Transcript of IMF Press Briefing
IMF News, July 12, 2018
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- Published: July 12, 2018
Announcements and upcoming publications
- Press briefing embargoed until 10:30 a.m. Washington time.
- World Economic Outlook update to be released Monday, July 16, with a press conference led by Economic Counselor Maury Obstfeld.
- G-20 surveillance note to be released on July 18 ahead of the G-20 meeting in Buenos Aires on the weekend of July 20 to 22; Christine Lagarde and David Lipton will represent the IMF.
- External Sector Report to be released on Tuesday, July 24, with a press conference led by Maury Obstfeld.
- Deputy Managing Director Tao Zhang to be in South Africa and Botswana July 24 to 26.
- Deputy Managing Director Mitsuhiro Furusawa to be in Honduras July 25 to 27.
- This briefing (July 12, 2018) is the last IMF press briefing before the August recess.
IMF biannual work program — purpose and policy priorities
- Purpose: translates the Managing Director’s Global Policy Agenda (GPA) and the IMFC communique into an agenda for the Executive Board over the next six to 12 months.
- Managing Director’s main message (GPA): "when the sun is shining it's time to fix the roof" — there are "some clouds on horizon" and "the time is now to act."
- Three policy priorities highlighted:
- Strengthen financial sector resilience.
- Rebuild fiscal buffers and withdraw monetary stimulus while addressing infrastructure gaps.
- Undertake structural reforms to support medium-term growth, including investing in workforce skills.
Multilateral flagships and external sector work
- Flagship publications to guide policy dialogue: World Economic Outlook, Global Financial Stability Report, and Fiscal Monitor; these will take stock ten years after the financial crisis.
- External Sector Report:
- IMF is positioned to assess external positions of its largest members, which account for about 85 percent of global GDP.
- The report is "somewhat revamped" and "based on a revised methodology."
- Purpose: assess whether external imbalances of members are excessive in an evenhanded, transparent, candid way underpinned by rigorous analysis; raise awareness of potential risks from external imbalances.
- Detailed methodological changes to be discussed at the dedicated press conference (no specifics provided in this briefing).
Digitalization, Fintech, and AML/CFT workstreams
- Workstream on the macroeconomic impact of digitalization covering effects on fiscal policy, monetary policy, financial sector, labor markets, growth, and productivity.
- Fintech: acknowledge both opportunities and risks (financial regulation, financial stability, financial sector integrity).
- IMF support for global dialogue on anti-money laundering and combating the financing of terrorism (AML/CFT); a review of the IMF’s AML/CFT strategy is planned later this year to better serve membership.
Rising debt vulnerabilities and debt transparency
- Ongoing work, jointly with the World Bank, on rising debt vulnerabilities in low-income countries.
- Focus areas:
- Creditor-side work: assess countries' debt management capacity (recording, monitoring, reporting debt); identify gaps and technical assistance needs.
- Improve debt reporting dissemination and link databases to increase transparency.
- Improve debt sustainability analysis (DSA): extension of prior joint work for low-income countries to countries with market access.
- Rationale: "one of the lessons we have learned from the global financial crisis is that there are dangers if you do not know where debt is coming from."
Fragile states and internal evaluation follow-up
- IMF Internal Evaluation Office (IEO) report on fragile states concluded the IMF has an important role in catalyzing donor funds but can do better.
- Work program includes a "management implementation plan" with actions responding to IEO recommendations to provide granular, tailored support helping countries exit fragility.
Country-specific engagement and Q&A highlights
- Trade tensions and tariffs:
- Question referenced "potentially 250 billion dollars in tariffs on Chinese imports" (about half of all imports into the U.S.).
- IMF view reiterated: encourage constructive engagement to reduce trade barriers and resolve disagreements without resort to exceptional measures; "nobody wins in a trade war."
- Further detail to be provided in upcoming WEO update, G-20 surveillance note, and External Sector Report.
- Turkey:
- Recent legislative changes increase presidential role in selecting the central bank governor; IMF emphasizes the need for the new administration to "demonstrate a commitment to sound economic policies to promote macroeconomic stability and reduce imbalances while ensuring full operational independence to the central bank to pursue its mandate of securing price stability."
- IMF does not comment on day-to-day exchange rate fluctuations; refers to the 2018 Article IV staff report calling on authorities to tighten policies to address internal and external imbalances.
- Greece:
- Executive Board discussion of the Article IV on Greece expected to take place on July 27; publication expected some days after that.
- IMF engagement after the ESM program ends on August 20: post-program monitoring (enhanced surveillance), coordinated with European partners, typically about two reports per year with missions and visits.
- Haiti:
- IMF and Haitian authorities agreed earlier this year in March on a staff monitored program (support without financing) focusing on strengthening revenues and reform.
- Fuel subsidies put significant strain on fiscal accounts and disproportionately benefit the well off; reducing subsidies is intended to free fiscal space for public investment and social spending.
- Going forward IMF will support Haiti and cooperate closely as authorities develop a revised reform strategy; expected elements include:
- A more gradual approach to reducing fuel subsidies.
- Implementation of compensatory and mitigating measures to protect the most vulnerable (examples previously discussed by authorities included targeted measures such as transport vouchers).
- IMF outreach to development partners to mobilize additional support is underway; no specific timetable provided.
- Zambia:
- Discussions on a possible Fund-supported program have been suspended because the authorities' borrowing plans "compromised the country's debt sustainability and, in our view, undermine its macroeconomic stability."
- On June 14, 2018, authorities announced measures to address debt sustainability concerns but the IMF has not received specifics of new debt plans or revised budget numbers; premature to discuss reengagement or a Board decision.
- Zimbabwe:
- Zimbabwe cleared its overdue financial obligations to the Poverty Reduction and Growth Trust in October 2016; the Executive Board lifted remedial measures related to a declaration of non-cooperation, restrictions on TA provision, and ineligibility to the PRGT.
- For IMF financing, Zimbabwe still needs to clear arrears to other institutions (African Development Bank, The World Bank, European Investment Bank), secure debt treatment commitments from bilateral creditors, and put in place a comprehensive macroeconomic policy framework including fiscal adjustment and structural reforms.
- IMF continues policy dialogue and technical assistance.
- Pakistan:
- No request and no discussions of a program with the IMF at the time of this briefing.
Key dates and numeric references (as stated)
- Press briefing date: July 12, 2018.
- Embargo time: 10:30 a.m. (Washington time).
- World Economic Outlook update: Monday, July 16.
- G-20 surveillance note release: July 18.
- G-20 meeting (Buenos Aires): weekend of July 20 to 22.
- External Sector Report launch: Tuesday, July 24.
- Tao Zhang mission: July 24 to 26.
- Mitsuhiro Furusawa mission: July 25 to 27.
- IMF engagement with Greece — Executive Board discussion of Article IV: July 27.
- ESM program end for Greece: August 20.
- Authorities’ announcement on Zambia measures: June 14, 2018.
- Zimbabwe cleared PRGT arrears: October 2016.
- Largest IMF members covered by External Sector Report account for about 85 percent of global GDP.
- Press reference to "potentially 250 billion dollars in tariffs on Chinese imports" cited by a questioner.
Transcript of IMF Press Briefing — July 12, 2018 — IMF Communications Department