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

December 3, 2015

Thursday, December 3, 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 communication department and as usual for our briefings this well be embargoed until 10:30 am. That’s Washington time. Let me begin with a few announcements, then I’ll turn to your questions in the room and take some questions online as well. In terms of upcoming events the Managing Director Christine Lagarde will travel to London next week and join the IMF team for policy discussions with the authorities on the UK 2015 Article IV consultation. There will be a press conference to present the staff’s mission concluding statement and that will be on Friday, December 11.

The only other announcement I have for you today is that on December 9, the Fund will be publishing its work program for the next six months. The document will be posted under embargo the day before on December 8, and I think you are all familiar with the work program, it gives a fairly comprehensive picture of the funds core activities for the upcoming six months and all the major areas of our work. With that let me turn to your questions in the room.

QUESTIONER: The usual questions on Ukraine. The Russians keep saying that they are expecting an announcement from the IMF or other major international creditors other than the Ukraine because Ukraine doesn’t have much money of its own at this point. Whether the Russian offer of the debt restructuring is acceptable in the eyes of the IMF? And then to go with that obviously you might want to touch on the subject of the status of the bond that still has not been official.

MR. RICE: So look on your first question the context here is, as I think we’ve discussed before, that during the recent G20 meetings President Putin met with managing director Christine Lagarde during which the Russian authorities outlined a proposal for how to relieve the debt and financing situation of Ukraine in the context of the Fund supported program that you mention. As we have said, and I would just repeat today, we now expect the Russian and the Ukrainian authorities to conduct direct discussions on this matter. As you know from previous discussions that we’ve had here and elsewhere the Fund cannot get involved in the details of the debt restructuring strategy which must be left to the parties and their legal and financial advisors.

On the status of the bond, which was your second question, again just a reminder that Ukraine has remained current on this bond as on all other Euro bonds and I guess that’s the current status and it would be for the executive board to establish the further status of this bond and there’s been no decision on that as yet and I don’t have a date for you on when that decision might be made. If I was anticipating your follow up. Sorry about that.

QUESTIONER: To continue on Ukraine, any update on the status of the program review? I know that several missions have been to Ukraine to this point. There are some issues with respect to their budget as I understand. Can you give us an update on the review and would you anticipate that it would be completed and that a disbursement could happen this year?

MR. RICE: I think you’ve got most of it. So for those who haven’t been following it, the mission was in Kiev from November 12th to 20th and understandings were reached on many issues. One key issue still outstanding was the formulation of the budget for 2016. That is consistent with program targets, so where we are now is that we see it as important that the government submits to parliament a budget that is indeed consistent with the program objectives, that is to further reduce the budget deficit and the public debt to safer levels and that the parliament would adopt such a budget. In addition, we want to see progress to work between the anti-corruption prosecutors in place through a transparent and credible process and that’s where we are on the review.

QUESTIONER: And a quick follow up on Brazil actually. Brazil’s latest fourth quarter results were not the greatest. They are in the midst of a contraction that I think is the worst since the great depression. The President is now facing impeachment in Congress. What type of update can you give us on the fund’s view of Brazil and have there been any discussions with the authorities about a possible program?

MR. RICE: No discussions on a program. On the outlook -- the broader outlook question indeed growth in Q3 and the third quarter was weaker than anticipated suffering a broad based contraction on the order of 1.7 percent for the quarter. Combined with the release of downward revisions to growth in the first half of the year. This represents downside risks to our growth projections published in October and then as you know we will be updating our numbers growth projections in January, so we’ll have the updated numbers there. But that’s where we are on the outlook.

QUESTIONER: Staying in Latin America, Argentina. It’s kind of been really good relations between the fund and Argentina in the last decade, with a new elected government do you expect that this relationship will be improved or better? Talking about the statistics and everything else. And also have there been any conversation yet with any government of (inaudible).

