Transcript of IMF Press Briefing

June 28, 2018

MR. RICE: Good morning, everyone and welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communication Department and as usual, this morning our embargo will be at 10:30 a.m. That's Washington time. Let me just make a few brief announcements and then we'll get to the questions of the room and I know we have a number of colleagues online who have questions as well.

So, in terms of upcoming events, I want to bring to your attention that on Monday, July 16, we will be releasing the update on our World Economic Outlook, the WEO. So, that's on July 16. We're going to do that here at IMF Headquarters and, of course, Maury Obstfeld, our economic counselor will take that press conference and we'll do it right here in the studio, so I know that's of interest to many of you.

Just about a week later, actually on July 24th, we will be releasing another report that I know is of interest to many. That's our External Sector Report. Now, we've been doing the External Sector Report for some time, but this will actually be the first time that we will release the report at a press conference and we'll have that press conference again, here in Washington and that also will be led by Maury Obstfeld, who will present the main findings of that report.

Why is that External Sector Report of interest? It will have -- it does have our updated assessments on economies external positions including current account balances, real exchange rates, external balance sheets, capital flows and international reserves. The report actually covers 28 of the world's largest economies and the Euro area making up over 85 percent of the global GDP. So, two important reports coming from the IMF in short order in the coming weeks. And we'll be making these available to you and to our friends in the press under embargo in the usual way.

Okay, that's it for the announcements. Let me come to any questions you might have in the room. Good morning.

QUESTIONER: Your comment on President Trump's proposal to these seven countries to drop off tariff and values.

MR. RICE: Okay, did you have anything else or that's it?

QUESTIONER: That's the one question. I have another one on India.

MR. RICE: So, why don't I take -- I'll take both and we can --

QUESTIONER: Okay and what are the steps that India needs to take -- India has met in high growth rate? So, what should India from IMF's position do to maintain that growth rate?

MR. RICE: Okay. I'll take both of those. So, on your first question regarding the President's comment about G-7 tariff reductions. I think it would be premature to express a view before seeing a more detailed proposal. As I said, it was a comment at the G-7 so we -- I think we need to see something a bit more detailed before offering a view. What I would say more generally is that bilateral and regional agreements can bring important benefits by building on strong multilateral trade agreements; building on strong multilateral trade system that promotes transparency and includes well-enforce trade rules that promote even-handed competition.

So, let me also take your second question on India, which related to India's 7 plus percent growth rate and how it can be sustained. So, you're right, India's growth accelerated to 7.7 percent in the fourth quarter of FY2017-18. That was up from 7 percent in the previous quarter. We expect the recovery to continue in FY2018-19. Growth is projected at 7.4 percent in FY2018-19 and actually, 7.8 percent in FY20 -- sorry, FY19-20, respectively. And in terms of sustained that high growth rate, maybe just three points. One, to revive a bank credit and enhance the efficiency of credit provision; by accelerating the cleanup of bank and corporate balance sheets and enhancing the government of public sector banks. We talked about that the last time I was here. That's point one.

Point two, to continue fiscal consolidation; to lower elevated public debt levels supported by simplifying and streamlining the goods and services tax structure; and thirdly, over the medium-term, renew impetus to reforms of key markets. For example, labor and land, as well as improving the overall business climate. We believe would be crucial to improving competitiveness and again, maintaining that very high level of growth in India.

QUESTIONER: What kind of reforms does IMF want to see in the G-7 part?

MR. RICE: I don't want to get into too much detail on that here. We can come back to you after the briefing, if you will. And we will be providing more detail on that. I can tell you in the context of the Article IV discussion, the Board is right now tentatively scheduled to meet on that on July 18, 2018. We will be releasing the staff report in relation to that Board meeting and it will have detail. But as you know, it's a complicated text to administer and to implement, so I think some suggestions that streamlining can be important and as I said, there will be more on that in the context of the Article IV.

QUESTIONER: Okay, thank you.

MR. RICE: Thank you. Good morning.

