Transcript of IMF Press Briefing
IMF News, June 4, 2020
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- Published: June 4, 2020
IMF financial capacity and emergency lending
- The IMF has "a trillion dollars in financial capacity" to help its membership.
- Deployed "about $250 billion" across all IMF lending facilities.
- Emergency financing: "66 countries" in roughly 10 weeks, "totaling about 23.5 billion in emergency financing."
- Actions taken:
- Doubled access to emergency facilities, enabling about "100 billion" in financing.
- Expect to triple concessional credit to low-income countries.
- Provided immediate debt relief to "27" of the poorest member countries.
- Established a new Short-Term Liquidity Line to strengthen the global financial safety net.
- Flexible Credit Lines:
- Approved for Chile ("24 billion") and Peru ("about 11 billion").
- Supplements Flexible Credit Lines already for Colombia and Mexico for a total of "$107 billion" supporting membership.
Emergency financing features, transparency, and governance
- Emergency financing is provided in upfront, outright disbursements, without traditional IMF conditionality.
- IMF commitment to address governance and corruption vulnerabilities remains: promote transparency and accountability and "ensure that those resources are used for their intended purpose."
- Policy recommendation emphasized: "spend what is needed, but to keep the receipts."
Debt Suspension Initiative (DSSI)
- DSSI eligibility and potential relief:
- "About 73 low-income countries" are eligible.
- Potentially "12 billion in debt relief" for those countries.
- Participation status: "So far 35 countries have made formal requests."
- G7 Finance Ministers' statement highlighted:
- Importance of private sector involvement.
- Importance of transparency.
- G7's continued strong support and commitment to the Debt Suspension Initiative.
- IMF and World Bank are supporting the initiative and urging further development partner participation.
Sub-Saharan Africa assistance
- Requests and disbursements:
- "Between 35 and 40 Sub-Saharan African countries" have requested emergency assistance (as of June 3).
- "27 countries so far have received financing" totaling "about USD10 billion" (already disbursed, without traditional conditionality).
- This "$10 billion" is "about 10 times more" than the region's historical average annual disbursement of "about 1 billion per year."
- Catastrophe Containment and Relief Trust (CCRT):
- "19 Sub-Saharan Africa countries" have received debt relief under the CCRT, part of "27 countries" overall, for a total of "204 million."
- Special Drawing Rights (SDRs): exploring deployment to support low-income and small economies in the region.
- Policy recommendation: urge other development partners to do more, complementing African countries' efforts.
Sudan: status and next steps
- Sudan has requested a Staff-Monitored Program to build a track record of policy implementation and support progress toward debt relief.
- An IMF negotiation mission (virtual) is expected to be completed "by around the fourth week of June."
- Clarification: Staff-Monitored Program is not financing at this stage; it aims to build a track record to help clear arrears and unlock financing from other sources.
Lebanon: discussions, diagnostics, and social impact
- Status: Discussions characterized as "constructive" and focused on understanding the government's reform plan and implications.
- Timeline: No firm timeline; discussions expected to be "rather lengthy" due to complexity.
- Technical assessment:
- IMF staff preliminary view: estimated losses in the government's reform plan "are broadly in the right order of magnitude, given the assumptions presented."
- Further technical work needed to refine estimates as reforms are implemented.
- Governance and corruption:
- Significant scope to "strengthen the transparency and accountability of economic policies, and public sector entities."
- Strengthening transparency is "critical" to restore confidence and reform loss-making sectors.
- Social protection stance:
- IMF discussions emphasize implementing reforms "in a way to ensure that the burden of adjustment does not fall on the poor and middle class."
Egypt: financing and forecasts
- Emergency financing:
- Executive Board approved emergency financing "2.7 billion" (Rapid Financing Instrument).
- Stand-By Arrangement (SBA):
- IMF mission (led by Uma Ramakrishnan) is in virtual discussions with authorities; modalities (length, size, reviews) will reflect crisis impact.
- If staff reaches agreement, request will be presented to the IMF Executive Board for final decision.
- Forecasts:
- IMF revised projections in the April World Economic Outlook.
- Next WEO Update scheduled for "June 24th."
India: outlook and policy assessment
- April WEO projections for India: growth "4.2 percent" (fiscal year 2019-2020) and "1.9 percent" (fiscal year 2020-2021), with FY2019-2020 matching national accounts outturn.
