Transcript of IMF Press Briefing

March 21, 2019

MR. RICE: Good morning, everyone, and welcome to this press 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.

We are about to head into our Spring Meetings here at the IMF and I'll say a few words about that at the top. So let me give you just a few announcements on that and on a few other things.

Next week the Managing Director, Christine Lagarde, will be making opening remarks at an event at the Peterson Institute. So that's going to be next Monday and that's going to be on the issue of international tax. The Peterson Institute is holding a seminar on that issue and Madam Lagarde will be opening that up. So that's this coming Monday.

Later in that same week, next week, Madam Lagarde will be in France for the Banque de France Symposium, and that will be to mark the 20th anniversary of the euro. Madam Lagarde will be making a keynote speech at that event in the latter part of next week. That's the 28th. And on that same day, she will be visiting the University Paris-Dauphine to speak with students at the school there.

And then we head into what I mentioned, the Spring Meetings run up, which many of you are familiar with. But let me tell you that on April 2 at the U.S. Chamber of Commerce here in Washington, Madam Lagarde will give what we call our curtain raiser speech for the Spring Meetings. So that's the speech where the Managing Director lays out what we see as the main issues and the main messages for the Spring Meetings. So that's going to be at the Chamber of Commerce. You're all very welcome. It's going to be at 9:30 in the morning, Tuesday, April 2. Okay. That's Madam Lagarde and the curtain raiser speech.

The day after that, April 3, we will be releasing, again what we call the Analytical Chapters, the issue focused chapters of the World Economic Outlook. And I can tell you, we've got some particularly interesting issues this year, including on trade, which I know many of you are following, and on this issue of the concentration of corporate power in some sectors.

The day after that, on April the 4th, we will have, again, those Analytical Chapters, those issue based chapters, for the Global Financial Stability Report, which will include a chapter on housing prices, which again I know is an issue of interest to many of you. And the Analytical Chapter of the Fiscal Monitor, which will be on the fiscal costs of corruption. So, as I said, I think quite an interesting set of analytical chapters. We will try to make these as accessible to you as possible, you know, briefing materials, webinars, access to the authors, et cetera.

Then on April 9th, so that will be a week from this coming Tuesday, the release of the World Economic Outlook itself. And that will be presented by our Economic Counselor and Director of Research, Gita Gopinath. This will be Gita's first full blown WEO, first Spring Meetings, as our Economic Counselor. That's going to be on April 9.

The day after that we will have the release of the Global Financial Stability Report with Tobias Adrian, who is our Financial Counselor, and with Vitor Gaspar, who is head of our Fiscal Affairs Department, and he will be leading the release of the Fiscal Monitor.

All that information will be online. I know it's a lot to follow, but that will all be online available to you, including media opportunities around all of those things. They're all going to be very public. And you can register, of course, for the meetings on our website too.

Just a couple of other items. David Lipton, our First Deputy Managing Director, will be making a speech in Lisbon at the Bank of Portugal. IMF Conference there on March 25th. David will be talking about the reform in the Euro Area.

Our Deputy Managing Director, Tao Zhang, will be in China from March 26th to 31th. He will be representing the Fund at the Boao Forum and participating in various panels and going on to Chengdu to participate in the meeting of the Inter-American Development Bank, which is having its Annual Meeting in Chengdu this year. And again we can get you more details on that.

Look, that's it for the announcements, but thank you for your patience. I do just want to say one other thing at the top of this meeting because we've all been watching with sadness the effect of Cyclone Idai, and I just want to reiterate what Christine Lagarde said yesterday on that issue. She said our solidarity is with the people of Mozambique, Zimbabwe, and Malawi in the aftermath of Cyclone Idai. Our condolences go to the families and friends of those affected by this terrible disaster and an IMF staff team is now in Maputo to evaluate options for possible IMF support. I know many of us have been watching that situation, so I thought I'd just say that at the top before coming to your questions in the room.

Good morning.

QUESTIONER: Thank you for doing this. I wanted to ask you about India. What is IMF's assessment of India's economic strength, especially because the Modi government has completed five years, India is going to the election mode. How does the IMF sees how his government has performed the five years? In terms of economy.

