Transcript

Director of External Relations Department
International Monetary Fund
Thursday, August 25, 2005
Washington, D.C.

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MR. DAWSON: Good morning, ladies and gentlemen. As you'll see, I have a visual aid that's been added. It is not to give me the answers. It is in fact to provide the possibility of remote questions being forwarded, and I promise I will deal with them in as forthright a fashion as I deal with yours. It does appear to be working.

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

I hope everybody had a good vacation. I was just discussing some of my vacation with our friends, and we're now back for the beginning of the next season in the Fund year, the annual meeting season, and hopefully good collaboration on our Fund-related issues.

The Annual Meetings officially convene on September 23rd through 25th, as most of you know, but I do expect to have one more briefing before the meetings. I believe it will be on Tuesday, September 13th, and at that point we can preview perhaps in some more detail the agenda items. I would like, however, to remind you that the deadline for press registration is September 16th, and registration can and should be made online.

The initial press schedule for the meetings was posted this week on the meetings website and the schedule will be updated as various briefing details are finalized. So keep visiting the site for up-to-date information.

There are, not surprisingly, a number of public events between now and then that I'd like to draw your attention to. On September 14th, the Managing Director will speak at a meeting of heads of state and international institutions at the United Nations Summit in New York City, which is focused on action against hunger and poverty. I expect we will release the text of the Managing Director's statement.

There is also a summit-related round table that the Managing Director will be involved with on September 15th. Press should consult the U.N. for full details about press access and so on. We, of course, will try to get you the text of his brief summit address.

The Managing Director will participate in a conference on September 16th in New York organized by former U.S. President Clinton after the conclusion of the summit.

On September 15th, Gerd Häusler, Counsellor and Director of the Fund's International Capital Markets Department, will hold a press conference on the latest global financial stability report at the European Central Bank headquarters in Frankfurt. Text will be posted under embargo on the Media Briefing Center on September 14th, and details will follow via an advisory from Media Relations.

The World Economic Outlook will again be released in two parts, not counting the parts that are released in Germany and Italy.

[Laughter.]

You will also receive an advisory from Media Relations with details. On September 14th the analytical chapters of the WEO will be published, the global forecast chapter will be released on September 21st, and Raghuram Rajan, the Economic Counsellor and Director of Research, will hold a press conference at Fund Headquarters at 9:00 a.m., that's on September 21st, to review the outlook.

Again, all of these documents will be made available under embargo on the Fund's password-protected Media Briefing Center.

I will also note, I think a number of you who follow the Fund as an institution, I think you are aware that the management and staff have been working and working with the Board on a medium-term strategy for the institution. I expect that this process will reach a point of additional Board discussion and then a presentation of a formal strategy document, and I expect that will also be made public well ahead, or at least a few days ahead, of the annual meeting. We will give you an alert, and I suspect we will have some form of a briefing when that becomes public as well.

Prior to all of these events, and as I believe we've announced, I know we've announced, the Managing Director will travel to Singapore to participate in a high-level seminar on regional financial integration organized jointly by the government of Singapore, the Monetary Authority of Singapore and the IMF. This event is on Saturday, September 3rd.

Following that, on September 6th, the Managing Director will travel to Seoul, Korea, for bilateral meetings with the Korean authorities, and then for meetings the next day, on the 7th and 8th, the 7th in Seoul. He will actually travel on the 6th and get there for meetings on the 7th. Then on the 8th he'll be in Jeju, Korea, to attend the APEC Finance Ministers' meeting.

The September issue of the IMF's quarterly magazine Finance & Development is entitled "Making More Aid Work," and will be published on Monday. Text will be posted on the Fund's external website. The issue looks at possible consequences of a rapid scaling-up of aid and explores various aspects of the aid puzzle, the link between aid and growth, possible ways to make aid flows less volatile and more predictable, the track record in five African countries that have received aid, Ethiopia, Ghana, Mozambique, Tanzania and Uganda, and other issues as well.

Now I would be happy to take any questions that you may have. As usual, please practice proper etiquette and identify yourself and your institution.

QUESTIONER: The Brazilian political crisis has worsened considerably in the last month. I'd like to know if the evaluation of the IMF continues to be the same regarding the possibility of impeachment of the President and the possibility of Minister Palocci leaving. Does the IMF think that it won't have any effect?

MR. DAWSON: I think I will restrict my comments to the parts of the Fund's business in terms of the analysis of the Brazilian economic situations and implications for the economic situation.

It's our view and strong belief that recent political developments have not affected macroeconomic performance and policies and that the strong economic policy framework remains firmly in place. Fiscal policy continues to over perform. I noted on one of the news services this morning the 2004 revenue performance, but I know it's continued on a quarterly basis since then.

