Transcript

Transcript of a Press Briefing by Thomas C. Dawson
Director, External Relations Department
International Monetary Fund
Thursday, May 12, 2005
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, it is embargoed until 15 minutes after conclusion, and we'll set the precise time at that point.

The sort of traditional rundown of activities: Regarding management travel and public engagements, Managing Director Rodrigo de Rato will be traveling to four African states next week: Abuja, Nigeria, on May 17th; Cotonou, Benin, on May 17th-18th; Niamey, Niger, on May 18th-19th; and then to N'Djamena, Chad, on the 19th and 20th.

The main purpose of the visit is for the Managing Director to exchange views with political leaders, civil society leaders, and so on, on the Fund's role in Africa, and the external support and debt relief that is needed to help poor African countries achieve the Millennium Development Goals. There are plans for press availability during the trip, and Media Relations will advise you on them once they are finalized.

As previously announced, First Deputy Managing Director Anne Krueger will be speaking today at the Cato Institute's Book Forum here in Washington entitled "The Hindu Equilibrium: India Circa 1500 B.C. to 2000 A.D." The event is scheduled for 4:00 p.m.

If we have additional management schedule announcements, travel, or public engagements during the next two weeks, we will certainly let you know. There is a press release on the African trip that I think is available back there. In addition, we have a release on the opening of our new headquarters building. "HQ2" is what we call it, for those of you who want to learn a new Fund acronym. And it will be opening on May the 16th, and the description of its facilities is available. But that will put us in the position of having all of our Washington-based staff in two contiguous buildings.

And at this point, then, I'd be happy to take any questions that you may have. Again, proper decorum. Identify yourself and your organization so your mother will know who you are and who is speaking. Thank you.

QUESTIONER: Hi. (?) from La Nacion, Argentina. Could you give us some insights regarding the upcoming [inaudible] for Argentina?

MR. DAWSON: The discussions for the Article IV with Argentina have started here in Washington. The delegation from the Argentine authorities arrived on Tuesday. Discussions continue, and as normal in an Article IV discussion, you know, all aspects of economic policies are being discussed. (?) Nielsen is the head of the delegation up here.

I would anticipate a follow-on question, because I see it was in La Nacion this morning and elsewhere, regarding the issue of extension of repurchase expectations into obligations. You will recall, the readers of the transcript or the attendees at the meeting, this is an issue that has come up previously, and indeed, the Argentine authorities have made a request for an extension of repurchase expectations, and this will be considered by the Executive Board in due course. And when we have a timing for that discussion, we will let you know.

We have another follow-on, okay.

QUESTIONER: Could you clarify which sort of extensions, for which time, until 2007, 2008?

MR. DAWSON: At this point I—I mean, it is for the Executive Board to consider the request. If the Argentine authorities wish to put out a statement, they certainly may do so. But I think it's inappropriate for me to discuss this until the Argentine—I mean, until the Board has a chance to consider it. But we will, in a timely fashion, let you know once the Board has a chance to consider it.

QUESTIONER: (?) TV Global, Brazil. Does that mean to say that the IMF will follow the Argentinean lead on all steps of [inaudible] reacting to whatever Argentina is going to say?

MR. DAWSON: No, no. What happens is the authorities have made a request for an extension of repurchase expectations, converting them into obligations, and that's a matter for the Executive Board to then consider. And that would be inappropriate for me to anticipate the Executive Board's action, but as I say, it is expected in the near future for the Board to consider it. And as I've also noted, this is an issue that has come up—has come up previously. I mean, it is—it is one sense a technical matter in that it is the transmission of the shifting of obligations—expectations and obligations is something that can take place under certain specified conditions. However, it's still a matter that requires the Executive Board's approval, and, therefore, I think I just have to wait for the Executive Board to address it, which they will do in a timely fashion.

QUESTIONER: Leslie Wroughton from Reuters. There seems to be some confusion if these talks will include discussions on a new loan program. Can you please--

MR. DAWSON: These are the Article IV discussions, period.

QUESTIONER: A follow-up. (?) TV Global. Then a new loan discussion is, as far as the IMF is concerned, out of the table at the moment.

MR. DAWSON: We are doing things a step at a time, and at this point it is the Article IV discussions. When the authorities are in a position to come with the next—but the Article IV itself is somewhat delayed, and so it's, I think, important that this get concluded, which we expect it will be concluded shortly. I don't have a sense yet as to when the Board date for the meeting would be, but it is my anticipation that this meeting—the set of meetings taking place now will conclude the discussion part, and then the report needs to be prepared and submitted to the Board.

Leslie?

QUESTIONER: Do we have to identify ourselves every time?

[Laughter.]

MR. DAWSON: No, Leslie Wroughton of Reuters, you do not. Everybody else does.

[Laughter.]

QUESTIONER: My question is on Bolivia. There was a—congress passed the hydrocarbons law. There is some concern on the outside—well, the U.S. has expressed some concern this might hinder foreign investment. Does the IMF comment on--

MR. DAWSON: Well, certainly I don't think it's appropriate for me to comment on what a second government says about another government's policy. But in terms of the state of play presently with Bolivia, the current stand-by arrangement was extended on April 8th for another year. The next review by the Executive Board is not expected until August or September, although, of course, we remain in close contact with the authorities.

