Transcript of IMF Press Briefing

July 15, 2021

MR. RICE: Okay good morning everyone, welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communications Department and this press briefing will be embargoed until 10:30 a.m. Washington time as usual. Great to see colleagues on screen this morning and questions coming in online. We'll get to them all just in a second.

Quite a busy couple of weeks coming up here at the Fund. Let me just mention a few things that may be of interest to you. Next week, Wednesday July 21st, Kristalina Georgieva, the Managing Director of the Fund, will be at the Peterson Institute for an event on trade and its role in the pandemic and post-pandemic recovery. That will be with Cecilia Malmström, the former European Commissioner for Trade now at the Peterson Institute. That's Wednesday, 9 o'clock open to media and the public.

A couple of days later, Kristalina will be with the International Labor Organization Director General Guy Ryder for a virtual conversation on jobs, employment, the role of the informal economy. And there's an IMF book being published related to that topic, that's on Friday July 23rd.

On July 28th, Kristalina will be opening the Camdessus lecture. You know this is an annual event here at the Fund. A lecture on monetary policy this year will be delivered by Alejandro Diaz de Leon who's the governor of the Bank of Mexico. That's July 28th. He will make a speech and then have a chat with Kristalina. That will be again, open to you.

And the day after that, Kristalina will be talking about the role of digital currency with the central bank governor of the Bahamas John Rolle. As many of you may know, the Bahamas has been very active in this digital currency sphere and this is July 29th. Julie Chatterley of CNN will moderate that event.

So quite a few things coming up over the next couple of weeks. Let me also mention, I know this is of special interest to all of you that we will be having the update to our World Economic Outlook, the WEO with Gita Gopinath our economic counselor and that will be on July 27th, Tuesday, 9 o'clock, the update on the WEO. Again, I know that is of great interest to many of you with our updated forecasts for the global economy.

Week after that, on Monday August 2nd, we will be releasing the external sector report which again, I know is of interest to many of you. It looks at external developments, exchange rate issues and the external positions of the world's largest economies essentially which we analyze in that external sector report. So, the WEO on July 27th, the external sector report coming August 2nd for your radar. And any more details that you would need, just be in touch with us - media relations here at the Fund.

Finally, releasing today at the end of this press conference you'll be able to get a hold of it, the IMF's work program. You know, this is something we share with you a couple of times a year. It sets the Fund's strategic priorities and, in some detail, the work program priorities and of course this work program talks about the Special Drawing Rights (SDR) allocation. It talks about climate digitalization, of course our work on the pandemic and the recovery is very much front and center. That will be available to everyone at the end of this press briefing.

So, thank you for your patience and bearing with me on that. I think it's a couple of interesting things. Let me turn to your questions, good morning to colleagues online.

QUESTIONER: Question on China’s second quarter GDP data.

MR. RICE: The second quarter GDP data from China was released over night and it suggests that the recovery in China continues broadly as expected with sequential meaning quarter on quarter growth picking up after the rapid slow down it the first quarter. But it remains unbalanced. Consumption is still lagging suggesting that the handover from public to private demand is not yet secured.

So broadly as expected - but remains unbalanced. We're taking a closer look at the data, since it just came in overnight and that will be ahead of the new forecast that I mentioned will be upcoming with the WEO update at the end of the month and part of our overall updated forecasts. Thank you for that.

QUESTIONER: So, there were a number of meetings last week in Buenos Aires. I was hoping you could give us an update. You know, the language keeps being very promising you could say but we still don't have any date whatsoever to when the new deal between Argentina and the IMF might be completed.

I do have a very specific question regarding the discussion about whether countries are going to be able to share the SDRs that the IMF will distribute late August once the board of governors approve the special allocations of SDRs. Both Ms. Kristalina Georgieva and the G20 said that they were going to study the development of mechanisms for countries to provide additional SDRs to poor and vulnerable countries.

I was hoping you could tell me what should we consider vulnerable countries and whether Argentina could be included in that list since you could argue that, you know, that most countries are vulnerable especially, you know, amidst the pandemic, a global pandemic. So, the question specifically is whether Argentina could be included in this mechanism that would allow the country to receive additional SDRs from other countries besides the one that is expected to receive directly from the IMF.

