Transcript of a Press Briefing by William Murray, Deputy Spokesperson, Communications Department, International Monetary Fund

January 22, 2015

Washington, D.C.
Thursday, January 22, 2015
Webcast of the press briefing Webcast

MR. MURRAY: Good day. I'm William Murray of the Communications Department of the International Monetary Fund. This is one of our regular press briefings. It's also the first briefing of 2015. I want to wish everyone a happy new year. Again, to remind you, this briefing will be embargoed until 10:30 A.M. Washington time. That's 3:30 P.M. GMT. I’m going to run through a few housekeeping items, plus I have a statement from Managing Director Christine Lagarde that I'll read to you. First of all, the Managing Director Lagarde is in Davos at the World Economic Forum annual meeting with Deputy Managing Director Min Zhu. They've been on various panels and will be in Davos throughout the weekend. On January 25th, the Managing Director will travel to Rwanda and on January 29th, she'll leave Rwanda for Senegal. In both Rwanda and Senegal, she'll have meetings with the authorities, with policy makers, civil society representatives and others, and there will be various events on the ground in both locations. Media Relations can fill you in on full details of the Managing Director's visits to Rwanda and Senegal.

On February 2nd, First Deputy Managing Director David Lipton will travel to Asia for stops in Seoul, Korea, where he will meet with senior officials and then on February 4th, he will visit Beijing for official meetings and to participate in a discussion at Peking University. Again, Media Relations will have further details as we get closer to those missions. Lastly, our next regular briefing will be on February 5th here at IMF Headquarters. That will be a briefing where we can get into some of the agenda items for the G20 Finance Ministers and Central Bank Governors' Meeting in Istanbul which is on February 9th and 10th. The Managing Director will attend the meeting along with David Lipton and Siddharth Tiwari, the Director of our Strategy, Policy and Review Department. For planning purposes, the G20 surveillance note, which we present at each of the ministerial meetings, will be published in advance of the Istanbul meetings. Again, Media Relations will come back to you with details on the publication plans.

Now let me again remind you that we're under embargo right now until 10:30 A.M. Washington time and 3:30 P.M. GMT. This statement is under the same embargo. It's a statement by IMF Managing Director Christine Lagarde on the ECB decisions that were announced today. Quote from the Managing Director: "We welcome the measures announced today that will strongly reinforce the ECB's accommodative stance. The planned expansion of the ECB's balance sheet will help lower borrowing costs across the euro area, raise inflation expectations and reduce the risk of a protracted period of low inflation. These measures will also strongly increase the prospects of the ECB achieving its price stability mandate. It remains essential that the accommodative monetary stance is supported by comprehensive and timely policy actions in other areas, not least, structural reforms to boost potential growth and ensure broad political support for demand management policies."

With that, let me open the floor to your questions.

QUESTIONER: We will start with Greece because, as you know, we have a new crisis there. Greece has elections on Sunday. Can you tell us what is the process for the IMF mission to return to Greece after the elections? Does the government send a letter to you and invite you? What is the process?

MR. MURRAY: Thank you for that question. Let me just preface my remarks on Greece. This is for everybody in the room and for our viewers. We fully respect the political processes evolving and underway in Greece at the moment, so I'm very reluctant to say anything at all today on Greece, particularly ahead of this important decision by the Greek people. In terms of process, there are no firm rules, regulations, regarding engagement of the nature that you inquired on. We fully expect to be engaged with whatever government is elected this weekend, and when that happens, we look forward to having that engagement. But until then, there is nothing hard and fast in terms of how it plays out.

QUESTIONER: A follow up. In these cases, not only about Greece, who takes the first step? I mean, we try to understand, what do you expect the new government to do?

MR. MURRAY: Right.

QUESTIONER: I mean, are you going to send them a letter and then are you going to tell them that we want to go to Greece? Do they have to send you a letter saying that, come to negotiate?

MR. MURRAY: Okay, thanks for your question. I understand you're trying to pin down the details. I don't really have that kind of detail. It's going to vary by countries. Don't forget, we do have a resident representative in Athens. We have ongoing relations, a physical presence in the Greek capital. It could happen in a number of ways, but like I said, we expect to be fully engaged with the Greek government after these important national elections.

