Transcript of a Press Briefing by Caroline Atkinson, Director, External Relations Department, International Monetary Fund

May 12, 2011

Washington, DC
May 12, 2011
Webcast of the press conference Webcast

MS. ATKINSON: Good morning, everybody. I'm Caroline Atkinson, Director of the External Relations Department at the IMF. Welcome to our regular biweekly press briefing. The briefing is embargoed as usual until 10:30 a.m. Washington time or 1430 GMT.

First of all, on upcoming travel and management events, the Managing Director is going to be in Brussels next week. On the 18th he will make a keynote address at the Twelfth Brussels Economic Forum. And then on the 19th he'll be back here in Washington and will be speaking at the Bretton Woods Committee 2011 Annual Meeting which is closed or an event by invitation, but we may post his remarks. We certainly will be posting his remarks for the Tenth Annual Niarchos Lecture at the Peterson Institute which starts at 5:00 p.m. and is open to the media. If you're interested, please contact the Peterson Institute.

Meanwhile, the First Deputy Managing Director, Mr. Lipsky, is in Beijing for the International Forum of Sovereign Wealth Funds, which began yesterday and finishes tomorrow. He will deliver a speech to the forum tomorrow morning, May 13, so tonight our time, which we expect to post in Chinese and in English.

Looking further ahead, we are jointly co-hosting with the Brazilian authorities a conference in Rio on the 26th and 27th of May on the management of capital flows and we will be issuing a detailed program with a media advisory closer to the time. Then coming back, tomorrow; as you know, Antonio Borges, the Director of the European Department, has been in Europe this week releasing our Regional Economic Outlook for Europe, and tomorrow he will be in Warsaw focusing more on the emerging markets side, and there will be a press conference at the Ministry of Finance at 11:00 a.m. local time.

Let me open it up now to your questions. I have a couple of questions online, but I'll start with those of you in the room. Please identify yourselves and your affiliation when you start.

QUESTIONER: Good morning. IMF officials have publicly said the Fund has proposed moving the loan vehicle for the Greece program to the Extended Fund Facility as a way to extend the maturity of the debt repayments to the IMF. Why is that necessary if the current program is working and the debt is sustainable under the current three-year program?

MS. ATKINSON: We said some months ago that we were open to the idea of conversion to an EFF, which is a longer-term arrangement. By the way, as you probably know, Ireland has an Extended Fund Facility, an EFF. An EFF would give more time to Greece. That has nothing to do with whether or not the debt is sustainable. All of our programs and all of our facilities require a judgment that debts are sustainable.

QUESTIONER: If I could follow-up: Then why would the IMF consider or propose to the Board that they move to the EFF if it's nothing to do with the program or the sustainability of the debt. If you're talking about a longer debt repayment program, why would you move if the current program is fine?

MS. ATKINSON: What I said is every program has to have a judgment. Before we take any program to the Board there is a judgment of debt sustainability. As we've said for some months, there was a question of whether the program for Greece should be extended to give more time, whether it should it switch to an Extended Fund Facility as has been the case in Ireland.

QUESTIONER: To follow-up. Please excuse me, Caroline. I'm just asking questions as a journalist to a spokesperson and right now I haven't heard why--you haven't said why you think it's necessary to move to give Greece more time.

MS. ATKINSON: If I can go back and say that again, we have said many times that we might move, that we were open to the idea of a conversion and the idea of that is to give more time so that if Greece needs more time to get to a position where they are finished with the program, an EFF allows for a longer period of repayment.

QUESTIONER: To clarify, that would mean that if you're saying Greece needs more time to get where the program needs to be, that would seem to indicate that it cannot repay its debts in the current program in time.

MS. ATKINSON: No. That's your assumption rather than mine. We have many programs with many countries that are Extended Fund Facilities rather than Stand-By Arrangements. That is the case for Ireland. The reason that I keep stressing that we've been open to the idea of this conversion for some period is that as you know right now there is a mission on the ground in Greece and so I'm not going to comment on the current negotiations, the current judgment about the program or anything like that, because that is something that is under discussion in the field. That's why I'm resisting being drawn on some qualification of the current program.

QUESTIONER: I'll follow-up on that. Is there a date for the Board meeting on Greece next month, and that would be the time you would consider this change of program? The last question is Jean-Claude Juncker said in the open that Greece cannot go back to markets next year. Is that the IMF's opinion as well?

