Argentina and the IMF
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Transcript of a Press Briefing by Thomas Dawson|
Director of External Relations Department
International Monetary Fund
Wednesday, October 12, 2005
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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. As usual, the briefing is embargoed until approximately 15 minutes after conclusion, and I will set the precise time at that point. A few operational announcements, and then I'll be happy to take questions.
We will be issuing a press release following this briefing which outlines the Managing Director's upcoming travel to Asia, the Middle East, and Europe. His mission, which starts—well, actually he leaves town tomorrow, the 13th, but the visits between the 14th and 20th will include stops in China for the G-20 meeting, in Saudi Arabia for the Gulf Cooperation Council ministerial meeting, and Pakistan for meetings with the authorities. After Pakistan, he'll visit Brussels for a meeting of the Capital Markets Consultative Group, which, you may remember, is our advisory group, informal group of capital markets participants. He'll also have meetings with committees of the European Parliament.
The visit to Pakistan had been planned for some time, but has been reconfirmed with the authorities. The horrific events that have unfolded in recent days will give—certainly the MD will have a chance to take some time to personally deliver his condolences and to consult with officials about the impact of the earthquake on northern Pakistan and the region. As you know, we did issue a statement over the weekend on the earthquake.
I'd also like to quickly mention a couple of events already published or posted on the Fund's website: the Sixth Annual Jacques Polak Research Conference on November 3rd and 4th and a public forum on November 4th, which is essentially at the tail end of the Research Conference, entitled "Reforming the IMF: Governance and the Executive Board." Actually the title that's written here in my comments says "Reforming the IM," so clearly a letter dropped out of this just as apparently a letter or two dropped off of our building the other day, which was kindly noted by Reuters, and the name is back up there.
I would also note, though, for those of you who may not have been around as long as I have, or as long as Jacques Polak, who is, I think, 92 years old now, quite a legend in the Fund, one of the early Research Directors, et cetera. Mr. Polak was at a town hall meeting of the staff the other day that the Managing Director addressed, and Jacques came up and, shall we say, buttonholed me to note that "Visitor's Center," the sign outside on the corner, was mispunctuated. Instead of being s apostrophe, it was `apostrophe s.' So we should all do as well as Jacques Polak at age 92. It has been corrected, just as the name on the door has been put back up. With regard, however, to the Research Conference, details are available on the home page of the website.
I'll be happy to take questions now. And please identify yourself and your organization. Thank you.
QUESTIONER: I think the IMF mission is in Turkey today. Could you give us an update about what will happen with Turkey in the next several months?
MR. DAWSON: Well, I can't—
QUESTIONER: Also, do you have a comment on the launching of the accession talks between the European Union and Turkey?
MR. DAWSON: I think certainly the launching of the talks is an important development, and I will link the launching of the talks to the launching of an occasional paper by Fund staff over—I guess it came out during the holidays, an occasional paper that I believe the co-author included Reza Moghadam, who is the new chief advisor to the Managing Director. There is, of course, no relation between those two.
With regard to the mission, indeed—and we did put out a statement, the resident representative did, last night, I guess, indicating that a Fund mission headed by Lorenzo Giorgianni is visiting Turkey beginning today to continue discussion with the authorities on their progress in implementing their program, which is supported by the Fund under a three-year stand-by arrangement. The discussions are picking up discussions that began on September the 8th and continued during the Annual Meetings.
I am unable, however, when I almost interrupted you, I am unable, however, to predict what the progress of the talks is going to be over the next several weeks. But we will, in fact, of course, keep you up-to-date and informed of what is going on.
QUESTIONER: On Argentina, first, I wonder if you could give us an update on what's happening, whether you're negotiating with Argentina or not, or what is the status. And then also recently there have been more signs of inflation in Argentina, which is something that the IMF has pointed out in the past. So I wonder if you could tell us what the IMF thinks that Argentina should do to curtail the increasing prices there.
MR. DAWSON: In terms of the status of the discussion with the authorities, there haven't been any specific developments since the last press briefing or since the Annual Meetings, but as always, we maintain an active dialogue with the authorities, both headquarters staff and our resident representative office in Buenos Aires.
Certainly we are aware of the numbers that have been coming out on inflation, as well as other numbers, including continued strong growth. I don't have any comments on that one in particular, but clearly the importance of the Argentines developing their program and keeping an eye on the inflation front, as well as other indicators, is important. And I think they recognize that, but I don't have any particular comments. You know, these are figures that come out—I think new figures came out again this morning. So I don't think I want to respond on a day-to-day basis.
