Transcript of IMF Press Briefing

May 6, 2021


MR. RICE: And welcome to this press briefing on behalf of the International Monetary Fund. I’m Gerry Rice, of the Communication Department. As usual, our briefing this morning will be embargoed until 10:30 a.m., that’s Washington time, and let me just begin by wishing everyone well. I hope you’re managing to stay safe and healthy in these challenging times. Let me begin with a few announcements, then go to your questions. Great to see so many colleagues online today, and great to see them in person on camera, too. So, we’ll get there just shortly.

So, a couple of announcements, mostly relating to the Managing Director, Kristalina Georgieva, who will be traveling to Europe for a few bilateral meetings and events that may be of interest to many of you. From May 12-13, the Managing Director will be in London for bilateral meetings with the UK Authorities. That’s to prepare for the G7 Summit and the 2021 UN Climate Change Conference, so-called COP26, later in the year, in Glasgow, in Scotland. On May 14th, the Managing Director will then be in Rome, and there she will be taking part in a seminar organized by the Pontifical Academy of Sciences, on dreaming of a better restart, post-crisis. And she’ll be meeting bilaterally with the Italian Authorities and that’s with a view to preparing for the G20 Meeting in July. Then on May 17-18, the Managing Director will travel to Paris to participate in the International Conference to Support the Sudanese Transition and the Summit on the financing of African economies, both of these events hosted by President Macron. And she will also participate in the Paris Peace Forum Spring Meeting, including joining a panel with the President of the African Development Bank, the Chief Executive of the French Development Agency, and a number of others, focusing on recovery in Africa. So, a strong African theme there in the Managing Director’s activities over the next period, immediate period.

And continuing on the theme of Africa, we will be commemorating the 60th anniversary of the establishment of the IMF’s Africa Department, here at the Fund. That’s going to be on this coming Monday, May 10th, and we’re delighted to host President Ouattara, of Cote d’Ivoire, for a conversation with Kristalina Georgieva to talk about the challenges facing Africa and the work that’s been done over the years, the work that needs to be done in the post-pandemic situation. And you can all join that event. It will be webcast live. That’s going to be at 9:00 on Monday. And with that, thank you very much.

I’m going to turn to your questions, and let me begin with Lalit Jha, of Press Trust India. Lalit, I see you there. Good morning.

QUESTIONER: Good morning. Thank you for doing this. I wanted to ask you about the current situation in India. You know, India is facing one of the worst outbreaks of COVID-19. What do you think -- is this going to have an impact on India’s economy? Is there also a sense that India might head towards a second consecutive year of contraction? What is the IMF doing to help India to fight this battle on the economy front, save lives, reduce the level of unemployment, and prevent large-scale -- the large, massive scale of people falling below the poverty line? I am so -- I’m sorry there are a lot of tough questions.

MR. RICE: Thank you, Lalit. Nice to see you. Look, the first thing I’d like to say on India is that our sympathy and condolences to the Indian people on the human tragedy that is taking place there, as a result of the COVID-19 crisis. We continue to engage closely with the Indian Authorities. We stand ready to strengthen that engagement, that dialogue, and to scale up our technical collaboration. The human tragedy, indeed, is a stark reminder that the pandemic continues to be a grave threat, probably.

And on that -- on that point, at the IMF, we are redoubling our efforts to foster global collaboration. We welcome the most recent announcements by several countries to provide immediate support to India, and just to reiterate that we believe that a multilateral response is critical to overcome the pandemic, in India and globally. Again, the human dimensions of this tragedy are uppermost in our minds. On the economic aspects, Lalit, which you also asked about, our April World Economic Outlook envisaged an economic recovery in India, with growth projected at around 12.5 percent in fiscal years ’21 and ’22. And, of course, the recent upsurge in COVID-19 cases implies that downside risks, which we had also spoken of at that time, are materializing. So, we are following these developments very closely, and we will be revisiting that growth forecast in our World Economic Outlook update, which will be forthcoming in July, so not too far off in the distance, but we will be looking at that again.

For India, it will be critical to continue with a coordinated policy response to fight the virus, including through accelerating the vaccination campaign and providing fiscal resources to the health sector and social support to the most vulnerable, and those are the immediate policy priorities. And again, we welcome the recent announcements by several countries to provide immediate support and help to India.

Let me go to Matthew Lee, in New York. I see you there.


MR. RICE: Matthew, and some good news in recent days coming from New York. Nice to see you.

