Press Briefing by Thomas Dawson, Director, IMF External Relations Department

October 24, 2002

Press Briefing by Thomas Dawson
Director, External Relations Department
Thursday, October 24, 2002
Washington, D.C.

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MR. DAWSON: Good morning, everyone. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings. As usual, we're on the record and embargoed until approximately 15 minutes after the conclusion, and we'll set a precise time at that point.

Before I take questions, I have a few short announcements. At 8 o'clock this evening, First Deputy Managing Director Anne Krueger will speak on issues related to Latin America at Georgetown University's Healey Hall. The event is open to the press. If we have an advance text, we will provide it to you. If we do not, we'll try to get you the text in as prompt a fashion as possible, and Media Relations will be in touch when details are finalized.

Earlier today, Deputy Managing Director Aninat opened the first AFRITAC Technical Assistance Center in Tanzania. This center will serve to support a range of Fund technical assistance activities in East Africa. We also plan a center in West Africa as part of the Fund's overall effort to bolster sustainable economic activity and reduce poverty in Africa. Copies of the press release issued earlier today in Dar es Salaam are now available. I think they're maybe down there.

The Third Annual IMF Research Conference is scheduled for November 7th and 8th here at headquarters. It will be open to the press. The theme of this year's conference is capital flows and global governance, and, again, the press release is available. There are a number of speakers, including opening remarks, at 9 o'clock on November 7th by Managing Director Köhler. We also anticipate copies of papers presented at the conference will be available. The organizers do request advance press sign-up, so please send an e-mail to Media Relations for access to the conference.

Finally, before I take questions, on Friday the IMF's mission chief for Italy will brief on the latest Article IV consultation. Advance text will be made under embargo, and the Media Relations Division will be organizing the event. So anyone interested should contact the division by e-mail. Now I will be happy to take your questions. Yes?

QUESTION: The Argentina government sent the corrections to the draft of the letter of intention, and I would like to know at this point which is the position of the Fund. Are you correcting that? Are you suggesting changes?

MR. DAWSON: We are presently in very intensive and detailed discussions with the authorities. As you know, a team of senior Argentine authorities--officials led by Mr. Nielsen-- was in Washington until recently, and we have maintained close contact with them and the authorities since their return.

I don't want to go into details of these discussions, but I can tell you we are continuing to seriously discuss all of the issues involved aimed at securing the consensus for moving forward with a credible program. And I think it is fair to say it's a quite--as I said, a quite extensive as well as intensive set of discussions going on, at this point largely telephonically.

QUESTION: I wanted to know why do you think you haven't reached an agreement with Argentina yet. Why do you think that it's so difficult for Argentina to have a political consensus?

MR. DAWSON: Well, I mean, I think there are any number of difficulties. It is a complex situation. The economic situation is quite difficult. The political situation, there are not only issues of consensus, you have issues of the prospective election. So it's a difficult situation I would say not just for the Argentines, for the Fund as well, and for the international financial community. So it is quite difficult--quite clearly one of the most difficult cases that we have ever had to work on, but that doesn't deter us from doing our very best to work with the authorities. And I think the authorities certainly are committed to continuing to work as closely with us as they possibly can. But it is in a number of areas, economic and political, an extremely difficult situation.

QUESTION: Just a follow-up on that. I guess it was two weeks ago that you briefed us, and I think that was around the time that Mr. Nielsen was still here and just about to return home the next day. At that time you had said that in the weeks up to your last briefing that there'd been progress. Would you characterize it there's been any progress in the intervening two weeks?

MR. DAWSON: I think there have been areas in which there has been progress in that period as well, but the issues are extensive and the discussions, as I said, are intensive.  So it is--we have--we are benefiting from these discussions, and I think both sides want to continue and are continuing these discussions. I don't think one can put up a meter that has a percent toward the final goal. I think it was quite clear then that we had made progress, and--but it is--there is still--there has been and still is a lot of work, and it is an extremely complicated and difficult situation.

QUESTION: One more on Argentina. Can you tell us, first of all, first what the sticking points still are with the Argentines? And, second, there's a certain sort of cynicism in order that the talks seem to stall for about ten months, and then two or three weeks before the Argentines do a large payment to the World Bank, they seem to have accelerated.

MR. DAWSON: The sticking points, there are a number of areas where--there are a number of areas that we are discussing, and as I indicated in my initial comments, we're not prepared to go into detail. There have been a lot of reports in terms of issues under discussion, and I can't take issue with many--with much of what's in the reports. But I don't think we want to go into detail because we're engaged in discussions on a number of issues. So sticking points implies there are one or two. It is a complicated situation. There are lots of issues. And so I think that's--I would rather view it more from--not that there is a limited number of specific issues that, once done, you just sort of say, yes, it's all done. I mean, it is complicated. And issues, of course, interrelate.