MR. RICE: Sure. We'll be saying more about India and in more detail, of course, in this WEO, this World Economic Outlook that I just mentioned that will be published on April 9. But what I can say today is that India has of course been one of the world's fastest growing large economies of late, with growth averaging about 7 percent over the past 5 years. So important reforms have been implemented and we feel more reforms are needed going forward to sustain this high growth, including to harness the demographic dividend opportunity, which India has.

So, again, the WEO will go into more details, as I mentioned, but amongst the policy priorities, we would include: accelerate the cleanup of banks and corporate balance sheets, continue fiscal consolidation, both at center and state levels, and, you know, broadly, maintain the reform momentum in terms of structural reforms in factor markets, labor, land reforms, and further enhancing the business climate to achieve faster and more inclusive growth.

And, again, Gita will have more to say on that in a couple of weeks’ time.

Alfonso, good morning.

MR. FERNANDEZ: Good morning. Alfonso Fernandez from EFE. On Venezuela, do you have any update on the situation of the possible recognition? Last week the IDB recognized Ricardo Hausmann as the Governor sent by Juan Guaido, Interim President, and Carlos Vecchio, the ambassador of Guaido here in Washington, has said that there's been some conversations with the IMF on this possible recognition. Can you confirm that?

MR. RICE: Let me -- are there other questions on Venezuela? Let me take them and.

QUESTIONER: Yes, Gerry, can you confirm that the Board will be taking a vote either today or this week on recognizing the Guido government as the true leadership of Venezuela. What considerations are there still to be made in that area?

MR. RICE: Okay.

QUESTIONER: Yes. Following up on Alfonso's questions.

MR. RICE: Sure, good morning.

QUESTIONER: It is my understanding that the finance minister of Argentina, Nicolas Dujovne talked about this issue with Madame Lagarde and David Lipton when they met in Washington.

MR. RICE: Okay.

QUESTIONER: I was hoping you could confirm that.

MR. RICE: Venezuela? Okay. Then let me give you as much as I can in terms of an update.

You know, maybe just steeping back a bit and then I will come to your specific questions. So we are all aware of course of the very difficult situation in Venezuela that has taken an enormous economic and humanitarian toll on the population there. We have been closely monitoring the situation and as Managing Director Christine Lagarde has said, we stand ready to help once the question of official recognition of the government there has been clarified.

Now, for that clarification as I have said here before, the IMF we rely on the guidance of the international community represented by our membership of 189 countries and so any prospective engagement with Venezuela would be predicated on that guidance. At this point, there is not yet clarity on that guidance.

So in terms of next steps, we continue to monitor the situation very closely. The member countries of course are in the process of establishing their position. We are listening carefully. And as I said we will be guided by them on this issue.

There was a question about Board meetings and I have no schedule for a board meeting or a date for a board meeting on this issue. I think that is what you were asking about, David. I also am not aware of any consultations, Alfonso, that you refer to. And, you know, Madame Lagarde of course met with the finance minister and, you know, discussed many things. I am not privy to everything that was discussed there but I'm not, again I'm not aware of any discussion specifically around Venezuela. We did issue a short statement as you know after the meeting but that was not part of it.

So are we on Venezuela? Delphine, then David I'll give you, I'm going to take the last one on Venezuela from you and then I'm going to move on.

QUESTIONER: Just, I mean, one of the conundrums here is that President Maduro is still the president, he is still in power, he has the support of the military behind him. You know, do we need to sort of see a major shift in those -- in that status that either the military supports with Guido or, you know, there is some diminishment of his control of the country.

MR. RICE: Yes.

QUESTIONER: And the IMF will --

MR. RICE: I don't really have much to say on that, that issue, David. And again, we are guided by our membership. We are guided by the international community. And views are still being formed and as I said, you know, we are listening to that and we are watching it carefully. And beyond that, I don’t really have much. So let me move on from Venezuela and, Delphine, you had something I think.

QUESTIONER: Good morning, Gerry.

MR. RICE: Good morning to you.

QUESTIONER: The Fed yesterday announced that they revised its forecast, growth forecast for 2019. It is the second time since December. Do you have any concern of about the U.S. economy and how do you see the U.S. economy this year?

MR. RICE: On the Fed move, given the range of global uncertainties facing the U.S. economy, we support the Fed's decision to be patient in determining future changes to the Federal funds rate.

The Federal Reserve's continued adherence to the principles of data dependence and clear communication, we believe will help to minimize any market disruptions and spill overs from its policy decisions.

