Transcript

Transcript of a Press Briefing by Caroline Atkinson, Director, External Relations Department, International Monetary Fund

December 2, 2010

Webcast of the press conference

MS. ATKINSON: Good morning. Welcome all of you to the regular IMF press briefing. I am Caroline Atkinson, the Director of the External Relations Department at the IMF. This briefing as usual will be embargoed until 10:30 a.m. Washington time, 1530 GMT.

I will start with a couple of announcements about upcoming events and management travel. The IMF Executive Board's New Work Program is available on our website. In line with the G-20 priorities and the priorities of our International Monetary and Financial Committee, the Work Program focuses on the IMF's role in fostering global stability and cooperation. We will continue our work on the Mutual Assessment Process, which includes new spillover reports for systemic countries as well as further analysis of the state of the international monetary system. In addition, we will assess ideas about the Multilateral Framework for looking at cross-border capital flows.

Another event next week on December 9 here at the IMF is a conference on Large Fiscal Adjustment Plans. A final panel discussion will be open to the public, with speakers including Carlo Cottarelli, the Director of our Fiscal Affairs Department, Carmen Reinhart from the Peterson Institute for International Economics. Please contact the Media Relations Department for more information.

Coming forward again to where we are now, the Managing Director is currently in India, in New Delhi. We have been posting a keynote speech that he delivered today and he had a press conference there. He will then be traveling to Brussels to give a keynote speech at the annual meeting of the Parliamentary Network on the World Bank (PNoWB) in Brussels on December 4. On Monday, he will participate in the opening plenary session of the European Development Days, EDD, also in Brussels. He will also while in Brussels attend a meeting of the Euro Group where he will discuss the views of the regular staff visit that has just been in Europe for the sixth monthly update of the Article IV consultation with the Eurozone. He will then visit Greece on December 7 to meet with the authorities. On December 8, he will deliver a speech in Geneva on the impact of the financial crisis on global economic governance, which we will be available under embargo. The details again will be available from Media Relations. The following week he will be briefly in Mexico meeting with Mexican President Felipe Calderon. We will advise you on the complete program ahead of time on that and on press opportunities that there may be in connection with that visit. With that, I will open up to questions if you could please identify yourself and your news organization.

QUESTIONER: Caroline, I wanted to speak to you about the story out of Brussels talking about more funding possibly necessary considering the spreading instability and concerns in Europe. I was wondering whether you know of any request or work being done by the Fund to try and strengthen its resources further, and specifically for more resources going to the Fund being backed by other members of the Fund outside the Euro Zone to strengthen the whole European Stability Mechanism that was formed?

MS. ATKINSON: A couple of comments on that. First of all, the Fund is in a strong financial position to address our members' needs. Secondly, perhaps I can take the opportunity to say that we lend money to our individual members, to our member countries on a case-by-case basis. We do not contribute money to a pool for any particular group of members. We have IMF resources. We are like a credit union with 187 member countries and we have financial arrangements with individual member countries and assess on the basis of their financing needs and strengths of programs and so on.

QUESTIONER: May I follow up on that? Do you know of anything going on at the moment in which the U.S. has said that it will contribute more to the Fund to make sure that these resources -- don't forget that the quota resources aren't fully in yet because a lot of parliaments haven't even okayed the quota increase and a lot of that was going to come from -- the quota increase from 2008 and from this one.

MS. ATKINSON: Just to repeat that we are in a strong position -- our resources are in a strong position. Early on in the crisis, we were provided with a certain amount of money including bilateral loans and a new New Arrangement to Borrow, as you know. I do not comment on rumors but I believe that there were a number of different stories including statements from officials contradicting that story, but again it was not coming from us or anything of which we were aware or were able to comment on.

QUESTIONER: Can you tell how much does the Fund -- having lending resources right now? Not the total $858 billion. Do you have anything on hand?

