Transcript of IMF Press Briefing

September 20, 2018

MR. RICE: Well, good morning, everyone, and welcome to this briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department. As usual our briefing this morning will be embargoed until 10:30 a.m. That's Washington time. Let me make a few announcements and then I'll come to questions in the room and take a few on line as well.

Let me tell you about some of the events involving our Managing Director, Christine Lagarde. On Monday, September 24, she will be in New York for events related to the UN General Assembly meeting. She will take part in a number of events there, many of them open to the media, including making remarks at the Secretary General's High-level meeting on the financing of the Sustainable Development Goals, participating in the World Economic Forum Sustainable Development Summit, the One Planet Summit at the Bloomberg Global Business Forum, and other events. Media Relations can give you more details on those. The ones I have just mentioned are all open to the media, for example.

Then on October 1, here at IMF Headquarters, Madame Lagarde will deliver what we call our Annual Meetings Curtain Raiser Speech. This Speech serves as the prelude to our Annual Meetings in Indonesia and will lay out the agenda in terms of how the IMF sees those meetings. So that is again going to be October 1, that's a Monday, here at the IMF, 11:00 a.m., and open to the media of course.

On Wednesday, October 3, a couple of days later, we will be releasing the analytical chapters related to a couple of our flagship reports, the World Economic Outlook and the Global Financial Stability Report. We will be doing this via a webinar. So, again, completely open to you, open to the press to plug into that, ask questions. A couple of interesting chapters, including the IMF's view on the financial crisis and other issues, including inflation, disinflation in emerging markets. So, some interesting things there.

The day after that, Thursday, October 4, Madame Lagarde will be in Tokyo for the Japan Article IV. And, again, open to the press, a press conference that she will do after that consultation.

And then October 8-14, I think as you know, we have our Annual Meetings in Indonesia. It's a packed program, lots of events and seminars open to the media. The WEO, the World Economic Outlook will be launched on Tuesday, October 9. We will also have the GFSR, the fiscal monitor. We've got a full program and, again, Media Relations can give you all the detail on that for those who are planning to attend. If you are planning to attend and haven't registered, please do so. We look forward to seeing you there.

Let me turn to your questions in the room.

Good morning and welcome.

QUESTIONER: Morning, Gerry. On Argentina. Can you tell us if Madame Lagarde is going to meet President Macri in New York on Monday?

MR. RICE: You know, I don't have a specific meeting scheduled between President Macri and Madame Lagarde. But, you know, what often happens at the UN General Assembly, given that there are so many world leaders there, that they do tend to meet. They meet in the margins of meetings or they meet at events that they're attending together. So, it wouldn't be surprising to me if Madame Lagarde and President Macri were to meet at the UN General Assembly. I just don't have a scheduled meeting or time for that right now.

Anything else from you on Argentina?

QUESTIONER: Yes. Is there any news on the next meeting of the Board where the new arrangements of the program with Argentina are going to be considered?

MR. RICE: Okay. Anything else on Argentina?

QUESTIONER: Yeah, Alfonso Fernandez from the Spanish News Wire, EFE. Just a follow up. Is Minister Dujovne expected to come over here for like discussions on the Board or for a formal announcement? And is it going to be before the end of September as the Minister said a couple of weeks ago?

MR. RICE: So, let me take those questions together and I'll give you as much information as I have. I'll try and respond to your questions and then we can always do follow ups if needed but let me give you the information I have.

So just to put things in context, over the past week, the IMF team, led by Roberto Cardarelli, who is the Mission Chief for Argentina, has been in Buenos Aires and we have been meeting with the authorities, officials of the Ministry of Economy and the Central Bank of Argentina. What I can tell you is that important progress is being made toward strengthening Argentina's economic policy plans, supported by the IMF standby arrangement, which as you know was previously announced in the amount of $50 billion. We are working very hard to conclude the staff level talks in short order. And as Christine Lagarde has stated, we share a common objective, and that's to reach a rapid conclusion so as to be able to present the proposal to our Board as soon as possible.

