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

April 5, 2012

Washington, D.C.
Thursday, April 5, 2012
Webcast of the press briefing Webcast

MR. RICE: Well, good morning, everyone and welcome to this regular briefing by the IMF. I’m Gerry Rice, Director of External Relations. And just a reminder that this will be embargoed until 10:30 a.m. Washington time.

Allow me to mention a few upcoming events and some information that may be useful to you as we head now into our annual Spring Meetings, the meetings of the governors of the IMF and World Bank. So, I’ll just race through these quickly, then we’ll go to your questions.

For the Managing Director, let me bring to your attention that Christine Lagarde will be making a curtain raiser speech on the Spring Meetings at the Brookings Institution next Thursday, April 12 at 11:00 a.m. That’s a week today at Brookings.

A few other things: I’ll try and keep these clear. Tuesday April 10, 9:00 a.m., we will hold a press conference for the release of the Analytical Chapters of the World Economic Outlook.

Wednesday, April 11, the day after, at 9:00 a.m., we’ll hold another press conference for the release of the Analytical Chapters of the Global Financial Stability Report and we expect both these documents to be available to you under embargo as of tomorrow.

Tuesday, April 17, at 9:00 a.m., then there’s the full press briefing on the World Economic Outlook with Olivier Blanchard.

And Tuesday, April 17, that’s the same day, at 11:00 a.m., we will have press briefing on the Fiscal Monitor by Carlo Cottarelli.

The following day, if you’re still with me, is Wednesday, April 18, at 9:00 a.m., another press briefing. This time on the Global Financial Stability Report, the GFSR. And this is going to be with José Viñals.

Finally, Thursday, April 19, squarely then into the spring meetings, at 8:45 a.m., Press Conference with Christine Lagarde, the IMF Managing Director. That’s Thursday, April 19, 8:45 a.m.

Sorry to overload you with so much. All of this, you’ll be happy to hear, is on the website, so if you didn’t catch that go to the website or ask anyone in EXR, in media relations. And let’s, with that, go to your questions.

QUESTIONER: Two questions. Second one’s on Hungary. The first one is so it’s nearly a week after Europe has approved a plan to expand their bailout facilities. That has given Madame Lagarde a week to make phone calls and chat to folks who have given some preliminary willingness to contribute to IMF funds and after that week, what is her assessment? Is she confident that the April meetings will yield the 500 billion that she’s seeking or is that still an open question? And then we’re going to come back on Hungary.

MR. RICE: I think you may have heard the Managing
Director speak the other day, Tuesday, at the Associated Press event where she gave her view on that. But I think what we’d want to say is that looking at the totality of the important efforts made by the Europeans in recent months, we believe we have a good basis to continue with the process of increasing the IMF’s resources, a process that will benefit all our members. And you’ll recall this is requested by the IMFC and the G20.

And just to remind, that we did issue a statement almost a week ago last Friday on the announcements on Copenhagen welcoming the European Declaration.

QUESTIONER: Can I just follow up on that point? If one were to take potential needs of Greece, Portugal, Ireland, Spain, and Italy, total up their financing needs and compare it to the lending power of the EFSF and the EFSM as currently projected and Madame Lagarde’s dream of another 500 billion, that still appears to be short of being able to finance all of those potential needs. Why then, is the IMF confident that what Europe has already done is sufficient?

MR. RICE: As you know, we at the IMF have been calling for sometime for what we call the comprehensive approach to the challenges facing the Euro Zone and, some of the elements of that approach have beenthe requisite policies by the countries under pressure themselves.

We’ve called for increased financial support from the European partners. We’ve called for an increased role of the European Central Bank. And we’ve called for a stronger European firewall to be supplemented by increased resources for the IMF and increased firepower, if you will, for the IMF to support a global firewall and the totality of the IMF membership. I think what we have seen, as I mentioned previously, in recent months is movement in all of those areas including what you were referring to, the European firewall itself. And you know, just to respond directly to your question, on that basis, we continue to engage actively with our membership on what we still see as the need for an increase in IMF firepower. And, in fact, we’re encouraged by the many expressions of support that have been voiced so far.

Further, I would just add that our discussions on this, obviously, will continue into the Spring Meetings, and we would expect to report on further progress at that time.

QUESTIONER: As you know, a Greek retiree yesterday shot himself dead in front of the Greek Parliament and he left a note saying, and I quote, “(inaudible) short-sight with economic problems of Greece and the austerity measures.” Any comment, please?

MR. RICE: I think what I’d like to say is we’re deeply saddened to learn of any death in these circumstances and, you know, just to express our sympathies.

QUESTIONER: I’m new here. I would like to know IMF’s opinion on the new budget of the Spanish government and if you think it is enough to meet the deficit targets the Spanish government has proposed.

