Transcript of IMF Press Briefing
IMF News, June 6, 2024
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- Published: June 6, 2024
Announcements, logistics, and contacts
- Transcript date: June 6, 2024.
- Briefing embargo: embargoed until 11:00 a.m. Eastern Time in the U.S.
- Press contacts:
- PRESS OFFICER: Tatiana Mossot
- Phone: +1 202 623-7100Email: MEDIA@IMF.org
- @IMFSpokesperson
- Upcoming Managing Director engagements:
- June 14th: G7 Leaders' Summit in Apulia, Italy.
- June 19th: Lujiazui Forum in Shanghai, China.
- June 20th: Eurogroup meeting in Luxembourg; press conference to present findings of the annual consultation on the euro area's economic policies (annual consultation equivalent to Article IV consultation).
- June 24th: hybrid press conference on the conclusion of the 2024 U.S. Article IV Consultation.
- Deputy Managing Directors travel:
- Kenji Okamura: currently in Tokyo for the 9th Tokyo Fiscal Forum and the Fiscal Policy and Sovereign Debt Conference.
- Li Bo: traveling June 24th to July 5th to China, Tajikistan, and Cote d'Ivoire; June 26th speaking at the World Economic Forum annual Meeting of the New Champions in Dalian, China; participating in discussions on climate change and digitalization; constituency meeting in Tajikistan.
U.S. and euro-area monetary policy and outlook
- U.S. assessment and policy guidance:
- U.S. economy: described as "remarkably resilient" despite shocks and the sharp tightening of monetary policy from 2022 to 2023.
- First quarter activity: "slowed" but domestic demand "remained strong."
- Inflation: "overall higher than we would like to see" through the first quarter; "bumps on the road" anticipated as inflation returns to target.
- Policy guidance: Fed should be "cautious and data dependent"; policy restraint is expected to slow U.S. growth in 2024.
- Expectation: "there does need to be some slowing of the U.S economy in 2024."
- U.S. Article IV Consultation: Staff Report and Managing Director will cover issues in more detail at the press conference later this month.
- Euro area / ECB:
- Assessment: "significant progress in reducing inflation in Europe."
- IMF view: "ECB policy is appropriate"; IMF "did think that it was appropriate for the ECB to begin cutting in June."
- Recommendation: ECB should maintain a "data dependent" and "meeting-by-meeting" approach.
Ukraine: program, review, debt restructuring, and reforms
- Program status:
- On May 31st, IMF staff and Ukrainian authorities reached staff-level agreement for the fourth review of the four-year EFF Arrangement (subject to Executive Board approval).
- Conditional disbursement upon Board approval: access to a disbursement of $2.2 billion.
- Performance: "all quantitative performance criteria met," one structural benchmark met, another implemented with a short delay.
- Economy: "resilient growth and disinflation through the first quarter of 2024"; "risks to growth are very high and they're rising."
- Executive Board timing: "we do expect our Executive Board to consider Ukraine's review in the coming weeks."
- Debt restructuring and IMF role:
- Discussions between Ukraine and creditors (bondholders/external creditors) are "on track" and ongoing.
- IMF role: define targets for the debt treatment consistent with the EFF program; these targets will appear in the Debt Sustainability Analysis (DSA) published with the Staff Report.
- Purpose: debt treatment needed to bring public debt and gross financing needs to sustainable levels.
- Reforms highlighted:
- Authorities plan to complete the external audit of NABU (the National Bank of Ukraine) and to amend the criminal procedure code in the autumn of this year.
- Authorities plan to enact a law to establish a new high administrative court planned for the end of this year.
Country updates and program notes
- South Africa:
- Past growth: declined from 1.9 percent in 2022 to 0.6 percent in 2023.
- IMF projections (World Economic Outlook, April):
- 2024: 0.9 percent.
- 2025: 1.2 percent.
- Medium-term growth: 1.4 percent.
- Inflation: returned to within the South African Reserve Bank's 3 percent to 6 percent target range in 2023 following decisive policy tightening.
- Key policy priorities recommended:
- Remove bottlenecks via an ambitious structural reform agenda.
- Put public debt on a sustained downward path through fiscal consolidation.
- Continue to manage the return of inflation to target while safeguarding financial stability.
- Political context: ANC lost majority; IMF looks forward to constructive engagement with a new government.
- Cameroon:
- Staff-level agreements reached on May 31st for the 6th reviews of Cameroon's ECF/EFF (blend) and the first review of the Resilience and Sustainability Facility.
- Challenges: persistent public financial management weaknesses; substantial extra-budgetary expenditure in 2023 led to overruns and a missed target on the non-oil primary fiscal deficit by a small margin.
- Authorities intend to introduce a revised 2024 budget to limit expenditures executed through treasury advances and adopt a plan to clear domestic arrears.
- IMF concern: spending overruns constrain resources for pro-growth investment and underscore need to strengthen budget integrity and execution.
- Mozambique:
- Recent mission: early May to discuss the fourth review of the ECF; discussions continuing virtually.
- Growth outlook: projected at 4.3 percent in 2024.
- Fiscal pressures: overruns in the wage bill in 2022 and 2023; authorities adopted corrective measures but need to rationalize wage bill spending to underpin fiscal consolidation.
- LNG projects: medium-term outlook for the extractive sector is strong as large LNG projects expected to resume; IMF does not envisage debt servicing issues if fiscal discipline is maintained.
