Transcript

Washington, D.C.
Thursday, September 12, 2013

MR. RICE: Good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I’m Gerry Rice, the Director for Communications at the Fund. I’d like to welcome colleagues in the room, and we’ll take questions online as well. As usual this briefing will be embargoed until 10:30 a.m. Washington time.

Let me begin with a few notes on travel and events of our senior management here at the Fund and then turn to your questions in the room. Beginning with Madame Lagarde, Christine Lagarde, the Managing Director, on September 19 will be giving a speech at the U.S. Chamber of Commerce -- that’s here in Washington -- on prospects for a dynamic global economy. That is open to the press. Then a few days later on September 24, Madame Lagarde will participate in the opening plenary session at the Clinton Global Initiative in New York. “Mobilizing for Impact” is the theme of that session with President Clinton, Mo Ibrahim, Sheryl Sandberg, and others.

Turning to our Deputy Managing Director, Minouche Shafik, she will also be in New York on September 18 to attend the Conference on Human Potential.

Our Deputy Managing Director, Min Zhu, is right now attending the World Economic Forum’s Summer Davos in Dalian, China, that goes on until tomorrow. From September 18 to September 20 he will be leading the Fund in a conference jointly organized with our sister institutions on growth and sustainability in the Caribbean and that’s going to be in the Bahamas. That’s September 18 to 20. And then he, too, will be in New York on September 23 in connection with the U.N. General Assembly meeting, which -- I should have mentioned also that Madame Lagarde will be addressing the U.N. General Assembly also. That will be on the 24th. And Deputy Managing Director Zhu will participate in a panel on jobs hosted by the ILO, the International Labor Organization.

Finally, our Deputy Managing Director, Naoyuki Shinohara, will attend the APEC Finance Ministers Meeting in Bali on September 20. And then Mr. Shinohara will travel to Jakarta to meet with the authorities and then return to Bali for the remainder of the conference on risk banking and financial stability.

Let me mention just one other thing that may be of interest and that’s a conference in Africa, which begins shortly. On September 17 to 18 we are cohosting a conference in Nairobi with the government on Kenya’s economic prospects and challenges. And our Departmental Director, Antoinette Sayeh, will represent the Fund. We can get you more information on any or all of these events as you are interested.

And, of course, we are now hurtling towards our annual meetings, and I hope you have all registered. With that let me turn to the room and take any questions that you might have.

QUESTIONER: Gerry, good morning. First, the usual question on Greece, when the next mission is going to be in Athens and for how long. Who is going to be the leader this time? Is Mr. Thomsen going? And if you agree with all these reports in Europe that the next review is going to be a “hell” for Greece? Thank you.

MR. RICE: I can tell you that the next mission will begin on September 17 again, as usual, with our partners from the European Commission and the European Central Bank having our discussions with the Greek authorities in Athens on the program’s fifth review. Yes, I can confirm Poul Thomsen will be leading the IMF team. And in terms of the content of the review, as usual I won’t preempt that, but the staff teams clearly will assess progress on the economic program. And, as usual, we will be communicating on the outcome when the visit concludes.

QUESTIONER: Greece had a primary surplus between January and August, which means that Greece is fulfilling its commitments. What’s next regarding the new year’s funding gap? What kind of additional help or relief is on the way?

MR. RICE: I think the review that I just mentioned will be discussing developments and seeing where we are on these various issues.

QUESTIONER: Mr. Samaras said that this surplus is going to be beneficial for the people of Greece. Does the IMF agree with the Prime Minister of Greece who promised to give some of this money to the unemployed people and to some of the retirees?

