Transcript

Transcript of a Press Briefing by Thomas C. Dawson, Director of External Relations Department, IMF

February 6, 2006

MR. DAWSON: As usual, I'm embargoed until about 15 minutes after conclusion, and I'll set the precise time at that point.

I'm sorry to have scheduled this on a Monday morning. It's obviously not a normal work pattern for our hardy corps of journalists. This won't happen again. I am off on vacation later this week, later today, and the next briefing will be two weeks from Thursday, I believe.

I have several announcements. The Fund and World Bank Spring Meetings officially convene on April 22nd and 23rd here in Washington. We'll be opening registration for the Spring Meetings around March 1st. That's online registration. So watch the `For Journalists' page on the website for details. Our Media Relations Division will also circulate a Note to Correspondents flagging the launch when everything is set to go. And since I will still be External Relations Director when the Spring Meetings convene, I expect we will have a briefing closer to the event to run through the agenda and focus, and maybe we'll have Mark Allen or somebody like that from our staff to go over that.

Now I'll turn to some official and events. The Managing Director will travel to Rome later this week. On February 9th, in Rome, he will attend a round table hosted by the Aspen Institute where he will speak on the Fund's medium-term strategy. He will brief the media along with Minister Tremonti at the conclusion of the event. The Managing Director will also have meetings with the Italian authorities during the visit which actually begins on February 8th. He'll be leaving Washington tomorrow.

The Managing Director will then travel to Moscow to attend a meeting of Finance Ministers of the Group of Eight countries. If you want details about the ministerial meeting, which is of course a preliminary for the G8 Summit in July, you should ask the Russian authorities. I think they have a website up and running. The Managing Director will participate in particular on issues as you can imagine that are relevant to the global economy.

In addition, I'd like to note that on Wednesday, February 8th, at 12:30 p.m. here at Fund headquarters there will be an Economic Forum entitled `Moral Consequences of Economic Growth.' The forum will discuss a new book with the same title by Harvard Professor Benjamin Friedman. In addition to the author's discussion, we'll feature Sebastian Mallaby of The Washington Post, Nigel Ashford of George Mason University's Institute of Humane Studies, Simon Johnson of the MIT Sloan School of Management, and the Reverend Andrew Small of the U.S. Conference of Catholic Bishops. The Reverend will, I think actually I should just say Father, I think Reverend is a more Protestant formulation. Anyway, the Father will moderate the discussion and the forum is open to the press and you're welcome to attend.

QUESTIONER: What was the date?

MR. DAWSON: Wednesday, February 8th, at 12:30.

To give you a heads up on upcoming Fund publications, we will be releasing the `First Annual Report on Fund Related Transparency' this week. Some of you might find this a bit amusing since we've been into transparency for six to seven years, but I think we've accomplished so much in transparency that about the only thing left to do is to do a report on our transparency. This will give an indication of trends, for example, in publication rates, upon staff reports and documents. It's part of our continuing efforts to improve and strengthen transparency and the report will be put on the Media Briefing Center under embargo and we'll let you know when you can access it.

Now I'd be happy to turn to questions. I would like to welcome press watching via the Media Briefing Center's webcast, and feel free to submit questions. If I don't get to them during the briefing, someone from the Media Relations Staff will follow-up after we conclude. And now I would be happy to take any questions. Proper etiquette, of course, of identifying yourself and your affiliation.

QUESTIONER: We had a report out this morning from Baghdad saying that the Iraqis are going to increase state control of the fuel prices by tenfold. This sounds quite radical. Is this generally what the Fund envisions? And also, what implications--

MR. DAWSON: We've seen that report and I can't tell you where anyone got a tenfold number from. I don't think there is any basis in that. To give a little background, Iraq did make an important initial adjustment in domestic fuel prices in December just before the Stand-By Arrangement was approved, and it is a welcome start toward addressing what is a costly and distortionary subsidy. There will be further adjustments during 2006. The aim is to reach a level of prices similar to those prevailing in other Gulf countries by 2007. This was included in the Letter of Intent, it is included in legislation passed by the Iraqi Parliament, by their government. And so there is the need to adjust fuel prices in part in order to produce revenues so that the government can concentrate the spending on important social sectors as opposed to a low-price environment which simply gives rise to smuggling and other forms of distortions. It is I think something that is broadly understood as a matter of policy. It needs to be implemented carefully, indeed, with social safety nets. And, indeed, in the context of the Iraqi program, there is an effort to keep an eye on trying to assist the neediest families in Iraq.

It is always a controversial issue, this is one that I think has been quite well telegraphed, the goals are pretty clear, and it's being implemented in a careful and I think sympathetic manner.

