Transcript of a Press Briefing by Gerry Rice, Director, Communications Department, International Monetary Fund

May 14, 2015

Washington, D.C.
Thursday, May 14, 2015
Webcast of the press briefing Webcast

MR. RICE: Good morning, everyone, and welcome to this Regular Press Briefing on behalf of the International Monetary Fund. I am Gerry Rice of the Communication Department.

And as usual, this morning our briefing will be embargoed until 10:30 a.m., and that is Washington time. We have actually a fairly busier day than normal today at the IMF and the media are going to be involved in that.

Let me begin with an announcement that was made to the press just a short time ago, and that concerns the retirement from the Fund of Oliver Blanchard. Olivier Blanchard, I think everybody knows, is our Economic Counsellor and Director of Research. And sadly for us today, he has announced his intention to retire from the Fund. That’s going to effective September 30, 2015. As I said there is a press release that, I think, was issued to you a short time ago. So that has most of the basic information. Olivier has made an incredible contribution to the Fund, and I think to global economic thinking.

In the press release, Christine Lagarde says that Olivier has over the past number of years been one of the world's leading macro economists, has been at the forefront of the Fund's response to the global financial crisis, spurring a fundamental re-thinking of macroeconomic policy that is still reverberating in academic, and policy circles. She pays tribute to Olivier in that statement, his intellectual leadership and his wise counsel, his friendship.

And the Managing Director notes, and I can certainly echo it on behalf of the staff of the Fund, that we will miss Olivier on his retirement effective September this year.

Let me also just mention, and as I say, the details are all in the press release, that Olivier will be taking up the position as the C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics and the Search Process to identify Olivier's successor will begin right away. So that has been issued to you this morning already, so that is not under embargo. But everything else will be, from this point. Any questions on that? And then we'll move on.

QUESTIONER: On, Mr. Blanchard, you know, I have a question on something that he said recently. Can I ask that question now, or?

MR. RICE: You can ask the question, I'm not sure I can speak for Olivier. I was talking about his retirement from the Fund.

QUESTIONER: So do you want me to wait?

MR. RICE: You can probably better ask me directly in the course of the press briefing, rather than ask me to comment on something Olivier might have said.

QUESTIONER: No. Thank you very much.

MR. RICE: You know, just it might be just more practical. No. This was just to note that Olivier has made an immense contribution, and his retirement is an important thing for the Institution.

So let me then turn to a couple of announcements. As I've said, it's a really pretty busy day. In a very short time, at -- you know, at 11:00 this morning, Mario Draghi, the President of the European Central Bank will be here at the Fund, for the 2015 Michel Camdessus Central Banking Lecture. This is the second in our series. We are honored and thrilled to have Mario Draghi with us today.

I know that many of you will be coming; it's open to the press of course. So that’s happening shortly today. On Saturday, May 16, the Managing Director will be delivering the Commencement Address at the Illinois Institute of Technology in Chicago. And we will make her address available to you.

From May 20th to the 22nd, next week, the Managing Director will travel to Brazil to take part in the Brazilian Central Bank's Inflation Targeting Seminar in Rio de Janeiro. And she will also, of course, meet with the authorities and present to the private sector and so on.

Christine Lagarde will then travel to Germany for the G7 Meeting of Finance Ministers in Dresden. Our first Deputy Managing Director, David Lipton will visit Japan from May 20th to the 22nd, then China, from May 25th to 26th, and David will be participating in the conclusion of this year's Article IV Missions for both countries.

Our Deputy Managing Director, Min Zhu, will be in Kosovo, from May 25th to 27th, and he will then travel to Belarus on May 29 for meetings with the authorities.

Finally, our next Regional Economic Outlook, the Rio, and you know we are in that cycle of releasing all our Rio -- the last one will -- the Rio update event will take place on May the 19th, in Almaty, Kazakhstan, with a presentation by MCD Deputy Director, Juha Kähkönen.

And I think that’s it. So let me turn to your questions, and we'll try and do this fairly expeditiously. I think we are all interested to get to the event that I mentioned this morning.

QUESTIONER: (Inaudible). An easy question. What is the status of the talks in Greece, because there is a lot of misinformation around? According to these reports you have a lot of differences with the Greek authorities. The Greek authorities, they say that, again, that you are the bad policeman again, that you cannot find common ground on pension system, on labor market reforms. Can you tell us what is going on?

MR. RICE: You know, talks are continuing. You’ve seen the statement I'm sure from the Euro Group, just a couple of days ago, in which ministers welcomed progress and said more time and effort were needed to bridge the gaps, on the remaining open issues. What I can tell you from the Fund side, is that we are working with all parties, with our European partners, with the Greek authorities to -- you know, we are working intensely to reach an agreement as soon as possible.