QUESTIONER: Last week, Senator Schumer and others in Congress on China said that the IMF should take a stronger role in monitoring currency exchange rates. I wondered if you had a comment on that.
MR. DAWSON: Well, certainly it is the role of the Fund and we think we are fulfilling our role in terms of monitoring exchange rate and other economic, macroeconomic developments in all of our member countries, particularly the important systemic countries, and we think we are indeed doing that. Our position on these issues has been public, and I think reasonably well understood for some period of time. I'm sure these issues will be—a number of these issues will be discussed at the G-20 meetings that will be taking place this weekend near Beijing. But I think we certainly are aware of our responsibilities and believe we are and will continue to fulfill them.
QUESTIONER: Talking about the G-20, what other issues do you think are going to be coming up and that the MD will be raising in his—I guess he gives a speech?
MR. DAWSON: Well, I think it's—the G-20 meeting is, of course, the G-20's meeting, so I think in terms of agenda and so on, the questions are best directed toward them, toward their Secretariat. Certainly the Managing Director will be attending. This is a regular practice with this organization as well as a number of the other G's, as well as regional organizations. And traditionally the Managing Director does provide an assessment of the state of the global economy, an update from perhaps what was discussed at the meetings last month or early this month—last month, and certainly the strategic review and our progress in implementing the strategic review of the IMF. I know this is an item of interest that will be discussed there. And I don't think—I mean, you can try a follow-up question, if you wish, but I don't think I have much beyond that. However, I should note there will be a press briefing by the Managing Director at the G-20 meeting. As I recall, it is toward the end of his participation in the meeting, I think on Saturday.
QUESTIONER: Do you expect the question of the reapportionment of quotas and seats to be raised?
MR. DAWSON: Well, I mean, I've certainly seen some press speculation to that account. I am sure in terms of corridor conversation certainly, but, of course, the strategic review itself contemplated that voice and representation and quotas was an issue that needed to be addressed going forward. And I'm sure it will be coming up. In particular, with the G-20 meeting this year being hosted by China, this is, of course, of particular interest in Asia, but it is all over. I mean all over. I noticed a comment from Minister Lavagna in the press this morning talking about, you know, the relevance of this issue to Argentina.
QUESTIONER: Just a follow-up on Argentina. I wanted to know if the government, the Argentina Government, has already asked for a new program or not officially. And, second, if you expect something to happen before the election.
MR. DAWSON: I'm not going to really—I'm certainly not going to touch the second question. I'm not really going to address the first question either. Clearly, you know, we've been in discussion with the authorities. You know, the decision for the next steps is fundamentally theirs and it's for them to take. We stand ready, as we've said, to be of help to them in whatever manner they think is appropriate, and as I say, we do keep in quite close contact with them, both through the res rep and through contacts here, including, of course, during the meeting. We'll get back to you later.
QUESTIONER: Concerning the visit to Pakistan, what kind of help does Mr. Rato propose to do for—
MR. DAWSON: Well, we're going to see what the authorities themselves are—you know, what they're interested in, if they're interested in particular assistance. As you know, Pakistan is not in a program at the moment, so we will have to see if they are interested. They have a very strong reserve position. But if there is a way in which the Fund can be helpful within our mandate, we will see what we can do.
QUESTIONER: [unintelligible] colleague, Mr. Ingves, leaves the Fund to join the Swedish central bank. How do you fill such a high-level post in the Fund? Is there official or unofficial quotas for [inaudible]?
MR. DAWSON: We, of course, always try to recruit the best qualified international staff without regard to national origin, but with certainly an understanding of the need for the Fund to be reflective of the international character of the institution and its members.
The Managing Director has the responsibility for—I'm somewhat familiar with this process as it's going on for another position at the moment. The Managing Director has the responsibility for making a recommendation and decision on that selection. He typically does discuss this with the Executive Board, discusses it with other advisors, and in most cases, there's a public announcement. I think for department heads there's almost always a public announcement that's available for application from internal and external candidates, and then the process goes forward.
We are, of course, delighted for Stefan. I was particularly delighted when he called me on Saturday morning to inform me of this. I was afraid we had a financial crisis that I was not expecting, and I was delighted for him to see that he had this position. I note also—I had not realized it, but he's actually by birth Finnish, so I believe he is the first non-native-born Swede to be the head of the Swedish central bank, another accomplishment. But Stefan will definitely be missed. He joined the Fund just shortly before I did, and it's kind of inspiring to me that there's life after the Fund.
