Transcript of IMF Press Briefing

March 7, 2019

MR. RICE: Good morning, everyone, and welcome to this briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department. And, as usual, this morning this briefing will be embargoed until 10:30 a.m., and that's Washington time.

Also, as usual, I'll take some time to go over a little bit of management travel here at the Fund and major events, and then I'll turn to questions in the room. And I'm seeing quite number of questions on line. I'll try to get to as many of those as I can.

So let me turn to IMF events and so on. Tomorrow, which is International Women's Day, the Managing Director of the IMF, Christine Lagarde, and the interim President of the World Bank Group, Kristalina Georgieva, will have a conversation on the topic of leadership, appropriately, and the benefits of a more gender balanced world. And, again, this is to mark International Women's Week, International Women's Day, which is tomorrow. That event starts at 3:30 p.m. (CORRECTION: the event starts at 3:00 p.m.) It will be live webcast. You can watch it. It's going to be on our website, on the World Bank's website and in the usual paces. So that's tomorrow afternoon.

Then the only other couple of things I want to mention is that David Lipton will be at CSIS, the Center for Strategic and International Studies here in Washington next week, March 13, to launch an IMF book on the future of China's bond market. That's March 13, David Lipton.

The Spring Meetings are coming up and you can register for that. And, as I said, this week, as you may have seen from some of our communications already, there has been a strong focus from the IMF on the role of women in the economy and gender issues. Amongst other things, you might have seen our latest issue of our quarterly magazine, Finance and Development, which is focused appropriately, again, on that issue of women's role in the economy. And as those of you who follow the Fund know, this is now an issue that permeates our work, whether it's programs or lending programs, surveillance, analysis, research, capacity development. It's a big issue for the IMF.

And on that note, let me wish everyone a very happy International Women's Day tomorrow.

Andrew, good morning.

QUESTIONER: Good morning, Gerry. Andrew Mayeda with Bloomberg News.

I have a question about the ECB and then a question about Venezuela. I'm sure you'll get a bunch of questions about Venezuela. On the ECB, they downgraded their outlook today. They offered some more liquidity to banks. They also said they're going to say lower for longer. What's the Fund's view on the ECB's positioning today?

And then, secondly, on Venezuela, you know, whatever you can tell us essentially on the Fund's position right now. Any talks happening between the Fund and the old regime and the new regime? And what the economic situation is there?


MR. RICE: Yes. So let me take your question on the ECB first, Andrew, which is of course has just happened this morning. What I would say on the ECB announcements this morning is that their revised forward guidance and new targeted refinancing operations are appropriate steps to maintain strongly accommodative monetary and private sector credit conditions, as is warranted until inflation is convincingly converging to the objective set by the ECB. So appropriate steps, I think, is the Fund's view on what has happened this morning coming from the ECB.

On Venezuela, I imagine there is interest in that in the room and online, so let me take a little bit more time just to set it in context. Again, I don't have a -- in terms of news increment, you know, I will just say to you up front I don't have a lot more of news for you from what I said here a few weeks ago. But let me try and put this in context. In recent days both Christine Lagarde and David Lipton have spoken about the challenges, the very difficult challenges facing Venezuela. And Mr. Lipton in particular talked about Venezuela facing one of the most complex situations that we have seen here at the Fund. And that's a combination of food and nutrition crises, hyperinflation, a destabilized exchange rate, very debilitating human capital and physical productive capacity, and a very complicated debt situation.

So addressing this complex set of challenges in Venezuela will require strong resolve by the authorities and broad international support. And that was something, again, that David Lipton emphasized in his public remarks a few days ago.

In terms of the IMF's position, I said here the last time I was here that, you know, we are guided in situations like this by the international community, as reflected in the IMF's membership. That's 189 countries, as you know. So the situation remains very fluid in that respect on the ground and in terms of international recognition. So the determination of the recognition of the government in Venezuela by the IMF has yet to be made. And, of course, again as I said here the last time, any prospective engagement with Venezuela -- I imagine you have some questions on that, interest on that -- is predicated on that determination being made.

