Transcript of IMF Press Briefing
IMF News, April 4, 2024
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- Published: April 4, 2024
Spring Meetings and logistics
- Spring Meetings scheduled in Washington, DC from April 15th through 19th.
- Managing Director Kristalina Georgieva to deliver a curtain raiser speech on April 11 at 9:00 a.m. at the Atlantic Council.
- IMF to release the latest World Economic Outlook, the Global Financial Stability Report, the Fiscal Monitor, and Regional Outlooks during Spring Meetings.
Ukraine: program status, financing, and risks
- On March 21, the Executive Board completed the third review of Ukraine's four-year Extended Fund Facility (EFF) arrangement.
- Third-review disbursement: US$880 million; total disbursements under the program: US$5.4 billion.
- Ukraine's economy: described as showing "remarkable resilience" but outlook is "subject to exceptionally high war-related uncertainty."
- Program implementation: "all structural benchmarks and all but one quantitative performance criteria met."
- Debt sustainability analysis (DSA) for the third review found debt sustainable on a forward-looking basis conditional on:
- continued fiscal consolidation as outlined under the program;
- continuation of substantial concessional financing consistent with the program;
- debt restructuring covering official bilateral and external commercial debt (explicitly excludes multilateral debts, including IMF debt).
- IMF stance on frozen Russian assets: decisions for relevant country authorities and jurisdictions; IMF emphasizes sufficient legal underpinnings and preserving functioning of the international monetary system.
- IMF will factor recent missile/drone strikes and energy infrastructure attacks into macroeconomic framework for the next review.
- Spring Meetings to include ministerial roundtable discussions on Ukraine and the "criticality of timely disbursements of budget support for Ukraine."
Global spillovers from the Ukraine war
- Early sharp increases in food and energy prices led to a global cost-of-living crisis; low-income countries were particularly affected.
- Central bank responses raised interest rates to bring down inflation, increasing debt servicing costs for many low-income countries.
- IMF will present a full assessment in the upcoming World Economic Outlook and Regional Outlooks.
Sri Lanka: program progress and debt restructuring
- December 12, 2023: Executive Board approved the first review enabling a disbursement of US$337 million.
- March 21: Staff-Level Agreement reached to conclude the second review and the 2024 Article IV Consultation; Executive Board completion requires:
- implementation of agreed prior actions;
- completion of the financing assurances review to confirm multilateral partners' continued financing and assess progress with debt restructuring.
- Positive macro outcomes cited: "rapid disinflation, robust reserve accumulation, and initial signs of economic growth."
- Next steps: conclude negotiations with external commercial creditors and implement agreements in principle with official creditors; domestic debt operations largely completed.
El Salvador: program discussions and bitcoin risks
- IMF staff are engaging with Salvadoran authorities to reach an IMF-supported program focused on fiscal and external sustainability, productivity, and governance.
- "Addressing risks arising from Bitcoin is a key element of our discussions."
- 2023 developments: real GDP growth strengthened driven by tourism and construction; inflation declined; current account deficit narrowed; fiscal policy was "somewhat accommodative" due to higher pension spending and public investment.
Bank of Japan (BOJ) and Taiwan earthquake
- IMF welcomes BOJ decision to exit yield curve control and negative interest rate policy; these actions align with IMF recommendations to anchor inflation around Japan's 2 percent target.
- Further BOJ moves should be "data dependent."
- On the Taiwan earthquake: IMF condolences expressed; impact analysis to be covered in the World Economic Outlook and Regional Economic Outlook releases.
Argentina: stabilization progress and exchange rate policy
- Authorities implementing an ambitious stabilization plan centered on a strong fiscal anchor eliminating Central Bank financing of the government.
- Reported outcomes: fiscal surplus recorded in January and February "for the first time in over a decade"; international reserves rebuilding; inflation falling "more quickly than anticipated"; improvements in market indicators such as FX GAAP and sovereign spreads.
- IMF engagement: active discussions in the context of the current IMF-supported program; "premature to discuss modalities for a potential future program."
- Exchange rate: authorities using comprehensive measures (fiscal anchor, foreign exchange and monetary policy) to support reserve accumulation and disinflation.
Pakistan: Stand-By Arrangement (SBA) review and disbursement
- March 19: IMF staff and Pakistani authorities reached staff-level agreement on the second and final review under Pakistan's SBA (subject to Executive Board approval).
