Transcript of a Press Briefing by Gerry Rice, Director, Communications Department, IMF

November 12, 2015

Thursday, November 12, 2015
Washington, DC
Webcast of the press briefing Webcast

MR. RICE: Good morning everyone and welcome to this press briefing on behalf of the International Monetary Fund. I am Gerry Rice of the communications department. As usual, this briefing is embargoed until 10:30 am -- that is Washington time. Also as usual let me begin with a few logistical things about management travel and events, and then I’ll take your questions in the room and I’ll take some things online as well.

This weekend November 15 and 16, so that’s actually Sunday and Monday, Christine Lagarde managing director of the IMF and David Lipton our first deputy managing director will participate in the G20 leaders summit in Antalya, Turkey. In connection to that, I think our colleagues and the press know that we have already given to you the G20 surveillance note -- the usual note that the fund produces in advance of this G20 meeting so you have that.

Attached to that note is an annex on the topic of migration, which of course is much on people’s minds and I’m sure will be a topic for discussion at the G20. In connection to that, Christine Lagarde had a blog that you may have seen yesterday on the same topic of migration. The G20 note and the annex on migration are released at 10:30 today. But again, our friends in the media have had that under embargo. So that’s the G20 coming up this weekend.

Let me also tell you that Min Zhu our Deputy Managing Director will participate in our third statistical forum in Frankfurt, Germany this year, November 19 and 20 and it will focus on issues of policy making and micro-data. One of our other deputy managing directors Masuhara Fujisawa will participate in the Southeast Asia Central Bank governors meeting in Manila, in the Philippines. That’s on November 26th. Masuhara Fujisawa will then travel to Bangkok where he will give the opening address, the international capital markets conference and after that he’ll be in Kuala Lumpur where he will be attending the ASIAN plus 3 finance and central bank deputies meeting.

Let me also mention that First Deputy Managing Director David Lipton will be in Manila November 18-19, representing the Fund at the APEC Leaders’ Summit, which as you know is taking place there. One other thing then, tomorrow we will be releasing the next in our series of regional reports, regional outlooks. So this is the Regional Economic Issues report that will deal with principally eastern Europe, southern Europe prepared by our European department that will be released to you tomorrow and in fact will be launched at the national bank in Vienna, Austria so we refer to that as the REI -- the other one is REO. This is the regional economic issues for eastern and southern Europe. So thank you for your patience with that. Let me turn to your questions in the room.

QUESTIONER: Good morning, I have a long question. Ms. Lagarde published an article yesterday calling on the international community to do more to address the refugee crisis. She stress and I quote that “countries have done more to welcome these displaced people are to be commended.” In this context as I read she brought the example of Jordan where the (inaudible) adjusted to lower levels to address the public finance specials from support to refugees. My question is this: Is Ms. Lagarde coming to us from European are drastically programmed to a great problem. To make some changes in the problem. To help the government and the people, since Gerry you did the same a few months ago with some African countries suffering from the Ebola disease. Don’t you think it’s the right thing to do?

MR. RICE: You know, the way I’d like to comment is just give a little bit of the context. The policy discussions with Greece are ongoing as you know. In fact, we have a mission on the ground as you probably know and we are working with our European partners to assess progress on policy implementation under the ESM the European Stability Mechanism Program so we’re looking at policy implementation and potential financing needs under that program. The reason I wanted to give that context is that I would expect -- I would imagine that in the context of those discussions -- issues of additional fiscal strains that the country may be facing would be discussed under that general framework. I don’t have any details or specific knowledge on that, but as I say I would expect that that’s something that would be under the general discussion.

With regard to Madame Lagarde’s blog yesterday, it was not getting into country specific issues. The Jordan case was cited, indeed as an example where the IMF has been able to help the country, you know, with its fiscal flexibility and its fiscal program given the very large numbers of refugees that Jordan has been accepting over the years.

QUESTIONER: On the same blog, it says demographic forces, global, additional environmental degradation means that migration pressures across borders will increase in the coming decades. Which are the reasons of the world city’s (inaudible) obviously feels are important show concerns, areas for these issue migrations.