QUESTIONER: It's not related to the elections. I was wondering if the IMF was working to assess the economic consequences of Greek exit from the euro zone?

MR. MURRAY: I don't have anything for you on that

QUESTIONER: So is it yes or no?

MR. MURRAY: That's not something that we are even looking at. We are following political developments in Greece and we're ready to discuss the sixth review of the program that we have with Greece, with any government that is elected on Sunday. We do not see Greek exit as a possible outcome.

Let's make this the last question on Greece, because I really don't have much to say.

QUESTIONER: Mr. Tsipras, who may be the Prime Minister of Greece, said the other day that he will never meet with representatives of the Troika and wants to talk only with the bosses. In such cases, and I'm not talking about only Greece, how does the IMF react? You just don't go or do you do something else?

MR. MURRAY: Totally hypothetical, We’ll wait to see what happens. Let's revisit this later. I think it's all speculative at this moment. We fully expect to be engaged with the Greek government.

QUESTIONER: Is there progress in debt relief for the three major Ebola states in West Africa? Can you sort of guide us through where things are and where things might go?

MR. MURRAY: Okay, sure. Just for the record, you remember in September we disbursed 130 million dollars to the three affected countries. We plan to, we have it in train right now, an additional 160 million dollars in financing that will be unleashed once the Executive Board takes it up in the next few weeks to the three affected countries. I can't be more specific than that, but we're in the process of finalizing the proposal to provide exceptional assistance to the Ebola stricken countries that are likely to take the form of debt service relief. What we're looking at is an existing facility called the Post Catastrophe Debt Relief Trust or PCDRT, that was put in place for Haiti a number of years ago. We're looking at some measures that would enable us to utilize that trust for debt relief for the three stricken countries, but that's still a work in progress at this moment.

QUESTIONER: And what is the pathway towards getting that finalized?

MR. MURRAY: A combinations of things. We have to mobilize donor support. We have to mobilize our membership, our shareholders that approve the use of these funds, broadly not only the 160 million I mentioned but the debt relief mechanisms. So this is what's in train right now and once we're close to action, there will be an Executive Board meeting. I'm hoping that happens in the next few weeks, and then things would proceed from there.

QUESTIONER: Just to follow up on that. What's the amount of the debt relief? The United States proposed a certain amount…

MR. MURRAY: I don't have a number for you at this moment. We'll get back to you. But when I do have a number, we'll certainly make it public.

QUESTIONER: Just to come back to the ECB quickly. Given the question of over notification with the SNB last week, was there any notification from the ECB to the Fund ahead of its move today? Although it was obviously well trailed over a number of days, there's a question of notification, having been in communications beforehand. Second, is the size of the move, at 60 billion euros a month, enough?

MR. MURRAY: Let me take your second question. I'm not going to do a quick analysis of what was just announced by the ECB. We'll come back to you on that. I don't have anything to add beyond the statement that the Managing Director has issued today. On your first question about the notification, this action was being essentially telegraphed for some time. Don't forget that the European bond markets have been telegraphing some sort of extraordinary actions by the central bank for some time. I'm not aware of any notification process there may have been. The other point to make is notification takes different various forms. So I know much has been made out of that, but you need to keep in mind that we're notified but not necessarily informed ahead of time on central bank actions more broadly.

QUESTIONER: My questions are about Russia and the Ukraine. We looked at the recent update for Russia. Obviously you project a big downturn in the economy and I wanted to ask about the figures, what played into the revision, including an uptick for 2014, I think the results were better than expected. For the current year obviously we expect, as I said, quite a different picture. So if you could comment on that a little bit. And I have a question on Ukraine also.

