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Transcript of a Press Briefing by Thomas C. Dawson|
Director, External Relations Department
International Monetary Fund
Thursday, January 15, 2004
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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. Happy New Year to everyone.
I only have one brief announcement. I'm pleased that starting today the Fund is launching a new Web-based publication entitled "Questions in the News." It's a resource in question-and-answer format based on questions raised by journalists and others on Fund policies and operations, often, you will note, probably drawing on the questions you ask each week.
The material presented consists of edited excerpts of the responses given by IMF officials to questions, and we think this will be of interest to those who monitor and criticize the Fund, not only journalists but also civil society organizations and members of the public.
It also has an interactive element where users are invited to submit questions, which may form the basis for future responses, and we would appreciate any feedback you may have on that
Now, to follow our normal format, if you would identify yourself and your institution when asking questions, and as usual, the press conference will be embargoed until approximately 15 minutes after conclusion, and we will set a precise time at that point.
QUESTION: I have two questions. One is, after the meeting of Mr. Köhler with President Kirchner, Lavagna told us that one of the recommendations that Köhler made to Kirchner was that Argentina has to be more friendly with creditors. I would like to know what that really means.
And second is, today in New York Judge Glazer (ph) has to decide if he gives authorization to the creditors to embargo the payments of Argentina to the IMF. Treasury, as you know, has sent a letter recommending not to do that. I would like to know what happens and what would be the consequences if the judge goes ahead with the embargoes.
MR. DAWSON: I don't have any comment with regard to the latter question. I think we just simply need to wait for the judge's actions, and at that point we may have something to say.
Regarding the comments by Minister Lavagna, I think it is well known that one of the issues that the Fund needs to consider when it comes to a program or a program review, as in Argentina now, is the nature of the dialogue between the creditors and the authorities. And I think that is the context in which both Minister Lavagna as well as the Managing Director raised the issue.
In terms of where we are at this point, of course, I would draw your attention to the press release that was put out last Friday indicating agreement had been reached on a Letter of Intent for concluding the First Review and that we would be going forward expecting to have Board action by the end of this month. That is indeed where we are. We do expect to have Board action by the end of the month on Argentina. I do not have a particular date for you for that. When I do have it, we will let you know. So in that sense, we were able to conclude the First Review, which, as I indicated previously, took a look at the overall macroeconomic performance, which, as I think is well known, has been quite strong, as well as the progress being made in a number of the other policy areas.
QUESTION: Is the IMF going to anticipate the next mission to begin to make the review for the second revision? And then what about the utilities and the bank compensations? There were--those issues were requested in this meeting between Kirchner and Köhler or not?
MR. DAWSON: On the terms of when a next mission might be, I think it's quite premature to be discussing that. We will be concluding the review, as I said, by Board action toward the end of the month, and at that point I think it's better for you to start asking the question. Again, we don't set things out that far in advance.
In terms of the discussions and the meetings, I don't think I want to go into details of it. I think I would agree with President Kirchner that it was a very good meeting. They went over a number of issues. But it was not in that sense a negotiating session, if that was sort of the implication of your question.
QUESTION: ...in the press it was told that it could be a possibility that the mission will--
MR. DAWSON: It's just too early to say when that mission will be. If you'd like to get a sense of the issues of the next discussion, I would draw you back to the Dubai decision of the Board and the timetable that was laid out then, both timetable in terms of dates but also timetable in terms of actions that would be undertaken under the program. And we are on that track.
It is fair to say that this particular review is a little bit later than originally indicated, but both the steps and the measures are what was originally indicated back on September 25th or so when the Board meeting was. So we are in that sense on track. But as far as a date of the next mission, I just really think it's premature.
QUESTION: Would you consider there's been progress in the talks with creditors? And what would you consider as progress in the creditor talks?
MR. DAWSON: We are at this point concerned with the process that's going on--where the discussions are proceeding, and we don't do kind of a line analysis of progress in X, Y, or Z area. It is simply that the process is going forward, and that's the judgment that we have made.
As you know, we certainly follow the discussions, the negotiations with interest, but we are not a party to them. And as I say, we encourage all parties to continue discussing, and it's my understanding that's what is going on. But we don't make a scorecard of that. We make a judgment, an overall judgment, and that's the judgment that was made.
QUESTION: Sorry, can I follow up? In Dubai, Anne Krueger said that there should be a deal with creditors by mid-2004. Is that still on track?
MR. DAWSON: I think that question is best directed to the Argentine authorities. Certainly they are going forward, and I think that question--Minister Lavagna or Mr. Nielsen are the best ones to ask on that because they are the masters of that agenda.
QUESTION: Köhler made some remarks in his speech earlier this week about--or it was reported in the press about excluding infrastructure from budget calculations. I wanted to get a little bit more clarification on that, the definition of infrastructure. And was that with the primary surplus and was it for all countries?
