Transcript

Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, September 23, 2004
Washington, D.C.

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MR. DAWSON: Good morning, ladies and gentlemen. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular press briefings, which is embargoed until approximately 15 minutes after conclusion, and we will set a precise time at that point.

I would like to start by noting that Fund management and staff have followed with great concern the tragic events in Haiti during the past week, and we would like to express our sympathy and condolences to the Haitian people. We are in close contact with the authorities and stand ready to help the authorities within our ability in any way that we can.

I'd like to remind everyone also that the Annual Meetings of the Fund and Bank, the World Bank, will be held on October 2nd and 3rd, although I guess technically the meetings will be on October 3rd, but the Committee meetings will be on the 2nd. Deadline for press registration is tomorrow, September 24th. Registration, of course, is online.

A number of press and public events associated with or in anticipation of the Annual Meetings have already taken place, but I'd like to briefly review those events that will take place between now and the meetings.

The Managing Director will hold a pre-meetings press conference here at headquarters on September the 30th. The press conference will be web cast--that's Thursday, September the 30th. The press conference will be web cast live starting at 9:00 a.m., or 1300 GMT. The briefing will be an opportunity for the Managing Director to review issues that will be taken up by the International Monetary and Financial Committee on October 2nd and during the plenary session of the Board of Governors of the IMF and World Bank on October 3rd.

Prior to that, on September 29th at 9:00 a.m., Raghu Rajan, Counsellor and Director of the Research Department of the IMF, will hold a press conference to review the global forecast chapter of the latest World Economic Outlook. The content of the chapter and the press conference will be under embargo for release at 11:00 a.m. that day. We will make the forecast chapter available on the IMF's password-protected site for journalists at 9:00 a.m. on September 28th, the day before, and we will also web cast the WEO press conference on the password-protected site.

I would also note that the Managing Director on the 30th will also be addressing the Bretton Woods Committee. I believe that's the afternoon of the 30th. I believe Mr. Wolfensohn also will be addressing them, so there will be a couple of events for you to cover there as well.

Regarding management travel and public engagements post-meetings, the only thing that I have to announce at this point is that Deputy Managing Director Carstens will speak at the Emerging Markets Investor Conference on Monday, October 4th, here in Washington, and on October 11th and 12th he will travel to Kuala Lumpur to participate in the high-level conference on financial sector issues in Asia. There are tentative plans for media availability, press availability in Kuala Lumpur, and Media Relations will provide information once details are finalized on that.

That's all I have for the opening, and I'll be happy with our hard core of perennials here to take what questions you may have. Sorry for the early briefing time, but we do have--I have a meeting, a department heads meeting with the Managing Director later. Thank you.

QUESTIONER: Could you talk about the security preparations for the meeting, whether you've had any indication about protests? We checked with the police yesterday, and nobody's asked for a permit or anything. And a larger question is I wonder if you think the host government has sort of overdone this Code Orange thing.

MR. DAWSON: I think we have great confidence in the host government as well as in the security authorities to make the security assessments. We've been in close contact with them from shortly before the Code Orange decision with regard to the Fund and Bank and other buildings were made. They have shared information with us, and I think it's quite clear this was a serious threat that needs to be taken seriously.

With regard to the arrangements for the meetings, it's obviously an inconvenience. It is unfortunate, but we are adapting as we can. Some of the construction that you can even hear in the background was underway even prior to Code Orange, but it has obviously been accelerated and strengthened, and you will see even after the meetings continued enhancements of our security.

With regard to the meetings themselves, in terms of demonstrations, which is sort of, shall we say, the old concern of Annual Meetings, I think that it is fair that there seemed to be relatively limited indications of protest activities, although I have seen some indications on websites of some discussions of this, at least. But the security concerns go, of course, far beyond that in this new environment, and they don't involve people announcing in advance what they're planning on doing at or around our meetings or our facilities.

So as I indicated at the last couple of press briefings, I think it will be an increased inconvenience, and it's regrettable. But, unfortunately, it's a fact of life that we are accommodating.