QUESTIONER: I had a question about Zimbabwe. It was reported that you'll be sending a mission there at the end of this year or early next year. I was wondering if you have any details as far as what particularly it was about the way they repaid their debt that made the IMF suspicious of whether—
MR. DAWSON: Well, I'm not—I mean, we do send missions in this case, which I note, you know, Zimbabwe remains an arrears case, even though they have made substantial payments, that we discussed--that we took note of, I think, in September. And we will have a mission going forward. In terms of the payments—I guess I just will leave it at that. There will be a mission. This is expected as part of our normal process, whether they're in arrears or not, but particularly when they're in arrears we do have a review of the status of the program every six months.
I know there's a lot of press speculation on the source of the payments and so on, but I don't have anything to say about that at the moment. I'm afraid I'll just have to suggest you wait for the next Board—the mission, and then subsequently the next Board discussion.
QUESTIONER: When is the debt relief issue coming to the Board, or how is that proceeding, and when will we see—
MR. DAWSON: The staff are working—you know, I would start by saying we are on precisely the time schedule originally contemplated last June, when the G-8 made their proposal, which they asked that the Fund and Bank consider at the Annual Meetings, which they did, and I think there was a strong endorsement of the approach. Both the Bank and the Fund are taking on the G-8 proposal and incorporating it into the Fund and Bank's work program. Staff are working on that, and it will—there will be meetings. I think the next formal Board meetings are likely to be taking place within the next month, and we are on track. I think in the next press conference I might have a particular agenda, a particular timetable that I might be able to indicate that we expect, but it is on track, you know, for approval essentially toward the end of this year.
QUESTIONER: But do you expect that the Fund will deal with its section of this separately from the Bank, or will it be announced as a joint—
MR. DAWSON: I think the Board actions will certainly be separate, but clearly the two institutions proceed, you know, in some sense in parallel. But the actions are different because the nature of what's going on in each institution is different. The funding for the Fund is largely from own resources, both the Fund's own, but some resources have been made available to the Fund. There are issues for the shocks facility and so on about possible additional funding, which I would note the G-8 committed to in their communiqué. Whereas, on the Bank side, it's an issue that is quite closely linked with IDA and the future of IDA, which is a multi-decade issue that is far more complicated, and I will not even pretend to understand it.
You're a very questioning group here this morning.
QUESTIONER: Can I just follow up—
MR. DAWSON: [inaudible] promised me I'd be out in ten minutes.
QUESTIONER: Can I just follow up on that and clarify where the IMF funds for debt relief are coming from, what part of the IMF?
MR. DAWSON: We have—I think we have a fact sheet or at least explanations we can provide to you, but there are a series of reserve funds that have been accumulated, some out of the Fund's own resources, so-called SCA account. There are also funds that have been contributed through the various trust funds that have been set up for the institution. The PRGF trusts are the ones that are the main ones, but I believe there's even some money left over from the ESAF and SAF days. It's an extremely—it's complicated, too, but it's more lawyerly complicated as opposed to large dollar amount complicated. And that requires—the use of the funds for debt relief requires approval of those who contributed the money. If it was their own money, it's one set of actions. If it's the Fund's money, then it requires a vote by the Board.
So it's a process that is complicated but not unprecedented, since we set up the trust funds to begin with and have had various arrangements like this before. So it is—you know, it is something that is going to be done and will be done in a timely fashion. If there is a generalized interest in this, we can arrange a briefing for you from our PDR and legal and finance staffs, who have a lot of practice in explaining it to us.
QUESTIONER: [inaudible, off microphone].
MR. DAWSON: No, the GCC meeting, obviously given developments in oil markets, that's obviously going to be an important issue, you know, on the fringe of those meetings. But the GCC meeting is a regular—it's their regular meeting that we have attended in the past. I think Mr. Hawley will be on most of this trip that we're just talking about, but I remember attending the meeting last year as well. So it's a regular meeting, and as I indicated earlier, there are a number of regional meetings that the regional authorities want the Fund present at, and this is part of our job. This is part of our surveillance function to go and participate in meetings, give our view of the global economy, and answer any questions that they may have. Obviously both regional and global developments, you know, put a slightly different cast on it this year than last year, but it's something that we do regularly.
QUESTIONER: Does the IMF have an appreciation of the Italian financial maneuver proposed by the government after the Annual Meetings?