MR. RICE: You know, if you - let me first say we’ve attached a note to the G20 -- a note that I just mentioned which goes into quite a bit more detail than Madame Lagarde was able to in the context of obviously a much shorter blog, so I would refer you and everyone perhaps to take a look at that and I think you might find more of the details you are looking for there, but I mean in terms of the broad reasons -- the broad underlying factors behind this issue, I think we’re all familiar with what many of these main reasons are.

There is a lot of conflict in various parts of the world. There are economic crises and pressures in various parts of the world that are demographic pressures in various parts of the world and I think it really depends region by region and country by country, but I think these are the broad forces that are at play. I think one useful point that was made in the blog and I think is brought out even more strongly in the paper is that it’s useful to distinguish between the migration issue broadly and the refugee issue which was obviously a very, important part of that issue.

It’s a broader issue than just the people who are forced to relocate because of conflict as opposed to people who voluntarily choose to leave their country perhaps for economic opportunity and so on. Again, I would refer you to that paper which I think has a bit more detail.

QUESTIONER: Hi, I wanted to follow up. When you said that the issue of the migrants and the impact on the Greece economic situation was discussed in the context of the review, can you be more specific? Are we talking about possible additional financing or easing of some fiscal targets?

MR. RICE: What I said is I would expect that that issue would be part of the broader discussion but again I think I said I don’t have the specific knowledge or detail of those discussion but I would imagine it’s an issue that is in the context of those discussions.

QUESTIONER: Do you have any assessments of the impact that this crisis has on the Greek public finances and on the budget.

MR. RICE: I do not. I don’t think we have that information yet.

QUESTIONER: Is Madame Lagarde planning to raise this issue in Turkey for the G20? The burden that Greece carries because of the refugee crisis?

MR. RICE: Well what I would say Lenny is that I would imagine the broader issue of migration will be something that is discussed at the G20. It’s on everyone’s minds. It’s a burning issue and I would imagine it would be discussed. I have no knowledge again of a specific discussion that’s going to be held with regard to that issue and Greece at the G20.

QUESTIONER: Are there any developments in the debt issue discussed. Just recently, a senior official from the treasury said to Bloomberg that these discussions have begun, so is Madame Lagarde planning to raise this issue as well while in Turkey? The Greek debt issue?

MR. RICE; Yeah, again I’m not aware of any particular discussion of Greece on the G20 agenda or at the G20. As I’ve said here before and as you all know, you’ve been at these things -- in the sidelines of these meetings other meetings take place, but again I have no knowledge of the specific meeting behind held on Greece at the G20.

QUESTIONER: If I can follow up. Are you going to be -- these talks are you going to be supportive of Greece, I mean to just (inaudible) of the problem because of the refugee crisis what is your position as the IMF?

MR. RICE: Again, as I said Michael we don’t have -- I don’t have an assessment of the economic or fiscal impact of the refugee situation in Greece, just don’t have that detail so really can’t offer you very much more on that.

QUESTIONER: Given that recapitalization rate for the Greek banks are lower than initially estimated (inaudible) that the financing that the IMF may provide to the new ESM program may be lower than initially estimated as well. Less than one third of the total amount if the Europeans are willing to put in more money?

MR. RICE: Well let me just say on that ESB comprehensive assessment which I think you’re referring to, we took note of the recently published results of that comprehensive assessment of Greek banks and the mission is on the ground evaluating those results and the policy implications, so I think we have to wait for that, wait for those discussions. The team is there engaging with the Greek authorities and with our European partners. I think we have to wait for that and I think it would be premature to talk about the level of IMF participation.

QUESTIONER: But theoretically could it affect the amount of financing that the program or the (inaudible) the IMF participation.

MR. RICE: I wouldn’t want to speculate. Yeah?

QUESTIONER: I’ve just learned from this paper that China has been mentioned as one of the top issue in this paper, especially about the economic growth and the reform so can you articulate more on China’s reform especially on the financial sector, and China has just mapped out the next five year economic plan, reform plan, so what's the assessment from IMF on this plan?

