Thomas C. Dawson
Thomas C. Dawson

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Brazil and the IMF

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Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, September 9, 2004
Washington, D.C.

View this press briefing using Media Player

MR. DAWSON: Good morning, everybody. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings. As usual, we are embargoed until about 15 minutes after conclusion, and I will set a precise time at that point.

As you know, the Annual Meetings of the Fund and World Bank will be held at the beginning of October, and I will likely have one more briefing before the meetings to help review some of the agenda items. However, I'd like to remind you that the deadline for press registration is September 24th, and registration should be made online.

There are also several public events between now and the Annual Meetings that I'd like to draw your attention to.

The Managing Director will speak in New York at the Council on Foreign Relations on September the 20th, 8:00 a.m. is the speech, I believe, and that will be his major public appearance before the Annual Meetings press conference on September 30th. The New York event is open to the press. The actual speech and Q&A is open to the press, and then we'll have a press availability for half an hour or so. And Media Relations will issue an advisory on this shortly, and I believe the Council will also be putting out a release.

The Managing Director will also attend a meeting of heads of state and international institutions at the United Nations on September 20th, which is focused on action against hunger and poverty. You may recall that Brazilian President Lula da Silva has been a leading voice among leaders calling for a more concerted global effort to fight poverty, and President Lula will be among the speakers at the event. I believe President Chirac, President Lagos, Secretary-General Kofi Annan, among others, will be there.

Additionally, Gerd Häusler, Counsellor., and Director of the Fund's International Capital Markets Department, and Hung Tran, the Deputy Director of the department, will hold a press conference on Wednesday, September 15th, on the latest Global Financial Stability Report here at Fund headquarters. Media Relations issued an advisory on that yesterday.

The World Economic Outlook will again be released in two parts. You'll receive an advisory from Media Relations with details, but let me note that Raghu Rajan, Counsellor and Director of the IMF's Research Department, will hold a global teleconference on September 22nd to review the analytical chapters of the latest WEO. The Global Forecast chapter will be released on September 29th, and Raghu will hold a press conference at the Fund's headquarters that day to review the outlook.

All documents will be made available on the IMF's password-protected site for journalists, and we will also web cast the Global Financial Stability Report and WEO global outlook press conferences.

First Deputy Managing Director Anne Krueger is traveling today and tomorrow to Nottingham, England, United Kingdom, to deliver a lecture on the world economy at the University of Nottingham. On September 12th to 15th, she will be traveling to Moscow to deliver a keynote speech on Transition in the CIS countries at a conference of the Institute for the Study of the Economy in Transition. Both events involving Ms. Krueger are open for the press, and there are also plans for a press conference in Moscow. Media Relations will provide further information on these plans shortly.

And now I'd be happy to take any questions.

QUESTIONER: In past years, we saw an increased security at the Annual Meetings due to the concern for protests. I wonder if this year is going to be any change in security, especially after these reports about the IMF and World Bank being possible target of terrorist attacks. You saw what happened a couple of hours ago in Indonesia. So I wonder if the IMF is, you know, considering to taking some extra precaution this year due to this threat.

MR. DAWSON: Well, I think simply approaching the building today, you will have seen extra precautions already in effect, both in a short-term and a longer-term nature in terms of some of the construction projects around the building. And, yes, I certainly expect that we will have enhanced security for the meetings this fall. I don't think it's appropriate to go into the details. I think they will become apparent—the ones you need to know about will become apparent as the events transpire.

Clearly, it will be advisable for those participating in the meetings to allow plenty of extra time for the sort of security screening process that has always been a feature of the institutions, but in the last four years or so has become more evident and, unfortunately, more necessary.

QUESTIONER: Is there a timetable in terms of things to be done with Turkey in terms of the Ninth Review and the planned arrangements with the IMF after the present one ends?

MR. DAWSON: I don't really have a detailed timetable. Let me just sort of express where we are.

As you know, but just to repeat for the rest here, the Turkish authorities recently announced that they have decided to request a successor to the current Fund arrangement, which has delivered very good results and which expires in February 2005. The authorities are presently working further on formulating the policies required to sustain the existing strategy of disinflation and debt reduction aimed at sustaining the robust growth.

As far as a mission or further discussions go, a mission to begin discussions on the new program is likely to visit Turkey before the Annual Meetings, and we would hope to be able to make an announcement shortly on the exact dates of the mission. As you know, we are pretty transparent on that, and typically at the end of the mission there is some form of at least a press statement or press briefing or whatever.