QUESTIONER: Just a follow-up to that, have there been any cancellations of delegates or country governments that have said they're not coming due to--

MR. DAWSON: I don't have--in fact, we have been monitoring enrollments, if that's what I can call it, and in terms of official delegations there is not any indication of that. In fact, by some counts it's somewhat higher than in the past.

In terms of private visitors and so on, I would suspect there are fewer. That's in part because the meetings take place over a shorter period of time, providing them less opportunity for the bilateral meetings of the sort that the private sector and others have always found useful at these meetings. And I have to say I'm terribly disappointed to discover that the number of media sign-ups for the meeting seems to be somewhat lower than in the past. But, of course, there could be a feedback loop involved in this that if you don't think there are going to be demonstrations, you're not going to be covering in as great a quantity, although, of course, I realize the people in this room are only interested in the substance of the meetings, not what may be happening outside.

QUESTIONER: [Off microphone.]

MR. DAWSON: That may be, but, fortunately, it is online and we can accommodate the last-minute rush.

QUESTIONER: Yesterday evening, the Brazilian Government just announced the raising of the primary surplus. I would like to know which is the opinion of the IMF on that and if you think that raising of the surplus will be enough not to contain the raising of interest rates in the country.

MR. DAWSON: Well, indeed, they did raise the--as I understand it, they raised the surplus target for this year a quarter of a point, and I think that--I mean, the Brazilian authorities throughout this program have shown themselves dedicated to taking the measures needed when necessary preemptively and always in an appropriate and timely fashion. And I think that's--they seem to have a solid control and view of what needs to be done, and I think that's being recognized. It's being reflected not only in terms of the broadening and strengthening of the recovery pattern in Brazil, but also in terms of the recognition in the markets, both in terms of spreads and in terms of the strengthening of the currency.

So indeed, they took those measures. We are aware of them, and we are--in fact, we did yesterday, as I'm sure you know, have the Eighth Review under the present Stand-by Arrangement, and I think the view is that Brazilian performance continues to be outstanding. There are two more reviews scheduled prior to the expiration of the program at the end of March of 2005. But all performance is, I think, exceeding just about everyone's expectations except perhaps the authorities themselves.

QUESTIONER: Just to follow up on the monetary policy impact.

MR. DAWSON: Indeed, they--I mean, I saw the central bank's release and decision in terms of raising interest rates to respond to the rising inflation, and I think that, again, was reflected--was well received by the markets. And so, again, the authorities seem to have an excellent appreciation, understanding, and orientation toward strengthening and protecting their program, and results continue to be overwhelmingly positive.

QUESTIONER: I wonder if you could give us sort of a rundown of the main issues you think will be covered in this meeting. And also I wonder if this program with Iraq could be announced during the meeting.

MR. DAWSON: In terms of the issues and themes to be discussed at the meetings, I mean, taking it from the most macro of macro levels, certainly the view--a review of the global economy and the state of the global recovery is obviously the headline issue. I think a preview of that as well as a preview of the meetings themselves was contained in the Managing Director's Council on Foreign Relations speech on Monday in New York, which is available on our website. Certainly the view that the global recovery remains firmly established and when the WEO numbers come out next week, you will see that as well.

Clearly, you know, moving toward somewhat more institutional issues, certainly this being the 60th anniversary year, it is natural that a lot of reflections about the role and activities of the Fund take place, whether it is in the context of reviewing our broad surveillance responsibilities for our 184 member countries, whether it includes looking at financial sector issues, whether it includes our role in low-income countries, I mean, the full range of issues will be discussed. Again, I direct you to the speech from Monday. I will direct you going forward as well to the various--both speeches and papers that will be put out in anticipation of the meeting.

