Thomas C. Dawson
Thomas C. Dawson

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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, August 21, 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. As usual, it will be embargoed until after our conclusion, and we'll set a precise time to lift the embargo at that point.

I'd like to just start by noting it was with great concern that management and staff at the Fund learned Tuesday of the explosion at U.N. headquarters in Baghdad and of the injuries suffered by Fund staff and the deaths suffered by U.N. and other personnel doing important work in Iraq.

In terms of the status of the Fund staff, since that point, we have a pretty clear picture of their conditions, which I believe we have already made available, but just to briefly recap, including a consultant, we had six staff members in Baghdad at that time. They were all in the U.N. headquarters building, and they were all injured.

Four of them suffered minor injuries and have since been moved to a neighboring country, two more remain in hospital in the region, but all are in stable condition, and we hope that all of them will be, all six of them, will be reunited with their families in the near future.

I'd like to remind everyone about press registration for the Annual Meetings for the Fund and World Bank or I guess I should say World Bank and IMF, since it's the World Bank here, and we have Mr. Milverton back here keeping an eye on me today.

The meetings will be the 23rd and 24th of September in Dubai, in the UAE. Press registration has opened, and the deadline for sign-ups is September 1st. I expect we will have one more press briefing prior to the Annual Meetings, and I think it will probably be on September 10th. And I think at that point we can preview the agenda for the IMFC meeting and the joint IMF-World Bank Development Committee.

Now, I'd be happy to take any questions you may have. I would ask again, in keeping with tradition, you identify yourself and your organization.

Thank you.

QUESTION: I would like to have a comment on the lowering of interest rates in Brazil. That has been higher than the market expected, from 24.5 to 22 percent a year.

MR. DAWSON: We certainly took note of that, of the lowering of the benchmark rate, as you said, by 250 basis points. I think it does demonstrate the continued convergence of inflation and inflation targets toward, expectations, rather, toward the government targets. Over the last three months, the decrease has been some 450 basis points. I think monetary policy remains firmly oriented toward achieving the targets, and we certainly support the policies of the Central Bank.

With regard to the program, performance continues to be quite good under the program. The government's tax reform and pension proposals are working their way through Congress, and I would say that the government and the authorities continue to show firm resolve in implementing their program.

QUESTION: We are told that there will be an informal meeting of the Board today or tomorrow to discuss the Argentinean draft. I would like to know if this is true.

And, second, how do you evaluate the state of the negotiations?

MR. DAWSON: I do certainly appreciate the Argentine newspapers this week having preempted our plans to be more explicit about publishing our Board agenda because every day this week I've read that the Fund was going to be having an informal briefing on Argentina. I can certainly confirm it hasn't happened yet.

It is natural, after a mission comes back, as they were down for a couple of weeks, I believe, in Buenos Aires, that the mission does, in fact, brief the Board in an informal fashion. I don't have a particular time for when that will take place. I do expect that it will take place before long, and that's just routine.

In terms of where we are in the program, I think we had indicated the last couple of press briefings that the expectation was that the mission would go down in the first part of August for a couple of weeks and that it would then come back and review the progress that's been made. That is precisely what is going on.

In fact, I can recall Mr. Nielsen, as a matter of fact, making that comment himself, to I believe it was the Financial Times in an interview a couple of weeks ago, that he expected the mission would come down, and then there would be—they would return to Washington, and there would be further discussions toward the end of August. And we're on the sort of time line that I expected that we would be on that point.

In terms of the status of the negotiations, in terms of issues and so on, I don't think it is appropriate for me to talk about that at this point. I'll just leave it at that.

QUESTION: Do you expect another mission to Argentina or do you expect—

MR. DAWSON: Whether a mission would go there or people would come here, I don't know. I mean, both certainly could be possibilities. When there is a development in that regard, we certainly will let you know. As I say, the mission has just returned, and while I know there was at least one internal staff briefing yesterday that I know of, I mean, we're in the debriefing, as opposed to the next steps stage at this point.

QUESTION: Mr. Roger Noriega was a couple of days in Argentina, and he talked about the possibility of an agreement between Argentina and the IMF. Among other things, he said that he feel the conditions right now are very favorable to have an agreement. Do you agree with that assessment?

MR. DAWSON: Well, that is certainly what our goal is. To expand, actually, on what I understand that he said was he talked about his belief, which I think is the belief shared by the Argentine authorities, as well as by the Fund, that what we should be trying to work for at this point as a medium-term arrangement, and that is what we are working on.

If we didn't think there was a reasonable shot at accomplishing that, I'm not sure that we would be going in that precise way that we are.

QUESTION: Just on the September 9th, whatever you call that, the deadline for payment of an important sum, is that an absolute date in terms of—is that the final date for payment? Is there a possibility of extending that? If there is no payment at that date, on that date, what are the options?

MR. DAWSON: I've been asked this question a number of times over the last year-and-a-half when other dates had come up, and that's a hypothetical question. Our goal is to work out a program, to work out an agreement, and that's the track that we're on, and I think it's premature and not particularly productive to speculate on what will or won't happen.