QUESTIONER: I was wondering if the increase of the primary surplus is a condition for the postponement of the payments that Argentina has to do.

MR. DAWSON: Well, I don't think—I mean, we're in a situation clearly where the authorities, as we've indicated, as they've indicated, are focusing on the debt restructuring offer. They're in a broad policy dialogue with us. The extension of repurchase expectations, which is what you were referring to, is something that they've indicated they will ask. It hasn't actually been formally requested yet, but assuming it does come—and we expect it will—it would be—need to be considered by the Board. And at that point we'll see what the circumstances are.

The program, the third review, as you well know—I don't want to repeat too much of what we've said before, but we were unable and the authorities were unable to conclude the Third Review. But the dialogue on all of those issues continues. I believe it's September 15th the new budget will be coming out in Buenos Aires, federal budget, so there is a lot going on now. But I think indicating what is related—in any, you know, formal sense, what is related to what, I can't really indicate at this point. We will, I presume next week, probably have some indication for you on the current state. And while we don't have a briefing next week, I'm sure in some way we'll be able to let you know.

QUESTIONER: But is there an expectation that they will increase the primary surplus—

MR. DAWSON: At this point I can't answer that. I mean, the authorities have the budget process going forward, we have issues we're discussing with them, and I don't think it's appropriate to discuss the contents of the negotiations. We know what the various issues that the authorities are looking at in terms of their own budget and planning. We know what's in the program, and we know that the authorities at this point, as I said, are focusing their efforts in the period ahead on the restructuring program.

So sorry not to have more for you on that. As I do say, I expect before the Annual Meeting, and probably a week or so before the Annual Meeting, we will have more—an update on the expectations issue, and when we do, we'll find a way to let you know.

QUESTIONER: Thank you.

MR. DAWSON: I suspect you might also hear from Buenos Aires.

QUESTIONER: Tom, the Ecuadorian finance minister met with the Fund this week. What's the state of play there? And have they decided yet what kind of program, monitoring program, they're going to go into?

MR. DAWSON: You're correct. We met, the Fund staff met yesterday with the Minister of Finance to continue discussions on the modalities, which is your word for possible arrangements or whatever you call it, a future Fund-Ecuadorian engagement. The authorities obviously were also meeting with IDB and the World Bank about possible support for 2005.

The authorities do not plan to seek a stand-by for 2005 but are exploring other options for involvement with the Fund that could allow them to gain access to IDB and World Bank financing. So the issue is at play. Exactly what it will be, we do not know, but, you know, it is not expected to be a stand-by arrangement.

QUESTIONER: What is the difference between—I mean, because they're seeking some sort of monitoring one, so I gather there's the enhanced surveillance and then there's the monitoring—staff monitoring program. What is the difference between those two?

MR. DAWSON: I don't—I'm not prepared at this point to go into the theological difference. I think some of that's actually on the Web.

The practical issue is that the development banks—the IDB and the World Bank—like to have a view from the Fund in terms of the nature of the macro program as an input to their consideration of certain types of loans. Some types of loans don't require that kind of an indication; some types of loans do. The more you get to program or more general purpose balance-of-payments type loans, the Fund—some form of Fund either program or something less than a program, enhanced monitoring, staff-monitored program, et cetera, is enhanced surveillance, rather, is what you often expect. That is exactly what, you know, the issue is at this point, and I don't think we can say yet. The meeting was only yesterday, and presumably we will be in touch with our sister institutions on that as well.

QUESTIONER: During the recent visit of the Managing Director to Brazil, President Lula asked him to analyze a possible new mechanism for precautionary help. I'd like to have some details on this conversation and how does the IMF see this request.

MR. DAWSON: Well, first of all, I don't think it's appropriate for me to discuss the content of the discussion of the Managing Director and the President. The contingent credit line expired some time ago. A number of our members, including Brazil, are interested in some form of an arrangement that could be viewed as a successor to or a different form of the contingent credit line. And as indicated, the Brazilians have an interest in that. I think there are many in the institution interested in it. However, any facility that is created requires a broad-based consensus to go forward, and at this point we don't have a consensus in that regard. But it is very much an issue that remains on the table, and I think it is fair to say—I mean, your report is accurate. Certainly President Lula indicated an interest in this. A number of other governments have as well, and we are trying to see if something like this can be developed. But it does, as I indicated, require a consensus of the members. It's not just something we can announce and implement.

