Transcript

Thursday, March 3, 2016
Washington, DC

MR. RICE: Good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department, and as usual, this briefing will be embargoed until 10:30 a.m. That is Washington time.

Let me make a few announcements about upcoming events and travel, and then turn to your questions in the room and online.

Tomorrow, March 4, the Managing Director of the IMF, Christine Lagarde, will deliver in Boston the Compton Lecture at MIT, the Massachusetts Institute of Technology. The topic of her lecture is the role of fiscal policy, demographic change, and economic well-being. We will get that speech to you. That is the Compton Lecture. We will get that speech to you ahead of time.

A week later, the Managing Director will embark on a trip to Asia, a fairly extensive trip, which will begin with our conference in New Delhi. This is the conference we have been working on for quite some time, jointly with the Indian authorities, advancing Asia in New Delhi, but an Asia-wide conference.

I will just point you to information on that on the Web. I won't go through it here. We expect that to be a fairly major event.

Following that conference in New Delhi, Christine Lagarde will be going to the Democratic Republic of Lao, and then she will travel to Vietnam, where she will be both in Ha Noi and Ho Chi Minh City. There will be public events there which again we can get you the information on various interactions, speeches, and so on.

Finally, on that expansive trip, the Managing Director will be in Beijing to attend this year's China Development Forum. As you know, that is something she has attended in previous years, and she will be going to Beijing for that. So, a fairly extensive Asia trip coming up.

Next Tuesday, March 8, David Lipton, our First Deputy Managing Director, will deliver the keynote speech at the NABE Conference. NABE, as I am sure you know, is the National Association for Business Economics, so it is a fairly important event here, and David will be giving the keynote speech on Tuesday, March 8.

Our other Deputy Managing Director Min Zhu is also speaking today at the Conference on Economic Linkages between Asia and Latin America. That is happening now as we speak. You're welcome to go and I believe a number of our colleagues are already there. It runs for half a day today.

Our other Deputy Managing Director Carla Grasso will be in Africa until March 11, Tanzania, Mauritius, and Mozambique. She will be at a conference in Mauritius on monetary integration in Africa, and on her way back, she will be in Brussels to sign several agreements with donors related to the IMF's work on capacity development. You know, that is the third big area of what we do, surveillance, lending, capacity development. That is important.

Finally, March 8 is International Women's Day. On March 7, we will be releasing a staff paper, one in a series of gender related research papers. We will be releasing a paper on Monday on “unlocking female employment potential in Europe”, and we will get that to you in advance.

On Women's Day, we will also have some public communication coming from the Managing Director and others. More details will be provided shortly.

Our next briefing will be March 17 for your calendar, and that will be the last one before the spring meetings, which we then head into broadly starting the week of April 4, because we have the Curtain Raiser Address and then the meetings themselves beginning about a week later, April 11.

Thank you very much. Let's take your questions. I am going to have to leave around 10:00 this morning. Can I suggest that on Greece we group the questions and I take a pass at answering them, and of course, if you have a detailed follow up, we will take that, too. Is that okay with you?

QUESTIONER: Yes, of course. I think we have the same question. Actually, we are looking for Mr. Thompson.

MR. RICE: You're looking for Poul?

QUESTIONER: Yes. Is he still in Brussels, and can you tell us if after Brussels, the mission is going back to Greece soon?

QUESTIONER: It has been reported that some progress has been made on the fiscal gap between the IMF and the European projections. I understand no Greek was present or invited to this dinner. Can you confirm that this is the case, and what does it mean about the extent of reforms needed as detailed on Poul Thompson's blog? Thank you.

QUESTIONER: According to the IMF, Greece will not be able to make the necessary payments by the end of this month. Is that what the IMF projects?

QUESTIONER: I have a couple of questions. The first question is we need to know why the review for the Greek economy is not completed yet. Is it because there is like a divergence between Europe and IMF regarding the numbers and the projections about the growth of the Greek economy, or is it because the Greek government hasn't implemented fully its commitments to the IMF.