MR. RICE: I don’t have a comment on that statement that you refer to, but maybe just -- again, I won’t preempt what’s in the next review. But referring back to the last review, which was as you recall in late July, it concluded that the program was on track at that time, that the Greek authorities have continued to make commendable progress in reducing fiscal and external imbalances, although greater reform efforts and progress on structural reforms remain key to a sustained recovery and lasting growth. So, again, I don’t have a comment on that statementbut clearly we’re all working on this program together -- the Greek government, the European partners, the IMF. And, of course, the goal that we all share from the beginning is overcome this crisis, achieve a stable economy, and improve growth and job prospects for the people of Greece.

QUESTIONER: I have two questions. The first is on Portugal. Portugal is going to ask the Troika to be given more time to reach its fiscal targets. Do you think it’s appropriate? And on Argentina The U.S. Supreme Court will decide at the end of the month whether or not it will review the case between Argentina and France. How worried is the IMF that this ruling could imperil future debt situation?

MR. RICE: On Argentina I won’t comment on the legal case.

QUESTIONER: I’m sorry, why won’t you comment on that because the IMF was willing at one point to inform the Supreme Court of the implication of its decision? So why won’t you comment on that?

MR. RICE: Well, I think we’ve been through all that in previous press conferences, so I don’t want to go over that whole issue again. But in terms of a future legal hearing or decision, it’s not appropriate for me to comment on that.

I’m going to turn to Portugal, and I think the issues you’re raising will be discussed with the next review mission that’s going to be underway on Monday, and I think this will be the occasion to discuss with the authorities the budgetary situation in Portugal based on the latest information.

QUESTIONER: So you think it would be appropriate to give more time to Portugal?

MR. RICE: I’m not going to get into what might be the focus of the discussions at the mission at this point. I think we should leave that to the mission, which is beginning next week.

QUESTIONER: Ireland’s Deputy Prime Minister recently spoke about the government and whether they still need to fulfill a pretty rigorous package of spending cuts since they are on track to reduce their debt. I was wondering if the IMF has any comment on this, whether those cuts -- I think 3.1 billion euros -- are still necessary for Ireland to stay on track.

And the second question is about a precautionary credit line for Ireland. I think they put a figure on it, about 10 billion euros. So I was wondering if that’s something you’ve discussed with them and if that’s something you view as appropriate after the bailout ends at the end of this year? Thank you.

MR. RICE: Well, on your second point, if the Irish authorities were to request a successor arrangement, the specific facility, the policies, the amount, would be something that would be discussed in the context of the next review, which is in October, upcoming.

I think you were asking about the budget and the fiscal progress. Our view is that the budget in 2014 should continue the authorities’ track record of steady fiscal consolidation. And this year the government is implementing a consolidation of about 3.5 billion euros. A smaller consolidation effort is currently scheduled for 2014, helping to reduce the drag on growth. And, again, this will be the starting point for discussions with the Fund, the European Central Bank, and the European Commission. And this will take into account various factors affecting Ireland’s growth prospects.

QUESTIONER: I’m sorry, just to clarify, you don’t think there needs to be any changes to Ireland’s consolidation because some of its growth is faltering and the government says they’re already quite on top of --

MR. RICE: Well, I think that will be something that will be an issue to be discussed, again, at the review, which is coming up very soon now.

QUESTIONER: Could you please keep us updated about the latest progress on the IMF quota and governance reform. Has there been any effort that has by the IMF to speed up this process or does that mean that we have or we are unlikely to see it completed before the United States enters the next fiscal year?

MR. RICE: Probably the most helpful thing I can do there is refer to Christine Lagarde’s statement just a few days ago on this issue at the G-20 Leaders Summit. Let me just remind you. She said, “I welcome the G-20 support for completing the IMF’s 2010 quota reform agreement, and I urge the few remaining countries to quickly ratify the measures necessary to implement this important agreement. Completing the reform would contribute greatly to the evolution of IMF governance and help ensure that it better reflects the global economic reality.” So I think that’s kind of where we are on that.

QUESTIONER: So is there any talk that has been going on among the Board about the possibility that we’re going to see it completed in the IMF annual meeting?

