Transcript

Transcript of a Press Briefing by Thomas C. Dawson, Director, External Relations Department, IMF

October 9, 2003

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 is standard, the briefing is embargoed until approximately 15 minutes after the conclusion, and I'll set a precise time at that point.

Before I start the briefing, I'd like to welcome a group of journalists visiting Fund headquarters today under the auspices of the United Nations Information Program. I believe they represent print and broadcast media from Africa, Asia, Central and South America, Eastern Europe, and the Middle East. Thank you for coming and for also allowing this room to seem to be a little more full than it would be otherwise. We're still in post-Annual Meetings recovery period.

I have one brief announcement and then another—some other comments I'd like to make.

It is my pleasure to announce the Managing Director's decision to propose the appointment of Takatoshi Kato as Deputy Managing Director of the IMF. Media Relations will be handing out a press release on the appointment, which we'll issue following this briefing. Mr. Kato is very well known throughout the international financial community, particularly having served as Vice Minister of Finance for International Affairs for Japan and concurrently as the G-7 Deputy. He will succeed Shige Sugisaki, who recently announced his decision to leave the post at the Fund early next year. The Executive Board was informed of the Managing Director's proposal yesterday, and we expect that Mr. Kato's appointment will become effective at the beginning of February.

I would also note—I mentioned in the briefing a few weeks ago that we are hoping and now indeed we are about ready to start the process of giving you regular updates on the IMF Executive Board schedule. The Fund Board had several discussions last year on the general issue of transparency. We are about to issue a PIN as well as the paper for the underlying Board discussion that goes through a number of transparency issues, including an increase in the quantity and nature of documents that will be presumed to be published. That information will be available in the next day or so once the PIN is finalized. As part of this transparency review, we have also gotten permission from the Board to publish the Executive Board schedule, which we will start doing.

As I've indicated in the past, it is a work in progress in terms of particularly for country items. They do quite often change from day to day in terms of when they will be scheduled. But I think in the interest of transparency, this is a step forward.

And I would note, to be frank, that our friends across the street at the Bank have actually been in a position to publish their schedule prior to our being able to, so I'm happy that we were able to match what they have been doing in that particular area. It's healthy competition between the two institutions.

With that, I would ask you, if you have any questions, to identify yourself and your organizations, and our visitors are certainly welcome to ask questions as well, although I do want to warn you, I may not be up-to-date on all of your particular country questions, but I will give it a try. Or our Media Relations officers who are here can speak with you after the meeting.

QUESTION: Two things.

Do you roughly have an idea about when Turkey's sixth review could be over? And in this regard, do you have any comments?

And, secondly, the Turkish lira's appreciation is continuing, and the Turkish current deficits—current account deficit this year is reaching $8 billion, some 4 percent of the GNP. With size of problems for exporters, do you think this situation is beginning to jeopardize the economy?

Thank you.

MR. DAWSON: In terms of the status report on the mission—or on the sixth review, the mission is presently in Ankara and discussions are continuing, so I'm not in a position to be able to indicate when it will be completed or when the review will be concluded. But as is traditional, we will have a notice to the press once the mission concludes. I mean, I think Turkey is a model in terms of how we deal with missions in country program cases, and I think there will be a statement at the time it is concluded.

You mentioned one particular market indicator; that is, a market indicator in terms of the strength of the lira. But I would also note that a number of the other market confidence indicators are also very, very strong. So the markets are still giving a strong vote of support for the Turkish program, but—so I would just leave it at that. I don't think, you know, I want to comment on export competitiveness sorts of issues. I think that is an issue that the mission, I'm sure, may touch on in the discussions, and we'll have a statement at the end of the—as I said, at the end of the mission. So I would just leave it at that, and when we do have a report on the conclusion of the mission, we will, of course, let you know.

QUESTION: I would like to know when exactly starts the negotiation with Brazil. The Minister said that it would—I'm not sure if it will be during the mission or something separately.

MR. DAWSON: Well, in terms of our contacts with the Brazilian authorities, they are, of course, continuing. The fifth review mission will be taking place I think the end of this month or the beginning of November. The program is on track. The authorities are making good progress in the structural reforms that they had indicated that was part of their program, and the central bank is continuing to ease monetary policy cautiously as inflation remains under control.