MS. ATKINSON: We have a lot of data on our website and I'm very happy to go through with you the details because it's rather complex. We have money immediately available. Then we have some money that we keep for precautionary reserves. We have some money that is already committed but hasn't been disbursed and may never be disbursed and then we have some bilateral money where it's more in the form of countries have said they would give us the support if we needed it. So it's rather complicated to come up with a single figure, but we have several hundred billion. I can give you a figure like that. And repeat that we are in a strong position to meet members' financing need.

QUESTIONER: May I ask you about the recent deal with Ireland? There has been a lot of comment about this in Ireland, particularly about the interest rate that's been charged by the IMF. Let me make just two points. One is a general comment if you have it on the deal. And the second point is on that interest rate which is worked out apparently at 5.7 percent after the swap rates have been exercised. Is that the optimum rate that the IMF would give for such a deal and was there pressure to make it higher or make it lower?

MS. ATKINSON: Thanks for that question. First of all, our interest rate on our loan to Ireland is 3.12 percent on the SDRs that we lend. We have exactly the same interest rates that we charge to every single country depending on which facility they borrow under, and what type of country they are and what -- there are very clear rules so there is no room for discretion and there -- I would say that is a reasonably advantageous interest rate of 3.12 percent. And there's no room for deviation from that interest rate. It's set by very clear rules and the interest rate on our standby facility (SBA) and our extended arrangement (EFF) are identical. We have special low interest rates or zero interest rates for low-income countries.

On the deal more generally, of course there will be a lot more information after we've had our Executive Board meeting o -- where the program will be considered. We believe that it's really important for the Irish economy and for the Irish people that this crisis be halted. We are supporting this program designed by the Irish authorities and supported by the E.U. in order to help put the Irish economy on a sustainable path, for the benefit of all of the people in Ireland.

QUESTIONER: Just to rebound on what you said, would you extend that statement that it's important that the crisis be halted to the whole Euro area because it seems obvious that it's not halted right now?

MS. ATKINSON: We are in support of strong and stable growth around the global economy and we are on record as saying that the global recovery is proceeding but it remains fragile. Just to take a question online Pakistan: has Pakistan sought an extension of 3 months for the standby arrangement that is going to expire by December 31, 2010? If they ask for an extension, what would be the Fund's response? Is the Fund required to get approval from its Executive Board? We've had similar questions from others in Pakistan. We have not had a formal request for an extension of the Pakistan arrangement. Under general Fund procedures, it's not complicated to extend an arrangement. Just like an approval of an arrangement, it will require an Executive Board decision. There is also a question on Ireland: is the IMF a preferential creditor in the event of default of -- IMF's claims -- sorry, rank ahead of other lenders to Ireland such as the E.U., U.K. and private sector bondholders? There is a convention, as you know of IMF and multilateral lending having preferred creditor status generally because we lend at time crises. The IMF lends on behalf of all of its member countries and we need to get repaid in order to maintain the balances of all of those member countries, which may include some poorer countries so there is a generally accepted convention that the IMF has preferred creditor

QUESTIONERI know that the IMF is going to be really soon in Argentina I would like to know if you can explain to us what changed? I know that in the past, several times we have been speaking about some technical assistance concerning the consumer price index in Argentina? So what has changed to be able to do it right?

MS. ATKINSON: From our point of view, the authorities have invited us to come and carry out this work, which will be primarily to advise the National Statistics Agency on the design and methodology of a new national consumer price index. I think I've always emphasized in the past that we maintain relations and close contacts with Argentina. We have a resident representative in the field. The Argentinean authorities have asked us for their help in working on a new national CPI and members of the team will include people from our statistics department who go on such missions . It is a fairly common thing for them to do.

QUESTIONER: Can you explain to us something about the agenda that you're going to develop there? For example, I would like to know if you are going to see there just the people of the official institute and the government or if the IMF is also going to contact there the people and the technical officials that are very critic of the official index?