QUESTIONER: What kind of mechanism would it be? Without a Fund program, do you have any ideas that can be disclosed?

MR. DAWSON: Any kind of financing mechanism will be a Fund program, but the question of how it is set up, how it is triggered, whether it, you know, is a spin-off of the now expired CCL in terms of how it's designed, whether it is a version of a precautionary arrangement, whether it is some new type of facility, nobody knows and that's exactly what people are trying to see, whether there is a consensus as to whether something can be done. But I repeat, there is not a consensus. There are some members who don't believe this is necessary; there are many members who believe it is necessary. And that's one of the realities of this institution where we have a decision-making process that is broad-based and requires consensus.

QUESTIONER: A month or so ago, the Managing Director said that he was conducting a strategic review of the Fund and that it would be released in October. Is that timed to be released during the meetings? And can you tell us a little bit more about what sorts of things will be looked at in that strategic review?

MR. DAWSON: Well, I mean, there are—it is natural in the annual cycle, it's natural in the cycle of a new Managing Director, and it's natural in the cycle of this being our 60th anniversary that, you know, a certain amount of self-analysis, introspection take place—and, I might add, also a great deal of external analysis and criticism and so on takes place. And there is a process internally as well as among a number of groupings of our member governments to undertake a review of—in our case, of the Fund and how we are operating, ranging from a policy point of view, a facilities point of view, to an administrative point of view.

All of that is underway. I certainly expect that this will be a subject that is discussed around the Annual Meetings, before, during, and after the Annual Meetings. And I suspect we will be—you know, information will be released in that sense of the world. I don't think there is a definitive study that gets released in October, but certainly it will be a significant topic of discussion at the meetings.

QUESTIONER: Tom, how close are we on the—or how close are you on a financing deal with Iraq?

MR. DAWSON: Ah, I could just tell by the lead-up of your sentence, so I started turning to the right tab.

QUESTIONER: And obviously you're going to [inaudible]—

MR. DAWSON: No—who knows? That's for you to determine. I recall the first briefing I did, which is almost five years ago, at the end of the briefing, I think Mike Phillips said, "But, Tom, you didn't make any news." And I said, "I didn't know that was a requirement."

But, in any event, a mission visited Paris September 4th and 5th and met with senior Iraqi authorities. The mission made good progress in its discussions of policies that could form the basis of an economic program that could be supported under the Emergency Post-Conflict Assistance Facility sometime in the last quarter of 2004. And staff will have further discussions with the authorities at the time of the Annual Meetings in a couple of weeks.

QUESTIONER: [inaudible].

MR. DAWSON: No, but this is—I mean, I will draw you again to the words "good progress" and "further discussions at the Annual Meetings."

QUESTIONER: [inaudible].

MR. DAWSON: And reiterating "last quarter of 2004," if you want me to—

QUESTIONER: [inaudible] was always—

MR. DAWSON: No, but this is—you know, we're getting closer to 2004, the last quarter of 2004, and it is still the line.

QUESTIONER: This emergency—what's the official title?

MR. DAWSON: Emergency Post-Conflict Assistance.

QUESTIONER: Does that require the arrears situation to be resolved first, or is that something that can—

MR. DAWSON: The arrears to the Fund, certainly. And it requires—you know, there is an iteration between Paris Club and the Fund, but there is no requirement for a debt deal in that sense.

QUESTIONER: So it doesn't have to be—the Paris Club doesn't have to be sorted out for this to happen.

MR. DAWSON: They don't have to reach a conclusion, no.

QUESTIONER: Like Brazil, like the question about Brazil a few minutes ago, could you also say that some members could be in favor of a successor program for Turkey, probably supported by IMF funds, and some members may think that it's not necessary?

MR. DAWSON: No, I don't think I would want to go into that subject. The Board is certainly aware that the authorities have indicated this interest, and the Board will consider it at the appropriate time, particularly after they hear from the next mission. Nice try, though.

QUESTIONER: Going back to Iraq, I wonder if outside the financial and economic issues the IMF mission is also considering the security issues, especially since we have seen that the country is not, you know, fully stabilized. There are acts of violence almost every day. So I just wonder if, you know, this is a separate issue on these talks or this is something that in some way the IMF is considering to, you know, going further in these talks.

MR. DAWSON: I mean, it's obviously a factor in what's going on, but the nature of emergency post-conflict assistance is that there are those sorts of risks and concerns. But obviously it's a factor. But it is not stopping us from doing the work that we need to do.