QUESTIONER: Great. No, no, that’s true. Although, these questions are a little more on the crisis side. I wanted to know -- I wanted to ask you first about Colombia. As I’m sure you know, there’s been a lot of unrest there, and it does seem financially related, in the sense of tax increases on basic staples. So, I’m wondering, I saw the announcement that the IMF had said that Colombia is, you know, going to have a flexible credit line. What’s the relationship between that announcement and the tax and things? And what do you make of developments since? Just on Myanmar, I wanted to know if you’ve had any contacts with them, since our last briefing, and if you can just give a summary of the -- with the existing authorities, the de facto authorities, the wannabe authorities. What’s happening between the IMF and Myanmar?

MR. RICE: Okay, Matthew, thanks for those questions. On Colombia, you know, like others, we’ve been following the situation very closely and saddened by the reports of the violence there and the loss of life. We do welcome President Duque’s pledge to build a broader consensus around policies to help preserve important social spending and pandemic support, while securing the resilience of the economy. And we will wait until that consultative process is completed and concrete proposals emerge to assess those. We do remain committed to continue working with Colombia to overcome the pandemic and to help implement policies that promote inclusive growth, while protecting the most vulnerable and safeguarding public finances.

You asked about the flexible credit line, Matthew. I can confirm that Colombia continues to qualify for the FCL, for the flexible credit line, because of its very strong economic fundamentals, institutional policy frameworks, and a track record of economic performance and policy implementation. In fact, we recently completed the review of Colombia’s FCL arrangement, which allows it to retain access to those resources, those FCL resources, through April ’22, okay? As you know, the FCL was designed to help insure against external risks and to make resources available, when they are needed. That’s on Colombia.

You asked also about Myanmar. Not a great deal of news since the last time we spoke about Myanmar. We, of course, remain very concerned about escalating tensions and their impact on the people of Myanmar. In addition to the tragic loss of life witnessed thus far, the fallout from the recent coup will have a dramatic impact on livelihoods, which could last well into the future. As I said, the last time I think we spoke about it, Matthew, the Fund is not currently engaging with the regime and effective control in Myanmar, and we will follow the guidance of our membership regarding engagement going forward. So, as I say, not much more to report there.

QUESTIONER: On Uganda, but I can definitely wait. I think others have questions.

MR. RICE: Well, why don't you just go ahead, Matthew, and then I'll --

QUESTIONER: It would be at, just right at your wheelhouse. It's reported that Uganda is looking for a $900 million three-year package from the IMF related to spending driven by COVID-19 response. Is that, can you confirm it? Where does that stand? And thanks a lot.

MR. RICE: Yep. So, what I'd say on Uganda, it's -- we've had fairly intensive engagement there via our surveillance and engagement on economic policy issues prior to the COVID crisis. And then as some of you may recall, the authorities requested and indeed obtained emergency financial assistance from the IMF last year. That was for about $491 million, again, to help fight the crisis—part of our overall response to the crisis. Some 86 countries, as some of you may know, have received assistance from the IMF over the past year, Uganda was one of them.

So, on your question, the authorities have requested a three-year financial arrangement. Again, to help continue to fight against the pandemic and build forward to more inclusive growth. I can tell you discussions have progressed well with details yet to be ironed out on the potential magnitude of that financial assistance and on the authority's reform program that would be the complement to any financial arrangement from the IMF.

So, the exact final amount will depend on Uganda's estimated balance of payments needs and the strength of policies the authorities commit to implement. And, of course, as is always the case, the ultimate approval of the arrangement rests with our Executive Board. So, that's not sui generis, that's not unique to Uganda. That's the case as many of you know in all our arrangements. Our Board has the final approval.

Let me go to -- thank you, Matthew. Let me go to, let's see, Eric Martin of Bloomberg. Hi, Eric. Good to see you.

QUESTIONER: Hi Gerry. Good to see you. Can you hear me?

MR. RICE: Yes, sir.

QUESTIONER: Good. I wanted to ask you on a few fronts. One is relating to Chad and whether on the G20, what type of (inaudible) talks to restructure the external debt of Chad have continued since the death of President Déby, and what is the next step in those negotiations. I also wanted to ask you about Pakistan and the request for a restructuring of that program for Pakistan. And finally, about El Salvador, where those negotiations that the leaders of El Salvador requested, where that stands and whether that is at all affected by the current situation, or the recent situation over the weekend with the replacement of the Supreme Court Ministers and the Attorney General in El Salvador. Whether that (inaudible) rule of law questions there that would affect the IMF negotiations with El Salvador. Thank you.