With regard to the possibility of a follow-on program, as we have indicated from the beginning, this is very much in the authorities' court, and we will—and we are in a position to discuss with them what they are interested in, whether they wish a program or don't wish a program, and the nature of a program if they do wish that.

I would fully expect that's an issue that will be discussed in the mission, but I don't have any sense of when the mission and the authorities will reach a conclusion as to what course of action the authorities wish. But the Fund, as I've indicated previously, stands ready to support the Brazilian authorities in the time ahead as they make a decision as to where to go after the present program concludes.

QUESTION: I want to find out about Liberia. I know that—we spoke to a Liberian representative in Dubai, and they'd indicated that they were seeking some kind of comeback to the Fund. Do you know if any talks or any kind of communication has been made?

MR. DAWSON: I do not have anything in that regard, and we'll have to get back to you. I mean, they are in arrears, as is well known, so there is a process that will have to be undertaken, but I'm not updated on that.

QUESTION: The Italian Government recently approved a reform of the Italian pension system. Is the IMF aware of that? And has the IMF an evaluation of that?

And, secondly, if I can take advantage of your new transparency—

MR. DAWSON: That's why I'm here.

QUESTION: When the Board will discuss the Article IV for Italy?

MR. DAWSON: The Board discussion is expected in early November. If I had to just sort of with my Ouija board predict a date at the moment, it would be, say, November 7th. But as I've indicated, there are—you know, these dates do move.

With regard to the pension plan—proposal, rather, of the authorities, the government has put it forward, and I think it is certainly a step forward. And, you know, we will see how it goes forward in the legislature, and I'm sure this will be an issue that will come out as we have the Board discussion and the Article IV, as I say, probably on November 7th.

QUESTION: Do you see any kind of exaggerated reaction from the market to Brazil regarding the fact that the country still has a very heavy debt burden?

MR. DAWSON: I mean, you think—I don't know if I'm the one who should-let me rephrase the question. Do I think the markets are taking too positive an assessment of Brazil?

QUESTION: Yeah.

MR. DAWSON: I'm one who does believe the markets are pretty good indicators of assessment, and I indicated also earlier that progress under the program has been very, very strong. I note there has been a general market rally that continues today, but spreads continue to narrow quite substantially from levels that we saw only a few months ago. And as an example, yesterday I believe it was, the government chose not to roll over some of the dollar-indexed bonds.

So, I would say, across the board there are very strong market indicators, both general market conditions but for Brazil in particular.

QUESTION: About Iraq, are your people back there? Is the IMF able to assist Iraq as long as the governing structure is the way it is? Or do you need some UN decisions or Iraqi Government?

MR. DAWSON: We continue to work with the authorities in Iraq, both on developing a macroeconomic framework and on particular—I guess I would call them technical assistance areas in terms of reestablishing and rebuilding institutions such as the Ministry of Finance and the central bank.

We also are in contact, regular contact, with the Coalition Provisional Authority and are part of that sort of Fund-specific activities. We are also part of a broader international effort that includes the World Bank and the United Nations Development Group, which is, I think, the United Nations Development Program but also some other UN entities that are involved in preparations for the donors' conference at the end of October, I believe October 24th, in Madrid. And so we are working on that as well.

As I've indicated in previous questions, the nature of the Fund work on Iraq at this point is not constrained by the lack of recognition, general recognition of a government there. We have enough work to do and still more work to do that that is not a binding constraint for us at this point.

QUESTION: Is there a team back in Baghdad yet?

MR. DAWSON: No, this work is being done outside of Iraq.

QUESTION: Are you going back any time soon?

MR. DAWSON: I'm not aware of plans to return at this point. As I indicate, our work is not being—I should further indicate that our work is not at this point being constrained by the problem of the security.

QUESTION: Following on Iraq, could you explain a little bit which role has the IMF in the Madrid conference, which kind of preparation the IMF is doing for the Madrid conference? And the approval of a new resolution by the country, the lack of approval, the new resolution, the United Nations, will affect, will impact the role of the IMF in the Madrid conference?

MR. DAWSON: At this point I do not see the lack of a resolution as impinging on what we are doing and would be doing to the—up to and even after the Madrid conference.

