Transcript of IMF Press Briefing

December 7, 2023

MS. KOZACK: Good morning and welcome to this press briefing, both to those here in the room and those of you joining us online. My name is Julie Kozak. I am the director of the IMF's Communications Department. This briefing is embargoed until 11:00 a.m. this morning. So, this morning I am going to start with some announcements and then I will take your questions both in person on WebEx and via the Press Center.

So, starting with COP28, the Managing Director just returned from COP28, and as she has said in her recent engagements at COP , this was a COP of hope. We noted important steps being made in the right direction, including the creation of the Loss and Damage Fund. We at the IMF (International Monetary Fund) went to COP emphasizing three areas where we think more progress is needed. The first is on carbon pricing, where based on our analytical work, we called for a carbon price of $85 a ton. And we also noted the increase in carbon price taking place and the broadening coverage of carbon pricing.

Second, on fossil fuel subsidies, our recent analysis is that these are currently costing $1.3 trillion annually in explicit costs, and the removal of such fossil fuel subsidies is a critical step in decarbonization. And finally, on climate financing, like others, we recognize the need for financing for decarbonization to step up, and of course, that much of this financing will need to come from the private sector and through coordinated action by multilateral development banks, the official sector, and of course, we, the IMF, are making our contribution through our Resilience and Sustainability Trust. On the Resilience and Sustainability Trust, the Managing Director, of course, welcomed the UAE's significant pledge of $200 million to our RST (Resilience and Sustainability Trust) and we hope that discussions at COP continue in the same spirit and that more concrete progress is made.

Since we have not met as a group here since our annual meetings in Marrakech, let me just take a few moments to review some of what was accomplished in Marrakech. So, first on quota reform, in November our Executive Board approved a proposal to be considered by our Board of Governors to conclude the 16th General Review of Quotas with a significant increase in IMF quotas. The Board also proposed to develop by 2025 approaches for further quota alignment that would better reflect members position in the world economy, while protecting the quota shares of the poorest members.

Second, to improve and increase the voice of Sub-Saharan Africa in representation of the IMF, a third chair for Sub-Saharan Africa on the IMF Executive Board will be created. Third, the IMF successfully met its fundraising targets for our Poverty Reduction and Growth Trust. This is our main vehicle for providing zero interest rate loans to low-income countries. And fourth, we have continued to work with our economically stronger members to channel a significant share of their SDRs to our more vulnerable members.

This has generated pledges of around $100 billion in new financing through our trust funds, especially the PRGT (Poverty Reduction and Growth Trust) and the Resilience and Sustainability Trust. Only one year after it was operationalized, we have eleven member countries benefiting from the RST, and many more countries who have expressed interest, and we continue to improve our lending toolkit along the way. Today, for example, our Executive Board will examine shortly a proposal to increase annual access limits for our Poverty Reduction and Growth Trust.

Let me also use this opportunity of us being here gathered, to brief you on an upcoming milestone for Somalia. On Wednesday, December 13th, our Executive Board will meet to consider Somalia's debt relief under the Heavily Indebted Poor Countries Initiative completion point. The World Bank's Executive Board will meet on the day before on the same issue.

To mark the occasion, we will have a public event on December 13th at 11:30 a.m. featuring Bihi Egeh, the Minister of Finance of the Federal Government of Somalia, Jihad Azour, the Director of the IMF's Middle East and Central Asia Department, and Victoria Kwakwa, the World Bank's Vice President of Eastern and Southern Africa, and we will also have a briefing with journalists. Please contact my colleagues in media relations for more details.

And before we get to your questions, let me just brief you on two management trips that are coming up. On December 11, our first Deputy Managing Director, Gita Gopinath, will deliver the keynote address at the International Economic Association's Global meeting in Medellin, Colombia. She will speak about the evidence of increasing geoeconomic fragmentation and its impact on the region and the global economy. On December 14th and 15th, our Managing Director will travel to Korea to participate in an international conference on digital money and to hold bilateral meetings with the Korean authorities. She will also attend the Women's Corporate Directors Special Forum and meet with the faculty and students at Ewha Women's University.