But it is a meeting taking place while there certainly are uncertainties in the global economy--the rise in oil prices is obviously one that has gotten a lot of headline--the recovery seems very well entrenched globally, very well set globally, and this is, therefore, the opportunity for our members to take perhaps advantage of these relatively benign circumstances to undertake the sorts of measures needed to pursue and make more sustainable the recovery. That involves in developed countries both on the fiscal side and the structural reform side, and among the broad range of our membership, taking advantage of something, of a sweet spot in the global economy to make recovery more sustainable.

QUESTIONER: And Iraq?

MR. DAWSON: Sorry. Thank you. On Iraq, I believe I indicated at the last press briefing that very good progress has been made in discussions with the authorities on helping them work to develop a program--I should start by saying, you know, help them establishing the institutions and framework, and then on toward developing a program.

I indicated at the last briefing that we are hopeful--and we certainly still are--to have an emergency post-conflict assistance program before the end of the year. How much before the end of the year I am not in a position to tell you right now, but I can assure you that as soon as we have something to announce, we will announce it.

I should back up for a second, back to my opening comments. This is my last press briefing, of course, before the Annual Meeting. There will be next Thursday the Managing Director's press conference. If we have news on the Iraq front or otherwise prior to then, we will, of course, get it out to you right away.

QUESTIONER: How about debt relief? Will HIPC be extended or modified as Treasury Under Secretary Taylor suggested yesterday?

MR. DAWSON: I think the issue of--the HIPC issue has been under discussion in both the Bank and Fund Boards for a number of issues, such as the topping-up, such as the extension as well in terms of countries being able to qualify. Certainly the U.S. has views on how to pursue--I don't know quite the words that they use on it, but enhancement, strengthening, deepening, broadening, whatever, of HIPC. That is an issue that, I can be honest, was discussed at the last IMFC Deputies meeting in London last week, that will be discussed, I'm sure, at the IMFC Deputies meeting this year, next week, next Saturday, Saturday a week. I've discovered that in Spanish and English "next week" or "next Saturday," you have to be very careful because they have two different meanings in the two languages. I never had that problem with German because I didn't understand the German enough.

[Laughter.]

[Inaudible comment.]

MR. DAWSON: Yes. But, clearly, it is an issue. It's an issue fundamentally, though, for the members because it is the members who have the lead on that. We are providing the support we can. The U.S. certainly has made its views known. I know a number of other member countries have that. And it will--certainly, yes, it will be a big issue, as generally our role in low-income countries is an important item of our work program now, again, as indicated in the speech last Monday--last Monday being three days ago.

QUESTIONER: Again, a follow-up on that one. Would this enhancement or strengthening of HIPC at all involve some sort of write-off of debt?

MR. DAWSON: This is to be seen. We have HIPC now, and, of course, we could get into a theological discussion of what a write-off, et cetera, et cetera, is. But certainly the issue of ensuring that these countries are in a position to have a sustainable debt burden when they exit the HIPC process, or whatever debt relief process they're in, is clearly a very important issue. It's an issue of concern to the members. That's why the topping-off issue has--topping-up issue has been an item of interest for several countries in the last few months.

But the form which something would take will depend on what our members agree to, and that is an issue that does, I think, by the history of HIPC, of the first HIPC and of the Enhanced HIPC, it does take a while.

But as your question reflects, this is a process that is taking place in public as well, so you will have plenty of chance to write copy.

You can't have a follow-up on your own follow-up.

QUESTIONER: No, no. Another subject. Yesterday, also, Under Secretary Taylor said that China would be invited to a special session of the G-7. And I wondered if the Fund had a view on that and whether the Fund has any ideas about strengthening China's role in some of your organizations here or your committees.

MR. DAWSON: Well, China is, of course--has a sole-seat member position on the Board, as well as on the IMFC, and is an active participant in our meetings already. The broader vote and governance questions are obviously on the table being looked at in a broader context. But I certainly can assure you that China is an active participant in the meetings in which I take place--in which I take part. And the G-7's inclusion of China in the discussions is, of course, a G-7 issue, not a Fund issue. We do support the G-7 meetings both by participation and by providing analysis.

