Transcript

Washington, D.C.
Thursday, April 15, 2010

MS. ATKINSON: Good morning. Welcome to our regular biweekly press briefing. I'm Caroline Atkinson, Director of External Relations at the IMF. I want to start the press briefing by going through a press release that we've just issued on Greece. This briefing today will be live and not under an embargo.

We just released the following notice that Mr. Dominique Strauss-Kahn, the Managing Director of the IMF, has issued the following statement in his name: "Following a request by the Greek authorities, I have agreed to send an IMF team to Athens to begin discussions with the Greek authorities this coming Monday on polities that could provide the basis for Fund financial assistance under a multiyear program in the case that the authorities decide to ask for such assistance. The Greek decision to initiate Fund program engagement is consistent with the agreement among European leaders last weekend that financial support for members of the Euro Area should go hand in hand with IMF engagement in financial assistance."

Thank you, and we are open for questions from the Online Media Briefing Center online and also from those of you here.

QUESTIONER: I wanted to ask you how much money the IMF is going to give to Greece in the case that Greece asks for money? And are you going to put conditions since --

MS. ATKINSON: Two answers to that. First of all, we're just beginning negotiations. This is the first time, when the team gets there on Monday, that we will be engaging on program discussions, and there will be two key elements of program discussions. One is determining the amount of financing that is needed, so I can't give you any idea yet as to what that will show. The other is determining whether the policies or which policies are needed in order to achieve the balance of financing and adjustment that we reach agreement on with the authorities.

QUESTIONER: Caroline, could you tell is this going to be a joint mission with the EU and the ECB? The other question is how will such a program work, any sort of idea during your talks last weekend or last week with the authorities how you see this working with the EU?

MS. ATKINSON: Our team is going to be led by Poul Thomsen from the IMF’s European Department and I'm sure that we will continue to work closely with and coordinate with the European members, the EU and the ECB.

QUESTIONER: So they're not going on this mission?

MS. ATKINSON: I'm sure they will be there. All of this has just happened. As you know, the letter or the request from the Greek authorities came to the three, I'm sure you've seen it. The letter that came was sent to the Commission and the ECB and to the Managing Director, and so we will all be working together.

QUESTIONER: Who is going to put the conditions, the European Union or the IMF or together?

MS. ATKINSON: When we have a program, and of course we have worked with the Commission and other financers before last year, when a number of programs began with Eastern European countries, which had joint financing with an important element of bilateral financing such as Hungary. But when we the IMF – and we're responsible to our Board — when and discuss policies with a country, we have to be satisfied that the program and the financing and policies are all technically up to scratch in our view.

QUESTIONER: First two questions. This is not a request for a loan that they did, or what's the nature? Because if you go and discuss policies, what's the next step until it becomes an official? Then if you have a program and you present it to the Board, it will have to be presented along a European program that's fully financed over 3 years. Correct? Because now we have from the Europeans only 2010.

MS. ATKINSON: On your first question, what's happened this morning is that the Greek authorities have requested discussions with the Commission, the ECB and the IMF on a multiyear program on economic policies. This is the first time - of course, we've been working more closely together - but this is the first time that the Greek authorities have invited us or asked us to discuss their policies with them that could form the basis of a multiyear program that could be supported with financial assistance from the IMF as well as from others.

And on your question, the Greek authorities are talking about a multiyear program, so we would be looking at least for some idea for ourselves if we do a multiyear program, we decide the amount of our financing that is the amount of the arrangement, the program, and then we have a discussion about how much of it is available over which time period, and I'm sure you're all or at least most of you are familiar with the ways that we do things. It's early days, so as far as defining the need for financing from others in the out years, I think we'll come to that.

QUESTIONER: But if you have a program and you present it to the Board and it's a joint program, you need to have the Europeans' figures for 3 years as well as your figures for three years?

MS. ATKINSON: Yes. Well, what we present to the Board will be our program and which of course will be worked out in conjunction with and be consistent with the policies that Greece agrees with the Euro Area member states, the European Commission and the ECB. For any program we need to be assured that the plan of adjustment is appropriate and realistic and adequately financed.

