Argentina and the IMF
Brazil and the IMF
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Kyrgyz Republic and the IMF
Turkey 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'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings, which is embargoed until about 15 minutes after conclusion, and we'll set a precise time at that point.
A few brief announcements before I take questions. On-line press registration for the 2005 Spring Meetings of the Fund and World Bank opened yesterday. I remind everyone to register in advance. If you have any questions, contact the Media Relations Division, and we will certainly have a number of opportunities prior to the Spring Meetings to preview the agenda and issues of interest.
Moving on, the IMF and World Bank, along with the United Kingdom and Dutch Governments, last year launched an international research project on the macroeconomic challenges faced by low-income countries. The main goal of the project has been to obtain insights from the academic communities in low-income countries on the effectiveness of macroeconomic policies.
The research that was generated on the project is being presented at a conference entitled, "Macroeconomic Policy Challenges in Low-Income Countries," which is taking place at the Fund today. The conference is open to the public, and those of you who are interested in attending are welcome to do so.
Regarding management travel and public engagements, I would just like to remind you that a previously announced visit by the Managing Director to Colombia, Ecuador, Peru and Bolivia is underway. The Managing Director is in Bogotá. I expect we'll have some statements and coverage coming out later today.
The Managing Director then proceeds onto Quito tomorrow, and then onto La Paz on the 18th of February and Lima on the 19th.
On February 23rd, next week, the Managing Director—a week from today—the Managing Director will speak at noon in the Colombia University in the Kellogg Center in New York City. This event will be open to the press, and Media Relations will provide details later. Later that day, the Managing Director will receive an award or that evening will receive an award from the Foreign Policy Association and present a speech, and that event, also, is open to the press. I believe it's at the Pierre Hotel.
From February 28th to March 2nd, the Managing Director will travel to Morocco, Tunisia and Algeria. At this point, I don't have details of the itinerary, but we will get back to you on this closer to the trip.
Deputy Managing Director Carstens is currently in Uruguay for meetings with the authorities, and a local press event is being organized through Andreas Bauer, the Local Resident Representative.
Let me remind you that Fund headquarters is closed for holiday on Monday, February 21st, but the ever-vigilant and awake Media Relations Division will have a duty officer on call, and you know how to reach them through the Media Relations phone number.
And, finally, I'd like to introduce a guest from the Kyrgyz Republic, Ainura Aibalaeva, the head of the External Relations Division of the National Bank of the Kyrgyz Republic. She is visiting us to observe firsthand Fund work with the press and public in order to identify ways to enhance the National Bank of Kyrgyz Republic's External Relations activities and transparency. If you have any questions on the Kyrgyz Republic, I hope Inura will save me and answer them for me.
Now, I would like to take your questions, if you have any.
QUESTION: Do we know when Turkey is coming to the Board and how is progress going on the Turkish Government?
MR. DAWSON: To follow up on the story that we had earlier, I do not have a date on Turkey at this point. When we do, we will let you know.
The issue has not particularly changed since the last time, in that the recent mission had left with the authorities something of a work program, which they are working through.
I would hope—let me just see what sort of update we do have. In terms of requests, we know. I had indicated previously that the authorities needed to take a number of steps, which they are working on.
The issue that has I think gotten most of the attention in the press recently is plans to extend income tax and Social Security exemptions to firms in the poorer regions not just those hiring new workers, as we have indicated both in Turkey here. Hugh Bredenkamp had made a statement along this regard, that this is a source of concern to us since we think it would increase distortions, weaken the Social Security system and have a significant fiscal cost. We are encouraging the authorities to improve the scheme, in particular, to make it more targeted and to take measures to compensate for any fiscal cost.
Clearly, the important targets in the program are the primary surplus, up to 6.5 percent of GDP, and capping the Social Security deficit at 4.5 percent of GDP. And this regional incentive plan jeopardizes both of these targets, and so we are looking to the authority to take the needed high-quality fiscal measures so that these targets can be achieved, which is necessary before the new program can take effect—no date.
QUESTION: So the going to the Board has been delayed because of that?
MR. DAWSON: I mean, delayed, again, it had not been set. We had been hoping to have it by now, but, yes, in that sense it's been delayed, but it's not that it had shifted dates on the schedule.
QUESTION: I'd like to know—I have two questions—I'd like to know which were the results of the meetings that Mr. Joaquin Levy, Secretary of the Treasury, had last week here in the IMF. I think he had one meeting, specifically, with Teresa Ter-Minassian.
And another question is if the IMF has any comment to make on the current number of 42 percent of the creditors accepting the Argentinean offer.
MR. DAWSON: As far as the status of the Argentine debt offer, as we've indicated, we do think the completion of a comprehensive and sustainable agreement with the private creditors is in everyone's interests, but we are not going to be commenting on the process. We're waiting for what the results are.