MR. RICE: Well, as you know, the budget was presented to the Parliament just a few days ago, April 3rd, so we still need to assess the details of that. But we would point to the need to ensure compliance with the new target, also not just the central level, also at the regional government level.

But beyond that, on Spain, clearly the challenges that Spain is facing are severe as we all see. Market sentiment remains volatile. This calls for sustaining the reform effort of which the budget is a part. Spain has been taking strong and wide-ranging policy action which we, the IMF, fully support. And, the priorities in that regard remain as highlighted in our last Article IV, our economic assessment of Spain.

QUESTIONER: I was going to follow up on Hungary -- we believe Mr. Fellegi’s in town this week. I understand these are not full negotiations. How close are you to formal negotiations, or what are these talks about? I mean, this is the second time, I believe, in a few weeks that he’s been back, so what’s going on there? And then I have the follow-up on Greece.

MR. RICE: Well, just on Hungary, I don’t have much to add beyond what we’ve said here before in recent press conferences. You are right that Minister Fellegi had an informal meeting with the mission chief for Hungary yesterday. We have no dates for possible start of negotiations on the program. And as we said before, before we would do that we need to see tangible steps that show the authorities strong commitment to engage on all the policy issues relevant to macro-economic stability.

QUESTIONER: Is the Fund feeling encouraged by what’s going on in Hungary? I mean, is there progress, or is this pretty much a stalemate?

MR. RICE: You know, I would just repeat that the discussions continue and at this point we have no dates for the possible start of negotiations on the program.

QUESTIONER: I have a follow-up on the IMF additional recourses. As more homework is being done in Europe to strengthen its firewall, when does the IMF and the G20 finance minister and the central governor planning to meet and talk about putting up more IMF additional resources? What can we expect from them?

And additionally, BRIC countries stated in New Delhi, they want the truth on the quota reform being completed before moving to the next step, so will you use this platform to pressure some countries to complete the truth on the quota reform quickly?

MR. RICE: Just on your last part, we’ve been encouraging all our member countries to make progress on the 2010 quota and voice reform and as you know, our membership has requested that as much progress as possible be made on that by the time of our annual meetings in Tokyo.

I think your other question allows me to say just a bit about the Spring Meetings, because at the Spring Meetings not only will our IMFC meet, the International Monetary and Financial Committee, which is the IMF’s governing body, but also the G20 will meet at these spring meetings. In fact, the G24 Ministers will meet, and the BRICS [Brazil, Russia, India, China, South Africa] will meet.

So, the groups that you have mentioned are all going to be in town, if you will, in two weeks time for the Spring Meetings. And I think we would expect that amongst the major issues to be on the agenda would be, indeed, IMF resources because both the IMFC and the G20, as you know, had asked us to explore how to increase the IMF resources, look at the adequacy of IMF resources. So that's going to be one issue. I think other issues will be obviously the World Economic Outlook, and the Global Financial Stability Report, and the Fiscal Monitor, so we'll have an update on where we think the global economy is and where we are in the crisis.

You know, I think there'll be a lot of discussion about growth and unemployment, which continues to be a major concern. I would expect the Middle East to loom fairly large. There's going to be actually a regional economic outlook update launched during the spring meetings on the Middle East countries. There'll be a meeting of the so-called Deauville partnership administers.

And finally, a great deal of attention will be paid to what's happening in the low-income countries and implications of what's happening in the rest of the world for Africa.

I have a question online about Egypt: What is the IMF's reaction to the report to deal in Egypt around an IMF program? Will the program now go forward? Does the IMF think enough stakeholders agree?

What I want to say in regard to that is, the technical team has begun talks with the authorities on specific elements of the government's program, and has met with representatives of the political parties.

These talks are ongoing. As we have previously said, broad political support for the specifics of any IMF-backed program is essential for its successful implementation. The timeline for concluding an agreement is not fixed and will depend on how quickly progress is made by all sides on these issues.

QUESTIONER: As I show what your latest report on the Greek economy to say that early elections in Greece is a source of uncertainty. Can you tell me what this uncertainty consists of?

MR. RICE: As we noted in the staff report which you refer to, elections do create uncertainty related to policy implementation. What I would add, is that this type of uncertainty is always present when countries hold elections. So it's not unique to Greece. I would also say that as we also noted in the same staff report, we are reassured by the commitments given by the major political parties in Greece to the objectives and the policies in the program.

QUESTIONER: And usually as you know, the major big parties before the elections are used to use -- to say big words and big promises to voters. What do you say about this phenomenon right now in Greece before the elections?

MR. RICE: I think it's important to keep the big objective, the big goal in mind. And what's important is timely and effective implementation of the program, and for that we need strong and broad based political support. As I said, the two largest political parties in Greece have already publicly supported program policies. And you know in a way, the elections are an important opportunity to gain a mandate for that.

QUESTIONER: Do you think that the elections are obstacle to the implementation of the program?

