Transcript of a Press Briefing by Thomas C. Dawson, Director, External Relations Department, IMF

December 18, 2003

Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, December 18, 2003
Washington, D.C.

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MR. DAWSON: Good morning, ladies and gentlemen. I am Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings. This is also the last briefing of 2003, from which I am sure we are all grateful, and we wish everyone a happy holiday season and new year.

I do not believe that we will have another briefing until, I believe, the week of January the 12th. The Board does come back in briefly for one or two sessions possibly the previous week, but I do not believe the level of activity will be that high. So I think the likelihood is that the briefing will be the 15th of January, if that is a Thursday. If it is not a Thursday, the Thursday nearest to them.

Now, the Fund holidays for the season are going to be, of course, December 25th and January 1st, but because those are both Thursdays, I expect that we will also be closed on the Friday after that. But our press officers will be available if questions come up, and I will be around at least until just after New Year's before I take a little bit of time off.

So that is sort of our housekeeping. I do not have any other announcements at this point. I think, however, in anticipation that we are likely to get some questions on Argentina, I thought I might just clarify a couple of points that might make the likely follow-on questions a little easier to make and even easier to answer.

There was a story circulating that in some fashion the Executive Board had decided to cancel a meeting on Argentina. That is just not the case. There never had been a meeting scheduled in any sense of the word. The discussions with the Argentines on the current review do continue. They continue in Washington and in Argentina because that is where the different people are. There is not a mission at this point, but we are in regular contact with the Argentine authorities, and there are a number of open issues. If you are interested in what they are, you can take a look at the Letter of Intent that has been posted. And I do not think there is much beyond that, but I would stress, negotiations do continue. We do not have a Board date because we do not set or even think about setting a Board date until we have the prospect of conclusion. We do not have that at that point, and, of course, when we do, we will let you know.

So I thought I would try to make that clear, but I suspect I have not preempted questions. But now I will be happy to take your questions .

QUESTIONER: Tom, is—you know, let us get some facts straight here. Is there a delay in the review of Argentina?

MR. DAWSON: I do not want to do a Rumsfeldian parsing of words here. There is a schedule for reviews. The review has not been concluded. What a delay is depends on what people's expectations were and when they had those expectations. So the reality is that they have not been concluded, but those people who thought that the negotiations for the review would have been concluded earlier, they may view that as a delay. But it is not a delay in the sense that we are not continuing to talk, because we are indeed continuing to talk.

To put it in a context that is not Argentine—that indicates that this is not an Argentine-specific question—think, for example, about the regular questions that I get on Turkey. We regularly have exactly the same set of questions on when will the review be concluded, when will the Board meeting be concluded. This is not at all unusual.

So when an agreement starts, there are ideas as to when reviews are going to take place. But that is not a forcing deadline, and they are concluded when they are concluded. Sometimes it is because negotiations themselves have not been concluded in terms of what the performance criteria, benchmarks, and so on will be. Other times it may be because legislative action may not have been taken, because quite often there are parliamentary prior actions required.

So we do not have a fixed schedule because the reality is that we are dealing with a give-and-take situation, a situation that involves actions that governments need to take, decisions they need to take sometimes that require parliamentary actions. So, you know, I do not view this as a delay because we are within, you know, sort of the time frame when we expected it would be happening. Other people may have a different view. It is not like you said when you prefaced your question by saying "facts." It is not really a fact issue. But if someone says there is been a delay, I may disagree that there is been a delay, but it is a disagreement. It is not a factual issue in my--at least in my opinion.

And to stress the point, we are still in close contact, regular contact, negotiations with the Argentines.

QUESTIONER: A question regarding how long that time frame could be. My understanding is that these reviews take place every three months. This was signed in September so it should within that three-month time frame happen sometime in December, if I am correct. So if you could clarify that?

Second, I was just wondering if you had any comments on what President Kirchner said about this undue pressure and that you were not accepting pressure from the IMF or from—

MR. DAWSON: No, I do not have any comments on that latter point. I would just stress we are working as hard as we can, and I think the Argentine authorities are working as hard as they can, and we are having, you know, as I said, regular contact, good discussions with them, but we have not—we have not concluded them.

You are correct, I mean, remember that the program was brought to the Board around the 25th of September, so we are just a little less than three months. But, again, this is not time-precise clockwork. The reality is that December 18th, which is today, is still less than three months after September 25th. So we have these expectations as to when reviews will take place, but they are not firm deadlines. They are not firm deadlines for the vast majority of our country programs. So I try to put it in that context. I wish the world were neater and tidier and everything could be done on a precise deadline, but this is not a mechanical process. This is a negotiation process on difficult issues.

