Transcript of a Press Briefing by William Murray, Deputy Spokesman, Communications Department, International Monetary Fund

December 12, 2014

Washington, D.C.
Thursday, December 11, 2014
Webcast of the press briefing Webcast

MR. MURRAY: Hi, good day. I'm William Murray of the Communications Department at the International Monetary Fund here at IMF headquarters. This is our regular press briefing. As usual, I'm going to run through a few items and then we'll take questions from you online, and from the journalists gathered here at IMF headquarters.

Let me start with some management travel and then go into some other items. Managing Director, Christine Lagarde, as you know, is returning to Washington after visits to Lima, Peru; Santiago, Chile; and to Milan and Rome in Italy. She met Pope Francis in Rome to discuss issues of mutual concern including youth unemployment, inequality, and other global economic matters. In Milan, she delivered an address which is on our website at Bocconi University. Again, youth unemployment issues were addressed there.

First Deputy Managing Director, David Lipton, is currently in Istanbul, Turkey participating in the meetings of the G-20 deputies. This is the first deputies' meeting in preparation for Turkey's chairmanship of the G-20 in 2015. Following that, Mr. Lipton will take the opportunity to stop briefly in Ukraine for discussions with the authorities.

Turning away from management travel, today, after the embargo on this press conference expires you'll see on our public website the IMF's latest Work Program which summarizes the agenda of the Fund in the next year. The Work Program is updated every six months, so this is the latest update. It's built off of the global policy agenda, which we also publish at the spring and annual meetings, along with guidance of the International Monetary and Financial Committee (IMFC). The Work Program is reviewed and approved by our Executive Board. Give that a look if you haven't yet.

Probably early next week, we don't have a precise time, and Media Relations will get back to you with details and exact timing, but probably early next week we'll be publishing a report called Housing Recoveries Cluster Report on Denmark, Ireland, the Netherlands, and Spain. This report examines the experiences of the four European countries that have had large house price declines in recent years. It's going to be available under embargo, and as I noted, Media Relations will come back to you fairly soon with publication details.

Let's see, also, our next regular briefing will be next month, but our precise timing hasn't been fixed yet.

QUESTIONER: It'll be in January?

MR. MURRAY: It'll be in January.

QUESTIONER: Is this the last one?

MR. MURRAY: Yes, this is the last briefing of 2014. We'll resume the briefings in January.

Now, the reason the date is a little in flux is that also the Managing Director will have her regular New Year's speech in mid-January, so we're going to have to build the briefing around the timing of that speech. We expect the speech to be here in Washington. She will then travel to the World Economic Forum in Davos, Switzerland.

We will also, in January, publish the latest World Economic Outlook Update. That will be published ahead of the Davos Forum. For planning purposes, we plan to launch that update in Beijing. As you know, a few years ago we started doing updates abroad, so the next update, which will be in January, is going to be launched in Beijing.

Last housekeeping item, we observe holidays here, December 25th, 26th, January 1st, January 2nd, 2015. Duty officers are on call during that period, and you can reach press officers by email.

QUESTIONER: You know, the first question is the easy one, I guess, always. What is the latest on the negotiations between the Troika, the IMF, and the Greek authorities? Where do we stand right now?

MR. MURRAY: Just a quick status report on Greece. We expect the negotiating mission to return in January. Meanwhile, discussions on the sixth review, that's where we're at right now, the sixth review of the IMF program, have been continuing, and they've been constructive. We have a technical fiscal team on the ground in Athens to continue work on various fiscal issues as part of the ongoing sixth review. That's really where we stand. Our focus, at the moment, is on successfully completing the sixth review.

QUESTIONER: I'm sure you know that we have some political developments in Greece. I wanted to know what is the IMF's position on the presidential elections. Also, as I understand, the Prime Minister of Greece has informed its European partners on his decision. Did he inform Ms. Lagarde too?

MR. MURRAY: I don't have any specific details on that level of contact with Fund management. I have to get back to you on that, Michael, and I’m not sure. But certainly, it's our understanding that the authorities now intend to continue the current Fund arrangement on a precautionary basis. We welcome, also, their intention to request an Enhanced Condition Credit Line from the Europeans. But beyond that I don't really have much more to offer.

