Transcript of a Press Briefing by William Murray, Deputy Spokesman, Communications Department, International Monetary Fund

September 3, 2015

Washington, D.C.
Thursday, September 3, 2015
Webcast of the press briefing Webcast
MR. MURRAY: Hi, Good day. I’m William Murray of the Communications Department at the International Monetary Fund. This is one of our regular biweekly press briefings. This briefing is embargoed until 10:30 a.m. Washington time. That’s 2:30 p.m. GMT. I’m going to have a couple of brief items to go over and then I’m going to take questions from the journalists here in the room and also from those that are currently online. I’d recommend if you could, if you haven’t submitted online questions yet, to do so as quickly as possible because there’s a little bit of a lag when they show up.

Starting with travel by senior IMF officials, Managing Director Christine Lagarde is currently in Ankara, Turkey for the G-20 Finance Ministers and Central Bank Governors meeting. That meeting, of course, is preparatory to the G-20 Summit in Antalya, Turkey later in the year. Gerry Rice, the Director of Communications here at the Fund is with the Managing Director. At this point in terms of press availability, unclear, but it’s a possibility there’ll be some press once the ministerial concludes on Saturday. Gerry will be the person to reach out to on Saturday for confirmation of that. In addition to the Managing Director, David Lipton, our First Deputy Managing Director -- he’s also out G-20 Sherpa -- is in Ankara with the Managing Director.

Following Ankara, Managing Director Lagarde will travel to Ukraine. She’ll be in Kiev on Sunday, September 6. She’ll have a series of meetings with country officials, parliamentarians, women leaders. I expect that Olga Stankova will be on the ground in Kiev with the Managing Director and will be reachable in terms of additional press availability. That’s again on Sunday, September 6.

On Monday, September 7 -- this is part of a series of opportunistic visits by the Managing Director as she travels from Asia where she’s been through Ankara on back to Washington. On Monday, September 7, she arrives in Tunis, Tunisia for a series of official meetings with business leaders, civil society, a fairly extensive agenda. Ismaila Dieng, will be on the ground with the Managing Director in Tunis, and you should reach out to Ismaila for those of you who know him. Those that don’t, his contact information is on the Media Website.

Then on Thursday, September 10, Ms. Lagarde will travel to Monrovia, Liberia. She’ll have a series of meetings there with the authorities, again business leaders, civil society. We expect a press release will be issued at the conclusion of that visit. The press officer onsite will be Lucie Mboto Fouda. So again for journalists in Ukraine, in Tunisia, and in Liberia, reach out to the respective press officers if you need updates on the Managing Director’s visit.

Then we have Deputy Managing Director Min Zhu is currently in St. Kitts in the Caribbean. We have a regular meeting with ministers and central bank governors from throughout the Caribbean. We call it the Caribbean Forum. That is now underway and this year being hosted by St. Kitts. Deputy Managing Director Min Zhu is the most senior person from the Fund at this meeting where they will discuss a host of issues, current challenges obviously facing the Caribbean, along with how to get more robust growth moving. Following St. Kitts, Deputy Managing Director Min Zhu will travel to Dalian, China for the World Economic Forum’s Summer Davos event.

That’s it as far as our housekeeping things. Just a reminder our next press briefing here in Washington is September 17. We will come back to you in terms of whether or not that briefing’s going to include sort of a preview of the Annual Meetings that will be held in early October, early to mid-October, in Lima, Peru. And the schedule for Lima, Peru will be going up on the Annual Meeting’s Website fairly soon. A key date to watch for, of course, is October 6, which is the latest update of our World Economic Outlook. And following from that will be the Global Financial Stability Report and the other flagship, the Fiscal Monitor.

Okay, with those items, let me know open the floor to questions. Let’s start here and then move back around.

QUESTIONER: Do you have any concerns that the elections in Greece will lead to a delay in the scheduled review and also in the discussions about the Greek debt?

MR. MURRAY: We just have to see how the elections play out. We really don’t like to talk about political processes in any country. The bottom line right now for those of you that haven’t followed Greece closely is that we still remain engaged with the interim government at the technical level. We’re going to work with the new government, whatever government that may be, as soon as that government is ready to reengage with us on policies. But beyond that, we just have to wait and see what happens on September 20.

QUESTIONER: And do you think that the Europeans are ready to provide significant debt relief and to ask them a relief that’s well beyond what has been considered so far? And if they are not ready, will the IMF not participate in the third program?

MR. MURRAY: Just let me remind everyone, this is not new. We’ve been saying this for some time now that for us to reengage with Greece on a program basis, there will have to be substantial debt relief. I’ve no reason to believe that that won’t happen, but we have to see how things play out. To repeat as we’ve said before, for our program to successfully restore medium term fiscal sustainability and growth it needs to be based on strong and well-specified fiscal, structural, and financial sector reforms combined with the debt relief by Greece’s European partners. The European Stabilization Mechanism Program is beginning, but decisions on most of the key reforms have been delayed until the fall. And, of course, we’ll work with the EC and the ECB and the Greek authorities to put in place these reforms.

QUESTIONER: But do you have any concern that these reforms that you just mentioned will delay because of the political uncertainty?

