Transcript of IMF Press Briefing

December 13, 2018

MR. RICE: Good morning, everyone. And welcome to this briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communication Department.

And as usual this morning our briefing will be embargoed until 10:30 a.m., and that's Washington Time.

Allow me to make a few announcements, and then I'll turn to your questions in the room, and our colleagues online who are already sending some questions I see.

So, on the announcements, our Managing Director, Christine Lagarde, will be in Africa next week, and she will be visiting three countries, Ghana, South Africa and Angola. And during her visits there, Madame Lagarde will hold meetings with the authorities, as well as fairly extensive meetings with the private sector, civil society, academia, women leaders, and of course the media. And we'll be able to give you more information on those public events and media activities.

In Ghana, in particular, Madame Lagarde will make opening remarks at a major regional conference that's focused on the issue of employment, and the future of work in Sub-Saharan Africa. And in addition to that event, she will deliver a keynote public speech on Ghana's economic prospects. And again, this will all be made available to you in good time.

So, then there will be a break for the holiday season here in the U.S., and immediately following the break the Managing Director will be in Africa, and this time visiting the Seychelles. So that's four countries in Africa, visits by Madame Lagarde in the next couple of weeks.

One other thing to mention today, because later today we'll be updating and making available to you the IMF's Global Debt Database, which, as some of you may know, is the comprehensive dataset covering public and private debt for about 190 countries. It's, I think, the definitive dataset in terms of debt and, it goes back in time, and brings us up to the present day, and that's a relatively new platform and instrument. It was launched earlier this year, so we will be updating it today for those of you following the debt issue. Thank you.

Let me turn to your questions in the room. Good morning, Andrew.

QUESTIONER: Hi, Gerry. The U.S. Treasury has kind of finally come out its position on IMF quarter reforms, it says it doesn’t want a change in IMF quota, we take that to mean they don't want a quota increase. From the IMF's point of view, what are the next steps? Does this mean that, you know, you're taking off a quota increase from the table at this point? What are the next steps from the IMF's point of view?

MR. RICE: As you indicate, Andrew, we've taken note of Under Secretary Malpass' statement yesterday, including his commitment to ensure that the IMF is sufficiently and efficiently resourced to carry out its mission and role, and I'm actually quoting from Secretary Malpass there.

Stepping back a bit for those who don't follow the quota issue quite so closely. At the moment, and we've said this before, the IMF has the financial means to fulfill its role in the global financial system, and will continue to do that, providing advice and program support to our membership in line with our policies.

However, and this comes to your question, Andrew. We are actively engaged in discussions to complete the 15th Review of Quotas, by the time of the Annual Meetings 2019, at the latest. So, these discussions will continue guided by our members' common interests in ensuring that the IMF remains strong and well-resourced into the future.

So, I'm drawing a little bit of the distinction there between -- currently we have the resources need to meet demands, to meet the membership needs, but the membership is looking at what might be needed in the future.

And the membership has expressed this most recently during the 2018 Annual Meetings, and this was reiterated by the G20 Leaders. And again, just trying to respond to your question; we look forward to continuing to work with the U.S., as well as with all our membership to ensure, as I said earlier, and as the Under Secretary said, that the IMF is sufficiently and efficiently resourced, so the discussions and the process continues.

QUESTIONER: So would it be fair to say that the IMF feels that going forward, at some point, it will require more financial resources? And are you agnostic about what format it has to take? I mean, could it be maybe an increase in the new arrangements to borrow? I mean, does it have to be a quota increase?

MR. RICE: so, I think, as I said, the membership, and we are very attentive to what our membership says on these issues, and I mentioned the IMF, see communiqué at the Annual Meetings, and the recent statement from the G20 Leaders, and they have expressed a common interest in ensuring that we remain strong and well-resourced into the future. So, that's their view, and it's the discussion around that now, that's taking place.

In terms of the modalities of IMF funding -- again for those who don't follow it -- as things stand at the moment, the IMF is resourced at what we estimate as the total lending capacity of about a trillion dollars, and that consists of different types of funding, different modalities, there's the quota, permanent resources, there are the new arrangements to borrow, and there are bilateral borrowings. So at the moment there are different modalities that make up the composition of IMF funding.

