Transcript of IMF Press Briefing
IMF News, January 11, 2024
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- Published: January 11, 2024
Announcements and logistics
- Briefing embargoed until 11:00 a.m. Eastern Time.
- Managing Director Kristalina Georgieva and First Deputy Managing Director Gita Gopinath will attend the World Economic Forum 2024 Annual Meetings in Davos:
- Managing Director in Davos from January 15 to January 19.
- Staff Discussion Note on "Artificial Intelligence and the Future of Work" to be released Monday, January 15 (made available under embargo via the Press Center).
- Managing Director to travel to Rome on January 28 and 29 to attend the Africa Italy Summit.
- IMF will launch the next World Economic Outlook Update on Tuesday, January 30 in Johannesburg, South Africa.
Egypt — program discussions and macro needs
- Background:
- Extended Fund Facility (EFF) approved by the Executive Board in December 2022 in the amount of $3 billion.
- Managing Director met with Egypt’s Minister of Finance and Central Bank Governor on January 9 at IMF headquarters.
- Ongoing discussions:
- IMF staff and authorities are discussing a set of policies to support completion of the first and second reviews of Egypt’s EFF.
- Details such as size of disbursement and specific policy measures are under discussion and will be communicated in due course.
- Policy priorities noted by IMF:
- Tighten monetary policy.
- Tighten fiscal policy.
- Move toward a flexible exchange rate system to support the authorities’ commitment to reduce inflation and to gradually move to an inflation targeting regime.
- Additional financing seen as critical to successful program implementation.
- Impact of the Israel–Gaza conflict:
- Conflict has complicated Egypt’s macroeconomic situation.
- Observed effects include disruptions in the Red Sea and negative impacts on current-account-supporting sectors such as tourism.
Global outlook and World Economic Outlook (WEO)
- Retrospective and near-term view:
- 2023 proved more resilient than expected at the beginning of 2023.
- IMF expects resilience to continue into 2024.
- Key characterizations:
- Global growth “hovering around 3%” both in 2023 and expected over the medium term.
- Past global average growth rates were “about 3.8%”.
- IMF view: poised for a soft landing but significant challenges remain in an environment of high uncertainty and repeated shocks.
- Distribution of resilience:
- Differentiation across countries; the United States outperformed peers and slightly surpassed its post-pandemic growth trajectory.
- Low-income countries at risk of falling further behind.
Ukraine — program status, needs, and forecasts
- Program progress:
- In December the Board completed the second review of Ukraine’s EFF, enabling a disbursement of about $900 million.
- Total disbursements under the program to date: $4.5 billion.
- Program targets met and strong structural progress under challenging conditions.
- Macroeconomic indicators:
- Latest IMF forecast (released in December) suggested growth in 2023 would be 4.5 percent.
- Inflation: nearly 27 percent in 2022; expected to be 6 percent in 2023.
- Financing needs for 2024:
- Estimated financing need: about $42 billion.
- Official donor support needed: about $32 billion.
- IMF stance:
- Continued donor/partner financing essential to support macroeconomic stability.
- IMF remains ready to assess and, if requested, provide additional support consistent with mandate and capacity.
Russian frozen assets — IMF role and assessment approach
- IMF position:
- Decisions on seizure or taxation of Russian assets are for relevant country authorities.
- IMF is monitoring ongoing discussions and will assess potential economic implications for member countries and the international monetary system based on the precise details of any actions.
BRICS enlargement and global fragmentation / derisking
- IMF view on country groupings:
- Welcomes countries working together to deepen trade and integration.
- Evidence on derisking and fragmentation:
- Greenfield FDI increasingly flowing among geopolitically aligned countries.
- Supply chains lengthening; trade restrictions have gradually increased over the last five years.
- Research findings (from IMF staff regional work):
- Derisking scenarios may drag on global growth:
- One scenario: global GDP could fall by 1.8%.
- Full reshoring scenario: global GDP could decline by 4.5%.
Argentina — staff-level agreement and program details
- Recent developments:
- Staff-level agreement for the 7th review of Argentina’s EFF arrangement reached.
- Subject to Executive Board approval, Argentina will have access to about $4.7 billion U.S. dollars.
- Objectives of agreed package:
- Restore macroeconomic stability and bring the program back on track after missed targets in late 2023.
- Support an ambitious stabilization plan with:
- Large upfront fiscal consolidation.
- Actions to rebuild international reserves.
- Correcting relative price misalignments.
- Strengthening the central bank’s balance sheet.
- Creating a simpler, rules-based, market-oriented economy.
- Scaling up social assistance to protect the most vulnerable.
- Specific program targets communicated:
- Reserve accumulation target: accumulate reserves of $10 billion U.S. dollars by the end of 2024 (a change in reserves of $10 billion).
