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

June 6, 2013

Washington, D.C.
Thursday, June 6, 2013
Webcast of the press briefing Webcast

MR. RICE: Good morning, everyone. Welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice, Director of the Communications Department.

As usual, this briefing will be embargoed until 10:30 a.m., Washington time. Let me begin with a few announcements regarding travel and events, and then we will turn to your questions in the room, and to our friends online, as well. So, a couple of announcements:

The Managing Director, Christine Lagarde, will be attending the G-8 summit on June 17 and 18 in Northern Ireland. Also note that the Managing Director, Christine Lagarde, will participate in the press conference for the Concluding Statement of the Article IV Consultation with the United States on June 14th. That press conference will be here at the Fund, at 11 a.m.

The First Deputy Managing Director, David Lipton, will be attending the St. Petersburg International Economic Forum starting June 20th

A couple of other things -- actually one other thing: We are publishing today, at 10:30 a.m., the IMF's Biannual Work Program. It may of interest to some of you. As you know, it translates the Fund's policy priorities --laid out in the Global Policy Agenda -- into more concrete details, in terms of the work program over the next six to 12 months. It charts a range of actions focused on reinvigorating the global recovery, and how the Fund is assisting all our member countries in the various parts of the world -- advanced, emerging, low-income, etc. And with that, let me turn to the room.

QUESTIONER: Gerry, good morning. I'm sure you saw the headlines today all over the world about the evaluation report. Actually, I had a few questions. First, do you consider the evaluation report a mea culpa, or just a misstep? My second question is: do you really disagree with the Europeans on this report's findings? The third question is: did I understand well that, according to the report, the Troika does not work?

MR. RICE: Thank you for your questions. Look, I want to set your questions in a bit of context. First, for those who may not have been following this all that closely, let me explain a couple of things.

We released a number of documents on Greece yesterday, including the evaluation report on the first Greek program that you mentioned, but also the most recent Article IV Consultation staff report, and the staff report related to the latest review of the current program. There was a press briefing, as you know, yesterday afternoon on that with the mission chief for Greece. There's a transcript of that. If you haven't seen it, it's already posted on the website. And there's further information on those documents also on the website. So, that's for colleagues who haven't been following it. This is all done in a very open way.

Look, the objective here is to learn, in terms of the evaluation report, so that our members can benefit, and we can integrate lessons into future operations. This is a standard process for all of our exceptional access programs, and I think rigorous self-assessment is one of the hallmarks of the IMF.

More context: I think it's very important to emphasize -- again, for those who may not have been following it as closely as some in the room -- that the evaluation refers to the previous Greek program, which began in 2010, not the current program, which began in 2012. So, it's looking at the past. The current program, in many respects, has already internalized the core lessons from the previous program; those core lessons that were described in the evaluation report.

Another piece of context that I'd like to offer here is to remind ourselves -- and sometimes, you know, with hindsight we forget -- of the intense crisis that Greece was facing in 2010, in many ways unprecedented, and the need to respond quickly. Also, of what happened after 2010, including the depth of the global recession, the depth of the European recession, the political uncertainties in Greece, the implementation problems, etc. I think that context is very important.

In that context, the evaluation report looks at, indeed, how things might have been done differently. But it also concludes -- and I think this is important -- that, in the same situation, with the same information, we would probably have made the same decision today. I think that's important to say.

I think it's also important to note that, despite the difficulties, Greece's economic program today is on track as the Article IV Consultation and the program review reports make clear. These documents were part of that package that was released yesterday. And, indeed, they indicate that Greece has made major strides in the fiscal area, in the financial area, in some areas of structural reform, and so on. I think it's important, as well as looking back, that we look forward.

I hope that responds to your first question. On your second question, what I'd be inclined to say is that, again, the context that I've given is important. I think we all agree that this was an exceptionally difficult crisis. I think we would all agree that some things could have been done differently. And I think we would all agree that, with the European partners, we have learned, and we have adapted. I think that the current program is a reflection of that.

Your third question?