With regard to the visit by Mr. Levy, I don't really have anything on that. I believe it had to do with the public investment study that has been underway that we discussed at the last meeting, where we will be having a Board discussion later on. We have a paper that has been circulated. I think the Board discussion is scheduled for after the Spring Meeting, if I am not wrong, and that paper will be public.
MR. DAWSON: Around the time of the Board discussion. I presume immediately after, but I don't have a time yet.
QUESTION: Tom, this is the first time we've seen you since the G7 meeting. And I wanted to find out if you've received, I mean, I don't know really how it works, if you receive a brief from the G7 on the gold sale, how does that work, and then what can we expect from the Fund?
MR. DAWSON: I think, certainly, I mean, it's well known from the G7 communiqué that that was an issue discussed. The Managing Director attended almost all of the meetings there. I'm not sure I would describe it as receiving a brief from the G7. I think it's quite clear that the G7 has asked the Fund to take a look at a number of issues regarding debt relief, including the possible mobilization and/or sales of gold or other ways to provide effective debt relief, in a broader context, of multilateral debt relief involving other institutions as well. And, indeed, the Fund will, at their request, be preparing this kind of an analysis of pros, cons, options, basically, for the Spring Meetings, and this is an issue that, of course, will be discussed with the wider membership of the Fund, as well. It is not simply a G7 issue, but that group has asked us to work further on it, and that's what we're going to do.
QUESTION: So does that discussion take place at the Spring Meetings?
MR. DAWSON: There, certainly, will be a discussion of it at the Spring Meetings, but it is not exclusively there. I am sure, traditionally, the seven meet the day or two before the Spring Meetings. I am sure they will discuss it. I am sure the G24, who also meet usually the same day as the G7 meet, will be discussing it, and it will be an item of, at the very least, corridor conversation at the 7 meetings, and I'm sure it will be one of the subjects touched on in the communiqué.
QUESTION: What is the Fund's position or view on debt relief on whether it's a panacea or not—not about the gold sales, but just about—
MR. DAWSON: We, generally speaking, don't believe in panaceas. We think hard work, policy efforts across the board are needed, but continue.
QUESTION: Right. I'm looking for a broader picture. You think debt relief should be augmented by policies—
MR. DAWSON: I mean, certainly, debt sustainability is critical, as we look at a wide range of our member countries, some middle income and many of our low-income countries. So debt sustainability is an important consideration. The role that debt relief can play in that, I think it's been established for 10 or 12 years, more than that, that the Fund has been active through the HIPC process. Certainly, a number of our members are interested in seeing how further debt relief might be provided.
On the bilateral side, quite a bit has been done for the very poorest countries. There's now efforts at seeing what additional might be provided on the multilateral side, but it has to be looked at, initially, as I said, in the context of debt sustainability, but, also, remember what the ultimate goal is to promote growth to improve standards of living and reduce poverty levels. Debt relief, in that context, to use the word that you used, is not a panacea. It can be an important contribution to the effort.
Good policies are important, and the Managing Director has made this very clear. Assistance is, also, important. One-of debt relief and the international community then turning their back on these countries and not providing continued assistance is not what is needed. It is an effort on a broad range of fronts. Relief, and assistance, good policies, open trade markets, all of that, open markets for trade, all of that is critical.
Clearly, in the context of coming up to the Spring Meetings, there is a particular focus on debt relief, but it is taking place in the context of a much broader work program.
MR. DAWSON: We excuse you for being late.
QUESTION: I'm sorry. I would like to know you know there have been some speculation among government officials in Argentina that the government will try to negotiate an agreement only with fiscal and monetary goals and not with structural reform conditions. I would like to know which are the possibilities of this.
MR. DAWSON: I mean, I think it's a little premature to discuss that. As has been indicated, the authorities indicated they wish to take sort of a time-out while the debt offer was launched and now will be concluded and then re-engage with us on a program.
I would, certainly, though note that there are important issues on the structural side. The Managing Director has made that clear in a number of his recent speeches. I would direct you to the Canning House speech in London about 10 days or 2 weeks ago. So we certainly think there is important work that needs to be done on the structural side as well.
What will need to be done in the context of a program if, and when, the authorities would turn to us to discuss that will be determined at that point.
QUESTION: Mr. Carstens, Agustín Carstens, made some reference I think yesterday or two days ago in Brazil about the oil still as a factor of grave risk for the economic prospects, especially among the region. There are some reports that countries like Ecuador, due to the fact that they have been having the positive income because of the high oil prices, they are now in a better economical shape, and they are not considering the possibility to ask for a new program with the IMF.
In that context, I was wondering what the IMF is telling these countries, countries like Venezuela and Ecuador how to maybe explain wisely this extra money that they are getting by the oil, I mean, the high oil prices.
And, also, Mr. Carstens made reference to the U.S. deficit as another issue of risk. In the past, you have been asked about this, and you have been avoided to answer.