With regard to your second point, I would really reject this issue of cynicism. The reality is it's been difficult for the authorities all year, and I wouldn't say that our posture at this point is at all related to the issue of payments that you were bringing up. We have been working as hard as we can throughout this period, and we are continuing to do so. The fact that we perhaps were in somewhat more continuous contact in the last month or so is simply a matter of the calendar. The reality is that Mr. Nielsen stayed up here after the Annual Meetings, and that allowed us a chance to have pretty intensive discussions.

QUESTION: Duhalde has said that he expects an agreement with the IMF to be signed early November. There are some important payments due to the World Bank around the second week of November. Do you think an agreement can or will be signed before that date?

MR. DAWSON: We are working to sign--to reach an agreement as soon as we can. As I've always said, sooner is better than later, but sustainable is what is an absolute requirement. So is it possible to reach an agreement by then? Yes, I would think so. But I think rather than doing odds on possibility and so on, I think it's more important that we try to continue to work with the authorities. And I think--and I very much believe that's their position as well. But as I say, it's a difficult situation for them as well as for us.

QUESTION: I'm just wondering to what extent is the IMF concerned about the rising pace of inflation in Brazil. It used to be that the foreign exchange rate depreciation back a few years ago had a surprisingly small impact on inflation rate. Does the IMF continue to see a depreciation of the real as not necessarily endangering the solid performance on inflation the past few years? To what extent is the recent up tick in inflation a concern?

MR. DAWSON: Well, I think the volatility in the markets I think explains a great deal of the exchange rate action recently, and much of it related to the anticipation of the elections. I think the performance of Brazil on the inflation front as well as on other important policy fronts has been very, very impressive. I don't think I would read too much in, however, to short-term trends on the inflation front given the difficult market and exchange rate--including exchange rate situation that they have been facing.

We expect--you know, the elections are coming up this weekend, and we look forward to working with the authorities and the prospective authorities as soon as they are ready to engage with us.

QUESTION: On Ecuador, the last time you briefed us, you said that talks between Ecuador and the IMF were put on hold until the new government takes office in Quito. Do you have any kind of concern about the advantage a leftist candidate has taken in the past vote?

MR. DAWSON: We don't. I mean, really, I don't--we don't get--we look forward to working with governments that are elected and in office, and we look forward to working for--are looking forward to working with the new authorities in Ecuador once the election process has concluded.

During the election period, we did continue and will continue to work with the authorities, and when there is a transition team to work with, we will consult with them. You know, we're continuing to monitor economic developments and provide to the authorities technical assistance. And, in particular, we have urged the authorities to refrain from additional further expenditure increases because I think it's well known that's been a concern of ours. But we stand ready to restart the discussions on a new program as soon as requested by the new authorities. We have only one hemisphere that people are concerned about this morning?

QUESTION: I'd actually like to turn to Asia, specifically to North Korea. You announced earlier this month that North Korea would be invited as an observer nation to take part in the Annual Meetings next year. Since that announcement, there have been a number of revelations from the North Korean authorities, and I was wondering what the situation between--in relations between the authorities and the IMF were and whether there have been any specific negotiations for financial assistance.

MR. DAWSON: Well, there certainly couldn't be any such negotiations for assistance since they're not members. I don't think that's quite an accurate description of what we had indicated earlier. Just to give a little bit of history, in Prague in the year 2000, the North Koreans were invited to attend the meetings as special guests, not as observers, as special guests, although they did not, in fact, attend.

The question of inviting North Korean officials to attend the 2003 Annual Meetings as special guests will be considered at the appropriate time, and they could be invited if conditions, including improved relations between North Korea and major shareholders of the Fund, were to be favorable for such an invitation. But these arrangements or these decisions would not be made until around mid-2003, so we're at least six to nine months away from anything in that regard. So I think there's been a lot of anticipation because of non-Fund-Bank-related developments, but the normal course of events would be mid-year would be before a decision was made in this regard--I'm sorry, mid-year 2003.

QUESTION: The Argentine Government expects that at the end of this week or next week would go a new mission to Argentina to discuss the details of the letter of intention. What could you tell us about--

MR. DAWSON: I don't actually have anything on a prospective mission. As I indicated, we are in quite regular contact, and at the moment, at least, I certainly have the impression--I spoke with Anoop [Singh] last night--that the present--the fact that the authorities--we are in telephonic contact with the authorities at the moment is not preventing very intensive discussions, but I have nothing in terms of whether there's a mission at this point. And when we do, we will let you know.

We'll lift the embargo at five minutes after 10:00. Thank you very much. Have a good week, and we'll see you in a couple weeks.

[Whereupon, the press briefing was concluded.]


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