Transcript of IMF Press Briefing

January 17, 2019

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 this briefing will be embargoed until 10:30 a.m.; that's Washington time.

Let me take this opportunity to wish you all a very happy New Year, both colleagues in the room and to those of you on line.

As usual, I will begin this morning by giving a very brief rundown of the schedule of engagements for senior management here at the IMF, then we'll turn to your questions in the room and a few on line as well.

So, on January the 21st -- that's next Monday -- the IMF's Managing Director, Christine Lagarde, will be in Davos for the World Economic Forum meeting that week. And there's actually quite a large number of public engagements in Davos for Christine Lagarde as well as our new Chief Economist, Gita Gopinath, who will be there, as will our First Deputy Managing Director, David Lipton. And, as I said, they all have various public and media engagements, and rather than run through them all there I'm going to suggest if you have an interest in all of those events, colleagues here in media relations can get the full program to you because, as I say, it's quite a long list.

But let me mention of couple of outstanding items. Notably, on Monday the 21st, as I mentioned, Christine Lagarde, the Managing Director, and Gita Gopinath will present the World Economic Outlook update of the IMF. And that will be at the press conference in Davos, 3:00 p.m., Swiss time. That's 9:00 o'clock here in Washington. So I know that's of great interest to many of you, the WEO update, and so this is going to happen on Monday. And, again, we will make sure that gets to you in a timely way, as usual.

A couple of other things that will happen next week in terms of the IMF's focus at Davos. We're releasing two staff papers actually based on recent research, one of which will focus on the issue of jobs and unemployment, especially in emerging markets and developing countries, and especially focused on the issue of youth unemployment actually. So that's going to be launched -- that staff paper is going to be launched on January 23.

The other piece of research is another staff paper -- we call these staff discussion notes -- and that one is going to be focused on the Sustainable Development Goals and the costs, the fiscal financial costs of the Sustainable Development Goals where the IMF staff have conducted some recent research.

So those will be two focal points of our messaging in Davos, as well as what I said upfront, of course the economic outlook for the global economy and for individual countries as well.

I think I will probably leave it there. As I said, there's an array of public engagements and, indeed, media engagements for the IMF senior managers who will be in Davos and the media relations team here will be happy to give you that full program so you know exactly what's going on. Most of this is live webcast so you can watch it.

So, with that, let me turn to questions in the room. Good morning, Andrew.

QUESTIONER: Good morning, Gerry. Happy New Year. One question about Pakistan, one about the shutdown. So on Pakistan, there were some statements out of their government recently suggesting that they're deciding to go another route, perhaps they're not going to pursue an IMF program. I mean what update do you have on that? Are talks ongoing? Where do things stand at the moment?

MR. RICE: Okay. Then we'll come to your other question. On Pakistan, just again coming back in the New Year I'm reminding that it was in October last year, during our Annual Meetings actually, that Pakistan's Finance Minister made a formal request for financial assistance from the IMF. So since then we've had a staff team visit Islamabad following that request that I mentioned. And where we stand is that IMF staff are continuing discussions with the Pakistani authorities, with our counterparts, toward reaching an understanding on policy priorities, on reforms to stabilize the economy and lay the foundations for sustainable and inclusive growth. So that's where we are. We've had the formal request for financial assistance, we followed up with that and the discussions continue.

QUESTIONER: Thanks. And on the shutdown, you know, I know this is a moving situation, but to what extent is there evidence that this partial shutdown of the U.S. Government is having any impact on the U.S. Economy?

MR. RICE: You know it’s still in the very early days of making an economic assessment of the impact of the shutdown. Like everyone else, you know, we are monitoring the situation and U.S. economy. As I mentioned, next week in Davos when we release the World Economic Outlook. Perhaps what I would say is the longer the shutdown is in effect the bigger effect, impact it will have on the economy. So we encourage the U.S. authorities in both congress and the executive branch, to work together in the spirit of compromise to pass a funding bill that can reopen the federal offices.