The second question is regarding the Greek Minister of Finance, Mr. Tsakalotos. I am sure you have seen he has identified his rhetoric against the IMF. I am quoting his latest statement saying … we don't understand why the IMF is constantly demanding from the Greek government additional Draconian measures. I think generally Mr. Tsakalotos says the IMF is the tough player in this game. I don't think Mr. Tsakalotos is a foolish guy to say these things, probably there must be a reason for saying that. What do you think?

QUESTIONER: The IMF has essentially said that it won't rubber stamp a program that it does not believe will work. Poul Thompson has made that abundantly clear in his posts. You all have made that abundantly clear in your DSA last year. You will not simply say it will add up if it doesn't add up.

Is there any chance that Madam Lagarde might make a political decision that senior staff may disagree with on whether the program adds up, just to ensure that some kind of program is made, something is better than nothing?

QUESTIONER: I just have somewhat of a general question because the IMF has not been saying even once “we impose Draconian measures on Greece” -- at the same time you are asking for tougher pension reform. Isn't that a Draconian measure to ask for pension cuts?

MR. RICE: So, as mentioned, there was a meeting, a dinner meeting of the institutions last night to take stock of the progress towards the first program for Greece. Good progress has been made in the discussions. We would expect an early return of the mission. I don't have a date for you, but we will know more about that, and be able to say more, after the group meeting upcoming on Sunday.

So, that is on that point. Again, for those who don't follow it, the first review of the European program, the ESN program, has been delayed since October last year, and speaking for the IMF, we certainly share the authorities' view that it should be completed as soon as possible. We definitely share that view.

QUESTIONER: Were the Greek authorities present at this dinner yesterday?

MR. RICE: I can tell you that Poul Thompson was there. The IMF was there. I don't know who else was around the table. I don't have that. The IMF was certainly there and the other institutions were there.

There was sort of a clutch of questions on issues around the stance that the IMF has taken, that the IMF has been reported to take. Let me try to say something about that.

Number one, our views have essentially not changed from the summer when the original agreement was made. We are not, in fact, asking for anything additional in terms of the agreed targets. The targets that were agreed last summer and we are not asking for anything additional to that in terms of the targets.

But to set that in context, Greece and the European partners agreed to what was very ambitious medium term fiscal targets, very ambitious targets. So what we have done and what the blog, for example, from Poul Thomsen, was trying to do was seeking to explain just what is required to meet those targets. Because that had never been quantified nor specified. So to meet the agreed targets requires this 4% to 5% of GDP, and we’ve also said that we think it would be very difficult for a society that has been undergoing a painful adjustment over the last five years to meet that very ambitious fiscal target. Which brings me to the point that we have sort of emphasized here before. That really, and it was a point made clear again in the blog, that the needed reforms would be less demanding if there was more debt relief on offer from Greece’s European partners.

So it gets to this calculus, the two legs, we’ve talked about this before. There’s a calculus between the package of reforms, the strength of the reform package, and the level of debt relief. Okay? And that’s really where the discussions are now. And the Europeans and the Greeks need to come to an agreement on that package. That two legs calculus that we’ve talked about.

There was a question, well about: do we see it differently from Europe? I think the Europeans also see the need for the measures to be quantified and specified, again, to meet these agreed program targets. So I don’t think there’s a great deal of difference there. And, again, that is what’s under discussion.

On Spiegel, the statements that the IMF was reported to have made in Spiegel we have not made any such things. But let me say, Greece’s financial position depends on a number of factors, including tax revenues, the ability to generate primary surpluses, and importantly, official financing on which Greece still relies to meet its payment obligations.

It’s, therefore, really important that Greece would put in place the necessary reforms not only to unlock that further official financing, but also to pave the way for a return to sustainable public finances and growth which, of course, is the overall objective.

Have I missed something?

QUESTIONER: Soft on your targets?

