Transcript of IMF Press Briefing

December 12, 2019


MR. RICE: Good morning everyone and welcome to this press briefing on behalf of the IMF. I'm Gerry Rice of the Communications Department.

Let me make a few announcements and then I'll turn to questions. This will be our last briefing of 2019, so we look forward to seeing you in the New Year.

A couple of announcements. One, next Tuesday, December 17, you will be able to find the newly updated global debt database on the IMF's website. I mention that because it's something that many of you are interested in.

We are releasing today another IMF staff paper on recent economic developments and prospects for low-income developing countries. Again, we consider this an important paper. The low-income developing countries represent 59 countries of the IMF's membership. It is about 1.5 billion people. So, their challenges and prospects are important, and we are publishing that paper today. You will find that on the website as well, or we can point you to it as needed.

In terms of the Managing Director, Kristalina Georgieva's travel, in the next 10 days or so she will be traveling to Europe for visits in Italy, France, Switzerland. This will include a meeting of the G7 labor ministers. It will include a meeting with the WTO director general in Geneva. We can get you more information on that trip should you need it. The Manager Director will be delivering a speech at the Peterson Institute here in Washington on January 17. And that will be on new research that IMF staff have developed on the financial services sector and its impact on income inequality. The following week, Kristalina Georgieva will be traveling to Davos representing the IMF. There will be lots going on there. We'll get you more detail as we get closer to that.

But amongst other things, alongside Gita Gopinath, our Economic Counselor, the Managing Director will be releasing our WEO, our World Economic Outlook, update in Davos. We've done that for the last couple of years and we will be doing that again in 2020.

And with that, let me come to your questions in the room.

QUESTION: On Ukraine, what is the significance of the recent announcement of the staff-level agreement and what are the risks before the Board meeting to approve it? I understand it will be early next year.

MR. RICE: Well, it's an important staff-level agreement. The backdrop is that just last weekend the Managing Director had a telephone call with the President Zelensky and we issued a press statement related to that. She commended the President for impressive progress that he and the Ukrainian government have made in the past few months in advancing reforms and continuing with solid economic policies.

During the call the Managing Director noted that IMF staff had reached an agreement with Ukrainian authorities on policies to underpin a new three year arrangement under the IMF's extended fund facility in the amount of about $5.5 billion. I would want to stress this is a staff-level agreement, meaning it's subject to discussion and approval by our Executive Board. That's an important point. In their conversation, the Managing Director and President Zelensky agreed that Ukraine's economic success depends importantly on strengthening the rule of law, enhancing the integrity of the judiciary, and reducing the role of vested interests in the economy, that it's paramount to safeguarding the gains made in cleaning up the banking system and to recovering the large cost to Ukrainian taxpayers from bank resolutions.

So, again, an important step, the staff-level agreement, on a new program. The goals of that program are clear, to maintain macroeconomic stability, lift the economy to a higher level of more sustainable, more inclusive growth. Its effectiveness will be dependent on the implementation of the set of prior actions. If you look at the statement we made after the telephone call between the Managing Director and the President you will see those prior actions mentioned there. So contingent on the set of prior actions. And, as I said, all of this contingent on approval by our Executive Board in the period ahead.

QUESTION: Do you know when the Executive Board will look at it?

MR. RICE: I do not have a date for you on that. Again, it will be contingent on the implementation of the prior actions and then there would be the program. Contingent on those being completed would be taken forward to the Board.

QUESTION: Minister Martín Guzmán yesterday said that he has been here in Washington meeting some IMF officials some weeks or some days ago. Could you give me some details on that? When exactly did he come and if he came by himself or with somebody else and what was the context of those meetings, what did they talk about?

And, Mr. Guzmán said yesterday that Argentina has to grow first in order to be able to pay the debt later. Do you agree with that concept? What do you think about?

MR. RICE: Thank you. Look, I'm imaging there might be a few questions on Argentina today. If there are, let me take them

QUESTION: Minister Guzmán said yesterday that they are already working on a new program with the IMF. Also he characterized the past program as a failed program. Is the IMF currently working on a new program? And could it be like that haircut part of that program? Could you support that kind of proposal from the new government in Buenos Aires?

QUESTION: The minister said that those meetings were held like two weeks before. Those meetings were held with the knowledge of the administration or not?

