Transcript of a Press Briefing by Gerry Rice, Director, External Relations Department, International Monetary Fund

January 12, 2012

Washington, D.C.
Thursday, January 12, 2012
Webcast of the press conference Webcast

MR. RICE: Good morning and happy New Year to everyone participating in this regular press briefing. I am Gerry Rice, the Director of External Relations for the IMF. The briefing is embargoed until 10:30 a.m. Washington time.

Let me update you on management travel and some upcoming events. Managing Director Christine Lagarde will be in Davos, Switzerland to attend the World Economic Forum from January 27 until January 29. Deputy Managing Director Min Zhu will attend the Forum also from January 25 until January 29.

First Deputy Managing Director David Lipton on January 16 to 17 will speak at the Asia Financial Forum in Hong Kong. We do expect to post that text on the external website for you and we will try to provide an advanced text if we can. Media Relations will be in touch with you on that. I can also tell you that Mr. Lipton will then travel on from Hong Kong to Beijing for meetings with the authorities on January 18. This is a long-planned mission to discuss the outlook for the global and the Chinese economy. Then on January 19 to 21, Mr. Lipton will travel on to Mexico City for the G-20 deputies meeting.

Finally, the update of the World Economic Outlook, the Global Financial Stability Report and the Fiscal Monitor will be published on Tuesday, January 24, and Messers. Blanchard, Viñals and Cottarelli, will hold a press conference here at the IMF Headquarters at 10:00 a.m. A media advisory was published earlier in the week and you can contact our Media Relations for more information. With that let me turn to any questions that you might have here in the room or online.

QUESTIONER: Do you have some updates on the additional resources for the IMF from European nations as Britain just mentioned that they are willing to hop in if other European nations would also provide resources for the IMF? And Britain insisted that the money should go to a general resources account.

MR. RICE: As we'd said before, we welcome contributions to help augment the Fund's resources to help us in meeting our systemic responsibilities. I won't comment on any reported individual country contribution. We have said and will say again that we welcome the European Union's commitment of €150 billion and don't have much more detail for you beyond that at this point.

QUESTIONER: I don't know where to start. Is it Italy, Greece or Hungary? First of all, do you know when a monitoring mission is planned for Italy? Do you have any update on the talks so far with Hungary? We know that they're meeting Ms. Lagarde this afternoon. The question here is whether there is going to be a deal at the end of this. We know that that is not the purpose. This is not a negotiating mission. But would you have any update for us in the meantime?

MR. RICE: Let me take them in order. On Italy, as you know there was an IMF staff visit in December to discuss the modalities of the monitoring mission with the Italian authorities. What I can tell you is that the details are still being finalized and we expect that the first monitoring mission could take place later this month or very soon thereafter. On your question then on Hungary. I won't say too much because the Managing Director is meeting with Minister Fellegi later this afternoon here at the Fund. But what I can say as you indicated, these are not negotiating discussions. This is not a negotiation for the program. It's an informal discussion and stay tuned for an update we may be able to give you later today.

I have a slew of questions on Argentina and I want to make sure our online participants get a chance here. There are several questions, "This month ends the period of 180 days that the IMF gave Argentina to start normalizing its statistics. There is no sign that this has happened. What will the IMF do about this? In the event that Argentina has not fulfilled expectations, does the IMF apply a sanction? What kind of sanction? Argentina still does not accept Article IV. Does the IMF have any updated opinion or resolution about this situation?”

Let me try and uncluster those questions a bit and say that of course we welcome any opportunity to deepen our dialogue with Argentina. We maintain a regular bilateral dialogue with the authorities including through our Resident Representative on the ground. On the specific issue of the statistics, I can tell you that we expect that there will be a Board meeting to assess progress toward the end of January or the beginning of February on this topic and we would expect to provide a statement on the outcome of the Board meeting upon its completion. The Executive Board will assess progress made and decide on any necessary measures based on staff recommendations. It's too soon right now to determine what those recommendations will be, but I can say the Board meeting will not result in any sanctions on Argentina.

QUESTIONER: On the mission in Greece, when they are going there, when Mr. Thomsen is going and how long they are going to stay in Athens?

MR. RICE: I can tell you the mission will begin next week on January 17 to discuss recent economic developments and the policies underpinning Greece's adjustment program. I don't have the precise concluding date for that mission but, again, it will be next week, and, yes, the mission will be led by Poul Thomsen.