MR. RICE: I'm wondering is there any other question on Argentina and I'll just group them and try and respond?

QUESTIONER: I was wondering if Argentina is negotiating an extended fund facility. But there is news that the Fund is preparing a new line in the future. Could Argentina switch to that line if it has better conditions at some point when it's available?

And also, regarding the Buenos Aires province staff negotiations, there have been some reports that the IMF has requested or was going to request the Argentine government to push for an agreement to encourage the province to reach an agreement with the bond holders. Do you have any comments on that? Has the IMF requested that or has been approached by the bond holders?

MR. RICE: I'm also seeing online a question who is asking a similar set of questions, at least similar to what this trust and whether Argentina might be eligible. And he's also asking for more of an update on the Argentine economy. Do we have any comments after the meetings in Venice regarding the economy inflation exchange rates investment rates and so on.

So, let me take those various questions. On the status of discussions between the IMF staff and the Argentine authorities. Kristalina Georgieva did meet with the Minister Martin Guzman on the sidelines of the G20 meetings some days ago. And they did discuss broadly the outlook for emerging economies and, of course, Argentina's economic and social challenges.

The IMF team was there led by Julie Kozack and Luis Cubeddu were also in those meetings which continued after the meeting with Kristalina. And as I've said here before, the discussions were productive. The goal continues to be deepening the work necessary to develop an IMF supported program. I don’t have any dates on that, Raphael, you were asking.

But again, very productive discussions over the last several days in a couple of areas on policies to strengthen the recovery on economic stability, on job creation. And progress made in three areas that were mentioned and identifying policy options to develop the domestic capital market to mobilize domestic revenue and to strengthen Argentina's external resilience.

So those discussions will be continuing in the period ahead. And again, no specific dates regarding a conclusion of the program. I would not speculate further on the details, but we are discussing a view towards an Extended Fund Facility (EFF). That's what the discussions are heading toward. A program under what we call the Extended Fund Facility.

I don’t really have anything for you on your question on Buenos Aires so I will -- I don't have a comment on that specific case. I will try and give you something on the whole question of this SDRs for which Argentina like every other member country of the Fund will be eligible to receive an allocation of SDRs once it's approved by our board of governors which we expect by the end of August in line with its quota share in the IMF, again, like every other member country.

We have talked about the possibility of creating what’s been called this Resilience and Sustainability Trust, which would be a possible mechanism for countries with excess SDRs to channel them to poor and vulnerable countries, who are badly in need of such resources. That trust is under discussion, as I say, for poor and vulnerable countries. At the moment, we’re focused on securing the allocation. As I said, that should happen by the end of August. And then the question of the trust and other means of potentially reallocating, channeling, as we call it, SDRs will be discussed.

Just to try and respond specifically to the question of what would constitute a vulnerable country, we’re not there yet, in terms of, you know, defining what that would mean. As I said, we’re still in the early stage, relatively, of discussing the possibility of this trust. So, the question of who might be eligible is something that will be discussed, as part of that. I would want to just make clear, again what we’re talking about in the discussions with Argentina, right now, is working toward an Extended Fund Facility. And that’s very separate from the discussions I have described around the potential Resilience and Sustainability Trust. So, just trying to make that -- those two things are very separate.

Okay, I think that covers Argentina.

QUESTIONER: I wanted to ask you again, if you can, if you have any update on, I guess, relations between the IMF and El Salvador, given its announcement on Bitcoin as legal tender. And since the last briefing, also, Paraguay has announced -- has at least unveiled a bill, a slightly different one, if you see any difference between the two, and if you’re thinking has evolved. Also, on Cameroon, you’d said last time that you, you know, you were reviewing this letter from the Women Leaders. There’s a lot of controversy in the country about COVID response, corruption, and missing money. And I’m just wondering -- I understand that you’ve said that they should have a bill and trace beneficial ownership, but has there been any sort of a meat on the bones of anticorruption on that? And just if you have a response on Haiti, on, obviously, the assassination of the President. Where do things stand between the IMF and Haiti, at this time? Thanks a lot.

