Transcript of IMF Press Briefing
IMF News, March 7, 2019
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- Published: March 7, 2019
Press logistics and upcoming events
- Embargoed until 10:30 a.m. Washington time for this briefing.
- Contact details listed: Phone: +1 202 623-7100 Email: MEDIA@IMF.org
- IMF events and travel noted:
- International Women's Day event: Christine Lagarde and Kristalina Georgieva conversation on leadership; event correction: "the event starts at 3:00 p.m." (originally announced as 3:30 p.m.). Live webcast.
- David Lipton at CSIS on March 13 to launch an IMF book on the future of China's bond market.
- Spring Meetings registration noted.
- Fund emphasis: gender issues permeate programs, surveillance, analysis, research, capacity development; Finance and Development magazine issue focused on women's role in the economy.
Venezuela: situation and IMF engagement
- Current situation described as "one of the most complex situations" with a combination of:
- food and nutrition crises,
- hyperinflation,
- a destabilized exchange rate,
- debilitating human capital and physical productive capacity,
- a very complicated debt situation.
- IMF position on engagement:
- Any determination on recognition of Venezuela's government by the IMF has yet to be made.
- The IMF is "guided in situations like this by the international community" and by its membership of "189 countries".
- Prospective engagement is predicated on the determination of official recognition being made.
- Process and Board considerations:
- Management would make a recommendation to the Executive Board for discussion.
- Past practice: decision has rested on a majority of the voting par of the members of the Board.
- Public/official government recognition can sometimes obviate a formal vote if clear.
- Outreach and contacts:
- Mr. Rice: "I'm not aware" of recent contact between the IMF and Venezuelan authorities or White House staff over the past month and a half.
European Central Bank (ECB) announcement reaction
- IMF view on ECB actions the morning of the briefing:
- Revised forward guidance and new targeted refinancing operations are "appropriate steps to maintain strongly accommodative monetary and private sector credit conditions."
- Such measures are warranted "until inflation is convincingly converging to the objective set by the ECB."
Zimbabwe: engagements and currency reform
- Visits and meetings:
- Finance Minister Ncube met with Managing Director Lagarde and senior Africa Department officials.
- IMF interaction:
- No IMF financing program currently with Zimbabwe; the Fund continues discussions to assist implementation of the transitional stabilization program.
- Preconditions for an IMF financing program include clearance of arrears to other international financial institutions and financing assurances from bilateral creditors, agreement on policies, etc.
- On recent currency reform:
- IMF initial evaluation: "a step in the right direction" to address distortions that have impaired macroeconomic outcomes.
- Success hinges on implementation of:
- an effective overall monetary policy framework,
- market-determined interest and exchange rates,
- prudent fiscal policies.
Argentina: third review and mission activity
- IMF staff team led by Mission Chief Roberto Cardarelli is in Buenos Aires for the third review of Argentina's economic plan.
- Expected communications:
- A staff statement is expected "relatively soon" in the coming days; the Board would meet "within a matter of weeks" after a staff-level agreement or staff statement.
- Assessment highlights:
- "Important progress continues to be made."
- The plan has been "effective in addressing the major macro imbalances" so far.
- Political engagement:
- IMF staff met with government, central bank, private sector, academia, civil society, and opposition — described as normal under program conditions.
- The IMF's mission is to support the country regardless of political changes; elections create uncertainties.
China: growth target, fiscal measures, and transparency
- Government work report:
- New growth goal set "between 6 and 6.5 percent" (compared to "around 6.5 percent" last year).
- IMF view: resetting the growth target allows focus on "improving the quality of growth" rather than high quantity and helps avoid excessive debt.
- Tax and fee cuts:
- Cuts to the relatively high Social Security contribution rate viewed as "a positive step" because the rate penalizes employment.
- Reduction in the dispersion of VAT rates is "a positive step" to reduce inefficiencies and tax avoidance.
- IMF recommendation: accompany these reforms with measures to ensure overall fiscal policy supports consumption, including making the tax system more progressive, expanding health, pensions, education spending, and transferring more to poorer households; ensure fiscal deficit sustainability.
- Transparency and exchange-rate issues:
- China has "come a very long way" in transparency and openness regarding foreign exchange and currency issues.
- Further progress under Governor Yi Gang noted.
- IMF will examine these issues in detail in the upcoming Article IV consultation "early in the summer this year."
Greece: post-program monitoring and non-performing loans
- IMF status:
- The IMF is in post-program monitoring with Greece; no financing program currently with the IMF.
- The post-program monitoring report was expected to be published "next week" (from the briefing date).
- Early repayment of IMF loans:
- Decision rests with the Greek government, in consultation with other creditors where appropriate.
- Early repayment would reduce the overall interest rate for Greece but "would not affect the post program monitoring process."
- Non-performing loans:
- Strengthening bank balance sheets to improve credit provision is an important issue; staff preliminary views referenced in the first post-program monitoring mission.
- More detailed assessment to appear in the forthcoming post-program monitoring report.
Haiti: Article IV and proposed financial arrangement
- IMF mission currently in Port-au-Prince to complete the Article IV consultation and discuss a possible IMF financial arrangement.
- Proposed financing:
- Described as "highly concessional, on the most concessional terms we can offer for Haiti."
- Will highlight social protection and the fight against corruption.
- Any fuel price adjustments would be deferred "until the government is able to guarantee that the most vulnerable will be protected."
Ghana: program conclusion and post-program monitoring
- IMF Board expected to consider the combined 7th and 8th reviews of the program by the end of the month, which "would indeed successfully conclude the program."
- Post-program engagement:
- Regular Article IV surveillance, capacity development, and a post-program monitoring arrangement as is normal.
Egypt: fourth review publication
- Egyptian authorities have agreed to publish the staff report and related document for the 4th review; IMF expects these documents "to be posted very soon."
Jordan: donor conference and financing needs
- London Donors Conference:
- IMF Managing Director Lagarde attended; IMF strongly supports increased external financial support for Jordan.
- Economic challenges:
- Growth is low; unemployment high especially for youth and women; high public deficit and debt levels; the refugee crisis places extraordinary strain.
- IMF stance:
- Jordan "needs additional financial support, particularly in the form of budgetary grants" to help reform and build resilience and self-reliance; IMF will push for the right kind of external support.
IMF governance and recognition procedures (as applied to country authorities)
- Recognition process overview:
- Management discusses the issue and makes a recommendation to the Executive Board.
- Decisions have rested on a majority of the voting par of the Board members in the past.
- If public and official statements by governments make recognition clear, a formal vote may not always be necessary.
- Other international organizations:
- The situation for Venezuela was noted as fluid; other organizations, including the United Nations, "have not made this determination as yet."
IMF Communications Department — March 7, 2019.