Transcript

Director, External Relations Department
International Monetary Fund
Friday, January 31, 2003
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 is standard, the briefing will be embargoed until approximately 15 minutes after conclusion, and we'll set a precise time at that point.

Before I take questions, I'd just like to offer a brief reminder related to the Global Linkages Conference, which began yesterday and will conclude today at Fund headquarters. The conference will wrap up with an Economic Forum entitled "The `Links' That Bind." The forum starts at 1:30 here in the IMF auditorium and will explore issues related to the transmission of economic activity across borders and their meaning for investors, policymakers, and international financial institutions. The forum panel includes Stefano Cavaglia of UBS Asset Management; Vincent Reinhart of the Federal Reserve; Randy Kroszner of the White House Council of Economic Advisers; and Anoop Singh, Director of the Fund's Western Hemisphere Department.

That is all I have for opening comments, and I will be happy to take any questions.

QUESTION: I want to know how are the negotiations with Uruguay going. And why haven't you disbursed the money that was due in December for them?

MR. DAWSON: We are still engaged in active discussions with Uruguay, and the discussions are taking a while. So I think that this is part of the natural process, and indications of when disbursements might be expected are always on the sort of notional basis. It depends on the status of the program. And I don't have any more recent update from the team.

QUESTION: Why haven't you recommended [inaudible] of the debt?

MR. DAWSON: I'm not quite sure what you mean. The issue of the debt burden in the country is an issue under active discussion down there, but I don't think we have a recommended position per se. It is clearly an issue that we have said that the authorities need to be aware of and have an approach for maintaining the debt sustainability. But we did not have a proposal that they are considering. They are dealing with the issue.

QUESTION: On the same topic about the possibility of a debt restructuring, there's been a lot of reports in the media that at least that is one of the topics that the IMF is discussing with the Uruguayan authorities. Can you confirm—

MR. DAWSON: Well, no, I don't really want—I mean, there are a number of issues being discussed. Clearly, the debt burden in Uruguay—and you can look at the numbers; they are transparent—is a significant burden. But I wouldn't single it out as the only issue under review, but it is one of the concerns.

QUESTION: A few questions about Turkey. First of all, could you publicly say that at this point Turkey is in violation of its Fund commitments and it's off track? And, secondly, do you have any comment on Turkish Banking Supervisory Council's Pamukbank decision? And do you have any time frame for return of the regular mission to Turkey?

MR. DAWSON: That's a series of very good and related questions when you talk about the return of the regular mission, because we do have a small group there now discussing fiscal issues. In terms of when the review discussions will continue, the government at the moment is working on their letter of intent, and we're discussing—and we can do this remotely as well—specific measures. And the mission will return when the authorities indicate they're in a position to continue those discussions. On the Pamukbank, that is, of course, one of the issues in discussion with the authorities, but I don't have more for you on that.

Did I miss another part of the question? Oh, you asked me about on track, off track. I couldn't and wouldn't say that. Clearly, we are talking with them about a number of issues, including the primary surplus target, which we think is—a 6.5 percent target we think is a good and appropriate target, and we think that achieving the target is fully feasible but will require prompt, strong, and decisive measures. And as I say, we are in active discussions with them, and they are taking a very active role in developing the letter of intent on their own. And so this is one of the reasons why the process is evolving in the way that it is, and this is what ownership is about. So I think this is a natural and to be welcomed process.

QUESTION: So you don't say Turkey's in violation of its commitment or it's off track?

MR. DAWSON: I do not say that. That is correct. But we are clearly looking at the calendar 2003 program, and the target that the authorities have set for themselves we think, as I said, is an appropriate and good target but will require—an achievable target but will require work to meet, and that's what they're doing.

QUESTION: Has the Fund been consulted at all by the Mexican Government about actions to try and control the fall of the peso?

MR. DAWSON: I am not aware of any formal contacts. I am aware of the statements the Mexican authorities have made, and they have an exchange rate system that has worked well for them, and that is what I understand they are pursuing. But I'm not aware of any contacts. If there are, we will let people know.

QUESTION: My understanding is that there's a delegation of senior Honduran officials here looking for a $350 million agreement with the IMF. Could you bring us up to date on that? What are the prospects for a deal? I understand Honduras has been looking for a deal for some time now.

MR. DAWSON: I will confess to not being briefed on that. We will have to get back to you.

QUESTION: Can you tell the present state of your talks with Argentina? Are there any talks with them or have you shelved the whole thing until elections?

MR. DAWSON: No, indeed, we are in regular contact with the Argentine authorities. There will be a mission joint with the World Bank going down there next week. And I would direct you at this point to the Argentine authorities' having published some of the documents regarding the actual program on their website which you could take a look at to see the sorts of measures that are contained in the program, and that can give you sort of a hint as to what is being worked on. But, in particular, the issue of utility prices is one the authorities have been actively working on, and we have been working with them as well. So there is still a dialogue going on.

I think there's a bit of a misnomer. I mean, while in a financial sense this is a, quote-unquote, rollover program, that is not to say that the program did not have measures in it, both in the financial sector in terms of the primary surplus and certain structural measures. So there is work continuing. We clearly recognize that in a number of areas it will be difficult to reach major breakthroughs or sweeping measures in the run-up to the election, and that's just a matter of realism. That's not to say that we aren't and the Argentine authorities aren't anxious to see what can be done in the period running up to the election. I thought maybe my Argentine group had fallen asleep here.

