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

March 24, 2005

Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, March 24, 2005
Washington, D.C.

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MR. DAWSON: Good morning, everyone. I'm Tom Dawson, Director of External Relations at the IMF, and this is another of our regular briefings. As usual, the briefing is embargoed until 15 minutes after conclusion, and we'll set a precise time at that point.

I have no announcements to make today, but I'd like to run through a range of public engagements related to the upcoming Spring Meetings and a couple of other points before I take questions.

The World Bank and IMF meetings officially convene on April 16th and 17th, as most of you know. The initial press schedule for the meetings was posted Wednesday on the meeting website. The schedule will be updated as various briefing details are finalized, so keep visiting the website for that up-to-date information.

What I'm going to now mention are events that, by and large, are not on that schedule.

On April 6th, the Managing Director will give a speech at Georgetown University here in Washington starting at 12:30 p.m. This will be his main public event before the Spring Meetings. The speech will be open to the public, and Media Relations will circulate details on the exact venue in the coming days.

The day before that speech, on April 5, Gerd Häusler, Counselor and Director of the Fund's International Capital Markets Department, will hold a press conference at the Bank of England 9:30 a.m. London time to review the latest Global Financial Stability Report. The report, which will be embargoed until 11:00 a.m. in London, London time, will be posted in advance on the Media Briefing Center.

On April 5th as well, the background chapters of the World Economic Outlook will be posted on the Media Briefing Center to enable journalists to read ahead of a global conference call set for April 7th at 8:00 a.m. Washington time. Raghu Rajan, Economic Counselor and Director of Research, will lead that conference call. The briefing and text will be under embargo until 3:00 p.m. Washington time on August 7th.

The three background chapters include essays on worker remittances and economic development, the volatility of output growth in emerging markets and developing countries, the impact of globalization on external economic imbalances, and an essay entitled "Will the Oil Market Continue to Be Tight?", which looks at current and future developments.

There will also be a staff report on oil market issues released at 3:00 p.m. on April 7th. This report complements the WEO essay and will include a Public Information Notice that summarizes its finding.

The WEO's global forecast chapter won't be released—or given leaks, I should say probably re-released—until 9:00 a.m. on April 13th when Raghu Rajan convenes a press conference here at Fund headquarters. The April 13th press briefing will be live. Text will be made available on the Media Briefing Center about 24 hours prior to the press conference.

Regarding management travel and public engagements, the Managing Director will be traveling on April 1st to Madrid to deliver a keynote address at the Institute for International Finance's spring membership meeting. Media Relations will be in contact regarding any press availability during this event, and I will be accompanying the Managing Director on that trip.

First Deputy Managing Director Anne Krueger will travel to Dublin, Ireland, on April 5th to speak at Trinity College's University Philosophical Society. The address is entitled "Bismarck's Warning: The Challenge of Economic Reform in the 21st Century." I guess the theme is "Remember the Bismarck."

There are a few noteworthy economic forum events at headquarters in the next few weeks. A panel discussion on "Should Europe Embrace Cowboy Capitalism or Go Its Own Way?" will be held today at 12:30, and they will be moderated by Mr.Jeroen Kremers, the Executive Director for the Dutch constituency at the IMF. And the panel is open to the press and public.

On April 8th at noon, New York Times columnist and author Tom Friedman will present his new book, "The World Is Flat: A Brief History of the 21st Century." This event is open to the press as well, and you're welcome to attend.

Now I would be happy to take your questions, assuming, of course, you exercise proper behavior and identify yourself and your organization.

QUESTIONER: Could you give us an update on Turkey? Will the IMF mission be traveling to Turkey in early April? And it seems you have a new mission chief. Who's that guy?

MR. DAWSON: Who's the new mission chief?

QUESTIONER: Lorenzo Giorgani or—

[Simultaneous conversation.]

MR. DAWSON: I was talking to [inaudible] this morning, and I forgot [inaudible]. We have a new mission chief and we'll give you the full name. He actually—I think he came from the Western Hemisphere Department, right? That's correct.

As far as the state of discussions with Turkey, it is as I had indicated, you know, before. There was, you know, unfinished business the authorities are working on in terms of being ready to receive the mission. We had expressed our concern about some of the measures that had been under consideration.

As far as your specific question, which is regarding the mission, I would like to make clear, because there were some reports this morning, that no mission is currently scheduled, but as always, we'd be happy to send a team to Ankara if the authorities find it useful and invite us. But the invitation has not happened at this point. If that is the case, I'm sure we will let you know promptly.