I am now ready to take your questions. So, the floor is open.

QUESTIONER: My first question is on macroeconomic development at a global level, and what is your updated view, especially on recent deflationary development on the US, and especially on China? Now, we are having the next Federal Reserve decision next week. And my second question is on BOJ (Bank of Japan). There are some arguments on lifting its negative portion rate next year or next spring. What is your advice for the BOJ on the best timing to raise its short-term interest rate?

MS. KOZACK: So, first, let me just step back and talk a little bit about the global economy to set the scene. In our WEO (World Economic Outlook) that we released in October, we expect global growth to slow to 3 percent this year and 2.9 percent in 2024, and this is happening amid divergences among regions. So, for example, we have raised our growth forecast in the US and some large emerging economies, but we downgraded our growth forecast for the Euro area. More recently, we upgraded our growth forecast for China as part of our Article IV Mission. But in many countries, economic activity is still falling short of what is needed to return to the pre-pandemic growth trajectory.

With respect to inflation, underlying inflation is still high, too high in many countries. And although headline inflation is declining, core inflation globally is declining more slowly.

Now, turning to the US and China specifically. For the US we are projecting core PCE inflation, which is the measure that the Fed looks at, we are projecting that to decline from 4.8 percent in 2022 to 3.8 percent in 2023 to 2.8 percent next year. Our view is that policy settings continue to be appropriate in the US and that interest rates will need to remain at current levels in order to durably reduce inflation.

In China, we are projecting inflation to decline from 1.9 percent in 2022 to 0.5 percent in 2023, before rising to 1.6 percent in 2024. We do see scope for monetary accommodation in China, including an easing of monetary policy through the interest rate channel by reducing interest rates.

Turning to your question on Japan, Japan's economic recovery is expected to continue, but it does face some headwinds. Our projections for Japan are 2.5 percent for headline CPI inflation in 2022, 3.2 percent in 2023, and 2.9 percent in 2024. Around this forecast, we see the risks as balanced. There could be upside risks to inflation and through second round effects from higher wages, and there could be downside risks that could stem from a global slowdown. The Bank of Japan allowed further flexibility in long term yields in October, consistent with the IMF's policy recommendations in our 2023 Article IV Staff Report, and we believe that the bank of Japan should remain prepared to raise the short-term policy rate once it is clear that the inflation target will be durably achieved. Thank you.

QUESTIONER: A couple of questions on Ukraine. There was a staff level agreement on Ukraine in November to provide another transfer of financial assistance. When is the Board of Governors decision regarding it going to take place? And what is the IMF's outlook for Ukraine? If there any serious disruption of the U.S. financial support, how will it impact the economy? And what is the IMF overall assessment on Ukraine financial needs for 2024? Taking into account that the Central Bank is expecting to receive about $38 billion next year.

MS. KOZACK: Any other questions on Ukraine?

QUESTIONER: My question is about the uncertainty in the US Congress on the new assistance for Ukraine. How could you assess an impact on the Ukrainian economy on this specific factor?

MS. KOZACK: Stepping back, on November 10th, about a month ago, our IMF staff and the Ukrainian authorities reached staff level agreement on an updated set of economic and financial policies for the second review under the EFF. The Executive Board is expected to meet on Monday, December 11th, to consider the second review. Approval by the Executive Board would enable a disbursement of $900 million US dollars.

With respect to the economic situation, the Ukrainian economy continues to show remarkable resilience. The outlook, of course, is extremely uncertain, but it has been resilient. We have upgraded our GDP growth forecast for 2023 to 4.5 percent, inflation has declined sharply, the foreign exchange market has stabilized, and this has allowed Ukraine to transition away from its exchange rate peg to a managed exchange rate regime.

