Transcript of IMF Press Briefing (February 1, 2018)

IMF News, February 1, 2018

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Managing Director Christine Lagarde:
- February 10: Dubai — keynote remarks at the Arab Fiscal Forum; meeting with women leaders in Dubai.
- February 11: Attend World Government Summit in the Emirate (press-related activity during the summit).
- February 12: Qatar — series of meetings with Qatari authorities.
- February 15: Paris — Banque De France Conference; one-on-one conversation with Finance Minister Bruno Le Maire (this conversation will be webcast).
- February 16: Attend Munich Security Conference in Germany.
- Next IMF press briefing scheduled for February 15th.
Deputy Managing Director Mitsuhiro Furusawa:
- February 7: New York City — participate in the Japan Securities Summit.
- January 15 and 16: Visit to Mauritania for meetings with authorities.
Deputy Managing Director Tao Zhang:
- February 12 through 16: Mission to Albania, Kosovo, and the former Yugoslav Republic of Macedonia for meetings and outreach; attendance at a conference in the former Yugoslav Republic of Macedonia sponsored by Reinventing Bretton Woods organization.

Fiscal 2019 budget:
- IMF welcomes fiscal 2019 budget targets which include a fiscal deficit of 3.3 percent of GDP; characterizes this as returning the budget to a path of gradual fiscal consolidation while supporting nascent recovery.
IMF World Economic Outlook forecasts (from WEO update referenced):
- 7.4 percent real GDP growth in India in 2018.
- 7.8 percent real GDP growth in India in 2019.
Economic Survey (released Monday):
- IMF finds the economic survey "interesting and informative" and broadly aligned with IMF assessment.
- Economic survey outlook cited: 6.7 percent in fiscal 2017/2018 and 7 to 7.5 percent in fiscal 2018/2019; IMF describes this as well aligned with its forecast.
Structural reforms noted as significant progress and consistent with IMF recommendations:
- Implementation of the goods and services tax.
- Implementation of the insolvency and bankruptcy code.
- Ongoing recapitalization of public sector banks.
- Further liberalization of foreign-direct investment in India.

Status of IMF program:
- Agreement in principle on a program exists but the program is not yet activated.
- IMF working on two legs: (1) economic policies necessary to support an IMF program, and (2) debt relief / debt sustainability for Greece.
- No date set for when the IMF Executive Board might convene or a program might be activated; "no expressed deadline at this stage."
- IMF statement: activation depends on European partners engaging and completing a debt relief accord with the Greeks.
Debt sustainability analysis (DSA):
- Debt sustainability analysis is a component of every IMF program and will be conducted for Greece when the Fund comes to the point of activating a program.
- IMF does its own DSA; European authorities will see it, but the IMF conducts its independent analysis.

IMF view:
- Views stress testing as an important step to assess adequacy of strategy for Greece's exceptionally high level of non-performing loans and to assure banking system soundness.
- Notes the stress test is conducted by European authorities, not the IMF.

IMF role described as analytical, not supervisory:
- Conducts annual or biannual surveillance of member countries (all 189 members) through in-country missions and technical analysis ("looking under the hood").
- Provides diagnostics and recommendations on economic policy and structural reforms.

IMF general take:
- Sees a course of gradual monetary tightening underway in the United States and expects that to continue for the foreseeable future.

IMF engagement:
- Managing Director had meetings with Tunisian officials; IMF expressed strong support for authorities' efforts.
- Acknowledges frustration about pace of growth, recovery, and job creation; IMF shares concerns and supports reform efforts.

Program detail:
- $224 million program referenced.
- Completion of the first review (which would enable disbursement of the second tranche) has been delayed relative to anticipated timetable of December 2017.
- Key reason for delay: weak budget revenue outlook where measures to increase revenue did not yield expected revenues.
- IMF working with the government to identify appropriate corrective measures and timing for their implementation.

IMF position:
- Views the Mozambican prosecutor's complaint (filed January 26) as an encouraging step toward ensuring accountability.
- Reiterates the need to fill information gaps in audits of Ematum, Proindicus, and MAM companies.
- IMF seeks public accountability; prosecution decisions are for national prosecutors.

Anti-Corruption Court:
- IMF expects to work with authorities and international partners to address concerns regarding the current draft law and to bring it fully in line with Ukraine's commitments under the IMF program and the recommendations of the Venice Commission.
- Establishment of an Anti-Corruption Court consistent with Venice Commission recommendations is described as an essential component of the IMF-supported program with Ukraine.
Timing of mission/review:
- No details available on timing of an IMF review mission; timing has not been decided.

IMF observations:
- Relationship with Zimbabwe has been evolving positively; IMF arrears normalized but Zimbabwe has significant debt overhang with other IFIs and official creditors.
- An IMF financial arrangement would only be possible after progress in resolving Zimbabwe's arrears to other IFIs and creditors.
Economic assessment and policy recommendations:
- Unsustainable fiscal deficit has led to severe liquidity shortages, inflationary pressures, and threats to financial sector viability and exchange rate regime.
- Restoring growth requires:
- Tackling the fiscal deficit, including rationalizing and better targeting agricultural support program expenditures.
- Structural reforms to strengthen the private sector by improving the business climate and reducing policy uncertainty.
- The 2018 budget (presented December 7) emphasizes reimposing budget discipline, reforming and opening the economy, and engaging with the international community for arrears clearance.
- IMF stands ready to support authorities; a concerted international effort required to revive and reintegrate the Zimbabwean economy.

International Monetary Fund — Transcript of Press Briefing, February 1, 2018