MS. ATKINSON: On the first question, the mission is in the field now and carrying out discussions so a date for a Board meeting would only be fixed once those discussions were concluded. As to characterizing any discussion as normal, we will leave that to those in the field. Of course when they've finished the mission in the field, we will be ready as usual, that Mission Chief Poul Thomsen will be ready to answer questions.

Again the judgment about when Greece may or may not be able to return to financial markets is something that would be incorporated in a program and part of program discussions so that's again not something that I'm going to anticipate now.

QUESTIONER: Do you expect that the next Board meeting will also address the change of maturities?

MS. ATKINSON: I don't want to go there. As I said, this issue of a Stand-By Arrangement and an Extended Fund Facility and of possible conversion has been on the table for a while. I don't think there's been any particular change in what's happening about that. And I don't want to give you a steer one way or the other about what might happen at the end of these discussions, and then any future discussions with the Board, because we just don't know yet.

QUESTIONER: Can you tell us a little more about this extension, how many years and the rate for example? And I have another question. Do you see the need for a new program for Greece?

MS. ATKINSON: Our interest rates are the same on those two different facilities, and the repayment terms, I believe that instead of being three to five years, it's six to 10 years or something like that. But again I want to caution you that I'm not announcing anything new about a possible conversion.

Your second was do they need a new program. They have a program now and we have a mission in the field that is discussing that program with them and I'm not going to anticipate those discussions. As I said, we will let you know about that. They're ongoing so we have to leave it to them in the field.

QUESTIONER: But if a new program will be needed, are you ready to implement it with the cooperation of the Greek authorities? Are you ready to implement a new program? Are you willing to do this?

MS. ATKINSON: That's just another way of asking what's going to happen about whether or not there will be a new program and I'm not going to comment. Thank you.

I have another question online that I'm going to give a similar answer to, but I'll read it out anyway : “Is there a new plan to maximize returns of public enterprises and public property in Greece? Are you satisfied with the progress of the Greek program?”

Again I'm going to say a team in the field and that the team of our European partners and they are discussing, I'm sure, all of these issues or any issues related to the program with the Greek authorities, and it would be premature for me to speculate on those.

QUESTIONER: The IMF had previously said that its cooperation with the EU would be a two-thirds: one-third venture, one-third from the IMF and two-thirds approximately [from the EU]. That was the stipulation on which the IMF said it was working with the EU Would it be wrong to assume that since Juncker has said Greece will need more money under any program whether it was Greece or any other program, that the IMF is still sticking to that stipulation or has it changed its views?

MS. ATKINSON: I'm sorry, you were talking about Greece in particular?

QUESTIONER: I was talking about in general, the European program in general.

MS. ATKINSON: What we said was that we excepted there would be this 2-to-1 split that was based on the historical average, and we also said that of course in every program we have an independent Executive Board, every program is reviewed on a case-by-case basis. As far as Greece itself is concerned, then I will go back to that I'm not going to anticipate what's being discussed in the field.

I have a question online about Ireland: “Is the IMF mission team to Ireland concerned about recent downgrades to economic growth there? Will this make hitting targets there even more difficult?”

Just to say that the Irish program is on track. Of course there are difficult challenges. It will be coming to the Board. I believe we've just put it on the public calendar on Monday, May 16, and the review mission in the field recently will be discussed at our Executive Board on May 16.

QUESTIONER: I apologize for asking so many questions.

MS. ATKINSON: That's fine. That's what I'm here for.

QUESTIONER: Good. Should the ECB be more accommodative in its monetary policy allowing a higher inflation target to ease the burden on the peripheral countries? In context, won't a tightening policy in the next few months exacerbate an already bad situation? Can't the core countries handle higher inflation?

MS. ATKINSON: You might want to take a look at some of the comments from Antonio Borges. He was this morning in Frankfurt also talking about this. What I can say is that we have been supportive of the ECB's operations in the financial markets to promote financial stability which I think are important in helping support the periphery, refinancing operations and continued use of the Securities Market Program. That is an important element while monetary policy gradually as people expect, there is a gradual normalization process of monetary policy.

QUESTIONER: Going back again to the extension, what are the gains for Greece if the rate is the same?

MS. ATKINSON: I'm sorry?

QUESTIONER: What are the gains, what Greece is going to earn if the rate is the same when you extend the loan?

MS. ATKINSON: The point of a conversion is simply to give more time because you don't need to start repaying the principal so soon.