QUESTIONER: Good morning. There's something you say on the way for Greece. Can you please provide us with a little more details regarding the timeline from this point onward?

MR. RICE: Yeah, so on Greece, for those who don't follow Greece in such detail, just about a week ago in Luxembourg, there was the meeting of the Euro Group on Greece where some very important decisions were taken regarding to Greece's economic reform effort. And indeed, that belief to support Greece in that effort, we issued a statement. In fact, our managing director, Christine Lagarde, made a statement at the end of that meeting in which she commended Greece and its European partners for the additional debt relief measures announced and just a reminder of what she said, again, last Thursday, in Luxembourg, we believe that the measures undertaken were significant and that we are comfortable that Greece will be able to access markets again in the short and the medium-term.

Now, on your question, there is an Article IV Consultation underway right now in Athens with the Greek authorities and IMF staff. We expect that to conclude tomorrow. Yet, on Friday and we will be offering our preliminary reviews to you at that point. So, this will be our Greece -- our mission chief for Greece here at the IMF, Peter Dolman and we expect him also to hold a briefing for you -- with you in Athens with the media.

Now, just on the debt sustainability analysis which you were asking about the DSA, of course, that will be part of the Article IV process. That will not be something that will be released tomorrow, okay. Just to set expectations, but it will be released with the staff report in the usual way. So, again, for those who don't follow it, we have the staff concluding a statement tomorrow and then, the full staff report will go to our Executive Board in the normal way for their discussion and as part of that discussion, the IMF's Debt Sustainability Analysis will be included in that report and then it will be released in public, again, in the usual way along with the staff report.

QUESTIONER: Can you give us any statement that there is?

MR. RICE: So, tomorrow, for the staff concluding statement, and in terms of the staff report, I don't have a date for you. It normally takes, again, as you know, it normally provide several weeks for, right, for this staff report to be finalized, discussed by the Board and then the report to be released. However, I would expect this to happen -- our Board goes into recess towards the end of July and I would expect the beginning of August, I would expect this will be done before then. Are we on Greece, Michael?

QUESTIONER: You know, now that we are getting out of the (laughs) program, we have some questions and the first question I have is that after the commercial of the Euro -- you remember, in Luxembourg, Mrs. Lagarde said, and I quote, "The additional debt relief measures will mitigate replaces medium-term refinance risks and improve its medium-term debt prospects." Can you clarify the word medium-term because are we talking about 10 years, 15 years, 20 years? Thank you.

MR. RICE: Well, actually, you've been quoting the managing director very well. Michael, thank you. Actually, her full quote was that, "…these are both very welcome results" --


MR. RICE: -- and she said, "This will be good for Greece and good for the Euro area." You know, maybe just to elaborate a bit, we were indeed very clear that we think the measures announced last week will mitigate Greece's medium-term refinancing risks and improve its medium-term debt prospects, both of which are significant. In terms of the definition of medium-term, again, I want to point you to the concluding statement tomorrow and the Article IV which I think will give a better sense of our views on short-term, medium-term, long-term and our assessment of that. So, I won't attempt to define with specificity right now.

QUESTIONER: Okay. If I can follow-up, according to the outline of the Euro Group decision, you're out of the program. You're not going to participate with a new loan, but as I understand, you are going to undertake surveillance until 2022. Can you describe to us the form of this surveillance? I mean, how you going to go again every three months to Greece, or what are you going to do?

MR. RICE: So, you know, you are right and in fact, Madam Lagarde, again, mentioned this in her statement last week that the IMF will not be participating financially in the program support for Greece and what she said was, you know, just kind of a factual matter. The time has clearly run out in terms of the IMF entering into a standby arrangement, however, she also said we will remain fully engaged in supporting Greece to sustain its economic recovery and achieve more robust growth and the post program period, so what you're asking my colleague, thanks, so what does that mean?

