Transcript

Transcript of IMF Press Briefing

March 23, 2023

MS. KOZACK: Good morning. Welcome to this press briefing. I'm Julie Kozack, director of communications at the IMF. This briefing is embargoed until 11:00 a.m. Eastern time.

We will start with a few announcements and then we will take your questions via Webex and the online media briefing center.

So, first, starting with travel by our management team. From March 24 through 30, MD Kristalina Georgieva and Deputy Managing Director Bo Li will travel to China. On March 26 the MD will deliver a keynote speech at the China Development Forum in Beijing. On March 30 the MD will speak at the Boao Forum for Asia Annual Conference 2023 and she will also participate in a number of side events and bilateral meetings. DMD Bo Li will join the panel discussions at the Boao Forum for Asia.

Our Spring Meetings will take place between April 10 and 16. As usual, we will have press briefings for the WEO, GFSR, Fiscal Monitor, and we will also have the managing director's press briefing and other events. A full schedule is available on IMF.org. And for further information, please reach out to our media relations team. And just before the Spring Meetings, during the week of April 3, we will be releasing our flagship's analytical chapters. So these are the analytical chapters for the WEO, the GFSR, and the Fiscal Monitor. And our media relations department will have the full details.

Finally, on April 6 the MD will give her curtain raiser ahead of the Spring Meetings at the Meridian House here in Washington, D.C.

Now, let's get to your questions. Some of you have already reached out asking for our reaction to recent developments in the banking sector, and I'm aware that many of you probably have questions about this top. So let's start here. We'll take a couple of questions on this issue and then we can move on to discuss other topics.

So let's start.

QUESTIONER: That's exactly what I wanted to ask about, is whether the IMF has an assessment yet of the fallout from the recent stress across the banking sector and, you know, when we can expect, you know, a detailed analysis of the situation?

MS. KOZACK: Okay. Great. Thank you.

Any other questions on the recent developments in the financial markets or the banking sector before I go ahead to answer? I see Reuters.

QUESTIONER: Thank you so much, Julie. Thanks for doing this.

I just want to build on the question there. There's been some discussion about having stress tests conducted across the United States, for instance, to look at regional banks. Stress tests are something that the IMF has, you know, been a proponent of in the past, but has also sort of talked about expanding the use of to include climate and so on. So would you support kind of a global effort now to just ensure that banks everywhere are doing better?

And, separately, on the question of Credit Suisse, do you have a view on whether this was an isolated incident that had to do with problems, longstanding problems at the bank, or are you concerned that it could be a broader problem that is lurking?

MS. KOZACK: Okay. I don't see any other questions, so let me take those.

So in response to the financial stability risks that we've seen, policy makers have taken rapid action and this rapid action has included coordinated action by major central banks to enhance the provision of U.S. dollar liquidity. These actions have eased market stress to some extent. At the same time, uncertainty remains high and continued vigilance is warranted. We are continuing to monitor developments closely and we are assessing the potential global financial stability implications across our membership. A detailed assessment of developments and implications for global financial stability and the global economic outlook will be contained in our upcoming April GFSR and WEO.

Okay. I now have Ukrinform on Ukraine.

QUESTIONER: And do you hear me now?

MS. KOZACK: Yes, yes, now I can hear you.

QUESTIONER: Thank you so much for the possibility.

So I have a question regarding the last statement of the IMF on the new program for Ukraine. Could you please share the plans for when the meeting of the IMF Executive Board is scheduled for Ukraine? Your latest statement said it would happen over the coming weeks, but as far as I understand, it is not about the end of March.

And the second question regarding this program and negotiation process, the IMF statement says the program envisions a two phase approach. And the first phase, the Ukrainian authorities are committed to continuing governance the corruption reforms, including legislative changes. Does this mean there is a specific list of reforms that the IMF expects to see in the near-term? And what legislative changes are foreseen during this period?

Thank you.

MS. KOZACK: Thank you very much.

Do we have any other questions on Ukraine? Andrea also, do –– Andrea Shalal from Reuters, did you also have a question on Ukraine?

QUESTIONER: Sorry, I did, yes. Thank you so much.

MS. KOZACK: Great.