QUESTIONER: In spite of the political situation in Greece, the review remains unfinished all these months. Can you tell us why? What are the unresolved issues, please?

MR. MURRAY: You know, like I said, we've had ongoing contacts with the Greek authorities and they continue. There's a technical fiscal mission on the ground, and the discussions that we've had with the Greeks have been constructive. But beyond that I don't really have much to offer.

Let me just say, for those that aren't following as closely as our Greek colleagues are, that our focus, at the moment, is on the successful completion of the sixth review so that Greece can continue to put in place the essential conditions for sustainable growth and job creation, and meet its fiscal targets under the existing Fund program.

The review can be completed provided there is swift progress on the policies needed for it to move forward. In terms of those policies, again, let's let the mission work play out before we get into that.

QUESTIONER: Could the presidential vote and the result of the presidential vote postpone the return of the full negotiating mission to Greece that you said would normally take place in January?

MR. MURRAY: As I mentioned at the top of the briefing, we expect to return to Athens in January. I don’t have anything beyond that.

QUESTIONER: And may I follow-up on what you said that, basically, there is a technical fiscal mission right now in Greece. Does this mean that this is the sticking point that unless the fiscal gap is closed the full negotiating mission will not go back to Greece?

MR. MURRAY: Fiscal policy is an important issue, but beyond that I wouldn't draw the inference about timing of the negotiating mission and this technical mission. We have a lot of work to do in Greece, as you know. I mean, we've been doing a lot of work in Greece. We need to have people on the ground doing that kind of analysis. So I think that's really the significance of that.

QUESTIONER: Have you or has the mission, any IMF officials, met with Tsipras or any other SYRIZA officials? Can you just clarify your answer about whether the presidential elections might delay -- I thought the first thing you said was no, and then you…

MR. MURRAY: On Tsipras, on the level of contacts of the political leadership with the mission, no, there have not been meetings.

You're trying to figure out what I'm saying on the general mission. No, we intend to return to Athens in January. In terms of election outcomes that would be hypothetical. I'm not aware of that being the defining…

QUESTIONER: Okay. So just to be clear, you're saying that you hope to conclude the mission before the elections, but as in other cases, like Ukraine…

MR. MURRAY: No, no, not conclude the mission. No.

QUESTIONER: If there isn't a government to deal with, a formed government, then it's hypothetically…

MR. MURRAY: I see where you're trying to… no, no, that's getting into a whole level of speculation, no.

QUESTIONER: I'm sorry, Bill, it's not speculation because we're talking about real timing of elections. We're talking about, like, what the IMF's intent is…

MR. MURRAY: I just want to clarify for our audience the premise of the question. Our plan is to return to Athens with a negotiating mission in January. That's our plan.

QUESTIONER: Sorry, just a basic question. I'm sure everyone else knows, just to clarify. So Greece has asked for a precautionary line. Because, I believe, last time we spoke they hadn't actually asked, but you said…

MR. MURRAY: Our understanding is that the authorities now intend to continue with the current Fund program on a precautionary basis.

QUESTIONER: Right. So then basically as soon as the sixth review is complete it would switch over to a precautionary basis. I mean, what does that mean? Does that mean you have to renegotiate the conditions or what is…

MR. MURRAY: No. This is terminology that's used in terms of signaling to the world what a country, it could be any country, not just Greece…

QUESTIONER: Did Greece ask for the precautionary…?

MR. MURRAY: Our understanding is the authorities intend to. Intend to ask for a…

QUESTIONER: From the IMF or the Europeans?

MR. MURRAY: Well, it's our program. It's not the European programs.

QUESTIONER: We are talking about the IMF program? Where do you stand on that?

MR. MURRAY: I'm talking about the IMF program. We have a program with the Greek government, and we intend to continue the program as far as I'm aware. But anyway, I’m getting back to the question that was raised about the precautionary versus a program which disburses.

What it is, it's just a characterization of how a country sends a signal to the rest of the world about what they intend to do with the credit. So when you treat it as precautionary you still have this conditionality, but you treat it as precautionary, you're telling the world we don't intend to draw on the credit. We have it as a backstop.

