Transcript of a Press Briefing by David Hawley, Senior Advisor, External Relations Department, International Monetary Fund
October 21, 2010Wednesday, October 21, 2010
|Webcast of the press conference|
MR. HAWLEY: Good morning, ladies and gentlemen, and welcome to one of our regular briefings by EXR for the media. This is, as usual, under embargo until 10:30 Washington time, that’s 14:30 GMT. My name is David Hawley. I’m a Senior Advisor in the External Relations Department. Before taking your questions, I’d like as usual to make a few preliminary announcements, chiefly about management travel.
The Managing Director, Dominique Strauss-Kahn, and the First Deputy Managing Director, John Lipsky, will be in Gyeongju, Korea, this weekend for the G-20 Finance Ministers and Central Bank Governors Meeting. I expect there will be some media availability for the Managing Director on Saturday, and we’ll give you further details of that as they become available. And as usual, we will release the Note—the Surveillance Note—that we prepare for G-20 after the meetings.
Deputy Managing Director, Naoyuki Shinohara, will travel November 3-9 to Bangkok and to Manila for meetings with the Thai and the Philippine authorities. During his trip to Asia, Mr. Shinohara will also participate in the APEC Finance Deputies Meeting in Kyoto, Japan.
You may have noticed that we have over the course of the past few days been releasing our Regional Economic Outlooks. Today we launched the Asia-Pacific Outlook in Jakarta. There will be a transcript of the press conference available during the course of this working day in Washington. Looking forward, the REO for the Middle East, North Africa, Afghanistan, and Pakistan will be launched in Dubai on Sunday, the 24th. And on October 25, the Africa Regional Economic Outlook will be launched in Nairobi. All these documents are available on our web site.
And finally, the next issue of the Fiscal Monitor will be launched on November 5. This will update our fiscal development since the last Monitor was released in May. The head of the Fiscal Affairs Department, Carlo Cottarelli, and his colleagues will hold a press conference on the launch of the Monitor on November 4.
So with those remarks, I’m open for questions.
QUESTIONER: I’d like to ask you if there is any strategy that governments can apply in order to combine fiscal consolidation and economic growth, first? And secondly, in the Outlook for 2012 is written that Portugal has a too rigid labor market and there are some limitations in the business environment. Can you be more specific on that and what reforms should be done?
MR. HAWLEY: Okay. Let me take the questions in reverse order if I may, starting with your Portugal question. The context, of course, is the policies that have already been announced by the authorities. And we welcome the consolidation measures adopted earlier this month, which should make the 2011 government targets achievable, and we urge the authorities to implement these measures forcibly. To ensure medium-term public debt sustainability, we also urge the authorities to complement these measures by further structural reforms to boost productivity and to promote economic growth through labor and product market reforms.
Now you’ve asked a question about the broader approach to exiting from the stimulative policies that have been a feature for the past two years. Our general line is that as the global economy is emerging, broadly as expected from the great recession, conditions nevertheless remain fragile and geographically unbalanced. That means that the policy mix will vary according to country circumstance, with those countries most advanced in recovery starting to exit and in general maintaining supportive policies for as long as needed.
QUESTIONER: Dave, I was wondering if you got any comment on the Chinese move on raising rates by 25 percent?
MR. HAWLEY: 25 percent, yes? Basis points. Less than you suggested. Well, this is in line with the IMF’s longstanding policy advice, including in the 2010 Article IV. We support the decision of the People’s Bank of China to raise rates. Given the pace of recovery in China, it’s appropriate that the Central Bank should continue to withdraw its monetary stimulus and return the pace of credit growth to more normal levels.
QUESTIONER: I just wanted to double check. So you think that their rate was appropriate given the circumstances and the flood money going into China?
MR. HAWLEY: We support the decision of the People’s Bank of China, yes. Please?
QUESTIONER: Again, the Portugal thing. It’s what I’m interested in right now. Can you be more specific on what reforms should be done in order to improve the business environment?
MR. HAWLEY: I don’t want to add too much specificity at the moment. I’ve outlined the approach that we favor, which is the authorities should carry out forcibly and implement forcibly their announced policies.
QUESTIONER: In the IMFC Communiqué, one thing struck me. “The IMF signaled for a more even-ended assessment of advanced economies.” What do you infer from that? What is your understanding of this formulation?
MR. HAWLEY: Well, you would have to ask the members of the IMFC for their interpretation of the language they chose to offer in the Communiqué. But in general terms, the Fund is, as you know, sharpening its surveillance work, which is the economic analysis with in particular a focus on multilateral considerations; in other words, the spillovers from policies in one country to others as a whole. Yes, please, in the back.