MR. RICE: Thank you. There have been no contacts. No contacts between the fund and the prospective economics team in Argentina. As we have said in the past we would welcome a more in depth dialogue with the Argentine authorities over their economic policies including through the article IV process. But again no contacts as yet between the fund and the prospective economics team there.

QUESTIONER: Do you expect better relationship right now?

MR. RICE: Well I think just as I said we would welcome a more in depth dialogue as we’ve said before including through the article IV. I think I promised Michael, Krista, and then I’ll come to you.

QUESTIONER: The Europeans are saying that you will participate in the new program. Can you tell us if you decide to participate and what are the terms for your participation and also since you don’t have a problem now with Greece why your team in Athens is asking the Greek government to cut pensions across the board?

MR. RICE: Yeah, maybe online questions and I can give you the overall context and try to respond to them. So we had a November staff visit to Athens jointly with the European institutions, and that was focused on the first set of milestones in the program, that’s the ESM program -- the European program. On the basis of those milestones the ESM then approved the release of further funds to address upcoming financing needs including for bank recapitalization.

So where are we? The policy discussions are ongoing. I can tell you including through an upcoming mission next week focusing on a second set of milestones and that then will be followed by the first review mission which is planned for January at which point the fund could come on board. On the basis of these discussions we will finalize our overall assessment and the debt sustainability analysis. Are we on Greece?

QUESTIONER: Still on Greece. Just to clarify just briefly on that point, when you say followed by the first review mission is that the first ESM review mission?

MR. RICE: Yes, are we on Greece?

QUESTIONER: Okay, (inaudible) are you concerned about political stability in Greece after the government lost some of its days in parliament given that in the few -- the next few weeks and months there’ll be politically sensitive measures and important for I understand IMF participations that will be coming into parliament.

MR. RICE: As I’ve said here many times before our concerns always relate to policies rather than politics. That said the government’s ability to implement reforms is key for the success of its program in achieving an improvement in the public finances and placing the Greek economy on a sustainable growth path.

QUESTIONER: If we take it down to the pension reform the IMF bonds -- what is the IMF position? Does the IMF have a position in raising employee contributions? This is something that the Greek government has been reported to propose in order not to reduce -- further reduce basic pension increases.

MR. RICE: There’s going to be a mission next week. I’m not going to get into the details of what…

QUESTIONER: Not necessarily Greek specific. If you have a position as a policy recommendation for all countries whether they should be raising employee contributions or not.

MR. RICE: It really depends on the countries circumstances Katarina, so there is no blanket -- just to answer your question straightforwardly there is no blanket IMF position on that issue. It really depends on country circumstances and I think that’ appropriate. Are we on Greece?

QUESTIONER: (Inaudible) given that there is a big delay in the completion of the first review, rumors have it that it will be completed in February does it concern you that the first review is delayed so much?

MR. RICE: Again…

QUESTIONER: Does it influence your decision to participate in the program?

MR. RICE: You know, again, those –

QUESTIONER: Does it influence your decision to participate in the program?

MR. RICE: You know, I've kind of laid out what I think the roadmap is here, the broad scheduling. You know, we've talked many times here in the context of many different countries that reviews get delayed, they get rescheduled, things happen, there's flexibility built in so, you know, it's not a great surprise that the review gets delayed. And I've laid out what we think the timetable will be. There's a review mission plan for January, and I think we should wait for that. Thank you for your patience, Jeremy.

QUESTIONER: Just a clarification on the timeline; so you expect to take a decision on whether or not you will participate in the bailout in January, after the first review?

MR. RICE: I think what I was trying to say, was that would be the first point at which we could take a decision, it clearly depends on where things stand, what the assessment of the mission is, what the assessment of the review is; but that would be the first possible point where we could begin to think about coming onboard, as I've said.

QUESTIONER: Okay. And I have another question on other issues. The first one is on the SDR decision on the yuan.

MR. RICE: The SDR decision?

QUESTIONER: On the yuan, on the decision to include the yuan in the SDR basket?