QUESTIONER: As a follow-up, other countries that have precautionary IMF programs started off as precautionary, and they were often countries that already had really good policies, and therefore, had fever conditionality attached. I don't know of any other examples where a country has switched halfway through.

MR. MURRAY: There are numerous examples.


MR. MURRAY: I can't, off the top of my head, pull them out right now, but this is not unprecedented. This is definitely not unprecedented.

QUESTIONER: I want to ask you whether you believe that the political uncertainty existing right now in Greece as we know is a factor of the stabilization of the economy? Do you agree with this view?

MR. MURRAY: I'm not going to comment on the political process in Greece, but, in any country, we see in other countries that you tend to have volatility in markets before elections. Beyond that, I don't have any observation.

QUESTIONER: Given the vague situation existing right now in the political spectrum in Greece what is your major fear for the country?

MR. MURRAY: Like I said, our main goal right now is to see the sixth review of the IMF program successfully completed, and that's what we're focused on.


MR. MURRAY: We are working with our Greek colleagues to complete the sixth review.

QUESTIONER: But possibilities are open?

MR. MURRAY: I'm not going to speculate beyond that.

QUESTIONER: I just want to ask you if the current program on the precautionary basis, as you said, is your ideal evolution of the relationship with Greece going forward?

MR. MURRAY: Our relationship with all countries evolves over time. You know, the goal right now for us is to complete the sixth review with Greece, and see Greece, as a country, return to a more stable and sustainable economic environment. That's our ultimate goal. That's what we're trying to do.

Okay. Let's move then. Thanks for those Greece questions. I'm glad you gave me the opportunity to comment on Greece, though.

QUESTIONER: I have a couple of questions on Russia and Ukraine. First on Russia, the Russian Central Bank has performed a series of rate hikes. I'd like you to comment on that approach, and maybe share your view as to whether that is fraught with a risk of a recession, and whether the recession can be a problem, say, a year or more?

MR. MURRAY: Thanks. I've commented in the past with this situation with Russia, but let me remind everyone what our current views are.

Russia's growth is expected to continue its slowing trend to 0.2 percent in 2014. That's going to end fairly soon from about 1.3 percent in 2013. Investment is likely to contract further as geopolitical tensions persist, and consumption growth is slowing. The escalation of sanctions and the sharp decline in oil prices will decrease growth further in 2015. Moreover, unaddressed structural bottlenecks and stagnant investment are reducing potential output in Russia over the medium term.

That's our current view of the economy. Of course, we have ongoing engagement with the Russians and we'll be updating you as we go forward. I can't prejudge the WEO update that we'll be releasing in January, but that will be another opportunity for you, Andrei, and others that are interested in the outlook for Russia to explore some of those trends.

QUESTIONER: I was asking specifically about the central bank (inaudible) which is, after all, the --

MR. MURRAY: Right.

QUESTIONER: -- of the IMF.

MR. MURRAY: Well, on that I don't have any specific guidance at the moment, but the ruble has depreciated because of the decline in oil prices, and continued geopolitical tensions and sanctions.

The now flexible exchange rate is an important component of adjusting to external shocks. We welcome the central bank’s move to provide assurances on foreign currency funding via the use of repos and swaps while retaining an option to intervene to safeguard financial stability. Beyond that, I don't really have any comments to offer you, at the moment, on central bank policy.

QUESTIONER: So the central bank believes that the ruble is undervalued at this point by about 20 percent. Do you agree with that assessment? If not, why not, and what is your assessment?

MR. MURRAY: I'm a bit reluctant to comment on exchange valuations. It's a pretty dynamic environment, in general, but right now it's certainly a very dynamic environment. We do regular very, very granular, detailed analysis of exchange rate valuations using models plus our expert judgment by our economists. I'm not prepared to come up with a valuation, under or over valuation view on that.

QUESTIONER: So that modeling that your experts do… when can we expect the next installment of that?

MR. MURRAY: It's not going to happen anytime soon. As you know, we have the external sector report which is an annual report. The work is underway right now. I mean, there's very, very active work on the external sector report right now. It's going to be a few months before we have the formal views.

QUESTIONER: Moving on to Ukraine, if I may. First, you mentioned that Mr. Lipton will be visiting Kiev.

What date is that?

