstrations planned on the same weekend, but I believe on a subsequent day.

So I do not have that understanding, and I can assure you we monitor the websites more closely than you do. But there are certainly expected to be demonstrations in town. Because of our physical location, they will indeed impact these meetings, and the appropriate precautions will be made. Those that are our responsibility we will make, but the overall responsibility is, of course, with the host authorities.

Do I get to say goodbye to you yet?

MR. EGAN: This is my last briefing.

MR. DAWSON: Oh, my goodness. My staff have failed me to--we should have had a cake of some sort. Mr. Egan is moving north, I believe to New York. Is that right?

MR. EGAN: That's right.

MR. DAWSON: Where he will become some senior manager, I believe, in the Reuters organization. No longer be writing and I won't have him--

[Laughter.]

MR. DAWSON: I guess that's right. In the new slimmed down journalist world, everybody has to write, I guess. Well, anyhow, we will indeed miss you. Now I hope I've made you forget your question.

QUESTION: A question about the meetings. Obviously the WEO and the potential impact of the war in Iraq will give everybody plenty to talk about. But before the war became such a major issue, the SDRM was supposed to be the centerpiece of the Spring Meetings. It's become apparent from comments from Secretary Taylor at the U.S. Treasury and comments from Ms. Krueger at the Harvard Club that it's not going to happen, there's not political support for it at this meeting. Is the meeting going to be something of a damp squib and a disappointment to the staff as a result of that?

MR. DAWSON: Someone may need to define "damp squib" for me, but I'll just presume--I can imagine what it implies.

No, indeed, we are following through on the mandate given us by the IMFC last fall in terms of to come up with language on a possible proposal on the SDRM as well as further work on collective action clauses as well. So indeed we will be doing that. We will be reporting to the IMFC. Indeed on Monday of this week, there was a discussion of this issue at the so-called IMFC Deputies, which is a preparatory meeting we have, and last week, I believe it was, maybe slightly before then, we had the discussion in the Board preparatory to the submission of the paper to the IMFC.

And, in fact, we released the PIN, I believe yesterday. That reflects that discussion.

Some of the reporting on it, while accurate in a literal sense, I think misses perhaps some of the context. Let us remember that amending the Articles of the IMF, which is the concept behind a statutory SDRM, requires an 85-percent vote of the Fund weighted vote membership, as well as a quorum requirement. That is a fairly high bar, so that when one talks, as perhaps some of the news articles did, about strong opposition, you can have strong opposition when you still have 70 percent of the membership supporting something. And I think that's the context in which it should be viewed.

It certainly would indicate that one would not expect coming out of this meeting that a proposal would be submitted to the Board of Governor--or by the Board of Directors to the Board of Governors for the appropriate action. But that does not mean that it will not be discussed at this meeting, and the meeting itself still will have to determine the nature of how this work is carried forward. And I would not want to prejudge and I think others would make a mistake prejudging what the IMFC itself will come up with.

I would note for those who like to make these sorts of predictions that when the IMFC indeed asked the Fund last September to engage this work and report back by April, that was a complete shock to many in the private sector, and I think that perhaps they should wait a little while until they find out what the actual outcome is.

QUESTION: Last September, the Americans were basically making noises in support of this. And now in view of what Mr. Taylor has said, it seems like it's dead in the water.

MR. DAWSON: Well, again, I explained what--one person's dead in the water could also be another person's 70-percent support for it.

QUESTION: And it's 85 percent, and the Americans have 17 percent, so it's--

MR. DAWSON: But that does not--I think the 70 percent of the membership, if they wish to continue discussing the issue and so on, I think that is a factor that the IMFC would want to continue to take into account. So again, as I say, I don't want to prejudge the result.

The likelihood of an amendment being submitted to the institution one can--by the Board to the Governors, that's one question. It's a separate question as to whether the issue is going to continue to be discussed, and I think people should perhaps not confuse the two.

QUESTION: And may I ask a different question I had tried to ask this morning of Mr. Rogoff? Yesterday the World Bank in its report suggested that they're almost at the end of their--many countries are at the end of their macroeconomic tools in terms of influencing the situation in case something goes on a bad-case scenario in Iraq. So the question is: What can you do, what do you expect the Fund to do if the situation in Iraq evolves--

MR. DAWSON: Well, you know, you'll have two opportunities to ask that question next week with Mr. Rogoff when he presents the WEO, as well as with the Managing Director, as well as with the Chancellor and the Managing Director a week from Saturday.

