Transcript of a Press Briefing by Masood Ahmed, Director, External Relations Department, International Monetary Fund

October 4, 2007

By Masood Ahmed, Director, External Relations Department, International Monetary Fund
Washington D.C.
Thursday, October 4, 2007
View a Webcast of the Press Briefing

MR. AHMED: Good morning to you. I'm Masood Ahmed. Welcome to our regular press briefing.

Before taking your questions, I thought I might walk you through the various events between now and the Annual Meetings. I'd like to start off by reminding you that next week we will be releasing publicly the analytical chapters of the World Economic Outlook. On October 10th at 9:00 a.m., Simon Johnson and the authors of the chapters will brief the press. The material itself, that is to say the chapters as well as summaries in several languages and some video clips, will be posted under embargo tomorrow on the Media Briefing Center, and the embargo will be lifted on October 9th at 8:00 p.m. Washington time, which is to say before the briefing by Simon Johnson and his colleagues the following morning.

Moving forward, on the 15th of October, the press room will open here for the Annual Meetings and on that same day, the 15th, the Managing Director is going to have a press breakfast principally for the Washington press corps to preview the Annual Meetings. So that will be on the morning of the 15th.

On the following day, October 16th, Jaime Caruana is going to update journalists on financial market developments since we put out the Global Financial Stability Report which, as you remember, was released last month. This will then give you an update since that was put out.

The day after that on October 17th, Simon Johnson again and his team from the Research Department will do a press briefing on the WEO, World Economic Outlook, forecasts. So that will be the day when we basically put out our quantitative assessment of the likely impact of recent developments, including market developments on the real economy. Embargoed access to these forecast chapters will begin on October 16th via the Media Briefing Center.

The day after that, October 18th, we'll have the traditional Annual Meetings press conference by the Managing Director. That will be another preview of the agenda for the IMFC and for the Annual Meetings, and will allow journalists who are coming into town for the Annual Meetings to participate.

The IMFC, you will remember, meets on the October 20th. On that day, after the IMFC meeting, the Managing Director and the Chairman of the IMFC will brief the press and summarize the discussions and conclusions of the IMFC meeting that will take place earlier that morning.

By way of background, I should also add that the IMF Executive Board will be discussing the provisional agenda for the IMFC tomorrow. So we will put that up on the website once that's been discussed and agreed.

I should also say in relation to the Annual Meetings that on the October 19th and 20th we have briefings scheduled on the economic outlook for Asia and for Sub-Saharan Africa, respectively. These are the regional economic outlooks for which recently there's been quite a lot of interest in. I should put those down for you as well.

On October 22nd , which is the Monday and the day of the plenary opening of the Annual Meetings, the Managing Director will be making his Annual Meetings speech, which, as you know, is going to be the last speech he will make at the Annual Meetings as Managing Director before he leaves. I expect that there will be press availability immediately following the speech at Constitution Hall. So I'll give you an early alert on that.

For all of these events, closer to the date, we'll have more specifics to offer you on logistics and timing. If you have any questions, you can always get in touch with my colleagues in the Media Relations Division.

Let me also make one other announcement. The Managing Director will be making a speech this coming Monday, October 8th, at the annual gathering of the Association of Ibero American Chambers of Commerce in Madrid, and this event will be open to the press. So if any of you are interested in getting more information on it, please contact the organizers or our colleagues in Media Relations.

Let me now turn to your questions and also let me remind those of you who are joining us online through the web to please send in your questions early, so we can get to them during the course of this briefing. Please identify yourself when you ask a question.

QUESTIONER: Do you know if any decision has been taken yet on who's going to chair the IMFC?

MR. AHMED: We expect that the process will be formally completed by Friday, and at that time, on Friday afternoon, we'll be able to put out a public notice on who's going to be the next Chairman of the IMFC. So it will be on Friday of this week.

QUESTIONER: Do you know what the subjects are of the analytical chapters this year?

MR. AHMED: I can give you the titles of the analytical chapters of the WEO, which will give you a pretty good sense of the subjects. The titles are: Managing Large Capital Inflows; Globalization and Inequality; and the Changing Dynamics of the Global Business Cycle. Obviously, then there will be a lot more texture within each of those, and there are the usual additional country boxes and examples.