Regarding financing, Ukraine's financial needs indeed remain substantial. For 2024, IMF staff estimates that the country will need about $42 billion in financing. Support from the international community, including from the EU (European Union), the United States, and the G-7, as well as international financial institutions, will be essential to put the country back on the path of fiscal and external stability.

MS. KOZACK: Let's go for Argentina.

QUESTIONER: The Managing Director said last week that Argentina is a candidate to receive financing through its Resilience and Sustainability Trust. Is it just an idea or are you working on that? How would it work? And another question is, will there be a staff mission to Argentina, to Buenos Aires, in the coming weeks?

MS. KOZACK: I am sure we have several on Argentina.

QUESTIONER: Good morning. I just want to know if you can tell us if the next government of Javier Milei is planning on working with the current program? If there have been any updates on that or if they want to start from scratch with a new program different from the one that the government of Alberto Fernandez signed with the IMF? I have a follow up afterwards.

QUESTIONER: I would like to know if you talk with Argentina authorities about changing some objective of the current agreement we have and what are they, for instance for fiscal deficit, exchange rates, monetary regime.

QUESTIONER: Two things. One, the markets already started showing by next week when Milei comes in a pretty large devaluation. Just wanted to get your sense on what that might mean for them, for their ability to repay the loans to the IMF? And then more about that new administration. Caputo and the IMF famously had a pretty bad relationship when he was Macri’s Central Bank President, and I just wanted to get some sense from you what that relationship is like. I know that they were here quite recently to visit IMF staff, so we just get some sense of what that dynamic will be like going forward.?

QUESTIONER: It is kind of a follow up, but any specifics on the November review? If it's going to come through, if it will happen in December since there are payments due at the end of the month, or if you're just leaving that for the rest, for next year? And a little bit of details on what came out of the meeting with the new administration, with the team that's coming in.

MS. KOZACK: I am going to try to take these all in a group. Starting with the economic situation, I think, as I have said here before, and it continues to be the case, the economic situation in Argentina is challenging and very complex. Inflation is very high and reserve buffers are extremely low, and this is, of course, taking place in the context of very fragile social conditions. Against this backdrop, a strong, credible, and politically backed stabilization plan is needed to durably address Argentina's macroeconomic imbalances and its structural challenges, while, of course, protecting the most vulnerable in society.

The Managing director had a constructive meeting with president elect Milei, where he underscored his commitment to strengthen public finances, to bring down inflation, and to create a more prosperous and private sector led economy. In that discussion, they also discussed the significant challenges facing Argentina and the need for decisive policy action. And the MD reiterated that the IMF is committed to supporting efforts to durably reduce inflation, improve public finances, and raise private sector led growth.

A few days after that, on November 28th, an IMF team led by our First Deputy Managing director, Gita Gopinath, met in Washington with president elect Milei’s future Economy Minister, Luis Caputo, and his future Chief of Staff, Nicolas Posse. The discussion focused on better understanding the authorities' plans, or the incoming authorities' plans, to urgently restore macroeconomic stability, as well as their plans for reforms to boost Argentina's medium term growth prospects. Positive discussions have continued at the technical level, and we expect that our engagement will intensify in the period ahead.

I know that there were a number of other questions that were more hypothetical or would require speculation. I am not going to speculate other than to say that we are engaged with the authorities. Virtual engagements have continued. As I already noted, the team also met, in addition to the meeting with Gita Gopinath, the team already met with incoming Economy Minister Caputo, and the engagements are expected to intensify. And the focus right now, and this goes to the question on RST, is on a strong, credible, and politically backed stabilization plan to effectively address the country's challenges. I am going to leave it at that. You wanted to come back?

QUESTIONER: Just a follow up. There have been concerns about the autonomy of the Central Bank. The future governor of the Central Bank, Santiago Bausili, is a partner of [the] future Ministry of Economy Luis Caputo. Does the MF concern, or does the IMF believe, that a strong independent Central Bank should be a pillar of a stabilization program?

