Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department
June 7, 2007Senior Advisor, External Relations Department
International Monetary Fund
Thursday, June 7, 2007
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MR. HAWLEY: Good morning, ladies and gentlemen, and welcome to this, one of our regular press briefings. Welcome to those of you joining us on the Online Media Briefing Center. I'm David Hawley, Senior Advisor in the Fund's External Relations Department.
Before taking your questions, I'd like to start by mentioning the work program of the IMF and some forthcoming management travel and engagements.
You have before you copies of the IMF's Work Program which is a comprehensive statement of the work of the institution in the period ahead. What you have is a press release which identifies elements of the Work Program together with the more extended statement by the Managing Director. Since this is such a large document, I won't attempt to summarize it, but you can see that it aims to move forward key elements of the Fund's Medium-Term Strategy. Let me mention some of the issues which I know you in the media have been following.
On surveillance, you are aware that the Fund's surveillance serves to preserve global financial and economic stability. A key priority will be to update the 1977 decision on surveillance over exchange rates, which sets out the principles guiding the Fund's surveillance over countries' economic policies. There is going to be a discussion on this matter in the Board in the middle of this month.
On quotas and voice, the Executive Board of the Fund will work towards reaching consensus on a new quota formula by the 2007 Annual Meetings and by no later than April, 2008. There will be at least one Executive Board meeting on the main elements of a new quota formula before this year's Annual Meetings.
On the Fund's income position, the Executive Board will work on an income model consistent with the Fund's various mandates, and the initial Board meeting on this issue will take place later this month.
Let me mention finally the work on low income countries which will include papers that assess the consistency between aid flows, economic stability and development goals. There will be public financial management responses to additional aid and the adequacy of Fund instruments to assist post-conflict countries. Furthermore, there will be a Board discussion of the follow-up to the recent evaluation by the Independent Evaluation Office of the role of the Fund in Sub-Saharan Africa.
As I say, this is by no means an exhaustive list of what's in the Work Program.
Let me mention briefly some management travel. The Managing Director, Rodrigo de Rato, will attend the G8 Summit in Heiligendamm today and tomorrow. There is a possibility of some press availability with the Managing Director tomorrow, and if you would like to follow up on that, please contact the Media Relations Division.
On Tuesday, June the 12th, the Managing Director will deliver the opening address at the annual meeting of the Bretton Woods Committee here at IMF Headquarters. His speech will focus on the Fund's ongoing reform efforts and include the discussion of the motivation behind some of the key changes that the Fund is making in the context of the MTS with a particular focus in his speech on surveillance.
He will travel to Canada later this month on June the 18th and 19th. In Montreal, he will deliver a speech on aspects of globalization, specifically the policies needed to maintain global growth and stability and enable countries to help their citizens reap the benefits of globalization. That speech will be at the Conférence de Montréal of the International Economic Forum of the Americas.
On June the 19th, he will deliver a speech in Toronto at the Economic Club of Toronto. That will be an update of prospects for the global economy and to discuss financial sector issues.
During his visit to Canada, he will also meet in Ottawa, the authorities. Again, for media availability in connection with the Canada visit, please get in contact with Media Relations.
On June the 11th, the First Deputy Managing Director, John Lipsky, will be in Turkey where he will attend the meeting of the Investment Advisory Committee in Istanbul.
With those opening remarks, I'm ready to take questions. Thank you very much.
QUESTIONER: David, I'm a little intrigued why there's only one meeting on the quota system. We're talking about informal meetings in between and then the last one being just before the—it can't be just before the IMF meetings because it's in July. Oh, I see.
MR. HAWLEY: Let me refer to the language in Paragraph 18 of the Work Program. There will be at least one formal discussion on quota and voice reform. That implies that there could be others if these prove to be necessary.
QUESTIONER: There are indications that they want an agreement on the formula by the next meeting. Are you confident that that's moving at the pace?
MR. HAWLEY: It remains the goal to have a consensus on this issue by the Annual Meetings this year or by no later than April, 2008.
QUESTIONER: The other question is regarding the Chinese stock markets. There's a lot of volatility. Any comments from the Fund on that and the impact of that generally and how closely is the Fund watching it?
