Transcript

Director, External Relations Department
International Monetary Fund
Thursday, November 30, 2006

MR. AHMED: Good morning and welcome. I am Masood Ahmed and this is our regular press briefing embargoed as always until 11:00 a.m. Washington time or 1600 GMT. As before, we have a number of people who have logged into this through the Media Briefing Center, and I encourage you to put in your questions early so that we can have time to respond to them before finishing.

Before moving to questions, let me make a couple of announcements. First of all, just to let you know, the Managing Director is speaking today at the Cato Institute at 2:30 at a conference on "Latin America: Between Populism and Modernity". We don't have a text yet, but we will have it in time for the meeting.

Secondly, the IMF's six-month work program is available to the press on the Media Briefing Center, and we have copies here for you. The work program was discussed by the Board on November the 13th, and this work program takes us through to the Spring Meetings of the IMFC which will be held here at the Fund Headquarters on April 14th. I will be happy to pick up questions on the work program, but it may be useful for me to just highlight a couple of areas to get us started.

First, of course, the overall thrust for the work program is to follow through on the implementation of the Medium-Term Strategy which, for those of you who haven't been following it, was endorsed by the IMFC in April, 2006, and received strong support at the Singapore Annual Meetings where we followed through on one key element of it in particular which related to quotas and voice.

Now, in terms of taking that work forward, the first area is, of course, continuing the work on IMF governance and the issue of quotas and voice. On this, there are two tracts of work that are underway. First, we are working on a new quota formula which, as you will know, will be the basis for the subsequent round of increases in quotas for members that are under-represented. On that, we have a first discussion in the Board in December, and there will be probably another discussion before the Spring Meetings. The second tract is to work on the amendment of the Articles which will be necessary to bring about the increase in basic votes which is part of the two-year program. On this, there will be a Board discussion in January.

The second area I want to just highlight is the work on enhancing the effectiveness of IMF surveillance including the work on multilateral surveillance and deepening our work on financial sector and capital account issues. On this, we anticipate a discussion on the review of the 1977 decision on surveillance which, as you know, is the framework that guides surveillance in the Fund. This discussion will take place in January, and again we expect possibly another discussion before the Spring Meetings.

In January, the Board will also consider the recommendations of an internal task force that has been looking at how to strengthen the coverage of financial sector issues in country surveillance. Finally, before the Spring Meetings of the IMFC, the Board will be briefed on the status of discussions under the first multilateral consultation on global imbalances.

Just let me mention as an aside on surveillance and draw your attention to the press briefing we had yesterday on strengthening the framework within surveillance of exchange rate arrangements. We are going to try and use more of these briefings on some areas of the work program for those who are interested.

Now, the third area I want to just spend a minute on is the work on crisis prevention and emerging markets. As you know, we have been asked to look at and come back to the Spring Meetings with a view on whether the existing toolkit that the Fund has for crisis prevention and the financing instruments related to that need to be updated. We are doing some outreach on that now, and we will continue to do that in the coming weeks, and there will be a discussion in the Board in early 2007. Also, the Board will take stock of the basic elements of regional reserve pooling arrangements, again in the coming month.

The next area I want to say a word on is our work on low income countries, perhaps just to point out in there that between now and the Spring Meetings, there are in particular two things that we will be pursuing. One, we will be doing follow-up work on the joint debt sustainability framework that is joint with the World Bank, of course, and we will be doing this with the objective of helping to give countries that have had their debt written off, a framework to make sure that they don't accumulate excessive debt again. Early in 2007, we will also be looking at the parameters of the Fund's involvement in low income countries by defining more clearly what the Fund's role ought to be in the PRSP process.

Finally, in terms of areas of work, let me put out two areas of interest where the Managing Director has asked groups of eminent people outside to look at a particular issue and to make recommendations. First, as many of you know, an eminent person's group chaired by Andrew Crockett is expected to provide a report in the first quarter of 2007 on how best to ensure more stable sources of income for the IMF, and the Executive Board will meet on these recommendations shortly thereafter. Depending on the timing of Mr. Crockett's and his group's report, this discussion may be combined with the Board's review of the Fund's income position for 2007 and 2008.

The second group is one that is chaired by Pedro Malan which is looking at IMF-World Bank collaboration and with the aim of trying to better define the relative areas of responsibility and effective collaboration between the two institutions. Again, Mr. Malan and his group will be providing their report by the end of the year, and this will be followed by a discussion in the Board.

I should also say that as we did in the run-up to the September Meeting, we see quite an extensive and active program of outreach on all of these areas of the MTS to try and establish what it is that different parts of the membership see as being key issues to be considered in the work program and in the design of those elements of the MTS. To that end, let me just point out two specific events that are planned for the coming fortnight. The first one is a seminar in Santiago on December the 11th, which will bring together senior officials from the Americas to review considerations for a new liquidity instrument for crisis prevention as well as looking at the issue of effective surveillance. Shortly thereafter, on December the 14th in Rome, there is another seminar co-hosted by the Bank of Italy, which will bring together senior officials from academia, think tanks -- senior officials and representatives, I should say, from academia, think tanks, from Europe, Africa, and the Middle East, and this will focus on how to make the surveillance work more effectively. For both of these seminars, the First Deputy Managing Director, John Lipsky, will be participating.

That is by way of background for the work program.

Let me take any questions that you have.

QUESTIONER: Masood, do you feel that the reform program is going according to the wishes of the M.D.? I am talking about the MTS. What would you say is the priority here in this work program and what would he like to see finished or what progress made on any of these?