So, again, we'll be saying more about the U.S. in Davos in the context of the WEO.

QUESTIONER: Happy New Year, Gerry.

MR. RICE: Thank you.

QUESTIONER: You know, ever since they were founded the IMF has been run by a European and the World Bank has been run by an American. And now that there is an opportunity to appoint someone new at the World Bank I wondered if you could comment on whether or not that arrangement has served the IMF and the World Bank well, or whether or not it's time to consider people who live in other parts of the world to run these two Bretton Woods institutions?

MR. RICE: So, you know, as you mentioned, Josh, the process of selecting a new World Bank president is underway and, you know, I'm going to leave that to the World Bank of course. Just a reminder on the process that the IMF has followed in recent times, and includes 2011 when Christine Lagarde was first selected, and 2016. That, in fact, the process was open, it was merit based, and it was pretty transparent. In fact, there were several candidates put forward. The way it works is, in fact, that any member of the IMF Board of Governors and Executive Board can nominate a candidate. In that respect, as I say, it's very open. And as I said, the last time that we did this it was an open process, there were several candidates, there was a short list of candidates put before the Board, and several -- well, at least two candidates were interviewed, indeed, by the Board, and a selection was made. And we think -- I say all of this because I think people tend to forget about those elements of the process. So we think the process is open, it's merit based, and it's transparent. So, you know, just a reminder of how this works.

QUESTIONER: Hello. I have two questions. One, could you do any comment after the rejection of the Brexit deal? And the second question is regarding the Yellow Vest Movement in France. From the very beginning there was a huge hope of optimism on the French economy when Macron was elected. What do you think today and how is the French economy regarding this movement?

MR. RICE: Okay. On Brexit, you know, we've made our views known quite extensively and regularly. So I won't go over all of that ground again. But you can find our assessment in the 2018 Annual Review of the UK, the economy, the Article IV. That was not something in the distant past, that was just in November last year, and you'll find that on our website. I can summarize what's in the staff report and indeed what, you know, the Managing Director and other senior managers at the Fund have said in the past, that as we see it, all likely Brexit outcomes will entail costs for the UK economy because they involve departing from that frictionless single market with the European Union that exists today. And then we've said that the higher the impediments, the higher the cost.

And so an agreement -- and this is what we have advocated -- an agreement that minimizes uncertainty and trade barriers will best support growth. And we've also said, and I said it here fairly recently again, that leaving without a withdrawal agreement, the so called no deal Brexit, so 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 as we see it.

You had asked me also about France. So we take note of the difficult situation in France and the authorities' policy response. Looking forward it will be important to find renewed social consensus to continue to reform the French economy and ensure the sustainability of the public finances for the benefit of all French citizens and future generations.

QUESTIONER: Sorry, a follow up. I don't know if in the WEO you take into account this movement for the impact on the French economy.

MR. RICE: You know, again, I would give -- very different situations of course -- but I'd give a similar answer when we talked about the U.S. earlier, just in the sense it's very early days in terms of making an economic assessment of the impact the protests might have. But that said, we will be publishing our new projections for France in the context of WEO update, and that's coming in just a couple of day’s time actually now, on Monday.

Good morning.

QUESTIONER: Good morning, Gerry. Happy New Year.

MR. RICE: Thank you.

QUESTIONER: Two questions about Greece. When are the IMF officials return to Athens for the post program monitoring of the Greek economy? And the second one, Greece is at a critical turning point, as we see a slowdown in the Euro Zone economy and an increasingly volatile international environment. How should the country proceed in addressing these challenges?

MR. RICE: Thank you. So just in the interest of those who don't follow it, as you all know, there's no IMF financial program supporting Greece. We are now -- that ended some time ago. We are now in what we call post program monitoring mode, which involves staff visits to Greece several times a year to consult with the authorities and help them in terms of advice and analysis, support them in terms of that monitoring. But there's no financial component to that is what I'm trying to say.