So, again, we're guided by our membership on this issue. The situation continues to be very fluid. We are watching it very closely of course. That's where we are at the moment on Venezuela.

Please. Good morning.

QUESTIONER: Good morning. Luis Alonso with AP.

Just to follow up on that, is there any plans for the Board to address the Venezuelan crisis in any upcoming meeting? And when you say that the engagement with Venezuela is predicated on the determination, does that mean that the IMF has had zero contact with Venezuelan authorities or White House staff over the past month and a half?

Thank you.

MR. RICE: On your second question, I'm not aware of any such contact.

And on your first question I don't have anything regarding timing of a Board meeting to make the decision on official recognition. No timing on that.

Barry. Nice to see you here.

QUESTIONER: Thank you(inaudible). Can I ask about Zimbabwe?

MR. RICE: Yes, sir.

QUESTIONER: The Zimbabwe finance minister was here this week.

MR. RICE: Correct.

QUESTIONER: What was the nature of the discussions he had with Madam Lagarde? And how would you characterize the moves that that government is making towards opening the economy? And do you foresee another staff monitored program there?

MR. RICE: So you're right, Barry, Finance Minister Ncube was here. He met with Madam Lagarde and senior officials here at the IMF managing the Africa Department.

As we said in the statement that we issued, the Minister briefed Madam Lagarde on economic developments in Zimbabwe and the reforms that you refer to that have been implemented since they last met. As you know -- well, maybe people don't know -- but the Fund does not have a financing program with Zimbabwe, though we continue to have discussions with the authorities to assist them in implementing the economic reforms contained in their transitional stabilization program, which, you know, as Barry indicated, is a wide ranging stabilization and reform program aimed at addressing what is clearly a deep macroeconomic imbalance challenge, as well as a broader set of social and economic challenges. So the discussions are -- we're engaged. The discussions are certainly continuing.

Maybe just a comment on the currency reform, if that would be helpful. And our initial evaluation of that which has been announced by the Zimbabwean authorities recently is that it's a step in the right direction to address distortions that have significantly impaired those macroeconomic outcomes that I've mentioned. Its success, of course, the currency reforms' success will depend on the implementation of an effective overall monetary policy framework supported by market-determined interest and exchange rates, together with prudent fiscal policies. So it's the major set of challenges facing Zimbabwe. The IMF is trying to help. We're engaged with them on how we can help them as much as possible.

Given the absence of a financing program which I've explained here before, Barry, that that would depend on, I think you know, the clearance of arrears to other international financial institutions and financing assurances from bilateral creditors, agreement on policies and so on. So there's no financing program with the IMF, but we're looking to be supportive as we can, and so stay tuned for further developments.

Good morning.

QUESTIONER: Good morning, Gerry. On Argentina. I wanted to know how worried is the IMF about the high inflation which has been higher in January and February than expected. And when is the IMF planning to review its own measurements for 2019?

MR. RICE: Okay. Again, just setting a little bit in context. We have an IMF staff team in Buenos Aires right now led be Mission Chief Roberto Cardarelli. So this is in the context, as you've mentioned, of the third review of Argentina's economic plan which is underpinned by the financing from the IMF. So Roberto and the staff team have been meeting with the government, the central bank, private sector, academia, civil society, and, indeed, members of the opposition party in Buenos Ares which is normal for IMF staff missions under program conditions.

I do expect a statement from the staff team relatively soon. You know, in the coming days, so fairly shortly, as to what our assessment is on the third review. So you can expect more details on that soon. I would characterize where we are as important progress continues to be made. But, as I said, I don't want to preempt Roberto and the team. So you'll hear more detail on that very soon.