QUESTIONER: I was wondering about something, which is probably a little bit of a broader question, but you've now given –– you know, agreed to a four year program over –– you know, that is a relatively long period of time. Does it indicate, this staff agreement and also the amount of money that you've given, that the collective assessment of the IMF is that this conflict will go on for a long time? And can you put that in context with the new assessment that's just out from the World Bank and the UN and the European Commission and the Ukrainian Government that it will cost $411 billion to reconstruct and rebuild Ukraine once the war is over?

Thanks.

MS. KOZACK: Okay. Very good. Okay. I don't see any other questions on Ukraine coming through. So I'll take these.

So first I think it's important to step back and reiterate that the Ukrainian authorities have done an impressive job in managing their economy through extremely difficult circumstances. It's also important to recall that Ukraine will have very large financing needs this year, in 2023. And, of course, we're operating in an environment of very high uncertainty.

The Ukrainian authorities and IMF staff did reach agreement at the staff level on a set of macroeconomic and financial policies that would be supported by a new four year EFF arrangement. The EFF will have requested access of about $15.6 billion and it aims to support the Ukrainian authorities anchor policies that sustain fiscal, external, price, and financial stability. And it also aims to promote long-term growth in the context of post war reconstruction and Ukraine's path to EU accession.

The staff level agreement reflects the IMF's continued commitment to support Ukraine and is expected to help mobilize large scale concessional financing form Ukraine's international donors and partners.

In terms of the Board meeting, we do expect it to take place in the coming weeks.

I'll stop there.

QUESTIONER: Yeah, thanks for taking my question. I had two questions.

But let me start with this specific one, if you don't mind, just on Sri Lanka, if that's okay.

MS. KOZACK: Of course.

QUESTIONER: So I just wanted to ask, you know, it does seem like this is going to be a big lift for the government to be able to really move ahead with its debt restructuring. And I just wanted to get your assessment of the viability of this $3 billion program, just given the challenges and the fact that the prime minister is out there saying that they still need to get the creditors involved. We've see in other cases, like Zambia, that the IMF sort of announces a deal, but actually getting relief to the country and be able to start the restructuring is quite complicated.

So I just wanted to get your take on what the road ahead is for Sri Lanka and this deal.

MS. KOZACK: Very good. Thanks.

While we're on Sri Lanka, let me ask if there's any other question on Sri Lanka.

Okay, I don't see anything else on Sri Lanka coming through.

So again, stepping back, Sri Lanka has been facing a severe economic crisis as a result of economic shocks and past policy missteps. We did approve –– the IMF Board approved a 48 month EFF arrangement for Sri Lanka of about $3 billion to support Sri Lanka's economic policies and reforms.

The reform program is built on strong policy measures and priorities and these include an ambitious revenue based fiscal consolidation, restoration of debt sustainability, a multi-pronged strategy to restore price stability, and the ability to rebuild reserves under greater exchange rate flexibility. The program also includes policies to safeguard financial sector stability and structure reforms to address corruption vulnerabilities and to enhance growth.

And another point that I'd like to make here is that the economic impact of the reforms on the poor and vulnerable, the program does envisage that these will be mitigated with appropriate measure. And here we welcome the authorities' firm commitment to strengthen social safety nets, including through a minimum spending floor and well targeted spending through a new social registry.

I think on the broader question of how the program can be implemented, I would emphasize two points. First, implementation is critical in the case of Sri Lanka, as it is in all IMF programs. And, importantly, some of the implementation risks have been mitigated by the strong economic reforms that are being supported by a wide range of this society, including the business community and the opposition in parliament. It's also important to note that the authorities have taken important upfront critical measures, including on the revenue side, cost recovery energy pricing, improving social safety nets. And, finally, the program will be supported by extensive capacity development support, both from the IMF and our development partners. And those give us some comfort that the implementation risks can be mitigated.

QUESTIONER: So still I have a follow up on Sri Lanka.

With the case of Zambia, for instance, we've seen China and the Paris Club, you know, have differences that prevented the debt restructuring. Is there anything that the IMF can do in the case of Sri Lanka to prevent a similar deadlock?