So, again, to answer your question, I'm sure that those kinds of modalities of what the membership will be looking at going forward, and of course it will be for our membership to decide on exactly how, the funding should take place to meet the stated goal of the IMF being strong, and well resourced.

QUESTIONER: Good morning. Thank you Mr. Rice. On Venezuela, do you have any update on the situation regarding the censure declaration, and when was the last time you have had contacts with Caracas officials in the last two weeks? And also, a separate question, on Ecuador. There have been talks about the possible program with the IMF, the Finance Minister was here two weeks ago, and I'd like to know if there were specific details about that?

MR. RICE: Thank you very much. On Venezuela, I can give you a little bit of an update relative to a few weeks ago when we talked about it. Again, just for those who don't follow it, just to remind, that one of the obligations of membership of the IMF, is for countries to provide accurate and timely data. Earlier this year, our Executive Board had issued a Declaration of Censure against Venezuela for its failure to implement remedial measures, and to comply with that obligation regarding data.

On your question I can confirm that we have received from the Venezuelan authorities, and IMF Staff is currently in the process of reviewing that data, and we will be submitting a report to the Board in the coming weeks for the Board's consideration of whether that data complies with the obligation that I mentioned earlier.

I don't have the specific date for that Board Meeting to take place at this stage as I said, staff is reviewing the data that we have received from the Venezuelan authorities, that's where we are. I don't have the date either for, you know, when was the last interaction; but there has been an interaction, we've received data, now we are looking at it, and that will go forward to the Board.

QUESTIONER: So, the Declaration of Censure is dropped now?

MR. RICE: That will be a no. That will be a decision for the Board to take when it meets and makes an assessment of the member's compliance with its obligation in the context of the data provision.

QUESTIONER: And on Ecuador?

MR. RICE: On Ecuador, I will characterize our engagement with Ecuador as one of in the context of our ongoing surveillance with members, it's one of policy advice and policy dialogue. Of course, we stand ready to help member country as needed, but I don't have anything specific to offer at this stage.

Go ahead. Good morning.

QUESTIONER: Good morning. Thank you, Mr. Rice. Yesterday the Ecuadorian President announced that his country received a $900 million loan from China, and his Government said that the loan came with an interest rate three-and-a-half points below the average market, which is around 10 percent. Does the IMF, would like to comment about these loans about the fact that the interest rate is so low, does that make the countries receiving these loans to be more assertive, more careful about the terms of loans from China. If you could please address that.

MR. RICE: I don't have any details on the prospect of lending from China to Venezuela, so I won't comment on that. I don't have the information. However, more broadly on your question, of course debt sustainability is one of the priority issues that the IMF looks at, assesses, and discusses in the context of our ongoing surveillance and engagement with our member countries. So it's clearly something we look at and we talk about it here all the time actually. But, again, I don't have any specifics on the Ecuador situation.


MR. RICE: Good morning.

QUESTIONER: Good morning. According to your website the meeting of the IMF Board on Ukraine is scheduled on December 18. Obviously the Board is going to consider the first disbursement for Ukraine by the new SBA program. Could you please clarify that issue, taking into account the current escalation between Ukraine and Russia? And could you also comment what is the amount of the first disbursement may be considered?

MR. RICE: A little bit of context before answering that. A staff level agreement has been agreed between the IMF and Ukraine on a new standby arrangement, and this will be equivalent to about $3.9 billion. You are correct that this is going to be considered by our Board on December the 18th.I can confirm that for you.

In terms of the first disbursement and the precise amount, that will be the decision for the Board next week, so you will have that information next week. Our intention is to go forward with that Board meeting and for the Board to make a decision on the standby arrangement next week.

You asked about the context in Ukraine right now. It's proceeding. The Board meeting is going ahead. The Ukrainian authorities have affirmed their commitment to continue with the sound macroeconomic policies as well as with reforms to attract investment and achieve stronger growth. Again, we expect us to proceed as scheduled next week.

QUESTIONER: Can I also ask you to clarify how many disbursements are scheduled in the frame of this SBA program for Ukraine?

MR. RICE: Again, the schedule of disbursements is something that the Board will decide on next week, and we will publish that for you transparently. And you will be able to look atthe dates and the levels of disbursement, and so on. That will all be put forward contingent on the Board decision.