MR. RICE: I don't have much beyond what I've said. There's uncertainty related to elections but that's not unique to Greece, and I think it's reassuring that we've had those commitments from the major political parties. And, you know, another way of looking at this is for the election to give a mandate to the winners of the election to go forward with the program.

QUESTIONER: Thank you, Gerry. A couple of questions; one on Russia, one on the Ukraine. On Russia, Goldman Sachs and then your report says that the biggest risk for the country is overheating. So I was wondering if the IMF has an opinion on that.

And on the Ukraine, basically I wanted to ask about the most recent update of what's happening with them. They keep saying different things about their own intentions and hopes. So please give us the IMF line on how the IMF sees the progress with their program -- resuming their program.

MR. RICE: So, on Russia and your question about overheating. We believe that economic growth is running at or ahead of its long run potential. This means that the budgeted increase in the non-oil deficit in 2012 poses a risk of overheating. We believe the government should take advantage of the high oil prices by reducing its non-oil deficit and saving windfall oil revenues in the reserve fund.

Besides protecting the economy from potential overheating, doing so would reduce fiscal vulnerabilities.

Now if I can turn to Ukraine and where we stand. The status of the second standby arrangement review, the review's on hold pending implementation of measures agreed for the completion of that review.

I think the key issues center on actions to ensure that the program objectives for 2012 are met, including fiscal consolidation, energy reforms, and financial sector reforms. In terms of, you know, resumption of that program, we don't have a timeline.

QUESTIONER: And if I may, they have a VIP visitor in town or at least they had her yesterday. She's the deputy chief of the presidential administration in Kiev. I was wondering did she have any meetings at the IMF by any chance? Have you heard anything about that? Her name is Ms. Akimova.

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

MR. RICE: I'm going to take a couple more questions and then wrap.

QUESTIONER: So the Hungarians are blaming the IMF and you for not being clear on prerequisites required. What exactly must Hungary do to be able to start official talks?

And then secondly, so they have been having quote, unofficial, end quote talks several times with IMF officials. What exactly are they discussing if -- or what does unofficial talks, discussions, what do they actually mean?

MR. RICE: You know me well enough to know I'm not going to release the details of unofficial talks, even if I had that information. You know, I can just repeat. We want to see tangible steps that show the authority's strong commitment to engage on all the policy issues relevant to macroeconomic stability. And again, we have no dates for the possible start of negotiations on the program.

QUESTIONER: Is there an Article IV mission planned at all?

MR. RICE: We have no plans at the moment. No dates for you.

QUESTIONER: No, I want to find -- just on Egypt, who is the Fund actually talking to? Is it not any political parties? Is it the military as well? And is the feeling that you would make more progress after the elections which are in -- and then I just have a quick question on Mali.

Does the fund -- you know, the World Bank has suspended operations with Mali since the coup as ECOWAS and the African Union as well. Where does the IMF stand?

MR. RICE: On Mali, I don't have much for you, beyond to say, given the uncertainty of the situation there, we're monitoring it closely and assessing next steps. You may have noted that we have evacuated our resident representative and the team from Mali as a precautionary measure.

On Egypt I don't have a great deal for you in terms of specific meetings. But just to stress again what we've said before, that the broadest possible political consensus is what we are seeking. We are looking to support home grown policies, Egypt's policies.

We are looking to make sure those policies include and protect the most vulnerable to the greatest extent possible, and the discussions continue. And we don't have a datefor the negotiations on the program.

QUESTIONER: I think that is a matter that needs clarification on behalf of you. Recently the representative of Greece and the IMF, Mr. Maillotes speaking to Greeks on the Sky TV said that the IMF was pushing, you know, beyond partners of Greece and the Greek authorities to go forward with a broad restructure of the Greek that -- and this was something decided on 2010 if I'm right.

But at the same time, what is your comment? Given that the IMF was saying that going to a broader restructure of the Greek debt should not be an option for Greece. And there are statements of IMF executives on that matter. Thank you.

MR. RICE: Thank you. What I'd say in that regard, is the Fund has been pressing for some time for a program that would place Greece's public debt on a sustainable trajectory. And again, that's the big objective, always has been. That's the goal.

In that context, we have been advising on whether the totality of the policies considered by the Greek authorities and the Euro group would deliver on this goal including private sector involvement, the support required from Europe, and the policy framework to be adopted by Greece.

And you know, what I'd say just to conclude, we have always tried as we do in every case to do this in an intellectually honest way, and in the best interest of the Greek people, and against a background of a fast-moving and evolving situation. Let me --

QUESTIONER: To clarify, you advised the Greek government for a haircut in 2010, correct?

QUESTIONER: As far as concerns Mr. Maillotes, what he said.

MR. RICE: I'm not going to comment on a third party report. And I would justreiterate what I've just said on that point. Okay. Thanks to all, and thanks to all online also. And I look forward to seeing you during the Spring Meetings. Thanks a lot.


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