MR. RICE: You know, it’s not normal at all where you have the situation where the management of the Fund would take a very different view from the staff. That would be highly unusual and I do not envisage that in this case. I do not. Did I miss something?

QUESTIONER: Greece has a lot of statements regarding the IMF portraying the IMF as a down player, and I’m sure that you have seen the recent statements of Mr. Tsakalotos. He is talking about the IMF during the last two weeks using very tough and strict words.

MR. RICE: You know, I was trying to answer that a bit. I’ll try and say a bit more. I was trying to answer that by saying: look, our views have no changed. We are not asking for anything additional in terms of the program targets. But those targets that were agreed last summer, and we said so at the time, and we’ve said so again, including in Poul Thomsen’s blog…. these are very ambitious fiscal targets that have to be met, but that’s what has been agreed.

In terms of the IMF being, you know, the one to say something needs to be done or that we are somehow in conflict with Greece. Over the last five years the IMF has provided exceptional support for Greece. Exceptional support for Greece. I think if you were to ask the other parts of the IMF membership they would probably tell you that they would see it that way.

I think we have often been the ones, again, looking back over the life of the several programs, we have been the ones seeking realism on the fiscal adjustment so that it can, in fact, lead to medium term recovery and longer term growth. And I would remind you that the IMF was the one arguing strongly past summer for debt relief for Greece. So I say all that because I don’t think it is right to characterize the IMF position as tough or blocking.

What we are doing is what we do in every program, including Greece. We try to be objective. We try to provide the realistic analysis because we think that’s what’s necessary for a program to succeed. It has to add up. And, you know, that’s our job, to try and be objective and realistic.

I’m going to take one or two follow ups and then I’m going to move on because it can’t just be Greece.

QUESTIONER: Thank you. From what you’re saying I understand that the fiscal gap you’re seeing is still 4 to 5% of GDP, and maybe more -- a less ambitious target will have to be directly connected with a further debt easing from the Europeans. Is that correct?

MR. RICE: Well, again, the target, in terms of the primary surplus was set last summer, and that hasn’t changed. That’s the agreed target. So what we’re talking about is the measures required to meet the target, okay?

QUESTIONER: The 4% to 5% of GDP is still gap?

MR. RICE: It’s as Poul described it in the blog.

QUESTIONER: As Poul described it, it stays the same. Despite the fact that some of the numbers that came out of Greece are actually better than expected on the primary surplus for 2015?

MR. RICE: Yes, it’s as described in the blog.

QUESTIONER: Although I completely and totally accept your answer regarding Mr. Tsakalotos’ statements, I would like to know whether you think that this way of portraying the IMF as the evil of the story by the finance minister whom you’re supposed to work with closely, is it a constructive way to reinforce your collaboration? Does it make you feel comfortable?

The second question is about the refugee crisis. What is the stance of the IMF regarding all these thousands humiliated refugees stuck in Greece? There are a lot of views saying that Greece should get something from the IMF and its lenders. Do you share this view?

MR. RICE: Well, you know, on your first question, we always have the deepest respect for our member country. We do. We always try to work in a constructive manner. I just try to give you a sense of the extent of the IMF support for Greece over the last five years which has been, by any measure, exceptional, exceptionally strong. So, I’m just going to leave it there and say that we’re always seeking to be constructive, but we have to do our job. The membership expects us to provide realistic assessment and analysis of the programs. We think, at the end of the day, that’s also in the best interest of the membership. So we are fully engaged with the Greek authorities. We are engaging in those discussions, as I say, with our usual, you know, deep respect for the authorities.

On the refugees. Clearly, like, everyone else, we are very aware and sympathetic to that enormous humanitarian tragedy that’s taking place. We think that in looking at the overall assessment of support for Greece that it needs to be taken into account. And we welcome, of course, the recent commitment expression from the Europeans regarding their willingness to help Greece in this effort.

Are we moving on? Okay.

