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

July 11, 2013

Washington, D.C.
Thursday, July 11, 2013
Webcast of the press briefing Webcast

MR. RICE: Well, good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice, the Director for Communications.

And, as usual, our briefing this morning will be embargoed until 10:30 a.m., Washington time.

Let me begin with a few announcements, and then I will turn to questions in the room, and also to our colleagues online.

Beginning with management travel, the Managing Director, Christine Lagarde, will visit Romania on July 15 and 16, and Lithuania on July 17 and 18. Madame Lagarde will meet the country authorities and policy-makers, as well as with representatives of the private sector, civil society, and academia to discuss the current outlook and challenges facing each of those two countries.

Just a bit more detail might be of interest to you. In Bucharest, on July 16, Madame Lagarde will deliver a speech open to the media on Romania and Eastern Europe. And then, in Vilnius, on July 18, she will participate in a panel discussion, also open to the media, on the challenges and opportunities of European economic integration, which, inter alia, amongst other things, marks the beginning of Lithuania's presidency of the European Union.

After visiting Romania and Lithuania, Madame Lagarde will then travel to Moscow where, along with our First Deputy Managing Director, David Lipton, they will participate in the G-20 ministerial meeting. That's July 18 to 20, as you know, in Moscow.

Let me also mention that tomorrow David Lipton will also participate in a panel discussion here in Washington on the outlook for the G-20 meeting in St. Petersburg, and that's organized by the Center for Strategic and International Studies here in Washington. And that event takes place, as I said, here, tomorrow. And my understanding is it's open to the press. I believe it's in the morning. Ian, let me get you the specific timing on that. There are a couple of events within the seminar, but it's basically tomorrow morning.

Finally, just to mention that our Executive Board will be discussing Article IV consultation reports for all what we call "systemic" countries in the coming weeks. That will start with China tomorrow, and the U.K. on Monday, followed by the euro area, the United States, and Japan -- all before the end of July. We will keep you posted about the publication of all the related documents. As you know, we publish all of these country reports, so you will have access to them.

With that, let me take your questions in the room, if there are any.

QUESTIONER: I would very much like an update on Egypt. We haven't heard the Fund very much since the events of last week.

Have you had any contact with the new officials, the new government? Does it mean the loan is completely abandoned? Would you have to restart from scratch? Where do you stand?

MR. RICE: We continue to follow developments closely, and are considering their implications for the IMF's work in helping Egypt address its serious economic problems.

Directly in response to your question, we have not been in touch with the interim government, but we are in regular contact with our counterparts at the technical level. That's basically where we are.

QUESTIONER: Can I just follow up? What would it take for the IMF to be back in touch? If a government is formed, is that enough?

MR. RICE: Well, you know, in determining how to deal with the interim government of Egypt, we'll be guided, as is usually the case in these circumstances, by the views of the international community -- in particular, those of the Fund's membership. So, again, we're monitoring the situation closely, and, you know, looking at what the implications might be for, you know, the next steps.

QUESTIONER: Just one thing to clarify -- you said you have not been in touch with the government, but you have been in touch with your counterparts at the technical level. Does that mean just bureaucrats within the Ministry of Finance?

MR. RICE: I don't have the details of the technical, you know, interactions that are taking place.

QUESTIONER: But, they are -- I'm just trying to understand who your "counterparts" are. Are you saying that -- you're not saying that they're political figures, but there is some technical discussion with Egyptian officials. They're just not the government.

MR. RICE: That's right. We're having continuing discussions at the technical level, right.

QUESTIONER: And then, secondly, the last amount was 4.8 billion, but that was December, and the economy has -- there have been some changes to the economy. And, you know, of course there have been, those things have been accelerated by the change in government.

Is it realistic to assume that that figure is on the low side now?

MR. RICE: Well, you know, I think we just have to, as I said, wait and see. We're looking at developments. We have to look at what the implications might be for the Fund's work, and it's premature, really, to get into the details of that.

QUESTIONER: Still on Egypt.

How do you see the aid announced by countries in the region? Do you see that as a way to solve the financing problems that Egypt is facing?

MR. RICE: Well, we don't know the details of that proposed support. So, again, it's too early to make an assessment of what the economic implications might be.

QUESTIONER: Well, do you see that as a good sign of support from the countries in the region?

MR. RICE: Well, you know, support, financial support and otherwise, for the people of Egypt, to help them address their difficult economic challenges, of course, is something that we would support.

But, again, I'm not commenting on the proposed pledges of support from other sources at this point, simply because I don't have any details on that.

QUESTIONER: Good morning. I will go to Greece. And, Gerry, can you tell us when the Board is going to meet to discuss the Greek program? And also, is it true that the IMF accepted a reduction for the VAT for the restaurants by 10 percent?

MR. RICE: I don't have an exact date for the Board meeting at the moment, but I can tell you we expect it to take place toward the end of July.

And you, no doubt, have seen our staff-level agreement that was announced a couple of days ago.

The date will be, as usual in the Board calendar which, you know, is announced seven days ahead. So you'll get full notice on that.