MS. KOZACK: So I think on the issue of debt, we're working very hard, as we've indicated, before with the global community, including key creditors –– key traditional creditors, like the Paris Club, and key nontraditional creditors, including China, India, Saudi Arabia. This has culminated in the launch of the Global Sovereign Debt Roundtable. We had the first meetings of the Global Sovereign Debt Roundtable in Bengaluru just –– I'd say I think it was February or earlier March, and we intend to build on that progress, right. There will be more meetings of the Global Sovereign Debt Roundtable, a deputies meeting in early April, and a principals meeting on the sidelines of the Spring Meetings. And the goal of this Roundtable is to bring together creditors, but also debtor countries to find way to agree processes and procedures to accelerate the debt restructuring process.

Okay. I see Argentina next. I think we have several questions on Argentina, so let's go there.

QUESTIONER: May I? Julie?

MS. KOZACK: Yes, hello?

QUESTIONER: Hello, hello. Nice to see you again in your new capacity.

MS. KOZACK: Thank you. Nice to see you as well.

QUESTIONER: My question is related to Argentina of course.

The IMF has a fundamental mission, which is to help countries when they face severe external constraints, such as the current situation in Argentina nowadays, caused at least by the drought and the Ukrainian war.

My question is what concrete measures does the IMF propose to Argentina to avoid a new balance of payment crisis? Could be, for example, to change the fiscal goal, nowadays is in 1.9 percent GDP, or it's possible a new law concerning the circumstances I mentioned.

Thank you very much.

MS. KOZACK: Thank you so much. I suspect there's a few other questions on Argentina, so why don't we take a few questions.

QUESTIONER: Yes, may I, Julie?

MS. KOZACK: Yes. Good morning.

QUESTIONER: Good morning. Good to see.

MS. KOZACK: Good to see you, too.

QUESTIONER: I wanted to know –– the government announced a new debt swap this week. I wanted to know if this was discussed with the IMF staff and if the staff cleared this operation?

Thanks.

MS. KOZACK: Thank you. Okay, I have one more question on Argentina.

QUESTIONER: Hi.

MS. KOZACK: Hello.

QUESTIONER: Hello, Julie.

MS. KOZACK: Very nice to see you.

QUESTIONER: I was wondering when can we expect the Board to discuss the Argentinian case. And, looking ahead, just as you were asking, if there could be any change in the future goals for this year.

MS. KOZACK: Okay. Very good. Thank you all very much.

So maybe just to step back and recap where we are on Argentina.

So on March 13 the Argentine authorities and IMF staff reached staff level agreement on the Fourth Review of Argentina's program. Upon completion of the Review by our Executive Board, Argentina will have access to about $5.3 billion.

Prudent macroeconomic management in the second half of 2022 supported stability and help secure the program targets through end 2022 with some margin. Against a more challenging economic backdrop, particularly the increasingly severe drought, strong policy actions are now necessary to safeguard stability. Stronger actions are also needed to address rising inflation and policy setbacks and maintain the anchoring role of the program.

With respect to some of the more specific questions, on the Board meeting, we do expect the Board meeting to take place very soon. Typically there's a period of time between when we reach staff level agreement and we go to the Board, so we do expect that meeting to take place relatively soon, and in line with the regular quarterly cycle of reviews.

On the government's recent decision on debt, we are aware of the decision and we are assessing it in accordance with program objectives. And in our view, prudent debt management is necessary to improve the functioning of the domestic bond market and the FX market. But it must be conducted in a manner that does not add to vulnerabilities down the road. And it should also be accompanied by tight and consistent macroeconomic policies.

Okay. Is there any follow up on Argentina before I move on?

QUESTIONER: Good morning. Good to see you.

MS. KOZACK: Good to see you.

QUESTIONER: When you say, you know, that it will be –– that the Board meeting will happen very soon, is that by the end of March? I mean in the next week? Or is this something that could slip into April?

MS. KOZACK: So just reiterating that we do expect the Board meeting to take place in line with the quarterly cycle of reviews.

Okay. Good morning.

QUESTIONER: Hello, Julie. Good morning. Thanks for doing this.

I want to ask about the Managing Director's visit to China. Can you share with us what's her expectations and what are the topics that she hopes to talk about with China's government? And, following up on that, I wondered if the IMF has any, you know, expectation or projection about China's economy for let's say the next five years.