And then the Minister said yesterday that he would like to stop paying interest and maybe capital for two years. Do you think that's possible? What is the IMF going to say about that?

MR. RICE: Lots of questions there, so let me try and set them in a bit of context and let me try and answer them.

There's been a fair amount of interaction in recent days between the Argentine authorities and the IMF. Most recently, as I'm sure you have seen, the Managing Director, Kristalina Georgieva, congratulated President Fernández just a few days ago on his inauguration. Prior to that, I can tell you that the Managing Director had a very constructive conversation with then-President Elect Fernández. That was a few weeks ago. Other interactions have included Alejandro Werner. The Director of our Western Hemisphere Department met with Guillermo Nielsen. And even more recently, the Managing Director and members of the IMF Argentina team had further exchanges on the broad objectives of the new administration's policy program with Finance Minister Guzmán.

So, a number of interactions, exchanges, discussions in recent days. During all of these conversations, the Managing Director stressed that we share the President's objectives of pursuing policies that reduce poverty and foster sustainable growth. And we reiterated the Fund's readiness to engage with President Fernández's administration.

As the Managing Director has said recently in public, given the increase in poverty levels in Argentina, we fully support the Fernández administration's plans to bolster social protection measures. And, again, we stand ready to continue discussions with the new economic team in Argentina to better understand their plans and discuss ways in which the Fund can best help if the new administration so desires.

So, as I said, and I think as the Minister mentioned also, there has been a dialogue with the Argentine authorities and what I'd say, it's been very focused on the future, a better future for Argentina, a better future for the Argentine people. We share that objective. The Argentine authorities have talked about the dialogue being constructive -- is the word that has been used -- and we again agree on that point and again, we stand ready for further exchanges.

There were a number of questions about the past program. And on that, what I'd say is that we certainly recognize and have done for some time, that Argentina is facing challenging circumstances and that the economic contraction has had important social effects.

And again, as Kristalina Georgieva has been emphasizing, given the increase in poverty in Argentina, we fully support the Fernández administrations plans to bolster the social dimension.

On specific questions about when these discussions took place, I don't have the detail on the tick tock of the specific timeline of when different discussions happened, but I've tried to characterize over the last several weeks, there has been a fairly active period of meetings and exchanges. And again, we stand ready to continue those discussions.

In terms of questions about debt and fiscal targets and all of those things, I think it's important that we don’t get ahead of ourselves. We are at a very early stage. The new government is just taking up its position.

And as I said earlier, the important thing is to hear from the Argentine authorities on their priorities, on their plans. And we have to respect what will be their areas of emphasis. We certainly respect that at the IMF, so we want to hear about that first before we would start to talk about what the details might be on fiscal or any other policy area, so there is a clear sequencing there. That applies to any discussions that there might be on the debt front.

But if it's helpful to you, on debt, the way it gets handled by the IMF and this is true for all countries, not just for Argentina. So, the sequencing is that the decision on debt or a restructuring of debt is entirely the purview of the member country. Again, this is true not just in the case of Argentina, but across all countries. It's for the country itself to make decisions in that area in consultation with their legal and financial advisors.

In the context of what we call IMF exceptional access programs, our role is to assess whether the debt is sustainable with high probability.

We are not again at that stage because we are just at the very beginning of discussions. And in order to conduct any kind of debt sustainability analysis, we would first need informant on the authority's policy plans as well as the macroeconomic outlook consistent with those plans. We would need to see that. So, I say all that just to try and be helpful, to try and explain what the sequencing is, not just in again, Argentina, but across all countries.

So again, I would say not to get ahead of ourselves, there have been various useful exchanges, interactions. There has been a period of that. It is being characterized by the Argentine authorities as constructive. We agree with that.

And, we should wait to hear with more specificity what the government's plans and priorities are and then, the discussions will continue based on that and contingent on the desires of the Argentine authorities.

QUESTIONER: President Donald Trump just tweeted that we are very close to a trade deal with China. And the IMF has also stated that the tariffs have generated a very negative impact on global economic development. My first question is what does IMF think of a trade deal between U.S. and China at the current movement and what's the influence on the global economy?

And how does the IMF evaluate China's handling of the whole trade talk with the United States and the tariffs.

QUESTIONER: The China's positions, China's handling of trade talks with the United States. Thank you very much.