QUESTIONER: Yeah, good morning, Gerry. On Argentina, the IMF has said repeatedly that the program with Argentina is working, but the markets are signaling some lack of confidence with country risk, well over 700 points. And I know part of that may be political, but is there anything else lacking?

MR. RICE: Again, stepping back to explain it for colleagues, so a few weeks ago, November 26, IMF staff and Argentine authorities reached a staff level agreement on the second review of Argentina's economic program, which the IMF is supporting. Completion of that review, which, as always, is subject to approval by our Board, is schedule for December 19. So that's again next week. Argentina will be at the Board and the decision on approval of the second review.

Our view is that the authorities' revised and strengthened economic plan is in fact yielding positive results. I won't comment in terms of your question on stock markets going up and down on a daily basis, but broadly financial markets we feel have stabilized the deficit. The fiscal deficit has been tackled decisively and, as you know, Francisco, Madame Lagarde, IMF Management, David Lipton, were in Buenos Aires quite recently, last week, met with President Macri and the economic team there, and I think they all agreed that they key is now implementation and keep going forward with the program.

Our view is that with this kind of implementation that there will be a return of confidence and indeed will lay the basis for a return of growth. We think progress is being made. It's a difficult challenge, of course, that Argentina and the people of Argentina are facing, but the authorities have demonstrated a clear commitment and are implementing the program and we are going ahead with the Board meeting next week, which will be on more positive step, contingent on the Board's decision.

QUESTIONER: Hey, Gerry; I missed the very beginning -- did you already discuss the program with Pakistan, the talks there?


QUESTIONER: I was curious if you could give us an update on the kind of status and timing of how those talks are proceeding, and if you could specifically address the kind of questions around the progress in terms of debt transparency. One of the things that's come up in Under Secretary Malpass' testimony is the question of whether or not any program with Pakistan would be repaid before any of the loans that have been made to Pakistan from China are coming due. And I wondered if we are getting any transparency near that issue or if we are likely to by the time the program is complete.

MR. RICE: Thank you. In terms of the status of where we are, the IMF staff team was in Islamabad until toward the end of November, until about November 20, and, again, as you indicated, following Pakistan's request for IMF financial support. I don't have a great deal of detail for you, Josh, on where we are right now, except to say the discussions are active, they continue toward reaching an understanding on the policy priorities and reform to stabilize the economy, lay the foundations for sustainable, inclusive growth. Those discussions continue and we will keep you posted as to when we think they might be able to conclude.

Now, on the question of debt, which we just touched on in an earlier context, clearly debt transparency is essential to conduct proper analysis of the sustainability of a country's debt. That is what the IMF does when we are going into a program with our member countries. So that will be the case in Pakistan. I don't have the details of that, for the reasons I just mentioned, that the discussions are ongoing. But one of the things that we do in every program is to have a very detailed debt sustainability analysis to ensure that indeed the country's debt profile is sustainable.

So that kind of information and that level of detail will be available at such times as we reach conclusions on the discussions and go forward with the program.

QUESTIONER: Good morning, Gerry. First, I have Turkish question. What is the status of the Turkish economy, if you can tell us? How healthy it is? And also is it true that you are in talks with the Turks to help them?

MR. RICE: On your last point, Michael, there's no program request from the Turkish authorities and there are no discussions along those lines. More broadly, on the Turkish economy, I don't have a great deal to say, but our base line projection is growth to slow to 0.4 percent in 2019 with considerable downside risks before slowly converging to potential growth by 2020.

I don't really have a great deal to add on Turkey.

QUESTIONER: And on Greece, Gerry, do you believe that the major corruption cases that have emerged lately in Greece have an impact on investor confidence?

MR. RICE: Yes, I don't have anything on individual cases in Greece, Michael. So I won’t comment on that. On the broader issue of corruption, we've said a lot, as you know, the IMF. And Madame Lagarde actually just a few days ago here in Washington made a fairly major speech at the Library of Congress where she spent a considerable amount of time indeed talking about corruption and its corrosive effects on economies as we see it. And I would refer you to that if you want something that's quite recent on what we've said. But, again, I don't have anything on individual cases in Greece.