Another question is about any updates on the discussion of the SDR issue. Thank you.

MR. RICE: Thank you. Just to be clear for everyone who may not have read the notice as carefully as you, I think the context for the references to China are in the context of transitions taking place in the global economy, and the reforms underway in China and the rebalancing of the Chinese economy. I think that's broadly the context.

What I would say on China's reforms broadly, I think we would say good progress has been made in many areas, at the same time, substantial work, you know, remains to be done, again, as China is in the midst of this transition to a new growth model.

You asked about the financial sector. I think that financial reforms in particular have advanced wealth. For example, the new budget law has laid important foundations for strengthening local government finances. Again, we look forward to the full implementation of that in the coming years.

You know, just on what is remaining to be done, it will be critical to continue progress in liberalizing, opening up the market based pricing, while maintaining demand and financial stability.

So, again, broadly, good progress. We see good progress in many areas, but work is to be done. Financial market reforms advancing, and the RMB internationalization is continuing, which I think takes us to your second question.

The review of the SDR basket and the question of China's inclusion in the SDR basket, I think as you know and everyone else here knows, the process is underway. IMF staff are preparing a report, which will include a recommendation to our Executive Board on that issue. I would underline that the decision rests with our Executive Board, which of course represents 188 countries.

So, to characterize it, I would say the progress is on track, on schedule. I have said here before that we expect the Board meeting to take place in November. I would repeat that today.

QUESTIONER: Okay. Is there any specific timetable?

MR. RICE: I don't have a specific date for you today for the Board meeting, if that's what you're asking, but I would expect that we would be able to announce that Board date very soon.

QUESTIONER: Just to follow up on the issue of the SDR, can you talk to us a bit about what options are on the table, should we be expecting a clean yes or no, is it possible that the decision may be deferred, and if it is deferred, can you walk us through how that would work? Is it possible, for example, that the Board might defer into next year, and without waiting for the five years, including the RMB in the SDR next year?

MR. RICE: Well, again, on the process, it's on schedule, it's on track. Staff will make a recommendation to the Board. It's the judgment of the Board on this issue. That's very clear. Our Board, the IMF Board, is of course at liberty to take any course of action on the review. Again, it's their judgment.

I think we should wait for that Board decision, and I wouldn't want to speculate on, you know, what if they decide this or they decide that. I want to wait. I think we should respect the Board process.

MR. MAYEDA: A quick follow up on the Ukraine. Russia has outlined, if you will, a strategy that they plan to use at the IMF. A lot of experts are skeptical about how successful that strategy will be, but nevertheless they are saying that they may dispute that the Ukraine's debt is sustainable if the $3 billion Euro bond is not paid, and under the new lending into arrears policy, if it is indeed passed, they may argue that the Ukraine didn't argue in good faith. Any thoughts on that?

MR. RICE: Maybe just to clarify for those again who don't follow as closely as you do, that we don't have a new lending into arrears policy as yet. That's something that will be discussed, is expected to be discussed by the Board, as I've said here before, in the near future. Just to be clear, we don't have that yet.

What I have said here before, in fact, at the last press briefing, I don't really have much more to add, but again for those who may not have caught it, the Ukraine is current on the Russian bond at the moment.

We encourage both sides and continue to encourage both sides to engage in constructive discussions on the restructuring of this bond to provide the necessary financing for the program and help restore debt sustainability.

As you know, we have welcomed the agreement reached between the Ukrainian Government and the ad hoc Creditors Committee of the holders of Ukraine's sovereign guaranteed debt, so again, we are in the mode of encouraging both sides to continue to engage and come to a constructive conclusion on this.

QUESTIONER: Good morning. To follow up on the Ukraine issue. Can you give us any more detail on what the near future might be? Is it likely to be this month or next month, and can you outline any of the options that are under consideration in that staff recommendation, and then on a logistical issue, is Madam Lagarde going to be appearing in Paris before a judge in the next few weeks in the legal case? Do you have any information on that?