MR. MURRAY: You know I think I’d have to speculate and I’m not prepared to do that. I mean the important thing to remember is that the sooner things fall into place, the less costly they become. Let me turn to you. Can you identify yourself for our viewers and then I’ll go over here.

QUESTIONER: So just to close the Greek theme, do you think -- how important do you think the Greek discussions will be at the G-20 in Ankara this weekend? Do you think a call for significant debt relief might make it to the G-20 Communique? And my second question is about China. Is the IMF still on track to make the decision or not SDR by the end of this year and is it inclined to support such an inclusion?

MR. MURRAY: I’ll take the first question about the G-20 and Greece. I’m not aware of Greece being an agenda item in Ankara. I mean that is really a European issue, although systemically important, but I’m not aware that Greece is a specific agenda item. There may be sidebar discussions, but I’m not aware of Greece being a focal point of the agenda in Ankara. There are much broader issues on the table there. In terms of China and the SDR basket reform, yes there’s no delays. We have to -- we must complete a review. Whether it's China or not, it doesn’t matter what currency, we must be required under our rules to complete a review of the SDR Basket by the end of this year. And that will happen. And as you know we issued a press release a number of weeks ago, talking about the resetting of the Basket occurring by September of 2016.

I think there is some misguided speculation that has somehow represented a delay. So no, it's not that, it's just that if there is a change, a substantial change in the SDR Basket to the incorporation of a new currency, central banks around the world need to be able to get ready do that. So, you can't do this stuff overnight.

As far as I'm aware the review process is completely on track. We are actively engaged with the Chinese authorities at a range of levels, and that engagement is active, and we'll see how it plays out. You know, again, a reminder that ultimately it is the -- ultimately it is the decision of the Executive Board in terms of who is in the SDR Basket, it's ultimately their review that they must complete, and we have to let that process play out.

QUESTIONER: How about the staff -- Do you feel like staff is in favor of including this?

MR. MURRAY: Well, I mean, I'm not going to cast the die anyway, but we are actively working the Chinese authorities. Please, I'm going to go with some questions online.

QUESTIONER: Do you expect there to be any discussion about the inclusion about of the yuan and the SDR Basket in Ankara? And secondly on Ukraine, last week there was the restructuring deal, do you agree that was -- some people who said that that was too generous to creditors, and therefore creates the risk that the Ukraine, like Greece, might be coming back and back for more restructuring.

MR. MURRAY: On the SDR, I don’t -- again, I don’t believe that the SDR Basket is a formal agenda item at the Ankara Ministerial. I think in the past, if I'm not mistaken, some of the Group Gs have remarked about this in their formal communiqués, but I'm not aware that this is a formal item for discussion. Of course, there are always sidebar discussions, but I don’t believe the SDR Basket is a formal agenda item in Ankara.

On Ukraine, I really don't have -- that would really be asking me and asking the Fund to speculate about something that is purely speculative. We have, as you know, issued a statement, welcoming the fact that the Ukraine and its core creditors have come to an agreement on debt restructuring that’s needed. That still has to go to market, so to speak, to be finalized, and we look forward to that happening fairly soon. There's a timeline for that over the next -- roughly over the next month, and then we move from there. But beyond that, I don’t really want to speculate about -- I think it's good that they’ve done a deal with their creditors.

ONLINE QUESTIONER: The IMF is to send a mission to Ukraine, is the date of arrival set?

According to the guidance I have here, Alicia, there will be a -- as I noted at the top of our briefing here, the Managing Director will be arriving shortly in Kiev for a brief visit meeting with the authorities opportunistic, it's a great time to take stock with the authorities on where things stand.

Then a staff mission will be going to Kiev, and their scheduled arrival is on September 22nd. The focus of this mission will be on the implementation of the program so far, the policies needed to achieve the objectives of the program going forward. Some of the topics of that mission will be the execution of the 2015 General Government Budget, tax and expenditure policy for next year, for 2016, and implementation of the authority's structural agenda and anticorruption framework. That’s what I have on Ukraine at this time.

ONLINE QUESTIONER: Who from the IMF is coming to the U.N. General Assembly in late September, and what is their program? What do they hope to accomplish?"

Matthew, the Managing Director is scheduled to attend the General Assembly, particularly the SDG segment of the Assembly in late September. She will be leading the IMF Mission Team to that. And in terms of, you know, it's an up -- there was a previous meeting in Addis Ababa that we participated in at a high level which dealt with the SDGs.

And let me just, a quick reminder on what that’s about. At that meeting we delivered on some measures that are directly in support of the post-2015 Global Development Agenda, that’s just what the SDGs are about. The IMF Executive Board recently endorsed a 50 percent increase in access to all the Fund's concessional lending facilities, and also agreed to maintain a zero interest rate on lending for low-income countries that struggle with disasters and conflicts.

The Executive Board of the Fund has also endorsed proposals to expand the IMF's engagement in several areas that are central to achieving sustainable inclusive growth. The whole concept of the SDGs, and these include domestic resource mobilization, inequality, inclusion, gender and climate change. We'll be elaborating on those issues, resource mobilization, inequality, inclusion, gender and climate change in the weeks and months ahead. There's quite a bit of work underway at the IMF on those topics, and we'll feed into through the U.N. process this year.