Just to answer your questions, I don't have a specific timeline, either on the conclusion of the discussions or the presentation, when it will be presented to the Board. But, again, important progress, we believe has been made this past week and short order is what we're looking at in terms of moving this forward.

So, because the discussions are ongoing, I don't have a lot of information on specific financing measures or other issues, as is the case with all of our discussions with countries in program. When the discussions are going we tend not to get into the details from this podium so as not to preempt those discussions. Maybe it would be helpful if I just could add that the draft budget that the authorities submitted to Congress just on Monday, a few days ago, we believe is a fundamental part of the authority's plan to strengthen their economic policies and to boost confident. And we thought it very important that the proposed budget protect spending on social assistance and health. And, in particular, the budget includes an expansion of coverage of the universal child allowance and health. And, again, we believe this is key in light of the economic challenges facing the country.

So, again, that's about as much as I have on Argentina, but, you know, happy to take a follow up if you have one.


QUESTIONER: Yes. Could it be possible that the conversation in the Board will be delayed until after the Annual Meetings due to all of the things that are going on here, like busy weeks? So, if it's possible that the final decision about this new loan, restructure loan, will be like after the Meetings? So, it will be like second part of October?

MR. RICE: So, what I'd say on that is, again, I don't have a timeline for you, but again I want to reiterate, we are in the mode of full support to Argentina and the Argentine people. The IMF is fully supporting their efforts. We want to do this as quickly as possible, in short order. Again, I don't have a specific date or timeline on that, but I'm trying to impress a sense of urgency around this.

Okay, I'll take David and then, Katerina, I'll come to you.

Good morning, David.

QUESTIONER: Hi. Good morning, Gerry. Thanks for the question. As you know, President Trump has gone ahead with his, I guess some would call it the third round of tariffs on China, $200 billion worth of goods that go into effect next Monday. And, of course, he's threatened again, if China retaliates -- which it is -- put in motion that he will go bigger with another $267 billion worth of products. I'm just wondering sort of what strains you're starting to see on emerging markets that sort of supply both of these economies. You know, for example, will this increase the urgency on providing some help to Argentina and to other economies that are going to be in need?

MR. RICE: You know, what I would say, David, is we're still assessing the impact of the trade measures that have been announced. And we are analyzing that carefully and we will be in a position to give a more detailed assessment of that in a few weeks’ time, including via the World Economic Outlook.

What I can say today is that, you know, depending on the specifics of course and how they play out, that the imposition of additional tariffs by the United States on Chinese imports could come at a significant economic cost. Again, we're in the process of assessing that. The impact obviously depends, in terms of China, for example, the impact on China, on how much China's domestic policies would be adjusted to dampen the negative growth effects and the impact of the trade dispute on global confidence and financial conditions.

In terms of the U.S., we expect its growth would also be affected. I don't have any numbers for you today, but again we'll be looking at that and offering that at the time of the WEO. And, of course, should the escalation go further, as you suggested, the economic costs for both countries and around the world will quickly add up. Christine Lagarde has said before, and I'll just repeat it here, there are no winners in global trade war. And it's critical that we continue to look for agreed solutions.

On your question about the emerging markets, David, Christine Lagarde also talked about that quite recently actually, and said that the trade tensions indeed are another challenge that the emerging markets are all facing in terms of the overall economic climate. She also talked about the tightening of financial conditions, you know, the changes being made in monetary policy, as another common challenge that the emerging markets are facing.

So, we stand ready, of course, to help our emerging market members as needed, but it's a situation we're watching closely, and we'll have much more to say on this at the time of the WEO.

Katerina, let me take your question.