QUESTIONER: Just to follow-up, do you know off hand what the price is across the Gulf States?

MR. DAWSON: No, but I think we can get that for you because that is a reference number that people have been focusing on lately. The Gulf States generally have in fact been reducing the amount of subsidy that they have.

QUESTIONER: In regards to the Managing Director's speech the other day involving surveillance, he said that work is underway to iron out the ability to surveil. Do you have any further information--

MR. DAWSON: Surveillance makes a better noun than it does a verb.

QUESTIONER: Do you have any details as far as what exactly is being done, what time frame we're looking at?

MR. DAWSON: Sure. It is indeed a part of the medium-term strategy effort being undertaken by the staff. The Managing Director's report on that came out this last fall. A series of working groups were set up. One of those particular working groups does in fact focus on possible improvements in surveillance they can have to deal with the communications aspect of surveillance in terms of making views known, different ways of looking at multilateral surveillance, regional surveillance, and how to make it effective. Effective, is I think, a term of art, trying to encourage governments to adopt some of the issues and concerns on policy implications that come out of the surveillance process.

I guess the next step I would expect prior to the Spring Meetings is that you will see some indication of what is in these various reports that are being worked on that will be consolidated in some fashion for the Spring Meetings and presented. And it's an issue that while it is largely thought of in terms of the industrialized countries, I should stress it involves middle-income countries as well since we have a number of middle-income countries, emerging market countries, that are in fact of systemic importance. If you want to get the thrust of it, take a look at the MD's initial report and it lays out a work program including in the area of surveillance specifically.

QUESTIONER: Just to follow-up on that.

MR. DAWSON: Sure.

QUESTIONER: He said, I believe, that he found Tim Adams's suggestions to be interesting. Is there anything that Mr. Adams suggested that he doesn't agree with?

MR. DAWSON: In terms of looking at Tim's speech, I think it was noteworthy for being thoughtful and across a broad approach and noted that a number of the issues were already--Tim noted that a number of these issues were already underway in the Fund and he noted that implementation, or if I can read into it, that it requires a collaborative approach by all of the members and the U.S. was putting forward its views which come into the institution and to the Board in particular. But I found the speech, as I said, quite thoughtful and I think that's consistent with what the Managing Director said, and I honestly can't give you an example of something that wasn't thoughtful.

QUESTIONER: [Off mike] just to follow-up on this same speech, the specific issue that Adams referred to at the beginning about defining some of these so-called vague terms more precisely like excessive reserves, do you see that sort of discussion taking place at the Spring Meetings?

MR. DAWSON: Not just at the Spring Meetings. This is part of the general work program at the institution. It's reasonably clear that a number of countries have reserve levels substantially higher than used to be considered sort of the rule of thumb comfort level and there may be a number of reasons that they are doing that. And to the extent that some of the reasons reflect some imperfections or problems in the functioning of the system, that is clearly something that the Fund and our members should be taking a look at.

On the other hand, countries having reserves for the rainy day is something that is sort of a natural instinct as well. So levels of reserve is one. He clearly had views on appropriate exchange rate policies, coming down clearly on the flexible side. This is an issue that's under constant discussion within the Fund and that discussion will continue. And making our surveillance, to back to the earlier question, more effective which is a combination of being clear in your public statements, but also being effective in terms of the influence that you can bring to bear on the country, and at times that requires a less public approach. So it's a balancing act, and it remains that.

MR. DAWSON: Lesley Wroughton of Reuters.

QUESTIONER: Yes. For the G-8 Summit in Moscow, what can we expect in an update from the MD about the meeting?

MR. DAWSON: Certainly the state of world economic outlook most probably, but also the areas that have been of concern to the members. Clearly the impact of higher oil prices would be one, but not the only one. But basically a review of the world economic outlook.

QUESTIONER: And I guess the surveillance issue and the reform--

MR. DAWSON: I'm sure that's discussed on the sidelines there. It is not as I recall a formal agenda item for the G-8 Summit since this is the initial meeting of the ministers under the Russian chairmanship in preparation for the meetings later in the spring, and I think the time at which the G-8 more likely that would take a closer look at that would be closer to the Spring Meetings when they will have another meeting and there will be reports that they would be able to see from the Fund itself.

If you go back to the G-8 cycles, this is the time when typically there is a meeting in the new year of the chairmanship, and this of course is the first year the Russians have had the chair.

QUESTIONER: Mr. de Rato said something about this cartoon crisis.

MR. DAWSON: What?

QUESTIONER: Cartoon crisis, the Danish.

MR. DAWSON: Nothing that I'm aware of. I think we will then lift the embargo at 10:30 Washington time, and I can be reached in Brazil for the next two weeks. Bye.