So I think it's quite understandable that China is playing a more important and more visible role than in the past, because certainly it's--to give you a hint of what the WEO may show, if you look at the pattern of global economic recovery, China is clearly showing up as an important contributor to the global economic recovery, which in past cycles I think was not as clear.

QUESTIONER: My question is on Kenya. There's been a mission in Kenya. Do you know how talks are proceeding and generally the Fund's view on Kenya's performance?

MR. DAWSON: You got me. We'll have to get back to you.

QUESTIONER: Just to clarify, I think Secretary Taylor said something yesterday about the IMF would begin a program or they would have a program to announce. If that wouldn't be the case, what would happen would be if anything's announced--

MR. DAWSON: What country are we talking about?

QUESTIONER: For Iraq.

MR. DAWSON: Yes, we are hopeful to have a program to announce. I'm saying the same thing. I just don't have the timing for you now.

QUESTIONER: If Iraq was to receive emergency post-conflict facility, that is the same as having a program?

MR. DAWSON: Yes, that is, I'm sure, what he was talking about, yes.

QUESTIONER: He seemed to be saying that, you know, it's going to happen next weekend.

MR. DAWSON: I am just not in a position to say that. It requires, you know, decisions and conclusions, and you can go back and ask John again. But, you know, as I say, as soon as we have something to announce, we will announce it. But I can assure you we don't have anything to announce right now.

QUESTIONER: On this issue of Iraq as well, Under Secretary Taylor said yesterday that for the IMF program to go forward, there had to be an agreement with the other creditors so they wouldn't be knocking on Iraq's door. And if I remember correctly, that was not--

MR. DAWSON: No, it's what we would call financing assurances, which is that the other creditors, both Paris Club and non-Paris Club creditors, indicate their willingness, commitment to--in working with Iraq, to, you know--it's the Fund looking at the other creditors and the other creditors looking at the Fund to make sure that the one set of financial assistance isn't being used to pay the other set. So it's a matter--it's sort of a comparability of treatment issue. But the phrase that we use at the Fund is "financing assurance." In other words, when we provide assistance, whether it's emergency post-conflict or any other kind of assistance that takes place in the Paris Club environment, we make sure that the other creditors are providing the sort of relief to the country--including private creditors, by the way--that makes the program financeable because we do not want to be lending into a program that is unfinanced.

QUESTIONER: Is that what is delaying the program?

MR. DAWSON: Actually, I would not say that anything is delaying the program. I mean, as I indicated the last time, we've had a schedule set forth since September of last year. We are still on that, you know, time frame. Whether we are able to do something in the next three days, the next three weeks, or the next three months, all of that would still be on the same original timetable.

QUESTIONER: What you just said, does this mean that there can't be an emergency program before these debt relief talks?

MR. DAWSON: When we have financing assurances, it is an indication from the other creditors that they will provide the sort of relief that is necessary to make the program financeable. So it is not a signed, sealed, formal agreement on every single bilateral creditor with Iraq because that takes months. In fact, in some cases it takes years to do that. But there is a commitment from the authorities--I mean, a commitment--well, from bilateral authorities to the Fund and, for that matter, it would be to the Iraqis or whoever the debtor government is, that relief would be provided that is sufficient to allow the assumptions in the program to be met.

QUESTIONER: Just to be clear, this would just be for the emergency post-conflict facility, and that for an actual stand-by program you have to still have--Iraq still has to--

MR. DAWSON: It's the same issue. Financing assurances are the same under both.

QUESTIONER: It would be the same as--

MR. DAWSON: I mean, the stand-by program obviously has a higher level of conditionality, nature of the program, a larger level of financing. That would be a next step. But the first step has always been indicated to be emergency post-conflict assistance. That is what we are on. Look, when we have something on that, we'll arrange a briefing before you because it will be transparent. But the cart is a little bit ahead of the horse right now.

QUESTIONER: I just want to be clear. This is different from the lending into arrears.

MR. DAWSON: Yes.

QUESTIONER: This is not the same criteria--

MR. DAWSON: This is not a lending into arrears issue.