QUESTIONER: I noticed in your opening remarks that you made several references to reports on oil. In the last WEO, one of the assumptions was that oil would stay at $35 a barrel, and now it's at $55. I wondered if the Fund had any view on the volatility of the prices in the oil market.

MR. DAWSON: I think it's appropriate for you to wait for the WEO briefing on that. Indeed, you know, certainly we will have the essays that have been mentioned, in the WEO. But I think it's better to wait for that.

QUESTIONER: I have two questions. One is if you can give us an update on the Article IV review that is going on in Argentina. When do you expect that to finish? And if you have perhaps a date [inaudible] begin immediately the negotiations on the new program. And second is I would like to know if the IMF thinks that there is an inflation threat in Argentina.

MR. DAWSON: In regard to the first question, which had a couple parts itself, yes, certainly last week the Fund had technical discussions with the authorities here in Washington for the Article IV consultation. We met with officials from the Ministry of Economy and the central bank and, you know, as you would expect for an initial discussion, it focused largely on the macroeconomic outlook and projections.

The discussions were cordial, productive, and we expect they will continue in the coming weeks, and so to conclude the answer to that question, no, I don't have a particular date for it. But, you know, given the nature and the interest in this, I'm sure we will be letting people know when the discussions continue.

With regard to the question which is inflation in Argentina, I've seen certainly the coverage in the Argentine press in the last couple days in that regard, discussions both from the central bank and the Ministry of Economy and that is obviously one of the indicators that we keep a close eye on and interest in. So we are- following it, but I would not describe it as the only thing we are looking at, but, as the Argentine recovery continues, that is certainly something that people naturally are more alert to.

QUESTIONER: Could you comment on the new European Stability Pact?

MR. DAWSON: Well, first of all, it, of course, was just worked up in the last 24 hours or so, and so we are still naturally examining the implications of the changes, and I would note we will do that in more detail in the context of the Article IV on the euro area later this spring.

Our view remains that Europe's problems are preeminently structural and need to be addressed through reforms carried out within the context of fiscal frameworks focused on consolidation, so keeping an eye on the medium-term consolidation continues to be a theme, but I think you can expect that the euro Article IV will go through that, go into that in more detail, and will be published and made available after the Board discussion.

QUESTIONER: I would like to ask again about the Turkey situation. First of all, if a team goes to Turkey, would it be under the leadership of the new guy?

MR. DAWSON: I don't know. I think Reza—I mean, Reza's still the fellow I've been talking to, so I think he may go as well.

QUESTIONER: Okay. And Turkey's central bank Governor in an interview with the Financial Times warned yesterday that a further delay in [inaudible] agreements with the IMF on stand-by could destabilize the situation. Would you have any comments on that? And the last time you talked here, you reported some progress on the part of the Turkish Government in meeting the prior actions. Could you also say that progress is continuing?

MR. DAWSON: I think we're still waiting for the authorities to indicate to us that they are ready to invite us, to receive us for the visit. And I think that they need to make the judgment as to whether they think sufficient progress has been made. As I think that we have a very good, productive, close relationship with the authorities, and I don't think there's no doubt in their mind as to what it is that we think is needed, and I think there's an agreement, in fact, as to what is needed. And it's a question of how the authorities can work to that point.

So in some sense I guess I would say from the last briefing we are at the same point. Certainly three weeks have passed, and, by the way, I hope you missed me as much as I missed you all in the last three weeks. I did see the Governor's comments yesterday, and I'm not sure it's really appropriate for me to comment. We have indicated in the past that—in the context of Turkey and in other countries—it's better to get the program right than get the program done quickly. And certainly in the context of Turkey in particular we have on occasion had delays, and I think that has, in fact, led to a better agreement in the end than otherwise.

So I think there is a point at which delays may raise concern, but at this point I think we're working closely and not concerned. I think the authorities have a sense of what needs to be done.

QUESTIONER: Have the Brazilian authorities indicated that they want to renew their program?

MR. DAWSON: I do not have anything for you on the Brazilian program in that—in that sense of the word. And when the authorities have come to a conclusion—we, of course, are in close contact—I'm quite confident that you will hear about it very quickly, both from the Brazilians and I suspect from us as well. Clearly the program and policies have been very strong, and we think it provides the opportunity for the authorities to press ahead with structural reforms so they can convert the present cyclical upswing into a longer-term growth pattern, and how the Fund will help in that regard, whether it is in the context of a program, in the context of a post-program relationship, as we've indicated, is fundamentally a decision for the authorities to make, and we're in touch with them and look forward to hearing from them what their decision is [inaudible] hear it very quickly as well.