A couple more on Greece and then I do have some questions on other countries that we can talk about.

QUESTIONER: If I may, this letter is a step before asking for help?

MS. ATKINSON: Yes.

QUESTIONER: This letter is a letter that they're going to ask for the money?

MS. ATKINSON: This letter is requesting discussions. So it's not a formal letter asking for financial assistance, but it's asking for discussions on policies that could form a basis for financial assistance.

QUESTIONER: So the next one would be the letter of intent? Not that it will happen, I'm just saying the process is the first -- is the request.

MS. ATKINSON: The process, yes.

QUESTIONER: The discussion and then --

MS. ATKINSON: And then a request for an arrangement.

QUESTIONER: In case.

MS. ATKINSON: Yes. I guess when we're discussing with them the policies that could form the basis, at a certain point that could mutate into a discussion for the arrangement. And finally when we have agreement on the policies there would be a letter of intent that would be the summing up of their proposal for their policies and their request for money and description of how they're going to finance the program more generally which would of course include the bilateral part. And we have many examples of letters of intent for other cases on our website.

So I'm going to just turn to a couple of questions on Turkey that have come through online. ‘Will there be a meeting between Managing Director Dominique Strauss-Kahn and Turkish Economy Minister Babacan during the Spring Meetings? And is there any news about the timing of the Article IV mission?’ On that, we don't have a meeting currently scheduled between the Managing Director and Mr. Babacan. I think as we've said before we do expect that there will be an Article IV consultation mission that goes to Turkey in mid-May.

I have also been asked whether I have a comment on the Central Bank of Turkey's exit strategy from emergency crisis measures and what I think about Turkey's economic and financial situation without an IMF agreement. Again, and I think I said this actually when I was here last time, the Turkish authorities concluded that they are not in a position where they need a financial arrangement with the Fund. We agree with them. And we believe that they have weathered the crisis successfully and we look forward to discussing policies with them in detail in the context of the normal Article IV consultations. As we haven't had that mission yet, and we'll be going in May, I don't have detailed comments on our views. Obviously these will be issues that we will address in the Article IV consultation.

QUESTIONER: Caroline, coming back to Greece. This one is about a timeline. Discussions are going to start now. Is there any sort of idea how long those discussion would take and how quickly such a decision could go to the Board?

MS. ATKINSON: Thank you. The discussions will begin on Monday in Athens and I'm sure we will be working quickly with the Greek authorities and then coordinating and working together with the European Commission and the ECB. As you know, we don't give timeframe for how quickly agreements can be reached. We are able to work very quickly. It depends what the situation is, how close we are to understanding the situation, how close we discover we are in terms of what measures are needed and over what timeframe. So we never set off with a deadline in mind. We set off with a goal in mind which is to reach a good agreement.

QUESTIONER: As far as the money, I wanted to ask you, the Europeans committed already $30 billion for 5 percent. So you are going to give the one-third. Correct? So how much are you willing to give and what is the rate of it's possible?

MS. ATKINSON: I can be more helpful on the second than on the first. The European member states talked about I think 30 billion euro, not $30 billion.

QUESTIONER: Yes.

MS. ATKINSON: That's okay. And we have not given and are not in a position to give an amount that we would be recommending. And of course, all of these decisions are decisions that will be taken by our Board. So what management and staff will do is recommend on the basis of their discussions some amount to the Board and that will become clearer as the negotiations progress next week. On the interest charges, again it's on our website, but we have for amounts up to 300 percent of quota, our interest rate is 100 basis points above the base rate. The base rate is currently I think .26 basis points, so the interest rate on amounts up to 300 percent of quota would be 1.26 percent. Now, for amounts beyond 300 percent of quota, we have a surcharge of 200 basis points that would bring the interest rate to 3.26 percent. You start with .26, you add 100 for the normal amount, you add 200 for the surcharge.

QUESTIONER: So you're adding the --

MS. ATKINSON: Yes. It's a surcharge that goes on top of the basis charge. And Greece's quota is 823 million SDRs, which is just under 1 billion euro.