I just should assure you that the Fund takes seriously its mandate. We have a responsibility, I think a unique responsibility among international institutions, to review the prospects not only for the global economy but for every one of our 184 members. We take that responsibility very seriously, and I think as we go into the meetings next week both with Mr. Rogoff at his briefing and then with the Managing Director's press conference, I think we will be putting forth our views on it that are the result of a considerable amount of work with our entire membership for whom, all of whom we have a responsibility in terms of both surveillance and advice.

QUESTION: Do you see any signs, any initial indications that the number of delegates or officials coming to the meetings, the Spring Meetings will be fewer than prior Spring Meetings?

MR. DAWSON: Actually, the registration--I had a hint about this question. The registration, in fact, is marginally higher than it was at this time last year.

QUESTION: Do you know why that might be?

MR. DAWSON: We're a more open institution than we were last year?

[Laughter.]

MR. DAWSON: You didn't want that follow-up.

QUESTION: Is there going to be a representative from Iraq coming to the meeting, either to your part of the meeting or the World Bank part of the meeting, that you're aware of?

MR. DAWSON: I do not believe so. I don't believe they have attended the meeting for a number of years. The last--as you probably know, the last completed Article IV consultation was the 1979 Article IV consultation which was completed in 1980. There was also a 1983 Article IV consultation that was prepared, circulated to the Board, but there was never a Board discussion held.

I'm ashamed of many of you here who have not taken advantage of our new, improved, liberalized, and more open archives policy, because both of those documents are, in fact, available. Mr. Murray would be happy to provide them for you. We have had a couple of reporters request it, but I don't think I want to, you know, identify those who actually thought of this.

I remember from my own recollection that even somewhat later than that, there was in the then-relevant Executive Director's Office a member of the Executive Director's Office who was, in fact, from Iraq, but I believe that ended in 1991. I believe there have not been contacts with the authorities since then, and I don't believe there will be any.

QUESTION: Sir, with the $1 billion aid package on the table for Turkey, do you think that would affect Turkey's program at IMF or at least that would require some rearrangements for the program?

MR. DAWSON: No, I think the program has been designed and you have always known what the contingencies are in terms of possible aid, and that's--I think at this point, you know, we are proceeding. The need for a strong program is clear, no matter what, and I don't think that factor works either way in that regard.

QUESTION: For those of us who don't have access to the archives just yet--

MR. DAWSON: You just have to ask.

QUESTION: --can you help us to--what is Iraq's status? Is it in arrears?

MR. DAWSON: Yes, they are--

QUESTION: And more broadly, could you just talk about what this meeting could do or going forward this agency can do to help in a reconstruction of Iraq?

MR. DAWSON: I think it's premature to deal with that latter point. Obviously the Fund is aware of looking at that situation, and when the time comes, I think we would be, you know, taking up what our role has been and is.

Indeed, Iraq is in arrears to the Fund. It is in arrears--I don't want to get too technical for you, but it's in arrears to what is called the SDR account. In other words, these are SDR allocations that they have used on which the payments, interest payments have not been made. It's around 50 or 60 million SDR, as I recall. And, of course, it's on our website as well.

Mr. Murray points out, which I had forgotten, that, in fact, the authorities have at times attended the Annual Meetings. I don't know precisely when, but if any of you have saved the books that some of you occasionally have access to, you can find whether they were here. But to my knowledge, nothing is planned this time.

QUESTION: If an Iraqi official were to show up, would he or she be welcomed? And if so--if so, why?

MR. DAWSON: That is a--no, I'm not going to answer that question.

[Inaudible comment.]

QUESTION: A question on Brazil. Yesterday there was a vote on giving the central bank more independence. It was passed by a big margin. If you could comment on that vote, what that would mean, and also what that would bode for the future reforms, tax reforms that the Fund has been--the tax and pension fund reforms that the Fund has been requesting?

MR. DAWSON: Well, I mean, the new government has made very substantial and impressive progress in terms of their program. The passage of, as I understand it, the legislation enabling a constitutional amendment to allow for central bank independence was an important part of their program. It's something that we have expressed support for in the past, and so I think it's yet another indication of the government being able to put forward and succeed in putting forward their agenda. And I think that's where it was. Did I miss part of your question?

QUESTION: The other reforms.

MR. DAWSON: Well, their program is quite clear and strong, and they are proceeding on it, and I think everything augurs well. I think the markets have been very strongly supportive of the program. I didn't look at the exchange rate this morning or the spreads, but the spreads yesterday were under a thousand basis points, and the real was up to-3.25 or something like that. So, I mean, it's been a very powerful vote of confidence in the markets, and I think it's a vote of confidence that we are happy to see. And as I indicated, we've been very pleased with the authorities' commitment and ownership of this program.