QUESTIONER: Does it mean that you don't plan to send any staff to Iraq in the next month?

MR. DAWSON: I have no indication that the staff, you know, of what the—other than the mission—I'm sorry, their mission to us in October, that's the only additional visit I have in mind, and I think it's obvious for security reasons we do not discuss in general when and where meetings are taking place. The fact, however, that we're having an Annual Meeting is, I think, a reason to give a little more guidance. An Annual Meeting here.

QUESTIONER: Always on Iraq, but the IMF, does it plan to be part of the meeting in Tokyo at the middle of October, the meeting of donors announced two days ago?

MR. DAWSON: I'm not aware. I think in the past we have tended to attend those meetings, so Bill will have to get back to you on that. The earlier sessions like that we have attended, but I don't know.

QUESTIONER: Staying on Iraq, I just want to find out, the IMF did the debt sustainability assessment. Is there follow-up to that at all? And how far are those debt talks, do you have any idea?

MR. DAWSON: The debt sustainability analysis was provided to the Paris Club, and I think major donors have it as well. I believe the Iraqi authorities have it as well. And it presented, as we've indicated before, a broad analysis with a number of different scenarios and assumptions, no recommendations, and that was sort of an input to the Paris Club. And I think the—beyond that, your question is better directed toward Paris Club, which, as I'm sure you know—AFP can confirm—is meeting to discuss this issue today, or toward the donors. I mean, we provided technical input to this process, and that's where I dealing with want to leave it.

QUESTIONER: This is on the same subject, but I just want to clear it. You said that, you know, for IMF to provide post-conflict aid, you'd have to clear up the arrears, Iraq would have to clear up—

MR. DAWSON: Our own arrears.

QUESTIONER: Right.

MR. DAWSON: Which are relatively minor, because we never—we have not had a loan outstanding to Iraq. What we have is something in the so-called SDR account.

QUESTIONER: Right, but the Paris Club does not have to be sorted out, but—

MR. DAWSON: The Paris Club—we need to have—you know, we look to the Paris Club, the Paris Club looks to us, to make sure that going ahead is something they're comfortable with and we are comfortable with their state of play. So there is an interrelationship with that. But you're not going to have a signed, concluded debt deal. That's the issue. I mean, maybe you will, but the post-conflict assistance is intended to go forward as soon as the conditions are adequate. But it does require, you know, communication and understanding between the major donors, the Fund, and the Paris Club.

QUESTIONER: Okay. But to turn that around, I mean, you didn't—you said the IMF doesn't have to have a side debt deal, but does the Paris Club have to have an IMF program to—

MR. DAWSON: You'd have to talk to the Paris Club about that because that's their—those are their—you know, that's their remit.

QUESTIONER: Is there some indication yet that they're going to settle those arrears pretty soon, or have they settled them already with the IMF?

MR. DAWSON: I do not believe they have settled them. You can check on the web because that's there. But, no, as I say, it's not—the size of arrears to the Fund is not a significant issue. I mean, take a look at the website. I don't have the numbers in front of me, but as I say, it stems from the SDR account, which is they're drawing down their SDR—I mean, they're turning their SDRs into currencies and then being able to—and then using the proceeds, and they were unable to make payments on the SDR account over the years when the embargo was in effect because the transfers couldn't be made. So it's not a debt issue in a practical sense.

QUESTIONER: Some days ago, [inaudible] published a report or a statement that Mr. Torres in the Board complaining about the intervention of the IMF in the negotiation of the debt. I would like to know your reaction to that.

MR. DAWSON: Well, I mean, I think that question—you know, the Executive Directors representing countries often make statements, and I have a general practice of not commenting on their statements. You might ask Mr. Torres, but I don't have anything to say on that.

QUESTIONER: But on the intervention—on the fact that at the same time that the creditors were launching a new statement, if you want, about the sustainability of the debt, the IMF did the same, and they coincide by perhaps chance. Can you comment on that?

MR. DAWSON: I mean, you know, obviously we have a continuing close working relationship with the Argentine authorities, and we are—you know, we do analyses all the time with them, nothing secret—secret from you but nothing secret from them. And that's the way it is. And the debt talks, the commercial debt talks that you refer to, are a completely independent matter.

I think we've exhausted ourselves, so we can lift the embargo at 10 minutes after 10:00. Thank you very much, and we'll see you in a couple of weeks.




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