MR. RICE: Good to see you. Let me just start with Haiti because I can be brief. We have made a statement that we strongly condemn the assassination and the increasing violence in Haiti. We, of course, offer our condolences and express our solidarity with the people of Haiti. We call for unity to find a way out of this crisis. We are engaged with officials in Haiti to support the country’s institutions to try and help them foster economic and social stability. And, you know, we hope to be able to work closely with the incoming government to promote economic growth and poverty reduction. Just to remind, we did, the IMF did, help Haiti during the pandemic, along with 85 other countries, with financing to help fight COVID-19. So, I’m not in a position to predict the form of any future support but hoping we -- hoping for peace and stability there, soon.

On El Salvador, we’ve talked about this a couple of times, in recent press briefings. I don’t really have, you know, a comparator with -- you mentioned Paraguay. I don’t really have anything on that. But on El Salvador, again, as we’ve said, we’re following the developments there. We are in discussions with the authorities, regarding a possible IMF program, and that includes economic governance, macroeconomic financial stability, inclusive growth, and including the implications of the Bitcoin law. Since we last spoke, the El Salvador authorities have clarified, publicly, that the holding of this cryptal asset will be optional. So, there has been that development. And as I say, our discussions with the authorities continuing, including regarding the implementation of the Bitcoin law.

On Cameroon, we talked about it the last time. On the letter from the Cameroonian Women, which you mentioned, which was sent to the IMF, we talked about it the last time, I can tell you, since then, IMF staff have followed up and actually met with the Women Leaders of Cameroon to follow up on their concerns about the governance of COVID-19 related financing. And, you know, I won’t go into the details of that discussion, but we were able to, I think, reassure those Women Leaders about our concern and our focus on those governance issues and our willingness to continue to engage with that group, as the IMF does with civil society in very many countries.

I don’t really have much more on Cameroon to add, Matthew. I think I said the last time that we are calling for the publication of public procurement. You mentioned beneficial ownership of companies receiving procurement contracts. The issuance of a report on COVID-19 related spending, independent audit, we’re asking for these items of good governance in Cameroon. We’re asking for these items of good governance in many countries, where we have been supporting with IMF related support for COVID-19. We’re very much engaged with the authorities on these issues.

Maybe just a footnote, we helped Cameroon with two rapid credit facility disbursements, last year. The authorities have requested new financing arrangements, additional financing arrangements with the IMF. Our Board will discuss this request in the following weeks, but subject to the authorities meeting mutually agreed prior actions. So, that’s what I have on those three countries.

I’m going to take a question online that’s been here since the beginning, on Ukraine, from Demetrio Khashoggi, Inter-Facts. What are the results of the recent negotiations with Ukraine, in Washington? How does the Fund assess the probability of the safe and torrential standby in late summer, early autumn, due to progress on key laws in Parliament?

On Ukraine, I’d say we remain closely engaged with the authorities on implementing the policies and reforms needed to move forward under the current standby arrangement. We did have very constructive meetings with Finance Minister Serhiy Marchenko, recently. Again, in line with the objectives under the program, the discussion is focused on strengthening governance of the National Bank, improvements to the legislative and regulatory framework for Bank supervision and resolution, discussions on the fiscal deficit, and on restoring and strengthening the anticorruption framework and the judiciary, as well as on energy policy. So, on that, I can say we welcome the recent approval on laws that will strengthen the judicial system in Ukraine, but more progress is needed in several other areas to support completion of the first review, under the IMF supported program. So, our discussions with the authorities will be continuing in the period ahead.

QUESTIONER: Thanks for taking the question. I just have a follow up on Argentina and a follow up on SDRs, so.

QUESTIONER: You know, in recent days, the Central Bank in Argentina has tightened rules on companies accessing dollars through sort of foreign -- alternative foreign exchange channels. This has sort of, you know, toughens restrictions on dollar access. I’m just wondering if this is something that the IMF views as a positive thing, that this will sort of help the negotiations along towards the EFF. And then on SDRs, the question is about the timing of getting this new facility, the new lending trusts, I guess, up and running. You’re expecting to have the SDR allocation completed by the end of August. Is it still the goal to have this facility in place? You know, we’ve thought with Geoffrey Okamoto -- he mentioned that countries expect them to have an option ready to go, when the SDRs are out, so. But I think there was also some discussion about possibly by the G20 Leaders Summit, in October, to have this finished. So, what’s the timeline? Is it shifting? Is it slipping? Thanks.