QUESTIONER: Thank you, Gerry, Katerina Sokou with Kathimerini and Skai TV. If I may first follow up on the trade tensions and ask a more specific question about Canada. How do you view the prospects for that economy given the trade interdependence and economic interdependence between the U.S. and Canada if a NAFTA deal is reached without Canada in it and with the increased trade tensions continuing? Have you done any research on that?

MR. RICE: You know, we are hopeful that there will be an agreement and we are supportive of an agreement being reached.

We will be doing more, assessing more the impact of the situation as it stands again in the context of the WEO including an updated forecast for the Canadian economy. I mean, what I would say, Katerina is that again, we know negotiations have resumed between Canada and the U.S. and we are hopeful an agreement between all three NAFTA partners can be reached soon to support trade and growth in the North American region. We think it is important for all three of those partners. But more to come in a couple of weeks.

QUESTIONER: Thank you. And a question on Greece. Where does the IMF stand on the spending cuts by one percent of GPD next year and pensions and it is something that may be postponed or canceled all together as the Greek economy -- as the Greek government is requesting? What would that mean for the Greek economy and would it require a constant (inaudible) to pursue the primary surplus targets?

MR. RICE: You know, an IMF staff team just returned from staff visit to Athens. Joined the European institutions for their first visit. This was in the context of what is called the European enhanced surveillance framework, the monitoring process that’s underway. Discussions centered on 2018 fiscal developments, the preparation of the 2019 budget and the directional structural policy so all the things that you are asking about Katarina, were discussed.

I wanted just to make clear, this was a staff visit for us. As you know there is no IMF program with Greece, primarily to targeted at updating our understanding of fiscal developments and plans with no formal reports. So, in terms of our assessment of primary supports and all of that, I would refer you to the article, the most recent Article IV of, you know, quite recently actually so I think the information there is still current.

Amongst other things, Katerina, it said that the preliminary findings were that the government is broadly on tract to reach the near-term growth and fiscal targets, so our next report will be early 2019.

On the pensions which you asked about, just a reminder that, you know, these were the measures agreed in 2017, some time ago. So these are not new measures, okay, I know you know that but just so everybody understands that. And our view is that implementing these measures will not only improve Greece's long-term prospects but send a clear signal to investors that the government will indeed stay on track with reforms.

Our view has been on the pensions that, you know, the need to shift to a more growth friendly, actually more socially inclusive fiscal policy mix is helped by a pension reform which would move in this direction. Why? Because it frees up fiscal space for non-retiree social spending which remains as you know low in Greece and would help to reduce the high tax burden.

QUESTIONER: Good morning. Thank you, Gerry. I would like to follow up on trade if possible. As you know there are some suggestions even demands to reform the World Trade Organization and international trade rules by the U.S. administration and recently the European Union joined these suggestions. What does the IMF think about this? Is there a need to reform the World Trade Organization and could it help to reduce trade tensions that we are seeing?

MR. RICE: We have noted those reports that you refer to and we will be looking at them in a bit more detail in the coming days.

In terms of reform of the trade system, the international trade system, we have actually said quite a lot about that in recent times. And, I mean, maybe two things. Number one, we think that international trade over the past generation has helped the global economy a great deal and helped to, amongst other things, boost prosperity for people all over the world and reduce poverty in many places of the world in significant ways.

The second thing I would say, and we have said this on the record, we do see areas where the international trade system can yes, be improved, reformed, strengthened and we have talked about those. For example, in the area of services, it’s a place we think that the international trade system can be improved. In the area of e-commerce which is relatively new but it's an area where the trade system we think could be usefully adjusted, reformed. We have also talked about, while I said trade has benefitted people massively across the world over the last generation, people who have been left out of the process and who have indeed been hurt by trade. There are pockets of people in various parts of the world where that has been the case and we have said we should be looking at measures that can help to mitigate the negative effects of the current trade system on those affected people. So those are all areas where we think that improvements can be made, reforms could be made but we strongly support a free and fair global trade system.