Thank you very much.

MS. KOZACK: Thank you very much.

I believe there's also another on China. Good morning.

QUESTIONER: Good morning, Julie. My question is also on China and the MD, we would like to have a plan to make a speech during her trip to China. And what does she like to appear in China at the moment? Thank you very much.

MS. KOZACK: Okay. I think there's no other questions on China, so let me go to these ones. So, on China, again, stepping back to just give a sense of where we are. We project real GDP growth this year in China to increase from 3 percent in 2022 to 5.2 percent in 2023. And we expect this growth to be driven by private consumption.

And this reflects, of course, the reopening of China's economy starting in December of 2022. With respect to the managing director's trip, the managing director will be in China from March 25th through 30th. She will be participating in both the China Development Forum and also the Boao Forum for Asia. She will be giving keynote addresses at both events. And she will also be using the opportunity to meet the Chinese authorities to exchange views on the global and domestic economic outlooks, and to discuss how we can work together to tackle global challenges. Thank you.

Okay. I now see I have a question on Egypt, which I will go ahead and read out. What are the new updates regarding the first review of Egypt's extended Fund facility which was scheduled on March 15th? When are the results expected to come out?

So, let me -- I have that question. Are there any other questions on, on Egypt?

QUESTIONER: Yes, Julie, just wanted to ask about the delay with Egypt in that the IMF mission was supposed to visit Cairo this month to discuss with authorities before publishing the first review. And just to understand if that's been delayed, if there's a new date or what the next step is. So, in line with my colleague's question.

MS. TAKIOKA: okay, very good. Thank you. So, the IMF approved a four-year EFF with Egypt of for $3 billion in December, 2022. The goals of the program were to help safeguard economic stability and support structural reforms to increase private sector activity. Preparations for the first review have started and dates for the first review mission will be announced when they have been agreed with the authorities.

Okay. I now have a question from Matthew Lee. Matthew, good morning over to you.

QUESTIONER: Sure. Thanks a lot. I wanted to ask about Tunisia. There's a lot of, in fact, yesterday at the Standard Forum Banking, excuse me, Foreign Relations Committee and Secretary Blinken has commented, Mr. Browning's talked about it. What's the status of a program? There seems to be a sense that I don't know if the comments about migration have caused some delay, or the monopolization of power by the president. But there seems to be concern among, I guess, powerful IMF member states about the status of the program. And I'd like to know what the thinking is, what the slowdown is, and what the future portends.

MS. KOZACK: Okay. Very good. Anything else -- any other questions on Tunisia? Okay. Don't see anything else coming through. So, to take a step back and let you know where we are with Tunisia. On October 15th, 2022, IMF staff and the Tunisian authorities reached a staff level agreement to support Tunisia's economic policies with a four-year arrangement under the EFF. And this arrangement was worth about 1.9 billion US dollars.

Tunisia's IMF supported homegrown program aims to restore macroeconomic stability, strengthen social safety nets and tax equity, as well as to step up reforms and support an enabling environment for inclusive growth and sustainable job creation. The international community can greatly contribute to the success of the authorities' program through a rapid release of additional financing. The presentation of this program to the IMF Executive Board has been postponed to give the Tunisian authorities more time to complete the program requisites.

A new Board date will be set in consultation with the Tunisian authorities once the requisites are in place. And the IMF remains a strong partner of Tunisia and will continue to support the authorities in their reform efforts, including to enhance social equity.

QUESTIONER: That would -- just one follow-up. I mean, I guess I wanted to know if you're willing to -- seems like many people have expressed concern about comments about the migrant flow through Tunisia and what's viewed as a real anti-immigrant stance there. Is that when you say inclusiveness, can it be read that way? Or is that a totally separate issue?

MS. KOZACK: So, we are concerned about the recent developments in Tunisia, and of course, we note the steps taken by the authorities to address the situation. The IMF remains engaged with Tunisia, notably to support efforts to enhance social equity and promote inclusive growth.

QUESTIONER: Thanks a lot.

MS. KOZACK: And okay, Good morning.