MR. RICE: We have to wait and see if there actually is an agreement between the U.S. and China on the so called phase one trade front. We, of course, are encouraging of progress. We are hopeful that there will be progress. We have been urging resolution and we would welcome any steps to deescalate the trade tensions and roll back recent trade measures and particularly if they can provide a comprehensive and lasting agreement.

Kristalina Georgieva has been using the phrase we need to move from trade truce to trade peace to something that's not just interim, but to move to something that's lasting. So, in as much as any agreement would be a step in that direction, we of course think that would be a positive step and we would welcome it.

We have, on your question about impact, we have stated in some detail what we project to be the impact thus far of the tariffs announced and implemented. And we have put the figure somewhere around 0.8 percent in the impact on global growth in 2020. It’s a number of about $700 billion.

And at the time of our annual meetings, we went into some detail on what's behind that. There are at least two major aspects. There's the direct economic impact of the tariffs and we've quantified that and then there is the impact which is even greater of uncertainty. Policy uncertainty and the impact that has on trade and on the global economy and we actually have disaggregated that too in terms of our numbers.

So all in all, just to say again, we hope that there will be progress. There is a bit of a milestone coming up this weekend as you know. October the 15th, where some planned tariffs may take effect or not take effect. We have to wait and see. But again, we are urging resolution and hoping for progress.

QUESTIONER: And then just a quick follow up on the IMF's evaluation on China's handling the issue?

MR. RICE: I really wouldn't go past what I've said, which is we are urging all sides, both sides if, you want to talk about China and the U.S. to come to a resolution as quickly as possible. We think that's good for China, good for the U.S. and good for the global economy.

QUESTIONER: Just a follow up on Argentina.

You talk about the past program with Argentina. Does it mean that the program is closed and we are like discussing a new one or what is the status of the program that was signed with the previous government?

MR. RICE: The status of the program is that it remains, but of course the discussion of how it might be adapted or changed in the future is going to be contingent on discussions that we might have with the Argentine government and dependent on their objectives and their desires.

So we are in a period where I would characterize it as waiting to see what the plans and the objectives of the new government are and then we would be deciding on the next steps and whether that would be modifications to the program or other adjustments.

Again, I think we have to wait for the priorities and the policy plans of the new government.

QUESTIONER: The minister yesterday already said very concrete and specific things but now you're saying you need to hear more. He already is putting out publically what the goals are and if there have been such an active exchange of information, it's fair to assume that the IMF already knows what the objectives of this new government is.

So, I'm surprised that you don’t, you're saying you would need to hear more but we've already heard enough for. I think would be -- would like to hear some more specific answer.

And, I would like to know what is the assessment of the largest loan in the Fund’s history at this point. Is the Fund satisfied or not and why?

MR. RICE: The way I'd characterize it is that the discussions that have taken place, the exchanges that have taken place, they - number one they took place before the new government came into office which has just happened over the last several days. We have to respect the new government coming into office and coming in more detail with their plans and their priorities.

You're right that and I said we have had meetings and discussions, but the way I'd characterize it is those were around sort of broad contours of the incoming administrations objectives and goals, broad goals which I have actually indicated we share.

But again, I don't think we should get ahead of ourselves and I think we have to respect the new government coming into office and give them some time to come forward with the more detailed, the more specific aspects of their policy and programs. The Minister and, I think, the President have again, used the word constructive for the discussions so far. We would agree with that and again, I think we stand ready to continue those discussions going forward. I think it is important to make the distinction between discussions on broad policy contours, broad objectives and the more detailed specifics that we'll get to in the future.

QUESTIONER: And how about the assessment of the largest program in the Fund’s history at this point?

MR. RICE: I've said before that we recognize that Argentina faces many difficult challenges. We have tried, with the program, to support Argentina as best we can. And we will continue to try and support Argentina and the people of Argentina as best we can and contingent on the priorities of the new government.

One other important point that we share is that we're focused on the future. And how it can be a better future for Argentina and a better future for the Argentine people. And we totally share that objective.

QUESTIONER: The IMF staff and the Argentines - here in Washington or in Buenos Aires when could they meet formally to start this discussion and these details?

MR. RICE: I don't have anything on dates or planned meetings. But of course, we will keep you apprised should such meetings or such be arranged.