QUESTION: Not yet. I was wondering what you thought about all these articles that came out in the Financial Times, the Economist, Wall Street Journal, accusing the IMF of having given up to the Argentinean blackmail.

MR. DAWSON: I think, first of all, as I said, I would direct you to looking at what the content of the program is, and I think it is a program that looks to consolidate the gains that have been made and try to see what can be done in the pre-election process. I've certainly seen those articles, and some of them are the product of entrepreneurial efforts on the part of reporters, and that certainly is your job to try to, from your points of view, understand the Fund and how it works better. I think there is, however, a tendency in these articles to perhaps overdramatize the process, but that's part of what a free press is about so I'm not complaining. I've found a number of the articles quite entertaining.

QUESTION: I have a follow-up. What about the five abstentions, also has been presented like there was a lack of consensus on the Board and that this is very unusual?

MR. DAWSON: First of all, we do not discuss the actual positions taken by individuals, individual representatives in the Board. So I am not going to comment on that aspect of it. On the other hand, I think it's important to stress this was with the Board a very open exchange of views, of opinions, and I think people have a clearer understanding of how difficult the situation was. And if it turns out at the end of the day that different people have different—or different constituencies may have different positions, that's part of the way life is.

I don't think—as I say, I would not overdramatize it, but I think there's a—one thing there certainly is a consensus on in the Board is how difficult the Argentine situation has been, the experience that both the Argentine people, the government, and the Fund have been through. And I think everyone is committed to trying to find the best way to go forward, and I think that the position ultimately taken by the Board is the best that we could do at this point.

QUESTION: Could you just elaborate a little bit on what that mission, that joint mission with the World Bank is about?

MR. DAWSON: There may be more—there quite often is more than one mission going down, but there may be something going on that I'm not—that is my understanding that the Fund and Bank have a joint mission going down that will be discussing some of the utility pricing issues. There's other work that goes on all the time, too, so I wouldn't—I would identify that one, but there's other work going on, and the authorities are often up here visiting and so on. So it's a continuing discussion, but this particular mission I did point out is happening.

QUESTION: Following up again, what are some of the pending discussions on the utilities?

MR. DAWSON: Well, I mean, it is discussing the framework for going forward. I wouldn't describe it as particular issues. It's discussing the framework for going forward. And you are correct, the authorities have taken some measures in the last, I guess, 24 hours in that regard.

QUESTION: Yes, I also have a follow-up to this Board thing. How often does the Board actually vote in the everyday life of the IMF? And how often does it happen that there are so many abstentions?

MR. DAWSON: I don't keep a running count of it. As you may know, I was for a while a Board member, and I certainly was quite aware of a number of abstentions. I was quite regularly outvoted on salary issues when I was a Board member. But it does happen, and it is a fact. The fact that it gets to be public is also a fact that obviously people may view as being newsworthy. But it is not our position, the position of the staff or the management, to reveal individual countries' or constituencies' positions. That's, frankly, up to them. You know, the United States and some other countries quite often are explicit about their position on particular voting issues, more often on the policy side—or policy and the country side. So it is not unprecedented, but it is not an everyday occurrence either. I mean, but it happens throughout the year there are abstentions and even no votes on varying issues.

QUESTION: One of the things that seems odd about the Argentine program is that, as far as I could tell, there's only one number target in the whole program. That's the primary surplus. Are there other targets that we are just not being made aware of? Or was the sense that this was the only one that could be reached over the next month?

MR. DAWSON: Well, no, I think there certainly are—I would steer away from thinking that numerical targets are the only thing that people need to look at. I mean, that is a key target. Remember, this is a program of limited duration. But certainly there are issues in the financial sector side and others where we and the authorities are working to make sure, as I said, that the gains that have been reached have been consolidated. And since the program is essentially—what is it?—a seven-month program, I think the fiscal targets are, in fact, quite important. But there are other undertakings as well that may not be quantified in that sense, but that are part of making the whole program fit together.

QUESTION: Two questions on Latin America—one on Ecuador. Do you have an update on the mission that was working down there? And the second question is on Venezuela. As you know, Venezuela is facing a lot of serious problems. Did Venezuela make any kind of approach to IMF for help?

MR. DAWSON: On the Ecuador issue, it's my understanding that there may be something coming out later today from Quito, and I think it would be inappropriate for me to talk at this point but I think there's likelihood that there will be a statement later today, at which point we would have a statement as well. But I think it's appropriate for the authorities to make the first statement.

In regard to Venezuela, I am not familiar with any recent contacts in terms of the question as you phrased it was asking for help. I don't know what kind of help you were talking about. I am aware over the last few months there has been assistance of the sort of technical assistance nature taking place with elements of the government, I recall, including the central bank. But I'm not familiar with anything more in the last couple of months. I haven't heard. We'll get back to you on that as well. But certainly, had there been a request for another kind of assistance, I'm sure I would be in a position to answer that.

[Whereupon, the press briefing was concluded.]