Argentina and the IMF
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Transcript of a Press Briefing by Thomas C. Dawson
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MR. DAWSON: Good morning, ladies and gentlemen. I am Tom Dawson, Director of External Relations at the IMF, and this is another of our regular briefings. I hope everyone had a pleasant summer vacation, and I welcome you to the beginning of another season, Annual Meeting season, of hopefully good collaboration on Fund-related issues.
While entering the building this morning, you undoubtedly noticed the consequence of the enhanced security measures in effect, and I have to tell you that more is likely to come, particularly around the times of the Annual Meeting, and we will let you know about that as soon as we can in order to make your life at least logistically as smooth as possible.
Before we take questions, I would like to go over Fund management engagements for the next couple of weeks. As of today and until the weekend, both the Managing Director and the First Deputy Managing Director will be participating in the Kansas City Federal Reserve Annual Conference to be held, as usual, in Jackson Hole, Wyoming.
After that, next Tuesday, August 31st, as I think you know, the Managing Director will start his South American trip in Buenos Aires, his first visit to South America in his current capacity. He will be meeting there with members of the Argentine economic team. Later on, on the 31st, he will travel to Montevideo, Uruguay, for similar meetings.
On Wednesday, September the 1st, Mr. de Rato will go to Santiago, Chile, to participate in the APEC Finance Ministers meeting and also to meet with Chilean authorities and I think for some additional bilateral meetings with APEC members.
Finally, on Friday the 3rd, he will be having meetings in Brasilia, Brazil, for a round of discussions with the Brazilian economic team and financial authorities, including President Lula da Silva.
From Brazil, the Managing Director will go to South Africa to continue, in effect, the second part of his listening tour in Africa, starting in Johannesburg on Monday. Then late on the following Tuesday, he will go to Ouagadougou, Burkina Faso, to attend the African Union Extraordinary Summit on Employment and Poverty Reduction, and will then return from there to Washington.
I will be on the portion of the trip that is in South America. Mr. Hawley will be on the African portion of the trip. As a consequence of my not being on the full trip, the next press briefing we expect will take place two weeks from today in this room.
As usual, we are embargoed today until approximately 15 minutes after conclusion, and we will set that precise time at that point. That applies, of course, to our Web viewers as well. And at that point, I think I can cut it off, and I will be happy to take any questions you may have. And as usual, will you please identify yourself and your institutional affiliation.
QUESTIONER: Two questions. One is you did not mention a meeting between Rato and Kirchner.
MR. DAWSON: I think President Kirchner is the ultimate authority, so, yes, he is one of the authorities. The Managing Director will be meeting with the President, yes.
QUESTIONER: Okay. Then—
MR. DAWSON: No more questions?
QUESTIONER: Yes, of course I have another one. There is some expectation that Rato will announce something in respect to the payments that Argentina is due to pay but that they are not obligatory, you know, the ones that are considered an expectation, they call them. It is like $1 billion. I was wondering if you have something on that.
MR. DAWSON: I think, first of all, I think we should just wait for the visit to take place. It is, you know, something like a hundred hours from now.
I should note, as is the case with each of our visits, we expect and are planning on a press conference toward the end of the meetings in each of the stops, starting with Buenos Aires.
You know, certainly, I will not pretend that I have not read the Argentine press, including especially Clarin, over the last three weeks or so in terms of the various issues that are at play, and certainly the issue of the expectations versus obligations repayment will certainly be discussed. But there is nothing that has been decided at this point. It is one of a number of issues that will be addressed during the meetings, and I think you will just have to wait until the meetings to see what we have to say at that point.
You know, I would just note at my last briefing, which was, I guess, about four weeks ago, I indicated what the state of play was in terms of the Third Review, that it had still not been completed. Essentially, we are at the point where we were at that point, except, of course, with the additional passage of time. We remain in good contact with the authorities. The fact that we are going to visit is, I think, an indication that we remain in good contact, including at the highest levels. And I just would say, you know, urge a little bit of paciencia until Tuesday when we have the meetings, and then we will see what there is to report on the meetings.
But as you can expect, and as we have done, including in Buenos Aires, in the past, we will have a press briefing in which, you know, the Managing Director will address whatever issues you are interested in his addressing.
QUESTIONER: What does the IMF actually think of Argentina's plan to put the program on hold until the end of the year?
MR. DAWSON: Well, you know, I have seen a number of descriptions of the state of play. Sometimes it is called a suspension; sometimes it is called putting the program on hold. I think the way, you know, we view it is we are unable to complete the review, for the reasons that have been stressed in the past, and I do not think I need to go into them here.
You know, the additional factor that I think is clear is that the authorities have indicated that they are going ahead with the debt exchange offer, and that is a focus of their attention. But putting it on hold, I am not quite sure I would quite agree with that description. I mean, the reality is the review cannot be concluded because we cannot get it concluded, as I said, for the number of reasons that were stressed before. And there has not been much of a change since then.
So we continue in contact on any number of the issues, and the authorities have clearly indicated that their focus at this point is on the debt exchange, and that is the way it is.