I don't have a specific date when the board would meet, but we'll have a communication before the board meeting, because Roberto will communicate with a staff statement when the mission concludes. And the way things work at the Fund is usually in a matter of weeks after what we call the staff level agreement or the staff statement, mission statement, that the board would meet within a matter of weeks to formally approve, discuss and approve, hopefully, the review.

On inflation and your question about that, again, you know, Roberto and the team that's something that they'll be looking at so I don't want to preempt what he might say on that. You know, that's probably as much as I can say. We think, again, important progress has been made. That so far the plan has been effective in addressing the major macro imbalances. And we'll wait and see what Roberto says. He'll have more for you.

QUESTIONER: What can you tell us about the meetings with political leaders, with opposition leaders? And if the IMF still sees a risk for the program? If there's a change of program of government next year?

MR. RICE: You know, as I said, it's normal for us to -- in programs, in countries with programs supported by the IMF, and, you know, especially where election cycles are imminent -- that we would sit down with opposition parties. Some of you in the room will be familiar with this process from your own countries and experiences.

I don't have details on, you know, what was discussed in those meetings, and we wouldn’t normally disclose that, for obvious reasons. But, again, we're confident that steady implementation of the policies that have been developed by Argentina under the program together with strong support from the IMF and the international community will allow Argentina to meet its full potential. That's probably about as much as I can say.

You know, maybe I'll say one more thing which with regard to elections and so on, there are always uncertainties related to election cycles. That's not unique to Argentina, obviously. And just a reminder, what I've said here before, the IMF's mission is to support our member countries, in this case Argentina. And, you know, we would continue, hopefully, to support Argentina, you know, regardless of political changes. And, again, this is something that is normal for the IMF. As administrations may change the IMF continues with its mission to support the country.

Good morning and welcome.

QUESTIONER: Good morning. Virginie Montet with Agency France Press. I had a question about the currency talks with China, between China and the U.S. in parallel with their trade talks. Right now we kind of know that China is not said to be exchange manipulator. The U.S. Treasury said it and even the IMF one year ago. What kind of progress would be useful beyond the promise not to engage in any competitive devaluation that’s been done in the last G-20s declaration. So what kind of progress would be useful in terms of transparency, reporting regularly the intervention on the exchange markets? And has the IMF been consulted in any way for the stocks given that you accepted the Renminbi three years ago?

MR. RICE: I don't have a lot more to say beyond, as you've reference, what we've said on currency issues related to China and any agreement or understanding that may be reached in the context of the broader trade discussions between China and the U.S. You know, I think we need to wait and see what the details on that would be before we would make a comment.

You know, I think our view is that China has, in recent years, come a very long way in terms of transparency and openness around communication related to foreign exchange and currency issues. And, you know, I think in even more recent times under the governorship of the central bank, Mr. Yi Gang, I think we've actually seen even further progress on those transparency and communication issues related to central bank activity in China and foreign exchange and currency issues.

And, of course, that's something that we would continue to encourage in that direction. As we would in virtually every country.

Good morning and welcome.

QUESTIONER: I am Maoling Xiong from Xinhua News Agency. My question is about government work report just delivered earlier this week. So China has set its new goal of economic growth to be between 6 and 6.5 percent and last year it was around 6.5 percent. So it's like lower than last year. I was wondering what is the Fund's comment on the new goal.

And also the Work report says that China will introduce massive tax and fee cuts in order to boost consumption and reduce corporate burden.

So I was wondering whether you could share your thoughts on what the economic -- expected economic -- impact on China's growth of that measures? Thanks

MR. RICE: Thank you. Broadly, on the government of China's work report which you referenced, we think that the focus on maintaining macro-economic and financial sector stability while controlling leverage is welcome. So that’s a sort of broad comment on the work report.

On the resetting of the growth target, which you mentioned, the IMF's view is that this would allow policy makers in China to focus on improving the quality of growth, rather than maintaining a high quantity of growth, per se. And certainly to help avoid creating too much debt.