- Fiscal target: aim to achieve a primary fiscal surplus of 2% of GDP in 2024.
- Exchange rate and import controls:
- IMF notes Argentina moving toward a more market-based exchange rate regime and abandoning administrative import controls; addressing debt overhang associated with importers in an orderly fashion.
- Monetary policy stance:
- Evolving to support money demand and disinflation.
- Authorities committed to ending central bank credit to the government while strengthening the central bank's balance sheet.
- Implementation notes:
- Large omnibus legislative package under consideration; authorities are expected to build political support for key fiscal measures.
- Full staff report, letter of intent, and projections (growth and inflation) will be provided around the time of the Board meeting and publication.
Japan–Germany nominal GDP comparison
- Technical explanation:
- Nominal GDP comparisons in U.S. dollars are affected by exchange-rate movements.
- The Yen has weakened more against the dollar than the Euro, explaining much of the dollar-denominated change.
- Using PPP weights (Purchasing Power Parity), Japan is projected to remain a larger economy than Germany.
- Japan projected to have positive growth in 2023; Germany expected to have weaker growth.
Spain — fiscal consolidation and emergency measures
- IMF policy priorities for Spain:
- Sustained fiscal consolidation in 2024 and beyond to rebuild fiscal buffers and reduce public debt.
- Advance reforms to reduce structural unemployment and boost productivity.
- On emergency measures extended into 2024:
- Fiscal cost for 2024 assessed as lower than in 2023 due to varying degrees of extension.
- Additional efforts will be required to achieve the envisaged fiscal deficit target of 3% for 2024.
- IMF staff sees the 3% fiscal deficit target as still appropriate.
Mozambique, Angola, and DRC (Africa updates)
- Mozambique:
- Executive Board completed the third review under the ECF arrangement; program performance satisfactory and on track.
- Authorities implemented immediate policy adjustments after earlier fiscal slippages.
- Continued fiscal efforts warranted to reduce financing needs and contain debt vulnerabilities.
- Parliamentary approval in December 2023 of a sovereign wealth fund bill noted as an important step for transparency and sound natural resource management.
- Angola and DRC:
- No fresh details provided in the briefing; IMF will follow up bilaterally.
Red Sea attacks, PortWatch data, and Yemen implications
- Red Sea trade significance and observed impacts:
- Transport through the Red Sea accounts for 10% of global trade flows.
- Ongoing attacks raise shipping times and costs, potentially applying upward pressure on prices.
- PortWatch indicators (10-day period ended January 2):
- Volume through the Suez Canal decreased by 28% year over year.
- Shipping volumes via the Cape of Good Hope increased by 67%.
- IMF monitoring: closely tracking developments and shipping-route shifts; will provide updates as analysis continues.
Sri Lanka — program progress and next steps
- Recent actions:
- Executive Board approved the first review of the program on December 12, 2023 with a disbursement of $337 U.S. dollars.
- Program performance assessed as satisfactory.
- Current mission:
- A staff visit is on the ground to discuss recent developments and follow up on program targets and commitments.
- Next program review mission to be scheduled later.
- Debt-restructuring steps:
- Conclude negotiations with external commercial creditors and implement agreements with official creditors.
- Domestic debt operations largely completed.
Crypto assets and recent U.S. SEC decision
- IMF assessment of crypto assets:
- Potential benefits: cheaper and more transparent payments.
- Risks: macro-financial risks including effects on monetary policy effectiveness and financial stability; consumer protection concerns.
- IMF recommends a consistent, coordinated, and comprehensive regulatory framework to balance innovation benefits and risks.
- On the SEC approval of spot bitcoin ETFs:
- IMF is analyzing the decision and will have more to say later.
Tunisia — mission status
- A mission scheduled for December 5–19 was postponed by the authorities.
- IMF remains a strong partner and stands ready to conduct Article IV consultations and support reform efforts.
Ghana — program review and financing
- Program status:
- On October 6, 2023, IMF staff reached a staff-level agreement with Ghana for the first review.
- Executive Board completion of the review would give Ghana access to US$ 600 million.
- Preconditions and creditor engagement:
- Timely completion of reviews requires agreement between Ghana and official creditors on a debt treatment consistent with program objectives and the financing assurances provided in May 2023.
- Discussions between Ghana and the official creditor committee are ongoing with good progress, aiming to bring the program to the Board soon.
- On draft term sheet sufficiency:
- IMF indicated no additional detail beyond prior communication; further comment to be provided if possible.
Closing remarks
- Transcript to be made available on IMF.org.
- Media contact: MEDIA@IMF.org.
Transcript of IMF Press Briefing, January 11, 2024 — IMF Communications Department