MR. HAWLEY: There's no reason to believe that the volatility in China's stock market will have a significant effect on China's economy or on the international economy or world financial markets.
QUESTIONER: I'm just wondering if the Managing Director has had much or any contact with Robert Zoellick since he was named as the replacement at the World Bank.
MR. HAWLEY: I'm not aware of contacts between the Managing Director and Robert Zoellick since the latter's nomination by the U.S. to be the next President of the World Bank.
QUESTIONER: Any update on the Nicaragua IMF program, please? It looked like they were about to agree on something, but we haven't heard since.
MR. HAWLEY: I don't think I've got anything fresh for you from your perspective.
Let me remind you that a mission to initiate discussions on a new PRGF visited Managua in early May and held productive discussions on the authorities' medium-term economy program. The authorities have prepared a substantive and wide-ranging proposal of which the main goal is to reduce poverty in a decisive way and to move forward to achieving the MDGs. Moreover, they have stressed the importance of achieving these developmental objectives in the context of a stable and sustainable macro framework.
It is expected that the mission will continue discussions with the authorities and perhaps visit Nicaragua in June.
QUESTIONER: Going to Europe, the European Central Bank has just raised interest rates. What is the Fund's evaluation on this move and do you believe at this point they have reached the correct level to contain inflation pressure and keep stimulating growth?
MR. HAWLEY: I refer you to the statement issued yesterday in the context of the Euro Area staff report. I don't have anything further to add to that. As you know, we don't comment on individual rate moves.
QUESTIONER: Tell me, what are you referring to exactly?
MR. HAWLEY: Mr. Deppler, Michael Deppler, the Director of the European Department, met the media yesterday, spoke to the media yesterday. We issued the Euro Area staff report which had a discussion of monetary policy, and that fully reflects our views.
QUESTIONER: There apparently are intense debates around the G8 Summit about the debt relief in Liberia. In the last conference organized by the World Bank on the subject a couple of months ago, it appeared that the IMF was part of the key element in this mechanism of debt relief. What has been done so far and what is the position of the Fund now that could lower or change the position of the Liberian debt?
MR. HAWLEY: Let me explain the current position. As you may be aware, there is what is called a Staff Monitored Program, an SMP, in Liberia. Performance under the SMP through March has been broadly satisfactory and continued progress under the SMP, together with sufficient indication of support from donors, would be important steps towards clearing arrears to the Fund and would help pave the way for Liberia's timely participation in HIPC and the MDR Initiative, the Multilateral Debt Relief Initiative.
The management of the Fund has proposed the possible partial use of special internal resources and looks forward to indications that the membership, that is, the membership of the Fund will demonstrate its full support in reaching agreement on an appropriate financing package for arrears clearance and debt relief.
QUESTIONER: David, what is the MD, what is his main role at the G8 today and tomorrow? He has expressed concern regarding the aid flows by the promises of the G8 to deliver on aid promises, and that looks like a big issue right now with Canada and Italy not fessing up. Is there anything? Is he going to deliver a report on that or what is his role?
MR. HAWLEY: He's going to speak to the G8 leaders and other attendees and then, as I say, he will be available to speak to the media. I would prefer that he speak to the media in Heiligendamm than my trying to anticipate what he might say.
QUESTIONER: Is he going to deliver a report on the global economy to the G8?
MR. HAWLEY: He's just going to speak to the leaders. As I say, I would prefer that he speaks directly to the media on this. He has some availability tomorrow.
QUESTIONER: These reforms, we've just got the copy of them, so I haven't been able to look through them except briefly. But is the feeling that this is halfway through the reform program? Is this three-quarters through? This program, where does it leave the Fund at the end of those, the MTS?
MR. HAWLEY: I think I can do no more, no better than quote what the Managing Director says, which I will refer you to Paragraph 2 where he notes that we have a challenging Work Program requiring careful prioritization and sequencing.
If one were to pass these remarks, it indicates that the Fund is fully engaged in carrying out and implementing the Medium-Term Strategy including in the light of guidance provided by the membership, most recently at the meeting of the IMFC here in Washington in April.
I'm being reminded that the Euro Area statement was, in fact, issued in Tuesday, not yesterday.
Thank you, if there are no further questions.