Transcript of a Press Briefing by William Murray, Deputy Spokesman, Communications Department, International Monetary Fund
IMF News, September 3, 2015
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- Published: September 3, 2015
Press logistics and upcoming schedule
- Briefing embargoed until 10:30 a.m. Washington time. That’s 2:30 p.m. GMT.
- Managing Director Christine Lagarde travel and availability:
- In Ankara, Turkey for the G-20 Finance Ministers and Central Bank Governors meeting (preparatory to the G-20 Summit in Antalya, Turkey).
- In Kiev on Sunday, September 6, for meetings with country officials, parliamentarians, women leaders.
- Arrives in Tunis, Tunisia on Monday, September 7 for official meetings with business leaders, civil society.
- Travels to Monrovia, Liberia on Thursday, September 10; a press release expected at the conclusion of that visit.
- Deputy Managing Director Min Zhu in St. Kitts for the Caribbean Forum; will travel next to Dalian, China for the World Economic Forum’s Summer Davos event.
- Next Washington press briefing: September 17.
- Annual Meetings in Lima, Peru in early to mid-October; key date: October 6, which is the latest update of our World Economic Outlook. Following that will be the Global Financial Stability Report and the Fiscal Monitor.
Greece — engagement, program preconditions, and debt relief
- IMF engagement:
- The IMF remains engaged with the interim government at the technical level and will work with the new government as soon as it is ready to reengage on policies. The situation depends on how elections play out (September 20 referenced).
- Preconditions for IMF program reengagement:
- For the IMF to reengage with Greece on a program basis, there will have to be substantial debt relief.
- Program success requires: strong and well-specified fiscal, structural, and financial sector reforms combined with debt relief by Greece’s European partners.
- The European Stabilization Mechanism Program is beginning, but decisions on most key reforms have been delayed until the fall.
- Political uncertainty:
- “The sooner things fall into place, the less costly they become.” The IMF avoids speculating about political processes but notes timing affects costs.
- Additional attributable statement (added on September 3):
- “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.”
- Excerpt from the debt sustainability analysis (mid-July) quoted in full:
- “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.”
SDR basket review and the People’s Republic of China
- IMF rules require completion of a review of the SDR Basket by the end of this year.
- Press release noted resetting of the Basket occurring by September of 2016.
- The review process is described as “completely on track”; the Executive Board must ultimately decide on SDR Basket composition.
- Engagement with China:
- The IMF is actively engaged with the Chinese authorities at a range of levels.
- Recent Chinese moves toward a more flexible exchange rate are broadly welcome.
- Market volatility:
- Short-term market volatility is described as “fleeting”; not in itself a reason to alter the SDR review process.
Ukraine — mission and debt restructuring
- Managing Director will make a short visit to Kiev; Olga Stankova expected to be on the ground with the Managing Director.
- Staff mission scheduled to arrive in Kiev on September 22.
- Mission focus:
- Implementation of the program to date and policies needed to achieve program objectives.
- Execution of the 2015 General Government Budget.
- Tax and expenditure policy for 2016.
- Implementation of the authorities’ structural agenda and anticorruption framework.
- Debt restructuring:
- The IMF welcomed that Ukraine and its core creditors have come to an agreement on debt restructuring.
- The agreement still has to be finalized “in the market” on a timeline “roughly over the next month.”
Egypt — gas discovery
- Recent very large offshore natural gas field discovery in Egypt:
- IMF view: the discovery “has the potential to improve Egypt's energy position and to contribute to its economy more broadly.”
- Given limited information at this stage, it is difficult to assess the ultimate impact; the IMF will explore the matter during the Mission Chief’s regular visit to Cairo this month.
United Nations General Assembly and Sustainable Development Goals (SDGs)
- Managing Director scheduled to attend the General Assembly, particularly the SDG segment, in late September.
- IMF actions relevant to SDGs:
- Executive Board recently endorsed a 50 percent increase in access to all the Fund's concessional lending facilities.
- Executive Board also agreed to maintain a zero interest rate on lending for low-income countries that struggle with disasters and conflicts.
- IMF engagement to expand in areas central to sustainable inclusive growth: domestic resource mobilization, inequality, inclusion, gender and climate change.
- The IMF will elaborate on these issues in the weeks and months ahead and feed into the U.N. process.
Global monetary policy and U.S. Federal Reserve considerations
- IMF view on U.S. monetary policy tightening:
- The IMF’s general view: the Fed should proceed gradually with planned interest rate increases as it moves from the zero bound.
- Rationale: inflation and wage pressures remain muted, and the output gap is not yet closed.
- Communications around Fed intentions are critical to allow countries to adjust.
- The IMF will not speculate on the exact timing of the first Fed hike; notes that the Fed and the Bank of England may be closer to tightening than other advanced economy central banks.
Migrant crisis in Europe
- The situation is described as “a sad, extremely sad situation” and a “humanitarian crisis in the making.”
- IMF monitoring: economists are assessing macroeconomic ramifications; European leaders are urged to take quick action to address the developing situation.
Transcript of a Press Briefing by William Murray, Deputy Spokesman, Communications Department, International Monetary Fund — September 3, 2015.
References
- Arab Republic of Egypt and the IMF
- Greece and the IMF
- St. Kitts and Nevis and the IMF
- Peru and the IMF
- Ukraine and the IMF
- People's Republic of China and the IMF
- Liberia and the IMF
- Tunisia and the IMF
- Republic of Türkiye and the IMF
- Special Drawing Rights (SDRs) -- A Factsheet
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