The tightening of monetary policy is paying off and inflation expectations declining markedly. Despite some volatility in financial markets, asset prices have remained supported by good economic news and the expectations that strong policies will be maintained.

Further progress on reforms will be important to achieving stronger growth over the medium-term and we would encourage the authorities to look for opportunities to move forward with reforms where feasible including further measures to improve the business environment and reduce the cost of financial intermediation and reforms of the Social Security Administration to contain spending.

QUESTIONER: Just a follow-up. Considering the political climate, do you think it's feasible to go on with the reforms?

MR. DAWSON: I think it certainly is in the interest of all in Brazil and others outside Brazil since Brazil is an increasingly systematically important country for the reform process that has shown such benefit to date to continue.

MR. DAWSON: Leslie, you have to have something to say.

QUESTIONER: Does the Fund have any concern about the possibility of Finance Minister Antonio Palocci Filho resignation?

MR. DAWSON: I don't think it's appropriate for us to answer political questions of that sort. Certainly we have the belief that the Brazilian performance has been strong and that commitment in Brazil to the program and for the program is strong, and I think I would just leave it at that.

QUESTIONER: Tom, the rise in gas prices is really being felt at the pump cross the globe. I was wondering if you feel any kind of impact from that or growing impact from that. Also if you have any comments on Indonesia.

MR. DAWSON: On oil, certainly I would direct you to some comments that were made overnight by the Managing Director in a video conference with reporters in Singapore, and Reuters was I'm happy to report to you represented there so that you could get your sleep.

Certainly we see that growth has remained strong. Obviously the level of oil prices is a matter of interest and continuing interest. As the Managing Director indicated last night and as I said this morning, we're about 3-1/2 weeks before the publishing of the World Economic Outlook and I think you can expect that we will have more of an analysis there.

I think what is remarkable is how strong the global economy has remained and we see that continuing in this year and next. There are, however, of course, concerns about the global imbalances as well as the level of oil prices, and I think we will be looking at that in the context of the World Economic Outlook and elsewhere.

The other question was? On Indonesia, yes. Indeed, again, there were several questions in this briefing last night on Indonesia. I would like to get away with simply directing you to what those questions were, but we did indeed indicate, first of all, that the Indonesian economy has in fact been performing and continues to perform rather strongly so that the concerns that there are now are issues that are being dealt and are being looked at as the economy from what I would a position of strength with good growth performance over the last couple or 3 years.

Clearly, the impact of oil prices on the economy, the issues in the budget, issues on the currency have attracted a great deal of concern and attention in the markets. The President of Indonesia made a speech on August 15th indicating his concerns and the direction that he wished to go. I think it's something that the Fund appreciated and supported, and as the Managing Director indicated last night, there are some issues that need to be addressed including the impact of the level of subsidies on the budget, approximately I believe 3 percent of GDP.

That's not to say that we are not concerned about the impact of rising oil prices, but that the way to deal with this is to allow the economy to adjust to prices, and adversely affected sectors that have difficulty bearing the cost of energy price adjustments should be assisted through targeted subsidies as opposed to subsidies that perhaps are not as efficient.

If you need additional information, I believe we will be posting the transcript, and there was a fair amount of coverage of those questions from the Managing Director last night.

QUESTIONER: Do you have any update on the negotiations with Argentina? Are they advancing as you were planning?

MR. DAWSON: As I indicated at the last briefing, productive discussions were held with Argentine Finance Secretary Guillermo Nielsen in late-July and we had an exchange of views on a wide range of issues, and we continue to maintain an active dialogue with the authorities both here and with our resident representatives in Buenos Aires.

QUESTIONER: You indicated last time that there might be a mission going to Argentina.

MR. DAWSON: At this stage the authorities have not requested that a mission travel to Buenos Aires. But as I did indicate at the last mission, if that is to change, we will let you know.

QUESTIONER: I'd like to know what's the IMF view on the recent data on the real estate market in the U.S. and if there is any worry about--

MR. DAWSON: I think that is a perfect question to just have you wait and anticipate the World Economic Outlook as well as the Global Financial Stability Report. I continue to follow it in the upper Northwest area of D.C. on a personal basis.

MR. DAWSON: I had a boss once, the former Secretary of the Treasury, when in the summer of 1982, I guess, it was when the market started recovering rather strongly, they asked him whether he would be a seller or a buyer, he is the former Chairman of Merrill Lynch, and he said, `I would be a broker. I'd be making money both ways.'

[Laughter.]

MR. DAWSON: And he did well at that, too. That's it? I want to welcome my Brazilian friends. I thought you were ignoring me in the last few briefings.

As I say, we will have another briefing I believe on the 13th, but the week of the 19^th, which is the Annual Meetings week, I think you can expect quite a lot of activity and we will keep you all up to date. We will lift the embargo at 10:35 Washington time. Thank you very much.