MR. DAWSON: Indeed, that was actually a topic of considerable focus at the meetings, at the Special Summit of the Americas in Monterrey. A number of the Presidents raised the issue of the treatment of public investment in the accounting and fiscal sense of the word.
As part of the Fund's work program--and I will draw you to our semi-annual work program statement from November 5th--we noted that the MD in his comments in Monterrey mentioned that the staff is indeed preparing a paper on public investment and fiscal policy which will examine the treatment of public sector investment and public-private partnerships in fiscal policy assessment program design and in fiscal reporting and accounting. That is a broad description of what that particular issue is.
That paper is in progress. The present expectation is that there would be a paper to be presented to the Board for the Board's consideration in March. And that paper will then be reviewed by the Board. So that is what he was referring to. That is the context of it.
As I indicated, this question has come up here a couple of times before. It is an item of great interest in Latin America in particular, but it is a global issue, and it's one that the Fund has been looking at for some time.
If you would like the precise quote--it is paragraph 20 of the work program statement, which is on the Web.
QUESTION: When that paper is approved, does that mean there's a new policy?
MR. DAWSON: It is a paper for the Board to consider how to go forward on those issues. My suspicion is that whatever conclusions might be reached in terms of the Board acting on this paper would themselves require further actions. But I would fully expect we'd be in a position to describe that where we are at that point.
I mean, this is not a short-term effort in terms of the work that's already been going into it. It's not a new issue. It's an issue that's come up for a long time, and it is something, however, that is being pursued with an expectation that the Board will actually take a look at these considerations in March with a view to seeing what should be done in terms of changes, in terms of new standards, in terms of reporting requirements and so on.
QUESTION: I have two questions. The first one on Iraq, the second one on Italy. On Iraq, could you add some details to the information on the consultation yesterday between the IMF and the United States on debt?
MR. DAWSON: Yes. Secretary Snow and Jim Baker came and met with the Managing Director and members of the Fund management and staff yesterday afternoon. Mr. Baker reviewed with management, with the IMF, his recent visits to Europe and Asia and his consultations with governments on the Iraqi debt situation. They also reviewed the present situation and work of the U.S. authorities as well as of the Fund on Iraq. It was a natural course of events that he briefed. I gather--I think Damien made a similar sort of announcement yesterday. And it was a good meeting. I saw them briefly, and I think I don't really have much more to add to that.
But it was the sort of thing that I think you would expect would be going forward since Mr. Baker has particular responsibilities for the U.S. on the debt side, and we, of course, are involved in trying to assess the debt situation, as well as help the Iraqi authorities develop a macroeconomic program.
And your second question?
QUESTION: On Italy, is the IMF aware of the Parmalat scandal? Is the IMF following that? And is the IMF worried that it could have an impact on the Italian economy?
MR. DAWSON: Staff is closely following developments with regard to Parmalat, and particularly insofar as they have implications for financial sector--for the reform of financial sector oversight.
The staff had already signaled during the 2003 Article IV consultation the need to strengthen transparency and consumer protection in financial services, and the issue will continue to be discussed, including in the context of an FSAP, Financial Sector Assessment Program, which was requested last month by the Italian authorities and is planned for early next year. It will also be discussed in the context of the 2004 Article IV consultations.
QUESTION: In Monterrey, President Kirchner said that there are permanently(?) from the IMF new requirements about Argentina. What are exactly those requirements? And what is the position of the IMF about the--
MR. DAWSON: It is not for me to interpret the President's words. I think that's best directed by asking the authorities in that regard. But I would direct you, as I did earlier, to the Letter of Intent as has been published in September in Dubai, what the measures were, what the timetable was. And it's certainly our view that that's the course of action that we are on, that there have not been additions to that.
QUESTION: On Iraq, do you know when that assessment is going to be completed? Will it be--the IMF assessment on sustainability, debt sustainability for Iraq. Would that be completed by the G-7 meeting in Florida?
MR. DAWSON: First, the answer to the first part of the question is I don't know, and the answer to the second part of the question is I don't know. Obviously, that is something that we are all interested in. That is something we are actually working on, but I don't have the time table. It also involves consultations with Paris Club and non-Paris Club creditors. So I don't have anything on it, but it's a good question and keep asking.
QUESTION: Getting back to the Argentina question, President Kirchner said last night that Argentina won't make $3 billion repayment unless there is a second revision by March. I mean, the dead line for the $3 billion repayment is March, and unless there is a second revision of the package.
MR. DAWSON: Well, we're operating, of course, on the assumption, as we do in all programs, that the program will go forward and the review will be completed. So that's all I would have to say in answer to that. I had not actually heard that particular report, however.
QUESTION: I have questions on a couple of CIS countries. The first one is on Belarus. An unnamed U.S. Government official yesterday made a comment that Belarus was faced with an economic crisis. Do you see any immediate basis for such a dire prediction?