MR. AHMED: I think that the Managing Director is committed now to pursuing the reform agenda which was endorsed mostly recently in Singapore, and some elements of that reform agenda have a longer preparatory time and others have a shorter time. For example, as you know, in the area of quotas and voice, which is very high priority for the institution, we have in terms of deadlines, the Annual Meetings of 2007 as a time when we need to come back with a number of things and then again at the Spring Meetings subsequently and then the Annual Meetings of 2008. But even in that area, to be able to get to the deliverables that are envisaged for the Annual Meetings of 2007, we need to make progress in the coming months. So, if you like, between now and the Spring Meetings, we will be working on the quota formula, and we will be working on the amendment for basic votes. We don't expect that we will close on the quota formula between now and the Spring Meetings -- it is something that is going to take a little bit longer -- but it is an area where we need that time to be able to meet the deadline for September, 2007.

In other areas where we actually have deliverables for Spring which are expected by the IMFC, as I said, we are expected to come back with a view on the crisis prevention instrument that I mentioned for which we are now doing some work. That is, obviously, again a high priority for the institution and for a number of people in the membership.

Similarly, I think on surveillance, there is a body of work that is underway, some of which has been done, some of which we now proceeding to do in terms of looking at the 1977 decision. There is work to be done on strengthening the coverage of financial sector issues and surveillance. It doesn't lend itself to a single moment but which is an ongoing effort over the coming years.

I think what I have outlined to you, the areas that I have focused on from what is actually a 16-page statement on the work program, is pretty much the focus of the priority areas: quotas and voice; surveillance; continuing the work on surveillance; trying to come forward with a view on whether and how we can strengthen our instruments for crisis prevention; clarifying our role in low income countries and particularly focusing on the issue of debt; and then, as I said, two areas of what you might broadly call housekeeping which we need to deal with, one of them being the work on the income of the Fund and the other one being the relationship between the Fund and the Bank on which we have external groups coming in.

Again, on both of those, my expectations is that those groups will come in the next few weeks. We will have initial discussions, and those discussions will probably take more than one round, but we start those during the coming months.

QUESTIONER: Following up on the two reports that you mentioned are being done externally, have there been any preliminary reports as far as the people who are dealing with the financial parts of the Fund?

How have they been meeting? Has that been coordinated at all by the Fund?

Will the reports be public? Anymore information you have on them would be helpful.

MR. AHMED: In both cases, the groups concerned have been meeting, both amongst themselves and indeed with a number of other people to try and get views. I know, for example, the group looking at Bank-Fund collaboration, Pedro Malan's group, has interviewed people extensively, both in the two institutions but more importantly representatives of different parts of the membership of the two institutions to get their perspective. They have also had, as you may recall, an open web site to get people to submit comments to them on which they have received a few inputs from civil society and other interested parties. So they have been having their discussions.

I am sure they are putting those down on paper somewhere as a process for them to have an internal discussion. But at this stage, it is something that the group is doing on Bank-Fund, and it is not something that we have as an institution been party to.

Similarly, the group that is looking at income, Andrew Crockett and the other eminent people in that group, have been meeting and discussing amongst themselves. They have asked Fund staff for information, and the Fund staff provided that information to them. But the discussion is one that they are having, and they will then provide the reports back.

So the first time we will actually get documents is when those groups complete their work. Once we have those documents, we will have a discussion and the Board will take a view on how best to make that information public. We haven't taken a view on that.

QUESTIONER: On Monday, the Debt Sustainability Paper was discussed. Are they coming back with more work on that paper? Is it still a work in progress or do you know if those discussions have been rounded up already?

MR. AHMED: My understanding of it, Leslie -- and if that turns out not to be the case, somebody in this room is going to let me know before this briefing is over -- is that that discussion has taken place. I don't know whether there is a need to come back again with another discussion, but I certainly know that that discussion is the one that I was referring to as being the one that would take place. In the work program, that was the discussion that was referred to as being. But as to what follow-up there is going to be on that, I haven't caught up on it, so we can brief you on that.

QUESTIONER: Serbia has said that it is going to repay the Fund. Have you had any notice from Serbia on repayment? If you don't have that now, I will check with you later, but we had a story out of Belgrade.

MR. AHMED: I don't have any reference to Serbia having made that announcement.

QUESTIONER: Or saying that?

MR. AHMED: I haven't followed that story. If there is a story, then we will come back to it.

I have a question here from Scott Millada asking: What is the process of reviewing the 1977 decision on foreign exchange surveillance? What changes are up for consideration? What are the mechanics of that decision?

Well, I think what I would say in response to that is that the process, of course, and what we are now engaged in is to come to it in two parts. There will be an earlier discussion, as I said, in January followed by a second discussion probably before the Spring Meetings. The purpose of that, what we are doing now is reviewing the decision. As you know, the decision is 30 years old now. So, clearly, the question is: Are there elements of that decision, which was crafted at a particular time when the world economy functioned a particular way, that are still relevant, and if not, how best can they be updated to reflect best practice in the way in which surveillance is done today?

As to the mechanics of it, it is basically then if there is agreement both on that a review is needed and on what the elements of that review ought to be, that will be crafted up in the form of a new draft decision which would then have to be approved by the Board.

There are no further questions. Keep it short and sweet. Thank you very much.

Our next briefing is going to be two weeks from today at the same time. We look forward to seeing you then.

This is embargoed until 11:00. Thank you very much.
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