Transcript of a Press Briefing by Gerry Rice, Acting Director, External Relations, International Monetary Fund

September 8, 2011

Washington, D.C.
Thursday, September 8, 2011
Webcast of the press conference Webcast

Mr. RICE: Good morning, everyone. I'm Gerry Rice, Acting Director of the External Relations Department at the IMF. Welcome to this biweekly press briefing. This is embargoed until 10:30 a.m. Washington time. This will be the last briefing before the Annual Meetings, and related events, which is as you know the week of September 20 to 25, and it might be useful for you if I can run through some of the major upcoming events as follows:

Next week, September 13, next Tuesday, we have the analytic chapters for the Global Financial Stability Report and they will be launched at a press conference at 9:30 a.m. The following day, September 14, same time, 9:30 a.m., we'll have the analytic chapters of the WEO, the World Economic Outlook.

On September 20, Olivier Blanchard, who is the Fund's Economic Counselor and Director of the Research Department, will present the two forecast chapters of the World Economic Outlook. That's at 9:00 a.m. On the same day, September 20, we will also have the launch of the Fiscal Monitor document. That will be by Carlo Cottarelli, Director of the Fiscal Affairs Department, and that will be at 10:30 a.m. The day after that, that's the 21st, at 9:00 a.m., Jose Viñals, the IMF's Financial Counselor and Director of the Monetary and Capital Markets Department, will present the main chapter of the GFSR, the Global Financial Stability Report. Those are the three key flagship documents as you know in the run-up to the meetings. They will be made available to you ahead of publication under embargo on the Online Media Briefing Center and you will be receiving media advisories to that effect.

A couple of other things that you may find interesting related to the Annual Meetings, on September 22 at 9:30 a.m., Managing Director Christine Lagarde will hold her first Annual Meetings press conference to review the issues under discussion at the meetings. On the following morning, September 23, the Annual Meetings will open officially with the plenary and the gathering of the Fund and the Bank's shareholders. That event will be open to the press and held at Constitution Hall here in Washington. Then as I'm sure you know, on September 24 the IMFC, the International Monetary and Finance Committee, the Fund's policy steering body, will hold its meeting followed by the customary press conference. Let me also mention finally in the context of the Annual Meetings the Per Jacobson Lecture, which is on the morning of September 25. This year we have Axel Weber, the former President of the Deutsche Bundesbank, and he will deliver that lecture at 11:00 a.m., and that's open to the press.

All of this is available on the Annual Meetings page on the Fund's website so that you can find more information there.

In terms of the agenda at the Annual Meetings, we're anticipating that the IMFC will discuss the current economic developments and review the Fund's mandate and role in light of those developments, the institutional framework, lending instruments, surveillance capabilities, and so on, basically looking at how the Fund can respond even more effectively in terms of serving our membership at this point.

Finally now, ahead of all of that, a little bit on management travel for the Managing Director. Tomorrow Christine Lagarde will be in London to participate in a panel discussion with Chancellor Osborne. That will be held at Chatham House in London. The title of that event is Challenges Facing the Global Economy. That is open to the press. Then the day after, September 9 and 10, Christine Lagarde and First Deputy Managing Director David Lipton travel to Marseilles to participate in the G-7 Meeting of Finance Ministers and Central Bank Governors. On September 10 she will participate in a meeting of the Deauville Partnership to discuss support to transitions in the Middle East and North Africa. We do anticipate a press conference following that meeting on the Middle East and North Africa in Marseilles. Finally, finally, September 15, next Thursday a week today, Christine Lagarde will deliver a speech at the Woodrow Wilson Center here in Washington entitled Global Economic Challenges and Global Solutions. That will be at 10:00 a.m. and that event will be open to the press. My apologies for going on at such length, but I hope that information is useful to you. Now I'm happy to take your questions.

QUESTIONER: I know I'm only supposed to expect answers that are in the book, but we're at a pretty critical stage here in the global economy particularly with Europe where it is and it would be irresponsible of me as a journalist not to ask probing questions even if I'm not expecting deep answers. That's not to say that you can't answer them, but just I know the constraints. The Greek program's talks have been suspended. This sovereign debt crisis has gone from one stage to the next, escalating, not deescalating. Europe seems to have acted by the IMF's own account at too slow a pace. The market is racing ahead -- what policymakers can do. Is the IMF just basically unable to do anything to stem the sovereign debt crisis? Secondly, there has been dithering over capital needs in Europe, bank capital needs. Are bank capital needs and liquidity sufficient, adequately given the sovereign debt risks and the worsening economic outlook there?