MR. RICE: Okay. Thanks, Eric. Look on Chad first, which you asked about. The nomination of the civilian prime minister and the recent appointment of the civilian government provides a framework for resuming the work on the medium-term program, IMF program, that had been agreed earlier this year, in January, to be supported potentially by IMF resources after receipt of the necessary financing assurances. And the new authorities just this week, earlier this week, re-confirmed the commitments made by the previous government under the January 27 staff level agreement, which I mentioned. So, that again, provides the framework for the resumption of IMF engagement work with Chad.

As you indicated, Chad is also a country that is working towards alleviation of its debt under the G20 framework, including the common framework that has been discussed. I don't have further detail on the status of that right now, but, of course, we are all looking for further progress on that in the period ahead.

On Pakistan, I can just give you maybe a bit of a status report that we just about a month ago had completed the pending reviews of the arrangement, the financing arrangement we have with Pakistan and the decision by our Board at that time allowed for an immediate disbursement of about $500 million, which brought total disbursements to Pakistan of about $2 billion. So, that was just done very recently. So that's some weeks ago, about a month ago. We stand ready to support Pakistan, to navigate the difficult situation that it's facing with the COVID crisis, while helping to ensure the objective of debt sustainability with strong and sustainable growth.

So, as such, we look forward to continued discussions with the Pakistan authorities, when the time comes for the sixth review. As I mentioned, those other reviews have been completed just about a month ago.

On El Salvador, which you also asked about. Clearly the pandemic has severely impacted the Salvadorian economy. The timely containment, fiscal and financial measures undertaken, helped fight the pandemic and provided much needed support to households, to people, as well as to businesses and companies. Nevertheless, the 2020 real GDP contracted by about 8 percent on the back of the lockdown that took place and the plunge in external demand. So, that kind of takes us to, to where we are. So, at the request of the El Salvador authorities, an IMF team is currently holding a virtual mission with the El Salvador authorities. And the mission is conducting the 2021 Article IV Consultation, the annual consultation that we have with our member countries, and discussing the possibility of an economic reform program that could be supported by an IMF financial arrangement. And we will communicate more on that at the end of the virtual mission.

These discussions follow a close dialogue with the authorities since the disbursement of a rapid financial instrument about a year ago and the request for program negotiation. So again, under the emergency finance that we had provided to many countries, El Salvador received about $389 million last year from the IMF. Now, we are in discussions on the Article IV and possibility of a further financial arrangement with the IMF. That's where we are on El Salvador.

QUESTIONER: Is there a timeline for completion of that?

MR. RICE: I do not have a timeline for you, Eric. Once we get more information, we'll keep you updated, but I don't have a timeline on those discussions.

QUESTIONER: Thank you.

MR. RICE: I'm seeing actually a number of questions on Tunisia. I'm wondering if -- I see one coming from Tunisia and I see one coming in from Delphine. Delphine, I don't know if you can join us on camera or I'll take your question online.

QUESTIONER: (inaudible).

MR. RICE: Good, thanks, Delphine. I'll take that. And I want to recognize Taoufik Habaieb, who is with Leaders (groupe de presse), in Tunisia--a similar set of questions to Delphine's, asking about the Tunisian delegation, was it in D.C. this week, and can you update?

So I can confirm that the Fund staff met with the Tunisian authorities here in Washington earlier this week, and they shared with us indeed their economic reform program. And our technical discussions currently focus on understanding the details of their plans for that economic reform program.

I do not have a timeline, Delphine, on those discussions going forward, just to say that they are taking place and that of course we stand ready to support Tunisia and the Tunisian people to cope with the impact of the crisis and move forward to an inclusive, job-rich recovery and restore sustainable finances. So those discussions are underway as of this week. I'm confirming that, but I don't have a timeline in terms of coming to a conclusion. We will keep you updated as we go along.

Let me turn to David Lawder of Reuters. Hi, David.

QUESTIONER: Hey, Gerry, thanks for taking the questions. It's been a couple of weeks here. I do have a quick follow up on Tunisia, and then a follow up on the India‑U.S. question. So, if I can just give them to you all at once here.

So, on Tunisia, as you know, we have reported that the authorities there have proposed increased sweeping reforms including eliminating all food subsidies. I'm wondering if you, if the IMF sort of views what they have put on the table as positive developments, and also if you can confirm the amount that the country is seeking, about $4 billion?