QUESTIONER: Thanks, Gerry. A question on Brexit. The Bank of England had a pretty dire estimate of the impact of a no-deal Brexit economically. I think that they said that the impact would be worse than the financial crisis. I mean does the Fund agree with that assessment? I know that you've run the numbers yourself. I mean what is the Fund's position on a no-deal Brexit?

MR. RICE: I wouldn't comment on the Bank of England's assessment, Andrew. Our views on the economic impact of Brexit I think have been well --

-- articulated and well covered, actually. We did a staff report on the UK several weeks ago, published mid-November, and it has our most updated scenarios.

In summary, what we were saying in that staff report and Christine Lagarde has said this too, that all likely BREXIT outcomes will entail costs for the UK economy by departing from the frictionless single market that exists today. And the higher the impediments, the higher the cost.

So, and again, we've said this for some time, an agreement that minimizes uncertainty and trade barriers will be the best to support growth. And we've also said I think I said here also a few weeks ago, that the hard BREXIT or the no deal BREXIT, leaving without a withdrawal agreement and a framework for the future relationship with the EU is the most significant near-term risk to the UK economy. So I'd characterize our position that way.

Good morning. Do you have a question? And then I'm going to go online because we're coming to sort of the end of the in the room.

QUESTIONER: Sorry. I am a bit late. I'm not sure if someone --

MR. RICE: It's no problem.

QUESTIONER: -- asked you a question.

MR. RICE: No problem. I already spoke on Pakistan unless you have a --

QUESTIONER: So then I'll go to India.

MR. RICE: So I gave an update on Pakistan, and we talked about the debt issue a little bit. So those were the two questions.

QUESTIONER: I don't want to be repetitive. If this question has been answered, then you can just skip it. Yesterday the U. S. said that it is making sure that the IMF -- any finance list sends a loan to Pakistan, is not used to repay its debt to China. Is that the case inside the IMF? What's IMF thinking on that?

MR. RICE: Yes. We did cover that, I think mostly. What I said was that debt sustainability in a country's debt profile is one of the priority issues that the IMF looks at in the context of a program discussion with a member. That definitely will be the case in the case of Pakistan. And I was just explaining to Josh that this level of detail and granularity will become public actually at the time of the program agreement.

I might add just one other point, and it may be useful for you and for Josh. Of course, when a program is agreed by staff with the authorities, it goes forward to the board. And the board representing our membership, including the United States, of course, makes the final decision on whether that program should go ahead. So maybe that's just one other important point to add given the question you're both asking.

QUESTIONER: Okay. I wanted to ask you about India, the Reserve Bank of India, its former governor resigned abruptly), citing personal reasons but reports in India say (inaudible) could be some other reasons too. You had spoken about RBIs and its relationship with the central government in India in the past. How do you see that development as? Do you think there is any cause of concern when it comes to the independence of RBI?

MR. RICE: So let me say a couple of things. We've taken note, of course, of Governor Patel's resignation and the appointment of Governor Das. And, you know, I'd add we believe Dr. Patel was instrumental in formulating the Reserve Bank of India's inflation, targeting, framework as a deputy governor and in successfully implementing it as governor. We wish him all the best in his future endeavors.

Turning to your other questions, as we've stated before, international experience shows that the operational independence is important for a central bank to carry out its responsibilities. The RBI plays a vital role in ensuring economic and financial stability and is an important counterpart and partner for the IMF. And so in wishing Governor Patel all the best in the future, we also look forward to working closely with Governor Das and wish him well in his new incarnation.

QUESTIONER: Does RBI has what you describe as operational independence?

MR. RICE: I'm sorry?

QUESTIONER: Does RBI has operational independence?

MR. RICE: What I would just repeat is that we feel that the independence of a central bank is fundamental to its effectiveness.

QUESTIONER: Thank you.

MR. RICE: Let me take a few things online. I'll come back in the room if there's anything left over. But we've got a few questions. There's actually one on Pakistan, but it's the same questions that we've covered here so I won't go to that.

There's a request for a few updates from Matthew Lee in New York. He'd like an update on Haiti and where we are. I can say that an IMF staff team is in Port-au-Prince, and we expect them to conclude quite shortly. The team discussed with the authorities the latest economic developments and the authorities’ social protection strategy, and strategy of public investment. It's a fact-finding mission not a discussion of a program at this point, is what I'm trying to say. It's a fact-finding mission, and we're engaged with authorities on discussions and policy advice.