So in that context, an IMF staff mission will be in Athens next week and that will be, indeed, the first of these post program monitoring discussions that I just mentioned. And the mission will be discussing a range of issues with the authorities, including the economic outlook, the fiscal risks, the efforts to clean up the financial sector, and revive lending, all of that. So I don't want to get ahead of that PPM, post program monitoring, mission next week. But I can tell you we will publish a concluding statement at the end of next week and, you know, we can make sure you're apprised of that in good time.

Good morning.

QUESTIONER: Good morning, Gerry. Two questions. Do you have any details of meetings Madame Lagarde will be holding with the Argentine officials in Davos? And secondly, if you see any effects of Bolsonaro’s policies on the Argentine economy.

MR. RICE: On your first question, I can actually confirm to you that Madame Lagarde will meet with Finance Minister Dujovne and Central Bank Governor Sandleris in Davos. That meeting will take place. Your second question was about the impact of Brazil on Argentina. You know, I don't have anything specific on that. You know, our focus is on the Argentine governments program, the implementation of that. It's on track as of our last mission which was, you know, in December. The board -- December 19 so that’s, you know, not very long ago discussed Argentina's performance under the program and again it was regarded as being on track. So I don't have anything that suggests there has been a negative impact spillover effect from any other country at this point. Let's stay on Argentina?

QUESTIONER: Yes. Thanks, Gerry. On Argentina, the Peso has strengthened in the last couple weeks and there are certain concerns that if the Central Bank starts intervening in the foreign exchange market again it might impact negatively on inflation. Can you comment if there have been any discussions between the IMF staff and the Argentine authorities regarding this?

MR. RICE: Well, you know, I mean, just in general, it's a very active and healthy dialogue between IMF staff and the Argentine authorities just in general. But on the monetary policy aspect, the Central Bank of Argentina's monetary policy framework, as you know, includes a very transparent framework which sets the parameters for the Central Bank to intervene. And the Central Bank authorities have intervened in the foreign exchange markets consistent with this rule. You know, in terms of going further forward, you know, I think it is really for them to talk about that.

On inflation, the 2018 annual inflation figure is pretty much in line with the Funds projections and most of those numbers can be found in the staff report related to the second review which I mentioned earlier. David.

QUESTIONER: Hi, thanks Gerry. Egypt's presidency has said that they expect to get the next $2 billion tranche from their IMF program this month but we haven’t heard any confirmation from the IMF on this. Have you -- do you have timing for the executive board review for this?

And also, we have heard that Egypt is seeking approval possibly to delay the fuel subsidy cuts that it had -- is putting in place because of concerns about unrest. Have they sought to make a delay in this, in these cuts?

MR. RICE: On your first question, related to the fourth review, and when the board might meet on that, we are still finalizing the details. We expect it to be soon and we will let you know as soon as that is, you know, as soon as that date is set. But we expect it to be soon. Okay.

MR. RICE: And on the fuel price issue that you raised, we do think that the fuel price indexation is an important first step in protecting the budget from changes in fuel prices and creating fiscal space for investment in other areas, notably health, education and infrastructure.

At the time of the third review, so the previous review, the authorities indicated their intention to implement indexation for most fuel products as part of completing their energy, overall energy sector reforms and, you know, the exact timing of that will be determined by them, but my understanding is the direction is, you know, as I just described with the timing to be decided by them.

QUESTIONER: To come back to Latin America, last month you told us that you received data from Venezuela. At that time you were mentioning that there were under review. Could you say anything about the data you received and if you have something new after reviewing this data?

MR. RICE: I don’t have much that’s new, since I talked about this the last time. So again, for those who may not follow Venezuela so closely, the IMF's executive board had issued a declaration of censure against Venezuela for its failure to implement remedial measures and its failure to comply with its obligation regarding data provision which is an obligation that applies to all our member countries. So that declaration of censure had been announced earlier.