On your second question -- again, I had referred to Monday's statement. And, as we said in Monday's statement, the staff-level agreement does not assume a temporary reduction in the VAT rate on restaurants and catering, but this issue is important to the authorities, and continues to be discussed with the European Commission and European Central Bank and the IMF.

QUESTIONER: So, do you think that Greece is going to have an answer at the end of the month? Because, you know, they wanted the reduction for the summer, you know.

MR. RICE: I wouldn't want to speculate on exactly when there's going to be some kind of resolution on that. But, as I just indicated, the discussions are continuing.

QUESTIONER: On Greece -- your previous report was one of the fastest ones. The IMF representative of the troika attributed it to improved policy implementation. And I'm wondering if the partial reimbursement of the amount that's going to Greece for the next few months is an indication that this policy implementation is slowing down?

MR. RICE: I'm not sure I quite got the question, but just let me step back, and refer back to the staff-level agreement, which said a couple of things.

It said the program is broadly on track, and significant progress has been made, but there are a number of issues still needing to be resolved. And, again, if you look at the statement, it goes into those in a little bit of detail. They include the tax administration and the public administering to the continued implementation of those reforms, before making the final decision, which, I just indicated, would be a board meeting toward the end of this month. And then there would be the release of the contingent on Board approval that would be the release of the IMF portion of the disbursement.

QUESTIONER: Just to follow up on Greece, is it true that the IMF had threatened to withdraw from the program because the country has not sufficiently financed the year ahead?

MR. RICE: You know, again, I would just refer back to the staff level arena, just a couple of days ago, where, again, we said the program is broadly on track, and there are a few issues to be resolved. And we look forward to -- contingent on those issues, those actions being taken and implemented, we look forward to continuing our support.

MR. TORDJMAN: Are those issues related to the financing gap in the country?

MR. RICE: Well, on that specific issue, there is no financing gap through July 2014. A gap is projected for after July 2014 but I think at this stage we want to take it one step at a time. We need to discuss the budget, we need to look at what exactly the financing needs would be, and what the financing gap would be in that context -- also, to remind that the European partners have made commitments to provide adequate future financing for Greece, provided that the program is implemented.

So I think, again, we want to take this one step at a time. We are completing the current review and then, you know, moving ahead on the assumption that the commitments on both sides will be met -- that is, first and foremost, commitments on the Greek side to implement the program, and then commitments that the Europeans have made that, contingent on the program being implemented, financing would be provided.

QUESTIONER: Just to follow up very briefly, July 2014 is the time when the European financing will be over. This is correct? The financing part of the bailout?

MR. RICE: Under the current program, that's right.

QUESTIONER: Gerry, can I follow up? Mrs. Lagarde gave an interview to the CNBC and she said -- and I quote -- that she was "pleased with Greece's progress." And also she said that she believes that "Greece is on the road to recovery," and to have "a surplus at the end of this year" -- end quote.

Given this, why the IMF, and the troika, asking for more measures?

MR. RICE: Well, I think, again, to step back, we issued a statement on Monday saying the program is broadly on track, but there are a few things that need to be implemented. So it's not a question, really, of additional measures, it's a question of implementing the commitments that have been made under the program so that we can complete the review.

QUESTIONER: Good morning. Just a quick follow-up on Greece.

How worried are you and the Board about Greece not meeting its growth targets under the program? And how would that influence its financing for the next year, and going forward?

MR. RICE: Well, again, you know, I wouldn't want to speculate way into the future, because we're looking at the moment at implementation for this review. But, you know, we continue, as we have said, to expect growth to turn positive in 2014 -- although, again, as we noted in our statement the other day, there are uncertainties to the outlook related to a number of internal and external factors.

So, again, I think it just speaks to this point of the importance of continued implementation of the program, continuing to monitor that, and, you know, to taking it one step at a time.

I'm going to try and move on from Greece, but not very far away, because there's a question about Cyprus online, asking: "Can you say a few words about the upcoming troika visit to Cyprus next month? Are there signs that the Cyprus program is going off track?"

And what I can say on that is that, together with our partners from the European Commission and the European Central Bank, the IMF staff team will start discussions with the Cypriot authorities on the first review of the country's economic program on July 17th, and the visit is expected to last for about two weeks. And, as usual, we expect the outcome to be communicated at the end of the visit.

Maybe to give just a little bit more detail, of course, since this is the first review, we will be assessing progress in implementation of the program, and agreeing on policies for the upcoming period. We expect the talks to focus on the financial sector reform, the macroeconomic and fiscal performance and outlook, and the status of other structural reforms.

There is a question on Portugal --

QUESTIONER: (Inaudible) follow up on that, if it is okay?

MR. RICE: Okay.

QUESTIONER: The last time, the last briefing, you told us that Madame Lagarde received a letter from the President of Cyprus, Mr. Anastasiades. He was complaining about the program. And you told us that Mrs. Lagarde is going to give him an answer soon.

Did she send any letter to him? Did she answer?

MR. RICE: Yes. The Managing Director responded to the letter.