MR. MURRAY: Let's focus on Russia. Just for the record, the latest WEO -- World Economic Update, that was released a few days ago reflects the following numbers, which is 0.6 percent growth in Russia in 2014, negative 3 percent in 2015, and negative 1 percent in 2016, so two consecutive years of negative growth are forecast at the moment for Russia. Your question is about a slight upward revision to the 2014 forecast, because it's still January 2015. This is still somewhat of a forecast. Basically it's the third quarter date from 2014, was slightly stronger than anticipated and influenced the 0.6 percent growth for 2014 figure. In terms of negative growth for 2015, 2016, Russia is among a number of countries right now worldwide that are affected negatively and significantly from the downturn in world oil prices. Don't forget that oil accounts for about 50 percent of Russia's exports and 45 percent of the federal government's revenues, so the fall in oil prices will obviously affect the economy and the Russian budget. One point I want to make before moving on is that the flexible exchange rate regime right now through depreciation in part helps to absorb the effect on the budget and may help stimulate non-oil exports from Russia going forward and in that context, we welcome policies undertaken by the central bank, in response to pressures on the Ruble.

QUESTIONER: So for this projection, as you like to discuss in your reports, the risks are upside or downside mostly?

MR. MURRAY: You should probably take this up with Olivier Blanchard when he's back in Washington from Asia. I don't have anything for you specifically on the downside risks or the upside risk to our current forecast, specific to Russia. The bottom line is that oil price movements can be unpredictable. Olivier Blanchard mentioned in his press conference in Beijing, not specific to Russia, but in general, that obviously world oil prices are heavily dependent on OPEC actions at this moment, whether or not there is a production cut by OPEC and then in essence by non-OPEC producers, so that's a wild card. But I don't want to be more specific on upside or downside turns.

QUESTIONER: On Ukraine, we obviously saw the announcement yesterday from Madame Lagarde and that was my only question to add to that, unless you want to disclose the figure, of course.

MR. MURRAY: It will happen at some point. QUESTIONER: How successful are the efforts to collect the money for the bailout? You are attracting resources. You expect resources from donors.

MR. MURRAY: It's completely hypothetical. I have no indication that's an issue for us.

QUESTIONER: There was a line in the statement yesterday that the IMF was working with international partners to support the bailout program and you have said before that the IMF doesn't want to be the only one supporting Ukraine.

MR. MURRAY: Let me clarify for everybody else what we're talking about here. I think it's a little bit of apples and oranges. Don't equate that statement to mean that IMF programs have to be fully funded. We've had this conversation before. That's what that reference is to, pure and simple. But beyond that, I don't really have anything for you.

QUESTIONER: Yesterday the country's finance minister said that Ukraine was seeking talks with some of its creditors to improve debt sustainability. I was wondering if you had any comment on that, whether you believe a restructuring is necessary or what, kind of explain some of that and how would that affect the IMF program.

MR. MURRAY: The authorities have announced their intention to consult with the holders of sovereign debt with a view to improving medium term debt sustainability. These consultations will guide the process going forward, but beyond that, I don't have any comment on the debt restructure.

QUESTIONER: So does the IMF support this?

MR. MURRAY: As we noted, we are moving to bring to our Executive Board a request to shift to an Extended Fund Facility for Ukraine. That’s a new program. It’s an important shift because Extended Fund Facilities by their nature are designed to enable a country, whatever country, to undertake deep and badly needed structural reforms. So there’s a structural reform component that is not quite captured necessarily in a Stand-By Arrangement. The main message is that we’re now moving into a phase where Ukraine has got to adopt very badly needed structural reforms and that’s really the point of what’s happening now.

In terms of the debt situation, the authorities -- the minister in Davos -- stated that they were going to reach out to their sovereign debt holders and explore options, but beyond that I don’t have anything to add.

QUESTIONER: The previous arrangement didn’t include any structural reforms, but isn’t the main point of this new arrangement with Ukraine that the IMF is going to bring more money to the country? Isn’t it the main point?

MR. MURRAY: I don’t think that’s the main point. I think the main point is to enable or provide the Ukrainians, the Ukrainian policymakers, with flexibility because the Extended Fund Facility is a bit more flexible in terms of timelines and the way it’s structured, give them some policy flexibility to introduce the structural reforms they need. And by extension you attract money, but I can’t be more specific in terms of numbers and things of that nature.