MS. KOZACK: I think it is fair to say that we are focused right now, as I said, on strong, credible, politically backed stabilization plan to address Argentina's macroeconomic imbalances. Inflation is, of course, one of those imbalances, and it does require a strong and credible central bank in order to reduce inflation. All right let's now take a question from the room.

QUESTIONER: Thank you for taking my question. I want to ask about Chinese economy. The ratings agency Moody has changed China's government credit rating outlook from stable to negative, with concerns about China's growth prospects and fiscal sustainability. I wonder, what is the IMF's reaction to it? How would you evaluate the Chinese government's ability to repay its debt? And also, you mentioned that IMF has recently upgraded China's growth forecast, what is the growth outlook for the Chinese economy? Thank you.

MS. KOZACK: On China. First, I am not going to comment on the decisions of the ratings agencies or their actions, but I am happy to share with you our view of China's growth outlook. You may have seen that in our recent press release, following the Article IV Mission, we upgraded China's growth forecast both for 2023 and 2024. In each case, the upward revisions were about 0.4 percentage points. We now project growth in 2023 at 5.4 percent and we expect growth in 2024 to slow to 4.6 percent. This slowdown reflects continued weakness in the property sector and subdued external demand.

We do also expect that the Chinese economy, on the basis of our latest forecast, to meet the government's 2023 growth target of around 5 percent, and this reflects the post COVID recovery. Over the medium term, we do expect growth in China to slow to around 3.5 percent, and this reflects an aging population, as well as slowing productivity growth. We also see that China has the potential to raise this medium-term growth through structural reforms to boost productivity and improve labor force participation.

QUESTIONER: Thank you, Julie. I would like to know if you have any updates about Spain's projections for next year. Is there any possibility that you upgrade the growth projections? And also like to know, do you have any suggestion to the country related with public debt? Thank you.

MS. KOZACK: On Spain, I am happy to share with you our growth forecast from the October WEO, that we released a month and a half ago. We do expect growth to fall from 5.8 percent in 2022, to 2.5 percent in 2023, and 1.7 percent in 2024. Growth is projected to be modest in the near term, while underlying inflation pressures are expected to be persistent. Overall, the labor market in Spain remains resilient, which is of course very positive news. The unemployment rate is stabilizing at its lowest level since the global financial crisis, and of course headline inflation had been high at 8.3 percent last year, but it is now easing to three and a half percent in 2023. The next update for Spain will take place in the context of the January 2024 WEO update and we'll have further information at that time. Daniel?

QUESTIONER: I have a few questions about the MENA region. With regards to the Israel-Gaza conflict, the IMF noted in a recent report that if the conflict spreads to other countries in the Middle east, it could constitute a major economic challenge for the region. I am just wondering if you could provide some specifics on how the IMF is working to support countries in the region, including Israel, whose economies have been impacted? And also, what policy advice the IMF has been providing to the Palestinian Authority as well?

On Tunisia, if I may, I am just wondering if you can comment on any possibility of a resumption of talks between Tunisia and the IMF. How are the relations right now, in light of press reports at least, that a planned visit was recently cancelled? And with Egypt, I noticed that the MD talked recently about a potential for a new program with Egypt. And I am just wondering if there is any concern from the IMF's standpoint with regards to Egypt's economic situation. Thank you.

MS. KOZACK: First, on Israel and Gaza, we are shocked and saddened by the humanitarian situation and the loss of life in this conflict, and we certainly call for an end to this conflict and to all conflicts. And unfortunately, this conflict is yet another example that we live in a very uncertain and shock prone world.