MS. ATKINSON: I think when the mission is in the field we'll be able to tell you a bit more maybe at the end of the mission of how the discussions have gone and who they've met. At the moment, we expect that, as is typical with these missions, the staff or the team would be meeting with officials, the technical staff of INDEC, and also with the users of official data. That's the normal way that it would be done because you want to speak to both the producers and the users to find out.

QUESTIONER: When you say the users, you mean what?

MS. ATKINSON: The people who rely on and use the official data.

QUESTIONER: How concerned are you about the potential of extending the crisis in any other country of the Euro Zone? Are you ready to support the country, which will have problems with its economic situation like Portugal, like Spain, like Italy maybe.

MS. ATKINSON: First of all, our Managing Director said this morning that he expected that the European situation would be brought under control by European actions. We observe that the European authorities have generally managed to come up with measures and proposals to address the problems collectively as well as in a number of countries where preemptive steps have been taken by countries facing market pressures. I will repeat for the record that we have no requests for any support from other countries, but I'd also like to again make clear that we look at our resources in the context of our 187 member countries and we believe that we're in a strong position to meet our members' needs.

QUESTIONER: Are you afraid about these market pressures which will become stronger and stronger every day.

MS. ATKINSON: First of all, I think I'd like to emphasize that what we look at fundamentals of a country's position, the fundamentals of their debt position, their growth prospects and so on. And if I can take your country, Greece, there were clearly problems. We believe that there is a very strong program that is being implemented. The government has had popular support for these difficult measures has been reaffirmed recently in elections. And as you know, from our mission recently concluded the program is broadly on track. So I just want to point out that on those fundamentals we've definitely seen considerable improvement. We also believe that the Irish program is a strong one. It will come to our Board and we'll have more to say about that after the Board discussion in a week or two. Other countries facing market pressures whether in Europe or other places have also taken steps, which we applaud. And of course, everybody pays attention to what's going on in the markets, but we have to look at what's the fundamental position and be ready to address particular problems when asked to help in a financing sense form our members. Of course, being the IMF, we're alert and ready.

QUESTIONER: Do you have any comment on the ECB's announcement today on the special liquidity measures? The fact that they have to do that is not a positive sign that they have to extend these. So if you are looking at the fundamentals, obviously -- in extending these is there any reaction to that?

MS. ATKINSON: We welcome the announcement of the European Central Bank today, and in particular I think it's important that President Jean-Claude Trichet emphasized the importance of doing what was necessary to preserve financial stability in the Euro Zone and the statements and actions today confirm that the ECB is ready to take steps as necessary to preserve financial stability in the Euro Zone and that's of course a welcome confirmation. I have a question online. Can you please describe the focus of the Managing Director's visit to Athens next Tuesday? We will have more for you in due course on that, but the main purpose is to meet with and talk to the authorities. The Managing Director has been interested in going to Athens and he will be as I explained in Europe visiting -- he typically goes around and visits member countries and this is one that he has been planning to visit and meet with officials there.

QUESTIONER: About this question I'm sorry, are you interested -- maybe Mr. Strauss-Kahn will be interested in meeting with the unions in Greece.

MS. ATKINSON: I don't have the program for you, but we will get back to you on that. I don't have the program for you, but I'm sure you know as well that our mission chief and mission team always make a point of meeting with the unions and discussing the issues with them in Greece as also we did in Ireland. I'm not sure whether that will be part of the Managing Director's agenda. He will be there for a short time.

QUESTIONER: In the case of Greece in particular, the E.U. said it's ready to extend the maturity or to extend the repayment dates for the loan. Is the IMF going to do it soon too? A second question, the Managing Director in India talked also that European countries are close to the edge of the cliff as he says. So I was wondering if that calls for more stringent measures now. The third question is completely different on Ukraine. The tax code was blocked. Does it impact the program and the next disbursement?