We have been able, obviously, with hiccups and with delays, on occasion, to be able to continue to work constructively with the Argentine authorities, and we have no reason to believe we won't be able to continue going forward.

QUESTION: But do you continue to expect payment on the 9th?

MR. DAWSON: The payments are, in fact, expected on the 9th, and that is, I mean, that's public knowledge because it's on the web, and that's the basis on which we are acting.

QUESTION: Back to Iraq, do you think it's conceivable that the Fund will send their people or you will send your people back to Baghdad with the present security arrangements?

And another thing, is it proper to ask your colleague from the World Bank, now that he is here, to comment on the story [audio break] today that the World Bank has withdrawn?

MR. DAWSON: I think it would be quite improper, as well as unkind, to ask Mr. Milverton. The Bank, I think the Bank Press Office was quite active yesterday, in terms of briefing people, and I think the questions are best directed in that direction.

As far as next steps on Iraq, we do continue to be engaged in working on Iraq, on the issues that I've identified here previously, that fit, in one sense of the word, under helping restore and rebuild institutions, the Central Bank Finance Ministry functions and so on.

This work does not have to be done, in the short run, in Baghdad. Work does continue, including preparations for our contribution to the Donors' Conference that is scheduled for I think late October on Iraq. So, in that sense of the word, we are continuing to work.

Quite clearly, as I indicated, our staff were unable to continue in Baghdad. And when we're at a point where we figure out the modalities of working in the future for the types of work that are done by missions and by people who are semi-permanently resident in Baghdad, we will make those decisions. That's—48 hours after what happened—that's not a decision that has been made, could have been made or that should be made.

QUESTION: Tom, would there have to be some kind of precondition for the Fund to send people back into Baghdad? I know you haven't pulled out, but would there have to be a precondition of more security, you know, that type of thing?

MR. DAWSON: This is not a precondition institution. This is a consensus institution. We will be consulting with all of our, with our membership and find the consensus on how to go forward. And I'm sure, with the passage of some time, we will be able to see how to go forward. I don't think there's any ability to identify preconditions.

Thank you.

QUESTION: Back to Argentina for a moment. How difficult would it be to breach a disagreement over the fiscal targets? That is reported to be one of the issues being negotiated. It's a difference of a point-and-a-half.

MR. DAWSON: I don't think we try to breach disagreements. I think we try to reach agreements or to close breaches. But anyhow, I'm not going to, as I indicated, I'm not going to talk about the status of the discussions.

QUESTION: I mean, how—

MR. DAWSON: Obviously, the discussions, the mission is negotiating a program with the authorities. Negotiations require exchanges of views and ultimately reaching agreements. That's part of the process. I don't think it's appropriate now to talk about how difficult it will be.

As I indicated, the process is continuing. It is continuing at the pace, in terms of the scheduling of discussions, that was expected initially.

QUESTION: If I can ask a follow-up on Paulo's question, which I would regard as more technical than hypothetical.

A lot of the payments—

MR. DAWSON: He's a very well-rounded person.

QUESTION: A lot of the payments that come due do have automatically built into them the ability of a country to extend for 30 days, postpone for 30 days.

MR. DAWSON: Those are for SRF payments. That is not the case with—

QUESTION: So there is no 30-day extension built in.

MR. DAWSON: These are so-called obligations payments, not expectations payments. I'm quite certain about that, yes.

QUESTION: [Off microphone.] ...with Turkish Television.

On the [inaudible], the other day there were talks here in Washington, and we were told that there was an IMF [inaudible] there. What is the IMF position? And is it compatible, [inaudible] position is compatible with the IMF?

MR. DAWSON: The program for Turkey has been developed with a full understanding of what the potential other sources of financing were, including the possible U.S. financing. I would just leave it at that.

Questions with regard to the status of the U.S. financing, I would direct to the U.S. authorities.

QUESTION: A couple of days ago President Chavez of Venezuela, he had not some very good words toward the IMF. Among other things, he said that the IMF must disappear. And while this sentiment has been expressed in some political circles, as well as some civil circles across the continent, I wonder if, I mean, what do you think the IMF needs to do in order to have a better image or a better perception among politicians and people across the continent?

MR. DAWSON: Well, actually, I note across the continent, with very few exceptions, an eagerness on the part of the authorities to work with the IMF. And, indeed, we have a good relationship with almost every country in the region. So I think that comment is not reflective of the general sentiment in the region.

And I indeed note, I believe that comment was made while he was visiting Argentina, and I indeed note that the authorities indicated, at that time, a desire to continue working closely with the Fund—the Argentine authorities.

QUESTION: How important is, from the IMF, the utilities law that the Congress now is debating to reach an agreement?

MR. DAWSON: The which? I'm sorry, which—

QUESTION: The utilities law.

MR. DAWSON: The utilities law.

QUESTION: Yes.