QUESTIONER: Would you say you are having paciencia with
MR. DAWSON: No. I was urging you to have paciencia. I was making no such suggestion. My job is not to counsel the authorities. It is to try to help the press keep their blood pressure down.
QUESTIONER: On Brazil, during the meetings will be discussed the termination of the current agreement with Brazil and possibly the renegotiation of a new one for 2005? And will the Managing Director have any decision on the exclusion of investments of the budget?
MR. DAWSON: On the latter question, which is the public-private partnership, public investment, infrastructure investment issue, if I can lump all the various descriptions of how it is described, I am certain that will be discussed. But Brazil is part—is one of the countries in this pilot project examining the treatment of public-private partnerships, public infrastructure investment, and so on. Other countries in the region are as well. For example, Chile is also involved in the pilot projects. I am sure that will come up, but the process on getting a conclusion as to how treatment should be changed, if it should be, is something that will be coming to a conclusion and to the consideration by our Executive Board later this year. So not a conclusion at that point.
With regard to the Fund program, I am not quite sure I would call it termination of the program. The program will expire when the program expires, and I would stress, of course, that the authorities have made it clear that it is and it continues to be a precautionary arrangement at this point. In other words, the authorities are not drawing on the program.
Certainly the future—the present and future relationship of Brazil and the Fund will come up, but I do not—again, it is, I think, an opportunity for the Managing Director to meet President Lula to review the tremendous progress that has been made in Brazil. I am sure you follow the numbers even more closely than I do. But both the growth performance as well as the external accounts have been coming in very, very strong. And the authorities I think are to be commended for their program, and the Fund remains, you know, anxious to help in whatever way is appropriate. At the present moment, that is in the context of a precautionary arrangement, and I am sure we will keep in close contact and relationship with the Brazilians when the program expires, not terminates.
QUESTIONER: On this issue of language regarding what is happening with Argentina's program, are you suggesting that the word—saying that it is suspended is really just kind of a spin, and the real issue is the fact that Argentina just did not live up to the commitments [inaudible] review?
MR. DAWSON: No, I would not describe it that way. Programs are agreed to and they have a time frame. In the context of Argentina, this is the program that was agreed to last year and goes forward, as I recall, for three years. So programs do not get suspended in that fashion. Reviews can be delayed. That is exactly why I made that point, and the review has been delayed, and that is quite clear. When we call it a delay, initially when you do have a program, you have a sense and indicatively indicated when reviews are expected. It has not taken place.
But, again, "suspended" has an element of lack of contact, lack of agreement, lack of understanding that I just do not think describes the present situation. I think we have a very cordial relationship with the Argentine authorities. We know, you know, what their position is, what they can do. We know what our position is, what we think they can do, what their priorities are. As I indicated, the authorities have made clear they are focusing on the debt exchange at this point.
So I just think "suspended" is not the right word, either in the legal sense or in describing what the nature of our relationship is.
QUESTIONER: I have a follow-up. Are you expecting, though, that Mr. de Rato will ask Argentina to continue to press ahead with reforms on the banking industry—
MR. DAWSON: I mean, certainly the authorities have made clear that they remain committed to what is in the program, and the program is there, and they are doing what they can to get the program achieved. So I think we support them in their desire to fulfill their program—which is fairly specified. I mean, if you go back—fairly well specified. If you go back into the program, you can see that, and I see on a regular basis indications from the—in particular, from the legislature of the government, you know, working on various aspects of the structural reform agenda in particular.
QUESTIONER: I would like to address two other items. First of all, Iraq. Is there any progress you can tell us after your last briefing?
MR. DAWSON: No. I mean, we remain in contact with the Iraqi authorities and working with them on developing—helping them develop their program and seeing how the emergency post-conflict assistance facility, if I can call it that, of the Fund can be of assistance to them, and that process is going forward. So, the dialogue continues. There are no changes in either the direction or the intensity of the dialogue, and we are on the track that has been indicated for some time in trying to reach an agreement toward the end of this year or the beginning of next.
QUESTIONER: The Iraqi Government will be present at the next meetings, Annual Meetings?
MR. DAWSON: That is my understanding, yes.
QUESTIONER: The second item, oil. Is there any impact, new impact, new element or impact on the worldwide economy from the prices of oil that you can—
MR. DAWSON: We make it a practice of not responding to the day-to-day market developments. As I think you know, we are in the process of finalizing the World Economic Outlook, semi-annual outlook, and I think that is our sort of benchmark that would take a look at that.
We have our traditional rules of thumb on the impact of energy prices that sustained—changing energy prices have sustained over a period of time, which will be an element of our analysis at that time.
I would also note that, prior to the WEO coming out, you will have the opportunity with the Managing Director, with several speeches, you will be having his views on it. I am pretty sure Mr. Rajan as well—well, I am not sure whether—I know he is speaking out at Jackson Hole. I am not sure if it is a public address or not. But it is an issue that we are looking—that we are obviously following, but I think I would in the medium term wait until the WEO next month, and in the shorter term the Managing Director will be addressing that on his trip next week.