QUESTIONER: I was just wondering if I could ask you about the Peoples Bank of China’s move to resume its easing cycle this week which comes just two days after they spent quite a bit of time at the G-20 reassuring members that they would not devalue their yuan, or they did not intend to devalue the yuan. I’m just wondering if the IMF was surprised by this move this week, and if you see it as counter to their message that they have at meetings?

MR. RICE: No. I think I don’t see it as counter to the message. You know, we heard loud and clear during the G-20 meetings that there was no intention to devalue the renminbi, so I think the Chinese authorities provided reassurance along those lines. The assessment in our last staff report was that the real effect of exchange rate was broadly in line with medium term fundamentals, and that’s where we are.

QUESTIONER: Thank you. I have a bunch of questions on Russia and the Ukraine. On Ukraine, when can we expect some movement on the program? How confident are you that the program can move forward given that in the polls over 77% of the Ukrainians do not want drastic reforms that make them tighten their belts?

And on Russia, my editors want me to ask again about that debt issue. They say there was supposed to be a letter from Russia to the IMF. Has the IMF received a letter like this, and does the IMF see a role for itself in the dispute over the debt? Which, as you know, is now important.

MR. RICE: The status of the program. I’ll not go into what I’ve said here before. Where we are today, you know, we need to have more clarity about the status of the government and the coalition for us to be able to engage on policies to strengthen and transform the economy and to pave the way for the completion of the second review, which I think was your question. You know, I would remind you that President Poroshenko recently reassured the IMF, the managing director, of his commitment to the reforms, including improving governance and fighting corruption. And so, in the last weeks that’s been the focal point of the discussions about measures to ensure progress towards tangible results in these areas. I mean I can give you a bit more detail in those areas if you wish. But they are part of the program and they are in the memorandum of economic and financial policies. In terms of the mission going back, again, once there’s more clarity about the status of the government and the coalition would …

QUESTIONER: (inaudible)

MR. RICE: Could you turn on your mic? Thanks.

QUESTIONER: The other question was how confident are you that the program can be successfully implemented given that the vast majority of the Ukrainians seem to be against it?

MR. RICE: Well, again, we’ve received commitments at the highest level from the authorities in Ukraine and you know, that’s the direction that we certainly want to go in is to make as much progress as we possibly can toward the second review, but contingent on what I just said earlier. On your debt question, I don’t have a lot to add to what I said before, that we continue to engage. We continue to encourage, encourage Ukraine and Russia to achieve a cooperative solution that contributes to the financing and the debt objectives of the program. We are not part of the discussions between the two parties. I am not familiar with the letter that you mentioned. But in terms of that cooperation between the two parties and the question of good faith and how it can be resolved, it is something that …. of course our board will assess those efforts at the time of the review.

QUESTIONER: Can you give us any update on the funds’ engagement with Argentina? For example, there was some stories in the Argentinean media suggesting that the Argentinean authorities might request a program from the Fund. Can you give us just an overall update?

MR. RICE: There has been no request for a program from Argentine authorities, nor any discussion whatsoever between us on that topic. But, you know, stepping back from that, what can I say? You know, we welcome the authority’s announcement that the intent to resume the Article IV consultation. We are ready to move ahead with that at a time of the authority’s choosing. We published, we released some documents earlier this week on Argentina that I’m sure that you saw. That was again, at the request of the Argentine authorities. We’re encouraged also by the announcement on the agreement on the holdout deal, on the debt deal. And you know, that’s going to be important toward allowing Argentina to return to financial markets and restore its financial position.

QUESTIONER: I would like to ask about Cuba. In the context of their having two currencies that simultaneously circulate and their intention, the Communist Party says it wants to unify those currencies. They’ve got a party congress in April. The American president is going there this month. Has the fund been approached to assist in capacity building on this challenge? And also, have there been any informal contacts on Cuba rejoining the Fund?

MR. RICE: No, on your second point. What I would say is that Cuba has not reapplied for Fund membership. I say reapplied because as you probably know, Cuba was a member of the fund until 1964. So there’s been no request along those lines. And of course, should there be any request, we would look at that in accordance with our normal procedures. We are also not engaged in TA, in technical assistance right now with Cuba. But as soon as we have something I will get back to you.