QUESTION: Could I follow up on the SDRM? There was an indication that we would be able to see Ms. Krueger's remarks. Have they been posted on the websites?

MR. DAWSON: They haven't been. That is simply because we've been busy and we haven't gotten around to them. I will try to get it out for you today. It's just a matter of not having gone, compared the text delivered with the text written. And I know that the changes were few. It's just we haven't had a chance to reconcile. A number of us were traveling between the time they were given and now, but we're all back now.

QUESTION: What are these voice and representation issues you mentioned?

MR. DAWSON: That has gotten a little bit of attention already in the press. It was a mandate from the Development Committee to the staffs of both the Bank and the Fund to look at issues regarding representation of the--in particular, the poorest developing countries in the Fund relating to the level of support in Executive Directors' offices and the--or provided to Executive Directors' offices. The paper, while not I think yet posted, will be posted rather shortly. The Development Committee papers are usually posted well in advance of the meeting, although at least one salmon-colored newspaper did have a fairly extensive leak of this some time ago.

QUESTION: Following up on the non-attendance of the Iraqi delegation, I was hoping you could confirm which countries will not be represented. And I'm assuming countries like Myanmar and North Korea. Can't they have representation even though they are not formal members of the institution?

MR. DAWSON: Well, Myanmar is, in fact, a member of the institution. These are the--let's remember, these are the Spring Meetings. The attendance at the Spring Meetings does not normally include all 184 member countries. It includes certainly the 24 members of the committee, and in those cases of constituency members, usually multiple members of the constituency. It is not normal for every country to attend the Spring Meetings. In fact, I believe it has never happened, and I would bet that probably no more than a half, probably--40 percent? Forty countries. So probably that is by my math less than 25 percent but more than 20 percent of the members normally attend.

So the attendance or non-attendance is not a sign of anything because these are not the kinds of meetings that take place in the fall. And indeed you note that the IMFC meeting takes place during, you know, a good part of one day, and then the Development Committee takes place on a good part of the next day. So it's a different sort of a meeting. There aren't associated seminars and so on.

That said, of course, there are always a number of bilaterals that take place and so on.

We'll get back to you.

QUESTION: It's a question about Honduras. I wanted to know whether you have any comment on the new tax plan that the parliament approved today.

MR. DAWSON: I'm always pleased to have one question each time that I'm completely unprepared for, so I'm--

[Laughter.]

MR. DAWSON: Hopefully not many more than one, so I will have to--we'll have to get back to you. Sorry.

I knew I should have called on Mr. Sitov.

QUESTION: A technical question. Is the WEO ready?

[Laughter.]

MR. DAWSON: Yes.

QUESTION: Are all the reviews completed?

MR. DAWSON: Yes.

QUESTION: Again, in the light of the Iraqi situation.

MR. DAWSON: The WEO's--in light of whatever situation, the WEO is--I guess I would say at the printer.

QUESTION: Let's see if you're ready for this one. There was a report out of Argentina yesterday quoting Candidate Menem, basically saying that he had an agreement with some international financial organizations and hinting at the IMF that there would be $15 billion available if he were elected to take that country forward. On the understanding that Anoop Singh and other high officials have really tried to reach out to all sectors of the Argentine society, can you sort of illuminate us on any kind of agreement that--

MR. DAWSON: I can assure you that while indeed it is part of our responsibility and we do meet with wide elements of societies when we are in a program situation or negotiating a program in a country, and indeed it is true that Mr. Singh met with a number of the candidates, pre-candidates, whatever the precise description is, and staff have as well--but those are meetings in order to understand and to talk about the future, they are not in any sense negotiations, agreements, commitments, or any other such things. There will be a review coming up, a review mission coming up at the end of--the very end of April. And then we will see where we go from there.

QUESTION: A follow-up?

MR. DAWSON: Well, let's just--do we have any other questions? Then your follow-up will be the last question.

QUESTION: Is that the last review, the April review on Argentina?

MR. DAWSON: I don't believe it is the--no, it couldn't be the last review. And indeed, of course, the transition program which goes through the summer, you know, we were hopeful that we will continue to have a relationship going forward. But the mission--as I say, the mission goes out at the very end of April.

Okay. Thank you very much. The embargo will be lifted at 3:15. Thank you.




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