ONLINE QUESTIONER: What is the Fund's assessment of Egypt's latest gas find, and its impact on Egypt's increasing energy demands?

This is in reference to the news, I believe was announced last about a very, very large offshore natural gas field discovery. Basically, our view is that the discovery of a major gas deposit has the potential to improve Egypt's energy position and to contribute to its economy more broadly. However, given the limited information that we have at this stage, about the find and its exploitation, it's difficult to assess the ultimate impact, but it's something that we're certainly well aware of. And, as we saw earlier today, the Mission Chief for Egypt will be going to Cairo for a -- this month for a regular visit. It will be -- give us a chance to explore this matter more actively.

ONLINE QUESTIONER: Do you expect that China's recent market volatility will play into the Executive Board's decision on the SDR basket?

I think it's a little speculative. I'm really -- I'm not in a position to really speculate about market volatility because for that reason it's fleeting, not sure how long it's going to be around. But certainly, the government -- the Chinese government's move to adopt a more flexible exchange rate is broadly welcome throughout the IMF. It's one of our key policy goals for China in general. A more flexible exchange rate is really what we think China needs to pursue and it's moving in that direction. Some of the recent volatility that we've seen in markets has been the result of some -- of some of this -- some of these -- some market reaction to the move to adopt a more flexible exchange rate in China, but that in and of itself isn't a reason for us to be voicing concern about China and the SDR basket.

QUESTIONER: I would like to know; where does the IMF stand on the migrant crisis in Europe and especially in the case of Greece that has to deal with such a problem while in a deep crisis, economic crisis?

MR. MURRAY: Well, it's a sad, extremely sad situation that seems to be developing in Europe at the moment, and you know, we're watching carefully. Our economists are looking at -- you know, as we would naturally do, looking at macroeconomic ramifications. Way too early for me to get into that, but it is certainly a humanitarian crisis in the making, and we hope that the European leaders will take quick action to address this developing situation.

QUESTIONER: So there is a Fed meeting later this month with, I guess, some probability of interest rate increases. You know. What are the IMF's concerns about the global reaction which accompanies, if it might be (inaudible) should be on guard?

MR. MURRAY: Right. Well, let me step back a little bit in the sense of for some time now, quite some time now, particularly in the wake of the taper tantrum that we saw in 2013, it's been clear that our general -- our general view has been that the Fed and communications are critical so that countries broadly around the world can adjust. Right now, obviously, the situation globally is pretty bumpy, but our general view is that recent developments have not changed our view that the Fed should proceed gradually with planned interest rate increases as it moves from the zero bound. Because inflation and wage pressures remain muted, and the output gap is not yet closed, we continue to believe that the Federal Reserve can afford to hold interest rates low until there are more tangible signs of wage or price inflation than are currently evident.

Let me also remind you what we've been saying in the context of our U.S. Article IV consultations that -- you know. I know a lot of people are speculating about exactly when the first Fed hike may occur or may not occur. I don't want to get into that game. But we have made it clear all along that when the Fed does start to tighten we expect it to be fairly incremental and that it's important, again, communications about the intention of monetary policy going forward will help all countries adjust appropriately. And they will have to adjust, obviously.

QUESTIONER: But do you mean you don't want to give a view on whether they should raise interest rates next week or not?

MR. MURRAY: Well, I mean, our general view is they have flexibility to hold off. The indications now, broadly speaking, are that the -- that certain central banks, the Fed and the Bank of England, are closer to tightening than other central banks in the advanced economies. It may -- it's going to happen eventually, and whether it happens next week or not I'm not going to comment on that.

I think we've covered most bases. Again, this is embargoed. We're embargoed until 10:30 a.m., 2:30 p.m. GMT. Our next briefing will be here in Washington, D.C. on September 17th. We look forward to seeing you again. We look forward to seeing you in Lima, Peru for our Annual Meetings in October when we'll be able, through various reports and other events there, to elaborate more on current developments in the global economy.

Thanks for coming.

[Added on September 3. In response to the question asking if the IMF has changed its mind on Greece, this statement, can be attributed to Mr. Murray:]

“We have not changed our mind. As we have said before, Greece needs debt relief that goes well beyond what is currently being considered. This would not necessarily involve haircuts provided that there is agreement on strong structural reforms in the fall, in particular pension reforms. Without such reforms, we would have to reconsider medium-term fiscal targets and haircuts could no longer be excluded. There is nothing new here. This is in line with what we have been saying for a long time. 

To underscore the point that we have indeed not change our mind, I’d point you to the debt sustainability analysis issued in mid-July, particularly the very last paragraph, which I paste here for you:

“The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM. There are several options. If Europe prefers to again provide debt relief through maturity extension, there would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt, including new assistance. This reflects the basic premise that debt cannot be assumed to migrate back onto the balance sheet of the private sector at interest rates close to the current AAA rates before debt levels have been brought to much lower levels; borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for the next several decades. Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide.”


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