QUESTIONER: Can one consider the MD's speech on October the 8th to be his main speech before the Annual Meetings?

MR. AHMED: Because of the timing of it, I would say that the press breakfast on the 15th is the occasion where he would preview the agenda for the Annual Meetings in the way that we have done in the last three or four sessions by doing a curtain-raiser speech. So it's the 15th press breakfast which I would use for that purpose.

QUESTIONER: Do you have anything for us on the record on these reports coming out of Argentina regarding a possible deal between the IMF and Argentina, so that Argentina can go ahead and restructure its debt with the Paris Club?

MR. AHMED: The only thing I have for you on our relations with Argentina is that we continue to have regular productive discussions with them, and I anticipate that we will undertake the next Article IV consultation shortly after the new government takes office.

QUESTIONER: Masood, these are three questions relating and interconnected to the IMFC. The first two are just schedule. I wanted to make sure I understood correctly that the Board tomorrow will analyze and finalize the agenda for the IMFC meeting that will be held the 20th of October. Is it correct?

MR. AHMED: That is correct.

QUESTIONER: The second thing is on the designation of the Chairman of the IMFC. As you know, the designation of Italian Minister of Economy Padoa-Schioppa has already been announced by Italian Prime Minister Romano Prodi last evening and has been published by me and my colleagues at Reuters and the press all around the world.

I am a bit surprised that we cannot get something very clear on the transparency of this process. From what I understand, the Board designates the new Chairman and then there is a window of 48 hours in which, of course, the Governors need to confirm this designation. As journalists, we would like that you and all your press office talk to us in a very clear and straightforward way so that we don't need to bother our sources just asking confirmation for a process. Can you confirm for me the process, please?

MR. AHMED: The process is that the decision is made by the IMFC members, as we said. It is the members that do it, and they do this through consultations in the Board and in the capitals. That process has been advancing and, as I've said before, the process is that one or more names come up and then there is a process of narrowing this down to a single person who then commands the broad support and the consensus, if you like, of the membership.

That process has been advancing. We anticipate that that process will formally come to closure on Friday. Until that process comes to closure, there's nothing more that I can formally or, off the record, add to what I have just said.

Now, I read the same newspapers, maybe not all of the same newspapers as you do, but I read the press. But, as I said, the process is one that I have just outlined, and it will end on Friday. As soon as the process ends, which is expected to be on Friday, we will then formally and, on the record, announce the outcome of that process.

QUESTIONER: I want to say something to add to that for the record. We wouldn't have to go and bother our sources if the IMF was a little bit more transparent about what happens in the IMFC.

Number Two is the fact that this IMFC contest was extremely important considering that India was part of it. That's why there's such interest in it, and I think the Fund should have prepared for that.

A follow-up on that question: Is it still possible that Mr. Padoa-Schioppa can be ousted from that or that the vote, the straw poll, can be declared null and void if somebody else comes in and makes an issue about it? As far as I understand, that's how it works, but again, the process on this thing has never been clear from the start.

MR. AHMED: On your first point, I take your point, that there's clearly an interest, I am sure, not just amongst you two but amongst others for us to try and be more open and give you more information as it goes along on what the process is and how it takes place. I take that on board. Of course, as I have said before, this is a process that is agreed amongst the IMFC members.

In this case, I'll take that on board and make sure that it gets transmitted and certainly for next time around. It is important input. Thank you for that.

As to what is or isn't possible in the remaining 48 hours, there isn't anything that I can add to what I've just said for the reason I've said. There is a process underway, and under the current in which we are doing it, it's at the end of this process that I'll be able to give you an outcome.

So I take on board your sense of frustration about not being able to get more information directly from us on the process, but that's as far as I can go on giving you what is the current process and the likely date for an outcome.

QUESTIONER: I have two questions. They are not related to the IMFC. One is a somewhat technical question, and the other one is a little bit more complicated. First, I wondered why Mr. Johnson is having his press briefing the day after the embargo is lifted because if the chapters are interesting, we'll probably write them before.