QUESTIONER: Good morning. Hi. Welcome to this process here. It's -- I hope you can get used to it quickly. So, a couple questions. Ghana's president has said he expects the program request to go to the IMF Board by the end of this month. Is that realistic? Can you give us an update on that? Also, is there an IMF visit scheduled to Ethiopia? And what does the IMF require in the peace process to get to a staff level agreement there?

MS. KOZAcK: Good morning. Okay. Very good. Let me start with Ghana. Any other questions on Ghana? Okay, let me start with Ghana. So, on December 12th, 2022, the IMF reached a staff level agreement with Ghana on a three-year program supported by an arrangement under the ECF. This program was worth about $3 billion.

Ghana also requested a debt treatment under the G20 Common Framework. Financing assurances from partners and creditors are necessary for presenting the program request to the IMF'S Executive Board for approval. We continue to engage closely with the Ghanaian authorities while they seek these assurances, and we're calling on bilateral creditors to support Ghana's effort to restore debt sustainability, form an official creditor committee, and deliver the necessary financing assurances as soon as possible.

The IMF program aims to support Ghana's efforts to restore macroeconomic stability, debt sustainability, while also protecting the vulnerable, preserving financial stability, and laying the foundation for strong and inclusive growth.

And you also had a question, David, on Ethiopia.

QUESTIONER: Ethiopia.

MS. KOZACK: Yep. Any other questions on Ethiopia? Okay. So, let me talk about Ethiopia. The IMF welcomes the strong progress toward restoring lasting peace and stability through the Cessation of Hostilities Agreement. Implementation has progressed well, including the restoration of humanitarian assistance and basic services in Tigre. IMF staff have ongoing discussions with the authorities on the reform plans and how we can support their efforts to address humanitarian and economic challenges. We have received a request for financial assistance, and we are conducting the technical work to prepare for a potential program discussion.

And as background, I just want to note that Ethiopia has been subject to multiple shocks, including six consecutive years of drought, the Covid-19 pandemic, domestic conflict, and the impact of Russia's war against Ukraine. The economic challenges are significant, including food insecurity, humanitarian needs, inflation, and shortages of foreign exchange, and some imported goods. A stable economy with strong growth would be essential to meet the social challenges, create jobs, and reduce poverty in Ethiopia.

I next have another question Good morning.

QUESTIONER: Thank you, Julie, welcome here as well. There's been concerns -- I have one more on Zambia. There's been concerns from China and from some of the bondholders about the DSA, so I'm wondering if there's a plan for you guys to reconsider, to reassess the DSA because of those concerns.

MS. KOZACK: Okay. Thanks, Rodrigo. Any other questions on Zambia?

QUESTIONER: Yes, Julie, I just wanted to ask about what is holding up the restructuring process at the moment and what the next step is for Zambia?

MS. KOZACK: Okay, very good. So, on Zambia again, stepping back to make sure we have the background. On August 31st, 2022, the IMF Board approved a 1.3 billion 38-month ECF arrangement for Zambia to help advance the authorities' homegrown economic reform plan. Zambia is making promising progress on delivering on its commitments under the IMF supported program.

This includes significantly reducing the fiscal deficit and increasing social spending in 2022, together with steps to strengthen public financial management and governance. But Zambia also needs a significant reduction in its debt burden from its external creditors to contemplate these reforms and preserve the recent growth momentum. Sorry, I should say to complement these reforms. The team is conducting the first review under the ECF and an Article IV consultation from March 22nd to April 5th in Lusaka to remove any hurdles to the timely consideration by the IMF's Executive board of the first review and the Article IV, we urge official creditors to move forward and reach agreement on a debt treatment in line with the financing assurances that they provided in July, 2022. Discussions are ongoing, and we hope a suitable agreement will be reached soon.

QUESTIONER: I'm so sorry. I'm having a little technical difficulty. Julie, just very quickly on Zambia, I had one additional question, which has to do with the movement that we saw from China on the Sri Lanka deal. Are you confident that that, and the sort of comments that have come from Chinese officials will speed up this process going forward? And is that, I know you spoke broadly about what the managing director will discuss in China, but is she pushing China to step up their participation and game in this process? Thank you.