MR. RICE: On Argentina, the technical discussions continue. So, I don’t really have anything further on the detail of that, that you were asking about. On SDRs, I know you had that good conversation with Geoffrey Okamoto, our first Deputy Managing Director. Let me just give you a sense of the process and the timeline that you were asking about. So, just a week ago, barely a week ago, our Board approved the decision that agreed with the Managing Director’s proposal for this new special drawing rate allocation, equivalent to $650 billion, which is the largest in IMF history. And then on July 9th, the day after that, Kristalina sent that proposal to the Board, our Board of Governors, for their approval, which we expect by early August, early August.

So, there’s the Executive Board approval, last week, and then it goes forward to our Board of Governors, and we expect approval, hoping for approval, in early August. What else can I tell you? So, we would expect, once we get that approval from the Board of Governors, that this would be implemented and become effective, you know, three weeks or so later. So, again, sometime in late August, the SDR allocation would become effective, and these are distributed, allocated, as I said, in response to the Argentina question, according to a country, a member country’s quota share, in the IMF. So, the process and the timeline is running pretty much as we’ve described in the past. So, we’re expecting, by August, that this allocation would be made effective. On the channeling, as I said, right now, our number one priority is to get the allocation approved. Get the new SDR allocation approved, but we are looking at how these excess SDRs from more advanced economies could be channeled to poor and more vulnerable countries.

And beginning the discussions on various options around that. The G7 and the G20 have explicitly referred and expressed support for a trust that this resilience and sustainability trust that we talked about earlier, that could potentially help channel SDRs to vulnerable countries.

Even before that, a key option that we have and that has been used before is the Poverty Reduction and Growth Trust (PRGT). So, this is very different from the new trust that might be created, but we have the Poverty Reduction and Growth Trust which is a vehicle through which excess SDRs can be channeled to low-income countries. And, in fact, this has already happened about $15 billion of resources has been channeled through this Poverty Reduction & Growth Trust, the PRGT over the past year.

So, we're hopeful that more can be done via the PRGT under the new allocation. And the beauty of the PRGT is that it's ready to go. The mechanism is there and could potentially play in quite quickly.

On the timing of the RST, that's the Reliance and Sustainability Trust, sorry for all the acronyms, again, discussions are just beginning. The managing director has said that she looks forward to engaging the membership on this issue; engaging with our Board as a first step. I don't have a date for you on that, or a timeline for you on that, but stay tuned and we will come back to you on that.

I think, I hope I covered your questions on the SDRs. Anyone else?

QUESTIONER: Any discussions on sort of the -- there's a lot of technical issues, which some countries have to hold their SDRs as reserve assets and if they're going to lend them to other countries, they take on risk estimate of their laws. But that any clarity on how to get around that problem? Do countries have to sort of add more capital to that, create a capital buffer for that?

MR. RICE: Not much more detail on that at this point, David. These are the issues that will be discussed as we look to channel as much of the SDR allocation as possible to the poor and more vulnerable countries. That's certainly our objective. The G7, you might recall, referred to a global ambition amplifying this SDR, new SDR allocation with a global ambition of around a $100 billion to the more vulnerable countries.

We would certainly be supportive of an objective being as ambitious as possible in terms of getting additional resources to the poorer and more vulnerable countries. But I don't have much of the detail of that right now.

QUESTIONER: I had a second question about the situation of the Argentine economy besides, or beyond the technical discussions because today, the Argentine Government will release the CPI of June. And the inflation rate is getting around 50 percent in the last year.

I would like to know your opinion about the macroeconomic situation of Argentina with this high inflation. Multiple exchange rates, almost more than 10 kind of exchange rates and as you say in past, a lot of macroeconomic challenges ahead.

MR. RICE: -- and you never bother me by the way, so you never have to say that. But I did try to cover that earlier before you came online by saying that the teams just a few days ago, and the discussions continue, that, of course, their discussions included on the outlook and I mention that on stability, on unemployment, they look to -- they discuss various policy options.