As you may know, this more modulated growth rate in China is something that the IMF has actually been advocating and encouraging and working with the Chinese authorities in that direction for some time. So, again, as China shifts the economic model from less export orientation to more domestic consumption, again, the quality quantity issue, we think this is a -- this is an appropriate step.

On the tax issues that you referred to, we also see the cuts in the relatively high Social Security contribution rate as a positive step because that high Social Security contribution rate penalizes employment. So we think that the cuts there are positive.

And the reduction in the dispersion of VAT rates is also, we think, a positive step because it reduces inefficiencies and opportunities for tax avoidance. So again, we welcome the intention to support consumption which remains relatively low in China.

Just to balance what I just said on the, these fiscal issues, we think that these reforms should be accompanied by other measures to ensure that overall fiscal policy again supports consumption. So that would include making the tax system more progressive, expanding health, pensions, education spending and transferring more money to poorer households.

Of course it's also important to ensure that the overall fiscal deficit remains sustainable. And we will be looking at all of this in great detail and with communication around the Article IV consultation which is upcoming in the summer, early in the summer this year.

Good morning, sir.

QUESTIONER: Good morning, Gerry. Michail Ignatiou from Open TV and Ethnos Newspaper. According to the polls, the Greek government is considering the early repayment of the IMF loans. Can you tell us if -- have you been informed about this? And if this happened, Gerry, will it affect the you think the post program monitoring of Greece?

MR. RICE: You know, clearly that’s a decision for the Greek government, Michael. I mean, the early repayment of part of the IMF loan. It's a decision that would be made by Greece in consultation with its other creditors, where appropriate. And, you know, it would -- that would clearly reduce the interest rate overall for Greece. But it would not affect the post program monitoring process which is ongoing.

So just a reminder, and Michael knows this, but others may not follow Greece so closely, the IMF does not have a financial program with Greece. We are in what we call here our post program monitoring period which is what Michael was referring to. And we have actually completed that process and we expect the report to be published next week. So there will be full transparency on that. That should be, we are expecting that early next week actually.

QUESTIONER: So they didn’t inform you yet?

MR. RICE: I'm not aware.

QUESTIONER: You don’t know.

MR. RICE: I'm not aware of any communication on that.

QUESTIONER: Okay. I have another question if it's possible?

QUESTIONER: According to all analysts, the non-performing loans are the elephant in the room for the Greek economy. Do you believe that the measures that have been taken till now are sufficient to address this issue?

MR. RICE: So I mentioned that we would be publishing the report, Michael, next week. So I'll leave the, you know, the assessment on that to the material on Tuesday. And that will reflect of course, the views of our executive directors and our boards. So I don’t want to anticipate that.

But I have said here before and maybe in answer to a question you’ve raised, that the need to strengthen banks' balance sheets in Greece to improve the provision of credit to the economy is an important issue. It was mentioned in the staff concluding statement to that first post program monitoring mission which had staff’s preliminary views. So, you know, you’ve seen that.

So we have touched on this issue. It is important. And there would be more coming in the context of that post program monitoring report that will come early next week. Okay.

I'm going to, I'll take a few questions online. I'll try to get through them quickly. And then I'll come back if there is anything in the room. So, you know, these questions are useful because they allow other journalists to weigh in who can't be with us. And also to touch on country, a broader range of country issues so, you know, that's why I think they are important.

There is question on Haiti coming from Matthew Lee in New York. I'll take a couple of Matthew's questions as usual. And Matthew is asking about any updates I can give him on Haiti. And I can say that an IMF team is in Port Au-Prince as we speak to complete the Article IV consultation. But more than that, to discuss a possible IMF financial arrangement with Haiti. And we will hear more on that very, very soon.

But I can say that what the mission will propose is highly concessional, on the most concessional terms we can offer for Haiti and it will highlight social protection. It will highlight the fight against corruption while deferring any fuel price adjustments until the government is able to guarantee that the most vulnerable will be protected from any negative effects.

