Transcript of IMF’s Bi-Weekly Press Briefing by Caroline Atkinson

Washington, D.C.
Thursday, June 18, 2009

Webcast of the press briefing Webcast

MS. ATKINSON: I'm Caroline Atkinson, Director of the External Relations Department at the IMF. Welcome to all of you here and those online to our regular biweekly press briefing.

Let me just start by going through some of the public events and management travel that we have coming in the next few weeks. There are quite a few things, so I'm going to go through by each member of management or staff. First, the Managing Director who has been this week in Central Asia, and he is finishing that trip today. He has visited Kazakhstan, Tajikistan, the Kyrgyz Republic, and now Uzbekistan, and we have issued press releases at each stop, and those of course are available online.

On July 3, the Managing Director will be going to Chile for the second meeting of the finance ministers of the Americas and the Caribbean. About 15 ministers from across the region and heads of several international organizations will be in the conference which is in Viña del Mar, a way from Santiago. We expect that the Managing Director will be available to the event, and we'll inform you as those plans firm up.

Next, First Deputy Managing Director John Lipsky is currently visiting Turkey where he is delivering the keynote speech at a conference organized by the Turkish Business Association, TÜSIAD, and that event is open to the press. We will have a press event and the speech available for you later today under embargo until tomorrow when the event takes place. Next week Mr. Lipsky will participate in the OECD forum and ministerial meetings in Paris. And on June 25 he will be at the Paris Club/IIF Conference.

Deputy Managing Director Murilo Portugal is traveling beginning June 24 to Europe to attend the Dubrovnik Economic Conference, a Commonwealth Conference, in London on the response to the economic crisis, and then the 125th Anniversary of the National Bank of Serbia in Belgrade, before going to Geneva for an ILO meeting and an ECOSOC meeting, that's the Economic and Social Council of the U.N.

On June 24, Deputy Managing Director Takatoshi Kato and Nicolás Eyzaguirre who is the Director of our Western Hemisphere Department, will inaugurate the IMF's latest Regional Technical Assistance Center in Guatemala City. It's being established as have the others with donor support and will serve Central America, Panama and the Dominican Republic, and provide technical assistance to promote ongoing economic and financial integration in the region. These technical assistance centers have been rather successful, and this region is where we began with regional work and especially on regional integration some years ago. A press release will be issued and a press conference held at the central bank on that occasion. Then just afterwards, Mr. Kato and Mr. Eyzaguirre will join the finance ministers and central bank governors from the region for the Eighth Annual Regional Conference on Central America, Panama and the Dominican Republic, also in Guatemala.

Mr. Belka who is the Director of our European Department, who last week was presenting the European mission results, will later today speak at the German Marshall Fund here in Washington on "Is Europe Doing Enough: Economics and Polities in the Wake of the Financial Crisis," and the event is at lunchtime between noon and 2:00.

On country matters, we expect that at the end of this month Kosovo's membership will be finalized, bringing the number of IMF members to 186, and more details on that will be circulated by Media Relations closer to the event.

Also, and I expect that there will be a lot of interest in this, we have a date for the release of the World Economic Outlook and Global Financial Stability Report update which will be released as is usual, and the quarterly ones together, on July 7. There will be a press conference here at 9:00 a.m. at headquarters, and details on access to embargoed texts will be made available through Media Relations.

I'd like to turn to your questions now. We have one already on the Online Media Briefing Center which asks, "If the IMF planning to revise its 2009 forecast for Ukraine from 8 percent to 12 percent decline? How does the IMF view that the country's 2009 state budget runs at 0.4 percent of economic growth? And can the third tranche be used to cover the state budget gap?"

As you know, there is a mission [scheduled to go to] Ukraine and of course we do foresee a sharper-than-expected contraction. We don't have numbers for you yet because those are being worked on. I'm not sure that I quite understand the second part of the question on the budget. Obviously, we are looking at the strains on the budget from the deeper contraction and from the continued financing needs of Naftogaz.

As you know, on the issue of whether IMF money can be used to cover the state budget gap, it's actually quite usual for IMF money to be used for this purpose, and in particular, in this current crisis the Fund has called for fiscal expansion in a number of countries and is aiming to provide fiscal support, and in some countries that means that IMF money is directly used for budget support as it was for Ukraine in the first tranche. So that is quite possible going forward.

QUESTIONER: Could I get some clarity on Ukraine? You said the mission was on the ground at the moment or are they heading there?

MS. ATKINSON: I'm sorry, I'll need to come back to you on that because I don't want to mislead you.

QUESTIONER: You said they're working it.

MS. ATKINSON: Yes.

QUESTIONER: The other one was the sharper-than-expected contraction. You're talking about overall GDP?

MS. ATKINSON: Yes, overall GDP growth as we've been noticing in many countries around the world.

QUESTIONER: A third question. After the mission has been there, there would be a disbursement…

MS. ATKINSON: Just to clarify, the Ukraine mission is going next week.

QUESTIONER: They're going next week?

MS. ATKINSON: Yes.

