Transcript of IMF Press Briefing
IMF News, May 21, 2020
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- Published: May 21, 2020
IMF-wide response to the crisis
- Emergency financing requests received from 102 countries so far.
- Emergency financing approvals:
- Approximately 50 approved two weeks prior.
- 59 countries approved as of yesterday.
- Consideration of 29 more expected soon.
- Executive Board approved doubling of access to emergency financing through the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI), enabling emergency financing up to $100 billion.
- RCF and RFI features:
- Provide emergency assistance without the need for a full-fledged program.
- Do not entail program-based conditionality or reviews.
- Can be dispersed very quickly to support urgent needs (e.g., pay for doctors and nurses; protect the most vulnerable; safeguard livelihoods).
- Accountability and transparency measures:
- Reporting and specific commitments in Letters of Intent.
- Publishing of how expenditures are used.
- Independent audits of emergency financing encouraged.
- Managing Director’s exhortation to countries to “keep the receipts”.
Debt relief, DSSI, and related initiatives
- G20 Debt Service Suspension Initiative (DSSI):
- Call led by Kristalina Georgieva and World Bank President David Malpass for suspension of debt service payments by the poorest (IDA eligible) countries from official bilateral sources.
- Progress reported: over 20 countries have made formal requests for support under the initiative.
- Of the 73 countries that could be eligible, more than half have indicated interest to participate.
- Timeline currently set to end-2020; IMF stands ready to support extension if deemed appropriate by the G20.
- Private sector participation:
- IMF and World Bank called on private sector to participate on comparable terms to the official sector.
- Institute for International Finance (IIF) leading efforts on terms of reference with over 100 leading private sector firms.
- IMF position: private sector participation should be voluntary and on terms that help countries in need; broad participation would add substantial additional debt relief.
- IMF-specific relief measures:
- Catastrophe Containment and Relief Trust (CCRT): so far 27 countries have received immediate relief on their IMF payment obligations; the IMF is looking to triple that debt relief from the IMF (these are grants).
- Aim to triple concessional resources under the Poverty Reduction and Growth Trust (PRGT); PRGT resources given at zero interest rate.
IMF instruments, terms, and liquidity support
- Rapid Financing Instrument (RFI) and Rapid Credit Facility (RCF):
- Designed for rapid emergency support without traditional IMF conditionality.
- Access doubled to meet elevated demand.
- Short-term Liquidity Line introduced as part of pandemic response for eligible countries to help stability and confidence.
- Example RFI terms cited:
- Egypt’s RFI carries an interest rate of about one percent.
- Repayment over roughly three and a quarter to five-year period (significant grace period).
Fiscal and financial analysis, public communications
- IMF estimates of direct fiscal support globally: 9 trillion (noted as a new estimate, "a trillion more" than two weeks prior).
- Warnings and analysis published on risks of rising inequality due to the pandemic.
- Analytical publications and outreach:
- World Economic Outlook analytical chapters published; WEO update scheduled for June 24th.
- Global Financial Stability Report chapters being published; chapters and related interviews scheduled (Tobias Adrian interview on CNBC; GFSR update on June 25th).
- Managing Director published an op-ed in the Financial Times urging banks to consider retaining earnings to strengthen capital and liquidity.
- Deputy Managing Directors and staff participating in parliamentary and public dialogues (e.g., Tao Zhang participating in a parliamentary web dialogue).
Country-specific updates and IMF posture
- Argentina:
- Argentine authorities are in active negotiations with private bondholders to restructure sovereign debt; these negotiations are bilateral between Argentina and its creditors and do not involve the IMF directly.
- The IMF is encouraged by willingness of both sides to continue discussions.
- Argentine authorities indicated they would first like to conduct an Article IV consultation and then eventually seek a Fund-supported program; IMF has not started discussions on a Fund-supported program and has no timeline on next steps.
- Egypt:
- Government and Central Bank responded with a comprehensive package; authorities requested IMF assistance under the RFI and a more traditional standby arrangement (SBA).
- IMF Board approved emergency financial assistance under the RFI of about $2.8 billion.
- IMF and Egyptian authorities working on the SBA modalities; length, size, and policy package to be considered with IMF Executive Board.
- RFI terms: interest rate about one percent; repayment roughly three and a quarter to five-year period.
- Lebanon:
- Discussions between IMF staff and Lebanese authorities are constructive and ongoing (virtual).
- IMF views the government’s economic plan as a good starting point; it diagnoses issues and proposes comprehensive policies.
- South Africa:
- South Africa requested an RFI at the end of April; IMF in discussions with authorities.
- Access limit noted: 100 percent of quota for all countries; for South Africa this would amount to about $4.2 billion U.S. dollars (subject to Executive Board discussion and decision).
- Zambia:
- Zambian authorities have requested emergency assistance from international partners including the IMF; this is in addition to an earlier request for Fund support for an economic reform program.
- IMF view: Zambia’s public debt is on an unsustainable path under current policies (as indicated in last year’s Article IV consultation).
- Any IMF financial support, including emergency financing, is contingent on steps to restore debt sustainability.
- Zambian authorities have expressed intention to restructure debt and to hire debt advisors; IMF continues active discussions on pandemic response and medium-term macroeconomic objectives and policies.
- China:
- China took early, strong actions and is among the first to exit the crisis; China’s experience offers lessons (monetary and fiscal measures; electronic payment systems; ecommerce; linking small firms to markets).
- IMF welcomes China’s support for the CCRT and China’s pledge to support the G20 Debt Relief Initiative for low-income countries.
- Pakistan:
- Pakistan’s EFF remains in effect; discussions paused due to pandemic, with focus shifting to the RFI.
- IMF Executive Board approved $1.4 billion for Pakistan under the RFI (approved almost a month ago).
- Technical discussions continue with authorities on the EFF second review; IMF hopes to bring it to a positive conclusion as soon as possible.
- Ukraine:
- Passage of bank resolution bill in parliament welcomed; bill strengthens bank resolution process and safeguards for public resources; awaiting President’s signature.
- Virtual IMF staff mission discussing parameters of a new standby arrangement to provide balance of payments and budget support.
- Policy focus should shift to longer-term structural reforms once recovery is firmly in place.
- Belarus:
- IMF has received Belarus’s request for a disbursement under the RFI; IMF staff is in discussions with authorities and evaluating situation and policies.
- Spain:
- Spain severely affected: large service sector dominated by SMEs; strong reliance on tourism; widespread use of temporary employment.
- IMF commends forceful government measures (income and liquidity support); as lockdowns lift economic activity will start to resume.
- New forecasts to be published in the World Economic Outlook update on June 24th.
Key statistics and dates (as presented)
- Emergency financing requests: 102 countries.
- Emergency financing approved: 59 countries (as of yesterday).
- Consideration of 29 more countries expected soon.
- Emergency financing capacity via RCF/RFI up to $100 billion.
- CCRT immediate relief provided to 27 countries so far.
- DSSI potential eligible countries: 73 countries.
- Over 20 countries made formal requests to participate.
- More than half of the 73 eligible have indicated interest to participate.
- IMF estimate of direct fiscal support: 9 trillion (a trillion more than two weeks prior).
- Egypt RFI approved: about $2.8 billion.
- Pakistan RFI approved: $1.4 billion.
- South Africa possible RFI access: about $4.2 billion (100 percent of quota, subject to Board decision).
- RFI example terms: interest rate of about one percent; repayment roughly three and a quarter to five-year period.
- World Economic Outlook update scheduled: June 24th.
- Global Financial Stability Report update scheduled: June 25th.
Source: Transcript of IMF Press Briefing, May 21, 2020