Transcript of a Press Briefing with the IMF Managing Director
IMF News, April 16, 2015
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- Published: April 16, 2015
Opening remarks and global outlook
- Event: Spring Meetings 2015 press briefing; Washington, D.C.; April 16, 2015.
- Managing Director: Christine Lagarde; First Deputy Managing Director: David Lipton; Moderator: Gerry Rice.
- Global growth forecasts (WEO cited by Managing Director):
- "we expect growth to be 3.5 in 2015 and 3.8 in 2016"
- Assessment:
- "global recovery continues."
- Growth is "moderate and uneven."
- Growth "is just simply not good enough" to reduce high unemployment, boost middle-class incomes, or drive poverty reduction.
- Upcoming engagement: Spring Meetings discussions with Finance Ministers and Governors of Central Banks; IMF presence in October in Lima, Peru.
Lifting today’s growth — demand-support policy package
- Policy recommendation is a tailored package of demand-support measures that includes:
- accommodative monetary policy where needed;
- tightening of monetary policy where possible;
- "smart fiscal policies adjusted to country specificities."
- Financial stability considerations to be addressed in tandem:
- risks from "super low interest rates, volatile commodity prices and exchange rates, and from the potential rise in the U.S. short-term interest rates that is expected in the near future."
- risks are "rising and have been rotating" — examples of rotation:
- "from advanced economies to emerging markets;"
- "from banks to the nonbank financial sector;"
- "from sovereign solvency to market liquidity."
- Call for "stronger financial policies" to tackle these evolving risks.
Getting good — raising medium-term growth potential (structural reforms)
- Observed trend: "Potential growth rates are going down; we have revised downwards."
- Contributing factors cited:
- "changing demographics,"
- "lower productivity factors,"
- "in some countries, the legacy of the crisis."
- Required responses:
- "serious, in-depth structural reforms pretty much across the board" that are "granular, adjusted to the diversity of the country’s specifics."
- Examples of reforms: "labor market reform, infrastructure, trade, and investment in people."
- "Implementing these reforms will call for strong leadership."
International collaboration and IMF institutional reforms
- Assertion: "to get good, it needs to get better, and to get better, it can only be done together."
- Priorities for international cooperation:
- lift today’s growth and tomorrow’s growth;
- make growth "more sustainable and more inclusive."
- IMF-specific items highlighted:
- "continue reforming the International Monetary System to make it more resilient, including efforts to better integrate fast growing emerging markets."
- explicit reference to "quota and governance reform" and "the reform and the review of our SDR basket later this year."
- 2015 framed as "a special year for development" (financing for development, sustainable development goals, climate change); IMF will engage with membership on these long-term goals.
Country and regional discussions — key points
- United States:
- Cited as a bright spot: "the U.S. economy, for instance, is recovering quite strongly."
- WEO notes that "macroeconomic risks have declined."
- Europe and Japan:
- "the U.K. is clearly holding very strongly. the euro area is also showing signs of recovery."
- Japan "coming out of a slight recession, is also forecast to be on the rise."
- For Japan, monetary accommodation should be complemented by fiscal measures (consumption tax anchoring) and structural reforms (labor participation, deregulation, TPP).
- Emerging markets and specific countries:
- Brazil: "flat and forecast to be slightly negative this year" in the global picture; later noted as suffering the most in recent months with "negative growth this year but turning positive next year and onwards" conditional on credible medium-term fiscal anchoring.
- China: "slowing down, and foreseeably so"; technical work is underway on inclusion of the renminbi in the SDR basket; two SDR criteria emphasized — "freely usable" and export capacity.
- Russia: "not doing well at all and is in negative territory" given oil and sanctions; President Putin cited as saying "the worst for Russia seems to be over" but IMF stresses continued importance of policy.
- Middle East:
- High geopolitical risks; combined effect of low oil prices and geopolitical uncertainty can give "a very concerning forecast."
- Distinction between oil exporters with or without buffers and oil importers (some of which in programs, e.g., Jordan, Tunisia, Morocco) that are "not doing badly."
- Africa (oil-exporting countries):
- Mixed effects from dollar appreciation: some benefit from dollar pricing of oil; others face stress because sovereigns and corporates borrowed in dollar-denominated loans.
- Policy suggestions: "keep a tight ship," phase out fiscally paid subsidies "to the maximum possible extent," and accelerate economic diversification.
Greece and IMF operational stance
- Payment delays:
- Historical note: "payment delays have not been granted by the [Executive] Board of the IMF in the last 30 years."
- Payment delays treated as "additional financing" and not viewed as recommendable in the current situation.
- Managing Director: IMF is rule-based; "all options are available to all countries" but payment delays are not a preferred course of action.
- Advice to Greece:
- Focus on concrete measures and reforms addressing short-term liquidity and medium-term stability; "the tedious work of Financial Ministers" and lenders to "implement reforms ... to create jobs."
- IMF lending safety and institutional financing:
- Managing Director commitment: "management will do everything it can to make sure that lending to the Fund is actually the safest lending route."
- IMF financing capacity noted as strong across "quota, New Arrangements to Borrow, or on its bilateral loans" though Quota and Governance Reform of 2010 remains incomplete pending ratification.
Financial stability risks, exchange rates, and coordination
- Concerns highlighted:
- Large exchange rate movements could "reignite a currency war talk" if they continue.
- Managing Director emphasizes IMF role in fostering cooperation and coordination among major economies and authorities.
- Recommended approach: reinforce international monetary system, expand safety nets, continue surveillance (FSAPs and bilateral/multilateral work) and engage authorities on spillovers and "spillbacks."
Special initiatives and institutions
- SDR review:
- Five-year review due "before the end of 2015"; technical assessment of renminbi candidacy underway with Chinese authorities.
- AIIB:
- Asian Infrastructure Investment Bank described as "a most welcome institution" focused on infrastructure and regional projects; IMF intends to cooperate.
Transcript of a Press Briefing with the IMF Managing Director — April 16, 2015. International Monetary Fund.