MR. RICE: Oh, I apologize. Yes, of course.


MR. RICE: I thought you were saying U.N.

QUESTIONER: No, no, no. Sorry for my accents.

MR. RICE: Sorry for mine.

QUESTIONER: Some (inaudible) have criticized the Fund for -- and argued that the decision to include the yuan in the SDR basked was premature and maybe politically motivated. I was wondering if you had any comments on this. And also, I have a question on the SBF maybe we can ask.

MR. RICE: Well, it's been obviously extensive discussion and coverage of the decision this week by the IMF to include the yuan in the SDR basket as you say, and for colleagues who may not have been following it so closely, it really has been an extensive amount of information put forward on that. You can find it all on, including a transcript of a conference call with you all, the transcript is there.

On your question, though, thank you for asking it because I'm pleased to say emphatically that, as we've said before, but I'd like to repeat emphatically, this was a technical process that went on over an extended period of time, and the decision is firmly based in technical criteria. Those criteria were -- have been laid out from the very beginning, and have been explained again. So this was a decision based on the technical criteria.

I would also point out that this was a decision fully endorsed by the IMF Executive Board which, as you know, represents 188 countries, so the support for this decision was comprehensive.

QUESTIONER: So, you are denying that it's politically motivated, and it was a way to maybe ease the frustration of China for the -- maybe the 2010 Reform.

MR. RICE: Yes. I don't see any linkage between the decision on the SDR and, you know, I think you were referring to the 2010 Quota Reform.


MR. RICE: There is no linkage there. As I say, just to be clear, and to emphasize. And thank you for asking it. This was a decision based on technical criteria. We have released the Staff Report with a supplement, with questions and answers, backed up by various interactions with you and others, and this has been done in the most transparent way, I think, as possible, so.

QUESTIONER: What a suggestion -- Gerry, you said two times, that the mission going next week.

MR. RICE: That's right.

QUESTIONER: Do you mean that (inaudible) Valesco is going?

MR. RICE: That’s right. Yes.

QUESTIONER: I'm sure now that the Finance Minister of Greece, Mr. Tsakalotos gave an interview to Reuters, and I quote, he said that, "He could accept the idea of a long-term debt relief, which will be having -- have specific terms linked to the progress of reforms." He's giving you an offer, I think. What is the -- The IMF is going to agree on this approach?

MR. RICE: This is a Reuters' report; I think Krista should really respond.

QUESTIONER: It's an interview, another report.

MR. RICE: Kidding, just kidding; just kidding. You know, I haven't seen it, obviously, but I mean, it sounds like, you know, in a way the formulation that we've been putting forward for some time, and you know what I'm going to say, is that, you know, we need both the reforms and we need the debt relief. That’s the IMF position. That’s been our firm position for quite some time, and that remains our position. You know, Christine Lagarde has said, "It needs to walk on two legs," and those are the two legs. Krista, I think we have –

QUESTIONER: Yes. I want to follow up on (inaudible) question earlier about whether it's possible they might still be an disbursement this year, this current year, so –

MR. RICE: Yes. I don't have -- I don’t have a timeline on that, Krista.

QUESTIONER: Okay. Then separately I had some questions about Pakistan, specifically, regarding their Privatization Program. They had said they would raise 5 billion in revenue in two years in 2013, but have only managed 1.7 billion. Is the IMF very concerned about this? And particularly there's been a delay in the privatization of the Pakistan International Airlines, and if they meet a deadline of December 31, is that a big concern?

MR. RICE: You know, I'm going to have to pass on Pakistan this morning, on the privatization detail, Krista, but we will get you something, immediately after the briefing. Okay?

QUESTIONER: Just a follow up quickly on Greece.

MR. RICE: Yes?

QUESTIONER: I just want to be -- Gerry, I just want to be 100 percent sure that I understand the timeline, in particular what you mean by "come on board." So there is mission next week, and then in January, the mission that you are referring to, that will be the first -- that will be the first ESM Review?

