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, May 8, 2003
Washington, D.C. .
View this press briefing using Media Player.
MR. DAWSON: Good morning, everyone. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings. I do not have any formal statements to make today. So let me turn to questions.
QUESTIONER: As you know, Ms. Krueger is in Ankara, and she had a long meeting with the prime minister and his economic team. And when we look at the press statement release after this meeting, we see the same concerns being worded after the last review. Why? No progress has been achieved so far?
MR. DAWSON: Well, no, I don't think that's a fair characterization at all. A number of these are problems that are deeply rooted and take time to deal with. I think indeed the path is clear, the government has made clear their indications and their commitment to pursue the program, and in that sense of the word, the program is on track. There are issues. The statement that was released yesterday does, in fact, enumerate a number of the problems. But, for example, the debt burden is not likely to be something that can be resolved overnight. So these are issues that take time, but actually had, as the statement indicated, quite a good visit, and the government reaffirmed its commitment to the program. There are issues, there are matters that the government needs to continue to work on, and they're enumerated as well in the statement. So I think I would have a slightly more upbeat assessment, but recognizing that indeed there's a lot of work to be done.
QUESTIONER: Could you summarize for us, please, the progress that the IMF did since your last briefing in preparing to help Iraq in the reconstruction?
MR. DAWSON: Indeed, the task forces that we have have continued working and meeting among themselves, with interested governments, and with other institutions. And I would say that the work is proceeding as we had anticipated. As I indicated earlier, if and when there is a fact-finding mission that goes to the field, we will let you know in a timely fashion. We just are not at that point now. We are still in the data collection and assessment, working with a wide range of other institutions and countries. But there is a group of people here at the Fund who are, in fact, working full-time quite hard on this now.
QUESTIONER: Would the lifting of UN sanctions set the stage for sending a mission to Iraq?
MR. DAWSON: No. As we've indicated consistently, we are in a position to be able to send a mission if the conditions are correct without regard to what happens in terms of a UN resolution. A UN resolution is needed for a number of issues, including certain types of sanctions, payments and so on, but in terms of our ability to send a mission, that will happen when we are ready to and does not need a prior action, to use that phrase.
QUESTIONER: The IMF has lent a good deal of support to Uruguay's effort to pull off a debt exchange. The deadline for arranging that exchange is coming up. I wonder if you can give us an assessment of how close we are to getting agreement among bondholders.
MR. DAWSON: I don't think it is appropriate to ask us in that regard. I think you should as the managers of the exchange as well as the authorities themselves. Now, certainly a successful completion of the ongoing debt exchange would achieve the objectives of eliminating the near-term financing gaps and improving the medium-term debt sustainability. But I think that question is best directed toward their advisers and the authorities.
QUESTIONER: Is the IMF satisfied with the movement on this issue?
MR. DAWSON: As far as we understand, it's going well. But having been one who was in the markets, had been in the markets prior to assuming this glorious position, I do note that quite often the participations are only determined at the last minute. Market participants like to make the decisions when they need to, and so I think that's why we need to wait until the conclusion. But there's no reason to expect anything other than a satisfactory, successful result.
QUESTIONER: The Brazilian currency, the real, is valuating very fast against the dollar still, and last week President Lula said that it would not be good for the export sector. Do you have any concern that Brazil adopts some measures against this valuation?
MR. DAWSON: No, we continue to believe that the Brazilian program is firmly on track, and I think that the strengthening of the currency certainly can be viewed as a vote of confidence in the markets, in the Brazilian program. So we obviously monitor developments, but I think we don't see reason to be concerned for the overall Brazilian program because, as I say, it continues to be outperforming in almost every regard.
QUESTIONER: And what about inflation? Is it still a concern?
MR. DAWSON: It is always a concern, but needs to be kept in perspective. In fact, I noticed just in the last day or so the market expectations --Brazil is a country that's not short of data on market expectations-- indicated actually a slight lowering of inflation expectations for the end of the year. That's obviously one of the factors we're looking at, but overall performance has been very, very strong.
QUESTIONER: Staying in Latin America, in Paraguay. Did you get in touch with the new elected authorities? And what would be the IMF conditions for starting talks with Paraguay?
MR. DAWSON: You win the prize for asking the question on the country that I'm not briefed on. We'll have to get back to you.
QUESTIONER: So just to be absolutely clear, you don't need a UN resolution to send a mission to Iraq?
MR. DAWSON: That is correct, and we've been saying that for a month now. That's not news.
QUESTIONER: Do you need a government to be established there? Do you need anyone to negotiate?
MR. DAWSON: We certainly need to have interlocutors, but at the moment, we are still in a fact-finding, data collection point of view. But we will be going, there's nothing that has delayed sending of a mission at this point. We're doing the work that we anticipated doing.
QUESTIONER: The IMF, of course, avoids any kind of involvement in domestic politics of its client countries. But in light of that, I wonder, wouldn't you agree that in the case of Argentina of the choices now offered, that one of them has views and policies and is much more in keeping with the viewpoints of the IMF?