- Upon Board approval, access to "around $1.1 billion" bringing total disbursements under the SBA to "about $3 billion."
- Board meeting expected in late April.
- Authorities have expressed interest in a successor IMF-supported program.
Sub-Saharan Africa: climate shocks, droughts, and IMF support
- Increased frequency of climate shocks noted; current drought emergencies in Zimbabwe, Malawi, and Zambia highlighted.
- Since 2020, IMF provided "almost $58 billion" of financing to Sub-Saharan Africa, mostly on highly concessional terms.
- Nine Sub-Saharan African countries with arrangements approved under the Resilience and Sustainability Facility (RSF): Benin, Cabo Verde, Cameroon, Cote d'Ivoire, Kenya, Niger, Rwanda, Senegal, and Seychelles.
- IMF continues to receive requests for RSF support and will work with countries to build resilience.
Kenya: mission and program review
- IMF team on the ground in Kenya conducting the 7th review of Kenya's IMF-supported program; team assessing recent developments and program performance.
- IMF will communicate findings after mission concludes.
Niger and Tunisia: program updates
- Niger: IMF has an Extended Credit Facility (ECF) and an RSF; a team visited in early March; preparations underway for a Review Mission; Article IV Consultation expected to be presented to the Board later this year.
- Tunisia: benefiting from term-of-trade and tourism tailwinds; growth subdued and unemployment high; three-year wage agreement helped reduce external and fiscal deficits in 2023; IMF committed to supporting Tunisia's reform efforts.
Interest rates outlook
- Reference to an IMF analytical chapter on the neutral rate of interest (World Economic Outlook, April 2023): recent increases in real interest rates likely temporary; when inflation is under control, advanced economy central banks likely to ease policy and real rates may return toward pre-pandemic levels.
- Outcomes depend on global developments; chapter presented different scenarios.
Germany and Eurozone spillovers
- Germany avoided dire scenarios after Russian gas shutoff due to energy conservation and securing supplies.
- Near-term growth weighed by energy shock, tighter financial conditions, and weak external demand.
- Study cited: a 1 percentage point negative shock to German near-term growth affects the rest of the Eurozone by 0.1 percentage points; U.S. shocks can have larger Euro area effects.
Ecuador: request for IMF support and policy needs
- Ecuador authorities have requested an IMF-supported program.
- Main challenges: macroeconomic and fiscal pressures amid an ongoing security crisis and a liquidity crisis; government has taken policy steps to address liquidity and fiscal issues.
- IMF recommends policies to ensure macroeconomic and fiscal sustainability and create conditions for stronger and more inclusive growth.
Ethiopia: program request and mission
- IMF received a request for financial assistance to address food insecurity, humanitarian needs, post-conflict reconstruction, and high inflation, and to support Ethiopia's "homegrown Economic Reform Agenda."
- IMF mission visited Ethiopia from March 19 through April 2; "substantial progress" made toward ways IMF can support the authorities; discussions continue and will proceed at the Spring Meetings.
Papua New Guinea: Resident Representative Office rationale
- IMF has a program with Papua New Guinea; establishing a Resident Representative Office is standard practice when a program exists.
- Reasons: 14-hour time difference with Washington; Resident Representatives support program monitoring, engage with authorities, and foster local community engagement to build social support for reforms.
India growth projections and institutional roles
- Clarification of roles: Executive Directors represent countries/groups on the IMF Executive Board; staff produce IMF staff forecasts.
- Staff forecast (as of January): medium-term growth for India projected at 6.5 percent (a slight upward revision relative to October).
- Staff will update forecasts in the upcoming World Economic Outlook.
Ghana, transparency in debt processes, and Zambia debt restructuring
- Ghana: IMF had no immediate update; follow-up to be provided bilaterally.
- Common Framework/creditor transparency concerns noted (private bondholder access to Official Creditor Committee terms).
- Zambia:
- 2023 real GDP growth: 4 percent (broadly in line with program projections).
- 2024 outlook: deterioration due to drought and slower rebound in mining production; drought pressures budget, external balance, inflation, and food security.
- Third review mission scheduled after the Spring Meetings to assess drought impact and financing needs.
- Recent agreement in principle with Eurobond holders described as a "critical milestone"; under G-20 common framework, authorities must finalize bilateral agreements with official creditors and reach agreement with other commercial lenders; agreements should be in line with program parameters and comparability of treatment.
IMF Communications Department — Transcript of IMF Press Briefing, April 4, 2024