Transcript of a Press Briefing by Gerry Rice, Director, Communications Department, International Monetary Fund
IMF News, May 14, 2015
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- Published: May 14, 2015
Announcements and institutional news
- Oliver Blanchard (Olivier Blanchard) announced his intention to retire from the Fund effective September 30, 2015.
- Olivier Blanchard will take up the position as the C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics.
- The Search Process to identify Olivier's successor will begin immediately.
- Upcoming IMF events and senior staff travel:
- Mario Draghi, President of the European Central Bank, to deliver the 2015 Michel Camdessus Central Banking Lecture at the Fund at 11:00 (same day as the briefing).
- Managing Director Christine Lagarde to deliver the Commencement Address at the Illinois Institute of Technology in Chicago on Saturday, May 16, 2015.
- Managing Director to travel to Brazil from May 20th to the 22nd for the Brazilian Central Bank's Inflation Targeting Seminar in Rio de Janeiro and related meetings.
- First Deputy Managing Director David Lipton to visit Japan from May 20th to the 22nd and China from May 25th to the 26th, participating in Article IV Mission conclusions.
- Deputy Managing Director Min Zhu to be in Kosovo from May 25th to 27th and in Belarus on May 29 for meetings with authorities.
- Regional Economic Outlook (REO) update event to take place on May the 19th in Almaty, Kazakhstan, presented by MCD Deputy Director Juha Kähkönen.
Greece — negotiations, program credibility, and contingency work
- Status of negotiations:
- Talks are continuing; the Eurogroup welcomed progress and said more time and effort were needed to bridge gaps on remaining open issues.
- IMF staff are “working intensely to reach an agreement as soon as possible” with European partners and the Greek authorities.
- IMF stance on flexibility and objectives:
- The IMF states it is “flexible” and “open to looking at all the options,” but “must insist on reaching the objectives of the program.”
- Any alternative proposals must “add up to reaching the objectives that have been agreed.”
- Credibility requirements:
- “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.”
- Debt sustainability is part of credibility; the Fund uses the Debt Sustainability Analysis (DSA) updated regularly and “will be doing so in the course of this review as it continues.”
- Contingency planning and scenarios:
- Baseline assumption: “Greece remains in the Euro Zone,” which is the Greek Government’s stated objective and the IMF supports that objective.
- The IMF conducts scenario planning for different countries and helps member countries assess various risks; it does not disclose details of contingency analyses.
- On regional banking exposure: Greek banks in Central, Eastern and Southeastern Europe are subsidiaries (not branches), supervised locally, fund themselves mainly with local deposits, and have been monitored closely for liquidity positions and collateral to access short-term liquidity if needed.
- IMF governance and review process:
- Regular informal Board updates on Greece occur; Poul Thomsen, Head of the European Department, briefs the Board on the staff side.
- For program reviews generally, the mission concludes, staff submit a report to the Board, and the Board meeting completes the review.
- Specific procedural points and responses:
- On questions about a second ex-post evaluation (EPE) of the 2010 Greek program: “No, that’s not true.” The Fund published the EPE of the 2010 program; there is no second EPE. The Fund conducts periodic post-crisis program reviews for many countries.
- On European financing commitments and the 2012 framework: the Fund notes the financing framework remains in place and was recently restated by the Eurogroup.
- On whether the IMF would proceed without European financing decisions: an important consideration for the upcoming review is the need for financing assurances and assurances that debt remains sustainable with high probability to proceed.
Ukraine and creditors
- Status and requirements:
- Discussions between Ukrainian authorities and creditors are “in process and continuing.”
- It is “vital that Ukraine and the creditors reach an agreement in line with the three objectives of the operation” as detailed in the staff report (referenced as paragraph 22.6).
- The IMF’s completion of the review is tied to the Board meeting; the expectation remains that the review would be completed in June.
- Financing and conditionality:
- The IMF will need financing assurances and assurances on debt sustainability to proceed with the review.
- Question on whether the $5 billion in debt relief assumed for this year is included in fully financed guidelines: no precise detail provided; IMF to follow up.
Other country engagements and programs
- Burundi:
- Following the Fund’s announcement of $6.9 million in the run up to the elections, given current security and political developments the timing of the next discussions with the authorities is yet to be determined; the Fund is monitoring the situation closely.
- Nepal:
- A team is on the ground assessing needs, including after a second earthquake; the IMF will consider “all feasible options to help Nepal as much as possible.”
- Egypt:
- Next mission is a staff visit as part of regular surveillance, scheduled for June (the month cited).
- The IMF “hopes that the budget for 2015-16 will continue the important progress made on subsidy and tax reform begun last year.”
- Policy advice: 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.”
- SDR review and renminbi inclusion:
- The renminbi inclusion request relates to the next SDR basket review, “currently scheduled for later this year.”
- Reviews are normally held about every five years; last review found the yuan met one criterion (exports), while the second criterion relates to being a “freely usable currency” with underlying indicators to be assessed.
- The IMF is collaborating with Chinese authorities as it does with all members: work includes data exchange and policy advice; Article IV consultation with China is underway with a concluding statement expected “around the end of this month,” followed by the staff report.
Procedural clarifications and operational points
- Board review timing: A program review is completed at the Board meeting; staff make a statement at mission conclusion, then submit a report to the Board for decision.
- Disclosure policy: The IMF does not disclose details of contingency scenario analyses for obvious reasons.
- Regular practices: The IMF conducts regular briefings, post-crisis program reviews, Article IV consultations, and maintains close monitoring of banking liquidity where relevant.
Transcript of a Press Briefing by Gerry Rice, Director, Communications Department, International Monetary Fund — May 14, 2015.