MR. DAWSON: I think we have made clear in Argentina, as well as in other countries, I think this question was asked in a somewhat similar context in Brazil last year. We look forward to dealing with the government that comes out of a sound electoral process, and that's fully what we expect to happen in Argentina. And your premise was absolutely correct. We do not discuss domestic politics. By the way, I should note, you know, we do have a mission in Argentina at the moment. It is wrapping up toward the end of the week. I don't believe Mr. Dodsworth will be returning until over the weekend. I don't know whether he's house-hunting or not, but that's possible. We also have a mission presently in Brazil, and all the reports on both of them, things are going quite well.
I should note, by the way that the Managing Director will be leaving shortly for Europe. He will be in Europe for most of next week, including an appearance in Geneva at the WTO General Council, I believe it's called, and there will be a press event next Tuesday. I believe a joint event with Director General Supachai, President Wolfensohn, and the head of the representatives to the WTO. There will be a couple of other events of the Managing Director as well.
QUESTIONER: A question regarding the resetting of economic projections. There have been reports in the press in Argentina that inflation is turning out to be much lower than expected. Growth is turning out to be much higher. What kind of implications does that have for the ongoing program now and for the future program that is to be agreed upon to replace the one that runs out in August?
MR. DAWSON: Well, it is unambiguously good news that the bottoming out happened more quickly than had been expected, and that the inflation performance has been better than had been built into the program. So that obviously is cause for some degree of encouragement and does indeed put the new administration in a somewhat better than might have been anticipated position going forward. On the other hand, it is clear there are still important measures, important issues remaining in the development of a medium-term program. I certainly would cite areas of structural reform that have been discussed extensively over the past. At the moment, given the need for a sort of transitional program, they haven't gotten as much attention, I think somewhat naturally, but I think they remain important over the medium term. And I'd also indicate the debt burden. The authorities are, President Duhalde mentioned just the other day, I believe just yesterday, that over the course of the North American summer there will be a need to start negotiations with debt holders.
So there are issues that remain to be dealt with, but I think our hope had been at this point to have stabilization in the economy, and indeed the stabilization has turned out to reflect a better performance than had been expected. And as I said, this is good news. But a lot of work does remain to be done. This provides, however, the government with a little more leeway than it had otherwise.
QUESTIONER: Do you have anything on SARS in your notes?
MR. DAWSON: Yes, indeed I do. We have been monitoring developments closely following the SARS outbreak, and that has caused some disruption of economic activity in several economies, mainly in Asia. We welcome the efforts being taken, in particular by the ASEAN+3 grouping, to coordinate and intensify efforts to control the spread of SARS. We especially welcome the commitment by the Chinese authorities to tackle the outbreak in China and to work closely with the international community, especially the World Health Organization.
We express, of course, sympathy, deep sympathy over the loss of life and the hardships experienced as a result of the outbreak. It's difficult to estimate the economic impact of SARS given the uncertainties over extent and duration. However, if the disease is contained soon, the macroeconomic impact in Asia should be manageable given the robustness of the economies in the region, and the impact on the global economy should, therefore, be limited.
QUESTIONER: Has the timing of the next mission to Italy already been decided? And if yes, when will it be?
MR. DAWSON: The mission has been scheduled; however, I don't think we're quite in a position to reveal the date. But it's running according to the established schedule. I'm sure if you asked the Bank of Italy or the Ministry, they can let you know.
QUESTIONER: I wonder, back to the SARS issue, if you could just define two terms that you used in the last sentence, "contained" and "soon." "If the disease is contained soon," what do you mean by "contained" and what do you mean by "soon"?
MR. DAWSON: "Contained" I think is when the indications are of a decline in new incidents, and I think that the continuation of that trend is I think what is in mind. And "soon" is, I would venture to say we're talking about the next few months. But it's a trend so "soon" doesn't mean it's as of one date. It is a trend. And certainly the indications are in a number of countries that the trend is quite favorable. I note that the U.S. Center for Disease Control lifted the recommendation to not travel to Singapore. Obviously the news out of Vietnam was quite positive earlier. So these are all good signs. But, you know, "soon" is going to be a judgment as time goes on.
QUESTIONER: Assuming that this beneficial trend continues, what would be the impact on East Asian economies, specifically China? I ask because Chinese authorities are remarking about possible profound setbacks for their economy from this...
MR. DAWSON: I'm not aware of that quote at all, but I would note that we are in touch. We will be assessing it as it becomes clearer, but as I say, we think that the underlying fundamentals were quite strong.
QUESTIONER: It's about the contacts between Brazil and Argentina towards a joint currency. Does the IMF have a point of view about it?
MR. DAWSON: I mean, I did notice over the weekend reports on that coming out of both countries, and then I saw further reports indicating differing views. The currency choice is obviously a matter for individual governments to judge, and this is an idea that seems to have been floated, but I don't think we have a view on it. We are most actively engaged in working with each of those two countries on helping them develop their own programs. And as I indicated, indications in both countries are pretty positive.
Thank you very much.
IMF EXTERNAL RELATIONS DEPARTMENT