Transcript of IMF Press Briefing
IMF News, July 15, 2021
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- Published: July 15, 2021
Upcoming IMF events and releases
- Press briefing date: July 15, 2021.
- Briefing embargo: 10:30 a.m. Washington time.
- Events and dates announced:
- July 21st, Wednesday, 9 o'clock: Kristalina Georgieva at the Peterson Institute event on trade (with Cecilia Malmström).
- July 23rd, Friday: Virtual conversation on jobs with ILO Director General Guy Ryder; IMF book related to the topic published.
- July 27th, Tuesday, 9 o'clock: Update to the World Economic Outlook (WEO) with Gita Gopinath.
- July 28th: Camdessus lecture opening by Kristalina Georgieva; lecture by Alejandro Diaz de Leon, governor of the Bank of Mexico.
- July 29th: Discussion on digital currency with John Rolle, central bank governor of the Bahamas; moderated by Julie Chatterley of CNN.
- August 2nd, Monday: Release of the External Sector Report.
- Release announced at end of briefing: IMF's work program, covering strategic priorities including SDR allocation, climate, digitalization, pandemic and recovery work.
China: Q2 2021 GDP reading
- IMF assessment:
- The second quarter GDP data from China suggests recovery continues broadly as expected.
- Sequential (quarter on quarter) growth picked up after rapid slowdown in the first quarter.
- Recovery remains "unbalanced" — consumption is still lagging, and the handover from public to private demand is not yet secured.
- Next steps:
- IMF staff taking a closer look at the data ahead of the WEO update at the end of the month.
Argentina: status of discussions with IMF and program outlook
- Recent engagements:
- Kristalina Georgieva met with Minister Martín Guzmán on the sidelines of the G20; IMF team led by Julie Kozack and Luis Cubeddu also met with Argentine authorities.
- Discussions described as "productive" and focused on policies to strengthen recovery, economic stability, job creation, developing the domestic capital market, mobilizing domestic revenue, and strengthening external resilience.
- Program direction:
- Discussions are heading toward an Extended Fund Facility (EFF).
- No specific dates for conclusion of a program were provided.
- Sub-sovereign debt (Buenos Aires Province) general policy:
- IMF lending approvals require relevant Fund policies to be met.
- The IMF's lending-into-arrears policy does not apply to sub-sovereigns.
- No comment provided on the specific Buenos Aires Province case.
Special Drawing Rights (SDR) allocation, channeling options, and timelines
- Recent decisions and expected timeline:
- Executive Board approved the Managing Director’s proposal for a new special drawing rights allocation equivalent to $650 billion.
- Proposal transmitted to the Board of Governors on July 9th; approval by the Board of Governors is expected by early August.
- If approved by the Board of Governors, implementation would become effective "three weeks or so later," implying an effective date in late August.
- Allocation mechanics:
- SDRs are allocated to IMF member countries according to each member’s quota share in the IMF.
- Argentina, like every other member, will be eligible to receive an allocation once approved.
- Channeling SDRs to poor and vulnerable countries:
- Discussions are under way on mechanisms to enable countries with excess SDRs to channel resources to poor and vulnerable countries.
- Proposed mechanism under discussion: the Resilience and Sustainability Trust (RST).
- The G7 and the G20 have expressed support for a trust-based channel (the RST is under discussion).
- Existing and immediate vehicle: Poverty Reduction and Growth Trust (PRGT) — already operational and has channeled about $15 billion over the past year.
- The PRGT is "ready to go" and could be used quickly to channel resources.
- Eligibility and definitions:
- No firm definition yet of what constitutes a "vulnerable country" for purposes of the potential trust; those criteria will be discussed in the membership and Board process.
- Ambition and targets:
- Reference to a G7/G20 global ambition of directing around a $100 billion to more vulnerable countries (as mentioned in discussions).
- Operational and legal considerations:
- Technical issues remain, including how countries that hold SDRs as reserve assets would manage legal and risk implications when lending SDRs to others (e.g., potential capital buffers or legal adjustments). No detailed solutions provided yet.
Country updates and IMF engagement
- Haiti:
- IMF statement: strong condemnation of the assassination and increasing violence.
- IMF offers condolences and solidarity; calls for unity.
- IMF engaged with Haitian officials to support institutions and promote economic and social stability.
- IMF provided financing to Haiti during the pandemic (as part of support to 85 other countries).
- No prediction on future IMF support; hope to work with incoming government.
- El Salvador:
- IMF in discussions with authorities regarding a possible IMF program that includes economic governance, macroeconomic and financial stability, inclusive growth, and implications of the Bitcoin law.
- El Salvador clarified publicly that holding the crypto asset will be optional.
- Discussions with authorities continue, including on implementation of the Bitcoin law.
- Cameroon:
- IMF staff met with Women Leaders of Cameroon to follow up on governance concerns related to COVID-19 financing.
- IMF has requested publication of public procurement, beneficial ownership disclosure for companies receiving procurement contracts, issuance of a report on COVID-19 related spending, and an independent audit.
- IMF provided two Rapid Credit Facility disbursements last year; authorities have requested additional financing arrangements.
- IMF Board will discuss Cameroon’s request in the following weeks, subject to authorities meeting mutually agreed prior actions.
- Ukraine:
- IMF remains closely engaged under the current Stand-By Arrangement.
- Recent constructive meetings with Finance Minister Serhiy Marchenko.
- Program discussions focus on: strengthening governance of the National Bank; improvements to legislative and regulatory framework for bank supervision and resolution; fiscal deficit issues; restoring and strengthening anticorruption framework and the judiciary; and energy policy.
- Recent approval of laws to strengthen the judicial system welcomed; more progress needed to support completion of the first review under the IMF-supported program.
- South Africa:
- IMF watching unrest closely, saddened by violence and loss of life.
- Pandemic and the third wave have weakened economic conditions; vaccination campaign emphasized as very important.
- IMF provided emergency financial assistance to South Africa during the pandemic (as with some 85 other countries).
- No quantified estimate provided in the briefing on growth impact or investor confidence; monitoring continues.
- Lebanon:
- IMF continues technical engagement with authorities; discussions continue.
- IMF looks forward to formation of a new government with mandate to implement reforms to address the deepening crisis, restore macroeconomic stability, and pave the way for investment, jobs, and growth.
- On SDR allocation to Lebanon: confirmed amount cited by IMF Executive Director Mahmoud Mohieldin is "about US$860,000" (noting this figure may vary with exchange rates).
- IMF will advise Lebanon and other members on how best to use SDRs consistent with macroeconomic sustainability and transparency; uses include strengthening reserves, creating room for urgent priority spending, and supporting better policies.
Additional procedural and programmatic notes
- IMF staff will continue technical discussions with member authorities across these cases; no speculative conclusions provided.
- IMF emphasized priority actions: securing SDR allocation approval, preparing options to channel SDRs to vulnerable countries (RST discussions and PRGT use), and continuing program negotiations (e.g., EFF discussions with Argentina).
Italic: Transcript of IMF Press Briefing, July 15, 2021 — IMF Communications Department