Transcript of a press briefing by Gerry Rice, Director, External Relations Department, International Monetary Fund
IMF News, March 28, 2013
Source details
- Canonical URL
- Transcript of a press briefing by Gerry Rice, Director, External Relations Department, International Monetary Fund
Other formats
Bibliographic details
- Published: March 28, 2013
Announcements and upcoming IMF events
- Press briefing embargoed until 10:30 a.m. Washington time.
- Managing Director Christine Lagarde travel and speaking engagements:
- Travel to Hainan, China to attend the Boao Forum for Asia’s 2013 Annual Conference on April 6-8.
- Deliver Spring Meetings’ curtain raiser speech on April 10 at 12:15 p.m. (Economic Club of New York, New York City).
- Lecture hosted by the IMF in partnership with the World Resources Institute:
- Lord Nicholas Stern on fostering growth and poverty reduction in a world of immense risk on April 2 from 2:30 p.m.-4:00 p.m.; Managing Director to give opening remarks.
- World Economic Outlook (WEO) analytical chapters:
- Published on April 9; press conference at 9:30 a.m., April 9.
- Global Financial Stability Report (GFSR) analytical chapters:
- Press conference at 9:30 a.m., April 11.
- Analytical chapters posted under embargo by end of day April 5 on the Press Center.
- Spring Meetings:
- Begin the week of April 15; agenda and publication dates online now.
- Conference “Rethinking Macro Policy II, First Steps and Early Lessons” hosted by Olivier Blanchard and others on April 16-17; webcast live.
Cyprus: overview, implementation, and IMF role
- Context and diagnosis:
- Cyprus faced an exceptional situation with an oversized banking sector, two major banks deeply insolvent, and high and rising public debt.
- Agreement reached in Brussels:
- Focuses on dealing with the two problem banks.
- Fully protects insured deposits in all banks through a clear strategy.
- Seeks debt sustainability while avoiding excessive burden on the Cypriot taxpayer.
- Described as having the full support of the Cypriot authorities, the entire Eurogroup, and the three institutions (IMF, European Commission, European Central Bank).
- Adjustment and outlook:
- Financial sector downsizing and economic adjustment expected to be difficult for the Cypriot people over some period of time.
- Objective: a more sustainable, growth-promoting economic model.
- IMF technical work and financing decision process:
- IMF, European Commission, and European Central Bank staff teams in Cyprus completing technical details; mission expected to conclude in early April.
- IMF Executive Board will discuss possible financing arrangements for Cyprus after mission; a final decision from the IMF not expected before the end of April.
- Unresolved specifics:
- No IMF-provided figure yet for IMF financial assistance — to be determined by the ongoing mission.
- No specific numbers provided on cash outflows while banks were closed; teams on the ground to assess recapitalization needs.
- Applicability to other euro area cases:
- Repeated position: Cyprus case is very complex and unique; it would be difficult to extend that model to the rest of Europe or the world.
- Emphasized the broader need for Europe to move toward a banking union including a single supervisory mechanism, a single resolution mechanism, and a single resolution authority.
- IMF stance on earlier proposals (bank levy/initial agreement):
- Focus remains on the agreement reached in Brussels; no further comment on the initial levy beyond reiterating support for the current agreement.
Greece and Ukraine program negotiations
- Greece:
- IMF, European Commission, and European Central Bank teams were in Athens in mid-March for the third review; significant progress made, a few issues outstanding.
- Teams plan to resume discussions in Athens during the first week of April; no further details provided while mission is ongoing.
- Return timing: teams plan to return during the first week of April; length of mission as normal for such reviews.
- Ukraine:
- Mission in Kiev as of the previous day to continue negotiations on a new Stand-by arrangement.
- Expectation of progress over the next couple of weeks; no detailed outcomes provided.
Slovenia and other country-specific banking concerns
- Slovenia:
- Distinct from Cyprus; loan problems in the construction sector and leveraged buyouts weighing on banks’ earnings and capitalization.
- Authorities plan a publicly owned asset management company to take over nonperforming assets and recapitalize banks to enable funding of the real economy.
- IMF: Article IV Consultation concluded in October 2012 with a published concluding statement.
Egypt: engagement and missions
- Masood Ahmed visited Cairo on March 17 and reiterated IMF commitment to support Egypt.
- Agreement to continue discussions aimed at reaching agreement on possible financial support.
- Next IMF staff team expected to travel to Egypt in the first days of April to continue work; based on the most up-to-date information submitted by the authorities.
Italy: economic recommendations and political stability
- IMF monitoring:
- Following political developments but not commenting on domestic politics.
- Reiterated recommendations from last year’s Article IV Consultation:
- Maintain gains from fiscal adjustment and structural reforms.
- Shift composition of fiscal adjustment toward lower expenditures via thorough spending reviews and lower taxes to support growth.
- Accelerate implementation of comprehensive labor and product market reforms to boost productivity and labor participation, especially for young people and women.
- FSAP:
- Financial Sector Assessment Program concluded the prior Tuesday; statement issued.
- Political stability:
- General affirmation that stable government is important for financial stability.
BRICS development bank initiative and IMF governance reform
- BRICS development bank:
- IMF follows the initiative with great interest; recognizes infrastructure gap in developing countries as key constraint to sustainable growth.
- IMF quota and governance reform:
- Good progress made on the 2010 governance reform; described as “very close to the finishing line.”
- Urged all member countries to implement reforms as speedily as possible.
- United States has indicated support for moving forward with the reform as expeditiously as possible.
IMF governance and Managing Director briefing
- On legal matters concerning the Managing Director:
- IMF stated it would not comment on cases before the French judiciary.
- The Executive Board has been briefed on the matter, including recently, and continues to express confidence in the Managing Director’s ability to carry out her duties.
Euro area market confidence and policy guidance
- Markets and reassurance:
- Emphasized the importance of euro area leadership continuing implementation across fiscal, monetary, and structural reforms.
- Key message: accelerate implementation of measures already initiated to support confidence and stability.
Institutional posture and staff sentiment
- IMF’s institutional role and mood:
- IMF serves 188 member countries.
- Staff share a sense of urgency and commitment to assist members across regions.
- Work characterized by long hours and dedication to serve members’ needs.
Transcript of a press briefing by Gerry Rice, Director, External Relations Department, International Monetary Fund — March 28, 2013.