MR. MURRAY: He's in Istanbul now for the G20 deputies' meeting. I think it's going to be some time over the weekend, but I don't have any precise details. We have a mission, as you know on the ground right now in Ukraine. Our resident representative issued a statement a few days ago that outlined the mission intent. I can tell you a little bit about that.

QUESTIONER: We saw the statement, so does this mean that by Mr. Lipton's visit they expect to achieve some, at least, preliminary result and agreement that he can review, and maybe…

MR. MURRAY: I don't want to prejudge the First Deputy Managing Director's visit. A new government has been formed, and it's an opportunistic visit by him. The mission itself is doing negotiating, and that's really the new twist, because a government has been formed, and as we have said previously the mission is discussing with the new economic team the current economic situation, progress under our program with Ukraine, and policies necessary to maintain macroeconomic and financial stability with a goal of reviving growth.

QUESTIONER: All right. It's been reported -- one last thing. It's been reported that the IMF is of the view that Ukraine needs additional money, obviously, that's probably a subject of mission discussions. Figures have been around, say, like, $15 billion additional. Can you comment in any way on those projections?

MR. MURRAY: I don't have a specific comment. I've seen the report, but I'm not going to comment specifically on that. What I can tell you is that the review can be completed, provided there are financing assurances for the program to be funded through the next 12 months.

As I've noted, the mission is working in Kiev and is assessing, among other issues, financing needs, and discussing policies to maintain macro stability. But beyond that I don't have any further guidance.

QUESTIONER: Bill, I'm sorry. I just want you to clarify what you just said. If you don't have assurances of financing for the program for the next 12 months you will not be able to complete the review. Is that what I heard?

MR. MURRAY: That's basically it -- we need financing assurances, programs have to be funded, and it's a 12 month horizon.

QUESTIONER: Sure. Just to clarify one thing on your Russia statement. You said that next year you expect growth to contract further. Is that beyond -- I think currently you are forecasting a small amount of growth, but it's positive growth. Is that beyond what you're forecasting now or is that part of your forecast?

MR. MURRAY: We're expecting growth to slow further in 2015, but I'm not predicting -- I can't give you a number in terms of change.

QUESTIONER: So you're expecting it to contract further than you already have projected, okay.


QUESTIONER: Second, on Ukraine, in your last review you said that any additional cash would have to come from external sources. Is that still the case or is the IMF open to boosting its own financing package?

MR. MURRAY: The mission is on the ground. Part of the mission is assessing the financing needs of the Ukraine and how those financing needs will be fulfilled. Beyond that I can't elaborate. QUESTIONER: So there's no change at this point in that…

MR. MURRAY: We said it's really important that the donor community step up and provide financing to Ukraine.

QUESTIONER: And that's part of what you're talking about in terms of financial assurances?

MR. MURRAY: We have to look at the whole package.

QUESTIONER: The last time I understood the IMF was comfortable with the fact that the mission might not be concluded until January. Since then, their reserves have dwindled, I think, to like a month's cover. It's pretty critically low; the hryvnia has dropped even further. Is there a need for some, sort of, short-term financing between now and January? Or will the country be able to survive without any major payments due? Are we okay until then?

MR. MURRAY: I'm not aware of this being on the table in any fashion. I'll get back to you if I have something on that. We've had ongoing contact at the technical level for some time. New government's been formed; negotiating mission is now on the ground. It's an important mission.

In that context they're having discussions with the authorities about the financing needs and how to proceed going forward. Beyond that, I'm not going to speculate on how it's going to play out. I don't have any guidance on the premise of your question.

QUESTIONER: Let me just jump in with one more clarification. I was speaking to the White House, basically to the President's advisor on Russia a few days ago, and she said, specifically, on my question on whether the U.S. was willing to provide additional funds to Ukraine. She said specifically the IMF is working on this. There will be a new package, and the U.S. will be part of the package, and Russia will be part of the package as members of the IMF. So there is a presumption, at least I see it as a presumption, on the part of the American Administration that there will be a new package. Can you comment on any of it?

MR. MURRAY: I can't comment on donor packages and things of that nature at this juncture.

QUESTIONER: (inaudible).