QUESTIONER: Could you comment on the difference of time frames that elapsed between the negotiations that the Fund has had with Brazil and is having with Argentina? You know, what were some specific reasons for the complexity of the negotiations with the Argentines?

MR. DAWSON: I think I will just say no.

I mean, you know, every country is different. There is not a cookie-cutter approach from the Fund's point of view on how to approach negotiations, nor from, you know—and each country's circumstances are different. The Brazilian program, which was first indicated in the North American summer, Northern Hemisphere summer of 2002, was for a program to last through the end of this year. This now has been extended. The performance has been excellent. The program was pretty well laid out at the beginning. There have not been sort of issues that were left for a later point.

The Argentine program, on the other hand, was earlier in 2002, was clearly envisaged as a transition program. It is now moved into a new stage. And so there are just different circumstances, and, therefore, the timelines are likely to be different, and the process of negotiating is likely to be different.

QUESTIONER: I wondered if you could actually point to specifically in the Letter of Intent what issues are holding up the—

MR. DAWSON: No, I really would rather not. These are negotiations, and there is a give-and-take process in negotiations. What the issue—what I wanted to do was to point out to you what the issues were. They are there in the Letter of Intent, and to anticipate a follow-on question, one of those issues is indeed the lending into arrears or the status of the debt talks. But it is not the only issue.

QUESTIONER: About the Iraqi debt, does Iraq have any outstanding debts to the IMF? And when will the Fund be in a position to decide how much you actually can lend the Iraqis?

MR. DAWSON: There is an obligation of Iraq to the Fund in the so-called SDR account, which is obligations that arise from their use of SDRs at an earlier point in time. I do not have the precise number. It is on the Web. You can look it up. It is a relatively minor amount. It did not take place out of a traditional lending program but out of the use of special drawing rights.

In terms of prospect for Fund financial support for Iraq, as you are all aware, we have been in close contact with the Iraqi authorities, with the CPA, and with other interested parties. There were discussions in Amman, Jordan, last week, quite extensive discussions. And so we are continuing to work with them both on the elaboration of their 2004 program as well as technical assistance in a number of areas.

We are not at a—in terms of the prospect for financial support, I would draw your attention first to the Managing Director's speech in Madrid in October, where he did indicate a range in terms of what financial support from the Fund might be in the period of a year to three years, I think, ahead. When that process might get started I think depends on a number of factors, including the establishment of a broadly recognized, internationally recognized government. But at this point, as I have said in previous sessions, the work we are doing is not constrained by the recognition issue at this point. But we are continuing to work with the authorities and in the sense of elaboration of their plans as well as technical assistance continuing to make progress.


QUESTIONER: Yes. Has the U.S. requested the Fund to forgive this minor SDR—

MR. DAWSON: I do not believe so, but the nature of this transaction, it would not likely—that would not be likely that would happen. For countries where there have been arrears, particularly relatively minor arrears of this sort, there are lots of ways they can be handled.

QUESTIONER: I am just wondering when we are going to get a readout from the IMF on more specific numbers about Iraq's debt, because we are all using 120 billion, which basically Wolfensohn was the first one to use, or at least I heard it attributed to him. And on Paris Club—the Paris Club website seems to show something like 21 billion. The figure of 40 billion is used a lot.

MR. DAWSON: The number that I continue to hear is still the 120 billion number. We are in the process of trying to collect data on what the debts are. Paris Club, I believe, has a reasonable handle on what its debt is, but there are a lot of non-Paris Club creditors there and different categories of debt and so on.

At some point we will have more, but I know at least from our point of view, one of our roles is collecting—trying to collect non-Paris Club creditor information, and we are still in the process of doing that.

Mr. Murray, do you want to add something?

MR. MURRAY: [inaudible].

MR. DAWSON: We will set up a blackboard here afterwards, and Mr. Murray will give a tutorial.

MR. MURRAY: [inaudible].

MR. DAWSON: But the best global number we still have is the 120 number. When we get something better, we will let you know.

QUESTIONER: I wanted to know, when do you expect the first review of the program with Dominican Republic to take place? And, secondly, I want to know if you have any reaction to the outcome of the referendum in Uruguay that decided to maintain the monopoly of the processing and distribution of [inaudible].

MR. DAWSON: With regard to the latter question, no, I do not have any additional—or any comments on the referendum. We are obviously working with the Uruguayans in their program and providing the support that we can.

As far as the Dominican Republic goes, I do not have a time. Just for those of you who may not have had it, we did put out a press release yesterday afternoon, a statement, really, from the mission chief in Santo Domingo on the agreement on the main elements of a Letter of Intent, which is hopefully going to be--there are some measures that will need to be implemented, financing assurances from creditors, and the Letter of Intent, you know, would be hopefully in the near future finalized and circulated to the Board. I do not have what the date would be. It obviously is not going to be before Christmas.