On more broadly the U.S. economy, Delphine, we will have more, much more to say on that in the WEO, but what I can say today and as we have said before is that we believe the outlook for the U.S. economy is strong with historically low unemployment, high levels of consumer and business confidence and aided by the fiscal expansion that's underway.

There is more to come. And we will be updating our view on the U.S. economy and sharing that with you in a couple of weeks.

Anything else in the room? Delphine, you get to go again. Oh, sorry, Michael, I didn’t see you there. Delphine, do you mind? Can I -- we have this newcomer in our midst so I'm going to give him a question. Oh, what a gentleman.

QUESTIONER: Thank you. I have a question about Argentina. Do you have any specific date for a board meeting to approve the third review?

MR. RICE: I don't have a specific date for you, Delphine, but we expect it to be soon, in the next few weeks. So we are on a very standard timeline with Argentina because as you may have seen just the other day we issued the statement about the agreement on the staff level agreement with Argentina. And, you know, we made some comments around that in terms of where we see the Argentina program at the moment.

Other colleagues may have some questions on that. So, you know, the sequencing as I say is very standard. We have the staff level agreement and then of course the approval as always is contingent on discussion with our Executive Board. And again, we expect that in a couple of weeks and we will publish the full staff report with all the details at that point.

Are we on Argentina? Yes, lets -- can I prevail upon you, Michael? Thank you very much. We will stay on Argentina and then I'll come to Michael. Yes.


MR. RICE: Good morning.

QUESTIONER: Francisco Seminario.

MR. RICE: Francisco, good morning.

QUESTIONER: On that statement you mentioned, there was a line that said that achieving the zero deficit would require further restraint in government spending. Could you give used a more clear idea of what that means?

MR. RICE: Yes. The -- I just want to say, to your question in context, which was that Roberto Cardarelli who is the mission chief in the statement we issued commended the authorities’ policy efforts and strong determination to address the macroeconomic imbalances and advance the authorities' stabilization plan.

This statement said the high fiscal and external deficits are in the midst of significant correction and there are good prospects for gradual recovery. We strongly support the authorities' efforts including to mitigate the social impact for the stabilization policies so just for those who haven’t seen the statement the other day, that was included.

The statement also indicated that the authorities have met the 2018 primary deficit target which we think demonstrates their resolve to eliminate the vulnerability associated with fiscal imbalance.

And indeed, coming to your question, we said that achieving the zero primary deficit this year will require a tight control of primary spending and will place Argentina's debt to GDP on a decisive downward path.

So just to be clear and to answer your question, this is not a new requirement or a new target. It’s in line with authorities’ stated objected of achieving a balanced primary deficit in 2019. So, I think that’s important. And I think it’s important, also, to highlight that it will be critical that the high-impact, social spending programs are preserved during the course of the year and beyond. And, again, you may have seen that measures are included to support that objective.

Still on Argentina.

QUESTIONER: Yes. Hi, Gerry. Rafael Mathus from La Nacion newspaper. And so, a follow up on that question. Are you saying that in the view of the staff of the IMF, the Argentine government will not have to further reduce our public spending? I was hoping if you could clarify that.

And another question, if I may.

MR. RICE: Okay.

QUESTIONER: After the latest announcements made by both, you know, the Argentine government and the IMF, there have been some opposition figures in some economies related to the opposition in Argentina that have criticized the IMF saying that you’re not actually aiding or helping Argentina, but you’re actually bailing Mauricio Macri’s government and helping him to get re-elected. I was hoping to get a reaction from you on that criticism.

MR. RICE: You know, I feel, you know, it’s important to clarify that last point, in particular, Rafael. Look, the IMF supports its member countries. We support the people -- all of the country. And, you know, we do that regardless of political complexion. And, you know, you just have to look across the number of countries that we’re supporting to see its various political complexions.

And I’ve said before here and even recently, that the IMF stands ready to work with any Argentine government to help Argentina move onto the path of sustainable growth, high employment, and benefits for all of the Argentine people. So, I just want to be very, very clear on that.

The resources that we have made available in the programs, you know, still on your point, are indeed to support the government’s budget at the request of the authorities. And, again, this is at the core of what the IMF does. And we hope it will indeed enable the authorities to cover their financing needs in the coming months. But again, that’s a major objective of the program.