QUESTIONER: So that 3.26 currently for the $10 billion. Correct?

MS. ATKINSON: The amounts beyond roughly 3 billion euro would carry an interest charge -- amounts outstanding beyond that would carry an interest charge of 3.26 percent.

QUESTIONER: There is some confusion how the Fund is going to work with the EU and the ECB, and I just want to make sure that we understand completely. The question here is whether the program from the ECB -- the Europeans would have to be agreed first or does the IMF come in at the same time and have to agree with theirs at the same time? Do you have any sort of idea how that works?

MS. ATKINSON: For us we're beginning this now. Of course, we know a lot about Greece already, but the negotiations and discussions are just starting on Monday. And we will conduct those discussions in our normal way with a view to the appropriate mix of financing and adjustment and which policies are needed to reach which sort of level. We have I think already said that the measures that Greece has outlined for 2010 seem appropriate. Obviously we'll have to look at that in the light of developments and so on. And again, we have worked closely with European countries and with the Commission before, so it's not a new thing in that sense. We have worked closely with them and jointly and had bilateral financing or European financing as part of the financing package for earlier programs in Europe.

QUESTIONER: Just a quick follow-up. I know that the Fund has been to Greece and looked at the conditions and followed them. Do you have any comment on whether you think Greece is going to need financing or anything you can say on the outlook for Greece?

MS. ATKINSON: What I can say is that we're beginning discussions. We have not had a request for financial assistance and we will be engaged in those discussions so that we are ready. As we've said before, we're ready to assist if need be. It's a little different now because now we're actually getting engaged into the numbers and discussing the program and not just technical assistance measures to make sure that the program -- that measures are implemented in a technically the best way.

I have a couple of questions online on Ukraine. ‘Is it true that the IMF and Ukraine are two weeks away from a new program as the Ukrainian government says?’ And then another saying, ‘It's been reported that the IMF is "pressuring" Ukraine's government to set a budget deficit goal of 6 percent of GDP and did this issue get discussed with the managing director and was that number discussed earlier this week?’ As usual, we do not go public with numbers until we have done the work with the authorities. As the Managing Director said earlier this week after his meeting with President Yanukovych on Monday, we are very glad that the new government is wanting to engage with us and see how we can take forward the program that as you know we had disbursed quite a lot of money under but has been sort of on hold for a while with the elections. And we will of course have staff discussions and technical discussions when the authorities are here during the Spring Meetings. I think that's where the two-week idea came up, but just as in other cases, we might be able to say when we begin discussions, but we don't say when we're going to end them, and of course we always hope to move as expeditiously as possible.

QUESTIONER: I want to try once more. What do you say your assessment so far from the Greek program? I know that you have a team in Greece and they are consulting with the Greeks every day. I'm sure that they reported back already. What are they reporting how Greece is doing right now?

MS. ATKINSON: The team that we have in Athens at the moment is a fiscal affairs technical team and they are working on how best to help the authorities implement technical measures. I believe some of it is on tax administration and so on. The team that will begin work on Monday is the one that will assess recent developments, prospective developments, the implications of how the full economic data and framework fits together and reach a judgment with the Greek authorities on whether there is a need for financing, how large that would be and over what period of time and with what implementation each year, there may need to be adjustment measures. And as usual, when that team goes even if they're reporting back every day as they may be, we've got enough experience to know that these things change over time and we wait until they're settled. We won't be giving daily bulletins, I'm afraid.

QUESTIONER: You were asked before about Turkey and the possible meeting of Mr. Babacan and Mr. Strauss-Kahn. Will there be a meeting -- I would assume there will be between the Greek finance minister and the director?

MS. ATKINSON: That's a good question. I'm not aware that one has been scheduled. I agree with you it's quite likely that there may be, but I can't confirm that one has been scheduled. I suspect we may let you know at the time.

