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'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular briefings. The briefing is embargoed until 15 minutes after conclusion, and we'll set a precise time at that point.
As you know, the Spring Meetings of the Fund and Bank will be held on April 16-17, and I expect to have a couple more briefings--I'm sorry, three more briefings before the meetings to preview some of the agenda items. However, there are some events between now and the Spring Meetings that I would like to draw your attention to.
Gerd Häusler, Counsellor and Director of the Fund's International Capital Markets Department, will hold a press conference on Tuesday, April 5th, to review the latest Global Financial Stability Report. This press conference will be at the Bank of England in London, and Media Relations will send you an advisory on this once the details are finalized.
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 the analytical chapters of the latest WEO will be posted on the IMF's password-protected Media Briefing Center on April 5th, for release on April 7th. On April 7th, Raghu Rajan, Counsellor and Director of the IMF's Research Department, will hold a global teleconference to review the analytical chapters. The Global Forecast chapter, Chapter 1, will be released on April 13th, and Raghu will hold a press conference here at Fund headquarters that day, and the WEO--to preview the outlook, and the WEO forecast will be posted on the Media Briefing Center 24 hours prior to the April 13th press briefing, again on an embargoed basis.
As for official publications, I'd just like to take note that the Fund has just published "Post-Conflict Economics in Sub-Saharan Africa," a book edited by Jean Clement of the Fund's Africa Department. The book examines the reconstruction effort in Africa's Great Lakes Region, where one of the bloodiest wars since World War II took place, and concludes that economic policymaking can play a helpful and key role in the peace process. We plan to organize a presentation of the book, and Media Relations will send you an advisory once the plans are finalized.
The March issue of our quarterly magazine, Finance and Development, is now available on the Fund's website, and I believe Media Relations sent you an advisory and advance copies last week. This issue focuses on international trade and the Doha Round.
Regarding management travel and public engagements, the Managing Director will be traveling to Shanghai on March 14-15 to meet with government officials as well as representatives of the private sector. Following his visit to China, he will then travel to Mumbai to deliver a speech at the Reserve Bank of India and then to New Delhi for meetings with the Indian authorities. Again, Media Relations will be in contact regarding press availability during these visits.
Deputy Managing Director Kato will travel to London on March 17th to deliver a keynote address at the Summit on the Extractive Industries Transparency Initiative, EITI, organized by U.K.'s Department for International Finance and Development, affectionately known as DFID.
Deputy Managing Director Carstens is today in Acapulco for a meeting of the Mexican National Bankers Association, and Francisco Baker from Media Relations is with him if you'd like to give him a call.
And now I'd like to take your questions. And proper decorum in identifying yourself and your organization. Thank you.
QUESTIONER: Do you have an update on Turkey? Is there any progress toward stand-by plans?
MR. DAWSON: With regard to the stand-by, and in particular, I think you would be interested in the timing of a Board meeting, there has been no change since my last press conference. No specific date has been set as the authorities are still working on the measures needed to facilitate Board consideration of the new program. The authorities are making progress on the structural reform steps needed in the area of tax administration, banking, and social security reforms to facilitate Board consideration of the new program. However, the steps are not yet complete.
As you may recall from my last press conference, we are concerned about the government's plan to extend income tax and social security exemptions to all firms in poorer regions as opposed to just those hiring new workers. And it appears that the authorities are considering adjustments to the scheme, and we hope that this will make it more targeted and reduce its cost. However, no definitive decisions have yet been made, and we will need to see the final scheme to be able to judge the extent to which it resolves our concerns.
QUESTIONER: The Argentinean press is announcing today that Mr. Lavagna is coming to Washington to have a meeting on Sunday with the IMF. Can you confirm this?
MR. DAWSON: Yes, I can confirm that Minister Lavagna will be coming to Washington over the weekend. I wouldn't steer you to just a Sunday meeting. I think there will be a meeting early in the week as well. I believe actually that Minister Lavagna may be making some comments to the press in the next few minutes confirming that as well.
QUESTIONER: Holidays are finished. We are back.
First of all, I wanted to know if you have any reaction to the results of the [inaudible] that, as you know, the government considers very successful. And, second, also if you can comment about what is the subjects that Messrs. Lavagna and Rato are going to discuss.