QUESTIONER: Since ’64, is that right?

MR. RICE: 1964. I believe actually Cuba was a founding member of the IMF and was a member until 1964.

QUESTIONER: Cuba was a member during Castro? The first years of Castro’s regime?

MR. RICE: Until 1964, yes. I’m going to take a few questions online, yeah.

QUESTIONER: Just to follow up on Argentina?

MR. RICE: On Argentina?

QUESTIONER: Yes. You did say that you welcomed the agreements reached with the holdouts, but at the same time, don’t you fear that it could, you know, incite new holdouts to emerge in other cases because basically the funds who refused to negotiate like Argentina are going to be rewarded with a big check. Don’t you fear that other holdouts could emerge down the road with other cases like that?

MR. RICE: You know, I don’t really have a comment on that specifically. It’s a matter for Argentina and its creditors, obviously at the end of the day to come to an agreement. They appear to have come to an agreement that’s largely agreeable on both sides. For our views on debt related issues, we’ve had this whole series of papers over the past two years, and I think that’s the status of our views at the moment. I’d refer you to that slew, that series of papers on lending reform and sovereign debt that we’ve had -- sovereign debt resolution over the past year and you know, one of the major themes of that is that we are favoring a market based approach to debt resolution. So we have not been advocating this super national type instrument.

I’m going to take a few questions online and then I’m going to leave it there. There’s a question on Tunisia asking about asking about the status of the program with Tunisia. There’s an IMF mission in Tunisia until today negotiating a new four year Fund arrangement to support the authority’s program. And in fact, we’re going to be releasing a press release as soon as I finish here, so I can refer you to that. It will give the complete update on where we are on that matter.

There’s a question about Jamaica, what’s the relationship now between the IMF and Jamaica, given the elections, and when will the review, due on March 15^th, be done. You know, clearly, we note the election of Mr. Holness and the GOP, the election results. We look forward to continuing to support Jamaica under its new leadership and we plan to discuss the economic priorities with the new authorities soon. Again, I’d note Mr. Holness has made clear during his campaign the intent to continue the reform program supported by the IMF, so we look forward again to a close policy dialog with the new leadership and geopolitical changes that the authorities and the staff have agreed to delay the discussions of the 11th Review for now, and I’ll come back when we have a date on that.

There is a question on South Africa> What is the IMF view on the budget, how can South Africa grow faster, to which I would say we think the 2016 budget was prudent and charted appropriately ambitious targets for the government deficit and debt. We welcome the budget’s focus on improving the efficiency of spending and on containing the wage bill while protecting the most vulnerable by shielding social grants and reprioritizing some spending to provide funding to new priorities such as the drought.

Just to add, to ensure that the budget meets its objectives and to improve the living standards of South African people, it will be important that the budget is complimented with structural reforms that can boost growth and create jobs.

And there’s one other question on Zimbabwe, which I’ll take. On Zimbabwe, what’s the IMF’s response to criticism from parliamentarians about normalization of our relations, is it taking too long? The status with Zimbabwe is that we have what we call a staff monitored program. We’ve had that for some time. It helps a country establish a policy record with a view to normalizing relations with creditors. We are also providing some technical assistance. We have an ongoing mission and it’s aimed at conducting the third and final review under that SMP, that staff monitored program, and the 2016 Article IV.

As you probably know, Zimbabwe is currently in arrears to the IMF and others and the strategy entails how to clear those arrears that are due to the IMF, the World Bank and others. The Zimbabwean authorities presented their plans for repaying their arrears during the annual meetings in Lima and that has received support from creditors and development partners. So successful completion of that SMP and a depending of ongoing reforms sets the stage for advancing the discussions about the reengagement process. That’s where we are on Zimbabwe. I’m going to leave it there for today. Thank you very much for your cooperation and patience this morning. I really appreciate it.