I wonder if you can add a little bit of that. Also, if this issue, in particular the deficit, which now that President Bush announced his budget, he also made clear that the deficit is going to increase, I wonder if this issue of the deficit is going to be part of the agenda for the upcoming meeting.
MR. DAWSON: On the former question, certainly, for oil-producing countries, there are a significant number of them in our membership of varying income ranges—we have been talking to them about how to make best use of these resources, both in terms of well-targeted spending, but also rainy day funds, as may be appropriate, and I think there is a track record of a number of countries in the oil area, but also in other extractive industries having successfully implemented such programs. So that is part of the continuing dialogue.
With regard to the—and I guess both parts of your question were identifying risks, as it were, to the global economy—
QUESTION: [Off microphone.] [Inaudible.]
MR. DAWSON: Although the risk for the oil producers is a different kind of a risk than for the oil consumers, certainly, in terms of the kinds of measures that are appropriate, but the U.S. deficit, and we have spoken—I have spoken on it, too, I'm sorry to slightly contradict you—certainly is an issue. However, we view this as part of the pattern of global, you know, an important component, but part of a pattern of global imbalances, and it's the pattern of global imbalances that needs to be addressed, and that requires measures by a number of countries not just the United States, not just any other one that you wish to pick out.
I really don't have much to go beyond that. I would note that I think you can expect that the Managing Director, in his two appearances next week, will be addressing this issue on global imbalances. So I think you'll get a chance to hear from him on that, although I would note he, also, did address that, to some degree, at his Canning House appearance 10 days ago, but I think next week you'll see somewhat more treatment of that.
We do speak out on a number of, on the whole pattern of imbalances, whether it is the U.S. deficits, whether it is the European Structural Forum and Growth Prospects. I would note Michael Deppler, yesterday, had an op-ed that appeared in the Financial Times, and I think he did a conference call with a number of your organizations yesterday on our views on the stability and growth pact. We have, at times, also, spoken out on the need for a more flexible exchange rate system, particularly in Asia. We have talked about the need for structural reform in Japan.
So it's a broad agenda, and it's not just focused on one, and I think Mr. Carstens was bringing one up, but it's part of a, as I say, a pattern of global imbalances that we think needs to be addressed cooperatively.
QUESTION: Yesterday, the Brazilian Government announced that an IMF team would go to Brazil to evaluate fraud in the welfare system. I would like to know if you have more details about it.
MR. DAWSON: I have no more details about that. I will have to check. I am not familiar with that at all. In fact, I am not sure that's—it is a Fund team, but it doesn't sound quite right. But there may be something going on. We'll get back to you.
QUESTION: Back onto Argentina. Has there been any thought or indication—I know that the government is busy with the restructuring, but they are already starting to talk about what they see as following up on that. Has there been any sort of dialogue, even by letter or whatever, saying how they want to proceed with the IMF.
MR. DAWSON: No. I mean, they have said publicly, what they have said privately, is they wish to address this issue once the debt exchange is concluded. That is not to say we're not in contact because there is a regular information flow. We have a senior resident representative in Buenos Aires. But in terms of the next steps, which I think is what your question is about, the public position and the private position, happily, happen to be the same. It is easier to remember that way.
QUESTION: What do you think the options are here?
MR. DAWSON: I think that's speculative.
I think we're going to wrap it up pretty quick.
QUESTION: No, no. Don't wrap up yet.
MR. DAWSON: No, no. That's why I called on you. I said "pretty quick."
QUESTION: What I would like to know is you say all the time that you have these contacts, ongoing contacts (with Argentina). Do you consider that there was any progress on the structural reform side during this period?
MR. DAWSON: Indeed, there have been some areas where progress has been made. I understand that, for example, with some of the larger utility companies there have been some renegotiation of contracts, also, in some of the I think the port and railways, for example. So there has been some in that regard, but it is a broader issue than just that. But there have been areas in which there has been progress, yes.
QUESTION: I have a question—
MR. DAWSON: We are observing this. We are not a party to that—
QUESTION: I know.
MR. DAWSON: It's just a fact that, indeed, there have been some longer-term agreements reached.
QUESTION: The subject, generally, was the jurisdiction of the World Bank. Is it going to become a jurisdiction now of the IMF, also?
MR. DAWSON: Well, I mean, they certainly have the lead in terms of utility sector issues, and we work closely with the Bank and cooperatively. I think, since we don't know the nature of the program at this point, I can't say what will or won't be in the program and what will or won't be the Bank's lead responsibility.
But in the context of trying to get Argentina onto a sustained growth path, which is, indeed, the objective, I think there is no doubt that structural reform, including in the utility area, is important. Exactly how that is worked out in context with multilateral organizations in the program is way too early to tell because we haven't reengaged, but it is certainly an issue.
MR. DAWSON: Thank you very much. We will lift the embargo at 10 minutes after 10:00. And someone will have to remind me, since I'm on the wrong page, as to what time that is GMT—1510, GMT. Thank you.
IMF EXTERNAL RELATIONS DEPARTMENT