MR. DAWSON: Let me first give some initial comments. I think we need to, of course, take note that the official announcement by the authorities of the results of the exchange offer will not take place until this afternoon, but I think there is general understanding of the range of--of the nature of the announcement, and we'll in a sense anticipate that here. But I will, of course, not go into details about acceptance levels, et cetera, et cetera. That is something we would need to analyze in any event.
But conclusion of the debt offer is an important step for Argentina, and we are looking forward to finding out the breakdown of participation and non-participation before making a final judgment and analysis. And, of course, we'll need to consult with the Executive Board and our members.
The conclusion of the offer, though, comes at a good time in the global economic conjuncture, with low interest rates, inflation, and good growth prospects. I would reiterate what I have said on a number of occasions, that Argentina has established a strong macroeconomic performance recently, and this leads us to the view that this presents an important opportunity for Argentina to move forward since there is a lot of work remaining for the country ahead to achieve a sustainable growth path in the years ahead. And we are committed to continuing to work closely with the authorities in the period ahead.
I would note in that regard, I would have said it except that President Kirchner said it before I did, so I had to actually literally change my talking points. But he said it was a very important step--this is quoting President Kirchner--"but we have to make much more important steps to move forward." And I think we quite agree with that. We look forward to seeing how we can work together, and the visit of Minister Lavagna should be very much seen in that context, and I think it is something we've indicated that the authorities had told us that they expected to re-engage with us to discuss what the next steps vis-a-vis the Fund and Argentina would be once the offer was concluded, and the Minister's visit I think is--while it is news, it is by no means unexpected.
QUESTIONER: Can you confirm with the European press said that the IMF revised downward its growth prospects for the euro zone?
MR. DAWSON: We do not discuss WEO forecasts except when we actually make the WEO forecast and when they are actually released. This has become something of a tradition for numbers to come out in advance, and it's, you know, unfortunate in one sense. But, on the other hand, I would also note that if you go back and look at the records of these numbers having been leaked in the past, quite often when the report actually comes out, they are different than the leak was because, in fact, the WEO process, the collection of estimates and so on, is very much a work in process, and sometimes perhaps a bit too much attention is paid to relatively small number changes from one point to another. You'll have the WEO numbers in about a month, and they will be final at that point.
QUESTIONER: I wonder if you have any news from Brazil on whether they want an agreement or not. Also, related to this, how is this change in the objective in the primary surplus, you know, play into the negotiations with the IMF? I mean, I saw the statement that was, you know, issued by the IMF in this regard.
MR. DAWSON: Well, I don't really--in terms of the public investment treatment of it in the accounts, I don't think I have anything to add to what I had indicated before. I mean, we have worked closely with the authorities. I believe I saw Joachim Levy had announced some measures, you know, particular projects and so on, I think focusing on the roads area going forward, and we were happy to have worked with him.
As I've indicated, it doesn't have a direct impact into the present program. Your first question was what about--I think your first question was really what about the prospects for a possible new program, and it's exactly where we had indicated before. The authorities are considering what their options are, and we are in close contact with them, but I have nothing new to report from the last time. The only thing new from the last time is this announcement that Levy made in terms of some details on the public investment program, but that is distinct from their consideration of the program, which is, as I said, very much back--you know, it's in their court.
QUESTIONER: I have a follow-up on the meeting with Mr. Lavagna. I'd like to know if you can confirm that he's meeting Mr. Rato. And I'm also wondering why this meeting is taking place during this weekend.
MR. DAWSON: I tried to steer you away from thinking that the meeting was taking place during the weekend. He is coming up, as I understand it, over the weekend, whether there's a meeting Sunday, Monday, Tuesday. But I would not characterize it as "a weekend meeting." They may see each other on the weekend, but they will certainly see each other during the week as well. So the weekend--there is a daily airplane flight, I'm aware of that. But I would not call it "a weekend meeting." This is completely to be expected after the conclusion of the agreement. And, yes, he will be meeting with Mr. Rato.
QUESTIONER: Are you expecting he's staying then up to Wednesday or--
MR. DAWSON: I have no idea. I would suspect it would be at least two days.
QUESTIONER: Okay. I have another question--
MR. DAWSON: And I'm not a hundred--I believe he arrives on Sunday, but I'm not a hundred percent certain on that. If I believe Clarin, that's true. And, of course, I believe Clarin.