SPEAKER: That's the only gain?

MS. ATKINSON: That is the difference between a Stand-By Arrangement and an Extended Fund Facility.

QUESTIONER: I'm sure there are a lot of reports in the foreign press saying that Greece needs full restructuring or exiting the Euro Area. What is the position of the IMF?

MS. ATKINSON: As you know, our program was designed on the basis of the government's firm commitment to honor its debt obligations and guarantees and that still holds. I believe also that there were comments today from the First Deputy Managing Director in Beijing and so on. Those are the general comments. Again the specifics, more detail about Greece we won't be discussing as long as the mission is there.

QUESTIONER: Economists and analysts say the Portugal program appears similar to the words of Poul Thomsen, that it needs to "avoid excessively fast fiscal consolidation and financial sector deleveraging." It seems to be a different approach than it's taking with Ireland and Greece. Is that a lesson that the IMF learned from the Greek and Ireland loan programs as some economists suggest?

MS. ATKINSON: I think what's important is to recognize that people often group these countries together, but of course they are three different countries with a different focus that their programs seek to address and we will tend to focus our program on whatever is the main issue in the particular country. The big issue obviously for Greece has been fiscal policy as well as the need for growth.

Portugal has had an even more worrying growth problem in the past, but I think the numbers will show that their fiscal problem is not quite the same as Greece's and they have a lot of banking issues. So all of the programs are different and they are designed by the authorities with us and with the E.C. partners to address those differences. That's why we have our mantra of case by case.

QUESTIONER: May I follow-up there? Then the IMF is confident that its Greece program so far did not require austerity measures too severely restricting -- in frontloading the program?

MS. ATKINSON: The program when we designed it was designed so as to address the financing problems that Greece had and obviously we and others can provide a certain amount of financing, but to make the books balance you also need to have adjustment and that's the judgment incorporated in the program. We had a review of that in April I believe based on a mission earlier this year so I don't think there's been a rethinking of that notion.

QUESTIONER: Just to be clear, since there hasn't been a rethinking, there is no thought within the IMF, there's always 20-20 hindsight of course, that perhaps the IMF would have drawn up a different program than it originally had last year?

MS. ATKINSON: We tend to think about looking forward. Of course everybody wants to learn from experience and history, but I think what we are concerned about now is how to make the program and policies in Greece successful and our support for them successful.

QUESTIONER: I had a different question on Egypt. I wanted to see if there was any news since we'd heard the IMF says they need US$10 to 12 billion by June next year. Have they asked you for help, or where do any talks stand?

MS. ATKINSON: Yes, you're right. The Egyptian authorities had indicated that they expected to have a financing need of some $10 to $12 billion from now through June 2012 from all of the international community, and they've approached bilateral and multilateral partners including the IMF to provide the financial support for what is their home-grown program. We expect that an IMF team will visit Cairo shortly to begin the discussions with the Egyptian authorities on an arrangement.

QUESTIONER: So there has been an official request now?

MS. ATKINSON: There has now been an official request, yes, but this is part of their request to a number of bilateral and multilateral partners.

QUESTIONER: We know that you are opposed to the restructure of the Greek debt, but are you opposed to the April filing of the Greek debt I mean to give to Greece more time to pay back the whole amount of its debt, not about the IMF loan only?

MS. ATKINSON: I'm sorry, but again with the team in the field and a lot of discussion and noise about what might happen, I think we want to give space to those discussing these issues to work out what would be best on all aspects for Greece.

QUESTIONER: To follow-up on [the Egypt] question, can you say specifically how much they've requested from the IMF? Then separately just to deal with this issue, there's been, I think, a broad perhaps misuse or misunderstanding of what actually the IMF means by ‘restructure’. The market terms it as a multiple of things, either a debt extension, maturity extension, lowering the rates or paying pennies on the dollar. What does the IMF mean when it says ‘restructure’ to clear the air about that particular term?

MS. ATKINSON: You put it very well that people mean a lot of different things and the Fund doesn't have a formal or official definition of ‘restructure’. I think that we can all agree that the word means different things in different contexts and it's probably not worth trying to parse it and rather to think about a specific context, what is your actual question or issue. I think you're right that clarification is more likely to be contextual than just the general use of the word.


MS. ATKINSON: On Egypt, no, we don't have a specific number and we will of course be keeping you updated as that happens. Again this is a multilateral effort. I believe the World Bank is there as well.