My second question has to do with Mr. Strauss-Kahn's press conference in Paris. This concerns considerably the issues of the quota and how difficult that is. At one point, he said no one expects the United States to give up a share of their quota even though they said they actually would. But in any event, at one point he said if we were to take 5 percent from the U.S. quota, which nobody expects... is there a minimum that we're talking about that would be needed to redistribute to have a better reflection of the weight? He just used 5 percent, and I think he was using that as an example, but I was wondering. Is it 2 percent? What kind of minimum distribution are we talking about that would allow to redistribute the quota without having to have a quota increase? Is there anything like that? I know there are several quotas under discussion.

MR. AHMED: On the question of how we are scheduling the briefing on the analytical chapters compared to the embargo date for the release on them, I think my colleagues in Media Relations have been looking at how to get information on this material out to the maximum number of journalists who would like to report it and have tested various models of whether you hold the release until after the press briefing, or do the press release the night before to be able to get coverage in certain parts of the world and then have the press briefing thereafter.

We have kind of come to the conclusion that this model would work well for us. So we're going to try it out. If it works well, we'll continue it and if it doesn't work so well, we'll try a different model. So there's no great mystery behind it. It's just simply a way of trying to see if we can accommodate the needs of our various audiences around the world in different time zones in a way that allows us to get good coverage of the analytical material.

Recognize also that this is the analytical chapters we are talking about rather than the projection chapters which come later, for which we are following a different model. So we are going to try it out.

On the second point you raised on the quotas, the specific question of whether there is a minimum, if you like, a threshold of what is the size of the increase that would need to take place, there isn't.

There has been a lot of discussion of the fact that there should be a second round of increases and that it should be a significant increase, but as to what precisely will be the size of the second round of increases and how that increase will be allocated across how many countries and in what form is exactly the discussion that is to take place in the next phase of the quota and voice reform package. So I don't think that at this stage there is any particular number that we should get attached to.

As you said, the number of 5 percent was simply as a way of illustration that I think Mr. Strauss-Kahn was using in Paris when he spoke about this issue at his press conference.

I wasn't sure whether you were asking me a question about the comment on the increase for the U.S. or decrease for the U.S. or that was just a comment that you were making as a prelude.

QUESTIONER: What I'm talking about is the different comments by people saying you have 2 percent reallocated of the quota to the emerging economies, and that's like the minimum I've heard. Then he was using 5 percent as an example. So I was just wondering if there was a minimum out there that everybody has sort of agreed on that you need to get from the industrialized countries to the emerging countries.

MR. AHMED: There is no particular agreement on saying this is the minimum. Obviously, you could do your numbers. You have all the numbers out in the public domain in terms of quotas, so people can figure out is 2 percent enough or not enough. Others will say that it depends on how it's allocated. So that discussion is going to happen next.

QUESTIONER: Just to clarify, is there any decision going to be made on quotas in the Annual Meetings at all? As far as I understand, it's just going to be discussion of the current proposals. I guess there's not going to be a firm proposal tabled at the meetings. Is it just a discussion? Just clarify, please.

MR. AHMED: My understanding is that the discussion at the Annual Meetings will aim to narrow down further the areas where we have now got broad consensus and the areas which need further work to bring this to closure.

Now, if you recall, that process was to happen in Singapore. So, basically, in the Spring Meetings, we had the process of trying to narrow down again the areas of consensus and those where we need to do more work. This time around, we hope we'll achieve a further narrowing and that will then enable us to take this forward with the objective of delivering on the expectations and timetable agreed in Singapore, which is to say to bring this to closure by the 2008 Annual Meetings.

We are sort of halfway through that mark, but this is the point at which we try to keep moving the momentum and narrowing it.

QUESTIONER: I need you to clarify. When you say there has been a lot of discussion about a second round of increases, is that second round of increases on top of the ad hoc increases or are you talking about something else? Are we talking about second round meaning the ad hoc increases that were in Singapore?

MR. AHMED: No. I'm talking about the first round of increases as having been the four countries that got an increase that was agreed in Singapore. Then the second round will be a further set of countries that will get increases during this two-year period. To arrive at that second round of increases for the additional countries, we will then need to have before that agreement on a formula which would guide that second round of increases.