- Zimbabwe:
- Article IV mission: staff expected to conduct the Article IV Consultation mission later this month.
- Currency developments: introduction of a new currency, the ZIG, backed by a basket of foreign currencies and other assets, mainly gold.
- IMF stance: stands ready to discuss and support efforts to restore macroeconomic stability.
- Pakistan:
- Staff visit: May 13th through 23rd; "significant progress" toward a staff-level agreement on a homegrown program supported under a new EFF; discussions continuing virtually.
- Specific operational details: IMF to respond bilaterally; no additional public detail provided at the briefing.
- Question on asset disclosure portal: IMF did not provide a definitive public answer at the briefing and indicated will follow up.
- Ghana:
- Staff-level agreement reached on April 13th for economic policies and reforms for the second review.
- Board timing: aim to bring the second review to the IMF's Executive Board for approval before the end of June.
- Financing access: Board approval would give Ghana access to $360 million, bringing total disbursements since May 2023 to about 1.6 billion.
- Debt restructuring progress:
- Domestic debt exchange completed last year.
- January 2024: agreement in principle with official bilateral creditors.
- Engagement ongoing with external private creditors.
- DSA and publication: IMF updates projections and the Debt Sustainability Analysis at each review; the latest DSA will be published with the Staff Report after the Board considers the second review.
- Policy advice: steadfast policy and reform implementation to fully restore macroeconomic stability and debt sustainability.
- Sri Lanka:
- Staff-level agreement: March 21st — staff-level agreement on economic policies to conclude the second review and the 2024 Article IV Consultation.
- Executive Board meeting: scheduled for June 12th to discuss the second review and the Article IV Consultation.
- Program performance: strong — rapid disinflation, robust reserve accumulation, initial signs of economic growth; most quantitative and structural conditionality met or implemented with delay.
- Debt restructuring status:
- Domestic debt operations largely completed.
- Ongoing: conclude negotiations with external commercial creditors and implement agreements in principle with official creditors.
- Authorities holding extensive discussions with external official creditors regarding an MOU; discussions with external bondholders continue; negotiations with China Development Bank at an advanced stage.
- IMF assessment: "sufficiently strong progress" on debt restructuring front.
- Argentina:
- Staff-level agreement: May 13th reached on the eighth review of the EFF program (subject to Executive Board approval).
- Access upon approval: about $800 million U.S. dollars.
- Program status: "all key program targets were met with wide margins."
- Policy priorities highlighted:
- Improve quality of fiscal consolidation to ensure durability and fairness while protecting the most vulnerable.
- Monetary and FX policy to evolve to anchor inflation and safeguard reserve accumulation and market stability.
- Micro-level reforms to unlock entry barriers, promote formal employment, and attract private investment.
- Broaden political support for macroeconomic stabilization and reform.
- Social policy: IMF emphasizes scaling up social assistance to support the poor and improve governance and targeting of social programs; protect the real value of pensions while preserving fiscal targets.
- Board timing: Board meeting expected "soon"; press release and Staff Report to follow as customary.
- Albania:
- Ongoing legal investigation into alleged consumer protection abuses by distressed debt managers (DDMs): IMF will not comment on active legal investigations.
- Historical context: IMF-supported program reviews in 2015 and 2016 identified high levels of non-performing loans; IMF endorsed 2015 action plan to reduce NPLs and supported Bank of Albania mandate to license and supervise DDMs.
- IMF note: maintaining independence of the Bank of Albania is key to safeguarding price and financial stability.
Debt, SDRs, and MDB hybrid capital channeling
- SDR channeling decision:
- IMF Executive Board authorized use of SDRs for acquisition of hybrid capital instruments issued by prescribed holders of SDRs (prescribed holders include MDBs).
- Universal limit set: 15 billion SDRs, which is about 20 billion U.S. dollars, for acquisition of hybrid capital instruments.
- Operational status:
- Some MDBs (e.g., African Development Bank, Inter-American Development Bank) have developed proposals to issue hybrid capital instruments in exchange for SDRs.
- No prescribed holder has yet issued hybrid capital instruments under the newly authorized use of SDRs.
- IMF role: decision makes such use permissible; the ultimate decision rests with each member country and the IMF is not part of country–MDB subscription discussions.
- Specific figure referenced in briefing: AfDB channeling figure of $20 billion U.S. dollars discussed in context of the 15 billion SDRs limit (about 20 billion U.S. dollars).
Russia assets and legal/financial system considerations
- IMF position reiterated:
- Any actions taken regarding Russian assets should have "sufficient legal underpinnings" and should not "undermine the functioning of the International Monetary System."
- Position is public and unchanged.
Global fiscal advice and elections
- Global context:
- Global outlook improved somewhat; inflation declining; April assessment: risks to global outlook balanced.
- Nonetheless, many countries face high debt levels, high fiscal deficits, high interest rates, and weak medium-term growth prospects.
- IMF fiscal recommendation:
- "This is the time for countries to really begin fiscal consolidation" and to bring fiscal positions back to pre-pandemic levels.
- Advice applies in election years as well: countries should rebuild fiscal buffers decisively to safeguard public finances.
Transcript of IMF Press Briefing, June 6, 2024. IM F Communications Department. Media relations: PRESS OFFICER: Tatiana Mossot. Phone: +1 202 623-7100Email: MEDIA@IMF.org.