Transcript of IMF Press Briefing (June 24, 2021)
IMF News, June 24, 2021
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- Published: June 24, 2021
Announcements and upcoming public events
- Managing Director Kristalina Georgieva participation schedule:
- International Financial Congress (Bank of Russia) on June 30.
- Chairing a press briefing on the Article IV Consultation with the United States on July 1.
- Participation with EBRD President Odile Renaud-Basso for the 30th anniversary of the EBRD on July 2.
- U.N. High-Level Political Forum on July 6.
- Three Seas Initiative keynote speech on July 8 focusing on the green digital transition.
- G20 Finance Ministers and Central Bank Governors meeting (Italy chair) on July 9-10.
- Venice Climate Conference on July 11.
- Deputy Managing Director Tao Zhang speaking at a roundtable on Financial Choices for Africa in the Face of Climate Change on July 1.
Global inflation assessment and the United States
- IMF view on recent inflationary pressures:
- Spike reflects transitory supply–demand mismatches, temporary input shortages and largely one-off shifts, including commodity price increases coming off the very low base of last year.
- Risks exist that inflation will prove higher and more persistent, with potential impacts on financial conditions and activity in the US and globally.
- Managing Director Kristalina Georgieva’s guidance: "we need to be watchful."
- On the Federal Reserve:
- Actions taken by the Federal Reserve are expected to help support the US economy and more firmly anchor inflation expectations.
- Continued clear communication and an orderly, methodical, transparent messaging of policy intentions will help mitigate potential risks from policy normalization.
Special Drawing Rights (SDR) $650 billion allocation and voluntary channeling
- Executive Board process and timing:
- Executive Board to discuss a proposal for a new SDR allocation of $650 billion.
- Managing Director to prepare a report to the Board of Governors based on the staff's assessment of long-term global reserve needs.
- Report to the Board of Governors expected to be approved by the Executive Board around mid-July if the Board concurs.
- If approved by the Board of Governors, the allocation would become effective toward the end of August (described as "late August").
- Voluntary channeling options being explored:
- Members with strong external positions could voluntarily channel part of their SDRs to scale up lending for low-income countries via the IMF's Poverty Reduction and Growth Trust (PRGT).
- Past channeling: through the PRGT to low-income countries at the level of some $15 billion in the past year.
- Discussion of channeling SDRs to support greener recoveries, climate issues and structural transformation.
- Managing Director has discussed magnifying impact to reach a total global ambition of $100 billion for the poorest and most vulnerable countries (a number indicated by the G7).
- Possible instruments: PRGT and a potential new Sustainability and Resilience Trust.
Argentina debt, Paris Club and IMF engagement
- Paris Club and Argentina:
- Argentina announced it would pay $430 million in two installments (one in July, the other in February 22) instead of a $2.4 billion payment.
- IMF welcomes Argentina's progress toward addressing debt owed to Paris Club creditors.
- IMF–Argentina program talks:
- Argentina has indicated commitment to meeting its obligations to the Fund; IMF staff expect to meet with Minister Martín Maximiliano Guzmán and his team on the sidelines of G20 meetings in early July (Italy).
- Talks characterized as constructive and productive; no specific timing provided for a new IMF program.
- Objective: support Argentina’s return to sustainable and inclusive growth.
El Salvador and Bitcoin as legal tender
- IMF stance:
- Adoption of Bitcoin as legal tender raises macroeconomic, financial and legal issues requiring careful analysis.
- IMF consultations with El Salvador authorities are ongoing; discussions on potential IMF support continue and more will be said once they conclude.
Cameroon emergency financing and accountability measures
- Context:
- IMF Board approved two emergency disbursements last year to Cameroon to help address the Covid-19 pandemic.
- Recent investigation by Cameroonian authorities into use of those disbursements.
- Accountability measures expected or agreed:
- Publication of the results of public procurement and beneficial ownership of companies receiving procurement contracts.
- Issuance of a report on Covid-19 spending.
- Independent audit of the spending and publication of its results.
- Engagement with civil society:
- IMF received a letter from women leaders in Cameroon and responded by reiterating measures aimed at strengthening governance and reducing corruption vulnerability.
- IMF looking to meet with representatives of those women leaders.
Pakistan program and sixth review
- Status:
- Open, constructive discussions with Pakistani authorities on the next review of the reform program supported by IMF resources.
- Key reform areas: sustainable fiscal path, structural reforms particularly on tax and energy sectors, and social spending enhancements.
- Recent mission could not complete discussions; IMF aims to resume discussions in the period ahead.
- Clarification on disbursement reporting:
- IMF did not confirm suspension of disbursements; discussions on the next review are ongoing and constructive.
Pandemic response, vaccine finance proposal and the World Economic Outlook (WEO)
- IMF vaccine proposal:
- IMF staff proposal for $50 billion to vaccinate 40 percent of people in all countries by the end of 2021 and 60 percent of people in all countries by the middle of 2022.
- Proposal elements: dose sharing, closing financing gaps for low and middle income countries, removing barriers to export of raw materials and vaccine inputs, boosting production and distribution capacity.
- WHO, WTO, and World Bank joined the IMF in support of this proposal; a “war room” task force formed to push the proposal forward.
- Concern highlighted: low vaccination rates in sub-Saharan Africa and low-income nations in general, with "less than one percent" of vaccine received so far in those low-income nations.
- World Economic Outlook Update:
- Upcoming WEO Update will incorporate status of vaccination, status of variants (including Delta) and their impact on major economies and the global outlook; led by Gita Gopinath.
Debt distress, Common Framework and low-income countries
- Common Framework uptake and status:
- Three countries have requested assistance under the Common Framework: Chad, Ethiopia, Zambia.
- Chad recently received financing assurances from its G20 bilateral creditors; IMF calls for speedy commitments on comparable terms by private sector creditors and other official bilateral creditors.
- IMF is pushing to make the Common Framework fully operational and encourages countries to seek early action for debt resolution rather than wait.
- Recent milestones noted:
- Somalia received debt relief under the enhanced HIPC decision point and is now benefiting from IMF financing.
- Sudan: Executive Board scheduled to meet next week to discuss the decision point on Sudan.
Closing remarks
- IMF remains engaged across crises: pandemic response, debt resolution, climate and digital transitions, and supporting member countries’ sustainable and inclusive growth.
- Press briefing embargo: remarks embargoed until 10:30 a.m. Washington time.
Transcript of IMF Press Briefing, June 24, 2021 — IMF Communications Department