MS. ATKINSON: I can perhaps say that we're aware that -- of a potential bunching of maturities for Greece. It's not a today issue. It's something that's out in the future. And as mission chief Paul Thompson stressed at the end of his trip to Athens, we have a number of options that we would expect we could consider sometime, as I said it's not a today issue about how one could extend the maturities of future disbursements. So we would have a number of options that we could look at. We would obviously -- we would be willing to do that and we would be doing it -- we'll thinking about our maturities and how they relate to those of the other financing partners

On your second question, a number of countries have been taking measures. The ECB has just today announced measures. So actions are underway in various countries. I don't think I want to say more on that. On Ukraine, –we reached staff level agreement on the first review of the new arrangement and it will be coming to the Board in coming weeks, and the program is on track. I don't have anything for you on this tax code issue. I'm not aware of it. We can get back to you if there is something specific on that.

QUESTIONER: One last question. If you agree to extend the loan to Greece, will you also extend the supervision of the IMF and the role of the IMF in Greece will be extended?

MS. ATKINSON: I don't want to be describing the IMF's role in Greece because it's a hypothetical question whether there will be any extension of maturities. But if we talk about Fund practices, we have agreed -- under an arrangement with the Fund, authorities agree on their policies for the period of disbursements, the period during the arrangement and that is our policy conditionality. As you know, we have the disbursements after reviews and in slices or tranches over the period of the loan. We also have a system of what's called post-program monitoring where there are discussions in the Executive Board about how a country is doing as long as money is outstanding but there is not conditionality attached to -- at that stage. The conditionality comes before the disbursements.

QUESTIONER: The opposition leaders in Ireland have been discussing this deal and they say they're not going to be bound by the details of it and there's an election upcoming early in the New Year. What does the IMF do in this case?

MS. ATKINSON: We have a lot of experience with -- governments’ change during a period of an arrangement. As I believe, you know the team led by Ajai Chopra in Dublin had discussions with the major opposition parties and was sufficiently satisfied by those conversations to believe that it was appropriate to reach agreement with the government on the basis of this program and to bring this program to the Board. What happens under a future government will be their prerogative, but we would then consider whatever does happen at the time in terms of what we would then be willing to disburse. I think it's fair to say that there is broad support in Ireland for the broad outlines and the key goals of this program, which are to strengthen the economy and strengthen the banking system -- strengthen and reduce the size of the banking system.

QUESTIONER: The IMF in Greece had very good cooperation with the authorities. But some of the members of the Greek government were not so willing.

MS. ATKINSON: We have indeed worked very closely and cooperatively with the Greek authorities. We believe that their plan for addressing the Greek crisis is a good one and an appropriate one and in the interests of the Greek people and the Greek economy, and it's the way to address the twin problems facing the Greek economy of competitiveness and the need for growth and the fiscal deficit and the need to bring government borrowing under more control so that it's self-sustaining. I had a question on the Maldives just to acknowledge this online and I will get back to bilaterally on the Maldives. We also have a question on Argentina : Does the IMF's technical mission also propose to look at data to complete the chapter or Article IV? This is a technical mission. It is not an Article IV mission, so that's how I would answer that.

QUESTIONER: May I have a follow up on that, because in Argentina we know the difference, but in some ways some people see this as the beginning of an Article IVIs this the beginning of a Chapter IV or nothing to do with it?

MS. ATKINSON: This is not an Article IV mission It is the first in what we expect to be a series of missions to help the authorities to construct a new consumer price. I have another question about governance changes asking to confirm and comment on report about what will happen to Africa's voting share under the quota agreement that was recently announced. And please describe what support the IMF would give to an East African community to set up a regional monetary union. We will get back to you on the second point. In terms of quota shares, again, our information is online and I don't have the figures off the top of my head. We can get back to you. But I would like to stress that one important part of the agreement both in 2008 and more recently in shifting quota shares toward dynamic and emerging countries was that the voice of low-income countries would be preserved through a change in what we call basic votes which means that they have a larger voice than would be strictly deduced from their size in the global economy and the membership as a whole though that was an important step to make sure that that would be possible for the low-income countries many of which are in Africa.

Thank you all very much. Just to repeat that it's embargoed until 10:30 our time, 1530 GMT.