MR. RICE: There’s an ongoing discussion on this issue. I’m sure that the issue of quota and governance will be discussed at the annual meetings because we have our 188 member countries here. And, of course, we’re hoping for as much progress as possible.

QUESTIONER: Gerry, recently global financial markets are fluctuating against the background of possible U.S. military action on Syria and U.S. fed rate tapering. Some emerging markets like India and Indonesia have seen their currency value and their stock markets falling. So in the IMF’s view, should the fed take those factors into account and delay its rate tapering or take a small scale tapering instead of a big one? Thank you.

MR. RICE: On the question of the spillover effects from the fed’s potential tapering, again let me remind what Managing Director Lagarde said in the context of the G-20 last week, which was, “I’m pleased the G-20 members recognize the need to ensure that exit from one conventional monetary policy when it comes should be orderly and clearly communicated. At the same time there was also a clear recognition that emerging markets need to address their domestic challenges in order to effectively manage the spillovers.”

Let me turn to a couple of questions online and then I’ll come back inside the room. There is a question on Ukraine. Has the Ukrainian delegation already carried out negotiations with the IMF concerning a new stand by arrangement in September? And if so, what are the preliminary results?

On Ukraine, since the last mission in April, Fund staff have conducted periodic discussions with the Ukrainian authorities at a technical level on policies that could form part of a comprehensive Fund-supported program. But to answer the question there are no in-depth discussions of such a comprehensive program at the policy level since then.

In the meantime, Fund staff are preparing for the 2013 Article VI Consultation and, of course, the post-program monitoring review planned for this fall. This will provide an opportunity for the Fund’s board to discuss the challenges facing Ukraine before the end of 2013.

I am going to take a question from Greece, but it’s not about Greece. [The questioner] asks: “Madame Lagarde said recently that euro zone governments could not count exclusively on the accommodative monetary policy of the European Central Bank to stabilize the euro zone’s debt crisis. Can you clarify whether the IMF believes that the ECB’s monetary policy has replaced the budgetary efforts of EMU member states?”

Well, you know, what I would say is that, these countries are all different, their policies are different, the response is different. And what we have said in the past is that we need a comprehensive set of policies, not just monetary or monetary complemented by fiscal and structural and so on (inaudible) policies that really matters.

I’ll take one more and then I will come back inside the room. And it’s from Turkey “An IMF mission will visit Turkey next week for the Article IV Consultation. What’s on the agenda of the mission? Among the OECD countries Turkey recorded the strongest growth in the second quarter. What’s your assessment about Turkey’s growth figures?

I would say that during the Article IV mission that starts next week, the IMF team, as is customary for all our member countries, will review the recent economic developments and discuss them with the authorities. For 2013, the staff currently projects -- so that’s the current WEO forecast -- GDP growth at 3-1/2 percent. The mission will be -- an occasion to update that projection and (inaudible) new numbers (inaudible). And we’re meeting in about three weeks, with the new forecasts.

QUESTIONER: I have a question on Slovenia. The liquidated two banks in the past few days. You know, there were lots of concerns for the country before the Spring Meetings. Do you have an assessment of where things stand on their banking crisis?

MR. RICE: On Slovenia, the Fund supports the authority’s efforts to bolster the financial stability and the exit of the poorly capitalized banks should strengthen the overall resilience of the banking system.

QUESTIONER: Aside from the Article IV missions, are there any technical advisory missions, teams heading into the major Emerging countries such as India, Brazil, South Africa and Turkey and other regions that you can cite?

MR. RICE: Can we get back to you after the broadcast with that? I mean, that’s a very technical question where we need to check who’s going where and when. So we will get back to you and we will post that information online, so everybody can have access to it. Is that okay?

QUESTIONER: Sure.

QUESTIONER: I have a question about Japan. Prime Minister Abe is expected to make his decision whether they’re going to raise the consumption tax from 5 percent to 10 percent in 2 years. So do you have any comments on that kind of thing, what kind of decision do you expect to see? Thanks.