I have a question here on talks with the Pakistani government from Muhammad Mushtaq Ghumman, Business Recorder, who is asking for an update on talks with the Pakistani government that have concluded. And he is quite correct. We have had a small team in Islamabad to carry on discussions with Pakistan on the next stage in their program. We believe that those discussions have gone fairly well. There are a couple of things that we are checking with the authorities on implementation of their measures and we are still expecting that there would be a Board review meeting scheduled in May, probably in early May, and when we have that date of course we'll let you know.

Here I've got a couple more questions [from the Media Briefing Center]. ‘What is the IMF proposing on VAT to the Board on Pakistan? Then on Colombia, would the facility to Colombia which Mr. Lipsky has favored come with any similar conditions or any conditions at all? On Pakistan, as you know there is a program of adjustment. There are different ways that governments have to choose to reach that adjustment. And we will be proposing a program to the Board that includes various measures. I'm not going to go into those measures now. They will be consistent with what we have in the basic program. More generally, governments decide which measures to implement. We help them in two ways in a way. The first is to determine the overall size of adjustment measures that may be needed. And the second is to make sure that the measures they're proposing are likely to yield whatever is needed. At the same time we also give them financing so that they don't need to take as much adjustment measures as they would do if they didn't have financing. And finally, we do get involved just in making -- this is a more recent thing as you know, in making sure that the most vulnerable and socially weak are protected.

On the Colombia question, that was a renewal of our Flexible Credit Line that Mr. Lipsky announced yesterday, and as you may know, the Flexible Credit Line is given when we believe that countries have a strong track record and have policies in place that are adequate and sufficient and strong. And the credit line is really there in case there should be some shock which is to boost confidence and so on. So it's a little different from cases where we're negotiating about a program.

This is a question from [the Media Briefing Center] is on a different topic, on financial taxation. He says, ‘Can you please give us an update on when we are getting the IMF report on new bank taxes? Isn't the Fund rather behind the curve on this now given that the U.S., U.K., Euro Area, and others have now committed to new bank levies before your report is even published? As you know, the report was commissioned by G-20 leaders. The G-20 leaders will meet in June and we are committed to deliver a final report to them then. We are preparing an interim report for ministers and governors of the G-20 countries for April. And we have done a lot of work and I'm sure you're aware of that. We've had consultation through our website. These are complex issues. And we believe that there will be a lot of value -- maybe that's presumptuous, but I don't think that the horse is out of the stable -- although, of course, countries have been announcing different measures.

If I can just say the question referred a lot to bank levies. What we've been talking about is the financial sector contribution. Our agreement was to look at how the financial sector could make a fair and substantial contribution to potential costs of financial crises. Of course, that's drawn a little bit more widely and there is a balance between taxes and regulation and so on. But we're also anxious to move forward and we are moving forward with the work on that report and we will be giving something to the G-20 ministers and governors.

Perhaps I should just go back for a moment to what is the normal beginning which is just to outline for you some of the things that are coming up. I'm sure you know them, but just in case. On April 17 and 18 Deputy Managing Director Naoyuki Shinohara is going to join the ASEM -- that's Asian and European finance ministers' meeting that's taking place now in these coming days in Madrid, in Spain. There are of course the Spring Meetings that begin at the end of next week. Ahead of that we've already this week released the analytic chapters of the GFSR, the Global Financial Stability Report, and our World Economic Outlook, and there's a lot of material available on our website on those.

Next week, on Tuesday the 20^th, we will release Chapter 1, which is the main chapter, if you like the main chapter about current developments and immediate prospects of the Global Financial Stability Report, and we will have a press conference here with Jose Vinals ,who is the Financial Counselor and Director of our Monetary and Capital Markets Department. The following day, Wednesday the 21st, we will release Chapters 1 and 2 of the World Economic Outlook. There will be a press conference here with Olivier Blanchard, the IMF’s Economic Counselor and Director of the Research Department. Both of those chapters will be posted under embargo through the Media Briefing Center the day before to make it easier for you to review them.

