Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department

International Monetary Fund
Washington, D.C., Thursday, January 29, 2009
Webcast of the press briefing

MR. HAWLEY: Good morning, ladies and gentlemen, and welcome to this regular press briefing.

I'm David Hawley, from the IMF's External Relations Department. As usual, let me start by mentioning a few upcoming events.

On February the 5th, the Managing Director, Mr. Strauss-Kahn, will attend a discussion on global economic and financial developments with other heads of international institutions in Berlin at the invitation of the German government. And then, on February the 6th and 7th, Mr. Strauss-Kahn will visit Malaysia to take part in the 44th South East Asian Central Bank Governors Conference in Malaysia. We'll be in contact with the press about possible availabilities during this travel.

The First Deputy Managing Director, John Lipsky, is currently in Davos at the World Economic Forum. On Saturday, he will take part in the Global Economic Plenary Session. That's at 10:15 a.m. local time, and the WEF will make available the proceedings online soon after it wraps up.

The Deputy Managing Director, Murilo Portugal, will visit Lebanon on February the 5th and 6th to discuss the country's progress under the post-conflict program with the Fund. He'll hold a press conference at the end of that visit. And, again, for further information, go to the Media Relations Division.

Antoinette Sayeh, the Director of the African Department at the IMF, will be in Europe next week, presenting the IMF's latest analysis of the global crisis on Sub-Saharan Africa and engaging in discussions with local audiences and stakeholders on how Africa's economic policies and the international community should respond to the challenge of the crisis. She'll be in Paris on February the 4th, where she'll take part in an event jointly organized by the IMF and CapAfrique. And the next day, February the 5th, she'll be in Brussels where she'll discuss Africa's challenges at a forum organized by Friends of Europe. And then, lastly, on February the 6th, she'll be in London at a Royal African Society discussion. These three events are open to the press and should be seen in the context of the run-up to the high-level conference that is being organized in Dar es Salaam in March by the IMF and the government of Tanzania.

Let me finish by mentioning that Masood Ahmed, the Director of the Middle East and Central Asia Department, will be in Dubai next Tuesday, that's February the 3rd, to give a presentation at the Dubai International Financial Center on the economic outlook for the region. That is open to the press.

And with those remarks, I'll take questions.

QUESTIONER: Do you have any follow-up on the Lipsky discussions with Turkey yesterday in Davos? There seems to be some sort of confusion that these talks are stalled for a certain period or if it's a temporary lull in them. Do you have anything for us?

MR. HAWLEY: Yes, I'm happy to bring you up to date.

It's true. You're right. Yesterday, John Lipsky and Prime Minister Erdogan of Turkey met in Davos, and they had fruitful discussions.

There is a staff mission which left Ankara on Monday, that's January the 26th, having made good progress in several areas in the discussion of a Stand-By Arrangement. The discussions are continuing, and the mission is likely to go back next month to finalize remaining areas in the discussion. These relate in particular to the medium-term fiscal reform agenda.

QUESTIONER: Do you have any update on the China Article IV Consultation, which we've been waiting for for quite a long time now?

MR. HAWLEY: I've got nothing to add about the timing of an Article IV Consultation discussion in the Board. You'll have seen the latest projection for China that was released yesterday by the Research Department, which sees growth falling to 6.5 percent in 2009 from 9 percent last year.

QUESTIONER: Could I have a follow-up on that? Is a mission planned to go to Beijing soon?

MR. HAWLEY: I don't have any dates for a mission.

QUESTIONER: Could I ask something on Romania? Romania said it's going to the EU for talks on a possible loan rescue plan. The IMF is also going off to Romania now. Can we assume that these are a start of discussions on a possible rescue plan?
MR. HAWLEY: The mission that's visiting Romania is to discuss recent developments and the outlook for 2009 with the new government. There is no request from the Romanian authorities to start program discussions.

QUESTIONER: But would it be possible that that sort of thing could lead to discussions?

MR. HAWLEY: I don't want to speculate about where the discussions that are not yet started will end up.

QUESTIONER: So the mission is currently in Romania?

MR. HAWLEY: It's currently in Romania.

QUESTIONER: I just wanted a bit of a clarification on the IMF's attitude toward bank nationalization and to the idea of a bad bank. What exactly is the IMF's posture on these two approaches to cleaning up the banking system?

MR. HAWLEY: Jaime Caruana went over this fairly thoroughly yesterday in the context of the release of the GFSR Market Update. When having characterized the difficulties in the financial sector, he went on to discuss policies and specifically on recapitalization and measures to deal with distressed assets.

He said that this requires rigorous examination by supervisors of individual bank balance sheets and business plans in order to determine which financial institutions may require public support in the form of public capital and/or asset restructuring, and he went on to say that this approach might involve the use of a publicly-owned bad bank to remove distressed assets from the balance sheets of institutions.

QUESTIONER: When you said that you need to examine bank balance sheets to assess their viability, does this imply that in current aid packages the IMF think that nonviable banks may have got aid and this might not be terribly productive?

MR. HAWLEY: I'm not sure I fully understood the question, Chris.

QUESTIONER: Okay. So the IMF is suggesting that regulators look at banks and try and assess which are viable or not and which might need aid. You could do that, I suppose, for two reasons: One, that you want to make sure that every institution that needs help gets it, and the other is that you want to make sure that an institution that is doomed anyway does not get help and that you don't waste your money on it. Is that the part of the logic of going bank by bank?

MR. HAWLEY: To the extent I understood your question right, my response is, yes, we support the most efficient use of public money in support of the financial sector.

QUESTIONER: David, you've probably seen reports today about Caroline Atkinson being considered for the U.S. Treasury. Any comments on that? Is there any reason why she's not here? Is it possible she's in talks with them? Anything you've got on that?

MR. HAWLEY: I've got nothing for you on the overnight news story that some of you may have seen, and there is no significance in the fact that she is not here today giving the briefing. As you know, I quite often give these briefings.

QUESTIONER: Yes, but she was scheduled to give that briefing.

MR. HAWLEY: And, occasionally, the schedule moves.

QUESTIONER: So you don't know if she's in discussions with the Treasury?

MR. HAWLEY: I've got nothing for you on that. You should talk to others. Thank you.

I'll take a question, if I may, from the Media Briefing Center which asks whether the Fund is satisfied with Pakistan's implementation of the program. The response is that initial developments under the program have been positive. The exchange rate has appreciated somewhat, and preliminary information suggests that end-December targets for net international reserves and net domestic assets of the State Bank of Pakistan were met.

QUESTIONER: Does that mean that the reserves have increased?

MR. HAWLEY: I don't have, I'm afraid, a current reserve figure. Media Relations will get back to you on that point.

QUESTIONER: Is there a mission going soon?

MR. HAWLEY: I don't have a mission date. The next assessment of the performance under the program will take place in the first program review, which is scheduled to be completed by March. So the review is scheduled to be completed by March, but I don't have a mission time for you.

QUESTIONER: David, do you know if anybody is going to the African Union meeting?

MR. HAWLEY: Yes. Mr. Kato is going to the African Union summit in Ethiopia next week. Thank you for reminding me of that. He will. There is, I believe, a press availability planned on that, and Media Relations will get back to you if that firms up.

QUESTIONER: Just a quick clarification on the scheduling point that you mentioned earlier, did you say that Masood would be in Dubai on February the 3rd?

MR. HAWLEY: Yes, February the 3rd.

MR. HAWLEY: Thank you very much.



IMF EXTERNAL RELATIONS DEPARTMENT

Public Affairs    Media Relations
E-mail: publicaffairs@imf.org E-mail: media@imf.org
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