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

May 23, 2013

Washington, D.C.
Thursday, May 23, 2013
Webcast of the press briefing Webcast

MR. RICE: Good morning, everyone. Welcome to this regular press briefing on behalf of the International Monetary Fund. I’m Gerry Rice, the Director of the Communications Department. As usual, this briefing will be embargoed until 10:30 a.m., Washington D.C. time.

Let me begin as usual with a few housekeeping details, visits, travels, events, and then I will turn to questions in the room and online.

So on management travel and events: next week, the First Deputy Managing Director, David Lipton, will be in Beijing for the mission concluding statement for the 2013 Article IV Consultation with China. That's going to be May 28-29. Mr. Lipton will then continue to Tokyo, May 30-31 for the mission concluding statement for the 2013 Article IV Consultation with Japan. He will also participate in a seminar in Tokyo on "Growth: Prospects for the Japanese Economy."

Deputy Managing Director, Madam Nemat Shafik, will travel to Dubai where she will give the keynote address at a Regional Summit on Y on May, 28. The following day, May 29, she will address the annual Women in Leadership Forum for the Middle East and Africa, and that's also in Dubai. She will then travel to London on May 30 where she will speak at the Global University Summit. Finally, Madam Shafik will attend the Festival of Economics in Trento, Italy, where she will discuss the global economy in a presentation on June 2.

Deputy Managing Director, Naoyuki Shinohara, will give the keynote speech at the Bank of Korea International Conference on Assessing Global Liquidity on June the 3rd, in Seoul. He will then participate in the World Economic Forum-Asia in Myanmar. That's on June 5-7.

Finally, Deputy Managing Director Zhu Min will travel to Jordan to take part in the World Economic Forum on the Middle East and North Africa on May 24-26, where he will speak at the opening plenary session on Advancing Growth and Resilience on May 25. He will then travel to Paris for the OECD Ministerial Council meeting on May 28-30.

So I apologize for those fairly long announcements, but as you can see there is a good deal of activity on the part, especially, of our deputy managing directors, which I thought might be of interest to you.

With that, let me take questions in the room.

QUESTIONER: I have a question on Mrs. Lagarde. She's been questioned in Paris. Would she be in any position of invoking any kind of diplomatic immunity in that case? And I was also wondering if you fear that this case could harm the IMF reputation? Thank you very much.

MR. RICE: Well, let me just step back. As we have said before, it would not be appropriate to comment on a case that has been and is currently before the French judiciary. However, the executive board has been briefed on this matter, including recently, and continues to express its confidence in the Managing Director’s ability to effectively carry out her duties.

On your specific question on immunity, the IMF’s Executive Board some time ago waived the Managing Director’s immunities to the extent necessary to enable her to appear before the French judicial authorities in this matter. The Managing Director herself had requested such a waiver.

QUESTIONER: And what about my question regarding the IMF reputation?

MR. RICE: On that, I would just refer to the board statement I’ve just made. There’s a process underway in France, so let's wait for that.

QUESTIONER: When you say "briefed," how recently has the Board been briefed?

MR. RICE: The IMF’s Executive Board has been briefed a few times, and I can refer you to the most recent statement, which I just mentioned.

QUESTIONER: Briefed by whom?

MR. RICE: The Fund's General Counsel has briefed the Board.

QUESTIONER: And when he briefs the Board, what does he actually tell them?

MR. RICE: I’m not going to go into the details.

QUESTIONER: Is he discussing how much likelihood there is that this court case is going to impede her? I mean, he must be offering some sort of assessment of what’s going to happen for the board to come to the conclusion that it’s not going to impede her ability to carry out her duties. Is he rendering an opinion on whether she’s going to be prosecuted?

MR. RICE: The best read out on the board discussion is actually what the board says at the end of the particular briefing. And in this case, as I've just said, at the most recent briefing, the board continued to express its confidence in the Managing Director’s ability to effectively carry out her duties.

QUESTIONER: On Greece, when will the new mission going to start? Is Mr. Thomsen going to participate in this mission?

MR. RICE: Just stepping back, the executive board is expected to meet next week, Friday, May the 31, to discuss the completion of the third review of Greece’s program. And at that time, the executive board will also discuss Greece’s 2013 Article 4 consultation.