A couple of things. We will have what we call here at the IMF are post program monitoring where we look at the outcomes and the implementation of measures that were agreed previously and this is very normal. This isn't specific to Greece. This is very normal, so if you look at Ireland; if you look at Portugal; if you look at Cyprus; look at other countries around the world, this post program monitoring is a very normal process for the IMF. So, we would be involved in that. And then, in addition, we would be doing the Article IV, again, very normal. We do this with every country. Economic analysis -- annual economic analysis of Greece which we hope would be helpful to the authorities and help to advance the progress that Greece is already making.

So, those are the sort of key elements and you know, the Article IV is normally a -- it can range from a couple of weeks to three weeks in terms of staff visiting; staff are on the ground in Athens right now, as we mentioned. And likewise, for the post program monitoring, there's no set defined period of time. It's not quarterly reviews. It's not that, so it's more flexible than that, but really, the point I think I want to make, Michael, is that we are looking -- the IMF is looking to continue to support Greece at this very important and relatively positive point. I think everyone recognizes that, so we want to be as supportive and helpful as we can.

Good morning.

QUESTIONER: Good morning.

MR. RICE: And welcome.

QUESTIONER: Thank you. Reed Figure from Bloomberg News. I have a quick Greece follow-up and then an Argentina question.

MR. RICE: Okay.

QUESTIONER: I'd like them both. So, to start with Greece, so you were talking about the Article IV report coming out tomorrow, but could you tell us a little bit about what that report that will be released will say about the sustainability of Greek debt and then, Argentina's question, does the IMF believe the Argentina government can reach a deal with opposition regarding the 2019 National Budget Discussions in Congress.

MR. RICE: Okay and so, on Greece, I just want to be clear, tomorrow is what we call the staff concluding statement, okay. So, we won't be issuing a report as such, but we will issue a press statement from staff.

As I said, the next step then is for the report to go to our Executive Board who really have the prerogative of discussing and approving that and I just talked about that. And just to be clear, in terms of debt sustainability, I'm sure that we'll say something tomorrow on that and I just explained that the detail in terms of our debt sustainability analysis, the DSA, will come at the time of the report, but it may be useful in terms of your question just to, again, harken back to Christine Lagarde's statement, the managing director's statement last week where she did talk about the debt. And again, I just said that she welcomed the debt relief measures that were announced last week by the European partners for Greece. And she said that again, she thought that they were significant and that the IMF is very comfortable that Greece will be able to access markets again in the short and medium-term. I think she was clear that she thought those measures will indeed mitigate Greece's medium term refinancing risks and improve its medium term debt prospects and she went on to say that she had some reservations about the longer-term debt sustainability perspective. But she added the important point too that in that context, we take note, that is, the IMF takes note of the commitment expressed last week by Greece's European partners to keep debt sustainability under review; to take additional debt relief measures if needed. I think that's probably where we see a range of long-standing vulnerabilities.

So, in terms of your question, about Argentina, Madame Lagarde reiterated as we have been repeating and indeed, as the Argentine authorities have themselves been emphasizing. This is an economic plan driven by the Argentine priorities with a particular focus on their ownership of the program; on protecting the most vulnerable and strengthening the economy in light of some recent financial market turbulence. So our goal, the IMF's goal is to support the authorities' plans.

In terms of your specific question and reaching agreement among various political groups in Argentina, you know, that would be the prerogative of the Argentine government to do that. So, that's not an IMF prerogative. It's very much for the Argentine government to do that and I think it's speaks to that point I was just making about this being an Argentine program fully owned by the Argentine government reflecting their priorities for the benefit of the Argentine people. So, that's a process and a prerogative of the Argentine government.

Since I don't see further questions in the room,

I'll come back to you, Michael, as always.