MS. KOZACK: Thanks. I think it's fair to say that the global sovereign debt roundtable got off to a constructive start. We are pleased with the constructive nature of the discussions, and we hope that further progress will be made around the sovereign debt roundtable. In the upcoming further discussions first the deputies meeting in early April, and then the principals' meeting on the margins of the spring meetings. And we're hoping that this process will give creditors a forum to discuss their issues, to improve the process and procedures around debt restructuring so that we can accelerate progress for our members for whom debt issues have been a cause of some delay. Thank you.

QUESTIONER: And Julie, just before when I asked about the stress test in the banking sector, can you say anything at all about whether stress tests would be a useful tool?

MS. KOZACK: So, Andrea, I think on this one we are looking very closely and monitoring the recent developments and also assessing in general the implications for global financial stability and also, of course, any policy implications. These will be discussed in detail in our GFSR, WEO and our flagship documents, which will be released in the coming weeks. And of course, as you know, we will be holding press conferences with our subject matter experts so that you will be able to ask questions on the detailed policy advice and detailed assessment that we will provide at that time.

QUESTIONER: Yeah, thanks. I just wanted to ask a more general question because we see that more and more countries are turning to the IMF for assistance these days, particularly as external conditions worsen. And I was just wondering if there's more that the IMF sees itself being able to do to step in earlier in the process before countries are really reaching sort of distressed levels and in desperate need of funds. There's more that the IMF can be doing proactively with countries sort of mitigate problems ahead of time. Thanks.

MS. KOZACK: Great. Thank you. So, I think this is an issue that is close to our hearts. We do encourage countries to come early preemptively to the IMF so that we can support them before the situation gets worse. And of course, we do see that in a world where we have had many shocks, the pandemic, Russia's invasion of Ukraine, higher interest rates, now some market and financial stress, that these all affect our most vulnerable countries the most. And so we are very dedicated to working with especially the most vulnerable countries to provide support and financial assistance if needed. And of course, we encourage countries to come early to work with us and we are ready, of course, to work with and to support our countries as they grapple with this extremely difficult global environment.

QUESTIONER: Hi, Julie. Yes. Can you hear me?

MS. KOZACK: Yes, I can hear you. Good morning.

QUESTIONER: Good morning. Thanks very much for doing this. Just a quick one on Pakistan. Can you give us an update on what's happening there? What the major outstanding issues are; what more you'd like to see from Pakistan's creditors? And if you're able to, any estimate you can give us of timing as well in terms of sort of how you see that playing out. Thanks.

MS. KOZACK: Great. Thank you. Any other questions on Pakistan? Okay. Don't see anything else. Okay. So, on Pakistan, let me start by saying, Pakistan's economy faces multiple challenges including from slowing growth, high inflation and large financing needs. And of course, this is all coming on the back of devastating floods.

Discussions are ongoing between IMF staff and the Pakistani authorities toward a Staff Level Agreement on policies to complete the ninth review of Pakistan's extended Fund Facility, the authorities are committed to implementing the necessary reforms. They've started to implement decisive actions to stabilize the economy and restore confidence. While providing space to accommodate the needs related to the floods, including through an increase in social assistance through the Benazir Income Support Program, which is aimed at the most vulnerable.

Timely financial assistance from external partners will be critical to support the authorities' policy efforts and ensure the successful completion of the review.

QUESTIONER: I'm sorry, could you just go into a bit of detail on what it is you need from those external partners, if possible?

MS. KOZACK: So, I would maybe add that to say that at this point, ensuring that there is sufficient financing to support the authorities is the paramount priority. A Staff Level Agreement will follow once the few remaining points are closed. I can also say that financing assurances, right, what we're looking for here are a standard feature of all IMF programs. Aside from support provided by the IMF, Pakistan's, EFF supported program receives financing from other multilateral institutions, including the World Bank, the ADB, and the AIIB and bilateral partners, notably China, Saudi Arabia, and the UAE.

So, we do need to ensure that we have those financing assurances in place in order for us to be able to take the next step with Pakistan. Okay. I don't see any other questions coming in. So, thank you so much for joining us this morning. It's been a pleasure to be here with you. This briefing is embargoed until 11:00 a.m. Eastern time. The transcript will be available on imf.org. In case of any clarifications or additional queries, please reach out to media@imf.org. And I look forward to seeing you all at the Spring Meetings. Thank you so much. Have a wonderful day.