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

December 13, 2012

Washington, D.C.
Thursday, December 13, 2012
Webcast of the press briefing Webcast

MR. RICE: I am Gerry Rice of the External Relations Department. This will be our last briefing before the holiday season so we expect to see you again sometime in January. Let me take this opportunity though to wish you all the best for the holiday season. This briefing will be embargoed as usual until about 10:30 and that's Washington time.

Let me begin with a couple of announcements and then we'll turn to the questions in the room and online as well. Regarding the Managing Director, Christine Lagarde, and her travel, she is today in Latin America. She arrived yesterday in Chile and later today at 2:30 p.m. local time, that's 12:30 p.m. Washington time, the Managing Director will hold a press conference at the Ministry of Finance with Minister Felipe Larrain and Governor Rodrigo Vergara.

Then tomorrow she will conclude her visit to Chile by participating in a regional finance minister's meeting in Viña del Mar. As you probably know, the visit to Chile follows her visit to Colombia earlier in the week.

Looking to January, the Managing Director will travel to Africa where she will visit three countries, Malawi, Côte d'Ivoire and Mauritania. Again, at the conclusion of her visit in each country, she will hold a press conference together with the local authorities.

Turning to Deputy Managing Director Min Zhu, he will participate in the Asian Financial Forum in Hong Kong on January 14 and 15. Then he will travel to Beijing to give the opening keynote address at the Economist bellwether event on January 16.

As you may know, the IMF is reviewing our code of good practices on fiscal transparency and related instruments. I mention this because we have opened an online consultation process and we are seeking input until February 10, 2013, and that consultation page can be found on our website at I think with that I will turn to your questions in the room.

QUESTIONER: We saw the statement by Madam Lagarde welcoming the agreement in Europe. First of all, I want to ask you, - we know that she is in Chile -, if she participated in the Euro Group meeting today. The second question is about the biggest issue for the IMF: the sustainability of the Greek debt. Do you really think that the debt target of 124% in 2020 can still be met by Greece?

MR. RICE: I can confirm that while the Managing Director is indeed in Latin America, she did participate in the Euro Group meeting today by teleconference. On your question on the debt targets, the package agreed in Brussels today including the debt buyback program will deliver substantial debt reductions to Greece and as you know, Greece's European partners have stated that they will find a way to deliver on the commitments of the Euro Group to ensure the financing remains adequate and debt remains on a sustainable track. This includes the targets of 124 percent of GDP by 2020 and substantially lower than 110 percent by 2022. In fact, there is, and I'll point to it, the Euro Group statement this morning on Greece says that the Euro Group reaffirmed that this together with the initiatives agreed by the Euro Group on November 27 and full implementation of the adjustment program should bring Greece's public debt back on a sustainable path to 124 percent of GDP in 2020. This is the sentence I was referring to. Greece and the other Euro Area member states are prepared to take additional measures if necessary to ensure that this objective is met. I think the Euro Group has been fairly clear on that this morning. You mentioned the Managing Director's statement and that's right. As you know, she has welcomed the Euro Group decision today. We think this decision is important for Greece and to remind ourselves of the big objective here is to help Greece get back on the sustainable path for growth, for jobs and the debt sustainability is key to that of course.

QUESTIONER: If I can follow-up. Why is it said “if necessary’ given that it is necessary that they're going to do more because documents that are public in Germany show that 128 percent and not 124 has been spelled out so far. What gives the IMF confidence that it's actually going to be 124? The second question is why is the board meeting only in January and not before the holiday break?

MR. RICE: On the debt objectives, I would reiterate what the Euro Group has said. They've made the commitment to 124 percent by 2020 and indicating that they will take the steps necessary to ensure that objective is met. In terms of a reassurance, I think that statement is fairly clear. On the date of our broad meeting, obviously we want to move as expeditiously as possible, but there is the usual preparation of documents and time needed to get those to the board and so on and that's why we'll be going in January as we said this morning.

QUESTIONER: I have a follow-up for the board meeting. Does the IMF require a new review of the program?

MR. RICE: What is being recommended is for the board to make a decision on completion on the first review of the current program.

QUESTIONER: June or September?

MR. RICE: It's the completion of the first review of the current program.

QUESTIONER: As you know, Italian Prime Minister Monti has announced that he will resign as soon as the parliament will approve the new stability law. Is there any preoccupation on your part that the pace of reform and fiscal responsibility chosen by the Italian government might slow down or reverse as an effect of that?

