Transcript of IMF Press Briefing
IMF News, December 7, 2023
Source details
- Canonical URL
- Transcript of IMF Press Briefing
Other formats
Bibliographic details
- Published: December 7, 2023
COP28 and climate finance
- IMF emphasized three priority areas at COP28:
- Carbon pricing: called for a carbon price of $85 a ton.
- Fossil fuel subsidies: recent analysis estimates explicit costs at $1.3 trillion annually; removal is critical for decarbonization.
- Climate financing: need for stepped-up financing, much from private sector and coordinated action by multilateral development banks and official sector; IMF contribution via the Resilience and Sustainability Trust (RST).
- RST developments:
- UAE pledge of $200 million to the RST welcomed by Managing Director.
- Eleven member countries are benefiting from the RST one year after operationalization.
- Financing mobilization:
- Efforts to channel a significant share of SDRs to more vulnerable members generated pledges of around $100 billion in new financing through trust funds, especially the PRGT and the RST.
Outcomes from Marrakech and IMF governance reforms
- Quota reform:
- November Executive Board approved a proposal for the 16th General Review of Quotas to be considered by the Board of Governors, proposing a significant increase in IMF quotas and development of approaches by 2025 for further quota alignment while protecting poorest members' quota shares.
- Representation:
- Creation of a third chair for Sub-Saharan Africa on the IMF Executive Board to improve and increase voice.
- PRGT and funding:
- IMF met fundraising targets for the Poverty Reduction and Growth Trust (PRGT), IMF’s main vehicle for zero interest rate loans to low-income countries.
- PRGT operational change:
- Executive Board will shortly examine a proposal to increase annual access limits for the PRGT.
Upcoming events and management travel
- Somalia milestone:
- Executive Board to consider Somalia's debt relief under the Heavily Indebted Poor Countries Initiative completion point on Wednesday, December 13th.
- World Bank Executive Board to meet the day before on the same issue.
- Public event on December 13th at 11:30 a.m. featuring Bihi Egeh, Jihad Azour, and Victoria Kwakwa; briefing with journalists to follow.
- Management travel:
- December 11: First Deputy Managing Director Gita Gopinath keynote at International Economic Association Global meeting in Medellin, Colombia.
- December 14 and 15: Managing Director to travel to Korea for conference on digital money, bilateral meetings with Korean authorities, Women's Corporate Directors Special Forum, and Ewha Women's University engagements.
Global growth and inflation outlook (WEO and Article IV highlights)
- World Economic Outlook projections (October WEO referenced):
- Global growth: 3 percent in the current year and 2.9 percent in 2024.
- Noted divergences across regions: upward revisions for the US and some large emerging economies; downgrade for the Euro area.
- United States:
- Core PCE inflation projections: 4.8 percent in 2022, 3.8 percent in 2023, and 2.8 percent in 2024.
- IMF view: policy settings appropriate; interest rates likely need to remain at current levels to durably reduce inflation; interest rates will likely need to stay at current levels well into 2024.
- China:
- Article IV revisions: upward revisions of about 0.4 percentage points for both 2023 and 2024.
- Growth projections: 5.4 percent in 2023 and 4.6 percent in 2024.
- Medium-term projection: growth to slow to around 3.5 percent over the medium term.
- IMF sees scope for monetary accommodation including reducing interest rates.
- Japan:
- CPI inflation projections: 2.5 percent in 2022, 3.2 percent in 2023, and 2.9 percent in 2024.
- IMF view: Bank of Japan should remain prepared to raise the short-term policy rate once it is clear the inflation target will be durably achieved.
- Spain:
- October WEO forecasts reiterated: 5.8 percent in 2022, 2.5 percent in 2023, and 1.7 percent in 2024.
- Headline inflation eased from 8.3 percent (last year) to three and a half percent in 2023; labor market resilient with unemployment stabilizing at its lowest since the global financial crisis.
- General inflation note:
- Headline inflation is declining in many countries, but core inflation globally is declining more slowly; underlying inflation remains high in many countries.
Ukraine: program review, financing, and outlook
- Program timing and disbursement:
- IMF staff and Ukrainian authorities reached a staff level agreement on updated policies for the second review under the EFF on November 10th.
- Executive Board expected to meet on Monday, December 11th, to consider the second review; Board approval would enable a disbursement of $900 million US dollars.
- Economic outlook and indicators:
- IMF upgraded GDP growth forecast for 2023 to 4.5 percent.
- Inflation has declined sharply; foreign exchange market stabilized enabling transition from exchange rate peg to a managed exchange rate regime.
- Financing needs:
- IMF staff estimates Ukraine will need about $42 billion in financing for 2024.
- Central Bank expecting to receive about $38 billion next year noted in question context (as reported by the Central Bank).
Argentina: engagement and stabilization priorities
- Current situation:
- Argentina faces challenging and complex economic conditions: very high inflation and extremely low reserve buffers amid fragile social conditions.
- IMF engagement:
- Managing Director met with president-elect Javier Milei to discuss commitment to strengthen public finances, bring down inflation, and promote private sector led growth.
- November 28: IMF team led by First Deputy Managing Director Gita Gopinath met incoming Economy Minister Luis Caputo and Chief of Staff Nicolas Posse to discuss plans to urgently restore macroeconomic stability and medium-term growth reforms.