- IMF view: India's policy response characterized as "strong," including fiscal stimulus, monetary easing, liquidity and regulatory measures, and expanded support to vulnerable households.
- Policy recommendations:
- Swift implementation of response measures.
- Medium-term fiscal consolidation remains important.
- Further fiscal stimulus can be deployed to support the poor as needed.
- Possible scope for additional monetary easing to support growth and financial stability.
Pakistan: Extended Fund Facility review
- Emergency financing previously provided: "about $1.4 billion" approved by the Board in April (COVID-19 context).
- Technical discussions on the Extended Fund Facility continue; goal to conclude the second review of the program "as soon as possible."
- IMF working constructively with authorities to adapt the program to new conditions and ensure delivery on objectives.
Ukraine: Stand-By Arrangement and transparency
- Staff-level agreement reached on "May 21st" for an 18-month Stand-by Arrangement with requested access "of around $5 billion."
- President Zelensky spoke with Managing Director Kristalina Georgieva; prior actions for the IMF-supported program were completed.
- Executive Board discussion expected on "June 9th."
- IMF transparency policy: staff report and accompanying documents will be released in full soon after the Board meeting, assuming Board approval.
Spain: labor reform and minimum income scheme
- Labor market:
- Past labor reforms supported Spain's job-rich recovery and reduced unemployment.
- Going forward, labor market institutions should "continue to provide sufficient flexibility" while addressing structural weaknesses that "are intensifying inequality and that hinder labor productivity growth."
- Recommendations include lowering precariousness of work contracts and strengthening active labor market policies for reskilling (e.g., digitalization).
- Emphasized importance of dialogue with social partners for successful reforms.
- Minimum income scheme:
- The IMF welcomes resolute measures to "support people’s incomes" and notes the Targeted National Minimum Income Program as an "important contribution to enhance the social safety net."
- Recommendation: careful review to integrate different income support measures into a medium-term budgetary plan.
ECB action on Pandemic Emergency Purchase Program (PEPP)
- IMF staff "welcomes" the ECB’s decision to increase the size and duration of the PEPP by "an extra 600 billion Euros" and to maintain a strong accommodative stance until the medium-term inflation objective is met.
Argentina: debt restructuring discussions
- IMF stance:
- Will not speculate on creditors' negotiations.
- Encouraged by parties' willingness to continue to engage and find consensus.
- Hopeful an agreement can be reached to "restore debt sustainability with high probability" and pave the way for strong, inclusive growth.
- No update on timing for a potential new Fund-supported program; discussions on a new program have not started.
Ecuador: emergency support and successor program
- Emergency financing provided: "$643 million" in immediate support (virtually unconditional).
- Ecuador could request additional emergency financing under the Rapid Financing Instrument next month "anywhere around U.S. $250 million" if shocks persist.
- IMF working with authorities on a successor program to the previous Extended Fund Facility aimed at:
- Bolstering economic performance.
- Strengthening foundations of dollarization.
- Delivering broad-based benefits, especially for the most vulnerable.
- IMF engagement includes outreach to a broad spectrum of stakeholders (political parties, civil society, trade unions, academics, private sector) as standard practice in all countries.
Trade and export restrictions on medical supplies and food
- Reported use of export controls: "156 export controls on medical supplies and medicines" executed by "85 governments" since the beginning of the year (as reported).
- IMF position:
- Global economy benefits from "a more open, stable, transparent, rules-based trade system."
- Raised concerns over supply disruptions from export restrictions and actions that limit trade in key medical supplies and food.
- Calls on governments to refrain from imposing or intensifying export and other trade restrictions and to work to promptly remove those put in place since the start of the year, particularly for medical supplies, equipment, and food.
- Cited precedent: during the global financial crisis, global leaders committed to refrain for a year from new import, export, and investment restrictions, which helped recovery; IMF suggests a similarly bold step is needed today.
Events and upcoming publications
- Kristalina Georgieva to speak at the U.S. Chamber of Commerce (live-webcast).
- "June 24th" — Gita Gopinath, Economic Counsellor, will release the World Economic Outlook Update with a fresh forecast for the global economy.
- "June 25th" — Tobias Adrian, Financial Counsellor, will release the Global Financial Stability Report update.
Transcript of IMF Press Briefing — June 4, 2020. IMF Communications Department.