With respect to the economic impact, from the global perspective, the economic impact so far has been relatively contained, but it is highly uncertain. When we look to the impact of the economies at the core of the conflict, Israel and West Bank - Gaza, these economies will be hardest hit. But the ultimate impact will depend on the duration and intensity of the conflict. We do expect the conflict to severely depress economic activity in both the West Bank and Gaza, where even before the conflict, GDP growth was set to decline over the medium term. And to maybe give some perspective on Gaza, in particular, per capita income in Gaza has already declined by an average of 2.5 percent per year since 2007, and before the conflict, it stood at less than 30 percent of the per capita income of the West Bank.

Looking beyond this epicenter, the conflict may affect the immediate region through a number of channels. The channels include tourism, you could see a reduction in tourism in these neighboring countries, we have the potential for higher oil and gas prices, disruptions to financial markets and disruptions to regional trade routes, and the potential for higher trade costs. And just to give some context, for example with tourism, tourism currently accounts for 35 percent to 50 percent of exports in regional economies as of 2019. It is a critical source of both foreign currency and employment for the region, and this is why we worry that this channel can have effects in the region.

With respect to how the IMF is helping, as I think many of you know, we have ongoing engagements in both Egypt and Jordan, to neighboring countries. We will come to Egypt in just a moment because you have a question on that.

With respect to Jordan, we have a long standing, very productive relationship with the Jordanian authorities, and following discussions that started over the summer, IMF staff reached a staff level agreement on a new four-year EFF, which would unlock $1.2 billion following IMF Board approval. The program with Jordan aims to improve Jordan's resilience and to help it maintain stability in the face of shocks. Let me now turn to Egypt and then we will come to Tunisia. So, on Egypt -- before I start on Egypt, are there any other questions on Egypt?

QUESTIONER: Good morning, Julie and all colleagues. During the COP28 in Dubai, the IMF Managing Director stated that she is expecting an increase to the $US3 billion Extended Fund Facility (EFF) loan program with Egypt. Could you provide us with the new updates regarding the deal and what is the ceiling of the increase that could be applied to the loan's amount?

MS. KOZACK: On Egypt, let me just step back and give you the overview and then I will go to the specific questions. I think as many of you know, the Egyptian economy is facing significant macroeconomic challenges that have become more complex to manage given the recent conflict in Gaza. We are in discussions with the authorities on a set of policies that could support completion of the first and second reviews under the EFF. This strong engagement with the authorities has helped achieve important progress in the discussions that will continue in the coming weeks to operationalize the key policy priorities. This includes the need to tighten monetary and fiscal policy, together with a flexible exchange rate system, in support of the authority's commitment to reduce inflation, and to gradually move to an inflation targeting regime. Egypt is one of the countries that has been affected by the recent conflict, including the potential impact on tourism revenues. Therefore, as part of these discussions, it is clear that additional financing will be critical to ensure the success in the implementation of the policy package for Egypt. The discussions of the exact size of financing is part of the ongoing discussions that IMF staff is having with the Egyptian authorities.

On Tunisia, the mission for the 2023 Article IV Consultation, which was originally scheduled for December 5th through December 19th, has been postponed by the authorities. The IMF remains a strong partner of Tunisia, and we stand ready to conduct the Article IV Consultation, and we will continue to support the authorities in their reform efforts.

QUESTIONER: I have two questions: on Nigeria and on Zimbabwe.

On Nigeria, the current high inflation and the government driven austerity have left many Nigerians in a very precarious economic situation. Can you provide any information on how the Fund is working with the government of Nigeria on addressing some of these issues? And what is the fiscal projection for Nigeria and any other updates you can give us on Nigeria. And on Zimbabwe, if you can provide any latest engagements, and any other update on Ghana and Zambia.

MS. KOZACK: Let me start with Nigeria. On Nigeria, President Tinubu has implemented two bold and important reforms shortly after taking office. The first is on fuel subsidies. Nigeria's fuel subsidies were costly, especially for the budget, and not well targeted to provide relief for vulnerable households, and so this was rectified. And the second was unifying of the official exchange rate and that removed long standing distortions of the multiple exchange rate system.

