Transcript of IMF Press Briefing (February 22, 2024)
IMF News, February 22, 2024
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- Published: February 22, 2024
Global outlook and monetary policy
- IMF global growth projections from the January WEO update: 3.1% in 2024 and 3.2% in 2025.
- Historical average growth referenced: 3.8% (2000 to 2019).
- Inflation: falling faster than expected in most regions due to easing supply constraints and restrictive monetary policy.
- IMF guidance on monetary policy:
- "The job is not yet done on monetary policy."
- Central banks should guard against premature easing.
- Where underlying inflation and inflation expectations are "clearly and decisively moving towards target consistent levels," some adjustments may be warranted.
- Monetary policy is becoming less synchronous across countries: some emerging economies have begun to reduce policy rates from already high levels, while some advanced economies need to retain restrictive rates.
UK and Japan: recent developments and implications
- Japan: weaker than expected outturn in the second half of 2023 driven by weak domestic consumption and investment; 2023 growth remained robust due to strong export performance. The weaker 2023 performance may add to downside risks for Japan in 2024.
- UK: negative growth in Q4 2023. High-frequency indicators are pointing to developments in 2024; IMF will incorporate new information in country forecasts to be released with the April WEO.
Africa: country-by-country status, program updates, and risks
- Ethiopia:
- Authorities requested financial assistance to address food security, humanitarian needs, post-conflict reconstruction, and high inflation, and to support a homegrown Economic Reform Agenda.
- An IMF mission in October made "good progress"; discussions are ongoing and another mission to Addis Ababa is expected in the coming weeks.
- Ghana:
- Executive Board completed the first review of Ghana's IMF-supported program on January 19, resulting in additional access of 600 million U.S. Dollars and bringing total disbursements under the program to $1.2 billion.
- Progress noted: signs of economic stabilization, more resilient growth in 2023, rapidly declining volatile inflation, improved fiscal and external positions, and reduced exchange rate volatility.
- Debt restructuring progress: domestic debt exchange completed last year; January 12 agreement in principle with official bilateral creditors; engagement ongoing with external private creditors.
- IMF role: sets overall envelope for debt restructuring; details are to be agreed between debtor and creditors.
- IMF emphasis: steadfast policy and reform implementation needed to restore macroeconomic stability and debt sustainability.
- Kenya:
- Recent re-entry to the international bond market expected to help shift from costly domestic financing to external financing, meet gross financing needs, ease liquidity pressures, and demonstrate commitment to debt obligations.
- Comment on exchange rate: IMF recently assessed Kenya's external position to be "broadly in line with medium term fundamentals and desirable policies"; exchange rate flexibility should help respond to shocks.
- President's proposal to cut food imports (50% in 5 years; 100% in 10 years): IMF has no details and cannot assess yet; food security is a high priority.
- Recent Eurobond issuance carried a coupon of 9.75%.
- Shilling appreciation noted: rally of about 12% in four days following the Eurobond announcement.
- Zambia:
- Real GDP projections: 4.3% in 2023 and 4.7% in 2024.
- Second review approved in December 2023, providing additional $187 million and bringing total disbursements under the program to about $560 million.
- Debt treatment reflected in the MOU agreed in October 2023 is consistent with IMF program objectives and parameters and provided sufficient assurances for completing the second review.
- IMF noted Zambia is pursuing policies consistent with restoring macroeconomic stability; discussions with bondholders and the official Creditor Committee are progressing.
- Tunisia:
- 2023 Article IV mission originally scheduled for December 5–19, 2023, was postponed by the authorities.
- Staff-level agreement on a four-year EFF was based on a 2022 homegrown reform program; authorities later indicated they were revisiting reforms and have not shared alternative measures with IMF staff.
- IMF remains ready to engage should authorities express interest in the program.
- Guinea:
- No immediate update provided; IMF will follow up bilaterally.
- Senegal:
- IMF is actively monitoring the situation, engaging relevant stakeholders, and hopes for a speedy resolution to ensure stability and economic progress.
- Regional question on election-year fiscal risks (Ghana): IMF highlighted the need to manage expenditure escalation risks and to adhere to program targets to safeguard macro stability; timing of Ghana’s second review was not specified.
Ukraine, Russia, and sanctions considerations
- Ukraine:
- On December 11, 2023, IMF Executive Board completed the second review under the EFF, enabling a disbursement of about $900 million and bringing total disbursements to about $4.5 billion.
- An IMF team is currently in Warsaw to conduct the third review; findings to be communicated at end of mission.
- 2024 estimated financing needs for Ukraine: about $42 billion in total financing, including official donor support of about $31.9 billion.
- Russia:
- Decision on frozen Russian assets rests with holding countries; IMF emphasizes the importance of sufficient legal underpinnings to avoid risks: litigation, countermeasures, and risks to the international monetary system.
- Russia’s economy has shown stronger-than-expected growth so far, described as a "war economy" with large military expenditure and social transfers supporting production and consumption.
- Signs of overheating: rising inflation and a shrinking current account surplus.
- IMF expectation: reduced access to international financial system and technologies should weaken Russia’s growth over the medium term; loss of highly skilled labor will have a significant medium-term impact.
Egypt and the MENA region
- Egypt:
- IMF and Egyptian authorities have agreed on the main elements of a program and are making "excellent progress" toward a staff-level agreement for combined first and second reviews; discussions ongoing.
- IMF working with Egypt and partners to ensure Egypt has no residual financing needs related to refugee pressures from Gaza and to safeguard macroeconomic and financial stability.
- MENA region impact of Gaza conflict:
- IMF downgraded MENA growth projection for 2024 by 0.5 percentage point relative to October projections due to adverse economic consequences of the conflict.
- PortWatch data through the seven days ending February 13: Suez Canal shipping volumes decreased by 55% year-over-year; volumes via the Cape of Good Hope increased by nearly 75%.
- IMF continues to provide technical assistance and policy advice to the West Bank and Gaza as circumstances allow.
Argentina and Gita Gopinath’s visit
- First Deputy Managing Director Gita Gopinath is in Buenos Aires meeting the President, the administration’s economic team, academics, civil society, and the private sector to hear firsthand about Argentina's economic challenges and opportunities.
- IMF will await Gita Gopinath’s communication at the end of her visit for further perspectives.
- No specific program decisions or policy prescriptions were announced during the briefing.
Europe, protests, and sectoral impacts
- European farmers’ protests: IMF expects any impact on economic output to be small because agriculture is a relatively small share of GDP in most European countries; example cited: agriculture is less than 3% of GDP in Spain.
- Persistent protests could have a more significant impact on prices.
Pakistan and program status
- Pakistan:
- On January 11, IMF Executive Board approved the first review of the Stand-By Arrangement (SBA), bringing total disbursements under the SBA to $1.9 billion.
- SBA supports stabilization with a focus on protecting the most vulnerable; caretaker government maintained economic stability through fiscal targets, protected social safety nets, tight monetary policy, and rebuilding foreign exchange reserves.
- IMF looks forward to working with the new government on policies to ensure macro stability and prosperity.
- Question on potential IMF engagement with political claims (Imran Khan’s letter): IMF declined to comment on ongoing political developments.
Transcript of IMF Press Briefing, February 22, 2024 — IMF Communications Department