MR. RICE: There are a few online, so let me just take those quickly. There's a question on Moldova. What's the status of the third review under Moldova's program with the IMF? Just factually, I can tell you the Executive Board is scheduled to meet tomorrow, Friday, June 29th the discuss the third review of Moldova's program. So that's just a factual thing. There's a question on Egypt. Also, asking when will the Board meet to discuss the third review of Egypt's program. And again, that will be tomorrow, I expect a discussion of Egypt's third review. And again, in both of these cases, we will publish the staff report. There is a question about Turkey and the question is whether the IMF may turn to -- sorry, whether Turkey may turn to the IMF for support. Have there been discussions along these lines? I can just say again, very factually and straightforwardly, the IMF has received no indication that the Turkish authorities are contemplating any requests for financial assistance from the IMF. Our contacts with the Turkish authorities proceed in the normal way. Part of our regular work, so again, just very straightforward on that.

There's a question on Sri Lanka about the new pricing formula introduced in May. Was this implemented to meet IMF conditions under the program? To which I can say the introduction of the automatic fuel pricing formula by the Sri Lankan authorities marks a major step toward completing energy pricing, reforms in 2018 and minimizing fiscal risk. If implemented properly, this formula-based pricing will eliminate subsidies that benefit the risk rather than the poor. I think that's an important point. The finance minister made it clear that the reform would benefit the Sri Lankan people and the economy broadly and going forward, it's also important to improve social safety nets to mitigate the impact on poor households.

I'll take one last question. On Congo, here's a question about when the Board will meet. So these are very factual questions. And there's a question about what some of the issues are in terms of the IMF discussions and going forward with a program for Congo, Brazzaville and this is coming from, I should have said, Matthew Lee, in New York. So, the Executive Board meeting on Congo is tentatively scheduled for July 11. Tentatively scheduled for July 11 and on the discussions and the issues with Congo, the issue of corruption and governance is a big issue that's being discussed. We have made clear that the authorities will need to take bold and immediate governance reforms to put into effect their proclaimed intention to mark a break with past policies and practices. In that regard, we welcome the recent publication by the government -- of a governance study that will guide future reforms in the area of transparency, public finance management and overall governance. We also welcome in this context the authorities plan to establish an independent anti-corruption body with full investigation powers and an asset declaration system for high-level officials. There are elements of that, enhancing transparency in the oil sector; ensuring -- to help ensure that the share of the state and the people in the nation's natural resources can be improved and that's critical. We also feel that a strong participation in civil society will be essential for the success of these governance reforms in Congo.

That's -- there's one more question on Tunisia just popped up. Let me take it. It's very factual and short. It's asking for the Board date on Tunisia's third review. And I can say that Board meeting again, is tentatively scheduled for July 6, that's on Tunisia. So, quite a bit of information there on board dates. So, Michael, you have the last word.

QUESTIONER: Thank you, sir. I want to transcribe this question many times, but this is an opportunity, I think. I remember years ago, you told us that Greece is going to get out of the program in two years. As you know, Gerry, eight years and months pass already and we are still trying to see what went wrong. Now that Greece is getting out of the program, are you ready to declare a triumph because we still feel in Greece that our problems are not behind. Instead, our problems are in front of us. This is my question.

MR. RICE: So, you know, on that, Michael, what I would say, I think again, as I said earlier, I think last week, that Euro Group meeting and decisions taken there were an important milestone and I think they were a recognition of the massive efforts undertaken by the Greek government and the Greek people and I think it was a recognition by every one of those efforts. I think it was a very positive development, set of decisions and a positive milestone for Greece. I think at the same time, everyone recognizes and I think first, and foremost, the Greek authorities have recognized this that the Greek people have gone through a very difficult period and I think we all respect that very much. And at the same time, there remain challenges ahead, so from the IMF's perspective, I think we support this progress that Greece has made and we will continue to support Greece in the days ahead in some of the ways I mentioned earlier that will not include financial support. As I said earlier, we believe Greece is now in a position to go to the markets and that's -- the IMF financing is not required, but we will continue to support Greece and the Greek people in any way that the Greek authorities might find helpful.

Okay, I'm going to leave it there and thank you very much for coming today. Thanks to our colleagues online and I hope that everyone is enjoying the World Cup.

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