The day after that, Thursday the 22nd, the Managing Director will give a press conference here to preview the Spring Meetings. Then on April 24 after the IMFC, the International Monetary and Financial Committee Meeting of Ministers, there will be a press conference given here again by Chair Youssef Boutros Ghali and the IMF Managing Director Dominique Strauss-Kahn. Also on the IMFC agenda obviously there are issues, the role of the Fund and the ongoing work on the full range of governance reforms although many of those have final deadlines that are later in the year, and the current global outlook for the world economy and financial markets.

Something just vanished from my screen so I'm not sure if there was just a mistake there, but if there are any other questions.

QUESTIONER: For the G-20, the IMF is going to present its options on financial issues that you just mentioned?

MS. ATKINSON: Yes.

QUESTIONER: The second one is the peer review. Is that also going to be presented this time to the G-20?

MS. ATKINSON: The Mutual Assessment Program is a process and we will be reporting to ministers on how that is going. It's slightly different. The other one is more of a kind of study that we've been doing ultimately for the leaders. Of course, the Mutual Assessment Program is also ultimately for the leaders, but it's not quite the same as that special study. We're involved in doing a lot of work and documentation around the G-20 MAP of course.

QUESTIONER: Could you maybe also just elaborate a little bit more on the IMF mandate? Do you see any approvals during this meeting on the mandate? Clearly the quota issue is going to be next year. Do you see anything finalized during this meeting?

MS. ATKINSON: I think that what's more likely is that we will make some progress. We do expect actually to be issuing a number of papers next week ahead of the meetings on different aspects. We already released a month ago I guess a paper on the overall views on the mandate. There will be some further steps on that that we'll be releasing probably next week. I'm sure there will be some progress, but I think the main issues are still ones that take some time to carry forward.

I just have another question [from the Media Briefing Center] that's about a press release on Bulgaria. There was a meeting with the Bulgarian opposition parties and there was some press after that, which Mr. Bakker of the IMF felt were not the way that we would have characterized them so he put the record straight from our point of view. And Mr. Lee here is asking me will there be any changes in IMF meetings with opposition parties? Do we tell our interlocutors how to describe such meetings or not describe them? I think we have different exchanges with different interlocutors. We try to meet with opposition parties when that is relevant and always with the knowledge of our interlocutors in the government and I expect that to continue. It's normal. It's part of our way of getting a good idea of what is going on in an economy and doing appropriate outreach.

QUESTIONER: Another question, actually in case that Greece sent the letter, who is going to sign the agreement from the part of the IMF? Can the leader of the team do it in Athens?

MS. ATKINSON: The letter of intent is something that is signed by a government to carry out certain policies. We actually refer to understandings that we've reached with authorities and we don't sign something like a contract, so a letter of intent would be something that would be signed by the Greek authorities. Typically it's the minister of finance and a Central Bank governor. Then that is something that is presented to our Board along with a staff appraisal and staff recommendation about what the IMF should do, so that's the sort of legal nature of it. So it's not something that a mission chief signs. But maybe what you were saying is when is an agreement really done.

QUESTIONER: Yes.

MS. ATKINSON: And that is when our Board approves it. Nobody signs anything I don't think, but they approve it.

QUESTIONER: I have a question on Hungary with the new government in place. Have there been talks yet with the government on possibly a new program or an extended program? Is there anything you can give us?

MS. ATKINSON: I may have to get back to you on that. I believe that we've been having good contacts and so on, but I can get back to you on the precise details of that. Or maybe it's even here. I'll have a quick look. I am also being asked here whether funding out of Iceland -- Ollie Amendson is asking whether funding has been guaranteed for the second review of the Iceland Economic Program. And I'm going to answer that just by saying that this review is going to go to the Board tomorrow, Friday the 16th, and so we have to wait the outcome of that review. The fact that management has decided to put the review to the Board at least suggests that management and staff are satisfied that financing has been reached, but of course that is something that the Board itself will need to determine tomorrow and we will issue a press release immediately as soon as we can on that.

MS. ATKINSON: Thank you all very much indeed, and I'm sure I'll be seeing you not in this type of press briefing, but the ones that I mentioned with the WEO, the Global Stability Report and the managing director and so on. Thank you, and thanks to those of you participating online.