Mr. RICE: Thank you. I think I hear two questions there, one in Greece and one more broadly on European banks.

QUESTIONER: I'm sorry. I know that it long.

Mr. RICE: It was.

QUESTIONER: I understand that. I apologize. The broader question was more than just Greece. It was about Europe. Is the IMF unable to really do anything to stem -- it appears as though it's ineffective to stem the crisis so far and I'm wondering if there are other options that the IMF has that it hasn't put on the table, IMF bonds, bilateral -- from China, et cetera, to help that situation.

Mr. RICE: Thanks for sharpening that. The IMF has been as you know working closely with our partners in Europe to help stem the crisis on a variety of fronts and I think you're all familiar with that, including in helping with programs to help countries get back on the growth path. I think what we can expect at the Annual Meetings is that these discussions will be continuing and I think we should wait for that to happen and then we can revisit in terms of what is going to be on the table.

In terms of the broad issue of European banks and so on, again we want to wait now for the Global Financial Stability Report. We are working to finalize that document. We had a meeting with our Executive Board last week and we are reflecting on those discussions. And as I mentioned, the GFSR will be forthcoming on September 21 and we will have a full press conference at that time at which these and other questions can be raised.

QUESTIONER: I have a question about Greece of course. What is the real problem between Athens and the Troika? What are you asking the Greeks to do and they don't?

Mr. RICE: The mission is still ongoing, so it's not prudent to go into great detail on that. What I would refer you to is the statement from the ECB, the European Commission and the IMF last week, which said that good progress had been made but they are temporarily leaving Athens to allow the authorities to complete technical work among other things related to the 2012 budget and to the implementation of structural reforms aimed at growth. That statement also said that the mission expects to return to Athens by mid-September to continue the discussions on policies needed to complete the review as soon as the authorities have completed that technical work. So I'm not really in a position to go into much more detail beyond that statement.

QUESTIONER: If I may, you cannot tell us when they are going back if I understand well?

Mr. RICE: Michael, I don't have a specific date for you right now, but as the statement said, it's going to be around mid-September is the expectation.

QUESTIONER: To pick up from what Ian was saying, are Christine Lagarde and the IMF sticking to that figure of 200 billion recapitalization needs or is there discussion that maybe the Fund got something wrong?

Mr. RICE: As I said, I don't really have anything fresh on that issue. We're working on the GFSR, the Global Financial Stability Report. It's going to come on September 21, we've had the board discussion, we're reflecting on that, and I think we should wait just over a week now for the GFSR and come back to it then.

QUESTIONER: So what you're saying is you're refining the details, that it was a draft? The final report isn't completed yet?

Mr. RICE: The final report is not complete. It's absolutely normal process that we have a draft, we discuss with the board, we reflect on that and then we finalize. That will come on September 21 with a full press conference around that and I think it would be good to wait for that.

QUESTIONER: I asked that question because Trichet has his news conference and he's just said a few minutes ago that they're sticking to the results of the European stress tests. The other one is on Greece. If the technical details are being worked out, can we expect some discussions during the IMF meeting to proceed on Greece between the finance minister who will be present and obviously senior Fund officials?

Mr. RICE: I'm sure that discussions will be continuing during the Annual Meetings, but to repeat where we are in the process, the mission is ongoing. It has temporarily left Athens to allow the authorities to get on with some of the technical work that needs to be done. And the mission is expected to return around mid-September. So that's going to happen before the Annual Meetings. But you're absolutely right that the Greek authorities will be here for the Annual Meetings and I'm sure there will be discussions at that time.

QUESTIONER: I asked that question because two weeks ago David Hawley who stood before us said that the Fund was aiming to complete the approval of the next tranche by the end of September and I was wondering whether you think that there could be some delays considering delays on the technical front.

Mr. RICE: I think David spoke before the statement from the mission last week, so what we need to do now is let the mission return mid-September and then we'll have a better sense I think of exactly when the board date might be because I think it would be premature to jump to it now.