QUESTIONER: You said you support the decision of the Chinese Central Bank on their rate increase, but in light of the better-than-expected growth numbers released today, do you think the numbers were enough? The Communiqué suggested that you expect continued changes.
MR. HAWLEY: I’m sorry. I couldn’t hear your question.
QUESTIONER: No problem. I was asking you said that you support the decision of the Chinese Central Bank to raise the rates. But in light of the better-than-expected growth numbers that were released today, do you support the quantity, the size, of the increase or do you think that more action is needed?
MR. HAWLEY: Let me answer the question as follows: The growth figures released today were broadly in line with our forecast, and so they don’t change the nature of our policy advice to China. So, no, they don’t change the answer I gave to the previous question. Please?
QUESTIONER: It was reported yesterday that currency would be the main topic in upcoming G-20 meeting, and how do you expect that the currency issue will be discussed in the coming G-20 meeting and what’s the role behind that please?
MR. HAWLEY: Okay. I don’t want to anticipate the deliberations of the G-20 at the forthcoming ministerial meeting, or the summit in the middle of next month. I think our views are clear. The IMF plays a central role in such discussions because it is the forum for discussing the International monetary system and, in particular, collaborative approaches to strengthening the system and rendering it more stable.
QUESTIONER: A follow up on the G-20. It seems likely that you will have to make this spillover report that the Managing Director has been talking a lot about. Does it imply a new board to formalize this?
MR. HAWLEY: So your question is –
QUESTIONER: If the G-20 calls you to make this spillover report that is the framework that the Managing Director is in favor of, does it imply that you will have to make a board decision to formalize?
MR. HAWLEY: Oh, I’m sorry. I misunderstood. Let us see what the guidance is from the G-20. I don’t have anything in detail about what the nature of a specific board response would be [to the G-20].
QUESTIONER: I’m just—I was wondering if you have any details on the next Article IV to the UAE?
MR. HAWLEY: No, I don’t.
QUESTIONER: Okay, I know it was –
MR. HAWLEY: I’ll get back to you by lunchtime.
QUESTIONER: ( Talking about the G-20 and the efforts for more balanced growth with hearing more voices expressing concerns about the upcoming quantitative easing policies of the Fed, how do you think this is affecting imbalances, and is it a way of sort of indirect currency intervention on the part of the U.S.?
MR. HAWLEY: Your question is about the—well, one has to recognize that any monetary or fiscal policy action by the U.S. or another systemically important country inevitably carries implications for other countries. And this only serves to underline what our position is, that a coordinated policy response is important to ensure that the benefits of one country’s policies are more widely shared.
QUESTIONER: Dave, I wanted to get you to—to ask you about the MAP, the Mutual Assessment Process, that’s going to be given to the Ministers—I gather there’s one that’s going to be given to the Ministers and then the IMF is going to come back and then look at it again. Right? A Korean newspaper has come up with—which looks very much like what the MAP is meant to do—looking at ways to cut the current account. I think it’s more focused on the surplus countries, and it’s talking about a 4 percent, within some band of 4 percent. Does that sound familiar to you? Does that sound as if this is the MAP or is this something completely different?
MR. HAWLEY: I’m not going to give comments on a newspaper report on these figures.
QUESTIONER: Right, that’s what I figured, but when you’re looking at the MAP, what kind of specifics are you going to get into for this G-20?
MR. HAWLEY: Before the MAP goes to the G-20, I’m not going to describe its contents.
QUESTIONER: No, I’m not asking you to describe the contents, but what kind of issues has the IMF been looking at under the MAP? I’m not asking for the details. I’m just saying, what economic benchmarks and—so would current account be one of those? What are the issues that the MAP would get into?
MR. HAWLEY: The basic thrust is to promote a collaborative approach to addressing global imbalances and that has implications across a range of policies. At this stage that’s all I’ve got on the MAP.
Can I take a question from the Media Briefing Center? “There is an impression in Pakistani official quarters that the IMF always extends support to Pakistan with the influence of Washington,” and he asks for comment on this.
The answer is straightforward. We extend loans to our member countries at their request. The agreement to give a loan and the size of the loan is dependent on the quality of the economic policies. And that describes exactly the circumstances in which the current standby arrangement has been agreed and disbursed with Pakistan.
QUESTIONER: Dave, I was wondering if you could elaborate more on the discussions between Dominique Strauss-Kahn and the Chinese authorities?
MR. HAWLEY: I’ve got nothing to add to the press release that was issued yesterday. Okay?
If there are no further questions, I’ll end the press briefing at this point. Thank you very much, and it’s under embargo until 10:30.