If you remember, the Singapore agreement was basically a first set of increases for four countries that were clearly underrepresented. Then move forward on two tracks.

One track was to move toward a second round of increases for other countries that were underrepresented, including possibly additional increases for those that had got the first round of increases and, to do that, arrive on agreement on a formula that would guide.

A parallel track was to make sure that the voice of low income countries was protected, which included within that, at a minimum, a doubling of basic votes and discussion of how to strengthen the offices of the Executive Directors representing the most countries including possibly through the addition of an additional alternate director.

Those are the two parts that we're working on, and that's what the second round was that I was talking about.

QUESTIONER: The paper that was published recently by the Fund, by Mr. Kuhn, on quotas, is the last note from staff that has gone to the Board or is there an additional one? It was published, I believe, on Monday or Tuesday.

MR. AHMED: That's not part of this discussion as best as I understand it. I think that's a different paper that you're referring to or it deals with a different issue rather than this particular one. I appreciate it's about quotas, but I don't think it's part of this cycle, but let me go back and look at that. Then if it's any different from what my understanding is, I'll come back and we'll clarify it on the website.

QUESTIONER: If you don't have an overall quota increase like you had in, when was the last time, 1998, I guess... I mean, I'm thinking about what Strauss-Kahn said, that it's a zero-sum game because it has to add up to 100 percent. If you don't have an overall quota increase, how much do you need to redistribute from the industrialized countries to the emerging market countries to have some sort of fair rebalancing of the vote? Is there a minimum? That's what I'm trying to get. Is it 2 percent that you have to take away from the rich countries or is it 5 percent?

MR. AHMED: I'll say the same thing again a different way then. First of all, just to be clear for everybody who is participating in this, the idea here is not that the quota of any particular country would be reduced in absolute terms. The notion is that a set of countries would receive an additional ad hoc increase and in terms of shares. Then obviously, by doing that, the relative shares of other countries would go down by the percentage of the total ad hoc increase. So that's, if you like, the relative increase in share.

Now, as to your question on what is the minimum amount of an increase that would need to take place in terms of the relative shares of particular countries to achieve an outcome that was satisfactory for them, that is exactly, as I said before, the discussion that has to take place, and is now taking place.

So the answer to that will emerge from the process in the coming months, but there isn't yet a number or an agreement in saying this is the minimum amount that the whole membership agrees because that's actually part of the discussion that's going to take place, the negotiations that are going to take place amongst the membership.

QUESTIONER: Just to be clear, this is what I am going to quote about your statement on the IMFC, and you tell me if I get it correctly, if you want to add anything, if you want to answer yes or not.

The IMFC Chairman is selected through a process of consultation in the capitals. This process is underway, and we anticipate that it's going to be formally closed by Friday, and then we will make an announcement. The process has been narrowing down to one name. Is it correct?

MR. AHMED: It's all correct except the last sentence that you said which is the process has been narrowing down to one name.

That's correct, but the point I want to make is that there is a process of consultations in the capitals and amongst Executive Directors representing the IMFC members, which aims to narrow it down to a single person who commands the broad support. That process has been continuing, and we expect that it will come to closure by Friday at which point we will make an announcement. So that's a slight nuance, for what it's worth, on what you had said.

QUESTIONER: Theoretically, from what you tell me, the consultation is still ongoing, so we cannot say who is going to be designated the Chairman of the IMFC at this point.

MR. AHMED: The process is continuing and we expect that it will come to a formal closure on Friday, at which point we will be able to give you the, for the record, the outcome of that process.

QUESTIONER: Just to go back to the quotas, so what do you think will happen at the Annual Meetings in this process of trying to come to an agreement? Is it just a further discussion of the different proposals that are out there or is there anything that's been narrowed even a little further? Because he indicated that there are several quota proposals on the table.

MR. AHMED: There will be a report done for the Governors, a progress report, that will set out where we have moved forward in terms of progress, which are the issues on which there is still further agreement to be had amongst the membership, and that will serve as the basis for the guidance that we get from Ministers and Governors at the IMFC.

Thank you all very much.

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