QUESTIONER: So there could be delays?

Mr. RICE: I think what I'm saying is let's wait for the mission to complete its work and then we'll have a stronger sense of the exact board date.

QUESTIONER: If I remember right, in the Spring Meetings this year the IMFC's Chairman Shanmugaratnam mentioned that the IMF work on the Consolidated Surveillance Report. Could you please elaborate on the process of this work? Will there be any result of this work during the Annual Meetings?

Mr. RICE: Yes, there will be a Multilateral Consolidated Surveillance Report that will be presented to the IMFC and it will draw together the various strands of the IMF's surveillance work that you will see incorporated in the WEO, the World Economic Outlook, the GFSR, the Fiscal Monitor and so on. It will bring these things together in a consolidated way and that will be presented to the IMFC.

QUESTIONER: Could you share with us more specifically if you can about the agenda in G-7 Marseilles?

Mr. RICE: I'm not privy to the agenda for the G-7 in Marseilles beyond what I indicated at the beginning, that on Saturday the focus is going to be on the Deauville Partnership and efforts to support the transition in the Middle East and North Africa.

QUESTIONER: I'd like to go back to Greece because there are a few points. First of all, is there no reaction from the IMF at all to the recent pledge by the Greek government to accelerate its reform I think it was 2 days ago or 3 days ago? The second thing is the IMF is the only partner that's not mentioning and keeps not mentioning a second bailout program. Where do we stand on that? Does the progression of the PSI give you satisfaction or are there elements for you to make a decision on this?

Mr. RICE: In terms of implementation of the program and government statements indicating their commitment to that effect, we welcome them. We think that obviously implementation of the program is what is key at this point. What I was indicating earlier, is that we're still in the process of the fifth review and I think you know, and I think the Fund watchers here know how this works, that we need to receive a request for a program or in this case a second program from a country, from the Greek authorities, and there has been no such request at this time. So again we are still in the process of the fifth review, there is a temporary break in that to allow the work to continue and then the mission will continue and the objective will be to complete that fifth review.

On the PSI, on the private-sector involvement, I can tell you is that the authorities have indicated that they intend to maximize the participation of the debt exchange targeting the 90-percent rate originally assumed by the Institute of International Finance (IIF), and the authorities are now in the process of inquiring about the creditors' interest in participating.

QUESTIONER: Does the IMF have adequate resources to handle a joint Italian bailout should there be need of one? It's not just a random hypothetical, but one that the market is currently factoring in. Previously the IMF has commented about the adequacy of its resources to handle other hypothetical situations.

Mr. RICE: I wouldn't comment on hypotheticals, as you said related to individual countries, but what I can say is that thanks to the actions taken by the membership since the beginning of the crisis, the Fund is in a strong position to meet its members' need as necessary. And as I mentioned at the beginning, during the Annual Meetings I think this will be one of the issues along with surveillance and the role of the Fund that I think the membership will be discussing in the course of the meetings.

QUESTIONER: Just a follow-up. You mean the resource needs or not of member countries and the adequacy of the IMF to provide those resources will be one of the priorities on the agenda. Am I understanding you correctly?

Mr. RICE: It's normal at the Annual Meetings for the membership to take a look at the Fund's institutional framework and capacity and I would expect that that would be under discussion at the Annual Meetings.

QUESTIONER: And these are normal times?

Mr. RICE: I'm talking about the normal process of the Annual Meetings and what's discussed.

QUESTIONER: I want to ask about Brazil. Brazil had a surprise rate cut of 50 basis points 2 days ago which even seemed to surprise the President. I was wondering if the Fund thought that that move was appropriate considering -- and the reasons given by Brazil for that rate cut which is a slowdown in the global economy? Then I have a follow-up.

Mr. RICE: Generally, as you know we don't comment on interest rate moves. But as you said, the global economy is slowing more quickly, downside risks are increasing and we understand that the Central Bank in Brazil has emphasized those downside risks to the Brazilian outlook in coming to this decision.

QUESTIONER: I have a question on Afghanistan, following-up, if there is a mission planned to go back to Afghanistan soon and discussions about the program was suspended. Exactly what were those discussions focused on?