On your specific question, a staff team will start discussions in Athens with the Greek authorities and our European partners on June the 4. And as usual, these discussions are expected to last about two weeks. Poul Thomsen will be leading the mission.

QUESTIONER: Gerry, would you like to comment on that report by Reuters saying, and I quote, that “it is increasingly likely that Greece will become the first country ever to choose to restructure debt owed to the IMF”? According to Reuters, Greece is going to put into question for the first time the IMF standards. And I really need your comment on this.

MR. RICE: As I said two weeks ago, we don't envision any new official sector involvement or discussions at this point. On your specific question, the Fund’s preferred creditor status is not under discussion, not in Greece or anywhere else.

QUESTIONER: According to the Greek Ministry of Finance, the public debt increased in the first quarter of this year and more generally for this year, it seems to remain high in Greece. There's a discussion in Europe and here in the States about whether Greece is turning the corner or not. What do you think?

MR. RICE: The best way I can answer that is to refer to the most recent concluding statement from earlier this month, which speaks to your specific question. It says: "Greece is making progress in overcoming deep-seated problems in the midst of a very serious and socially painful recession." And it concludes by stating that “overall, while it will yet take some time for the country’s situation to fully normalize, the government of Greece has come a long way in its adjustment effort. Adopting the necessary policies for the next leg of that adjustment effort, which may well mark a turning point for Greece, must take priority.”

QUESTIONER: Gerry, I want to come back again to the haircut. I know you answered the question, but today the President of Eurogroup Jeroen Dijsselbloem said regarding a haircut, that “There has been no decision on the specifics yet, so I cannot say whether there would be a write-off of bilateral debts at this stage.” But he continues saying that within the quote of 2014, we will know if the program delivers and if more is necessary to be done. So the talk about the haircut of the Greek, it's ongoing. I don’t know if you participate, first of all. But when you say that you don't envision a new haircut, what do you mean?

MR. RICE: I won't comment on Minister Dijsselbloem’s comments. I would just repeat again what I said earlier. We don’t envision any new OSI discussions at this juncture.

But let me step back, and I'm going to repeat a lot of what I already said two weeks ago. What we have said in the past, is not new. Our projections show that further debt relief will be needed for Europe to meet its commitment to reduce Greek debt significantly to the programmed level. And you'll recall that that's 124 percent by 2020, and substantially below 110 percent by 2022.European partners have said that they expect to review the country's case—that is Greece’s case—by the beginning of 2014 and 2015, once information on the fiscal outcomes for 2013 and 2014 are known.

So again, this is not new. It's not news. It's been said before a number of times. And that's the position on that.

MR. RICE: Let me just try and respond to some colleagues who are online today. There's a question on Ukraine: “The third IMF mission was supposed to come to Ukraine in May. Is it already known when the IMF mission will visit?”

An IMF mission visited to Kiev from March 27 to April 10 to discuss economic policies that could be supported by a standby arrangement with the Fund. There was a press statement from us at that point. Technical discussion continued then during the IMF Spring Meetings, and they continue now. And just responding to the specific question, we have no specific dates for the next negotiating meeting.

Let me take another online question, and then I'll come back inside the room. The question is: “Does the Dominican Republic need a Stand-By Arrangement, or will monitoring be sufficient? Is there a date for the next mission?”

The IMF and the Dominican Republic authorities are engaged in policy discussions, but there is no immediate plan for a Fund-supported program. On the specific question of the next mission, it will take place in the second half of June 2013 under the post-program monitoring.

QUESTIONER: Two different questions. One is on Egypt. Could you let us know the latest, because two weeks ago you were awaiting data? And the second on Mrs. Lagarde’s court case. I was wondering when the board was briefed when they hired her in 2011. Were they told that the French case could go this far?

MR. RICE: On Egypt, we continue to work closely with the Egyptian authorities, with the objective of reaching an agreement on an IMF Stand-By Arrangement to support the authorities' national economic program. At this stage, as you say, we are waiting for the authorities to revise and update their economic program.

We have not discussed nor scheduled a new mission, but staff is working closely with the authorities building on the work that was advanced in the field during the April mission. It's too early to venture when that work will be completed.

On your second question, all I can tell you is, again, that the board has been briefed on this matter a few times, including recently. And again, as I said, continues to express its confidence in the Managing Director’s ability to effectively carry out her duties.