QUESTIONER: That I understand from the report that the Troika does not work anymore…

MR. RICE: Well, again, the context is very important. I think the report makes that point. At the time of the initial program, the first program, the troika of the European Commission, the European Central Bank, and the IMF was a new way of working. I think the point made by the report is that whilst there are areas where we can improve -- and I think everyone would agree with that -- the Troika has worked well, and the Troika is working well.

QUESTIONER: I have two questions for you, Gerry. The European Commission today said that it fundamentally disagreed with the key findings of the report. So I was wondering if you have any comments on that. And I wanted also to know if the report suggest in a way that a new debt restructuring in Greece would be appropriate earlier than expected?

MR. RICE: On the first question, I think I would just repeat what I said earlier. Laterally, you know, I won't get into parsing different issues. But I think there is broad agreement along the lines that I mentioned.

In terms of your second question, I think I've tried to deal with this, unsuccessfully, obviously, in the last two press conferences. But let me say it again: we do not envision any new debt relief discussions on Greece at this juncture. And in previous press conferences I've tried to remind you of what we have said in the past -- it's not new. I think that's what's repeated in the documents. What we have said is that 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. Those levels are 124 percent of GDP by 2020, and substantially below 110 percent of GDP by 2022.

The European partners have said -- again, not new -- that they expect to review the country's case by the beginning of 2014 and 2015. And once information on the fiscal outcomes is known, they would make a decision accordingly.

So, again, this is not news, this is established position. And that's what's reiterated in the reports.

QUESTIONER: If I can follow up on the first question -- do you regret that the European Commission doesn't acknowledge its own mistake in Greece?

MR. RICE: I think it's for every institution to make its own assessment. And, you know, we at the IMF are very respectful of that prerogative. That said, I'd just refer to what I said before about the areas where there is broad agreement.

QUESTIONER: A lot of people in Greece seem to feel that the program contained the contagion, but at the same time, in some ways sacrificed Greece. What would you say to people that think like that?

MR. RICE: We put out a lot of information yesterday – and there was a press briefing -- so I want to refer you to that, and not go back into too much detail. I do want to emphasize, however, in response to your question, that the initial, the first program, which has now ended, obviously, was aimed at helping Greece, first and foremost helping Greece to address the urgent -- as I said, in many ways unprecedented -- crisis that it faced in 2010. That was the primary objective of the program. And I don't think there's any inconsistency between that objective and looking to help address any potential broader systemic risks that might have been involved. I don't see an inconsistency there.

QUESTIONER: Any update on Egypt or the Ukraine or any other near-crisis programs?

MR. RICE: On Egypt I don't have too much information beyond what I said a couple of weeks ago. We're making good progress in our technical discussions with the Egyptian authorities, and we look forward to the resolution of the remaining technical issues, which would enable us to conclude the negotiations successfully. So, not much more beyond that.

On the Ukraine, I have to say again, beyond the fact that we had the mission at Kiev ending in mid-April to discuss economic policies that could be supported by a Stand-By Arrangement with the Fund, the technical discussions continue. I do not have specific dates for the next negotiating mission.

QUESTIONER: If I could just follow on Egypt, because I think now the authorities say they have given you the data that you were requesting to get on to the next stage of the loan. Can you confirm that the authorities have sent you their new policies and data?

MR. RICE: We are receiving data and information all the time from the Egyptian authorities. As I said, there's good progress on that front, and in our technical discussions.

QUESTIONER: I was wondering if you could speak about the program with the Democratic Republic of Congo. Back in early May, I believe, you said discussions had restarted once the government started publishing some of the information that you had requested earlier. I wanted to see if there's been any more progress since May 9th.

MR. RICE: Yes, I do not have much for you on that. Maybe I can come back to you a bit later. The reviews have been completed under the Extended Credit Facility. As you probably know, three reviews were completed, but three did not take place owing to the lack of progress on the governance and transparency front. Let me come back to you later with a bit more of an update on that.

I see that there are some questions online. There is one on Turkey: "What are your views on the recent developments and market fluctuations in Turkey?" All I have on that is to say that, like everyone else, we're following the developments.

And there's a question from Portugal: "Can you confirm the date of the Board's discussion of the 7th Review on Portugal?" I can tell you that we expect the discussion at the board to take place around mid-June.

Let me come back to the room for a few more questions, if there are any.