MR. DAWSON: We don't make a practice of responding to unnamed U.S. or any other government officials. If you'd like our basic assessment at this point, I'll just make about some observations.
First is that Belarus continues to have the highest inflation in the region; that some progress has been made in some of the structural reforms, for example, in reducing energy cross-subsidies. But there is also some slippage in other areas, in the areas, for example, of directed bank lending and the possibility of renationalization. It is the Fund staff's view that monetary and fiscal policies need to be tighter if indeed they plan to peg the exchange rate to the ruble later this year, which is at least is "mooted"--I think is the right word. Is that a good English word, David? "Mooted"? Okay.
QUESTION: The other one is simple. It's if you have any update on the situation in Georgia.
MR. DAWSON: We do expect a staff visit next month to Tbilisi to discuss a new three-year Fund-supported program, and one of the issues that will be discussed is the existence of arrears to the Paris Club.
QUESTION: A brief follow-up. The authorities were supposed to finish their own assessment in January of their fiscal situation. Have they done that? Have they reported their findings to you?
MR. DAWSON: I don't directly have knowledge of that, but my suspicion is that since the mission is expected for next month, you know, enough has been done so that the mission can go forward, because that's a reasonably specific purpose for the mission.
QUESTION: Just another follow-up on Iraq. Can you say if Mr. Köhler will be attending the winter meeting of the G-7 in Boca Raton, February 8th? And is it likely that he will make some presentation at that time on Iraq?
MR. DAWSON: I don't have anything for you on that at this point. I'm well aware of the meeting, but I just don't have an announcement in terms of the travel. Let me see whether I can get an answer, but I'm just not prepared at this point to give a positive response on that.
QUESTION: And the Managing Director of the IMF is normally at the G-7 meeting.
MR. DAWSON: Finance Ministers, typically, yes. There are other issues as well likely to be discussed there, too, so that's one reason I'm a little hesitant--you know, Iraq would not be the only issue likely discussed there.
QUESTION: I have a philosophical question. Lavagna says that the paradigm of the IMF with Argentina has changed, that there is no more rescue packages, you know, to give to countries that default in their debt, and that then the IMF cannot make the same requirements that they did before on the level of the payments with the creditors. Do you agree with that statement?
MR. DAWSON: I'm not quite sure I understand--I mean, it may be a little too philosophical for me. I'm not sure that I understand the premise.
First of all, I take some exception. In working with a country to develop a program, there's no doubt we have conditionality. So that word, the word "requirements," is understandable. But, you know, our goal is to work with the countries to get sustainable longer--medium- and longer-term fiscal and external position. And in that context, I don't think there has been a shift in the paradigm. That's still what the goal has been--that's always what the goal has been. Where we've had a degree of a shift in the paradigm is trying to encourage the authorities to take much more of an initiative in terms of designing a program, which is a process that often goes under the rubric of ownership.
And, again, I would draw your attention to the Argentine program, which I think is a good example of that. Certainly vis-a-vis the beginning of this present program, or even going back to the transition program early in 2003 for Argentina, there's been no shift in paradigm. So that may be too--if you want to get even longer term, that gets really too fuzzy for me. I'm a pragmatist, not a--
QUESTION: No, it's more the change--on the fact that you don't give any more rescue packages. I mean, we got a package--
MR. DAWSON: Well, I'm not quite sure how to characterize rescue packages, but the Fund's business to help members achieve a sustainable balance of payments situation remains the case. We do that in a large number of our member countries. Whether you call it or don't call it a rescue package sort of depends on your perspective.
If you go back to the '97-'98 debt crisis where people used the rescue packages, we certainly would hope we're not giving lots of rescue packages because financial management in countries has, generally speaking, improved; the global economy is in pretty good shape now; and we don't have either contagion or these serious policy problems and collapses in some cases that endured in a previous era.
So I guess if I want to turn your question around, I will claim the success of the international community in working to learn lessons from the '97-'98 period so that rescue packages are no longer necessary. If that's what the thrust of the question is, then I'm sure we agree.
QUESTION: Can you bring us up to date with the Dominican Republic? And is there any Board date scheduled?
MR. DAWSON: The answer to the last part of your question is that we don't have a date yet.
We had a mission in December, which reached broad agreement with the authorities on the main elements of a program for the First Review under the present two-year stand-by. At this point the authorities are working on a number of macro policy and structural measures that are critical to the success of the program. They need to implement these measures, and we need to get financing assurances from official creditors. Only at that point would we be able to finalize the Letter of Intent and circulate it to the Board.
So in that sense of the word, action at this point is with the authorities as they're trying to put into implementation the agreement that they reached with the mission in December. And, once we have something on that, we certainly will let you know.
QUESTION: Is there a concern of a default?
MR. DAWSON: No, I just would leave it at that. Thank you very much. We'll lift the embargo at ten minutes after 10:00. Thank you.
IMF EXTERNAL RELATIONS DEPARTMENT