QUESTIONER: What is the IMF's assessment of the measures taken by the Italian authorities? Do you think as a result of them Italy will be out of danger, let's say out of the woods at this point? Also do you have any planned visit or encounter here in Washington with Mr. Monti?

MR. RICE: On your last question, I'm not aware of any plans for Mr. Monti visiting Washington or visiting the Fund. What I can tell you on the measures adopted by the Italian government that the IMF believes these recent measures are an important step toward restoring confidence, raising growth and putting debt on a downward trajectory. It's probably best to leave it there.

QUESTIONER: According to some experts, Croatia is, together with Hungary and Latvia, the next candidate for recession in 2012. What is the IMF's take on that one? And a second question. Has the new Croatian government contacted the IMF already seeking help, possibly a new standby arrangement? Thank you.

MR. RICE: On the overall outlook just to set Croatia and others in context, as I mentioned, we're going to have an update on our World Economic Outlook on January 24 so that will set the context. I think as the Managing Director and others in management in the Fund have indicated in recent weeks, we are anticipating a markdown in the overall global forecast. I don't have a number for you on that, but will have on January 24th.

Coming back to Croatia then we would expect that Croatia would be affected by the crisis in the Europe and the challenging situation being faced there. More details will follow as we continue our discussions with the Croatian government. On your second question, no, we have not received a request for a program from the new government and I'm not aware of any plans for a meeting in D.C.

QUESTIONER: If you plan to cut the global forecast, it's also going to affect Greece. What is the IMF's position on the money Greece might need? There was an agreement in the past month for public money for a second Greek program. Does this need to be increased? My second question is on Egypt. Do you still have a mission going on Sunday and are we still talking about a $3 billion sort of loan?

MR. RICE: On Greece, as I indicated, the mission next week will be discussing all the issues so I don't want to preempt that in any way given those discussions that will take place and given the discussions that are ongoing at the moment. On Egypt, yes, I can confirm that in response to a request from the Egyptian authorities there will be an IMF mission in Cairo beginning next week, the week of the 15th, to initiate discussions on possible IMF support for Egypt's economic program. This mission will constitute the first step in the process leading to possible financial assistance and we expect that this visit will be followed by further discussions in the following weeks.

Let me turn again to our online participants. There is a question on the Dominican Republic. "What is the status of the program discussions? What have been the outcomes of the IMF's special delegation that visited the Dominican Republic in December?" On the status of the program, the Fund keeps a close dialogue with the authorities and continues working on policy and technical issues related to the programs. The dates for an eventual future mission are still to be determined. I want to say on this question of the special delegation, what that is referring to is that at the request of the authorities there was a team of tax experts from our Fiscal Affairs Department that visited the Dominican Republic in early December to conduct an in-depth analysis of the tax system. This is what we call a technical assistance mission and not involved in the negotiations on the program.

Let me take this other question which I think may be of a broader interest. It's a question about Madam Lagarde's recent meetings in Europe and about further steps is she urging the Europeans to take and her message regarding Greece. To set the question in context, in the first few days of this week, Christine Lagarde was indeed in Europe for a series of high-level meetings and engagements. These included meetings in Basel with all key central bank governors on Monday. On Tuesday the Managing Director had a dinner meeting with Chancellor Merkel. She also met with Finance Minister Schaeuble and others in the German government. And then on Wednesday the Managing Director met with President Sarkozy, Finance Minister Baroin and again others in the French government.

I won't go into the details of these private discussions, but of course they discussed recent developments in Europe, progress on the implementation of the European strategy that's been discussed in various summits, recently October 26, December 9, for example, and they also discussed developments related to Greece. So I think the bottom line is it was a series of very active, high-level policy engagements with the European leadership on the issues facing Europe at this point.

QUESTIONER: Did she ask Mrs. Merkel and Mr. Sarkozy for more money for Greece? Also, are you satisfied with the 50 percent haircut or are you asking for more?

MR. RICE: As I said, I won't go into the details of any discussions that the Managing Director had in Europe last week. I'll refer back to my answer that all issues will be discussed by the mission next week so we should have more in the coming weeks. On PSI, private-sector involvement, in the Greek financing package, what I'd like to say is that, yes, the objective is still to reduce the Greek debt-to-GDP ratio to 120 percent by 2020 as was agreed by leaders later last year.