- Continued virtual and technical engagements expected to intensify.
- Policy priorities emphasized:
- Need for a strong, credible, and politically backed stabilization plan that durably addresses macroeconomic imbalances and protects the most vulnerable.
- IMF stress on the role of a strong and credible central bank to reduce inflation.
- Resilience and Sustainability Trust (RST):
- Managing Director indicated Argentina is a candidate for RST financing; engagements ongoing (no operational details provided).
MENA region, Israel-Gaza conflict, and country-specific support
- Israel-Gaza conflict impacts:
- Global economic impact so far relatively contained but highly uncertain; Israel and West Bank - Gaza to be hardest hit.
- Gaza context: per capita income in Gaza declined by an average of 2.5 percent per year since 2007 and, before the conflict, stood at less than 30 percent of West Bank per capita income.
- Regional channels of transmission: tourism reductions, higher oil and gas prices, financial market disruptions, regional trade route disruptions, and higher trade costs.
- Tourism importance: accounted for 35 percent to 50 percent of exports in regional economies as of 2019.
- IMF support in the region:
- Ongoing engagements with Egypt and Jordan.
- Jordan: staff level agreement on a new four-year EFF to unlock $1.2 billion following Board approval; program aims to improve resilience and maintain stability.
- Egypt: discussions on policies to support completion of first and second reviews under the EFF; need to tighten monetary and fiscal policy with flexible exchange rate to reduce inflation and transition to inflation targeting; additional financing critical and exact size of financing under discussion (note: EFF referenced as $US3 billion in question context).
- Tunisia: 2023 Article IV mission (scheduled December 5–19) postponed by authorities; IMF stands ready to conduct the Article IV Consultation.
Nigeria, Zimbabwe, Ghana, Zambia, Suriname, and Haiti — country engagements
- Nigeria:
- Reforms by President Tinubu: removal of fuel subsidies and unification of the official exchange rate.
- Inflation: reached over 27 percent in October (year-on-year).
- Central Bank actions: withdrawing excess liquidity; next Monetary Policy Committee meeting expected to further raise policy interest rate.
- Fiscal context: revenue to GDP ratio at 9 percent; raising revenue from this low level is essential to create fiscal space for social and development spending.
- 2024 budget aims to reduce the fiscal deficit while creating space for priority social and development spending.
- Zimbabwe:
- June 2023: Zimbabwean authorities formally requested a Staff Monitored Program (SMP).
- IMF stands ready to support Zimbabwe when authorities are ready; an SMP would help restore macroeconomic stability, revitalize growth, and build a track record for arrears clearance and debt restructuring.
- Ghana:
- Three-year, $3 billion program with IMF; strong policy and reform commitments starting to bear fruit.
- Signs of stabilization: growth more resilient in 2023, inflation down, fiscal and external positions improved, exchange rate volatility declined.
- October 6, 2023: IMF team reached staff level agreement on the first review; Board completion would give Ghana access to $600 million in financing.
- Timely completion requires agreement on debt treatment with official creditors consistent with program objectives and financing assurances from May 2023.
- Zambia:
- Growth projections: Real GDP growth projected at 4.3 percent in 2023 and 4.7 percent in 2024.
- Staff level agreement on the second review reached on November 20th; performance under the program remains satisfactory with significant fiscal effort in 2023.
- IMF Executive Board expected to consider the review toward the end of December; approval would give Zambia access to $184 million in financing under the program.
- Debt restructuring and comparability of treatment:
- IMF staff assessed the bondholder-negotiated proposal as consistent with the Debt Sustainability Analysis and program parameters provided the MOU with the Official Creditor Committee (OCC) remained valid.
- OCC on November 20th assessed comparability of treatment was not met; authorities are revising the proposal for OCC assessment per the MOU.
- Suriname:
- November 8: staff level agreement on fourth review under EFF reached; authorities requested extension of the EFF until March 2025 and an augmentation of about $63 million.
- Executive Board expected to consider the review on December 15th.
- Authorities close to concluding debt restructuring negotiations with remaining bilateral creditors.
- Haiti:
- IMF engagement includes a concluded SMP in June 2023 and an ongoing new SMP to build policy track record, stabilize the economy, raise revenues, and strengthen institutions and governance.
- $110 million disbursed under IMF Food Shock Window earlier in the year to help fight food insecurity.
- Ongoing capacity development on revenue mobilization, public spending transparency, and governance; governance diagnostic led by IMF Legal Department is underway.
Debt, restructuring, and comparability issues
- IMF role:
- IMF-supported programs determine overall financing envelope required to restore debt sustainability but do not assess comparability of treatment.
- Official Creditor Committee (OCC) assesses comparability of treatment; MOU mechanisms require authorities to revise private creditor proposals if OCC finds comparability not met.
- Specific cases:
- Zambia: IMF staff found the bondholder proposal consistent with DSA provided OCC MOU conditions held; OCC found comparability not met on November 20th, prompting authority revisions.
- Suriname: authorities nearing conclusion of bilateral creditor negotiations; EFF augmentation request under consideration.
Transcript of IMF Press Briefing, December 7, 2023.