MR. RICE: Well, we support the implementation of the tax increase as planned because, you know, we’ve been saying fairly consistently. At the last press briefing just two weeks ago I was asked that question, so we haven’t changed our position since then.

QUESTIONER: Obviously like all of us from countries experiencing some unexpected developments . I want to ask about Russia, but I’m not sure you have any specific updates on Russia.

In terms of policy implementation or something, if Russia needs a QE of its own or whatever you have on this, but specifically in St. Petersburg, the BRICS announced their new arrangement, financial arrangement, a development bank and a fund also/ .

MR. RICE: Yeah, you’re quite right; I don’t have anything specific on Russia.

On the BRICs’ various plans that were discussed in St. Petersburg, as you say, I think our view is, that any arrangements that can help our membership, particularly in the emerging market economies, we would welcome and we’ll be looking at once the details are clear, how we can coordinate and work with them as effectively as possible.

QUESTIONER: So you don’t view this a tendency to create small rivals for the IMF, but rather as a complementary tool right?

MR. RICE: You know, we’re a cooperative organization with a membership of 118 countries. And again, I think anything that can help to support our membership is something that we would want to work with very closely.

QUESTIONER: The unemployment rate in Greece rose to a new record high, almost 28 percent. And the worst is that more than half of the young people under 25 are out of work. What’s your comment?

MR. RICE: Well, this is of grave concern to all of us, the unemployment in Greece and particularly amongst the young people. It’s just something that all our efforts aimed at addressing. That’s, in many ways, what the program and what the support effort is all about. But at the end of the day, we can help Greece get back on a sustainable path to growth and job stability for the Greek people, especially the young people.

QUESTIONER: I have a question on Cyprus, when the board is going to discuss the Cyprus program. And also, if you want to comment, I heard that the IMF report is going to be positive for Cyprus for a change.

MR. RICE: I can tell you, that the board will discuss -- first review of Cyprus’ Extended Fund Facility on Monday, September the 16th. And we would expect, as usual, for that report to be published soon thereafter. So, you know, let’s wait for that, for the assessment.

QUESTIONER: You don’t want to comment if the report is positive or at least satisfactory?

MR. RICE: I don’t want to -- you know, it’s our practice not to try and preempt the board, so I won’t do that.

QUESTIONER: I have a question on Pakistan. The IMF recently agreed on a program for Pakistan. A previous program was interrupted back in 2011, because the authorities at that time felt that the measures passed by the IMF were too harsh. What makes you think that it will be different for this new program?

MR. RICE: Well, you’re right just to confirm that on September the 4th, our Executive Board approved a three-year US$6.6 billion Extended Fund facility. In terms of the implementation of that program and the prospects that you’re asking about, the authorities have already taken appropriate measures to ensure a strong start and signal their commitment, including approving the fiscal consolidation measures applying higher electricity tariffs as part of a comprehensive new energy policy, reorienting monetary policy to begin rebuilding foreign exchange reserves, and launching a new tax enforcement program. So, you know, I think these are positive steps that augur well for the ongoing implementation of the program..

QUESTIONER: Do you have any insights on the reason why they interrupted the previous program and did you talk about that with the authorities?

MR. RICE: You know, I don’t have the specifics of, you know, the interruption going back to the past program. What I have is what I gave today.

QUESTIONER: Can you just give us an update on the nature and status of IMF official engagement in Egypt?

And secondly, is the IMF preparing an assessment to provide any sort of special advice to the nations surrounding Syria in regards to the Syrian crisis or is that more a World Bank -- something you’re leaving to the World Bank?

MR. RICE: On Egypt, I just want to say up front that of course we remain strongly committed to helping the Egyptian people deal with their economic and financial challenges. On your specific question in determining how to deal with the interim government of Egypt, we will be guided, as is the norm, by the views of the international community, by our membership.