QUESTIONER: To follow up, I believe it was the Handelsblatt that reported that Lagarde said to Merkel that billions and billions more were needed for Greece. I want to clarify that you're neither confirming nor denying the accuracy of their report. Secondly, I hear what you're saying about the debt-to-GDP ratio. I want to understand what you've just said in light of Blanchard's comments, was it last week?

MR. RICE: He was at the American Economic Association on Friday and Saturday.

QUESTIONER: At some point he said publicly that they may need a bigger haircut for the bondholders. Can you explain to me how that dynamic works for what Blanchard said publicly and what you just said? The IMF has also said publicly that it will revise its forecast for the Euro zone for more recession. That is a note as well to Blanchard's and your comments on the debt-to-GDP ratio.

MR. RICE: On the revision, again I think we should wait for the release of the WEO Update so I'm not going to comment further on that, and that will be on the 24th. On your first question, you're familiar with our policy that we don't comment on press reports so I'm not commenting on your first point.

On the PSI issue, I think you know that Greece and its creditors are continuing to discuss this issue. It's being discussed right now. It's an issue between Greece and its creditors. Once they come to a formal agreement, the Fund will evaluate whether it's consistent with the debt sustainability targets that I had referred to earlier. In terms of the Fund's role, we've attended some of these meetings on the PSI as an observer. We bring to the table our experience with PSI arrangements in other countries as well as our economic assessments and expertise. But again in the end it's up to Greece and its creditors to come to the agreement.

Let me take one more online question. The question is on Pakistan. It says, "Pakistan's economy is not performing well. Is this a cause of concern for the Fund?" I don't have too much on Pakistan, but we did have an Article IV discussion recently that was in November and we had a press release around that time, so I would refer to that press release. Clearly the 2011-2012 outlook for the economy is challenging and in this context, containing the budget deficit and the cautious monetary policy, responsive exchange rate, et cetera, are key to help Pakistan get back on the path of growth and sustainability.

QUESTIONER: On the PSI, do these discussions have to be completed before the IMF can make an assessment on another program or financing for that, which would mean there's a timeline here? If the team is going next week, the PSI should be wrapping up then surely. The other issue is, was it made clear or is it important also this time that the Greek program is fully financed? We know that if the PSI does not get what is necessary to reduce the debt that there's going to be a financing gap and the question is who's going to make that up. If you speak to the IMF board members, they will say it's not going to be the IMF. So the question has to be raised what kind of pressure is the IMF putting on Europe to then make up that money?

I want to clarify on Egypt. Were there informal discussions beforehand, and who's leading that mission? Is Masood Ahmed going to be doing that? According to my sources, he's going to go ahead before to talk to the authorities.

MR. RICE: Masood will be leading the mission. I don't have anything on going out earlier or anything like that. But, yes, it would be Masood Ahmed, who is our Director for the Middle East Department. On PSI, I think we would say along with others that the sooner the better to complete the deal; that it's one of the key issues obviously in the overall financing of Greece's needs. We always require full financing of any program in which we are involved or might be involved. And I think as I said earlier, we need to wait and see what the details and the final conclusions of the deal are, make an assessment of that how it meets the debt sustainability targets that have been set and then the combination of PSI and OSI official financing, private financing, that might be required and the precise combination.

QUESTIONER: My question is about Madam Lagarde's visit. Is she going to visit the Middle East region? My second question about Egypt is we are going to have a mission from the IMF to Egypt. What's your opinion about the current economic situation now in Egypt? And are you expecting to have a deal with the Egyptian government? Thank you.

MR. RICE: On the Managing Director's travels, she has actually made a point to be visiting most of the regions representing the entire global membership of the IMF in her first 6 months. She's traveled to Asia, she has traveled to Europe and to Eastern Europe. She has traveled to Latin America. And she was in Africa up until last weekend and traveling there so that that's part of a deliberate reach to the global membership.

What I can tell you on the Middle East is that there are tentative plans for the Managing Director to visit some countries next month. We will come back to you with countries, dates and confirmation of that trip. But again it's set in that broader context of the Managing Director reaching out to the global membership of the IMF. On Egypt, you had heard what I had said earlier. The objective of the mission indeed is to identify how the Fund can support an Egyptian program. As I said, it's the first step in a process. The authorities are still updating their economic program and the visit will allow the Fund to update our assessment and then we'll be working together to take it from there so that we'll be able to update you on that once the mission is underway and completes and in the usual way we'll be publishing information on that.

Thank you very much. I'm going to wrap up here. Thanks to you all for coming, both in the room and online. We'll see you in the very near future.


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