QUESTIONER: President Bolaños said a couple of days ago during his visit, talking about the negotiation between his government and the IMF to reduce Nicaragua's debt, he was saying that now Nicaragua is in the process to establish a program after Nicaragua gets debt reduction to avoid what happened in other countries. He did not name names, but he said one country in Africa and another in Latin America failed after their debt was reduced. I just wonder—he also spoke that—during his encounter with Mr. Kohler, he presented or he discussed with him what Nicaragua plans to do once its debt is reduced. I wonder if you can elaborate a little bit more about what is the sense of the IMF—

MR. DAWSON: I will confess—no, I cannot. I mean, I was aware of the visit, and I think—I am aware of everything that you have said, but I am just not briefed. We will have to get back to you on that.

QUESTIONER: Did the Board discuss, even informally, the strength of the euro? And there is an appreciation from the IMF of the impact that the strength of the euro could have on the global economy?

MR. DAWSON: The Board has regular discussions on global economic issues. So when those take place, which is every few weeks, issues come up, but there is been no specific discussion that I am aware of, and certainly no formal discussion. In the regular reviews of the global economy, all sorts of issues are discussed.

QUESTIONER: The impact of the euro strength on the global economy—

MR. DAWSON: I think I would just—I would continue to direct you toward, you know, the statements, I guess most recent—I would start the timeline with the World Economic Outlook, the WEO, but continue coming forward with comments that Mr. Rajan, our chief economist, has made in terms of the global imbalances and the need for an orderly adjustment of them. But we do not get into specific exchange rate—discussing specific exchange rate movements. But our views on the need for an orderly adjustment of global imbalances are clear, and, you know, we hope the process is, in fact, orderly.

QUESTIONER: Coming back to Argentina, what would you regard as progress in the Argentinean negotiations with creditors? What are the steps you would like to see happening from now through—you know, that would make you happy? And, also, what do you regard as bargaining in good faith or negotiating in good faith?

MR. DAWSON: I mean, I think you can take a look at what the lending into arrears policy is, because it is--you know, this is an issue that has come up over the last few years. And I do not think there is a particular, you know, checklist of what has to have happened, what has to be taking place in terms of what constitutes good faith—obviously discussions, exchanges of views, you know, progress. We have to make a judgment in each set of negotiations as to what that constitutes.

It is just hard to say in individual cases. I would repeat, however, that there are—that is not the only issue that is under discussion in the negotiations. I know—I certainly understand it is an issue that has attracted a lot of attention from the financially oriented press in particular. And it is our obligation to keep in touch with the authorities, with the creditors, both official and private, and get a sense of how the process is going. And there are discussions going on, by the way, among those parties, which we are not a part of, but ultimately a judgment needs to be made.

QUESTIONER: When you answered my first question, you said that at one point the Brazilian plan was well laid out. Can you qualify the Argentina laying out of—

MR. DAWSON: No, no. I mean, it was a different context. You did not have, for example, arrears. A different situation. You had an election process where the candidates, three of the four candidates agreed among themselves, with the assistance of President Cardoso, on how to work with the Fund on the possibility of providing support. It is just a different situation. The transition in Argentina was a different situation. So you cannot do a simple comparison because the countries are different. The circumstances were different.

QUESTIONER: I was just wondering if you could be a little more precise as to the nature of these talks that are going on. Who is participating—

MR. DAWSON: Since they are not our talks, you should be asking the question to the people who are doing the talking. We are aware discussions have taken place. For example, December 3rd, I believe, in New York, that is an example. And I think also another set of discussions on December 4th. So there are lots of discussions going on. Some of them are publicly known, like those two that I just indicated. There are others that are not—and which we may not even know about.

QUESTIONER: So, Tom, I mean, would you say that unless you are seeing some progress on the creditor talks, unless there is progress on utilities and other structural changes, could you see that issue going to the Board—could you see the issue going to the Board—

MR. DAWSON: That is far too hypothetical. There are discussions continuing in all of the areas. We need to have a view on kind of how all of it adds up—how each of them add up and how they all add up. But, you know, we are not there. We are continuing to work in those questions that we are involved in, the Argentines are continuing to work on others, and at some point we would hope to be able to reach a judgment that we can conclude the review.

We are not there yet, and to repeat, it is not just one of these issues. There are a number of these issues.

Last question. Yes, okay.

QUESTIONER: So the IMF is waiting?

MR. DAWSON: No, no. We are negotiating. We are discussing with the Argentines their program. As far as the negotiations with the creditors, we are watching what is going on, but we are not a party to that, and this is a well-established position. But I would not say—I would say waiting is an inaccurate characterization of our involvement with Argentina at this point. We are working with Argentina.

Okay. Thank you very much.


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