QUESTIONER: Was the March briefing the latest, because I remember I asked you some weeks ago, and you said they had been briefed. Was that the most recent one, or was there a more recent one?

MR. RICE: The most recent statement that we have released, which is in March, was related to the latest briefing.

QUESTIONER: So there's been nothing since.

MR. RICE: That’s the latest statement that the board has made.

QUESTIONER: And a quick question I forgot to ask you. What about Tunisia? When is it going to the board?

MR. RICE: The board meeting to discuss the Stand-By Arrangement with Tunisia is scheduled for June 7th.

QUESTIONER: Can we go to Cyprus? I wanted to ask, again, about the haircut. Did I understand well that if there is a need for a haircut for Greece, according to your answer, the European are paying?

MR. RICE: Well, I would just refer back to what I said, and that's my statement on that.

QUESTIONER: On Cyprus, what is the purpose of the mission currently there? When will be the first new mission? Are the growth assumptions in the program realistic? Because there are a lot of reports that, according to the IMF, there are substantial risks in the program.

MR. RICE: There's a small technical team from the IMF in Cyprus this week to review progress on financial sector issues in connection with the recently approved Extended Fund Facility arrangement for the country on which we provided a fair bit of information last week. That team is part of a joint technical staff visit with the European Commission and the European Central Bank, so that's the mission that's in the field this week relating to financial sector issues.

You asked about the first review mission and when would that take place. We're anticipating that the first review mission will be scheduled in late July.

On growth prospects, the macroeconomic assumptions in the program take into account several factors that are expected to affect growth in the short and medium run, including the fiscal adjustment underway, and the recent policy actions in the financial sector. Having dealt with the key problems up front, as is the case under the program, growth is expected to resume in 2015, supported by a favorable international tax regime, a well-educated labor force, strong institutions. So the assumption that fiscal, structural, financial sector reforms go forward.

Nevertheless, given Cyprus’ unprecedented situation involving the resolution of the two large banks, the capital controls adaptation of the business model, et cetera, macroeconomic uncertainties, and risks to the outlook remain significant. That's something to which we will be paying great attention to as we move forward.

QUESTIONER: I have another question on Mrs. Lagarde.

MR. RICE: I'm going to move on from this topic, okay? But go ahead.

QUESTIONER: What would be the option if she's finally sent to court because the spokeswoman of the French government today said that she could be forced to resign? And I have another question on another topic. Yesterday the Chairman of the Fed said that it was premature to tighten the U.S. monetary policy. Can I have a comment from the IMF on that? Thank you.

MR. RICE: So on your first question, I won't engage in hypotheticals. And just to reiterate again what I said about the board having been briefed on this issue, including recently, and the statement they've made expressing confidence in the Managing Director.

On your other question let me just step back on the broader issue. You may have noticed last week that the IMF just a week ago published a fairly extensive paper on the whole issue of unconventional monetary policy, and examining the role and the effects of monetary policy during and after the crisis.

The paper had a couple of key conclusions, which are germane to your question. First, unconventional monetary policies have largely succeeded in achieving their domestic objectives and helping to advance global growth. That said, some of the effects on the rest of the world have been mixed.

Second, that paper has said also that further unconventional policies will be warranted if economic conditions do not improve, but again with an eye to the medium-term risks. And, in addition, that that the breathing space provided by the unconventional monetary policy must be used to implement reforms in other areas on the fiscal side and the structural side. So those are some of the main conclusions of that paper just to recap.

On your specific question, you know, we have an Article IV Consultation underway right now with the United States. That's expected to conclude around mid-June. And so we would be giving further assessment on the specific United States situation at that time.

QUESTIONER: One last question about Greece. There are great expectations in Greece that if negotiations can proceed without problems, then we will be able to lower the so-called VAT. Do you think that this is possible because of the summer?

MR. RICE: I won’t go into that level of detail. And, it's a hypothetical question. What I can say, again, is the key focus now is the completion of the third review and the measures included under that program. And that's where the focus is.

Okay. I think with that, I’m going to call it a day. Thanks for coming. I hope you have a good, long holiday weekend, which is here in the United States. Look forward to seeing you in a couple of weeks’ time. Thank you.
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