Transcript

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

May 7, 2009

Webcast of the press briefing

MR. HAWLEY: Good morning. I’m David Hawley from the IMF’s External Relations Department and welcome to another of our regular briefings for the press. As usual, this is under embargo, and today’s embargo is 10:30 Washington time. That’s 1430 GMT.

Before going to your questions in the room and to those submitting questions on the online Media Briefing Center, let me just make a couple of housekeeping announcements.

The Managing Director, Dominique Strauss-Kahn, will be delivering a speech in Austria at a central bank conference on May the 15th, and his speech will be on crisis management and policy coordination.

He will be traveling to the Democratic Republic of Congo and Côte d’Ivoire between May the 23rd and the 28th. This will be an opportunity for him to meet with policymakers in these two countries and other leaders and civil society and non-official audiences to discuss how the IMF can assist Africa in responding to the current crisis and to underscore the Fund’s commitment to supporting these countries in their effort to address the current economic challenges.

The First Deputy Managing Director, John Lipsky, will travel to Japan for the annual Article IV consultation. He will be there between May the 17th and May the 19th. I expect there will be some press availability, and we’ll give you details later.

He is also attending the Aspen Seminar for Leaders on May 22 to 24 in Venice and will address the group on “Towards a New Financial System, Reviving the Global Economy”.

On May the 25th, he will participate in the G-8 meeting of energy ministers and participate in an Italian parliamentary budget committee roundtable on global governments, which will focus, I understand, on proposals for reforming the IMF.

Finally, Deputy Managing Director Takatoshi Kato will be speaking at the plenary session of the Pacific Economic Cooperation Council here in Washington on May the 12th.

With those opening remarks, I’m happy to take questions.

QUESTION: Do you have a comment on Turkey including your recent government reshuffle which changed your key interlocutor?

MR. HAWLEY: Well, on where we stand on program discussions, discussions on a standby arrangement are ongoing. There were further productive meetings on the sideline of the Spring Meetings with Minister Simsek, and the authorities and the staff continue to assess the current macroeconomic conditions and the required response in terms of policies, reforms and targets.

On your question on our new interlocutors, we wish Ministers Ekren and Unakitan, with whom we’ve worked closely for a number of years, much success in their new endeavors and look forward to further productive cooperation with them and with Deputy Prime Minister Babacan and Minister Simsek.

QUESTION: I was curious to know if there’s any progress that’s been made concerning Article IV consultations with China. Is there a timeline for when there could be movement on that?

MR. HAWLEY: The 2009 Article IV mission is expected to go to China in the coming weeks.

QUESTION: Markets are growing in Russia. The ruble is picking up, and people have started talking that Russia, along with other BRIC countries—Brazil, India and China—will probably be among the first to emerge from the current crisis. How realistic are these expectations?

MR. HAWLEY: Well, let me answer generally on Russia. We support the decision to use the substantial reserves to mitigate the impact of the credit crunch, and, in this regard, recent monetary tightening has helped to stem loss of reserves. We also welcome the decision to widen the exchange rate band. The tightening of monetary policy since the beginning of the year has helped to stabilize reserves.

QUESTION: Do you have guidance maybe for the other BRICs because it seems like these are general comments. I’m talking about really an expectation of them coming out of the crisis, if this is misplaced?

MR. HAWLEY: I don’t want to draw a distinction between the BRICs and the rest of the world. Let me, therefore, answer by making a comment about the global outlook which is to say that recent data suggest that the pace of contraction in the global economy, following steep declines in the fourth quarter of last year and the first quarter of 2009, is now slowing. Growth is projected to reemerge in 2010 but only at a sluggish pace of 1.9 percent.

QUESTION: To go on, staying within the region, Ukraine, is it true that the Board will take up Ukraine on Friday?

MR. HAWLEY: Yes. The Board is set to discuss the first review under the program on May the 8th—that’s Friday—and we’ll brief you fully afterwards.

QUESTION: Is the program fully funded at this point?

MR. HAWLEY: I’ll brief you fully afterwards, after the Board.

QUESTION: Now I have a couple of technical issues left over from the recent Spring Meetings. One of them is Cuba. The Brazilian minister, finance minister, called for a rapid admission of Cuba to the IMF. I wonder if you have heard anything about that happening.