On your first question, so, the objective is clear and has been clear. It’s the government’s objective to achieve the zero primary deficit this year. This will require tight control of primary spending, as I said earlier.

But again, this is not new. This is something that’s been in the program from the beginning. And our view is that the Argentine authorities are committed to that, and that it will be implemented in the period ahead.

Delfina. Oops. Michael. Michael. Oh, no, I’ll take your question. You’ve been patient.

QUESTIONER: So, my first question is about Greece, and also, I have one quick on Turkey because there are a lot of reports that the cracks in Turkey’s economy keep getting larger. Do you have something to tell us about this, about the Turkish economy?

MR. RICE: I don’t have a great deal to tell you on Turkey, Michael, except that we are, IMF staff are, now assessing, you know, the possible impact of the recently announced tax changes. More broadly speaking, Turkey’s economy is slowing sharply, and underlying vulnerabilities remain. The authorities are urged to pursue a comprehensive set of policies to credibly and consistently address the key underlying imbalances. Again, we’ll have more to say in a couple of weeks.

QUESTIONER: Let’s go to Greece. In your latest assessment on the state of Greek economy, you repeatedly referred to the weak payment discipline of the Greek people. And you argue that this is reflected in the very high, nonperforming loan ratios to the banks and elevated levels of private and public-sector debt in areas.

Do you believe that this is a culture thing or a legacy of the crisis?

MR. RICE: I’m sorry, I didn’t catch your word. It says something thing.

QUESTIONER: Do you believe that this is the culture of the Greek people or a legacy of the economy crisis?

MR. RICE: You know, you do know, we went into great detail on our current assessment of where Greece is, Michael, because we released that report the other day, which has all that detail.

I mean, broadly, what I would say in response to your question, is that thanks to the reforms that have been implemented up to this point, Greece today is, I think, on a much better path in terms of sustainability of the economy and growth. And the credit for that goes to the Greek authorities and the Greek people who, I think, have shown great perseverance and patience in moving those reforms forward.

We also talked in the report about what else we thought needed to be done going forward. And, you know, I think we would be looking to support the authorities and the Greek people in moving that agenda forward as much as we can. And given that, you know, we don’t have a program, a financing program, with Greece anymore, but in terms of our analysis and research and capacity development, we will be looking to support them as much as we can.

So, I would want to commend the Greek people, rather, on the efforts that they have made over the past years to deal with the depth of the crisis that they faced.

QUESTIONER: I have another question. I asked you before about these, but I want to come back. And as I understand, the Greek authorities are ready for an early repayment of the IMF loans. And I want to ask you again, are you in favor of an early repayment of these loans? And help me on this, is it true that these will require a special permission from the ESM in order to accrue? Or the Greek authorities can do it with you?

MR. RICE: You know, it’s a decision, and I’ve said this before, Michael, so it’s not new. It’s a decision for the Greek authorities to make. And the way I would put it is to make that decision in consultation with other official creditors where appropriate, is how I would put it.

And again, it’s for the Greek authorities to decide. It would reduce the interest rate, so, you know, it could have that affect. But again, it’s a decision for Greece.

I am going to take a few questions online. There was one on Mozambique. And I think I’ve covered that at the top of the meeting. So, I won’t say it again.

There’s a question on Haiti. Given the political developments there, can we give an update on the IMF’s position?

Well, we’re monitoring that, of course, we did issue a staff-level agreement on a potential program for Haiti a short time ago. So, obviously, what is happening there has an effect.

We look forward to the formation of a new government and the introduction of a budget. And until we have that, we will not be able to bring forward that recently negotiated staff-level agreement for a program that I mentioned. We would not be able to bring that forward to the Board until there’s a bit more clarity on the new government and the introduction of a budget.

So, we hope that the policy and political uncertainties can be resolved quickly, so that we can get back to that work helping Haiti and the people of Haiti to meet the considerable social and economic challenges that they face.

There is a question from the Editor-in-chief of il Boursa in Tunisia. That’s Omar el Oudi, who’s asking what’s the objective of the IMF’s mission and the impact of recent wage increase in Tunisia’s as economy. On that I’d say that indeed an IMF staff team will be in Tunisia next week. That will be the fifth review to discuss the fifth review with the authorities of Tunisia’s economic reform program, which is supported by the IMF. So, we will be communicating on that mission when it concludes as we normally do.