They specify the domestic capital market, domestic revenue, external resilience. And again, these discussions continue on these issues. I would not want to preempt those discussions by getting into the details of the macroeconomic outlook right now. So that's about as much as I have.

QUESTIONER: Okay, very good. Good morning, I wanted to ask you a following on the questions from a couple of my colleagues about Argentina. Buenos Aires Province has been in debt restructuring talks with private creditors for more than a year. Wanted to know if Argentina needs to have all of the provinces debt deals done for all the provinces prior to reaching an agreement with the IMF on a program? That's question one.

Question two is the about the unrest over the past week in South Africa on what it might mean for economic growth prospects and longer term on investor confidence in the opinion of the IMF.

And question three on Lebanon, the Prime Minister designate has just announced that he is stepping down after failing to agree with the President on a new cabinet. What is the IMF view of the situation, and how his resignation will impact the financial crisis in Lebanon? Thank you.

MR. RICE: I missed your, the second question. I got your Argentina and I got your Lebanon. What was your one in the middle?

QUESTIONER: The second question is on South Africa.

About the unrest of the past week and what this means for growth prospects, the impact on investor confidence.

MR. RICE: Okay, thanks very much for that. On your question about the Province of Buenos Aires, again, as I said earlier I won't comment on this specific case. I mean, what I can say as a general matter, the IMF can only approve an arrangement if the relevant Fund policies are met.

This applies in every country. And in this regard, our lending into arrears policy does not apply to sub-sovereigns. So, again, I'm not commenting on the specific BA case, but that's our general stance regarding policy.

QUESTIONER: So, in general, you would not have to have all debt deals at a sub-sovereign level resolve in order to receive an IMF program?

MR. RICE: So, as I said, the only pre-condition for IMF lending is that our policies are met. As regards into arrears policy, it does not apply to sub-sovereigns.

Now, on Lebanon, I think you were asking broadly about the status of where we are?

QUESTIONER: About the resignation of the Prime Minister designate, and what is the IMF's view on that resignation based on disagreement on the cabinet choices and how that will impact the financial situation in Lebanon?

MR. RICE: Well, I would say on Lebanon is that we continue to be engaged with the authorities and discussions at the technical level continue. We look forward to the formation of a new government with a mandate to implement reforms and to address the deepening crisis, which is at the root of the worsening conditions and growing poverty.

And we've said before what we think these policies need to do to restore macroeconomic stability and pave the way for investment jobs, and growth. So, again, I'd say we're looking forward to the formation of a new government and discussions that would follow.

There's actually another question on Lebanon that I want to take, which is asking about -- it says, IMF Executive Director for Arab Republic of Egypt, Mahmoud Mohieldin was quoted by Lebanese officials. He meant at saying that $860 million will be allocated to Lebanon as part of SDR allocations after two months. Can you confirm the amount that Lebanon would get this money? How can Lebanon use this money?

I can confirm that amount mentioned is about accurate. It's -- once the allocation is approved, which hasn't happened yet, we'll get a new SDR allocation of about US$860,000. Again, this can change a bit given exchange rates’ and so on.

And in terms of how they are used, we will be providing advice to our member authorities, not just to Lebanon, but to all our member countries on how to best use the SDRs in a manner consistent with macroeconomic sustainability. And importantly, in a transparent manner.

So, again, it's very important how these SDRs would be used to good effect to strengthen the reserves of a country; create room for urgent priority spending; and, support better policies.

On South Africa, I do not have a great deal to say, but obviously, watching the situation closely, saddened by the violence, and the loss of life. Hoping the situation will normalize, as we all know the pandemic has weakened the economic conditions in South Africa, as has been the case in so many other countries. And South Africa has also been hit by this third wave of COVID-19. So, the vaccination campaign in South Africa, as in all countries, very important, more important than ever.

And just a reminder, we did support South Africa over the past year with emergency financial assistance to help with the pandemic. Again, as we did with some 85 other countries.

I am going to leave it there for today. Thank you all for tuning in online and on screen. And reminding you of those upcoming events including the wheel on July 27th. Look forward to seeing you all in that context, if not before. Stay well, everybody. Thank you so much.

IMF Communications Department


Phone: +1 202 623-7100Email: