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

November 10, 2004

Director, External Relations Department
International Monetary Fund
Wednesday, November 10, 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 briefings. As usual, we are embargoed until 10 or 15 minutes after conclusion, and I will set the precise time at that point.

A few announcements about management travel and public engagements. The Managing Director, Rodrigo de Rato, will be traveling November 16th to 18th to Moscow for meetings with the Russian authorities. Then November 19th and 20th he'll participate in the G-20 meetings in Berlin. And on November 21st and 22nd, the Managing Director will visit Warsaw for meetings with the Polish authorities. Following that, November 23rd to 26th, the Managing Director will be in Spain, in Valencia and Barcelona, respectively. He will participate in the Congress of European Enterprises and various academic events at Barcelona universities, and in Madrid he'll participate in a meeting of Latin American parliamentarians.

With regard to Ms. Krueger, she is presently in Delhi to give a speech, a presentation at the 2004 Bankers Conference, and she will then travel to Stanford University in California, my alma mater, to participate in the annual Latin American Conference of the Stanford Center for International Development.

Deputy Managing Director Agustín Carstens on November 11th, which is tomorrow, will speak at Tor Vergata University in Rome, and November 18th he'll be in Bogotá to participate in a seminar of the National Association of Financial Institutions. And November 20th to 23rd, he will be in Hong Kong to participate in a conference entitled "Managing Procyclicality of the Financial System," which is jointly sponsored by the Hong Kong Institute for Monetary Research and the IMF.

I think that's all the travel I have to announce. I should make you aware also of some personnel changes within Media Relations that I think are relevant to you. Conny Lotze, who has been covering European press relations—my notes here say for more than four years, but unless I'm mistaken, she started at the Fund on the same day that I did, so I believe it's actually more than five years—will be taking a one-year assignment in our Current Publications Division, which produces, among other things, The IMF Survey, Finance and Development, and the Fund's internal newsletter, IMF Staff News, and we wish her the best in her new endeavor. We'll miss her. But after a year, I'm sure she'll come back.

Jeffrey Hayden from our Editorial Division will be joining Media Relations for a year as a general assignment press officer. We welcome Jeff, who is among our inventory of Columbia Journalism School graduates. We welcome him to Media Relations and wish him the best. I'll be happy to have him over in this building since he's the person I call whenever my computer doesn't work, and he's over in International Square. So it will be helpful—in fact, I was on with him this morning. And so we'll be happy to have him with us in Media Relations.

During this period also, Lucie Mboto Fouda will be covering Europe, while Frances Hardin, still another Columbia Journalism School graduate, I think, has shifted to Lucie's Africa role and joins Gita Bhatt, who also doubles as our Asia Pacific press office. We should say, I guess, welcome back since she is just back from maternity leave and returned to her previous position.

Now, I hope you followed all of that. We will not give a quiz on it, but there are some new names and faces, and we will, I think, have a posting of some sort to make sure that people have that.

The final announcement for today is that the Fund will be closed for business on Thursday, November 25th and Friday November 26th in recognition of the Thanksgiving holidays, but, of course, we will have Media Relations officers on duty, as we normally do.

With that done, I will be happy to take any questions you may have. Mr. Sitov. Sorry, Mr. Sitov's over here. Turkey?

QUESTIONER: What's happening with Turkey's new stand-by program? What are the preparations? What do you have announced? And, secondly, normally I know that you don't like commenting on economic indicators of countries, but taking into account the fact that Turkey is one of your favorite problem countries and—

MR. DAWSON: My favorite what kind of country?

QUESTIONER: Problem countries.

MR. DAWSON: Problem, no, no. It's one of my favorite countries.

QUESTIONER: Would you like to say anything about the really high latest inflation figures? And would that be a deviation from—

MR. DAWSON: No, I think I will decline that kind opportunity you've offered on the latter point.

The October mission did make progress on a range of key issues, including the budget for 2005, which has now been presented to parliament, the medium-term macro framework as well as monetary policy. The government is now finalizing the details of their policies to ensure their effective implementation and working to flesh out the specifics of structural reforms, especially in tax and Social Security as well as the new banking law, which there is a Fund technical team in Turkey at the moment.

As soon as this work is completed, to get to answering your first question, we do expect that the follow-up mission will return to continue discussions on the new stand-by arrangement, and we will be in touch as soon as that happens and let you know.

QUESTIONER: A follow-up?


QUESTIONER: Do you think it could be possible for the Board to ratify an agreement this year?

MR. DAWSON: I really don't know because it obviously depends on when the next—when the mission would be because there's a normal circulation period for the Board and so on. So I think we just have to wait and see when the authorities are ready for the mission.

Now Mr. Sitov.

QUESTIONER: Could you please outline briefly the agenda of the MD's visit to Moscow?

MR. DAWSON: I don't think I have much—let me just check. I may have a little more, but not much more than what I had indicated. But I do know he will be having meetings with the authorities. There will be a press briefing, and I expect—both the financial authorities and political authorities, and I expect—as I say, there will be a press conference at the conclusion of the visit. Obviously, normally you would expect there to be some press opportunities during the visit. And, finally, there's at least one meeting that I'm aware of that's penciled in for nongovernmental people, economic types.

QUESTIONER: Actually, maybe I did not express myself very clearly. I actually wanted to see if you have any outline for us on the issues the Managing Director wants to raise in Moscow.

MR. DAWSON: I think, you know, this will be the Managing Director's first visit to Russia in his position as Managing Director, and Russia as an important member of the Fund, one which the Fund continues even in a non-program sense to have a close relationship, I think it's natural both as part of his initial listening/learning tour and familiarization with our members to be visiting, and that's the context in which I would frame the visit, not in the context of any particular problems or any particular issues in that regard. The performance of the Russian economy, as I've said on a number of occasions here, has been really quite strong, and I think in that sense it's a to-be-expected visit.

QUESTIONER: Apparently, the IMF has just made public or is about to make public a report on Spain criticizing its inflation and the risk of a housing boom—not housing boom, housing...

MR. DAWSON: Prices. And the question is?

QUESTIONER: What is [inaudible]—

MR. DAWSON: Well, as I think most people here are aware, everyone here I think is aware that we do have regular Article IV consultations with all of our member countries, almost all of them annual, and that cycle is underway at the moment for Spain. The mission was there. It wrapped up I believe on Monday, and the preliminary conclusions from the staff were posted on the website, I think either last night or this morning. I think yesterday was a holiday in Spain.

The authorities this morning gave a press conference on their reactions to the report, and I will direct you—as I say, we posted the statement there. The issue, for example, of housing prices is an issue that was raised last year and it continues to be raised this year. I think it needs to be—that particular aspect of it also needs to be looked at in the context of what—I'll read you the first ten words of the statement, not the first ten sentences of the statement. "The overall performance of the Spanish economy has been distinctly positive." So I think, you know, it is a report that recognizes the very strong growth that has been going on for a number of years, but then goes into the challenges that the new government has and the opportunity provided by the strong performance to undertake some of these reforms.

As I say, it's a nine-page preliminary conclusions from the mission. I don't think I should preempt it by going into detail here, but I'll even give you my own copy if you want.

QUESTIONER: How close is the Fund to reaching an agreement with—a new program agreement with the Dominican Republic?

MR. DAWSON: Let me just get my update, my note. As I think I indicated the last time, the last briefing, we had a mission to Santo Domingo that did make significant progress on a new stand-by. The authorities are continuing to develop, specify their plans in greater detail, including in particular in the electricity sector and the budget for 2005. We expect that the next step will be program discussions to continue in Washington, and that could be as soon as next week. When we can confirm that, we will let you know.

QUESTIONER: Does the IMF share the concerns of a lot of Europeans about the American deficit?

MR. DAWSON: I would direct you to a number of statements that the Managing Director and others have made and our own World Economic Outlook where we have expressed our views on the pattern of global imbalances, which includes the U.S. fiscal as well as current account deficit. But we've always noted and continue to note that it is a pattern of global imbalances, and the solution to the global imbalances requires action on the part of a number of countries. And, again, to repeat what the Managing Director has indicated recently and consistently, as well as the staff, this calls on actions not only in the United States in terms of dealing with the fiscal situation, but also in other countries to pursue structural reforms and get the sort of growth going that would help ease the global imbalances.

So I think our views are well known. You can go back to the U.S. Article IV which was published, including the staff analysis. You can go on to the World Economic Outlook in the end of—the beginning of October, actually, and subsequent speeches by the Managing Director, and I don't think there's any reason for us to have changed our views or to add any particular emphasis to them at this point.

QUESTIONER: I was just looking at my notes here. The G-20 meeting in Berlin, what—are we likely to get something from the Managing Director's visit to that?

MR. DAWSON: No, the Managing Director—this is the Finance Ministers meeting. They meet regularly, a couple times a year, I think, and, you know, he is attending—there may be some press activity there as well, but I don't have anything in particular to point to you. I mean, the Fund is a participant in it and in some fashion acts to provide almost—not Secretariat services, but we provide papers and so on for the discussions, and that is the case this time. The G-20 themselves I'm sure can give you information about the agenda. We are participants in their meeting.

QUESTIONER: I wonder if you have to say something about Argentina and if you think that in January, the end of January, we'll be beginning a negotiation with—Argentina with the IMF, or do you think there will be more delays? And, second, if you are analyzing the assessment about this kind of Chinese investment that affects the economy of Argentina, will be good or not?

MR. DAWSON: I did see a story on that last point. I did see a story on that, and I have to say I was a little bit confused as to what was going on or not going on. And there was at least one of the—one Chinese official visiting, who I think put out something of a clarifying statement because there were some very large numbers that were thrown out that didn't seem to make too much sense in context.

With regard to the situation and our relationship with Argentina, as I've said before, the authorities have indicated that they are going to focus and they're going to continue to focus their efforts on the launch and conclusion of the debt exchange offer, and we've agreed, therefore, to resume the program discussions, formal program discussions following completion of the offer. We, of course, are in regular contact with the authorities, both here in Washington and through our resident representative, as the Managing Director indicated on Monday in Mexico.

In terms of the current state of play, you know, it is not appropriate for us to comment on the debt exchange offer, either in terms of any of the details or on the acceptance process and, in fact, even the timing. I would just, you know, repeat though that completion of a comprehensive and sustainable debt restructuring agreement with private creditors is critical for Argentina's economic prospects.

In terms of the timing, the timing very much depends on the conclusion of the debt offer and then on the authorities indicating that they are in a position to resume the discussions. I think we expected for some time that it's likely to be January, and I don't have any reason to think that that has changed in the last couple of months.

QUESTIONER: I have a question on Iraq, but before that, I would like to be sure I understood you well on the question on imbalances, United States imbalances. Is that right that the IMF is calling for actions from the United States as from other—

MR. DAWSON: Well, we—

QUESTIONER: —to correct imbalances?

MR. DAWSON: We see global imbalances and that regards all of the major players to play their role.

QUESTIONER: So is that right that you are calling for actions from the United States?

MR. DAWSON: Go back and look at the Article IV consultation and you can quote from that. I mean, I'm not issuing a new—you know, I'm trying to make it very clear, this is not a new position. We are very well—our position is very well laid out. It's in the Article IV published statement. It is in the summing-up from the Article IV. It is in the PIN from the Article IV. It is in the World Economic Outlook. And as I indicated, you know, this has been a consistent position of ours. So there is not—the idea of issuing a call I think is an inappropriate characterization, and I didn't say that.

QUESTIONER: I'm not saying that you are issuing a call. You are remembering us that—

MR. DAWSON: Reminding you.

QUESTIONER: Reminding us that the IMF issued calls in that sense. Is that right?

MR. DAWSON: To all of the major economic centers to do the appropriate things, yes.

QUESTIONER: May I ask a question on Iraq now?

MR. DAWSON: Yes, please.

QUESTIONER: Is the IMF involved at any level in the ministerial conference in Sharm el Shaykh next—the 22nd, 23rd of November? And in any case, could you remind us what the IMF is doing for the help in the reconstruction of Iraq?

MR. DAWSON: I'm not aware of that particular conference in terms of Fund participation. I had seen a reference to it a few days ago. As far as Iraq goes, we continue to be involved in working with the authorities and providing technical assistance. You know, we had, of course, the post-conflict assistance—emergency post-conflict assistance, that was provided a month or so ago, and continue in regular contact with the authorities through a variety of means. So that is the nature of our assistance, which was demonstrated with the loan and continues in terms of provision of technical assistance and policy advice.

QUESTIONER: As far as you know, are the negotiations in the Paris Club on the debt issue on track to be completed by the end of the year, which was the original—

MR. DAWSON: I think it's inappropriate for me to characterize the Paris Club discussions or their status. I suggest you contact the Paris Club. Or you can try some of the major creditors, too, but that's not us. We provide technical input to the Paris Club, but we are not part of the decisionmaking or scheduling process.

QUESTIONER: Could you just remind us the status of the IMF in the Ivory Coast?

MR. DAWSON: Cote d'Ivoire is obviously facing a tragic situation with the deterioration in the security situation in recent days. You know, obviously it's not a situation where a mission could be in the field in any event. You know, we would expect to reengage with Cote d'Ivoire once the security situation is reestablished, but that is, as I say, you know, a tragic situation, after looking at the pictures. I used to visit there quite regularly in a previous capacity, and our—you know, our hopes are for a peaceful restoration of order there and to have a situation where we can provide them with assistance. There obviously has not been a program there for some time.

QUESTIONER: One more on Iraq. When you talk about the loan for post-conflict assistance, can you help refresh my memory on—that was part of a series of loans that were proposed. Is that correct? And when would the next review be scheduled to look at a second—

MR. DAWSON: Your memory is correct from the Madrid conference about a year ago, a sort of—a pattern or notional timeline—not so much timeline but notional sequence was laid out, the first step of which in terms of financing was this emergency post-conflict assistance with the thought that it would then—as things went on and improved, that it would eventually lead to the possibility, assuming the authorities were interested in it, of some sort of a stand-by arrangement. But the post-conflict assistance was just approved, and I think it's way premature under any circumstances and never had been contemplated at this point that we would be talking about a stand-by this year. The thought had always been that we'd try to have the emergency post-conflict assistance provided during calendar 2004. That we did do. And now we're looking forward to seeing what the next steps are.

If you want a sense of that, I would just direct you to Managing Director Koehler's speech at the Madrid conference last October—October a year ago, sorry.

QUESTIONER: Another follow-up on that. Isn't it true, though, that the agreements with the Fund for the loans make the Fund a priority creditor, priority lender in the sense that now that Iraq has money from the IMF coming in, the loans are supposed to be repaid ahead of all other debts?

MR. DAWSON: Well, the Fund is what is in the term of art referred to as a preferred creditor, always has been. And certainly in the context of lending to a country when you have an arrears situation and an unresolved Paris Club situation, it is quite normal for the Fund when it lends to have exactly that position. There's a broad international consensus for that position, and it is, I think, not at all controversial.

Last question, Diana.

QUESTIONER: I was wondering if there's any chance the IMF at some point is going to update the part of the Outlook that has to do with the oil prices that are so much higher now than what you actually were talking about.

MR. DAWSON: Well, you know, one of the problems when you—if you think of doing that, then you may turn around and discover that they're lower than they were when you decided to do that. So at this point, we are not expecting to have a revision of the World Economic Outlook, but obviously we do keep an eye on market developments, and I'm sure you all will find out if we are, in fact, doing a revision to the WEO. But at this point I can assure you we are not.

Thank you very much. We will lift the embargo at 15 minutes after 10:00, which I am told I should also indicate is 1515 GMT for those out on the World Wide Web.

Thank you.

[Whereupon, the press briefing was concluded.]


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