QUESTIONER: Do you still have this Code Orange in this building? And do you have any indication of how long it is going to go on and has it had any effect on your daily life?
MR. DAWSON: The enhanced security measures have been put into effect. In some sense, they are still in the process of implementation. You will see construction going on around the entrances of the building. Some of that was already—was already planned, but it has been intensified and accelerated in that regard.
In terms of the impact on the day-to-day functioning of the building, obviously I think people understand why it is taking place and, therefore, are, you know, adapting to it as best they can. Clearly, lines are longer than they have been before, but I think, unfortunately, this is a fact of life. And as I indicated, you can expect for the Annual Meetings that this will—compared to the past meetings you have had, there will be enhanced measures in effect which will become apparent over time, and we will work to make it as comfortable for you to do your important business as we can.
QUESTIONER: Which is the usual procedure when a country has to postpone a loan with the IMF that is labeled as expectation? And do you think there will be any restrictions for Argentina to apply and ask for this deferral?
MR. DAWSON: I am not quite sure what you mean by the latter part of it. The issue of expectations versus obligations, you can delve into, you know, where these two different treatments come from on our website, or we can arrange a conversation with our Finance Department if you really are interested.
It has happened before, in fact, even in the case of Argentina. Earlier this year, there was a shift of a repayment from expectations to obligations. So it does happen. And the other point I would make is that when it does happen, it does require an action by the Board.
So that is sort of the context of it. And I dealing with just again—I do not want to parse every sentence. When you talked about postponing, you know, we prefer to view this as we were unable to conclude the review. You know, we do not think it is being postponed, and certainly payments are not postponed. Payments are either expectations or obligations, and that stream goes forward as specified in the original loan agreements.
QUESTIONER: It is proposed that in September Argentina and the IMF will begin to discuss the framework of the target, the macroeconomic target for 2005 and 2006. And this kind of postponement of the review—
QUESTIONER: Okay. Well—
MR. DAWSON: The delay in the conclusion of the review.
QUESTIONER: The delay in the conclusion of the review will postpone this discussion, or it will begin in 2005?
MR. DAWSON: Well, no. The discussions with the authorities are continuing. [The Senior Resident Representative] John Dodsworth is back in Buenos Aires. He is in daily contact with the authorities on a wide range of measures. There is a second resident representative resident there. The delay in the review does not mean there is a delay in the dialogue and the discussion.
I think we will wrap up. We are getting a little—many of your organizations at least will have the opportunity to ask the same questions next Tuesday.
QUESTIONER: I just have a technical question. When do we get the Managing Director's remarks from Jackson Hole? Will they be posted?
MR. DAWSON: No, I am not sure that we have remarks from there. He is attending. He is not speaking. I mean, he may have a few words when he speaks there, but he is not there to give a speech, no.
QUESTIONER: So what is the earliest when there would be a speech when he would—
MR. DAWSON: You will have the Managing Director giving a press conference on Tuesday in Buenos Aires.
QUESTIONER: I thought you were talking about he might be addressing the issue of oil prices.
MR. DAWSON: I was just guessing that that question might come up, but maybe it will only be Argentina. And also the APEC conference the next day, I would also note.
QUESTIONER: Tom, does this delay mean—
QUESTIONER: Does this delay actually make sense to you—well, let me put it this way: Are you giving us—we cannot use any other word than "delay."
MR. DAWSON: You can use whatever words you want. I just wish to qualify them.
QUESTIONER: Would this delay make sense if the government is focused on its restructuring, debt restructuring with bondholders? I mean, does it make sense that the government would like to delay this review so that it can—
MR. DAWSON: You are putting—you are asking me to, you know, divine why the government does something. That question is best addressed to the government. I am not going to make—you know, it is up to them to decide what their best approach is, and so I am not sure it is for me to say whether something does—in fact, I am sure it is not for me to say whether something does or does not—
QUESTIONER: Well, would you think that Argentina should use this opportunity now while it is not—while the review is delayed to reach an agreement?
MR. DAWSON: That is—I believe that is what they have stated they are trying to do. Reach an agreement with the—
QUESTIONER: With the creditors.
MR. DAWSON: With the creditors, I believe that is-they are launching the—
QUESTIONER: Well, what is the Fund's view—
MR. DAWSON: They are launching the offer.
QUESTIONER: What is the Fund's view on that?
MR. DAWSON: We think it is important for the authorities and the creditors to reach an agreement. I mean, that is been our position from the beginning. No change.
QUESTIONER: How is the process for selection for the new chief of the Internal Evaluation Office going?
MR. DAWSON: The process is going forward. This is a selection that is done by the Board, and so I will—I guess we will try to get a line from the head of the Evaluation Group at the Board as to what is going on. But they are trying to find a successor to Montek.
Thank you very much. See you in two weeks. And as I say, the Managing Director, Monday, Tuesday, Thursday, and Friday will be having press conferences in these stops. Thank you.
[Whereupon, the press briefing was concluded.]
IMF EXTERNAL RELATIONS DEPARTMENT