QUESTIONER: Can you tell us some things about the letter, if it's possible?

MR. RICE: Well, you know, paraphrasing, the Managing Director welcomed the President's determination to continue on the path of sustainable growth, and reassured him of the IMF's support for the government's efforts to implement this very ambitious program.

Let me take a question on Portugal that's online, since that may of broader interest.

"Due to the recent political events, has the government asked for an extension of the eighth review, which is due to begin? When can we expect that review to take place?"

On the exact timing of the next IMF visit, we are still in discussion with the authorities. I wouldn't really comment on political events, but would simply say that Portugal has made solid progress under the joint ECB-EC-IMF program, with great determination and sacrifices of the Portuguese people. And it's important that the record of strong implementation continues, so that recovery can take hold.

Let me take one more question, on the Ukraine, online, and then I'll come back in the room.

There's a question, asking, "On Ukraine, do you expect any decisions in the next months on the standby program?"

What I can say on the Ukraine is that there was an IMF visit on June 26th and 27th from Mr. Gueorguiev and Mr. Jarvis -- Mr. Jarvis the outgoing mission chief, and Mr. Gueorguiev the incoming. And they met with a number of officials in Ukraine, in the presidential administration, the government, and the national bank. And this was an introductory trip for the new mission chief to meet those officials and get their take on the economic issues facing the Ukraine.

As you know, the authorities have requested a standby arrangement, so discussions are ongoing on some of the outstanding policy issues there. Further technical work needs to be completed, and, again, we're continuing those discussions, with the aim of arriving at a consistent package of measures.

Let me come back inside.

QUESTIONER: Thanks. I had a question about Pakistan.

MR. RICE: Yes.

QUESTIONER: As announced last week, you have agreement to try to get a new (inaudible) to Pakistan.

So, I was wondering if you could speak about some of the prior actions that you're going to require of the government, since Pakistan wasn't able to complete previous reforms, and that's why the last IMF program went off track. And, kind of your confidence in this government's commitment to the program?

Thank you.

MR. RICE: Yep -- you're right that the next steps, you know, after the announcement of the staff-level agreement is implementation of the agreed prior actions by the authorities to prepare for our Executive Board's consideration of the loan request, tentatively scheduled for early September -- again, provided the prior actions are met.

Just responding directly to your question, the prior actions include the fiscal package, electricity price adjustments, launching of a tax reform initiative, certain central bank actions, and approval of the fiscal commitments by the Council of Common Interest.

QUESTIONER: I have another question. I promise it's the last one, Gerry, on Greece.

MR. RICE: On Greece.

QUESTIONER: Yes. And there is a lot of criticism in Europe for the IMF, and some people question the impartiality of the IMF, and its role in the European programs, especially on Greece and Portugal. They accuse IMF that IMF is hiding the problems under the rug, postponing the serious dilemmas after the German elections.

Do you have a comment about these accusations?

MR. RICE: You know, I think the IMF is well known for its straightforward, candid analysis. We are accountable to our shareholders, the member countries, and I can assure you that in the case of Europe, the countries with which we are involved, our shareholders there are well aware of our views.

And, you know, I'd also say we have -- as I think you all know, we have mechanisms in place to ensure that our rigorous assessment, our objective analysis, can be conveyed on a regular basis to the respective authorities and, in fact, to the world. Because we have these quarterly reviews, which -- we've been discussing a number of them here this morning. And, you know, these are published reviews.

And, you know, I think if you look at some of the reports that the IMF Has published in recent weeks and months, I think a lack of candor or transparency is not an accusation that anyone would make.

I want to make these the last two questions.

QUESTIONER: Can I please follow up on that? Because in your last assessment of the export evaluation of the previous program on Greece, you actually admit to delay in understanding within the troika -- not necessarily within the IMF -- that there was need for a restructuring of the Greek debt, and also on the need, on the conditions and the limitations that the political landscape within Greece was presenting on growth.

And I'm wondering whether this is not the case, another case of this happening again, right now, with the second program on Greece, where the German elections are actually delaying a decision that economically would make sense, you know, many months ago?

MR. RICE: You know, I wouldn't want to conflate the ex post review of the first Greek program to which you're referring with, you know, the current program that's underway. As we've discussed here before, the ex post evaluation on Greece referred to the first program, initiated in 2010, completed in 2012. Okay, so that needs to be separated out from the new program, the current program, which began in 2012. So I wouldn't want to get into a discussion of intermingling those, or conflating those two things.

You're going to have the last question.

QUESTIONER: I wanted to follow up on Pakistan.

Did you get any guarantees from the authorities over there that the program won't go off track like it did before? Did you get specific guarantees that they will implement the reforms that you are requiring?

MR. RICE: You know, when we move forward with these staff-level agreements, which we have done with Pakistan, they are, of course, on the basis of commitments made by the government. So, we're moving forward on that assumption. And as I said earlier, the next steps now include implementation of those agreed -- you know, we call them "prior actions," commitments. So that's the next step.

Okay. With that, I'm going to leave it there. And see you in a couple of weeks. Thank you for coming.


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