QUESTIONER: Okay, thank you so much. And I have one question on Turkey. Today the Turkish government revealed a new economic plan, and this came after the 625 pages points increase in the policy rate by the Turkish central bank very recently. How do you view these efforts aimed to stabilize the economy and reduce the vulnerabilities? Thank you.

MR. RICE: We take note of the announcements made to which you are referring today and the forecasts. We will be assessing these in more detail and the measures that will help the authorities achieve their goals and we will do that in light of our earlier recommendations from our Article IV.

As with other countries, we are in the process of updating our Turkey forecast and these will be released at the time of our World Economy Outlook publication in a few weeks' time during the Annual Meetings.

Let me take a few things on line. I will come back in the room briefly at the end but there are a few questions on line. There are a couple of questions actually on Ukraine. So, let me take those. And the questions are from the National News Agency of Ukraine.

Could you comment on the conclusion of the IMF mission meetings with Ukraine I think was the question in Kiev? Did they discuss the possibility of a new standby program for Ukraine? What are the prospects of the next disbursement in the frame of the current EFF program?

And a second question, media announced recently, leaked that the current EFF program for Ukraine might be substituted by a new IMF standby with revised conditionality. Are you considering that possible?

Mr. RICE: We have had a staff team in Kiev discussing with the Ukrainian authorities the continuation of our efforts to support policies on reforms that support macroeconomic stability and growth in Ukraine and on possible financial assistance from the Fund. I don't have any further detail on those discussions which are ongoing as I said. And I don’t have a specific date for the conclusion, but we will keep you posted as that situation unfolds.

There is a question on Zimbabwe and I want to take that. It's from Matthew Lee who is asking can you give us the status of steps toward any IMF program in Zimbabwe in light of reports that Britain will support Zimbabwe to get an interim IMF program to help the country quickly clear its foreign arrears.

MR. RICE: What I would say is we see the new administration of President Mnangagwa has expressed commitment to strong economic reforms and supporting reforms will require a comprehensive stabilization and structural reform program from the authorities and financial support from the international community to provide space for these reforms.

Where the IMF is, we stand ready to help the authorities design a reform package that can help facilitate the clearance of external payment arrears to international development banks and bilateral official creditors and that then would open the way for fresh financing from the internal community including potentially the IMF.

But, again, just to stress as we said before, potential financial support from the Fund is conditional on the clearance of those arrears to the World Bank, the AFDB and financing assurances from bilateral official creditors. We are working with the Zimbabwean authorities in the meantime to provide policy advice and technical assistance that might help, could help move that process forward.

There is a question on Indonesia and the annual meetings and I want to take that given that we are just a couple of weeks out, a few weeks out from the Annual Meetings. And the questions are from the Jakarta Post asking about the status of preparations in light of, you know, the earthquakes and natural disasters and so on. What is the status?

MR. RICE: You know, what I would say on that is of course with the Indonesian authorities, we continue to monitor developments relative to the safety of all participants attending the meetings in Bali coming up in October. We are most reassured by the efforts that the Indonesian authorities are taking, and we look forward to very successful Annual Meeting in Indonesia, working closely with our Indonesian partners. We think the arrangements being made are excellent and again will lead to a very successful meeting.

Clearly and you can tell from your questions here today, the meetings are taking place at a key moment for the global economy, so I think there will be a great deal of interest in the issues being raised. We expect more than 15,000 participants in those meetings, the usual constituents. It is indeed the largest gathering of economic policy makers and practitioners in the world and they will be looking at these issues. So, it’s a full agenda. I think is an exciting agenda, the preparations are going full speed ahead, and are excellent and as I said at the beginning, we hope to see as many of you there as possible.

Is there anything further in the room? Then I want to thank you very much for coming along today and thank you for your questions. I look forward to seeing those of you who will be in Indonesia soon and if not, we will make sure that you are able to cover the meetings in real time via technology as much as possible. So, thanks again, see you soon.

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