And, I mean, in terms of what is new, we expect our board to meet again on this issue in the coming weeks to take stock of where we stand. And I had said the last time I spoke about this that the Venezuelan authorities had in fact provided some data and we were reviewing that and we will report to the board. So when the board meets which we expect to be in the coming weeks as I said, they will be taking into account this updated data that has been provided by the Venezuelan authorities. So I don’t want to preempt any board discussion or decision on that but it's coming soon. One more from you and then I will take a couple online.

QUESTIONER: Yes. I have question regarding Chinese data, Chinese data. Maybe you have seen --

MR. RICE: Did you say China?

QUESTIONER: Chinese data.

MR. RICE: Data, okay.

QUESTIONER: Yes. Because maybe you have seen that conference board published a kind of study showing that maybe Chinese data were more optimistic than they are in real. Do you have any concern of the potential falsified data in China especially ahead of GDP data which will be published I think on Monday?

MR. RICE: No. I don’t have any information on that or, you know, questioning of Chinese data on the IMF's part. I don't have anything on that. However, again, we will be talking about China amongst other countries in the context of the WEO and including an updated forecast but I don’t have any information on that particular data question.

I am going to take a few questions that are online asking well, a number of questions, a question about the status of where we are with Yemen. And said did the agreement in Stockholm between the Houthis and the governance, the government of Saudi and Emirati led coalition make it more likely that the IMF can provide the assistance it has said it wants to? So what is the IMF doing now?

I don’t have a great deal of update on Yemen from what I said the last time which is that, you know, given the armed conflict and the humanitarian crisis, you know, we can only, we the IMF, can only have a limited role in Yemen. We are of course encouraging the donor efforts to focus on the humanitarian situation there which is of great concern and the UN of course is in the lead.

What we are doing is continuing to provide technical assistance to the Central Bank to identify any major capacity gaps and supporting the authorities and donors in identifying measures that would help mitigate that humanitarian crisis including by facilitating imports of basic food staples and paying the civil service wages in the whole of Yemen.

There is a question about Sri Lanka asking what would be the focus of the areas of the IMF staff visit to Sri Lanka in February. So that staff visit was announced just the other day in a statement from Christine Lagarde, our managing director, who met in Washington on January 15 with the Sri Lankan authorities including the finance minister and the Central Bank governor.

And she said in that statement that Sri Lanka had stressed a continued commitment to the economic reform agenda under an IMF supported program and they agreed that a strong policy mix with effective implement of that agenda is key to strengthening confidence and putting, helping to put Sri Lanka back on a sustainable, high quality growth path that would benefit its people.

So as the question suggests, there will be an IMF team in Colombo in mid-February to resume program discussions and those elements mentioned by the managing director in her statement would be the main topics of discussion.

I'll take one more online and that's about Zimbabwe and asking for the status of where we are with the countries debt and relation with the IMF and did we have any comment on the unrest and the government crackdown there is the question.

So in answer to that, I would say that of course Zimbabwe is facing major challenges and just in terms of the unrest, we encourage all stakeholders to collaborate peacefully in developing and implementing policies that will stabilize the economy and promote sustainable and inclusive growth.

On the overall economic situation, debt and the IMF, there has been no real change in what I have said here recently which is Zimbabwe continues to be in a difficult situation regarding debt with protracted arrears to official creditors including multilateral creditors such as the World Bank which severely limits Zimbabwe's access to international financial support.

In terms of the IMF, Zimbabwe has in fact cleared its arrears to us, to the Fund, but our rules preclude lending to a country that is still in or under arrears to other international financial situations. So until that particular situation is resolved, we would not be moving forward with a financial support for Zimbabwe.

I said here the last time that the authority's economic policies we felt were headed in the right direction broadly in terms of addressing the fiscal deficit and monetary policy and so on. I won't repeat what I said the last time but that’s where we are on Zimbabwe.

Is there anything else in the room? Okay. In which case I will say thank you very much. It's really good to see everybody in the New Year and we will be getting to you the World Economic Outlook update very shortly and looking forward to seeing you soon. Thanks very much.

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