MR. MURRAY: No, we have a program in place with Ukraine. Financing assurances are required as part of that program. It's a $17 billion program. Beyond that, what the donors are working on, I'm not privy to exactly where those discussions stand at the moment, so we can get back to you on that, but I don't really have any guidance.

Let me turn to the online questions. . Does Saudi Arabia withholding budget support due to advances by the Houthis impact the IMF's program or predictions? This is on Yemen.

As far as I understand, Saudi Arabia has been the largest financial contributor to Yemen, and has already disbursed, in 2014, more than what we pledged for, for this year. According to the information we have Saudi Arabia provided grants and cash and oil products this year amounting to somewhere between $1.25 and $1.5 billion. The exact amount depends on the pricing of oil products and stuff like that, but basically the Saudi's have been financing Yemen.

On the second related question, which I see here is a reserve question, the status of Yemen's reserves. Yemen's reserves are in line with our current program projections. Overall, on Yemen: the first review of the program will take place in the spring of 2015. Preliminary data shows that all quantitative targets of the program have been met as of the end of September. The authorities are advancing their structural reforms in the context of program plans and public investment has been lower than envisaged under the program. This, along with the political insecurity situation, is a factor in terms of job creation in Yemen. So it's a situation that we're monitoring carefully.

I have another question here, and then I'll come back to the room. It's from Ghana. When is Ghana likely to secure a Fund program with the IMF, and what is the status of current talks with the Fund? I don't really have any fresh guidance on Ghana, per se, in terms of developments.

But the IMF team is in close contact with the authorities, and is working with the authorities in several areas including issues related to concrete steps in cleaning up the government payroll, finalizing remaining details of their medium term reforms, and seeking external financing assurances from bilateral donors and international institutions.

Once this work is completed a financial arrangement to support Ghana's economic program could be agreed at staff level before being proposed for the IMF Executive Board's consideration. Right now, we are still working with Ghana in terms of nailing down details of policies that could be supported by the Fund and its Executive Board.

All right. That's from the screen. Any other?

QUESTIONER: So in her speech a couple of weeks ago, the Managing Director mentioned, in particular, Venezuela as being vulnerable to the drop in oil prices. I was wondering if -- I mean, obviously, the IMF hasn't had an Article IV in Venezuela for a long time. Are you still monitoring the country's situation? Have they ever reached out to you, I doubt it, and do you trust the quality of the data that's coming out of Venezuela now?

MR. MURRAY: That's a lot of questions. We're going to have many follow-ups after this.

QUESTIONER: Also, I have something on Burkina Faso and the quotas.

MR. MURRAY: Okay. Because we answered so many Greece questions she's not taking any chance now. Seriously, on Venezuela. You know, don't forget Venezuela has an executive director on the Fund's Board. So it's not that we don't have contact with Venezuela. They do have somebody here on our Executive Board, and I wanted to remind people of that.

It's true that we have not had an Article IV Consultation in some time. We are monitoring, and I'm not going to get into data issues at this stage, but we are certainly monitoring developments in Venezuela with keen interest. If you've looked at anything we've published in the last two years, particularly on the Caribbean countries and Argentina, you'll notice in our various staff reports references to Venezuela's oil support program, which is known in the region as Petrocaribe.

Certainly, you know, we watch developments in Venezuela with great interest. Oil price movements are, certainly, an issue for Venezuela and other oil producing countries. But, as you know, the oil price movements that we've seen in recent months are a very complicated issue in terms of who benefits and who does not. Certainly right now our view is that the net benefit from a decline in world oil prices is net positive for the global economy including, by extension, you could say countries that are involved in the Petrocaribe subsidized oil program. You know, oil price movements are moving in the consumer's favor at the moment. But beyond that I really don't have much to offer on Venezuela. We're watching Venezuela and other oil producing countries carefully.

QUESTIONER: Just since the coup in Burkina Faso there have been concerns about the government's finances and the level of reserves in particular. So I'm wondering if you have any updated figures on that?

MR. MURRAY: The Fund's Executive Board approved a three year credit arrangement in December 2013 for Burkina Faso. The first review of that arrangement was completed in July of 2014.

There is a second review mission that was temporarily ended. My understanding is that review mission will return to Burkina tomorrow. I think the mission departs for Burkina Faso tomorrow to discuss the program and engagement going forward. The issue, really, is that we have not completed the second review, so that's where we stand.