So that's Tunisia. On India, if you could ‑‑ to follow up on Lynn's question, what sort of spillovers does the IMF see from India, particularly, if the situation worsens, threats to other countries like Bangladesh or Sri Lanka?

And then, as for the region, what do we see in terms of global growth? Could this be something that sort of takes down some of the more optimistic forecasts we had in the springtime?

And then, on the U.S. side, can you talk a little bit about the Biden Administration's plans to support the IP, intellectual property, vaccine waiver at the WTO, you know, it's said to be significantly narrower than what South Africa and India proposed?

How concerned are you that this will get bogged down in negotiating with WTO and sort of be maybe too late to have a major impact on its prices? Also if you could, well, just talk about the U.S. inflation situation right now.

There is also some concern this week: the Treasury Secretary, talked about the possibility of the interest rate going up, you know, there are all kinds of anecdotal reports of bottlenecks in the economy, prices going sky high. How concerned is the IMF about those kinds of shortages and shortages worldwide?

MR. RICE: Okay. Thank you, David. Look, let me try and take them in order. On Tunisia, I really don't have much to add beyond what I said. I don't have details on the discussions that just took place in recent days. And I do not have a number for you on the, you know, what the financing might be should the financing arrangement go forward. So I don't really have much to add beyond that engagement is taking place, is happening, and discussions are ongoing, and stay tuned on that.

On India, again, we're all watching what is happening in India with concern. And I think really what the economic impact will be will really of course depend on the path of the pandemic and how long this serious situation goes on for.

So I gave some indication of, you know, we see the downside risks that we have spoken of at the time of the last WEO (World Economic Outlook) emerging. And, you know, we'll have more to say on that, as we upgrade the forecast and the economic assessment going forward.

On the spillovers point, David, I mean I think you are right that there will be spillovers ‑‑ that, again, contingent on how deep and how long the severity of this crisis continues. India is a country that's important to, not just neighboring countries of India, but to the global economy.

So there would be, you know, some impact there in terms of our overall assessment, not just of India and the region, but the global economy. But I don't have any specifics on that at this point. Again, the situation is unfolding, we're assessing it, and we'll have more to say at the time of the WEO update that's coming up in July.

On the U.S. and the outlook inflation supply site bottlenecks, and so on, I would refer you, David, to Gita Gopinath, our Chief Economist, Economic Counselor, gave an interview yesterday, or at least she was in a panel discussion, and she went into some detail on how we saw those issues. So I would refer you to her expertise on that, and it's ‑‑ I think it's publicly ‑‑ well, I know it's publicly available.

In summary, you know, while we do see some ‑‑ on inflation, while we do see some transitory pickup inflation, we do not see it likely that this would translate into a persistent overshooting of the Fed’s target rate, which is average inflation of about two percent. And Fed officials ‑‑ that's the U.S. Federal Reserve ‑‑ have emphasized that they have sufficient tools to control inflationary shocks and these include, of course, forward guidance, as well as actual monetary policy action.

And we have said that given the diverging recoveries on the global economy at the moment, which was the focus of our economic assessment at the Spring meetings just a few weeks ago, given these diverging recoveries, prudent policies in emerging and developing economies and careful communication by major central banks are critical to minimize harmful financial spillovers and to support vital capital flows, especially to middle income countries.

But, again, David, I would refer you to what Gita said yesterday, she spoke about inflation. She also gave her view on the supply side bottlenecks. So I'm going to refer you to that. I see our Argentine colleagues on the call.

QUESTIONER: Can you address the issue of the vaccine waiver? That was one of the questions.

MR. RICE: Oh, yeah, sorry about that, David. (Laughter) I did miss that. Let me take that indeed.

So it's my understanding the WTO members are debating this whole issue right now, you know, the lifting of intellectual property rights and so on, the waiver to which you referred. So I don't want to comment on their deliberations.

What we have said is that the pandemic is not over anywhere until it is over everywhere. And to end it everywhere, we need much stronger international collaboration and we need an equitable distribution of vaccines. And, you know, we've laid out, the Managing Director has spoken, and a number of other senior IMF officials have spoken about this additional financing to secure doses, timely reallocation of excess vaccines from surplus to deficit countries, addressing logistical issues and other measures to help vaccine delivery to poorer countries. And, of course, vaccine production capacity itself. And, you know, we've said advanced countries need to do more to help countries that cannot pay for vaccines or do not have the capacity to distribute them because, again, it's in everybody's interest.