We talked about the charge of inflexibility. The last time we were here, you know, I don’t accept the descriptor as I said then, we are flexible, we are open to looking at all the options, but we must insist on reaching the objectives of the program.

So we are open to different ideas, different options, different ways we can get there. We are fully flexible on that, but we, you know, need to see -- it needs to add up to reaching the objectives that have been agreed.

QUESTIONER: I want to ask my question about Blanchard, and then I'll give that thought to my colleagues.

MR. RICE: Okay.

QUESTIONER: Blanchard recently said, and I quote, "That the Greek program will not continue unless it is credible." He said it at an institution here in Washington. Can you elaborate on what he meant?

MR. RICE: For me, it's a fairly obvious thing, and it's what we are all working towards, and certainly from the IMF side that, you know, the program needs to be credible in all aspects, on the policy side, on the reforms that are to be implemented, and on the financing side. And you know, that’s not new for IMF programs; you know, that’s the usual equation, and credibility in those aspects, of course, is important and it's what we are working towards.

QUESTIONER: I have a question with a different subject, you mentioned --

MR. RICE: Can we stay on Greece?

QUESTIONER: I'm going to stay on Greece.

MR. RICE: And I will certainly come to you shortly. Is that okay with you?


QUESTIONER: I guess it's my turn. Gerry, the Deputy Director of the European Department, Mr. Decressin said the other day in Brussels that the IMF is working with the national authorities of Southeastern Europe on the contingency plans for a Greek default. What is your comment on that? Does the IMF believe that an agreement is not possible, and so it's working for the next day? Thank you.

MR. RICE: As I said, I think a couple of weeks ago, you know, our baseline assumption is that Greece remains in the Euro Zone, that’s what the Greek Government has stated as its objective and we support that objective and are working towards it. I also said a couple of weeks ago that it's our job to look at different scenarios, in different countries. That's something that we do for all countries.

So, let me just try to respond directly to your question about the comments from our Deputy Director. That of course the IMF and the local authorities have been watching these countries for several years. And you know this isn't the first challenging period that they’ve gone through. Overall, we are re-assured by the past and ongoing efforts to shore up the resilience of the Greek banks in those countries, so that’s the Eastern European countries that we’re talking about here.

Greek banks in Central, Eastern and Southern Eastern Europe are subsidiaries, not branches, so they’re supervised locally. In general, these banks fund themselves mainly with local deposits. The monitoring of their liquidity positions has been very close for some time already, and the authorities are also making sure that these banks have sufficient and adequate collateral in case some of them should need short-term liquidity.

So, again, this is all very much par for the course. It’s our job to look at different scenarios, help our member countries assess various risks, and I think that is consistent with what I said a couple of weeks ago.

QUESTIONER: Good morning. Just first on the Greek program credibility, that includes the debt, correct, the debt burden has to be sustainable and also credible by the IMF, does it not?

And secondly, since the IMF has outlined the preparations that the Fund is helping some countries take in the event of a Greek default, can you outline what the contingency planning that the IMF is making for Greece for default?

MR. RICE: As I said before, we do various scenarios for various countries. We don’t disclose the details of that information for obvious reasons. On your question about the debt, well, you’re right. Of course, it’s a big part of the credibility and that’s why we have the Debt Sustainability Analysis (DSA) updated on a regular basis, and we will be doing so in the course of this review as it continues.

Are we still on Greece?


MR. RICE: Okay, then I’m going to turn to you.

QUESTIONER: Hi, good morning. Thanks for taking my question. There are reports that Poul Thomsen will be briefing I presume the Board today. Could you tell us about that? Is it a regular briefing and often do such briefings usually happen.

MR. RICE: It’s a regular update on Greece to the Board this afternoon in one of our informal meetings. These happen very regularly. They happen on many countries. It has happened on Greece on a regular basis. I don’t have in my head the time of the last one, but it was probably within the last four to six weeks, or certainly within the last couple of months there was a regular briefing. Just to say it’s a regular briefing is the point.

QUESTIONER: And who is Mr. Thomsen?

MR. RICE: Poul is head of the European Department. He will be on the staff side.

QUESTIONER: Gerry, can you just take one more on Greece?

MR. RICE: Okay. QUESTIONER: Thank you. I have two questions. First of all, will Madam Lagarde be meeting with Mr. Draghi today and can you give us a sense of what they’ll be discussing?

Secondly, do you have any update on Greece’s liquidity situation? Obviously, they did some interesting maneuvering to make the last IMF payment. What is your sense of their liquidity situation and their ability to make the next payment?