MR. HAWLEY: I’m not aware that Cuba has applied for membership of the IMF. Any country may apply for membership.

QUESTION: And another country that has applied for membership and that has actually said that it will become a full member quite soon is Kosovo. So, please give us an update on what’s up with Kosovo.

MR. HAWLEY: Okay. I can confirm that voting by the membership on Kosovo’s application for membership in the IMF has now closed. The results have been circulated to our Executive Board for review, and we will confirm the outcome of this vote within the days ahead.

I’ll take a question, if I may, from the Media Briefing Center.

QUESTION: Is the IMF prepared to consider widening Latvia’s permitted GDP deficit for 2009 from 5 percent of GDP to 7 percent as requested by the Latvian government?

MR. HAWLEY: Let me answer as follows: There is—we hope to have a review mission traveling to Latvia soon, and the proposed budget and many other issues will be discussed and reviewed by the mission, and we will able to comment on it once we’ve seen the authorities’ proposals on the deficit. The key task now is to put together structural measures to reduce the fiscal deficit, and it’s hoped that the full review mission will be able to discuss this in Riga.

Naturally, when it comes to adjustment, it’s important also to consider the social dimensions, and the Fund supports the authorities, but is, of course, concerned about social costs and will do whatever it can within the framework of the program to protect the vulnerable.

QUESTION: Regarding the global outlook, these recent data you were mentioning, giving a slightly more positive outlook in the IMF’s view, and, specifically, do you still expect the recovery to start from the U.S.?

MR. HAWLEY: I haven’t anything fresh to add to what we’ve recently said on that subject, so I don’t have fresh information for you.

QUESTION: During the meeting, in fact, you or the IMF said that you were expecting the recovery to start from the United States.

MR. HAWLEY: Nothing has changed.

QUESTION: Another question is regarding in general all this talk in the auto industry of mergers. Does the IMF see these generally as a good path to recovery for this sector which has been so hit by the global crisis?

MR. HAWLEY: The Fund doesn’t have a view on the auto industry.

QUESTION: There was a report yesterday that the IMF is going to be making corrections to some of the external debt projections or data for European countries from the Global Financial Stability Report. Are those revisions underway and when should we expect to see the final data on that?

MR. HAWLEY: Errors in a table in the Global Financial Stability Report were drawn to our attention, and we’re in the process of reviewing the numbers to correct them, and we will release the corrected numbers as soon as they are available.

QUESTION: As a quick follow-up, some European leaders, Christine Lagarde, for one, during the week of the IMF/World Bank meetings, some leaders were critical of the IMF’s projections for bank losses in Europe as well. Seeing as how there were some errors made for the external debt data, will the Fund also review the bank loss projections for Europe?

MR. HAWLEY: I commented on a specific error in a table. The GFSR will be updated on the regular cycle.

QUESTION: Just a technical clarification on Kosovo, do I understand it correctly that the voting requires just a simple majority for Kosovo to be admitted?

MR. HAWLEY: I’m afraid you’ve caught me out, and I will get you an answer.

[Answer: Votes are based on a simple majority if there is a quorum.]

QUESTIONER: And also, on another issue, the Managing Director recently repeated his opinion that the voting threshold at the Fund should be lowered to basically eliminate the veto power for some members. Can you elaborate on that and is anything happening on that score?

MR. HAWLEY: I don’t think the Managing Director expressed himself quite as definitely as your characterization of his remarks suggest. However, governance reform, which is the issue you’re raising, is very much a front-burner issue at the Fund, and I would refer you to what the membership meeting of the IMFC a couple of weeks ago had to say, which is that they, the Committee called on the Executive Board to report back to the IMFC at its next meeting, at the Annual Meetings. So that’s the timetable in which you might expect to see further on this.

QUESTION: And, if I may, one last thing. The G-7 seemed not to be very happy with the figure of $4 trillion in expected losses from the crisis. I wonder if the Fund stands by that figure, and, if not, how and when will it be corrected?

MR. HAWLEY: That question was asked and answered several times during the Spring Meetings, and I’ve got nothing to add.

Have we got further questions? No?

Thank you very much. The embargo is 10:30.