QUESTIONER: I want to go back to Greece and ask you, Gerry, if you broke your own rules to accommodate Greece and Europe and why you did that.

MR. RICE: No. We did not. We continuously look and review our policy and legal frameworks and, if necessary, adjust them according to global economic developments. That also applies to crisis management and resolution. But let me emphasize that any changes to the Fund's policy and legal frameworks are only done with the consensus of the IMF's membership. So, the Executive Board needs to approve any modifications.

QUESTIONER: So you're saying that Greece didn't have special treatment at that time?

MR. RICE: I'm saying that the modification to our rules apply to all our members.

QUESTIONER: The report yesterday suggested that some criteria were not met when Greece was bailed out in 2010. So can you just say that Greece didn't have special treatment at that time?

MR. RICE: I'll just repeat that the modification in our rules applies to all our members. So, I'm not going to get into parsing.

QUESTIONER: I have to ask about Cyprus, if you have anything new on the program, and when Mrs. Velculescu is going back. And also, Gerry, given what happened in Greece, I'm wondering if the IMF is going to come, after three years, and tell us that they made mistakes in the Cyprus program too -- especially for the haircut of the deposits.

MR. RICE: On your first question, the first review mission is scheduled for late July, and the mission chief will participate in the mission.

On your second question, every country is different, so generalizations really don't make a lot of sense. We believe that, on the Cyprus program -- to respond to your question -- the macroeconomic assumptions take account of 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.

And, having dealt with the key problems facing Cyprus upfront, we expect growth to resume in 2015 -- again, assuming a favorable international tax regime, progress on structural reforms, institutional reforms, etc.

Nevertheless, given Cyprus' situation, there are, of course, macroeconomic uncertainties and risks, and so those risks to the outlook remain significant, and that's something we will obviously be monitoring closely as the situation evolves, which is something we do in every program.

QUESTIONER: I was curious about one thing that you mentioned in the evaluation yesterday, that it's difficult to trust official data -- that you need to be skeptical about official data, more skeptical. And I was wondering, with the waiver for Greece for the tax auditors that they were supposed to reappoint and they didn't, but eventually they did… but they got the disbursement before they actually reappointed them. I was wondering if you could speak about some of those challenges, and how the IMF will change the way it approaches countries to be able to get a different set of data, or how you get around that constraint.

MR. RICE: The accuracy of data is a fundamental aspect of an effective program, of a successful program. And we certainly, in all our programs, make extensive efforts, we make every effort to ensure that the data is as accurate as possible.

A lot depends, of course, on what the authorities in a particular country are able to provide. There were issues, as the report acknowledges, and as you say, in the first program, in terms of the data being received. There have been steps taken to strengthen that. And I think that, speaking of the lessons learned and how they've been integrated from the first program into the current program, the second program, the ownership of the program and the implementation of the program, on behalf of the Greek authorities, is one of the notable evolutions between then and now.

You did mention the misreporting case. We issued a press release on that yesterday. Just to be clear, the Board reviewed this case of misreporting by Greece, which was related to a prior action for the first and second reviews last January, and granted a waiver, given that there was prompt corrective action taken by the authorities. This was in the area of tax administration. So on the basis of the prompt corrective action taken by the authorities, the waiver was granted by the Board. I'm happy to see you got that far in the documentation. Last question.

QUESTIONER: On the lessons learned, the report mentions the fact that it learned from working in a monetary union, and that there may be things to change to take into account when you work in a monetary union. What have you changed, say, like in the case of Cyprus, for instance, that you learned from Greece? Or if there is any other rescue in the euro area, what did you learn about working in a monetary union, and what would it change?

MR. RICE: I wouldn't want to get into details of how Greek lessons apply to Cyprus, because I think it can just become very confusing. In terms of some of things we learned generally -- and, you know, these are documented in the report -- obviously, the importance of the right pace and the right mix on the fiscal side is something that's extremely important in all countries, including in the monetary union. Another big lesson is the one I mentioned earlier, which is the importance of ownership and the importance of implementation by the respective authorities. These are big lessons that are coming through.

With that, I'm going to call it a day. Thank you for coming this morning, and look forward to seeing you in two weeks. Thank you.


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