QUESTIONER: Then the [third] tranche would be financing that would include budget support?

MS. ATKINSON: Since they're going next week, they haven't determined yet, but it could well include budget support.

QUESTIONER: Yesterday the World Bank revised its outlook for China, raising the GDP for 2009, and they also said that they felt additional stimulus in China is not only unnecessary, but it would be inappropriate. Does the IMF share the view that there is adequate stimulus spending going on in China right now or do they feel like more should perhaps be used this year?

MS. ATKINSON: What we feel is that the government has acted very decisively with fiscal and monetary policy in the face of the global economic and financial crisis. We're looking at our forecasts right now as I mentioned. We will be doing the WEO update on July 7. There are some signs that the economy is bottoming out even though growth this year is of course likely to be slower than it was last year.

QUESTIONER: I know Mr. Lipsky put out a statement on Latvia, but I was wondering the E.U. spoke about it didn't want any delays in funding for Latvia. I was wondering if you had a timeline on how quickly that announcement could be on additional funding for Latvia? And then how quickly could it go to the Board?

MS. ATKINSON: Thank you. I don't have a timeline for you. As you know and as Mr. Lipsky and the Managing Director have said, this is something that we're looking at, we're assessing the government's measures that were announced earlier this week, and those were important measures. We're working with the authorities and the E.U. Commission and other financing partners. But we don't have a timeline as yet. Of course, we are able to move quickly when we need to, but at the moment we're assessing. It's your turn.

QUESTIONER: I know this will probably be discussed in Turkey, but I'm just hoping to get an update on the IMF and discussions with Turkey regarding a possible loan. Is the IMF considering giving access to the Flexible Credit Line?

MS. ATKINSON: As I said before, and I think John Lipsky has said, we've had good discussions. He's in Turkey for this big meeting of TÜSIAD but took the opportunity to see the authorities, and I think they had good discussions and we continue to work with them on what kind of support they may or may not want from the Fund and on assessing their economic plan. Whatever happens, of course the Turkish authorities will be looking at how to strengthen their own fiscal, monetary and structural policies going forward.

QUESTIONER: I was wondering if you have an update on Sri Lanka's program. I think the last time you spoke you said that you were waiting for a staff agreement. I checked with our bureau in Sri Lanka and that thought that staff agreement had already happened, so I think there's some confusion. I'm not sure. So I was wondering if you have any update on that one.

And then the second question is something completely separate. The Senate today is considering the legislation that includes IMF financing. I know that I'm going to probably call you after this, so I'll just ask you now, which includes the approval of the sale of IMF gold. I was wondering how quickly that will start moving once the U.S. approves that.

MS. ATKINSON: On your second question first, we of course very much welcome the action that was taken by the House earlier this week. It was very important. And I think we will wait on other comments until we see what happens in the Senate. But by all means, do call after that, which I agree what we're hearing is that it's likely to be today, but we'll see about that, and we will have then material to help you on that.

The first question on Sri Lanka, I don't have anything new but the mission has been in Colombo to look at the safeguards assessment and so on and we basically have the same line as before that whenever there is final agreement then a program would go to the Executive Board, but we don't have that announcement to make now.

I have a question online from the Media Briefing Center: "Russia not wants to join the WTO as part of the customs union with Belarus and Kazakhstan. Can you comment on this?"

I'm afraid I don't have anything for you but will be happy to get back to you on that. I'm not briefed on the customs union, but we can get back to you on that.

QUESTIONER: Caroline, I was wondering if you have any comment on the announcement yesterday by the Obama Administration on regulation particularly the additional powers it's giving to the Fed, and was wondering if that was part of what the IMF thinks is the appropriate response. In addition, is it part of a broader coordinated response that you had in mind?

MS. ATKINSON: We welcome the proposal to strengthen financial regulation in the U.S. Obviously that's extremely important and it's a thorough and detailed plan. We also have been recommending strengthening of regulation of systemic institutions and a focus on systemic risks, and so we certainly hope that that will be an important part. Of course there's a legislative process to go through, but the notion that regulators look more at systemic risks and systemic institutions is an important one that we have been advocating for a while.

And we also of course support the objective of better international coordination and there is a need to avoid gaps in cross-border regulation and supervision, so that's before problems. And then also a need to enhance crisis management authorities and so on after that. This is a long process, but I think that gradually the world moved a bit closer to this, but the U.S. steps are an important signal of willingness to go further forward on that point.

I have one question online on whether we have any update on the bond issue and any concerns that countries will use them to reduce exposure to U.S. treasuries. Just to say that I think that you're aware that we now have a number of countries and they are all listed on our website who have expressed interest in investing in IMF bonds and we expect that that will become possible soon. We're working on that as I said before on the technical details. In the scheme of things, the amounts that we're talking about are small relative to worldwide holdings of U.S. treasuries, but I see it more as an important sign of a widespread commitment and willingness to support the IMF and IMF financing.

Thank you. I think that's it. We'll obviously speak or be available later on if we do have any news from Congress, and there will be all of these trips and so on coming up on July 7.

Thanks very much indeed.



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