MR. RICE: I have no information on the latter one, none whatever on that. I have not heard that, and I'm not aware of anything like that happening.

On the lending into arrears policy, options, process, timing, all of that, you know I hesitate to bore people more than I usually do, because last time I went into some great detail on all that, maybe if I could summarize it.

I don't have a Board timing for you. I said just now I expect it to be discussed in the near future. We have said, if you look at our work program, that we anticipated -- maybe this helps you a little bit -- we anticipated a kind of two step Board process of an informal meeting on this issue and then a formal meeting. I would expect that still to be the kind of process the Board would follow, subject to the Board agreeing, of course.

What else can I tell you? As I said the last time, this has been part of a much broader program of work related to the reform of our lending framework that we have been engaged in for a number of years.

Actually, this issue of lending into official arrears goes way back in time, way back in history, and it's something that has been discussed over that period. Most recently, as I said here the last time, in 2013, we issued a paper. It was referenced there. I think I gave you the reference the last time. You will find it in the transcript if you need it.

You know, it's the mirror of the lending into arrears policy that we have been discussing also with regard to private creditors. You know, we have a policy of lending into arrears with private creditors for much the same reasons that are being discussed now as to why we might need an adjustment in the lending to arrears policy for official creditors. You know, there is kind of a mirror asymmetry there between the two.

Again, this is all subject to the Board's discussion, which again I would expect would begin to take place with that two step approach in the near future. We will let you know. I know you're anxious about the Board dates on this. We will let you know as soon as we can.

QUESTIONER: Can I have just a quick follow up? If there's a two step process, is it still your expectation that policy could be voted on by the Executive Board before -- actually, it's the entire bond that becomes due on December 20. Would you still expect that the policy could be voted on by then?

MR. RICE: You know, again, I don't want to pre-judge any discussion by the Board, on that. You know, we'll keep you posted. As I said, we expect the Board to have their first discussion very soon and we will be able to update you then on that issue after that.

Perhaps I can just go online and then I'll come back in the room for those of you who might have some follow up.

I'm seeing a question on Mozambique and Iraq, the steps needed to reach a program with the IMF.

On Mozambique, what I can say is that we actually issued a statement just yesterday on Mozambique because the mission reached agreement on an SCF, potential SCF, standby credit facility, with Mozambique.

Maybe just to back up on that. The mission staff team was there October 14 to 28. This was for the fifth review under the three year policy support instrument. So, as I said, they reached a staff level preliminary agreement on an 18 month economic framework through 2017 that could be supported under the IMF's SCF, standby credit facility, subject, of course, and as usual, to approval by IMF management, and of course, our Board. We expect the Board to meet mid-December on Mozambique. I hope that helps on Mozambique.

On Iraq, our mission chief again issued a statement yesterday on an agreement on a staff monitored program, SMP in our jargon, a staff monitored program. He said yesterday that we have reached a staff level agreement in Iraq on an SMP, that is the staff monitored program, starting at the end of 2015.

Under the SMP, the authorities -- I'm just reading actually from the statement, the press release that you can find online. Under the SMP, the authorities will implement a fiscal consolidation that will contain public expenditure in line with available revenue and financing, and to reduce the non-oil primary deficit by four percent of non-oil GDP between 2014 and 2016.

Under the SMP, an agreement has also been reached on measures to strengthen public financial management, anti-money laundering, and countering the financing of terrorism, as well as financial sector stability.

And finally, the SMP, the Staff Monitored Program, will be submitted to IMF management for its consideration by the beginning of next year. That will allow the Iraqi authorities to build a track record for a possible Fund financing arrangement.

A question from Ghana: "When is the IMF expected to approve the third tranche of funds for Ghana after the recent staff review, and what is IMF's expectation as the Finance Minister presents the 2016 budget tomorrow?"

On Ghana, I would say the IMF Staff was in Accra recently, October 21 untill November 5th, and we conducted the discussions on the second review, under the program that we have, the extended credit facility arrangement that we have with Ghana. The mission, in fact, focused on the budget issue, on the 2016 Budget, which will aim at further fiscal consolidation, how to reduce government financing pressures, how to bring inflation down gradually, and structural reform measures to strengthen public finances.

