Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department, IMF
July 10, 2008Washington, DC
Thursday, July 10, 2008
|Webcast of the press briefing|
MR. HAWLEY: Good morning, ladies and gentleman, and welcome to another of EXR's media briefings. I'm David Hawley, Senior Advisor in External Relations Department. Before I go to questions, I would like to make a couple of announcements on forthcoming reports.
Next week on Thursday, July 17, we are going to release the World Economic Outlook (WEO) Update. [*The release date was rescheduled to July 17 after the briefing, from the initially announced July 15.] Simon Johnson, Director of the Research Department, will lead a press briefing on this. The Update provides fresh information about the global outlook that has emerged since the publication of the Spring WEO in April. On July 28, the companion flagship publication, the Global Financial Stability Report, will see the release of its update. Jaime Caruana, Director of Monetary and Capital Markets Department, will lead a press briefing on that.
Let me mention a couple of management travel items. The Managing Director Dominique Strauss-Kahn was in Toyako at the G-8. He is traveling to Ukraine, where he will participate tomorrow in the Fifth Yalta Annual Meeting organized by the Yalta European Strategy. He gives remarks to the plenary session there. Deputy Managing Director Murilo Portugal is traveling this week to Istanbul, Turkey where, together with Bank counterparts and the Turkish authorities, he will discuss preparations for the 2009 Joint Annual Meetings of the IMF and World Bank which are being hosted by Turkey. There will be a press statement on that trip tomorrow, July 11. Mr. Portugal will then be traveling to Warsaw early next week to participate in a debt management forum that the Fund is co-hosting. Finally, John Lipsky, the First Deputy Managing Director, will give a speech at the Brookings Institution here in Washington, D.C. on Tuesday, July 22. In this speech, he will address a range of global issues.
With those opening remarks, I'll move to questions.
QUESTIONER: The IMF released its work plan on Monday. Could you maybe just go into a little more about it? The MD said it was a step to turn over a new leaf and things like that. And then with yesterday, David McCormick from the U.S. Treasury was pushing for further IMF reforms. Can you just put it into perspective on where this is going, please?
MR. HAWLEY: I think the Managing Director captured the juncture best with the remark that it's now time to turn the page. Work on restructuring the Fund is well advanced, but work on refocusing the Fund is now beginning, and he went on to say that the guiding principle of our work will continue to be responsive to our members' needs and with a focus on the Fund's comparative advantage.
Now the Work Program that you mentioned is a document that's issued twice a year and is a roadmap for the work of the Fund that's been endorsed by the membership. It's derived in large part from the guidance provided by Governors at the meetings of the International Monetary and Financial Committee in spring and fall.
The highlights of the Work Program that is now being implemented fall into four areas. One is to address urgent tasks, and these are the perhaps obvious ones of responding to the challenges posed by the surge in food and fuel prices, drawing lessons from financial market crisis and making progress. This is the specific Fund activity, surveillance work.
Another priority is looking at our lending instruments, how to make them continue to be serviceable to members who will, from time to time, turn to the Fund for financing needs.
We're continuing, however, on some of the more inward-looking tasks, which are some reorganization, the creation of a unit to look at macro-financial linkages at the Fund and to bring together our low income work.
And then, finally, there is the continuing work on the Fund's governance agenda, which includes completing the quota and voice package and the Fund's new financing model. Under Secretary McCormick highlighted the need in his remarks this week for coordination and collaboration. The Fund provides an ideal forum for that because of its universal membership of 185 member countries.
QUESTIONER: The call of McCormick on coordination and collaboration was also mirrored by earlier calls almost very similar to Gordon Brown. Is there a feeling that there is a message coming to the Fund that these countries would like to see the multilateral consultations revisited?
MR. HAWLEY: I don't have a response specifically on Mr. McCormick's remarks and the multilateral consultation. I read these remarks as being of a more general nature about the desirability of consultation and coordination in matters of international economic policy.
QUESTIONER: The MD has been pushing, and you saw a message coming out of the G-8 regarding the currencies. Is there a feeling that the MD wants to revisit the multilateral consultations to get the imbalance issue fixed?
MR. HAWLEY: The Fund and the Managing Director continue to be attentive to the issue of global imbalances which was the subject of the first multilateral consultation. On that issue there is attention in particular to the impact on imbalances that the surge, in particular, of fuel prices has had. It is in that context that one should look at the multilateral consultation, and it is perhaps an issue that can be developed in more detail next week with the release of the World Economic Outlook Update.
I'll take a question from the Media Briefing Center, asking about the status of the China Article IV consultation. The question is whether the Fund will combine the annual Article IV consultations for 2007 and 2008 with China and when do we expect the Board to discuss this?
The answer is that the Article IV for China will be willingly be folded into this year's consultation, and the Executive Board discussion—that's a discussion that takes place at the conclusion of every one of these annual consultations with our members—likely to take place in late August or early September.
QUESTIONER: Is the Fund concerned that a large emerging market like China—there hasn't been an Article IV discussed by the Board in more than a year. It's rather unusual, don't you think?
MR. HAWLEY: It's not unprecedented, by any mean, for an Article IV not to take place at the regular 12-month interval. There are plenty of examples of that. And to your main point, I would respond that the Fund and the Chinese authorities have, as usual, been in close contact during recent months, and that the Fund's views on aspects of China's economic policy have been made public, including by the Managing Director most recently in Japan.
QUESTIONER: Do you have an update on what discussions are with Turkey on a follow-up program?
MR. HAWLEY: Okay. This is separate, of course, from the visit of Mr. Portugal as I mentioned at the top of the briefing. The latest situation on the format of future relations between the IMF and Turkey is as follows: Prime Minister Erdogan and Minister Şimşek have both indicated that the government is assessing whether to request a new Stand-by Arrangement and will announce their decision soon.
In the meantime, we are finalizing an internal assessment. That's the so-called Ex-Post Assessment on previous Stand-by arrangements with Turkey. This is something that would be needed before the Fund could enter into a new arrangement with Turkey.
The background to that is that any country that has spent a considerable period of time under a Fund program—and this is the case of Turkey—is the subject of an Ex-Post Assessment. They would use that experience before entering, if they do enter, into another arrangement.
QUESTIONER: When will that assessment be and does it include financial and economic issues?
MR. HAWLEY: I can only say that it is being finalized currently, and it covers the range of issues that were in the standby agreement arrangements themselves.
I have a question from the Media Briefing Center. Does the Fund recommend a global tightness on monetary policies to respond to the surge in energy and fuel prices?
I think this is an issue that the Managing Director addressed in his remarks to the G-8 earlier this week, where he spoke specifically about monetary policy responses in the current environment against the background of high oil prices. He said that many advanced economies have taken appropriate monetary policy remedies to tackle higher-than-expected headline inflation, but in some emerging economics where real interest rates are low or negative, there is a risk that central banks are falling behind the curve.
If there are no more questions, I'll wrap this up. Thank you very much.