Now, if the authorities wish to continue program engagement possible options are a conversion to rapid emergency credit or a continuation of the current three year program. This is something that's going to be discussed by the mission, as I noted as leaving tomorrow.

I don't have any more questions online, so we'll go to the Greece clarification. I'm going to start wrapping up soon because it's getting kind of close to the deadline.

QUESTIONER: You spoke about the return of the mission in January, correct? But I thought, and please correct me, that if a country with a program has elections the program freezes?

MR. MURRAY: Our intention is to return to Greece in January, presumably following elections. What the mission expects to do is return in January.

QUESTIONER: You said presumably following the elections?

MR. MURRAY: Well, I mean, it's a negotiating mission in January. That's when we intend to return.

QUESTIONER: With Mr. Goyal?

MR. MURRAY: Yes. He's the mission chief. We expect the negotiating mission to return in January.

QUESTIONER: The other clarification is this. If Greece asks for a precautionary credit line from the IMF what happens to the program?

MR. MURRAY: It's not unusual for programs to start off as a facility that a country needs to tap because of severe balance of payments needs, and they have to fill their gaps, their financing gaps. That's what we do.

After time, the programs can serve another useful purpose of just providing confidence to the international community, investors, and everybody else. This is typically when countries make a decision to shift an existing program, like standby arrangements, to become precautionary, and they do that. Our understanding is that the authorities intend to continue with the program as precautionary, but there's more work ahead of us.

QUESTIONER: They've asked?

QUESTIONER: How do you know what the Greek authorities are intending? They haven't asked you?

MR. MURRAY: Well, my understanding from our mission is that the authorities intend to continue with the current Fund arrangement on a precautionary basis. Presumably, we've had discussions about this. You know, it's coming from the mission. I think we're finished on this. Case closed here.

QUESTIONER: The US Congress has made clear that they're not going to pass quota reform in the budget. There's a pretty clear signal. Ted Truman said it looks like it's dead now. The Managing Director said, look, she'd give them to the end of the year and then start working on plan B. So, first of all, what is plan B? Second of all, wouldn’t plan B require U.S. approval, executive director approval? Finally, one of the main arguments presented is that giving up the veto on the NAB relinquishes some control over the financing. Can you respond to that argument?

MR. MURRAY: Okay. Thanks, Ian, for that. Let me just comment first on developments. We are following developments on Capitol Hill very closely. Our position regarding the need to rapidly advance the Fund's quota and governance reforms remains unchanged. Full stop. The work program, and for those of you online you may have an easier chance of pulling the work program document up, but if you open the work program document, paragraph 12 touches upon some of the items just mentioned in the question.

Let me just read that paragraph for the record. It's entitled, governance and resources. A prompt entry into force of the 2010 quota and governance reforms is of utmost importance to preserve the quota based nature of the IMF, and strengthen its legitimacy, effectiveness, and relevance. In line with the IMFC's commitment to maintaining a strong and adequately resourced IMF steps will also be taken to ensure the availability of sufficient Fund resources for crisis prevention and resolution.

As flagged in the spring work program, in the event that the 2010 Board Reform Amendment and the 14th general review of quotas have not become effective by the end of 2014, a Board meeting on alternative options for rebalancing quotas and increasing Fund resources will be scheduled for January 2015. The Board will discuss a draft report to the Board of Governors on the 15th General Review of Quotas before the end-January deadline for the completion of the review. The timing of Board meetings on the 15th General Review and our revisions to the quota formula will be determined taking into account progress made in ratifying the 2010 reforms.

This is basically all I have to say today on this matter. We will follow-up with you when we have more to elaborate on. Thanks for asking a question.

I want to wrap this up. There is one thing that wasn't in my opening remarks, and I apologize, but I want to announce it. Simonetta Nardin, who has been Deputy Chief of Media Relations at the Fund, has formally been appointed Chief of the Media Relations Division. So I would like to give a quick round of applause to Simonetta because she deserves this appointment.

For those of you who do not know Simonetta it's important that you get to know her. So I look forward to hearing more from you in the future.

MR. MURRAY: Thanks again. Look forward to seeing you all in January 2015. Happy New Year everyone.


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