Those of you who follow Haiti, you know, will understand the context of what I have just said. And again, the mission will communicate its findings at the end of the visit.

Matthew's asking another question about Ghana. Again, the status of Ghana, the Ghanaian government has made statements about signing off from the IMF program and about no need to return to the IMF.

So I can confirm that our board is expected to consider the combined 7th and 8th reviews of our program with Ghana by the end of this month and that would indeed successfully conclude the program. So maybe just to emphasize that point we think it is a successful conclusion to the program and we have been working hand in hand with the authorities on that. We will continue to engage with Ghana through our regular Article IV and provide capacity development technical assistance as is needed. And again, we would have a post-program monitoring arrangement with Ghana, as is normal.

There's a question coming from Sayed Samarel in Egypt that is asking again, status of the Egypt program and when will the IMF actually issue the documents related to the 4th review, where I can say that the Egyptian authorities have agreed to publish the staff report and the related document. So, we expect them to be posted very soon.

There is a question from Petra News Agency in Jordan from Fajed Hijazeen asking about the recent London conference, Donor's Conference in London which has been much in the news of late. And asking about the IMF position and its support for Jordan and how we see the situation. Madame Lagarde, herself attended that conference in London last Thursday. So, that kind of gives an indication of the importance that we attach to it and to Jordan.

So, over the last several years, Jordan has undertaken a significant effort to maintain economic stability, including policy reforms against a very difficult external environment. And despite internal socio-economic tensions, Jordan continues to face considerable challenges. Growth is low, unemployment's high, particularly for youth and women. Its public deficit and debt levels are very high. The refugee crisis continues to place extraordinary strain on Jordan's economy. That's a very important dimension of the challenges that Jordan is facing. So, the bottom line is, Jordan needs additional financial support. Particularly, and again, this is a point that we've been emphasizing, in the form of budgetary grants to help the Jordanian authorities reform the economy and make Jordan more resilient and self-reliant. So, we're pushing strongly in that direction. Madame Lagarde pushed strongly in that direction at the London conference last week. We expect discussions on this issue of increased external support and the right kind of external support for Jordan to continue in the coming days. And hopefully, to achieve the level of financial support that we think, we at the IMF think Jordan badly needs and deserves.

Is there anything, Andrew, I'll let you take --

QUESTIONER: Yeah, Gerry --

MR. RICE: The last one.

QUESTIONER: -- if I may, could you walk us through what the process would be without getting too deep in the weeds, what the process would be for recognizing Venezuela. Is it ultimately a Board decision, does a certain threshold of support have to be reached? I mean, I saw that the IDB recently named Ricardo Hausmann of Harvard as Venezuela's representative. So, I'm just curious what the process is here.

MR. RICE: So, again, I just want to state upfront that we're guided by our membership on this issue and the membership -- the views of the membership are reflected through the views of the Executive Board. So, the process would be, first of all, a meeting of the Board to discuss the issue and management -- our management would make a recommendation to the Board and discuss that with them.

In the past, it's -- the decision has rested on a majority of the voting par of the members of the Board, so that could well be what the discussion would revolve around in this case. On the other hand, I do want to mention that sometimes the public recognition, the official recognition of a government in a country is just so clear on the basis of public and official statements that have been made by governments, but it's not always the case that you need to go to the -- through the process of having a precise vote around that decision because, again, if it's just so obvious that the official recognition is there via official public statements.

So, I want to go back to what I said earlier. That's not where we are at the moment with Venezuela. The situation continues to be fluid and I think that you've asked about the IMF, Andrew. If you look at other international organizations, they also -- many have not made this determination as yet, including the United Nations. So, we are guided in this situation by our membership and that process is still unfolding and we're watching it very closely.

I am going to leave it there for today. I want to thank you for coming in the room and to the colleagues who joined us online and look forward to seeing you in two weeks' time, by which time our Spring Meetings will be fast approaching. I'll tell you more about that in two weeks. And again, happy International Women's Day to everyone.

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