Staff fund, again, this is the Ghana program; staff fund implementation of the program has so far been satisfactory, with all end August 2015 performance criteria met, and our Board is tentatively scheduled to consider that review by the end of the year, after finalization of the required documentation.

Let me take one other question online, and I'll come back in the room, and so on. Egypt; "What is the IMF's estimate of, or thinking, on the suspension of flights after the downing of the Metro Jet?"

Well, I mean, the first thing is our thoughts go to the victims and the families of this tragic incident. It's too early for us to assess, fully, the impact on the Egyptian economy, but clearly there could be significant effects on tourism, so we'll be working with the government in the coming weeks to assess what that impact might be. Let me come back. Jeremy?

QUESTIONER: I have a question on an issue you said was of critical importance in terms of macro-economy, i.e. the climate. Is it your hope that COP 21 Conference will lead to legally-binding agreements to curb the CO2 emission?

MR. RICE: Well, I think our hope would be that the COP 21 Summit would reach a conclusion that, you know, helps the world and our member governments to mitigate the effects of climate change. I don’t want to get into the legalities of that conclusion, but I think that’s what we and many others, I hope will be the conclusion.

QUESTIONER: Thank you, Gerry. When is the Crisis Program Review, I believe it's been done by the SPR Department coming to the Board, and when do you expect the evaluation of the review of the internal evaluation of this to come to the Board, about the IMF and controlling the Euro Zone programs? Thank you.

MR. RICE: You know, those are good questions, to which I do not have the answers, but --we'll come back to you offline because that should be straightforward in terms of whether there is a date or not, or at least a timeframe. I think it's safe to say both, next year, on both, but let's come back with, if we have any further dates. Okay?

QUESTIONER: This week you gave a comment about (inaudible) of the economy in FOBs.



MR. RICE: In India?

QUESTIONER: Then the Indian Government this week announced the (inaudible) funds. In view of the report that’s coming out 20 minutes from now, what is IMF's assessment of the economic reforms being started by the Indian Government, almost 18 months?

MR. RICE: You know, I'm not familiar with the report that you mentioned is coming out. We have been broadly supportive of the reforms being undertaken by Mr. Modi's government and, you know, again, perhaps offline we can come back to you with a bit more granularity on that, but we've been broadly supportive that those reforms are in the right direction.

QUESTIONER: Is the Managing Director, planning to meet with the Indian Prime Minister?

MR. RICE: Again, I don’t have a schedule of the Managing Director's bilateral meetings, but she normally does, indeed, one way or the other, either in a formal meeting or on the sidelines of the meeting, she normally meets with each of the Heads of State, again, one way or the other, so I would expect that they would have a discussion at some point.

QUESTIONER: Again, maybe it's a naïve question, but since you do have a program with Greece, or the Europeans have a program, why you participate on these talks in Athens? Why do you send a mission there?

MR. RICE: Well, as you know our program actually runs until March next year, 2016.

SPEAKER: Not in March.

MR. RICE: It doesn’t run out then?

SPEAKER: No. I don’t think so.

MR. RICE: Well, formerly we have that framework, and within that framework, as you know, we are working with our European partners. You know, we've been supportive of Greece, as you know, for many years, and we continue that effort. Our European partners and the Greek authorities have expressed their wish that the IMF should continue to be involved, and continue with that support.

So that’s where we are, and as I mentioned earlier, we are in discussions right now, with the partners, with the Greek authorities as to how to take forward the ESM Program. And then the question of the IMF's participation in that or any new program, you know, that will come when those discussions have come to some kind of conclusion. Okay?

Good. Thanks to you all, and we'll see you in three weeks' time.

SPEAKER: Three weeks?

MR. RICE: Because the U.S. Thanksgiving Holiday falls two weeks today.

QUESTIONER: That’s for the announcement of the SDR?

MR. RICE: And we'll see you then. Thanks.


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