MR. RICE: We still don’t have like the last time, the granularity on the liquidity situation in Greece. On the Managing Director meeting with Mario Draghi today, she certainly will because he’s coming to, as I mentioned, give this lecture. And, of course, they’ll have many interactions in the course of the day. And I don’t know what they will talk about. I would imagine that they will discuss developments in Europe, including Greece. But you’ll see him here for yourselves very shortly.

QUESTIONER: Thank you, Gerry. I actually have a follow-up on Greece also. QUESTIONER: No, no, it’s not a first. I sometimes veer off my usual path. We were discussing with my colleagues here before the briefing that Greece has been offered a membership in this BRICs Bank and I wanted to ask you whether it sounds to you as a good idea for them to sort of -- it looks like they’re looking for additional arrangements that maybe used in the current situation and, again, diluting. Does that look like that to you? What would you like to say about this.

MR. RICE: Not much. I’ve seen the reports like you, in the press. I don’t really know anything beyond that. And, of course, as you would expect me to say and I will say, it’s a matter entirely for Greece and the Greek authorities.

QUESTIONER: And I presume there are other countries in the Bank if they are offering the membership then. I guess they want it. Now, on the other issues, you mentioned that Mr. Min Zhu is scheduled to visit Belarus. Could you please elaborate on that a little bit, what is on the agenda?

MR. RICE: I’m going to have to get back to you on that. Beyond what I mentioned, that Min is going to be meeting with the authorities, I don’t know if there are other things he’s doing in Belarus. We’ll get that information for you straight away after this briefing. And in terms of the issues, we could also get you something on that as well. I don’t have it for you right now.

QUESTIONER: Okay, and the perennial subject of Ukraine: In recent days Ukraine and its creditors have exchanged somewhat testy statements about who is dragging their feet. I know that IMF is not a part to the consultations, but you obviously watch them very closely. What do you make of it? How likely are they to still meet the deadline?

MR. RICE: Well, as you say the discussions between the Ukrainian authorities and the debt holders are in process and continuing. I don’t have the details of that. We did spend some time on it at the last briefing, in your absence and I won’t go over all of that again. But what I said then is that it is vital that Ukraine and the creditors reach an agreement in line with the three objectives of the operation that was stated in the staff report and to do so before the completion of the first review under the EFF, the Extended Fund Facility from the Fund. We want and expect that outcome. And just a reminder on the three criteria and they’re detailed in the staff report. I have it here. It’s in great detail in paragraph 22.6, but it’s the sizes of the three criteria related to the size of the operation, the impact on debt service, and the impact debt to GDP.

QUESTIONER: And, Gerry, I’m sorry to keep bringing up the point, but my understanding is that even if they don’t reach an agreement, the program will go on. You will find -- the IMF will find a way to carry on with the program. Am I wrong about this?

MR. RICE: Again, we discussed this exactly two weeks ago, and I’m going to repeat what I said then. It will be a very important consideration in the upcoming review as we need financing assurances for the program to be in place and assurances that debt remains sustainable with high probability in order to proceed. So I’m going to stay with that. It’s exactly what I said two weeks ago.

QUESTIONER: Gerry, just a quick follow-up question on that, a technical question. The review, the Ukraine review, is completed when? Is it completed when the mission returns or is it completed when the Board has voted to disburse the funds or not disburse the funds? When exactly, according to your definition of completion, is it completed?

MR. RICE: Yes, that’s very clear on that. It’s the Board meeting.

QUESTIONER: The Board meeting.

MR. RICE: Yes, so staff will usually make a statement at the conclusion of the mission and then they will come back and submit their report to the Board and the Board meeting. The Board has the review on that.

QUESTIONER: And it’s still your expectation that would be June?

MR. RICE: That’s still the expectation at the moment.

QUESTIONER: On Ukraine, as part of the fully financed guidelines or rules, does that include the $5 billion in debt relief that the IMF has assumed for this year?

MR. RICE: I don’t have the precise detail on that one.

QUESTIONER: Can we follow up on that?

MR. RICE: I can come back to you on that one.

QUESTIONER: Thank you.

MR. RICE: Greece, and then I am going to take other questions if there are any. I’m watching the time for all of us.

QUESTIONER: You talk constantly about a commitment of Europeans regarding the financing needs of Greece and Greek debt relief. My question is if the Europeans do not decide to take board decisions, what is the IMF planning to do, if they decide not to give the money? You are always saying you are asking the Europeans to finance the financial needs for Greece, important to the decision of November 2012. You remember, you were there?

MR. RICE: Yes, that’s right.

QUESTIONER: You were there that night. If they don’t give the money, what is the IMF going to do?

MR. RICE: You have just said there is an agreed framework in place for financing the Greek program in terms of the Europeans’ financing that would be contingent on the policy measures being taken. There were two sides to the equation.