MR. DAWSON: I don't have anything for you on that. We'll have to get back to you.
A couple more questions, although you've done a very good job of spreading them around.
QUESTIONER: On Ecuador, I understand that the IMF was going to release a document assessing the economy—and I don't know if I missed it—because they needed the document to get some loans from the World Bank, and I don't know where that stands.
MR. DAWSON: What you're talking about in the present term of art is, I think, an assessment letter. I don't actually know the status of that. We'll get back to you. I know there was something going on in that regard. I just can't tell you whether I've actually seen a signed letter or not.
Yes? Then we'll go to Diana, and that will be the last one.
QUESTIONER: Speaking about life after the Fund, I'm sure you will have a wonderful life.
MR. DAWSON: Thank you.
QUESTIONER: But, seriously, I wanted to ask you, there are some experts, you know, that think that Argentina could do without the Fund, that they could continue as they are making repayments and without a need for any program. I was wondering if the Fund has an opinion on that.
MR. DAWSON: I think I answered—actually, I think I answered that question in one of my earlier answers. You know, it is up to the authorities in terms of the nature of the relationship. I think there will always be a relationship with the Fund. Argentina is a member in good standing, an actively participating member, I would say, on fronts not just simply including the program relationship, I noted Mr. Lavagna's quote on representation. But that's really a question best directed toward the authorities, but I would reiterate that we stand ready to work with the authorities in whatever way they think is appropriate.
And then the last question.
QUESTIONER: A while ago, you said that, "The IMF is aware of its responsibility to monitor exchange rates and we think we're doing that." Can you just repeat what the Fund's position is on China's exchange rate right now, I mean, that they're not manipulating the exchange rate?
MR. DAWSON: The view—I mean, the Fund has had a public—had a public position prior to the movement of the exchange rate regime in July. I made this comment a number of times in press briefings here, but also it has been made in speeches by management, others—research, WEOs—that we thought it was in China's interest to have a more flexible exchange rate regime. I'm talking about the July period at this point—that it was in—as I said, that it was in their interest, that it was something that should be approached from a position of strength, and the authorities subsequently did indeed move to a new exchange rate regime, which is well known.
Our position at the moment is that they should take full advantage of the additional flexibility provided them by the new regime to continue forward for their implementation of their overall economic program, again, being, as we indicated earlier, in their interest. And I think this is broadly understood and broadly accepted, and I think reflected in the comments that have been made by others. So I think I would leave it at that.
I think we have—the reason I made that first comment and that comment is I think we have been consistent publicly before the change in regime and subsequent to the change in regime, and our position remains the same, that the regime change was appropriate and that going forward they should take advantage as they can of the flexibility that the new regime provides them because it is in their interest to move to a more flexible regime.
Now, Leslie, you don't really want me to—okay. One last one.
QUESTIONER: Actually, it is about the China exchange rate issue. Has anybody else complained—other than the U.S., complained about the Fund's role in the way it handled the yuan story?
The other one is: Was the Managing Director ever requested by the U.S. or any other shareholder to make a study of the manipulation, possible manipulation of the Chinese—
MR. DAWSON: I think you have to ask—you know, when governments make requests to us, you know—and I'm not aware of—the simple answer to that is I'm not aware of that.
Give me the first part of your question again?
QUESTIONER: Has any other country, other than the U.S.—
MR. DAWSON: We read a number of public comments. We take them into account. But I think I would fall back on my comment that we believe we have been doing our job and communicating our job to our members, but also publicly, that we are transparent. So, I mean, I think we—I just will leave it at that. I think there are parts to the premise of your question that I don't want to really address because what is or isn't a formal request and so on is not something I want to get into. Those are best directed at people—at the requesters.
QUESTIONER: I'm sorry, but I don't think you answered that question. To the best of your knowledge, has any other country, any country, aside from the U.S., complained about the regime? That's a simple question.
MR. DAWSON: There are plenty of public comments I have made about—not made—I have seen about that issue by governments, but I do not wish to say who did it, what, in what context inside the Fund because it is—you know, there are—lots of public comments have been made, particularly on the trade aspect of it, but also on the exchange rate. So I just don't think it's appropriate for me to do it. I repeat, we believe we are doing our job.
Thank you. The embargo will be lifted at quarter of 11:00, 10:45. Thank you.
[Whereupon, the press briefing was concluded.]
IMF EXTERNAL RELATIONS DEPARTMENT