Transcript of a Press Briefing by Caroline Atkinson, Director, External Relations, IMF

July 16, 2009

Washington, D.C.
Thursday, July 16, 2009

Webcast of the press briefing Webcast

MS. ATKINSON: Hi, good morning everybody. I’m Caroline Atkinson, Director of the External Relations Department at the IMF. Welcome to you and to the journalists participating via the Online Media Briefing Center to our biweekly press briefing.

I’d like to start with a reminder that the registration for our annual meetings for the press registration opened last week. You can register through the joint IMF/World Bank website for the meetings, which is linked to the homepage of our website.

I’d also like to mention that our formal annual recess of the Executive Board will begin on August 10th. That’s the formal two-week recess. There will be no formal Board decisions in that period. Of course, we, EXR and Media Relations, will remain open for business.

Turning to IMF finances, there’s been as you may have noticed, some more progress on mobilizing new resources to support our lending activities. And a loan agreement with the government of France for $15 billion, which was part of the overall $100 billion commitment made by the European Union, or 75 billion euros, was approved by the Executive Board on July 6th, and is expected to be signed soon. That will add to the resources that have already been made available by Japan, Norway, and Canada, and many others that have committed resources.

Let me also mention that our Fiscal Affairs Department has been working on several papers covering aspects of taxation and associated issues relevant to the economic situation. One of these is a Staff Position Note entitled “Collecting Taxes During an Economic Crisis: Challenges and Policy Options,” which was published on on Tuesday. Later this month we expect to launch a quarterly Fiscal Monitor to provide regular updates on government finances, and we’ll be in touch with you on the precise timing of that.

Finally, let me announce, looking further ahead, that in 2010, next year, we will be launching a new research journal called IMF Economic Review. This is the baby or brainchild of Olivier Blanchard, our Chief Economist. It will replace the current IMF Staff Notes, and will be dedicated to publishing top-quality research on open economy macroeconomics. The publication will be open to both IMF and outside economists for unsolicited submissions, and it will be edited by the distinguished UC Berkeley academic, Pierre-Olivier Gourinchas.

Let me turn now to your questions and remind journalists online to submit questions.

QUESTIONER: Could you give us an update on Latvia. What is the status of the mission? If it’s just the mission here that’s coming back? Also, what is the status of the next disbursement? We’ve seen reports that the IMF is not quite happy with certain things going on, so could you just let us know what the facts are?

MS. ATKINSON: Absolutely. Well, as I’ve said before, we are very concerned to support the Latvian authorities. We have been having productive meetings with them, including the Prime Minister and the Finance Minister, and a number of related technical meetings this week. We’ve been working closely with the EU. The mission is continuing its work. As you mentioned, Anne-Marie Gulde is coming back this weekend, as scheduled, but the mission is continuing its work. We have been particularly concerned to avoid social costs that could be involved in some of the measures that have been under consideration and to help the authorities to protect the most vulnerable. But, as you know, there’s a broad consensus amongst all the parties involved about the goals of the Latvia program, and we’re having productive discussions.

QUESTIONER: Can you see a possible resolution to this pretty quickly? I’m concerned obviously with financing. You know, when would you see that some agreement is coming? Is it close? Is it just a technical issue?

MS. ATKINSON: I’m afraid I can’t go into all of that. Sometimes things can happen very quickly, but I do think that we’ve been having productive discussions. The mission is staying. It’s continuing its work, and I’m sure that everybody’s very keen to reach a resolution.

QUESTIONER: There have been some really concerning numbers coming out of the Turkish economy, unemployment numbers jumped, budget deficit jumped 13 fold. And we’ve seen the government taking some measures like increasing some of the taxes, like the gas tax and the tourism and everything. First of all, where are the talks between the Fund and Turkish government? And are these precautions that are taken or measures that are taken in line with, parallel to the talks that are going on in the Turkish government?

MS. ATKINSON: I’d just like to say that discussions are continuing with the Turkish authorities. You probably saw the Prime Minister’s comments last week that he would like to, I mean, I don’t want to paraphrase him, but I think the general gist was that he would like to reach an agreement with us. He met, as you know, in the margins of the L’Aquila Summit with the Managing Director, Dominique Strauss-Kahn. So, we’re involved. And, of course, you’re right, that there are difficult numbers that have been coming out. That is a concern of everybody’s. I think the Managing Director made a more general point about the global economy that we don’t see any time for complacency. We do expect a general global recovery to be beginning and there to be world growth next year, but it will be not fast enough to stop unemployment from rising in the world.

QUESTIONER: I have a follow up, not on Latvia, but it’s on Pakistan this time. We’ve seen the finance official yesterday talking in New York, saying that they’ve asked for an additional $4 billion dollars. Could you confirm this? We know a mission actually had talks with the Pakistanis in Turkey, and just wanted an update on that please?

MS. ATKINSON: Well, you’re right that there was a mission, it was a second mission on the second review that was discussing it in Turkey last week. And they had very good discussions. They’ve concluded that phase of the discussion on Friday, and we will let you know when there is anything scheduled for an agreement.

QUESTIONER: But you can’t confirm the $4 billion?

MS. ATKINSON: I can’t confirm the $4 billion. I think a number of issues have been under discussion.

QUESTIONER: Anything specific on the fiscal side that the Fund wants to see in Turkey? And do you have a number? I know you stay away from saying numbers on Turkish talks, but anything to tell?