We also have to go to the Executive Board. We’ll have a consultation with the Executive Board, which I assume will happen today or shortly to brief them on the discussions, because we have a mission on the ground currently in Kiev. The mission has to get approval from our Executive Board, a green light in essence -- not formal, but some approval -- to shift from discussions over the status of the Stand-By Arrangement and the reforms that were predicated under it to a program under the Extended Fund Facility.

So that has to take place first. That was reflected in the statement from the Managing Director yesterday in Davos. If you revisit that, you’ll see that reflected there. I expect once the Executive Board gives us the green light to move to the next phase, the mission that is now on the ground in Kiev will have those discussions and it will get into some of the issues you raised about debt sustainability, external support beyond the IMF. These are all issues that would be explored by the mission on the ground and in the context of the EFF.

And then, last bit on this because you’ll have questions, on the assumption that this moves forward, it would be a number of weeks before a formal proposal goes to the Board and formal action is taken. I do not have a date yet for the Board. I don’t have anything to offer on that.

QUESTIONER: I have a question on the 2010 quota and governance reform because now the Fund has decided to move without obviously the support of the United States. So what are some of the upcoming procedures that we are expecting, and the Board might meet maybe next month, sometime next month, for alternative options. So what are some options that we have on the table and what is the timetable of the reform?

MR. MURRAY: I will get to your question, but there are a couple of points I want to make on quota before we get into that a little bit, not much, at this stage.

Number one, we are deeply disappointed that the 2010 reforms have still not been implemented and that we continue to await the ratification by the United States. But, as was agreed last year and as we were called upon by the International Monetary and Financial Committee, our policy guiding body, plus the group of 20 nations, both their leaders and their ministers, called upon us to look at possible interim steps that can be taken pending the implementation, the effectiveness, of the 2010 reforms. Securing the 2010 reforms should and does remain our highest priority. In weighing different options we’re not losing sight of that objective. Implementing those 2010 reforms still remains critical to us.

The other options: We are not at a stage right now where I’m able to give you clear guidance on where we’re headed -- and how this will play out. I expect that the discussions on options, interim steps -- not an alternative to 2010, but just an interim step to implementation of 2010 -- will take place over the coming weeks and months. I can’t be precise on deadlines, but I would anticipate that clearly the IMFC convenes again in April here in Washington and the IMFC would fully expect us to have clarity. And we also have other events -- G-20 ministerials and things of that nature -- that intervene. So there are a number of fora in which discussions can take place and certainly there are informal discussions underway here at IMF headquarters through our Executive Directors.

QUESTIONER: So when will the Board of the Fund meet for this, this month or next month?

MR. MURRAY: It’s a process of discussion, laying out positions, and then coming to a consensus view on which position works the best. But, again, our main goal, and I think there is a clear view among the membership that 2010 reforms have to be implemented as well, even though we may move toward some interim steps or explore those interim steps as requested by the IMFC and the G-20.

QUESTIONER: Have you made any progress in reaching out to the new Congress and seeing if they’re giving you any indication of their priority list?

MR. MURRAY: I’d recommend you ask the U.S. Treasury about that. We personally try to stay out of commenting on that. Treasury is literally the best agency to go to.

QUESTIONER: Can you provide any thoughts or the IMF’s official position on when central banks end currency pegs? Obviously, we saw a lot of turmoil in the market last week from the Swiss National Bank’s move. Madame Lagarde seemed to express some mild annoyance perhaps at the way that was carried out. What’s the IMF’s position on that?

MR. MURRAY: I wouldn’t say there’s one specific course of action, but the one clear message that we’ve been consistent about for many months now is the need for clarity on central bank communication. Olivier Blanchard, you may have caught some of what he said on this matter in Beijing in the context of what the Swiss National Bank did. Arguably there’s going to be certain things that the central banks can and cannot do publicly before they take policy action, so all this stuff has to be taken into account.

But our main message in the wake of what we see, the very extreme volatility that we saw last week, is that obviously effective communication is going to be necessary for other central banks that are taking actions in the period ahead. And that there are countries that have pegged their policies to other central banks, they have to be cognizant of the risks associated with that. Beyond that I don’t have much more to add.

I’ve got two questions online. They’re Mideast questions. “How does the IMF see the heightened stand-ff this week between the Hadi government and the Houthis impacting the IMF’s program with the country?”