MR. RICE: Prime Minister Monti has taken bold steps to improve Italy's fiscal health and initiate important structural reforms. We believe the key now is to continue with the implementation of those reforms, to secure sustainability and revive growth quickly in Italy. We believe that Italy is now on the right path of fiscal consolidation and structural reform and again continuing on that path with implementation is the way forward. In terms of the steps required, our main recommendations have been fairly clearly articulated and they remain valid.

QUESTIONER: A follow-up. Of course the electoral campaign is already on and there are some political forces that are taking sides of the change of course for Italy. Some of the political forces are saying that the spread with the German bonds is fake issue, some are saying that austerity is overrated, and they of course have some traction in the Italian public. What would you say to the Italian people to convince them that the right track is the one that we already following?

MR. RICE: It's not for the IMF to speak to the Italian people. Of course, that's for the Italian government. But just to reiterate that the steps that Prime Minister Monti has taken we believe are steps in the right path and should be continued and should be implemented going forward. Again I won't go into the details of those, we can if you'd like, but we've fairly clearly articulated those in the past and they're on the record. Again we believe that the steps being taken are the right steps to put Italy on the path to growth, sustainability, jobs and the key is implementation now.

QUESTIONER: Just to clarify about Italy, the IMF's suggestion is continuing for whoever is going to be the next government, to continue on the same path. Correct?

MR. RICE: Implementation. That's right.

QUESTIONER: To make some example, you were saying about the reform already started. What are the keys that we need to implement?

MR. RICE: Touching on a few things, ensuring fiscal adjustment, is more growth friendly by rebalancing the composition toward expenditure cuts and lower taxes, accelerating the implementation of labor product market reforms to boost productivity and labor participation especially for young people and for women in the Italian economy, ensuring that the banks maintain adequate capital and liquidity buffers and in general securing stability and reviving growth again entails continuing with implementation of these reforms which are the reforms that Prime Minister Monti has initiated.

QUESTIONER: I would like to ask about Argentina. The deadline this Monday and I would like to know whether the IMF has received recently any information from the Argentine government and whether the board meeting will take place on Monday which is the deadline, because you said last briefing that there was no date yet for the board meeting. Thank you.

MR. RICE: Thank you for the question. I'd like to be clear on this because you've mentioned deadlines. To be clear, as our Executive Board said in September, the Managing Director is required to report to the board by December 17 on Argentina's response. There will be a report to the board on Monday, December 17. There will then need to be a board meeting. That board meeting will not be on December 17. In fact, the date of that board meeting is not yet set. But at a later date there will be a board meeting to discuss the report that is submitted on Monday, December 17, to clarify those things. Again, we don't have a date for you yet in terms of when the board would meet to discuss that report.

QUESTIONER: This year?

MR. RICE: I don't have a date, but I wouldn't expect it to be this year.

QUESTIONER: And the IMF has received nothing from the Argentine government so far on this topic?

MR. RICE: I don't have any details on the contents of the report that is going to be submitted, so I don't have much for you beyond what I'd said.

QUESTIONER: A quick follow-up question on Argentina. Could you elaborate a little bit about what the next steps could possibly be as far as the procedure goes? Once the report is submitted, what would happen next? Then I have a second question on Egypt. The Egyptian government requested to delay their loan so they have more time to explain the conditions to the people. I was wondering if you agree with their timeline that they could come back at the end of January or do you have any concerns about the government fulfilling the conditions for the program now that there is all this political turmoil.

MR. RICE: On Argentina, I wouldn't want to preempt that board discussion or any board decision so that I don't have anything further on that except to say as the Managing Director has said in the past, we stand ready to continue to cooperate with the authorities with regard to the issue of the official CPI and GDP data. We stand ready to continue to cooperate.

On Egypt, as you mentioned, at the request of the Egyptian authorities there has been a postponement of the board date. We continue to be in close contact with the authorities. We stand ready to consult with them on the resumption of discussions regarding the standby arrangement. And once these discussions are completed, the next steps will be determined accordingly. In terms of when that might be, I don't have a date and again I think it depends on the discussions and the consultations that will be ongoing.

QUESTIONER: Those discussions are happening now?

MR. RICE: We're in close consultation on an ongoing basis with the Egyptian authorities.

QUESTIONER: I was going to talk about Cyprus. Again what is the status of the talks, because there is a sense that we are in a deadlock. So my question is this. Is agreement expected before Christmas or we are talking about January? And the second question is: I hear that the IMF team is in Brussels right now discussing Cyprus. Is that correct?