To the best of my knowledge, and I think it is a fact, there is no change and no discussion of a change in this framework, at least that I have seen. I think that has been fairly recently restated by the Euro group.

I am going to change the subject.

QUESTIONER: One last one on Greece. There are persistent reports in Greek media that the IMF is conducting a second EPE on the Greek program besides the one that was published back in 2010. Is this true? Is there an internal investigation or assessment of the Greek program?

MR. RICE: No, that’s not true. I’ve seen those reports, and I’m glad you asked the question. Those are inaccurate. As you said, we already did what we call our ex-post evaluation, the EPE, of the 2010 program, and we published that, and we have discussed it here on many occasions.

I think there may be confusion in some people’s minds. What we do on a regular basis is what we call a post-crisis program review, so that is not just for Greece, that is for various programs. We did one a few years ago. I can get you the date, it is published, it’s on the web. Another one of those is scheduled for next year.

It may be that people are looking at that. I think it is in the work program, so people may have seen that and extrapolated from that there is another EPE on Greece. There is not.

Let me move away from Greece for just a second and then I’ll come back, and then I think we should probably wrap. I see there are a few questions online. Let me take some of those. On Burundi, after the IMF’s announcement of $6.9 million in the run up to the elections, bearing in mind the current situation, what is the status of the IMF’s program, and when will it be reviewed.

Obviously, like everyone else, we are following the developments in Burundi, the current developments, very closely. Regarding the questions, the Fund supported program that was recently approved, it is fair to say that given the current security status and political situation, the timing of our next discussions with the authorities is yet to be determined. As I say, that is something that we are monitoring very closely given the situation.

I will take another one on Nepal. The question is asking if there is an update about possible IMF programs or facilities for the country, including in light of the second earthquake. The update that I have on that is we have a team on the ground in Nepal, so we are assessing it. We will be doing that as quickly as possible.

As I said last time, we will be looking at all feasible options to help Nepal as much as possible.

Let me take one other question, it is on Egypt. What is the objective of the next mission to Egypt, does the delay of the announcement of the Egyptian budget to be announced in March raise your concerns, and your advice for the new budget concerning subsidies, taxes, and so on.

The next mission is what we call a staff visit, so it is part of the regular process of surveillance, and that happens in all countries. That is going to be in June, I believe.

On the specific question, we hope that the budget for 2015-16 will continue the important progress made on subsidy and tax reform begun last year. Egypt needs a strong tax base and savings from subsidy cuts to contain public debt and to free up money to spend on health, education, and infrastructure.


MR. RICE: Maybe just to clarify for others who don’t follow it. I think your question is relating to the expressed Chinese request that the renminbi would be included in the SDR basket at the time of the next review of that basket, which is currently scheduled for later this year.

We discussed last time we were here the criteria for inclusion in the basket. The reviews are held normally about every five years. The last time the review was held, the yuan was felt to be meeting one of the two major criteria, which is relating to exports, and the second criteria relates to having a freely usable currency, and that criteria has various indicators underlying it.

Just for people who don’t follow it, that’s the context. What I can tell you is the work is underway. Discussions are underway. Assessments are underway. I don’t have a specific report to point to you, but I would expect our board would be meeting on this topic very soon for their first meeting, and as I say, the current schedule is that the review would be towards the end of this year.


MR. RICE: I don’t want to get into the specific indicators underlying each of the criteria. That’s something that is going to be assessed in the course of the review. We do have online the technicalities relating to that, so maybe you want to take a look at that and follow up if that doesn’t give you what you need.

QUESTIONER: I’ll follow up on that. On the SDR, I believe last time you briefed us you said the IMF is collaborating with the Chinese authorities on this matter.

Can you elaborate on that? How extensive is this collaboration? Is it, for example, simply a matter of trying to obtain data with them and kind of scrub the data, or are you actively helping them come up with a suite of policy reforms, for example, that would allow them to qualify?

MR. RICE: Collaboration is what we do with all our member countries, so I don’t think there is anything new about the particular work. Yes, it is about data, but of course, we are also in the process with the Chinese authorities, as we are with all our governments, of advising them on policies that we think are in their best interests, are in the global interest. I think that is a particular perspective on the policy advice that the IMF can offer.

That process is also continuing as well. In fact, you will get a chance to look at some of the specifics there very soon in the sense that the Article IV consultation, as I mentioned earlier, with China -- that process is underway.

We would expect a concluding statement somewhere around the end of this month, and then the full staff report. As I say, that will go into some of the policy recommendations that we are making to the Chinese government, and there won’t be anything secret about that. It will be transparent.

Let me leave it there, if that is okay. We should head over to the event with Mario Draghi. Those of you online, you will be able to watch it. It is being live webcast on

Thank you very much. We will see you in a couple of weeks.


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