MR. RICE: That’s right, that’s right.

QUESTIONER: Would the IMF participate in that?

MR. RICE: Yes. We would participate in that review, we would be party to that with the European institutions, and it's only then at that point we would begin to think about what the IMF participation would be in terms of, you know, financial contribution. And again, as I said, that depends on the assessment at that time of where the reforms are, what the debt relief component would be, and so on. But it's only at that point we -- It would be first point where we could begin to think about what our participation would be.

QUESTIONER: And just to clarify then, so come on board involves, potentially, some type of IMF financial contribution, either under the current program or possibly a new program?

MR. RICE: Well, it would be in the context of a new program but, you know, as I've said, this would be the first point at which we could begin to consider that kind of participation.

QUESTIONER: Okay. Thank you.

MR. RICE: Yes?

QUESTIONER: Thank you. Does this also mean that you'll start negotiating with the Europeans about the debt restructuring at that point, or have you already started this process?

MR. RICE: You know, again, I'm just going to repeat, it's got to be on two legs, so it's an assessment of the reforms, and then the discussion of the debt relief and these things go hand-in-hand, and those will be the discussions, I think that will begin to take place around the time of the first review.

QUESTIONER: I mean, we meant to ask about the bank recapitalization as well in Greece. Do you think that it was a success? Like, the Greek Finance Minister mentioned. Some people in Greece consider it a fire sale that has come, too, at the loss to the Greek taxpayer. If you don’t consider it a success, is it because of the state of the banks and the economy? Or of the book building way that the process handled? Thank you.

MR. RICE: Well, the IMF was not directly involved in the bank -- comprehensive assessment so, you know, we are still analyzing the results actually. What I can say, is that adequate recapitalization, together with ambitious financial sector measures to strengthen the bank governance and address the NPL, the nonperforming loan issue, are essential to restoring confidence and ensuring the viability of the financial sector in Greece and its ability to support the economy or the medium and long.

QUESTIONER: I was wondering if you had any comment on the set of measures announced today by the ECB, to satisfy the -- with what has been announced, or do you think that more needs to be done over there.

MR. RICE: The ECB's decisions to day will help address increased downside risks to the recovery. The ECB's asset purchase program has supported confidence, financial conditions, and inflation expectations. Today's actions and its strong commitment to adjust the program if needed will help meet the price stability objective. The ECB should continue to strongly signal its willingness to act and use all the instruments available until its price stability mandate is met.

I am going to turn briefly online, and take a few questions there. And the first one is on Zambia. He actually has two questions, one on Zambia, and one on Burundi. Let me take those because it is also an opportunity to make some comments on Africa.

On Zambia, the question is it's reported that the IMF proposed a billion facility which the president had turned down. A sticking point for the president was the insistence by the IMF that the government commit to drastic reductions in expenditure, particularly on road construction. What is the IMF's response?

Well, just to be clear, the Zambian authorities did not and have not requested a program with the IMF, but just a bit of context. There was an IMF staff team in Zambia during November to review recent economic developments and have discussions with the authorities.

What was agreed was that the authorities and the IMF staff would remain closely engaged in the period ahead, and the Zambian authorities undertook to conduct internal consultations based on the outcome of the mission, which I mentioned.

That's where we are. So, again, just to be clear, no request as yet for a program from Zambia.

The question on Burundi was along similar lines. What I can say is that in terms of the outlook in Burundi, it's affected by the decline in economic activity there, and the withdrawal of donor support, and confidence in the economy has been weakened by the political climate and adverse security developments.

The growth rate in Burundi, which we had initially projected at five percent in 2015, is now estimated at -4.1 percent in real terms. The curtailment of donor support, which I mentioned, has led to a significant decline in development spending, and in the current environment, turning to the IMF, the completion of the seventh and eighth review under our program there is not possible, and as such, Burundi's program with the IMF, which is an ECF arrangement, is now off track.