You asked a specific question on inflation. Inflation in Nigeria is running very high. It reached over 27 percent in October, that is the year-on-year number. The Central bank, under its new leadership, has started to withdraw excess liquidity that was in the system and contributing to high inflation. The next Monetary Policy Committee meeting should further raise policy interest rate. So, the Central bank is taking action to try to address the high inflation problem. As we mentioned in our Article IV Consultation, which was held in February of 2023, raising revenue from the very current low revenue to GDP ratio of 9 percent is essential to create fiscal space for social and development spending. 9 percent of GDP is a very low revenue to GDP ratio, and it is really not high enough to be able to support strong social safety nets, and development spending, to help protect vulnerable households and also to meet Nigeria's development needs. The 2024 budget aims to reduce the fiscal deficit while also creating space for these priority spendings, both on the social side and also on the development side.

With respect to Zimbabwe, the IMF stands ready to support Zimbabwe as soon as the authorities are ready. In June 2023, the Zimbabwean authorities formally requested, what we call an SMP, Staff Monitored Program. An SMP would help durably to restore macroeconomic stability in Zimbabwe. With strong policy commitment and implementation, the SMP would help stabilize the economy and revitalize growth. It would also help build a track record of policy and reform implementation, which could pave the way for arrears clearance and debt restructuring in Zimbabwe.

On Ghana, the authorities’ strong policy and reform commitments under the three-year, $3 billion program with the IMF is starting to bear fruit. There are signs of economic stabilization. Growth in 2023 has proven more resilient than initially envisaged, inflation has come down, and the fiscal and external positions have improved. Moreover, exchange rate volatility has declined. On October 6, 2023, our IMF team reached a staff level agreement on the first review under the program, and once this review was completed by the Board, Ghana would have access to $600 million in financing. To ensure timely completion of the review, official creditors and the Ghanaian authorities will need to reach agreement on a debt treatment, consistent with the objectives of the program, and in line with the financing assurances that creditors provided in May of 2023. Discussions between the Ghanaian authorities and the Official Creditor Committee are ongoing, and we certainly hope that an agreement can be reached soon so that we can rapidly bring the program to the Board.

MS. KOZACK: Are there any other questions on Zambia?

QUESTIONER: With the deal with the OCC and bondholders falling apart, I just wanted to get your sense of what the concerns are around those discussions and how they are re moving ahead and what you expect to be the timeline for when the deal might get reached? And what the sticking points might be? And also, what impact that might have on the next disbursement under the IMF program and what it might mean for the DSA analysis if a deal isn't done by the end of this year, what it means for 2024 and IMF engagement with Zambia.

MS. KOZACK: Someone online wanted to come in on Zambia.

QUEISTONER: Just a quick rider to the questions asked. What does this mean? The collapse of the Zambia restructuring from a comparability of treatment discussion as IMF had a rethink given what has happened with Zambia.

MS. KOZACK: Let me start by saying that the Zambian economy is showing resilience. Real GDP growth is now projected at 4.3 percent in 2023 and 4.7 percent in 2024. Conditions do remain challenging, and they've put pressure on the external balance in the exchange rate, and inflation has increased.

The staff level agreement on the second review of the program was reached on November 20th, and this agreement shows that Zambia's performance under the program remains satisfactory with a significant fiscal effort undertaken in 2023.

Zambia's performance under the program, the agreement in principle with official creditors on the Memorandum of Understanding (MOU), and the authority's good faith efforts to reach agreement with private creditors, are sufficient to bring this review to our Board toward the end of December, and approval of the review by the IMF's Executive Board would give Zambia access to $184 million in financing under the program.

There was a question on the issue that arose between the bondholders and the Official Creditor Committees, which we call OCC, and its compatibility with the DSA.