There is a request for, Matthew again, an update on Yemen. Asking, what's the role of the IMF and the steps being discussed in the talks in Sweden which I think we all know are ongoing today, including but not limited to with regard to the central bank.

I'd just like to repeat again that the fund is very concerned about the humanitarian situation in Yemen and the economic costs of the conflict there. And we are working with donors and authorities to avert that humanitarian disaster.

Like many other partners, we look forward to the outcome of the talks in Sweden, and hope that they can lead to measures that would alleviate the crisis.

What can the IMF do? Well, we are actually providing technical assistance to the Yemeni Central Bank to identify its main capacity gaps. We are also supporting the authorities and donors in identifying measures that would help mitigate the situation there, including by facilitating imports of basic food staples and paying civil service wages in the whole of Yemen. So we are urging the international community for remedial action in Yemen.

There is a question about Egypt, actually. Has the IMF decided to delay its vote on Egypt's fourth economic review? The meeting was scheduled for 12-19 but it's no longer on the board calendar, and if so, so what and when et cetera?

Look, on the board calendar there was a technical problem with our calendar. I apologize for that. So we're still finalizing some details with the Egyptian authorities as to when exactly that review will go forward to the board. But we will communicate the exact date in due course, and we will endeavor to get that right. Again, apologies for the technical issue which is what it was in terms of the date that appeared in the board calendar.

Finally, there is a question online on Zimbabwe coming from Barry Wood. What are the prospects for an IMF program for Zimbabwe, and what's your assessment of the government's reform program that took effect in October?

To which, I can tell Barry that IMF staff is currently discussing with Zimbabwe the policies that might become the staff monitored program which would aim to assist with fiscal consolidation and the reform agenda. We think the policies, to answer the question, the policies of the new administration under the Zimbabwe transition and stabilization program, do constitute a comprehensive stabilization and reform effort in order to address Zimbabwe's macroeconomic situation.

And, you know, we see it as a fairly ambitious program that the authorities have requested the staff monitored program. I'm differentiating that from an IMF financial program which, of course, discussion of that, as we've said here before, would require the clearance of arrears by Zimbabwe to the other international financial institutions as well as an agreement with official bilateral creditors. So we are looking at a staff monitored program, but not at this point, the full financial program for the reasons I just mentioned. Okay. Yeah.

Questioner: On France, this week after the riots, the President, Emmanuel Macron has decided to rise the minimum wage. I would like to know the position of the IMF of this movement given that usually the institution is kind of cautious talking about these measures because they raised the deficit. So what's your position about it?

We take note of the difficult situation in France obviously, and that the authorities' policy response which you just mentioned. We feel the recently-announced tax measures can help support the purchasing power of workers and pensioners. They will also, of course, increase the 2019 deficit. So, to safeguard the sustainability of the public finances, these should be offset by compensatory measures that’s something going forward. Also going forward, it’s going to be important to find a renewed social consensus to continue to reform the French economy and ensure, as I said, the sustainability of the public finances for the benefit of all French citizens and the future.

QUESTIONER: Do you think the measures are appropriate?

MR. RICE: I think they are appropriate in the sense that they will help to support the purchasing power of workers and pensioners, as I said, appropriate in that respect. But they will also increase the deficit, so compensatory measures should be considered going forward.

QUESTIONER: (inaudible)

MR RICE: We’ve commented on this quite a bit in recent days, including, Madame Lagarde for the last several days. Our call has been broadly for de-escalation of the tensions, we’ve been saying that for quite some time. We indicated that we thought the discussions that took place between China and US in Buenos Aires after the G20 meeting was an encouraging step. We think further progress along those lines would be good for both countries. Madame Lagarde said quite recently more trade means more growth, more investment, more jobs. Having the US and China agree on an initial time frame as they did in Buenos Aires is a positive step. We are hopeful that more details can be provided to underpin that. We are encouraged that there was that meeting in Buenos Aires and we are hopeful that it would lead to further and more specific progress and that more broadly we would see a de-escalation of the trade tensions which would be good for both countries and the world.

Okay I’m going to leave it there. Thank you very much for your attendance on this morning in Washington. Thanks very much for your patience, I look forward to seeing you in a few weeks’ time.

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