QUESTIONER: Does the board have any plans to meet by year end to discuss anything related to Argentina or could you rule that out?

MR. RICE: I am not aware of any plans for a board meeting on Argentina. But for you and others who follow the Fund, you know it works. We often brief the Board on country and policy issues. It can be done in short order. They can be long planned so that's the way we work. But again, I'm not trying for you to read between the lines here. I'm just being completely open. I'm not aware of any plans for a board meeting before the end of the year.

I've got three or four online questions that I'm going to take.

There is a question on Equatorial Guinea. Reporters is asking that civil society has criticized the IMF for planning to loan money to Equatorial Guinea despite corruption and lack of transparency. What is the IMF's response to that?

Just broadly, those of you who follow the Fund, you know that we are asked, we are requested to work with our member countries. We have 189 member countries and we try to work with those countries regardless of the difficult circumstances.

As part of our efforts with our member countries, we do pay great attention, it's important to us, to issues of governance and corruption and transparency. That comes in various aspects of our programs. Disclosure of documents, compliance with international transparency standards, combating money laundering and financing of terrorism, various elements.

And in the case of Equatorial Guinea, the governance and anti-corruption elements of the possible program, again, are very important. We very much appreciate the concerns in this area expressed by civil society and others. And the program which is to be discussed with our executive board, that has not happened yet. The governance and the anti-corruption elements, that will be a very important part of that.

For their part, the government of Equatorial Guinea has committed to adopt and implement a national strategy to improve governance and fight corruption. And again, that strategy will be a key plank of the program, of any program that would go forward between the IMF and Equatorial Guinea. And again, that program has not yet been discussed and approved by our Executive Board and we expect that to happen. And governance and corruption will be very important elements of that.

There's a question on Lebanon. Prime Minister Hariri has asked the IMF for the possibility of providing technical assistance to Lebanon. Can you confirm?

On Lebanon, I'd say that as you may have seen the international support group led by France and the UN met on Wednesday of this week to consider measures to help Lebanon. We support the position of the international support group for the urgent formation of a new government to immediately implement a comprehensive and credible plan to restore economic stability. And on the IMF part, we are open to supporting the authorities with technical advice as desired by Lebanon.

There is a question on Somalia. Will the IMF board meet to discuss Somalia's debt relief and when is the board date? We are working with our members to secure the financial resources necessary to clear the arrears to the IMF currently owed by Somalia. And importantly to cover the costs of debt relief.

And I can tell you that the board will meet on this issue on December 18th, to agree on how to finance the Fund's contribution to debt relief for Somalia. This has been a priority issue for us in terms of trying to help Somalia. And this board meeting next week on this issue is an important step forward.

There is a question about Pakistan. Where do we stand now with Pakistan, what's the status of the IMF program, is Pakistan doing the necessary reforms and so on.

The IMF has a $6 billion program to support IMF's economic reforms. We had a mission there in November and the communication around that with a preliminary assessment of where we think Pakistan stands. Which is that the program is on track and we reached a staff-level agreement on what we call the first review. You can read about that in more detail on our website.

We had the preliminary assessment from staff after that mission to Pakistan and the board will meet to discuss that first review on Thursday, December 19th. What that indicates is that all prior actions and performance criteria under the program with Pakistan have been met. And that the financing assurances needed for the program to go forward are in place. There's a question on the European Central Bank, which met this morning and had a press conference and were asked for the IMF response to the ECB's decision today. To which I would say that the IMF staff firmly supports maintaining strong monetary accommodation until the EBC's medium term inflation objective is met. So, I think characterizes as firmly supportive of the ECB decision today.

There's a question that has just come in. Could you give us a sense of the way the global economy is doing during the last quarter of 2019?

I don’t really have an update on that beyond what we've been saying recently. And the Managing Director has been out in public, including over the last few days talking about the global economy. We have characterized it as a synchronized slowdown. Countries representing 90 percent of global GDP in a slowdown, we talked about that quite a bit at the annual meetings. The global economy is growing, but it's growing more slowly. And we will have an update on that with fresh numbers and a fresh forecast in about a months' time, when we release the WEO update.

I want to thank you very much for your courtesy, your patience, and your good questions. And this will be the last press briefing of 2019 and I thank you for all your work and working with us in 2019 and really look forward to working with you all in 2020. So, happy New Year when it comes.

IMF Communications Department


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