On this, IMF staff had assessed that the proposal that was negotiated between Zambia and the bondholders would be consistent with our Debt Sustainability Analysis, and the program parameters, provided that the MOU with the OCC would remain valid. The latter included the requirement that the OCC would assess that the bondholder proposal would meet comparability of treatment or, in the opposite case, that the authorities would further revise the proposal until the OCC assesses that the comparability of treatment requirements were met.

And to just step back and remind, the IMF- supported program determines the overall financing envelope needed to restore debt sustainability. But it does not assess comparability of treatment. It was the OCC, on November 20th, that assessed that comparability of treatment was not met, and as planned, in the MOU, the authorities are now further revising the proposal to ensure that the OCC assesses that the comparability of treatment requirements are met.

QUSTIONER: Let me ask about the Caribbean. I know in Morocco IMF support to both Haiti and Suriname came up, so I wanted to ask about both. With Haiti, with the Kenyan police about to deploy, what's the IMF thinking? What has it done in recent times on Haiti?

On Suriname, particularly on the debt to China, there seems to be that the IMF has said that agreements with creditors, all except China, have been consistent with program parameters, but not with China. So where do things stand with Suriname on debt to China.

MS. KOZACK: Let me start with Haiti. The IMF has a strong engagement with Haiti on multiple fronts. A staff monitored program, SMP, aimed at strengthening the macro framework and supporting governance reforms was concluded satisfactorily in June of 2023, and a new SMP is ongoing. And this new SMP aims at helping Haiti to build a policy track record to stabilize the economy, raise government revenues, and strengthen institutions, and governance.

Earlier this year, the IMF dispersed $110 million under our Food Shock Window to help fight food insecurity in Haiti. We are also engaging with Haiti through capacity development. Work in this area is extensive and it spans from policy advice on raising revenue, enhancing the transparency of public spending, and improving governance.

A governance diagnostic, which is led by the IMF's legal department, is currently underway, and it should help provide a roadmap to strengthen the rule of law and enhance revenue administration in Haiti. We strongly collaborate as well with other development partners in Haiti in line with our overall strategy, for fragile and conflict affected states.

On Suriname, on November 8th, the IMF team and the Surinamese authorities reached a staff level agreement on the fourth review of the authorities’ economic program supported by an EFF. The authorities requested an extension of the EFF until March 2025 and an augmentation of the program of about $63 million. The staff level agreement is subject to approval of our Executive Board, and the Executive Board is expected to consider the review on December 15th.

The authority's commitment to structural reforms and macroeconomic stability is starting to bear fruit. The economy is growing, inflation is on a downward trend, and investor confidence is returning. The authorities are close to concluding the debt restructuring negotiations with their remaining bilateral creditors.

QUESTIONER: Regarding US inflation, the market is increasingly believing that the Fed's rate hike cycle is over. What is your opinion on this? And also, when do you think, the Fed is going to start cutting rates?

MS. KOZACK: When we think about US inflation, let me just step back to say that the US economy has proven to be quite resilient. The economy was exceptionally strong in the third quarter of 2023 and despite this strong growth and tight labor markets, wage and price inflation are both coming down. High frequency indicators point to some softening in growth momentum ahead, and when we take this picture comprehensively, we think that the current policy settings are the right ones for the US on the monetary policy side, and that interest rates will likely need to stay at current levels well into 2024. We are also confident that the Federal Reserve is cognizant of the upside risks to inflation and will act accordingly if these risks are realized.

And just as a reminder, I will repeat again, that our inflation forecast for core PCE inflation, which is the Fed's preferred measure of inflation, in 2022, it was 4.8 percent, we projected at 3.8 percent in 2023, and at 2.8 percent in 2024.

And with this, I'm going to close this press briefing. Thank you very much for joining us. This briefing is embargoed until 11:00 a.m. Eastern Time. The transcript will be made available on, as always. And, of course, in case of any clarifications or additional queries, please reach out to my colleagues at

This will be our last briefing of the year. I look forward to seeing you all in the new year, and I wish you all a very happy New Year and a wonderful holiday season. Thank you so much for joining us today.

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