And as you know, David, we've been trying to help low-income countries with emergency financing and we are committed to do more. So that would be my comment on vaccines.

Let me turn to colleagues from Argentina. I see Liliana there. I see Raphael there. Hi, Liliana, why don't you go ahead.

QUESTIONER: Yes, thank you. The first question will be if Kristalina Georgieva will hold a meeting in Rome with the President Alberto Fernandez who is going to be in Rome for the same meeting. Is it possible? And the second question: [The government promoted an initiative in Congress that Special Drawing Rights can only be used for social causes.] My question is, is this possible? Can each country decide what use to give to the SDRs? Thank you.

MR. RICE: Thanks, Liliana. Raphael, I want to offer you the floor.

QUESTIONER: Hi, Gerry, good morning.

MR. RICE: Hey, Raphael.

QUESTIONER: Thank you. There have been reports in the Argentine press about difficulties for Minister Guzman to actually carry out his economic plan. I was wondering how important do you think is Minister Guzman's negotiations with the IMF on (inaudible) part of the government. How would that impact negotiations? Thanks.

MR. RICE: Okay thanks to you both for those questions. Let me just back up a bit. IMF staff continue to engage. We are working constructively with the Argentine authorities over the possibility of an IMF supportive program to help Argentina work on the challenges its facing, including the pandemic. And that remains our focus, helping Argentina, helping the Argentine people.

And what we've been talking about in this engagement is a carefully balanced set of policies to foster stability, to protect the most vulnerable people and set the basis for sustainable inclusive private sector-led growth going forward. The authorities are continuing to work, laying out their policies. Those discussions continue, as I said, constructively. I don't have an update on the conclusion point or the timing of a new program but the process continues to progress in that way.

On your specific questions, we are very much engaged in those discussions with Minister Guzman. He is our partner in those discussions and, you know, I wouldn’t speculate further. We're fully engaged with him at this point.

And on Liliana's questions, I am not aware of any scheduled meeting in Rome, Liliana. You asked about that, between the Managing Director and President Fernandez. And on SDRs, you know, again maybe just backing up for a second. Just recently, the IMF membership expressed its support for a new SDR special drawing right allocation to our membership of $650 billion.

The Managing Director, Kristalina Georgieva, will be bringing that to our executive board next month, June, sometime next month for approval. Again, our board approval being a sine qua non. And then it will go forward to our board of governors for their approval in the coming months. So that's the process on the SDRs. So I don't want to get ahead of ourselves. That allocation has not yet been approved by the board, so we're still working on that. Very hopeful, of course, but that has not been approved.

Should it be approved, okay, should it be approved, Argentina like all other IMF members would be receiving an allocation in accordance to its quota share at the IMF. I would not speculate on what the Argentine authorities might deem appropriate in terms of the use of the SDRs. Again, I think we should not get ahead of ourselves. Let's wait for the approval of the allocation and then we can talk about, you know, SDR uses - of course which is very much the prerogative of the countries, the members concerned.

I'm going to take the last question today on Ukraine. It's coming from Ukrinform online. Ukrinform is the national news agency of Ukraine and asking this question, what is the intensity of the IMF-Ukraine negotiation in the standby program. How do you assess the prospects for Ukraine to receive the next disbursement.

So in brief on Ukraine, we've talked about Ukraine a number of times here before. Our board has approved, as of last year - actually June 2020, a $5 billion Stand-By Arrangement, financial arrangement, from the IMF to Ukraine, amongst other things to help the country with its COVID response. But beyond that, to support an important set of reforms to strengthen recovery and growth.

And earlier this year, we held virtual discussions with Ukrainian authorities on progress in implementing those policies and reforms. The discussions were productive but in terms of the status, more progress is needed to support completion of the first review under the program.

As I said, the program is aimed to help the country in the current crisis but also to focus on safeguarding medium term fiscal sustainability, preserving central bank independence and a flexible exchange rate and enhancing financial stability. An important dimension was aimed at tackling corruption, strengthening governance. So all of those measures we've talked about here before. And discussions continue, as I said, and we will keep you posted as to further progress.

I want to thank everyone for joining us today online. Great to see you all. And I want to thank those who've asked questions online. We try to take as many as we could. And great to see so many colleagues again joining us from far parts, including Tunisia today. And stay safe and stay well and I'll see you in a couple of weeks' time. Thanks a lot everybody, bye, bye.

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