I am going to take another question online, and it is relating to Sri Lanka. Again, I'm happy to turn to another part of the membership.

Has the government so far made a verbal or official request for assistance as per statements from the Prime Minister, and what is the assessment on Sir Lanka's economy?

The authorities have expressed interest in a Fund supported program as one option to address the balance of payments pressure that they are facing, but again, there has been no formal request for a program.

In terms of the IMF thinking, our staff are looking at what might be the best options based on our assessment of the macroeconomic vulnerabilities facing Sri Lanka, the nature and size of balance of payments' needs, and the proposed government policies to address these issues.

What I can also say is that staff do have concerns with the proposed 2016 budget, which does not envision significant consolidation relative to the expected outcome for 2015.

I'll take one last one online. Can we get an update on when the Board is planning to meet on the review of the IMF's lending into arrears policy? Are there any new reports associated with it, and if so, what are the recommendations? Can you elaborate on the Board's consideration of the crisis program review?

Actually, two questions there from Ian. On the lending into arrears policy, we talked about this two weeks ago when I was here. I mentioned this two step process, the informal Board meeting, to be followed by a formal Board meeting on the Fund's policy of non-toleration of arrears to official bilateral creditors.

I can tell you that first step, the Board did in fact meet informally on November 23. That has happened. I do not have a date for the second step, the formal Board meeting. That is also, as I have mentioned, expected to take place.

Again, just a reminder and as I said setting the context the last time we were here, this policy has been part of the Fund's work program for quite some time, and I went as far the last time as to quote, for example, from our 2013 Board paper on sovereign debt restructuring. That is where we are on that set of issues.

On the crisis program review, again, it was mentioned the last time I was here, and I can update a little bit. I was asked about the timing at that point, and Ian is asking again.

In fact, the Board is scheduled to discuss on Monday, this coming Monday, a staff paper that provides an updated review of the Fund's crisis programs. It's going to be a fairly comprehensive review. It's actually going to cover 32 Fund supported programs that have been undertaken during the global financial crisis across the world.

That will include Asia, emerging Europe, the Euro area, of course, the Middle East, North Africa, and the Caribbean. Many people are not aware of the extent of these crisis programs. That is what that review will be covering.

You know, this is part of our ongoing assessment. Those of you who follow us, you know this is, I think, one of the strengths of the IMF, that we do these kinds of assessments on a regular basis. They are rigorous. They are often self-examining, self-critical. They are done precisely for that reason so that we can continuously improve, learn, get feedback, and feed it into future program design.

We had previous program reviews in 2009, updates in 2010, 2011, 2012, and then we are going to have another one in 2015. We will publish the staff paper in the following days, and we will offer you a briefing on that as well as the right time.

I think you had asked about that last time. I hope I've given you a more accurate update.

Let me take one or two more in the room.

QUESTIONER: About emerging Europe, I'm racking my brain trying to remember which countries are involved. Could you remind me?

MR. RICE: I will come back to you straight after this with the list, Andre. I don't have it in front of me. I'll come back to you. Will you give the last question?


MR. RICE: It seems that way; yes.

QUESTIONER: I have a question on Cyprus. You send a team to make proposals on how the solution of the political problem of the island is going to be viable to their economy. There is a published report that there is a team with proposals on this issue. If you don't have an answer, can you give us an answer later?

MR. RICE: I can give you an answer, which is that indeed, the IMF has been asked to provide technical assistance on the economic aspects of a post-settlement Cyprus. We stand ready to aid the two communities in finding sustainable economic solutions.

What would our assistance look like? It would be technical assistance, as I say, providing capacity building in our areas of strength and our areas of expertise, the macroeconomic framework, financial and fiscal affairs, and statistics. That's about all I have on that. I hope that's helpful.

QUESTIONER: Thank you.

MR. RICE: Thank you very much. Thank you all to you in the room and to our friends online. We will see you soon.


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