Yesterday, Masood Ahmed conducted a regional economic Middle East and Central Asia Department outlook press briefing and he touched upon some of his concerns. I’m just going to really remind you of some of the key points that he made. This is basically paraphrasing Masood Ahmed, the Director of our Middle East and Central Asia Department: We are worried about the continued difficulties in Yemen because it is already a country with a fragile economic recovery with a large number of people living in poverty and which is already trying to cope with different shocks that the economy has undergone.

In terms of how it impacts our program, the program, which was put in place last September, its first review is not until the spring. So while certainly recent events are not positive from an economic standpoint, we’ll revisit some of the spillover effects from current developments when we undertake the first review of the program in the spring.

The second question online is: “When is the Board date from Egypt? When will the IMF publish the staff report? What are the findings?”

There was an Article IV Mission to Egypt in November and a press release was published at the end of that visit. The Executive Board will take up the staff report for Egypt on January 28. The typical process is that it takes a while for the Board’s views on a specific country to be distilled, the discussion of the country, and it will potentially be published sometime after that date. But I do not have a specific publication date or guidance on when the Egypt staff report will be published. But, again, the Board will take up Egypt on January 28.

QUESTIONER: I’ve got a question on the Greek debt. I would like to know where does the IMF stand on the proposal for international restructure of the Greek debt? The Managing Director said recently that debt restructure always comes with consequences. Can you elaborate on this, please?

MR. MURRAY: I want to make it clear, we’re not commenting on anything about Greece ahead of the elections. But on this point, let me just touch some base here. The debt sustainability analysis is updated at each review. That’s standard IMF practice. So when we have our next review, debt sustainability will be updated. There’s a whole host of reasons why debt is sustainable and unsustainable. That will be explored in the context of our review of Greece.

As far as I understand, the point our Managing Director was making is that debt restructuring is a very serious matter and revisiting or changing the terms of an agreement has fundamental consequences that need to be very carefully considered. But beyond that, I don’t think there were any other conclusions you can draw.

MR. MURRAY: I’ve got a question here online. asking for a clarification. “To be clear, you’re saying that the IMF has no opinion on whether Ukraine needs a debt restructure or not, a key dynamic that’s foundational to the future of Ukraine’s finances.”

I’m happy to clarify as much as possible. The mission is in Kiev and they will discuss this with the authorities among other things, full stop.

QUESTIONER: The Nigerians are having some currency issues at the moment. So the central bank governor is saying that it’s inappropriately priced currency with the U.S. dollar, but they’re holding a narrow trading ban. Do you think it is appropriately priced? Do you think their approach is appropriate? And are you worried about inflation in Nigeria? A lot of these countries are now facing similar issues. The Nigerians definitely this week have been facing this issue. Any comment?

MR. MURRAY: Well, I don’t have anything too specific, but let me take a look at our notes here. We don’t really comment on day-to-day movements on exchange rates, so let me just focus on the broader issues. Nigeria, like most oil-producing countries, is facing economic impacts. Oil exports and associated fiscal revenues will decline, but Nigeria has a relatively diverse economy. The oil sector accounts for only 13 percent of GDP, so growth is expected to slow only moderately. The authorities have already taken measures to respond to the oil price decline, including some exchange rate adjustment, tightening the monetary stance, and adjusting the draft budget for 2015 in line with a lower oil price. That’s basically as specific as I can get on your question.

Last question.

QUESTIONER: Madame Lagarde met with the President of Cyprus in Davos. Can you give us a readout of this meeting, if possible?

MR. MURRAY: I will have to get back to you on this.

QUESTIONER: And I have a comment. We are not asking your opinion about the Greek elections. We just want to know the process after the elections.

MR. MURRAY: That’s a legitimate point to make and I understand you want to know process. But there’s no rulebook in terms of how you engage with a new government or an existing government. You just engage and it takes many, many forms. Like I said, we intend to be fully engaged with whatever government comes out of the election on Sunday. That’s what we fully intend to do.

Thank you very much. Again, Happy New Year! Look forward to seeing you again on February 5.
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