Mr. RICE: I can tell you that there is going to be a small team in Kabul next week to discuss with the authorities some of the key actions that would be needed if the authorities wished to move forward with a program. More broadly, we remain committed to our dialogue with the Afghan authorities and we look forward to continuing our discussions with a view to supporting economic reforms in Afghanistan.

ONLINE QUESTIONER: Is it logical, possible, for Greece to exit from the eurozone?

Mr. RICE I think this falls under the category of speculation and, I wouldn’t comment on that except to say that obviously the goal is to put Greece, help Greece, get back on the path of growth and to resolve the crisis that it’s facing. And all of us, the IMF working with our European partners, are working toward that goal.

QUESTIONER: Just to follow up on Greece, you’re saying that the goal is obviously to get Greece back on path. Finland requiring collateral for its lending was not a cost factored into the IMF assessment of the program, and I’m wondering what the IMF thinks. Will such collateral requirements by even one country put undue burden that the IMF has admittedly already said that the country is already on a razor’s edge for success or failure?

Mr. RICE: Well, I think this question came up a few weeks ago also, Ian, and I don’t really have a very different answer from then, which is to say, you know, we understand that discussions are continuing among Euro member states with the Greek authorities on the appropriateness and technical feasibility of such arrangements. And I think until those discussions are finalized, it’s not really prudent for me to comment further.

QUESTIONER: Just a second follow up, are there consequences or dangers for the ECB to be indefinitely providing liquidity for the eurozone? One of the changes in the July 21 agreement that the IMF was a part of in negotiating was the change in the EFSF to help to provide that backstop, that liquidity backstop. And I’m wondering, does the IMF -- just to repeat the question -- does the IMF have any concerns about the ECB indefinitely playing that liquidity role?

Mr. RICE: I’d really leave it to the ECB to comment on that. But I think what I can say is that we are on the record as supporting strongly the July 21 commitments that were made by the European authorities. And as you know, we are working in partnership with the ECB in the program countries in Europe, working very closely. And we certainly think that the actions the ECB has been taking have been very supportive. Leslie?

QUESTIONER: I was wondering whether the IMF had expressed a level of participation by the private sector banks for Greece. I mean, we know that the IMF said they were aiming for 90 percent. It looks like today the Greek banks are actually saying 75 percent would be fine. I mean, is there a level of participation that the Fund thinks would be appropriate?

Mr. RICE: I haven’t seen the comment that you mentioned, and I can only repeat what I said before that the authorities have indicated they intend to maximize the participation, targeting the 90 percent rate. And again, I haven’t seen anything that deviates from that.

QUESTIONNER: The IMF has -- Lagarde has said that the EU needs to recapitalize -- the EU banking sector needs to recapitalize. I’m wondering why recapitalization is necessary if the risk of default is, as you say, completely speculative.

Mr. Rice: I have to say again, as I said before, I really don’t have anything fresh for you today on that issue. And I think we should wait now just over a week for the Global Financial Stability Report, which I think will take onboard a lot of these issues, and it will be the final report. There will be a full press conference, and I think we should wait till then to take up those issues.

QUESTIONER: I was wondering whether some of the issues to be discussed -- as you know, banks and businesses are starting to find it difficult to get access to credit. And I was wondering -- the Fund had been working on the short-term facility. Has that ever come up again? Is that expected to come up during these meetings on -- I think, Mr. Lipsky was working on it? We haven’t heard much about that, and if anybody -- if countries -- if there’s one complaint that countries had about the Fund, it was that they wanted -- they turned to the fed for some swaps during this credit squeeze, and we’ve probably seen what’s going -- similar patterns going on now. And that’s when they asked the Fund to talk about or to look into this short-term facility that would give quick injections of cash into good-performing economies. I was wondering what happened to that.

Mr. RICE: I don’t have anything for you today on that specific issue. But again, I would imagine that during the annual meetings -- again in the context of the discussions of the current global conjuncture and the role of the Fund -- that, broadly the Fund’s institutional capacity and ability to respond will be under discussion. But I don’t have anything specific on the item you mentioned.

