Transcript of IMF Briefing
IMF News, February 25, 2021
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- Published: February 25, 2021
Announcements and context
- Briefing date: February 25, 2021.
- Embargo: briefing embargoed until 10:30 a.m. (Washington time).
- Upcoming events:
- February 26: Managing Director Kristalina Georgieva to participate in the G20 finance ministers and central bank governors meeting (virtually), under Italy’s G20 presidency.
- March 2nd and 3rd: African fiscal forum organized in cooperation with the European Commission; live streamed; focus on fiscal policies for recovery in sub‑Saharan Africa and elsewhere.
- Monday (following briefing): new Finance and Development magazine issue focused on digital technology, including digital currencies and digital connectivity gaps.
- IMF resources noted as available: "trillion dollars" available to the IMF to support the membership (description of scale; no specific dollar figure provided beyond the phrase).
Argentina — status of engagements and reviews
- Objective of discussions with Argentine authorities:
- Build a program to address economic and pandemic-related challenges.
- Foster stability, growth, protect the most vulnerable.
- Set the basis for more inclusive, private sector-led durable growth.
- Mission timing and visits:
- No precise date for next formal IMF staff mission at the time of briefing.
- Argentine Minister Guzman and his team indicated they would be traveling to Washington in mid‑March.
- Ex‑post evaluation of 2018 program:
- IMF staff is working on an ex‑post evaluation of the 2018 program (staff evaluation distinct from the Independent Evaluation Office (IEO) function).
- Such ex‑post evaluations are done for all programs undertaken under exceptional access criteria; mandated by the Board.
- The evaluation will consider context and program performance and aim to draw lessons to improve future support.
- Status: no specific timeline provided for publication, but it will be brought to the Board for discussion and will be published (full transparency).
- Letter from Argentine senators:
- IMF confirmed receipt of a copy of the letter addressed to the Director of the Independent Evaluation Office (IEO).
- The IEO is an independent entity reporting directly to the Board; detailed follow-up should be addressed to Charles Collins, Director of the IEO.
Sudan — exchange rate unification and implications
- Recent development: Sudan concluded review talks with the IMF on a staff‑monitored program and took policy actions including unifying its exchange rate.
- Rationale and expected benefits of exchange rate unification:
- Raise fiscal revenue; remove economic distortions.
- Boost donor support, social spending, and investment.
- Provide incentives for financial transactions to occur in the formal financial sector.
- Increase the value of donor support by exchanging donor funds at the market rate rather than parallel rates.
- Transitional risks and mitigation:
- Unification could lead to a temporary uptick in inflation.
- World Bank and donor support, including the Sudan Family Support program, expected to help mitigate adjustment impacts and facilitate reform implementation.
Cambodia — IMF engagement and technical assistance
- IMF role:
- Provides technical assistance on statistics, budget analysis, and National Bank of Cambodia topics such as supervision and monitoring real estate.
- Continued technical assistance expected through the year.
- Policy response noted:
- Cambodian authorities responded early to ease lending conditions and facilitate loan restructuring in line with IMF advice.
- Overall stance:
- Recognition that the economy and people have been hit hard by the crisis; IMF stands ready to support with technical assistance and macroeconomic analysis.
Zambia — mission status
- Ongoing IMF staff mission:
- Mission running since February 11 and expected to run through March 3.
- IMF will issue a press statement at the conclusion of the mission.
- No further details provided while mission is in process.
Digital currencies and crypto assets
- IMF perspective:
- Digital currencies include crypto assets, stablecoins, and Central Bank digital currencies (CBDCs).
- Potential benefits: reduce cost of doing business, improve productivity, increase financial inclusion, enhance market integration, strengthen payment system resilience and efficiency, lower costs, faster settlements, and greater competition.
- Potential risks: undermine bank funding, threaten data privacy and cyber security, create macro‑financial issues (currency substitution, financial stability, capital account pressures), and pose legal and operational challenges.
- Policy approach recommended:
- Forward‑looking supervision and regulation to contain risks.
- Manage macro‑financial implications.
- IMF engaged in analysis, surveillance, capacity development, and collaboration with other international bodies (e.g., BIS) on cross‑border payments and related issues.
- Specific note: Reserve Bank of India (RBI) reviewing CBDC models; IMF looks forward to RBI findings.
Special Drawing Rights (SDRs) — allocation discussion and recycling
- Background:
- Managing Director previously raised the possibility of a general allocation of SDRs; discussed by membership and in G20 context last year but insufficient consensus then.
- Item remained under discussion; mentioned at the most recent G7 Finance Ministers meeting and expected to be discussed by the G20.
- Managing Director described an SDR allocation as an option under consideration that could add a substantial direct liquidity boost to countries without adding to debt burdens and expand capacity of bilateral donors to provide new concessional support, including for health spending.
- Recent developments:
- U.S. Treasury Secretary Janet Yellen sent a letter to the G20 supporting an SDR allocation; IMF characterized the letter as very helpful and likely to be part of G20 discussion.
- Recycling and existing SDR usage:
- Existing SDRs have been used and transferred by advanced economies to poorer countries.
- Approximate amount cited as already used: around 16 billion (figure noted as closer to around 16 billion actually used so far).
- Larger numbers discussed in the briefing (for example, a referenced larger number of "22 billion" by a questioner) were not confirmed by IMF spokesperson; IMF noted the larger pool of resources potentially available via the Poverty Reduction and Growth Trust (PRGT) through recycling of SDRs.
- Implementation and transparency:
- Discussion underway about parameters for transparency and accountability in how SDRs are exchanged and used; further discussion expected at G20.
- No specific commitments from IMF or Treasury on donations to PRGT or CCRT were reported at the briefing; IMF noted discussions with the new U.S. administration could surface soon but no specific details at the time.
Ukraine — recent mission and outstanding issues
- Recent IMF mission completed work without reaching a staff‑level agreement.
- Areas emphasized in discussions:
- Strengthening governance of the National Bank of Ukraine; bank supervision and resolution.
- Fiscal deficit and fiscal risks.
- Strengthening judicial integrity and anti‑corruption measures.
- Status: discussions described as productive but some issues remain outstanding; no timeline provided for progress.
Other country notes and procedural points
- Mozambique: no additional updates beyond previous statements; IMF offered to follow up with press after briefing.
- Independent Evaluation Office (IEO):
- Receives external correspondence (e.g., letters from senators) and conducts independent evaluations reporting directly to the IMF Board.
- Communications and follow‑up:
- IMF to provide mission conclusions and press statements at the conclusion of staff missions (example: Zambia mission).
Italicized source: Transcript of IMF Briefing, February 25, 2021, IMF Communications Department.