What I can say right now on Tunisia is that we believe Tunisia has made important progress in several fields and is experiencing a modest recovery, however, the economy remains vulnerable, deficits and debt are large, inflation is high, and foreign exchange reserves are low. We support the Tunisian government’s efforts to strengthen macroeconomic policies and reforms in support of job creation and growth and we hope that this will yield more positive results for the people of Tunisia and in this context, also important is providing social protection for the vulnerable and we see that as a priority.

So, in short, you know, we are looking to be a good partner to Tunisia, to support Tunisia, and we also are encouraging the international community to step up to help Tunisia more in its efforts.

Question on Pakistan online from the daily Jang Karachi and it’s from Tariq Saeedi who’s asking what’s the status of the IMF negotiations with Pakistan to which I can say we are closely engaged in those discussions. There have been a series of meetings, which we talked about here before, including Madame Lagarde having met with the Prime Minister of Pakistan fairly recently. So, those discussions are continuing and I believe that there will be a mission to Pakistan shortly, though I do not have the exact date on that [ CLARIFICATION – reference to a new IMF mission chief trip for introductory meetings with the authorities ]. Can you turn on your mic?

QUESTIONER: What’s the amount which IMF is looking at giving financial assistance to Pakistan?

MR. RICE: I don’t have a number in mind. That’s something that will be discussed in the context of the consultations with the authorities.

QUESTIONER: In start six months ago, do you have a timeline for it or is it going to continue?

MR. RICE: You know, all I can tell you is that the discussions have been ongoing at various levels even at those high levels that I just mentioned and as I said, we expect a mission to Pakistan shortly for further discussions, but I can’t put a date on when they would conclude or when we would be in a position to announce agreement. There’s a process, you know, staff visits, negotiating missions, and then we would come to it. So, thank you very much. David, I’m going to give you the last question.

QUESTIONER: It’s actually sort of three questions.

MR. RICE: Three, oh, that’s not fair.

QUESTIONER: One is very easy. One’s on Egypt. We’re waiting to see the staff report there, which has been delayed a bit.

MR. RICE: Yep.

QUESTIONER: Do you have a reason for that? When can we expect to see that? And then I got sort of two sort of on the U.S. China trade issue. One is at the last WEO update, I believe that there was an assumption that the 25% -- the tariffs would go up from 10% to 25% on the 200 billion dollars worth of goods, that’s been delayed now. Will this next WEO assume something different or assume that the tariffs don’t go up on those goods. And obviously there’s been, you know, a lot of consternation over Donald Trump’s trade policies, his use of tariffs here, but in the case of China, does the IMF recognize that, you know, perhaps there’s been some usefulness to this that it’s gotten the debate going, it’s gotten China to table even though that it’s sort of against what would be considered normal WTO trading rules.

MR. RICE: Okay, David. On Egypt, the staff report has been, you know, it’s gone through most of the clearance process. The Egyptian government supports its publication so I expect that soon. Okay. I don’t have a specific date, but there’s no problem with it. That should be coming very soon.

On U.S.-China, you know, again, the negotiations are obviously ongoing. We are reading about them every day so I hesitate to say much except, again, as I said at the top of the meeting, the WEO, the World Economic Outlook, will have a lot to say about this. I said there was an Analytical Chapter on trade. There are actually two Analytical Chapters of the World Economic Outlook are dealing with trade and one of them specifically on the issue of tariffs and so on. So, you’re going to get a lot more detail on that very shortly so I’m not going to try and get into it.

And on the broader issue of trade reform, I think, you know, we’ve said we think that there are areas where it is useful for the international community to look at how the framework for trade can be updated in a number of ways. We’ve pointed to issues of, you know, people being left behind as trade agreements are implemented over time. I think that’s an important issue. We’ve pointed to technology issues and the digitalization of the economy and how that needs to be more taken into account. We’ve pointed to other issues of intellectual property and so on and, you know, how these things can indeed benefit from -- our trade overall could indeed benefit from an update on these and other issues, but, as I said, we will have a lot more to say on that in a couple of weeks’ time.

I’m going to leave it there for today and thank you for coming and look forward to seeing you and many others in a couple of weeks’ time when we have the Spring meetings. My colleagues in media relations are ready to assist you in any way that we can, so thanks very much and see you shortly.

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