QUESTIONER: Okay.

MR. DAWSON: And even Mr. Dallara would agree with me on that.

QUESTIONER: I just want to clarify. Does an emergency post-conflict program require IMF staff to be in Iraq?

MR. DAWSON: No.

QUESTIONER: I'd like to know the opinion of the IMF on the proposals made by the group of countries in that report, "Action against Hunger and Poverty," presented in the United Nations.

MR. DAWSON: Well, I first would direct you to the Managing Director's statement that he made at the conference on Monday, which is posted on our website. And we certainly indicated a willingness to take a look at those various proposals. There's a wide range of them, from taxation to SDR issues, to international financing facility and so on.

I think every one of them, however, are proposals that require the membership in the case of the Fund or countries in the case of some of the other proposals to reach agreements. And we are happy to work with any of them on staffing out and costing out and assessing these various proposals. But in the meantime, we are focusing on what is our core business of surveillance and promoting good macroeconomic policy, including encouraging our member countries, particularly developed countries, to have an open trading system, which is obviously of tremendous importance to the countries most affected in the developing world, as well as the need to sustain and increase traditional official development assistance.

QUESTIONER: A question on Latin America from my Latin American colleague. Latin America generally has seen a recovery in growth, yet unemployment remains low and increasing in many countries, except one I can think of is Colombia.

MR. DAWSON: And Brazil.

QUESTIONER: And Brazil, okay. What generally is the Fund's view on the way the region can--

MR. DAWSON: I mean, employment creation is obviously a critical issue in these countries, and I'd say--you know, there are two points I would make.

First of all, quite often in many economies employment levels are lagging--you know, lag the actual growth figures, so there is a lead-lag issue on that, and I think, for example, one of the reasons that the employment figures have been turning better in Brazil is that as growth becomes more clearly sustainable, employment levels have risen.

Another issue certainly--and that will not be a surprise hearing this from the IMF--is the importance of structural reforms to increase flexibility in the labor markets so that employers are willing to bring on new labor when business conditions improve, as well as the removal of impediments toward establishing new businesses so that what is an informal sector can perhaps be brought more into the formal sector of the economy.

So these are important concerns, and they are indeed problems. And we work--we are concerned on them. Within our mandate we work on it, but we also work, of course, with our sister institutions in this context, particularly the Inter-American Development Bank and the World Bank, whose mandate is more directly in that area.

QUESTIONER: To stay in the region, what exactly will be discussed about Argentinean programs and Argentinean negotiation of the debt during the meetings?

MR. DAWSON: Well, the meetings are, of course, general for the Fund, and I think there obviously will be lots of meetings on the side. I mean, I think the state of play with Argentina, of course, as I think the Argentine authorities have indicated, their priority at this point is the conclusion of the debt deal. And we understand that, but I certainly expect we will be having bilateral discussions with the Argentines. But I don't think--in a formal sense of the word, it's not an agenda item for the meetings, but obviously the situation in Argentina is of interest to our membership as a whole. So I just would leave it at that.

Maybe two more questions.

QUESTIONER: Still on Iraq--

MR. DAWSON: Back to Iraq.

QUESTIONER: The U.S. and Mr. Allawi have indicated or put some pressure on the UN and the World Bank to Iraq. Have you felt any such pressure?

MR. DAWSON: I'm not aware of any. I mean, we are--as I've indicated on a number of occasions, unfortunately we have plenty of precedent of not being able to work in countries when we're working with them on developing a program. So, therefore, it has not been a constraint thus far in terms of working with them to help develop a program, both because some meetings and training and assistance take place outside of the country, then you have videoconferencing abilities as well as travel. So it has not been a constraint for us at this point.

Last question? No last question. Okay. Thank you very much. We'll lift the embargo at quarter of 10:00. And as I indicated, if we have anything to talk about in terms of prior to a week from now, we will let you know. And if the subject merits it, we will arrange some sort of a briefing for you as well.

Thank you.