QUESTIONER: Just to be clear, I think that’s still the case as it has been you stated that there had been some technical engagement at a bureaucratic level. I’m wondering if that continues if the nature of that engagement has changed at all.

MR. RICE: Yeah, we have an ongoing, you know, intervention at the technical level. That has not changed. Beyond that, I don’t have much (inaudible).

On Syria. Of course, like everyone else, we’re concerned about the human dimension of the crisis there. But just in terms of IMF’s work, because of the security situation we have not had a mission to Syria since early 2011. So in terms of your question, we’re obviously monitoring closely the situation with regard to potential spillovers in the rest of the region, but we don’t have any update to give you.

MR. RICE: I’m going to go back to online right now. The other question I have here is “does the IMF share the concerns that many investors and analysts have about the present situation and political instability in Italy? Do you think that in case of a government crisis in Italy there’s the risk of new financial turmoil in Europe?”

Well, you know, as usual the IMF will not comment on internal political issues. What I would say on Italy is that Italy has made important gains in terms of its reform program and its fiscal discipline. And I think it’s important those gains be maintained.

I can also tell you that the Executive Board, will be discussing the most recent Article IV on Italy on September 23

QUESTIONER: (on this issue of the tapering ofthe QE programs in the U.S. that the whole world is watching with great interest obviously, can you give us any examples of how the IMF position influences the debate, if it does? Because I understand that your take on the situation does not always fully corresponds with the American banking authorities position So again, do you feel that your view will be taken into account? If you do, how -- can you show it to the world?

MR. RICE: I would point to two recent IMF statements that focused on this issue and statements were communicated widely, globally. One was the Managing Director’s recent speech in Jackson Hole, which was focused precisely and went into great detail on the issue of unconventional monetary policy.

More recently, Andre, as you know, we published less than a week ago the G-20 surveillance note, which again goes into some detail on this issue. So in terms of influence, impact, and so on, I mean, this was a note that went to the highest levels of the G-20, and it’s published.

QUESTIONER: Right, but does the USgovernment, the U.S. banking apparatus, come back to you with their feedback on your position? You know, basically say to you, yes, we are hearing what you are saying, but instead of what you are saying, we shall (inaudible).

MR. RICE: I don’t know anything specific on that

QUESTIONER: After a month, Gerry, you (inaudible) or the IMF had some (inaudible) discussions with the Europeans on Greece. Can you tell us the Europeans committed to fill the financing gap for ’14 and ’15? And also, do you believe that there will be additional fiscal measures?

MR. RICE: So as we’ve said here before the European partners have gone on record now several times, including recently, indicating that they would provide adequate support for this during the life of the program and beyond, provided that Greece fully complies with the program. So again, I think that the issues surrounding that will be something to be discussed in the upcoming review. And as we’ve explained in the past the last briefing, at the moment the program is fully financed through July 2014.

QUESTIONER: Gerry, if I may follow up on my questions, the reason I was asking this is because I’m looking at the room, everybody’s concerned about the report, except Americans. I mean, American are also concern about their economy for obvious reasons, including unemployment, (inaudible), and all that. But they don’t come here. They are not really interested in hearing what the IMF has to say about themselves. But what I’m saying is, the U.S. too big to fail in the IMF? And is it a danger? Is it a risk for the global economy? Because when we talk about Greece, Greece listens to every nuance in what you have to say about their economy and for a good reason obviously. The Americans probably a lot of reasons to listen to this, but they don’t, at least they don’t show it. Again, is the U.S. too big to fail? And is this a systemic risk to the world economy.

MR. RICE: You know, we, again, are in dialogue with all our member countries an endeavor to be an evenhanded organization in dealing with all our members, both in terms of providing objective economic policy advice and support.

On the United States, I’ll refer you to our recent Article IV of the United States toward the end of July, published, and our views on the United States are, what you asked about, are clearly there as is the case with all our Article IVs with all our member countries.

So with that, I am going to call it a day.