QUESTIONER: Coming back to the inflation problem in Argentina that you say that the IMF is following, I would like to have your reaction on the way—

MR. DAWSON: I think I called it an "issue." I don't think I called it a "problem."

QUESTIONER: All right. An issue. You don't think it's a problem?

MR. DAWSON: I just said I called it an "issue." Given the strong recovery in Argentina over the last couple of years, that is naturally an issue that people [inaudible]—

QUESTIONER: And not a problem.

MR. DAWSON: —because it—


MR. DAWSON: You know, it's—in the context of Argentina, it's probably a better problem that inflation would be [inaudible] this point.

QUESTIONER: No, I want to know if they are trying to fight against the issue by trying to control prices, and there are some economists that say that there should be tighter monetary policy. I would like to know if the IMF has an opinion on that—

MR. DAWSON: I don't think I want to get into that. You know, we have the Article IV discussions under way at the moment, and I think in the context of that, those issues will be discussed. And I don't think it's really appropriate for me to intervene in the discussions between the authorities and the Fund staff. I don't think Mr. Singh nor Minister Lavagna would appreciate it.

QUESTIONER: Okay. Can I have a follow-up?


QUESTIONER: On the issue. Well, Mr. Rato made some statements about the rules for private enterprise, and I think that this was in answer to the rhetoric—the tough rhetoric that Mr. Kirchner had about boycotting enterprises that were raising prices. I would like to know—

MR. DAWSON: Well, first of all—

QUESTIONER: —given [inaudible] statement than—

MR. DAWSON: No, no, no. The question—the Managing Director's comments were indeed in response to a specific question in Shanghai from a reporter. And the Managing Director's responses, however, were in the context of how the Fund views the need generally, not just in any particular country, about the need for a stable, predictable investment climate to encourage both domestic and foreign investors, establish rules of the game, et cetera, et cetera. It was not a comment directed at a particular country, although indeed there was a particular focus of the question. But I think -that the importance of stable investment rules, stable investment climate is, I think, something that we've consistently advocated in our work with our 184 member countries.

A couple more questions, quickly.

QUESTIONER: Tom, has the IMF asked Argentina to reopen its debt swap with the creditors?

My other question is: In the Article IV that is being done now, will there be a debt sustainability assessment included in that?

MR. DAWSON: Going forward on Argentina, it would be not only natural but inevitable that we would be looking at issues of debt sustainability in the context of an Article IV and, indeed, if we get to a point where the program is resumed, we would obviously have to do that there. So I think debt sustainability is an issue, clearly, in the context of Argentina, even after the swap, the debt-to-GDP ratio being, I think—there are varying numbers, but I think 72 percent is what the Argentine authorities have. So they use that number.

With regard to reopening debt, that is not something that we would be asking for. I think that's an issue that some creditors, both official and private creditors, are interested in, if I can use that phrase. And I think you should direct the question or part of the question toward the authorities. I think the authorities have made clear their position and I think that as we go forward, obviously the issue of debt sustainability is important both in our overall relationship, but then also in the context of whether we get—if the program is resumed.

QUESTIONER: I was just wondering, other than the high price of oil, is there any kind of—anything new or interesting that maybe we could look forward to in the Spring Meetings?

MR. DAWSON: I think all of our Spring Meetings are interesting, and I think clearly that this is obviously of topical interest. And I think if you have read, as I'm sure you have, the Managing Director's speeches recently, you will see that the Fund's concern and review of the pattern of global imbalances is certainly is something that will be a major theme in the Spring Meetings.

So I think what is new is certainly subjective. To you maybe what is interesting is subjective as well. But I think that we will have plenty to talk about, whether it is in the areas of low-income work to global imbalances to problems in the oil sector. And, you know, our sister institution is undergoing changes as well, which I'm sure will attract attention.

QUESTIONER: I was going to ask you, what are the themes or the topics that could—

MR. DAWSON: [inaudible].


MR. DAWSON: Oh, I'm hurt. Thank you very much, and we'll lift the embargo in 15 minutes, which is 1515 GMT. Thank you. Or 1505 GMT, sorry.

[Whereupon, the press briefing was concluded.]


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