MR. RICE: As I said here the last time, the discussions between the Cypriot authorities and the IMF and our partners, the European Commission and the European Central Bank are continuing from our respective headquarters with a view to making further progress toward a potential program with Cyprus. Again as I said here the last time, the preliminary results of the banking sector assessment were delivered by PIMCO this week and are now being analyzed, and why they are important is that they will be instrumental in determining the financing and envelope that would underpin a potential program. I would also point you to the Euro Group statement this morning a short time ago on Cyprus where the Euro Group also took note of the interim results of that due diligence exercise, that's the financial sector exercise on the capital needs of the Cypriot financial sector, and what the Euro Group said was the final results are expected in the middle of January so that's probably the best thing to point you to. And, yes, I can confirm that the IMF staff is in Brussels to review that financial sector study with our European partners.

QUESTIONER: Do you have any update on Ukraine? The situation seems unclear because first, the mission which was to visit Ukraine from 7 until 17 December was cancelled. And secondly which is much more important, the current standby program will expire in a couple of weeks in December of this year. Two short questions, please. First of all, is the new date of the new visit of the mission to Ukraine decided already? Secondly, do we speak about the new standby program or could the old program under the old conditions be unfrozen? What is the IMF's position?

MR. RICE: What I can tell you is that, at the request of the Ukrainian authorities, the IMF mission had been scheduled to Kiev for December to initiate the discussions on the standby was rescheduled to the second half of January. Our resident representative issued a statement on this that's on the website so I can point you to that. In terms of the modalities of the program, that will be discussed by the mission in January.

QUESTIONER: The Prime Minister of Greece said that this is a new date for Greece and Europe, that's what he said, the Euro Group. Does the IMF share the same positive attitude after the Euro Group's decisions? And on a second question, do you have more of a specific day of when exactly the review of Greece's fund will begin from the Board of Directors?

MR. RICE: I don't have a specific date in January for you this morning. In terms of how we view this package that has been agreed this morning, I would point you to the statement of the Managing Director. We've welcomed it and we think it is an important step toward what we're all trying to achieve, both the Greek government and people and Greece's European partners as well as the IMF, returning Greece to a sustainable path, trying to get growth going again, growth that will translate into jobs on a sustainable basis for the Greek people.

And of course, now that the support for Greece has been reassured this morning, what continues to be important is the implementation of the measures that Greece has agreed to undertake -- part of this package which is heading in the right direction.

I want to go to some of our friends online to pick up on a couple of questions there. One is on Portugal, and the question she is asking is: "Will it be necessary to improve alternative measures for Portugal? Is the next review going to be positive?"

On that I would point to our recent statement on the most recent review, the sixth review, which was issued toward the end of November which said that the program in Portugal is on track despite headwinds, it is adequately financed and the government has been doing a good job of rebuilding market access as evidenced by the decline in treasury bill yields this year and the extension of bond maturities in October. Our Executive Board will discuss this sixth review and the Article IV in Portugal in mid-January.

There is a question about the United States, asking, "Do you have comments on the stalemate of the U.S. fiscal cliff negotiation? What's the implication for the global market and the global economy?"

On that I would point to the recent statements a few days ago from the Managing Director on this issue where she spoke of the obvious importance of the U.S. fiscal cliff negotiations for the rest of the global economy. The Managing Director also indicated the importance of coming to a decision and breaking the stalemate as soon as possible with a balanced program that would include both revenues and expenditures.

QUESTIONER: If I could please come back to Argentina for a little bit. The Argentine media is reporting that a very high level official of the Argentine statistics department or entity is at the headquarters of the IMF today trying to do last minute arrangements before the Monday deadline. Could you please confirm whether that's true and whether you expect anything out of those conversations?

MR. RICE: I don't have anything for you on that but will come back to you after the meeting.

QUESTIONER: Can I ask a question about competitive devaluation? Mervyn King, the Bank of England governor who is departing decided to be frank before his departure and brought up this issue that he thinks is going to be dominating the global economy next year, countries trying to devalue their currency to hurt their neighbors and help themselves, and I'm wondering if that's something you're concerned about.

MR. RICE: One of the strengths of the IMF is that it's a place where 188 countries can come together as a forum for discussing these kinds of issues and helping to ensure that we don't get into any kind of negative spiral or competing, devaluations and other negative externalities in the global economy. I don't have a specific comment. I haven't seen that statement, but again I think this is one of the strengths of the IMF where countries can come together to really help safeguard the global economy against those kinds of issues.

MR. RICE: That seems to be the end of the questions here in the room. I want to thank you for coming today and I want to thank you for your questions, those in the room and those online, and again to wish you all the best for the holiday season and look forward to seeing you in January.


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