MS. ATKINSON: This is a matter that’s under discussion with the mission team and the Turkish authorities, so it would be premature for me to indicate particular policy measures or numbers now. Just to say that I think we all agree that whatever happens, there is a need for Turkey looking forward to address its fiscal issues.

QUESTIONER: I wanted to ask you about this new SDR allocations coming from the G-20 that are going to be introduced. According to rules, it should follow the quotas of the different countries, right?? Has it been considered at all to give it more to the countries who need it more, or will it just follow the rules? And have you heard anything from any country on their will to use it?

MS. ATKINSON: The SDR allocation under discussion is a general allocation, as you said, that goes proportionately to every member country according to their quota. And the rules governing such an allocation are rather specific, so it’s not something that would get switched around. It’s rather more complicated to agree, what we call a “special allocation,” which allocates disproportionately. And that’s something that requires an amendment of the articles and so on, one of which was just approved to give some new member countries SDRs, but that amendment had been awaiting I think for about 10 years. So the general allocation can move much more quickly. It requires a high Board majority, but we expect to be able to make an announcement on that very soon.

QUESTIONER: And did you hear from any country on their will to use it, other than in discussions on this?

MS. ATKINSON: No. Again, I suppose for any individual country, it depends whether using SDRs to provide some form of assistance is advantageous relative to using other kinds of money. It may often be just the same as allocating money from a budget. So it’s rather different for different countries, I suppose. And I’m not familiar with that. QUESTIONER: I’m just following up on the issue of the bonds that was announced last time. I just want to clarify: could the Fund issue one of those bonds or be asked, or would a country have to come to the Fund first and say, okay, we’re ready to move on the first bond?

MS. ATKINSON: I’m going to attempt an answer, and then if I get it wrong, I’ll correct afterwards. We have now agreed the framework under which bond agreements could be made, and those bond agreements are under discussion with individual countries. You know a number of countries have said they’re interested in investing in these notes. And those agreements with the individual countries can be made, just like agreements have been made with France, with Japan, with Norway, on a loan agreement. So we would, whenever there is one of those countries that’s interested in investing in notes, whenever they’ve finalized that agreement with us, we would be announcing it. Then that means that there would be a lot of sort of available resources that the Fund could use if we needed to support lending. So it’s not that the commitment to purchase the notes waits until we need the money. The commitment to purchase the notes, the agreement, the specific agreement with specific countries, would come before that.

QUESTIONER: Does the NAB first have to be revised before this can happen? You know, because I believe that the IMF is looking at revising and expanding the NAB.

MS. ATKINSON: Well, the NAB participants are looking at expanding and revising it. That’s something that is done by them. We obviously are part of the discussion and support it, but the mechanics of the NAB is something that is run by the countries that participate. And, indeed, there are discussions about expanding it and making it more flexible and those discussions are quite well advanced. And then it’s likely or it’s been suggested that the monies that will be made available through note issuance and loans may get folded in eventually to the NAB, but that’s a slightly separate track.

QUESTIONER: On Zimbabwe, they got a big loan announcement from China. That’s something that you worry about at the IMF. I don’t know exactly when was the last time Zimbabwe borrowed from the IMF. Is there any plan to resume lending to Zimbabwe?

MS. ATKINSON: We have had a mission to Zimbabwe and we are in discussions with them on policy advice and on targeted technical assistance. And we did actually put out a press release describing our relations with them earlier this month, I believe on July 2nd, that you may want to look back to. And we made clear there that before Zimbabwe could ask us for regular IMF financing, they would have to have committed donor support to help them clear arrears. So that would be the timing. And I don’t have a comment on the reports of the China loan.

QUESTIONER: For the record, is any travel coming up for anyone? I notice you didn’t make any travel announcements.

MS. ATKINSON: Right. We’ll get back to you if there’s something before the Board recess. I’m not aware of particular, important travel between now and the recess. By late August, when the recess is over, there will be G-20 meetings and other seminars, and the G-20 Pittsburgh meeting, and then of course the Annual Meetings. So we’ll have plenty to talk to you about then. And I, myself, will be going to Turkey probably in early September to talk about the Annual Meetings.

QUESTIONER: To go back to Latvia. You mention the worries about personal suffering consequences. Is this the program at the moment of all programs out there that feels the most delicate?

MS. ATKINSON: Probably everybody who’s working on a particular country feels that that is very challenging for them. So, we have a range of difficult issues and country situations that we deal with. I wouldn’t want to characterize one of other is the most difficult. I’ll get back and find that colleagues working on other countries will say, oh no, mine is really hard, too. So, for every country, their situation, and for the people there, is the one that’s most critical, of course. And we’re very concerned about the people in all of these countries.

I have the following question in the Online Media Briefing Center: has the expulsion from Honduras resulted in any changes or discussions within the IMF? In response, and just to deal with that, we have followed normal international practices. We don’t have any program with Honduras, so there is not an issue for us on how that would be proceeding.

On Sri Lanka, I’m sorry, the second part of the question is what is the status of Sri Lanka’s loan application? As you know, I think there was a mission to Sri Lanka, following up on earlier discussions that came back recently. I think they had good discussions with the authorities. We’ll, of course, let you know whenever we have anything in particular or specific to announce.

An Executive Board meeting, because the first thing that happens is a staff-level agreement, then an Executive Board meeting would be where all of the international community’s views would be considered.

Thank you very much.


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