QUESTIONER: As you know, we -- because we follow the Fund, we have to look at what could be coming up in these meetings. Can you give us any sense of, you know, what -- where the focus -- I mean, you talked about Fund’s mandate. I mean, that is a huge mandate, right? You know, where do you think Ms. Lagarde would want to take these meetings? What she would like to achieve at the end of that? I mean, any sort of sense that would, you know, of where these meetings could be headed?

Mr. RICE: I was trying to give at least a little bit of a sense of that. We don’t have the IMF agenda as yet, so that will give us a broader view once that emerges and is made public. I was just trying to say at the beginning that I think the focus will obviously be on where we are in the crisis, in the global conjuncture. That will be, I think, the main focus of everyone at the annual meetings. And in that context, how we work to strengthen the Fund’s effectiveness in helping our membership to respond.

QUESTIONER: I’m sorry, Gerry, just one thing -- you never mentioned the G-20 meeting. Is that still on Friday?

Mr. RICE: Yes.

QUESTIONER: And that’s going to be held -- and is it going to be held here at the Fund?

Mr. RICE: Yes, I can confirm that.

QUESTIONER: The EU has changed its growth outlook and significantly lower this year and next. And I’m wondering if the IMF has concerns that the other programs -- Ireland, Portugal, discussions in Spain about its budget and fiscal requirements -- that those programs could be either put off track or increasing the risk to -- just increasing the risk in general.

Mr. RICE: Well again, I think the situation, the economic situation, globally has been deteriorating and the downside risks are increasing, which is what we have said. I don’t have anything, you know, specific beyond that. But we will have and that will come in the WEO again in over a week’s time in the World Economic Outlook where we will have all the numbers, including country-specific numbers.

ONLINE QUESTIONER: Is Pakistan negotiating a new program with the IMF?

Mr. RICE: I think what I could say in response to that is that the Pakistani authorities, officials, will be here during the annual meetings, and we can expect that discussions will take place as to next steps on how to move forward in terms of helping support the Pakistan economy.

QUESTIONER: On Libya, and I was wondering as you know there were meetings in Paris last week and was wondering if you have any updates on the Fund’s engagement in any way or recognizing a new government in Libya.

Mr. RICE: Thanks. I know this came up also a couple of weeks ago, and we’re basically in the same place, which is to say we’re monitoring developments in Libya and hoping that there will be a prompt end to the conflict. We stand ready to support Libya in its post-conflict economic stabilization and reconstruction efforts. The nature of our engagement with Libya will depend on the wishes of an internationally recognized government in the country once we have one. So I know that’s basically where we were a couple of weeks ago, but that hasn’t changed.

QUESTIONER: As you’re likely well aware, the Swiss Central Bank put a cap on the value of its franc, and I’m wondering if the IMF believes that is an unhelpful or appropriate -- or any other adjective you’d like to use -- response to the movements in the franc of late.

Mr. RICE: Thank you. Switzerland is facing a specific set of challenges and clearly the Swiss National Bank was reacting to a rapid appreciation of their currency on safe haven flows and signs of a weakening of the economy. And we’re still assessing the broader impact of that move. I think we probably have to wrap up fairly soon unless there’s a burning two-hander here from someone. That’s only one hand, Michael, but I’ll take you anyway.

QUESTIONER: Do you see any possibility for Greece not to receive their next installment?

Mr. RICE: As I said, the mission is still ongoing though temporarily left from Athens, and we’ll be back in mid-September. We’re expecting the review to be completed at that time.

QUESTIONER: But what do Greeks have to do to receive the next installment?

Mr. RICE: Well, again, you know -- I’m sorry, going back to what we discussed initially -- I think it wouldn’t be prudent to go into the details since the mission is still ongoing. So I think we should let the mission go back, do its work, and we’ll take it from there.

QUESTIONER: Gerry, do you have a date for that Afghanistan mission? You said it was next week, but –

Mr. RICE: I’ll follow up with you on that, Leslie. I do not have that in front of me. This is going to be the last question.

QUESTIONER: Just a housekeeping -- Lagarde’s speech tomorrow at Chatham House -- will that be released under embargo?

Mr. RICE: What I can tell you, it certainly will be released if we can do it under embargo. I know it’s helpful to everyone, we will. But I just don’t know whether we’ll be able to quite manage the embargo, but it certainly will be released.

Thanks everyone. Look forward to working with you all during the meetings and thank you very much for the questions.



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