QUESTIONER: Of course. Do you think that one of the subjects they are going to discuss is what to do with the creditors that are left out of the--
MR. DAWSON: I think they have a wide range and a long list of issues that they could discuss, and I don't want to anticipate which ones they will or won't discuss. Certainly how the debt offer went is certainly going to be an issue of discussion.
QUESTIONER: I just wondered if you could comment on the timing of an IMF mission to Angola.
MR. DAWSON: Let's see if I can't.
I'm sorry, I don't have anything on it, and we will have to get back to you. Okay. Thank you. This follows the rule that there's always one, at least one country for which I'm completely unprepared.
QUESTIONER: La Nacion, Argentina.
MR. DAWSON: You had the story, too, I wish to announce, about the visit. But I saw Clarin's first. That's because my--
MS. BARONE [of Clarin]: We both published--
MR. DAWSON: That's because my favorites at home on my Internet Explorer, C becomes before N.
QUESTIONER: Following up with the questions about Argentina and Mr. Lavagna, he's coming on Sunday. He's going to meet on the next following days. Is he going to meet also with [inaudible] staff? Is he--
MR. DAWSON: I think it would be fair to expect that he will meet--you know, certainly he's meeting with Mr. de Rato, and it is, I think, fair to expect he will be meeting with senior staff and other members of management, too, assuming they're around.
QUESTIONER: Can we understand it like it's the official opening of the (?) --
MR. DAWSON: No, I think that would not be an appropriate conclusion. This is simply--as we had indicated from the beginning, we expect that the authorities would wish to resume conversations with us after the conclusion of the debt offer. That has--you know, and the announcement, which is what is coming up this afternoon. And this discussion, while I'm sure will go over a wide range of issues, should not be viewed as an opening of negotiations or anything like that. This is simply, you know, what happens as the authorities now are able to turn their attention to a number of issues, macroeconomic issues, their own programs, and how the Fund fits into that.
QUESTIONER: Have the Argentinean authorities told you whether they want a new agreement or they want to renew the one that they have now? And if not, do you expect that they will tell Mr. Rato?
MR. DAWSON: I do not want to anticipate--it certainly would not be my job nor appropriate for me to anticipate what the Argentine authorities will be raising with Mr. Rato. I think it's a broad range of issues, but I think it is clearly premature to be describing this, as a previous question had implied, as an opening or reopening of negotiation.
QUESTIONER: Something simple this time. Do you expect any communiqué at the end of the--
MR. DAWSON: That's a good question, and I have thought about it. I would not expect that you will hear anything from us over the weekend, if you'd like some guidance, but in terms of on Monday, I think you can expect we would probably--or whenever it's concluded. But I would expect that we probably would put a press line out for you and be in touch. And I'll talk with Hector Torres because I'm sure that the Argentines would be interested in doing something like that.
And as I indicated at the outset--I know people came in late--it is my understanding that Minister Lavagna is making--is going to be available to the press shortly and may be making some comments about his visit as well.
Okay. One last, last try.
QUESTIONER: Okay. Anna asked about the exchange, the restructuring. You mentioned that it's going to be one of the issues. But the difference--
MR. DAWSON: It's inevitable that it would be one of the issues because it is the major event that has happened, and it was always, you know, the event that we expected to need to happen before we resumed discussions on next steps with Argentina and the Fund.
QUESTIONER: Yes, but my question is: Given the differences, the wide differences between the acceptance rate between the local tenants and the foreign tenants, is that going to arise like another issue inside that issue?
MR. DAWSON: I don't think it's appropriate for me to respond to that because as I indicated in my statement, among the things we're looking at is the various--will be looking at are the various participation rates among classes of creditors, internal and external, et cetera. And we'll just have to take a look at it at that point. And this is an issue, of course, that will need to be looked at not just by the staff but also by management and by our Executive Board and the members. But as we indicated, it's an important step forward, and I think it will give us a broader range of questions for you to ask and me to answer at future press conferences.
Thank you very much. I'd like to indicate that we will lift the embargo at five minutes after 10:00 Eastern Standard Time, which is equivalent to 1510 GMT.
Thank you very much. 1505 GMT, sorry.
IMF EXTERNAL RELATIONS DEPARTMENT