MR. DAWSON: We've indicated that the need for a predictable, understandable framework for adjustment of public, of administered prices, public utility prices, is one of the elements necessary to establish the conditions for restoring business confidence, domestic and international, and providing the basis for growth.

So, therefore, it is an important element. It is not the only element, but it is certainly a factor, if you look at countries that have had successful programs, successful transitions, that's one of the factors—establishment of clear, predictable, understandable rule of law and so on. So it is clearly an important factor. It is not the only factor. And it is not, as I said,—here was a question in a different context earlier about preconditions. There are no preconditions in this sense.

QUESTION: Tom, coming back to Iraq, is there some kind of coordinated effort going on right now between the Bank, and the Fund, and the U.N. on getting things back to normal again?

MR. DAWSON: Well, we've certainly worked very closely with the Bank. And I'd like to take this opportunity to thank the Bank for the assistance they provided the Fund in the transportation of our staff out of Iraq, those who were less seriously injured who were transported out.

We do, as a matter of course, work closely with the Bank in situations and quite often, in fact, rely on the Bank in crisis situations like this because they tend to have a larger infrastructure than we do in cases like this.

As far as going forward, which is I think the more direct question that you had, I know we have been in touch, and we will continue to be in touch, in terms of how we go forward because there is a substantial interconnection—those who don't like it always call it overlap—of the work of the two institutions, and so it's hard to imagine, going forward, that we would not be working closely with the Bank, particularly when you get into areas like the banking sector, public expenditure management and so on. So we will be working closely with them.

But, clearly, the attention in the last 48 hours has been more for the care and safety of our employees.

QUESTION: So is it fair to say that the work of the IMF is also suspended on the ground?

MR. DAWSON: Well, it is, I mean, it is not fair to say that our work is suspended. I will repeat—

QUESTION: On the ground in Iraq.

MR. DAWSON: —every person we had there was injured. So I don't think I should go out further in answering the question.

QUESTION: Where are the injured people? You said neighboring—

MR. DAWSON: I don't really wish to identify precisely where they are, but at the moment, they are in the region in a couple of different places.

QUESTION: [Off microphone.] [Inaudible] there was an IMF—

MR. DAWSON: I am not aware. This is in the meeting with the-[inaudible]

QUESTION: Yes.

MR. DAWSON: I am not aware of that, and we'll have to get back to you on that. I was aware of the visit, but I'm not aware—and I'm sure there were contacts. I do not know, and I would be a little skeptical as to whether the Fund participates in the meetings. Usually, there are parallel sorts of briefings.

QUESTION: And the last thing is when the Fund plans to complete the next review?

MR. DAWSON: In terms of completing the review, I don't have that information. The next review mission is likely to take place in late September or early October.

Two more questions, maybe three.

QUESTION: About Brazil, I have a question.

Has there been any target set for the primary surplus, and is it likely it would exclude investment in the oil industry?

MR. DAWSON: The program is on track. Any discussion of what targets would be—these are, of course, the Brazilian targets—they will come up in the context of the government deciding to take a look at that. So, in that sense, I am unaware of that.

I was asked, in my last press briefing, the second part of your question, which has to do with the treatment of infrastructure and other kinds of investment spending in programs.

As I indicated, this is an issue that has come up from time to time, particularly in the Brazilian context, but it is an issue that is of interest throughout Latin America, in particular, now, and it's something we continue looking at and are in discussions with, both in a regional context, because there are various seminars and meetings taking place, but also in an individual country context as it comes up in programs.

QUESTION: I just have a follow-up on Dubai.

MR. DAWSON: On Dubai.

QUESTION: Yes. Given what's happened in Iraq this week, and then we found out about the assassination plan for George Bush later on in the State Department advisories for Yemen and Saudi Arabia, what measures have you taken to ensure the security during the meetings?

MR. DAWSON: I mean, clearly, the plans for the meeting, I mean, we've been planning for the meeting for some time, and we've been certainly aware of security concerns, and we continue to plan with the authorities, with our colleagues at the Bank, having all of those issues in mind. And so that work does go forward.

I don't think it's appropriate to discuss the particular measures which, in any case, are the primary responsibility of the authorities. But we are in continuing contact with the authorities in that regard, as we are now only basically about a month from when we will all be going to Dubai.

Two more.

QUESTION: I would like to know what your opinion is in the Minister of Economy of Uruguay just resigned. Do you think that can bring any kind of problem to the program in Uruguay?

MR. DAWSON: We did, indeed, have a good working relationship with the Minister, but we also have had a very good working relationship with the new Minister, who was one of his deputies. So I think that we do look forward to working with the new Minister, and I think I would leave it at that. We don't see that there would be the kinds of consequences implied.

Last question?

QUESTION: Is late October a feasible date in the light of these delays for the Donors' Conference?

MR. DAWSON: I don't think that we're the ones to ask that question of.

In terms of the sorts of work that we were preparing, I don't know that it couldn't go forward, but in any event, we are invited to attend the conference. So I would direct the question toward those who are hosting the conference.

Thank you very much. We will lift the embargo at 10 minutes after 10:00. Thank you.




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