On the issue of hydrocarbons, which is, I think, what is behind the question, you know, it's been our view—and the Managing Director indicated during his February visit to Bolivia—that it is important for the authorities to try to [inaudible] a national consensus for sound management of hydrocarbon reserves and resources in order to be able to raise living standards and reduce poverty. This is an issue fundamentally for Bolivia through their political process to resolve. And that's the state of play. It's my understanding that the legislation was sent up to the President, and there are some reports that it has been vetoed, and what the next step is I think is up to the legal and constitutional process in Bolivia.

QUESTIONER: Can I [inaudible]?

MR. DAWSON: Sure.

QUESTIONER: This is on the separate issue of growth, which is the OECD--

MR. DAWSON: In Bolivia or--

QUESTIONER: No, OECD put out a report--

MR. DAWSON: [inaudible]. Thank you.

QUESTIONER: The OECD put out a report which indicated that growth, global growth was slowing at a faster rate than expected, also considering that demand for oil from China and the U.S. seems to have fallen. Do you have any comment on that?

MR. DAWSON: Well, I mean, we have a situation in sort of the global financial community where we have a number of organizations who put out reports, and we have to make sure that they're time and methodologically consistent. So I think I can really mostly focus on sort of how we at the Fund are viewing the issue.

The recent WEO did, in fact, project global growth would slow to 4.3 percent this year, 2005, which is 0.8 percent lower than the 5.1 of 2004, but that itself was a 30-year record high. So I think that's the context in which it should be viewed.

Beyond that, though, the WEO also noted, partly because of the higher oil prices, that risks to growth in 2005 were to the downside. And recent data have tended to confirm that, although, again, oil prices have recently edged down from recent highs. And I was on my exercise machine this morning watching a national business channel and noted that they were down again today.

And, you know, our view is that, barring further substantial increases, you know, the so-called soft spot that may have been renewed is still—we would view as likely to be temporary. So I think that's the context.

One of the—for example, I saw recently a couple of revisions of country growth forecasts coming out of Europe, and they were revisions in the last couple weeks that brought them to the level that our WEO had predicted, you know, several weeks earlier, and I think that's simply because their cycle for making revisions was slightly different. So I think we have to try to maintain a certain common base for comparisons, and I think the basic assessments made in the WEO less than a month ago remain valid.

QUESTIONER: (?) . In this context, how is the IMF monitoring—or what conclusions is it arriving at in terms of energy prices, particularly oil?

MR. DAWSON: I mean, we—you know, we obviously monitor the oil supply and demand situation, and prices, consult with other international organizations, including in particular IEA. So it's something we keep under constant surveillance, to use our good Fund word. But as I indicated, and I'll repeat the point I made earlier, you know, prices recently have edged down from recent highs, and barring further substantial increases, we think that the so-called soft spot is likely to once again be temporary.

Leslie Wroughton of Reuters?

QUESTIONER: Regarding the Chinese yuan, excuse my expression of it, pronunciation of it, but we've seen continued reports this week about, you know, pressure on the Chinese authorities. Is there any sign yet of how they're going to be moving or when they're going to be moving?

MR. DAWSON: I mean, I think I've just—I can only repeat what we have indicated for some time, that we think that a flexible exchange rate arrangement would be in China's best interest to allow a more autonomous monetary policy and help cushion against shocks. An initial move toward flexibility is best taken from a position of strength, and we think that the current conditions do provide—are favorable for such a step, and we don't think there are impediments in either the exchange or financial markets that would preclude—prevent this move. Fundamentally, however, it is a decision for the Chinese authorities to make, and, you know, we have been giving them advice as they have requested it on any of the technical matters.

I think we should also note, just as a matter of disclosure, just to be fair, we do actually have our Article IV mission presently in Beijing, and they will be coming back in a couple of weeks, and that regular process of reviewing the Chinese economy will go forward.

QUESTIONER: Jean-Pierre Remaglie (ph), Italian News Agency ANSA. Could you remind me, please, how the IMF is now working with the new Iraqi Government, if you have any contacts with them, or do you foresee any contact?

MR. DAWSON: I mean, we do remain in contact with the transitional government and various technical counterparts to review the 2004 record as well as prospects for 2005. Obviously, the security situation has made it difficult as well as impossible in terms of visiting or establishing a Fund presence in Iraq. We are in the preparation process now for conducting an Article IV consultation, which would be the first one in 25 years. And if all goes well, we would be looking toward starting discussions on negotiations on a stand-by in the late summer, with the possibility of having an arrangement toward the end of this year.

Okay, that's it? Okay. [inaudible] has a late breaking development.

[Pause.]

MR. DAWSON: The mission is in China. What particular city they're in, we can talk about later.

All right. Thank you very much. We'll lift the embargo at 10:30 our time, which is 330 GMT, I think. Thank you very much.

[Whereupon, the press briefing was concluded.]