I have a couple more questions online. From Pakistan: "Both the Fund and Pakistani team are currently in talks. Is it a review mission? What is the focus point of ongoing talks?"

Indeed there are discussions going on now with our staff and the Pakistani staff. They're talking about recent economic developments and in particular the upcoming budget.

I also have a question asking, "Mr. Lipsky has said it is very plausible and widely recognized to be so that the U.S. will cease to be the world's largest economy in real GDP (gross domestic product) terms within a decade or even sooner. Is this the official IMF position? Please elaborate."

I think that if the First Deputy Managing Director just said it--but he was making a projection--I don't regard that as an official position so much as a judgment about what is plausible.

QUESTIONER: The Managing Director is due to attend part of the Euro Group in Brussels on Monday. There are different things happening on Monday in Brussels as part of the E.U. There's a Euro Group Plus, there's a Euro Group Normal, there are all sorts of meetings. Do you know which part he's attending?

MS. ATKINSON: I know that he's attending the Euro Group and I don't know more about it. I don't have more on which actual bit of which meeting he might be attending.

QUESTIONER: Do you know if it's Jean-Claude Juncker who invited him? Do you know the reason he's attending?

MS. ATKINSON: I'm afraid I don't know. It's quite usual for him to go. He's quite often attended Euro Group meetings in particular when it's likely there are likely to be discussions about countries that the IMF is involved in supporting. I think that's certainly happened before.

I have a question which I will read out, but I don't unfortunately know the answer. We'll come back to you on that: "What is the status of the IMF considering South Sudan for membership and a Program Trust Fund for South Sudan?"

As I said, we can get back on that on that one. I'm sorry that I don't have anything for you.

From Argentina: "When does the IMF expect that it will carry out the Article IV consultation? Have there been recent talks with the Argentine authorities to carry out this review?"

There was a second technical assistance mission with our Statistics and Western Hemisphere staff on April 4 through 11 and there is no request yet for the Article IV.

QUESTIONER: My last question. Did you receive a request by the Greek government for the extension?

MS. ATKINSON: No, I don't believe we did, but I have no news on any of that.

QUESTIONER: You never want a journalist to ask too many questions.

MS. ATKINSON: No. That's fine.

QUESTIONER: What will happen to the legitimacy of the institution if the next head of the IMF is another European and not from a non-European emerging economy?

MS. ATKINSON: I'm not going to speculate. We have a Managing Director who is fully focused on his job as you know. What I will say about the legitimacy of the institution is that I believe that it has been importantly strengthened and will be further strengthened when we have in place the quota reform that was agreed in the G-20 and then in the IMF Executive Board and by governors last year that will deliver a big shift in quota to emerging markets that will put all of the BRIC countries for example in the top 10 shareholders and I think that those shifts in votes and voice will be an element of legitimacy. The other part of legitimacy of course is our interactions with member countries and conduct of the Board and I believe that there has been important progress there as well.

QUESTIONER: If I may just follow-up. Of course the Managing Director is in the job, but he won't be there forever at the IMF. I think you can agree with me on that.

MS. ATKINSON: I think he once suggested that he might.

QUESTIONER: This issue of who heads the IMF is not something that I've raised in isolation but one that is actively being discussed in not only academia but in the G-20 world. So I'm curious as to why the IMF wouldn't address if it feels like it needs to address the legitimacy of its institution, why it wouldn't address where the head if coming from as a matter of legitimacy.

MS. ATKINSON: Perhaps I could just clarify one thing. Of course the IMF is very concerned with its legitimacy, the IMF staff and management. If I can just clarify one thing. These issues are issues for the membership and I'm also sure they're focused on legitimacy.

I have a question online: “How many days will the mission spend in Greece and will they conclude on the 18th?”

At the moment we expect them to conclude around the 18th.

I have a question online from Portugal asking, when I was talking about the problems with each country I mentioned banking problems, what [country] was I talking [about] and what kind of problems? I was talking about the different issues and [a reporter] had raised a question about deleveraging. As far as Portugal is concerned, we have reached agreement, we expect that to be taken to our Executive Board soon and we expect that program to be successful so that we don't see problems. I was just explaining that there are different key issues that need to be addressed in different cases. Actually Ireland is a case where there were important steps to strengthen the financial system.

Thank you all very much. As I said, this is embargoed until 10:30.

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