In terms of the type of work that we are doing in preparation for the donors' conference, I mean, we have prepared a macroeconomic assessment and policy framework covering 2003 and 2004, with particular emphasis on the 2004 budget. And that's sort of what our role is. We are not in a detailed sense of the word part of the needs assessment, which is something that the World Bank and the UN agencies are involved in going through sector by sector and seeing what the needs are. So we are in the traditional fiscal and monetary areas that you would expect the Fund to be, and I would stress it isn't just for the preparation of the donors' conference, although that's an important factor. It is part of our general attempt to try to assist the emerging Iraqi authorities to have the kind of framework necessary to go forward with the sort of budgeting, planning framework that is going be needed in the years ahead.

QUESTION: Also on Iraq, the U.S. Congress is currently discussing the proposal of President Bush to pour more money in Iraq. At this point there has been some Congress—members of the Congress who when, you know, they are supporting this request, they are saying that they are not supporting the idea to give this money freely to Iraq. They are talking about more in terms of a loan.

I wonder what is the position of the IMF in this regard since there has been a lot of talk about, you know, the necessity to condone the debt of Iraq as a way to improve the conditions and then to start growing again.

MR. DAWSON: Well, I certainly am aware that this has recently become an issue in the U.S. I think it would be inappropriate for me to comment on the considerations or discussions going on in the U.S. Congress. That is a national political issue, which we do not involve ourselves with.

I would note at this point our effort, and I think the effort of the other international organizations, is very much on the need side of it. The financing side of it is obviously important as well, and I think we will be turning to that. But at this point, you know, part of your question is best directed toward the U.S. Treasury or the Congress, and the other part of your question I think is just premature to answer at this point.

QUESTION: The agreement with Argentina, when Ms. Krueger announced it, she said it was conditional to some kind of agreement with private creditors. And they have presented their proposal to the private creditors in Dubai. I'd like to know which is the opinion of the IMF to the conditions given by the Argentinean Government?

MR. DAWSON: Well, first of all, I think you perhaps were a little imprecise in your formulation of what the—it was not a condition that there be an agreement with private creditors. There is, however, an expectation—and this is in all Fund programs—that when there is a situation of arrears that the country and the creditors be engaged in a process of negotiation to try to work out a debt agreement. That indeed is what is in process, and that indeed was symbolized or effected by the meeting that took place in Dubai of the Argentine authorities with the creditors. And I think there has been some meetings in London and New York, I believe, after that.

With regard to the actual negotiations between the two, we very much view this as negotiations between Argentina and its creditors and not something that the Fund is involved in. We obviously are interested in it. We monitor it. It has impact on the program. But it is not something that we take views on because it would be inappropriate. This is a matter between Argentina and their creditors.

Maybe one question, two more questions. One more.

QUESTION: Still in Iraq, let's approach this from another direction. Is there any rule or regulation or law, or whatever, that prevents the IMF to, for instance, give loans to Iraq run by the Coalition Provisional Authority?

MR. DAWSON: If the Fund were to get into a lending situation, which, as I say, we are not now and that's not even—I mean, we are in a situation where we are still engaged in sort of fact-finding, post-conflict sorts of work that we've been involved in in many other countries. For the Fund to lend to a government does require an internationally recognized government, and this is a judgment that the Fund makes based on a variety of considerations, and I think it's hypothetical to say when that will—you know, what those are because they vary from case to case. But the reality is we have, particularly in the last ten years or so, quite a track record of working with governments that are in a post-conflict situation that may not be internationally recognized, and when we get to a lending situation, we need an internationally recognized government. But as I indicated in other contexts earlier, it is not a binding constraint at this point. The work we need to do we are able to do without having an internationally recognized government.

QUESTION: The CPA is not internationally recognized.

MR. DAWSON: I'm sorry?

QUESTION: The Coalition Provisional Authority is not internationally recognized government.

MR. DAWSON: We are talking with the Iraqi authorities as well as CPA. If and when we get to a situation of lending, it would be with an internationally recognized government. But as I say, it's not a constraint for us now. I mean, we are able to do what we are doing without having to address that issue, which hopefully can be addressed before too much longer.

Okay. Thank you very much. We will lift the embargo at five minutes after 10:00. I expect the next briefing will be in approximately two weeks.

Thank you.